70+ Units Per Year and How Exactly to Make a Lowball Offer with Ryan Dossey

Brandon: All right, Ryan, welcome to The Bigger Pockets Podcast, man, good to have you here.

Ryan: Thank you guys for having me. It’s been a long time coming.

Brandon: Yeah, this is exciting. This is exciting. I’ve been following you actually on social media for some time now and so like we interact, but I’ve never actually talked with you at length. So, this should be a good time to get to know you a little more. So, why don’t we start with the very beginning. How did you get into real estate? What’d you do before that and how’d you get into your very first deal?

Ryan: Yeah, so I did car warranty sales for anyone who’s seen American Greed, it’s pretty much like that through and through.

Brandon: Nice.

Ryan: Yeah, so I did that for a while. Actually, my older brother did me the courtesy of getting me a full-time job in it at 17, so I didn’t technically graduate high school. I was really good at it. Yeah, I was actually home schooled from eighth grade on, and my mom went back to work so Halo was pretty much like 11th and 12th grade.

Brandon: Oh, nice.

Ryan: Yeah, it was fun. The one thing I do throw back to that experience though, is it taught me that normal rules didn’t apply. So, everything I’ve kind of looked at is I don’t have to do things the same way other people have, or the same way everyone else has done it.

Ryan: I did that for a while, made really good money. By the time i was newly married and 20, kind of the carrot kept getting kicked further and further down the road, got to the point that I think my last year pre-tax I made 23 grand.

Ryan: In that timeframe, we had a coworker who was you know, kind of talking about wholesaling, mentioned that he used to do these in the past and recommended I read Rich Dad, Poor Dad. So, like every other interviewer, I went out and read it. I really liked it, but it also kind of pissed me off because it taught me nothing so I was like wow, there’s a new way to handle money. Well, I don’t have money so what do I do right? So, I actually found Bigger Pockets on a whim.

Ryan: I was googling other books like Rich Dad, Poor Dad and stumbled into the forums. I’d done quite a bit of stuff on forums with motorcycles, so I was kind of like, this is home and I kind of have told people I’m Bigger Pockets’ poster boy because I started with you guys. You guys can go back and find my original posts of like, I’m 19 and have no money and good credit, what do I do, right?

Ryan: Logically, I found here in the forums [inaudible 00:03:44] provider and put like, $2,000 on a credit card that I couldn’t afford to pay off without telling my wife. I had a business partner in it, another one of my coworkers who read Rich Dad, Poor Dad, and we got our first deal within 30 days. Did everything like totally wrong, right?

Ryan: My posts are like, I have it under contract, now what? Right. We listed it on Solo as a For Sale By Owner, like, just broke every rule in the book and a couple came through and they were like hey, we want it and I as like okay, cool, I’ll be right back and I went back to Bigger Pockets. I’m like, so do I just have them sign the same contract, what do I do? We ended up making, I think our gross was about 12K on that deal, we netted about 10 so as somebody who was making $23,000 a year, I kind of had a like wait a minute, I just made 10 grand in four hours of my time, what am I doing?

Ryan: I was pretty much ruined as an employee at that point so that was the beginning.

Brandon: That’s awesome. I like to do this just in case people are listening to the show and they haven’t heard us because wholesaling is not the world’s most popular you know like strategy so some people don’t know what it is. Can you walk through people, how did you make 12 grand on a deal, then you said you bought it and sold it. Walk us through the basics real quick and then we’ll move on.

Ryan: Yeah, so quick and dirty basics of it, found a property, negotiated a good deal, went under contract as the buyer, found somebody else to buy it from me for more, went under contract with them as the buyer and myself as the seller, found a title company that would do the paperwork and buyers sent in their funds, basically bought the property for me, paid the seller, and then I got cashed out in the middle.

Brandon: There we go.

Ryan: Yeah, typical. It wasn’t an assignment, it was a double close, which means there was just two sets of contracts.

Brandon: Okay, so you actually for lack of a better, for simplistic way, you basically bought the property, sold it again five minutes later. It’s kind of what a double closing is. Sometimes you sell the property and then buy it five minutes later. Anyway, yeah, basically, that’s what you’re doing there. So, all right. So, wholesaling can be a good way obviously in some areas. I always like to put the disclaimer, some states are very anti-wholesaling. There’s ways to do it right, there’s ways to do it wrong and there’s legal ways, there’s not legal ways so just, if you’re jumping at it, you’re like wow, this sounds like the best thing ever, I want 12 grand in four hours. Great, you can do it, just learn how to do it. Don’t just go and do it, right?

Brandon: Can you walk us through overall, your whole real estate, what you do today, then we’ll go back to your second deal and stuff, but I’m wondering what do you do? What is your overarching real estate investing strategy today?

Ryan: I’ll kind of walk you guys through a quick timeline. I think that’s the best way to do it.

Brandon: Yeah.

Ryan: 2014 we kind of started. 2015 we maybe did three or four deals, got enough cash together to do a 25% down down payment on two rentals that my old business partner still owns in St. Louis. 2016 I decided to go full-time. I had a whopping 3500 bucks to my name and three grand a month in bills, so you know, that’s the logical point to quit your job. Went full-time in 2016, barely paid myself, barely kept afloat. I was also putting my wife through grad school and my big problem in 2016 was I was waiting on other people’s promises to come true of hey, we’re going to bring you in on this deal. We’re going to make you do this, you’re such a great marketer, you’ve got all these assets, you know we’re going to make you a partner.

Ryan: None of it ever happened, right? So, I decided 2017 that I was going to get serious, I was going to treat this like a business and I was going to go all in. I kind of like, I was kind of a wholesaler, but I was like kind of being an agent. Really what it came down to is if I split my focus and it failed, it was what failed not me, right? If I went full-time in one particular niche or side hustle and it failed, well, I failed.

Ryan: 2016 I kind of got over that. 2017 I decided to get really consistent about my marketing and my followups so 2016 I did six deals. 2017 I did 74 so [crosstalk 00:07:54].

Brandon: Whoa. Are those wholesale deals mostly?

Ryan: Yeah, so those were pretty much all wholesale deals, made obviously a lot more money than I made in 2016. End of 2017, I had a group approach me that wanted to buy deals from me, wholesale deals and stewardship properties. They instead offered to bring me in as an equity owner and so, all right, that sounds good. So, we bought four properties with them. All bought off market direct to seller in the end of 2017.

Ryan: 2018 I did about three dozen wholesale deals and we actually closed on 73 units and so far, year to date, I’ve inked 62 units. Just this year we’ve closed on 54. I’m actually supposed to get a triplex and duplex back under contract today and we’re expecting eight units assigned on Wednesday.

Brandon: Awesome.

Ryan: Yeah, yeah we kind of went all in on the buy and hold side.

Brandon: Okay, why the shift from the wholesaling and making good money that way because I mean like, 60, 70 deals, I mean even 30, 40 deals, I mean that’s a lot of money coming in. [crosstalk 00:09:04].

Ryan: Yeah, so real estate for me has always been a means to an end. I’m not somebody who like lives and breathes houses, right? I’m not just like, oh my gosh I’m so excited about this rental in a C class neighborhood. So, when you’re doing wholesaling or flipping at volume, what you really own is a transactional business that requires you to be a piece of it.

Ryan: You can build out kind of systems and teams and stuff to help with that, but I wanted to build longterm wealth. So, doing buy and hold investing, I mean, if you’re wholesaling right, the government’s going to take 25%, a third of the deal like right off the top. So, I did some flips that kind of like sucked. I mean, I think I had one that went decently and I kind of realized if I’m going to spend this much time working on a property, I just want to keep it indefinitely.

Ryan: Mark Ferguson of Invest for More, I think you guys have had on, was a huge inspiration to me. I’m a car guy, that’s actually how I found real estate. I remember [inaudible 00:10:03] like, you know at 17 how do people afford Lamborghini and I actually found, so [crosstalk 00:10:11].

David Greene: I wonder if that’s how he bought that car. That’s actually really smart now that I think about it.

Ryan: I think he’s made a lot of money. I know that car’s appreciated quite a bit.

David Greene: I’m sure it’s paid for itself with the business it brought in too.

Ryan: Oh, absolutely.

Brandon: Yeah, I read something recently he wrote about that. He paid like, I don’t know, 80,000 or something like that for, it’s worth like 300 grand today and I’m like …

Ryan: Yeah, he doubled his cash on it.

Brandon: Something crazy like that yeah.

