Deals Today

 In The 90’s when the internet started to come out, very few people understood it, let alone believed that it would be driving force of commercialization, marketing, and socialization… except for one man who TIME magazine accredits as THE father of internet marketing, Ken McCarthy. He’s been through many businesses throughout the decades, set up marketing for mortgagers and real estate investors, and was even a student and friend of the late great Jack Miller. He reveals today in this chat with Paul do Campo of RealEstateAudios.com, his stories, and tips to Real estate investors.  You can find out more about Ken (I highly recommend doing so and picking up his book “The system Club Letters”) at https://www.kenmccarthy.com/

From Corporate Job that he hated, to a $1Mill a year Wholesaling business, to Passive Investor, to now a coach of coaches… Brian Ellwood at www.brianellwood.net has been through many business, shifting to figure out what his passion is. Along the way, he’s found some very valuable skills, like finding and buying inexpensive cash flowing rentals that he pay his monthly expenses. This is a much different interview that you’re used because we talk much more about following your passion and doing what you ENJOY doing rather than following money. But I didn’t leave you hanging… Towards the middle we talk about what he defines as a GOOD rental market to invest and the criteria to look for when you’re looking for CASH FLOW. 

Tom Krol has started up 2 extraordinarily successful businesses, earned and kept millions, and has helped thousands of new entrepreneurs start flipping houses through his built up publishing and coaching business, Wholesaling Inc. Today, He’s going to reveal his new mission in life: to dispel money myths that coaches and gurus aren’t even doing themselves… and get entrepreneurs on the right track with REAL working money management principles to grow and KEEP their wealth. He has long left and entrusted his coaching venture at www.wholesalinginc.com/ to other successful wholesaling coaches, and has now took on a new venture at T4 Freedom and he’ll reveal these myths and corrections to good money management principles that most people miss and the reasons why they end up broke.

Show Notes:  How he’s ran his business in the last 20 years, and what he does now (with only one employee) The question he asks when hiring  What you need to know and have in a down market – Cash will be unavailable in these times.  When he is goes into “Buy and Hold” mode and when he flips How he tracks his business How to systematize parts (like McDonalds) in the REI business The one thing he loves about this business Why Cash Flow is a myth, and how he makes his true wealth and money in rentals Why he stays away from out-of-state properties

Repel to Attract

A broker who’s built the most successful real estate team in the state of Pennsylvania, John has seen the ups and downs of RE for 30 years and has coached Brokers and other industries in a very different approach to selling one on one. In this interview, we are going to go over:  How to build a small but effective team  How to find the right people using the right tools How to build yourself to be a great leader What to expect in the RE market coming up How to talk with prospects and door knock effectively with the right script https://topagentcoaching.com/

We're talking with Mitch Stephen of 1000houses.com who's built a thriving business that revolves around selling homes for cash flow with no tenant problems. It's the art of selling with owner finance and he's mastered getting private money, finding and selling homes in San Antonio Texas on a Promissory note. In this episode we'll go over: - exactly how he got started flipping 45 homes in his first year with no money - Where he puts his profits for long-term generational wealth (its not single family houses) - How he finds buyers- How to conquer new investors most troubling obstacles - The right attitude to have - How to abide by the Dodd-Frank laws - How to perform wrap mortgages - How to make your lenders happy and much more. www.1000houses.com Episode Transcript: If you can live off the down payments and your monthly cash flow just stacks up in the bank account, why would you ever sell a note? PAUL DOCAMPO: All right, welcome to another interview at Deals Today Podcast, and I am your host, Paul, at RealEstateAudios.com. We’re going to be chatting with Mitch Stephen at 1000Houses.com. The reason why his url is 1000Houses because, at the time, he’d flipped over a thousand houses. Today, he’s flipped over 2000 houses. He flips about a hundred a year, and he’s been doing this for 26 years at the time of this recording.  What does he do? Does he traditionally flip, because the title says that it’s a no-maintenance, no-tenant cash flow, and he doesn’t do the traditional buy-and-hold, you buy it and you rent it out. He sells them, and he sells them on payments. He creates that steady cash flow with absolutely no maintenance in place, absolutely no tenants in place. Over the years, he’s developed his own structure to find money to pay off these private lenders to fund these deals, to find the deals, and to find the buyers and to get them to make the payments to him and what kind of percentage and down payment. We’re going to talk about all that, his whole model of doing this, why he does it, and what he does for the long-term wealth because you might be thinking, well, that only lasts for 10, 20, 30 years. He does have something on the backend that he does for creating that long-term wealth, and that is storage facilities. We talk a little bit about that towards the end. So, tune in for the whole thing, and of course, if you’re not on my email list, go to RealEstateAudios.com where you can get my newsletter, a few free gifts on marketing and copywriting, and let’s get to it. (0:01:53.8) Mitch, in your blog you talk about how in your first year you did about 45 houses. That’s quite an achievement. How did you go about doing that? Forty-five houses in one year. People struggle with getting one house in one year. MITCH STEPHEN: My biggest problem was funding. But then it was also a different time back then when, if you had good credit, you could apply for any credit card, and they just checked your credit, and if you had good credit, they gave you a credit card with all the cash advance, maximum limits, and everything. I learned real quick that I could apply...I applied for like 45 credit cards and I got all of them, and I had great credit. Even through all my business failures, I always paid everyone back and I never missed my payments. I kept my name. It was very important to me, and it paid off because I have 45 credit cards that, if I wanted to take a week to go collect the cash advances off of all of them, I could put like $500,000 on my kitchen table. And no one would loan me any money because I didn’t have a track record. I had good credit, but I didn’t have a track record. I wasn’t bankable. I hadn’t been in the business. So, I just used those credit cards to buy all those houses. Again, it was another time. In San Antonio back then, you could buy a house in the lesser neighborhoods, the lesser parts of town for $15, $20,000. So, I would go get $10,000 off of this card and $10,000 off of that card and buy the house and then get $10,000 off another card and I’d rehab the house. So I’d have $30,000 of zero interest, no payments for 12 months or 18 months or six months. I would just sell those houses on owner finance notes and then sell the notes simultaneously when I created it to some note brokers in town. I would get 83 to 90 percent of the note value, and I’d get five percent down and a five-percent throwaway second, which I never threw away, and I did it 450 times in a row. PDC: You said 80-90 percent. Correct me if I’m wrong, I’ve heard in the note business you can only sell notes at 65 percent of the value, so how did you end up selling at 80-90 percent? MITCH STEPHEN: (0:03:52.6) It was a different time. Associates was in business. They were a division of Ford Motor Credit, and they were paying 83-87 percent on up to 93 percent if it had any kind of seasoning. I was selling these notes at 87 percent of their face value without collecting the first payment. Actually, how my buyers got approved was I would send in their application that had their social and everything on it, then I would describe the house and its values, and then I would describe the note I wanted to make. I’d say, “If I make this note on this house to this guy, how much will you pay me for the note,” before I collect one payment. If I liked the number, my buyer was approved. If I didn’t like the number, I found someone else. Sometimes I would even buy the house, sell the house on a note, and sell the note at the same closing. PDC: That’s a pretty complicated process. You’re 23 years old at the time getting started in this. Did you have a mentor to show you the ropes on this? MITCH STEPHEN: (0:04:51.9) At the time, there was still Ron LeGrand   and Lou Brown. I had been reading the oldtimers, Dave Deldadio and Jimmy Napier and Nothing Down by Robert Allen. So, I had these seeds planted into me that you could make things work if you were a coyote. You had to be kind of like a coyote. You had to figure out how to survive. I missed a lot of deals because I couldn’t do a lot of things, but I wasn’t concerned with the deals that I missed. I was concerned with the deals that I could do. I had a job for a little while, and I put $35,000 in the bank, which was how much I made a year bartending. Then I quit in March of 1996 to see what I could do if I worked full time, and I did 45 houses that first year. The second year I did 65 houses, and the third year I did 150 houses with a partner, Sam Madrid. He’s Sam Hombre in my book. Then we found out 150 houses was too much because we made a lot of money but we sucked at systems and we didn’t have the right infrastructure. So, a lot of that money was going out the back door and being lost with contractors and all that. Ron LeGrand was actually the one that told me to do half as many houses and make more money and have a life, so I went back to just cutting back. Then I’ve done about a hundred houses a year for over two decades. That’s a house about every 4-5 days for over two decades. PDC: Has your methodology changed since then? MITCH STEPHEN: (0:06:17.0) Everything changes. It’s been changing since the day I started, and it’s changing every day as we speak. It’s about being a coyote a little bit. If the place you’re at is not providing enough food, you’ve got to move around. You’ve got to figure out where it is. You’ve got to keep morphing. That’s what Failing Forward to Financial Freedom...my first book, My Life & 1000 Houses: Failing Forward to Financial Freedom, that’s what it was about. It was about how I kept morphing, moving from pain to pleasure. If something hurt me, I’d sit down and pick myself up and dust myself off and go, “That hurt. How do I keep that from happening again?” And then if something happened good, I would sit down and say, “How do I make that happen more often and put up some numbers? How do I multiply that?” It’s just all about morphing. Laws change. Associates closed. When Associates closed, I had sold 97 houses of the 150, and I had 53 houses in my inventory. Then Associates closed because there was too much fraud in the secondary subprime note business, so they closed. It didn’t matter who you sold your notes to, at the end of the day, they all ended up at Associates. So what happened effectively is note buying died in the whole country for about four years. PDC: Was this during the crash or after the crash? MITCH STEPHEN: (0:07:30.5) No, they just got tired of doing it. It was a Tuesday. We called it Black Tuesday, and I think it was like 2001 or 2002. It was a good time. Just Associates was getting frauded so bad. People were fixing up the outside of houses and making straw buyers and then creating false notes and then selling 10 or 12 of them to them and then making the payment for a month or two until they had 15 of them, and then they’d sell the whole bundle and then the payment stream would stop because these bullshit investors, these scam investors would get their big payoff and then they’d quit making payments and then Associates would go to that house and open the front door and the floor was dirt. There wasn’t anything inside the house. They were buying these notes on drive-by appraisals because we didn’t own the houses anymore so we couldn’t go in the house. It wasn’t our house. So they were doing drive-bys and just looking at the outside of the house. Well, the bad apples caught onto that and started manipulating. And then they quit.  But what happened was I had these 53 houses, and my endgame had terminated. It wasn’t the same game anymore. The game just stopped on one day. I had no place to sell my notes. So I got in a panic, and I said, “Well, the first thing I’ve got to do is I’ve got to load all these houses because I can’t just sit here making payments on all these houses if I’m going to expect to survive.” So, I loaded all these houses back then with about 10 percent down, which was around $3,000 or $3,500. I loaded 50 houses at $3,000 a piece, so I had $150,000 in the bank. Then I was clearing $350-$400 a house back then, so I had $25,000 coming in every month positive between what I owed. The problem was I had short-term notes. Then I had to go back and renegotiate or find private lenders, and that’s when I learned to find private lenders because I got my ass in the crap. I had to find them. I went and found people to take me out of these six-month notes, by the way 18 percent and a $2,000 kicker because I was turning these houses so fast that the people that loaned me money had to get a very high interest rate and they even had to get a $2,000 kicker because they were only in the deal for eight weeks or four weeks. So, I had to get out from under that money, and I did. I got longer term money that I was allowed to wrap. That’s how I morphed into the business I’m in, not because I dreamt it up. It was because I didn’t have a choice. PDC: So, those 53 in inventory, those are all tied up with credit cards still. MITCH STEPHEN: (0:09:53.4) Or basically a hard-money lender, 18 percent and a $2,000 kicker. The cool thing was I didn’t have to make payments. The 18 percent accrued because I was selling these houses within a month or two when I got them. So, the guy said, “I don’t even want to keep up with the payments. Just let it accrue, and when you sell the note, we’ll settle up with whatever percentage of that 18 percent you owe me and the $2,000 kicker.” The most I ever made in that one month was $93,000 net profit, but I was giving 50 percent away to anybody who brought the deal. That was 50 cents on the dollar. And I had a partner. We were making 50 percent, which meant he got 25 percent and I got 25 percent. My 25 percent was worth $93,000. PDC: You sold these off pretty quickly. Is that still a trend today selling these with your own owner financing in place? MITCH STEPHEN: (0:10:42.3) Not to institutions or institutional note buyers, but I learned how to sell notes to private people where I still collect for them through my servicing company. I still know what’s going on. I still know if these people are late. I still manage the notes for them, but I could cash out. You know what I mean? I’m  not obligated to buy the note back, but a lot of times I wanted to buy the notes back because these people had done such great improvements to the houses or whatever. Or I could just reload the house for my note buyer and be like a knight on a white horse. I was just too good to be true because I would watch it all and, if anything would go bad with the notes, I would go by and talk to the people and get it straightened out or I’d go through the foreclosure and tell my people you’re not going to get a payment for the next three or four months, but then we’re going to get another down payment. You’ll probably be able to be made whole from there, and we’ll get a new buyer and I’ll probably be able to keep some of that down payment myself for my effort. So it wasn’t all just out of the greatness of my heart. I was also getting paid because I would get paid some of that down payment, too, to