Posted on: May 27, 2021
WI 697 | Real Estate Wholesaling Deals

 

When you get into the real estate industry, you are automatically getting into the marketing business. Brent Daniels’ guest in this episode, Austin Rutherford, knows this to be true, doing a hundred deals a year ALL using referrals. He sits down with Brent to detail his journey into real estate investing, leveraging referrals from other investors as his primary lead source of income. He shares how he managed to flip his first property without any money and goes deep into a deal where he generated explosive profits. Join Austin as he breaks down the challenges he faced when he first got into real estate investing, how he financed his first property while being a student, and the lessons he learned throughout his real estate investing career.

Listen to the podcast here

How To Do 100 Real Estate Wholesaling Deals Per Year From Only Referrals

We’re back with another jam-packed episode where we share the tips, tricks, and strategies you can immediately implement to start making money in real estate…RIGHT NOW!  In today’s show, our guest is Austin Rutherford.

Episode Transcription

In six years from 2021, 2,190 days, the gentleman that I am interviewing on the show is doing 100 deals a year. He has added 70 doors to his rental portfolio. He’s flipping about 50 to 60 of those deals every year. He’s doing it based on getting referrals from other investors. We are going to break down this six-year journey. It is my pleasure to introduce you to the show, from Columbus, Ohio, Austin Rutherford. How are you?

I’m good. I’m looking forward to this.

I am excited. Six years, what a journey so far. When we start in this business and as budding young real estate entrepreneurs, we start out finding deals and opportunities, which is essentially called wholesaling. That’s all wholesaling is, finding discounted properties and then there are a lot of different paths we can go. We can do fix and flip, rental portfolios, development. We can be the bank, do coaching and mentorship. You are doing it all.

It’s grown over time but it has been a journey. It started with just flipping. I didn’t know anything about wholesaling. I’ve got into new construction, learned about wholesale and fell in love with it. It was a lot easier to make money and I continued building the rental portfolio along the way.

What about you? You are speaking to an audience that has that fire in their belly to be real estate business owners and to change their lives. We have read Rich Dad Poor Dad, Think and Grow Rich, and Go-Giver, all these amazing books. We’ve got all these great ideas. How did you start? What was the spark that started this whole business off?

My dream is to go to the NBA and it didn’t work. For whatever reason, the book Think and Grow Rich fell into my hands. I read that book at the age of nineteen years old and then the possibilities opened up. I was journaling on my rooftop here in Phoenix, Arizona. I lived here for a year. I know nothing about real estate. There was a ten-unit apartment building across the way and I was like, “One person owns that but ten people are paying them. Real estate is the way.” I fell in love with real estate. I started buying every little knick-knack book you could buy to learn as much as possible. I moved back home to valet cars to Columbus, Ohio and I was trying to start real estate. I was driving into work and I heard on the radio and it was like, “Do you want to learn how to flip houses? Come to this little free meet-up.”

I went to the free meet-up. It was three days. Day two, they were like, “We got this mentorship program and that itch was there but you needed the money on day three,” and I was broke. That night, I went home and opened up a line of credit, a credit card. Maxed it out the next day but I still didn’t have enough money for it. There’s a moment in life where people know something is for them and that was me that night. I asked my parents, my uncles and everybody for the remaining money to put down on this payment for mentorship. At that time, I was still living with my parents and I couldn’t get the money. I crawled under my parents’ dining room table and started bawling my eyes out because I felt like I was missing out on an opportunity of a lifetime. My parents woke up, came back downstairs, saw I was dedicated and I wanted it and they loaned me the money. I swiped my credit card. I thought I was going to be rich in a month. It didn’t quite happen like that but it did work.

Was the mentorship for fix and flip?

Yes.

Once you get into this mentorship, what do they have you do? This is the biggest thing, right? We read the books, see YouTube and listen to the podcast. We are doing all these things but a lot of it is education and not instruction. I think that’s why this show is popular because we want to get into the nuts and bolts of exactly what to do. “Tell me the action items and I will do them.” What did they have you start doing? When we get started, we are excited, we’ve got that passion and we are just on fire. Everything looks like an opportunity. We haven’t been tainted. Nobody has rejected us yet. We have another deal fall out. Everything is like blue skies. You get into it and all of a sudden, you are like, “I’ve got to stay motivated and keep taking action. I need to move the ball forward. This passion and energy burn itself out in one spot.” What did you do to start taking the action?

