David: Alright guys, welcome back to the Discount Property Investor podcast. In today's episode, we are going to be talking about a... case study of a property that we just closed, and it was a property that we essentially wanted to wholetail; then we decided that maybe we should wholesale it, then at the end of the day we went back to the wholetail. So it is going to be an interesting case study.
Before we start; we want to encourage you to check out the freewholesalecourse.com. If you have not listened to any of our podcasts yet, the freewholesalecourse.com is an awesome resource we have put together; Mike and I. It is... everything you need to know about getting started in wholesaling. So it is an awesome program, if you listened to previous podcasts you have probably heard us say it a time or two.

Mike: Go check it out though, that's the thing I want to encourage you to do. Because some people are like, "What is it? A five minute video or something?" No it is a complete course on wholesaling. So that is why it is called freewholesalecourse.com. It is literally a free course on wholesaling. If you have no invested in real estate, not done any deals, you absolutely have to go check it out. It really is a free wholesale course.

David: Absolutely. I was checking the reviews this morning. We have over 20 five star reviews. The reason that I mention that; 20 is not a ton by any means, not a single review has come in that has been less than five stars.

Mike: That's awesome.

David: I wouldn't sit here and lie about that because...

Mike: I didn't even know about that.

David: We have the ability to not post the ones we do not want to post, but everyone that has come in I have been like, yeah let's post because five stars.

Mike: We can turn off that filter pretty soon. Let the reviews go through, who cares?

David: That's right.

Mike: Once you get enough good ones...

David: Pretty cool course guys; check it out, we are really happy with it and we are getting a ton of positive feedback. So, about this episode, wholesaling to wholetailing to wholesaling to wholetailing. This is a case study. Mike, what was the address of this one?

Mike: To wholesale, or not to wholetail. That is the question, right? So this one was a pretty good property, so it is a nice area in St Louis. Because the market, and most likely in your area as well; the market is so good right now. Our strategy has been to wholetail if we can. If the property is in decent shape in a decent area; we are going to be able to maximise our return or our profit by putting it out to more buyers, potentially a owner occupant as opposed to an investor buyer. So we are able to lock things up a little bit higher and hopefully, so we are able to lock things up a little bit higher and hopefully get a little bit higher profit margin. So this property was technically in [00:03:10.05]. Not sure if was or not, it was 509 [00:03:12.25] was the address right here in St Louis, like I said in west county [00:03:18.08]. That is just a great market. A lot of my friends, our age group, 30's... 20's, 30's; first time home buyers are really kind of drawn to this area because it is in west county, which is a higher dollar area for St Louis. But it is not necessarily out of their price range. So it is not the top dollar are in St Louis. So again, great area for us to try and do a wholetail deal. So this lead came in; we sent some direct mail. I believe this was an absentee owner.
David: I am trying to find the... I wanted to pull it up... here we go.

Mike: So yeah, this owner was... he was a landlord and his tenant was getting ready to move out, and he actually lived out of state.

David: That's right; he lived out in Colorado so absentee owner landlord.

Mike: So there are multiple reasons why he was motivated to sell. He doesn’t want to have to come in and deal with the rehab; I don’t believe he had property management in place. So he was doing a lot of it himself out of state. Which is a great strategy, depends on your goals. But anyway, there was motivation there; he didn’t want to have to deal with it anymore. He was tired of being a landlord, flew in to meet people... but what was happening, Dave? You actually went on this appointment didn’t you?

David: I did yeah. He owned the house... I want to say they owned it for 25 years; they had been renting it for the last 12. So... I am not very good with math, what is the difference in that? 17? 16?

Mike: 12 and 25 is 13.

David: 13... I am terrible at math.

Mike: That's bad.

David: That is bad.

Mike: You are almost as good at math as you are spelling.

