Experiences are not enough. All of those will not mean anything if you don’t learn from them. What matters is your determination to use those experiences to your advantage. You have to reflect on those, grow personally, and do something about your situation.
Today is an exciting show as we have one of the newest coaches at Wholesaling Inc., Rafael Cortez, as our guest. He’s an incredibly successful wholesaler in his own right and has coached many new and experienced real estate wholesalers on building a business around wholesaling real estate. He breaks down his six-step wholesaling business blueprint and why it’s so important if you are trying to achieve freedom in your real estate business instead of just creating a job for yourself.
The 6 Step Wholesaling Blueprint to Achieve Massive Success as a Real Estate Wholesaler
As always, we are grateful that you’re spending your time with us. If you’re spending your time with me, I’m going to do my best to deliver for you and bring you some great value. I’ve got something exciting because of the topic that we’re about to hit on. I’m going to be talking with the man, the myth, the legend, Rafael Cortez, who is one of the newest coaches at Wholesaling Inc., coming in and teaching the Rhino Tribe Wholesaling course. I like to call it taking you from 0 to 1, from not doing a deal to doing a deal. What I love and what we’re going to talk about is so much more than that.
If you’re sticking around, let me tell you what you’re going to get. We are going to break down a philosophy that you can walk away with and begin to understand how to build your wholesale business. What we’re talking about is some people come in and they teach wholesale. They teach you to do a side hustle. They would come in and show you how to do a deal or two and then, “Sayonara. See you later. Hope you have a good time.”
What I love that Rafael Cortez is doing is he’s not teaching a side hustle. He is teaching how to build a business. If you know me, I love people that build businesses that can be scaled, and that can be run without them because you’ll never get to the freedom you’re looking for if you own a job. You’re getting in this to build a business that is automated and that runs without you. Rafael Cortez, what’s up? Welcome to the show.
What is going on? Thanks for having me. I’m excited.
One of the things I’ll applaud you on is you have a lot of business maturity. You have a deep understanding. When you and I were connecting, I was like, “This guy looks at the business like I do.” It was the first draw. I was like, “This guy doesn’t think like an investor. He thinks like a business owner.” You’ve done other businesses. You’ve sold businesses in the past. That all speaks to your history with this. Let’s break this down. You have a philosophy, a wholesale blueprint is what you call it. There are fundamentally six stages to this blueprint on how to go from not just 0 to 1, but zero to running an actual wholesale business. I want to break these down one by one and drop some tidbits as we’re going through it. Does that sound like a plan to you?
Let’s do it.
Number one in your blueprint is source. Define this for me. Why is this step one? What does it mean to source? This is what you’re teaching in your course.
I want to backtrack a little bit. A lot of the time, there’s a low barrier to entry in wholesaling. A lot of people get into it with the thought that, “I’m going to make a deal.” The next thing you know, a couple of deals come by and you’re still in that rat race. You’re still in the mouse’s wheel going around and you can’t step away from it. It’s important to understand how to build a business and set up the foundations because that way, you can step away from it eventually after you have all your ducks in a row. At the end of the day, we’re into it to reach a certain degree of freedom, whether it’s financial, emotional, time freedom, whatever that looks like for each of us. Success is subjective. If you have a process and a system in place, you can come in, build on that and reach that point. If you just have a side hustle, it’s never going to go away. It’s like restarting the reset button every single time you have a deal.
Success is subjective, but if you have a process or a system in place, you can come in and build on that.
I like this definition, I don’t know if you ever heard it, “The true measure of success of your business is not revenue. It’s more how long it would run if you stopped working in it today.” That’s spot on with your mindset. That’s how you measure business. How long is it going to run if you quit showing up to the office every day? That’s the true measure of building something that has longevity and it’s going to work without you. I know that this is exactly what you’re showing on. Let’s break it down. Talk to us about sourcing.
I’ve broken it down into six steps. This is the wholesale blueprint. It’s the same way that I run my business, the same principles that we had and we have dialed in through time and whatnot. The first one is going to be sourcing, which is your marketing and your outreach. It can be anything. It can be cold calling, pay-per-click. I don’t care where you’re getting your leads from. In the beginning, everything’s just data. We don’t have leads. We don’t have anything that’s pre-qualified. There are no deals. It’s just sourcing the sellers.