We think we are going to get rich overnight. It doesn’t always happen like that. The first thing that I learned is, one, how to evaluate deals and you’ve got to know how to run numbers. Two, the biggest thing with the misconception a lot of people don’t understand is we are not really in the real estate business. We are in the marketing business. From day one, we started marketing. Since that day, I have never stopped. I have never missed a week in marketing because I understand that’s the lifeline of the business. Back then, I didn’t know about cold calling, RVM or SMS, none of that stuff. It was just direct mail and driving for dollars. From the day I swiped my credit card to the day I ended up purchasing that first flip, it was a ten-month process. I was working in real estate. I was a licensed realtor. I was working 50 to 60 hours as a valet. I was going to college, taking fifteen credit hours because I promised my mother I would get my college degree. I was putting in 18 to 20-hour days.

We’re not really in the real estate business; we’re in the marketing business.

I remember driving home from work one day and I fell asleep at the wheel. I woke up because I hit the curb. I was on the sidewalk and there’s a light pole in front of me. I woke up, went back on the road, drove home, started writing handwritten letters to send out to sellers. It was a process. Direct mail, the first deal came from five letters over five months to the same person and there was probate. They ended up calling back seven siblings we had to put together but ended up doing the deal for me. The biggest thing is that you just got to market. That’s how you get started.

You have to have conversations with distressed property owners. That’s the fact. That’s the whole reason I wear the same shirt every day that has TTP on it. You’ve got to talk to people about their properties. Either they are going to call you from marketing or you are going to call them from being proactive and prospecting. The third one, which we will get into because I think it’s really exciting for this audience is, getting the referrals. Being the guy or gal in your market that people know, trust and like to do business with. It starts, you’ve got to find a way to have those conversations with people. You said something there. It took you ten months. You are working as a valet so you are running around all day. You are going to school and you are doing this real estate. There are a lot of distractions and opportunities for you to go, “It’s not going to work. I can make money doing something else. That shiny thing over there, that other business, that looks good too.” What kept you in it for those ten months?

It’s a 100% struggle. People think they are going to get into it and get rich. I had friends that I lost. I had friends that literally called me like, “Are you okay? We haven’t seen you in six months.” I had friends who were like, “You say you are working all this time but you are not making money. What are you doing? You are lying, right?” It’s something we go through but I always had that motivation to win. I like to win. I wanted nice things. I just got through it. It was definitely a mental fight. Ten months to buy it, another six months to renovate it and sell it. Sixteen months in credit card debt and $10 to $100 in my bank account at times. I sold the first house and made $100,000 in profit, and the rest was history.

Let me get into the technical things here. You are a valet. How does the valet buy a property? How do you get the cash to buy a property, have enough money to get it fixed up and wait for it to get sold? It’s not like you’ve got millions of dollars in the bank or your family is loaded and they are just giving you all this. How did you finance it?

My family never had real money. I definitely didn’t have real money. My entire business, all the rentals, everything has been funded by other people. Private money lenders are how I build it. It was a $74,000 purchase and $170,000 rehab, 600 square foot addition, $28,000 into the foundation, roof, windows, siding, gutters and a new two-car garage.

Was this your first deal?

It’s my first deal ever. I was 21 years old when I bought it. I borrowed $250,000 from a private money lender, funded the entire deal, and pushed off all interest and principal payments until the sale of the property. Thank, God.

How would you find that lender?

Networking. You’ve always got to be talking to people, TTP. As soon as I’ve got it, I swiped my credit card and went to a meet-up. We were just talking with people like, “What do you do?” The lady was like, “I rolled over my IRA to self-directed. I’m going to start flipping houses.” I was like, “Congrats. I hope everything goes well.” A year later, I’ve got this deal and I’m like, “I’ve got to get the money for it.” I started thinking who I could call and I was like, “What if that lady still got the money?” I called her back. She was like, “I haven’t done a deal,” I was like, “I’ve got an opportunity for you,” and she funded the deal.

There are a couple of important things to look at here. One, she knew it was a deal. You obviously put together something that showed, “Here is the potential equity in this property if we do XYZ and take care of these things with this property.” It made sense and she understood that it was a discounted property. I think that’s where this all starts. Remember, if you want to raise money, you’ve got to find deals. They’ve got to be discounted. You’ve got to find the opportunities to do something special with that money. You can’t hope and pray that somebody is going to give you money if it’s a tight deal or if it’s an okay deal. This was a big spread. You made $100,000 on your first deal. How old were you at that time?

WI 697 | Real Estate Wholesaling Deals

Real Estate Wholesaling Deals: Wholesaling is finding discounted properties.

 

I sold it a week after my 22nd birthday.