do the right thing. PDC: So, it was your name or entity still on that note, or you completely...was it...the word hypothecated. Did you hypothecate these notes? MITCH STEPHEN: (0:11:49.6) No, I sold the notes, but I would keep the last two years of the payments. So, I still had an interest in the note, so then if I had to resell it and reload it, I could do it without a real estate license because I still had an interest in the note. I was still owed two years. PDC: Was that also a help with capital gains tax when you do sell it because you’re still attached to it? MITCH STEPHEN: (0:12:11.4) No, selling a note is not protected by capital gains. I had to pay my tax when I sold the note to begin with. The point was I never really sold many notes after that because, when Associates closed and I had to load those 53 houses myself, this big lightbulb went off. I kept the down payments. I had none of my money in these houses, not a penny. I had $150,000 in down payments in my bank account, and I had $25,000 a month coming in. I thought to myself, why the hell did I ever sell a note? What was I doing? I didn’t invent that either. I just learned about it and was decently savvy enough to recognize, hell, if you can live off the down payments and your monthly cash flow just stacks up in the bank account, why would you ever sell a note? PDC: When you started moving to more private lenders for the acquisitions part of it, how was the deal cut? You might have briefly mentioned it, but I didn’t quite get it. How does that all work out with your private lender in place in the frontend acquiring these properties? MITCH STEPHEN: (0:13:09.3) Before COVID, I had $26 million I owed to private lenders that was out on the street. They all signed in the loan that I could wrap the mortgage, which meant I could sell this house on payments to someone else and not have to pay them off. So I would buy the house...I’m just using some round numbers that were close, so don’t split hairs on the numbers. Just understand the theory. I would buy the house for $53,000. I would go borrow from a private lender $55,000. I would always borrow $2,000 more than what I needed to buy it, close it, and fix it. Whatever that number was, I always borrowed $2,000 more because it cost me about $2,000 to find that seller. Maybe a little more, maybe a little less, but on average. If I was buying a hundred houses a year, and I was leaving $2,000 worth of advertising in every house, that was $200,000 a year. In five years, that’s a million bucks. You can’t borrow the extra $2,000 if you’re going to banks or hard money lenders. They won’t let it happen. But private people...I’m still only borrowing 65 percent or less of what I can owner finance the house for. I average borrowing 58 percent of what I can sell the house for. That’s my average. But I won’t borrow over 65. So I borrow $55,000, and let’s say it was eight percent and my payment was $350. Then I’d sell the house for $100,000 with $10,000 down. That $10,000 went in my pocket because I didn’t have any money in the house. That’s what I would buy my groceries and make my mortgage payment and pay my car payment or whatever with. Then I’d sell a house and carry the $90,000 at 30 years at 10 percent. So I was making two percent on my borrowed money, but I was making the full 10 percent on the difference between 55 and 90. Today, I only have about 18 or 20 million out because, during COVID, as people would pay me off...I don’t ever ask people to pay me off. I don’t want people to pay me off. I want them to go the whole 30 years, but people still pay me off. As people would pay me off, some of my lenders in COVID elected to hold onto their money for a little while and keep some of their powder dry because no one knew what COVID was going to do. So I went from 26 million out on the street to maybe 18 or 20 right now today, but they’re coming back now.  The owner finance business is a very durable and very dependable cash flow because I don’t have any liabilities of a landlord. You understand this because you do it. When I sell that house and I’m supposed to get $850 a month coming in and I owe $350 to my private lender, I’m keeping that $500 in the middle. If their air conditioner breaks or the hot water heater goes out, it’s not my house. I sold it to these people on payments. When the mortgage payment comes in, there’s very little reasons for it to go back out. In fact, the only reason is to foreclose. If I have to foreclose, then I may have to spend a little money, but I’m going to go find another buyer with another down payment. I usually get paid more than whole on the turnaround. So it’s been a very beautiful strategy. It actually booms in the recession.  n the recession, because I didn’t need a bank to buy houses, I was buying houses at 50 percent of what they were worth 30 days ago because of the recession, and I was selling them for higher than I’d ever sold them before because, when no one can buy a house, they’ve got to rent a house during a recession. When everyone is renting houses because no one can buy a house because the banks are not lending, then there are a lot of pressures put on rents so the rents are going up. My owner finance formula is based on the rents, so in the recession, this really weird dynamic happens. The prices drop like a rock, so I’m buying houses at super low prices. But the rents go up because everyone is a renter, and I’m selling them based on the rents. It creates this huge disparity. The thing that makes it work is I don’t need a bank to buy the houses because I have private lenders, and my buyer doesn’t need a bank to buy my house because I’m giving him the loan. So I don’t need a bank on either end at a time when banks are closed. That’s when I just boom like crazy. I was buying a house a day in the 2008 recession. PDC: Does the time to sell increase when banks are lending like crazy? MITCH STEPHEN: (0:17:20.8) You know, you got to make up your mind. Are you in the new loan business, or are you in the owner finance business? Because they don’t mix. I tried to put people in on notes and then get them to refinance later so I could get my big hit. What happens is...first of all, in the recession I was selling over a hundred percent over the market. I was buying houses from 15-years-ago prices during the recession. The prices had gotten to up here. The recession hit, and they fell down to here. I was buying here, but I was selling them for $59,000 within nine days. I was selling a hundred percent over the traditional cost. How I was doing that was my buyers don’t have a choice to go get a new loan. Their choice is, do you want pay $1,100 a month to rent that house across the street, or do you want to pay $1,100 a month to own this one right here, just like the one you’re living in across the street? The difference is you got to have 10 percent or more as a down payment, and I will consider you. There’s not a lot of people offering that. I average 12 percent down and nine days on the market. During COVID right now, I’m averaging four days on the market. PDC: What did you do to change with the Dodd-Frank laws? What do you do to stay within those laws? MITCH STEPHEN: What city are you in? PDC: I’m in southern California. Chino, California, right next to LA. MITCH STEPHEN: (0:18:40.2) First thing is a lot of people ran out of the business because it was 2,500 pages, and no one understood it. I started to get out of the business because I’m not a big fan of regulation and paperwork. I’m a simple guy. But I just made too much money. I thought, I can’t just throw this thing in the trash. How much does it take out of my profit for me to conform? The first question was, how do I conform? We just called the Savings & Loan Commission and got a hold of the commissioner that had jurisdiction over seller financiers like me and said, “What the hell does this mean and what do I gotta do?” Of course, they’re kind of like the IRS. They don’t want to give you an answer. They’re not responsible for any answer they give you. But we at least showed that we were trying to conform. Then we would call and ask them questions. What about this part?  It took a while, but finally some lawyers came on board that had actually read the 2,500 pages and actually had an opinion on it of what to do. Then we would call the commissioner and say, “Are we reading this right? Can we do this?” They did allow us, by grace, to hire a third-party RMLO so I didn’t have to be licensed or I didn’t have to have a full-time employee that only worked for me be licensed. They gave us grace, and they’re still giving us grace to this day. I just learned to conform.  What happened before Dodd-Frank was I could meet a buyer at eight in the morning. I could show them the house. They could like the house. We could go to the office at 10 o’clock. We could discuss the numbers. We could all agree. They could go to lunch and go pick up their down payment while I was eating lunch and doing the paperwork. They’d show back up at one o’clock. They’d give me their down payment. We’d sign the papers, and I could give them their keys and they were in the house by five o’clock that afternoon with zero closing costs. All Dodd-Frank did was now it cost them $1,800 and it takes 21 days. I just had to adapt. PDC: I understand with all this that you’re making you’re also moving that money over to storage facilities, right? You’re buying storage facilities. You own storage facilities currently, right? MITCH STEPHEN: (0:20:43.9) Yeah. Here’s the problem. One-time cash events...I’m quoting Jack Bosch from the book Forever Cash. You’ve got one-time cash, you’ve got temporary cash, and you’ve got forever cash. Direct quote from Jack Bosch and the book Forever Cash. I like the way he puts it, so I’m going to use him. One-time cash events are wholesales or fix-and-flips. You know, got a house, do the deal, it’s over. You got paid one time.Temporary cash is like the note business. You buy a house, you get a down payment, you collect payments for a long time, and eventually they pay you off. But it’s a temporary cash stream, right? It’s temporary because all notes expire or get paid off. Even if you make a 30-year note, the average note is only going to last seven and a half years in the United States as an average. Maybe in the economic echelon that I deal in the notes may last 10 or 11 or 12 years. I’m not sure. But they last a little longer because my people are not apt to go out and refinance. So it’s a temporary cash stream.  I learned early on, to work myself out of a job, I had to take all the money I was making from the one-time cash events and the temporary cash events, and I had to buy into a forever cash flow stream. I chose storages, boat storages on dry land. They just build little garages they pull into and shut the door and leave the lake. Or mini-storages where they store their household goods. Or covered parking or open parking. But when I bought a storage facility, that facility was mine until I said it was over. It continues to collect rent and continues to pay me until I decide to sell that place. So that was a forever place. That’s the thing. PDC: With your students, you teach them this exact model how to do it from A to Z? Do you even instruct them to start buying storage facilities with this one-time, temporary cash flow? MITCH STEPHEN: (0:22:27.9) Well, with students, we’ve got to do just-in-time learning. We just need to progress from where you’re at. The first thing about that is you’ve got to learn how to make a lot of money to buy this stuff. You’ve got to learn how to make some money. I’ll talk or teach whatever level they’re at. If they want to talk about storages, I’ll talk about it. But usually, I’m just trying to get them to a point where, first of all, they can quit their job so they can get an extra 126 hours a year to devote to themselves and their family and becoming an expert at whatever they’re passionate about. Then the next level after that is to build wealth. Then the next level after that is to preserve it by buying forever cash things. Usually by the time people start making money, they’ve got their own ideas. They might be going into apartments or strip centers or whatever, developing land or whatever. You know, I’ll talk to people about anything they want to talk about. PDC: In the event that, five years into their note payments, they lose their job, something catastrophic happens...you kind of briefly mentioned this, but how do you set the course so you can avoid the whole foreclosure process? MITCH STEPHEN: (0:23:34.3) I don’t. I put myself as a lien holder, and they owe me a note. I have a lien on their property. The deal is we live in two different states. My foreclosure process and Georgia’s foreclosure process...Texas and Georgia are about the fastest foreclosure process in the world, Mississippi. The flyover states seem to have not lost their freakin’ minds and still give the guy putting up the money some rights. In the liberal states, they give all the rights to the tenant who has nothing committed to anything, which doesn’t make any sense to me. My seller finance strategy won’t work in places nearly as well, or even at all, in states where you can’t get someone out of a house in a reasonable period of time. Can’t do it in Florida. But there are other ways to do it, like you’re suggesting. In Florida, there’s a way to do it. It’s not my way, but I know the way. In California, there are lease options and a bunch of stuff, but still, if you’ve got to go in front of a judge to get this stuff done, if those judges are liberal and bleeding hearts, then, you know, oh, it’s Christmas or it’s snowing and she’s pregnant. We’ve got to leave them in there for another six months. It’s like where the hell does it say that in the statute? Did I misread it? But you can’t argue with a judge. So you’ve got to go someplace where laws are interpreted a little more conservatively. PDC: Are some of your students doing this outside of their home state? MITCH STEPHEN: (0:24:53.4) Yes. Now, it’s a bigger challenge, but if you learn to develop a market from afar, then you actually have a real business because, if you’re in California doing houses in Georgia, you have to come up with a real business. You’re going to create a real business. It’s a little more challenging, but at the end of the day, you have created a business that you work on, not in. Therefore, you enjoy the ultimate freedom of owning a business. A lot of business owners are running on a hamster wheel, and they’re just glorified employees with all the liability. PDC: I love the information. How do people get in touch with you and find you? MITCH STEPHEN: (0:25:31.1) Just go to 1000Houses.com. You can find my 1000Houses.com podcast, all my books, my blogs. I’ve got tons of free stuff there. My YouTube channel. Everything in the world is there. 1000Houses.com.  PDC: And that will be in the show notes as well. All right, Mitch. I appreciate you being on here. I really do. That was a load of information. I love hearing another guy that does owner finance in a much bigger world than I’m involved with, but I love hearing all the nooks and crannies of it. MITCH STEPHEN: (0:26:03.1) Well, you don’t have to do a lot to be successful. Just always remember, I’ve been in the business a very long time. These things didn’t happen overnight. It was just one step at a time, one progression at a time. If you asked me if I would have ever believed where I’m at 20 years ago, I didn’t see this at all. I never set goals. I only set the challenge of me as a person and my business being better than it was last year. That’s what I do, and it’s led me this far so far. PDC: All right, Mitch. I appreciate you being on here. We’ll keep in touch. Thank you. MITCH STEPHEN: Bye, now. PDC: All right. That’s another episode in the can. Stay tuned for the next one and my marketing tidbits every single week on the Deals Today Podcast. Make sure you subscribe, you rate it, you review it, and you share it please. It keeps me going with this. It gets more guests on the show. If you’re not on my email list, go to RealEstateAudios.com, subscribe there to get onto my daily newsletter where I give daily mindset, business, marketing, copywriting tips all for real estate investors right there and any special gifts I’m giving away. Go onto RealEstateAudios.com.

