Clint Coons, Esq. and Greg Helbeck from Velocity Home Buyers tear down the facade that wholesaling is a no-risk investment, exposing the legal snares and fiscal sinkholes that might just catch you off-guard. Hear about Greg’s near-miss disaster when a contracted property burned to the ground, a story that underscores the need for bulletproof business strategies to safeguard your ventures against the unpredictable foibles of real estate.
Lastly, we traverse the digital landscape of virtual real estate, covering the essentials for managing sales and renovations without once stepping foot on the property. There’s a treasure trove of insights on direct mail marketing too, proving the worth of printed marketing in a world enamored with digital solutions. Whether you’re looking to hone your marketing tactics or fine-tune your remote investment strategies, this episode is a vault of expertise for any wholesaler eager to secure a fortune in the ever-evolving real estate market.
Highlights/Topics:
- What is wholesaling and why is it so appealing?
- Greg’s hair-raising wholesale tale of woe
- Structuring deals through an LLC
- Other risks in real estate contracts
- Wholesaling across state lines
- Motivation behind seller’s decision
- Direct mail marketing strategies for success
- Success through uncomfortable actions
Resources:
Tax and Asset Protection Events
Full Episode Transcript:
Clint: Has somebody told you that wholesaling real estate is a safe activity and you don’t have to worry about being sued? Well, that’s all wrong. In this video, I’m going to prove it by interviewing Greg Helbeck of Velocity House Buyers. We’re going to be discussing some of those things that went awry in his business, which almost torpedoed his entire wholesaling operation before it really took off. Alright, let’s get started.
Greg, hey, thanks for joining us today. We got a lot to unpack when it comes to wholesaling. Before we get started about wholesaling and the topics I want to go in today, why don’t you introduce to everyone who you are and what you’ve been doing with Velocity House Buyers, and explain to them—if they’re not familiar with wholesaling—what that actually is?
Greg: Absolutely. Thanks for having me, Clint. I’m Greg Helbeck. I’ve been a full-time real estate investor now for almost a decade. I started when I was 20 back in my parents’ basement. Over those 8 years now of doing this full-time, I’ve been able to build up a business where we’re doing 50-plus deals a year in the East Coast area, Delaware in New York, and a little bit out here on the West Coast. I’ve got a pretty decent-sized business back there.
If people aren’t familiar with wholesaling, that is our core business right now. It’s about 70% of our transactions. It’s the simple act of going out and marketing to sellers directly—mail, Internet, and whatever marketing channel you want. The key here is good deals under contract and choosing to assign your contract to an end buyer for an assignment fee versus actually buying that property, closing on it, and then either flipping it or renting it. You’re basically just flipping paper.
People get really attracted to wholesaling, Clint, when they’re new because it is perceived that you need no money and there’s no risk. But when you actually do this business for a little while, you’ll realize you do need some money to grow your business through mostly advertising. There is a risk, which we’ll get into in a minute here, on a deal that I almost got cleaned out on.
Clint: It’s funny you say that because for a lot of people who teach courses on wholesaling, that is the big draw. Here’s the […], you can come and wholesale. You don’t have to have any money, and you can start up this business.
Greg: That’s pretty damn tough, to try to start a business with no money because as you stated, advertising and structuring is important.
Clint: You touched on the subject. I want to delve into this because I think it’s really important. There is a misconception amongst many wholesalers that, hey, all I’m doing is flipping paper. I have no risk in this deal because I’ve just tied up the property under contract. You’re a client, and you’ve shared with me those issues that you’ve run into.
Before we get into talking about the market, what you’re doing right now, and how things have changed, let’s just talk about that risk. Why don’t you share with the audience things that have happened on your wholesale deals? And then let’s talk about what you did to get out of it, how you restructured, and how it helped protect you.
Greg: I’ll start with a story, and then I’ll start to make the points through that story. This was last summer in 2023. I was doing a wholesale deal with a buddy of mine. He brought me a house, and he was new. He was like, hey, listen, I got this deal. Why don’t you use your LLC to put it into a contract? You’ll find the buyer. At the closing, we’ll do a JV agreement, and we’ll split it 50-50.Â
I do this all the time. I do this with new people all the time. They come to me, and I can help them with their deals and whatnot. I was like, sure, that sounds good. I ran the numbers that made sense. It was a manufactured home out in the Hudson Valley which is about an hour and a half from New York City.Â
I got it under contract. It was a manufactured home on land, so it wasn’t in a park. I locked it up, and I found a buyer. We got the buyer in contract but wow, we were finding this buyer, Clint. We actually had multiple buyers who were going to see it. This thing was vacant. The seller was a real estate agent that lived way upstate in Rochester or something like that. It was in a lockbox. There was a lockbox on the house, so the house was completely unoccupied.
