Today on Unstoppable REI Wealth I am joined by Mike DeHaan. Mike is the owner and Marketing and Acquisitions specialist at INW Properties LLC. A local Spokane Cash property buyers helping the economic rise of the Inland Northwest by restoring properties and making them available for lease or sale.Additionally he works as a Full Stack Web Developer with various clients developing custom web applications for their business needs. From marketing websites to complex custom online tools, I have helped businesses expand and grow online at capacities far greater than if they had a simple templates Squarespace or Wix website.Mike previously obtained his BS in Electrical Engineering from Gonzaga University in 2013 and worked as an Electrical Engineer for 5 years developing and managing large, complex projects at various companies before discovering a passion for coding and deciding a career shift was needed. Back to the conversation at hand. Mike started his real estate business simply because he was at a startup company that was not cash flowing like he needed it to be and so he bought two houses to be rental properties. He then got multiple properties, a duplex, a triplex and more by networking and scouring the MLS database. Oh and did I mention he left a six-figure a year job through all of this? Listen in as Mike shares his story about building his real estate business. It was an incredibly great conversation that we had and for any of you thinking about starting, growing or scaling your real estate business this will be a great conversation to listen to. Thank you for listening and as always come find me at billyalvaro.com or billyssecrets.com
Today on Unstoppable REI Wealth I am joined by Mike DeHaan.
Mike is the owner and Marketing and Acquisitions specialist at INW Properties LLC. A local Spokane Cash property buyers helping the economic rise of the Inland Northwest by restoring properties and making them available for lease or sale.
Additionally he works as a Full Stack Web Developer with various clients developing custom web applications for their business needs. From marketing websites to complex custom online tools, I have helped businesses expand and grow online at capacities far greater than if they had a simple templates Squarespace or Wix website.
Mike previously obtained his BS in Electrical Engineering from Gonzaga University in 2013 and worked as an Electrical Engineer for 5 years developing and managing large, complex projects at various companies before discovering a passion for coding and deciding a career shift was needed.
Back to the conversation at hand. Mike started his real estate business simply because he was at a startup company that was not cash flowing like he needed it to be and so he bought two houses to be rental properties.
He then got multiple properties, a duplex, a triplex and more by networking and scouring the MLS database. Oh and did I mention he left a six-figure a year job through all of this?
Listen in as Mike shares his story about building his real estate business. It was an incredibly great conversation that we had and for any of you thinking about starting, growing or scaling your real estate business this will be a great conversation to listen to.
Thank you for listening and as always come find me at billyalvaro.com or billyssecrets.com
[00:00:00] Billy: This is episode number 44 of unstoppable REI wealth. I'm your host, Billy Alvaro, the unstoppable BA. And today I'm interviewing Mike from Spokane Washington. Mike's a 30 year old stud. The guy started real estate investing full-time in 2018. He literally quit a $90,000 a year job snap of the finger didn't look back, built his parachute on the way down and literally transformed his life, him and his partner now.
[00:00:29] Little over 50 deals a year. And he just went from Spokane and he broadened his horizons. He's actually doing virtual real estate investing in Tennessee. So if you want to learn what he did, if you want to learn about, some of the tools and tips that he's initiated, put into play, learn about how he picked up his rental properties.
[00:00:49] He's a fix and flipper, a wholesaler and a buy and hold real estate investor. There's a lot to learn. Tune in, grab a pen. Listen. And don't forget if you want any of the tools and tips that we're talking about on this podcast. Go to Billy secrets.com. If you look at a JV partner, get involved, want to do deals with us, New York, New Jersey, Connecticut, or anywhere around the America.
[00:01:11] On the wholesale side, Billyalvaro.com. Work with Billy. Go on there and fill that out. And let's make some money together. Welcome to unstoppable real estate investing wealth. My name is Billy Alvaro, AKA the unstoppable BA former billion dollar mortgage banker gone bankrupt turn professional real estate fester where each week you'll learn the tools, strategies, systems, and secrets.
[00:01:39] And other highly successful real estate investing entrepreneurs use to start, grow and scale their businesses, creating massive profits and how you can too. And we'll teach you how to put those profits to work. So you no longer have to get ready to finally experience financial freedom and generational wealth.
[00:01:58] Now let's get started.
[00:02:02] What is going on, everybody back to another episode of unstoppable REI wealth, you know who I am, your host, Billy Alvaro the Unstoppable BA. And I'm back from a summer off. I took that whole summer. I just kind of did me and did my rehabs. I had some major problems, which I spoke about a little bit on social media.
[00:02:22] Building a construction company, not as easy as it sounds. I'm going to have some guys on, I'm going to be interviewing in the next couple of months to talk about what it takes, not to just have a rehab company, but to go out and actually start a true full-out construction company. So today I have a young guy, you know, the podcast is about starting, growing, and scaling.
[00:02:40] And in the podcast, I interview a bunch of guys and girls that are at different levels. They're either starting out, they're growing where they're scaling the things, and I want to pick their brains. The tools, the tips, the tricks strategy systems, the secrets that they've used, they've employed to get themselves to where they were, where they are now and where they want to go.
[00:02:57] So today I'm interviewing a young guy, Mike, the Han I know saying your name, right? Cause I asked you beforehand, Spokane Washington, Mike, welcome to the show.
[00:03:06] Mike: Yeah. Thanks, Billy. Appreciate you having me on.
[00:03:08] Billy: Yeah, bro. So, uh, first of all, how old are you?
[00:03:11] Mike: I'm 30.
[00:03:12] Billy: You look a lot younger?
[00:03:14] Mike: I know I get that a lot. I know it's funny.
[00:03:18] I'll go out with my buddies all from college and I'll be the only one that still gets ID. So 10, 15 years. That's. Yeah, I good.
[00:03:27] Billy: So listen, I know you've, you're pretty new in the industry, right? You've been started now for about three years.
[00:03:33] Mike: Yeah. So I guess, you know, new and, I guess in terms of how long you've been doing it, but you know, we've done quite a few transactions, um, over the past few years.