It’s a whole process. There’s a whole dynamic of multiple things that happen during the sourcing stage. This is happening outside your immediate business. You source the deals. After you source the deals, you’re going to have to prequalify them. You don’t want to send them over to acquisitions right away because you don’t want to talk to 1,000 database contacts. You want to spend the time with the people who are going to make sense. That’s where the prequalifying process comes in.
You’re hitting on some good stuff already. The prequalification process, I’m glad that you’re hitting on this. Don’t you find that a lot of people skip this step? This is why they get inundated and they create a bottleneck in their business because they’re dealing with stuff that’s not prequalified, not allowing the cream to rise to the top. Is that what you’re seeing here?
Absolutely. There’s a process to prequalifying. This whole thing can be one single conversation. When you’re sourcing, you have a small conversation. It’s a short, one-page thing that we go through.
When you’re prequalifying, you’re going through an actual discovery process. That’s where you want to get to the root truth of what the problem is, and have that one-to-one connection with the seller. That’s where rapport happens. If you skip the prequalifying process and you don’t have that discovery session, and you move on straight to the offer, 90% of the time, you’re going to lose them right there and then. It’s ineffective. It doesn’t work.
Give us a couple of nuggets. When you’re teaching how to prequalify at a higher level, what’s maybe 1 or 2 practical things you could drop, whether that’s a question that you ask or a particular area of the seller that you prequalify, whether that be motivation? Help us understand this a little bit better.
Part of the prequalifying process is going to be the four pillars. We break those down on a regular basis, condition, timeline, motivation and price. The condition of the property. The timeline, how soon they want to close. The motivation, which is the reason why they’re selling, what’s the real problem or the issue. The price, if the numbers make sense.
That’s a great structure. It’s simple and practical. If you’re reading, you can run with that right now to make sure you’re prequalifying well.
On the price, you’re looking at making sure that the numbers make sense and all that stuff. One thing that happens when you’re having that conversation with the sellers is a lot of the time, especially when you’re starting, you’re going off of this robotic script. You have 7, 8 questions that you go through but it’s not landing. You’re not building that connection. At the end of the day, we have to look at the other person on the other side of the phone as somebody that we can provide a solution. It’s not just a script. It’s a human on the other side and you have to treat it as such.
You can’t be mechanical is what I hear you saying. You have some mechanics to this process, but you can’t be mechanical in the way that you go about it. Is that right?
Absolutely. Believe it or not, there’s a process and a system to that as well to have better conversations, and tap into that rapport and that connection when people feel more comfortable with you. They then start opening up and sharing what the real issue is, so you can get to the root problem of what they’re having and then provide a solution for them. At the end of the day, we’re here to exchange and give them time and convenience in exchange for equity. We’re looking for equity so we can build a profit. It’s simple as that. If you don’t have a good discovery session, if you don’t spend the time and know how to do it methodically, it’s not going to happen. You’re not going to find out what the problem is and you’re not going to know where the convenience can be provided so you can get equity in exchange.
Going back, I’ve been doing real estate for over fifteen years. I can remember by the year or maybe two in my business how thorough my prequalification was. We had a green prequalification sheet for sellers and we had a yellow prequalification sheet for buyers. My coach had to do that way so we wouldn’t lose them and get them mixed up because we’d have a lot of prequals. At that point, we were dealing with retail listings and buyers. That prequal sheet was everything to me. I’m on board with the way that you’re thinking and your philosophy. First, you source it. Second, you go through the prequalification. What’s number three in your wholesale blueprint that you teach?
