All Forum Posts by: Tucker Cummings

So are you doing a BRRRRnB type strategy? Buy, Rehab, Rent, Refinance, Repeat, AirBnB.

It sounds like time is the important factor with your partner, not money. If so, I think you can easily show that the fixer uppers will be quicker.

For example, you buy turnkey with a down payment, there’s going to be a several year period that it will take to recoup your investment to do it again. If you do BRRRRnB strategy, you can recoup your total investment in 6 months when you refinance and do the entire thing again with the same money. If you’re fortunate enough to do it through delayed financing, you can recoup your investment in as little as 3 months.

Having said all that, you mention you’re only having to put 5-10% down on deals, which is pretty amazing. If that’s the case, you might want to just do the turnkey route, because it will be way easier to break even on a 5% down payment than a 20-25% down payment.

It’s tough out there, but it’s very possible. You might have to look in areas outside your market.

For example, I live in Raleigh NC, one of the hottest RE markets on the US right now. It’s impossible to pick up cash flowing property due to elevated prices. So I went to Fayetteville NC where the rent to price ratio was great. I was 26 when I started and now I’m 28 with 13 units cash flowing 5K/month.

Couple things you can do:

1) Network with as many wholesalers and real estate agents to start building your pipeline of deals.

2) Can you send out letters, cold call, door knock, etc to find deals? What kind of sales and marketing levers can you pull?

3) While your building your deal pipeline, do what you can to build up your cash reserves and personal cash flow. That way when there’s a deal, you can pounce on the opportunity.

Real estate deals comes down to two things: Finding deals and Funding Deals.

If you can’t build up the reserves, can you partner with someone? Be a mentee under someone in the game, add value to them by being their assistant, or doing a task involved in the deal in exchange for equity. Maybe there’s a family member that wants to join in with you.

It’s possible, just have to get creative and put in a little sweat work. Good luck!

I love what @Jody Sperling said. I grew up with people always saying “you shouldn’t talk about money.” Then I got into the real world and realized I don’t know how money really works. I knew nothing about investing, leverage, cash flow, budgeting, value creation, etc. All I knew was to spend less than I make and put it in the bank.

I’m also super thankful that I stumbled onto real estate and learned all these concepts. I thought I was going to work til I was 65, hope I’d have enough in my 401k, then retire. But I attribute the fact that I don’t like being told what to do and questioning everything to finding the concept of financial freedom. Instead of being 65 and able to retire, I did it this year when I turned 28.

I actually think the reason why we have so many financially illiterate people is because nobody talks about it. Maybe if we stopped being so afraid to talk about money we would stop being afraid of the scarcity of money itself

@Matt Leber

I agree with you on having some paid off properties, but you may want to still set a metric to shoot for. I would say you wouldn’t really want anything less than 4.5% for a paid off property. Reason being that you could either put that into dividend stocks or overfunded whole life insurance policies and easily make that kind of cash flow yield without the landlord headaches. If you’re giving up the leverage advantage of real estate, these might be good alternatives.

Here’s simple math.

You have 68k equity in each, or 136k equity. You make $2400/year in cash flow… at best.

(2.4k / 136k) x 100 = 1.7% Return on Equity.

Those are some sh**ty returns. Sell and 1031 exchange.

If y’all are close on ballpark price, I would do it. But I would write it into a contract what it’s for and that it goes toward the purchase of the home. Also I would make it go through escrow.

So pre-screen the appointment by saying, “if I come out there and we agree to a price, are you prepared to sign an agreement to sell the property to me?” If they say yes, then you say, “great, so that we don’t end up wasting each other’s time, I’d like to know first if we’re even close on price. What do you want for the property?” Turn your sales hat on and get the number out of them, don’t give your number. If you’re close, follow through with the appointment, if not, it’s ok to walk away.

Lol it sounds like you’re not too fond of sales people. 

@Jay Hinrichs I'm sure we have some overlap in our thinking, some people have an innate skill of selling, some people have to learn it. I think it's still something anyone can be taught and honed over time. It's the same as having a skill for being a great quarterback. Some are born with talent to be great, some work hard to be great. But you can't beat talent that works hard.

