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David: Alright guys, welcome back to the discount property investor podcast. I am your host David Dodge coming to you today with a good buddy of mine, Billy Alvaro. Billy's up in the New York area and he's in one of my masterminds. I love connecting with this fucking guy. He is such a good guy, so fun to talk to, has the best attitude, gratitude is the attitude. I love it. This is my man, I love this guy so I'm so happy that he's here. I'm grateful for your time Billy and I just wanted to bring you on today and talk a little bit about the current state of the real estate market, right? You're up in New York, you guys are getting hit hard with Covid, everything shutting down, craziness.

Billy: Absolutely insane.

David: Yeah, but I know that you have been through hard times in the past and I am confident that you are going to you know, be just fine with what's going on, but again, thanks for coming on the show. How the hell are you bro?

Billy: Bro, your energy, I feel it. Feel that shit bro. Yeah, I'm doing good, appreciate you having me on dude, it is always good to reconnect with you man. I mean, we are in one of the same mastermind together. We have a great time, we get together once a year, it is- what do we have now? Like 40 guys in that mastermind?

David: Yeah, I think 40. I think they're trying to cap it like around 50 or 55, and I love that it's smaller you know, so I think right we're probably around 40.

Billy: It's more intimate.

David: And that's the multipliers guys, if anyone's curious on the masterminds I'm in. I'm in the multipliers mastermind, great mastermind. I'm also part of the Inner Circle Elite. These are two of the three masterminds I'm in. I'm in a third one too that's local to St. Louis. Billy, I know that you are in masterminds as well, it's a great way to connect with people and share ideas and you know being able to talk to other people that are in the same space as you, I would recommend masterminds.

Billy: Like-minded guys. Yeah, no doubt dude. Being together with high intensity, high-value like-minded individuals, multipliers is one. I mean, collective genius another one and like, 2 really sick ridiculous groups of guys and each one serves its purpose but the one thing in common is the people that are in both these groups, like in yours, they're just super high achievers and they're givers and that's the big thing with a lot of these masterminds we belong to, is the guy and girls that are in them, they're givers. They're not fucking takers, they look to give and if everybody's giving, that means everybody's fucking receiving, that means everybody's taking, everybody's giving, it's like, yeah.

David: Yeah, but it's so great to have a bunch of people that are all about giving, you know, because it's like I hop on calls with different people in the masterminds all the time, and I'm helpful. I'm happy to be helpful, to help them in their space, but then when I might need help later, it's like boom they're there for you.

Billy: Absolutely dude. Support, and that's how you got to where you're at. Of course, you're an implementer but you're fucking with guys and girls that are doing it at a high level and you take what you're learning and then you fucking implement like an animal.

David: That's right.

Billy: That's what separates- that's what separates bro, right there.

David: That's right, so hey let's jump in Billy. What's going on with the freaking Covid issue up in New York? I mean, everyone's been seeing the news. We don't have that many podcasts scheduled, so this will launch in a week. Today is June 12th, we'll probably have this launched on the 20th, not that much is going to change guys between the 12th and 20th of June, however, you know, I don't even know- I lost track of weeks, I mean, are we on like week 10, 11, maybe even 12 of Covid?

Billy: Well, New York is more like almost going on 16. I mean, it's like 15-

David: Holy cow, so I'm in St. Louis Billy, we are- we're like a whole month behind you guys, right? and we shut down. They shut this fucking city down.

Billy: When'd you get shut down? When did that happen?

David: Oh man, I mean, so I think, I'm counting roughly, I think this is week 11, if I'm right. If not, it's 10 so 10 or 11.

Billy: So sometime in April.

David: And they're gonna start opening shit back up on the 16th again, today's the 12th so you know, next week basically. And you know, who knows what's going to happen? but what's really affected me and I know I'm here to interview you so I want you to do the talking here, right? But what's affected me is the most part was just getting my permits for my rehab project. They shut this shit down and it delayed you know, 4, 5, maybe six weeks on some of our permits. Other than that, we haven't really noticed all that much of a slowdown on the retail side, on the listed properties, those are still flying.

Billy: And moving, are they allowing- are they allowing people into the houses? they allowing realtors into the houses to sell these spots?

David: Yeah, they never-

Billy: See in New York- yo, New York, we got shut down like a complete hammer. No realtors in the houses, no contractors working on the properties. Towns completely shut down, couldn't pull title, couldn't get CFO's.

David: So, we didn't have- like title companies were still operating but it was mobile closings or closings in the parking lot, right?

Billy: Yep, yup, we did that.

David: We had all the stay at homeowners, but they didn't shut down that much, right? But the permits slowed us down, the agents were good, houses are selling which is crazy because I guess banks are pretty lenient right now considering that most people or you know, not most but a lot of people are unemployed or not getting paid, but loans are still going through which is good, right?

Billy: We found- we had the opposite experience for about a good solid 6 weeks.

David: No shit.

Billy: We had to- we had a pipeline of deals that were like clear to close at the table and then the lender calls for a VOE, guys laid off, they yank the wire. It happened on 3 properties like you know, hundreds of thousands of dollars of cash flow like gone.

David: Right.

Billy: Thank God we were positioned like, we didn't know it was going to be this type of pandemic but going through what I went through in 2007 and 8, we were positioning for a market shift.

David: So Billy, I know you've told me this before and you probably hate repeating it, but for like just 2 or 3 minutes, tell us what happened 2008 to you because I think it's gonna be really valuable later here to describe some of the things that you've been doing to help.

Billy: Yeah, absolutely. So, back in 2006,7,8 when this whole thing happened, I had a huge mortgage company with 150 employees, we were doing over 40 million dollars a year in revenue, we were doing a billion dollars in loan volume and was taking the company public, doing reverse merger and bottom line, the whole fucking bottom fell out and I went from you know, making x to losing y and then that means 40 million dollars in debt like overnight. And the experiences and the lessons I've learned, invaluable, like it was a Harvard education that I gained, and you know, people looked at me like oh, that must have hurt, it must have sucked. Yeah, but it got me to where I am today and I'm so much fucking smarter now than I was back then, and so when this pandemic hit, I didn't do what I did, you know, 11, 12, 13, 14 years ago. I acted fats with precision, I immediately took action. I knew exactly, without knowing, I knew what to do. I went on autopilot and it was just chop the fucking overhead, make sure you fucking keep cash clean, get rid of what you can get rid of and pile stack- stack the piles of cash.