While we were doing this, the buyer beforehand or something like that ended up going inside the property to take a look at it. He turned the lights on, and then he turned the lights off. He went into one of the rooms. He left. He didn’t do any damage to the property. But after he left, the entire property caught fire and burned to the ground. It was a freak accident at this property. The whole thing burned down. The seller wasn’t living near there. I live in Nevada. I live out in Reno, so I was obviously not there. I barely ever go there. That’s where I’m from. I was like, oh my God.
Obviously, the deal did not work out with the other buyer because he was not going to buy land, and the seller was very upset. I was like, okay, this is bad, but I hope she has insurance. I’ve seen this happen with other properties before, landlord properties catch fire and whatnot.Â
Basically, I thought I was going to get out of this thing with zero repercussions at all. She inherited the property too, so it wasn’t hers. She wasn’t living there. It was her brother’s property or something like that, so I’m thinking we’re good.Â
The deal died. I got my deposit back initially because the property wasn’t delivered the way it was promised, and then I ended up getting a letter. It was an email. I got an email from her attorney whom she hired. It was a pending lawsuit for punitive damages. I was like, oh my goodness, I thought my only risk would have been the deposit. It turns out that wasn’t the case. She was trying to sue my LLC for punitive damages in the situation, which is bad if you’re a lawyer, that’s not good. It’s dangerous and scary. I had to investigate this whole thing.
I called my closing attorney who doesn’t do litigation. This guy is a very relaxed, easy-going guy. He doesn’t really get nervous and scared when deals go bad. I said, hey, John, am I in trouble here? What is the deal? He was like, dude, I’ll tell you what. I saw this document, and I was scared for you. I said, oh my God. Normally, we have deals all the time with this guy. He never gets worried. He’s like, you’re in big trouble. I said, holy smokes, what am I going to do here?
Long story short, I ended up hiring a litigation attorney. I had to get all the facts in line to prove that I wasn’t the reason the house burned down and that it was a freak accident. I took the fire report, called the fire department, got all this stuff documented, and put it in a file. I had my litigation attorney send it over to their attorney to show them he was not liable for this. It was an electrical fire. It was a freak thing. The house was vacant.Â
And thank goodness, Clint, I was able to have all my ducks in a row, and they ended up just walking away. They didn’t go after me for what they wanted to go after me for because they didn’t have a case.Â
But I’ll tell you what, if that wasn’t the case, there was a mistake I made, that buyer actually caused the fire, and I was the one who allowed them in the property, I could have easily been sued for about $200,000. That was what my attorney was telling me initially. But because we had our ducks in a row, we didn’t get hurt on that one.Â
That could have very well gone the other way, and I could have been in a serious liability situation which scared the heck out of me because I’ve probably done 200 houses before that, and never was something like that. It really woke me up, man.
Clint: I always tell people that. They say, well, I’ve never been sued. I said, that’s great that you’ve never been sued, but eventually, as you do more, that risk keeps going up, and it may happen. You still lost though, right? Because you had to pay an attorney to defend you.
Greg: Yeah, I lost probably $3000 at least. It was a $6000 retainer. Me and my buddy did it 50-50 so yes, it was a $3000 L and a lot of stress. I couldn’t sleep for the first couple of days.
Clint: That’s always the way it is the first time you’re sued. The way you structured that deal though, you did it through a business entity, correct?
Greg: Yes, my LLC.
Clint: Alright. Walk people through how you put that deal together. And then let’s talk about how you made sure that even if they were successful, you said $100,000, it wouldn’t have cost you that.
Greg: The first thing I do when I get properties under contract is I never do it in my personal name ever. It’s always through an LLC. This LLC is the one I use to flip and wholesale houses, mostly wholesale. This LLC is basically just an operating account. It has some cash in it. I make the offers to that LLC.Â
Actually, after talking to you, I want to change my strategy and get another LLC to make the offer—a different topic for a different day. But I knew when I was getting the initial garbage from the other attorney, I was assessing my situation here and figuring out what was going on.Â
They were going to sue my LLC. I said, okay, what does this LLC have? I want to know. Whatever entity you’re getting sued, you’d want to know, what does it have? What are the assets under that LLC? In this case, it was some cash in the bank. The thing that scared me even more, Clint, was there was a flip I was doing about an hour away from there with a private lender in that actual LLC, Velocity House Buyers LLC.
The main thing I was concerned about was if they figured that I had that other flip going on, and they wanted to try to use the equity in that flip to collect somehow, the lender was the main thing I was nervous about. If I lost money, whatever, but the flip, I want that lender to get paid back with his interest because that’s a personal relationship. Private lenders are a hard-money company.Â
I told my closing attorney, John, if they are successful with this, could they get a judgment on my LLC that knows that has the flip going on within a matter of a month because I was selling that property? He was like, dude, there’s no way they’d be able to do that all within a month. That would take much longer with the discovery and this, that, and the other.Â
I knew that my risk was the property that was getting flipped that was in that LLC and then the cash at hand. That was it because Greg Helbeck personally had no ties to that. It was just the LLC. I have other LLCs with rental houses in them and whatnot. They would have no idea that was something I had either because it’s all separated.Â
But if I had everything packed in one for just Greg Helbeck personally or Helbeck Holdings which has flips and rentals, an attorney would see that and go, wow, this guy’s got all this equity. He’s got these properties. He’s got cash.Â
So if you can limit what you put in each LLC, it can just make it a little bit easier and less stressful because most likely, if they’re going to go after that LLC, you know what you have in there and what your risk could be, if that makes sense.