David Greene: Brandon, in your next book I’m going to write a chapter about the Lamborghini strategy.

Brandon: There you go.

David Greene: I’m going to try to do what Mark did. We’ll see if it works.

Ryan: All right, that’s awesome.

Brandon: Okay, so you jumped from the whole thing because you wanted to build wealth, not just a job and that’s what, I mean there’s nothing wrong with wholesaling, nothing wrong with flipping, but what most people don’t realize or maybe they do and they just have no other options, like that is a job. That is a career. That is a business.

Ryan: Oh, absolutely.

Brandon: Yeah, you’re selling, it’s like being a door to door salesman. Like, you stop selling, it stops coming in. You can build up a business and stuff, right?

Ryan: It felt very, very similar to me to back when I was a car warranty sales person. I was putting in a lot of hours. I wasn’t spending time with my wife. You know, she’d go to bed alone. I’d go to bed a couple hours later. She’d be up before I was up. I mean it was kind of just this like, it wasn’t the lifestyle I wanted.

Ryan: The other thing is I told myself at a really young age that I wasn’t going to have like a nine to five and I ended up with something worse than that, right? It required more than nine to five out of me, so that was a big part of that shift.

Brandon: Yeah, okay. So, let’s talk about where you’re doing all this business at. Where’d you start and where are you doing it today?

Ryan: Currently, we own 110 units here in Indianapolis. I’ve got another seven in St. Louis, Missouri, and 10 in Louisville.

Brandon: Okay, and why those areas? That’s where you have teams?

Ryan: I was from St. Louis, so that was kind of a no brainer.

Brandon: Okay.

Ryan: Then, Louisville actually, there was a kid who hit me up through Instagram, who I don’t remember, you probably get this all the time, like how do I make money in real estate and somebody caught me on a slow day so I hopped on the phone with him for two hours, walked him through like scraping public records, marketing, all kinds of stuff and I was like, I’ll never hear from him again.

Ryan: It was about two months later, he called me and was like hey, I did what you say and I made like $37,000 and I was like, okay, you’ve got my attention. So, we were looking for another market to go into. It’s about an hour south of me. He was obviously an action taker so went down and we bought a couple units with him.

Brandon: That’s awesome. Just so you know, if you send an instant message over to Ryan, he will get on the phone call with you for two hours. Everybody knows, David Green will do the same thing. Just send him a message, two hours, free time. That’s a joke. No, but I think that’s cool.

David Greene: I got one of those this morning. It was like five pictures of Bigger Pocket’s calculators and someone saying hey, this is my first deal. Can you look at this for me and tell me what you think.

Ryan: Should I do this one?

Brandon: Actually, let’s talk about that for a minute. Why is that not the best approach when you’re trying to reach out to somebody? You’ve been on BP for a while, so.

Ryan: Yeah, so I’ll be blunt. I really, really value my time.

Brandon: Yeah.

Ryan: Like, more than money. If I can save myself time and exchange money for more of my time back, I’ll do it all day long because I don’t know how much I’ve got, right?

Brandon: Yep.

Ryan: If I live to be 100, me swinging a hammer on a project to save a couple hundred bucks could be a good deal. If I die at 40, not so much, right? So, the like, will you take me out to lunch, can I buy you coffee, that kind of stuff, like you’re talking to people who value their time and are good at making money.

Ryan: I would rather, like the people that I’ve typically done stuff with are the people that reach out to me and they’re like hey, I’ll pay you like 500 bucks for lunch if you’ll come out and I’m like, I’ll tell you what, you know, I’ll come out to lunch, you just pick up the tab. But, it’s showing that you value my time. I view my time as worth over $1,000 an hour and that’s honestly how I treat it. So, you know, buying me a nine dollar cup of coffee and me giving you all my secrets for the morning doesn’t typically sound like my idea of fun.

Ryan: The other thing I’d recommend if you’re going to reach out and somebody does show you the courtesy of taking you to coffee, lunch, whatever it is, be super, super respectful of their time. I’ve had times when I’ve done this and I’ve planned to be there for 30 minutes and we’re at like 45 minutes and they’re like oh, but just one more thing and then it’s an hour and a half later and my entire morning’s blown.

Brandon: Yeah.

Ryan: You know, view it like they are literally losing money to be there for you so, that’s my thoughts.

Brandon: Yeah. David you want to add anything to that because I know you get that as well.

David Greene: Yeah, this is like actually becoming a huge problem for me is that people are reaching out saying I want to come intern for you or I want to work on your team, but they don’t live in California. What they really mean is, well, I’m in Wisconsin and I want to learn from you for free and I’ll say well, what can you do to help us reach our goals, and they’re like I don’t even know what your goals are or well, I don know anything about real estate and I think, people have a, like their time matters to them right? Like, Ryan your time matters to you, but that doesn’t necessarily mean your time is valuable to somebody else unless you can bring them value with that time, right?

David Greene: People can say, well I’ll come work for you for free and I say well that’s great, but what could you do? What your really asking me to do is to stop what I’m doing and mentor you to help you reach your goals and that’s not necessarily going to help me reach mine and I think that the smart people, like understand that it’s not about them, that the right partnership is I can help you and you can help me and we have the same values and it’s hard to find people that are kind of like, that are going to match up in all those ways.

David Greene: The other thing is you could stop and you could give somebody what you said was 30 minutes and they try to take up an hour and a half because they’re going to, and you’ll tell them everything you know and it didn’t even benefit, it didn’t benefit you and it doesn’t benefit them because they don’t go do anything with it.

David Greene: Oh, that was so cool. He gave me a bunch of good ideas and they never move anywhere. So, what I would say is don’t even ask somebody what to do if you’re not ready to go take what they say and go run with it. You’re not actually helping yourself. You’re just kind of like, patting your ego or telling yourself oh, that’s so cool, I got to talk to Ryan. Now I’m cool because Ryan talked to me, but it didn’t benefit anybody.

David Greene: Those are the things that I think about and I don’t reach out to someone unless if eel like I have a plan in place of what I could do to help that person with what matters to them. What about you [crosstalk 00:16:31].

Ryan: Can I squeeze in on that real quick?

David Greene: Yeah, please. Yeah, please.

Ryan: My business partners and my buy in holds, the first deal we did, when he came out I already had the property under contract, perfect bird deal. We had actually re-fied, got all of our cash out, it’s cash flowing, like perfect deal. Not only did I have the deal lined up, I had a meeting lined up with the lender who funded the deal. So, I said hey, you’re going to partner with me on buy and hold deals as the money guy, but on this first one, I’ve gotten A class property built in 2007 and great school districts, it’ll cashflow over $200 a month, oh and I brought the money for it as well. Started that off great, right.

Brandon: Yeah. It’s so important to yeah, what are you bringing to the table when you want to meet a mentor. Like, mentorship is, I mean it’s so powerful, it’s so needed right? Like, I needed a mentor when, I mean I didn’t need one, but like, it helped so much to have somebody that can help me, but like, [inaudible 00:17:24] what am I doing and I’ve told stories before on the podcast of where I would go and like, you know, I manage this friend of mine Kyle, his entire portfolio, 30 units, I did all his phone calls, did all his maintenance work and I did everything and I made probably two dollars an hour for like five years.

Brandon: I didn’t get out of it until like, I mean I was well into Bigger Pockets life when I got out of working his stuff because I felt like I owed him for, you know, the fact that he was always there at the sounding board. So, what can you do, yeah, what kind of value can you bring?

Brandon: Also, like I would encourage people to think, if you’re trying to reach out to somebody, instead of just an open ended question, like, what do I do, how do I get started? It’s more like, I want to send a direct mail letter, I’m going to send a thousand direct mail letters this month, can you look at this three sentences and tell me if you think that’s appropriate to send and then, that’s really easy for Ryan or David or me to be like yeah, actually I really like that, good job, go do it and then don’t come back until you’ve sent those thousand letters and be like hey man, I sent the letters. I got only like two phone calls. Here’s the alteration I’m thinking about doing.

Brandon: Don’t leave open ended questions to somebody you’re trying to get a mentorship from, ask them specifics.

Ryan: Well, if you’ve got somebody like the three of us who already have a ton of content out there, look through it first.

Brandon: Yeah, yeah.

Ryan: If you see me post something on Instagram and you’re like, dang, I wonder how he raises his money. I’ve got a video on YouTube on how I do it and what I sell my lenders on. So, I think it shows, like I’ll have people, how’d you get started? Been on a couple podcasts, have you checked one out? You know.