David: Right.

Billy: And we did just that, you know like overnight. It took us about 4 days and cut back over $70,000 a month in overhead, like this.

David: Holy shit. 70,000 a month in overhead, whew.

Billy: Crazy. Now, it's not all permanent.

David: Cut back on, right.

Billy: It's not all permanent, it's just, it's- some of it's temporary, some of it was renegotiation with lenders, some of it was pausing marketing, like it was a combination of things we did, but when it all settles, you know here we are- what June 12th. We're going to be reback- opening back up like the 15th of New York and we're still going to- I'm not going to have all that when I come back, I'm still going to have about 35, 40,000 dollars a month as savings which is half million fucking dollars a year to the bottom line. So, you know, I looked at this whole pandemic and as shitty as it was, people losing their lives, companies going out of business. To me, it was- it was a gift because I realized I could fucking run this business virtually, like I don't need- I have two offices, I don't need offices, I don't need space. Everybody's been working from they're fucking laptop at home. They have work balance life-

David: For 3 months.

Billy: For 3 months bro. yo, work balance life- kids, family, wives, husbands, they're like working, they're with the family, they're enjoying themselves and the thing with me, I'm looking- productivity is still there, like my guys aren't dicking around. They're fucking working harder.

David: Yeah, it'd be one thing if they're doing half as much, right? but they're doing the same. Why have all this extra expense of having an office? And then I got to insure it, then I got to heat and cool that son-of-a-bitch, then I got to do this and have phone lines and all this extra shit and furniture and oh man. Everyone's got a laptop and a cellphone, why not use those things, right?

Billy: But we negotiated- I negotiated with the landlord, we got out. I had 5 years left in the lease and we negotiated 5 months we're out the door, so June 30th, like I'm officially physically closed and so for the last 6 weeks, I've just been strategizing on really how to run a virtual company. You know, bills and payments deposited, I figured it out, like I'll probably put together a fucking course on how to run a real virtual business virtually.

David: I love that, that'd be awesome.

Billy: I got this shit figured out dude, it is like bottom line driven, its efficiency driven, its workload driven, and its sales driven, like my guys are fucking selling, they are closing over the phone. They realize you used to have a fear of just closing over the phone, they had no choice for the last 90 days but to close over the phone and they're doing it.

David: I know, isn't that amazing how that works like that? Like, sometimes we get put into a corner and you know-

Billy: That's exactly it.

David: You evolve quickly and it's a good thing though. So, well dude 70 grand a month, that's huge. I know that's not all permanent, but temporarily that's massive.

Billy: Yeah.

David: They shut down everything up there unlike in St. Louis, they shut down, you know, most of the- basically with the retail was all shut down. Restaurants and retail, you know, but we can still get out and look at projects, there wasn't any issues with us like leaving our houses necessarily.

Billy: No, we had a complete stop.

David: I think it might've been different up there, right? I mean, you guys were like on lockdown lockdown.

Billy: It was a lot that- it was like marshal fucking state dude, like it was lockdown. It was, it was nobody leaving their house except if you had to go get food, you had to wear masks and gloves. There was nothing to do with construction, all the construction got shut down. Realtors, if they got found going into somebody's house and showing the property, they were getting fined. Like, yo threatened with gel, like it was crazy. Dude it's nuts, it was nuts man so we had a really- it was eight weeks of just a tough tough time because I'm like we have deals at the closing table with the- 400,000 dollars coming into pay this property off and the lender pulls the wire because they do a last-minute VOE, verification of employment, the guys laid off like, can't close one after the other, so it was trying dude but look, what doesn't kill you makes you stronger.

David: Yeah, so what happened with those particular deals? Did you just relist them?

Billy: Yeah, no we actually guy- we made it happen. He got a fucking another job and he did his thing and he was a union and he got a paycheck and so look, it just was a temporary setback.

David: That's all we do though, is solve problems, right? So, it's like you know-

Billy: That's what we get paid the money bro.

David: These problems come, it's like alright no big deal, just another hurdle, let's figure it out and that's what makes us awesome. Very cool, so what are you guys focused on at this point? Obviously, virtual, cutting costs, you guys have an awesome business up there and you're doing a lot of stuff, right? You guys are doing flips, rehabs, rentals, wholesaling-

Billy: The whole nine yards, across the board, yeah. So, what we're doing now is we've changed the model on the rehab side where we used to do rehabs 150, 200,000 on rehabs, like big ass fucking rehabs. Since the pandemic, well actually about 3 months before the pandemic, we're like you know what, we see the market start to shift a little so we're just doing small rehabs 40 to $75,000 renovations. I'm not adding second stories, I'm not blowing out the interior of the house. If it's a full fucking gut, I'm wholesaling it, and I got to tell you the buyers- I called them the HGTV buyers, they're not that smart because they're still buying and we don't- I don't ever give them when I think the value of the property is, I don't give my opinion. I leave it up to the buyers to figure it out for themselves cuz you don't want to be put in the position where they say you told me it was going to sell for x. So, like we're flipping deals dude, wholesale we're still making 40,50- we flipped one yesterday, 95g wholesale and I'm like, I wouldn't go near this property for the amount that I'm buying it for. It's like a tight deal and this fucking guy's coming in 95 over the top so look, I don't- it is what it is. They buy how they buy, if they lose, if they gain, whatever their model is is their model. I don't give a flying fuck.

David: Yeah, I don't either, right?

Billy: I just put properties out and if they buy, they buy.

David: Are you guys doing more and more wholesaling now?

