David: Hey guys welcome back Discount Property Investors; this is the Discount Property Investor podcast. We are your hosts; David Dodge and Mike Slane. Hey, Mike!

Mike: Hey Dave, how are you doing, buddy?

David: I am doing great, man. Good morning to you.

Mike: Welcome listeners! If it is your first time joining us; please go back and... well first off; thank you so much for listening.

David: Absolutely.

Mike: And we would encourage you if you are interested in learning how to wholesale to go back and listen to the first 10 episodes of our podcast. There we talk about a lot of the basics of wholesaling. We also put together a free course at freewholesalecourse.com. So go ahead and check that out as well. It has everything you need from contracts to sellers information lead sheet. Everything you need to get started in wholesaling and real estate.
So Dave, what are we talking about today?

David: Today is an awesome episode, Mike. I am excited; we are going to talk about how we made $2500 over the course of 365 days. This is an awesome episode guys; this is a case study of a recent deal we just did.

Mike: Yeah and we are kind of making fun of the fact we made a pretty small profit over a pretty long period of time. Because a lot of the time. A lot of the times... we are going to throw them out there too; the case studies where we made $10-20-30,000.

David: 60,000 80,000. Sometimes it happens, guys.

Mike: In 30 days or 14 days.

David: Right.

Mike: Things like that. But this is one of the deals where we are just grinding it out and... made some money and I think it is hugely important.

David: It is hugely important.

Mike: The money is in follow-up. Again, this is $2500 that wouldn't have been in our bank account...

David: I am going to repeat what you just said. The money is in the follow up. I can't stress that enough, guys. The money is in the follow up.

Mike: Again, $2500 that wouldn't have been in our bank account had we not done this.

David: Not only did we make $2500, but one of our junior buyers made $1500.

Mike: Yeah, that's awesome.

David: We really netted closer to 4000 but we paid out and... it was a win:win. One thing we don't want to forget is... not only did we make 2500... over the course of a year; we also helped a seller sell, and we always helped a buyer looking for his next rental property acquire a good deal on a property. The money is great of course, but there is more to it than that; we helped some people out in the process.

Mike: And we are kind of teasing about it, but you could be out there... I mean if you are working a lower paying job; you could be making $2500 in a month. That's what you are living off of.

David: Minimum wage. You are not going to clear that after taxes.

Mike: Right.

David: Not even in two months.

Mike: So again, it is not a huge win in the wholesaling business... but it is a win. For... if it's your first deal like our junior buyer who hasn't done a lot of deals; he is going to make $1500. That is a great deal, that's a lot of money.

David: Especially when you are making $20-25 or even $10-15 per hour. $1500 that is a lot of money.

Mike: Right, so again, we tease but...

David: Stay humble. $2500 is a good amount of money. The fact it took us a year to make it; that is kind of where the joke in the podcast comes in.

Mike: Honestly; that's what I am more proud of on this deal than anything else.

David: So if you haven't listened to the most recent podcast; I am not sure about the number of it, but it was called 'The Matrix'. It was all about follow up, so this is kind of a piggy back podcast to that one. We are doing a case study on this particular deal. But we would never have been able to help these people, never have been able to pay our junior buyer, and never been able to earn this $2500 of profit if we wouldn't have followed up with this particular deal over the course of literally... over a year.

Mike: Yeah and had that system built. Because again, it wasn't David and I doing all the work by the entire stretch of the imagination.

David: It was the entire team.

Mike: We have a whole team, a whole system built out.

David: So let's talk about this particular deal.

Mike: Yeah dive in, Dave.

David: We are going to pull up out lead sheet here in Podio. We talked about this CRM in our last podcast. So we essentially started working this lead about 12 months ago roughly. The lead came in, it was in North County, St Louis, Missouri where the Discount Property Investors are located. We are located here in St Louis Missouri. The lead came in for this small two bed one bath house, Mike, is that right? Three bed one bath house. The seller was motivated to sell. However, he was upside down in the property. We made him an offer for $8,000. I believe... don't quote me on this, but I believe he owed about 30 or 35,000 on this property. The mortgage amount on the lead sheet says 30. So he owed the bank 30 grand. For whatever reason he didn't go the short sale route which... you would have thought would have been the best bet.