Clint: That’s why we use strategies where, in your case, you don’t keep a lot of cash in that LLC because that’s your deal-making entity. We talked about this. Do not hold assets where you conduct business. You make some money, you pull it out.Â
Greg: Yes.
Clint: Now, about that property deal. Here’s something that’s a really great point for the people that are watching this right now. You never want to flip properties in your wholesaling entity as you understand now. That happens. You think you’re going to wholesale, you end up closing it out yourself, and you’re flipping it. You need to set up a different flipping entity because you got lucky.
If I were advising the seller of that property, what I would have done is move for a prejudgment writ of attachment against your house and follow lis pendens on it. It prevents you from selling that property.Â
In fact, that is actually what has happened to a client of mine here in Tacoma, Washington. He had three flips going on, and the attorney threatening lawsuit threatened to follow lis pendens. He was in the same situation as you, two hard money lenders that he was working with personal guarantees and these hard money loans, confessions of judgment, all of that. If they dropped the lis pendens on there, that thing would just roll right up on him personally. There are a lot of risks there.
You got lucky, obviously, because their seller’s attorney didn’t think about doing this. What it could have done is force you to settle because now they know, hey, we’ve got him. He wants to sell this deal. If we’re applying pressure as HML—he’s going to start applying pressure—he’s going to buckle. Good on that, but asset protection is important. We split those up.
You don’t have to go really in-depth, but what are some of the other things you’ve run across with your real estate that the viewers who are watching this right now aren’t appreciating the risk that comes from investing that has affected you?
Greg: I’ll just give you a really straightforward one. I’m a landlord in New York State, which is one of the hardest places to evict when you need to evict. I’ve had evictions that have taken two years. I’ve had to give tenants an unreasonable amount of money just to move out of my properties. Those ones are bad.Â
I’ve had many friends who’ve had a lot of New York attorneys from the state suing and whatnot just like California where I used to live. I’ve had friends who have slips and falls at their flips and get sued.
I had another buddy, this is an interesting one. This was in Connecticut, which is right next to New York. Some of my best friends in the business had a situation where they went into a contract to buy something in Connecticut, and they didn’t read the contract correctly. The liability on the buyer was not the earnest money getting defaulted. It was getting sued for the purchase price. They ended up canceling this contract because there was an oil tank that was not disclosed. They got sued for the entire purchase price, and they had to settle for $20,000.
There are a lot of things, mostly, Clint, around contract law with me that you need to know that I have. Like I said, thank God with the one on the firehouse. We had all the evidence to support the situation with me not being liable.Â
But mostly eviction stuff, long evictions, and slip and falls with flips, buyers coming back to you. In New York, this doesn’t happen as much but in Nevada and California, this happens more. If you don’t disclose something on a flip and don’t do it the right way, you can get sued afterward because there’s a lot of gray area with that like, oh, you didn’t say this wasn’t working. I’m going to sue you for $10,000. You thought you sold the flip and now all of a sudden, you’re getting sued for $10,000. You got to settle for $5000.Â
Thank goodness in New York—which I guess is one of the hardest markets to wholesale and which we’ll get into—there’s this thing you can do where if you don’t want to fill out a seller disclosure form, as the seller, you can give the buyer a $500 credit, and then they take all the liability. We do that honestly on every project. It’s crazy. There are never ever, after the fact, any issues if you give them a $500 credit.
Clint: That’s like buying an owner’s policy or when you sell the property down to the owner’s policy. I forget what it’s called where you cover all the appliances and things like that.
Greg: It’s like a home warranty for $500. It’s unbelievable.
Clint: That is pretty cool.
Greg: That’s the one good thing about New York, Clint. That’s the one good thing that I agree with where you use the $500 and go away.
Clint: I know, I was approached last week. I got a call from a broker from California. He’s saying, hey, I know you buy real estate, and I’ve seen you on YouTube. I got this property, this residential building coming up. It’s got maybe 40 units in it. I just wonder if you’d be interested. I said, where’d you say it was? California? Los Angeles? No, thank you.
Greg: No way.
Clint: He’s like, why is that? I said, you know the politics in that state. I’m not going to get stuck in a property where I can’t evict anybody, and I have to give away free rent. No, not happening.
Greg: Did you see the new law that’s going on in Santa Monica? I just saw this last night where basically, you have to pay tenants $18,000 to relocate or something in cities in Santa Monica. That’s for a studio, and then a one-bed is $25,000. I think if it’s a two-bed, it’s a $30,000 relocation fee.