I interviewed Mitch Stephen (which will be published sometime soon), and it reminded me of a great selling lesson and people's biggest hang ups of approaching people. That hang-up stems from narcissism and how to fix it and fix your boring marketing.

Lathe Lavada came out with a new book where he explains not only his life story, but the step by step guide to running a wholesaling and flipping business. He doesn’t hold a huge team, but actually leverages agents as much as he can on his acquisition side of the business.  In this interview, discover how he operates his wholesaling business virtually, how he finds cash buyers, how he got himself out of poverty and into wealth, and much more. You can find Lath at: https://www.lathelavadainnercircle.com/

100 houses 1 offer at a time

Transcription PAUL DOCAMPO: Welcome to another interview at the Deals Today Podcast. I’m your host, Paul, at RealEstateAudios.com, and today I’m interviewing Peter Apostolos who is not well known outside of California. But inside of California, he’s a local investor who’s very sought after by REI clubs. They want him to speak and engage with their audience because he has a lot of wisdom to say, but he doesn’t have a glamorous story. He doesn’t have a story where he started flipping and then he made millions in a year like all the YouTube gurus that are out there saying otherwise. It took him a long time to get to where he’s at. A lot of failing and figuring it out and seeing how things work.  Today he’s a buy-and-hold investor. He always was a buy-and-hold investor. He’s going to talk a little bit about his story and how he lost some things during the crash, picked himself up after, learned how to actually invest in real estate after the crash, after he’s been flipping and holding onto a few properties. He is a type of guy who says he likes to buy houses slowly. Meaning he’s not out trying to do a volume game. He’s out hammering away with actual motivated sellers for the long run. He’s waiting for them to actually be ready, and he’s always following up with them. He deals with one house at a time. It’s a famous John Schaub book Building Wealth One House at a Time where he’s not playing the volume game. He’s just building his portfolio slowly, flipping a house here and there for the income now.  So he’s going to reveal in this interview the three keys to doing this business successfully. Everybody talks about the one way to flip houses or whatever it is, but he says there are three keys that, if you don’t know these keys, you’re going to be lost throughout your real estate venture. Know these three keys, and he’s going to explain them thoroughly in this interview. If you’re not on my email list, I highly encourage you to get on and go to RealEstateAudios.com and sign up where I do daily emails, tidbits, advice, tips on business, mindset, marketing, and investing and copywriting all for the real estate investor no matter your career level here. So go to RealEstateAudios.com and sign up there. All right let’s get to it. PDC: Peter, tell us about what you’re doing today with real estate given COVID. Are you still out looking for deals, or are you sitting back right now? PAUL APOSTOLOS: (0:02:30.6) I am still out looking for deals. It’s easy to get caught up in the news about COVID or impending political changes or not changes, but let me run this by you. Most of the deals that I do end up buying are not what you call a short sales cycle. PDC: Explain that. PA: (0:02:57.6) Well, let’s say in another business… I used to be in the technology solutions business, so a sales cycle might be 30 days or 40 days or 90 days. In real estate, things can take six months, 12 months, 24 months, or even longer. So just because I’m marketing for deals right now doesn’t mean that I’m going, “Oh wow, COVID is terrible. Let me stop looking for deals.” You never want to stop talking to potential sellers. What usually turns a potential seller into a seller is some kind of a change: change in their job, change in their location, change in their economics. Based on that, when has there been a better time to talk to sellers than right now? Because if you talk to them tomorrow, the likelihood of some kind of life change for them based on all the chaos we’ve got flying around in the next 12-24 months is probably higher than it’s ever been. A lot of that is a mindset type of a thing for myself, but when I look back historically, the really great things I bought took some time. PDC: How long are we talking about here? PA: (0:04:21.3) Well, it varies. I’ve talked to a seller and ended up buying from them. The last real good deal I bought on just a crazy margin, was about two and a half years from the day that I talked to the guy. He wasn’t ready yet. He wasn’t ready yet. Finally, he had some big changes in his life, and because I kind of stuck with him and followed up, and I didn’t even think I was doing that good of a job following up, but I did a good enough job following up that, when the day came, I got the first crack at it. In the meantime, two and a half years went by, and when the phone did ring, guess what? I was still ready to buy a good deal. PDC: What did you do with that deal? PA: (0:05:07.2) I put a long-term hard money loan on it at 6.9 percent from The Norris Group, who I highly recommend as a hard money lender. I’ve been borrowing from them for over 12 years. I had to do some repairs. Part of the reason I got a great deal was that the house had some open issues with the County of Los Angeles, and it’s a $1,500 rental with a $630 payment on it. PDC: Do you hold onto all these deals, or… I know that you flip them. We’re looking at 50 percent you hold, 50 percent you flip them? PA: (0:05:48.9) No, it’s not 50/50. It really has to do with what’s going on. At the end of the day, I like to hold whatever I can. If I can make those numbers work, then I would prefer to hold.  PDC: You’re in southern California right now where everybody is saying in 2020 there’s no cash-flowing properties. They’ve been saying that for years. You’re still finding these cash-flowing properties and using a hard money lender to buy it. So explain how you could even get that. PA: Well, the property needed a certain amount of work, so it was not financeable, so that’s one strike against it. It had open issues with billing and safety with the County of Los Angeles. That’s another strike against it. So I just bought it at a really good margin. When I did the monthly numbers on that loan, it worked out.  PDC: What’s the buffer that you do that you have to have in there when you come to buying these properties you’re going to hold? PA: Do you mean on an equity or a loan-to-value basis? PDC: Sorry, no, no. I mean including your maintenance, property management fees, etc. per month. PA: (0:07:00.0) It depends on the neighborhood. Anywhere from probably 60-70 percent. So a 30-40 percent expense ratio. A lot of it depends on the product type, the neighborhood. PDC: Has that 30 percent expense… You’re paying per year 30 percent expense. That has been consistent, and you’ve been doing this for over 12 years you said? PA: Yeah. I mean, at the end of the day, a bunch of experienced guys, and I told my friend the other day what I noticed is the older they are the higher the expense rate is. What does that mean? That means guys that have managed a ton of doors over a long period of time are pretty conservative. In the beginning, I was real optimistic, and it’s easy to be optimistic about expenses, vacancy rates, evictions until you actually get on the field of play and start getting your ass kicked a little bit. PDC: How do you reconcile that 30 percent, your expense rate, from some of the older guys? Even John Schaub talks about he has a 50-60 percent expense rate. PA:  (0:08:10.4) Well, the 30 percent was back when I was a lot more optimistic, and it also has to do with the neighborhood and the house itself. Some things just don’t lend themselves to staying occupied for a long time. PDC:   Do you have some things that give you warning signs to keep out for that specific warning, having tenants that aren’t going to stay long in that neighborhood? What are some things that you do… PA:  (0:08:34.3) How about a house that doesn’t have a garage? I’ve got one of those. The garage was converted to a big family room. Houses that are just a configuration are not so great. I’ve got a couple thousand-square-foot houses that the living room is kind of small and it just doesn’t lay out really well. Houses that are just in kind of tough neighborhoods. I’ve got one that sits on a cul-de-sac right now. I’ve got a really great tenant there, but when I look at the family across the street at the way they carry on, I go, “Aah.” You can experience turnover in those situations. PDC:   If you don’t mind me asking, how many properties are you holding right now in your portfolio? PA:  (0:09:15.6) I’ve got a couple dozen. PDC:   And are they all cash flowing, or do you ever play the kind of negative cash flow game here in California? PA:  Play the negative cash flow game. No, I don’t play that game. Is that a game show? PDC:   Well, lack of better words. Here in southern California people bank and sit on the appreciation. PA:  That’s not investing. That’s speculating. To answer that question, no, I have no properties like that. Would I ever do that? Sure, I would if I was able to capture a nice, huge slice of equity. So if I did my calculations and my maximum payment was $750… We did some problems like this in my class last night that if you can capture a lot of equity, you might go up a little bit on your monthly payment and take less cash flow. But I don’t own any properties that fit that criteria. All my properties have good cash flow and good equity. PDC:   So it’s not always about… I mean, it’s always about cash flow, but it’s not always about cash flow. I guess what I’m getting at is that in Bigger Pockets, and we talked about this before we recorded… Bigger Pockets has a way of teaching, and one of the those rules of thumb that everybody talks about is the one- or two-percent rule. Do those rules apply to you ever, and if not, what is your… PA:  (0:10:46.1) What’s the one- or two-percent rule? You mean the one-percent rule on cash flow? Is that what you mean? PDC:   Yeah, yeah. One percent of the retail value. PA:  Yeah, sure. PDC:   Does that apply to you here in California? PA:  It does to the properties that I hold. A lot of those properties I bought quite a while back. Some of them I didn’t. I think it’s a good rule. It’s something I was taught by the old-school guys when I first got in, and I kind of got that in my mind. In terms of California… Look, in terms of some of the laws and changes in laws and the way that landlords are viewed and treated, yes, California can be  a tough environment there. If you want to do some comparison there, I would suggest Bruce Norris and his website and his radio show, I guess which now you’d call a podcast. He’s done the research on the differences between California and some of the other states. But in terms of just adopting a mindset of you can’t do this in California. Let’s go to Indianapolis or wherever the boutique market is at the time, California is a big place. I’m still in LA County, but I’m in definitely a lower price range. But there are all kinds of places where you can be, and I think these things are obtainable by a number of different methods. PDC:   Going back to what Bruce Norris said then, do you know the differences that he found between here and other states? PA:  (0:12:23.8) Well, his specific example is Florida. His charts have indications for other places like Texas. I don’t have the numbers in front of me, but I believe it’s Florida, Texas, Oregon, Nevada, Arizona is where people are migrating to out of California. It’s just looking at we’ve got some things going on here like rent control and the discussion about Prop 13 being taken out of there. The last time I checked we voted twice on rent control. The people of California voted it down, and whatever magic happens up there in Sacramento, it just got enacted. That seems to be the direction that California is going politically. So that’s something that…I think the way Bruce terms it is the rules of engagement have changed. Some real hard and fast things that we could always count on about the dynamics of real estate have the possibility of being changed. Other states, like Florida, don’t have a state tax. A comparison of what it cost to get a house permitted in Florida and get a house permitted here in California or Texas, we’ve got some challenges here in California. PDC:   Knowing all that, knowing that the legislation here is hammering down investors and made investors bad guys, evil guys, landlords evil, do you see yourself ever going out of California, buying property out of California? PA:  (0:14:04.2) That’s a really good question, and the one thing I don’t feel confident about is going out of state and dealing with everything remotely. If I was to buy out of state, I would need to be in the market that I’m buying in for at least a week every month. I’m just not a big believer… I had rentals in Vegas before and used a property manager, so yes, I do think there could be some higher ground and really to diversify. I think that’s a lot of what The Norris Group talks about is not just sell everything California but maybe sell some things, maybe your lower properties, harder to manage properties, and exchange that into another market that carries some other benefits, like diversification play. Yeah, I could see myself doing that. PDC:   I want to go back a little bit about your story in the beginning. I know you bought a property before you ever were declaring yourself as an investor and learning about all these things. Can we talk about some of the mistakes you made? I think there’s a big gap… People see you, Peter, and they think they want to be like you. But I want to talk about the big gap between when you started to where you are now, the mistakes you made. You quit your job pretty early on, right? PA:  (0:15:30.3) Oh, yeah, sure. PDC:   Was that a right choice for you? PA:  Well, first of all, I don’t think people look at me and say they want to be like me, and if they do, please have them give me a call so I can straighten them out. I made a lot of mistakes. I made a lot of mistakes. Yes, I quit my corporate job in 2004 because basically I was a genius. The property I bought in 2001 had a whole heap of equity on it, and so I decided I’m not putting this tie on every morning and coming in and sitting here having meetings with these dumbbells. I’m gonna be a real estate investor. PDC:   How many properties did you own at that time? PA:  One. PDC:   Okay, so you had some gusto there. PA:  (0:16:19.2) Yeah. I think being positive and optimistic; I was gusto. It’s pretty interesting. How did I think that was going to work? I didn’t know enough to even be able to answer that question. Looking back, I don’t think I would’ve been able to get into the business and hold a full-time job. I didn’t see that. And I had all of this equity. At the time, I don’t know, probably a couple hundred thousand or more in equity, and I had low overhead so let’s do this. Let’s get this going. But that was 2004. I don’t have to probably tell anybody what happens between 2004 and 2008. PDC:   So what did you do to scrape by? You quit your job. Were you flipping at the time? PA:  (0:17:09.3) No, no. I bought whole properties in Vegas. PDC:   And they cash flowed enough for you to live on. PA:  No, they didn’t. I had a bunch of equity in the bank. Don’t forget. You’re trying to make this make sense, like something you can tell your wife. You’re going down the wrong road. This was reckless, uneducated moves, but they led me to a great place. Coincidentally, a lot of my mentors have stories where things didn’t go so well and their first go-round was a big challenge. PDC:   Who are some of those mentors? Who are some of your great mentors? PA:  (0:17:44.7) Well, Bruce Norris. Bruce has got… The beginning of his career was really helpful to me to hear his story. I’ve heard it a million times, and it never gets old to me. Mike Cantu is another guy that I met through Bruce Norris that had some challenges when the market changed. Tony Alvarez is another guy that some of his early challenges and kind of how he basically was just persistant. You fall down, and you get back up, figure out what you did wrong, and try to do better the next time. When you’re beginning, that’s really helpful. Hey, I screwed up too. You know, we got a lot in common. Some stories are more drastic than others. By the way, I didn’t know what I was doing. Some of these guys knew what they were doing and still had a bad run at some point. But they recovered from the bad run. PDC:   Hey, real quick. I want to introduce you to my free daily newsletter where I give out free daily tips to real estate investing strategies, marketing, and sales techniques to keep you, the part-time investor, moving forward every day. Head on over to RealEstateAudios.com, and you’ll get a free report along with that free daily newsletter. PDC:   After 2008, were you one of those that lost arms and legs and lost everything? PA:  (0:19:07.5) I lost a lot. In terms of losing everything, I guess you could say that because I had refinanced my primary residence to make investments, and those investments didn’t go well. I was able to sell out of some of them right in the nick of time, but yeah, the books didn’t look good in 2008. PDC:   Did you end up losing your primary residence? PA:  (0:19:32.2) What I did was I did a short sale on it. I don’t really call that a loss. I made a decision… This may be helpful for some people too, but back in the day, everybody was, oh god, the bank is doing this to me and doing that. It’s real helpful to grow up and say, “You know what? I’m the one that signed up for this.” At one point, I had a $230,000 mortgage on a house that was worth $700,000. That house probably came down to $370 or $350, and it’s probably back up to a million at this point. But I sure the hell wouldn’t trade what I have now for that house. That house was part of my learning experience. I drive by there, and I have no emotional attachment to it. I could care less. So, I did negotiate a short sale on that one. But subsequent to that is when I started to learn. I was lucky enough… I don’t try to promote any individuals here, but I was lucky enough to hear Bruce Norris speak, and that was a starting point for me because I heard truth. I could feel that the intent of this person… He didn’t have any stupid mentoring program. He wasn’t a slick, bullcrap guy. He was a straightforward old guy, straight up and down, straight shooter. Fortunately enough, I started to create a vision of how I could do this. Before that, I was in the real estate business, but I just really didn’t have a direction. I wasn’t really sure what to do. You go to this seminar and that seminar, and this month they tell you to do tax lien sales and next month they tell you to do short sales and next month they tell you…and this guy has analyzed the market, analyzed the changes in the market, put together material telling you, hey, when the market does this, you do that. When the market changes and does this, now you should be doing something else. Okay, this is starting to make sense.  All my troubles led me to that. So I never really focus back on all my troubles. I focus on, wow, I sure was fortunate. Whatever landed me there, I thank God. Because it’s not just that you collect assets or make money, you learn a skill set. You learn a trade. You have a career. And that’s good. That’s something to be proud of, and the people you run into, you treat them well and try to make sure other people have prosperity and make sure other people don’t get hurt. That’s what came out of that whole experience. PDC:   It sounds like it took you a long time to figure it out then for yourself, right? It sounds like… You made it seem like it was years and years until finally… You made these mistakes, and you met Bruce Norris and things clicked. PA:  (0:22:31.0) Exactly. And it was a long time. It really was a long time. But time goes by quickly, so in retrospect, it’s like, wow, that’s already 12 or more years ago. PDC:   So you survived on that equity you had in your bank for that whole time? I’m just trying to put a picture on it because a lot of people… PA:  Well, I sold some things too. PDC:   So you were rolling around in money I guess. PA:  Not at all. Not at all. I was in bad shape, man. I was in bad shape. PDC:   Besides what Bruce Norris taught you about shifting with the market, what helped you just bounce back and start getting some traction? What are some key things? PA:  (0:23:22.1) Well, I can’t remember the month, but I think November or December of 2008. Bruce Norris used to do a 3-day bootcamp, and I went to that bootcamp. In that bootcamp, I was taught some of the core skills you need to be a real estate investor. I think in the discussion we had before, you told me that in all this real estate education that you really hadn’t run across too many people talking about appraising. I said something like, “That’s like saying you’re going surfing, but you don’t know how to swim.” I was taught that at that seminar, and Bruce’s appraiser at the time, Rick Solis, did a really good presentation. Then I just bothered the hell out of the guy for about a year. But if you don’t know how to evaluate a property, you don’t know how to appraise a property and assign value to it, then maybe somebody can teach me something but I don’t know how to operate in this business without that skill. I don’t know to operate in this business without being able to do repair estimates. When I started to put repetitions in on those skills, I started to gain confidence, and I went, “Oh!” This isn’t about your gut feeling, about speculating, oh god, if I buy this house, the bullet train is going to come through here some day. All that other bullcrap.  Who assigns value to property? Banks send out appraisers to appraise property for their borrowers. That data is recorded in the MLS, and those sold properties and pending properties are evaluated and value gets determined by an appraiser. So wouldn’t it make sense that we kind of put the appraiser hat on. PDC:   Somebody down the pipeline said that you value property better than these appraisers out there. PA:  (0:25:26.8) I don’t know who said that, but I’m doing a different job than they’re doing. I’m looking at what they do because an appraiser gets sent out, they go, “Here’s $400 bucks. Here’s an address. Now come back with a value.” And they look at the market conditions, and they’re trying to find sales data that substantiates a number, a value. I’m doing the same thing because, if I sell my house, the value of my house on resale will be determined by that same method in most cases.  But I’m also an investor, so I’m looking at some other things when I do an appraisal. I’m probably looking a lot more closely at the standard for repairs and the standard for finishes in a market. So I’m looking at all these comps, but I’m also looking very closely… If the range is 230-300, what’s the difference between the way a $300,000 sale looks in that market and how much a $230,000 sale looks? What kind of financing is used in this market? How long does it take to sell something? How much inventory is there? What’s active? What’s for sale today? I did an appraisal last night. There was one house available in a mile radius with a ton of sales activity. If there’s very little available, then… Obviously right now, we have a very low interest rate and very low inventory, so it is a super seller’s market. PDC:   Going back to what you said real quick. You mentioned repair costs, and you have students. Repair costs is a big hangup I think. A lot of people don’t know how to do that when they first get started. They don’t know where to start. How do you instruct somebody to figure out a repair cost when they’re not a handyman, they’re not in construction? PA:  (0:27:27.6) Let’s go back to when I started. I had no idea really what to do. Now again, I got some training at The Norris Group that was helpful. But what we just talked about, appraising and looking at what the higher comps sell for, the ones that sell fast, what they look like on the inside, that is what instructs me on how I’m going to fix my house. I look at the market standard. I look at what the market is raising their hand and saying, “We’ll take that house with that flooring and that countertop.” It’s not HGTV or I’m creative. It’s none of that. In terms of telling somebody else, one real basic thing you can do is you can get online and just look at what flooring costs. Look at your market. Look at 50 sales in your market. By the way, that involves you determining what your market is, and that’s a step that some people can go years without making that commitment or decision. But look at 50 houses. Look at what stuff sells for. Look at what it looks like. If you’re looking to buy, fix, and sell houses aka flipping, you’re not really in the business of seeing what can I get away with here. You just want to do a nice repair job. You’ve got to make some decisions that are budgetary, and you’ve got to put the money in the right place, but get real familiar with what it costs to do a kitchen. You can go right on Home Depot or Lowe’s and put a kitchen together, bottom cabinets, upper cabinets, countertops, sink, appliances, and you can really start to get a good ballpark of what the parts cost. PDC:   I like that. That’s a lot more than what people teach which is just do a rule of thumb. I’m following somebody else’s example like so many dollars per square foot. That’s what this guy pays. Instead you’re looking at what’s actually selling. People are paying this much for new countertops, new flooring, and knowing what’s needed inside the property you’re looking at. PA:  (0:29:41.4) Yeah, yeah. Because even in my market I’ve had agents tell me, “Oh, you should do this, this, that, and the other thing.” I’m like, “Really? How much are you kicking in on that.” I’m just looking at the market. The comps are very clear about what the market standard is. Now, if you move up to 1.2 million, 1.5 million, you’ve got a different market. You’ve got different materials. You’ve got different finishes. PDC: Now, are you talking about here flipping or is this all… When you’re going to hold onto the property, are you doing a different grade-level construction job for tenants? PA: (0:30:21.1) There is a difference, and I will say in my early rentals I did a terrible job of fixing them, and I learned the hard way. I can get away with this. I can get away with that. I was trying to squeak these deals out and make them work. If I had it to do all over again… Bruce Norris even told me. At the time I think he was doing Moreno Valley, and he rehabs his rentals like they’re resales. Beautiful stuff. In my mind, I’m thinking, hey pal, I can’t afford that.  