Posted on: December 02, 2021
WI 832 | Rental Portfolio

 

Tired of the hectic workload and thinking of transitioning to real-estate full-time? Do you want to learn how to build a $10 Million Dollar rental portfolio in just three years? Worry no more because this episode is for you!

Join our host Brent, together with former engineers and now full-time real estate agents Chaitanya Phansalkar and Prakash Dumbre. They will unravel everything you need to know about Assignment fees, building your team, and setting up systems for the Wholesaling process. So you can also kickstart your future real estate endeavors.

From Engineering to a $785k Assignment Fee and a $10 Million Dollar Rental Portfolio…IN 3 YEARS!

Episode Transcription

Think about having a conversation with a property owner and you are calling them on the home that they live in. You call up and ask them if they would consider an offer on their property and they are saying they would. You are negotiating a tighter deal so you are wondering maybe they have other properties that they would be interested in selling. It so happens that in this one conversation that you had, these property owners also own an apartment complex.

You can get in there, work the numbers and look at this. This one conversation gets you an assignment fee. They wholesale fees of $785,000 and not only that, that also kick-starts your business. You go on and add $5 million to your net worth over the next 3.5 years. This is not imaginary and fake. This is real life for the two gentlemen. They have been doing this part-time for a few years and are now full-time real estate entrepreneurs. I’m so happy to bring back onto the show the first show that we did and it is Chaitanya Phansalkar and Prakash Dumbre.

Welcome back to the show to tell your story. It has been explosive for the last few years.

A lot of credit goes to you. Thank you.

You guys have an engineering background. You wanted to keep being engineers but real estate keeps pulling you in. What finally made it to where you decided to go full-time into this business?

No workload and real estate is more fun. It was the right time to transition. We have a decent and good portfolio that we buy and hold. The goal with real estate is to spend more time with your family. We did not do that for the previous years but now we are done with our full-time.

It’s time to get life back. The last years was a good time expediting the whole life, whatever you call it. This is financial freedom.

You are replacing your income and efforts, and now you’re in the real estate business. You came out, went fast, got this big deal, and got a bunch of multiple deals. You put a great system in place for lead generation. You were able to go out and convert and turn those into closings and traditional wholesale deals. You decided, “Why are we selling these? Let’s keep these properties.” You own 40-plus properties. You have four Airbnbs that are crushing for you in Houston. You keep going. You have $10 million in your rental portfolio. Does it feel like it’s been fast? Do you feel like it’s warming up?

It’s like we started yesterday. The time has passed by so fast. We can’t believe it ourselves when we look back. When you said about systems, now is our time to set up those systems. All these years were our core values and the partnership we have, like the synchronization between us, helped us get there.

This is a beautiful example. I talk about on this show that wholesaling is the foundation. Wholesaling is the art of finding discounted properties. Once you can do that, you can go into so many different areas of real estate and invest and build your portfolio. You have been doing these Airbnbs, fixing and flipping, developing, lending on properties or building a fund to buy more properties. It’s so exciting what you can do but it starts where you guys started with finding the discounted properties.

Of those 40 properties, we have deals that are BRRRRs from BiggerPockets, subject-to deals, seller finance deals and owner finance deals. We are trying to touch all facets.

The goal with real estate is to spend more time with your family.

The options are endless. They are 4, 5 or 6 multiple exit strategies. We try to optimize every single deal.

You are netting $40,000 in net cashflow from your portfolio. You are also doing 1 to 2 wholesale deals. You said 70% you are keeping, 30% you are assigning. This is important. If people are reading this show and taking action, they are going to win. If you are going out there having enough quality conversations with distressed property owners, you are going to find opportunities. It’s what you do with the money once you make it. That has been your biggest problem. Your biggest challenge is what you buy and what you don’t. How do you know which properties you want to take off the table? For everybody reading and they are starting to build momentum, what is your advice on when they should start taking deals off the table and keeping it for their portfolio?