David: Yeah, those two are not my strong suits. So anyways they owned it for about 25 years, lived in it for 13, then they rented it for 12... they lived in Colarado so the tenants that they had... were moving out and they just didn't want to have to deal with ding this process again. They had done it for 12 years already. They were trying to get rid of everything they had in St Louis so that way when they went back to Colorado they could stay in Colorado, they didn't have anything on their... any baggage left behind. So... when I went on the appointment; the gentleman that sold the house to us... was in town and he was swing it, the tenant was at work and... I just want to talk briefly about the competition on this particular deal. The... there was wholesalers, or investor buyers I should say, a better word for it, but there was investors and buyers at the property when I arrived. I was at the property for 10, maybe 15 minutes, just did a quick walk around, took some pictures, did some due diligence as far as checking out the condition of it. There was also buyers coming as I was leaving. In the window of time that this guy had set aside for showings was I think maybe two or three hours. I think it was 10-12am to check the property out. So there was tons of...

Mike: It's funny too I don't know if you remember this or not, Dave. So... the Discount Property Investors... we do a ton of mail, we do a ton of advertising and this lead came into our system. We sent one of our associates out to go and look at the property.

David: That's right.

Mike: Well... Dave also prior to this, myself also; we had all done some direct mail prior to merging our companies. So Dave had actually got a call from this gentleman from his previous efforts, i guess to his cell phone. So he had set up an appointment as well. So Dave shows up and you met one of our junior associates.

David: So we sent one of our guys out to go buy the property...

Mike: I didn't mean to call you out on it.

David: No, you are not calling me out at all; that is perfect. Just goes to show you that whenever you drop a big bunch of mail and you don't get any calls right away, it doesn’t mean that people didn't get your letter, and or saved your letters. That is a great point; I mailed this guy like 15 months prior. He got a letter from me, then I joined Mike and Bill and Ray at House Sold Easy properties here at Discount Property Investor; and we had mailed him too, so he actually called both of our letters and I just didn’t put two and two together. Also on that same topic; a good pal of mine here in town Jeremy, had not done direct mail in five years. Five! And he got a call from this guy. This guy was essentially saving every letter that was mailed to him because he was out of state, and he know at some point in time he was going to have to sell this thing.

Mike: I bet he did a sly broadcast...

David: He might have. So it was pretty interesting to see all the people that were there, so it was pretty crazy.

Mike: Competition is pretty high.

David: Competition was super high on this one. That was kind of our lead source of motivation.  So, so absentee owner, his motivation; out of state, guys. He didn't want to deal with the turnover anymore. He had some pretty decent tenants in there for 12 years, out of state coming back and forth. He was just done; he was just tired of it.

Mike: So we come in with a pretty competitive offer and... our thought is; we are going to wholetail it. We kind of knew... we put in an offer at a price that we didn't necessarily thing we would be able to wholesale easily, right? We are higher than our typical numbers. We do that to be competitive, so the seller gets the best deal.

David: Right.

Mike: So creating a win:win, that's always our..

David: I will give you a quick little information about it. So when we were there... we had done some previous episodes about a credibility packet, being prepared and having comps. So we went out there, again we had one of our junior buyers out there, our associates out there. So it was... we teamed up at that point because we were on the same team; we were not trying to pay each other up.

Mike: Right.

David: But we both had credibility packets with us... we asked the seller straight up, "What do you want for this property?" We already had comps and knew what the value of the property was. He said, "I would like to get somewhere between 150-155 for it." We thought that was already a very fair offer. We didn't think he was crazy for asking that, because we thought the property would be worth over 200 when fixed up, and it didn’t need much work. With that being said, we pulled out a contract right then and there. We said... to the seller, "Hey if we paid you 156 for it, will you sign our deal right now?" We didn't want him taking our offer and shopping it against other investor buyers here in town and creating a bidding war. We are not really into the whole bidding war... game. Especially if we can provide value and say, "Here is what you are wanting; here is what we will pay you. This is exactly what you want; this is what we are going to give you." So in this scenario it was a win:win. We said, "Here is what we will pay you." He said, "No, I can't sign right now because I am in the middle of an open house and I want to at least get other people through the door." We said, "Okay that's fine, we understand. However we are going to give you a contract today for 156." Again he was only asking for 150-155. So we actually came in $1000 higher than his asking price. However, we told him that he had till 10pm that night to sign. So we essentially gave him an acceptance period. Here is what we will pay you, it is more than what you are asking, but again we don't want you shopping us off, that is not fair to us and we don't play that game. So if you want to sell this property to us for 156; you have till 10pm tonight to sign our agreement, and we can close this deal in two weeks. Sure enough we called him at 7pm to follow up with him, to remind him he only has a couple more hours. He had a couple of verbal offers but nothing else in writing. We were the only ones to show up with a contract in hand, signed it and gave it to him. So sure enough we won the deal.