[00:03:41] So, you know, we have the experience there, but yeah, I've been, been investing since, 2018.
[00:03:45] Billy: So, let's go into your story. Tell me, tell the audience, how did you get involved with.
[00:03:50] Mike: Yeah. So it was kind of by accident. honestly I got an engineering degree from Gonzaga university here in Spokane.
[00:03:58] Graduated and went to traditional path, went and got an engineering job. And I did that for about five years, you know, like your parents proud sort of thing, you know, got the good degree and the good high salary job. But after about five years of that, I worked a handful of different places. I think it worked for different companies in five years and I just hated it.
[00:04:15] So I, pretty much jumped ship without a real plan. And I just quit my job and decided I would figure it out, which was, you know, kind of a difficult thing to do because that time. My wife is working as well, but I was making, you know, 70% of our household income. So I pretty much just walked away from that.
[00:04:32] Billy: And, and if the listeners are perspective, because that takes balls just to take uproot and quit be making, when you decide to quit your W2 job.
[00:04:40] Mike: Yeah. So my salary at that point was, I think it was just over 90 grand to my total compensation with bonuses, about 110,000.
[00:04:47] Billy: So consistent every single week or every two weeks you had the paycheck coming in security.
[00:04:54] Mike: Yeah, exactly. No. And I had a 401k match, like all the good health benefits. I had a pension, all that sort of stuff, which all just went away.
[00:05:03] Billy: So. You're trained as an engineer, generally, you guys are more, you're not risk, you know, you don't usually expose yourself to risk your risk of right.
[00:05:12] Mike: Typically, yeah, so I was never the good fit for an engineer, to be honest.
[00:05:17] I mean, one of the main reasons I chose engineering at the start. You know, when I started college 2009. So it was right after the bus. So, you know, I remember I went to my first career fair my freshman year. And, , there was like six companies there, you know, because no one was hiring anybody. And I was like, okay, like nobody's looking for employees and other people that are here, five of them are engineering companies.
[00:05:39] So I was like, okay, cool. I guess I'll do engineering. And then I was like, well, what engineers pay the most? And I was like, okay, electric engineers. Sweet. So I'm going to do that. I just went down that route. So didn't really have an intrinsic interest in it, but, you know, making, what I thought it would be a smart long-term financial decision.
[00:05:55] That's what I did. And, you know, I was always from the mindset of once I just get through school, then I'll start to do like the actual work. And I'll maybe I'll like that more, which is I think the biggest mistake that so many people make. So yeah, definitely not risk averse, but I've always kind of been a little bit more risk.
[00:06:10] Oh, sorry, not we should have been more at risk tolerant because I don't know. I sort of just grew up with doing like extreme sports and just like being willing to put my neck out there and just sort of see what happens whenever I wanted something. And as,
[00:06:24] Billy: you have that entrepreneur spirit inside you
[00:06:26] Mike: I do. Yeah, for sure.
[00:06:27] And you know, I've always been the guy to that. We'll just jump and build a parachute on the way. So know for, for better, for worse, but yeah. Yeah. So anyway, so I walked from my job and a couple of months just sort of like trying to figure it out. You know, my wife and I traveled a little bit. We went down to New Zealand for just under a month and I don't know, still I found myself, we traveled around sort of thing.
[00:06:51] And then. I came back, decided that I wanted to get into tech startups. You know, I'd rather read a lot of books about passive income scaling businesses. And that sort of interested me in a lot of the books that I read were very web business focused and software focused. So that was kind of what pointed me down that direction.
[00:07:09] So I taught myself how to code over the following months. And I started working for a web development company based out of Chicago, like a startup. And you know, my goal at that point was to get with an early stage startup. See if I could get. Equity or ownership in the business and then hopefully, you know, grow that and sell out at some point.
[00:07:27] So as I was working for that, though, I realized that, you know, early stage not looking to pay very much because they don't have any money because no, when you're employee number four, there's no money really to be had there except for whatever the owners might have. So I was making like $200 a month doing that.
[00:07:41] And I was like, okay, well I need some passive income here, so I can focus on this startup full time. Well, still getting some cash coming in without needing to do a whole lot of work. So I went to my corporate 401k is if you're looking at my balances, which were pretty decent because I had been working good corporate jobs for five years and the economy have been growing pretty strongly, so liquidated all of it, bought two rental properties.
[00:08:05] And I got that idea purely just from a friend who owned a couple of rentals and he was getting mailbox money. I was like, okay, well maybe I'll try that. I bought two new build houses, just down the street from where I live. And it's funny because I knew nothing about investing in real estate. At that period of time, I was just like, oh, my payment will be 1200 bucks a month.
[00:08:23] I can run it for 600 bucks a month. I want to make $800 a month between the two houses. That's perfect. You know, I didn't take into account maintenance, property management, any sort of expenses, vacancy, whatever. So I kind of jumped into those and immediately I realized I'd made a mistake because I realized there was all these other things that were going to come into play that I hadn't accounted for.
[00:08:43] And.
[00:08:44] Billy: Building a parachute on the way down again,
[00:08:46] Mike: exactly, exactly. 100%. But, you know, I just sort of stuck with it and I stabilize them and, um, I actually found a, uh, a niche that balanced it out pretty well, where I connected with the state that was looking to home some physically disabled folks. And, you know, I connected with them kind of on another thing on, on accident, just from networking with people.
[00:09:08] And they were willing to essentially pay premium rates for houses that were like this, that were turnkey. Cause they were, you know, mostly finding houses that needed a lot of work that were willing to work with them. So I rented out these houses for prima rates to these perfectly fine individuals, but they were all physically disabled.
[00:09:24] The group homes might that you were doing kind of, so like it's not like a group home, but basically the it's like a subsidize, it's like a personal. Individuals in the care of the state. So there'd be like one or two people in each house. It's the same person. It's not like there's not really any churn.
[00:09:39] And, that basically half the rent is subsidized by the state. And half of it is paid by their family. So, you know, it's kind of a decent little niche and you know, they're still in both these houses and they still have. Prima rent and there's no maintenance, they handle everything. So it turned, it's turned into a really good investment and, you know, in rents grown just the same as it has.
