Let’s get one thing straight: while wholesaling is simple, it’s not always easy. It will require hard work and commitment. Fortunately, it’s one of the most lucrative ventures there is and is well worth all the effort!
Alec Lebeck already had some idea about real estate although he’s not quite familiar with wholesaling yet. In this episode, he shared what his wholesaling journey has been like, the setbacks he encountered, and how long before he started seeing results.
If you want to learn some techniques that can help you succeed in wholesaling, you’d surely love today’s episode. Alec even shared some of the game-changing books you can read that can help you with your mindset. Plenty of gold nuggets in this episode, so don’t miss it!
Winning The Game – Why Some Wholesalers Succeed While So Many Others Fail
We are sitting down with Mr. Alec Lebeck. This is another gentleman that’s playing around in my market. Welcome to the show, Alec. I’m very happy to have you over. I know we go way back. We have done a lot of work together. It’s cool to come in, sit down, pick apart your story and everything that you have done since you’ve got started up to the point that we are at now. Welcome to the show.
Give me a little bit about you. What’s your background? How did you get started in real estate?
Wholesaling is not a complicated business but it’s not easy. It’s something that’s going to take effort. It’s going to take grit and you have to put yourself out there.
I’m originally from Minnesota. I live in Arizona now, the beautiful Sunshine State. I started in real estate as an agent. My parents were real estate agents before I was conceived. My mom would always preach real estate investing growing up and house hacking.
Is that something they were doing back then?
She was saying like, “When you go to college, buy a house, rent your three rooms out to your buddies, and then you are living for free.” I thought, “That’s cool.” I moved to Arizona and met a couple of guys that were around my age that were in real estate. They were pretty young. I was like, “That’s crazy.”
How old were you at the time?
I was 19 or 20.
I know wholesaling has played a big part in what your life is now but how did you end up wholesaling? What was that transition like?
I was an agent and went to Stunning Homes. If readers don’t know, that’s Steve Trang’s brokerage. I went there and tried to do the agent thing. I wasn’t getting a whole lot of traction with it and wasn’t seeing the money that I thought I was going to be seeing. Granted, I was pretty fresh for the business, so what could I expect? I thought I bought a lottery ticket or something like that but that was not the case.
It’s one of those things that it’s simple to do but it’s not easy. It takes work. You have to put in the hours and the effort. There are a lot of setbacks that can play into it.
We will talk about some of those. I was at the brokerage and doing the agent thing. Max happened to be around and I would always hear them talking about wholesaling. I had seen the Cody Sperber Facebook ads because he’s in our market, too. I would see those all over the place and the Dean Graziosi ones. I was always curious about it. I wanted to be a real estate investor. I’ve got my real estate license because I wanted to go and own this portfolio of rental houses.
That was going to be my path to retirement, which I don’t want to be on different measures. I started going to the Disruptors‘ meetups, mingling around with other wholesalers. I partnered up with this older guy and I was like, “You bring money. I will do all the work. I know the people in the industry. I can make this work. I just need the money because I’m new to real estate.”
You started tapping into the network before you started tapping into the deals. Is that what you are saying?
I was immersed in it, though. Unless I was completely like, “I don’t want to listen to that,” there was no way that I couldn’t hear about it.
You had your real estate license and jumped into this brokerage that happens to be doing wholesaling as well and it’s full of great guys. How did you get into doing and starting working on your own wholesaling deals?
Wholesaling Success: Make sure to put your marketing dollars to work the right way.
I partnered up with that guy. We started with a small amount of money in the bank account. I was like, “I’m going to get a Mojo Dialer,” because I knew what Mojo Dialer was, “I’m going to do some texting.” I used the first platform that Batch launched before Batch was Batch. I was like, “I’m also going to write handwritten note cards to expired,” because I was still trying to do the agent thing. I also put in there, “I can buy your house, too.” I went at it like a double-edged sword, “I can provide this and that.”
