Real Estate Podcast

Episode 45: What Makes a Good Wholesaler

brrrr method david dodge discount property investor michael slane podcast real estate 101 real estate coaching real estate investing real estate investor real estate tips wholesaling wholesaling real estate Sep 21, 2022

Show Notes

Welcome Back Discount Property Investor podcast. Today Mike and Dave share some of the things that motivate them as well as describe what makes a good wholesaler.  There is no perfect personality for it, you may need to develop some skills or step outside your normal comfort zone to succeed in this but anyone can wholesale.  Listen in as Mike and Dave discuss. This episode Quotable Quote: "Success is not final, Failure is not fatal, it is the courage to continue that counts."

Episode Transcripts

David: Alright guys welcome back to the Discount Property Investor Podcast.  Mike? How are you doing today, bud?

Mike: I'm doing great. It is a beautiful day here in St Louis, nothing to complain about.

David: The weather has been nice.

Mike: We just got through a little heat wave. Anything under 100 degrees feels great.

David: Absolutely.

Mike: How about yourself, man. How you doing?

David: I am doing good, man. I am doing really good. Life is good, can't complain.

Mike: Business is going good here.

David: Business is great!

Mike: We are crazy busy, guys. Yeah I mean... our heads are spinning all the time it seems like. That is one of the things I think in our business we need to work on. It is one of the things Dave and I... we went to training last week and... we know it is something we need to work on so...

David: You went to one a few days ago too right?

Mike: I did. I went to another one... just kind of a beginners wholesalers boot camp.

David: Always good to pick up some new tips.

Mike: Just network and see what the guys are talking about.

David: Was it a big crowd?

Mike: It was a good crowd; about 100 people.

David: Wow that is a real big crowd.

Mike: Yeah it was pretty fun.

David: That's awesome. Well, Mike what are we talking about today, man?

Mike: Today we are going to talk about what it takes to be a good wholesaler or what makes a good wholesaler. So basically the personality type of someone who is going to be successful in this business.

David: Okay.

Mike: I think there is no real right answer. I really do believe that anyone out there can wholesale.

David: Oh yeah, absolutely.

Mike: It is just whether or not you are going to enjoy it or not. I think that is kind of the... main dilemma or the difference between these things. So please do not use any of this like we are saying that this type of person can't wholesale; because I truly believe anyone can. My personal experience is that I am not the sales type, I am not the... extrovert, I am much more introverted. But I still... I think I am a pretty decent wholesaler when it comes down to it.

David: Sure, I think you are too.

Mike: Thank you. So again like I’m saying; I don’t think any of these things necessarily excludes someone from being able to wholesale. Anyways, so what type of personality is going to be the best at wholesaling? My opinion... you think of somebody who is able to talk to anyone; I think are going to be a better wholesaler.

David: Right, you can't be shy in this business.

Mike: Right, and you also have to have somebody who is a doer. One of the biggest problems in wholesaling... at least what we experience is people who... want to wholesale. So they are ready to take action, but that's where they are at and they stop.

David: No action has been taken.

Mike: They stop at ready to take action. I hear it all the time that I am going to do this...

David: I bought this course and then I bought this course, and then I went to this seminar. But you haven't done anything. You are just educating yourself and you are kind of stuck in the whole analysis paralysis phase and... do something, get some bandit signs out there, put some mail out there, do something. Call people on Craigslist.

Mike: Think about two different kinds of kids. One is... going to out there and walk around the playground and maybe go on the swing a couple of times. The other who is just jumping in the mud and sliding down the slide head first.

David: Breaking his leg.

Mike: That is the wholesaler I think.

David: Totally. You have to be motivated. Motivation is key to this topic here. You have to be motivated. This is truly a business where you eat what you kill. Very few times... in the beginning I should say; I want to make this clear, in the beginning at times you are going to stumble across a deal. If you do enough marketing and you do a good enough... essentially if you do enough marketing and get your name out there enough, then you are going to stumble onto deals. Mike and I stumble onto deals weekly.