You were 21 going out there raising funds. I highlight this because anybody can do this. That internal fear that people have of, “Can I do this? Can I not do this?” Austin is giving you a perfect example. People can do this. You didn’t have an amazing credit score, cash reserves and even have experience. What you did have was enough courage to go talk to people at a meet-up group, build a connection, show that you are out there hustling and that was enough for you to raise money.

No business, construction or real estate. I want people to know that you have to show that you are dedicated and you can answer questions intelligently. If that lady would have asked me, “What happens if you die? What happens to my money?” I said, “I don’t know.” I wouldn’t have got the money. I educated myself on it and I knew the answers to things. I’ve got promissory notes, mortgages, anything from sellers, marketing and all that stuff. If you have the answers and sound like you are the expert, people just tend to trust and believe in you.

How do you find wholesaling?

For a couple of years of flipping and stuff, I made good money doing it but I never did a rehab less than $100,000 budget. We are doing big monster rehabs. Some went tremendous and some, we didn’t do as well. I don’t remember exactly how I found it but when I heard about it, I was like, “I’m doing all this work. I’m putting 6 to 9 months into one house. I can do it without even doing any of that.” I fell in love with it and increased the volume of deals through the marketing channels and stuff. We started wholesaling more for fast cash. We still flipped a little bit. The big ones that made the most money. I started buying some rentals along the way too. Once wholesale was put in-game, you can do a lot more deals and make a lot more money.

You’ve got three strategies. You’ve got buy and hold, rental portfolio, fix and flip, and wholesale so when a deal comes across your table, how do you determine what you want to do?

In 2020, it switched.

Five years of your business, you are flipping.

I’m trying to rent it up.

Flip is your first option. Wholesale second, rentals third?

Back then, yes. I’ve got tired of chasing money 24/7, 365 days, which is wholesaling and flipping. It’s a great business. You can make a lot of money doing it but you are always looking for that next deal. In 2020, the model changed a little bit and the first option now is rentals. The goal is to get in through the BRRRR method is $0.75 on the dollar so you can refi out of it. In our market, we looked to make $400 a month in profit and cashflow. If it fits that, we are keeping it. If it doesn’t, if it’s less than a $50,000 rehab, we are going to flip it and the profitability is 20% ROI. If it doesn’t hit those numbers, then we are wholesaling it to somebody else.

If you want to raise money, you got to find deals.

I think that this is an important lesson because it’s almost like you put your chips on the table and they keep stacking up and you are like, “This is great but I need to take these chips off the table or I’m going to lose them.” You literally will. You will get silly if you don’t take the money off the table for yourself and start putting them into assets because all of a sudden, you get a big, heavy bank account. You get a big stack of chips, you are starting to feel comfy, hiring more people than you need, starting new marketing channels, and getting cute and creative with some other things, and then that stack of chips is way less. You’ve got nothing that you are taking home. You have nothing that you are adding to your wealth and net worth. You are taking those chips off the table now because of that switch. Now, you are looking to buy more rentals first. You’ve got $15,000 a month net cashflow that you are making from your rentals. It’s $180,000 a year. It’s not $1 million or $2 million but this is an incredible passive cashflow. It covers a lot of costs but you are taking it to the next level. Do you have a goal?

The goal, by the end of 2021, is to get over 100 doors. That’s the closest goal that I have on the rental side.

Do you have a financial goal like, “If I get $50,000 a month passive, I’m going to feel good,” or is it one of those things where you get to $50,000 and you are like, “$100,000 would be good?”

There’s always the next level. My goal is to make $10 million a year. That’s not going to get me to $10 million but that will be part of it.

Let’s break down a deal. This is a Wholesaling Inc show. We break down deals so that people can understand exactly how you found the deal, how you negotiated it, what was the situation with the seller and what you made from it. Whatever deal you want to talk about. We will start by breaking down the four pillars of pre-qualifying. If this is your first time, anytime that you talk to a property owner, you are looking for four things to see if there’s somebody that you can do business with. One is the condition of the property. Two is their timeline to sell. Three is their motivation to sell and four is their price. Hit me with it.

It was a lead that came in from a direct mail campaign and they called us and was like, “We are interested in selling the property.” We went through the questions. Build rapport number one and then asked about the condition. If they live on the property. Is it tenant-occupied? Why are you selling? Where you headed to? Asked all of the questions to determine the motivation. There was a weird scenario on this one. I had a salesperson at the time and for whatever reason, they didn’t think the deal was a deal so they killed it. A couple of months later, I brought another salesperson in because it wasn’t working out. They were going back through old leads and came to this deal. They were asking $100,000 and the house was worth $300,000.

