Today, David interview Chris Craddock talks about Turning Trash Lead Into Cash Money. Last year he did 409 transactions. This year he has already listed over 100 properites since 1/1/2020. Chris has a course coming soon. In the meantime you can sign up for his Announcements here: https://www.chriscraddock.com/
[bg_collapse view="button-green" color="#4a4949" icon="arrow" expand_text="Episode Transcript" collapse_text="Episode Transcript" ]David: Alright guys, welcome back to the Discount Property Investor podcast. This is your host David Dodge coming to you today, to talk to you guys about turning your trash leads into cash. I have a special guest today. His name is Chris Craddock. I met Chris at a mastermind just a couple of weeks ago, and we really hit it off. Not only did we hit it off, but we were wing men, so we were forced to network, but boy am I glad that I met Chris. Let's give a nice welcome to Chris. Chris, how are you doing today, buddy?
Chris: Bro, thank you so much, man. It has been fun getting to be buds, man. This has been awesome. I love what you're doing. Yeah looking forward to spending some time with you today, man.
David: Hell yeah. Chris, we appreciate you coming on, we are grateful for your time.
Chris: I apologize for this thing on my face, it's terrible right now. I am in one of my buddy's weddings, got the most amazing mustache ever, and he said the rule to be in the wedding is that every single groomsman has to wear a mustache. I just haven't shaved for a while. One day I am going to go through puberty and not look terrible.
David: I think you look great, Chris. I think you look great. We have about 75-80% of our listeners via podcast versus YouTube. So most people won't get the pleasure of seeing your pretty face toda, but that's okay.
So anyway, I wanted to talk a little bit about how I met Chris. I met Chris at a mastermind a couple of weeks back. Chris had some really fascinating ideas, and some stuff I've done in the past, but never really had a whole lot of success with it. Chris is having some really good success. What he is doing is-- I'm going to let him explain it to you guys, but essentially he is turning trash leads into cash. If you are new to real estate investing, or new to wholesaling, you will know, especially if you have listened to this podcast before, that we make our money when we buy, and we get payed when we sell. So you have to buy things at a discount. Specifically in wholesaling, you have to buy great in order to sell good. Basically just making the spread between buying great and selling good. In order to find a great deal, you have talk to a lot of people. This is a numbers game; you have to talk to a lot of people about their properties, you have to make a lot of offers. You are going to have a lot of people that you spend money on, or time, or both in order to reach out to them or have them reach out to you. If you are not able to close that deal right away, they are going to end up in your follow up system. So first and foremost, have a follow up system in place, and work those leads. That is number one thing that you need to know about this episode today is have a system in place and work those leads. Now if you don't work those leads, you are throwing them all away. If you do work those leads, you are probably still throwing leads away, and that's one of the reasons I really wanted to get with Chris today, and talk about some of the ideas and strategies we can use together to reduce this, and to not throw these leads away, and I had to pull it out of Chris tooth and nail, but he has a course coming out soon. It's not out yet, but it will be out soon, and the the more people we can get over to his site, the quicker he will get his ass in gear, right Chris?
Chris: Absolutely! Alright!
David: Awesome, very cool. I just kind of wanted to lay that out there, that's kind of the foundation. I am not trying to steal the show here and talk everyone's ear off. So Chris, tell us a little bit about what you're up to, and how you are turning your trash leads into cash.
Chris: Yeah, so my story was-- in the early 2000's you know, I was in this organization called Young Life, when my wife got pregnant I knew I had to make some money, so I went out, knocked on every distressed property door I could find, and in four months I made 12 times what I made in a year and it was great. Then as I got-- you know time went on, everything went on. I started flipping houses again, like around 2011, it was all short sales, got licensed so that I could make a commission on those short sales I was flipping. Just through kind of doing the agent side and the investor side, I realized there there was a lot of these retail leads, a lot of people that would sell, but they were way too skinny to be able to do the deal-- like to flip the deal. Anyway, got tied in with a number of investors, one in particular that-- just spent a lot of money on leads, doing everything from cold calling, to direct mail, to TV, radio, everything. They are just bringing in a lot of leads, they do a lot of business. They have just been throwing away their old deals really. They have been giving them to agents, but not really tracking, not really doing anything with it. A few years ago I just started fighting tooth and nail, because I knew they were spending so much money on these, and I knew I could convert them and monetized these leads. They were-- literally to them were just trash. They make like maybe ten grand, twenty grand a year on these, but they spend a lot of money on marketing. It really was a drop in the bucket. This month alone, we are going to be sending them thirty grand, just in referral fees by converting these retail leads into-- deals, deals that they would have just thrown away and not even cared about. That's where I'm seeing-- this is real money, we are not just talking a couple of bucks here and there, or deals here and there, we are talking about real money and real deals if you know how to do it right. The problem is, most real estate agents, even good ones, they don't know how to convert these deals, they don't know how to talk to people that are calling investors for a deal. So then they just-- kind of what we've been doing, cracked the code on being able to convert them and actually monetized these deals.