Mike: Was the owner living there? Or was this an investment property?

David: No, this was an investment property.

Mike: Right so that's probably part of it then.

David: He had... we are not going to name any names obviously... but he has a bunch of other properties, and he had a mortgage with 30 grand on it, and he was just done with it. He was tired of the area, he was saying every time he installed an AC unit outside, a condenser it would walk off. So someone would steal it. It was a problem property.

Mike: Depending on how you define the area, it is definitely a C class asset, definitely not one of the better area in St Louis. But again, a solid rental area if you cage your AC's.

David: Absolutely. So long story short; we are scrolling through out comments section on Podio right now and... it looks to me like every two to three weeks... somebody from our team reached out to the seller on this. We made them the offer, we went out to the property, we took some pictures, we negotiated and negotiated. Essentially we were kind of firm on our $8,000 offer. He owed about 30 on the property. So long story short; he had to come to closing with $22,000.

Mike: Let's be clear though. I am looking at when it was initially filled in; the seller knew he was going to take a loss. His asking price was only about 15. So he realised he was going to have to come to the table with 15,000. So it wasn't even like he was shooting for... an unrealistic number.

David: To him I think it was a win to come out of pocket of 15 on this case 2000 vs. having that monthly mortgage payment of 5-600 or whatever it was.

Mike: He had to be done because it was a headache for him.

David: Some people may be listening and thinking, "You didn't help this guy." Well that is one way to look at it. Another way to look at it is we did because... we took this monthly debt, this monthly liability off his place. He knew he was going to lose and we were able to at least stop the bleeding.

Mike: We are pretty straight forward.

David: We told him if he can get an offer off someone else for more then go get it.

Mike: Exactly, that is the other thing too. A lot of real estate agents won’t even work in areas like this, they don't want to.

David: What is 3% of 8000, Mike? A couple of hundred bucks? They don't want to deal with that. It might not even be a couple of hundred bucks.

Mike: Something like this... there really isn't a way to liquidate the property, there is no easy way to liquidate the property. That is one of the value ads that investors bring to the market is that we bring in liquidity.

David: We do.

Mike: One of our buddy's says that all the time; we bring liquidity to the market.

David: We are the market makers.

Mike: Which is good. Again, it is helpful.

David: It's so helpful. Long story short; we closed on the property... seller brought in some cash so that way we could get away with only paying 8 because he owed more money on the property.

Mike: So talk about that though; we actually closed on this one. Was there a reason for that? What happened there?

David: So... that is a good question. We actually had a buyer lined up on this property. We worked this property for over a year... nearly 12 and a half months. The buyer we had found and he wanted to buy the property. He wanted the AC unit installed on the property. The seller had multiple other rentals and had an AC unit, and was willing to install an AC unit. The buyer however wanted a cage on there. I told the buyer that we would help, we know a guy who can put a cage on it, but I am not paying for that. If you want I can have it put on and either send the bill to you, or I can pay it and you can pay me back at closing. He said do it, pay for it, get it on there. You can invoice the title company at closing and we will get you paid back. So essentially what happened was that the seller installed the condenser, the AC unit. The very next day I called my cage guy and he came out and put a cage on it, I paid him. At closing... we were refunded the amount of the cage so... there was a little bit of a hiccup; all it was... was a problem we needed to solve in order to sell the property. We contacted all parties involved and we made it work. We solved the problem and were able to make the deal work.
So the numbers on the deal are this; we bought the property for $8,000.

Mike: Let me find the numbers for you.