This is the acquisitions process. It’s the backbone of the whole thing. We have marketing, sourcing and everything. If you can’t close them and you can’t come up with the right numbers and the right offers, and navigate that closing conversation, anything else that you’re doing is going to matter. During the acquisition process, you have to make sure that you’re tapping into the right numbers, how to present the offers, and how to break them down. One thing that’s happening and is very common because of the way the market is shaping up, the low-ball offers that we’re used to seeing left and right, they’re no longer working. It’s hard to be a one-trick pony in wholesaling. You have to have different options of coming in, and then looking at and structuring a deal. Acquisitions, that’s what it is. It’s an art. You have art in marketing, sourcing and converting. It takes a different set of skills to be a good acquisitions rep.
You could take an administrative person to do the prequal, but you wouldn’t take that same person and put them on the acquisition because it’s the difference between a connector and a closer. I know that some readers now are going, “I’m doing such a great job connecting with the seller. I have good empathy. I know that I’m a good listener. When I get that ball down into the red zone, I’m not getting it into the end zone.” What I’m going to tell you is you’re doing a great job at connecting but you’re not closing.
What Rafael is telling you, and he’s spot on again, is that’s a different skill to get that ball into the end zone because you’ve got to go from connecting to closing. Some people feel uncomfortable with that. Let me ask you this. Someone that’s a connector and struggles a little bit with the closing side, it feels a little bit too aggressive or it makes me feel uncomfortable to make that ask for that price. I’m dreading and sweating it. What’s one thing in your program that you teach that helps people in that acquisition phase maybe get past that fear?
I want to highlight the word fear. Ninety percent of it comes from a space of not understanding what’s after. What’s on the other side of that conversation when you’re closing? What expectations and that sort of thing? One thing that’s going to help you get over fear is running the right analysis and the right numbers, and knowing what you’re going to be talking about. Especially if you’re somebody who’s very analytical or somebody who’s usually doing a prequalifying process. They’re going to want to have everything down to 100% right before they take that action.
It’s important to understand how to build a business. You can step away from it eventually after having all your pieces in a row.
In closings, when you’re negotiating, it doesn’t work that way. You’re never going to have all the answers. You have to be ready to the best of your abilities and then jump in there and see what the conversation throws at you. One of the hardest things is to drop the number. If you can’t get a number out of a seller when you’re negotiating during the acquisitions process and you have to give them your number. The simplest way to come about is to do it fast. Rip it off like a band-aid. If you have a property that you’re going to offer $100,000 on and it’s worth $220,000 or whatever, you drop the $100,000. Here’s where the hard part comes. After you drop the number, you have to stay quiet. You can’t say anything. Drop the number. It sounds like something simple.
Don’t try to justify it. Don’t try to create a disclaimer, just drop the number. That’s great practical advice. I agree with you.
By the time you drop that number, you already have the discovery session. You already prepped them for what’s to come and what to expect based on the closing blueprint that we have. They already know the numbers. It’s a logical offer when you’re dropping the number. When you drop that number, regardless of what you do before, do not speak and see it as a game. You have to stay quiet. You have to wait for them to respond because if you start talking and justifying your offer, you’re giving them an out. That’s when the conversation goes from a closing conversation back to, “The weather is nice,” and you lose them.
People reading are already taking notes. You’re like, “This guy’s giving me some useful stuff.” That’s what I love about Wholesaling Inc. Every coach that we have is very instructional. We are not educating. We’re instructing. Instructing is like, “Step one, do this. Let me give you the practicals on exactly how to do this.” In my opinion, that’s what separates Wholesaling Inc. from all the other stuff that you find out there. Rafael, what you’re giving right now is what I would call straight street smarts. You can only pick this stuff up if you’re a practitioner and you’re in there doing deals, which you’re doing. Let’s go to number four. You acquire so what comes up next is dispoing. Talk about step number four. Bring us another little practical morsel that we can chew on.
There are many different layers to the dispo process. Usually, the idea is that I’m going to find a buyer and then push it. I’m going to call this buyer and sell this property. There are many different things that happen within the disposition process. That’s what dispo is. It’s when you’re selling the property to your end buyer and to your investor buyer. You have a deal or contract. You have a deal and then you’re selling that deal over to your end buyer.
