All Forum Posts by: Cornelius Garland

Welcome to the world of investing. This is why many investors focus their efforts on generating off-market property owner leads.

You could put a small marketing campaign together to test the waters. For instance, pull a list of homeowners who purchased their houses before 1999 and target distressed / gentrifying areas. These homeowners are more cooperative than targeting affluent areas, and you can add value to the homes, which will justify the homeowners selling for a discount.

Lead gen and marketing is a deep rabbit hole, and there are a lot of opinions on BP as to the best route to take. My opinion is that you will need to have a steady flow of leads coming in if you want to turn this into a business.

Usually, the good deals are sold directly from agents to their network of buyers and they may not even make it on the MLS. It might be good to go to your next REIA or local real estate investing group meeting and get connected with the bigger wholesalers in your market.

All the best,
C.C.

I definitely hear you. This industry is not for the faint of heart, especially when you first get started. I had several losses when I began. The deals I lost were expensive lessons learned. Even if this deal doesn't go through, just dust your feet off and get back to it. There's another deal around the corner.

However, this is why I am very adamant about not putting all of your eggs into one basket. It is important to have a consistent pipeline of leads that you can target. If one doesn't close then it's not the end of the world. I found that many new wholesalers become fixated with one or two leads then when they do not close, they are devastated. 90% of wholesalers who start never close their first deal. Very few make it past the 3-year mark. Even fewer make it to 5 years.

It's not easy and it takes tremendous fortitude. However, this industry has taken me to places I never would have imagined. It has been tough. Very tough some days, actually. But I ended up getting on A&E doing this - a show called "50/50 Flip. I appeared on there as the Director of Marketing on the first season. The show recently got picked up on Hulu. It is one of my proudest accomplishments to date. But guess where I started? Just like you, right here on Bigger Pockets in 2015 very confused and lost.

It all comes down to how bad you want it.

I got bamboozeled out of a deal once. This happened in May of 2017, and it was the first and only time a buyer cut me out of a deal. I did not get my money from the assignment fee. Legal action would have cost me the amount of my assignment fee. Since then, I've become a shark. I do not mess around with my business. If I sense any shadiness, I will pursue legal action in a heartbeat. I have attorneys on retainer for this. I've pursued legal action against previous business partners as well. I'm not one to be messed with.

Thick skin is required, but I had to develop this thick skin after being screwed over a few times.

I'm really sorry to hear this. I've had this happen to me several times before, and it is stressful not knowing if you will get paid when you put so much time and effort into the deal.

I would try and call the buyer again and tell him you would like to be put on the HUD. Also, you will need to review it before closing. Be persistent about this. See how he responds. If he tries to give you a reason not to then that should signal red flags. I would contact your seller and ask them if they were contacted by anybody else regarding the transaction. If they were contacted by the buyer or title company then you know there is a high likelihood that they're attempting to backdoor you - essentially, close the deal without you.

Your suspicions are correct. I always suggest using my closing attorney for this very reason. Whoever has the deal has the power. Buyers are a dime a dozen - deeply discounted properties are not. Always remember this. If I must use the buyer's title company/closing attorney then I always demand to be on all correspondence between the title company, seller, and buyer. It should raise suspicions as well if you're in an attorney state and he says he's using a title company.

You have to be on the HUD and you should receive it no less than 24 hours from closing. If you are not on the HUD, you will likely not get paid. I would call the title company ASAP and request to speak to a paralegal or closing representative regarding your deal. If you signed the original purchase contract with the seller then you have a legal interest in this property, and they should be corresponding with you every step of the way.

Always, always, ALWAYS make sure you are on the HUD settlement statement. Your assignment fee should appear on lines 1303 or 1304 on the second page.

I have had buyers close deals behind my back and also try to reduce my assignment fees before closing without speaking with me. There are a lot of shady players in this industry, and with the market tightening up, I only anticipate the shadiness to become more prevalent. Protect yourself. You are the only one who is representing yourself in this transaction. At least if you chose the closing attorney/title company, you would be the primary point of contact. However, in this deal, you are akin to the third wheel in a romantic relationship.

There is no need to go into panic mode. But I do suggest having a bit of urgency on this because once the deal is closed, it's done - nothing you can do. You could pursue legal action, but I found that this is more trouble than it's worth and not worth the negative energy surrounding this. It can end up stalling forward progress in your business. Nip this in the bud. Get some clarity. If you do not hear any word from the buyer or title company within 24 business hours, I suggest filing a memorandum of contract to cloud the title. This can be bypassed by savvy attorneys, but at least you will show up on the title for having an interest in the property.

All the best,
C.C. Garland

Greetings Jonathan, I just sent you a colleague request. I can help out with systems like this. It took me 8 years to figure this out.

