The Beginner’s Guide to Find Undervalued Rental Properties

Rob:
Welcome to the BiggerPockets Podcast Show 781.

Henry:
If you’re a new investor and you’ve got a small budget, there’s three strategies here for you, one of mine or James’s because those cost money and then doing both of what Sam and Rob said because neither one of those cost money, they take time and effort. And so now, you’ve got three lines in the water that could potentially all generate lead flow for you, setting you apart from every other new investor just trying one thing.

Rob:
I’m your host, Rob Abasolo, and I’m joined here by my good friend and co-host Henry Washington. How are you doing today, bud?

Henry:
Hey, man. What’s up? Glad to be back on another show with just you and I chopping it up. Let’s do it.

Rob:
Today’s a big victory for me because I did the intro and you weren’t laughing the entire time. And so, for me, honestly, I just feel like that’s a milestone in our relationship. Let’s get into today’s episode, man. So today, we’re talking all about off-market deals and the art of buying deeper. This whole thing stemmed from a podcast you and I did not too long ago where you brought up the concept of buying deeper and I think we had a lot of questions from the audience that was like, “All right. Well, that sounds cool. I want to buy at a deeper discount but how do I do it?” And so, this episode really nails, I think, four different ways that people can do this. What were some of your favorite parts of today’s episode?

Henry:
Man, I’m just such a deal junkie. I love hearing and learning how other investors are deploying some of these strategies and the results that it yields. And so, it’s cool to hear from some of these super high level operators at what they’re doing and knowing that there’s always a version that you can do. So don’t get overwhelmed when you hear of what somebody who’s doing hundreds of deals a year is doing from a marketing strategy. You could do that same strategy at a smaller scale and start to build up your cash reserves.

Rob:
Yeah. That’s right and we’re going to get into today’s episode. But before we do, we’re going to do a quick tip and I’m going to do what David Green always does and toss it to you with no time to think about what said quick tip is and go.

Henry:
Well, I am nimble and ready to do this always. So today’s quick tip is stake into this episode and pick one of these strategies and start implementing it today. I’m not going to give away too much but there are at least two of these strategies which you can literally get started on right now and it’s not going to take a ton of your money or really even a ton of your time. It’s just a matter of are you willing to put in the work to buy at a deeper discount so that you can do deals in this crazy market? So the quick tip, listen to the end, pick one strategy, take the action right now.

Rob:
All right. Let’s get into today’s episode.

Rob:
Welcome to today’s panel. This panel was actually inspired by an episode that I did not too long ago with my good friend Henry Washington, currently on the pod, about buying deeper and I think we got a lot of questions about what that means, what are the logistics of doing that. So we actually wanted to put together an entire podcast panel that walks you through the concept of going off-market, sourcing your deals, and buying deeper. So I’m going to go around really fast, toss it to you guys, and I’d love for you guys to introduce yourselves and talk about what your experience is with buying off-market and just a quick introduction. Sam, we’ll start with you.

Sam:
Yeah, I’m Sam Primm. Appreciate the intro, Rob. So I bought a thousand off-market houses since 2014. I started investing in the side. Then in 2018, I quit my job and went full-time and flash forward to today, I own $45 million worth of rental properties that I’ve bought without using any of my own money and I also own a house flipping company here in St. Louis, Missouri where we buy and sell about 300 houses a year. So we are in the game to find off-market houses and distressed properties. That’s how the magic works. That’s how we’re able to buy them without using any of our own money. So super excited to dig in and share that and combat your guys’ horses.

Rob:
Nice, nice. Not bad at $45 million. So you’re relatively green in the real estate space. You’re just getting your start, right?

Sam:
Just getting my feet wet.

Rob:
Awesome. Henry, I’ll pass it over to you, man.

Henry:
Why did you make me go after Sam? That’s a-

Rob:
I know. I had to create a little bit of a gap there.

Henry:
I’m Henry Washington. I’m a real estate investor, been doing this since 2017. I do what Sam does but I do it in Arkansas and I do it on a whole lot smaller scale. So essentially, what you would call a mom and pop shop, we are doing purely off-market deals. I’ve got about 100 rental properties that I buy and hold. We flip maybe 10 to 20 houses a year and we’re talking four man operation, myself, my wife, my project manager, and my… Well, five man, contact manager and my assistant. So it’s all a pretty small shop but it’s all still in the business of generating income through buying discounted properties and then monetizing those leads.

Rob:
Awesome, man. Well, you seem to be accelerating at quite the pace on your end over there and your team building is really great. So I’m excited to dive into your strategies. But before we do, James, tell us a little bit about yourself, man.

James:
I’m James Dainard. I’m a active real estate investor at Pacific Northwest Seattle, Washington. I got involved in real estate and sourcing deep deals when I was a senior in college in 2005. An old school wholesaler guy, banging doors, finding foreclosures, getting deals done. Since doing that, we’ve been through all different sorts of market cycles, all different types of things, but we’ve been able to accomplish over 3,500 off-market real estate deals since 2005. Like Sam, we’ve taken this money and built out rental portfolios in Seattle, Washington to where we’re over a thousand doors in our local market. So buying deep can really change the game for long-term wealth and really, when you re-invest that money, it turns into real, real wealth. So definitely a deal junkie, I will buy anything and I’m not afraid to go after anything either.

Henry:
You’re so serious.

Rob:
Dang. Yeah. I know. Okay. So do you want to give us your phone number just really quick? We’ll have people text you. No, I’m just kidding. All right. So Henry, since this kicked off with an episode we did and something you said which you said the word buying deep or the phrase, tell us a little bit about what that means and what it actually means to go off-market.

Henry:
Buying deep is essentially buying properties at a discount and when you buy properties at a discount, you walk into equity. So you’re buying equity essentially. And then, our job as investors is to monetize that equity in some way, shape, form, or fashion. And so, investing in a nutshell in any industry is about buying something, adding value to that something, and then monetizing the new value. So when we talk about buying deep in real estate, it’s buying properties at a discount which means you’re buying them at less than the value that they’re valued at and then adding to that value by adding value to that property.

