In this episode of the Discount Property Investor podcast, David talks with his buddy Chris Arnold about how you can take your business virtual!! Chris has built an AMAZING business with a team of about 15 people. They operate out of the Dallas - DFW Market. Chris focuses his marketing on bigger media type plays. He currently advertises his business on TV, the Radio, and Online Marketing. David and Chris talk about how the wholesaling stage is starting to become competitive and Chris's Strategy is to bet again what the masses are doing. 99% of wholesalers are sending direct mail. Chris doesn't send any! Pretty Impressive interview with him on how he operates his entire business from Tulum, Mexico. Chris also explains how he doesn't take the approach on managing his team instead he leads them :)
Check out the show if you want to learn how you too can scale your business to doing 15-25 deals a month virtually just like Chris does each and every month! He has built a very impressive culture of mostly virtual admin and staff that operate his business for him without him having to have too much intervention or time committed each day or even week. Chris has only been in the business for 8 years and has achieved an amazing business that we all can learn from.
David: Alright guys, welcome back to the Discount Property Investor podcast. This is your host David Dodge, if you haven't bought The Ultimate Guide to Wholesaling Real Estate yet, our new book, go check it out. Tons and tons and tons of gold nuggets in here. Mike and I have spent about two years working on this book and it is finally done. We have written it for you. But today I am joined by a good friend of mine who I have met through a mastermind, Chris Arnold. Chris how are you today my friend?
Chris: Man it is good to be hanging out with you buddy, always, excited to be here, man.
David: Thanks for coming on the show, thanks for coming on. I met Chris through a mastermind. It was funny, his partner Scott reached out to me and we started connecting, I really connected with Chris. I didn't even know Chris until I met him down in Mexico at the mastermind. I am so grateful that Scott reached out, and that I went to the mastermind, and I met Chris, and so many other like minded individuals. So Chris I want to say thank you for that, including me in that, inviting me down. But again, I want to interview you today, that's the goal of this. We want to learn more about you and your business, and how maybe we can teach some of the listeners and viewers about how they can pick up some gold nuggets here on virtual wholesaling, and removing yourself from the business. So not necessarily virtual, you kind of cross the boundaries of virtual, because you are virtual, your team isn't necessarily virtual when it comes to the acquisition. Very interesting, you have a very interesting business, Chris. I wanted to learn a little bit more about it, and hopefully some of the listeners and viewers that are new to this business, haven't done a deal or maybe have only done a couple of deals and learn something new.
Chris: Let's do it man, let's just in.
David: Let's jump in. Awesome. So Chris, where do you live? Start there.
Chris: I actually live full time down in Tulum Mexico. So it's about an hour south of Cancun. Big bummer, and my deal-- it's been a dream of mine for a long time to live down in the Caribbean. So for me building a business a lot of times was to serve lifestyle, it was about freedom. I think one of the greatest freedoms is the freedom of location. Being virtual, who says you have to live in the city where you do deals?
David: I love that.
Chris: I think it's a great place, but I don't necessarily want to live there long term. I would rather be out on the beach next to the ocean, that's where I'm happy.
David: Man, I love that. When I was down there I loved it too, I was happy. I'm jealous of that, that's awesome Chris. Chris, you don't flip, actually you kind of are, you are doing deals in your new current city. However, that's not even where I'm going today. You have a thriving business back in the States, right? It's Dallas Texas, am I correct?
Chris: That's correct. We do like a two hour radius of downtown Dallas. [00:03:35.18 - inaudible] for the deals we do.
David: That is a huge radius, man. So Chris tell me this, how many deals are you guys doing a month on average right now?
Chris: Yeah so we have a range of things on time of year, but we will contract anywhere between 15-25 properties a month consistently.
Chris: So lower month would be towards 15, higher month towards 25. That's consistent with the [00:04:01.04 - inaudible].
David: That's awesome, so four acquisition managers on the team, that's kind of where I was going to go next. How many people on the team do you have? Also what kind of marketing are you doing to acquire 15-25 properties or contracts I should say a month? Because that is awesome, I love that.