Mike: I will be honest; that's how I have had my success in wholesaling honestly is by stumbling into deals. If you do enough marketing... you are going to stumble...

David: Absolutely, that's the point though. I was on a call with... my buddy Jo who does... he does an 8 week... coaching program for new wholesalers and new lease option wholesalers. He had me on the call to just kind of talk about some of my success; I told his new students I said, listen guys, you are not going to stumble into a deal if you have not sent a single letter. If you are sending out 500-1000 letters a week; you are going to stumble into deals, you are going to fall into deals because you have so much marketing going out. Not every deal you are going to fall into but, lets say you do ten deals. Well maybe on that 11th deal somebody is going to call you up and say, hey... I don't even care what your offer is; I have to get rid of this house tomorrow. Come out and look at it and make me an offer on it.

Mike: That is absolutely true.

David: Definitely going to stumble into them.

Mike: Again, when you're new; if you are too timid to answer the phone you are not going to stumble into a deal. That is the whole personality thing. You have to be a little bit more outgoing if you are an introvert like myself. You have to be ready to get outside yourself. It is staying in the uncomfortable zone or whatever it's called. Do you know what I am trying to say? Get comfortable being uncomfortable. You have to push your comfort level further to improve yourself. If you have never wholesaled before it is going to be confusing and it could be scary. It's like oh shoot I am buying a house, that's a big deal. To a lot of people buying and selling a house is a big deal. To us again, we do a lot of...

David: I thought we bought four or five houses last week.

Mike: Right.  We bought four... no more than that.

David: Maybe five.

Mike: We bought a lot of houses. Then in the past year, how many deals have we done, wholesale deals? We have done over a hundred and something?

David: Yeah.

Mike: Again, it is not a big deal for us; but you have to recognise that it can be a big deal. In yourself just think of it as... less of a big deal. Step outside your comfort zone. So personality types; again, I think it is just somebody who is going to be a little more outgoing and an action taker. I don't really know if that's a definition of a personality type but... it is definitely a quality.

David: Definitely. Have to be an action taker.

Mike: If you... just put on that hat, put on the doer hat when you are in your wholesaling mindset, and put on the action taker hat when you are working on your wholesale business. Don't put on the thinking about it, and gathering information... that doesn’t do you any good. You do have to learn a little bit, but you do have to go out there and do things and learn from your mistakes. It is all part of the business.

David: Absolutely. Couldn't have said it better myself.

Mike: So let's talk a little bit about the motivation and how you stay motivated. I would say that wholesaling is basically very similar to a sales job. We are buying... basically selling to the seller that your price is right. Then you are selling a property and finding a buyer that agrees...

David: You guys have heard us say this 100 times. You are in the marketing business as a wholesaler. Real estate is your product but essentially you are in the marketing business. You are marketing out to motivated sellers. Once you have these properties either under contract or purchased; you are marketing these properties to be sold. But at the end of the day you still have to sell. Have to sell yourself and your business... that you are capable and have the capacity to buy these homes. Then you have to sell these properties to your cash buyers, investors, landlords, rehabbers and so on and so forth. Having the ability to sell is very, very important. I couldn’t agree more with you, Mike.

Mike: And the ability to sell is super important. So motivation though, right?

David: Motivation.

Mike: Go into a little bit about motivation...

David: What keeps you motivated, Mike? I know what motivates me and that's money.

Mike: Money. That is the number one drive. I got a little personal story before I get into... well we will start there. So one of the things that helps keep me motivated is setting goals. So I know you do this, Dave. We as business do it; we set goals for several years out, then quarterly goals as well. We call them rocks around here.

David: Right.

Mike: So we each have rocks and those are basically... hey don't forget, you have to do this. The other guys are going to make sure that you do that. So I would say set goals for yourself, it is extremely important. But when you hit those goals; provide yourself some sort of incentive for that...

David: Celebrate the victories.

Mike: Even a $2000 wholesale if it is your first one; take your wife out, take your girlfriend out for a fancy dinner.

David: Right. We just did a wholesale deal for $2500, took a whole year. Last episode, right?