Henry:
So that could mean that you renovate that property. It could mean that you add tenants to that property. It could mean that you change the usage of that property. Whatever that value add means, you do that and then you increase the value of that property but that doesn’t net you the money. What nets you the money is you monetizing that increased value.

Henry:
So that could mean that you rent that property out now that it’s been renovated. It could mean that you sell that property at that highest value, meaning you flip that property. It could mean that if you change the usage then you sell that property with the new usage. So some people add value by buying land, and then changing what you’re allowed to do. And so, if you can now do that new thing, then you monetize it at the highest value. So in a nutshell, buying deep means finding ways to buy properties at a discount and typically, that’s going to mean you need to find people who have equity because you can’t buy a deal without equity and you can’t buy a deal without motivation. That person needs a reason to sell to you at a discount.

Rob:
Awesome. Yeah. It’s a great explanation and there are so many ways to buy deep, to go off-market. Just a few, and we’re going to get into these a little bit in today’s episode, but just to name some of the main strategies that people are taking when they’re going off-markets, direct mail, driving for dollars, wholesalers, pocket listings with agents, property managers for other owners looking to sell, social media, SEO which means Search Engine Optimization, bandit signs, and softwares like Envelo, PropStream and DealMachine.

Rob:
And so, again, there are probably another 50 ways that you can go off-market. I think that’s the most amazing thing about this is that you can get as creative as you want. I’ve heard some pretty creative ways that people have landed deals and some of those we’re going to get into now. But now that I’ve given you the list, what I want to do is go to each panelist. What you’re going to do is you’re going to pick a strategy that you personally use to find good off-market deals, then you’re going to break down the steps, and then the rest of us are going to have a chance to poke a hole in your strategy. With that said, does everyone here have a strategy in mind? Because I’m going to make you pitch us. We’re going to do a two-minute pitch-

Henry:
Just like Shark Tank?

Rob:
It is. Yeah. And we’ll either be in or out and we’ll invest or not.

James:
I’m going to close you, Rob. I’m going to close you.

Rob:
All right. So since James came in with quite the confidence here, I guess we’re going to start with you. You’re up first. Tell us your strategy and I’m going to put two minutes on the shot clock here and I’m going to give you two minutes to pitch the strategy and then we’re going to break it down and we’re going to build it back up. Does that sound good?

James:
That sounds good. That sounds good.

Rob:
And go.

James:
All right. Buzzer beater. First thing I want to say is anything for off-market, all these avenues work and off-market, you have to constantly be changing your marketing platform to get deal flow in. So that’s the first thing. But the one that we’ve been using most regularly for the last 12 months is actually call centers. We use a company called Easy Button Leads and what this is, is we contract call centers. They’re professionally trained dialers that have real estate scripts that we provide them with and what they’ve done is that it allows us to mass contact sellers so we can get really big buckets to generate leads for a very fraction of the cost.

James:
So let me tell you why this works. So last month, here’s our stats. We had four callers that we paid $1,500 a month which produces about 25 to 30 leads per caller a month. That’s an average cost of $60 per leads and we’re getting 80 to 100 leads every month from that set of 6,000 that we’re spending. In addition to, they are calling over 80 to 100,000 people in that month to get massive reach so we can hit buckets that you didn’t really even know there was deals in, right? Because that’s always the thing. We have our segmented lists that we’re really targeting on with our inbound sales guys and then we want coverage for the rest so it gets us coverage.

James:
Based on this $6,000 we spent, we produced three hot off-market leads that we’re actively almost contracting right now, we got one deal done that we racked $45,000 as our assignment Theon, and not only that, because of the amount of coverage we’re getting, we get secondary business out of it to where we’ve generated now four listings that we’re about ready to take to market this week and it’s producing over $115,000 in revenue for our business by spending $6,000.

James:
And so, what we found is the call rooms in a market where we don’t know where people are locked in with their interest rates, they don’t know what they want to do, we want to make sure that we’re getting the most amount of coverage, more contacts, equal contracts. And the more contacts you get for affordable, the more deals you’re going to get done.

Rob:
Boom. With two seconds to spare. Wow. Very nice. I think we have… I have questions. I’m sure Sam and Henry have questions too. So now, what I want to do is just open it up to the panel here. Let’s spend about five minutes breaking this down because what you just described was honestly a mind melting amount of information in two minutes and I think the audience deserves to break this down and understand the strategy because really, it sounds amazing. So I guess I’ll just start. Based on everything you said, I’m curious, how complex is it to actually set up the strategy?

James:
It’s actually fairly simple to set up. So a lot of time… Now, if you want to set up your own call center, which I’ve done that, it’s a lot more work but there’s so many call centers that you can contract out there. You got to find the right ones that specialize in real estate. But our setup process was sourcing the right call center, that took us probably four or five months of testing and then we found Easy Button Leads. Then, we had to create scripts. We create scripts, that takes me about 30 minutes to an hour every month just to update their scripts and test it to see what’s working. From there, we also had to set up a CRM and a delivery from there.

James:
So the Easy Button Leads, they call it, they set it up, it goes into their CRM. We had to set up a connector that goes right into our sales team because what we wanted to do is make sure that we’re getting a certain speed to lead. That’s something that’s very, very important to our business. Once that lead comes in, we got to be contacting that within 30 minutes to an hour to keep that lead on the phone. And so, it was about connecting the communication so there was no drag in there. But it’s a simple, simple process. We had to source, vet the operator, make sure that they can actually do it correctly. We interviewed their sales team. I actually had some phone calls with them to make sure that their English was good, that they could carry a conversation, that it was fluid, and then it was a matter of setting up the right scripts and monitoring. We set up our CRM for live transfer, go from there.

James:
And then once a month, we do KPI reporting and we’re tracking all different types of things as far as contacts, conversion rates, speed to lead. So it’s a very, very simple process. It’s about just connecting and making sure they get the information to your sales team immediately.

Rob:
So help me understand the, I guess the ideal scenario, because we have a call center, a lot of people making phone calls, is the idea that the people at the call centers are calling potential sellers, are calling people on a list, and they’re asking those people if they want to sell their property and they’re effectively trying to lock down a property under market value and then you then go and flip it or what’s the next step in that chain?