I would send out a hundred handwritten mailers and make a few hundred calls a week. I didn’t understand the text stuff so I wasn’t super consistent with it. I didn’t get any deals from texting for a while. My former partner, Nick, was living in Virginia at that time. He had called me and was like, “I want to do this real estate thing. I know that you are doing it. I have this guy out here. He knows a little bit about it.” I was like, “Why don’t we partner? I will do Virginia and you will do Arizona,” because the other guy wasn’t working out. He was half in, half out.
Your friend from Virginia had a partner in Virginia. Did he reach out to you and wanted to partner up here?
He didn’t have a partner. He just knew this guy that was flipping houses out there. He’s like, “I’m thinking about doing this.” I was like, “Why don’t we do it?” He was like, “That’s cool.” We partnered, he flew out here, and we went to the Disruptors’ first bootcamp and learned a ton while we were there. We took everything that we learned, bought a bunch of lists, and got a new tech software because the other REO squad had shut that one down by this time.
At this point, you are trying to get going right on the business. You have made a partnership with Nick and now you have both taken off. You said you bought a bunch of lists. What did you get started on?
My first list ever was a pre-foreclosure list. That was the first list that I had texted. Previous to that, it was expired listings. I would pull a list of expired listings from MLS, and try and cold call them. I would skip tracing and try and cold call them. There was that and then I went to high equity because I was like, “In foreclosure, there’s not enough in there. We need more data.” We went to like high equity with some very targeted ZIP codes and stuff like that in the markets that we were in.
How long do you do this before you start seeing results?
When I partnered with Nick that was in April to May-ish. By then, I wasn’t sending as many of the letters. I just did texting and cold calling because I was like, “I don’t have time to do the agent thing, cold call for that, and try and make everything work.” One of the big challenges that I had was trying to make wholesaling and being a full-time agent work.
It is a lot of things, especially because it does take commitment. You have to allocate. I remember going back to our sessions, we spoke about time-blocking, bucketing, and taking the time to dedicate it to this specific task day in, day out. I know that when that started happening, that’s when the results were showing up the most. Wholesaling is one of those things. It’s not a complicated business and it’s not easy. It’s something that’s going to take effort and grit. You are going to have to put yourself out there, have those conversations with sellers, and give yourself the time to commit to it. That means one of the biggest things, honestly.
I started in December of 2018 and I didn’t get my first deal until July of 2019.
That’s six months. Tell me about the first deal that came through, what it looked like, and what it did for you at a personal level.
It was a house in Phoenix. It happened to be this guy that lived in Alaska. He bought the house for his daughter. She lived out here, got married, and moved to Switzerland or Sweden. He was renting the house out and was like, “This sucks. They are paying the mortgage and I’m not being paid.”
That’s my favorite. The accidental landlord. It happens all the time. You would be surprised. You are reaching out to an absentee owner list and start listening to the scenario, story, pain point, and actual situation. You find out that they bought a property for some reason and now they are stuck with a property. In this case, the daughter moved away and now he’s stuck with a property that he doesn’t want. He’s an accidental landlord. People are not built for that stuff. What happened?
We’ve got ahold of him from texting and followed up with him for six weeks. He happened to be out in parts of Alaska that he didn’t have service in. There would be a week that we didn’t hear from him.
He’s legitimate unreachable.
It was frustrating. I happened to be already into it at this time so I understood all the conversations that a lot of people are doing with the John Martinez training, Steve, and what you do too with your sales coaching.
Are you talking about closing and negotiation stuff?
Yes. I knew all that. We would do a lot of takeaways. He would come back and be like, “I’m not trying to ignore you. I’m just out.” We ended up having some competition on the deal. We laid some landmines, large earnest deposits, and waived the inspection, so we were rolling the dice. He threw that in our face. He’s like, “I want a $2,500 earnest deposit and no inspection period.”
“Put your money where your mouth is.” You had some vested interests.