Number one is cashflow. Any property that cashflows with zero out-of-pocket is excellent.

How do you get zero out of pocket?

In the Houston market, we are blessed in a way that any deal that is going to make you a wholesale fee, the deal under $200,000. If that deal is going to make you a wholesale fee, that deal is also going to make your cashflow. It is as simple as that. As opposed to markets like Austin or maybe your market as well, the deals that you can make your wholesale fee do not necessarily make cashflow. When we do such an amount of volume in terms of converting from wholesale strategy to buy and hold, other things happen on the other side in terms of rehabs, like how many contractors you have, how much bandwidth you have, and how much money reserves you have.

After you pay that property, we want to make sure the rest of the business is covered with the reserves we have. We have to put all that into consideration. We have at least 50 calls a day between the two of us. We spend more time talking to each other than our family. That is why I mentioned systems. Once those systems are in place, things will change.

How do you get into a property with none of your money?

We buy all of their properties in cash. They are $0.50, $0.60 to $1. We kept our jobs because we were trying to build company credit. That was the most important part. Lenders love us.

This is an interesting point because as soon as you go into a 1099 situation or an LLC where it’s a pass-through, you have to have two years of that. As entrepreneurs, we are trying to keep our taxes as low as possible and write off as much as possible. It restricts our buying power when it comes to getting conventional loans. You kept your jobs to keep the income so that it looked good to refinance. You would close them with cash, fix them up, rent them and the whole BRRRR thing, Buy, Renovate, Rent, Refinance, Repeat. You did that over and over?

In the first years in the business, before we had those tax returns for banks to love us, we started tapping into our W-2 and getting conventional loans. There is a product in conventional loans called delayed financing. If you buy it cash, you can go to the conventional lender the next day if the property is ready to go or after fixing it and ask for a delayed financing product and that can put up to the amount of cash you put in to purchase for 75%, whichever is lower. That is how you get zero out of pocket because a lot of times, you are buying below 75%. All your cash is out.

Here is the key to this. You have to get discounted properties. You cannot do it on the MLS, hoping and praying that deal would fall into your lap. You have to go out and find those deals. You are finding these discounted properties. You are getting conventional financing. What was going through my head as you were talking was somebody starts wholesaling, building some momentum and going full-time. They have a couple of years so that they can get these loans.

WI 832 | Rental Portfolio

Rental Portfolio: Any property that cash flows with zero out-of-pocket is excellent.

 

How much do you think should be set aside? Most of these properties are under $200,000 for cashflow. That is pretty much all the way around unless you get into multifamily stuff. We are talking single-family here. How much do you think that people should set aside for this type of strategy so that they can buy them cash and then refinance?

In my opinion, they don’t need all cash to buy it cash. There are people like us, you or everybody that is retired, has IRAs and 401(k)s. There are millions of people that are ready to hand out their cash. You just need to find them. There are easy ways to find them, such as networking events led by lenders. These people come to those events to lend their own money. If you find those people, you don’t have to wait until you have full cash reserves.

It’s difficult to have $200,000 in cash. You have those relationships that you can leverage. You can use those and give them decent returns. When we run out of cash sometimes we have 10 or 12 properties that we buy cash and then at that point, we go out to get that money from outside investors for 3 or 6 months. These are not hard money loans. These are private investors. It’s very reasonable.

What do you offer them? Is it a percentage of the deal or interest rate?

Between 6% to 9% interest rate.

Do they have a minimum amount of time that you are going to pay them? Is there a minimum amount of months that you are going to guarantee for that 6% to 9%?

They have asked like, “Don’t give me my money at least for the next three months.” Otherwise, it doesn’t make sense that somebody is putting in $100,000. They need at least $3,000. Otherwise, they are like, “I’m going to go for a longer term. I don’t want to switch the investment over and over.”