David Greene: I don’t know that they understand that what we’re hearing, when someone messages me and say, hey David can you explain this part of the refinance on the Bird Method and I just wrote a book that describes it. What I’m hearing when you say that is, I don’t value your time as much as I value my own so can you tell me what you wrote down so that I don’t have to go read it.

Brandon: Yeah.

David Greene: What their words are saying are hey, I love you, I love your show but what we’re hearing you say is I’m lazy, I don’t want to go look this up or watch this video or listen to this stuff so can you just cut to the chase and help me with what I need so that I can go be successful. [crosstalk 00:19:26].

Ryan: Will you save me the 24.99?

David Greene: Yeah, I mean that, if you said what you’re actions are saying, it would sound offensive which is why they don’t say that, but smart people can read through your words and what we’re going to hear is your actions, so when that person says can I take you to lunch, I’ll pay for your coffee or whatever, what they’re saying is your time is worth nine dollars and that’s what I’m going to give you and that is offensive.

David Greene: I think that’s, and I don’t mean to be rude, but that’s how it comes across when you’re reaching out in that way and that’s probably why you’re not getting a good response is because that’s what the other side is hearing.

Brandon: Yeah, hey, Ryan what do you, how do you look at mentorship today? As somebody who’s already successful now, you’ve done a lot of deals, do you have mentors in your life now that you learned from that you’re gaining knowledge from and how do you approach that today?

Ryan: Yeah, good question. So, I look for people that are uniquely successful, uniquely qualified or in a position I want to be in. So, I hired a mentoring coach and consulting group for a different company I own to the tune of over $90,000 last year.

Brandon: Wow.

Ryan: Yeah, it was one of those like, we can afford this but just barely kind of a deal and the reason I did that was I saw they were uniquely qualified, uniquely successful and they were at where I wanted to be. One of the best ways I’ve ever heard it put, you’ve got where you are and where you want to end up and there’s this gap. People will pay for what’s in the gap.

Ryan: For me, it was, you can shortcut where I am to where I want to be 10 years from now and get me there in a year and that group taught us a lot about Facebook advertising, things of that nature. We actually grew our answering service Call Porter by 450% in 2018 with only 32 grand spent on that.

Brandon: Wow. That’s awesome.

Ryan: That was worth the price of entry.

Brandon: Yeah, and I do want to talk about Call Porter in a little bit, because that’s a really, really cool business model. But, before we get there, I want to go to like, let’s go back to the smaller deals first and then we’ll move into the bigger deals. Call porter I’m sure will work into this as well. Finding wholesale deals or deals that you can wholesale, or even, do you do any flipping at all or are you just straight wholesale?

Ryan: Not anymore.

Brandon: Keep or sell. Okay, so the wholesale deals, let’s talk about those. How are you finding them today? Like, what’s your strategy for finding deals that you can wholesale?

Ryan: Good question. So, I don’t do any gray area marketing.

Brandon: What do you mean by that? [crosstalk 00:21:55].

Ryan: Pretty much anything that like, your kind of flirting with fire with, like RVMs.

Brandon: What’s an RVM.

Ryan: Ring-less voicemail.

Brandon: Okay, yeah.

Ryan: I know some people that are in some serious hot water off of it. You know, things like bandit signs, I’m sorry but I don’t believe you can claim you’re serving a community that you’re actively littering in for profit.

Brandon: Yeah. That’s kind of the Bigger Pockets [crosstalk 00:22:20].

Ryan: I do direct mail and also SCO. I have the number one ranking we buy houses site in something like 17 cities at this point.

Brandon: Awesome.

Ryan: We do that and then I own a company called Ballpark Marketing. We do custom direct mail pieces that are branded for the market and actually written in ink so that’s how we’re getting in front of sellers. That goes into Call Porter and then our team is working the leads from there.

Brandon: How do you get them actually, I mean, because there’s a couple ways to do direct mail right? Some people will just print them on a postcard, just you know print out a thousand postcards and some people have success there. Some people will actually like sit down at the kitchen table and hand write 50 letters and send those out but that’s hard to be scalable. You’re saying you actually have a service, how are you able to do that in ink so it actually isn’t just a printed you know, mass generated.

Ryan: There’s companies that you can find that make machines that do this, but they have a cap on how many they’re allowed to sell. Let’s just say I’m far past that cap. So, it’s actually written in ballpoint ink in cursive, smears, smudges, it’s indistinguishable from me hand penning you a letter.

Brandon: That’s awesome.

Ryan: Yeah.

Brandon: Why does that matter do you think, having it like that versus just a printed postcard or letter?

Ryan: I do that, I also do everything branded. I think people want to work with people they can tell are legit. So, it’s a combination of it ties into that. We build like, local community brands that are verifiable, they’ve got reviews on line. Think of like Amazon or Yelp, right? I’m not going to buy some like you know, two star insert anything. I want something that gets good reviews.

Ryan: I think it just ties into that approach of like a local community brand, somebody that cares. A lot of people do like dishonest marketing, which I’m not a fan of. The like, third notice, your cash offer is expiring. I think it’s crap. So, we do everything more like How to Win Friends and Influence People based so our typical copy is Dear John and Sarah, what are your plans for 123 Main Street? I’ve prepared a cash offer for you. Please give my office a call at your convenience. You can reach us at phone number. Thanks, Ryan. Website at the bottom.

Ryan: It just kind of ties into that approach of like, we want to build a relationship with you, I’m not just looking at you as a meal ticket.

Brandon: Yeah. I think that’s smart because again in today’s market, there’s a lot of people doing wholesaling, a lot of people doing direct mail marketing, a lot of people trying to get deals. I’m sure the people you’re reaching out to are probably getting potentially, maybe your list is fantastic and nobody else knows it, but like, they’re probably getting hit by multiple people. They’ve got multiple stacks of letters on their table saying hey, I want to buy your property.

Ryan: That’s kind of the apple tree deal, that’s how I describe it. With what I send, you know, you can send like the trashiest mail there is. If somebody’s at the bottom of the tree, they’re desperate, they’re going to call.

Ryan: With what I’m sending, I’m getting the people who don’t even look at a postcard. I’m getting people who are wealthy, they’re affluent, they want to trade equity for an easy transaction. That’s why a lot of our rentals are like, vinyl village stuff that’s built post 2000. They’re not going to call a third notice, your offer’s expiring deal. They’re going to call hey, hey wants to know what our plans are and well, we’d like an easy exit.

Ryan: I think it just kind of ties in with our whole approach a lot better.

Brandon: Okay, that’s cool. Are you doing, there’s not a postcard, it’s an actual letter, stamp, like in an envelope?

Ryan: Yeah, so we do a couple things but our big thing we’re known for is we’ll actually do a custom full color envelope and full color insert designed for that person’s brand for the market.

Brandon: That’s cool.

Ryan: It shows up and this person’s obviously local, right? Yeah, I won’t get into too much of it, but the guys I work with on average get a deal for about every 2500 letters they send. I’m messing with a guy right now I’ve JV’ed with in downtown Los Angeles and we’re getting like a 1.8% response rate in downtown LA. So, direct mail’s not dead.

Brandon: Yeah, direct mail’s not dead, it’s just, you got to ask yourself how can you stand out a little bit, how can you do a better job than everyone else.

Ryan: Yep.

Brandon: Any area of life it’s kind of like that. Any time somebody tells me something’s too competitive or too hard to do, or you can’t find [inaudible 00:26:17], you can’t flip houses, you can’t do this, you can’t do that, I’m always just like yeah, I mean if you’re just like everyone else, of course you can’t. If you just want to be an average person, an average business owner, you’re right, you probably can’t do it because average is too crowded.

Ryan: We take Facebook’s approach of like, the customer experience is my number one concern. So, that’s why we use Call Porter, our calls are all answered live. They’re booking appointments for our team to go out and meet with them. Before our team goes out to the appointment, they get a text message reminder a couple hours before. Our guys show up in branded polos, hand them a business card, leave them with a credibility package and every single person we meet with gets a thank you card the following day.

Brandon: That’s cool.

Ryan: If I’m competing with somebody on that deal, I mean, chances are they’re not doing all those things we’re doing.

Brandon: Credibility package, what’s that?

Ryan: Just leaving them with info about us, kind of what we’ve done, who we are, our track record.