So I did what I had to do. I cut all kinds of corners. I kept kitchen cabinets and just painted them instead of replacing them. I’m not proud to say that. I just painted the front of the house. You get curb appeal. Not side appeal and not back appeal; just curb appeal. I did all kinds of cheap crap, and as time goes on, you make a little more money and you live through the experience of going, wow, being a cheapskate is not a good trait in this business. I know sophisticated guys that are the biggest cheapskates in the world. I value my relationships with tradespeople, so if I’m always just trying to grind tradespeople to death… First of all, it’s just not a lifestyle I want to live. Second of all, the people that work for me know they’re going to get paid. They get ambitious sometimes. I’ve been working with the same contractor nine years. PDC: Yeah, I can see how it can be a high turnover for people who just keep pestering down your prices. PA: (0:31:51.2) I hate that. First of all, everybody around me has got to do good. I mean, the person that sold me the house, I want them to do good. I’m sure most people here would be mortified to find out that I insist that, if somebody brings me a deal and I resell it with them, they get three percent. I know that’s not the standard right now. I know that’s not the standard. But paying an extra 0.5 percent… To me, I just look at it as marketing dollars because if that person gets another deal, do you think they’re going to bring it to me or the genius investor that’s like, oh, I get it for two percent. At the end of the day, I just want everybody to be happy.  Now, that being said, the contracting world is full of sharks, and that’s what happens. You get this atmosphere of mistrust. Investors are cheap bastards, and contractors are lowlifes. You’ve got to cultivate relationships. The only way I know of doing it… I guess you could look everybody up on Yelp or whatever stuff you want to, but I just hand somebody a project and say, “Well, do this.” I had a guy that did small jobs for me for a year, and I handed him a full rehab. I had to fire him within about 10 days. It didn’t work out. The money was not going to my project that I was giving him, and I know what that looks like. I drive by. I go, “We’re not getting anywhere here. I’m throwing money on it. It’s not going anywhere. The money is going somewhere else.” So I told him, “Get your tools and get the hell outta here.” That can be daunting to some people, but go ahead and get three different estimates and get a feel for people and take time to find out about people and what they do and what they’re trying to accomplish in their career and how you can help them., I think I can be real helpful to tradespeople, to escrow people, to title people, to agents. I’m always referring business. So the Home Depot thing is one thing to just get a really good idea of what materials cost, and then you can do some square footage stuff. A piece of granite is $300 for a nine-footer, and I’ve got to do the kitchen and both bathroom vanities. So I’m going to need three nine-footers or two nine-footers. You can get that number together and then you can just price out a sink, a garbage disposal. The cabinets are surprisingly easy to design that. Take measurements and then just look at your standard flooring and how much tile and how much laminate. Most people are going tile and laminate and maybe carpet in the bedrooms. You figure all that out. Oh, maybe you need windows, so start pricing that out. You don’t have to spend a lot of time to start to get a good feel about what the material costs.  Then when it comes to the labor, you have to have people walk the house with you and find out what it is they’re proposing. Then you just have to manage the project. You don’t give them a whole bunch of money. You buy the materials yourself until you get a trust level with them and experience with them. Even my guy now, I don’t give him a lot of money upfront. He doesn’t even ask for it. When he gets halfway, he gets some bread, and you have milestones. If somebody is moving along, doing a good job, then keep the money flowing and keep it going. If they’re dragging, then you hold the money back. PDC: Somebody mentioned that you do well with REOs, that was kind of your thing dealing with realtors, dealing with banks. What is the deal with that? Are you still getting REOs today? PA: (0:35:31.2) No, no. When the market was giving a lot of REOs right after the crash, that was kind of my product of choice. PDC: Why is that? PA: Well, if you went on the MLS in 2009, ‘10, ‘11, especially early on, most of the market were bank-owned sales. That’s what was there. Now, there was a lot of competition for them as well, and my competition was a lot more experienced and a lot more well heeled than I was. But I still had a nice little run with REOs, but then I quickly switched over to buying short sales. When we had a lot of distressed inventory, there were a lot of short sales and REOs. REO is a bank-owned house. It’s a house that the bank took back in a foreclosure sale. Somebody owned the house and didn’t make their house payment. The foreclosure process commenced and went through it’s natural cycle and nobody bought the house at the auction steps so it ended up back in the bank’s inventory. Then the bank listed it with a real estate agent. A short sale is a situation where the person is not making their payment or has not made their payment for a long time. Maybe the loan is $500,000, but the house is only worth $250. In a short sale, you basically negotiate with the bank and ask them to take short, or less, of the loan balance. I was able to do a lot of those successfully and continue to work on short sales. Not so much with bank inventories. Very little of it, and the competition for it pays a lot more for it than I would like to. Part 2 PAUL DOCAMPO: So, let’s talk about then that ______ finding deals there. Today you’re not focusing on REOs. There’s not a lot of them out there. How are you focusing on finding deals? Where are you getting them? Are you still having relationships with realtors and they’re just coming from all over, or are you actually directly marketing to sellers? PAUL APOSTOLOS: (0:00:16.9) Well, the answer is all of the above. Probably my #1 favorite source of leads is to get in the automobile and go drive the neighborhood where I want a deal, where I want to buy a house. You mentioned John Schaub, and I certainly would recommend. His books are really some of the best, along with the Norris Group’s online education. You just talk about almost free. It’s funny. You find that the really good people really don’t charge much for what they have to teach.  But get out into a neighborhood and drive or walk or ride your bike and start looking around, and you’ll start to see houses that need work, houses that are abandoned, houses that look like they’ve got kind of an intense situation with a renter, people moving in and out or moving out. You’ll drive by and you’ll see a bunch of couches and busted projector TVs on the curb, and you go, “Wow, it looks like somebody’s leaving.” I would suggest that’s a good time to talk to the owner about selling. PDC: You see that and you get out. What do you say to them? PA: (0:01:31.3) Well, a lot of times, the stuff I really like, there is nobody there. So I write the address down and go do some research. On a good day, I get involved with the neighborhood and maybe ask some questions. I would suggest really good coverage is, if you find an abandoned house, leave some kind of a note or a letter. Leave one in the mailbox and one behind the screen door. Then maybe try to talk to the neighbor across the street and left and right. If they’re not home, have a letter for them too. I’m trying to contact the owner of the empty house next to you. I’d like to buy it and fix it up. My name is Peter. Here’s my info. Also leave a letter for the owner behind the screen door and in the mailbox. Then I go home..my favorite thing is just to go home, find out who the owner is, and look up his contact information and try to get him on the phone. PDC: How many people do you talk to? How many vacant house owners do you talk to before you get some deals coming from that? Basically a conversion rate. PA: (0:02:47.0) Let me answer that honestly because I always get asked this question and it’s usually by, no offense to you, by dweebs and real estate clubs. I would suggest to you, 1) I don’t keep those kind of statistics because everything is different. Every person you talk to is not the same. Those things really apply to if you’re just calling a crap list and weeding through it. I feel like I have really good leads. But let me give you the one conclusive piece of evidence that I give to people that want me to give them detailed statistics on how many calls it takes. When I stop making phone calls, I stop getting deals. When I start making phone calls, I start getting deals again. So I would say that’s everybody’s personal journey based on their lead quality, based on their level of research, based on their level of effort to find and contact the seller, based on their level of experience or how far they’ve developed what they’re saying to the seller, based on their follow-up and based on them being actually a decent person to deal with. But that number is going to be different for everybody.  I talk to a lot of “investors.” They’ve got the worst attitude in the world. They think that the planets revolve around them. It’s got nothing to do with you. It has to do with you addressing the need of the seller and listening to them say, “Hey, this is what I’m trying to do.” Then you create a solution that fits what they want to do, what they need to do, first and foremost, and that also puts you in a safe position as the participant as the buyer. So I don’t even try. I used to try. I used to try to track all those numbers for people. You know what? Go make a thousand phone calls and come back, and we can talk about that. PDC: Yeah, you’ll figure it out. So you’re meeting with these sellers face to face when you finally get a hold of them. I mean, they do contact… I’m assuming these vacant homeowners do contact you, and you meet with them face to face. Is that right? You don’t do any… PA: They don’t contact me. I contact them. Why do you think they’re contacting me? PDC: Right, right. Okay, I assume because you left a letter and… PA: (0:05:13.8) I’m very poor with letters. I’m terrible. I just want to pick the phone up. If you and I go hang out and I say, “Paul, let’s just go drive for an hour,” and you’re going to trip out. You’re going to be like there’s something wrong with this guy. I’m going to be like, “Dammit, look at that house. It’s vacant. It’s got boards on the windows.” The thing is, when you’re in the field, it creates excitement and motivation. PDC: Are there any subtle clues to seeing a house that might have a motivational situation, besides the boarded-up house? I imagine boarded-up houses can be pretty competitive, can get a lot people calling them. PA: (0:05:47.5) I don’t care about that. What do you mean competitive? PDC: I mean, explain that. What are you doing that night… PA: I don’t look at a boarded-up house and go, “Wow, it’s probably going to be competitive.” I don’t give a crap. Why did I take all these classes for? To have an inferiority complex about the competition? I don’t care about the competition. I don’t. I don’t.  Look, in any business transaction, in any transaction between two people, different personality types work with different personality types. Somebody decides to do business with somebody other than me, who cares? On to the next one. But you can’t think that way. I mean, you can, but I’m optimistic, bordering delusional. So why in the hell, Paul, would that person not want to sell the house to me?  Now, the only thing about the competition is they may be inexperienced and spending way too much, or they may have a money source that doesn’t give a damn, that can buy on the tightest of margins. I’m not in that business. I’m in the equity business. The way I got into the business is I went, “The Norris Group lends money to investors. If I figure out what they’re margins are and learn what they do, do you think I might be safe?” And that’s how I learned to be safe. So, I’m still looking for a house that’s 70 cents on the dollar minus repairs. All the whatever they are, Generation X, or whatever these crazy bastards are that are spending 90, 95 cents on the dollar, that’s a different business than the business I’m in. And that’s fine. They’re free to do that. It might not be the greatest time right now to overextend yourself into a property or in an investment. The other thing you’ll get from The Norris Group is some macroeconomics and say where are we in history? Wow, we just had a big economic run-up and now we have a pandemic, and I don’t even know what to call all the other political mess or anything. So, is that an optimistic time? Is that a time where you go, “Oh no, I feel great. Let me go 10 percent above my margin here and hope that’ll work itself out.” Again, you’re getting into speculating, not investing.  I would suggest to people don’t worry about the competition. I get overbid all the time. When COVID hit, I had to sit down and ask myself what can I pay for this stuff now. It totally screwed up my equation. By the way, some private lenders are completely out of the market, hard money lenders, and many of them have adjusted their parameters for their loans to be more conservative. There’s nothing wrong with getting outbid. You do the best you can do on coming up with a safe offer. The last thing you want to give a crap about is some agent saying, “Oh, that’s a lowball offer.” Really? You think I should make 20 grand more? Good. You want to be half partner on that deal? Let’s sit down with a calculator, and you show me how that deal works as an investment. As an investment. I’m sorry I went on a tangent, but you’re just talking about looking at an abandoned house and worrying about the competition. You know, some of those people are hard to contact. I have a house I drive by all the time. I’ve been trying to contact the people for five years. I can’t find them. And you know, I can’t even tell myself I tried hard enough. I got to go back and try some more. PDC: What’s your primary way of reaching out? It’s just finding their phone number and calling? PA: (0:09:38.3) Yes, that’s it. That’s it because I can sit down in an afternoon for an hour and a half, two hours and call 20 sellers. By sales standards, oh, you’ve got to make a hundred calls a day. Listen, at some point, you want to get a refined list of good leads and not be working on this giant list. If you have a big, giant list that you still need to weed through that you get from some list company, then fine, go ahead and do that, but that’s very time consuming, and eventually, you’ll whittle that down to a list of whatever it is. I have a hundred. If you get five or seven good contacts out of there, then good. But if you sit down every night with a good 20 leads that you can call, it doesn’t take very much time. You’ll probably be done in a couple hours, and you can have some really good conversations that will move you forward towards buying a house.  I think I told you before that, if there’s some way to find people that have their hair on fire that just need to sell you their house tomorrow..people have these divorce lists and all these other things. That’s fine, but at the end of the day, I think you’re better served having a number of good conversations with people, finding out where they’re at in the process, in the cycle. Maybe they say, “Maybe in two years.” Well, you call them back in six months. There’s a lot going on right now. Their plans can change. They can accelerate. They can decelerate. If you always have a group of sellers that you’re keeping in contact with…  We talked about the abandoned, crappy-looking houses. I think you were about to ask me is there some attributes to driving around. Well, how about an old, crummy car that’s got a ton of cobwebs going from the car to the ground. How about a bunch of those door hanger pamphlets on the door. How about utility company notices on the door. How about you go out on trash day in the morning and you see everybody’s trashcans out but there’s no trashcans out on that house. How about strange window coverings in the windows, like blankets and things like that and just overall unkempt landscaping, newspapers in the driveway. You got to drive around. Your eyes start to acclimate to what a potentially abandoned house looks like. PDC: With the sellers that just are pretty resistant when you finally get a hold of them… You ask them, “Hey, I’m just looking to see if you’re ever thinking of selling.” Do you ever throw those sellers in the trash? Say this guy is never going to sell. PA: (0:12:29.4) No, never! Never! I really don’t call it resistance. If it’s where they live, that’s not resistance. If it’s an abandoned house that was a rental or something or other, there’s no resistance. They just have plans in life that don’t involve them selling me their house right now. That’s all. If they get upset, I never think they’re upset with me. It’s a little perturbing if you’ve got an empty house that’s not making any income, that has taxes and insurance and maybe the city has tagged you for this and that. It’s just a little irritating. PDC: Do you see those problems? Those are the things you can solve to help close the deal. I was talking with Ellis, and that’s some things he does is that, hey, this guy has a huge lien and he’s going to pay this off for them. I’m not too sure exactly the process of different deals he was talking about here, but are you solving these deals creatively, paying off this thing here, putting a lien on this house? PA: (0:13:39.8) Absolutely. Absolutely. And Ellis is absolutely the cream of the crop. Ellis San Jose, if anybody… I’m not sure how involved in teaching he is, but I’ve taken a few classes of his, and they were just phenomenal. So yes, yes! That’s what it’s about. Look, I’m not knocking anybody that is in the We Buy Houses tribe of, you know, we buy houses, cash, fast. That’s not the business that I’m in. Let me tell you something straight up and down. I’ve been taken to task by this in a room full of investors. The day I find a really desperate person that needs money that has equity in their house, that might be the least likely day I am to make money because I genuinely would rather help them and make sure they get the most out of it. Obviously they’re in a lot more need than I am. That doesn’t mean I can’t strike a deal with them, but I’m not looking for desperate. If desperate comes across my desk, certainly that’s a deal that can be done. But the idea of having a business that is built on a bunch of desperate people is not all that appealing to me. I’d rather create mutually beneficial transactions with people where they get what they want and they come out really well, and I come out with what I want and I come out really well. PDC: So that two-and-a-half-year deal that you mentioned earlier, what was the issue with that? What was the problem you were solving there? PA: (0:15:12.3) Well, it’s a little complicated, but this gentleman owned a restaurant in..damn, I can’t remember the community. It’s maybe 70 or 80 miles away. He was selling the restaurant, but he had an open lawsuit with somebody that worked at the restaurant. I don’t know if they fell or what it was. So what he didn’t want to do was sell the restaurant and still have that open court case going. You know, it’s California. The guy’s lawyer is going to go, “Guess what?” And it was millions he was selling this business for. Guess what? The owner of that restaurant just sold it and has got a pile of money. So he was kind of laying in the weeds and selling off some smaller assets. Just a strange scenario, and he was well aware of the problems with the property. He did not want to deal with that because it required dumping money into it. PDC: It was a vacant house? PA: (0:16:12.6) Vacant house, man. I found it walking around my neighborhood. I called him. He said, “Call me back.” He said, “I don’t know where the key is,” and then we kind of lost contact. I called him again. Finally, one day he says, “Talk to my realtor,” and I’m thinking, oh boy, there’s the kiss of death. The realtor is going to want to crank me, get the highest amount. I knew this realtor. Cool lady, older lady. She said, “Oh, god, I don’t even live close by it.” I said, “Don’t worry about it. I live right around the corner. You don’t even have to come out here.” So I go over there and do different things to the property for her and take pictures. She hated spiders. I cleaned all the spiderwebs out. And, man, this lady advocated for me like you wouldn’t believe, and I got a great deal. It was amazing. Beautiful. PDC: So it took you two and a half years of just constantly calling him every month, and he kept just pushing it off? He was in no rush to sell it then obviously. PA: (0:17:15.0) No rush. It wasn’t the right time. And that’s what I am suggesting to you. Is there something we can tell somebody to make them sell it right now? People, in general, are going to sell it when they’re ready to sell it. Maybe you could call them up and go, boohoo, the election is coming. But in general… I don’t know who says it, but they say time and circumstances change all sellers. If you’re frequently marketing to people,then every so often, if you’re following up or they remember you, then you’re going to be in the right place at the right time, and that’s what I think marketing to these type of opportunities is is just being consistent, following up, and when the time comes, they remember you. Or if they don’t remember you, just constantly reaching out. That’s the challenge, just consistent follow-up. PDC: What was it that stirred him to just finally sell? What was the… Did you hear it over the phone? Was it a situation… PA: (0:18:20.3) No, I was going through the realtor. He needed the bread. He needed the bread to take care of some other things. The guy was wealthy. The guy was about to get a huge paycheck on the sale of a business, but he wanted to settle this other lawsuit before then and he needed some cash. There was no magic, man. No magic. PDC: People complain about dealing with realtors all the time. PA: (0:18:48.2) Why? What are their complaints? PDC: I don’t know. You said it there earlier. You said it was the kiss of death right there. Is there a problem dealing with realtors? PA: (0:19:00.0) Well, no, but generally a realtor is tasked with getting a seller the highest price on the open market. So when I heard realtor, I go, oh crap, it’s going to hit the open market. I’d rather have an opportunity to negotiate with this guy before every optimistic dummy that took a real estate class is out there making offers on it. So no problem.  As a group… I think really early in the bootcamp that I took from The Norris Group in 2008, he said, “If you’re going to base this business on what realtors tell you, you’re going to be out of here quick. They’ll say you can’t do that, you’re not going to get it that cheap, that offer is too low. Realtors, in general, to me, are like car salesmen. They sell the product. If you buy a car from a car salesman and you have problems with the fuel injection, I don’t think you go back to the car salesman. You’ll go back to somebody that knows the more intricate parts of it.  Now, there are plenty of realtors that know investing really well, and they understand what we’re doing very well. Some of them don’t want to deal with us because a bad investor or an inexperienced investor is as big of a pain in the ass as an inexperienced realtor. What are investors famous for doing? What are they famous for doing? They go make an offer. They tie the property up. They don’t even know what it’s worth. They don’t even know what the repairs are. And then they cancel escrow. I’ve never canceled an escrow since I’ve been doing this.  PDC: Yeah, it leaves a bad taste in a realtor’s mouth for investors, and if you can be a guy that displays confidence that you’re actually going to close, obviously that’s a big plus for these realtors. PA: (0:20:48.0) Sure. Look, at some point I had to do my first deal. I didn’t have any references or anything, but I did communicate that I knew what I was doing, I knew what the property was worth, and I knew what the repairs were. If you can communicate that to somebody that you’re making an offer to and make them feel confident about it, great. Then when you close that deal, now you got one reference, don’t you? And I use my title and my escrow and agents and people I work with. I’ll put in an email with my offer, “Hey, if you’d like to check on my track records or my performance, call this person, that person, and the other person.” PDC: Yeah, because that’s got to be one of the worst things for a realtor to go back and tell their client that this guy backed out. Nobody wants to deal with that. PA: (0:21:37.3) Well, no. It’s a waste of time. They meet you at the property, blah, blah, blah, blah. They do all the paperwork. They get all that going, and it turns out you’re just a turkey. Just a turkey. That’s where the repair estimating and appraisal skills, I think what they do is they create confidence, and people can feel it. They can feel your confidence or lack of confidence, and it gives you a leg to stand on. From there on in, it’s just performing. If I ask for a deal at a certain number, I’m just going to close it; keep my mouth shut and close the escrow. Even if I go in the house and find out, oh wow. Now I’ve gone back in the house and there’s another $4,000 in repairs. Well, that’s my problem because the relationship is worth a lot more than $4,000. Do a good job, and depending on what type of an agent it is, some of these guys and ladies are hustlers and they’re on the phone and they’re out door knocking. Man, those are great allies to have. Right now, there’s a huge shortage of inventory.