I don’t want this to go too high-level. I want to make sure that this is as simple as possible. When you are raising money, the best way to do it is to show him your track record. You had to go out there. You were the 50th person in the TTP Program. You were in March 2018. You put this together part-time and showed your track record. Does that help you?

We keep talking to people who are ready to invest. They want to see our track record. We got to a point where our investor is like, “Keep the money. Let it roll.”

We had started cold calling. We hired some random guy from the Philippines without any social proof whatsoever. The number one call he made, made us $35,000. We were blown away. We were like, “We have to do this.” He was already following Tom Krol and these guys on Wholesaling Inc and you came on. We are like, “Cold calling works. TTP is our guy.”

Add convenience and speed to sellers and close their deals. It’s a win-win for everyone.

I remember the first call with you. It was the best investment we ever made.

How much have you made since then?

We made $3.5 million in wholesale fees.

It’s not rocket science. It’s making sure that the lead generation of your business is running. I’m having this conversation more and more because I’ve been coaching now for years and a lot of the people are very successful. They are now at the point of transitioning to how do we build this into something bigger, do some incredible things and raise funds as you have done. The perfect blend for this business is 50% referrals, 50% regular lead generation.

Building that network, becoming the guys in your marketplace, becoming the spot is the perfect blend because referral has no marketing fee. You have to earn those referrals by your reputation, being able to close deals, communicate effectively with people and treat them well. You should get that. Keep all of those profits. On the other side, you got to keep the engine running with lead generation. You start seeing that your business grows through the referrals. That is why you have been doing a great job in Houston. You are starting to build an incredible network to buy deals. You are now the cash buyers. Talk to me about that.

Add convenience and speed to sellers but it’s not just sellers. There are other wholesalers. They work hard. It’s hard acquisitions and dispositions so if you can provide them convenience with speed and close their deals, it’s a win-win for everyone. We close our deals. We partner up with a lot of other folks from TTP, where we buy their deals and close with our funds or other investors. It’s fast and they can move on with their next deal. It helps everybody.

We are halfway into this conversation. How do they come into your world? If they want to add you to their cash buyer database or come to you directly to see if you want a deal they are looking to sell, how do they get ahold of you? What is the best way?

They can find us on Facebook. They can find me on Instagram. The best way to reach us is by email address for our company is Info@StepUpHomeBuyers.com.

Make sure to add a subject TTP so we know where they are coming from.

It started just you two and then you hired a caller. What does your team look like now?

We are very cautious about our cost control. We like to be efficient. We have two full-time cold callers and they both work 40 to 40 hours each. They also do texting.

What is the blend there? Is it half-day texting and half-day calling? What does that look like?

An hour of texting. They send a couple of thousand texts in the morning. As they come in, they respond to the text as they are calling.

WI 832 | Rental Portfolio

Rental Portfolio: There are millions of people who are ready to hand out cash. You just need to go find them in networking events led by lenders.

Where did you find your callers?

The Philippines.

The very first cold caller ever that I found off of Fiverr started his group and kept it real tight.

One of the first callers has been with us for years.

One of my callers is now yours. For years, you have had her. When you find somebody great, you got to keep them. How much does she make for you?

We are over $500,000 from her leads that have come in. People shuffle between callers but for the first three months, you have to train and give them enough time.

Anybody who wants to hire and scale has to be patient with your new hires. If you keep checking on them every second and micromanage them, they will not have the freedom to grow and be creative with their job.

They won’t blossom. They will think that someone is always going to be looking over their shoulder, “Am I going to get fired? Are they going to get rid of me?” There is so much turnover with phone prospectors that we do weekly meetings, let them know where their leads went and what we need if we need more information from one lead to another. It’s been great. I was like, “Remember that gal you talked to, where she got injured and couldn’t keep up with her rental property anymore? We did this and she feels so great. You wouldn’t believe how happy she is.” They feel that. They are part of that.

The most important is to set your team up for success and it comes back to you.