Clint: That’s just going to add to the problems. They pass this garbage. If I owned property there, I would convert it all into condos. Just start going back into the condo conversions. In fact, I should cut a video on doing condo conversions and how to structure those again because they’re going to come back into play. Why rent and take on that liability? Just sell it and you just increase more of the housing problems they have because of stupid laws like that.
Greg: It’s crazy. That’s why I don’t own property in California as a landlord.
Clint: Exactly. Stay out of the blue states is what I say, or the cities.
I know people want to hear about your wholesaling as well. I want to transition into your business because you’ve done a ton of deals, and you’re actually there. What’s even more interesting is that you live in Nevada, and you’re wholesaling all the way across the country. How about we first talk about how you are able to wholesale in New York, in Missouri, and those other markets you’re in when you live in Nevada?
Greg: Great question. People ask me that a lot. The main thing I will tell you is that I am originally from New York. I grew up there. I started the business when I used to live there. This was back in 2017.Â
I had a very good infrastructure set up there with contractors, buyers, boots on the ground that could go see properties for me, and attorneys. I have a great infrastructure set up there. With my phone, I can make calls whenever I need to and have people go to properties for me. I have people who work for me full-time on my team. They can deal with all the sellers.Â
Anytime, I look at the business in terms of, I want to do it virtually and don’t have to go there. I know you live in Washington and invest out of state as well for the most part. I look at, what are all the bottlenecks that could be an issue by doing this virtually and how do I solve each bottleneck?
An example would be contractors. How do we fix that problem? Even if I lived in New York, Clint, I probably wouldn’t go to my projects because I absolutely can’t stand going to see houses. I hate it. It’s a time suck. I just can’t stand doing it. I don’t like driving there and driving back. It’s just not a great use of time at this point. When I started, it was different.Â
If we’re doing flips or if we’re doing wholesales, we send the buyers to the property. Obviously, we’re under contract with a binding agreement, so the buyers can’t circumvent us because we have all the paperwork in place to avoid that. That’s pretty much how we sell the properties in terms of disposition. We’ll get the property under contract with the seller virtually, sign a DocuSign, and have the attorneys involved.Â
I’m not there, and my acquisitions guy lives in Delaware, so he doesn’t live there either. He’s ironically from New York. We get a housing contract, a binding agreement, and a deposit in there. When we go sell those deals virtually now, if it’s a vacant house, there’s access. There’s a lockbox. They have to let us know when they’re going, take a picture before, and take a picture when they leave, so we know they locked the house up.Â
But if the owner is living there or if the owner is living in the house and we have to have buyers go in there, we’ll literally send the buyer there to meet the seller. Thankfully, because I’ve been doing this for so long, all the buyers know who I am. I have relationships with these people, so 99 out of 100 times, they are never going to try to snake me out of a deal, talk to the seller, and be like, oh, this guy’s wholesaling me the house.Â
Thank goodness, we have good buyers who don’t really go behind our backs and do sketchy stuff. We literally just send the buyers right to the house. They’ll meet with the seller, go take a look, walk the property, and let us know what they want to offer. We’ve been doing it so long virtually, especially when COVID happened, we had no choice. Our new standard of doing business is like, okay, we’re not going to physically be there. We’re going to send the buyer to the property.
Clint, if we have a situation where I think it’s going to be a little hairy where the sellers and the buyers go in there—usually the seller is a little sketchy—I’ll have one of my friends who I know from back home go there, and he’ll be like a traffic conductor. He’ll go there, keep the peace, and make sure there’s no monkey business going on. But literally, maybe 1 out of 10 deals, we’ll do that because for the other 9, it’s never an issue for us. We’ve just gotten used to not having to be there and having the proper infrastructure set up with buyers, contractors, and obviously, contracts, so we don’t get snaked to where we can do it virtually.Â
I or my acquisitions guy going to that property physically at this point doesn’t add a lot of value to the process. It doesn’t really do anything. If I go and show a buyer a house, it’s not going to impact their ability to buy it from me because they’re going to look at the house, the house is what it is, and the numbers are just the numbers. Me going there or even having […] go there would just be silly at this point. We’ve just done it so much, and we’ve gotten so desensitized to it. It’s just our standard way of doing business.
In terms of doing the flips—because we do some house flips as well, and I do rentals—I have a really good contractor who’s my number one guy who I have a great relationship with. He knows that I live in Nevada and that I’m not going to be inspecting these properties.Â
Before he ever gets to paying—we do payments in draw schedules, so he’s never ahead of me or whatever—he sends me videos. I look at the video and make sure everything is done the right way. If there are changes, I need to have him make changes, and then I pay him electronically.Â
We always do this. When we’re done with the house, I have my real estate agent who’s there walk the property a final time, make sure all the stuff is done correctly, and then we give the contractor’s final payment.Â
Between real estate agents, buyers, contractors, and just being around that market for so long—I’ve been doing business there for so long—it makes it a lot easier for me to not have to live there. If I was starting from scratch and wanted to go wholesale houses in Minneapolis, Minnesota, that’d be a lot harder now because I don’t have any team or infrastructure. I don’t know anyone there. I’d probably have to go there a few times to get face-to-face with people to get those relationships off the ground to overtime and not have to go there as much. The fact that we’ve been there for so long is the reason why it’s so easy to do it virtually.