[00:09:58] So I got lucky there, um, to be completely honest, but then, uh, you know, those houses have also doubled in value since I bought them in 2018. So I can't complain. Um,
[00:10:07] Billy: so those were the two houses that you got your additional start.
[00:10:11] Mike: Yeah, exactly.
[00:10:12] Those are the first two houses that I bought. And then that was like June, July, 2018.
[00:10:17] Um, December of 2018, I started to get the bug a little bit to invest some more and we wanted some meet ups. So I bought a duplex and I was able to buy that duplex because my wife and I, we finished the basement in our house that we owned and basically added a bunch of square footage and we did a cash out refi.
[00:10:34] I essentially did like an accidental house hack, I guess, you know, I guess it hacks don't live in flip cause we increased the value of our property. A huge amount of labor to apply about $60,000 bought a duplex, which was our third property. And then that one was started cashflow really strongly because, you know, having the two sides to it there, and then I kinda got the bug after that.
[00:10:54] So I started really getting into learning about real estate investing, going to meetups, listen to podcasts. And that was early 2019. And then early, I guess, March, 2019, I bought my first flip property. Over the course, 2019, I flipped a couple of properties myself, but I guess to myself, with the financial partners didn't have any money, but I did the hustle and sort of figured it out, bought another triplex with those proceeds in August, 2019, and then November, 2019.
[00:11:20] I decided that it was getting really hard to find more properties to invest in on the market. So I decided to start a direct to seller business.
[00:11:29] Billy: So he's on the stand up to that point. Everything you buy was listed properties on the MLS through.
[00:11:38] Mike: Correct? Yep, yep. Is on the realtor and it was all, all part-time while I was still trying to work with the startup.
[00:11:44] Billy: You're doing a, will you doing searches yourself on the MLS? Did you have brokers that you told them the criteria of the homes you were looking for? Like what, like relationship was driving in those MLS leads.
[00:11:55] Mike: Yeah. So it was, it was kind of a mix. You know, I had a couple brokers that I worked with pretty exclusively that knew what I was looking for.
[00:12:02] And, but then I would also be combing the MLS all the time, looking for opportunities that triplex that I bought in 2019, I actually got as a pocket listing, which was great. So, you know, that just came from the relationship there and that deals like it's funny. I still look at that. I can't believe that I got that as a pocket listing because.
[00:12:16] So like turnkey and it's like the best property, but it was purely because I'd been networking with the guy so heavily for most of a year at that point. And the seller. Yeah, 100%. And the seller was like, I don't want to play like the whole game where like, I have to bug all the tenants and do all the search stuff.
[00:12:37] One an easy close. The guy knew I was good for it, and we were able to get it done. So, yeah.
[00:12:42] Billy: I want you to break down from listeners on the investment side specifically. Yeah, let's go over your formula for figuring out if it's a deal that you would actually be willing to invest in. So for on your rentals that you invest in and so
[00:12:59] Mike: back then or now, cause it's very different because we have this, this wholesale business that we generate quite a decent amount of cash with.
[00:13:06] So, you know, because like right now we invest not only for long-term wealth, but also. The tax benefits, the cashflow and the tax benefits. But I mean, our basic formula for us, we like to be able to have as little cash, less than a deal as possible after it stabilized. We pretty much purely, purely by fixers.
[00:13:25] But on average, I like to have at least $200 with a cashflow door going at $400 a month in cashflow to try bucks. They want at least 600. And, uh, I want there to be an equity position when I buy it at the very least. So, you know, that's where we make a lot of our wealth now, as we buy under market and even back then, the stuff that we were buying, we were typically able to buy with some equity in there because they were slight fixers or that.
[00:13:49] That triplex was, uh, it was a pocket listing. So we were getting it under market. I mean, I think that thing appraise for 50 grand more than we bought it for after, after we bought it. So, and you, and
[00:13:58] your first trigger,
[00:13:59] Billy: your first thing is you look for a minimum of $200 per door families. You want to try Plex 600.
[00:14:06] Is there any criteria you look for in regards to sales price plus rehab? Because you're all in on. What that is versus what the right is going to be. You have a formula, like a 1% rule or one and a quarter.
[00:14:19] Mike: We don't necessarily look at that. And any more, because we're buying at such a distress, such low prices and a such a discount most of the time.
[00:14:27] So, I mean, like we have one right now that, , was just a praise, I think for three 30, we're renting after $2,200 a month. Right. So that's very far off the 1%, right. But where's your pulling out all of our money plus $25,000 extra. So I don't really care if it's only $300 a month in cashflow. Cause it's infinite returns.
[00:14:44] You know, I already made 25 grand on the house, you know, and we have nothing tied up in there. So that they'll do that all day.
[00:14:50] Billy: When you're going through Mike and you purchasing. Now speaking about when you're purchasing these buying roles, I'll tell you what it's about your debt structure. You go in and use your own money.
[00:15:00] First, you get private money, you get hard money. What does that look like? And then how do you do the takeout?
[00:15:06] Mike: Yeah. So we have a couple different private money lenders that we use for a lot of our purchases. You know, like just like individuals that we know that we've networked with that will lend to us on pretty favorable terms.
[00:15:16] That's usually our first priority. If it's a deal that they don't have the capacity for, we have some hard money lenders that we work with that, uh, we've built relationships with them so we can get typically better terms than the average person can with them. So we're getting rates right now, I guess.
[00:15:32] Hard money. Our most recent one was eight and a quarter and one and a quarter points and that's, you know, pretty good. And, you know, that's 10% down with full rehab costs in there as well. So we'll do that. But then what we'll also do, so we can scale appropriately as we have some private lenders that will work with.
[00:15:50] Don't necessarily have the financial ability to do a full purchase, but the land for us and the down payments and like a second position. Yeah. So we use them pretty heavily to be able to do more volume to otherwise. I mean, we'd have to be put in three to $400,000 into the multiple projects we have going on at a time.
[00:16:05] And that's the greatest way to just complete. Hinder your business.