We did it, put up the money, the earnest deposit, and contracted everything virtually. I sold it that afternoon.
Did you already have a buyer’s list or did you tap into somebody else’s resources?
Focus on your bottom line and pay yourself.
That’s the power of the network again.
We contracted it for $165,000 and sold it for$ 178,000. The ARV was $230,000.
You made $13,000 on it. That’s nice. For a first deal, it’s a good size deal. A lot of the time, you are negotiating with fear on that first deal. You want it, you stick to it, and you are almost smothering the deal to the point where you squeeze out the profits. Kudos to you on that. Here’s a quick question. When he asked you to put down the $2,500 deposit and no inspections, what was your response to that? Did you put it out of pocket? Was that your cash? Did you tap into somebody else? How did it work?
We used our cash for that. We were like, “We can’t do too many of these before we run out of money.”
It can be nerve-wracking.
We did it and it ended up being fine. I knew it was either close to a deal or it was a deal, so I wasn’t super worried about it if it had been that he wanted $200,000 and the ARV was $230,000.
Where was the seller coming from? What list was it?
That was absentee or code violations. I can’t remember which 1 of the 2 it was.
What’s your process for getting code violation lists?
Going down to the county is a little different now. I haven’t pulled them for a while. I used to go down to the City Hall, go up to the fourth floor, ask them for the list, and pay the $12.50. They would email it to me and at that time, I would send it to my VA or we would do it.
It’s both a curse and a blessing when you have something like that. That’s how I see it because not everybody is willing to put in the work to get to that list. That means fewer people reaching out to those sellers. If you take the initiative to reach out to those people, put that list together, get it on a spreadsheet, get it to skip traced, start calling these people, and reach out to them by either driving for dollars calling or whatever. You are going to be one of the few that are doing it.
That’s a lot less competition than reaching out to a high-volume list. For example, absentee owners. You have competition. You can almost count on the competition. Anytime somebody is selling a property, it’s like, “This is what I’m going to start but in two days, somebody else is going to come in with another offer.” It’s the temperature of the market. You almost have to preplan for those things as they come up.
This happens and you close a deal. Another thing about closing the deal is that things become real. You are looking at a $13,000 check that’s coming at you from these efforts that you were going on, and doing for six months, the follow-up, and all that stuff. What happens is that you have that validation now. You know this is something real. It’s not something that you see on YouTube. It’s real and tangible. You can touch it, spend that money, put it back in your market, and do it all over again.
We popped three in a row. It was that one, and then we popped another one that was a $10,000 deal and then a $30,000 deal. The $30,000 deal closed before any of them. The first check we’ve got was $30,000 then $13,000, and then $10,000.
The first one that you locked was the $13,000 but the $30,000 closed first. They are stacking. You have a period of six months and then see all this cash coming in. Run me through the numbers again. You had a $30,000 and a $13,000 so that’s $43,000. What else?
It was a $10,000, a $13,000 and a $30,000. That’s $53,000 total and we contracted all three of them within a matter of three and a half weeks.
Where were the leads coming from? Were they all from the same campaigns? Was it follow-ups?
The $10,000 was a follow-up and also an absentee owner. The third one was an absentee foreclosure but I was targeting foreclosure for that.
Were you stacking the lists?
The list stacker was not out yet at that point. We had a billion spreadsheets.
Were you combining those lists?
I wasn’t smart enough to do that.
You’ve got lucky on that. The cool thing is that there are multiple pain points. You have an absentee owner who’s also in foreclosure. You know that’s the recipe. It’s got to sell at one point, either they bring it back from foreclosure or they lose the property, equity and credit.
It was also an inherited house.
Was that the same one or do you have three different pain points?
Yes, but I didn’t know it because I only had it on the foreclosure list. I didn’t have as many lists.