Brandon: That’s cool. All right, so you’ve got this, what I’m sensing from you is like you are not a fly by night wholesaler who’s just like throwing out some crap hoping you get something. This is a business, like the guy who owns the McDonald’s that’s producing well. You’ve got systems. You’ve got processes. Can you walk us through a little bit of your, like, I don’t know if you call it CRM if that’s what you would call it. How does a lead go from you know, you send out the letter, how are you tracking who you’re sending to, who are you sending to and then where does it go from there?

Brandon: You said you know, Call Porter is a company you created, right because it definitely solves a [inaudible 00:27:43], so walk us through that, what they’re saying on the phone and then how does a lead go from that to you closed it and I know that’s a big open ended question, but I’m just curious how you [crosstalk 00:27:51].

Ryan: No, I mean that’s easy. So, as far as who I’m mailing, the number I threw out of like 2500 pieces to get a deal is just absentee owners with equity.

Brandon: Okay.

Ryan: Here, I also, we’ve built some bots and scrapers. We do some light hacking, so I get every divorce, every pre-foreclosure, every probate, every eviction, every single week. Our data’s actually so fresh that we’ve mailed, in the past we made the mistake of saying why we were mailing or why we were calling and we called the guy who was getting divorced and he didn’t know he was getting divorced yet. Ouch, right?

Brandon: Yeah.

Ryan: We’re using the niche data. We’re also using stuff like absentee owners, seniors with equity, absentee owners with bad credit so that kind of stuff. So, we’re doing letters, sending them out, the calls are answered live by Call Porter. They’re screening for equity, motivation, condition and then they’re actually booking appointments with people. So, my acquisitions managers just go and show up so I don’t even look at properties anymore.

Ryan: The guys will go out, run a call. They’ll take detailed, detailed notes, take about 100 photos of the deal, come back to the office. They’ll analyze the deal, figure out what we want to pay, full comps, all that good stuff. We’ll then call the seller within 24 hours and make our offer.

Ryan: It’s pretty rare we make an offer on the spot unless we’ve got competition, but kind of following that customer experience. They called us for an offer, we’re going to make sure they get one even if it’s one they don’t like, right?

Ryan: We kind of go out, our approach is very, I’m not a high pressure sales guy. I had to do that for a long time when I did car warranty sales so our approach now is just hey, here’s your options. Here’s where I’m at. This is what makes sense for me. If it works for you, great. If not, you know, no big deal. No hard feelings. So, from there, most people will actually tell us no on our offer and in our CRM, we have the ability to automatically schedule follow up sequences based off their niche. So, if it’s an owner occupied absentee, if there’s financial distress, emotional distress, we have different sequences we’ll pick that we’ll actually send them text messages for a year without us even touching it.

Brandon: That’s cool.

Ryan: Yeah, I pulled our CRM this morning. We’ve had over 1200 leads come in so far this year and we had a guy from two months ago who replied to one of these automatic things and said well, you know I’m doing okay but I really just need to offload the property at this point. We wouldn’t have remembered to keep talking to that guy. So, once they say yeah, we’ve got a deal, we have it built into Podio, where they get sent a contract, it’s e-signed, they sign it, it uploads it back into Podio, we send it over to Title, schedule closing.

Brandon: Okay, so you use Podio for, to kind of manage that side of things.

Ryan: Yeah, Call Porter we spent a lot of money for our clients on building out. Basically we test anything we’re going to do on my stuff first, so we built a CRM for me so it’s kind of their default thing they offer.

Brandon: Okay, that’s cool. Yeah, so Podio, Podio is like an open source, right if I get this right? It’s like an open source CRM to track leads that are coming in, but you can built things on top of it right?

Ryan: It’s basically like a project management tool. It’s really not even meant to be used for investors, we’ve all just kind of tweaked up. [crosstalk 00:31:00].

David Greene: Because it’s free and that’s exactly why everyone does that.

Ryan: Yeah. I don’t know that it’s free anymore. I think they removed that or it’s like free if you barely do anything at all.

David Greene: Yeah, they [crosstalk 00:31:12]. Bait and switch. [crosstalk 00:31:16].

Brandon: What about, when you make an offer and I’m just drilling you, David, I’ll give you a chance in just one second. Any idea on your rejection rate? Like I mean, like, or maybe not even, yeah.

Ryan: 90%.

Brandon: Yeah, I was going to say like, if you make an offer, what percent, like how often do you get turned down because that’s about where I’m at, 9 out of 10 of my offers get reject typically.

Ryan: Yeah, I mean it depends on how much you whittle down who you’re making offers on. I know guys that close at like 35%, but they weed out most things. Our approach, general thumb, coffee’s for closures old school approach. If they have equity and they want to sell, my guys have to go meet with them and they have to make an offer. I’ve bought more deals from people that wanted too much money for properties that were too nice for them to sell to me to do it any other way. So that’s kind of how we do it.

Brandon: Yeah, so why would they sell to you? Like, let’s go basic fundamental. Why would somebody who can go and get, they know it’s a good market right now. They know it’s competitive. They could probably put on the MLS, why would they go to you and sell it to you for less than they could probably get on the MLS?

Ryan: I mean, there’s times when I’ve straight told people you should not sell me your house and they’re like, no, I want the easy option. So, I mean, we had one last year that was a wholesale deal right, we closed on it and then listed it and sold it. We made $80,000 in 30 days and the seller had a particular dollar amount they needed to close on another property. I told them, I’m a licensed broker, I was like I’m not going to BS you, you need to list this. It’ll sell quick, it’s in a good area and it was no, no, no, we want you guys to take it. You know, we need cash in like, it was like four days, something nuts.

Ryan: We cleaned up on it. So, I would say a lot of the times it’s the property needs work or a retail agent doesn’t really want it or there’s something else going on. There’s a divorce, they don’t want the neighbors to know they’re selling. I had a guy that just, I was on the phone with yesterday who, his mom left him the house and he’s very like proud of how his mom maintained this house, but they haven’t updated anything in like 50 years, right?

Brandon: Yeah.

Ryan: It’s one of those ones that you know, his agent told him, well it could be worth 240, but we should probably list around like 210. So, where I always start with on something like that is well, let’s talk about the number you’re going to net. After commissions, after inspections, it starts to get pretty close to kind of that 75% minus repairs. So, I think it’s just positioning it as I’m an option. The perk with me is it’s faster.

Brandon: Yeah. Yeah, that’s smart.

David Greene: You said a couple things in there that I think are solid gold that I want to make sure people don’t miss. The first had to do with, I don’t remember what you said but I know that you’re making the point that this is almost like a courtship. You can’t go in there and say to somebody, hey, I want to buy your house for 180 even though it’s worth 240 and they go okay. There is a tiny, tiny percentage of people that that will work for whatever reason and the guys with the really high conversion rate are just looking for that. That’s all they care about. They’re just getting in there, can we do this thing, no? Okay they move on.

David Greene: The smart business people in my opinion are the ones who understand most human beings need a courtship process to get comfortable doing something, so what you’re doing is creating systems to help move them along that process and I recognized this because as real estate agent I do the same thing. Very few people that I come across will I say hey, do you want to sell your house and they go you know what, as a matter of fact, I was going to put it on the market, I just hadn’t called an agent yet. Why don’t you come talk to me, here’s a listing agreement. That’ll happen less than one percent of the time.

David Greene: If that’s all I spend my time doing, I’m never going to find a deal and for a real estate investor, it’s the same thing. It’s more when you’re going direct to seller, you’re getting to know somebody. Hey, here’s letters. I buy houses, remember who I am, I’m here for you. At a certain point, maybe they call. Hey, this is what we do, will that work? No, not yet. Okay, well let’s stay in touch, let’s have a relationship. Here’s the value that I offer.

David Greene: Then, when they feel a little bit more motivated, they’re reaching out to you more frequently. Then, they get to the point where you can actually get in front of them and you can propose what you have but you’re being very honest and you’re saying here’s why this would work for you, here’s why this might not, what do you think is best?

David Greene: You’re slowly moving them to the very end of a funnel where you can actually convert that into money and you will overall have way more success than the people who are just trying to like, hey, do you want to marry me? No, okay let me go on to the next one, right? Something about business makes people forget the way that everything else in life works. You never meet a complete stranger and immediately think yeah, I want to do whatever that person says. I completely trust them.

David Greene: I love that you’re incorporating that into the business that you’re running. The other thing [crosstalk 00:35:40].