VA's vs Outsourcing from a guy who hates managing

Winning attitude with an Investor Mindset vs being Risk Averse

Don't be ashamed of what you do. Instead, here's the story of my 4 year old son who whipped it out and was not ashamed. People who get started in real estate investing are almost ashamed of it. Do this instead, and change your mentality.

What's the one thing you need to be doing? Well, if you've watched Batman Begins, you'll know what I mean when I say, nothing has to be perfect. Moving forward takes looking at your number one task needed. Avoid this mistake that most new (and experienced) REI business people make.

Today at RealEstateAudios, we're meeting Seth Williams of RETipster.com. Seth is a big land guy and is going to give us the low down on everything from his early days in land to his biggest deals. His expertise isn't just about land and he's also going to tell us about balancing investment and family life, as well as the dilemmas we face when starting a business. He's going to walk us through different aspects of a land deal, from dealing with sellers, to attracting buyers and putting the ink on the paperwork. He's all about quality rather than quantity, and makes his investments work well for him with only 6-12 deals yearly with minimal hassle. Listen in for tips and tricks from this seasoned land investor. Topics discussed in this episode: How Seth got his start Where he got his early inspiration Why Seth chose land as his first niche The flexibility of land investment The risks and rewards of seller financed deals Balancing entrepreneur dreams and family time The importance of a diverse income The value of letting sellers come to you Seth's average turnover times and his longest hold The value of fewer, higher-margin deals Seth's crazy first year The importance of paperwork when it comes to seller financing Dilemmas in the land business How Seth's biggest deal fell into his lap How due diligence, zoning and permits figure into your land deal Getting your marketing and paperwork to tie up during a sale Where you can learn more tips and tricks from Seth How Seth got his start My story started back in I think it was 2006ish, somewhere in that range. Where he got his early inspiration In Rich Dad, Poor Dad he talks about real estate as an option, but he doesn’t really give a whole lot of specifics of how, like what specifically he did. Why Seth chose land as his first niche how you’re able to buy properties for pennies on the dollar and find highly motivated sellers...they’re actually not that hard to find for vacant land compared to other types of properties The flexibility of land investment I could really scale it as much as I wanted to. I could make it my life, or I could just do it on the side as a hobby. The risks and rewards of seller financed deals So it’s a very real thing, but what I realized was a lot of people, unless you’re actually doing credit checks and really investigating your borrower ahead of time, a lot of people can and will stop paying you. Balancing entrepreneur dreams and family time It’s just spending your time better and not chasing after every single motivated seller who calls you. It’s more being selective about, nope, that’s probably not going to pay out so well so I’m not going to mess with that, but this one over here looks really good so I am going to spend my time on that. The importance of a diverse income That’s where the real meat was. But if there was a month where nothing was happening in land, there were other sources of income I had to draw on as well. The value of letting sellers come to you A lot of the deals that I find these days actually come in through my buying website. People will just find me and submit their property information and make an offer that way. Seth's average turnover times and his longest hold I think the longest I’ve ever held a property is 15 months. The value of fewer, higher-margin deals They mentioned that you only probably do less than a handful of deals a year because you want to focus in on bigger margins and less work. Is that true? … It’s more like I can really make sure the quality is there all through the process. Seth's crazy first year I didn’t realize how crazy it was going to be that first year. I guess I would’ve said just be ready for a lot of time. Pretty much all your nights and weekends are going to be tied up doing this. Just be ready for that. The importance of paperwork when it comes to seller financing They just kind of wing it and don’t do it right and they don’t use the right documentation. I think that can work to a point, but at some point, it can come back to bite you Dilemmas in the land business You’re crazy if you’re not paying attention to that and realizing, oh, there’s probably a price to pay over here if I go this way just like there’s a price to pay if I go over this way. I just realized that the price to pay with not doing seller financing, in my case, I’m okay with that. How Seth's biggest deal fell in his lap There was a property I sold just late last year where it was the biggest ROI deal I’d ever done where I bought it for $500 and it was landlocked and it was 10 acres. The neighboring property owner within 23 hours of me listing it offered me $25,000 for it. How due diligence, zoning and permits figure into your land deal It could be. I guess it just depends on the property. Do you mean difficult in terms of… PDC: Permits, county laws, restrictions. SW: Yeah, because there are actually a few different layers of that. There’s the zoning. There’s the Planning Department, and what are the setbacks required? Getting your marketing and paperwork to tie up during a sale I want to confirm that from these high-level metrics it does seem to be buildable. Also, there’s a document I have whenever I sell a property where the seller basically has to read through it and say I’ve either chosen not to get a survey or I did and everything is fine. I’ve looked at this. I’ve looked at that. I’ve looked at all these things. I’m never going to come back and sue you for anything. Where you can learn more tips and tricks from Seth We do offer coaching through RE Tipster. Transcription PAUL DOCAMPO: Hi! Welcome to another show with Paul at RealEstateAudios.com, and you’re going to be listening to Seth Williams in a bit. Seith of RETipsters.com. He opened up a blog site years ago, and he is a land guy. I wanted to get him on my site because I have interviewed a land investing guru, a land investing expert, and land was my bread and butter not too long ago. So I wanted to get him on the show to talk about his business. Iif you’re not in land, I still want you to listen to this because it is a lesson about building your business the way you want it to run. Everybody in land does this whole thing that you got to get notes. You got to start having lots of notes. You got to seller finance. That is the end goal. Notes are the end-game. Seth said to hell with that, and he strictly operated on a cash-business basis only selling 6-12 properties a year. That’s how he runs his business. He doesn’t mess around with notes. He doesn’t want to worry about people not paying. He just sells it for cash, and he has a volume of 6-12 a year. It keeps him going. It builds enough for him to buy whatever he needs to buy in terms of real estate rentals. So tune into that.  We have a lot of things going on at RealEstateAudios.com. Mainly, if you’re on my email list, I am finally putting a stake in the ground, and I am showing and teaching people how to be a copywriter, how to write ads that persuade and attract sellers, attract leads, and how to close them using the written word. I did that since I started as a real estate investor for clients, for investor care, for myself in my own businesses. So if you’re not already on my email list, go there. It’s a daily email list. I do promote things. I do give offers, and I do it in infotaining ways. If you’re not on there, go to RealEstateAudios.com and subscribe there. All right, let’s get to Seth. PDC: So, Seth, you have your hands in a lot of different niches. You’re kind of like me. You’ve kind of spread out, tried a lot of different things, and now you’re in land. What’s the story behind Seth Williams? SETH WILLIAMS: (0:02:14.8) Yeah, great question. My story started back in I think it was 2006ish, somewhere in that range. I say that because that was really when I first discovered this whole general idea of financial freedom and passive income and the Rich-Dad-Poor-Dad philosophy, just stuff that in hindsight seems kind of obvious, but I think many of us, the way we were raised, we weren’t really told that. It wasn’t an obvious thing until we’re sort of spoonfed those ideas from a book like that and several others. That was when I first realized, hey, I don’t necessarily have to do this 9-to-5, W-2 career. There are lots of other ways that could be a lot more fun and a lot more profitable to make a life for myself. In Rich Dad, Poor Dad he talks about real estate as an option, but he doesn’t really give a whole lot of specifics of how, like what specifically he did. So I just took that, and I was like, I guess I’ve got to buy rental properties. I have to buy houses to flip or something. And I just spent hours and hours and hours on the MLS trying to find deals. Back in 2006, it was a lot like it is today where prices were going nuts. It was impossible to find deals on the open market that would actually cash flow, and I was just banging my head against the wall thinking how do people do this? I can’t find these deals that people are talking about, the ones that actually make money. It was really frustrating.  (0:03:43.3) Fast forward a couple years, I took a home-study course about this idea of buying and selling vacant land, and I thought that was interesting. I looked into it further. I think a lot of people...and I was similar to this when I first heard this idea of vacant land, I didn’t really get it. It didn’t click. Once I learned more specifics about how and why it makes sense, how you’re able to buy properties for pennies on the dollar and find highly motivated sellers...they’re actually not that hard to find for vacant land compared to other types of properties if you’re looking in the right places...it just really resonated. I tried it, and it worked. It was the first thing I ever tried that really, really got traction.  So I spent several years trying to figure that whole business out, trying to figure out more efficiencies, different ways of approaching it, different ways to send offers, different types of mail to send out, more efficient ways to handle inbound calls, just fine tuning it and putting my own spin on it. I was able to do hundreds of land deals this way and realized just how much easier it was than most other types of real estate in that there were no improvements. There was nothing that was going to fall apart on me. There were no tenants to deal with. It really got cool when I realized I didn’t even have to be in the same state as where the property was. I could legitimately do this remotely, and that was just a big deal to me. I was able to do it on nights and weekends in my spare time. I could really scale it as much as I wanted to. I could make it my life, or I could just do it on the side as a hobby. I was able to make more from my hobby than I was from my day job at the time. That was just like, woah, this is awesome! PDC: How long did it take for you from 2006 until you started getting some actual traction in this whole real estate thing? SW: (0:05:36.3) The land thing didn’t really even enter the picture until late 2008, 2009. That was when I really started trying that particular approach. I think it was 2011 was the first year where I made more from my business than from my day job. PDC What was your day job? SW: (0:05:52.0) My day job was working as a...it’s kind of hard to explain exactly, but essentially what it boils down to is I was a glorified credit analysis in the commercial banking world. So I was dealing with a lot of commercial real estate deals, analyzing those deals and figuring out whether or not they were a good deal for a bank to lend on. PDC: Okay. So you had your hand in some experience with real estate already. SW: Yeah. PDC: Was that a very hard to decision for you to make to quit that safety net of a job? SW: (0:06:19.8) You know, it was actually several years after that when I decided to pull the plug on it. It’s something I could’ve done a lot earlier, but to your point, I’m somebody who worries a lot. It’s actually a huge personality flaw. I just spend way too much time just thinking about everything that could possibly go wrong. So I spent several years working my job anyway even though I had this other option. When I finally decided to pull the plug, it was definitely hard, but it sort of came to a head when my job was the bottleneck. It was the reason why I couldn’t take my business to the next step. Basically, when I hit that point and it had consistently been that way for a while, that’s when I realized it was time. PDC: So what was the income if you don’t mind me sharing before you quit? What was that income from your land coming in on a month-to-month basis? SW: (0:07:08.6) For me, I was always doing...well, let me back up a little bit. I was doing seller finance deals pretty regularly for a while until I realized I just don’t like this. It is definitely a real and very cool thing how you can buy land for a really cheap price and resell it for a much higher price, and pretty much, on the down payment or pretty close to it, you make most of your money back, and then every month after that you’re making pure profit. So it’s a very real thing, but what I realized was a lot of people, unless you’re actually doing credit checks and really investigating your borrower ahead of time, a lot of people can and will stop paying you. I just was really annoyed by that, and I didn’t want to have to chase people down. You can repossess on a property and take it back and then resell it all over again, but that’s a whole other process too. In some states that’s a fairly easy thing to do. In other states that’s a much more involved, complex thing to do. You actually have to go to court and stuff. So I decided to just start doing cash deals and focusing more on those big influxes of cash. That was the approach I took. My monthly income was kind of spiky. It was all over the place honestly. There were some months where I might make nothing and other months where I might make $40,000 or $50,000 a month. It kind of just depends on the month. But it was such that the annual income and the dependability of that was close enough for me to be comfortable and just realize this is going to be fine. One way or the other, I’m going to have the money I need. PDC: Was that a difficult thing to do to juggle...it sounds like it took you a couple of years to actually pull the trigger and quit your job. Juggling that “hobby” of yours, which is almost kind of feels like full time, or maybe not...to juggle that and...I don’t know if you had a family at the time. Did you have a family at the time? SW: (0:09:02.2)  Yeah, I did. It was actually very, very hard. There were times when I was just...I felt like I was going to go nuts just because, between family commitments and I do have to give my wife and kids some time. I can’t just let them sit by the wayside while I’m doing my thing. And also following up with people and closing deals and keeping direct mail going out. It was nuts on top of doing a job. Really what it kind of boiled down to was it never really was a full-time thing in the land business because it didn’t have to be. I didn’t have to spend 40 hours a week doing that in order to make really good money doing it, especially if there are ways to focus on deals that are probably going to pay out a lot better. It’s just spending your time better and not chasing after every single motivated seller who calls you. It’s more being selective about, nope, that’s probably not going to pay out so well so I’m not going to mess with that, but this one over here looks really good so I am going to spend my time on that. That’s hard to pick and choose which ones you’re actually going to chase down. There’s usually potential in all of them. There’s just more potential in some than others. I’m not going to paint the picture like it was easy. It was very, very mentally taxing, but at the end of the day, I think what kept me going was realizing I know this can work. I know it’s possible to make this all happen and just kind of believing in that and seeing it work, seeing the deals happen, especially after trying other real estate strategies and realizing how many things didn’t work and how many things I wasn’t good at. When I finally found something that was producing results, I just realized this is important. I can’t let this go. I have to keep my head down.  PDC: I’m interested to know why you shifted from the whole note side of the business because a lot of people I know want to shift over to land to get notes and you start selling these with seller finance. What motivated you to go into the cash business being that you worry a lot? It would worry me about constantly having the volume of cash coming in every month. SW: (0:11:02.5)  Yeah, that’s actually a great question. It’s also worth noting, especially at the time when I quit my job, land was not my only source of income. It’s not like everything was riding on the cash deals I did from my land. Land was the bulk of it. That’s where the real meat was. But if there was a month where nothing was happening in land, there were other sources of income I had to draw on as well. That was another big part of what helped me get comfortable with this. I think if you are going to do strictly land and nothing else, like you are intent on that being your only thing, then, yeah, I think seller financing is probably worth dealing with the hassles that come with it just because it’s really nice to have some kind of predictability in what the income is going to be each month. But for me, because I had that predictability coming from a few other spots as well, I didn’t have to go all in on that.  PDC: What were those other assets? Were they rentals? SW: (0:11:59.3) Yep. I had some rental properties. Also, on the RE Tipster blog there were a few things I was selling at the time that were making a little bit of money here and there. That was pretty much it. PDC: How many rentals did you hold at the time? SW: (0:11:59.3) Two duplexes that I had bought at a really, really cheap price at the very bottom of the market, and they were both performing pretty well. PDC: So the land right now is pretty much you use it as your active income, your month-to-month cash flow. SW: Yep. PDC: Awesome! With land, what did you change about your whole selling process to sell land at cash price? I have that mindset of thinking it’ll only sell on payments, $1,000 down, $200 a month. That was my model at the time. What did you change to actually start selling these things, and how fast did you sell them at a cash price? SW: (0:12:50.8)  I don’t know that I really changed a whole lot. I think it’s just understanding that when you’re only willing to accept cash, just statistically it’s going to take longer. Add another three months or so, and obviously it depends on the deal. It’s not always going to be that way. Sometimes it’ll make no difference, and sometimes it’ll be a huge thing. Just realizing you got to be patient. Everything is going to sell at some point, but if you’re not going to give people any other way to finance this stuff, you’re just going to have to wait until the right person comes along and keeping those listings out in front of people in every possible place that you can. I don’t know that I really changed a whole lot other than maybe trying to think from the days when I was doing seller financing versus not, but I think I probably am a little more willing to come down on price easier if things aren’t happening. I’m willing to have a lot of flexibility on that, and I’m also really conservative with the kinds of offers that I make. I hear from some people who are willing to offer 30-40, even 50 percent of market value, and that’s crazy to me. I would never offer that much for anything in land. Usually I’m sticking around that 10-20 percent of market value range.  