You found out after the fact and the conversation. When did you do that intentionally and you are stacking the list, and you start narrowing it down? You end up with a hot, high-response type of list that you can market out that you can tap into and that you can set up routes to drive for dollars. Direct mail is a lot cheaper when you have a concentrated list like that. It’s going to be a lot more responsive than blasting it out to anybody who is an absentee owner. You’ve got to watch out for those marketing dollars and make sure to put it to work the right way. It gets pricey. All this happened in the first six months. How did that change your outlook?
I saw that it was real. I also saw the money come in big so quickly. I was like, “Why am I being an agent?” My biggest check was $7,000, “Why do I want to be an agent?”
You are solving bigger problems than a traditional sale. For example, that guy that was in Alaska didn’t have to deal with the property, come down and do repairs on it. He didn’t have to do any of that stuff because you were giving him the speed and the convenience that he was looking for.
He knew that he was giving up equity, too. He had it appraised 1 month or 2 months before we bought it for $230,000. That was a great deal.
He knew that he was leaving a lot of equity on the table. Here’s the thing. A lot of times, starting the idea or the notion is that, “This is all about money. The seller only wants the highest offer,” but it’s not the case. If they can trust you with a solution to whatever problem they have, they are going to go with you. Take this guy, for example. He had an appraisal done on the property for $230,000 and sold it for $165,000. It’s a big gap.
Why would people do that? People do that every single day, twice on Sundays, because they have a particular problem that they need to be solved. They don’t want to deal with the headache. That’s where we come in. That’s where you came in and provided that solution for that seller. It has been cool to track from the beginning where you started and what’s happening up to date. Tell me a couple of main things that new wholesalers should be focusing on.
Wholesaling Success: Start with one market, two marketing channels and focus purely on acquisitions.
We started in two markets. That’s why I’m saying what I’m saying. I would start with 1 market, 2 marketing channels and focus purely on acquisitions. If you have a great deal, don’t worry about the dispo and building your buyers list before you have any deals because you have no deals to sell. Why are you talking to them anyway? Some people say to do it the opposite way but in the markets that we are fortunate to be in, we have people like the Inmans or KeyGlee that you can send them the property and they will sell it for you and don’t take that much out of the deal. You are getting up $5,000 to not have to worry about that.
It comes down to the type of business model that you are working on. You make a great point that you can partner up with other people that have resources, for example, a big, massive buyer’s list. They take a win and you take a win. At the end of the day, art is always going to be in the finding. The art of wholesaling is in finding a discounted property. That’s where our value comes in because we are providing a solution for the seller. We are creating a solution for the end buyer.
If you don’t have an end buyer, you can always tap into somebody else who does and has a massive buyer’s list. They have been in the business for longer than you. Thus, their resources are a lot bigger. If you have a property, you are coming to that person or that partnership for that one deals with value. It makes perfect sense.
I like how you are dialing it down to two marketing sources instead of tapping into a whole bunch of different ones. I agree that the best stuff to start with is always going to be cold calling. Cold calling is one of the backbones of our operation. We do tap into different things like direct mail and door-knocking. We do it all but at the end of the day, the one thing that never slows down is going to be the cold calling.
That would be the first thing I would say. The second would be focusing on your bottom line and paying yourself. That is once you have deals coming in. Once you have your 1st, 2nd, 3rd, and 5th deal, focus on what you are keeping and how much you are paying yourself. I made the mistake of, “I made all this money but where did it all go?” We reinvested it back in the business and didn’t pay ourselves anything. We were broke but we had all these intellectual RE assets in business. We had no real assets and no real money.
What do you mean by assets? Where were you putting the money back into? What wouldn’t you do again?
Lists, systems, you name it. We would buy PropertyRadar, PropStream and ReboGateway. We had all three of them but I didn’t ever pull lists from ReboGateway and hardly pull them from PropertyRadar. It’s stupid stuff like that where you are not focusing on where you are spending all your dollars because you don’t have an abundance of cash. You have to watch every dollar that goes out to make sure that you are not overspending.
