Posted on: August 28, 2020
WI 503 | $52k Deal

 

With all that’s going on, putting your wholesaling on hold and waiting for things to “normalize” seems like a smart business move. Not if you’ll ask today’s guest!

Michael McDonald is a determined wholesaler who’s doing something unconventional despite the current economic challenges. Rather than put his marketing efforts on hold, he’s doubling down on his efforts. While seemingly counterproductive, the risk he took paid off big-time and he’s now $52k richer!

If you think doing business in today’s current economic climate is futile, consider listening to this episode a must. Michael’s story will surely change your mind. And hey, his courage might just rub off on you, too!

Discover How Michael Did a $52k Deal . . . and Has 6 More Under Contract!

Episode Transcription

I have with me my man, Michael McDonald, who is going to be crushing it, allowing you to know how you can still do deals in business and the world nowadays. You don’t need to be hiding from the future. You need to be preparing for the future. You need to be scaling up. You need to get ready for the future because real estate should be something that each one of us still should be excited about. I’m excited to have Michael with us. Michael, give us a little bit of background of who you are and a little bit about yourself.

I’m honored to be here. Thank you so much for having me. I remember a year and a half ago, I started reading the blog. I’m like, “I’m going to be on that show someday.” A little bit about me, I’m from Lincoln. I’m from small-town Nebraska. I started wholesaling a few years ago. I did what a lot of people may do and go to one of those free events and get sucked into their first three-day workshop. $2,000 here, $10,000 later and you got to have the mentorship. I agree that it’s important. $25,000 mentorship, it’s money I did not have.

Shortly after my wife allowed me to commit to this, she said, “We’re having a baby.” Here we go. I’m $50,000 in debt on top of a student loan and tired of my corporate job. I went to school for Nutrition. A year into part-time wholesaling and failing, I finally got my first deal. After about twelve deals, my first year part-time, I realized that it was getting close to time to quit my full-time job. I made more money part-time. I formed a partnership in year number two. Six or seven months into it, my wife and I thought it’d be a good idea to take our business and move across the country. I’m sitting here in Las Vegas.

The city that finally sleeps.

We have the wholesaling business and flipping business in Nebraska and I’m out here in Vegas with my family and here we are.

This is fantastic. You went to a course and got into a ton of debt. Were you able to recap that? Were able to make that back? Is that something that you had to shift gears to make that money back?

I struggled in the beginning. It took me 5 to 6 months to get my first deal. The credit cards that I had all this money on had a year and half of zero interest. I paid back the final lump sum of expenses the month before the 23% interest kicked in.

Slide into so big credit in the last second.

Everything I earned was going towards the credit cards so it felt I wasn’t making any progress but I was making some money.

What’s impressive is the fact that you stick with it. I have a friend that went through the same thing. He went through a program that was about $25,000 and it ended up not delivering what he thought it was going to deliver. Still to this day, it knocked them out of never wanting to get into real estate ever again. The fact that you’re here is amazing because most people get knocked off. Hard enough, they’re like, “This isn’t meant for me. I wasn’t meant to make money in real estate.”

I love that we’re here sharing that story because I didn’t know this about you so I’m grateful you shared this. Your story needs to be heard often. You can do it. It means you might have received the wrong action to take and now here you are taking incredible action. I want people to understand that we’re going to be breaking down how you and your business partner, Ryan, are still doing deals. Are you doing deals in nowadays economy?

What hit home with me, listening to your last couple of talks, home base. That’s what this is all about. For me, I may not have succeeded in this had I not been thinking about my why and home base. You’ve got to dig deeper but we’re doing deals.

When we talk about home base, what he is referring to is now in this economy and I shared this in our student group coach call, home-based, a lot of people are hesitant to go out there and make money. They think that by making money, that it’s the wrong time to be making money but let me help you a little bit with your mindset here. If that’s what you’re thinking, “It’s not okay to be making money at this time.” Let me tell you what is worse. Not making money. Not making money during this time is worse.

I’ve got a beautiful wife and four beautiful kids that look at me every day. When I head to work, they’re looking at me and they’re relying upon me. Cody Hofhine, to bring my best, like be my best. They’re relying on that because I need to take care of them. I’m the financial way of making sure that they have food on the table, that we can sustain our way of living. More importantly, why each one of you needs to be making money in this economy is because you need to take care of your home base first.