One of the things that kill me every time, and I see it so often, is that people are leaving so much money on the table on the dispo process. For example, we have a particular way that we come in and we structure the deal. We lock it at this one threshold. When we come in on the dispo side, after we have the contract at hand and it’s all signed, we’ll rework the numbers, do a couple of things on there and then ramp up those profits as well. We usually end up adding another $10,000 to the deal aside from what we have on the acquisitions side.
A lot of people, whether they use ActiveCampaign, MailChimp, they got some emails in there. Tell me if this is what you see. You got some emails in there. You worked hard to build your buyers list. You press send, and then the first offer that comes in, you take. That’s usually the strategy of a lot of people. That’s not getting everything you can out of everything you got. Let’s say that you do twenty deals in a year and someone like Rafael comes in and goes, “I’m going to show you how to pull an extra $5,000 on each deal.” That adds up. That’s another $100,000 into your pocket simply because you didn’t sell too quickly. You didn’t take the first offer. I love that you’re taking the time to teach this because we should be maximizing the profit of every deal and not getting lazy and taking the first one.
When it comes to revenue and spreads, at the end of the day, it’s what people get into wholesaling for the most part. We end up structuring the deals around the solutions but the entry thought is, “How am I going to make that check? How am I going to bring that money through the door?” There’s no one way of calculating that profit. We have four different ways of getting or building up the cushion for profit. One is through the comps. We have a specific process. The other one is through the repairs. The other one is by showing our numbers, making the offer logical. We build another cushion for profit through the dispo process. That’s four steps where you’re building profit into the deal as opposed to coming in, making an offer, and trying to make $20,000 sound like it makes sense to your end buyer. You have to be methodical about this whole process.
What you’re thinking to yourself is, “This sounds systematic.” What I want you to say is, “It should be.” There is a step-by-step process. There is a methodical thing to do everything. Business is fundamentally systems. Everything you do in your life is a system. When you get up and you make a bowl of cereal, you have a system for making that cereal, whether you get the spoon out of the drawer first, you take the bowl down, you pour the milk with the fridge open or you close it and then pour it. Everything is a system. If you begin to understand that’s what business is, Rafael’s coming in and telling you, “I’m giving you an extremely efficient, systematic way to do this.” That is why he’s not teaching a side hustle. He’s teaching you to run this thing like a business. I love it.
We do it consciously or subconsciously. Every morning when you wake up and you’re putting on your shoes, which one do you put on first? It doesn’t matter who you are. I don’t care who you are. You have a system for things, whether you realize it or not. It’s the same process here. It doesn’t have to be complicated. This is not a complicated business. It’s step 1, step 2, step 3. It’s a simple approach. Once you have it all laid down, you’re cutting the learning curve. It’s tried and tested. It’s proven methods that bring the win at the end of the day.
I love the word simplicity that you said there because the reality is without systems, you’re running a complex structure. With systems, what you’re doing is you’re integrating simplicity. The reality is the longer you run your business, the more you should be moving to simplicity, not complexity. If you’re in the business for over four years and you’re going, “This thing is getting more complex,” it’s because you’re not building it right. It should be getting easier and simpler. It’s the irreducible minimum. This thing took ten steps when I first started and now I’ve got it down to three. I spent three years figuring out how to go from 10 steps to 3 steps on this one process. I have it down to the irreducible minimum. You can’t do this thing more efficiently. Can you imagine if that was every system in your business? That’s a mature business.
I have this philosophy of less business, more profits. What I mean by LESS is an acronym for Lean, Effective, Strategic and Simple. This is all my personal stuff. Anytime I start a new venture, I approach it from the end. If I can build something that’s LESS, Lean, Effective, Strategic and Simple, I know I’m going to be able to delegate it and step away from it, automate, delegate and elevate. Otherwise, it doesn’t make sense. Why am I building a side gig? Why am I building another job for me when I can get job security somewhere else and make LESS? That’s why you want to build a business, not a side hustle.
The side hustle, you’re working in it. A business, you get the freedom to work on it. There’s a big difference between being in it and on it. Let’s go to number five. It’s source, prequalify, acquire and dispo. Now we’re over to measure. What’s happening here?