You're definitely right about the top wholesalers though and the intense marketing budgets. I have no desire to be at that level, but I do have a business that helps me find deals on a regular basis. I mostly just use it as a way to help me find properties to keep until I can comfortably retire from my W2, and wholesale out deals that don't fit my criteria along the way. I know wholesalers get a bad rap (which I believe is due to youtube gurus saying how easy it is and you wind up having teenagers locking up preforeclosures with no idea what they're doing), but the ones worth their salt are definitely earning their assignment fees.

I actually think STR is the way our society is going. People like being mobile, to be able to pick up and move, not own anything, not be tied down to one place, etc. I don't think it's smart, but that's beside the point.

I think you’re ahead of the curve if you start implementing assets that accommodate that lifestyle. I have one AirBnB that specifically targets traveling nurses for months at a time. Sure you might have some hurdles, obstacles to overcome, but just be prepared for them and implement ways to overcome them. Great business owners are great problem solvers, so be a problem solver.

First criticism is that you say you're doing nothing wrong. If you were doing nothing wrong, you'd have results. But that's ok, just be real with yourself and your performance. The performance hasn't been there, so look at what you've been doing and pinpoint the break in the system.

Wholesaling/dealfinding is like any other business... it's just a system that you continuously refine and make better. First let's look at the different steps in wholesaling:

1) List Building - This is where you're pulling the lists of preforeclosures, probates, out of state landlords, divorces, tax delinquent, expired listings, etc. You could also be Second piece of this is skip tracing the data to find the contact information.

2) Sales & Marketing / Lead Generation - This is where you could be doing several things to reach your customers. Usually it boils down to either passive outreach (meaning you pay money and it markets in the background) or active outreach (usually lower cost but takes your time for outreach). Passive methods include but aren't limited to Google PPC, SEO, Direct Mail, TV or Radio Commercials. Active methods include but aren't limited to cold calling, texting, emailing, and door knocking. A healthy mix of both is the best way to pump up your pipeline and lead generation.

3) Contract Conversion - Once you get a lead, it's going to come down to your sales and negotiation skills to find the motivation of the seller, the condition of the property, they're timing, and purchase price. Negotiation skills are outside the scope of this post, but sales is a skill anyone can learn and SHOULD learn. Secondly, you're not going to convert everyone right away, so make sure you have a good follow up system in place to continue your outreach to them.

4) Disposition - Now is where you need to decide if you're going to keep it, assign it, flip it, build on it, or something else. Ask yourself what is the highest and best use of this property, then monetize the lead. Always continue building your buyer's list and your network so you can push up the prices on your deals and get better returns from your marketing dollars.

That's pretty much it. 4 steps to wholesaling/deal finding. Now that you know this, where are you falling short? 

Do you have bad lists? Try list stacking, which is where you target people that fall under multiple lists. For example, instead of spending time reaching out to a vacant property, reach out to a vacant property owned by an out of state landlord, who came into this property by probate and is now facing foreclosure. Or maybe you're already list stacking, but you have bad phone numbers so you never connect with homeowners. Try a better skip tracing service. Or maybe its just the total volume of prospects on your list - buy more data.

Maybe it's your marketing. Are you only reaching out to people via direct mail? Maybe you need to try getting in touch with them directly through cold call, texting, or some other method. Open up more funnels that will produce additional leads for you. 

Or maybe you're getting people on the phone, having tons of conversations, but just not getting the deals. It might be your sales skills. For example, a cold calling rule of thumb is that per 200 conversations, you might get 20 people say "yes I'm interested in an offer" and half will say "I'm willing to sell at a discount" with 1 person selling at enough of a discount there's room for an assignment fee, flip profit or BRRRR. It's just going to take time. I've been in sales and marketing my entire career, so this step is more natural for me. But there are countless books out there around sales, marketing, negotiation, etc.

Lastly for dispositions, it sounds like we're not even getting to this point so I won't touch on it. But people are looking for deals all over the place right now. If you find a deal, someone will buy it through assignment or partner with you... granted it's actually a good deal. You can find people on BiggerPockets, Facebook, your local market, everywhere. There are investors all over the place.

A word of caution, I don't advise wholesaling unless you have the means to close the deal yourself. The last thing you want is to lock up a contract with an owner in distress only to realize you can't buy it or wholesale it. Wholesaling is in desperate need of regulation, so just be ready to close the deal once you get one.