Mike: No, two episodes back.

David: Two episodes back. I celebrated; we went out and got a good dinner.

Mike: Celebrate your victories absolutely. So personal story about me. I have been thinking about this a lot lately. Dave you know the whole story so... I was driving and my car... someone fender bender... someone hit me and the vehicle was essentially... they totalled it out. So... instead of being able to just repair it... because I didn't want to get a new car, it was a great little car for running appointments and everything. I didn't want a new one but my wife... I was kind of driving her car so she wants a new car. We went out and bought a brand new car, we had to order it and it is actually going to take about 16 weeks to get here. So I purchased a $2,000... basically 1999 Toyota [00:10:11.15 - indecipherable].

David: It's not a bad car.

Mike: It's not a bad car.

David: Two grand.

Mike: It's not a nice car though.

David: Yeah but it gets you around though.

Mike: Rust on it... we will post a picture in the show notes. So again, it's a great car, there is nothing wrong with it. My point is; it's a 99 [00:10:31.18 - indecipherable], it's 2017; this thing is nearly 20 years old. I can afford a much nicer car than that. I could go get another car. But being in that car reminds me that I need to work harder.

David: Such a great point.

Mike: To me a 2000 car is like a throw away car. I say that and I realise how bad that sounds to some people just in general.

David: Right.

Mike: But to me a 2000 throw away car; I would rather have gone out and bought a $10,000 throw away car. Go buy a brand new Yaris or something. Do you know what I mean?

David: I do.

Mike: So remember that no matter where you are, you have to raise your standard of living for yourself and your family. A lot of people find that family is the biggest motivation for providing for their children. So again, wherever you are at in your life… I think it is important to have something that reminds you to work harder, to stay motivated, to stay on task.

David: That's a great point.

Mike: So again, that car to me... I honestly don't know if I want to trade it in because... again I enjoy driving it because it reminds me... hey man this is... this is how some people live; you have to hustle hard or you are going to end up here again too. You could end up with... this is the best it is going to get for you. So again, that was just my personal motivation and it reminds me to get out there and to work harder everyday... is that...

David: Absolutely. What motivates me is that I like to build businesses. I obviously like to make money. What motivates me is just helping people. Obviously building my business, making money... those are kind of side effects of me being out in the field, meeting motivated sellers that... often times they are in an ugly situation. Sometimes the house is ugly too but... usually it is the situation that is ugly. They are going through a divorce, someone recently passed away, they are in foreclosure... so on and so forth, lots of reasons that they could be motivated. I can come to them with a solution and I can say, hey I am here to help. Like I have said in previous podcast episodes; I am an investor, I can't pay you full price for this. However I can take this problem off your back. To me it is really rewarding to be able to go out and do that. Then on the flip side; find a landlord, rehabber, whoever, investor... that is looking for their next project that can get it at 20 or 30% off. Then provide them with value. It is such a win, win, win. The side effect of that is that I can make money. That to me just motivates the hell out of me.

Mike: I always find it funny because... like you said, you find that buyer and they are excited about the 20/30% discount they are getting on it.

David: Absolutely. Even if you can make 20,000.

Mike: But the funny part is... how many people are like, that's not a deal. You will get plenty of buyers who will tell you it's not a deal and you will doubt yourself constantly.

David: They want 40% off.

Mike: Right, or your comps are too high and all this stuff. It is definitely... you got to keep that in check that... you have different people telling you different things.

David: In this market though... what's the date? August 5th 2017? It's hot right now. It is really, really hot the market. There are people who have crews that are doing tons of rehabs and... fortunately for us they will pay 90 cents on the dollar for a property... just because they need to keep their crews in business. So just kind of varies too by market, by market conditions, lots of different factors.
Find your motivation; find out what motivates you and run with it.

Mike: I think we covered it in the first couple of episodes, we didn't even mention that today. The first ten episodes... we recommend you go back and check it out. I am pretty sure we had a little bit on why; finding your why. Why you want to wholesale.

David: That was episode four of five.