[00:16:10] Billy: It's a cash business. And a lot of times when you started, what they don't realize is, you know, you get two, three flips go in, and if you're using hard money or private money, but you have the down payment, somebody to construction costs, you can very easily tie up everything that you have.
[00:16:23] And then you have no money for operations. You have no money for marketing. And so, you know, the smartest thing that you can do is what you're doing. You kind of Mary first mortgage position, hard money you got private. With that second mortgage gap, funder to put yourself in where you're coming in with little to no money in the game.
[00:16:42] And you're fixing these things up and then doing a takeout, the backend.
[00:16:45] Mike: Yup. Yup, exactly. And you know, there's always the risks with that. Like, so even right now we have one that we're about to refinance. And as you looked at the comps that have come up, we've borrowed more money than we're going to be able to necessarily pull out on it.
[00:16:58] So we're going to have to have that cash available to pay out our private investor gave us the second. I mean at the same time, that also gives us the opportunity to keep getting more wholesale deals and flips and stuff locked down during that process. So it's not like we're having to pause all that because we put all of our cash into one project.
[00:17:15] Billy: Smart. All right. So let's go back. You were going from consumer to MLS direct or real to direct, and now you realize, or you just thought the scale, your game, you know, you're gonna have to start to go consumer direct. So what did you do to learn that? To start going consumer direct?
[00:17:31] Mike: Yeah, so, well, first thing I did is I approached my business partner.
[00:17:35] Who's also my best friend from college. He had a couple student rentals and he was actually kinda the one that got me introduced to investing a little bit and basically pitched him this idea of going direct to seller. And our initial goal was to basically wholesale all the kind of junky properties that we didn't really want and then keep all the good ones.
[00:17:53] So I pitched them on that. And I did that a, I guess, cause I was kinda nervous about it and B honestly, cause I needed his money because I didn't have a lot. And he was out, he had a record corporate job and he was doing very well for himself. So, you know, I didn't tell him that at the time I stopped told him that since then, but uh, you know, that, that was a big part of the pitch.
[00:18:13] And so that was November. And then how we got started was we joined a mastermind. So there's a, I mean, I don't know if I'm going to poke somebody else's mastermind in your show, but, uh, yeah, we did. We joined a group that focused on how to establish an off-market investing business. So as opposed to just like, oh, this is how you do something very specific.
[00:18:32] Like you see masterminds everywhere right now for like doing TV or direct mail or. This one was like, how do you go soup to nuts and tire business? Right. So started that. We're very diligent with it. We got super into like the weeds and like the longterm vision of that. So we started that, I guess, officially in December.
[00:18:50] By the time that we finished, it was beginning of March, 2020. And we sent out our first batch of marketing. It probably the worst time to possibly do so, which was March then COVID happened to like the next week, pretty much. So we spent, I think it was $6,000 of direct mail on our first letter of marketing and got approximately zero calls.
[00:19:13] Cause you know, the world. Yeah. So funny. Yeah. So that hurt, but then we sort of kept through it and then it took us four months almost to get our first deal, I guess, until about not quite four months, three and a half months till June to get our first deal. And we were about $20,000 in the hole and marketing and everything else at that point before we got our first deal that we, we assigned to another buyer in town, we wholesaled it for such an absurdly low.
[00:19:43] Price. They basically just bought it from us and we signed it for 7,500 bucks. They bought it from us. They list literally vacuumed it and listed it on the pro on the market. The next day, I think they made 85 grand. So
[00:19:59] it was a very much a learning experience, but, you know, we learned the process, right. And we actually made a great connection with these, um, buyers that time we've sold so many properties to them over the. You know, year and a half, two years that, I mean, it, it was worth me like in that connection.
[00:20:14] Billy: So I want to go a little deeper now because you brought marketing.
[00:20:18] Right? So, first of all, I want to go back and just bring up a couple of highlights. You've spoke about what I think is important for the business and realize, first of all, if you're resourceful, right. Any type of an entrepreneur or any business you're getting into, you didn't have the capital to do this deal, to do this business.
[00:20:34] You had no idea how you were going to do it. So you approached a friend and that's your JV partner. You guys started doing deals. So resource list, number one. Don't. If you're trying to start this business, don't use a lack of money or a lack of education as an effort. Excuse. Cause that's all it, is a freaking excuse.
[00:20:49] Like you could figure things out. If you want something done, you'll figure out how to make it happen. Second thing you said, which I think is extremely. Is for three and a half months of putting money out $20,000 plus on marketing sees zero return. I can't tell you how many people quit after their first, second to third mailing where they're like this shit doesn't work.
[00:21:11] It works if you stick with it. Right. And bro, you stuck with it for three months now. You made a $7,500 bullshit fee, 85,000, but you learn, you didn't value. Didn't throw the towel like you made shit happen. Two very important points wherever you go. But I want you to go in and want you to start going in to really give the listeners some insights as to your marketing.
[00:21:33] So you did direct mail specifically. Who did you, what was your niche? Who you target?
[00:21:38] Mike: Yeah, so. So very first batch was just absentee owners off list source. So super basic landlords with equity. You can pull that off list source for relatively cheap. And we started with that because that was our, our mastermind recommended after that, we started to niche down with, list off of prop stream, which are kind of the macro list that a lot of people market to, you know, so vacant properties, bankruptcies, pre-foreclosures kind of the typical distressed situations, right?
[00:22:06] So we started hitting those after the fact and our, our interestingly enough, our first deal actually came from our first batch of marketing that we had sent out three months earlier. So that's, you know, and we basically had kept following up with them continuously. And that's also the other thing that's big too, is we're able to get some successes.
[00:22:24] We were committed to that follow-up, which I think a lot of people. Somebody calls in and they're like, I'm not selling my house F you, and then, you know, they don't call them back. It's like, well, we just call it. We call them back in like a month to see if they want to sell it now, you know, and we still, to this day, we're still getting still getting deals that same way.
