Posted on: August 31, 2020
WI 504 | Crushing The Competition

 

If you think you need to have extensive wholesaling experience to dominate an ultra-competitive market, think again! Today’s guest is dominating his market. And he’s only 19!

Riley McGarity is a determined and hardworking young man who knows what he wants. While he has experienced several bumps along the way, Riley remained steadfast. With the right mindset (and the right guidance!), he was finally able to make things work.

If you can use some practical tips, wisdom, and inspiration from a smart 19-year-old, this is one episode you shouldn’t miss!

How a Determined 19-Year-Old is Crushing the Competition in an Ultra-Competitive Market

Episode Transcription

If this is your first time reading, welcome. You are about to read an awesome episode with Riley McGarity. Riley, welcome to the show.

Lauren, thanks for having me. How are you doing?

I’m good. Riley, where are you from?

I’m from San Diego, California. It’s a couple of hours from where you are.

I’m in Orange County. You’re in San Diego, a couple of hours away but in a similar real estate market. Riley, you’re ridiculously young for being how responsible you are. What got you into real estate?

Honestly, it was how most people get into it. They’re online and trying to look for some way to make money. That’s how I started. I realized that I didn’t want to go to college and didn’t want a normal job. I had experimented with the normal job for a couple of weeks and I hated it. I had to figure something out. I tried a couple of other random online business models that I wasn’t passionate about and they didn’t turn out to be anything. I came across some random video and then went through a month of YouTube university and went from there.

You were in high school, you’re approaching college age, and did you just decide, “I’d rather die than go to college?”

Yes. Until my junior year of high school, I was planning to go to college. I had a college set out that I was going to go to. I visited a couple of places and I saw what it was like. I was researching more into it and realized that’s not the route I wanted to go. Especially after graduating high school, I didn’t want to do another four years.

What is it about college? Why did you not want to go?

It’s because they’re not talking about anything that I’m passionate about. I couldn’t even find a degree that I was passionate about getting. I couldn’t see how that could help me in my life. I know for a lot of people that it does and that’s the right path to go. For me, I had to figure something out, and fortunately, that was wholesaling.

It’s not a bad thing to get some competition in your market.

College isn’t for everybody. It’s cool that you know that about yourself at such a young age. You have a strong sense of who you are. What did your parents think when you were like, “I don’t want to go to college?”

They weren’t on board with it. They supported whatever I wanted to do, but they did want me to go to college. I had been planning on starting to go to community college to at least be doing something. I was wholesaling for quite a long time and I was getting nothing. I was losing money every single month. I finally got that first deal and that started the momentum and then I said, “I’m not going to go at all.”

Tell me when you started wholesaling, started the process, and then got your first deal. When was that?

I started in October of 2018. That’s when I started learning. I spent about a month listening to podcasts, watching videos, reading 100 Wholesaling Inc. episodes. I went through the whole learning process. I then started taking some small action steps. I started cold calling. This was all in San Diego. I’ve been trying to get to a deal in San Diego for a little over a year. I got one contract that fell through, but nothing other than that. That’s when I decided that I was going to try virtually. I knew that a couple of people had success with it. I learned as much as I could. I found a market and started marketing there. It took about three months until I got my first deal.

When did you get your first deal?

That was in December of 2019.

You went a whole year. You were doing it in your backyard, in San Diego. I know what you’re going through because I’m in Orange County and it’s a high-priced area. A lot of the techniques that you probably would hear about on YouTube university did not apply in those high price markets. A lot of people don’t realize that.

When you’re newer, you think, “It worked for this guy in Idaho. Of course, it would work in San Diego, California, where house prices are on average $750,000.” You didn’t know that. Even the guy in Idaho doesn’t realize that. He’s not in California. It’s not until you try and you try for a year. I had that same experience. It was frustrating. We can commiserate with each other a bit in the high price markets, the West Coast, California, New York, and Miami. You finally picked a virtual market. What took you there? How did you figure out what market you wanted to be in?