That is an important point that a lot of people often look at is getting them good data or phone numbers that are accurate and freshen up their lists. Don’t have your callers go through a list 6 to 20 times. They are not going to talk to very many people, and they are going to get bored and tired of it.

Halfway through our time with the whole business, we decided to put our callers on the follow-ups

Like an acquisition manager?

Not really. The acquisition manager is anywhere there is a 6 to 8-month follow-up then the lead goes back to the callers. We closed the deal from one of the follow-ups and years later, the lady calls and tells me, “Your girl has been calling me every other week, back to back two times. I would hang up her call every time but that kept me going and then that is how I’m calling you back.” There was no conversation for years, only missed calls.

There are two things you need in an Airbnb. You need a location, and you need to make it pop.

If you work with your team well and set them up for success, they are always motivated to follow up. They don’t kill the leads. They keep moving. That would have been a $40,000 assignment if sold. We kept it.

That is our cold calling. In texting, we have our PPC lead, which is outsourced to Adwords Nerd. They do very well. They handle our PPC marketing. Google has been our best so far for pay-per-click instead of Facebook. Facebook has not been that. We stopped Facebook so it’s mostly Google and 20% Bing.

Bing is an interesting one. I have never gotten much attraction from it but I don’t think we put too much into it. We’ve been doing more web. You are here in the office. You saw my team meeting here on Fridays that we do. We’re about 50-50 with Facebook. We are having better luck with Facebook than you. Facebook is a wild card.

Depending on your market too. We probably don’t have many people using Facebook for all we know. The ones you are using are window shopping.

Our acquisition team has one more person and me. That’s two full-time acquisitions. My job is to get the person started. They will set it up and I’ll go there and help them. We at least sign 4 or 5 contracts before we leave them alone. That is how we train them.

They are shadowing you. It’s like an apprenticeship.

First, there will be appointments and I will take the lead. After that, I’ll stop talking. I will be there to teach them how to handle the objections and leave them alone.

How did you find your acquisition manager?

We post ads on Indeed. We have a live ad. It’s always there. We also have some of our TTP friends. We collaborate with them. They call our market. We have no issues checking their houses if they want to market in Houston. We have a couple of other partners that we have them closed. You can say they are part-time with us but they have their wholesaling business.

Are you the buyer or making sure that they are getting at the right prices?

It’s a combination of everything because we pretty much work in every neighborhood in Houston. We know what we can sell it for. Some of the sellers don’t want showings and inspections. They are going to sign the contract. They don’t want to see you again until the closing date.

WI 832 | Rental Portfolio

Rental Portfolio: Speed is important if the properties that you’re fixing and flipping are under 200,000 and you’re holding them as rentals. So just pick your battles. Quality, cost, and speed are all important.

 

That is where you come in.

We buy it, close it. We don’t need to go there again.

We do the same thing here. If it’s a fantastic deal, the best route for the sellers is to not have anybody else come through but they do want to sell it. We’ll close, fund, help them move, transition and then we’ll put it out there. We have been doing that more in 2022 than ever before because of COVID.

If you wait a month to dispo that deal, the price of the house is going to go up to $20,000 and then other people are going to swoop in and say, “They locked it too low.”

We have two deals that we took down and these are both going to be over six figures. They started at about $70,000. I have a buddy that does all the renovations for the Zillow properties that they buy but he is slow. When there are contractors, there are three factors. Those are speed, quality and cost. You get to pick two of those. He is not very fast. The quality is decent. The price is good and it’s slowing it down.

I’m like, “We drag this out a little bit. Each month we are making $10,000 more.” They want to make sure it gets done and I get it. In this market, it’s different when things flip to more of a traditional even market or a buyer’s market but when it’s a sellers’ market, you can afford to hold onto these properties a little bit longer.

The acquisition is a very important aspect. Otherwise, nothing makes sense. What all of these properties and the strategy and the life we have chosen to live with the amount of stress that adds because of adding and holding these properties. We have to worry about what to do next. We need lenders, contractors, private lenders and project managers. In 2021, we partnered up with one of our friends, Joel, who has his contracting company. He’s been going out there finding subcontractors’ owners. Those three things are quality, cost and speed.