Billy: Yeah, we're probably doing about 70% wholesale and so what I'm doing now for the last 6 weeks, I've been heavy on the capita raise sides. I'm going back to when I had the mortgage bank, I'm going out doing a massive capita raise, I'm putting money to work. A lot of people out there wanna get involved with this real estate shit but they just don't know how to do it.

David: Yeah.

Billy: I'm like, fuck it. Put your money with me, here's my record for the last 15 years. Like put the money with us, we'll put it to work for you. So, big time buy and hold over the next 24 months in the single-family side, we're going to go balls to the wall. Simultaneously as that's moving, the apartment piece, we have a 36-unit- it's almost like a drug rehabilitation center that we're opening up. Once we get licensed with Oasis on that one, that's a $15,000 a month, per bed per month times 36.

David: Ooh, wow.

Billy: It's a business though so it's only a 20% net but still, that one building is like a million-dollar a year net, cash flow coming in so big fucking deals, dude.

David: Love it.

Billy: Big deals, yeah.

David: And you guys are crushing it. It's awesome.

Billy: Yeah, listen we're having fun, we're having a good time, we're- I just moved out to New Jersey full time. I'm going to open up this market here, so New York is running, New Jersey's going to get up and running and it's- this isn't work. Dude you know, like we get paid to do this? Come on, I mean, this is fucking-

David: Awesome, isn't it?

Billy: It's the best man, there's nothing like it.

David: Let me ask you this Billy, I did a podcast yesterday and the day before, I can't remember who it was with but we we're talking on that show about the fact that a lot of people get into real estate cuz they want freedom and then they get the exact opposite of that, right? They go from working a 40-hour week to an 80-hour week because they want that freedom and one of the ways that we found or that we were talking about on you know, on that show was you know, how do you get into real estate and have the freedom? Well, one of the ways to invest with guys like Billy here, right?

Billy: Absolutely.

David:  Put your money to work, let his experience and his knowledge and his efforts invest that money wisely with little to no risk, right?

Billy: Correct.

David: And get paid that way. Another approach will be to just get in the business and start doing it yourself but again, people get in and they go from 40-hour weeks to 80-hour weeks and they have the exact opposite of what they're looking to get into for. So, one of the solutions that you know, that I have found and you know, that we were talking about is getting virtual assistants and getting people virtual and it sounds like you guys are making that shift right now. I'm just curious are all of the people that you work with local even though they are virtual at this point?

Billy: No.

David: Or are they virtual overseas virtual?

Billy: We have Philippines, we have New York, we have New Jersey, we have Ohio, like we have across the nation.

David: Cool, that's very cool.

Billy: When this pandemic hit, what we realized is that if we're going to really be virtual, we could hire an inside person that would normally be here, anywhere in the states, and you know, the VA's and stuff, we've always been utilizing VA's for the last 10 years. We have 2 full time VA's out in the Philippines. We have another two in the Philippines to do marketing like few hours a week here are there. We got a lady out in Ohio, we have people all over Long Island, we have people out here in New Jersey so it's like, this job pool with 30 million + people being out of work and with us now being 100% virtual, the job pools wide open. We're getting some quality fucking candidates coming in for positions, every single position that we have, from sales to acquisition like everything across the board.

David: Yup.

Billy: But, you know getting back to your point about the freedom piece. A lot of guys and girls that get into this business, they don't realize it could be a fucking job if you don't systematize and automate what you 're doing.

David: That's the thing.

Billy: And when I had the mortgage company bro, I fell into that trap. I was doing 14, 16, 18-hour days, flying around the country, raising money, doing this and I didn't have a life. I was working my fucking ass off and I couldn't even enjoy the fruits of my labor cuz I was one, working my ass off and two, I was stressed the fuck out.

David: I know right? and I didn't even mention that. The stress that comes with 80-hour weeks and in some cases 100-hour weeks, right?

Billy: And to be responsible for fucking employees, 200, 400, 900 employees, it's like oh- it's overwhelming.

David: It's overwhelming man, yup. So, you had mentioned earlier you had scaled back a little bit. We scaled back a little bit as well, not so much with the retail you know, our retail has been actually doing really good but what we scaled back temporarily was our offers. We were just making a little bit lower offer to adjust for the, you know, the uncertainty in the marketplace.

Billy: We've done the same.

David: But what we were able to do is, you know, less offers got accepted when the price went down of course, but we were able to build a really big funnel over the last call it 10 weeks give or take, of people that you know, they're motivated to sell but maybe not that motivated yet, or a lot of them Billy, a lot of them didn't have anywhere to go. They were uncertain about what they were going to do, if they were to go rent or they're going to go rebuy something or what else, so we built a huge funnel and literally this week we've started to hit that funnel really hard and we've gotten tons of appointments and even a couple contracts from  just hitting those people and following up with them because the uncertainty on when we may have reached out to them 10 weeks ago, 8 weeks ago, 6 weeks ago [inaudible]

Billy: Let me ask you this Dave, when you- over the last 10 weeks, did you curve back any of your marketing? Did you cut back at all?

David: I didn't man.

Billy: You kept going?

David: You know, we're not doing anything super crazy Billy. We used to spend 10 to 14 grand a month on marketing, we're probably down closer to like five or six right now.

Billy: And what does that consist of? Direct mail? Pay per click? Like, what is it?

David: We do, honestly, we do direct mail in waves. I haven't done it in a couple months, I need to do some but typically most of our marketing is split fifty-fifty right now. Now, it changes of course, but right now and for the last maybe five, six months, it's been fifty percent radio and Chris over at the multipliers, Chris Arnold's the big radio guy. He's the one that actually coached and taught me about radio, so I do 50% on the radio and the other 50% is literally just pulling lists off of Propstream adding them to Batchleadstacker, skip tracing them, cold texting them and then pulling out the numbers after we skip trace them to add to a dialer. So, we're hitting them with cold calls, cold texts, I don't do any RVM's cuz I don't really think it's very-

Billy: Ethical?