Clint: That’s what I’ve told people in the past. We used to wholesale more than we do now, but what I found is that if you don’t have the infrastructure, haven’t built that up, don’t know the area, or don’t have people there that you can rely upon, you get screwed so many times.
Greg: It’s so hard.
Clint: You got to be realistic about this type of business.
Talking about that now, with the market the way it is, we have interest rates that have gone up. You keep hearing in the news that people are just sitting on their properties and don’t want to sell because they can’t turn around and buy something else, and they’ve got low-interest-rate mortgages, where are you finding these sellers, and what’s motivating them?
Greg: I can talk about this for four hours. I love this. Marketing is my favorite as you could probably tell. Personally, my favorite way to get deals is through direct mail. The reason I like direct mail is there are many ways and reasons.
The first thing is that you can control who you’re sending the message to. If you’re doing Google Ads, for example, you’re going to target an area and get people with no equity. You’re going to get mobile homes that you might not want. You’re going to get whatever listed properties. But with direct mail, I can control that list of people I’m going to send to.Â
If I’m mailing somebody who’s owned their house for 20 years, and it’s a 3-bed, 2-bath ranch in a certain ZIP code, when we get calls, we know those calls are coming from that area. We can control the type of prospects that come into our funnel.
The second thing—and this is why people don’t like direct mail—is the response rates are so low. A quarter of a percent is generally the response rate for us. With the response rates being so low, people get scared because it’s expensive, and they don’t get a lot of calls. But the way that I look at it is if the response rate is that low, when the people actually call to do a deal with you, they’re generally really motivated if they’re going all the way through that funnel.Â
Most people throw that mail out. The people who actually call are serious because they see the postcard. They’re like, oh, wow, I know this guy’s buying houses for cash. I’m assuming he’s not paying top dollar. It’s the obvious thing.Â
The actual leads we get when they don’t disqualify themselves are very motivated. They’re almost pre-vetted. They’re like, I know, you’ve got to make money. I just know with direct mail, if I spend $5000 in ads, we’re going to generate at least $20,000 worth of revenue. That’s a 4:1 return. We just keep doing that over and over again.Â
For those reasons, I think direct mail is the best, at least for our business. The other thing that we will do sometimes is Google Ads. We’re going to bid on keywords people are going to search. They’re going to come to our website. They’re going to fill out a form.Â
Those can be pretty good, but a lot of times, those people are less motivated than direct-mail people because they’re just trying to get an offer on their house, they’re curious, or whatever the case is.
Our whole business is basically built upon direct-mail marketing, and it still works in 2024. People hate it for some reason. They think it’s crazy or too expensive, but I have the data to back up that it works in multiple markets.Â
This is not just in New York. I’ve done this in San Diego, Reno, and Delaware, so this channel always works if you work it consistently because most of our deals from direct mail, Clint, don’t come off the first thing. They get the sixth postcard.Â
That’s another thing that you mentioned. If you’re mailing somebody so many times, it’s just a matter of timing. In the first postcard they get, their tenant is paying rent, but in the fifth postcard, their tenant hasn’t paid rent for two months, and then their motivation level is rising because they don’t want to have to do an eviction, especially in New York.Â
They call us on the fifth mail. Hey, I see you guys want to buy my house. My tenant hasn’t paid rent for two months. I already know what you guys are about. I’ve seen your website, whatever. It’s more of a warmer lead at that point because you never know when they’re going to sell. But if you mail them consistently, it’s just a matter of time until somebody in that pool of prospects is going to call in with a problem you can solve.
Clint: You kind of answered one of my questions about motivation. It sounds like you’re targeting people who have investment properties, not necessarily homeowners but landlords. You’re looking to take their properties like you’re solving a pain point for them. They’re tired of being a landlord and tired of having the tenants not paying as you just described, so they’re motivated and want to take their money and put it somewhere else.Â
Greg: Correct. That is the big thing. All the rentals I have—I think except for one of them—were tired landlords that I got direct-to-seller where they had tenants inside. These are my personal rentals. They didn’t want to deal with doing an eviction, the property was beat up, and they wanted to get some cash out of that thing and just move it into something else.Â
I basically bought the property with the problem tenant inside and figured it out afterward. I was able to add a lot of value to them because they just didn’t want to be bothered with it and because they’ve owned it for so long. They know that the eviction process stinks in New York, so they assign value to that cash offer because of the convenience.Â
These people are smart people, too. They’re not knuckleheads. They know they’re going to take a discount for convenience and the fact that I’m willing to buy it with their tenant. Most people in my market don’t buy with tenants, but I know the risks and I know how to get them out usually, so I have no problem doing that at the right price. When I can make a cash offer and say, yeah, I don’t need to see it and you can keep your tenant inside, that’s very appealing to them. It’s very, very appealing.
