Posted on: January 24, 2022
WI 869 | Snowball Effect

 

Have you ever built a snowman before? If so, then you’re probably familiar with the snowball effect.

We might have encountered this saying before, and it can certainly be applied to real estate wholesaling. In making a snowman, you don’t start out piling snow into a giant heap –ideally, you start with a little bit of snow, roll it out for a while, and it soon starts to pile up and grow –picking up more snow quickly as you go along. The exact process goes by when you begin your wholesaling career, and today let’s get awed by this dedicated wholesaler as he walks us through his real estate story, the challenges that he faced along the way, and how he reached the peak of his career!

The Snowball Effect – The Method This Wholesaler Used to Generate $78,000 in One Month

Episode Transcription

The snowball effect started taking place when you were able to carve out that three hours in the middle of the day and then you are able to deep think.

We are going to talk about the snowball effect. We are going to talk about that moment where every wholesaler who pushes through eventually gets from 1 deal to 2 deals, to then having 3 deals in the pipeline, that feeling, and what it takes to get there. I’m excited because I’ve got my friend, Cergio Torres, from Riverside County, California to talk about it with me.

He’s in that stage. From beginner and having a hard time gaining traction, closing maybe one deal here, and then a couple of months later, closing two deals to this snowball effect of having multiple deals in the pipeline. He’s looking at making $78,000 in December 2022, fingers crossed, if all goes to plan. Cergio, thank you so much for coming on.

It’s a pleasure to be here, Lauren. Thank you for having me.

It’s a pleasure to have you. We’ve gotten lunch before you came down to my office because you are local to me.

Good Mexican food place. I remember that place.

We had some margaritas. It was awesome. Cergio, tell us a little bit about yourself. Where are you from? Are you working another job? Let’s get deep.

I have always had this interest in real estate but never jumped into it. I would hear about it and see the infomercials on TV. I had to add a different career path. Back in 2019, I took a change in career paths and what I was doing for work. I was working in a private Christian school. I was working at a church, on their staff there. I had to make a change in my life.

In June of 2019, it was my last day working at that job and I thought, “Now is the time to jump into real estate investing.” I started searching and went to some local REIAs. I joined my local REIA. I met up with some investor partners there. They were your traditional investors. They invested here locally but they would try and find something discounted on the market or whatnot.

It wasn’t something that I was looking for or that I need. I did learn. I did their Bootcamp and the mentors that I had there were great and smart. They gave me good advice. I started looking. I heard about calling people, getting leads, and doing whatnot. I didn’t know what to do. I went down to LA County and it cost me $60 to buy a CD of tax delinquents. There were 40,000 on there. I’m like, “What am I going to do with this? I’m going to take the ZIP code.”

Somebody said, “You need to skip trace them,” so I did that. I was hand dialing one at a time and I’m thinking, “There’s got to be a better way.” I started reaching out to other investors to sell my house fast. I talked to a few of them, and then one investor said, “Have you heard of Wholesaling Inc?” I said, “No.” They said, “You need to listen to that.” I thought, “I will take a listen to it.” I thought it was one of those things where you are going to have to pay for stuff. They gave out a lot of free content. I started eating that stuff. I was listening from the beginning all the way down.

I found out about TTP with Brent Daniels. I followed everything he said to do. I did that and ended up closing my first deal in 2019. It was a $5,000 deal that I did with the guy who was in charge of our REIA. I made $5,000. They made a lot. They flipped the house. In March of that year, I started making more calls. I was finding these deals in this area outside of my area. One of them was in Mojave. You had a deal on Mojave when you were here, too, right?

I have never had anything in Mojave but I have done high desert stuff.

The market can be tough. Sometimes you need to listen to what other people are doing.

I found another property there and then locked it up under contract. It was almost a three-hour drive. I drove out there and got it signed, then COVID happened and everything shut down. This thing took me from March until June to close. We were able to close that one. I had to partner up with my mentor that was at the REIA. We ended up locking it up. It was a $40,000 deal. We split it in half but I didn’t know what to do with it. I would have lost it if it wasn’t for his help.

By the way, you paid for your education. Could you imagine if you would have bought a coaching program instead?