From there, you’re able to help more individuals. You’re able to help your neighbor or your friends that might be in a tough situation. Maybe they did lose their job. What a blessing it would be that if you can make a lot of money during this time that not only do you take care of home base but that you can go to that neighbor or that family member and say, “I’ve got a little extra for you. How can I help you?” For those of you in that thought, “Is it okay to be making money?” Yes. Michael, I don’t know if you want to add anything to that.

I couldn’t agree more than that. You said something at the event last time I was with you.

Keep consistent with marketing. If anything, spend more.

Was it out here at Salt Lake, at the office?

Yes. At the SCALE event.

It was so good seeing you and Ryan at the SCALE event.

We told everyone when you guys left, Mark and I were like, “Those guys are going to kill it. You watch.” You guys have been killing it so go for it, share what you’re going to say.

What you said resonated with me is, “Once you have your home base or your stuff taken care of,” we’re talking about paying off the house. We’ve been buying some rentals, trying to buy him free and clear and leave them free and clear. Once you have the main expenses taken care of, you can help people. You don’t have to worry about yourself anymore. You can give back and that’s what I loved about that. That’s my mission.

Did you pay off your home?

We’re in the home-buying business. We sold our house to pay off some final debts and move out here. We live in a townhome in Henderson, which is South of Vegas now.

RC Willey, the furniture store was my dad’s business that built that in Henderson.

We’re looking for seller finance deals. It’s the beauty of real estate out there.

You’re trying to take care of your home base. You’re going to get the debt is taken care of, which I love but let’s talk about this $52,000 deal. What was it that you did to get this $52,000 deal?

Good old Carrot website. Somebody submitted a form. It was on a Sunday. I was sitting around and hanging out. I’m “These leads are typically hot.” I picked up the phone. I called and she’s like, “That was fast.” It was two minutes after she submitted the form. I talked with her and found out what she needed and whatnot. I closed the deal on the phone because I knew it was a deal and I didn’t even have to negotiate. She literally said, “I have a bridge loan. I don’t need the money. I have a high-paying job. I already have a new house. I want an easy sale.” I was like, “Okay.”

You’re like, “I’ll take it.”

“If you’re going to pull my arm.” We walked her through the purchase agreement. She said, “I have a bridge loan for $100,000.” I looked at Zillow real quick and its estimate was $150,000. I’m like, “You’re telling me the house is in great shape. This will work for us. I don’t even have to think about it. Let’s go ahead. I’ll walk you through this and we’ll go ahead and get this deal done now.”

Was this in the other market?

Let me explain. I’m in Vegas and this was in Lincoln, Nebraska. I know the area. It’s a good part of town. I put her under contract for $1,000 over her bridge loan, which was $101,000. I said, “We’ll pay for all the closing costs. I’ll have my business partner come by next week and confirm that we’re checked out and everything’s good to go.” I bought the deal for $101,000 closed down with private money.

What was your intent going into this? Was this something that you’re like, “It is a great deal?” Were you going to do a typical, find cash buyers that wanted this or were you like, “There’s a unique strategy I’m going to do with this.”

WI 503 | $52k Deal

$52k Deal: Once you have those main expenses taken care of, you can help people now that you don’t have to worry about yourself anymore.

 

We knew we had to buy this property because the seller wanted to close as quickly as possible. We didn’t want to leave money on the table and the market was hot. What happened was we’re like, “We’re going to wholetail this deal.”

Let’s break it down. For those that are reading, you’ve got wholesale and retail. That’s one word. You take wholetail and retail and you get wholetail. You’re finding a deal at a deep discount and simply what he’s going to do is put it right back on the market. Break it down.

That is exactly what we did, Cody. We bought the house. We may have touched up a couple of things, maybe spent a few hundred bucks to clean it up. When we put it on the market, our agent said, “Let’s put it on for $145,00 below his estimate. We’ll start a bidding frenzy.” I listed it for $144,900. We had 50 people through the house the first day.

On like a showing because you’re listed this with a realtor.