I had a property, one of the best rentals I have right now. It took me two years to evict them, but before I even bought the property, they hadn’t paid rent for two years. They were living for free for four years. The guy couldn’t believe that I bought a thing I hadn’t seen with the tenants inside.Â
I’m like, well listen, at $125,000 when it’s worth $270,000, of course, I’m going to do that. I didn’t tell him that honestly. I was just like, yeah, sure. The tired landlords, I’ve found that you can make really good deals with.
Another thing too, I did this on another condo I bought two months ago. Tired landlord. This is crazy, by the way. This guy’s a mortgage broker, a super sophisticated guy, and makes a ton of money. He owner financed me a condo with a bad tenant that I’m dealing with right now, 0% interest, and he’s a mortgage broker. Because he didn’t want to be bothered with the property, I gave him market value. I gave him $20,000 down. He took back a five-year balloon with 0% interest.Â
The reason I did that deal is because I knew like, alright, every time I make this guy a payment, I’m paying down the principal. There’s no interest. Then, in five years, I’ll either cash them out, refi, or sell it, and I’ll have all that equity there. I didn’t overpay for the property, I just paid at market value.Â
There are a lot of ways you can structure these deals when you have a tired landlord because usually, they either want to get cash fast or just don’t want to be bothered with their tenant. They might not want to pay huge capital gains situations. You can owner finance it to them, and then they’re going to receive their income over time.
At the end of the day, I always tell people, this business is just all about solving problems. If you can get really good at solving people’s problems, especially in the off-market world, you’re always going to make money. It’s just going to be impacted on your ability to solve their problems and see what’s going to be a good fit for their current situation.
Clint: I’m going to circle back on when you talked about the postcards that you’re dropping, and it takes six, you found. How are you spacing those? Is it one a week, or do you send them a new one every other week? Have you found that there’s a timing there?
Greg: Let’s say we’re doing 10,000 postcards at once for January, for example. We’re going to drop 2500 postcards a week. That’s mailing number one because then all those prospects have received at least one marketing message. And then I wait one week, so there’s a space in between, and then the next week after that, so it’s every five weeks. Those 10,000 people are going to get that same message sent again 2500 a week because I don’t want my phone systems getting clogged up with 10,000 people calling in verse. I’d rather space it on a weekly basis.Â
Every prospect gets a new message every five weeks because I’ve found that when you do it in that sequence, you’re staying around to where they’re not forgetting about you, but at the same time, you’re not flooding them with a message where once a week, they’re getting a postcard.Â
Odds are, on a weekly basis, stuff isn’t going to change, but on a monthly basis, there’s a better chance of a problem germinating and getting bigger. If you hit them once a week, they know what’s going on, but if you wait every five weeks, I’ve just found that, through tracking our stats, to be the most profitable way to do it. I have friends who do it every 90 days. I’ve just found every five weeks has generally been what’s worked for me in terms of getting the best […].
Clint: But for each of those postcards, there was a different message, or is it the same message?
Greg: If one postcard performs good, I keep doing that until the stats get worse. I want to keep doing what’s working and not try to reinvent the wheel. If I use postcard A, let’s say it’s a handwritten postcard or whatever, and that’s working well, I’m going to keep mailing that until my stats diminish.Â
It’s funny, with direct mail. People think you have to have some fancy message and have all this professional lingo on there. Those have always performed the worst for me. The best-performing postcards are handwritten postcards. They’re kind of ugly, and they stand out in the mail. We’ve always found that that type of marketing message, for some reason, resonates with the people that we do business with.Â
I used to be really into copywriting, Dan Kennedy, and all this stuff. I’d write these sales messages on these postcards, and no one would call me. I would write a whole paragraph, and we’d get literally no phone calls. And then I’d go send out an ugly postcard that looks like a sixth grader wrote it, and I get all these calls.Â
I’m just like, you know what, I’m going to let the market let me know what’s working. I’m going to stop doing this crazy Dan Kennedy marketing crap and just do what works. That’s what’s worked for us. It’s these ugly, handwritten postcards from any vendor out there like Yellow Letter HQ or Open Letter Marketing. They all have that product that you can buy from them.
Clint: What do you say? Hey, I’m interested in buying your property. If you’d like to have a discussion, just give me a phone call.
Greg: Yup. I am a cash buyer. I’m looking to buy your house. If you’re thinking about selling, give me a call, and we can talk about your options. Something simple like that.Â
You don’t want to make the message to be like, oh, I can buy your house creatively. Just, hey, if you’re looking to sell your house, give us a call. We can make you a cash offer and see if it’s a fit.Â
You want the calls to come in. At that point, you go from marketing to sales because a lot of people, like I said, make some crazy postcards up. I can do a wrap-around deal with you, and the seller doesn’t know what that is and a confused mind always says no, so we just keep it super simple.