PDC: When you purchase? SW: When I purchase, yeah. PDC: That’s pretty typical, 10 percent. With the type of lot, would that change at all? Were you very particular about the market location and choosing the right location? SW: (0:14:16.8) A lot of the deals that I find these days actually come in through my buying website. People will just find me and submit their property information and make an offer that way. It’s not so much about the size or anything. I basically just want to see there’s a lot of value here based on the market in which the property is. It could be near New York City, or it could be out in the boonies in Washington State or it could be in New Mexico or Michigan. I just want to see that there is lots of value here and they’re willing to take a really low offer. It doesn’t really matter. That’s kind of one of the downsides actually to accepting submissions and making offers through a website like this is that you’re sort of a slave to whoever decides to visit your website and submit their property information. You never really know where that’s going to come from, but at the same coin, it’s all free and really good deals do come through that medium. With direct mail you’re able to target things a lot better. You can say I only want this market, and I want this market with the properties that are in this size range or maybe in this value range. I don’t really get to do that with the website. It’s more just I take anything and everything, whoever decides to submit their stuff, and the offers go out based on that. PDC: So you are still doing direct mail right now for acquisitions? SW: (0:15:35.3) Yeah, a little bit. The past couple months I’ve actually been trying to buy commercial lots which is a little bit different than whatever I’ve done in the past. Anytime I’m looking for this type of property in this area, that’s when direct mail is definitely something I employ. PDC: Now, I’ve heard in a podcast somebody mentioning your name. It might have been a mastermind I was in. They mentioned that you only probably do less than a handful of deals a year because you want to focus in on bigger margins and less work. Is that true? SW: (0:16:07.6) Yep. I’d say that 6-12 range is usually what I’m targeting. PDC: Six to 12 lots that you’re buying a year? SW: Yep, you got it. PDC: And what’s the margins that we’re looking at here? SW: Usually I want to see that I’m making at least 10 grand on the deal. Obviously if I can do more than that, great. On the same coin, that’s the goal. Sometimes it doesn’t actually pan out that way. Sometimes I’ll realize, oh, maybe this isn’t worth as much as I thought. Maybe I’m only going to make 5 grand on this one. But at least going into it, based on all the information I’m looking at, I want to believe that is at least what the profit margin is going to be. PDC: Are there any horror stories with that, like buying a property that you thought was worth a lot more and was pretty much worthless? SW: (0:16:50.9)  No, not really. I think maybe it’s because I’m going back to this whole I’m so afraid of things. I’m just really, really careful with stuff. I would totally rather err on the side of just not doing a great deal than making a huge mistake. For me, I don’t have any big horror stories like that. Anytime I’ve ever made a big mistake or lost money on a deal, it was on the type of property that you pay like $300 for, and at the most, you lose $300. But not the kind where we’re talking tens of thousands. PDC: Yeah. With these bigger margins, how long do you expect to sell these things? How long does it take you to sell them? SW: (0:17:30.4)  I think the longest I’ve ever held a property is 15 months. Part of that was because of the property itself but also I wasn’t pushing marketing that hard the whole time. But usually what I would expect, it’s not a whole lot different from the other types of properties I’ve dealt with, the cheaper ones. Maybe six to nine months at the most is what I’m anticipating it taking. It’s kind of going back to that same general mentality when you buy any kind of vacant lot with this particular model is you want to make sure when it’s your turn to come and list the thing to sell it, you can list it for a price that’s well below anybody else on the market so it’s a great deal. It’s really the same thing, just bigger versions of that.  PDC: What are you doing to  sell them and market? SW: If it was a more consistent deal flow in the same spot, a buyer’s list would be a lot more helpful, but it’s usually not what’s going on. I’m just picking them up from wherever they’re coming in. Usually what I’m doing is just the usual Facebook Marketplace, Craigslist, Zillow kind of stuff, and somehow it’s always worked. Maybe I’d sell them faster if I had smarter ways of doing that, but that’s kind of what I’ve always relied on. PDC: Hey, real quick. I want to introduce you to my free daily newsletter where I give out free daily tips to real estate investing strategies, marketing, and sales techniques to keep you, the part-time investor, moving forward every day. Head on over to RealEstateAudios.com, and you’ll get a free report along with that free daily newsletter. Do you have a VA or anybody under you? SW: (0:19:00.3) I do have a VA, but she’s usually working more on other stuff, not so much the land business. That’s actually part of...there’s opportunity cost in everything you decide to do, but that’s one of the luxuries of doing fewer deals a year is that I really can pay a lot more attention to the deals I’m doing. It’s not like I’m telling somebody else to do something, and they’re screwing it up. It’s more like I can really make sure the quality is there all through the process. PDC: I’m thinking that it sounds pretty nice to have a higher margin deal because you’re dealing with less tire-kicker buyers. Is that true? SW: (0:19:38.3)  That’s a good question. The past several deals I’ve done I haven’t seen a ton of tire kickers. I don’t want to say they’re never there because they are. I guess it also depends on what you call a tire kicker. If somebody is just asking if it’s still available on Facebook, is that a tire kicker, or is it somebody that says, “Yep, I’m gonna buy it,” and then they just flake out on you. There are some of them out there, but I feel like it hasn’t been a huge problem though. PDC: How much time do you spend on a weekly basis following up and marketing these properties? I remember back in the day that was the biggest time block was following up and trying to sell these. SW: (0:20:15.6) Yeah, not a ton. I’d said at the most maybe in the craziest of weeks I might spend 10 hours a week on my land business but more like five hours a week is what I dedicate to all the stuff going on. I mean, it’s not...in terms of following up with the people, it might be a phone call or email here or there. I guess, now that you say it, maybe there are fewer tire kickers on the bigger deals because I feel like there’s not a ton of that. It’s not like insane where I’m sending out a dozen emails a day to people that are never going to respond to me. It’s not really like that.  PDC: It’s kind of amazing, Seth, that you have all this. You have over a six-figure business it sounds like with just land by itself, but you don’t have many processes in place. You keep it as simple as possible, yet you produce this cash that takes over your old W-2. What are some things that you would tell your younger self back when you started in 2006 to 2011? SW: (0:21:16.8) It’s funny you ask that. We just did a podcast episode on my podcast about this exact thing. What do I wish I would’ve known back then? I think, for me, one of the big things was just realizing how much time it takes, especially in the beginning, like that first year. It doesn’t take as much time now because I understand how to not waste my time, but when I was first getting started, it felt like it was just so much spinning my wheels and trying to figure out what do I need to set up? How do I do this mail thing? What’s the right market? How do I follow up? It was just insane when I think back on it. I think part of that goes back to, first of all,  not knowing what you’re doing which is normal in any new business, but also focusing on the smaller margin deals. There is a lot more of it when you’re doing it that way. It’s kind of crazy. Either you or somebody you hire has to follow up on everything or opportunities get lost. That was something that was pretty hard for me even that first year. It got way better once I started ironing out a lot of these wrinkles, but I didn’t realize how crazy it was going to be that first year. I guess I would’ve said just be ready for a lot of time. Pretty much all your nights and weekends are going to be tied up doing this. Just be ready for that.  (0:22:30.4) The seller financing thing was another...I think it’s one of those things that gets pitched a lot to people, like this is why the land business is awesome. There’s legitimacy to that. I totally get why. It works with land better than a lot of other types of real estate, so I don’t want to discount that. But there are also a lot of things I didn’t realize I would have to deal with as well with seller financing, like getting the right documentation done and understanding the laws in every state and collecting payments and tracking loans and tax stuff and dealing with people who stop paying. There’s a lot of stuff you’re signing up for when you go down the seller financing route. Some people handle that by just not doing it. They just kind of wing it and don’t do it right and they don’t use the right documentation. I think that can work to a point, but at some point, it can come back to bite you, especially if you get lots of deals that are all set up wrong. Occasionally it can come back to bite you. I want to make sure I’m doing stuff right before I really get into it. There’s a lot tied in with the seller financing piece that not everybody realizes. PDC: Yeah, I agree. There’s overhead and then follow up when somebody doesn’t pay, which does happen. I’m dealing with it right now. I love it! I love that you thought outside of the box here. The box in land is always jump into notes and start building up notes. Here’s Seth who’s like, nah, I don’t want to deal with that so I’m going to design my business the way I want. SW: (0:24:03.2)  Yeah, I mean, it’s to each their own. I’m not saying it’s bad. I just think, like anything, there are tradeoffs. You’re crazy if you’re not paying attention to that and realizing, oh, there’s probably a price to pay over here if I go this way just like there’s a price to pay if I go over this way. I just realized that the price to pay with not doing seller financing, in my case, I’m okay with that. PDC: It’s congruent with your whole personality. Like you say, you worry a lot. I kind of worry a lot as well, so if you have most of your income coming from notes, you might be worried about 30 percent, 40 percent not paying from the recession. Does that kind of give you a clear mind given your personality? SW: (0:24:48.8) Yeah, I think so. In my experience with seller financing, it was probably maybe a third or so of people would either start paying late or just stop paying all together. It’s not necessarily a terrible thing if you just know what to do when that happens. Again, in some states, it’s pretty simple actually. You send out some notifications, and you can terminate the land contract or whatever you used, and it’s over. If that’s the case and you know what to do, that’s fine. It’s a little annoying to have to do that when you planned on getting money, but in other states, it’s not that simple. Some people say, “You can handle it by just not recording the seller financing documentation, and then the title is clear.” That’s sort of true, but if that seller has a copy of a signed land contract and they’ve never paid you anything for it...again, I’m not a lawyer here so don’t quote me on that...they basically have an equitable interest in the property, and they can give you trouble if you don’t go through the proper channels of terminating the seller financing note. Not everybody will do that, but if you want to follow the letter of the law and do it the way an attorney would tell you to do it, at least the attorneys I’ve talked to, it’s not that simple. Some people just dismiss that and they just don’t care, but I just get hung up on that stuff. I want to do it right. I don’t want to just wing it and not care. That’s part of the reason why. PDC: Yeah. Now, going back to selling now, is there anything you do particularly different when you’re posting up ads on Craigslist and Facebook and Zillow, or are you just posting the type of lot and acreage and all that? SW: (0:26:31.3) Yeah, in terms of what would be different, I obviously put plenty of effort into making a good description and getting really good pictures, especially on the more expensive ones. The pictures are worth spending some money on. The neighbor letter  thing is sort of similar, I think, to the cheaper-end properties. In my experience, 20 percent of the time it will materialize into something if you send neighbor letters out to everybody adjoining the property. I find that to be pretty similar. Just realizing that can pay dividends. That’s not something to just skip. PDC: You’re talking about the neighbor letters, sending a letter to the adjoining lots? SW: (0:27:14.9) Yeah, exactly. So if you buy a property that has one on one side and the other side and behind it and across the street from it and even in a nearby radius, you could go that far if you wanted to, just sending them a letter saying, “Hey, we just became neighbors. I own this property by yours,” and sending them a parcel map so they understand what you’re talking about and just highlight some very realistic, relevant things like do you want to keep somebody from building something ugly next door to you? Do you want to control what happens to the property in your backyard or right next door? Just giving them some valid reasons to consider buying the property. Sometimes people will be all for it and other times they won’t care. There was a property I sold just late last year where it was the biggest ROI deal I’d ever done where I bought it for $500 and it was landlocked and it was 10 acres. The neighboring property owner within 23 hours of me listing it offered me $25,000 for it.  PDC: Cash? SW: (0:28:16.0) Yeah, cash. That’s why you want to send neighbor letters. That person may not even know if you’re posting it on Craigslist and that’s it. It’s always worth reaching out to people and saying, “Hey, just so you know, this is here if you want it. I give you first dibs.” That kind of thing. PDC: Yeah. That deal right there is not your typical land deal. SW: No. PDC: I think when people listen...the headlines in certain platforms are like “Make $25,000 with one land sale.” It gets people going. So it’s all the little deals, little runs that make this business, right? SW: (0:28:52.5) Yeah, I would agree. I think there is a lot to be said for the small ones that make 10 grand or less type thing...there’s definitely a lot more of those out there and they are easier to get and people are more apathetic about them, so I think you’ll find a lot more motivated sellers. So I wouldn’t discount those either. I just don’t do them. PDC: Who’s buying these lots? That’s always a question. Who’s going to buy land for that much money? SW: (0:29:20.3) I think part of that also is saying just the words “a lot of money” is kind of all relative to the market you’re in and the person you’re talking to. In that instance I just said, it was a neighbor and he ended up being a builder. I guess he was flush with cash. In other situations, it could be somebody who...I guess I don’t really know their story honestly. I know that in most cases they’re planning to use it themselves, but I don’t know where they got their money or what they do for a living or anything. They could be taking out a home equity line of credit to buy it if they don’t necessarily have the cash. So I don’t know. Maybe they got a cash gift from a rich relative or something. It’s just people who do have the money in some way, shape, or form from somebody. PDC: Does the usage of the property ever come into mind when you’re marketing, you’re setting up ads to sell it? SW: (0:30:11.6) Yeah, for sure. Just when I’m doing my due diligence, for example, I usually look at enough information to know this thing isn’t useless. It’s not wetlands. It’s not like a person can do nothing on it. I would try to go through whatever my end-buyer will end up doing. What are they going to want to look at? I just try to make sure...does it pass all those tests because someone is going to look at it at some point. It might as well be me before it’s too late. PDC: You know, when I was doing this, one of the things...I guess what you’re selling is...correct me if I’m wrong...is the dream of building something on it or doing something to it, making it into a dirt bike track or whatever it was or building a cabin on it. Is building in most parts of the US very, very difficult to do? SW: (0:30:58.4) You’re asking if it’s difficult to build, like approval, or what part of that do you mean? PDC: Right, right. I guess one of the things I struggled with ethically in my mind was always the selling point of land is so you can build your own house, build your own cabin, even though I didn’t really say that because just for legal purposes, but the reality of that is it’s actually very, very difficult to build on it. The buyers have this dream or this anticipation that they’re going to build something on it. SW: (0:31:31.2) It could be. I guess it just depends on the property. Do you mean difficult in terms of… PDC: Permits, county laws, restrictions. SW: Yeah, because there are actually a few different layers of that. There’s the zoning. There’s the Planning Department, and what are the setbacks required? You could build one thing on here but not another thing. Or you could roll your RV on here, but you couldn’t build anything. I think it kind of comes down to how in the weeds you want to get on that and how… PDC: Did you look into all that during your pre-research on the property you’re about to buy? Did you look into what you can do and setbacks and all that? SW: (0:32:10.0) Yeah, I mean usually what I’m looking at is...it kind of depends on the size of the property, first of all. If it’s something that is 10 acres or five or even a couple acres, in most cases you’re not going to have setback issues there. But even so, usually what I would look at is what is this thing zoned. I might look up whatever the local zoning ordinance is or even call the Zoning Department and just ask what can I do on this thing. Based on what you’re seeing, tell me what you think I can do. I kind of get it from the horse’s mouth, and if they tell me that, it’s like, okay, there you go. You told me that. I’m not lying or making anything up. This is buildable according to you, the Zoning Department or the Planning Department.  PDC: This will all go into your marketing and your ads, right? SW: (0:32:56.3) Well, if I was going to say something like “Buildable lot for sale in this area,” if I’m going to put the word buildable in there, that’s the kind of stuff I want to make sure it actually is buildable. That’s the thing. There can always be that next level of problem that could come up. I want to make sure I’m not finding out this is not buildable and then saying it’s buildable. That’s what I don’t want to do is confirm there’s a problem and then lie about it. I want to confirm that from these high-level metrics it does seem to be buildable. Also, there’s a document I have whenever I sell a property where the seller basically has to read through it and say I’ve either chosen not to get a survey or I did and everything is fine. I’ve looked at this. I’ve looked at that. I’ve looked at all these things. I’m never going to come back and sue you for anything. This is totally my thing. That’s kind of what...any time you buy anything at a huge discount, which is ultimately what I’m selling it for in the end, many people assume that any way, but I just make them put it in writing so there’s no confusion about that. PDC: Have you had any problems in the past from selling it and then somebody comes back afterwards and has a problem? SW: (0:34:10.3) Not really. The only time anybody has ever come back to me after I sold it was one person said that their neighbor claimed that they owned part of their property that I’d just sold to them. What I did in that case...I actually went further than I needed to, but at my cost I ordered a survey. The surveyor went out there and staked the corners of the property I’d just sold to confirm the property lines. That resolved the issue. PDC; How much is a survey? I’ve heard they’re pricey. SW: (0:34:40.1) Well, the one I got was about $300. It depends on the kind of survey you’re getting. There are many different levels of complexity when you order a survey. PDC: Is getting a survey part of your...I know that had to do with that specific problem, but do you do a survey as part of your whole process of selling the property or no? SW: No, I wouldn’t say it’s the norm. But again, if you’re getting super high-end, I think it’s okay to. It’s not like a dumb decision to do that. Every time I’ve done a survey, it’s when there’s been either some kind of an active boundary dispute on the table like that or, in another case, I had a property that was on Lake Huron. With any property on a federal body of water, the US Army Corp of Engineers, I believe, has jurisdiction up quite a ways beyond the shore. There are also flood zones and wetland issues. If there’s a lot of that kind of stuff going on, I think it’s a good idea to get a survey just to very clearly understand what the situation is and what parts of the property are affected by different things. Those can get a little more expensive too because you’re not just doing a boundary survey anymore. You’re asking them to look at a bunch of other stuff. If you have a weird property like that, a survey may also make sense. But usually, the GIS Parcel Map is enough for me. PDC: Seth, you’ve given a whole wealth of information here, and you coach land, right? You’re still coaching? You’re still having students? SW: (0:36:08.9) We do offer coaching through RE Tipster. It’s not something I personally do a whole lot. Jaren Barnes, my counterpart, the coaching is more his game. But yeah, we do have coaching. Jaren handles that. We’ve also got the land investing masterclass. It’s basically just a giant and very organized brain dump of everything I know about the land investing business.  PDC: What’s the best way for people to reach you or find out more about you? SW: (0:36:34.0) The main website where I’ve been explaining a lot of this stuff for a lot of years now is RETipster.com. If people want to reach out to me, in the footer of the website if you scroll all the way down, I think there’s a contact link down there, and you can shoot me a message through that if you want to. PDC: All right, Seth. I appreciate you being on the show. SW: Yeah, thanks, Paul. I appreciate it. PDC: All right, that’s another episode in the can. Stay tuned for the next one and my marketing tidbits every single week on the Deals Today Podcast. Make sure you subscribe, you rate it, you review it, and you share it please. It keeps me going with this. It gets more guests on the show. 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Using Hero's and Villain's in your marketing to motivated sellers