David: Got it, so Chris let me ask you this; this can go both ways, so I just want to figure out your approach to this. Are you converting the motivated seller lead that is contacting an investor into listing that property? Or are you converting the people that are contacting agents to get their property listed into more of the real estate investors role? Do you get what I'm asking?
Chris: Yeah, yeah. We-- do both for sure, but the real money here is like-- David, you're doing your marketing, you are doing your advertising. You see a deal, you're going to be able to do a quick wholesale, you flip it for 15 grand. Well if there is a deal that you see that is just way too skinny, they want close to market value, we are taking those deals and doing-- turning them into retail listing, and being able to give a big feedback to the person -- like back to you who paid for that lead. The crazy thing is, most people see it as-- they are doing-- a lot of people will look at it and say, oh man this is a deal-- 3% of-- I know in your market that you will see some $50'000. The crazy thing is, we got deals in Baltimore-- I have a $70'000 house right now, we have a 9% commission on it. That's real money, so we are-- it doesn't mean-- a lot of real estate agents, they just don't know how to do it right, they don't know how to talk to people. So they are getting-- in my market it is average to get a 4% commission where the listing agent keeps 1.5%, we are getting a 9% commission on another-- 7, 8 or 9%, and then we are able to turn them over, or on these lower dollar properties, we will get a flat fee like five grand, seven grand commission on that. You are giving 25-- up to 50% depending on the situation back to the investor on the deal, as long as it is set up in a way-- where you are able to do that, and not break any rules. So that is kind of the key there.
David: Yeah, then you know-- some of the best businesses are the most simple businesses. So you don't have to complicate it. That's it. It's just-- going-- just putting in a hustle to connect these individuals that are not aligning with your current model, or maybe they just don't know that there are these other options. I love it. You are converting agent leads to investors. You are converting investor leads to agents, and basically just saying, hey there are other options out there, right? We have more tools in our belt. Le's see what we can do to help you solve this problem. Typically their problem is that they need or want to sell. From there you are converting these over to other people. What would you say that you are converting more of? Is it agents? Leads that are contacting because they want a list and you bring in the buyer and do a wholesale type of transaction? Or is it more the flip side where they are contacting and they want someone to make them an offer? Then you convert those to listings.
Chris: Yeah so we are doing a little bit of both. So last year we did 409 transactions. Of them, a massive amount of those-- this year along-- who knows with the way the world is right now. This year alone we have already listed over a hundred properties since January. With them I would say-- I believe-- not quite 50 but almost 50% of those are deals that came in where people wanted to sell to a cash-- they wanted a cash buyer, then we converted them over because they were unrealistic. So David, when you go on an appointment-- when you get a lead in, how many leads do you get to convert one wholesale deal?
David: It depends on the marketing that we're doing. If you have-- if you pay for marketing, and the message is put in front of the individual and they call in, it is going to be a much higher number-- sorry it's going to be a much lower number of leads to deal as if we are calling out, right? There is not a level of motivation we are searching for. So let's talk about those who are calling us from a radio ad, or websites-- our direct mail campaigns. So we are spending money to get our message out. They call us. I would say, we are pretty good at converting, but I would say it's still going to probably be one in ten that are going to convert. Something we are outbound reaching out to, flip the script. I would say it is probably closer to like 1 in 200.
Chris: Right. So of the ten, let's say those ten-- how many are likely going to sell even if they won't sell with you? So 90% you will go on an appointment, 90% you don't sign up, how many are going to sell?
David: I would say probably half if not more. I mean they are reaching out for a reason. The reason they typically don't want to work with us is broken down to the simple science of math. If our offer is at or above what they owe, then that opens up the door to talk further. But, sometimes the offer is lower than what they owe, they are not willing to bring money to the table, or making payments and try and short sale it. Those are just tough leads for us because what do we do? We have some in house agents that we will turn those over to, but I want to be clear here, we are not that great at doing it. Our focus is buying houses. I am working on that though, I know that here is a need to convert these leads, I am spending money to generate them, that is another one of the reasons I am glad you're on today, maybe you can give me some pointers or some times on how to convert those a little bit better. But you're absolutely right; about half of those people need to sell, and I am only getting one out of ten, so I am getting one fifth of the five people essentially that are going to be selling. The other ones are probably going to be going and finding somebody that can pay them more, or they are listing those properties.