Mike: Again I think because... a bit of a testimonial to using a credibility packet and showing up prepared. Which is... you go back and listening to the credibility packet episode... that is basically our message; show up prepared to your appointments, be ready to win the deal. You are there to buy houses, let's go buy some houses, guys. That is the whole point of what you are doing. You are not going there with the intent of hanging out and making a friend. You are going out there with the intent of hanging out, making a friend with the seller; but you are also there to buy that house from that person, you want to help them. So again be ready to do it, Dave was as well as our associate buyer there.

David: We left our nice little folder with our proof of funds, a little tri-fold in there, had our contract; in this case we used a one page simple contract. This guy... I could just tell when I met him, that he was a simple guy. I didn’t think using our state board seven page contract was necessarily. So I just had a one pager in there, and I took the other contract out and shoved it in my back pocket and I pulled it out. We walked through the contract; it took me maybe 90 seconds. Here is my offer, here is when we are going to close, it's cash, and so on and so forth. He was like, this is great. Didn't sign it right there but got it signed that day.

Mike: Absolutely awesome.

David: It was. When we bought it, we knew we were paying a little more than we wanted to pay. However it was still a pretty good price. At that point that we thought that we are going to buy this, we are going to close on it. We are either going to list it or...

Mike: Let’s talk about that real quick. Why didn't he want to list it himself? I already know the answer. Because... he didn't want showings when he wasn't around. He didn't want to disturb the tenant, that sort of thing, so again he just wanted to be done with the property as soon as possible. So again, he didn't want to deal with that hassle. So we are solving that problem for him, he can come in one day he has scheduled who knows how many investor buyers to come out and look at it. He just wanted to be done with it, so we solved the problem; we got him more than he was hoping to get for it. Again, win:win situation. We got a property for $156,000 that we thought was worth mid 200's, 240/250. I mean depending on how you finish the property.

David: The property was occupant ready. It wasn’t something that you are going to be able to sell high end as be able to get the highest ARV comparable to the comps that we there. But, it was liveable, you could move into it today. It definitely was a dated home; they had not updated it since... hadn't done any work to it since they purchased it 25 years ago. So definitely needed some updates in terms of cabinets, flooring, light fixtures.

Mike: The tile work...beautiful pink and greens.

David: But with that being said, it was in good condition, even though it needed updated and have a fresh look, the house was sound, the structure was great, it was clean and people were living there. Great point, Mike.

Mike: Cool, so let's talk about wholesale/wholetail back and forth, what happened with this deal. So our point was, we are primarily a wholesale company. That is kind of our preferred method to quick cash is to wholesale most of our properties. We also do a lot of wholetailing. So on this one we figured we were going to have to wholetail it. We were going to buy it a little bit higher, okay we are going to have to clean this one up and list it. So that was really our plan from day one. We bought it back to Ray and Bill, discussed it amongst the managers and said why don’t we go ahead try and list it as it is and see what we can do.

David: Now when you say list it Mike, we... didn’t just put it on our website and shop it to our buyers. We did do that, but that's not all we did. We listed it on the multiple listing service, on the MLS.

Mike: That is legal; we listed it as owner by contract, so you have to disclose that you are the owner by contract.

David: Sometimes you are going to have sellers or property owners that you are going to buy a property from that are going to resist that; they are not going to understand what is going on and they are going to have a problem with. In this case though, we told the individual that we are investors, we may do a rehab on this property and then sell it for a profit, we told him that from the beginning. Or we may sell it as is. He didn’t really care because regardless of if we found a buyer or not, we were going to close on it, we made that very clear. We had proof of funds, we said if we can flip this before we even have to close on it; good for us, we might even do that. But you don’t need to worry because regardless of what we do with it, we are going to pay cash and close on it period.

