If you’re not having any luck in your current market, why not try out a new market? Lauren Hardy‘s guest today is Matthew Arnez, a new wholesaler who went from zero to closing a $60k deal just by moving into a new market. Matthew shares with Lauren how cutthroat the Southern California real estate industry is. He feels that for the amount of effort he’s giving in such a competitive market, he’ll reap more benefits somewhere less crowded. That’s exactly what happened! He tried out Sacramento, and results skyrocketed. So if you feel you’re working so hard and things are not working out, maybe it’s time to change markets. Tune in!
How a New Wholesaler Closed a $60k Deal by just Moving into a New Market
Motivation drives people to take action to reach goals. Our guest for this show got his to do better in his real estate investing business from Wholesaling Inc. after being unsuccessful for months. His drive made it possible for him to hit deals from zero to $150K!
I have one of my students who was wholesaling houses virtually from San Diego, California. His name is Matthew Arnez. What’s up?
How’s it going? Hope everyone’s doing good.
We are. I am doing good. I’m busy. I just hired three new virtual assistants. My brain is fried, Matthew, more importantly, what’s been going on with you? I hear you’re closing lots of deals virtually.
It’s been crazy. To give a little background to everybody who doesn’t know me. I started in the real estate industry some years ago. I started in San Diego. For anybody that has been in this market or anywhere in Southern California, you know it’s difficult and cutthroat. I tried and it was so difficult when I was trying to cold call to get these leads. I started to think about what’s another option that I could possibly do. I found you, Lauren, on YouTube because I was looking up, “How do I go virtual? How is that?” You were the first person that I’ve seen when it comes to trying to wholesale in another market that you’re not in. Now, I’m in Sacramento and everything has been going much better. It has me excited just moving forward with all the work that I’m doing.
Isn’t it night and day when you come from a Southern California market like San Diego or Orange County, I’ve heard the same thing in New York, Miami, or Seattle if you are in a market that’s above $500,000 purchase price, talking to those sellers? You were saying it was so different when you were cold calling the San Diego sellers. Tell me about that. Why was it so hard?
The biggest obstacle that people come across calling in a competitive market is it’s competitive. These people are getting constantly contacted 24/7. There would be times where I’d be like, “I’m looking for Joe.” They’d be like, “We’re not interested in selling our property,” and hang up before you even have anything to say. I felt personally, for myself, that was the biggest thing. There’s so much competition and not that you can’t make it work, but I felt for the amount of effort I was putting into it that I could probably reap better benefits in another market because I knew I was doing all the right things right. That’s the biggest thing, it’s competitive.
I remember when I went from Orange County, California, and the surrounding areas to do virtual markets, the first thing I noticed was the sellers were nicer.
One hundred percent, yes.
When you need to make a change, it’s time to take the risk.
They’re nicer. I don’t want to dummy this down, but literally, Southern California sellers will chew you up and spit you out.
It’s so bad. You’ll literally feel drained. Cold calling especially, they’re so mean on the phone. For anybody that cold calls a lot or has that experience, you know it’s already hard as it is, but in Southern California, people are aggressive.
The main thing about wholesaling houses and real estate investing is you want to buy everything at a discount. You want to buy with an equity position. Sellers in high-priced markets, and I want to be specific. Markets that are higher in price. What does high price mean? That’s subjective. Some people think above $300,000 is high priced. In San Diego specifically, it looks like the average house price in San Diego was $650,000. In Orange County, it’s $800,000.
We are dealing with sellers who are aware of the value of their property. They don’t just live here and own a house and not know that they own something that’s worth $600,000. We have to convince these sellers to sell to us at a discount so we can make money in the buy. We want to buy with an equity position. As a real estate investor or an investor with anything, you want to buy low and sell high. That’s investing.