Mike: That was a good episode. So that is your motivation; you really have to figure out... personally to you what is going to motivate you.

David: So true.

Mike: So yeah, definitely something to think about. So other things regarding like... the personality of a wholesaler. What about... I think you talked about ethics a little bit, is that you like to create win, win situations.

David: I love creating win, win situations.

Mike: I think that is really important because... a lot of people are going to say... you are ripping off grandma's or you are trying to steal people's houses. That is the perception that might be out there.

David: Right.

Mike: And it is not really the case. One of our friends says it the best, "Wholesalers provide a liquidity to a liquid market".

David: Jimmy, I love that guy. He says it all the time... I didn't realise that's what we were doing till he mentioned it. But that is exactly what we are doing.

Mike: Right.

David: We provide liquidity to home owners.

Mike: Yeah. So let's talk about real quick so... liquidity obviously if you are not super fluid, or if you are not familiar with financial terminology; so cash is the most liquid asset you can hold, because you can spend it right away in exchange for goods. Less liquid objects would be something like a gold or silver coin. Although it is...

David: You can sell it but you can't go to Wal-Mart and buy a new pair of shoes with a gold coin.

Mike: Gold and silver are considered a currency, so when you sell them it is really just a currency exchange, so it is not really taxed when you buy and sell them which is kind of an interesting thing. Next investments that are even less liquid would be stock. Because stocks are... I mean obviously there is a value on it and there is... exchanges set up so you can trade them pretty quickly.

David: Yeah.

Mike: Convert them to cash quickly.

David: Somewhat, it takes three or four days for it to clear... then you have to transfer the money from your broker trust to your bank account. But yeah, within a week.

Mike: Right, relatively quickly so less liquid than the other two. Housing or real estate is probably one of the least liquid, because it takes the longest time to convert that property into cash or spendable cash.

David: So true. Often times it can take months and months, maybe even years.

Mike: Think about typical transactions...

David: Maybe even ten years. Vacant property can take years to sell sometimes.

Mike: Right. So again, wholesalers think about yourself as providing liquidity to a liquid market, it is definitely... yeah again, it is not ripping off old ladies. It is buying at a discount. We are very clear with that. Hey we are investors, we say this all the time on the phone too. I am an investor, we can't pay full price. I can't pay full retail because I am an investor, I can't do it. It's my business; it's how we make money. So we have to buy at a discount. Again, it's full disclosure, you make that very clear to your sellers. We bring the comps with us; we have talked about this in the past.

David: Yeah, credibility packets, great episode.

Mike: So are bringing everything to the table. We are never trying to deceive anyone. You are trying to help people.

David: Totally.

Mike: If you think like that, get that in there... it's definitely... I think it makes the whole ethical dilemma of what you are doing... disappear. I don't even see it as an ethical situation anymore.

David: I am going to touch a little bit more on what you just said. You said 'full disclosure'. I pride myself on transparency. So I would rather the seller know... every possibility of what could happen once I purchase that property. When I go out on an appointment with a seller... I literally will tell them, hey I am an investor, I can't pay you retail for this property because... how would I make money to feed my family and pay my bills? Right there off the bat that's transparency; let them know that I am a cash buyer, I am here to buy this property, but I need to be able to get a good deal on it, okay? Secondly what I will tell them... like Mike mentioned a minute ago with the credibility packets; I will show them the comps and say, hey you know we got a property for 160, 165, 170. So our after repair value is 165, the average of those numbers, okay? This property that I am at for example, you Mr and Mrs Seller, the property is very comparable to the comps that I brought. However, your property needs 60 grand worth of work; let's say 65 grand worth of work for simple round numbers. So 165 minus the 65 puts you at $100,000. Now if I paid 100,000 for that property and put 65 into it... I would be into it for 165, but then holding costs, I have taxes; I have insurance and closing costs. I would have what is called seller concessions, meaning once I sold that property, the buyer is going to come in with the inspector and take it apart. I am going to either have to give them money at closing or fix a bunch of stuff. So in that particular scenario... if I bought it for 165 and put 65 into it, I would love $15,000 on that deal, 10-15. Maybe less, maybe more. So I will explain that, just like I am explaining it to you folks. I will explain that to the seller. In order for me to make... I should rephrase. In order for me to even break even on this property; I can't pay you more than one penny over 85 grand. Now I am not making any money at 85 grand that is a breakeven price. So I typically shoot for 10-15,000 on a flip. Especially one that I am spending $65,000 on. Maybe even 20.