Chris: Yeah, so that's the crazy thing; I think it's probably a little bit higher than 50%, at least from what we're seeing, even let's say it's 50%, so that means you're signing up one, then there are four others who are signing with somebody else. That' the crazy thing; if you could monetize those other four like-- what's an average wholesale fee for you in your market?
David: Our market is kind of low, and people laugh. Our is like seven or eight thousand. I know people are out there doing 15-18, sometimes even $30'000 wholesale fee. That's fine, that's really cool. In our market it's more like seven of eight grand. We do a lot of joint ventures with other people as well. I'm not too big or too cool to do a two or three thousand dollar deal. We do ten deals a month so-- to me it all adds up, and it is not always about the money. Whenever you build up a business that is pretty well oiled, and it's a good machine, it can crank our marketing, it can crank out appointments, help people buy and sell their house; it is not always about the money. So sometimes it is just about helping somebody sell their property, as well as helping somebody else find that next rehab and that next rental. We are creating wins and we are solving problems. To answer your problem though, yes, six or seven grand maybe, seven to eight grand call it is typically a wholesale fee for us.
Chris: Yeah and just after talking with you, hearing your business. It sounds like your business is rolling like clockwork, which is awesome. I think people that are making an average of 15-18, but literally clawing for every deal, trade for a wholesale fee that is half that.
David: We are always doing what we can to increase that number, but at the same time I don't want to piss off a seller, and get them to shop my offer to somebody else, while in the same time it is also important for me to feed by buyers and keep them happy, so they are not going and buying from other people too. Yeah there is definitely a balancing act here. Yeah a couple of thousand dollars is a couple of thousand bucks, let's call it what it is.
Chris: My point is this; let's say on five of those deals-- so four like-- let's say you go on-- you have ten appointments. You're in one, there's four others that are just no brainer, you know that you could capture if the numbers were different. They want to sell, they want to sell, but there is just not a number in there. If somebody were to come in and do what we were doing, and monetize, capitalize on those deals, and be able to get-- let's just say we have a flat fee of like four grand on that deal, and you are getting 25% whatever that is on four of those deals, all of a sudden you-- I don't know what you spend every month on marketing, but you could very quickly start to zero base all your marketing on deals that you pretty much are throwing away. If you are like most people that I know, most-- I am friends with a lot of investors, they are spending literally between a lot of my friends-- they are spending millions of dollars a month when you combine all of the amount of money everyone is spending on marketing. Every month millions of dollars that they are just throwing away. If you partner with the right person that actually understands how to close these deals, and it's not a waste of time, which it will be a waste of time if the person doesn't have a good system to close these deals. You can pretty much start zero basing your marketing. How does that change your business if all of a sudden you're getting 2500 times four every month coming in for-- to pay for marketing, and even a decent marketer should get a 2 X ROI if not a three X or four X. So all of a sudden you multiply that, you look at a multiplier on the ROI if you take that money, and it should change how your business-- and change the trajectory of your business if you are reinvesting it, and you're good with your ROI. That's my take, I think a lot of people are in that same place where they have ten appointments a month, and take one, and four of them-- you easily could have monetized if you had a system in place to monetize the deals that are just dying.
David: Yeah so let's talk about some of the strategies that we are using currently to put some of these systems in place. I think that's awesome. So one thing you mentioned earlier, if you have a deal that comes in to an investor side, and it's just a thin deal, there is not a lot of money to be made, you could refer those over to an agent. If you are an agent, you can send that over with a referral fee, and those are typically a one page agreement that you send over with the information of who that seller might be to the agent. Those referral rates usually range from 25-30%?
Chris: Yeah. Typically a little bit more if you're sending a massive amount of deals, it has to be a massive amount to be any more than that.
David: Right, that's a good point though, so with volume, it can get even higher.
Chris: Yeah, 100%. So yeah the way it works is, you partner with an agent, or you become an agent, or the way a lot of the bigger teams, they usually have somebody that is an agent that just hangs their referral status, and this is what I'm training. I'm training the people that are going in and converting. Most of the people that are doing deals should know how to sell the wholesale, or get somebody under contract. The problem most people have is that they don't know how to pivot, and so don't have that other tool. Whether it's you or an agent that you are partnering with, you can't just get anybody, you need somebody that understands sales, understands how to look at this. Basically needs to come in and act like a doctor, right? Identify the pain, and identify-- okay it is too thin for this deal, I blew out my shoulder, I always tell this story; blew out my shoulder, played rugby in college, so I have had three shoulder surgeries here, one here, and I just blew it out again which just sucks. I went to the doctor, he did all these things, moved my shoulder around, moved my arm around, nothing. Did something called the crank test, it's as bad as it sounds. He cranked my arm around, I mean I squealed like a little girl. It was terrible.