It’s exactly what you said. It’s working on it or working on the business. A lot of times, we get to that dispo process. We sell the property or sell the deal to an end buyer, and we get that check. That’s it. We think, “It’s done.” It’s not done. The most important part is the last two steps. These are overlooked so often. This is where you measure. You measure your performance on that particular deal. Where did that lead come from? What’s the cost per lead on that particular campaign? You break all those down. We call them KPIs, Key Performance Indicators. Think about a car dashboard where you have the fuel gauge, all the dials and everything. These are the dials of your business. You want to track those. There’s a specific set that is very effective to track.
The challenge with KPIs is that there are many KPIs that exist in your organization. The real value of KPIs is when you narrow them down to the select few that move the needle. It took me years in my investment business to get these KPIs down to the ones that matter most. You’re coming in and going, “These are the KPIs that matter most. I’m going to save you the time of tracking 100 things and I’m going to take you down to X amount of things.”
Focus on this. There’s a big difference between KPIs and navigators. The KPIs move your bottom line right now. If you improve a KPI, you’re going to see your profits and revenue get bigger right away. That’s a KPI, it’s a Key Performance Indicator. Navigators are other metrics or other stuff that you’re tracking in your business as well. For example, a navigator is the number of calls. It’s not necessarily a KPI because it depends on the caller. There are a couple of different variables. You get into a rabbit hole soon.
We’re all into real estate to reach a certain degree of freedom, whether financially or emotionally.
The big thing is to differentiate KPIs between navigators. You want to track your KPIs. With the navigators, if you improve one, you’re going to see a result in about 30, 45 days. KPIs happen right now. There’s a specific set of KPIs that you want to follow when you’re measuring. The deal doesn’t stop at the sale. You go back and then you break it down. You say, “This is what I got on this, this and this.” When you have 2, 3 or 4 deals that go by and you’re measuring that stuff, you start seeing a pattern. It becomes a predictable type of machine. Now you’re building a machine. It’s something that’s like a puzzle but you know what the overall picture looks like. You’re plugging pieces in after that point.
You’re building your business off of that. I love what my CFO has always taught me. The one phrase that he has nailed to me again and again is, “Chris, the numbers are our weapon.” You understand the numbers are our weapon. It’s game over when you understand every important metric in your business. You go from estimating, guessing and predicting to knowing exactly what’s going to happen because all you’re doing is a mathematical equation. “I want to make X amount of money.” If you know all your KPIs, you can back that all the way down to how many leads you need, to how much money you should be spending, to the whole thing. This is why you see businesses blow up because they’re able to come in and turn that volume up not by guessing on the business but by strategically understanding the math behind it. It’s a science.
I know it sounds almost funny but it is a science. You get to a point when you have all this stuff dialed in. It doesn’t take much. It doesn’t take years and years to build it up because you start seeing a pattern real quick where you can start allocating funds. For example, let’s say I have $1,000. If I throw them into this one campaign, I can expect this amount of leads. From those leads, this amount of prospects. From those prospects, this amount of deals, which are going to give me this amount of revenue. You can take $1,000 and end up with a ballpark estimate of what the revenue is based on your performance on your business. That’s where the measuring comes in. It’s super important.
You’re flying blind. You’re just burning money if you don’t know your metrics. Let’s go to this last one. I want to look at this. The last one after measure is improve. Now we’ve got your six-step process, source, prequalify, acquire, dispo, measure, and number six is improve. Bring it home for us, Rafael.
This is where the magic happens because it’s where you take all that information and all the experience from that one deal. We do it on every single deal. We have an improvement session and a breakdown. This is where you take those metrics, what you made, what the scenario the seller was in, and you start asking yourself. We do this with the team. I’ll bring my director of operations, the acquisitions guy, and then we’ll start having these conversations.
It’s not like a five-hour-long meeting. You sit down for 15, 20 minutes. We break down each deal and we start asking ourselves, “Regarding this deal, what’s the most important thing that we should be talking about?” That’s one. “What could we have done better? Did we have any excess expenses on this that were not needed? If so, how can we improve them?” You start packing all that information and putting it all together.