The main thing—this is a huge takeaway for people if they want to do direct mail—is I used to overtrack everything. I would over-track all these different weird metrics. The number one thing that matters with direct mail is the return on ad spend. How much are you making compared to how much are you spending? If you’re a 3:1 or higher which means every dollar you spend, you get three back, that’s definitely successful. You obviously can do better depending on your skill set.Â
That’s the only thing that matters with mail. Don’t care about the response rate. Don’t worry about what your cost per lead is. You just want to look at what the return on ad spend. That’s how you can actually scale that because if you know you get a 4:1 return on mail, that’s the only thing that matters. That’s any marketing. You’ve been in business for super long and done paid advertising. Return on ad spend is the only thing that really matters because that’s how you know if it’s effective or not.
Clint: When those calls come in, do you handle all those, or do you have a team?
Greg: No, I have a team. What we do is when those calls come in, it goes to a 24-hour voicemail recording. There are two schools of thought. You could answer the phone live, but most of the people calling are pissed off. They’re like, take me off your list, I don’t want to sell or whatever. You’re going to kill your sales teams like Mojo.Â
What we do is I have someone who works Monday to Friday from, I think, 8:00 AM to 7:00 PM, and he’s responsible for the new phone calls. When something goes to voicemail, it triggers CallRail, which is what we use. It’s a software system.Â
The seller generally leaves a voicemail. He’ll hear the voicemail. If it’s take me off your list, he’ll deal with that. But if it’s a real seller, because my voicemail says, hey, if you’re thinking about selling your property, please leave your name, your best phone number, and the property address, and we’ll call you back right away, which is true, we call them back right away from 8:00 AM to 7:00 PM, Monday to Friday. We’ll get right back to them.Â
We’ll get all their information first. We like them to leave a voicemail because we want to get their name, their address, pull the property up, and see what’s going on. Is it a single-family house, a duplex, or whatever?Â
When we call back that seller, we know what’s going on. We know their address. We know who we’re talking to. We can really focus on how we solve their problems. First of all, do they have a problem that you can solve? If that is the case, how do we solve their problem? I’ve found the voicemail system where you send everything to a voicemail to screen it has not dropped our return on ad spend.
We used to hire a third-party call center to answer the phones. It was just chaos because the company would answer the phone, they’d get chewed out, and they’d put garbage notes in our CRM. I’m like, this is super inefficient. I’m a big systems guy, so I’m like, this is just a broken system. We’re going to do what we were doing before. As long as our return on ad spend is there, that’s all that matters at the end of the day.Â
I learned that from a guy who’s done 2000 wholesale deals. He loves the voicemail system. I’m like, hey, if he’s doing it and it’s working, clearly, there’s some validity to that system.
Clint: If somebody wants to say they want to get started in wholesaling or maybe they’ve started but are just not finding traction, as an expert, what would you tell them? What would be your three points or things they should focus on right now to help change that?
Greg: That’s a great question. I hear this a lot. I would tell them this—and I wish I knew this when I got started, Clint—if you’re not having success wholesaling, flipping, or doing any sort of off-market endeavor, you have to go back and audit your funnel, which means that if you have not had a lot of success wholesaling, the first question I would ask if I was advising them is, hey, last week, how many offers did you make? We’re going to find a number. The second question I’m going to ask is, hey, last week, how many leads did you generate?Â
Usually, when the people who don’t have a lot of success answer that question, they say, I don’t know, or one. I’m like, okay, so you haven’t had a lot of success wholesaling, you’ve made one offer. You’re going to have to make 25 offers at least to get something accepted.
The problem isn’t that wholesaling is hard or that you’re bad at wholesaling. The problem is you’re not focused on the activities that move the needle in your business. I tell every new investor that if you want to be successful, you could just get in the habit of making one or two offers daily from two or three leads that come in. You can keep those numbers consistent, and every day you get a couple of leads, you make a couple of offers. You compound that over 90 days, and if you make 35 or 40 actual off-market offers on people that call them from your marketing, it would be very hard to not buy a house because it’s just a numbers game at that point.Â
But the new people who don’t have a lot of success or the ones who are confused don’t understand you have to focus on the things that matter. In this case, if you’re going off-market, whether you’re wholesaling, flipping, or doing the BRRRR, it’s leads, offers, contracts, closings, and whatever exit strategy you’re doing.Â
You got to focus on the things that make you money because a lot of new investors will just watch YouTube videos all day, make their business cards, call real estate agents, and deal with listed properties.
I have this guy. He’s a great guy. I’m not going to mention his name. He hits me up for all these garbage deals that are listed on the market. I’m like, dude, just spend your time marketing to sellers, cold calling, doing direct mail, and making off-market offers, and you’ll wholesale me a house, I can guarantee it. I’ll pay you a great price.