Chris: You have yourself, you have four acquisition managers, then we believe about having a strong sales culture. Now if you start to build a sales team you realize that's where most of your time and money is going to go. So we have what's called a fractional chief sales officer that does the development on the mindset and the practical training and we have a sales advocate. Those are the support staff for the four. Then the rest of the team is built up of administrative staff. In total there is roughly around 15 of us. But the bulk of that is going to be administrative staff.
David: Got it.
Chris: -- we rely on three major streams. We rely on online marketing, we rely on radio and we rely on television. So one of the things I would tell your listeners, especially as--.
David: Hold on I have to stop you there. I didn't hear--.
Chris: Exactly where I was going.
David: 15 to 25 a month and there is not a single postcard or letter in the mailbox? I love it too, because that is just polluting. I love sending direct mail because it makes me money. However it ends up in the landfill.
Chris: It absolutely does. You have to realize if you were to go back in time about four or five years ago. I would tell you that 75% of our business was coming through direct mail. But what we understand about the wholesale world right now, particularly if you're listening and just getting into it, you are coming in at a high competitive time. The more people know about wholesaling, becoming a bit more saturated but that's okay. What I would tell you is that if you start to learn-- get in and start to look for pieces of marketing that not everyone is doing. Everyone is doing direct mail, everyone is doing text blasting, everyone is doing ringless voicemail. I am not saying those things can't be profitable, but if you really want to scale I believe you have to go against the consensus, you have to bet against the consensus and you have to be right about it. So we have bet against the consensus. Again, online is common, but looking at radio and television is not. So that's where we have decided to park and have seen great returns there. Honestly-- you know Dave as well as I do, we talk to people all around the country. Less than 1% of the investors I know in the whole country and I know a ton don't do radio or direct mail. It's just the 1% that do it. So it is not saturated which is fantastic.
David: No I get what you're saying. So you're saying 99% of people are doing direct mail?
Chris: Yeah, and 1% are only doing radio and television is what I'm saying.
David: I love that. You guys are doing television as well? That's awesome.
David: How long have you guys been doing television? Is it having good results?
Chris: Yes, so television is a little bit newer, something we launched this year. But it's a great piece to accompany with radio. It's a force multiplier. We want you to be driving in the car, we want you to read our ad, we want you to be sitting in front of the TV, then when you go online we want you to see us there as well. So I really believe that those three things together are a strong force multiplier. But to give you an idea on any type of marketing, you should be looking at least for about a one to three return. If you spend ten grand, you should be making 30. You should definitely try to be pushing towards one to four. If you are doing any type of volume marketing it's a good place to be. If you are spending $1000 a month on something you are going to get a one to eight, one to twelve return. But you start to grow volume, one to three or one to four is where you want to park your money.
David: You know what, Chris, that is such a good point. You can make a one to eight or one to ten return on a small campaign of letters-- you get a lead. It may-- I was just thinking that. I just love that it is broken down that way, because once you start growing bigger scale, there are so many advantages, one it is less management of all the little campaigns you're doing; bandit signs, and direct mail, hundreds of list, the skip tracing, texting and RBM'ing and-- all the things that all the people are doing these days to get in touch with sellers. So when you go you have to know your cost is going to go down as you cast a wider net. However, you should still be looking for a one to three or one to four return. I totally agree with you on that 100%, I love that.
Chris: Absolutely. I think too if you are going to consider doing any type of marketing piece, look for something that can really be scaled. So the first thing I ask myself is am I going to hit a ceiling when I do this marketing piece? Or should I spent $100,000 a month on it. If you look at things like video, television and online, you can spend millions of dollars a month.
Chris: So you know, if I look at some of the other [00:09:07.03 - inaudible] things people are doing I go-- at some point you are going to max out on what you can spend. So that's just going to require you to get more and more things. I would rather go deeper into three things and know I can spend hundreds of thousands of dollars on this and never even scratch the surface on how much I can do. That in my opinion is a great piece of marketing, and the fact it is low maintenance and automated. It does not take a lot to run TV and radio.