David: Ethical, thank you for that. We'll do some RVM's and follow-up but-

Billy: Yeah, that's different.

David: But not cold, it's different. Right, right. So, basically cold call, cold text is half and radio's the other half. I'm lazy, you guys can't tell cuz I'm sitting but I'm fucking lazy and fat, right? I'm working on the fat thing, but the lazy thing is probably not going to change right? So, the coolest part about the radio is you just pay it and you forget it.

Billy: Yeah.

David: Radio took a big dive over the last eight weeks and I was thinking about pulling it but I'm happy I didn't because I'm only spending, you know, maybe three or four thousand a month on my radio, call it three grand a month on my radio, which is nothing really.

Billy: Nothing.

David: And you know, we've gotten at least one deal over the last month from it, so it's at least paid for itself, but again, I built that follow up funnel, right? So, we're building up a ton of follow-up and that's really it. You know, occasionally I'm looking at like 600 bandit signs right outside my office. We like to do waves of marketing, it's funny cuz I teach my students: hey guys be consistent, be consistent and I am consistent with my radio and my cold calling and my cold texting. When it comes to bandit signs and mail, I do waves. I don't know why, I've always been that way, I guess cuz I'm lazy and I'm not that good at being consistent, so I'll go by 5, 6 hundred bandit signs and flood the town or I'll you know, maybe do a five, six thousand mail piece drop, hit the town hard and then I'll wait. I like really more of the cold calling and cold texting, it's just so much cheaper, right? It's so much cheaper, I can build my own do not call list. One of the most- I don't know if you're doing any of this Billy but one of the most amazing things and you would think I'm going to be working for batch cuz I'm going to promote the hell out of them really quickly but one of the most amazing fucking things with batch is they don't charge you to skip trace a lead twice, ever.

Billy: Oh, that's good, that's real good dude.

David: It's the same address with the same name, you're not paying. So, as you start using the system, the match savings is growing like crazy. Like, I just did one last week and I saved $300 right. Doesn't seem like a lot of money but I'm also gonna be using this-

Billy: Yeah, multiply that by 52 weeks.

David: Yeah, that covers the monthly cost of the service, off of one skip.

Billy: Yeah.

David: So, as you start using this more and more and you start using more of the skip tracing features that are you know in the system, you start saving money cuz you're not skipping them twice, so if I'm only 3 months in essentially using the system and I'm already saving $300 per skip, you know, give me three more months and it's going to be double or triple, you know what I'm saying?

Billy: Sure.

David: So, and cost to skip trace, if you're in one of the higher end packages, it's going to vary depending on what you buy but it's only 12 cents.

Billy: Yeah, it's cheap.

David: Sending a postcard is 3 times that much. So, I can get 3 times as much bang for my buck by skip tracing, cold calling, cold texting-

Billy: How many people you have texting for you?

David: And we keep calling and texting until we get them, and if they say quit calling, we quit calling. You know we're not trying to get on anyone's nerve.

Billy: How many people do you have texting for you?

David: Say that again.

Billy: How many people do you have texting for you? What does that look like?

David: That's a great question. I got 4 virtual assistants, 2 part-time, 2 full-time. The 2 part-time people, they're 20 hours a week, one of them is 20 hours a week on cold texting, the other one is 20 hours a week on cold calling. Boom, so those people, that's all they do. I don't know/want them to do anything else because then they're gonna get dragged down, I want them to do just that. So, they log in at different times, I'm pretty flexible but we use Hubstaff, which is great because it tracks productivity, it takes screenshots, and it shows all the websites and apps that they're using.

Billy: I love watching it. Hubstaff-

As long as they're not on my clock you know, dicking around or watching porn, they can log in at any time they want, as long as it's not too early or too late. So, I basically tell them about 8 or 8:30 in the morning, stop maybe around 7, 7:30 at night, but they can log anytime they want. Sometimes they'll come in and they'll do an 8- or 9-hour day and they won't work for three days, I don't give a shit. I basically tell them hey you can work 20 hours a week or up to but when you are on the clock, I'm looking at what you're doing and I want you to only do this so cold calling, cold texting and then I have a full-time guy, been with me for about five years. He's an awesome guy, pay him great money, he's also in the Philippines. He does all of my inbound calling or like answering of the phones as well as 100% of the follow-up. That's it, that's all he does.

Billy: No shit.

David: Myself and my two partners, we run all the appointments and make most of the offers. Obviously, the VA's will help us, we have an acquisitions guy, we have a dispositions girl. So, we have a team built out, you know, we're doing 8-10 wholesales a month, 65 rentals and probably have anywhere from 6 to 10 flips going at any time.

Billy: I love it man. I love it.

David: So, we've got a lot of shit in the pipeline. We're launching the coaching business and that's been doing pretty well as well, slow but-

Billy: Congratulations by the way on your book bro, your second book. Congrats.

David: Yes, thank you man. Thank you. First one I got right here, 'The Ultimate Guide to Wholesaling', this one Billy is 270 pages, and we were like man this book's kind of thick, maybe the next book will make it smaller, and that was the goal. The second book just came out it's 383 pages.

Both laugh. 

David: So, it's like aah fuck it, but it's you know, it's my entire business in these two books and I tell people for 10 or 15 dollars, you can learn everything that I do, everything. It's all in there.

Billy: I love it, you're a giver bro. You're a giver. That's why you're getting what you get cuz you give.

David: I try to be, so hey, this is about you though, not about me. Fuck. I want to hear about your marketing, what are you guys doing? Have you scaled back any from Covid? Have you made any changes? I'm just kinda curious because you know, you are in a different region and in a different market, so you know, things are different in different places.

Billy: So, we changed everything, I mean when Covid hit, I looked at everything and I said let me put a pause for two weeks just to feel what's about to happen. We were doing TV, radio, direct mail pieces- 120,000 mail pieces a month. We we're doing text blasting, cold calling, door-knocking, I mean across the board, we had it all hammered out and when Covid hit and we did the first 2 mail drops, and my response rate was like .002.