Convincing a seller to take a 30% discount on their $650,000 home is a bigger pill to swallow for that seller than if that house was worth $180,000. For fun, I’m going to calculate that. Let’s say you’re making an offer and you’re taking a 30% right off, that’s $195,000 from $650,000. You have to say, “Mr. Seller, I know your house is worth $650,000, but I’m going to offer you $455,000.”
That’s the biggest thing. People reading who are in other markets, you’re like, “The average price home is $650,000?” Having to ask for such a big reduction, anybody reading is like, “$150,000 reduction. That is crazy. Why would anybody do that?”
You feel predatory, even it coming out of your mouth. You’re like, “I feel predatory.” When I went to a Midwestern market where the average house price was $180,000, a 30% discount on that home was $40,000. It was like, “You could get $180,000 if your property was fixed up all the way and you sold it with a realtor and you waited six months to do it because it takes time and escrows fall through and you have to make repairs. Instead, I’m going to offer you $135,000, Mr. Seller.” That is easier from $180,000 to $135,000, a seller can justify that, weighing out their time or whatever the seller’s situation is. Maybe they don’t even have time. Maybe they don’t have that option anyway. It’s a completely different negotiation. That’s why I chose all day long to just work a market that is priced lower.
That was the thing. Once I came to that realization and was trying to do some research online, I want to let everyone know that I was struggling. A lot of the time, people come on podcasts and talk about their massive success, but even when I was thinking about coming on here, I wanted to share my experience in San Diego. I was doing it for a year and I struggled. It was difficult for me. I would try every single day and bust my butt to try to make this work. For some reason, it wasn’t working, but you had that hope knowing that people are doing this. You’re reading the Wholesaling Inc. Podcast and people are doing this. It’s like, “I knew it wasn’t me.” July 2020, I was looking at part-time jobs. I’m like, “I need to pay my bills.” It was crazy. I then was like, “I need to make a change. I’m going to take this risk.” I didn’t take any of the jobs that I applied to do part-time because I was like, “No, I’m 100%. It’s all in at this point. I’m all in.” That’s when I started learning about your program and everything like that.
Do you remember on our welcome call, you were approached by an investor who you were going to work for? You said, “Should I just take this? They close a lot of deals in San Diego. Maybe I can learn something from them.” I said, “I don’t know how much they’re offering to pay you, but I gave you an idea of what you realistically can make. Why don’t you make that decision for yourself, but I’m going to teach you everything I know?” You made the decision to not go for that job.
I got offers from two different people. Somebody from Sacramento too, where I was running out of marketing dollars. I was running thin and I need to pay bills. I got offers from people who had money. They’re like, “We buy a whole bunch of cold callers. You’ll follow up with people and you’ll get a good percent and this and that.” It would take away from me having to pay expenses, but I wouldn’t be making 100% of commission that I’m making now from doing it myself. I’m glad I took your advice on that because you did tell me. You’re like, “No, don’t do it. Trust me. You got this. I have so much faith in you. You have the energy.” I’m like, “I do have the energy. I am going to make this work.”
I knew from when we first talked that you had it in you. I was like, “I don’t think you should do it.”
You’re straight up. You cut straight to the point. You’re like, “Honestly, I wouldn’t do it if I was you.” I’m like, “Lauren, trust me, I’m feeling that same vibe. I’m just in this weird situation,” but we managed.
I want to take back a second because you reminded me when you were saying that you were struggling for a year and you would hear these people on podcasts. “When I got started, I first started because I read the book, Rich Dad Poor Dad. I sent out some direct mail and I closed fifteen deals my first month. Now, I’m a multimillionaire closing $120,000 a month.” That, I can commiserate where I would listen to these podcasts of other successful investors closing all these deals and making a good income, and they were doing exactly what I was doing.
I paid for mentoring. I would pick their brain for an hour. I’d ask how much marketing. This is back in the day, years ago when direct mail was the thing. I would say, how much are you spending on direct mail? How many postcards are you mailing? What does your postcard look like? I kept thinking that there was something I was doing wrong. I dissected every ounce of my business. The only difference is I’m doing this in Southern California and they are doing it in Texas, Pittsburgh, Phoenix, and Oklahoma. What is the common denominator? Cheaper area to live in. House prices are a fourth and that was all it was.