Ryan: We do a lot of soft passes, so you know, hey Mr. Smith, man I’d really love to buy your house, but your asking price is just too high. I don’t want to hurt your feelings. I’m not here to low ball you. I’d love to buy it, but your asking price is too high. If something changes with your asking price, give me a call, I’d love to make you a cash offer. What does every single person say? Well, what would your offer be?

Ryan: At that point, they’ve invited it so I don’t have, I’ve got like 25, 30 plus five star reviews online from sellers that we’ve worked with, people we’ve made offers to. I don’t have a whole bunch of this guy’s a low balling D bag type of reviews.

David Greene: Yeah, because you prepped them. You can get away with a lot if you prepare the soil before you plant that seed and realistically, if you say well my offer’s 210, he wanted 240, he’s probably not going to say, okay deal, but he is going to think about it. It’s going to turn over in his head. He’s going to talk to a couple agents. He’s going to feel the pressure of why he needs that money and a week, two weeks, three weeks, a month later, he may come back to you and say hey, are we still in business at 210 here?

David Greene: That’s what I just want people to understand is that’s how human beings work and if you try to take a human being and force them into your model of how you want to buy a home because it’s more efficient for you, it doesn’t work. You have to create your model to fit the way that human beings make decisions, which means that you have to systemize things because it’s not always going to be a one shot, I get in there and I get out and I have my deal and I feel like this is why a lot of investors fail.

David Greene: Looking for deals, trying to build a wholesale business is they have that one shot approach. What you’ve got is if you know, let’s say you came up to the 10 steps of I just met someone, so they’re ready to sell a house and each of them has a phase that this person has to go through. You’ve put people in charge of every phase for running that part of it, preparing them and moving them into the next one so that you actually can take your hands off this whole thing and you’ve got this conveyor belt that of course at every step you lose a couple people, but the more you put into the front of the funnel, the more will be left at the end and the more that’s left at the end, the more you’re going to make and that’s how business people think and you’ve got to get your brain to understand this is kind of the rhythm of how business gets done and then you can apply it to wholesaling, finding multifamily deals, finding single family deals, flipping.

David Greene: Whatever your flavor is, this is what you have to learn to build.

Ryan: Yeah, I was in Paris with my wife for the first two weeks of May and this was like paradigm shifting even for me. While I was out of town, our team closed on 21 units worth a million dollars.

Brandon: Wow.

Ryan: They raised the money, closed on the deals, started the construction. My phone didn’t ring. You know, I’m moving to San Diego in a couple months, I’m currently in Indianapolis and everybody’s like, what are you going to do when you leave and I kind of have to laugh and fess up that I don’t really do much on a daily basis. My team does, right?

Brandon: Yep. You know, the book the E-Myth or E-Myth Revisited with Michael Gerber, we had him on the show a long time ago. He makes the analogy in that book that a business should operate like an ideal business should operate like an engine. That any part is replaceable and ideally, the owner of that engine is not part of the engine, right? So, like it feels like that’s what you’ve done, that’s what I’m trying to do with mine and David’s trying to do with his is like, how can you create an engine that yeah, you have to still go in there and oil it and you replace a part every so often or hire someone to replace a part every so often, but like, the engine just works. This part connects to this one, this one to this one and a lot of what we’ve been talking about today are the tools and processes that you use to make all that happen.

Brandon: That’s why I asked you that big picture question earlier about how does it move through the engine? How do all those pieces move and I think it’s phenomenal.

Ryan: Yeah, I mean I start any company that I’m going to own and run, my goal is to be totally removed from day to day operations. You know, people reach out to me and be like, hey, I need to change my form of billing for Call Porter and it’s like guys, I haven’t handled billing in two and a half years. You need to talk to this person. So, I mean, I think that should be most investors goals because you get to the point where it doesn’t cost you any time, right?

Ryan: Most people don’t take their time into account when they’re analyzing deals, but if you can even use other people’s money, which is our model, I don’t have any time and I don’t have any cash into this deal. [crosstalk 00:39:40].

Brandon: Yeah. That’s pretty amazing, yeah. I’m working on this mobile home park thing right now, I’m trying to build up a machine, an engine right? So, I’ve got a team of people who are analyzing deals, a team of people who are calling, cold calling these parks. I’ve got a partner who’s running the analysis. I’ve got another partner who’s you know, leading that team of the analysis making offers and at the end of the day, my goal is like, how can I build this and I keep thinking, every day I think, how do I build this so I have to work than a couple hours a week and if you just always take that approach of how, now I’m not saying a couple hours a week right now, but every decision I make is am I getting closer to this idea where it’s a machine running on a few hours a week and no matter whether you’re doing rental properties, flipping, Bird, house hacking, it doesn’t matter. If you just keep that mentality of how do I build this so that I’m not stuck in it.

Brandon: You’re not going to be the guy who’s working 80 hours a week at your own business just so you don’t have to work 40 for someone else. That’s just [crosstalk 00:40:34].

Ryan: You should run your scorecard which runs your business and that’s it.

Brandon: Yeah. Yeah, I love that. That’s a great quote. All right, let’s move on and shift from the smaller deals like the wholesale stuff and talk about the multifamily. We talked about why you switched to that, but I’m wondering what your technique is today. Are you doing direct mail for those as well or are you going straight MLS. Let’s talk about how you’re finding them.

Ryan: Yeah, no, so we’re doing direct mail. We’re going direct to seller. We’ve primarily been targeting properties like under 20 units. I’ve bought several eight units, a couple six units, a couple five units. We’re just now actually, we kind of realized why are we playing small. So, we are currently amassing kind of our database of multifamily properties, 50 plus units.

Ryan: On those, it’ll be kind of a combined approach of direct mail and then following up on that mail with a phone call after we’ve skip traced that person and hey, just checking to see if you got my letter. You know, I really want to buy your complex, more of that kind of an approach.

Brandon: Have you found a difference in the way that you reach out to people from a single family house to these smaller multifamily or mid sized multifamily or is it pretty much the same letter?

Ryan: Single family you can pretty much just blast whenever you want. With multifamily, I approach it the same way I’d approach any other business owner of you know, hey, I’d like to have a conversation with you. Here’s my track record, here’s honestly what I’m wanting so my intentions are clear up front. If you have an interest in selling, let me know and then we tag onto it, hey last month I sent you a letter, I didn’t hear back. Here’s where I’m at now. I actually bought a couple other properties since we last spoke. You know, this is, it’s not me, it’s somebody on my team, but we give them, those are the only calls that we don’t put into Call Porter is these large multis because you have to be able to hop into cap rate, occupancy, vacancy, condition of the building and things that because of how we treat those leads, we want those going straight to one of my acquisitions managers.

Brandon: Okay, that makes sense. Yeah, that’s cool. There’s a book out there called The Ultimate Sales Blueprint by Chet Holmes and Chet passed away a few years ago, but he was like a big business guru kind of like, sales guy. Anyway, in that book, he talks about, and I think I’ve mentioned this on the podcast maybe a long time ago, but he mentions what he calls the hot 100.

Brandon: This has nothing to do with real estate, it has to do with sales and so when you go, he’s like you know, just classic, you go to sell something like you go to a company, you sell something. Rather than blasting to everybody in the world, trying to sign up everyone, instead, define your hot 100, like your top hundred most ideal clients in the world that you want to sell to and just like, get a list on your wall and you know who they are, you know what their kids’ names are, you know when their birthdays are, you know everything you can about these 100 clients and I’ve been thinking a lot lately about that and kind of instituting that in my own life of, why not apply that to real estate and say these are my hot.

Brandon: It doesn’t necessarily work with the wholesale deals because it’s a broader funnel, but with the larger multi, can you just say, this is my top, this is my hot 100. These hundred apartment complexes in this area because on average, people sell properties every, let’s call it 10 years, multifamily. I don’t know if that’s true, it might be five, it might be 10. But somewhere in there, right? Between five and 10 years they probably sell, which means every single year, five to 10 of those hot 100 are going to be like yeah, I’m ready to sell and five to 10 more are going to be like yeah, I’m getting ready to sell which means at any given moment, there are probably five, 10, 15, 20 people on the verge and if you’re reaching out to them monthly or regularly and you know them and you know, you meet with them for lunch maybe occasionally once a year, be like, who are they going to go to? The guy that they don’t know. They’ll go to you at least to get an offer first right? [crosstalk 00:44:09].

Ryan: [inaudible 00:44:09] down to 52.