We have been focusing a lot of our attention on costs but in the next step, you would think it’s quality but it’s speed. The properties that we are fixing and flipping are all under $200,000. I don’t want to say they don’t need quality but because we are holding them as rentals, we are not worried about the end buyers. We are picking our battles. Everything is important, all three of those things.

What about your Airbnbs? In there, you have to have a theme. You have to put in a lot of investment upfront to get the big returns and make that pop when people go on to their Airbnb. Do you do that?

We are very picky about the location. If you are starting, Airbnb is awesome and people talk about $15,000 or $20,000 furniture. There are ways to get cheaper. We put furniture for all our properties for under $5,000.How?There are a lot of online sources like Amazon. We have a property going online. We interviewed 2 or 3 Airbnb managers. We are expecting $120,000 to $250,000 gross per property.

Collaboration is the fastest way to go up in any business.

How do you get that much furniture for these things for $5,000?

Amazon has beds, bed frames, metal, gold and powder metal frames for a couple of hundred dollars or less. There are two things about Airbnb. One is location or pop. You need at least one. Making that property pop is very expensive. Location with the wholesale business we have can be cheaper for us. We pick a location. We don’t go all out. Not only does it take more money but also a lot of time for detailing like maintaining the team and all these things. We don’t go after any of that. We buy a good location near the airport with a pool. It’s a simple start. That was our first one.

We bought the cheapest furniture on the planet. We had 2 friends with trucks and 1 one friend calling Facebook marketplace. It was madness. We paid our friends a couple of hundred dollars for helping us out with the truck and calling. All that said and done, we were all in $400,000 with furniture, everything in the house. We thought, “This is a property that I don’t want to live in it. It was so cheap.” That property since March 2021, has been making us $12,000 gross every month.

We wanted to upgrade the property. It was our first Airbnb. I don’t recommend people going the route that we went. This was our first house. We wanted to test out Airbnb. We said, “Let’s put $4,000 or $5,000 and test it for a month.” That property was full for six months. We couldn’t go in. We took it offline.

The next house we have is going to be beautiful, everything you need for Airbnb.

It’s the two of you who are callers and an acquisition manager. Who does dispo?

I do dispo. My job changes between dispo and managing contractors, tenants, lenders and portfolios. I also help out with acquisition.

I like this combination because this is where a lot of partnerships do it wrong. There has to be a division of labor. There have to be goals, “Our goal is to use this wholesaling business as our machine to build our wealth and portfolio.” Are we going to stay on the treadmill and make a bunch of money? We were talking about paying a bunch of taxes. You have to start playing the game so that you are not getting killed in taxes. You are building your wealth and it’s not just, “I need the cash coming in to live my life.”

Once you get that, keep your personal expenses reasonable, build the portfolio and then that thing will pay for whatever lifestyle you want. It depends. You have the wind behind you. You have the momentum. The ball is rolling downhill for you. With the partnership, it’s important in the beginning that both partners are hunting for opportunities. They are both going on the appointments, making the calls and doing the lead follow-up. They are doing all that. As the business starts maturing and growing, somebody takes the wholesale side and portfolio side because if you are trying to do both all the time, there is no way.

We cross paths a lot of times because of some sellers I talked to years ago over this lead and I recognized their number because both our cell phones still ring every time someone calls. I went and closed that one. At the same time, he is running Airbnb. Not only has that kept some variety and fun in your job. Otherwise, it gets boring doing only one thing.

We have a very decent partition. I handle some portion he does. I’m not saying that we argue like, “Should we keep or sell this?” That is all healthy discussions. Our full-time team is very efficient and small. I don’t want to take all the credit. We have a lot of support structures like students from TTP. There are sub-to students and we work a lot with them. We buy their deals.