[00:22:40] So, uh, we started with like the super general macro list that everyone's doing, that every single new person says it's really saturated and they don't want to waste their money on pay. What we still, we still get deals to the same lists, every single. You know, it never ends. And I mean, that's the funny thing too, is people always want to reinvent the wheel.
[00:22:58] We're doing the same thing everyone else is doing, and it's just consistency over time. Right. And it just feels good.
[00:23:04] Billy: It's consistency. You have to be consistent at it. And you have to have a follow up process because to your point, a lot of people, the phone rings, if it's a no, or if it's on a, I'm thinking about it, that kind of league gets put into the UBIs and it's forgotten about, and if you don't have a killer, follow-up.
[00:23:21] Either something on pen and pad on paper or in your CRM to constantly follow up with these people, you'll lose the money today. My team from liens and marketing that we did two and three years ago. Wow. Yeah, I bet it's just consistency hitting them. You have to hit them. You know, there's like the seller pain threshold and sometimes when they first call it, they might be in the middle where they have some.
[00:23:45] You get them on the phone. They had a great day. You just got a raise and her pain threshold goes down the left-hand side that I'm feeling it. But if you continue to hit them, eventually they're going to be on tilt. And when they hit tilt and they can't handle it anymore and you're in front of them and your marketing pieces there and your messages there, and the fall happens, you're going to connect with that seller and close the deal.
[00:24:04] Mike: Yeah. Yeah, you're here completely right. Billy. And it's funny you say that too, cause we're actually going to be signing one around today. I'm expecting, and we looked at the lead and we made our first offer to them July of 2020 say, and yeah, now we're in October of 2021 and it came around again. So, you know, but just doing that, that follow-up and, and the thing too, that I always find.
[00:24:27] Especially with new investors is they don't understand that following up and calling people, having difficult conversations. It sucks. It never gets easier, you know, for most people, but that's just kind of part of the game. Like you kinda, you know, it's like doing a hard workout. Like even if you're a big workout junkie when you're like really in the grit of it, like at that exact moment, everyone thinks.
[00:24:48] Why am I doing this? This is really miserable, but at the same time, you get high off the results at the end. You know, when you get the contract signed around those months of making those uncomfortable phone calls are totally worth it. And you just, you know, it doesn't seem so bad anymore.
[00:25:00] Billy: It's like one of the best drugs you have to take.
[00:25:03] Right. It really, it really is though, honestly, yeah. What was on that deal and you're able to lock it down and help the seller, put them in a better situation and get paid for doing so there's no.
[00:25:16] Mike: There really isn't. I know. And it's funny, it's one of those things that people don't even understand until they get.
[00:25:21] Like, you know, even my wife, like we'll have like a big week and I'll be so freaking and she'll be like, are you okay? I was like, you just don't understand, like, this is like the craziest feeling and, and still, you know, we've been doing it for a couple of years. It's still happens all the time. Yeah. So the marketing and how many pieces were you putting out then when you started and how many pieces of love you putting out now?
[00:25:40] Yeah. So back then we were doing about four to 5,000 a month, you know, it would kinda just, just vary depending on the list sizes now. We, I guess this past month we did about 12,000 pieces and on top of the direct mail, we've also started doing some cold calling, and some PVC and some Facebook marketing as well that we get deals from on occasion.
[00:26:01] So, you know, we've expanded our marketing pretty heavily, and we got some more cold callers that we're starting to hear in the next week that we're just getting trained up. So, and the, one of the reasons that we're going to that is. As we've sort of started to get our marketing systems in place. We've just found that like certain types of leads respond better.
[00:26:19] I mean, I have certain types of leads. Certain individuals respond better to certain times of kinds of marketing, right. Respond to the same piece. Totally. Right. Yeah. So, you know, everyone always tries to get it into like, well, we're going to mail this group. We're going to call this group. We kind of mail and call everybody and different people.
[00:26:37] You know?
[00:26:37] Billy: So on the telemarketing side, you have Scouts in that you have your KPIs.
[00:26:43] Mike: Yeah. I mean, I do, I can put those up actually. What are you looking to hear about cold calling cold calls. Are you guys doing a month and how many actual paper leads are you getting from the cold calls? So calls, we don't do high, high volume calls with like a 10 line dialer or anything like that.
[00:27:07] We tried that a little bit and we just found that we would typically get a lot of callbacks from people who were kind of pissed off. So we do pretty like targeted. So we have collars that, just do a, , a one or a three line. And they kind of turned through stuff a little bit slower. So calls per week, we're doing I guess 1400 for last month, per week.
[00:27:27] So training through kind of slow and then our leads 26. Last month out of those 26, we had eight appointments, eight offers, no deals. Last month off of those, this month, we got two deals off of cold calling. So their bread and butter is really direct mail, but, you know, we like, so we mix that in just to be know,
[00:27:52] Billy: the key thing is, is that every single month, you know, you're, you might not close deals this month from the marketing that you did this particular.
[00:28:01] Correct close deals this month at the marketing was done last month, the month before the month before that. Yeah. It just takes time to cultivate these relationships and really get to the root of the problems with the sellers. Because not every seller you a low-hanging fruit, anybody can close the people in foreclosure.
[00:28:18] They're losing a house next week, that half to sell. I mean, if you're in the right place, the right time, you're going to close that deal. When it comes down to really getting people to know, like, and trust you to build those homes. Relationships, those deep relationships where they trust you to a point where like, you know what, this is the guy or girl that I'm going to go with.
[00:28:36] Even if your offer is slightly lower or even sometimes substantially lower than the compensation. If you're there and you're coming from a place of trueness, you're not coming from a place to just close them. You really try to solve their frigging problems. I mean, that's where the magic happens. That's where the money happens.
[00:28:52] And that's where the people just don't realize you have to take. Looking at the seller as a dollar amount. If you solve the frigging problems and care about what you're doing, it's going to show and come through when you're on the phone. And it's going to resonate and yeah.
[00:29:06] Mike: Yeah, exactly. And I mean, I think that's the biggest key that, that so many people don't realize is it all comes down to solving a problem.