It’s easy to go on the MLS, try to lock up a garbage deal, and sell it to some knucklehead. It’s not easy to cold-call someone and see if they want to sell their house. There’s resistance there. People don’t want to deal with the resistance. Ultimately, that’s why they don’t have success because they don’t focus on the things that are uncomfortable that generate the money, which is making offers, getting rejected, getting leads, and talking to strangers. That stuff’s uncomfortable if you’re brand new, but it’s uncomfortable for a reason because it’s what’s going to bring you the results.
Clint: The rejection thing is what brings a lot of people down. They’re like, this is not going to work, no one wants to take my deals. It’s like when you’re in college and we’d have […] party. You’d go out and talk to as many girls as you could because finally, someone’s going to be interested in you. Eventually, it’ll work.
Greg: A broken clock is right twice a day.
Clint: Exactly. That’s true. There are a lot of people out there in the industry who put on classes and teach about wholesaling. What are your thoughts when it comes to the education side of it?
Greg: I think there’s a lot of good people out there who really have good intentions and integrity. I think there are some bad apples out there who just talk out of their butt quite frankly, and they give the wrong information.Â
My advice to somebody who wants to follow a guru is to make sure that the guru actually has a business that’s making money wholesaling and their business is not telling you how to wholesale. That’s step one.Â
Step two is just study that guru. Don’t listen to the other guru. Just focus on one person who’s actually successful and study their material versus trying to learn something from XYZ person, then the other person. They’re going to say things that are going to be conflicting, most likely. Find someone who’s actually doing the business and has a real wholesaling or flipping business, and they also happen to educate. Just make sure they’re legit and then follow their information to the letter. Don’t get shiny-object-distracted. Steve, the wholesaling guru, said to do this on the MLS, and then Randy said—I’m just making names up here—to do SEO Marketing.Â
No, you’re going to go nowhere with that. At the end of the day, if you just make enough offers and get enough leads, you will have success.
I always tell new investors—they’ll come to me, hit me up on social, or whatever—listen, the only thing that matters for you right now is doing your first deal to see if you even like this business.Â
You’re not going to be a multimillionaire overnight. You’re not going to have $100,000 in the bank. What do you need to do within the next six months to get your first deal done so you can determine if you enjoy this business or not? Because a lot of people don’t do a deal. They’ll make $10,000 and say, that completely sucks, I don’t think I want to do this. Now, all of a sudden, they can do something else versus thinking they’re going to be the next big wholesaler.Â
You got to really test the business out. You got to go all in. You got to get your first deal. Most likely, you’re going to like your first deal and want to do your next deal, so it’s going to probably benefit you.Â
But people are like, oh my God, I need my LLC. I need to have my trust set up. It’s like, dude, you have literally $500 in the bank. You don’t need a trust. You need a trust when you start getting some wealth. You don’t need business cards. You don’t need a website. Just focus on making offers. When you make offers, then you can obviously set up the LLC and buy the property. You can make an offer, put it in an LLC, and then close and all that. Be there on day one.Â
Clint: I know. A lot of people, like you stated, get hung up thinking they need to have all the fancy stuff in order to make their business work. The reality is that’s just an excuse so you don’t have to do the work yourself, I find a lot of times.
Greg: A hundred percent. It’s the fear of rejection. They don’t want to get rejected by a seller. The thing is—I know, I’m on a real high horse here because I’m so passionate about this—people take it personally when they get rejected by a seller. You have to separate that. You can’t ever let a seller impact your emotions when you’re trying to buy their house.Â
If they say no to your offer, they’re not saying no to you as a person and your moral compass. They’re just saying no, that offer doesn’t solve my problem. When people can get over that hunch of like, oh my God, it’s not no to me, it’s no to my offer, they’re just going to make a bunch of offers because they know it has nothing to do with them personally. It has everything to do with their situation and the fact that your solution doesn’t solve their problem.Â
But the good news is, if you do enough marketing, you’re going to find somebody who has a problem that you can bring a solution to and hopefully make a profit.
Clint: Well said. The last thing I’d probably put on that too is that the numbers have to work. Don’t chase a deal just because you want to do a deal. Because that’s where people end up getting hurt.
Greg: You’re a deal finder, not a deal creator. You have to find someone with a problem and then solve it versus trying to create a problem that’s not even there.
Clint: That’s perfect. If someone wants to get a hold of you because you have deals and they’re interested in it, where would you tell them to go?
Greg: I would tell them to follow me on Instagram. That’s probably the best way they can see what I’m about and see our podcasts and stuff we put out. So, grego_37 is my Instagram handle. They can shoot me a follow there and send me a message. Happy to help them out in any way I can.
Clint: Awesome. I’m going to put that in the show notes as well. Thanks for taking the time. I thought this was going to be 30 minutes. We went for almost an hour. You deliver great content, and I really appreciate you coming on and sharing that with the viewers.
Greg: Thanks, Clint. I appreciate it, man.
Clint: All right. Take care, bud.