I was tired of Southern California. I knew I had to pick something quick because I didn’t want to sit around and do nothing. At that point, I had already given up on SoCal, and I was searching for another market. I was going through a Facebook group, and I saw someone made a virtual wholesaling post and I started messaging with him, “What market are you in? How did you choose that market?” He told me they were in a couple of different markets and one of them was Wichita, Kansas.

WI 504 | Crushing The Competition

Crushing The Competition: Even if you are doing it in your local market, get a JV partner.

 

I didn’t know anything about Wichita. I didn’t know the house prices over there and the number of investors over there. He did a deal signed and it was possible. I was talking with him back and forth. I was like, “If I put some marketing dollars in that area and happen to get something under contract, can you dispo it for me?” He said, “Sure. Start marketing. If you get something, let me know.” That’s what I started doing. It still took me a couple of months, but it was a lot quicker than SoCal.

You didn’t know anything about Wichita. You were trying to find a virtual market. My first piece of advice when you’re trying to find a virtual market is to search for a proven concept. That was instinctually what you did. You didn’t know this. You weren’t a part of my program at the time. My first piece of advice is finding an area where other people are doing what you are trying to do and are doing it successfully. You found someone in Wichita closing deals successfully, so you thought, “If he could do it, I could do it.”

At that point, I was pretty scared of competition. I wanted to avoid that. It’s not bad to get some competition in your market, but I wanted to avoid that at all costs because I wanted to get a deal done as soon as possible. Even if it was $2,000 or $3,000, I wanted to know that it was at least possible. At this point, I was starting to doubt myself and thinking, “If I don’t get a deal in the next couple of months, I might try something else because this is wearing me out.” As I saw that he did a deal, I was like, “I haven’t heard of anyone else doing deals in this area besides this guy. If he has a buyer’s list over there, if I can lock something up for dirt cheap, I’m going to see if he can dispo it and at least get a deal done.”

You did one deal and then what happened next?

I did my first deal with my JV partner. That was a home run deal. I got super lucky on that one. I almost threw that lead away. If it weren’t for my JV partner telling me to keep following up with them, I would not have gotten that deal. They originally were asking $80,000 for the house, and then we ended up getting it for $40,000 and dispo-ing it for $69,000. We got that deal. We closed on it. I made my marketing budget. I started doubling the number of texts I was sending out and the amount of offers I was making and started building some momentum.

That is a home run deal for your first one, for sure. Your first deal, a seller comes in, you almost threw it away, but it wasn’t for having a mentor or a JV partner telling you to keep going and following up. They started at $80,000. I always say that a seller is never going to offer you a discount on their house. That’s pretty rare. They’re always going to come in high, and it’s in the follow-up that you get them down on their price and you did that. You got them 50% off and you locked it up. The JV partner handled the dispo and you’re done. Now you’ve got this fat fee that now you can put into your business for more marketing and double down.

I’m super thankful for my JV partner because if it weren’t for him, I don’t even think I would have gotten that deal. They were asking $80,000. We couldn’t have even sold it for that much. If it weren’t for him telling me to keep talking to him and following up, that wouldn’t have happened.

The other advice I give is a JV partner. A good JV partner is the difference between you doing deals and not doing any deals. It sounds like that was a big pivotal moment for you, not only making the pivot to a different area but having that partner to keep you going.

That’s super important. Even if you are doing it in your local market, I would still say get a JV partner. My first deal had closed late December, and then I’d done a couple more, but they were way smaller. I wanted more consistency. I wanted to learn the ins and outs of virtual because I didn’t have a virtual coach. I was learning on my own because my JV partner, that’s his market. He didn’t do any virtual stuff at the time. I was listening to Wholesaling Inc, and then they had mentioned you were going to join the program and start a virtual coaching program. As soon as I got done listening to that podcast, I scheduled a call.

You were one of my first students. That’s cool. I had no idea how young you were. I said from the beginning that you remind me of me. With a lot of the questions you asked, you asked good questions. You work hard. You’re consistent. What I like about you is you do the work. You make offers. You talk to sellers. I love it.

The worst place to be is analysis paralysis.

The worst place to be is analysis paralysis. I hate being in that state of mind so much that I have to do something even if it’s not the right thing to do at the time. I may not know what the right step is, but anything is better than being in that state of mind of not knowing what to do and being stuck.