[00:29:13] Like getting a deal up. There is no problem, very rarely happens. But, yeah, and I guess just for context too, docs by their cold calling. So our, our direct mail last month we sent 11,500 pieces. We got 82 leads. Was that 26 appointments, 24 offers and five. Yeah. So that's a huge difference. And then, but then also too, what's kinda interesting if you look at two of those deals that we got.
[00:29:39] So we got those deals that month, but it wasn't from that marketing. One of the deals from contact the contractor was 101 days the one was 111 days through them was 95 days.
[00:29:50] Billy: So three months with three months in long island and New Jersey, we have like a five month process from the time. From the time we actually get that contract in enclose.
[00:30:00] And it's, it's a long time. Like I tell people that it's starting out when we're in our area, that if you're starting today and you're going to fix and flip, you have to realize you're probably not going to see profits for six months to a year. All your marketing efforts that you do. And today it takes that long to turn.
[00:30:17] And not a lot of guys in this area could afford to wait a year before they start Receiving. You know, some return on capital.
[00:30:23] Mike: Yeah, exactly. And it's tough, but I think the trade is to when it does pay off, generally, it's going to pay off all of your marketing that you've been waiting for, you know, unless you do what we did and you'd take a stupid low fee on a deal, but even then, you know, if we learn the process, so, but yeah, so.
[00:30:41] Billy: Good stuff. So, the let's talk about your, some of your tool using inside your business. So what's the CRM you.
[00:30:47] Mike: Yeah. So we use a CRM called Ari simply, or is it already simply it's recently, it's a, it's been a great CRM for us. It's, the whole premise of it. It was built by these investors that had set up their own Podio, which is kinda what a lot of people use.
[00:31:00] And they spent all this time doing it and they basically just took their custom Podio and turned it into its own app. Yeah. So I think I know him. That's a charade is actually multiplies with me. Super, super good guy. Yeah. He's a good day. And, it's a smart system. And one of the things that's great about is that you don't have to have all these other systems for tracking.
[00:31:23] KPI's and you know, like your inbound calls, that sort of stuff, it's all done internally. It's kind of more expensive. So we have like the professional unlimited plan, which is like 300 bucks a month, but that gave us unlimited members, unlimited markets. And it gives us like, I think 30 phone numbers that we can have inside the system so we can track all of our campaigns really easily.
[00:31:42] You know, all the phone calls come through it, all the text messages go through it. So we can track like touch points and KPIs for everything in one central spot. So it just makes life so much easier than having to have this giant web of spreadsheets. I can do a lot of people get stuck doing
[00:31:57] Billy: CRM is it is the nucleus of your business.
[00:31:59] You have to have scale. If you're going to do a call with this. You don't need it, but if you turning this business real estate investing into a business.
[00:32:07] Mike: Yep. Yeah. I mean, you say it again, do a couple of those years. And honestly, I think if you're going to spend five, $10,000 in marketing in general, I mean, you're going to be getting probably 30 to 50 calls.
[00:32:18] I mean, I don't know about you, but I don't want to keep track of 50 people in a spreadsheet. Like that's the greatest way to get stuff. The look over stuff. So, I mean, you can get things like this at a lower price. If you're just a one man show you don't pay $300, whatever, but, uh, it just it's worth it.
[00:32:34] Like you get one deal from it because you're able to stay more organized. It's gets worth like a thousand bucks a year, whatever you spend for it.
[00:32:41] Billy: Yeah. Yeah. No doubt, dude. What are some of the, so on the marketing end, you hitting, you said you're hitting vacant, you're getting tax liens.
[00:32:49] Mike: Yeah, so we actually just got assigned around a tax lien one.
[00:32:52] Well, I guess it was tax foreclosure one last week. So we do those. We do, you know, like outside of the macro, I guess, sort of the public listing and get off proxy and everything. One of the biggest things that we've started doing is using VA's to scrape public records and that's been one of our biggest sort of advantages.
[00:33:09] Billy: So let's go with yeah. One was over that. So what does that mean? Going to public records? Yeah.
[00:33:16] Mike: So premises was saying too, that a lot of people think this is really difficult and it is. And also say that, you know, I'm in Washington state, it's a blue state with a lot of privacy rights. So it's probably a lot harder here than it is in most other people's states, but we can still figure out a way to do it.
[00:33:31] You just got to be a little bit more creative. So basically what we know, we have a VA in the Philippines that does a lot of our admin work. He basically goes into the court record. And he looks for, who's going to court for things like felony crimes, misdemeanor crimes, divorces, probates, cause like what you can see in the public court records here, as you can see, basically the name of the individual, you can see the date that their court date is set and you can see like a.
[00:34:00] Brief description of what their case is, right? No detail, no deep, no detail at all. So unless basically you call in and apply for this license and we try to do that, but they basically told us that we weren't allowed to, because we don't have an actual reason for it besides commercial use. So it goes in and looks for that.
[00:34:20] Then he goes, and he skipped traces the individual on, you know, we could use a couple of different systems, like free people search or Spokio or one of those. He sees if they essentially are tied to any properties through that, if they are, then we go and we look in the county assessor website to see if they actually own that property.
[00:34:38] Or if they were just a tenant, if they actually own that property, then we add them to a sheet and we add them to our, our marketing list. And so we have no idea if there's actual motivation there, but basically we're just going off the belief that they're getting divorced. If they're going to jail. If they're, you know, going to bankruptcy court, if there's a probate to the possibility that they might be motivated, you know?
[00:34:59] So, and then what that does is property is going to eventually have that data, or, you know, was that really flow would at like one of those large list providers eventually and have that data, but we're getting there like three months before them. So we've gotten an incredible number of deals by basically taking this extra step.
[00:35:14] That was a whole process to build out, you know, that we pay someone to do. To get access to these and get in front of these leads way before anybody else does.
[00:35:22] Billy: Yeah. Yeah. Data mining is key. I'm taking notes at it cause I want to want to go and people questions. So on that data mining side, what does it cost you with the VA to pull these records out on average?
[00:35:34] Mike: I mean, we pay him five bucks an hour, so like nothing.