David: Uh oh.
Chris: Then he did it again!
David: Oh no!
Chris: He's like yeah, that's it, you probably tore your [00:20:19.17 - inaudible], and sent me to go to the MRI, which if you have ever been to an MRI, it's terrible. The whole thing is, that's what we should be doing when you walk in; you find the pain point like a doctor, right? Once you find it, they need to sell quickly, but they are calling an investor, right? They are always calling an investor instead of an agent, every single person knows an agent, right? There are 500 billion agents that they probably could have called, but they are calling an investor and talking to an investor for a reason. What is the reason? Maybe they don't want people in their house, maybe they want a quick sale, maybe they are behind on the mortgage. Whatever the reason is, you find what it is, you find that pain point. Like the doctor did the crank test, you just push on it till they squeal, then they are able to sell them, and you are able to answer that pain, right? You are able to say okay, here's the pain, here is how I can solve that pain for you, and here's what we do. You answer it, but if you go in like-- if you have somebody come like a real estate agent, open up their listing presentation and treat it like an agent and not treat it like an investor, boom you're done, they are going to call their uncle's grandfather who is also a real estate agent and a hairdresser, and sell and let that person sell their house and list their house. You have to treat it like-- just like an investor that goes in and says, hey what's your pain? How can I solve your pain? And know that the people in the world that make the most money are the ones that identify pain and solve problems for people.
David: Man, you nailed it. I totally agree with what you're saying. Yeah this is a business, so the guy that is getting the referrals, they need to work these leads as if they payed for them, because somebody else did. The fact they are going to be able to keep 60-75% of the-- income that is generated from that leads is huge, because they are not paying for it either, someone else is, which we just mentioned. Lots of winning scenarios here, a lot of win wins for not only the seller, the agent that may be involved, but really mostly in my opinion for the investor who is spending money on their marketing, and they are essentially turning trash leads into cash, or into cash leads.
David: I think that is awesome, Chris. Very cool. Guys, I want to thank Chris for coming on the show. He has given us a couple of really good gold nuggets today about how to turn trash leads into cash, and if you're not familiar with Chris, check him out, he has an awesome website; ChrisCraddock.com. Did I say that right?
Chris: That's right.
David: I always want to over pronunciate the dock.
Chris: Otherwise it could go another way that we don't want to go.
David: Yeah. ChrisCraddock.com, go ahead.
Chris: Actually on the website as well, our business, when I started really running with the business we have, we went to a multi million dollar business really quickly. A lot of it was because of the people I spent time with and people I learned from. I actually created a reading list--.
David: I'm looking at that right now, it looks great. Down at the bottom of your website, check it out guys.
Chris: Millionaire real estate, millionaire reading list. If you just type in your info there, we will send it to you free, no cost. Just anybody that wants to build a multi million dollar business. I think there is something like pre requisite books, every entrepreneur, every business leader should read these books. I just put it out there, send it over and we will get you hooked up with that.
David: Hell yeah, man. I'm signing up as we speak.
David: Get my e-mail in there. Boom, signed up, that's what's up. Very cool. Chris, thanks for coming on. Guys, turn your trash leads into cash. He has a course coming soon. So go sign up and get on the reading list, because the most people that sign up for the reading list, the quicker he is going to get his ass in gear and get that course out to us. I'm super excited, he knows I'm giving him shit right now, but that's okay because we're buddies. Chris, thanks for coming on the show, check him out, ChrisCraddock.com. Get on that reading list, and don't forget, turn those junk leads into cash. Partner with real estate agents, partner with investors. You are most likely spending time, money, or both to generate these leads. It is really just stupidity and foolishness to not try to convert these leads and get paid on them. So get out there and do it, get on Chris's list, and hopefully Chris will be back on the show soon, when we can announce the opening and grand opening of the course that is going to be building for us. Wouldn't that be nice, Chris?
Chris: Yes, sir.
David: Giving him shit, giving him shit, I love him. Alright guys, we are going to be signing off for today. Chris, thanks again for coming on the show. Thanks for sharing some gold nuggets with me and the audience, and again, we are going to have to bring you back on the show sometime soon. Any parting words for us today?
Chris: Yeah, just do it boys and girls. Just go out, lots of stuff in the world tells us we should sit around and wait. But I will tell you what, get on the phone, grind, do what you have to do. Just go out and win.
David: I love it. Guys, you make your money when you buy, you get paid when you sell. We are signing off. Until next time.