Mike: No out contract.

David: We had no contingencies, it was as it. So he could have essentially sued us for breach, and I think the earnest money was like 2500... a couple of thousand bucks. So he knew he was going to get something as a minimum. But back to the point though; we got his approval to list it owner by contract on the MLS, and that's what we did.

Mike: Okay so we listed it owner by contract, we may have to close on it and hold it. It depends on who the buy is and all that. We actually had a side bet with one of the managers.

David: A steak dinner.

Mike: Yes. So we had a side bet that said we bet this is not going to investor. There is no way an investor is going to pay more than what we paid for it, I think it is too high. I said, "Bill, right now the rule is, whatever you think it is going to sell for..." It's not you, it's not me. Add 10,000 and send it out. That really has been holding true for a lot of our deals, and we are able to pay more. So we are not really profiting that much more but we are able to...

David: Do you remember what we listed it as, Mike? Sold it for 180, but I think we put it out at 187?

Mike: 186, something like that.

David: We added a couple of grand knowing they were going to negotiate us down and... it wasn't on the market for more than what? Four or five days maybe? We had quite a few people want to go look at it, we did have to coordinate because it was occupied. We were not able to put a lockbox on it, we were not able to use a super box or any of that type of stuff. So essentially what we did was herded all of the interested parties into small windows. So we will list this on a Monday, show it Wednesday from 1-3 and Friday from 2-4. Come ou and pick a date and essentially we got somebody who walked through and said they wanted it, they were a rehabber, investor. They said they would pay 180 for it and...

Mike: We said sold.

David: Sold.

Mike: Then we transitioned and said let’s try and get a double close out of this. We sold it much more quickly than we thought, at a price much her than we thought we would be able to. So we went ahead, let’s try and double close it. We worked with the seller and...

David: What would have been the advantages of doing that, Mike vests what we prior wanted to do?

Mike: Double close? The advantage to double closing... you don’t have to fund the deal, zero money out of pocket. So if you can close it the same day; you don’t have to fund it.

David: Check your state, check your title company. In Missouri where we live; we are able to do what is called a dry fund double close. So if we can like up our A to B and B to C, we essentially have zero money out of pocket, we don't need to go out and hire or work with a transactional funder. We can essentially just get both people to show up at the title company on the same day. The C buyer, the end buyer's money just flows straight through us to the seller and... we wouldn't have to do a dime. So again, we try to set this up, we worked really hard to try and get these two dates to align which would have essentially turned our wholetail into a wholesale.

Mike: That would have been beautiful.

David: But unfortunately... the buyer was using the line of credit and needed to get an appraisal I believe, don’t quote me on that. But we just were not able to get them to close on the exact same day.

Mike: We have a seller who is out of state...

David: We had already made a promise to the seller and we wanted to keep our word. So we said no problem, we will just close on this deal. So we went to the title company with 156... and bought it. Then... maybe 3-5 days later... maybe a week?

Mike: It was a couple of weeks later. I think it was maybe two weeks later.

David: Two weeks later... so we had two weeks of holding costs. But we have a line of credit, so we were essentially paying 12/15 bucks a day.

Mike: The other thing we want to point out is that we also get the property insured. If we are closing.. you want to get an insurance policy on it, because quite frankly you are almost gambling at that point.

David: You are if you don’t have insurance on it. That's a great point, Mike. So we had 150,000 invested, plus closing costs...

Mike: If that property burns down...

David: We would have owed 156, every penny of it.

Mike: So again...

David: I think we paid 250 for the short term insurance policies on vacant houses.

Mike: We are investors, not gamblers.

David: Absolutely. That is a great point.

Mike: It stinks to pay it, but it is worth it in my opinion.

David: Absolutely. Long story short; two weeks later we went back to the closing table with the same property, we sold it for 180... so we were able to pay back the bank loan which essentially was line of credit, plus interest, plus closing cost, plus $250 which we paid to insure it, covered our rear ends on any crazy thing that could have happened, fire or whatnot.