[00:35:38] Billy: How many record a month
[00:35:42] bringing up and putting on this list,
[00:35:44] Mike: several hundred on average, especially this past year with the divorces. We've been getting a lot of those. I think it's been good for people's marriages, but yeah. Yeah, exactly. So, yeah, I mean, it kind of varies, but usually like two to 400. So, you know, and that'll be like total cost or him doing that.
[00:36:04] Cause we pay him five full-time, five bucks an hour, so 800 bucks a month, but he does a lot of other stuff for us too. So I bet it's like $400 just to do these tasks
[00:36:13] Billy: cheap. And with the leads now, are you hitting them a multifaceted your direct mail and you're hitting them with cold calls. Are you doing text blasts too?
[00:36:21] Mike: We don't do text blasts mainly because the legalities of it are kind of questionable and there's some risks on the horizon for. And also too, like, you have to be so on. Like, we did it a little bit at the start, but you have to be so responsive on it. And it was hard to do that. Like we found cause like, you know, if you text somebody and they text you back in 90 seconds and then you don't respond back in 90 seconds, leads dead versus versus like with a cold call.
[00:36:47] You know, we can have it go out and say, Hey, someone's going to call you back at one o'clock that can be on their schedule. And that just seems to be a lot better for how our, our staff and our, our business works
[00:36:55] Billy: I love it man. So what's in the future for you? What do you see still taking the company over the next 3, 5, 10 years?
[00:37:01] Mike: Yeah, so I mean our biggest thing right now, so we've been able to get some good success in Spokane. We've done right around 50 deals over the last 12. From last October, I think we're at we're at 49 or 50th one should be closing actually this Friday. So yeah. Thank you. And you know, that's a mix of wholesales rentals and flips.
[00:37:22] So one of the things we started diving with a few months ago was okay. We have the system down. We've kind of spoken. Isn't a big place. We're kind of at capacity here with our marketing. So let's see if we can go to another market. So we basically took our system, you know, and this is why it's so important to build these systems too.
[00:37:38] We copied and pasted it over to Knoxville, Tennessee, and have been getting deals over there now as well. We're about to do our fifth deal there. That's actually the one that's closing on Friday. So a, you know, a wholesale deal. So like, okay, this is working pretty well. We'll work on scaling that market equally.
[00:37:54] And then, you know, if we want to keep going, we can just copy and scale in the third market, uh, copy and paste in a fourth market. And basically just build out the staff and the systems to do this thing, on scale, that's sort of our cash generating plans. And then, you know, for us as our, like for our wealth building, we're starting to look at some bigger assets.
[00:38:12] So we're actually in a contract right now for a 30 unit mobile home park, just north of us here. , we're gonna be looking at some more multi-family stuff. I have an interest in triple net, commercial properties. So looking at those sorts of things and, that's a whole different business altogether.
[00:38:26] Once you get into negotiating those sorts of properties. So that's where we're headed. Exactly. So. Well talk, if you can, you went to Tennessee, right? You said, yep. Knoxville. How did you, how did you decide to go specifically to Knoxville, Tennessee? Yeah, that's that's a good question. So we kind of started looking for.
[00:38:47] Looking at evaluating virtual markets is kind of challenging because, you know, especially we haven't been many places over on the east coast, so we don't really know the environment, but what we kind of looked for was price points that, you know, seemed like they had a reasonable spread and they would have the potential.
[00:39:05] For us to have like a 1% rule properties, which we sort of, we valued that a little bit more than here because we don't know the areas. We looked at population sizes that were kind of similar to Spokane or a little bit bigger. We looked at investor presence by basically looking at the number of cash buyers that were in an area.
[00:39:21] So, you know, look at basically price to rental rates, cash buyer, presence, population, and we looked at growth. And then one of the things that we looked for was we looked for where the really hot markets were. And we tried to find places that were close to that, but weren't necessarily that because that's what Spokane is right outside, or like, you know, a few hours away.
[00:39:40] Right. Because Spokane, no one cares about Spokane, but Spokane is that. Investor market. Like if you want to find like good properties and the appreciation here is like incredible, but everyone always forgets about Spokane because we're surrounded by Seattle Portland. Right, which are all like five hours away from here and are all very, very attractive markets because of the tech and all that sort of stuff.
[00:40:03] So when we looked over there, we're like, well, there's, you know, Nashville, it's a very, very hot market. What's kind of the forgotten city that we found over there. The Nashville and Memphis, Memphis are very popular investor markets. No one's ever talked about Knoxville. From what I can tell, I've never heard that on like bigger pockets or like any other.
[00:40:19] Large massive real estate media. So we decided to market over there and see what happened. And then we just started popping off deals and our thought was, we'll commit five grand to marketing over there. See what happens if nothing really comes of it, we'll just move somewhere else. And then sure enough, it just sort of took off really strongly.
[00:40:35] And we said with. How will you, how are you managing that process? You have boots on the ground there. So we do it all completely remote. Um, we do have some boots on the ground that we use just to verify condition only if the seller is not able or willing to send us. So we try to do it all completely virtually whenever we can.
[00:40:55] But you know, sometimes with these sellers in how it is, like they don't use the internet. Like they don't like, they're just kind of squirrely people. Right? So we have people that we, we connected with online, through Facebook that run appointments for us, we pay them $75 an appointment. And then if, and then if we close it, That they go and run for us.
[00:41:14] We give them a $500 bonus. So they're pretty incentivized to work with us. And how did you go about building your buyers list to start pushing these properties out? Honestly, haven't needed to like, have like a true buyer's list. We just go and post it on Facebook and it's gone in like three hours every single time.
[00:41:31] So it's been pretty simple. Yeah. Like it's not hard to sell stuff right now. If you get a good deal, you can sell it so easy. So we haven't needed to even go through the full process. Getting a concrete buyer that's timed out.
[00:41:43] Billy: What's your, what's been your spread out there.
[00:41:47] Mike: Yeah. So that's been, one of the things that's been interesting for us is it's very different from Spokane.