David: So as you know I am on the radio and St Louis now too. I want to thank you for helping me with that as well. But I am seeing good results with it too. I scale my business I would love to stop doing direct mail altogether and just do wider types of marketing. However, a lot of our listeners that are listening, they may not have three, four, five, ten years of experience and the finances to start spending a lot of money on their marketing. That's okay guys, there are still lots of other ways you can get into wholesaling doing bandit sign campaigns or other campaigns online, PayPerClick. What is kind of crazy right now Chris, I don't know if you noticed this, me currently in my market in St Louis, I am getting as much action right now on Yahoo and Bing with my PayPerClick campaign as I am on Google, which may or may not shock you. But Google usually ha 80% of the market share of the traffic. However I am getting 50% of my clicks on these other two. So there is also lots of other ways to go about it. If you are new and want to do direct mail there is nothing wrong with it.
Chris: I agree.
David: We still do direct mail in our business. We still do it--.
Chris: It depends on your market too, David. [00:10:45.12 - inaudible] you are going to have a tough time, but if you are out there and you have what I would call small to mid size market. I really believe direct mail is a strong piece. But what is coming down to whether it works is now geographical.
David: I agree.
Chris: Major cities are now getting saturated and so for me in DWS, direct mail is really not an option. We have another buddy [00:11:06.16 - inaudible] up in Indiana. We know that he is getting about a one to six return right now on his direct mail, because again, he is one of the couple of people in that city doing deals. What you have to look at is geography and making [00:11:23.22 - inaudible] position.
David: I love it. Let's circle back. So you were saying you have a multipliers mindset on the radio and television as well too, because people are seeing it, they are hearing it. One of my buddies here in St Louis, he is a personal injury attorney. He spent probably half a million a year on marketing. He's got television, he's got radio. One thing-- they also have billboards as well. One thing they implemented just recently which I think is a really good idea is-- they are doing buses and metros. I don't know if DFW has that or not, but essentially it's a billboard size advertisement on the side of a bus. He's got like 60 of them, and they are just driving all over town. I cannot--.
Chris: I fully support that.
David: I can't go from here to the supermarket without seeing them, they are everywhere. It's a billboard on wheels, it is actually kind of interesting, because I was looking into doing some of that a well.
Chris: It's on our radar as well. Again, it plays right into the fourth multiplier. Here's how you know it works. Dave Ramsey, right? When Dave Ramsey comes into a new market, we know his main media stream is going to be radio. But if you notice, what is he always coming into a new company and market with? Billboards. So I really do believe that billboards--.
David: -- you're driving, you're seeing it. Touching the seller with direct mail several times. Same concept guys, sales and marketing. Love it. Okay Chris, I don't want to let the episode go an hour because nobody likes listening to long episodes including me. So let's jump right into the fact you live in Mexico, we are going to call the kettle black here. You live in Mexico and you have a business in the States, in Dallas, so you are virtual, you are not even virtually wholesaling, you have a wholesale business set up and you said I'm going to be virtual. I love it. So tell us how you were able to do that? Because I'm sure that is not something that can be accomplished in three to six months. This had to be something-- you had a plan, or you had a goal, you put together a plan then you got it done. So let's hear a little bit about how that even started. Was it even a dream of yours that you had written down to say this is what is going to happen? Tell me a little bit about how that even came to fruition.
Chris: Yeah absolutely. Living in the Caribbean I had written that down years and years. I could really go back in the notebook and pull that up with part of my dream list, right?
David: Got the vision board?
Chris: When I wrote it down, it's in a notebook actually. I have it in a notebook. But I started brick and mortar, right? I have been in the game now for-- shoot, wholesaling eight years in real estate, fourteen years--. So when I started it was brick and mortar. There was no type of virtual aspect in my organization. So the first layer for me was to begin to hire virtual staff, and to realize that I could trust people to be a part of my company and not show up to an office everyday. It's difficult to conceive at first, because particularly as a visionary and an owner, sometimes we deal with letting go of control. So I begin to open that world up and hiring the first VA, the second VA. Over time I begin to realize I love the virtual world better than the office world.
David: I know, ain't that--. I love it too. I am in my office right now, I like to record here. But as soon as this is over I'm going back outside. I don't necessarily need to be locked in an office setting. Come on, get me out of here.