David: Yeah, I know, so much uncertainty you know.

Billy: Uncertainty, people just did not want to fucking do anything and so-

David: Even if their motivated to sell, it's like-

Billy: Where am I gonna go? where am I gonna go?

David: Right, it's just so much. The news doesn't fucking help either man, constant negative news in your face- Alert! Breaking news! Viruses! Now you got these protests man fuck, it doesn't stop you know, so yeah.

Billy: The world is shit, so we come back and like you, I said alright what are we going to do? So, we had a database over the last 10 years of just a shit ton of people that responded so we just went old school database marketing. My guys in the office all started picking up the phone cold calling cuz we couldn't go to somebody's house, we couldn't do anything, and we went- listen at the height before the Covid hit, we were doing 12-18 properties a month. Covid hit, we're not doing any marketing and we're still doing 6-8 properties a month.

David: Isn't that awesome? It's just lead- it's lead mining.

Billy: It's lead or lead mining, exactly. So, now we're going to slowly start to kick back the marketing, I'm going to start light first, do the direct mail again, I'm probably going to dabble back on TV. TV is a hit and miss in New York, it's ultra-expensive and the leads we're getting were just not super quality. We got a few deals out of it but I couldn't- it was just hard, I'm going to test the TV out here in New Jersey. The radio show- we have a radio show that airs every Saturday from 6:00 - 7:00 at night, to record that on Monday, that actually does decent for us. I'm gonna now turn the radio show into a- not cashing out, I'm gonna cancel that one. I'm gonna do real estate investing on the radio, start training people how to do it- do what I do locally and then do it as a broadcast on a podcast and then turn it into a bunch of training and shit.

David: Awesome.

Billy: Yeah, it's good shit.

David: I know you guys have a coaching business as well too, that's great.

Billy: Yeah, it’s- bro look like I dabbled, I did the coaching thing and I enjoyed it but what I didn't like is the one-on-one. Like, I can't do one-on-one with newbies. I could do one-on-one with somebody who has an understanding, but to train one-on-one newbie, not for me so I'm going to change that whole model around.

David: Yeah, it's frustrating man because-

Billy: Hard bro, like, I can't be asked what's an ARV?

David: You can show them the door, right? But they got to walk through that door and if you show them the door five different ways and they still don't walk through it, it's like man, I want to help you but you're not helping yourself. Trust me, bro, I get it, it's frustrating. That's one of the things, you know, that's- honestly, we've raised our coaching prices just to prevent that, you know, we used to do coaching for cheap like thousand bucks, 1500 bucks.

Billy: No way. No fucking way dude.

David: Yeah, now we're at like minimum 4, 5 grand minimum and that's for group, you know if they want one-on-one, it's 20k minimum, right? Because it's a lot of work, right. Totally, it's a ton of work.

Billy: Listen, I still even did- I was doing the 20-, 30-, 40-, and 60-thousand-dollar k for one-on-one, I hated it and I hated it because I just- the guys were good, the people I had were great people, it's just I had a job like I don't want to fucking create a job for myself, you know? The group coaching thing? Phenomenal. The online, you know, business in a box thing? Phenomenal, I just got to build that whole thing out and that's my next step, I'm going to build it out and push it out there and add some serious fucking value and then once they're trained up, if they want to do the one-on-one, I'll have no problem because they're a certain level.

David: Yeah, now they're past- they know the basics man.

Billy: Yeah man, right, exactly. That's exactly it.

David: Absolutely. So, you guys scaled back the marketing, you started lead mining the current leads that are in your system. You guys are still doing 6, 7, 8, 10 deals a month, that's freaking amazing.

Billy: We've started doing heavy texting, heavy cold calling so not costing us a lot.

David: Which is great and that's the beautiful thing about those two lead sources guys. I mean, it's like literally the cheapest and that's why I've converted to it. Guys, direct mail works, it'll always work, right? I'm not not choosing to do it because it doesn't work, I'm choosing not to do it right now, I mean, this is temporary right? I'm going to probably do it again, maybe later this week or early next, but I can get my leads for cheaper, right? and it just makes sense. So, I think cold calling and cold texting is probably the best way for anybody to get started cuz it's the most cost-effective.

Billy: Absolutely.

David: And Billy, I know you're going to agree with me on this, it's very easy to systematize and delegate which essentially means you are automating, right?

Billy: Exactly

David: Delegation is automation, it's a form of automation. So, I don't do any cold calling, I don't do any cold texting however, my company's doing 20 hours of each a week every week, right? And the amount of leads that we're setting is not any different than it was if not higher than we were spending the 12, 14 maybe 16 grand a month, which may not sound like a lot to a guy that just got 70 thousand but in my little St. Louis market of 2.3M people-

Billy: That's a lot of money.

David: That goes pretty far.

Billy: Yeah, it's a lot of money. Yeah, absolutely.

David: Yeah, it goes pretty far but here's the crazy part guys, I'm getting just as many deals, if not more, right? and I've cut my budget from, let's call it 14, that's probably a good average, from 14 down to about 6.

Billy: What is your average wholesale fee?

David: Almost a third, not quite but almost a third.

Billy: Almost a third, sure. What's your average wholesale fee?

David: So, it's low you're going to laugh but it's probably about 8 grand.

Billy: 8 thousand?

David: Yep.

Billy: And are you assigning or is that a double close?

David: That would be an assignment.

Billy: Assignment.

David: Yeah.

Billy: But I mean though-

David: It kinda varies you know, we- so the thing about the St. Louis is the average house here that the investor's looking at is typically somewhere between a 80 and 150 on the ARV side.

Billy: So, that's a good rental- great rental market. Great rental market dude.

David: Great rental market, we're talking 1 and a half percent.

Billy: No shit. Really?

David: Yeah, bro. So, we won't buy under 1%, period.

Billy: No, no, never. It's not worth it.

David: Got to be at least that. Well, our average and we've done- again, this isn't about me, this about you Billy.