I can’t agree with you more. Maybe you’re lucky that you’re young and don’t know any better, so you probably don’t get analysis paralysis as much as somebody in their 40s. Sometimes life experience is great in some ways, but then it also makes people afraid. The more you know, you get stuck and you overanalyze what you’re doing. Maybe part of it is you don’t overanalyze and you just do. That’s cool.

It hasn’t been the best thing at times. I’ve locked a couple of contracts way too high and sellers have gotten super pissed off at me. Luckily, I haven’t been sued. There’s a downside to it.

What you’re telling me is something that does happen and it’s common. It happens to everybody when they’re figuring out the market. Do you have any practical advice, maybe something that you got from your journey or anything that you can share?

I got from your program and something that I wasn’t doing before, continuing to plant seeds no matter how many contracts you have or how many deals you think you have. Even if you lock up a deal that you think you’re going to make $50,000 on in the next two weeks, the next day, do exactly what you did to get that deal and keep doing that every day. If you focus on that deal and rely solely on that deal closing, you’re going to have a completely dry pipeline and have to rebuild by the time it closes.

One thing that hindered my growth at the beginning was the fact that I would get something under contract and I’d be like, “I got something under contract. This and this with my JV partner and see if he needs me for anything.” I’ll probably do some follow-ups here and there. That property would close. I would get my assignment checked, and then I would have to completely rebuild my pipeline all over again. I wouldn’t get a deal for another 30 or 45 days.

Once I joined your program, I started asking these questions, and you would help me with the things that I was struggling with because I wasn’t growing. I wasn’t having any consistency in my business. That stuck with me. Every time I lock something up, I make sure I do exactly what I did to lock that contract up the next day.

Honestly, I know that because I did that. I made those mistakes when I started. A lot of people do. I noticed that you needed some refining and rules when it came to your processes and lead generation. You needed to consistently put out marketing, so you’re consistently generating leads every single day. It doesn’t matter how many contracts you locked up that you are consistent with your lead generation because today’s leads are three months from today’s deal. People don’t realize that.

If you stop now for a month, in three months, you’re going to have a dry month. I always tell people that you stop during the holidays with your lead gen around Christmas and the holidays. A lot of us do. “I will stop on Christmas, the week of,” because it’s a little rude to call people on Christmas. Be careful. If anything, I want to double down the first two weeks of December, so I’ve got more leads coming in. That can allow me to take that break for a week because I know that I do not want to have a dry February and March. A lot of people do that, they’ll take from November to December off, and then they’ll wonder why quarter one is terrible for them.

WI 504 | Crushing The Competition

Crushing The Competition: You can’t stop lead gen and planting those seeds because rarely will you come across that low-hanging fruit where you text them the same day and you get a contract.

 

I would get a deal closed at the beginning of one month, and then the next month, I’d be like, “I’m going to go extra hard this month. I’m going to send out twice as many texts, talk to twice as many people to make up for that.” At the end of the month, I made the same amount as last month or even less. It’s like, “How does that work?” It’s because you went a whole month, 30 days, without doing any lead gen.

I take the double-down approach only in the holidays. That’s a special time. Let’s say you were doing that four times a year, “I got a contract so I can chill out and work on this contract.” I hear that all the time. It’s like, “I got a deal. I’m busy working on this escrow.” What are you working on? There’s nothing to work on. Give it to an escrow officer and get back to your lead generation. What are you doing working on this deal, putting this deal together? I hear that all the time. I’m like, “You got to stop working on your deal. Work on getting more deals.”

If you’re doing that four times a year, that’s exactly why a lot of people have this lopsided snowball effect, where you think you’re getting a snowball effect, and then it becomes lopsided and falls on its side, and you can’t get the snowball back over again. I know it because I did it. I got started and had the same things. I know all the things those new investors do because I did them myself.

That’s the thing with having a JV partner. The point of having a JV partner is so that you can focus solely on lead gen and locking up contracts. Once you get a contract, there’s not much that you have to do from that point. Send the title company the contracts, get escrow started, send them all the seller and buyer contact info, and then you need to start lead gen again.