Nicely done, Mark. With single-line dialing, it may be more tedious, but this is truly the best way to get the most out of your marketing list. I found that there are a lot of wasted dials when I outsource my cold calling, but it's necessary for me to scale - or else I'll be the one dialing! It's the cost of scaling. Similarly, McDonald's could have PHDs making their burgers, but their profit margins will be little to none.

Curious - what area are you in and what type of list are you dialing?

How many hot leads would you say you have? I found that it's taking me around 30 leads to convert to one contract. Over a month, I'll have 3-5 ready to sign a contract, but only 1 - 2 that actually do. So don't get discouraged if they aren't smoking hot. You just might need a few more in the pipeline. Follow-up is also crucial to converting.

Also, one suggestion regarding the KPIs. I would separate the dead numbers out into a separate KPI or combine it with the wrong numbers. This isn't crucial to your conversions. However, this can help you gauge over time how accurate your skip tracing is. I found that my "wrong number / dead number" percentage is around 2% - 5%. Pretty good. Hit rates can be high for some data resellers, but that doesn't mean anything if 50% of them are wrong numbers. This is getting in the weeds, though, and it is not mission-critical.

Again nice work. It'll be nice to see a follow-up when you get your first contract!

Thank you, Don! Your response is very much appreciated. I was raised to do things the right way. I give the same care and attention to my wholesaling business as I would if I owned a brick-and-mortar store.

@Jennifer Durkee You're welcome, Jennifer. I own a skip tracing company and I collate data from 3 main data providers, which is why the data is so accurate. I saw this as a need a few years ago and created a company for my joint venture partners and their cash buyers to use. It helps offset my marketing costs as well. I use the profit from the company to funnel back into my wholesaling company. I would mention it here, but BP is strict about users promoting their services, even if it could be of value. I wish they would be more lenient about this, but I see why.

@Lisa Treadwell It would be a pleasure to speak with your son and his roommate. There is a lot of bad advice floating around regarding wholesaling. YouTube used to be a great place to learn, but now most of the wholesaling influencers are making entertaining content rather than informative content.

As a real estate agent, you can provide him with MLS access to see what houses are sold for with cash as well as cash buyers. With MLS access, he can know exactly what he needs to contract his properties for, and he'll be able to provide homeowners with accurate offers. When he gets his first deal, he can call the buyers from the MLS to see if they'd like the deal. If he wants to be proactive, he can also call the buyers to get their buying criteria. This way, he can focus his marketing efforts only on specific zip codes or neighborhoods that the buyers are targeting. Usually, the buyers on the MLS are serious and are not novices, so they'll gladly pay him an assignment fee for providing a deeply discounted property.

Please share my contact with him. I will connect with you and share my business email so we can coordinate a time to speak.

I'll try not to get him too excited as I want him to finish his studies and earn his degree! :)

@Lisa Treadwell When I first started wholesaling in 2015, I was torn over this very same thing. My father went so far as to tell me that I was "ripping off old ladies." That one stung and stuck with me.

8 years later, this is far from the truth. As wholesalers, we are really only serving 5% of the marketplace. Most of the homeowners I work with are of sane mind and not in a desperate situation to sell. They just prefer not to work with a realtor. Usually, it's because the house has extensive damage or they live out of state. I am not looking for "motivated sellers" like most wholesalers. I want to work with cooperative people who have a good idea of what investors do and already realize the advantages of working with one.

I believe wholesaling gets a bad reputation because new wholesalers have no idea what they're doing. Some of them are so hungry to close their first deal that they have no regard for the seller's wants or needs. They'll say whatever they need to do to get the deal closed.

Also, they are not knowledgeable about marketing. In reality, wholesaling is not really about real estate - it's all about marketing. Many wholesalers, both new and experienced, are not familiar with how to target their ideal avatars. I think wholesaling is a great entry into real estate, but I'd encourage your son to learn how to close a few wholesale deals himself to get familiar with going through a transaction from start to finish, evaluate which parts he's good at, and then specialize in a particular niche in investing where he's solving real problems while developing a useful skill set.

For instance, some of the guys I started with are only working probate leads where the owners are long deceased and the properties are tied up with liens. Some of these homes are sitting in limbo for decades and the city appreciates investors that clean up the title. Other people I know work specifically on foreclosures and short sales. I, personally, decided to niche down and currently, specialize in the marketing and business operations side of wholesaling (i.e., hiring and processes). 

I close deals by partnering with investors who struggle with this. I come in with my systems and my team, and I help generate leads. My joint venture partners will focus on acquisitions and dispositions (finding the buyer) while I'll handle transaction coordination. I cannot overemphasize how important it is to have a skill set that you can hang your hat on in this industry as wholesaling only works when the market conditions are right. Hope this helps.

-C.C.