James:
So what we do is we have them generate interest. I want my internal sales team, my closers, really work in the numbers. And so, for us, we just want the interest. Are the people interested in selling over the next 12 months? And then, we want to get general information from them. “What’s the condition?” because we want to make sure we’re giving the lead out to the right person. “What’s the condition? What’s their motivation to sell?” and then we leave it at that.

James:
We don’t have them close over the phone. I do know a lot of people do that. Our market, Washington State, it’s a little bit more expensive, the sellers are a little bit more educated, they want a little bit more dialogue and conversation. So for us, we’re just having them generate that lead and then it goes over to our sales team which is our internal guys inside of our office. We have four guys there that work these leads, set the appointments, go out and meet with the sellers, and that’s where most of my time and training are on, with my closers. But this is really just a lead gen and then the lead gen, you got to get it over to your sales closing team to convert it into dollars.

Sam:
Do you have a list that is good that is highly qualified leads? You don’t do stack lists for certain types of pain points for sellers or do you just mass call?

James:
That’s a great question. So we go specific but we keep it a little bit more broad with the mass calling because they can get through so many phone numbers, it’s all about the coverage. So we have our internal guys in our office, we have them call in on the specialty stuff, the probates, the foreclosures, the really symptoms for selling because it’s just a more targeted sale. We use the call rooms to target bigger platforms but we use big buckets like out-of-state owners, that’s a really big list of properties. Those are all people that are interested in selling. So we still segment it down but we just do broader segments or we buy different types of data like we have something called refi rejects where people went to refinance the property but their credit core wouldn’t allow them to. So that goes into there. So we use more broader buckets but we don’t just call everybody.

Henry:
James, what would you say your true or total all-in cost is? Because I know it costs a certain amount a month to have each caller but you also have the cost for, I’m sure you have a CRM, you said you have a CRM that you have to have. What other tools or things are you having to pay for on a monthly basis that account for part of the marketing dollars here?

James:
It’s actually not very expensive to get it all set up. We use something called Follow Up Boss for our CRM. It’s a very simple CRM to use. It’s easy for salespeople. I think the cost on that’s less than $100 bucks a month because we have a bulk account with them. And then, we had to set up our Zapier to zap the leads over which is at initial setup, it probably costs us $1,500 to get their CRM and our CRM plugged together. And then, it’s about $100 per rep to have the leads monitored at that point.

James:
Now, there is other things that go in that are part of that cost. We house an office, we are buying lead data which isn’t that expensive at that point but we’re spending usually about $300 to $400 a month on data just buying and mass manufacturing leads. And then, we do have to pay for the skip tracing of sourcing. So in EBL, Easy Button Leads, because you’re working with them, they will do your skip tracing for 8 cents so it does… You get a benefit where the typical cost is 10 to 12 and so it’s an extra cost but they’re giving you a savings at that point too.

Rob:
Okay. Cool. Yeah. That all sounds good. So can you tell us, is there a particular downfall or a pitfall with using this strategy?

James:
Yeah. There definitely is and the reason being is your salespeople are not professionally… They’re trained. We actually do training calls with them once a month on a Zoom call too because I like to be a little bit more hands-on than other people that I think operate. But if I have a highly trained real estate professional calling the seller, they’re going to know how to pivot and change a lot better. And so, if you get that random question that jams it up, that could be a really good seller that you just called but they asked a question that they didn’t like the answer to and you lose that lead. And so, it’s about quality of contacts that can sometimes go down but the benefit has way outweighed that and that’s why we set up our secondary team to really have our professional guys calling through that small segmented list.

Rob:
Cool. Cool, cool. That makes sense. And then, if you were going to assign one crucial KPI to this or one KPI to track the success of this model, what would it be?

James:
Speed to lead, that is the key. We’re testing this. So right now, we actually set a secondary army of callers up for our brokerage too to get listings. And then, we did a comparison speed to lead and what we did was with the off-market, it was taking us an hour to hour and a half to get to those sellers. And then, with the brokerage we set it up to where we’re getting to it within 30 minutes and going from a lead to an appointment increased by 400%. So if a seller’s interested, you got to keep them on the phone and get it moving fast. So that speed to lead has been the biggest KPI we’ve been tracking right now.

Rob:
Awesome. Okay. Well, James, consider me closed. I’m in on the strategy. Henry, Sam, any final questions for James?

Henry:
I think the key to this strategy is when you talk about the normal everyday investor, the key to this strategy is keeping up with your lead flow because a strategy like this can produce a lot of leads because you can call massive amounts of people in a short period of time but if you don’t have the bandwidth yourself to keep up with these leads, call these sellers, make offers, look at houses quickly, and make those offers, then you’re wasting your leads and they’re wasting your money you put into it, right? These guys have operations and they’ve got people doing all of those things. And so, you want to make sure that your strategy doesn’t overproduce or you don’t pay for leads that you can’t get to.

Rob:
Yeah. It seems like the follow-up game is also super important just because all those leads can materialize 6 to 12 months or even 18 months from now if someone actually decides to ever sell. All right. Henry, I’m going to move on to you. I want to hear your two-minute pitch and we will all collectively let you know if we’re in or out. But before we do, just a quick reminder, we got two minutes on the shot clock here. We want to know what is the strategy, how would your or how have you approached setting it up, and why is it successful for leads? All right. Timer starts now.

Henry:
So I’m going with the old tried and true direct mail marketing. This is the very unsexy way of generating off-market deal flow. So in a nutshell, direct mail marketing involves you generating a list of sellers who have equity and motivation, that motivation to sell at a discount, and you reach out to those sellers via direct mail. You essentially send them a piece of mail that says, “Hey, I’m Henry. I’d like to buy your house at 123 Main Street. You don’t have to pay any realtor fees or commissions. I will pay all of your closing costs. You don’t have to make any repairs. Give me a call, text, or check my website out if you would like a offer on your house,” and what this does is it allows you to reach out to sellers and then gives them the opportunity to reach back out to you.