David: I think we sold it for $12,500 I believe. 12,000 and some change.  So we had gross profits on the deal of $3,000. We paid our junior buyer which is essentially our field buyer, the guys that go out and look at the properties, make offers for us. We paid them out 40%. So he made $1,400 on that deal. House Sold Easy properties... that's the acquisition site of Discount Property Investor. We were able to make about $2,500 on this deal.
So not a home run, but we wouldn't have been able to do this if we hadn't followed up with the seller over the course of 10 or 11 months. Just said, hey we are still interested in this property. However, we are at 8, you are at 15... you either need to come down to where we're at, or you need to figure out how to make this work. Essentially we kept calling him. We kept calling him almost every single week.

Mike: It is unbelievable our... one of our assistants, he was extremely persistent and actually makes the calls for us which is huge. It is something...

David: It's his job.

Mike: If you don't have someone doing it you have to do it. It's something that... I wasn't great at until I had a system like this. Now we are able to let someone else do it for us. But it is so important, because again if you look through... I wish I could show you guys; but it is every week almost. Every week you can see 'Call seller', 'Called seller', Called - left voice mail'.

David: Texted seller, called seller.

Mike: Every week and it is not just this lead. So we have got...

David: Every lead.

Mike: Oh my God we have got so many leads in the system right now. There is probably...

David: Probably about 1500 of them in there give or take.

Mike: I was going to say 3200.

David: When you look at it that way yeah. True.

Mike: We have got a lot of leads that we are working on.

David: The follow up system is probably close to 1500. That means that they are on a sequence to either be called weekly, every other week or even as far out... as I said in our last podcast it could even be five years later. But we have created a task so we don't forget.

Mike: Dave says five years, I would never put a five year one on anything, I would put a year out.

David: A year out... I was exaggerating. But it does give you the ability to do such things.

Mike: You can do as ever long as you want. Anyways, it is not just this lead either though; that's what's so awesome. We have got 1500 something leads that we have got someone following up with either every week, or once a month or once every three months, or I will follow up in six months with this one. I think the other thing that is really neat about this is... my personal preference; I don't like the canned 'I am going to follow up with everyone in the next three months'. Like I am going to follow up with each and every one of them...

David: Not only that, Mike; but it is impossible... let's say you have like... let's say you did Tuesday as your follow up days and you have 1500 leads. You can't call all 1500 people every Tuesday or even... every other Tuesday. You have to have sequences that are irregular.

Mike: Absolutely.

David: That way once you get to 300, 500, 1000 follow ups in your sequences... that you know... okay I have 15 today and I have 12 tomorrow and I have 32 on Friday. If you try to do all of them on the same day it would never happen.

Mike: That's not even what I am saying. What I’m saying is; I like how ours isn't so robotic though. One of the things we mentioned in our previous episode about our follow-up is... it doesn’t really matter, you just have to have a follow up task on there, you have to have the next task open to remind you to do something. So what I am saying is; that I like how our system is flexible in that it doesn't really matter... just click and follow up in two weeks, or I will follow up in three weeks or whatever it is. We are able to get it done... it's neat and it is something I hope you experience is doing a deal that takes you a year.

David: Here are a couple of points I want to bring up real quick, Mike. First and foremost; 2500 over 365 days, guys. It's a joke, it's a laughing matter. But we are sometimes doing ten of these a month. If we were to walk away from this deal because we would have only made $2500; that's kind of sad because if you can do 5-10 of those in a month... well that can essentially be 20 grand... if you do ten deals at 2000, that's 20,000 a month of income and gross revenues... that you can essentially create... from these follow ups, okay? Another thing is look at our ROI on this deal. So before we paid our field buyer, our junior buyer; we had gross profit of 3500. Out acquisition price was 8. So I am not a math genius here, but we almost had 50% return on the investment. 4000... would have been 50%, so we are... we made a 43% return on our investment. We invested 8000 and got a little over 12,000 back. So out ROI on this deal... even though we spend time over the course of a full year calling, text and email. That doesn’t take a lot time, especially if they don’t answer. Call, leave a voice mail, you are out in 90 seconds, tops, maybe a minute. So once we were able to actually do this deal; we had a 43% return on our investment. We held it for maybe four days between the time we were able to buy it, and the time our seller was able to get to the title company, close and reimburse us. Where else on the planet can you get a 43% return on your money in four days?