Brandon: Perfect, yeah. I love that and you just focus on those and so, yeah, anyway, if you’re listening to this show right now and you’re like well I want to get a small multifamily in my area. Okay, go make that list. Go make your hot 52 and how do you just keep on those people? I mean is that essentially what you’re doing?

Ryan: Yeah. Yeah, I mean just staying in front of them, being relevant, being persistent. Just kind of letting them know where we’re at, what we’re up to. Believe it or not we actually, we did a lot of marketing to brokers on these deals and didn’t really get much because they typically have kind of their known player who they’ve made money off before right? So, we kind of realized okay, we need to go direct to the owner on these and kind of revamp what we’re doing for you know for residential, [inaudible 00:44:54] three or four units and applied it to kind of the larger deals.

Brandon: Yeah, that’s awesome. I love that. Okay, so that’s how you’re getting the deals. They come in, same thing, are they going through Call Porter and setting up appointments to go look at things or do you have a little [crosstalk 00:45:07] process?

Ryan: Our multifamily, those go straight to my acquisitions manager who analyzes those deals, just that way the process they deal with just one person, because [inaudible 00:45:15] there’s a smaller audience.

Brandon: Makes sense and what do you look for when you say analyze, like what kind of metrics are you saying hey, that makes it a good deal or I will buy that one, I won’t buy that one.

Ryan: Good question. So, typically we’re trying to buy in at a 10 cap from day one based off of current actuals, and I mean, that’s including like, everything. Our spreadsheets to look at these things hurts.

Brandon: Yeah.

Ryan: It doesn’t always happen, but that’s typically our goal and then the other thing we look for is if I 100% finance this thing, does it still cashflow? If I can check those two boxes, it’s probably a deal we’re going to do.

Brandon: That’s cool. Very cool. All right.

David Greene: I want to ask you Ryan, for a newbie who wants to get started going direct to the seller. What’s the number one thing they need to understand if they want to be successful doing that?

Ryan: I actually posted about this on Facebook a little while ago with regards to raising private money. I think anybody who’s under the age of like, 50 right now, they’re going to have a problem raising private money or starting to go direct to seller because it’s so relational. There’s kind of this inward trend in our culture to stay at home, have your food brought to you, have your groceries brought to you, you know, dive into your phone instead of you know, build a life. Make relationships, right?

Ryan: There’s never going to be an app, right, for like oh, I want to sell my house. Please get me 100 wholesale offers. I mean it’d be great, but it’s just not going to happen or it’s not going to happen anytime soon. So, I think the first thing they need to do is read How to Win Friends and Influence People and just start to play with it.

Ryan: I treat this stuff like experiments. Like, I’ll go to the coffee shop and I’ll actually make eye contact with the girl who handed me my order and smile at her and notice that she notices that I smiled at her, right? So, it’s figuring out how to build a relationship with somebody you’ve never met who’s guard is up, how do you lower your guard and get them comfortable where you can talk you know, man to man, man to woman, girl to girl, whatever it is so that they’ll actually get to the point of you’re having a conversation that could potentially lead to a conversion.

Brandon: That’s great. Yeah, you know people have this guard up when you talk to people. Everyone kind of does, they have like this automation and you’re just part of, it’s just what you do. The same response you give people all the time you go to the coffee shop. But, you just got to, if you can break through that and have a real like, you actually connected with that person and that’s such a valuable skill for real estate investors.

Ryan: I love answering people honestly. When they hit me with like a how’s your day, you’re like, you know actually today’s been pretty rough or like a, you know this is actually one of the best days I’ve had all year. They’re kind of like taken aback that you didn’t just hit them with fine, how are you? You know.

Brandon: Yeah, that’s typical.

David Greene: What you’re saying then is basically the number one skill someone needs if they want to have success direct to seller is the ability to form a connection with another human being?

Ryan: Absolutely.

David Greene: It’s not an app, it’s not a bit of knowledge, it’s not an ability to run a number [crosstalk 00:48:09] yellow.

Ryan: It’s not a software. No, it’s can you get thrown into a party with people you don’t know and leave with one person who you had a meaningful conversation with. If you can’t, you’re better off talking to realtors. You know. We had a friend who had an acquisitions manager that they were really struggling with and I was like, dude, this guy is creepy. Like, that’s your problem you know.

Ryan: Yeah, make, learn how to make friends and build relationships with people. I think a lot of people forget that a lot of the people that they’re going to meet with are hurting. I told somebody I’ve never met somebody who needed to sell a house quick for cash due to life going well. It’s typically financial, relational, you know, lifestyle changes. There’s something going on that if you come in and you’re just like, well you know, I’ll give you half of what you want because that’s all this dump is worth, you’re not going to get that deal.

Ryan: If instead you sit down and walk them through their options and explain why you’re the best choice, you got a much better shot.

Brandon: Yeah.

David Greene: I really, really like that.

Brandon: Yeah, that’s really good. I think people need to like again, listen to that again. There’s a heart issue at play here when you’re a wholesaler or you’re a real estate investor in general that like, this is real life people and their real life lives that we’re dealing with and it’d do a lot of investors good to realize that so, very good.

Brandon: All right, so let’s, I want to shift a little bit here and talk about one of your deals in particular so I think we should head over to the deal deep dive.

David Greene: Deep dive.

Brandon: All right, this is the part of the show where we dive deep into one of your particular deals. So, Ryan, you got something in mind that we can dig in on?

Ryan: Yeah, yeah I’ve got a really good one.

Brandon: All right, sweet. All right, let’s start with number one, what kind of a property is this and where’s it at?

Ryan: Single family rental south of downtown Indianapolis in an area called Bates Hendricks.

Brandon: Okay. All right. Number two.

David Greene: How did you find it?

Ryan: This one actually came from a wholesaler. Over 89% of all my assets have been purchased direct to seller, this was one of the 11% that I bought from another investor.

Brandon: Cool, and by the way I love that you know that number, that you track these things. Here’s the one thing, side note from the deal deep dive, but the best real estate investors I know, typically know their numbers like that. Like, their rejection rates, their you know, where their deals are coming from, like they track that stuff because it’s important right? What you measure matters [inaudible 00:50:38] book. So like anyway, I love that you know that.

Ryan: It’s actually 89.4 if I’m showing off.

Brandon: I love it. How much was this house that came in from the wholesaler? How much did they want for it?

Ryan: We paid $62,000. I don’t remember what they wanted, but my approach with any wholesale deal I get if it looks remotely interesting, I treat it like a direct to seller lead. I give them a number that works for me. That was one of those.

Brandon: Okay. All right, so no real negotiation there. They just, you gave them the price and …

Ryan: Yep. Yeah, he’d been sitting on it for a little bit. We saw some potential in it that we’ll get into of kind of why I went after this one.

Brandon: Okay.

David Greene: All right, how did you fund this deal?

Ryan: 100% funded with private funds. We pay eight to nine percent interest on a two year term.

Brandon: Okay, how do you find these people?

Ryan: It’s a mix. I’ve actually, I post pretty often on Bigger Pockets that I’ll look at any deal for anyone for free at any time, especially in Indianapolis, especially if they’re out of state and I had a guy recently that was a California investor was looking at funding a deal for somebody else. They straight fudged their comps. It was one of the worst parts of Indiana as a whole and I just told him, hey I wouldn’t touch this deal and that was it. There was no pitch. There was no like, you know, you can send your money to me and he reached out to me a couple weeks later and said you know, hey I decided not to do that deal. You know, I’ve got to figure out what to do with my cash now.

Ryan: I was like well, we have opportunities and I believe that guy’s invested 400,000 to half a million dollars with me at this point.

Brandon: That’s so cool. What a great story about like, you know, how giving to people can like, this is where people I think often times they’re like, well I don’t see direct value in helping somebody else or engaging on the forums or getting involved in a community or going to a meet up because I don’t see a direct one on one return right now from my time. But, you’re just saying hey, I’m just going to give. I’m going to help people, give my opinion on the market, on the areas and I know that at some point it’s going to come back to me and that’s a good tangible example of that happening.

Ryan: I mean, that’s literally been my entire Bigger Pockets experience. If I didn’t find Bigger Pockets, and I didn’t give back and I didn’t help in what I could, don’t like just regurgitate stuff you’ve read that you have no experience in, but help in what you know, I’d probably still be working for someone else.

David Greene: Yeah, and if you want to have something to give to people, you have to know what you’re going and if you want to know what you’re doing, you have to pursue things hard and I think that’s, you can’t skip that step. That’s what we’re always saying is you got to learn what you’re doing. You got to pay attention. You got to build up that tool belt.