Chris: When you realize that your talent pool can be the entire US, or if you decide to hire internationally, you start to break out of that mindset, why would I want the talent of my company to be limited to who can commute to the office? So what happened was we slowly started to shift the balance to where we had more virtual staff than we had in office. Honestly, it got to a place where it was me and my business partner, we had one assistant at that point that was local, and we had a couple of sales people that were local. We would show up to this nice office everyday and looking around going, no one else is here. We shifted so far to the virtual world that our staff is now scattered all over the US.
David: Basically how mine is. We meet once a week which is helpful, but we could essentially hop on a call just like this once a week and get the same thing accomplished. When we do meet it is usually for one hour. So yeah, our office-- we have a closing coordinator, we like to meet several times a week. It is [00:15:49.15 - inaudible] in my city, but we pay 1600 a month in rent, plus another 300-400 for water/coffee/tea/internet/paper. You are looking at 2300-2400 a month.
Chris: Yeah absolutely.
David: Eliminate that right there, that's huge.
Chris: Eliminate it. We looked around and said, why do we need this office? Why do we need all the costs that go with it? I said, why am I still sitting here in Dallas when a majority of my staff are not even here? So for me to go virtual to Mexico I think my staff looked and me and go-- finally, why are you sitting around in Dallas? None of us are there, we're virtual. So for me to answer your question, it's just a progression. You begin to understand the value of the virtual world, begin to trust that world, understand that the world in my opinion is more valuable than an office, and start to make that transition as I did. Then before you know it I look up and-- you look at me and go, man how did you end up living in Mexico? I say, the process, because the process to be here. Definitely glad I have freedom of location.
David: Right okay, two questions for you. How long have you been completely virtual from the city from which you are doing the deals?
Chris: Two years.
David: Two years, whoo! Good for you Chris, that's awesome bro! I am in the office right now, I need a few years-- that's awesome. Okay then, how does the management work and or change when you are managing your acquisition people in the city you're not in? Obviously everything is virtual, but you still have boots on the ground. That I feel like there has to be a special relationship with those people-- essentially they are the eyes and ears and also the face of the company when they are meeting the public and the sellers, meeting buyers at the title company, so I feel like that would be a big challenge for me. I am not into micro managing, but I like to know what's going on. So I am assuming you do know what's going on. But how does the relationship work with them? Is that a challenge to manage those people-- eight, nine--?
Chris: If you want to elevate yourself, you should elevate yourself from management. My responsibility as the owner of the company is to lead not manage. That's not my job.
David: I love that. It's perfect.
Chris: People become very confused by your role when-- you are doing a ra-ra speech, let's go conquer the world, then you are coming back around and saying you didn't make your calls today. What are you going to be? Are you going to lead me or manage me? Those are two critical roles I have that really [00:18:20.04 - inaudible] going back to the fact we have a fractional sales chief officer that literally is doing-- his number one responsibility is to manage the team, along with the sales advocate. Then secondly it goes back to the visionary innovative role. You have to have an exceptional COO calling the number two call it whatever you want. So when you have a great innovator, and you have got a great staff that is managing your sales team like we do with our fractional chief sales officer and sales advocate, they do all the management. So we don't have issues. I will often say this, when you get the right people on your team, the challenges of management should over time begin to disappear. If you had a team or even one sales person, and you are constantly managing them, I would argue that you do not have the right people. Great people do not need to be managed. They are self motivated, they are self driven, and they are working as hard for themselves to get what they want to accomplish, not because you are cracking the whip to get them to do it. So--.
David: I love it. You can find the right person easily too.
David: Not necessarily easily, but you have a large pool to chose from as well.
Chris: Not all of our acquisition managers are local. One of my acquisition managers is virtual. She doesn't live in Dallas and she she gets contracts from the State she's in.
David: I love that. So you do have people that are there that do go do walkthroughs of these homes, correct?
Chris: Here is the key piece; we have an in house inspector. The inspector is the boots on the ground that takes the pictures, can run over a contract, can write out a report on repairs. So when you have the one main person like that being the inspector, that's what allows you to be virtual, because all the stuff running around can be a handful for the most part by one person. She doesn't need to be there to close those deals, we have an inspector that can go out and look at the property, take a contract out and just get signatures on it if they don't want to do e-sigs.