Henry:
This was a great strategy for years. And then, technology like text messages and voicemail came in and then rules came in that said text messaging and voicemails aren’t legal. And so now, mail has regained some popularity but I have done the most volume of deals through my direct mail campaigns. I am not expecting to win anybody’s hearts here with direct mail as a strategy. It is a very tortoise and the hare tortoise style strategy. It takes relentless consistency. But when you do it, it can generate leads for you essentially on autopilot and it is a great supplementary method if you couple it with something like the call center strategy James said.

Rob:
Boom. Wow, that’s a record. That’s a minute and a half right there. That just goes to show, man, you’re good at this whole podcast thing so awesome. Well, let’s open it up to the whole panel here and I’ll kick us off with my question here which is how complex is it to actually start a direct mail campaign?

Henry:
It is so easy. It’s the same thing. You’re going to need to pull a list, right? So essentially buying that data from somewhere. You can buy it from literally anywhere. Credit bureaus, there’s tons of websites that you can use, DealMachine, PropStream. There’s tons of places where you can buy lists from. You gather that list and then you can go to… I think the best way to do this is to go to a print house that specializes in direct mail and you can give them your list, select the kind of mail you want to send. There are tons of print shops. What’s funny is several of them are located right there in St. Louis where Sam Primm is, but there are several of direct mail shops that you can just send your list to and you can then break that up.

Henry:
So one of the lessons I learned after my very first direct mail campaign is that you want to break it up so that you’re delivering your list over… Your list gets sent out over the course of a month, like a week at a time. My first mail campaign, I sent out 3000 pieces of mail. Everything went out all at once. My phone started ringing off the hook and I could not get to the calls fast enough. I probably lost some deal flow there. And so, we space it out so that somebody’s getting some mail every month. That way, I can stay on top of my leads. Again, we’re talking about a mom and pop shop. When I send mail, my phone rings. I answer the phone, I talk to sellers, I set appointments, I look at houses, I make offers. And so, I have to be able to keep up with that lead flow.

Henry:
But to answer… A long way of answering your question is pull a list, send that to a print shop who sends direct mail, tell them the frequency you want your mail delivered, and they will deliver it. Some of these print shops will even pull more lists for you if you give them your criteria. And so, you can literally set this on autopilot, tell them the kinds of lists you want to mail, how frequently you want it to go out, give them a method of payment, and your mail can be on autopilot.

Sam:
All right. So Henry, you ready for it?

Henry:
Let’s do it.

Sam:
So let’s say James had $6,000 he was spending. So let’s say I have $6,000 on a brand new real estate investor, what is the list or the area that I should be looking to maximize my $6,000, my very first list I’m sending out? Should I stack it like a lot of pain points? Should I send all absentee? What would you tell me if I was brand new?

Henry:
Yeah. If you were brand new and you had a limited budget, I’m going to tell you to use a more niche list to nail down your first deal and you want to use a niche list that isn’t the most popular niche list. So how I found my very first direct mail list to mail was I researched on podcasts and listened to people who were talking about what lists they like to mail. I literally wrote them all out on a piece of paper every time I heard a strategy and then I crossed out all the ones I heard multiple times and I used the strategy that I very least heard because I don’t want to be the 13th piece of mail that somebody gets from an investor. I either want to be the first or the last.

Henry:
So I’m not trying… If you have a limited budget, you want to mail a niche list that has some level of volume for you to mail. If your niche list only has 10 people, you can’t mail it. But you want a niche list that has enough volume for you to mail so you don’t have a ton of competition so that your response rate is higher. And so, my niche list that I used was owner occupieds for people over the age of 50 who had owned their house for 10 years or more. No LLCs, only personal names and deeds who had 40% equity.

Rob:
Wow. So for everyone at home, rewind that last two minutes. We’re going to do a drinking game, take a shot every time Henry says niche list. Okay. So that’s cool and just for anyone wondering, nichelist.com is available for sale for $4,350. I did check. So let me ask you this. When it comes to the actual composition of the letter, how hard is it to actually copyright that letter or does your company that handles all that write it for you?

Henry:
That’s a great question. Do not overthink this. Just needs to say, “Hi, I’m so-and-so. I want to buy your house at 123 Main Street. I will pay all of your closing costs.” Don’t say, “Closing cost paid,” say, “I will pay your closing costs.” It’s much more personal. “I will pay your closing costs. You don’t have to pay any fees or commissions. You don’t have to make any repairs. If you want to cash offer,” and then give multiple ways to contact you, “call me or text me,” and give them a phone number, “or visit my website at,” and give them your website. That is it. You don’t have to overthink what your message says.

Rob:
Which is nichelist.com, that’ll be your website.

James:
I love that, Henry. Simple is good for wholesaling. You try to overthink it as a wholesaler. I remember I was brand new, I was like, “I need to have this magical pitch that’s going to let me in the house and they’re going to sell me the house.” It’s like, “No, just be yourself and be direct.” Hey, question, Henry. I love direct mail. Direct mail was our main marketing source for deal flow from 2010 to 2014 for sure. It was 100% of our marketing spend and it worked really, really well.

James:
And then, it stopped working for a while. It was like when the texting and everything came out and then what happened is our cost per deal exploded in 120-day period because we were mailing so much and obviously, we were doing a lot more volume. What’s your average cost per deal? Because I love mail, I think it’s great, it gets you in the door, but the cost would… Because it’s so consistent, you got to be on that drip like you were talking about, that follow-up mail, it can turn into an expensive thing. What’s your average cost per deal when you’re closing?

Henry:
Yeah. So we measure more on cost per lead or cost per appointment. So for every appointment I go on, I’m probably spending about $500 to go on that appointment. So that means if you divide all of the channels we’re sending marketing out to across what we’re spending, every time I go look at an appointment, it’s probably cost me anywhere between $300 to $700 to go on that appointment with my marketing. But I’m not just doing mail and that’s why I wanted to caveat that by saying it’s a great supplementary marketing strategy.

Henry:
I don’t think it’s the best strategy to get started if you have a limited budget because there are other strategies like the call center strategy or hiring somebody else that’s going to do calls for you because you can get more volume that way, you can touch more people that way. But when you compliment a high touch strategy like calls with a slow touch strategy like direct mail, you capture some of those deals.