You have this cool little recipe for making the next deal better. That’s your overall operation, your business. Because it’s now a business, it starts to improve. That’s when you can start looking at, “I want to make more deals.” It’s interesting when people come to me and they say, “I want to scale my business.” “What’s your process?” “I don’t have one.” I’m like, “What do you mean you want to scale if you don’t have a process?” “I don’t have a process.” “You can either scale chaos or you can scale results.”
There was a lot of meat on that bone right there.
I get passionate about this.
I’m on the same page with you here. I’m going to put this into a principle. This is a principle that I live by and I’m going to go from a business to your entire life. Here’s exactly what you’re saying but I’m going to give it to you philosophically. Experience does not change you. Reflection upon experience changes you. People have experiences all the time in their life and they don’t grow, they don’t change, nothing happens in their life because of that experience because experience alone will not change you unless you take the time to reflect on what that experience was meant to teach you. Most people don’t take the time to slow down.
Here’s the thing. All these experiences in your life, underneath them are principles, lessons and wisdom. They’re all sitting there for you to go back and reflect on those experiences because there’s something for you to be learned. What you’re doing is you’re taking a philosophical life principle and you’re applying it to business and going, “You can have experience doing deals all day. If you’re not improving and reflecting on those experiences, you’re never going to better your business.” Those experiences aren’t changing you. They’re not making you a better business person.
It’s as simple as that.
You and I are cut from the same cloth. This is what I always tell people, don’t define yourself as a wholesaler or a fix and flipper. When you start to put those titles on yourself, you’re limiting who you are and who you can become. You are a business owner. You are an entrepreneur. You might be utilizing the methodology of wholesaling but as you grow, evolve and so forth, if you’re a true entrepreneur, you will go launch and do other things. Be cautious about how you define yourself. If you do that as a business owner, you’ll start to think and talk about how Rafael and I have learned through a lot of experience and pain. We paid for a lot of coaching and read a lot of books to get to a place where we think about business from a business standpoint.
It’s a learning curve.
If you’re reading and you’re like, “I want to go from 0 to 1. I want to better my wholesale game. I’ve been looking for a guy that thinks like this. I don’t want another guru that’s going to come in and show me how to do a deal or two and pat me on the ass and be like, ‘Good luck.’ I’m looking for a system.” This is why Wholesaling Inc. looked at you, Rafael, and said, “We got to bring this guy on to teach the Rhino Tribe Wholesaling course taking you from 0 to 1.” If somebody’s reading and going, “I like this guy. I like him a lot. I want to learn more. Maybe this is something I want to do,” where do they find you? How do they do that?
They can go straight to WholeSalingInc.com. Set up a call with one of our guys. If it makes sense from your side and our side, we’ll set something up. I look forward to working with you guys. We’re very interactive. We’re out there. This is not one of those things where we’re going to give you a login and a password, and then go forth and execute. It’s not my gig. It’s in our best interest and my best interest to make you successful in what you’re doing. My focus is that. It’s part of my purpose. They can go to WholeSalingInc.com and then have a conversation.
If you improve a key performance indicator in your wholesaling process, you’re going to see your profits.
You know Wholesaling Inc., you don’t get through the door unless you’re coming in and doing great instructions. Rafael, you’re the man. I’m glad that you’re a part, and coming in and adding value to the tribe. To all you guys, I know you had a lot of notes. There were a lot of nuggets dropped, a lot of principles, some good one-sentence zingers that Rafael said. They were great. I hope you wrote them down. Until next time, we will catch you soon when we add more value.
About Chris Arnold
Chris Arnold is a 15 year Real Estate veteran who has closed over 2500 single family real estate transactions in the DFW metroplex. Chris is the founder of multiple companies that are managed by a US virtual team, which allows Chris to run his organizations while living in Tulum, Mexico full time. His passion for leaders has led to the creation of Multipliers brotherhood which serves the top 5% of real estate entrepreneurs out of the US. Most recently Chris has launched his REI Radio coaching program. This program is designed to teach real estate investors the marketing stream that everyone knows about but NO ONE is doing!