We were like, “We don’t want to deal with it. You do it. You sell it. You do your thing.” We listed it with a realtor and the price kept getting driven up. It was like, “Full priced offer. Cool. We’re getting ready to accept it.” “No.” “$150,000. $155,000. $160,000. $165,000,” A couple of days went by and we’re fielding offers. We’ve got an offer for $168,500.

Here’s one thing I have to bring up because it’s so worth it. We talked about this at the SCALE event in Salt Lake. Slow your disposition side down. Those times when we get an offer and it’s like, “I like it. Let’s take it.” If you slow down, you start to see that more people start chiming in and it starts driving up the price. How long from all these offers, from the time the first offer came in at full offer until you got this $168,000. How long were you needing to wait before you got back to these offers?

It was probably 3, 4 or maybe even 5 days. I’m sitting here like, “Accept the offer,” but my agent’s like, “No. Have patience. They’re going to come through.”

I love your agent. We need to talk.

We accepted the $168,500 and closed in the month, 10 to 15 days.

What ultimately does that look like when you say, “Here was this deal we put under contract, we sold this price.” That was the net. Was the net $52,000?

The net was $52,000. They had their inspections and three days before closing, they wanted a sewer pipe that ran from the street that was a foot into the property replaced. He had to hire an excavator and had to hire a plumber to come out to dig up the ground and try to miss all these pipes so we didn’t blow up the whole street.

That was illegal.

We fixed that. That was a few thousand dollars expense and it was miscellaneous things, odds and ends. We replaced the dishwasher the day before closing. It’s small stuff. It’s nothing crazy.

$52,000, get ready for the school teacher bell yet again, Michael. This is crazy. You’ve done this deal. That’s a big deal and I don’t want to glaze over it like, “Let’s move on.” That’s an incredible deal. Has there still been consistent activity? Are there any deals going on like homes going under contract? What does that look like?

It’s crazy. The phone is still ringing and the business is still happening. We haven’t stepped off the marketing whatsoever.

Crucial note. Take note. We have not stepped off the marketing.

Be the best at one or two things until you have that on autopilot, and then you can move on to your next marketing channel and hopefully start seeing results from that, too.

We’re keeping consistent marketing and if anything, we’re spending more. It’s crazy to me that some of the bigger players in some of our markets that we’re working in, unplugged. I’m sitting on the sidelines until this is all over with. That’s fine if that’s what they needed to do but for me, it’s like, “That’s an opportunity.” Now there’s more opportunity for us to get in there and be in touch with those people and help these people who are struggling out.

I hate that I have to slow you down because this is so good. I want people to realize what you said. As the old adage goes, “The last mile is the least crowded.” If you will stay consistent and get out there and keep consistently sending out marketing is the time that you are going to be leaps and bounds above that word competition. Many people now have allowed what’s going on to allow them to slow down and step on the brake, where Michael has done the opposite, he has stepped on the gas full throttle.

The last mile is the least crowded. This is the time to not sit back. This is the time to get consistent. I’m starting to see an uptick on every marketing perform but we even saw its direct mail. The response rates and deal flows are going through the roof. The action you do now, you’re going to see the fruits of it for the next 30, 60, 90 days, whereas the people that aren’t taking action are going to be hurting for the next 30, 60, 90 days.

It’s crazy because we’ve been getting calls, people asking, “Are you still buying now?” A lot of people aren’t buying. It’s like, “Yes, we are. We’re still buying. We’re still doing business.” You asked about what the pipeline looks like when we’re looking at deals.

Let’s hear it.

I had to take some notes here.

You’ve been consistently doing 3 to 5 deals since we last spoke in Salt Lake. Consistently, you’ve been doing almost five deals a month. What does your pipeline look like?

Leading up until now and first of all, we had a deal close before that. We had two deals close before that two wholetail deals before that one.

Wholetail market and put on the retail market?

Yes. One of them was a gutted house. It was rough but I sold it right away. It looks like a few wholesale deals close.

When did those go under contract? How far back?

The one was probably 20, 25 days. The other one was quick. It went under contract and it closed. We have a few others in the works. We have another wholetail that we’ll be buying. We’re selling a flip. This has been in the works for a long time. We contracted one. She signed it for a while and I just signed it because we’re working out some logistics.

Isn’t it funny how every day is like Groundhog Day? You almost think like, “Was it yesterday I signed that contract? No. It was this morning. That’s funny, I thought it was yesterday.”