Henry:
I have bought deals that I’d been calling and not getting through to anybody or them hanging up on me. When they got my piece of mail, they answered it, they contacted me, I looked at the house and offered it. So it’s a great complimentary strategy and it’s just slow and steady. You have to think of marketing in general but direct mail, especially is you’re trying to get your piece of marketing in the hands of the seller at the moment they’re thinking about selling. And so, it’s not fun or pretty because you might send that first piece of mail and they go, “Uh.” They just throw it in the trash. They never look at it. Second piece of mail, they look at it and go, “Some Yahoo wants to buy my house,” and they throw it in the trash.

Henry:
But then they start thinking, “Man, I wonder what I could sell this house for,” and then they start thinking what they could buy with that money. And then that third piece of mail comes and they go, “I’m going to call this Yahoo because I sure wouldn’t mind a new truck and getting rid of this problem property,” and then they call you and that’s when you got to be ready to jump on that house, talk to that seller, look at that appointment, and make an offer. So it’s not a great only strategy, it’s a great supplementary strategy.

James:
And the good thing about mail is it leaves little golden nuggets for you everywhere. You get these random phone calls three years later… We don’t even send mail anymore right now and we still get calls because we just pounded Washington State with mail for years and we still get those random calls. It’s like a freebie. All of a sudden it comes and you’re like, “Yeah. This is awesome.”

Henry:
I closed on a flip two months ago that I sent mail two, three years ago and hadn’t sent mail to since, 100%.

Rob:
Okay. Well, awesome. Well, thanks for breaking it down. I hope for everyone listening at home… I mean, we just pitched the entire process in less than seven minutes and to be honest, these are strategies that I’ve always wanted to do but I’m like, “Oh, the logistics, the logistics.” But hearing it from you guys, it really is so simple, all you really have to do is just try it, right? Like actually, take a little bit of action and-

Henry:
Just do it.

Rob:
Work through those details one by one. So we’re going to move over to you, Sam. Do you have a strategy in mind that you’d like to pitch us?

Sam:
I do and I really like Henry and I’m just meeting James but my strategy’s going to blow their strategies out of the water for a new investor so-

Rob:
Love it.

Sam:
I’m just laying it out there. I’m calling my shot like, “Oh, did Ruth did that?” Calling my shot.

James:
Babe Ruth. Yeah.

Rob:
Okay. Awesome. All right. Two minutes on the clock and pew.

Sam:
All right. That sound is awesome. All right. So I’m going to take a step back. I’m going to try to talk to people that are brand new investors that don’t have a ton of money, don’t have a ton of time or energy, and are just doing this on the side, dipping their toes in the water. Maybe they’re not even fully committed to spend money. So my strategy is a strategy that has a $0 per cost, $0 per buy strategy, and that’s contacting other wholesalers.

Sam:
Not everybody is willing to send out direct mail or do ads or connect with people, get inside houses and negotiate, and do all the things that go into buying these distressed properties. They get them super cheap but not everybody wants to do that or has the skill or ability to do that. So what my strategy is, is taking a step back and just contacting wholesalers that do that every single day. We’ve bought over 150 houses in the past three years in the St. Louis market, all from contacting wholesalers and having them contact us because most wholesalers do not want to close on a property. Most wholesalers do not want to buy a property, fix it up, or keep it as a rental. They just want to get a check and move on.

Sam:
So what we do is we contact all the wholesalers in St. Louis and we let them know that we can be your end buyer and we can purchase the property from you. There’s no software to set up. You can probably use a Google Doc or maybe your phone to keep track of leads or a lead management software. But in general, you’re contacting the experts that are out there already doing it and of course, you’re going to pay for that by them marking it up. But as long as that meets your criteria and as long as you’re buying it at your price, which a good wholesaler will leave plenty of meat on the bone, that’s a good thing that they get paid. They make $30,000 on you, so they’re going to come back to you. So I love Henry and James’s strategies, we use them as well. But for a brand new investor, I think the best place to start is wholesaling because it’s unlimited cost, it just takes time and energy and effort to get your name out there.

Rob:
Awesome. All right. With 15 seconds to spare, we’ll add it to this 5-minute panel discussion. I’ll kick us off here. How complex is it to get into this specific strategy?

Sam:
It’s super easy. Go to your local meetups and you can meet wholesalers. We have one here in St. Louis. 250, 300 people come every single month and there’s 50 or 60 wholesalers every month that come. Those little bandit signs you see on the side of the road, if you’re not driving, take a picture of those signs. Those are wholesalers. You can google local wholesalers near me or real estate investors near me and these companies that are decent sized like James’s company, companies like that, they’re wholesalers so you can contact them and get on their list. So it’s pretty easy to do but you do have to be an extrovert and be willing to go out and talk to people and meet people to make this strategy work.

Henry:
Sam, I agree with you. I think talking to wholesalers is a good strategy. How do you… So put on your new investor hat, take off your Sam Primm hat, right? So how do you as a new investor get a wholesaler, especially if it’s an experienced wholesaler, how do you get that wholesaler to take you seriously and give you a shot at those deals where you’re not competing with all the big guys, right? Because yeah, you’re Sam Primm, you’ve got a reputation. You walk in there, you say, “Hey wholesaler, send me a deal. I can pay cash for it.” They go, “Yeah. I know you can. I know who you are.” But how does the guy who’s just getting started get that wholesaler to take them seriously?

Sam:
That’s a very good point. That is, I think, the main downfall of this strategy. It takes time to develop those relationships. Not everybody’s willing to close on a deal. You guys see it in all of your markets. People don’t close on deal and they get a bad name so these experienced wholesalers are always trying to find new investors that probably pay more than experienced investors.

Sam:
So somebody like me, our company, we are going to buy it with enough room to re-wholesale it, right? Daisy chain it and market up. So a brand new investor that is going to keep it, if you’re going to keep it as a rental and flip it, you can probably pay more than me. So I have to buy it deeper because I’m going to potentially resell it.