You are squatting up with everybody. You are a perfect example of it. You are always reaching out, trying to either help out, buy the deal or help move the deal. You are even giving dead leads to people in TTP to call up and they have a deal.

My first ten renters, before we started this business, were all with hard money. We have paid hundreds of thousands of dollars in collaboration of some sort. Early in your career, collaboration costs money because it’s a give-and-take relationship. I love to help and when I help, I don’t expect it. I don’t need that agreement sign that, “This is what I’m doing for you. In return, you do this.” It’s a given thing. In that give and take relationship, you build stronger business relationships down the road.

WI 832 | Rental Portfolio

Rental Portfolio: In real estate, responding is the single most important thing. If you don’t respond to sellers, buyers, and partners, it’s just not going to work.

 

You don’t need collaboration after a certain point. There are 1 or 2 ways new students are going to go. Some are going to go up and some are going to quit and go to other businesses. To go up, collaboration is probably going to take you off a lot faster than anything is. We have done it. We are splitting deals coming to us depending on the value we add. Pick your battles and move on.

It’s a win-win for everyone.

You do a fantastic job of communicating and responding to emails, texts and DMs with anybody trying to communicate with you. You respond whether you can help or not or it’s a deal or not. Talk to somebody that is getting started that has this vision. Whenever I talk to anybody that joins TTP, “What is your goal?” “My goal is I want to get a portfolio for the passive cashflow to cover our expenses.”

You are there. $40,000 of cashflow, even if it’s split between the two, that is the top 1% type of thing. Speak to somebody that is starting. Maybe they are in a job, reading this, in the Military, driving a truck, a nurse, teacher, eighteen-year-old and they are in school or whatever situation they are in, they are getting excited about this. What do you think they should do in the beginning to build some momentum?

It’s the quality of the data and the consistency. We have had months where we have no deals. Does it feel like giving up? Yes but look at the longer vision and keep going. Use the resources. There are so many resources. You have TTP and students that are in sub-to. Call people. They will help you out. Don’t give up.

This is coming from someone who is not born in this country. People who are reading, probably majority of them are Americans. You already have a lot of things that we did not have starting. Play with the cards you are dealt. Don’t cry because you don’t have money in the bank. Don’t cry because you don’t have this background of negotiating or whatever. Use what you have. There are 100 different directions to success. It’s not a one-way road. One thing you said I would emphasize on that is responding. That is the single most important thing in this business or any business for that matter, especially real estate. If you don’t respond to sellers, buyers or partners, it’s not going to work.

A huge pet peeve of mine was when I’m trying to reach out to somebody or get ahold or do something and they don’t respond. They are at the top of the top and they said to reach out any time but then they are not. There is no competition. There is no way that they can maintain that. Be the person that communicates and everybody wants to be around you. You are a magnet. When you are a magnet, have energizing enthusiasm, you love this business and are successful at it, people want to be around and partner with you to be in your world. That is important.

You cannot grow by yourself. You have to grow with the team.

If you are in the Houston area, you have to reach out to these guys at Info@StepUpHomeBuyers.com. They will respond and work with you. If you are wondering if it’s a deal or not a deal, looking to find a cash buyer for your deals, or looking to get some support in the Houston area, these are the guys that you should connect with.

Thank you.

Thank you for being on here. I’m glad that we get to do this in person and not when you are on vacation like we did last time. Thank you for joining us. If you are interested in joining the most proactive group in real estate investing, it is the TTP family. Go to WholesalingInc.com/ttp. Scroll down and check out what it’s all about and all the success stories.

If it feels good in your gut, sign up for a call. I look forward to working with you and bringing you into the world of this whole TTP family. You are an inspiration. $10 million in the portfolio, $5.5 million in equity and $40,000 in cashflow is everybody’s dream. Thank you for joining us. As always, I sign off by encouraging you to talk to people. Until next time. Love you.

 

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About Brent Daniels

483Brent 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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