You said it fifteen seconds, what all you have to do. There are people, though, who’d be like, “I’ve been putting this deal together for two weeks.” They don’t do anything. They don’t make a single offer on the house. They don’t do it because they’re staring at their emails about a deal and calling the escrow company every day, and making sure that they’re going to get that check. They’re doing themselves a big disservice. There’s something to say, too. When you have all your eggs in one basket, you depend on that check closing. Instead, mentally, you need to think about, “I’ve got plenty of other deals in the pipeline. If this one doesn’t close, it’s not that big of a deal.”

I found myself relying on one deal for the entire month. I learned my lesson with that because for an entire month, I’ve been relying on this one deal to close because this is going to help me with my marketing budget and do more deals and generate more leads. I wasn’t doing anything else. The closing day came and the lady walked out of closing. She said, “I’m not doing this. I want you to pay for my back taxes,” and then she walked out. We had to figure that out. We ended up getting it done, and I made a little less because we had to pay her back taxes. She was pretty stubborn. That was a learning experience. That showed me that you can’t stop lead gen and planting those seeds because rarely will you come across that low-hanging fruit, where you text them the same day and you get a contract.

What was your biggest fear? You are newer, but you’ve got some experience. Take me back to when you were first closing deals.

My biggest fear was not getting one at all. I was afraid of losing money on a deal and then having a seller get super pissed at me and then hire a lawyer or something to try to come after me. I was pretty scared of that, too. I would hesitate on certain deals. If I didn’t know it was a deal, if I thought, maybe it could be, I wouldn’t lock it up because I don’t want this person to get mad at me.

You threw out a lot of fears. I always like asking the fear question because these are things that we all go through, and I had all those same fears. I bring that up with KPIs. If your KPI, how many contracts to how many deals you’re closing, it’s 1 out of 1. For every one contract you’ve gotten in the last year, you’ve closed every single one of those contracts. That tells me you are not locking up enough contracts. You think that sounds good like, “I closed 100% of all the contracts that I lock up.” No. That isn’t good because that means you’re being too conservative.

Unfortunately, you need to get past that fear to be more successful because you need to take risks on houses that you’re not 100% sure about. I’m not giving legal advice. I’m not an attorney and not even pretending to be one. If you can get your attorney to look at your purchase agreement, make sure that your purchase agreement protects you gives you that inspection contingency and that inspection and due diligence time you need in that contract. You should be protected in that scenario.

Continue to plant seeds no matter how many contracts you have or how many deals you think you have.

Will the seller get upset? Sometimes. I’ll give what I do in my company. We over-communicate in our company. I tell the seller everything from the get-go from the first conversation. I let them know we are investors. We’re house flippers. We’re going to buy the house to fix it up and resell it. Sometimes we assign our contracts to high-volume landlord buyers. I give them a spiel. I have a script for free that I give away. If anybody is reading this, if you go to www.ThisMomFlips.com and opt-in, you will get my free seller qualifying script. Riley, you probably saw that script in the course.

I use it every time.

I overcommunicate. I tell them everything. I’m not being secretive about who I am and what I do. When I talk to sellers, the first thing I want to do is at least tell them who I am and what I do within the first minute of the call. Right there, the seller knows, “This person, Riley, has to make money on my home. If it comes to inspection time and the house is in disrepair, and I didn’t describe the house accurately, Riley might come back.”

I let them know in probably the 2nd or 3rd call when I’m delivering the offer, and then when we’re locking up the contract, “We need to inspect. As long as the house is in the same shape you described it to be, we should be good. Mr. Seller, we do need to inspect the property. We haven’t seen the home, but based on the comps in the area for similar homes like yours that have sold to other investors, we need to be at this price.”

That lets the seller know. That preps them that there is a chance that when they see the property in person, we might not be at that price anymore because the property needs a new roof, and the seller didn’t tell us about the roof. Usually, I’ve noticed with my script that I gave you in the course, it has reduced or gotten yelled at by probably 80%. There’s still 20% that’s going to get mad because they couldn’t pull one over you.