Sam:
So if you’re going to have your exit strategy be the very next domino to fall on the investment, then you can probably pay more than I can and it is going to take time to develop relationships. It’s one of those things that take the next six months and talk to as many wholesalers as you can, really get in with five of them, and then you got to grave your train is what we call it, where you’re getting 2 or 3 leads a month coming from these 10 people, these 5 people that you make connections with. So it does take time. You’re right, Henry. It’s not like you send out direct mail and get calls right away. It does take time but there’s enough wholesalers out there and there’s enough… Not every wholesaler has unlimited money, so they’ll be willing to come to you.

Rob:
I love this strategy. I think the power of networking with wholesalers, we do probably 10 deals a month with wholesalers that we have a partnership program with and then we have our own wholesaling team. And so, it’s a great way to get deal flow in. The negatives is you are paying a markup and that direct to seller. Direct to seller’s a lot more work but the return can be huge at that point.

Rob:
But one of the other big negatives for a newer investor is trying to vet the right wholesaler too, because a lot of new investors depend on the deal sourcer to provide them with analysis on the property and a lot of times, wholesalers, they’re sales people, they’re trying to get a deal done, right? And that happens a lot where I’ll talk to an investor like, “Well, I bought this deal and it wasn’t a good deal off a wholesaler.” I’m like, “Well, that’s not the wholesaler’s fault. That’s your fault. You didn’t vet your information.” Like, “Well, is rehab numbers wrong?” I’m like, “No, your rehab number’s wrong. You’re the one who looked at it,” but it’s about vetting your own information.

Rob:
So what suggestions do you have for newer investors like… Because it’s this hard thing, you want to qualify yourself so they take you seriously but you also want to make sure that you’re buying the right thing because buying the wrong thing can be detrimental. So what steps should newer investors take to really vet this information or should for us, I know we’ve set up our own underwriting so it’s like, “Yeah. Bring us the deal, we’ll underwrite it our own way. We don’t even care if there’s numbers in there,” but most new people are not like that. What steps should they be taking to verify this info?

Sam:
Yeah. I think in general, like you said, you have to do your own underwriting. So if you’re newer to this, I mean, you’ll be underwriting any strategy you have but you have to stick to your numbers. It’s good to reference a wholesaler’s numbers but they’re going to say it’s going to sell for more than it’ll sell for and they’re going to say it takes less than it’s actually going to take to fix it up. So knowing that going in I think is key and then sticking to your numbers and not letting emotion get involved and offering on every single deal you get from a wholesaler.

Sam:
Because the worst thing that can happen is you can build a relationship… Well, I guess not the worst thing. But you can build a relationship with somebody, they bring you a deal, it makes no sense, and you just ignore them. Well, they’re not going to bring you the next deal that might be a deal. So we always tell them, “Offer and explain your offer.” If it’s 30,000 less, 40,000 less than what they’re asking, who cares? Still offer it. Explain why. You never know. We’ve had that happen before where wholesalers have gone and re-negotiated with the seller and got it down and then they’re like, “I’d rather sell it to you and make 10,000. I was trying to hit a home run but I’d rather make a little money than no money on this deal,” so I think those are great points. Just being conservative and sticking to your numbers and always offering and explaining your offer will help you not maybe piss off a wholesaler with a low offer.

Henry:
I think the networking with wholesalers is great and I think one thing new investors can do is partner or make good friends with a newer wholesaler because look, what wholesalers need is they need to know somebody can close, right? What they also need is they need to be able to underwrite a deal. And so, maybe you haven’t done a deal but you know enough about a property to tell how much rehab it needs. One of the things that I did when I first got started was I was great at marketing and generating the leads but I couldn’t do great at renovating or understanding a renovation cost. I’m not a handy person. It took me a while to develop that skill.

Henry:
Well, I started taking a partner, who wasn’t a partner at the time, but another investor with me. He was great at understanding what the rehab cost was. We would walk a property, he would tell me what he thinks it was going to cost to rehab it, and he’d tell me what he would pay for that property. And then, all I had to do was go contract that property for less than that number and that’s how much money I made and I assigned maybe four or five deals to this person.

Henry:
So maybe you can walk properties with a newer wholesaler to help them feel more confident in their underwriting. Maybe you can say, “Hey, send me your deals. I’m going to take first shot at them. I will get them close.” Find a title company ahead of time that you know is going to handle assignment fees. That’s sometimes a problem that wholesalers have too, is finding a title company who will work the deal out where they get their assignment fee. What value can you bring to a new wholesaler? Pitch that to them, build the relationship because what they’re concerned about is getting that deal closed and getting paid. If you can make that job easier for them, they’ll bring you your deals.

Rob:
Yeah. Yeah. Sam, I love this strategy really. I don’t think you oversold it. I think this is a great strategy because people will listen to these different things. They’ll say, “Oh my gosh.” They may get hung up on some of the logistics with some of the things that we’re pitching here. But with your strategy, you’re taking out the logistics and you’re finding a wholesaler that’s doing all the work and all the scouting and all the off-marketing themselves. They’re paying for the direct mail, they’re paying for the call centers possibly, and you’re just working with them and paying the fee. So it is more expensive to go this way but it simplifies that process for you if you’re willing to pay that markup. So I think this is a really great one. Thank you so much. I’m in on this. I think you blew Henry and James away with your pitch but unfortunately, we still have one more pitch and that is my pitch.

Rob:
I don’t know if I have to time myself. I guess I’ll time myself. I’m going to aim to be the shortest pitch, that way I can at least win in one thing today. My pitch is the real estate meetup and what I really like about this specific strategy is that I think that this is something that people can do tomorrow. There are no logistics necessarily with a real estate meetup depending on how you approach it. I’m proposing it twofold, right? There is actually hosting a real estate meetup where you bring together a group of investors that are all like-minded people and they come from all walks of the real estate journey. You can bring together flippers, short-term rental hosts, multi-family people.

Rob:
Everybody in the real estate world can all come together and you can meet them and what I like about actually hosting a meetup is that it makes you a local expert and if you are just getting your start in the real estate world, at the very least, it makes you somewhat of an authority in the eyes of people that are coming to this real estate meetup because they say, “Oh, Sam is hosting this meetup. There are 10, 20, 30, 40, 50, 100 people here, he must know some stuff if he could get that many people here, right?” So it puts you in the limelight of your local area and if that happens, then I think you’re more likely to build a rapport with the people in your community and actually get deals tossed your way.