Mike: Bitcoin.

David: Maybe Bitcoin. You could also lose 43% in a minute.

Mike: I'm teasing Dave because I know he is a big Bitcoin...

David: But definitely, not only did we... have a hefty return on our investment. But there was not a lot of time invested even though we followed up over 365 days. So it is kind of a catch 22. There wasn't a lot of time invested even though we did spend a year working on this lead if you look at the big picture.

Mike: I love it, how we made 2500 over 365 days. I am going to put this out in one of our little case studies too.

David: I think that's great.

Mike: Because it just illustrates the point that follow-up is so important and... it can make you money. Dave points it out too; 2500 yeah it's not a lot of money, but again if you have a built a system, and we have built a system to enable us to do 5-10-15 deals a month...

David: Absolutely. Our rent is about 1200 bucks a month at our office her in St Louis. That pays two months worth of rent. We could have walked away from this deal and said... this is a small deal. But again, you do 5-10 of these a month or even a quarter. It starts to add up guys so don’t walk away from these little deals. You got to follow up. Follow up is the name of the game.

Mike: The thing is; you never know which deal... again, until the deal is closed you don't know what your profit is going to be. You can come up with a projection... a proforma is what they call them in accounting or whatever. But you don't know until it closes really what your profit is going to be. You can speculate that it is probably going to be a small deal.

David: The buyer on this particular deal was super happy to get the 12 grand too. He has a couple of other properties in the area; it's a good deal for him. Even though we made a little profit on this deal; he is super happy, he is going to come back and buy more properties from us. He would not have been able to find a house like this for that price without the wholesalers in the middle. So again, everybody is happy, it was a win:win:win. We made a 43% profit on our investment, which was only 2500 bucks... over the course an entire year. But this is a great case study and I love the fact we are doing this one, Mike because... we didn't make 25 grand, we didn't make 60 grand. We made 2500 bucks over the course of a year. But it just goes to show you that the money is in the follow up, guys. Persistence... one of my favourite quotes, you have probably heard me say it before; "Consistent, persistent action wins the game". You have to be consistently persistent and that is what we did with this deal. It is a great cast study, I am super glad we talked about it, Mike.

Mike: I love it.

David: It's awesome.

Mike: Well thank you guys so much for listening to us. I think we have covered this case study... if you have any questions please feel free to reach out to us. You can find us on... [email protected]. Shoot us an e-mail. You can find us on the freewholesalecourse.com. That's probably where you should go first.

David: If you haven't checked that out guys go check that out first. I had an individual send me a Facebook message last night. He's a local guy... said, "Dave, I have been following you and listening to your podcasts. I started the free wholesale course. Can you give me five minutes of you time?" I said, "I would be happy to, however have you finished the free wholesale course yet?" He said, "No I am about halfway through it." I said, "Alright, not trying to be rude. I will give you five minutes of my time, but finish the course because a lot of the questions you may have are most likely going to be in that course." He said, "That's fair. Let me go back in there, let me finish it." Because it is jam packed with all the things we do in our business. Anything you need to know about wholesaling is in the free course, so check it out. Freewholesalecourse.com.

Mike: It's funny because sometimes I feel the same way. But, our time is valuable.

David: I told him I said, "I will." The reason I am even going to do it is because he could be a buyer for me. There are multiple benefits there and I want to help the guy. But... you got to go do some work first. You got to... I have already put together this course.

Mike: Right, we spent a lot of time... so go look at it please. Be respectful of our time and we will be respectful of yours. So check out the free course, guys. Thank you so much for listening to our podcast.

David: Let's finish out with a good quote here, Mike.

Mike: You got one?

David: "Talent wins games. But teamwork and intelligence wins championships". That is a perfect quote for this case study, guys. Put in the work, follow-up, don’t be afraid of these smalls deals because sometimes your ROI can be massive on them. You do a couple of these a month it adds up. Thanks for listening, guys. I hope you enjoyed our $2500 case study. Until next time.