I’m working on one like that where I had locked the contract up at a certain price, and then my JV partner did the inspection and there’s a ton of termite damage. Now I have to go back and ask for a price reduction. Even if they do get upset, you’re not in the wrong because you had prepped them for that at the beginning that could be a possibility. It’s 50/50.

Remember that you are not in the wrong. They didn’t tell you about the termite damage. How are you supposed to know? They know that you locked it up over the phone. You tell them, “Mr. Seller, I’m on the phone and I’m giving you pricing now. If we can agree on this price, we are on the same page, but I do still need to inspect it.” A lot of sellers will say, “Why don’t you come down and inspect it first?” That’s when you tell them, “Mr. Seller, we are working on so many houses. We have many sellers that call us every single day that we can only work on the most serious sellers, the ones that are ready to execute now.”

We found through years of experience that when we inspect the house first, the seller often pulls out, isn’t that serious, and has often used us to give them a free appraisal on their home. That happens several times a week where we would go inspect a home, and then the seller would last-minute say, “I’m kidding. I don’t want to sell or I went around and took your pricing to ten other investors. I got a better price and now I’m going with them.” “Why did you waste my time coming down?”

I explain through storytelling to the seller that this is why our process is the way it is. We need to lock this price up over the phone, so we are both committing that we are serious about the sale. I will get in my car, drive, and go look at the property, but I am not getting in my car, not getting out of my desk until I have it in writing that you’re serious about selling your house.

WI 504 | Crushing The Competition

Crushing The Competition: Give them a range to start with, so you can see where they’re at. If you do that, you’re going to be able to pump out way more offers.

 

That’s going to happen a lot. Some sellers are going to use you as a free offer generator. They’re going to get your offer, write it down, and go to every other investor that they’ve talked to. They’re going to say, “I got this offer. How much can you come up?” They’re going to sign a contract, and you’re never going to hear from them again. That happens all the time, where I have a great deal and seem pretty motivated. I then tried to contact them multiple times. They block my number. I’ll check the county a month later, and some random LLC owns it. There’s nothing you can do about that.

That’s why I also say as far as my sales and negotiation philosophy, “Get the seller to like you on the first call.” Your goal is to get the seller to always like you because if they like you enough, they will feel bad that they blocked your number or didn’t give you at least the option to come up on your price.

If they like you, they will answer the call and be like, “I did talk to another investor and he offered me $5,000 more.” At least that gives you the opportunity to see if you can come up with $5,000. If you stay up on them enough, if you know that they need to sell, they should stay in a category in your CRM because you know they need to sell. Stay on them. They will communicate because you already made friends and got them to like you. They will communicate with you what they’re doing. You can get it out of them. That’s when you can slip in, “You talked to another investor. What did they say?”

You want them to feel bad because they like you so much, and then every time you follow up, they have to come up with some lie of why they haven’t signed your contract already. That’s when they’ll probably reveal that they talked to another investor. That’s when you say, “Where’s the investor at? What price are they at?” If they say they’ve talked to anybody else, I always ask, “What price did they give you?”

One thing that’s also helped me a lot is when we were on another Zoom call, and you were talking about a deal, and you said it was never yours in the first place. That’s helped a lot because I find myself fixated on certain leads that I think are going to be great deals, and then it ends up falling through and I get mad. I get upset, and I don’t want to do anything the next day. It’s true that that property, that deal was never yours in the first place. It’s not yours until the check comes to your door.

I do love saying that because it’s something I used to do. I used to do the same thing. I would get hung up on a deal and all I could think about was this deal. If it wouldn’t close, if I lost the seller or whatever, I would be devastated. There were times I legitimately cried losing a deal. At the time, I was flipping houses in California. I was like, “That was $40,000.”

It was like, “Lauren, it was never yours in the first place. If you were generating more leads and focusing on your lead generation, you would have had five other possible $40,000 pay-days. You wouldn’t have been so hung up on that one.” It is like a Buddhist philosophy of letting go of your attachment. Let go of that attachment to that particularly motivated seller. It makes me chuckle like, “That’s cute,” when the newer investor gets hung up about one seller lead that they got.