Rob:
That would be one option for the real estate meetup. I think a lot of people might get hung up on actually getting those started. I have some ideas for how you can actually get your real estate meetups up and running but you can also just go to meetups. There are a lot of meetups in every single city, every single week that you can just go to and meet other people and network with other people, tell them what you’re looking for, and I think this is a really great way, like you talked about, to find wholesalers and to find people that are executing the strategies that you might want to execute but don’t have time for. You let them do it, you let them send you the deals, and you pay a premium for it. End scene with 10 seconds to spare. Actually, I think you actually beat me on this one, Sam, time-wise, but that’s okay.

Sam:
Yeah. I love that strategy, Rob. I think that’s a great one. It goes along with the network that I’m talking about. There’s two main ways to get deals that we’ve all been discussing. They’re spending some money, putting some systems in place, buying them a little bit deeper, and having to deal with that end of it. And then, there’s just the going out and talking to people, making connections, and getting in front of as many people as you can and both of them have their pros and cons and I think going to a local meetup or hosting your own local meetup a little more effort, but that’s a great way to meet a lot of people. Instantly, your Rolodex is up. As soon as you go to a meetup, the business cards, the connections you make, you just make connections that might make you hundreds and maybe tens of thousands of dollars down the line so I love your plan.

James:
Yeah. And a meetup’s great because you get to meet people in person and shake their hand and there’s nothing like in the days of… We’re in a technology boom, right? Everyone’s online, we’re talking to each other on video right now, right? That in-person connection is how you build relationships for the long haul. And so, I love the strategy. Meetups are great. The only thing I always like to disclaim out of meetups is go in there with a purpose and don’t get distracted because some people just get lost in the meetups and all they’re all doing is going to meetups. Don’t be that person. Go get what you’re trying to do done and stay focused.

Henry:
I love it, Rob. I want to give two kind of pro tips to that strategy. So if you’re going to go to a meetup that you are not hosting, don’t go with the mindset that you’re looking to take something away from that meeting, to get something from somebody else. Go with the mindset that you’re looking to add value to the successful people in the room and just have that in your head, “I want to find a way to help somebody who’s doing deals,” because then you put human nature in your favor.

Henry:
If you walk into a room with a Sam Primm or a James Dainard and you hear them talking about their business and you hear something that they’re struggling with and you can make a connection to somebody or some other business that you know that can help with that problem or you have a skillset that might help with that problem and you offer that service or that help for free, whether they use it or not, they’re going to remember that person who tried to help them who knew nothing about them over all the other people who are probably standing around them trying to get them to give away some secret sauce or some information. So adding value is going to make you stand out if you go to a meetup.

Henry:
If you’re going to host your own meetup, it doesn’t matter if you’ve done a deal or not, just like Rob said. One thing you can do is now you have something that other local businesses who are partner to your business are going to want. And so now, you can go to your local title company and say, “Hey, do you have somebody maybe you’d like to come and just be at this meeting and meet some other investors who might end up wanting to close deals there?” Maybe you can go to contractors and say, “Hey, do you have somebody who’d like to come and just be in this room where some other people might have some business for you?”

Henry:
Now, you can go to all these other businesses who are potentially people who you would need on your team who didn’t have a reason to talk to you before because you were just some would be investor. But now, you’re hosting a meetup and that comes with some authority and now you’re going to be putting potential clients in a room with them and you get to leverage that relationship because they’re going to coordinate getting there through you and seeing the value you’re adding to their business just by connecting them with other local people. And so now, you’ve built your team without even having to have done a deal. You’ve given them something of value just by using Rob’s strategy here.

Rob:
Yeah. Yeah. I love that.

Sam:
One quick addition on that is you don’t have to be the expert. As you mentioned, you can have somebody else be a keynote speaker. We do that every month at ours. We have somebody come in that is an expert that will speak on a specific topic so that can draw more people in and whoever you have speaking usually has some type of following or people that they’ll bring. So you don’t have to get up there and talk for an hour at these meetups, you can do a quick intro and then you can have the expert speak and draw more of a crowd through them.

Henry:
Hey, James or Rob, I don’t know. Have you guys been asked to be an expert at Sam’s meeting? I haven’t got that invite to be an expert-

Rob:
Yeah, yeah. It’s kind of weird, right? Because it’s like, I don’t know, I just got a new number. Maybe the texts aren’t going through.

Henry:
At Sam’s meeting. Yeah.

Sam:
Yeah. That call center thing that maybe… Yeah. That’s why mail and call centers don’t work. I called you guys, I sent you mail, I must got that return mail. I’ll skip trace you guys and then I’ll reach out to you then.

Henry:
I appreciate that.

Rob:
Yeah. Okay. So you guys hit a lot of what I love about meetups and so, this actually goes back to Henry. Your question to Sam, how do you get a wholesaler to take you seriously? Listen, I have been contacted quite literally by, I don’t know, probably 100 wholesalers in my life and I have reached out back to them, I would say of the 100 in the last five years, probably 30. Where I’m like, “Hey, I want this deal,” or, “Hey, here’s my buy box. This is what I’m looking for. It’s in the same neighborhood.” I’ve never gotten a response from any of them. And so, it is one of those things, it’s a painful effort to build a rapport with someone digitally, with someone over email because there is no name to the face.

Rob:
And so, what’s really powerful about a real estate meetup is when you meet someone, there’s actually a vested interest to help that person win. Just like you said, Henry, if you’re providing value to someone, you find out that they’re a wholesaler. You say, “Hey, how can I help you?” Now, that wholesaler wants to help you win. If you can help a wholesaler narrow down their specific strategy, right? Because I have wholesalers that I’ve met at meetups that they’re like, “Oh, I do the LA area,” and I’m like, “Well, hey, I’m looking for zip code 90043. I’m looking between these streets and these streets,” and I just gave them exactly where they need to hit and then they send me deals that way. So it’s a really great way to actually get to know people.