The most obvious way of doing things

Today we're going to be talking to Seth Greene, an investor who cut his teeth on direct response marketing and has now become a best-selling author as he teaches others what he knows. He built a business with clever lead generation, trusting his staff through dedicated systems and finding clever ways to reach clients. Seth is very enthusiastic when it comes to business and is going to tell us the importance of getting the right approach, the value of split testing and why listening can be a great sales tool. All in all, this episode is a great one for anyone who wants to understand the marketing side when they invest in property. Topics discussed in this episode: The importance of networking How the right mentor can add value to your career and business The shortcuts to networking the property market in 2020 How to level up your industry contact list What made Seth leave 9-5 behind Why he went from making 300 cold calls a day to only taking inbound calls The importance of marketing diversity when you invest in real estate The advantages of direct mail The value in surveying nonresponders Taking a positive attitude towards your mistakes How paid ads can increase your reach The value of split testing on social media Defying norms for a competitive advantage How your systems become your business The value of listening in the context of sales Ideas to start a lead magnet How to get that initial email right Transcription INTRODUCTION:  Diversity leads to stability. If I’ve only got one source of leads and everybody gets on a do-not-call list, I’m screwed. PAUL DOCAMPO: All right. This is Seth Greene from the SharkPreneur show, and I got him on this show today and I’m really excited about it because he is a co-owner of the SharkPreneur with Kevin Harrington. We’re going to talk about different aspects of his business, entrepreneurship, marketing, and how we can tie that in for a real estate investor because he has some tips for that. So welcome to the show, Kevin. I really appreciate you being on here. I mean... SETH GREENE: (0:00:36.8) Uh, thanks. Seth.  PDC: Seth. SG: Yes, I was going to say. (laughing) I know we look alike, but he’s a little older than I am. Well, thank you very much. I’m really excited to be here and share with your audience.  PDC: Awesome. I appreciate that. You started your entrepreneur life pretty early into college. Your story is amazing. I recommend everybody checking that out and checking out his story about how he started college and his failure in the playwright industry, right, in college? SG: Musical theatre. Correct. PDC: Musical theatre. Then you met Dan Kennedy and Dave Dee and that kind of started you into your business. How did you even get into contact with David Dee because I think that networking is so important for real estate investors, and you have a lot of advice about networking. What can you share about networking and how you even gain contact with these top players in the industry. SG: (0:01:30.4) Sure. All right. So Dave Dee..I was 21 maybe. It was like 20 years ago, more than that. I was a magician, part time, as a hobby. Did a couple kids’ birthday parties here and there to make a few extra bucks to buy tricks. And I was a struggling financial advisor at the time. I was a college planner, helping families cut the cost of college in half, not saving money FOR college but saving money ON college.  My branch manager at the Fortune 500 financial firm I worked for had given me a book where he told me all my clients were going to come from my whole career. I said, “This is awesome. I’m young. I’m dumb. I’m going to be rich. I’m going to buy a Ferrari. Give me the book,” and it was the phone book. Some of your people aren’t old enough to remember what a phone book is, but it was literally the Yellow Pages and he said, “They’re all in there. Go get ‘em.” So I didn’t know any better. I was making 300 cold calls a day, interrupting strangers, asking for money, getting hung up on, and I was not happy.  I was reading a magic trade journal. Magicians have trade journals just like everybody else, and there was a full-page ad for a marketing course by Dave Dee. I didn’t know who he was, but the headline got my attention. It said Make an Executive-Level Income Working Part-Time as a Magician. So I borrowed the money from my parents because I was cold calling so I had no money to buy the course. I applied what I learned to my magic business. I became the busiest, most expensive magician in Buffalo, New York where I lived. So it worked really well.  One of the bonuses that came with the course was a critique call with Dave. So I got on my critique call, and I said, “It’s working great! I’m thrilled! Would this work in my real job as a financial advisor?” and he said, “Yes.”  I said, “Awesome! Where’d ya learn it?” and he said the two words that changed my life. He said, “Dan Kennedy.”  So I said, “Awesome! How do I talk to Dan?”  He said, “You don’t.” He said, “You can buy some books, buy some courses, buy some products, come to some events. Unless you join a mastermind, you’re not going to talk to him.”  I’m like, “Fine! You just put a big, red flag..I’m a bull..you just threw the..I got to get through it.”  So I did buy books. I did buy products. I did get more courses with the money from my magic shows that I was making, and then I got to be on a group conference call. It was promoting whatever his latest book was at the time. I had really fast fingers when they said press *1 to ask a question. I was like number three, so I got to ask my question.  He said, “Well, we should really talk offline about that.” So I did a consultation with Dan, and at the very end of it he basically said, “Write me a six-figure check, and I’ll change your life.” I mean, his pitch was way better than that. It took hours, but I mean, you get the..that was the end result. It was write me a big check and I’ll change your life.  So I went home to my wife. In that year..a couple years had gone by before that happened. I had gotten married. We bought our first house, had our first baby, and she’d quit her job to be a stay-at-home mom while I was cold calling for a living. So a little stressful year. Happy stress but stress. Then I had to go home and say, “Honey, I have to go borrow more than our mortgage on our house to go hire this guy Dan,” and she said, “No.” Thirty days later I asked her every single day, and my ask got more intense. Her rebuttals got more profane until on day 31 she caved and said, “You better pray this beep works,” which it did.  I was the 6,700th ranked advisor at that firm. I was in last place. In two years of working with Dan, I was in the top 30 nationwide for opening new accounts, and that was competing against guys who had been building their practices twice as long as I had even been alive. So it got me written about in a lot of trade journals.  My phone started ringing off the hook with advisors going, “How do I do that?” I said, “Dan, what do I do?” and he said, “You start a marketing company and do it for them.” So that was MarketDominationLLC.com, which I started 13 years ago. It started out as me and one advisor I let hire me to see if it would work, and now we’ve served almost 3,000 clients in 62 different industries in every time zone on the planet, and we have an awesome team of 35 people who work here.  (0:05:34.3) Now, you asked a question about networking, so I’m actually going to answer that part now. So how I got to Dave was I spent money, and a lot of marketing gurus, a lot of course creators, they will throw in bonus certificates for critique calls and analysis and stuff like that as a bonus to make the course look more valuable. Nobody ever cashes them in. Dave said I was only one of like two people that entire year who actually did the critique call, and when I had been in a mastermind led by Alex Mandossian of MarketingOnline.com for four or five years now with some..I mean, Ryan Deiss from DigitalMarketer is in that mastermind. It’s a huge..it’s like 30 people..30-50. There are some serious players in that room, and Alex said..Ryan and I both bought the same course many, many years ago. It was like Marketing With Postcards, and he said the only two people who ever did critique calls were me and Ryan Deiss. I’m like I’m in pretty good company because Ryan has like a $100 million company. So that’s one way to get in.  I think if you’re not buying their courses, if they’re selling a course, it’s a lot easier now than it was when I started. When I started, there was no social media. There was no Facebook. Email was barely a thing. So I think it’s easier now to get to people. I think posting on their walls, on their pages, writing positive reviews, commenting is a great way to show up in front of somebody over and over and over again so they know who you are and you’re adding value to the community.  (0:07:08.5) My number one strategy now for getting in front of high-level, impossible-to-reach people is interviewing them for a podcast. I started that when I had no audience whatsoever, and my original interviews were done on FreeConferenceCall.com. They sounded awful, and we had no production quality whatsoever. You could literally hear the, “Hey, nice to meet you, Mr. Jones. Thanks for doing this.” I didn’t know to edit those out. I didn’t know to have an intro and music and any of that stuff. Now, obviously, I co-host a show with Kevin from Shark Tank, and we were the number six rated show last year to listen to, so we’ve grown a lot.  But I get asked all the time, if you had to start over with $100 and a laptop, what would you do? I would pick a niche. I would build a list from Google or LinkedIn of the top like 25 influencers in that space. I would reach out via email to interview them for a podcast, and then I would find what the biggest problem in that space was and ask them how they were solving it or how they would solve it. I’d create a product out of that interview series, like a summit or a book or a course of what I learned. Use that to build a list and gain influence in the niche, borrow the credibility of those 25 people, and then take off from there. PDC: Awesome. And where would you think you’d be if you never did pay that..you said it was a six-figure check to Dan Kennedy. I’m assuming you didn’t have that. SG: I did not have..I borrowed it. I did not have one percent of that money to pay Dan Kennedy. PDC: Okay. So where would you be if you didn’t pay that right now? SG: (0:08:36.9) Okay, so part of me thinks I would still be cold calling for a living, interrupting strangers as just a financial advisor instead of a serial entrepreneur owning four companies. I think I would probably still be doing magic professionally. I would have applied the stuff that Dave Dee taught me to my financial services business so hopefully it would still be successful, but I don’t think I would be anywhere close to where we are now.  PDC: And that was a W-2 job, am I..or were you… SG: It was 100 percent commission. PDC: One hundred percent commission. Did you leave immediately after you opened up Marketing Domination LLC? SG: (0:09:16.7) Yeah. So I left October 23, 2007, because October 23rd was my brother’s birthday. I just happened to pick ‘07 as the year we did it. I left and started my own financial planning firm, leaving the Fortune 500 company and the marketing firm the same day because the Fortune 500 company wouldn’t let me do all of the marketing I wanted to do on the financial planning side. They had tentatively let me do the marketing firm, but that was when I was charging a couple hundred bucks a month and didn’t have very many clients. I could see the writing on the wall that, as we were growing, they were going to have a problem with it because they had a sales prevention department. And I also saw the writing on the wall that there were rumors we were going to get bought out by a bank because it was the subprime bubble burst, and I didn’t want to stick around. There’s no way a bank would’ve let me get away with half the stuff I wanted to do, so I left and started both companies on the same day. PDC: Cold calling is big in real estate as far as the operators who are out there looking for the motivated sellers. So how many cold calls were you making before talking to Dan Kennedy and then after? SG: (0:10:23.1) Okay, before talking to Dan, I made 300 a day, which your guys who are calling FSBOs and stuff like that can totally relate to. I’ve done some marketing in the real estate education space for some of the household name gurus selling courses, coaches, mastermind programs, so I know a little bit to be dangerous. So yeah, I was making 300 dials myself. We didn’t have virtual assistants back then making cold calls for us. It was all me. Since then, zero. After this marketing I learned from Dan started working, I only took inbound calls, which was the dream he sold me. It was you’ll stop cold calling and people will call you and want what you’ve got. I said, “Oh my god! That would change my life!” So then he said, “Okay, write me a really big check.” So I went from 300 a day to zero.  PDC: So do you not then recommend with your clients..you take clients from Marketing Domination LLC, right? Is that the main..okay, so any client, any industry that comes in, do you try to get them off of cold calling? SG: (0:11:16.3) Absolutely! Because they’re hiring us to generate the leads for them. They’re hiring us to drive traffic or whichever of the services we offer. They’re hiring us to grow their business so that they can run it. So if they were cold calling, I would say as soon as our results beat yours, you should stop. Don’t quit until it’s working better. I had one client who had a course he was selling, and it was all driven by radio ads. I said, “We’re gonna replace your radio ads, but don’t stop the radio ads until we beat their results because the revenue won’t be there.” He did not listen. Thirty days in he says, “I can’t pay my bill to you. My credit card bounced.” I’m like, “Why?” “Well, I stopped spending any money on radio ads, and I haven’t made any money,” and I said, “We told you to take 90 days to build what you need. It’s a whole thing. I told you not to stop anything.” So don’t quit the cold calling until you have something better, but obviously our goal is to be that something better. PDC: So it’s not so much the channel..you don’t have like some secret channel that people..you’re trying to replace this type of one-channel mentality. So what are you replacing it with? Are you replacing it with different layers of marketing, and what is it exactly that you might be doing with a client? SG: (0:12:28.2) It completely depends. So yes, we’re trying to replace one channel because diversity leads to stability. If I’ve only got one source of leads and everybody gets on a do-not-call list, I’m screwed. I went through that cold calling. The do-not-call list originally came out when I was smiling and dialing, and all of a sudden I couldn’t call half the people on the list anymore. So I would say, yes, our goal is to get you into multi-channel. What channels are going to depend on the target market. So that informs every decision as to where we’re going to market. So you might be..depending on the base you’re going after, direct mail might be the best for you. We’re doing some real estate-motivated lead generation right now on Facebook. Or maybe it’s LinkedIn or YouTube. It just depends on what your target market is. PDC: And so does..I mean, I guess money would be a big factor for real estate investors, wholesalers. The reason why people start wholesaling is because they have no money. So I guess the… SG: Plus they’re not buying the house, fixing it up themselves, and flipping it. They’re flipping the deal to somebody else. PDC: Right, right, right. So that’s all contingent on marketing. So they’re trying to find easy, cheap ways to market, cold calling… SG: They’re out there doing rabbit signs and everything else. PDC: Right, yeah. Text messaging which is real cheap, although they’re doing it illegally I think from… SG: Technically you can’t spam people. PDC: Right, right. So somebody who has absolutely no money, you can’t really help them anyways, right? What’s some of the aspects you can add if you’re giving free advice to a real estate investor with no money trying to reach out to motivated sellers? SG: (0:13:58.8) Okay, so first of all, nobody takes free advice. If they pay, they pay attention. Given that disclaimer, you have no money and you need to generate motivated sellers, so if I’m telling you not to cold call or you want something better than cold calling and you’ve got no money, I would say your cheapest best bet is direct mail because if you made a list of FSBOs (for sale by owner) that you were cold calling anyway, you presumably have their addresses. So you could take a hundred of those people and literally spend $50 on stamps and mail them. You could probably fit four pages in a #10 envelope before the postage cost goes up. You could probably actually mail more than that. So let’s pretend you’re super cheap, and you’re sending a letter that’s front and back one page. You spent $50. You’ve got to buy paper, envelopes, and ink. I’m presuming you have a printer. But you can spend $50 and send it to a hundred people. You get a couple. You get one deal. I mean, obviously, your ROI is infinite. PDC: Yeah, I don’t want to dive too much into the marketing thing because there’s a ton of advice right there, and I think the biggest thing that real estate investors need to realize is the list is the most important part of marketing. So it doesn’t really matter on the channel. But I’m interested to know, on your progression, if you had a lot of time struggling, it took you years to get to where you’re at right now. If we’re just right out the gate, you immediately..I mean, we saw success in your firm, but what about afterwards and even before that? SG: (0:15:31.2) Okay. So I’m not sure if I completely understand the question, but I’ll answer what I think you asked. My first direct mail campaign was a complete flop. So the first one I did with Dan..the first thing I did bombed. It was a long form, multi-page seminar invitation. Financial advisors are taught to sell..instead of one to one, get 30-50 baby boomers with money in a room, feed them a free dinner, and try and sell them something. So I wrote a Dan Kennedy-inspired, long form seminar invitation, and it bombed. He said, “I could tell you why it bombed, but you’ll learn the lesson if you physically call people who didn’t respond, get on the phone, and ask them if they remember getting it and why they didn’t respond.”  I said, “You want just tell me?”  “No, I’m not going to feed it to you.” Okay. He’s like, “Here’s a marketing lesson. Survey the nonresponders.”  So I started cold calling people who got the invitation, and the headline I think I had written was like 9 Biggest Retirement Mistakes, something like that. Every single answer I got as to why they didn’t respond and who remembered it was exactly the same, and the response was, “Son, nine biggest retirement mistakes? I probably made 11. What do I need to come to your workshop for?”   I said, “Dan, that’s what I got,” and he said, “Change your headline. I’m going to add three words, and it’s going to work this time.”  I said, “Awesome! What are the three words?”  He said, “Change it to How to Avoid the 9 Biggest Retirement Planning Mistakes.”  I changed the headline. We didn’t change anything else. We mailed it all over again. I had a full house. PDC: Wow!  SG: So my first attempt doing it myself with a little bit of guidance..he was like, “I want you to write your first one to see how well you can write and learn my copywriting techniques”..failed. It was an easy fix. Has every single campaign been a hit along the way? No, absolutely not. But we fail faster. We fail cheaper. We fail smarter. I try and make new mistakes and not make the same one over and over and over again. So yeah, there are ups and downs. It’s a roller coaster no matter what, but the bumps get smaller. You even it out more. You learn and improve along the way so that any mistakes you do make are smaller than when you don’t know anything. PDC: Hey real quick, I want you to introduce you to my free daily newsletter where I give out free daily tips to real estate investing strategies, marketing, and sales techniques to keep you, the part-time investor, moving forward every day. So head on over to RealEstateAudios.com, and you’ll get a free report along with that free daily newsletter. Your success with your firm was a combination of rolling out a direct mail campaign and then tweaking it by surveying. That was plainly what you did. I mean, it was nothing too sexy. No ninja tactics, no… SG: (0:18:19.9) There weren’t any back then. It was print ads in magazines and newspapers and direct mail. There was no..we didn’t even have a website. PDC: So today, being that technology has expanded, is that now a lot more inside of your firm right now, are you doing a lot more technology-based marketing? SG: Absolutely. Most of it’s online. We do drive traffic online via direct mail, but I would say at least 80 percent of the traffic we generate comes from social whether it’s Facebook, YouTube, LinkedIn, Google, display ads, native ads. I’d say 80 percent of our traffic is online.  