Mike: And that's something you... I personally kind of avoid is how much money I am making.

David: I tell them.

Mike: I have to make a profit on.

David: I tell them. I say, listen... why don't you put $100,000 or $165,000 into this property; they don't have it.

Mike: Right.

David: So I tell them I say, listen I’m here to make money. I might not tell them the exact figure but I tell them that I am in this to make money, because I have to feed my family, pay my bills, so on and so forth. So my offer in my head is going to go from 85,000 probably down to 55 or 60,000. I am going to start low because they are going to counter and then we are going to meet somewhere in the middle. But to me it is all about the transparency. That is the ethics I feel like I bring to the table when I am on these appointments. I want them to know exactly what's going to happen. Then I take it one step further. I say, listen once I purchase your property, I may rehab it. I may just throw a sign in the yard and sell it. Or I may e-mail and text message out all my friends, aka investors, cash buyers, rehabbers, landlords and so on and so forth; and see if they are interested in the deal. Maybe they want to partner with me on this deal, or maybe they just want to pay me to get the hell out the way. I will tell them that from day one. This is why I tell them that; if I purchase their house... let's say I haven't even bought it yet, I just have it under contract for maybe 20 days, then I am marketing this property out. My virtual assistants which we are going to talk about in a second... start posting this property on different websites; then the seller all of a sudden sees that... and they call me. Why the hell is my property on Craigslist? I will straight up tell them, remember our conversation we had at your kitchen table? About me marketing this property out to my investor buyers. Well I have massive list, at least I think I do. A big list I should say of partners, investors, cash buyers. But there are tons of other investors out there that I don't know. This is just another way for me to market this property. Then what I will say is, I am going to buy this property regardless.

Mike: Which is true.

David: Which is true. It doesn't matter if I am going to market this property and you see that I am marketing this property. All that matters is that we are going to close on the date on the contract. As long as you show up and sign you are going to get paid.

Mike: At the price we agreed to that you thought that was fair...

David: Absolutely. So maybe I went on a little tangent there about ethics. But my take; let me just sum it up my take is full transparency. I will tell people from the get go; I am going to look for a partner, but if that partner does not want to partner with me, meaning they don't want to joint venture and flip the rehab and purchase, and they just want to buy this property from me... they can. I will just sell them my interest in it.

Mike: Yeah and there are plenty of ways to talk about that with the seller too. So you can go to the meeting or when you are talking with the seller too so you can... go to the meeting or when you are talking with the seller say, yeah... they ask you what are you going to do with this property? You say I plan to re-sell it.

David: 100%, I am not moving in here, I already have a house.

Mike: Are you going to fix it up? Are you going to put tenants in it? Are you going to flip it? Any one of those, i could do anything with it. It really just depends.

David: Yeah I try to stay away from giving them an exact scenario. That sets yourself up for failure. So if you say, yeah I am going to fix it up and rent it... maybe that’s a great house to fix up and rent. But at the end of the day, it might not be you doing it, maybe somebody else you wholesaled it to or partnered with. I like that you say you give them multiple options; I do the exact same thing.

Mike: I plan to resell it though at some point.

David: Don't forget to say that, that's important.

Mike: Again, that's my... quick answer. Dave talks a little longer obviously.

David: I could go on for hours.

Mike: My point is so much quicker. I kind of get in get out. I am not there to... spend all day. Give the information, get the information, build a little rapport. Get it under contract if I can. So that's how I do it. I forgot... I lost my train of thought.

David: It's all good. What makes a good wholesaler? We got another topic here don't we?