Rob:
What I wanted to talk about were a few ways that you could actually get a real estate meetup going and how you could actually market it a little bit, right? Because this doesn’t have to be super hard. I think one of the downfalls with real estate meetups is that it does take a little while, right? It’s not like you’re going to get 200 people at your first meetup. It might start with 5 but then it’ll grow to 10 and 15 and 20 and 30 and 40. It is a grind that you have to keep reinvesting to but you just need one deal from every meetup that you host for this to be a $10,000 business for you per month.

Rob:
So I would post to your social media channels, tell people, your friends, family, if they know any investors, to go to your meetup and market it that way. There are different websites like meetup.com that you could create a meetup of event on there if you wanted to. You could create a Craigslist ad. I think that’s like $10. You could go to different Facebook groups that are targeted within your city, like local real estate meetup groups in your city.

Rob:
You can go to the BiggerPockets forums and say, “Hey, I’m hosting a meetup in Houston, Texas at this day.” You can contact local brokerages and say, “Hey, I know that you guys have a bunch of realtors on your team. I’m hosting this meetup. Would love to invite you guys and maybe if you want to promote it to your email list, here’s the link.” Go to conferences in your area. Conferences are probably the best version of a meetup. If you don’t want to throw one, if you want to just go and network with people because those are people that paid for tickets to go and learn something and it’s just a little bit more of a serious investor at that point.

Rob:
And then, ask a, this is a great idea that you guys just said, ask a local influencer. Is there a local influencer in your city that you can say, “Hey, come to my meetup. I’d love for you to speak. I’ll buy you a beer and you can promote your business to everybody,” whatever that is. But if you can get a local influencer there, they could get 20, 30, 40, 50 people there. Tony Robinson, me, and Brian Davila, we just threw a meetup in Los Angeles and we promoted it for about a week. I think 500 people registered and I want to say 300 people showed up. A lot of places actually said we couldn’t go to their breweries or whatever. We actually got turned down from businesses because it was so many people. So asking a local influencer to show up, I think, can create a pretty large meetup turnout for you.

Rob:
And then, the last thing I want to say to James’s point, which is super important, make sure that you do have a purpose and make sure that you have a way to reach out to the people that come to your meetup. I’ve hosted several meetups where I didn’t collect emails, phone numbers, anything, and that afterwards I was like, “That was amazing. I don’t know if I’ll ever speak to them again,” because I didn’t get any information. Create an Eventbrite and when people register on that Eventbrite, put an automation through zapier.com that sends their email to a spreadsheet, create that spreadsheet full of emails and re-market to them and build your email list at the local levels that you can always promote your meetup every single time that you do it. End scene. Yeah. Sorry. I know that was a lot but it is just such rich territory for me, I think, and I think a lot of people really don’t utilize, I think, the simplest way to get your name out there in the real estate community.

James:
Yeah. Thanks for inviting me to your meetup in LA, Rob. I’m just 30 minutes away.

Rob:
I thought you live in Arizona. Do you not? Am I wrong?

James:
Newport Beach in Seattle.

Rob:
Oh my gosh.

James:
That’s cool.

Rob:
You totally do.

Henry:
He’s got a boat. He lives everywhere-

James:
We’re having a memorable conversation about Airbnb and my boat out. You can’t do that in a desert.

Rob:
Well, it’s actually your yacht. You’re underplaying it. Your very, very cool yacht. Okay. Next one, it’s going to be our collab meetup in Los Angeles. We’ll plan it out, bud.

James:
There you go. I’m in.

Rob:
Okay. Well, that is four mega ultra solid ways to find off-market deals. I’d like to go around, just get final remarks, final thoughts from everybody. Do you want to switch teams? Do you want to try something out? Henry, I’m going to throw it to you first. You look like you have something you want to say.

Henry:
Yeah. I mean, my closing thought is if I were a new investor, I just heard… Let’s say this. If you’re a new investor and you’ve got a small budget to start marketing, what I just heard is there’s three strategies here for you. One of mine or James’s because those cost money and then doing both of what Sam and Rob said because neither one of those cost money, they take time and effort. And so now, you’ve got three lines in the water. One that’s taking some of your budget and two that are costing your time and effort that could potentially all generate lead flow for you, setting you apart from every other new investor just trying one thing.

Sam:
Yeah. I think all of these strategies work and none of these strategies work. It’s all about you actually going out there and doing it and following up. You send one batch of direct mail, you may get leads. You have to continually do that. You just call a couple numbers, you have to continually do that. You can’t just go to one meetup or talk to one wholesaler. You have to commit to this and you have to go do it and you’ll eventually be successful. But you will not be successful if you don’t commit to and actually go do it.

James:
Yeah. I love that, Sam. Consistency’s key. Try a method. Don’t give up on it too easily. It takes time. Consistency works. But I will plug call rooms one more time, it is working. If you are a new investor and you want to buy a deal where the money’s dripping off the HUD the day you’re, you’re buying it, right? It’s just dripping. You’re making money? Direct to seller. Avoid the other fees.

Rob:
I actually think, yeah, that tree behind Sam are a bunch of HUD statements with dollar bills hanging off right there.

Henry:
There are just call center leads on Sam’s tree.

Rob:
Awesome. Well, if people want to find you guys online, Sam, where can people learn more about you, connect with you, learn all the cool stuff that you’re doing out in the world?

Sam:
Yeah. Instagram’s probably the best place to find me, Messenger is the best. So at @samfasterfreedom on Instagram, just shoot me a message and I’ll answer.

Rob:
Cool. What about you, Henry?

Henry:
Best place to reach me is on Instagram. I’m @thehenrywashington on Instagram.

Rob:
Cool. And Mr. James?

James:
Same thing. Instagram’s an easy way to get ahold of me. It’s @jdainflips or you can check out jamesdainard.com.

Rob:
Awesome. Well, you guys can find me on MySpace at Robuilt, R-O-B-U-I-L-T, or check out my Zenga if you’d like. But with that, thanks everybody for joining. We’ll catch everyone on the next episode of BiggerPockets.