David Greene: If you want to try to ascend to the top without understanding what you’re doing, you have nothing to offer someone and a smart person, it doesn’t take them long to realize this is a hollow relationship. Enough of my grand standing and soapboxes.

David Greene: Did we ask you what you did with the property?

Ryan: We kept this. This was a classic Bird deal. So, we bought it for $62,000. We put right at $44,997 exactly into in renovation. What I liked about this property, it had a detached heated eight car garage.

Brandon: Whoa.

Ryan: So, it was, yeah, super weird right? I looked at it and was like, somebody’s going to pay a premium for this. It’s in an area that was super gentrifying, now it’s like, it’s totally exploded. Good luck finding anything there, but at the time it was like, this was kind of on the outskirts of this area. It was kind of a rougher deal, but I was like, it’s got this eight car garage, I’m a car guy. Some car guy’s going to want this, right?

Brandon: Yep.

Ryan: Rent comps at the time were 800 bucks. I threw it out for 1575 because you know, why not?

David Greene: He’s saving money on the garage space that he had to rent for all these cars, right?

Ryan: That was the thoughts. Interestingly, we ended up with a family in it who had other stuff in other storage units from when they owned a larger home and they just packed it with all their storage stuff and it actually cut down their monthly living costs.

Brandon: That’s awesome. You got the 1575 then?

Ryan: Yeah, I got the 1575. Year to date in like the past like 13, 14 months since this thing has been rented, we’ve cash flowed right at 3179 bucks, so right at 220 bucks per month. I thought this deal was going to be worth about 140, 150. I was pretty conservative up front. I was going to end up all in for 110. My bank appraised it for 240.

Brandon: Whoa.

Ryan: Yeah, that didn’t hurt. We actually pooled, you know tax free pay day, 54,000 bucks out of the back of that deal.

Brandon: I wonder if the reason it appraised so high is they were forced to go to a really nice neighborhood to find a comp with an eight car garage?

Ryan: No, the area in the past year, like everything around it was either redone to the studs or built new so all the other comps for you know, three bedroom one baths that were 14, 1500 square feet were 250 so they were even like, we don’t really like this one but here you go.

Ryan: Now, I do want to point out, not all of them are like that. We re-fied this deal in a package of six other parcels, I think there’s like eight or or nine units total in it and a purchase of a 12 unit multifamily. But, across the board on this re-fi, I was right at a million dollars, we pulled out $64,000 tax free so we did really well on this house. A couple others came in low. A couple others came in pretty decent, but we were able to perfectly Bird out with a $64,000 check on that re-fi.

Brandon: That’s so cool. All right, so just to recap in case people are confused. We’re talking about the Bird strategy, David Green wrote a book on it. You should buy it. It’s you bought it for 62, you put 45 roughly into it, so you’re at you know, we’ll call it 110 total into it.

Ryan: Yep.

Brandon: You were hoping that it’d be worth let’s say 150 so that you can go to a bank and refinance it so you can pay off that private lender [crosstalk 00:56:24]. Paying off that private lender so now you can go from that eight or 10% you’re paying other people down to the five ish percent from a bank.

Brandon: The bank appraised it at about 240 so you were able to refinance probably 70% to whatever of the 240.

Ryan: Yep, 75%.

Brandon: Which is where you were able to do that. Last question before we move to the last one of the deep dive, but you said it was a group re-fi. I mean, how did that, was this the local bank that did this?

Ryan: Yeah.

Brandon: Was this a commercial loan? I mean, how did that work?

Ryan: Yeah, so local community bank. It’s kind of a goofy product because it’s a commercial product that’s offered on residential properties and we bought a 12 unit and did this in with the loan as kind of our way to sell the bank on hey, we’ll give you this decent 12 unit, but you’re also going to re-fi these for us.

Brandon: Nice.

Ryan: We did I think it was five houses and a duplex.

Brandon: Very good. All right, and last question then, what did you learn from the deal? Sorry David, I took it from you. What’d you learn from the deal?

Ryan: Good question. I think I didn’t so much learn, I more reinforced. I went full-time with three K to my name. I’ve had more times when I’ve bet on myself than I should have and I haven’t gone broke yet so that was one of those ones where I looked at it and I decided even though the data wasn’t totally there that there was something here. You know, trusted my gut, my intuition behind it and I mean, that’s a beautiful deal. So, yeah.

Brandon: Fantastic, fantastic. All right, very cool. That was an awesome deal deep dive. Now, let’s head over to the next segment of the show. It is our world famous, fire round.

David Greene: Fire round.

Brandon: All right, let’s get to the fire round. These questions come direct out of the Bigger Pockets forums, which I know Ryan’s in, David’s, I’m in. It’s a great place to connect with people and learn, grow, network, whatever. So, go check it out. Biggerpockets.com/forums.

Brandon: Now, let’s get to the questions from the forums. Christopher from Powder Springs, Georgia said, “Hey, I’ve been reading and studying real estate for some years now. I’m having a hard time pulling the trigger and getting that first wholesale deal under my belt. I currently got an hour or two every day I could dedicate, but I have some friends and family that are willing to assist me as well. Can anyone offer some advice on how I could possibly delegate some of the grunt work or how I could make the best use of my limited time?”

Ryan: I’ll take this one. There’s an app called Deal Machine. It’s a Driving for Dollars app that these are actually the only postcards I would ever send. You take a picture of the front of the house, sends them a postcard. Their metric is like one of their members gets a deal for uploading 250 properties and mailing them six times on average.

Brandon: Nice.

Ryan: 12, 1300 bucks. Make your Uber drivers do it. You know, you can sell Uber drivers on hey, I’ll pay you a commission. Friends, family, even yourself to and from your way to work, take a little bit of a different way home every day. That’s absolutely what I would do.

Brandon: All right, I love that, that’s a great, and yeah, Deal Machine I actually have that on my phone as well and I just did a test send because I sent it to myself at my own house and I got the postcard and I was like, this is awesome. That was so easy.

Ryan: I know the founder of it and he’s an incredible guy. So, I stand 100% behind that recommendation.

Brandon: I actually just met him at a conference a couple weeks ago.

Ryan: Oh cool.

David Greene: That’s why this is familiar. Brandon, you were the one that was telling me about it because you had just met him.

Brandon: Yeah, I had just met him at the conference, yeah, and anyway, I think they’re going to be an eventual sponsor of the show or something on Bigger Pockets. But anyway, this is, they’re not right now, and I’m just totally, it’s a cool app. I’m not paid to say that. It’s just a cool app and there’s a few of them out there but that’s the one I’m playing with right now and I really like it so definitely check it out.

David Greene: I like that. So, basically, don’t just find a family member to do the grunt work, there are things like an app you can use to do the grunt work for that stuff. Okay.

Brandon: Yeah, if they’ve got an hour or two a day, they should be able to get some you know, work done in an hour or two a day. [crosstalk 01:00:15]. Seven hours a week. That’s enough time to find some deals.

David Greene: My favorite thing when I have that problem is I make a checklist. Okay, everything from the deal coming in to the deal closing, what’s all the stuff I got to do? Now, I’ve got like 15 steps or 20 steps and then I start looking of all these steps, what app or software could I use to do it for me and then what person could I use if I couldn’t find an app and you just kind of systematically eliminate and you’re like oh, I really only got to do two things and then just get really good at doing those two things.

Brandon: Yeah.

David Greene: Next question. We have a tiny duplex in a run down area, which we are sure will be hot in two years with billions of dollars of development underway. We were approached by an Air BnB super host to rent both units at the rent amount we are asking for, is this too good to be true? Is there something we need to be aware of?

Ryan: I mean no, I’d do that in a heartbeat, especially if you’re having a hard time renting it. It’s actually Air BnB arbitrage, it’s a pretty common business model where you approach people with rentals, offer to pay their rent and then rent it out on Air BnB for a premium. They’re taking all the Air BnB risk. No other tenant’s going to clean your place you know three to five times a week, that’s going to have the kind of insurance they have.

Ryan: I know people that have done both sides of it and I think ti’s a really, really cool model. You know, if you’re somebody who doesn’t have cash to get started or has a little bit of cash, it’s a potential option.

Brandon: It’s basically subletting right? Same idea.

Ryan: Yeah, it’s basically like subletting where you’re very, very clear up front that you’re going to be subletting for a profit.