How did your guy not think that was a deal?

That’s why they weren’t there anymore. I was like, “What?” He’s brand new. It’s the first week. He’s like, “I think this is like a really good deal.” I looked at it and I was like, “It’s a great deal.”

Is this direct mail? What list did you send it to?

Yes, this was high equity.

WI 697 | Real Estate Wholesaling Deals

Real Estate Wholesaling Deals: It’s all hard work. It’s all talking to people. It’s all building up the pipeline.

 

High equity owner-occupied or it doesn’t matter?

Non-owner.

This is somebody that has a rental property. They’ve got some equity. Did you do anything with the age of the house, the length of ownership or any of that?

No.

You just wanted a big wide list. Did you go what percent equity?

Seventy percent.

Seventy percent equity, non-owner occupied, single-family house?

Single-family.

Were those the three filters that you did for your list?

That was it.

You open it up, you are sending out mail, they call you and somebody drops the ball. Thank God you had somebody else to clean up on this thing. They call this person and go ahead.

There are two ways social media exists in today’s world. It either uses you, or you use it.

A couple of months before, the tenant moved out. I don’t know if they said it wasn’t a deal. Maybe there was a tenant at the time but at that point, when we followed up, it was turned vacant. There was an older gentleman. He was tired of keeping up on the house. It was one of those houses that had knobs and tubes, and the old shag red carpet. It needed to be renovated. It was not a nice house. We’ve got on the phone and we are like, “We talked a couple of months ago.” He’s like, “I remember talking to you. What’s going on?” We are like, “Are you still interested in selling?” He’s like, “The house is vacant.” We are like, “Can you meet in an hour?” He’s like, “I’m actually at the house now.” We jumped in the car and took off. We pulled up to the house. The funny thing is I didn’t even take a contract with me because I was going. I’ve got there and we built rapport and he was like, “I want to do $100,000.” I knew that I could sell it for $150,000 very easily. I was like, “Let’s do the deal.” I was like, “I don’t have a contract with me.” I called my assistant to load a DocuSign contract to send to him, we sat there and walked him through the process of signing the agreement.

Was he a tired landlord?

Yes.

Will you explain to the audience why people get tired of being a landlord because you are a landlord of 70 properties? Why would somebody be in that situation?

I’m young now. When you are young, you want to build, grow and you are ready to deal with all the headaches of people not paying rent or the people throwing house parties next door to other people. It’s just part of the process. When you are 70, 80, or 90 years old, you have ridden this way for 20, 40 or 60 years, made millions of dollars off of one property, you have owed on it for twenty years and somebody is flashing a couple of $100,000 in front of you, it’s motivating but it gets tiring. Everybody makes rentals out to be this beautiful, passive, guaranteed income. It’s not that. That $400 a month that I said that we try to make, we are lucky to actually take home $100 a month. With all the vacancies and all the repairs when the tenant moves out, you’ve got to go in there and dump another $5,000 to turn the unit. Rentals is definitely a long-term play. You don’t make much money. A seller can be tired of dealing with all the headaches. Non-payments usually the biggest one. Non-payment, do an eviction and they fight you. You are six months into the eviction, you finally get somebody out, you walk into the house, it’s destroyed and sellers are like, “I’m done.”

His timeline was, he was ready to go now? It is interesting because you had it for six months. Either way, it was probably the right time for him to sell it at that time. Even though the guy dropped the ball, fortunately, you guys picked it up at the perfect time, which doesn’t always happen. The condition was dated and needed a renovation.

It was livable but it was very dated.

It was dated and it was a rental condition. Timeline now, vacant property, tired landlord and he wanted $100,000 so you gave him $100,000. What did you sell it for?

I walked out the door and called a friend of mine that I knew was buying in the area. I said $150,000. He came by immediately. The guy was still there. I was like, “This is my business partner.” He walked in the house and signed a contract for $150,000.” I made a $50,000 assignment fee in seven days. It was good.

I just look at these things. It is the biggest month that we have had at $285,000 that we are closing. I think about that and you can easily google what’s the average household. How long would that take people to make in 9:00 to 5:00? The opportunities in real estate are unbelievable. I’m in Phoenix. Everybody is like, “That’s so competitive. How do you make money there? Are you doing business there? Are you doing it virtually?” No, it’s all here. It’s all hard work, talking to people and building up the pipeline. If I were to think when I started out, I remember the first time I’ve got a $42,000 deal. I was shaking and uncomfortable. I was like, “Can I do this again?” Now, we average $42,000 a deal. That is the potential. I’m not trying to do a humble brag on this. I want to inspire. The ceiling on this is so high. There are people that I talked to whose average deal size is $2 million that they make on things. There are many different layers to this but it starts with planting the seed of finding those distressed property owners and having that conversation.