Billy: I know but this is a-

Both laughs 

David: But yeah, we've done about a hundred doors in the last 15 months. We haven't kept all of them of course, we got 65 properties so probably about 80 doors right now, but we've done a hundred doors with BRRRR strategy in the last 15 months.

Billy: I love it.

David: And we've averaged $1,200 out of pocket per door.

Billy: Dude, that's fucking amazing.

David: Average.

Billy: That's amazing.

David: I know, so what we're doing right now is we're selling off some of them that have higher equity to pay down some bad debt that we've acquired which we'll probably be out of it in the next 6 weeks.

Billy: Nice.

David: And then we're going to go pedal-to-the-metal, so we'll probably sell off 10 or 12 properties to kind of reallocate some of our funds and then we're gonna go pedal-to-the-metal just like you had mentioned. Our goal is to get to realistically 150 by the end of 2021, so you know, maybe a little farther but that's kind of the goal that we have, and you had asked me a question, I sidetracked, what was it? Can't remember.

Billy:  It was just the wholesale fee, I think. I can't remember.

David: Oh yeah, the wholesale fee. Yeah yeah, So, here's the thing we're not really marketing. Let me say this quick, all the marketing I do, all of it even with the radio, is for me to find a flip or a rental, period. We have a model, you guys probably share the same approach at least in the current time. I've actually coined a little simple phrase, it's kind of catchy, it's funny but it's called keep- it's just keep the best, sell the rest guys that's it. Keep the best, sell the rest. So, all the market that I do, I am looking at it for a flip for me or a riddle that I can BRRRR. If it doesn't meet those two criteria, wholesale it.

Billy: That's it.

David: But I'll never go out and make an offer or look at a deal to wholesale typically, unless it doesn't fit those two boxes, right?

Billy: Sure, I love it.

David: So, all the marketing that we do is in the neighborhoods that have the good rehabs or the good rentals. With that being said, I'm not really wholesaling houses that are like above 200 grand that often, right? So, it's difficult to get- not impossible but it's difficult to get that $95,000 wholesale fee on a house that you- maybe you're buying at, you know, 80 grand or 110 grand.

Billy: Yeah, that's very difficult.

David: So, our averages are a lot lower, we kinda make it up by doing you know, a little bit more volume than the typical person. We're doing you know, 8-10 a month, on a bad month 5 or 6, good month maybe 12 or 15, but again, it's- the thing about wholesaling is it's a means to an end for me.

Billy: Sure, yup.

David: It's a job. It requires a lot of work. I want that passive money that's taxed really low.

Billy: Yeah.

David: So, I'm gonna use wholesaling and really it's- I look at it, I kind of word it differently but I use the motivated seller marketing to get my deals, we keep the best and then we wholesale all the rest of that shit off.

Billy: I love it, I love it dude.

David: Keep it simple man, keep it simple.

Billy: I love it.

David: Less is more, truly. Less is more and I'm in the process right now, I'm kind of taking your lead but we're cutting some software and some stuff that we've been paying for that we haven't even really been using. It's just you know, focus on what makes sense and to us, you know, we fall into every wholesale deal we get, truly. We're not looking for them, we're looking for fucking rentals, we're looking for fucking rehabs, we fall into them. We do 10 a month guys, so if you have not- If you're listening to this and you haven't done a deal yet, right? I am falling into 10 a month. I'm not bragging, it's not my intentions, that's not me. You guys know me if you've been listening to this shit, right? It's not me but I'm just saying this business is so incredibly simple, it's not necessarily easy.

Billy: Right. It's a simple business, it's simple but it ain't easy.

David: But it ain't easy but it is simple. It's so simple. Billy, man you've been getting- you've been making me do all the talking bro.

Both laugh. 

Billy: I'm fucking good like that bro. Turn this shit around.

David: I know. What are you selling me today, bro? I love it.

Billy: No, listen man, you're a good- I can't wait to get you on my podcast because I really want you to break down the BRRRR. I want you to fucking go in deep on that.

David: Oh, I would love to. Absolutely.

Billy: Like, promote your book, do the whole thing man because what you did this short timeframe, it's amazing. I mean, it's a fucking great move on how you guys put that together. Impressive. And to get a one and a half on those rentals-

David: Oh, that's where I was going, that's where I lost my train of thought.

Billy: It's insane dude.

David: So, 1%. Billy, one percent is the minimum. I won't even leave my house or my office to go look at a deal if it doesn't make sense and at least one percent.

Billy: So, explain to people what- what does that even mean?

David: I love it. Absolutely. So guys, the one percent rule is like one of the most simplest things to understand. Basically, what it means is I need to collect 1% a month of what I spent to buy the property, all-in, not just the purchase, purchase and rehab. Let's say simple math, I buy a property for 80 grand which may be impossible in some of these markets but not in mine and I put 20 grand in it, right? So, that means I'm all in it for a hundred, tack on another five grand for closing interest, insurance, utilities, and taxes, 105 is where I'm at, right? I need to collect $1,005 a month to make 1% basically, so I'm trying to get 1% of my all-in money in the monthly fee so if- that means that I can collect- so I usually work it backwards, right? If I can look at a property and I can say ARV-wise like after I fix it all up, I can get 1200 a month on that. That means that I cannot pay more than 120 grand all-in- purchase, rehab, holding, everything, closing, you name it. So, the cool thing is that's the minimum, that's the one percent rule. The 2% rule is the exact same thing, it's just double so let's say you buy a property for 40 grand and you're making 800 a month in rent. Those are a lot more hard to come by, much more. Here's what I was going to get at Billy, this is why I thought this was so interesting and fun. We average about one- between 1.2 and 1.4 on the properties that we buy, right?

Billy: That's sick.

David: So typically, what we'll do is if we get a 1%, we'll still buy it and BRRRR it, but we'll sell it off. If we can get one at 1.2, 1.3, we're going to hold it cuz it's going to cash cow.

Billy: Yeah, bro. I love the model, I love the model.