[00:41:51] And so our spreads like so we did, one flip out there with a partner that we're going to make our share on. It's going to be 36,000. Besides that we've had, you know, kind of, we have one wholesalers it's like five grand. We have some that are like, I guess we went to there at about 12 when that's 10. Um, I guess that's all of our deals.
[00:42:09] So the numbers, smaller numbers, right? Whereas in Spokane, I mean, we assigned one last week for 35,000. You know, we're assigning them one next week for 20,000 and they are average and Spokane is 17 and a half. So kind of larger numbers, but also higher price point houses, you know, cause down there we're contracting things for 50,000 bucks.
[00:42:28] If 50,000 bucks in Spokane is barely going to buy a Lowe's refrigerator box on the corner, like seriously.
[00:42:35] Billy: So the different markets that have so many different price points, I've spoken to guys and they do in California and you know, Wholesale deals like $85,000, but they're not doing, they're not doing, you know, 50 deals a month.
[00:42:48] They might be doing five deals a month, super competitive, trying to get the deals. So it's just interesting. I'm noticing the trend or the patterns. I should say. The guys that have really killer companies that are doing massive volume they're in the areas that they're nonjudicial. And the price points on the wholesale side, it's like 10, 12, $14,000 on average when it's twisted them over.
[00:43:15] And I made in the areas that we come from New York and New Jersey, it's hard to make that model work. Like because one, the volume is not there with the amount of deals you're doing. And you're our average. I'm just wondering, I'm talking. I let them, I wonder if we change our model, if we would go down to a lower wholesale flip and we would get more deals because we're.
[00:43:35] No $45,000 a wholesale deal now.
[00:43:40] Mike: Yeah. I mean, there's something to that and we've, we've shifted that way a little bit and spoken as it has gotten competitive and trying to get like smaller deals and basically get more base hits. But then the risk obviously is you go into a screaming deal with that model and you lose 20 grand, right.
[00:43:54] Because you walked your dog earlier. So it's kind of a fine balance. And I mean, I guess one of the base things too, between the two markets as we get. Like a smaller fees down in Knoxville, but our cost per deal is like 1300 bucks, whereas so cheap, right. Versus full camera or we're about $3,800. Right, so there's that discrepancy there too.
[00:44:17] It's all relative. It's all exactly. I mean, at the end of the day, I think the biggest point is, you know, once you get a process, You can go into it anywhere. Yeah. Yeah. And I, and I've met so many investors around the country through like my mastermind and, you know, just going to networking events and stuff.
[00:44:35] Every single person, all of them always say no, but my market. It's the toughest market. Like you don't understand it. Everybody says that. Exactly. Right. And it's like, I don't know. There's people there that are making money. So it can't be that much crazy. Anybody else's,
[00:44:52] Billy: you know, every market has its troubling things you have to deal with in his own ups and downs, but that's the market.
[00:44:58] Every market has, you know, I don't care who you are, where you're starting. If you're in Hawaii, California, New York spoken, I mean, you're going to have issues in every single market. The bottom line. Is to do what you did and just build a parachute on the waydown brother. Rather fucking do it. Don't wait. Don't stress.
[00:45:19] Don't struggle. Don't talk about it, actually. Freaking do it. Mike, you've been a, a great guest. How can people find you online? I know you have your own podcast too, right? Why don't you.
[00:45:28] Mike: Yeah. So, we're just, we're just starting to me and my partner and the focus on our podcast is called the no BS, real estate investing show.
[00:45:36] And we actually they're a little bit. Yeah. And the goal of it is to kind of get away from, you know, what you hear on like bigger pockets and lies ones that are just like fluff of like this person started last week and now they've done a hundred deals, you know, which is just so such like extreme examples all the time anymore.
[00:45:54] Into the weeds. Yeah. More into the weeds of like the actual challenges and horror stories of running this business, you know, because like there's stuff that goes on all the time, you know, I'm sure, you know, how it is Billy with like some of these sellers, like you can't make up this stuff, you know, and there's stuff that goes sideways.
[00:46:09] Like you're expecting to get $50,000 in profit and then the craziest thing happens and it just goes to zero all of a sudden, you know, so going into like that side of business and sort of how. Navigate that. So yeah, we have our first abstract coming out tomorrow. It's new, it's rough. So be gentle with us, but we're going to try and make it a thing.
[00:46:29] The no BS, real estate investing show.
[00:46:32] Billy: And they're going to find that where is it on?
[00:46:33] Mike: It's going to be everywhere. So we're going to be publishing it on iTunes and Spotify and Google and all that sort of stuff. And then, you know, if you want to connect to me directly, these are just ways on Instagram.
[00:46:43] You can find my Instagram at Mike _invest. Feel free to shoot me a DM. I'm always happy to chat with people on there. And, you know, I post sort of updates on deals and stuff that we've done and, you know, just kind of where we're going. So, yeah.
[00:46:56] Billy: Yeah. You're a bright guy, bro. I'm glad you came on and couldn't good to get to know you.
[00:46:59] I'm going to plug your cell phone and definitely stay in touch. Absolutely. Inform yourself on the east coast. For sure. Look me up. We'll break some bread after.
[00:47:07] Mike: Yeah. I'd love that. That'd be great.
[00:47:08] Billy: Yeah. And if I could help you with anything in the future, brother, just reach out I'm here.
[00:47:12] Mike: Awesome. Thanks bill.
[00:47:13] I really appreciate that
[00:47:14] Billy: take care, bro. I don't. Thanks. Thank you so much for listening to today's episode of unstoppable real estate investing wealth. My mission is to give you my listeners, the blueprint. For success inside the secrets for starting growing and scaling your real estate investing business, you could experience and live unstoppable lifestyle.
[00:47:36] I've been simple for you to catapult yourself success. Go to Phillies secrets dot com@billyssecrets.com. There you will find every single tool. Skip trace strategy system and spread to make millions of dollars as real estate. Everything my team uses and my guest use all in one place for you to tap into, you could start, grow and scale your real estate investment business.
[00:48:06] I really hope you implement what you're learning. I hope you utilize these tools, tips, tricks, strategies, and secrets, and I hope to see you on the next God. Bless bye-bye