Be more consistent with your little wins.
I want to hear your story of how you figured this out. I’ll tell you mine first. I was so frustrated that I flew all the way to a seminar in Nashville. It was thrown by some educators in the business. It was your typical real estate, wholesaling investing seminar. It was all the way in Nashville. I thought, “Whatever, what the heck, I’ll go to it and see if I can figure out what I’m doing wrong.” In that seminar, the educators did not tell me anything that I wasn’t already doing and didn’t already know. I sat there and I was like, “Okay.” The actual education part was a waste of time.
However, what was invaluable was it was a small group, it was only fifteen people.
We were sitting at a round table and I was able to ask everybody, how much direct mail are you guys sending? How many sellers do you need to talk to before you get a deal? What does your deal net you? How many deals are you doing a month? How many hours do you work doing this? Also, getting to know them, learning they weren’t smarter than me or faster than me. They weren’t anything more than I was. It was their market.
They weren’t anything more than I was. It was their market.
I was like, “This is ridiculous. It’s their market.” It was that moment that I said, “Forget it. I’m going virtual.” From that point, I never looked back. I did do a little straddle where I was doing some of California and I did Nashville just because I was there. I was like, “Nashville sounds good. Let’s make Nashville work.” What was your moment? Mine was in Nashville, did you have a moment where you’re like, “All of these people are not in California.”
My moment, my experience, I was new with it. I was busting my butt, calling the right list and calling and calling. I would watch videos and they would tell me, “How many contacts did you get per hour? How many leads did you get an appointment?” All my metrics were wrong. I wasn’t getting any appointments. Nothing would even come close. With price, I was so far off and competitors were coming in much higher. I’m like, “Am I comping wrong or something? Am I doing something wrong?” That was it, I just knew it wasn’t working.
I was doing it for a solid year. Actually, that’s not true. I was in it for another year for another real estate investing company here in San Diego, helping them with acquisitions. That’s how I got involved with the whole real estate investing industry. That was it, and then just everyone else’s success. I then did join TTP, Brent Daniels’ program. He was even saying too, “What market are you in?” I was like, “San Diego.” He’s like, “You should probably look into another market. It’s one of the hardest, most competitive markets in the whole entire US, if not the hardest, Southern California in general.” I’m like, “Okay.”
That right there, even Brent telling me that was like, “That totally makes sense.” I need to pay for bills too. I’m like, “It’s clearly not working fast enough here. I’ve been doing it for a year and we closed two deals. This wholesale is so small though. I barely got in there from referrals.” I was just, “I can’t last like this.” At this point, “I’m sorry, SoCal, but I’m giving up on you and I’m going to try somewhere else.”
I was going to start in Sacramento because after I graduated years ago, I planned on moving to Sacramento to start my own business within real estate investing. I decided to stay here and try to work this market. I knew Sacramento was starting to grow a lot more and people were having a good amount of success, but it wasn’t too competitive. Also, people were moving over from the Bay Area to Sacramento because a lot of these companies were allowing people to work from home because of COVID.
They realized that they’re just as efficient working at home than they are in the office. To cut overhead costs for big companies and big buildings, people were starting to move over. I was like, “I have no idea if this is even going to work, but let me go for it.” I did. Granted, I’m not going to lie, I’ve gotten big deals, but it’s not as consistent. I feel like in a California market, from my experience, which isn’t too much, but a decent amount in two different markets, I’ve come to learn that you get bigger deals here, but it’s not as consistent, if that makes sense.