Mike: Pro tip; if you are going to wholetail a property, it is going to make sense for you to use the same title company if you can.

David: Absolutely, that is a great point, Mike.

Mike: Why do you need to do that?

David: From past experience; if you use the same title company, it is going to be a hell of a lot easier to ensure that property... for the second time, for the end buy. The reason is, sometimes it takes the title company a little bit of time to get the documents recorded and... get all the leans paid off, all the type of stuff. Not only paid off, but record of them being paid off. So if you use the same title company; they already have all the paperwork. Hey, this transaction was successful a week or two or whatever ago. It could have even been two days ago, and when you are going to sell it... just sort of stream lines the entire process for the title insurance.

Mike: Right so title insurance... if you went to a different titel company, that transaction may or may not have even been recorded with your state, city or county or whatever it was. So the other title company may not even be able to see that you own the property. It can create headaches, so it makes sense if you can, if you can make sure to use the same title company.

David: To sum it up, we had a successful wholetail to wholesale back to wholetail. We were trying to line up that wholesale, but we were not able to line them up; but not big deal... we were able to purchase it, we paid a reasonably fair price for it... we found an investor buyer who wanted to rehab it. He got a good deal as well because he was going to put maybe 35 grand into it. But he could have sold it for 240/250... so he essentially probably made 25-30 grand on the deal.

Mike: He could be holding it as a rental himself.

David: That's possible too. Long story short, what did we profit on that deal, Mike? How much did we make?

Mike: So the gross was $18,405. It depends on your interest rates and insurance rates. But it was pretty close to $17,000 for this deal. So it is important to be able to pivot... make sure you kind of know your market and... roll with it. This deal we didn’t know what was going to happen, we just knew it was a good deal and we were going to make something.

David: It was a great learning experience too, because not only did we get a free steak dinner out of it... which we still need to redeem.

Mike: We do.

David: We were testing the market a little bit, we didn’t know... exactly how much we would get for it if we were to list it owner by contract... worst case scenario we would rehab the house. We were going to get it at a decent price anyway. So we threw it out there and sure enough we got an offer, we took it, it was a great offer, it was a win:win, everybody wins. The seller won, us as the middle buyer, we won because we were able to make 17,500 on it. But the end buyer, the guy that is either going to hold it as a rental or rehab it, he got the property at a great price too. Complete win:win. Great case study, Mike:

Mike: Guys, thanks for listening to our wholesale wholetail episode here. If you have not gone out and checked out the free wholesale course, please do that. Freewholesalecourse.com. You can check out any of our properties that we have available at Discountpropertyinvestor.com. Closing quote for the day, Dave. What do we want to end it with?

David: Well, you mentioned a quote to me earlier but I totally forget it but I am just going to go from the hip here. "Consistent, persistent action". I have said it before on a quote; I am going to say it again. Consistently be persistent and take action. That is the key to success in any business. It doesn’t matter if you are a real estate investor... or teaching piano lessons out of your basement. If you are consistently persistently acting to build your business and improve yourself everyday; you will be successful.

Mike: That's great. Thanks for listening guys.

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Episode Transcript

David: Alright guys, welcome back to the Discount Property Investor podcast. Today's episode we are going to be talking about a... case study of a property that we just closed, and it was a property that we essentially wanted to wholetail; then we decided that maybe we should wholesale it, then at the end of the day we went back to the wholetail. So it is going to be an interesting case study.
Before we start; we want to encourage you to check out the freewholesalecourse.com. If you have not listened to any of our podcasts yet, the freewholesalecourse.com is an awesome resource we have put together; Mike and I. It is... everything you need to know about getting started in wholesaling. So it is an awesome program, if you listened to previous podcasts you have probably heard us say it a time or two.

Mike: Go check it out though, that's the thing I want to encourage you to do. Because some people are like, "What is it? A five minute video or something?" No it is a complete course on wholesaling. So that is why it is called freewholesalecourse.com. It is literally a free course on wholesaling. If you have no invested in real estate, not done any deals, you absolutely have to go check it out. It really is a free wholesale course.