It’s like, “I got a great lead now. She inherited the house from her mother and the house is vacant. I’m going to sit for three hours and figure out the perfect offer price. I’m going to jump in my car, drive by the house. I haven’t even talked about the price yet, but I’m going to get my car, drive, take photos and walk the property. I’m going to think some more about my offer price. I’m going to call her and present my offer to her.” You’ve heard this story.

It’s exactly what I did.

This is a classic newbie move over one lead. You haven’t even determined if that lead likes you when that lead wants to sell, why they want to sell, who are the other decision-makers in it. If they’re talking to a realtor, what situation? Is selling to an investor, even that lead, the best option? You want to make sure that this is a good idea for them as well. I hear that so many times and I’m like, “You are way too attached to that lead already.” I could already tell you that’s not your deal yet.

That deal is not yours until the check comes to your door.

Instead, put them through my qualification, my acquisition spaces process. Do the qualifying script, get them to like you, get to know who they are, why they’re selling, and when they need to sell. Get them to like, know, and trust you. Deliver an offer. Don’t even dare get in your car and look at the home.

Get on PropStream, get on Google Earth and look at it there. You don’t need to get in the car. You’re not making a presentation. Some of these are like, “I’m going to present and offer stuff.” You’re not presenting anything. You’re not in front of a Board of Executives. Come up with something that works like you think by maybe finding some cash sales in the area minus your wholesale fee. Make the seller the offer and see if you’re even on the same page.

Give them a range to start with, so you can see where they’re at. If you do that, you’re going to be able to pump out way more offers. I remember I was doing three offers a week because now, I would get this lead out to cold call, I’ll talk to someone, and I’m like, “This could be my first deal.” I spent two hours researching the property, the mortgage info like the past owners when they bought it and looking at all the comps. It’s like, “I can do $52,500 for this property.” I call them and present my offer and they’re like, “We want $78,000.”

You borderline stalked the seller in everything about them. You’re a backup investigator to come up with $58,500. You could easily have signed up for LetsGoOffer.com, come up with an offer range, give the seller that range, and see if the seller is at all mentally in the same place as you. You then go back and refine your number a little bit. It’s fine. Go back and maybe hem and haw about the exact number you want to give it. Call them back and give them the $58,500. At least you know the seller was on the same page as you. You have a range that you know where you can come up from and lock it up. You could do all of that in twenty minutes.

I was giving my MAO for the first initial offer.

We all make mistakes in the beginning. That’s why you came to me. Let me give you the rules. Play by my rules. Promise me you’ll play by my rules. As long as you play by my rules, you close ten deals and you can do whatever you want. Make up your own rules. That’s fine. Riley, I love that you’re doing well. I love getting to know you. It’s now even more exciting because I know how young you are. If anybody wants to reach out, are you on any of the socials?

It’s either Instagram or Facebook. I’m on those a lot. My Instagram is @RileyMcGarity and you can reach out to me there. You can message me on Facebook and ask me anything. I’m not the most qualified to be giving advice, but I’ll answer whatever questions I can.

In this show, I’ve mentioned a few things. I talked about my coaching program. If you guys want to learn more about that, go to www.VirtualInvestingMastery.com. We talked a little bit about Let’s Go Offer. If you are interested and want $10 off per month, go to www.LetsGoOffer.com. If you type in the code TMF, that will get you $10 off per month. Riley, thank you so much. I wish you more success. I love having you a part of my coaching program. I can’t wait to see you close more deals. You’re going to be doing some big things.

Thank you so much. It’s been awesome, Lauren.

Thank you.

 

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About Lauren Hardy

Lauren Hardy is a Virtual Investing expert and Real Estate influencer who owns multiple companies in the real estate industry including real estate investment, coaching, and software companies. She is also a Wholesaling Inc coach and co-host of the Wholesaling Inc Podcast.

Her experience in the last decade has been focused on real estate investing and creating products and services to serve the real estate investing community. If you are interested in investing in real estate virtually, house flipping, or virtual landlording, Lauren’s your girl.

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