David: Right so you have your acquisition team there, and your acquisition managers, their job is to essentially to just qualify. Is this a deal? Is this person willing to sell--.
Chris: One job, close, when I hire them I say, I don't want you to do anything but put signatures on contracts. They don't run comps, they don't go out and look at properties, they don't do rehab stuff. We try to remove as much of that off their plate as possible. When I tell them, all you have to do is get signatures on contracts.
David: Let me interrupt for a sec, let me interrupt. I got to clarify this in my head, and I am sure everyone listening and watching is thinking the same thing. So how does the hierarchy go when the call comes in? Who does that hit? Does that hi a virtual assistant that starts getting information?
Chris: Absolutely. So a very simple call comes in off any type of advertisement, it goes to what we have as in bound prospecting assistant. So they answer that call, and their job is to pre qualify and get rid of the crap. Once those leads have been pre qualified, then they are escalated up to the acquisition manager. So we want the acquisition manager only to be talking to what we would consider warm and hot leads. We do not want them messing their time talking to--.
David: You have four of those people.
Chris: Two of those people.
David: Two of those people, so you have two people doing the first step too then?
Chris: We have two people that are pre qualifying, and four acquisition managers that are contracting. So two and four.
David: You have four on that level, okay. So when the acquisition manager contracts, you would send out that inspection guy or no?
Chris: No they actually send the inspector before they contract.
David: So the inspector is in the middle then? The acquisition manager's job is to get the price right, but essentially it all leads to the end game which is get a signature. Make sure there is a deal there, work with the seller, and then send the guy out in the event that they are there. Who is actually signing the papers with the seller? The inspector, and acquisition manager?
Chris: Digital, it can be the inspector, it can be the acquisition manager, it rotates around on what is going to get the deal a find.
David: Got it, love that. Chris this has been an awesome episode. You inspire me, and I want to thank you for coming on. You've not only done a virtual business, but you have removed yourself from the city, I love it. A lot of your employees are virtual So whenever you say one inspector, is that truly one person that handles a two hour radius? Or is it one company that has multiple people that you just pay one [00:22:57.16 - inaudible] for the inspection?
Chris: We have one. Now we do have a back up which is one of my-- it's funny, it's one of my assistant's brothers. And so if our guy gets too bogged down-- again, you have to realize he is running all day long driving around in the car. But--.
David: Are you guys paying him per deal, or does he get a cut?
Chris: He's on a salary.
David: That's awesome. He-- job is go out and take pictures.
Chris: He is an in house inspector, and aka runner. So he is also just doing all the running. You've got to remember, my staff is all over the country. So when my admin need an alarm put on a property, or this happened over the house, the fence fell down. You have got someone running to all these deals. His job is to run. He's a runner and he inspects properties and looks at repairs. All in one.
David: I love that idea, I love the idea that-- you have such a hierarchy though within the company that-- if you can put someone on salary that just runs around, I never even thought of that until now. If I could put someone on salary, give them a good wage, but all they had to do was run around and take pictures, but all the numbers that they were essentially negotiating was from somebody above them, it wasn't even their decision to have to make those. It wouldn't be weird or awkward with for them. Here is what the boss told me to offer, you know?
David: That's great, because then you are not having to clip them in on 20, 15, 12 whatever percent you are paying your acquisition managers. It is another level you don't have to necessarily pay out on. However there is a cost there, as a salary you are going to have to pay them every single day. But if you do enough volume like you were saying earlier, the costs are going to outweigh--.
Chris: It becomes a no brainer.
David: It becomes a no brainer, I love it.
Chris: It becomes a no brainer.
David: Chris, thanks again, I appreciate you coming on. I am sure there are tons of little gold nuggets in here. I don't usually have a name for the podcast until the end, because I usually find a good quote. But we are going to with [00:25:04.01 - inaudible] with Chris Arnold.
Chris: I like it.
David: Thanks for coming on buddy. Signing off guys, don't forget to check out our new book 'The Ultimate Guide to Wholesaling Real Estate'. If you want to learn how to wholesale we have a free course for you, FreeWholesaleCourse.Com. Check it out, we are here to help, signing off.