I call that elephant hunting versus squirrel hunting. It’s up to your temperament, which one do you want to do? Some people prefer elephant hunting. They want the big deals and they don’t feel like a $10,000 check or even an $8,000 check is worth it. I’m a squirrel hunter all the way. I love that. I break it down to more psychological reasons. What is your tolerance for risk? I personally have two children. I have two mouths I need to feed. I’ve got a staff now that I need to pay. Most importantly, it’s just me being a mom and having kids and childcare and private schools. If I am relying on that one deal a month and now that one deal is a $25,000 plus deal. That’s my one deal a month I’m relying on to pay my bills. If that deal doesn’t close, I’m going to blow my head off. It’s going to be a bad week.
You have anxiety. The whole time, you’re relying on it. Even for myself, being in Sacramento and maybe expanding the surrounding areas but I definitely want to dip my toes in other markets as time goes on. Elephant and squirrel hunting, that way, at least I’m still getting little wins to be more consistent. When I get the big ones, it’s like, “Great,” at the same time, I’m not stressed out every day waiting for that next big deal to come. Do you know what I mean?
Right. You chose to go virtual in a more elephant hunting-type market.
I didn’t even know I was doing that.
You didn’t know the difference. It’s okay. You guys now know. I call it elephants and squirrels. I had a good episode if you ever want to read the one with Greg Helbeck about it because he is more of an elephant hunter. We were arguing, squirrel versus elephant, what’s better? Greg is exactly you. He lives in San Diego. He’s single, probably has a girlfriend, but not married, doesn’t have children, doesn’t have dependents. If that deal that was supposed to close in March fell through because of a title issue, you didn’t get your $30,000 check, but you’re okay. You live lean. You’re fine. Your bills are pretty manageable. Whereas for me, I love that I have anywhere from 5 to 10 deals in the pipe at any month. If anyone doesn’t close, not a big deal. It’s like, “Whatever. That one didn’t close. I can still pay all my bills and pay everybody. I’m fine.” That’s my preference. You have to do that inner work.
That’s you. That way, if you get little wins, you’re like, “My work’s paying off.” Don’t get me wrong, we’ll probably talk about the big deal that I landed recently, and that was awesome but at the same time, it would be nice to have more consistent wins. That way, you’re like, “The work I’m putting in, here’s a $10,000 win.” $10,000 over six months instead of the $60,000 all at once. I feel that probably would have been good for my mental health.
It’s interesting. I’m still learning. For everyone that’s reading, I’m 24 years old in 2021. I’m still young and learning and I have time to figure all this stuff out. No matter what, at the end of the day, when you fail, you can always have a backup. In San Diego, it’s not a failure, it’s more like a learning experience. A little more positive way of looking at it, because that way, you know, “That didn’t work. Let me try something else.” That’s a part of the process for sure.
Tell everybody, how much have you closed since you started with the tribe?
How I look at it is starting in Sacramento. I started in July of 2020, it’s been months and I closed $70,000.
It’s not a failure when you learned your lesson.
I’m so stoked about it.
Do you have any in the pipeline right now?
I honestly have a ton. I’m pumped. I don’t stress out at all. I have another big one that I’m going to be closing. The one I was telling you about. They did a title report and I thought the liens were going to $10,000 plus. It’s $3,500. That deal, I thought I was going to make $55,000. I think I’d make $61,000 or $62,000.
You closed the $70,000 and you have one that is in escrow to close that’s almost $60,000?
Yeah. I closed one for $10,000. This was a vacant property, and I was negotiating with them for so long. It was crazy. They wouldn’t pick up their phone. They spoke Mandarin or something. It was difficult and so I had to talk with a real estate agent, but the real estate agent was bad and would never pick up his phone and never call back. They wanted to sell, but they couldn’t speak English. The agent had to handle everything. On that one, I joint ventured with somebody on that one like you always say to do because I was so broke. I’m like, “I need any money at this point.” Anything in my pipeline was pretty good. I was like, “I just need us to close. This guy’s super connected. He has a buyer and he wants to buy it for sure for $20,000 more than I got it under contract for.” We then split it 50/50. I was like, “I needed that.”