It would have saved me so much. In March, some things happened in my life, and had to do a reset. I stopped wholesaling or trying to do that for about a year, and then I ramped it back up in 2020. I couldn’t find anything in my market. I was calling but nothing. I’m thinking, “What is going on?” They might have heard you on a podcast. It was like the light shunned from heaven. I was like, “Somebody does that in a different market? I want to do that.”

I shed light on it that our market is hard. It’s much harder than anywhere else. There are other markets, there’s New York, New Jersey, and Seattle. There are other hard markets. When you are in Cergio’s position where you don’t know what you don’t know, you are listening to Wholesaling Inc and going, “That guy in Memphis, Tennessee says that if I call 200 people, I’m going to get a deal.” It’s not Southern California. It’s a different market. It’s not the same. It’s much harder here. You saw something that had me shedding light that it’s not you, it’s your market.

I was a little stubborn. I was like, “We will listen to what other people are doing.” We tried to do it our way and we wasted money. I’ve got my friend who’s my partner, too. I said, “We need to go virtual. This market is tough here. We are doing everything we can. I’m cold calling and I’m not getting anything.” We joined your program and it was a game-changer. We were like chickens with our heads cut off trying to figure out how to do it. We didn’t know what to do. We were just doing it, trying to figure it out, and we weren’t going anywhere. We needed something. We needed instruction. We needed somebody that was doing it and we found you.

Can we stop and talk about the hard knocks of a newbie that you have to go through? What I heard is you did your first deal, you only made $5,000, and you sold it to someone who made 10X that.

There were two of them and they each made $87,000 on this flip.

That makes me want to throw up. The reason is that you didn’t know what you didn’t know. You didn’t know the value of the contract you had. If you had a mentor that was looking out for you, you would have made probably $80,000.

This was a referral from a friend of mine. I was starting to be loud like, “I’m investing down.” They gave me the referral and at closing, I’ve got my $5,000 check. They made good money. It was a monster house. It was scary.

They didn’t do anything wrong. They are looking out for themselves. They are house flippers. You probably said, “I will take this price for it,” not knowing any better because you probably heard on YouTube university that wholesale fees are $5,000. You probably heard that somewhere and got, “That’s $5,000 more.” If you had mentorship at that point, you would have probably been $85,000 richer because it sounds like your partner made $85,000. You could have made $85,000, probably even more. You could have found a better buyer for that deal.

It was such a smoking deal and I didn’t realize it.

You didn’t know what you didn’t know. Perspective is important. You don’t know what you don’t know. Anyone needs to have that paradigm shift of like, “I don’t know everything.” Were there times in these hard knocks journey that you thought, “I know. I’m fine. I will figure it out by YouTube university?”

WI 869 | Snowball Effect

Snowball Effect: Make that commitment. It could be making calls or following up. You just have to carve out time to gain momentum.

 

“If they can do it, I can do it, too. I will figure it out.” You waste a whole lot more money and time trying to figure it out yourself.

I had the same thing. I flipped a lot but when there was a project that I didn’t feel comfortable flipping, I would wholesale. That’s how I’ve got started. When I wholesaled, I would wholesale to the same company. I wouldn’t get out of the house because I was too scared and I didn’t know. I had trusted this buyer. He was a nice guy. He’s still a friend of mine but I only wholesale to him. I looked back at all the money I probably left on the table because I wouldn’t bid the property up. I did the same thing. We all do these things when we do it alone. When we do it alone, we all make these mistakes, by the way.

Many of them.

I know that you went through some personal stuff and it’s up to you how vulnerable you want to be. It would be helpful if you can share some of the personal challenges that you have had and how they related to getting started in your business if you are open to it. How has it been? What are some of the challenges that you have gone through?

It was a struggle in the fact that you are grinding, working, calling and nothing is happening. Many times, you want to quit and it’s like, “This doesn’t work.” Maybe I’ve got lucky twice. That said, everything was dried up and there’s nothing there. We had some personal issues that happened in our family. Now, with custody time with our girls and all that that had happened. I’m trying to find something that’s like, “What’s going to free me up to be able to have that time with my girls, have that freedom of time, freedom of money?”

When I heard you, your story was somewhat similar to mine, wanting to have that time to be able to go pick up your girls from school. I have two girls as well. I pick them up from school, be with them, go to volleyball games, be available, be a dad, and be there for them. It was challenging but things aligned, thank God. When I heard you on the Wholesaling Inc podcast, I thought, “That’s what I’m looking for. That’s what I mean.”