Brandon: Yeah, I’m not a fan of the whole like, Air BnB arbitrage when you try to deceive the landlord and go rent a bunch of places, pretend you’re moving in and then you actually [crosstalk 01:01:48].

Ryan: No, no, no [crosstalk 01:01:49].

Brandon: That sucks. But I would love if somebody came, like one of my tenants came to me and said hey, you know, I’m going to do Air BnB on this thing because yeah, like you said, they’re getting, the house is getting cleaned three or four times a week and there’s no long term tenant going to be stuck in there that I have to then evict forever and like, I mean it’s just, I would love that.

Brandon: Then Air BnB even has their own insurance against damages and like, yeah. So, like there are, if you want to get into Air BnB arbitrage, there are plenty of landlords there that if you explain the benefits to them, they would be all for that and you can get into real estate with no money down and start making cash flow.

Ryan: I think you’ve got a few of them right here.

Brandon: Yeah, so, yeah very cool. All right, number three, I’m a new investor in the DC area trying to get started with a rental property or Bird. My question is two fold. What happens to rent in a recession, like what happens if we have a recession? Are all my rents going to drop and I’m in trouble, and then also, what is, do you have any effective strategies to recession proof an investment property?

Ryan: I actually got this from a guy named Tim [Brats 01:02:46] and he calls it hardening, which we’ve now done on all of our rentals. So, any property we have we’re doing granite, we’re doing vinyl plank flooring, we’re doing stainless steel appliances, we’re doing can lighting, this is a nice looking place. Reason being, in the event of a recession, the people that are in the A class stuff, are going to come down to my A minus, my B plus.

Ryan: It’s kind of like if you’ve ever driven or owned like a Mercedes or a high end car, you’re going to have a hard time owning a Toyota Corolla and feeling proud of it, right? So, you kind of, people get used to having nice things. They can come down a level to your place and still have most of the things their used to but then at the same time, people are going to fight really, really hard to stay in that asset class before they drop down to the you know, slum lord using church carpet from the 1980s [inaudible 01:03:35] 4,000 times.

David Greene: Church carpet.

Ryan: Yeah. As far as rents go, I think you’ll see a decline. Reasonably, I’m in the mid west, so I don’t quite have the concerns of you know, if I was a California investor. We don’t have the wild appreciations or growths. But, I know from a lot of the people I’ve talked to about the subject of, you know, I haven’t been through a recession as a buy and hold investor yet of how do I recession proof my portfolio. How do I make sure I’m not one of the guys who had 500 units and lost it all in a year, right?

Ryan: One of the big things I’ve heard is making sure you’re actually getting good deals so we’ve got the equity cushion. All of our properties are at a 1.25% rent to cost ratio, so they’re covering their debt service coverage. But then on top of that, if you own stuff in nice areas, I’m envisioning we’ll probably see more people you know, family members kind of move in and stay together but you’re also going to be more likely to have people get creative and find options if you’re in a nicer area than if you’re in kind of a really rough area that the family doesn’t want to live in.

Brandon: Yeah. For sure, for sure. Number four.

David Greene: All right, next question. Hi everyone, meaning hi Ryan. I’m looking to buy my first rental property around Pittsburgh. I found a potential great deal in a great school district for $30,000 when comps in the area are selling for 60 to 100,000. Problem is, there’s mold everywhere. Every wooden surface in the house is covered with mold. Should I forget about this place and move on or can the mold situation be fixed without costing a fortune?

Ryan: My first concern is comps can’t be a $40,000 range. You need to get better at running comps is my first you know, blunt thought because if you’re into it for 30 and it’s only worth 60 and there’s mold everywhere and you haven’t started rehab, that’s not a deal. If it’s 100, 110, 120 maybe, you could be looking at something.

Ryan: Mold is one of those things that I would get somebody who knows what they’re doing to look at it. You don’t want the guys off Craig’s List who are going to just bleach it, you know, hang sheet rock over it. But my other big concern with that property is where did the mold come from. Mold is typically a sign of water intrusion from somewhere and if it’s everywhere, I think you have a big problem on your hands.

Ryan: I think if it were me, given that there’s kind of this huge range in comps and it sounds like this thing’s pretty dang gross, I’d keep looking.

David Greene: That’s a good point. Mold is a symptom. It’s not actually a problem. You have a bigger problem that’s causing mold.

Brandon: Yeah. Very good. All right, well that was a great fire round. Now it’s time to head to the next segment of the show. It’s time for the famous four.

David Greene: Famous four.

Brandon: All right, before we get to the famous four though, let’s hear from Mindy on what’s going on this week over on the Bigger Pocket’s Money podcast. All right, before we get to the famous four, let’s hear about what’s going on this week over on the Bigger Pocket’s Business Podcast. All right, with that, let’s get to the famous four.

Brandon: These are the same four questions we ask every guest every week so Ryan we’re going to throw them at you. Number one, do you or what is your favorite real estate related book?

Ryan: It’s an old one. Nothing down for the 2000s.

Brandon: Oh.

Ryan: This was kind of like the precursor to what we now call the Burr.

Brandon: Nice.

Ryan: It really kind of got the wheels turning for me. I don’t find much of any of it applicable in today’s markets, but for me it was kind of the paradigm shift that led me to the Burr model.

Brandon: Okay, very cool. Yeah, Robert Allen. Cool.

David Greene: What is your favorite business book?

Ryan: Favorite business book. I would have to go with The Seven Habit of Highly Effective People.

Brandon: Cool. Stephen Covey. Good choice.

David Greene: All right, what about hobbies. What are some of your favorite hobbies?

Ryan: Good question. I like to travel a lot. I’m also a guitar player. Self taught. Played on stage a lot when I was younger and I’m actually in the process of getting certified for paragliding.

Brandon: Oh, that’s cool.

Ryan: Yeah.

Brandon: You should come out here to Maui, there have a paragliding course right on the side of Haleakala, the mountain.

Ryan: Where we’re moving we’ll be like 20 minutes from Torrey Pines, downtown San Diego so that’s where I’ll actually finish getting certified so I’m super looking forward to it.

Brandon: That’s awesome. All right, number four. Ryan, what do you believe sets apart successful real estate investors from those who give up, fail, or just plain never get started?

Ryan: I think I would say focus. We kind of touched on earlier of if you’re split between different things, if you’re trying to wholesale, trying to build a brokerage, trying to be a real estate agent, trying to flip, trying to get into buy and hold, trying to do lease options, trying to do like all these weird reverse you know things that I don’t even know what people are doing anymore, if your interests are divided between all of these things you’re kind of running with the if this one fails, I still have all these others, but I think really what it comes down to is if you go all in on one thing and it fails, you’re afraid that that makes you a failure.

Ryan: I know for me personally, the big shift from 2016 to 2017 was me deciding I’m going to go all in on this. I set the goal of doing 50 deals when before I’d done five and we did 74, so I think I would say focus and I also think it kind of ties into their why. Really being focused on something that you have no passion or real reason for, you’re going to give up whereas if you’ve got a strong why behind that focus, I mean you’re pretty much unstoppable at that point.

Brandon: Awesome. Awesome. All right dude, well this has been a ton of fun today, so I’m going to let David ask you the final question. I won’t steal that from you.

David Greene: Yeah. Where can people find out more about you, Ryan?

Ryan: Probably the best thing to do, I put together a like 27 page long guide that outlines how we did 73 basically Bird deals last year with none of our own cash. It’s just Ryandossey.com. That’s got videos of me walking through stuff in it, you’ll get my email and everything through that as well, so that’s probably the easiest way to do it.

Brandon: Cool. Do you want to shout out your business as well? You have Call Porter.

Ryan: Yeah, so Call Porter, live answering for real estate investors. We take over 10,000 calls a month, been featured in Forbes, all kinds of cool stuff. Americans that only take calls for real estate investors who will actually book appointments based off of your availability. Ballpoint Marketing is our direct mail company. Ballparkmarketing.com, CallPorter.com.

Brandon: Awesome. All right dude, well this has been fantastic. Thank you and everyone go check it out and without further ado, I’ll let David Green take us off because I’ve got nothing really to talk about, so we’ll get out of this show David. You want to take us out.

David Greene: Thank you buddy. Thank you Ryan. This is David Green for Brandon will you be my mentor Turner signing off.

Brandon: All right, that was awesome.

Ryan: Thanks guys, that was fun.

Brandon: Yeah. Very, very good. That was a solid show. People are going to love that thing. Let me stop my recording here. Stop this recording.