The next deal was $60,000. That one was like, “Holy crap.” I knew it was going to be a good deal. To give a little background on the situation, I was calling a multifamily list, individual owner. No LLCs, corporations, partnerships, or anything like that. I got ahold of somebody. I was like, “How’s it going? I’m looking for Thomas.” I did the normal intro. This guy was an older gentleman. He didn’t want the property anymore. Sick and tired of being a landlord and he literally gave me the price.
It’s how we always just say, what are you looking to get out of the property? He’s like, “I know you’re going to have to make a profit. I know you’re probably going to make a good profit on this, but for my plans moving forward, I want $575,000 and it’s yours,” because he was going to move out of state. “If you can make that happen, then we got a deal.” It was crazy. It was a unique situation where there was no negotiation. He knew what he wanted. I was like, “Okay, I can probably make that work. Absolutely.”
Long story short, I didn’t have a lot of buyers yet. I was trying to work on it, but not for multifamily. This property needed a ton of work. In California, for nine units, $575,000 is nothing. It just wasn’t the best neighborhood and it was run down. People were stressed out about COVID because California law says you can’t evict a tenant even if they’re not paying. For a landlord to evict the tenants, they’re scared about payment issues, plus the rent was super low. We closed in February 2021. I made $60,000 and it was an absolutely incredible experience.
That’s amazing. Now, you have another one coming that’s almost $60,000.
I have two more. My pipeline is nice, but I have a hot lead section and I have four other hot ones. They’re pretty close to going. I’m actually flying back to Sacramento because I have another guy who wants to sell his property for sure, guaranteed. I tried to get them to sign it over the phone. He’s like, “I want you to see the property first to make sure we’re good to go,” but he’s like, “We’re ready to go.” I know it’s a little bit riskier to wait because you want to get that contract ASAP, but that one should be looking more of a $15,000 to $20,000 deal. If I can get all those closed, I might get $150,000 by July 2020, within one year or even more.
There you go. From $0 to $150,000.
It’s crazy. My mind is blown. I’m so blessed. I’m so thankful too for it. All you guys, you and Brent. You gave me the knowledge and the foundation, especially you, going virtual. That was the game changer right there. I’m excited moving forward. What’s next for my journey? I don’t even want to take my foot off the gas at all. I just want to keep going. At this point, it’s a game. “I did this this year, but now what am I going to do next year?” I’m excited.
I can’t wait to see what you do in 2022. I know you are going to be even more successful than you are now. I’m proud of you. I remember talking to you when you first got into my program and I knew you had what it took. I was against the idea of you working for anybody else. I wanted you to work for yourself and make this work. I knew you had it in you. I’m super excited that you found success, your market, and what worked.
It was like, you had the car built, you just didn’t have gas in it. It was the one thing that was broken in the machine. It was the one thing, and that was your market. You were in a market that is difficult and it’s difficult for a lot of people. You made that switch and look at you go. I’m super excited. If anybody wanted to maybe get ahold of you to talk Sacramento or San Diego deals, how can they reach you? Are you on Instagram or any of that?
You can all follow me on Instagram. It’s my first and last name, @MatthewArnez. Follow me on there and feel free to reach out to me. I’ll definitely answer any questions you might have or anything like that. Even if you are trying to squad up, I’m always down to squad up like-minded people and people who are motivated, trying to hit this industry hard. I’m all about that.
I love it. Matthew, thank you so much. You guys, if you’re reading this and you’re curious about going virtual, check out my coaching program at VirtualInvestingMastery.com or if you’re more just curious about me, you can follow me on Instagram. My handle is @ThisMomFlips. Matthew, I’m so proud of you. Thank you all for reading. Take care.
Thank you so much, Lauren. Later, guys. Hope you all kill it.
- YouTube – Wholesaling Inc
- Rich Dad Poor Dad
- Greg Helbeck – Previous episode
- @MatthewArnez – Instagram
- @ThisMomFlips – Instagram
- TTP Cold Calling Training
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.