PDC: All paid ads.  SG: All paid. PDC: Is there a lot of frontend work as far as the organic reach goes? SG: We’re not organic experts. I cannot help you get found on the first page of Google. That’s not our sweet spot. That algorithm changes faster than Facebook’s, and I don’t pretend to be an expert in it. Plus you can’t control it whereas I could literally buy ads from Facebook or Google today, punch in my credit card, and have traffic tomorrow, and depending on how much traffic I buy..there’s lot of traffic stores..I could find out in days, hours, or a very short period of time if I had a winning idea or not. If I were testing that the old-fashioned way in direct mail, it might take weeks to run a bunch of different..I mean, I can run 250 split tests in Facebook ads in a week or two. In direct mail, that would either require a massive budget or it would take months and months and months to execute. PDC: For the real estate investor in my audience here, the common critique for doing Google ads is, “Hey, I have like three or four ads up there. They’re all for homebuyers, and how it operates is, whoever gets that first click and whoever answers the phone immediately is going to get that deal or that seller.” Is that true, or can you defy that norm a little bit by adding some other layer to your business? SG: (0:20:17.2) I would hope you defied it because if you do what everybody else is doing you’ll get the same results everybody else gets, and if you’re all fighting it out..so that’s my issue with Google search ads is that it’s a bloody red ocean, right? You’re competing..if the search term you’re bidding on is the same search term as everybody else, then you’re also going to be competing against a real estate brokerage like ReMax or Hunt or whoever depending on your area, Coldwell Banker, Prudential. They may have bottomless budgets that they can afford to waste on stupid ads whereas we can’t. We have to make things work. So I would rather not show up where everybody else is. I would rather show up in a competitive vacuum in a marketplace I can own, which is going to require a lot more thought and expertise to pull off than to just show up on a Google search term of buy a house with no money down or something. PDC: Right, right. So you mentioned defy norms. That’s a Dan Kennedy thing, defy the norms. So what are some things that you defy norms in your own business and maybe we can talk about how to apply that into real estate? SG: (0:21:19.7) I have pretty much fired myself from actually serving clients. I have a great team that is doing that for us now. Normally in the marketing world, you’re supposed to be deeply, intimately involved with every single step of the process. I’ve built a business that I think works better than that. I have built systems that tell my employees and team members what to do every day for what client and make sure they do it right that I don’t have to run. It’s allowed for better results. It’s allowed for faster scale. It’s allowed for less stress. So I think I’ve defied the norms in both of those areas. And I’ve created services for our own business that didn’t exist in the marketplace that then we’re the only ones offering to the point where we now have competitors who copy what we do and then try and figure it out and then sell it to other people. I’m flattered by the competition, but obviously we do our best to stay ahead of the curve and be the ones who are inventing as opposed to copying. PDC: So you’re defying the norms by the structure of your business. So what’s the normal structure of the business? It’s just a one-man show in that industry? SG: (0:22:32.2) Well, it depends. So there are a million so-called people who take a digital marketer course, hang up a shingle in their parent’s basement, and say I’m a marketer. They go to BNI, and they say, “I can build you a website. I can build you a funnel. I can run Facebook ads.” We come across them all the time, and they don’t know anything or they don’t know what they don’t know. Joe in his basement who has five clients and is 27 and is making a respectable living as a 27-year-old living at home and managing $10 grand a month in Facebook ads versus we’ve generated 30 million prospects. Obviously we’re going to know stuff he doesn’t. I think there are a lot of want-to-be internet marketers versus there are fewer real companies doing it. I think that’s one way we have defied the norms in the structure I think. There are a lot of firms that do one thing. So, hey, we only do Facebook ads, or we only do YouTube. There are a lot of firms that outsource. Hey, hire us, and we’ll hire a team in the Philippines to do the work.So I think the fact that we have multiple disciplines under one roof. They all speak English. They all work here. All of those are some of our differentiating factors. PDC: Okay. So you have a lot of different steps, and I’m in that same boat where I’m putting on all these hats. Going along this way, did you learn all these hats first? You mastered them first until you finally can create a system to outsource that or hire somebody in? SG: (0:24:01.3) Yes until I learned better. I originally thought I had to know it all myself so I could teach it. That was a painful lesson until I realized I could hire someone who had a skillset I didn’t have and then have them build out the system so that they and others could follow the same process. PDC: Hire them in as a W-2 employee into your business or just a freelancer? SG: We’ve done both. We’ve had them as W-2. We’ve had them as 1099. But you’re going to create a process so that, if you ever leave or if we max out your hours, somebody else can follow along and do the work. PDC: I think that’s a big struggle. I think that’s a harder thing to accomplish when you’re creating a business is how to do all these little things. I have the mindset of trying to do everything, learn it, and then create SOPs and send that out to somebody else. We can have a separate conversation about that. There’s an app for that. I mean, it’s not really an app, but there’s a solution to that. At least it worked in my business, and then we started licensing that program to others. So we could certainly have a conversation about that. PDC: Interesting. Let’s circle back to real estate investing. I didn’t know that you’re just doing digital marketing then. That’s what your firm does for others is… SG: (0:25:20.2) We do what we do. Digital marketing. We do direct mail. We have a separate podcast production company and a separate publishing company. So we’ve got an array of services under one roof. PDC: Okay, so let’s circle back to digital marketing. Digital marketing is getting big for real estate investors, although the niche is tiny. The niche is so small. What are some avenues you would have the motivated buyer trying to get for-sale-by-owners, trying to find probate leads, because the niche is very small. It’s a needle in a haystack you’re trying to find. It’s a $20,000-deal needle in a haystack. So what channels would you recommend for somebody getting into this business of digital marketing to find sellers? SG: That’s an awesome question. So we’re currently doing a pilot program for a small group of real estate investors right now. They’re not wholesaling. They’re doing lease options. So they want motivated sellers as well. Right now, we’re doing a beta test of Facebook ads is what we’re running for them, driving to a lead magnet, getting them into a funnel, getting them on the phone, getting them to fill out an application, qualify to a phone call, to a scheduled appointment. So we’re doing that.  I would test..we talked about direct mail. Depending on where you’re getting the information, cold email might work, but technically I didn’t say that because you can’t just randomly email people. Then I would look for leverage. I bet you there might be other professionals who see those people. So if you could build a network..like we have a strategic podcast program that builds you a whole bunch of affiliates out there promoting what you do in a local market. So maybe that’s the attorneys, maybe it’s the real estate agents, maybe it’s the mortgage brokers, home inspectors, whoever that real estate mafia is that would see motivated sellers. So maybe it’s the realtor that has a listing that she can’t sell that is now going, “Oh, they’re going to fire me in a month because I haven’t gotten any traction on their house. I should send it to Paul because he can get it taken care of.” That might work. I haven’t had anybody try that yet, but it might work. And then..I mean, I personally sold..we moved into the house we have now seven years ago. I sold our house before that with a Facebook ad. PDC: Really? Okay. SG: I ran Facebook ads to a list to register for our open house. My realtor had no clue what I was doing and said, “Oh my god! There’s a line out the door. I just put it on MLS. I don’t understand,” and I said, “Well, we marketed the house.” And we had a bidding war, which in western New York back then was not normal, and we sold for over asking which wasn’t normal back then because our real estate market was cold seven years ago. So there’s lots of ways to play it. PDC: Go back to the networking thing because I think that’s..leveraging the local area is highly powerful. How do you..I think that when I started that was a big obstacle. Like how do I..I’m getting in front of this attorney. He’s a professional. He can sniff out anybody who doesn’t have any experience or any fakes out there. So a newbie coming in, he can be of value, but he needed to have the mindset of it. So somebody coming in, how do you build the confidence? What can you do with no experience but approach attorneys and professionals to pass on deals to you? SG: (0:28:41.6) I would start a podcast. I would interview them for a show, so it’s not about you. You’re not trying to sell them anything. It’s all about them. So half an hour to an hour, most likely half an hour, letting them talk about themselves. Then they will love you for it because when is the last time someone ate it up when they talked about the law for half an hour and how they got started? So I would start there. It would cost you next to nothing unless of course we did all the work for you and then we’d charge you well for it because it’s a lot of manual labor. But if you had time but no money, it would work. You could do it yourself. So I would start with a podcast. I would interview them and do a, I don’t know, Western New York State podcast or whatever you call it, and then by interviewing those people, they will love you for the mini exposure, even if you have zero. We got our first client from my podcast..I mean, when I started it, I had 15 episodes on FreeConferenceCall.com. Zoom didn’t exist all those years ago. We did it..I mean, I had like seven listeners and one of them became a client. The other six I think were related to me. So if you wanted to build a sphere of influence of local professionals who might see the deals you want, I would start with a show.  PDC: That’s amazing! I have not heard that yet. That’s an amazing tip. I’m new to doing podcasting. I’ve done it since this whole year, but it has been a key to a license to approach people I would never be able to come up and approach with. That’s amazing. So do you think that following up with this sphere of influence..you’ve named your top 25 like we talked about in the beginning of the show. Following up with these attorneys, these professionals, these other real estate agents, would that be key to all of this as well? SG: (0:30:28.1) Yeah. The way our process works is after the show airs there are social media posts for them to post about the show. We turn it into a blog post so there’s a blog post written about them. We turn it into a physical bookstore book, so then there’s a book that they’re in that they’re promoting and handing out to their clients to tell them about it. Then we host a monthly..right now because of Covid it’s virtual, but a monthly networking group just for the people on the show, the show guests. And then of course you’re the only real estate investor on that call every month so all that business is going to come to you.  PDC: Speaking of a book,there’s less than a handful of people that I’ve met that are actually writing a book that is for the motivated seller. Have you seen that in this industry? This would be defying the norms. Do you think this would be a good approach to becoming the expert leader in your market area? SG: (0:31:20.7) Yeah, it would be totally different because, if you think about it, all those Google ads you talked about where whoever is the first person to call them back or whatever wins. What if instead of running the I’ll buy your house ad, it’s get a free copy of this book on how to sell your house for top dollar without a realtor. That’s a sexy lead magnet. PDC: Or 20 Ways Investors Are Scamming You, right? SG: Yeah, you could do that too. Absolutely. Either of those would work.  PDC: That’s the Joe Polish Method, right? Kind of be the spokesman against all the frauds out there. SG: Yes, absolutely! That is..Joe is in that mastermind group with me. I’ve known him for a lot of years. I was in Genius Network before it was $25K, before it..when it was still Piranha. So yes, the old consumer awareness advocate absolutely works. PDC: Right. Yeah, yeah. Awesome. Awesome. Well, I think that’s..I mean, there’s probably a lot of stuff we can pick your brain about marketing. The whole point is defying the norms, and you know what? I talk to a lot of people about that, and they’re afraid to defy the norms because nobody else is doing it. SG: (0:32:26.2) That’s the point. That’s why it would work. PDC: Exactly. They want a result to text blasting, to scrubbing a list and getting..just random cold blasts generating a small percentage but, hey, it’s cheap. It’s pennies. SG: Yeah, I have a real estate investor. I did a consultation with him the other day, and he’s doing..he at least had a niche in that he was going after veterans because he was one. So he was like let a veteran buy your home, and he was sending postcards. And he was like, “I do these, but they don’t work. But I keep doing them.”  And he was like, “I send out a thousand, and I haven’t gotten a deal, and I sent it out a couple times,” and I said, “Well, can you only do deals in your local market?”  “Well, no, of course not.” I said, “Okay, so let’s build a Facebook fan page for veterans, build up a fanbase, get 10,000 veterans following you, and then run an ad to the veterans, which would be probably cheaper than a postcard. Instead of just going after the low-hanging fruit, show up every day as an authority in that space, and the ones that are ready will come to you.”  He couldn’t get his head around it. I even offered to do the marketing. I said, “If you’ll do the deal, I’ll do the marketing. Just cover the cost. I’ll do it almost for free if you’ll give me a cut of every deal.” You can lead a horse to water, but you can’t make him drink. PDC: (laughing) Do you think that..the quote “lead magnet” in this business is always call for a cash offer, call for an instant cash offer. People kind of play around with “get a cash offer in five minutes” or whatever. Is there anything you could think of that could be a different and motivational lead magnet they can use. SG: (0:34:10.6) Yeah, absolutely! If everyone is doing it, how effective is it, right? They’re all offering the same thing. How do you stand out as a red ocean, not blue? So I would say a free report, a free consumer awareness guide, free video, free checklist, free cheatsheet. Any of those would probably work. PDC: You’ve just got to think outside the box a little bit. SG: Especially in the “call now,” the issue is they know they’re going to get sold something. They’re afraid that some high-pressure dude is going to try to sell them “give me your house right now” or whatever it is. I would say the people who are actually going to call are probably really, really motivated or desperate, and I would say the majority of those people probably won’t call and you need something gentler to warm them up. You got to date ‘em before you take ‘em home, right? PDC: Right, right, right. Now, that’s another thing. Instead of the “call now,” you can get their email. That is a common critique I hear is, oh, email marketing doesn’t work in this business. You guys do a lot of email marketing, right? As am I. If they’re not getting attention, they’re obviously doing something wrong. My guess is they’re not giving value-based emails. In your experience with email marketing, what are some do’s and don’ts and how can we apply it to here? SG: (0:35:24.4) Sure. It depends on your definition of email marketing. If we’re talking about email follow-up like we drove the lead to request something and then we’re dripping on them, obviously we’ve got to provide them with valuable content that establishes us as an authority who is trustworthy.  If you’re talking about outbound email marketing to try and drive them there in the first place, then you’re talking about you got a list from somewhere and you’re marketing to them. Then the most important thing you have to deal with is you’re From email address. Do you land in promotions? Do you land in spam, or do you make it to the inbox in the first place? Then your subject line which is going to determine whether or not your email gets opened.  So I would say most important would be the domain you’re sending from. Don’t do paul@gmail.com. It should be paul@whatever, .webuyhouses or whatever. The subject line for those emails..I would run a lot of split tests to come up with a subject line that gets people to open it because, again, they’re strangers at this point in that example. PDC: Right. Now, is the email provider as important as the kind of content you’re sending out? In doing everything you mentioned there, does a good email provider really matter, or are all of them kind of the same type of… SG: (0:36:40.3) It absolutely matters because, if you’re sending from yahoo.com… PDC: I meant like Aweber versus Mailchimp… SG: Ah, do those matter. Okay. Each one of those has their strengths and weaknesses, and they all..you can check whatever the deliverability rates are. We’ve used them all, but we certainly haven’t memorized it so I don’t know. Are some better than others? Yes. Is there going to be a ginormous difference. I have no idea. We haven’t actually tested it. I haven’t had a client go, “Buy an Aweber account, a Mailchimp, Constant Contact, and an Infusion. Let’s run the same email from all four places.” That would be a pure split test. You would really find out, but we’ve never done it. So I would say you’d focus more on the subject line, getting it open then buying four accounts at four different places to see which one works the best. PDC: What matters most is obviously the subject line, writing a good grabber, and the content inside of it. They have to keep reading it. They have to keep coming back to it. SG: (0:37:33.8) Yeah, they have to get it open, and then you have to get it actually read. So you can’t send a subject line that says “Sex,” and then they open it and now it’s buy life insurance, right? That doesn’t exactly work. PDC: Right, right, right. All right, Seth. I appreciate you being on the show, man. I really do. Thanks for bringing your tips, everything that you use in your digital marketing LLC. How can people reach you if they want to use your service? SG: Yeah, absolutely. Go to MarketDominationLLC.com. There’s a couple-minute sizzle reel there that tells them more about us and then fill out the form next to it and we’ll give any of your listeners a 15-minute consultation where nothing will be sold. You’ll tell us what your biggest problem, biggest challenge, biggest opportunity is, and we’ll solve it in 15 minutes. PDC: Awesome! Thank you, man. SG: Thanks for having me. PDC: All right. That’s a wrap, and I hope you enjoyed it. If you did, please go ahead and subscribe to it on iTunes, Google Play, Spotify, or whatever you use. It really helps me keep producing these. Just search for the Deals Today Podcast in your podcast directory, podcast app. If you’re not on my daily email newsletter and you want to be and you want to receive the free 40 Ways to Find a Deal seminar, go ahead and go to RealEstateAudios.com/flipping. Again, that’s RealEstateAudios.com/flipping.

Pooping on Sellers carpet