David: Yeah, it's truly the only way that I have found in my 35 years to acquire a crazy amount of wealth with truly little to no money.

Billy: How do you train your students? How do you train your students in the parts of the country that don't have the values of 60, 80, 100 grand? Like a dude like me, I'm in the New York and New Jersey region and let's just say I didn't know what I was doing, I'm not a real estate investor yet but I want to get into real estate, but I don't want to flip, I want to fucking buy in whole. How would I get into that part of the business if I'm in this part of the region?

David: Right so I mean, the thing about BRRRR is they're two main components: buying at a discount is number one and it's probably the most important thing that you can do with any type of real estate investing. Number two is you have to add value via rehab. So, if they're looking to do a BRRRR or you're looking to do a BRRRR, work your numbers backwards and work the entire freaking BRRRR method backwards. So, a really quick BRRRR- buy, renovate, rent out, refinance, repeat- That's what it stands for, it's a strategy to acquire a lot of wealth. It's all it is, simple, right? But you have to be able to refinance. If you can't refinance, you're gonna end up borrowing money or parking money or getting a hard money loans to buy a property, fix it up and get it rented out. And if you can't refinance, your fucked. You're stuck with that high interest loan, it may even come due so get your refinance in place before you do anything else, start there. Most people aren't going to coach and teach you that way but that's how I look at it because if you can't refinance-

Billy: You're fucked.

David: You're set up for disaster, that whole process, right?

Billy: Yep.

David: Quick, I'm gonna go quick. Number 2, you gotta buy at a discount. It is so incredibly difficult to buy a property and increase the value 20% by just doing a rehab. Is it possible? Of course, it's fucking possible. Is it likely that it's going to happen on every deal? Hell no.

Billy: Right.

David: That shit's hard to do but if you buy it at a 10,15, maybe 20% discount already then, it's super easy to increase the value up on that property to have a 20% equity stake, and that's it, that's the whole thing. So, then what we do is we go to the bank and we say hey, not only do we have a good relationship with you, but we've done this before, and we're qualified experienced investors. We want a loan on the appraisal and we're not going to settle for anything less and if they say send me over what you bought it for, I say I'm going to go to a different fucking bank, no thank you.

Billy: That's it.

David: I want my loan on the appraisal only because that's the whole thing. If you are getting an 80% loan or even a 75,70%, doesn't matter, doesn't matter. If you are getting a loan and they are going to give you 80% of what you bought it for-

Billy: You're fucked.

David: What you paid to fix it up, you're going to leave money in it every time, no matter what, that is the fucking laws of mathematics.

Billy: So, Dave do they have like a- and I know I'm interviewing you now, but I'm just-

Both laugh. 

Billy: Do they have a certain time frame that the loan has to season before you go up to appraise it?

David: Correct. So, that's called seasoning, in the beginning it's 6 months. I don't have any seasoning with most my banks cuz I've done a hundred doors in 15 months and they say hey, you have experience, you know what you're doing, we're good. In the beginning, you are going to have seasoning. It's going to be slow but just like anything especially motivated seller marketing guys, it's snowballs. So, once you're- so here's the thing Billy, you know this but a lot of listeners and viewers, they don't. Banks don't make money when you deposit money in their account, that's a liability to them. The way that banks make money is lending you money, right? So, go to your bank and ask for a loan and they're probably gonna tell you no, that's what happens, that's okay. Turn that banker into a coach, it's a free coach that you don't even have to pay for. Okay mister banker, what do I need to do to get a loan? Well, you got to increase your debt to income or decrease that, you got to increase your credit. Do whatever you gotta do, just work on that, go get it and once you get qualified then they're going to have the seasoning in place. Well, once you work with them, they're going to start calling you saying hey, I'm ready to give you more loans because that's how they get paid. And eventually they're going to want to speed up the process too so they can make more money. So, absolutely Billy there's going to be seasoning most of the time but as you do more and more deals, that's what you have to negotiate with, so now when I go to a bank, I basically tell them I want loans on appraisals, I want 70 to 80% depending on the area, you can pick that but it's going to basically be known by the area, right? I want my loans to not balloon, big point here.

Billy: That's huge.

David: They cannot- I will not get a loan that balloons, instead they all have to renew. Now, why would I want that? Because I don't want my amortization table starting over every 3 to 5 years. Instead, I want them to just go do a drive-by or an appraisal and renew with a new term because the amortization table is where wealth is created.

Billy: Sure.

David: You know this.

Billy: Yup.

David: All the loans renew, they do not balloon. They have to give me a loan on the appraisal and then where I have- my only thing that I can do to negotiate is interest rates and seasoning. That's it, it's the only leverage I can pull so if they're trying to give me a high interest rate, I'm going to go try to find a lower one. If they're trying to give me seasoning, I'm going to go to try and find one that doesn't have it or is shortened until my relationship with those people is strong enough for both of those are no longer really necessarily needed to argue about.

Billy: And one last question, do you find that you're having a better chance on dealing with local bankers than you are these national players?

David: 100%. I miss that, it's in the book though, it's why it's 380 pages. In order to get a loan that doesn't balloon, and it renews, you're typically going to need to get a portfolio loan which means it's a smaller bank that doesn't sell the loan in the secondary market. They own the loan, they hold the loan and they service the loan.

Billy: Service the loan.

David: Correct. Honestly, I don't have a loan with any bank that's national, well, not any cuz some of my older rentals of course, but in the last 3, 4, 5 years- no national banks, all local and they're small, guys. They're banks that have three branches, maybe five branches, at most 10, 12, something like that because once they get bigger, they're going to want to start selling those loans off. We don't want that, we want them to keep those loans and that's also one of the easiest ways to get a loan to be renewable and not balloon is to know that it's a portfolio loan and they have no interest in selling that loan off and they'll let you do that renewal. Do you know how much a renewal costs?

Billy: What's it running at?

David: 150 bucks.

Billy: Compare that to a refi.