Mike: We got some motivation; you have to be motivated, your personality type, ethics and... basically someone who is willing to continue to learn. The book I am reading right now 'The 7 habits of highly effective people'...

David: That's a good book; I’ve read that.

Mike: Stephen Covey, right?

David: Yep.

Mike: His 7th habit is sharpen the saw. I think that is exactly what we are talking about today is sharpening the saw, and... continuing to get an education. We know how to wholesale, right? Dave and I know how to wholesale, we help other people wholesale, we teach them... we put a free course together for you guys. Last week I still signed up for a wholesaling workshop.

David: You did, and the week before that me and you went to a coaching training workshop.

Mike: Exactly. So it is somebody who knows... again, you know what you know, but you also realise there is plenty of information out there that you don't know.

David: One of my favourite quotes is, "The more you know the less you know". I think I screw that up but... it makes sense though. The more you learn, the more you realise you know so much less.

Mike: I think it's something like... the more you know, the more you realise you don't know.

David: There you go, thanks Mike. I really screwed that one up didn't I? But... that is a great point though. So, continue to further educate yourself guys. One thing I do want to caution you on is... if you want to go out and buy a course on wholesaling, or a course on any topic; that's fantastic, you need to educate yourself. But don't get carried away by buying 6 or 8 or 10 courses. Take action, okay? We sell courses. I am not telling you guys that the courses are not great. Our courses are amazing, but you don't need to buy ten courses on wholesaling to start wholesaling. Buy one or two or whatever and just start doing what they tell you to do. Take action, that is I think the most important thing.

Mike: Right. In life it is kind of like how do you... lost weight? There is no magic bullet formula out there. You diet and exercise, right?

David: Diet and exercise period.

Mike: Kind of like wholesaling, there is no magic bullet; get out there and take action, do some marketing, answer the phone, write offers. There are a few more steps in it for sure.

David: It's a simple business, very simple.

Mike: So again, get out there, take action. But do continue to educate yourself. There is nothing wrong with that. If you already know a lot about wholesaling... I would say maybe learn a little but more about rental investments, tax strategies and...

David: Continue to further educate yourself.

Mike: Like I said, we keep doing it, we sharpen the saw so to speak, go back and learn about stuff we already know.

David: It also gives you... I didn't mean to interrupt, Mike go ahead. It also gives you a lot more tools to put into your tool belt. Like we are doing a subject to deal this week. We have done a couple of lease options deal recently. Now we don't specialise in these deals. We are wholesalers... we all own investment properties as rentals, and we do a rehab from time to time. But we don’t consider ourselves to be pros as least options subject to...

Mike: Or rehabs.

David: Or rehabs.  Rehabs are tough, those are really tough. But we know a good amount about rental properties and know a ton about wholesaling. That is really what we stick to, but we like to add more tools to our box.

Mike: Absolutely.

David: I am looking forward to doing more and more of these subject to deals... they are very profitable. Lease options as well.

Mike: I think that is kind of our take on what it takes to be a good wholesaler. Again, recap is just someone who is ethical, someone who is motivated and going to work hard, an action taker and... again, willing to learn. That's what it takes. If you are interested in learning that; those are the kind of things we are looking for when we interview people to come and work with us on becoming wholesalers.

David: Doing joint ventures with us... being a member of our coaching program.

Mike: Being a member of our coaching program or someone in St Louis is going to come up and ask us questions a lot. Again, we don't really want to take them under our wing if they are not going to listen to what we tell them.

David: My buddy Jo says to his students all the time he says, if you are not willing to take massive action, I don't consider you to be coachable and I don't want you in my program. That makes a great point. This isn't our ending quote, but you guys have heard me say it again. "Consistent persistent action".

Mike: Talking of ending quote let’s go ahead and fire that one off.

David: Want to fire that off, Mike do you want to do it?

Mike: No go ahead, go for it man.

David: Alright guys, "Success is not final, failure is not fatal. It is the courage to continue that counts".

Mike: Keep on keeping on.

David: Keep on keeping on, guys.

Mike: Thanks for listening guys; we will see you next time.

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