There’s so much good stuff out there but it’s easier to have that shiny object effect where it’s like, “Look at that. I’m going to buy that, too. I’m going to sign up for that subscription. I’m going to do this and that.” At the end of the day, you will only use 2 out of the 10 that you bought.
Been there, done that, and crashed with that.
I have this thing called Less Business, More Profits. It’s LESS as in Lean, Effective, Strategic, and Simple. That’s how I like to think about businesses. The wholesale operation is the exact same thing. Think lean, think effective, think strategic and think simple. If you can get all those four lined up, you are going to end up with a good solid flow of how you can do deals over and over again.
The blueprint pretty much that you are laying down is focused on two types of marketing because that’s what worked for you in the first six months. If you have to partner up, focus on marketing and acquisitions, which is the art of finding wholesale deals. There are going to be solutions for the rest of the stuff. If you don’t have a route yet, those are very actionable things that you can tap into and go to town on.
I have two more on that. The third one would be focusing on improvement and your own success. It’s very easy to see in our industry to look around and see the guys driving the Lambos or people like you and me, and people that are doing a lot of business. You are like, “I want to model that because that’s a success.” How do you know that’s success? You don’t know how much money they have in their bank, what their bills look like, how much stress they have, and what their family life is like. Figure out what you want for your own life, jump forward, and take your steps.
Focus on your own improvement and your own success.
That is deep. Mindset is going to be one of the things that either make you or break you, especially in a business like this where there are a ton of rejections and flashiness per se. There are a lot of egos in the industry and ego that plays into just about anybody that you meet. Choose your track, stay on your track, figure out what your track is, and what race you are running. That’s going to get rid of half the problems out there because if you know you are running your race and not the next guy’s, you know where you are headed. Give me your highest income-generating activity.
For me, my focus has changed a little bit. Previously, back when I was working with you, I was full-time in acquisitions. That’s all I did. With my new partner and the people on my team, they’re handling acquisitions, and I handle all of our day-to-day operations and disposition of the properties. For me, once the contracts come in, I go and sell the properties. That would be my highest generating aside from me running the whole backend, all the operations, and the marketing. I set up all of our campaigns and all that stuff.
You are big into personal growth. I know that for a fact. Give me a good book that you would recommend for somebody starting up in wholesaling.
I love this book called The Alchemist.
That’s the very first book I read cover to cover.
That is a great book for somebody that’s like, “My story sucks. I keep getting kicked in the teeth. I think I’m getting somewhere but I’m not.” I read that book. It’s that one, Outwitting the Devil, and Rich Dad Poor Dad. Those are my top three books.
They are phenomenal books, all three of them. The Alchemist is the first book that I ever read cover to cover. That one changed my outlook on books and now I go through them like a maniac. Thank you for sharing your journey with us and being open about how you started, the highs and the lows, and what got you through it, and sharing via the fact that you had three deals come in over the first six months. It’s insane. It’s a testimony to what happens when you commit to something. Go all in, and dedicate the time and the effort to it. Thank you very much for being with us.
There has been no better time than now to tap into the best opportunity out there, which is real estate wholesaling. Go to WholesalingInc.com, have a conversation with our team, and set up an appointment. If it works out for both parties, you might get an invitation to become part of the tribe. If you do, I look forward to working with you on a one-to-one basis. Until then, stay focused. You’ve got this.
- Alec Lebeck – LinkedIn
- Mojo Dialer
- Pace Morby
- The Alchemist
- Outwitting the Devil
- Rich Dad Poor Dad
About Rafael Cortez
Rafael is an Organizational Psychologist and real estate professional holding ownership in multiple companies in various verticals. He has profitably invested in wholesale real estate over the last decade, runs an active business doing an average of 15 deals per month and is now passionate about using his investment knowledge, entrepreneurial experience and training as an organizational psychologist to help others learn about real estate investing through the Wholesaling Business Blueprint Coaching program with Wholesaling Inc.