David: How much a refi costs? Fuck, you're talking 2 grand, 3 grand.

Billy: In New York, it's probably like fucking 8 grand.

David: I can renew 60 loans for the price of refinancing 5.

Billy: I don't think the people listening understand the value in that tip. That is a ridiculous tip that you just gave.

David: It's massive.

Billy: That could save somebody tens of thousands, hundreds of thousands of dollars if they're in this grand scheme of things, if they have a large portfolio they're trying to do.

David: Yeah, and all the bank wants to do guys is they just want to re-evaluate their risk which means hey, what's the interest that I'm charging them now? Can I maybe get them for more? Maybe they can even do a little less, doesn't necessarily matter but they’re trying to get more and all they're doing is locking in that term. So, I mean it's- you know, it's just you got to play the game the way the game's supposed to be played and that's why I said when you walk into a bank Billy and they say no, don't get upset. I still to this day get told no but I don't walk out with my tail between my legs and instead I say Jim, Jeff, whatever the bankers name is, I get it, you maybe not have the appetite for me right now or maybe something on my balance sheet doesn't look appealing to you. Tell me what it is that I can do to fix that, I'm going to go home, I'm going to work on that for a couple weeks or a couple months and I'm gonna go back and I'mma say hey, here's where I'm at. Will you lend me now? The thing about lending is a lot of these banks are required to lend like-

Billy: They have to, they're mandated to.

David: They have to, right so you know, they can't tell you no if you fall within the guidelines, so they're really just telling you if you're in there or not, right? But yeah, that's the BRRRR strategy. That's really where we're going, it sounds like you guys are kind of pivoting into doing more buy and holds as well.

Billy: Yep.

David: I'd highly recommend, find a local bank- and another thing too you know, imagine you try having a question about one of your mortgages and you're calling an 800 number that puts you in Kansas City and then they forward you to Phoenix and then all the sudden you're in Ontario. I don't ever fuck with that. No, I'm going to go to the bank that has two or three branches, they all know me by my first name. The president, I got a cell phone number in my phone. If I have an issue, I’m going to talk to somebody that's going to be able to handle it quick and efficiently, not transfer me around and not know what the hell's going on, you know.

Billy: I love it bro.

David: Another huge advantage of having the local banks.

Billy: If you ever want to bring me back on to interview you on your own podshow, just-

Both laugh. 

David: Billy, you are one of my favorite real estate investors in the country.

Billy: I appreciate that bro.

David: No bullshit. I fucking love your energy, you are hilarious and you're just really, generally truly, passionate about helping people and you're such a sincere dude. I fucking love you man. How could people reach out to you and learn more about what Billy is doing? Also guys, there's a lot of people out there that aren't willing to learn how to wholesale or wanting to do rentals, but they want to be invested and I think Billy might be able to help you with that.

Billy: Yeah, no doubt. If you want to get involved with this passively and have me put your money to work, go to billyalvaro.com, just fill out the form in there and address to Billy.

David: Spell it out for us.

Billy: b-i-l-l-y-a-l-v like Victor, a-r-o. billyalvaro.com. Check me out there, go on there, let's get together. I don't care where you live, we have to have a conversation, see if you're a good fit for me, if I'm a good fit for you. Can we take it to the next level? We're investing all over the place. We have single-family, multifamily, we have mobile home parks, we have everything that we're investing in and it's anything that we could get a nice healthy return on. We'll put the money to work and I'm smart enough to realize I can't do it all myself and in order for me to scale, I need to help other people create wealth. They might not want to go out there and find properties or create a business, but they want to make the return and that's where we come in.

David: Yup. I love it, where can somebody find you on social media too?

Billy: Yeah, it's funny the unstoppableba, that's on all my handles, it's on social media for Facebook, it's on Instagram, it's on LinkedIn.

David: Hey that's perfect though, if you can get them consistent, that's key. I got all different ones, it's fucking annoying and whatnot.

Billy: Yeah, the unstoppableba bro. Un-fucking-stoppable.

David: I love it. Guys, billyalvaro.com, check him out. Again, he is like one of my favorite investors, got the best personality-

Billy: Thank you bro.

David: Super nice guy, genuinely sincere, he cares about people and he knows what the hell he's doing. Billy, I wish that I would have had more time to interview you on my show but I'm gonna bring you back.

Billy: We'll I'll tell you what we'll do, I'll invite you on my show and you can interview me on my show.

David: I'm gonna bring you back in like a month or two if our calendars can align cuz there's so much more that I wanted to talk with you about that we didn't get to today but either way, you know we talked about a lot of good things guys.

Billy: Yeah, bro.

David: Make divots in your market, you know, figure out what's coming. Adjust your marketing as needed. Look at your efficiency, we just heard from Billy he is doing you know 6, 7, 8, 10 deals a month with zero marketing because he's lead mining his current follow up, right There's only three things that matter in real estate investing: marketing to motivated sellers, sending offers, following up. Prove me wrong,

Billy: That's it.

David: That's all there is to it. There's a lot of little things you can do in and outside of those things but if you are not doing those three things, you are not going to do deals. Period.

Billy: That's trifecta right there. You nailed it bro.

David: Billy knows. Awesome.

Billy: I appreciate you bro.

David: Billy, thank you for coming on, I appreciate you, I'm grateful for your time. We're going to get you back and again, guys billyalvaro.com. b-i-l-l-y-a-l-v-a-r-o.com.

Billy: Boom.

David: If you have money and you want to put it in the real estate business but not do any of it yourself and let a trusted experienced investor do it for you, you got to contact Billy. Guys, that's it for today. We're signing off.

Thanks for listening to the discount property investor podcast. If you enjoyed this episode, please like, share, and subscribe to help us reach a wider audience to jump-start your real estate investing career, visit freewholesalecourse.com- the most complete free course on wholesaling real estate ever. We would also appreciate it if you left us a review on iTunes or Stitcher. Thank you in advance for your support and remember you make your money when you buy, you get paid when you sell. Now let's go build some wealth.