We have similar stories. I’m a single mom. I’ve got divorced several years ago. Prior to being divorced, I was working a full-time job and able to flip enough houses on the side to quit my full-time job, which was the goal. I wanted time freedom and a corporate job for me felt like jail. It was awful. I couldn’t see my kids. I saw my kid for an hour a day. I worked from 8:00 to 5:00. I had an hour commute. I never saw my daughter, Reese. I would see, feed, and put her right to bed. I hated that. I would have done anything to quit my full-time job.

I started flipping houses on the side. It took me a year to save up a year’s worth of salary to quit my full-time job. I was able to pull that off in a year. That year, I was pregnant. Now I had two kids. By the time I had Presley, I was able to quit my full-time job, which was lucky and the best moment ever. One of the best moments ever was calling my boss to quit my job.

A few years later, I’ve got divorced. Getting divorced was one of the hardest things I have ever gone through in my life. I knew I have to make money for myself now. I’m leaving the golden handcuffs. I don’t have a partner anymore to rely on if this business doesn’t work, so I need to make it work. Most importantly, it’s because I still want to pick up my kids every day after school.

It was hard for me to picture having days where I wouldn’t see my kids. For me, I had to see my kids every day so I said, “I’m going to be the one that picks them up every day after school so they have that regular schedule in their life where they know, ‘Even though we sleepover at dad’s house, we go to mom’s house every day.’”

Although it was two houses, I created this stability that they come home to one house every day. This is their main house. They come to it every day, eat snacks, and do homework. Dad comes after work, picks them up, and do a sleepover, and then they are back at that house again. That’s my divorce journey. I wouldn’t have been able to do that if it wasn’t for virtual wholesaling. If I had a full-time job, it wouldn’t work. I’m lucky. I know what you are going through there, Cergio.

I had a buddy of mine who had an electrical company, so I worked for him during that time and he was gracious. I was having to wake my girls up at 5:15 AM, drop them off at my sister’s house, be at work at 6:00, and then make some calls during lunch. We were out a little earlier at 2:30 but I make calls after work. I thought, “I need to do something else because that wasn’t working with the schedule.”

Sometimes, things just get aligned and you find what you’re looking for.

I have been driving school buses for a long time. I have my commercial driver’s license so I thought, “These bus drivers get this break in the middle,” because I see them hanging out. I talked to one of them and he said, “We get 3 to 4 hours in the middle.” I was like, “Really? Okay.” I work in the morning. I had a four-hour split. I would be on the phone making calls, following up with people, and then going back on my route. Finally, in October, I was able to walk away from that, which was a blessing. We sold our house, had a little bit of equity, and was able to say, “I have this time where I can focus full-time on this. I’m going to hold virtual wholesaling.”

What I love that you talked about is that you made your full-time work schedule work for having a side hustle. I get this question sometimes from people, where they go, “I currently work 12 to 14 hours a day. I’m frustrated. I don’t know how I’m going to be able to do this business.” I’m like, “I don’t know either. I wish I could give you better advice. I don’t know how are you going to do this business when you work fourteen hours a day. Can you carve out three hours somewhere?”

What you did is you tried to do it with your first schedule. You said, “That didn’t work. I’m going to pivot and find another job where this will work.” That will be my response next time, “Find another job where you can carve out three hours somewhere and it has to be three consecutive hours.” What’s hard I noticed is that a 1 hour here and 1 hour here, you have no time for deep thinking work.

Whenever I could, during my lunch break, I was making calls. When I had the weekend off, on Saturdays, I would say, “I’m going to focus on making calls and follow up.” You’ve got to carve out time or pivot.

The snowball effect started taking place when you were able to carve out that three hours in the middle of the day, and then you are able to deep think. I had another student of mine come to one of our in-person meetings and she was reminding me of when we first met up when you were having a hard time gaining traction. I didn’t realize to ask you this question, tell me your schedule every day. There was something in her where I was like, “Give me your schedule.” She’s like, “I wake up at this and I take my kids to school, and then I pick up my kids from school.”

She only had two hours where she didn’t have a kid because her youngest only went to school from 8:00 to 11:00. She would try to do the business right in there. Of course, she also has to eat breakfast. I was like, “When do you have any consecutive time, I recommend three but do you even have two, and then you can find an hour somewhere else on that day?” She didn’t. That’s why she was having a hard time. It’s interesting. You have to carve out that three hours consecutive time for deep thinking work to make this business work and gain that consistency. I always say three hours of free money-making activities every single day.