The thing that shifted for me over the year is if you make the $42,000 $50,000, $10,000 or $20,00 or whatever it is and you do it one day, why can’t you do that every day? It’s the same thing. It just starts multiplying. We get in our own heads and think that it’s this one-off happening. If it happened, it can happen again but people don’t understand that.

WI 697 | Real Estate Wholesaling Deals

Real Estate Wholesaling Deals: You touch way more people on social media than you ever can in real life.

 

That’s the other thing about keeping all your money in that business. You get real loosey-goosey and all of a sudden, you are starting to do other things that didn’t get you the deals in the first place because you are trying to peer around corners that aren’t there. It ends up hurting you. I love that you are taking the chips off the table, buying those properties, looking to build up that rental portfolio and for long-term wealth. You are a young man. You are going to own millions of dollars in just a few years here. It’s exciting to watch. How do people find you? How do they reach out? Tell people what you are doing.

Instagram is where I communicate the most, @AustinRutherfordOfficial. TikTok, I’m on there as well, @AustinRutherfordo and YouTube, @AustinRutherford. We are still doing real estate, getting deals and buying rental properties. A lot of my time has been spent on putting out good content, helping people and building the brand.

From the start of this show, I talked about you are getting these deals from referrals. I have talked about it on the show a lot and on this YouTube channel about being loud. Being loud opens up opportunities. What has it done for your business?

People think that other people know what they do. Even if you bought 100 houses, there are a lot of people like close friends that have no idea that you are in real estate. Social media is a beautiful platform that you can use. There are two ways social media exists in this world. It either uses you or you use it. That’s it. If you are not on social, that’s not an option. If you are not on it, everybody around you is on it and they are talking about it. Use it as a benefit. Tell your story. The biggest question like, “What do I post?” Document what you are doing. You don’t get to create. This is creating stuff. You don’t have to do that starting out. Document when you wake up, the direct mail marketing campaign you sent out, the house that she bought, the house that you sold and the tenant that you had to evict, whatever it is. Document the journey and you will be blown away at the people that are like, “Are you in real estate?” My dad passed away. My mom is looking to sell her house. I’ve got this friend at work that doesn’t know how to sell a house. My friend got a deal for a $60,000 assignment fee from a friend he went to high school with. That is a basement contractor that went into a house and needed work. He’s like, “Is this a deal? You want to split it?” He’s like, “Let’s split it.” $60,000 just about a couple of posts on social media. It’s very powerful.

You are going to help out a lot of people that are starting out, looking to get their first deals and are confused. They are going through that trial period where you are like, “Is this a deal or not a deal? How big of a deal is this? Is there anybody that can help me? I don’t really know the paperwork. I don’t know the language. I don’t know the escrow officers. I don’t even know what escrow is.” All of those things and they see you out there, you are being loud and they are like, “Maybe this guy can help me out,” and then they DM you. All of a sudden, you are buying that deal, you put that into your rental portfolio, you help them flip it or you help them wholesale it. You are getting these referrals because people are seeing you out there doing the work, you are actually doing the business, they need help, they want to reach out and you respond.

We do free meet-ups in the city and connect with as many people as possible. You will never know the one person or the 100 people that are going to add value to your life. One relationship can literally change the trajectory of your life and you touch way more people on social media than you ever can in real life.

Give everybody your Instagram again.

It’s @AustinRutherfordOfficial on Instagram.

Reach out to Austin, especially if you are in Columbus. He’s got a phenomenal TikTok for everybody out there that’s on TikTok. He is just growing that like bananas. Check that out. Thank you so much for being on here.

It was awesome.

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About Brent Daniels

Brent Daniels is a multi-million dollar wholesaler in Phoenix, Arizona… and the creator of “Talk To People” — a simple, low cost, and incredibly effective telephone marketing program…

Also known as “TTP”… it helps wholesalers do more, bigger, and more profitable deals by replacing traditional paid advertising (postcards, yellow letters, bandit signs, and PPC) with being proactive and taking action every single day!

Brent has personally coached over 1,000 wholesalers enrolled in his “Cold Calling Mastery” training, and helped 10,000’s of others who listen to him host the Wholesaling Inc. podcast, watch his YouTube channel, and attend his live events…

A natural leader, Brent combines his passion for helping others with his high energy, “don’t-wait-around-for-business” attitude to help you CRUSH your wholesaling goals as quickly and easily as possible!

 

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