Our goal for a month is eight. We’re shooting for eight. We’re at five now.

You’re at 5, you got 3 more in the next couple of days.

We’ve got to get busy.

WI 503 | $52k Deal

$52k Deal: When you’re starting in business, focus on one or two things and just crush it.

 

You’ve got this. I want to put this out here and this is why I love the mindset of you and your business partner, Ryan because of this. You’ve already set a goal. You put the destination and we talk about this all the time how crucial it is to have that destination. If you don’t know the destination, you don’t know the road to get there. You won’t know how to map out how you’re going to get there but because you know, “I want eight deals this month,” you’re going to start to hear the pathway to get there. Most people go through the day and keep doing their thing. They keep being like, “I’m going to go through the day and see what happens. I’m going to keep going through the day.”

That’s much like me hopping in the car with my wife and kids and saying, “We’re going on vacation.” My wife’s like, “Where are we going?” “I don’t know. We’re going to hop in the car and we’re going to find out where we’re going to go.” You start going wherever you want and there’s no direction. You would never do that but yet most people run their business that way. They don’t even know what they want.

They start getting in the car and start putting in drive and it’s like, “Wherever it goes, it goes.” It’s like, “No, we got to take control.” Once you know you want eight deals, you now know from your experience that you’re going to have to say no to a lot of paths and only say yes to very few paths so you can obtain that goal of eight deals. I’m excited for you and I’m confident you are going to get it.

We learned a lot and we’ve definitely made a lot of money from one simple thing that we learned at the SCALE event. I don’t know if I can even talk about it here because it has so much value.

Is it the famous text?

It’s a disposition text.

That’s the best. You’ve got to keep that gold in your pocket. Keep it. That one is solid gold. Who was it? Was it Scott that used that text and it was an $8,000 bump in a one-hour time?

Yes. Every time we’ve done it so far since then, it always jacks the price up. It hasn’t not gone up once since we’ve done that.

You’re using the text that we talked about in Salt Lake. We give away the farm at SCALE but it’s because we want to see it work. I love the fact that you’re using it and the fact that you’re saying every time you use it, it’s increase what you make on your deal. Phenomenal.

Anything else you want to share with everyone reading who maybe are on the fence post of maybe, “Do I get into real estate?” There are some people who are reading this who are not even in the game. They’re on the sidelines now. There are some people that are in the game but kind of, “Do I hold off now?” What would you say to those people?

Don’t wait. It’s scary. There’s a lot involved with real estate but it’s pretty simple. The thing that a lot of people struggle with when they first get started is doing too many things at once, going this way and that way. For me, once I started focusing on 1 or 2 channels of marketing, I started seeing some progress. That right there is the main thing. When you’re starting in this business, focus on 1 or 2 things and crush them. Dominate. Be the best at that 1 or 2 things until you have that on autopilot and you can move on to your next marketing channel and hopefully start seeing some results from that too.

Michael, I know you’re busy. I know you’re not sitting back. I know you’re out there still doing deals but I want to thank you because this is going to inspire a lot of people. I know that this is going to motivate a ton of people. There’s no reason to sit back. Now’s the time to take care of the home base. Don’t be afraid to make money. It’s okay to make money. You’ve got to take care of the home base.

More importantly, money is not evil. Money is a good thing. Money, with the right heart, is a good thing. If you’ll use it to bless other people’s lives, this will give you that much more motivation to say, “I’ve got to be my best now because not only is my family needed to be taken care of but there are a lot of people that could use my help now.”

If you have that mindset, it’ll get you up there to start taking action and it’s that action that’s going to lead you to results. Thank you so much. The wisdom you shared was priceless. I hope you got enough from this that motivates you to get out there, keep doing it. Go do it. Michael, thank you for joining us.

For those of you on the fence post, if you are needing help to build your real estate business so you can get out there and do deals, head on over to WholesalingInc.com, fill out a quick questionnaire. It’s not hard. Hop on the phone with our team and see if it’s a fit. If so, let’s get you out there. We’re going to give you the simple instructions so you too can get out there and start doing deals in nowaday’s market. Thank you so much. Michael, you’re the man. God blessed you and your cute little family. Go take care of them and keep serving them.

Thanks. I appreciate it.

Take care. See you.

 

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