I remember that. You had us make that commitment in the course and said, “Commit three hours. It could be calling, follow-up, whatever.” We started gaining momentum when I had to have those three hours. My partner works a full-time job. His schedule is limited, so I’m thankful for him. He came in and was a real good friend of mine. He helped me out and I’m glad he was able to jump into it. It’s having those consistent 2 to 3 hours a day of money-making activity.

You are doing these deals virtually. These are not in our backyard. These are virtual wholesale deals. You are doing them in North Carolina. You said you had some in Alabama.

Yeah. I have never seen the property and never met the sellers physically.

Virtual is a way to go. Especially when you live in Southern California like us, virtual wholesaling is what saved me and is the only reason I’m still doing this business.

I couldn’t imagine not being able to go virtual and still working in this market. I don’t know where I would be. It would be a different story.

A lot of people get frustrated and give up. They instead become realtors or they find other businesses to get into because it’s hard to make it work here. Of course, you can. Anything is possible. You can make it work here. There are people that still do deals here but it’s much harder. I don’t want to have to stick with the challenges that my local market brought to me. It’s my choice that I want to move away. Every market has its challenges. I wanted different challenges. I didn’t want these challenges. I wanted to go where there was more opportunity for me. I did the same thing. I’m virtual and my market dies in Oklahoma.

WI 869 | Snowball Effect

Snowball Effect: Try a new marketing idea, give it a shot, and see where it goes from there.

 

I remember you on some of your episodes, you would talk to other investors when you are in Tennessee and they are like, “I was starting to call in and in my first week, I closed my first deal.” I’m like, “I have been calling for months. Is the grass may be greener on the other side? Is there more opportunity? It’s maybe less congested over there. Who knows?” I was thinking, “There’s no way. Here I am grinding over here in SoCal and not getting anywhere.” I thought, “I’ve got to go virtual. I’ve got to get a good market.” It was frustrating hearing those stories of people in other areas saying, “We are crushing it. We are this and that.” I’m like, “I need to be doing that, too.”

There’s this evolution where you are hearing podcasts and going, “Maybe it’s just me. Maybe I’m not working hard enough.” You are not doing it right or something. I would read these episodes and I was doing the exact things that they said they were doing, the same things, the same marketing lists, calling the same type of seller. Except I would maybe get a house that I had to flip. There wasn’t even enough room to wholesale it. I would have to house flip it and it’s maybe one of those contracts every four months, which was stressful when you are going four months not getting a contract.

They were getting four contracts a month doing the same thing and I’m like, “What am I doing wrong?” One day, it was a perspective shift. I had another high-level investor who worked in California and he chose not to work in California and go virtual. It was that perspective that he had. He goes, “No, Lauren, it’s not you. It’s your market.” I was like, “What?” I didn’t even know. You don’t know what you don’t know.

I was still new and green to this business. I didn’t know that different markets have different conditions that make it different for people. The grass was greener for me. I’m glad you found me at the right time when you did it. It has been a pleasure, honestly, to be a part of your journey. Thank you so much for inspiring those who are reading. Maybe virtual wholesaling is something that they should consider. Thank you for giving that out. Cergio, if anybody wants to get ahold of you, do you have a Facebook profile or Instagram? How could someone reach out?

They can reach me at Sell2000Hills.com or Cergio@Sale2000Hills.com. We are excited about the future and we are getting ready for commercials in our market, too. That was something I heard you talking about and I thought, “Okay.” You were excited about that and you were like, “My new favorite marketing is commercials.” I thought, “We are going to give it a shot and see where it goes from there.” We are excited about that, too. We have partnered up with RENTV.

I am doing well with my commercials as well. If any of you guys are interested in the commercial thing, make sure you tell Tony Javier that Lauren Hardy sent you. He will give you $1,000 off your ad spend. Thank you so much, Cergio, for that quick tip. Guys, thank you so much for reading. If you want to go virtual as Cergio did, I want to help you. Check out www.VirtualInvestingMastery.com. Cergio, thanks for coming on. It has been amazing and I’m so proud of you. I will see you next time.

Thank you, Lauren.

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About Lauren Hardy

WI 479 | Wholesaling TipLauren 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.

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