David: Absolutely. I was checking the reviews this morning. We have over 20 five star reviews. The reason that I mention that; 20 is not a ton by any means, not a single review has come in that has been less than five stars.

Mike: That's awesome.

David: I wouldn't sit here and lie about that because...

Mike: I didn't even know about that.

David: We have the ability to not post the ones we do not want to post, but everyone that has come in I have been like, yeah let's post because five stars.

Mike: We can turn off that filter pretty soon. Let the reviews go through, who cares?

David: That's right.

Mike: Once you get enough good ones...

David: Pretty cool course guys; check it out, we are really happy with it and we are getting a ton of positive feedback. So, about this episode, wholesaling to wholetailing to wholesaling to wholetailing. This is a case study. Mike, what was the address of this one?

Mike: To wholesale, or not to wholetail. That is the question, right? So this one was a pretty good property, so it is a nice area in St Louis. Because the market, and most likely in your area as well; the market is so good right now. Our strategy has been to wholetail if we can. If the property is in decent shape in a decent area; we are going to be able to maximise our return or our profit by putting it out to more buyers, potentially a owner occupant as opposed to an investor buyer. So we are able to lock things up a little bit higher and hopefully, so we are able to lock things up a little bit higher and hopefully get a little bit higher profit margin. So this property was technically in [00:03:10.05]. Not sure if was or not, it was 509 [00:03:12.25] was the address right here in St Louis, like I said in west county [00:03:18.08]. That is just a great market. A lot of my friends, our age group, 30's... 20's, 30's; first time home buyers are really kind of drawn to this area because it is in west county, which is a higher dollar area for St Louis. But it is not necessarily out of their price range. So it is not the top dollar are in St Louis. So again, great area for us to try and do a wholetail deal. So this lead came in; we sent some direct mail. I believe this was an absentee owner.
David: I am trying to find the... I wanted to pull it up... here we go.

Mike: So yeah, this owner was... he was a landlord and his tenant was getting ready to move out, and he actually lived out of state.

David: That's right; he lived out in Colorado so absentee owner landlord.

Mike: So there are multiple reasons why he was motivated to sell. He doesn’t want to have to come in and deal with the rehab; I don’t believe he had property management in place. So he was doing a lot of it himself out of state. Which is a great strategy, depends on your goals. But anyway, there was motivation there; he didn’t want to have to deal with it anymore. He was tired of being a landlord, flew in to meet people... but what was happening, Dave? You actually went on this appointment didn’t you?

David: I did yeah. He owned the house... I want to say they owned it for 25 years; they had been renting it for the last 12. So... I am not very good with math, what is the difference in that? 17? 16?

Mike: 12 and 25 is 13.

David: 13... I am terrible at math.

Mike: That's bad.

David: That is bad.

Mike: You are almost as good at math as you are spelling.

David: Yeah, those two are not my strong suits. So anyways they owned it for about 25 years, lived in it for 13, then they rented it for 12... they lived in Colarado so the tenants that they had... were moving out and they just didn't want to have to deal with ding this process again. They had done it for 12 years already. They were trying to get rid of everything they had in St Louis so that way when they went back to Colorado they could stay in Colorado, they didn't have anything on their... any baggage left behind. So... when I went on the appointment; the gentleman that sold the house to us... was in town and he was swing it, the tenant was at work and... I just want to talk briefly about the competition on this particular deal. The... there was wholesalers, or investor buyers I should say, a better word for it, but there was investors and buyers at the property when I arrived. I was at the property for 10, maybe 15 minutes, just did a quick walk around, took some pictures, did some due diligence as far as checking out the condition of it. There was also buyers coming as I was leaving. In the window of time that this guy had set aside for showings was I think maybe two or three hours. I think it was 10-12am to check the property out. So there was tons of...

Mike: It's funny too I don't know if you remember this or not, Dave. So... the Discount Property Investors... we do a ton of mail, we do a ton of advertising and this lead came into our system. We sent one of our associates out to go and look at the property.

David: That's right.

Mike: Well... Dave also prior to this, myself also; we had all done some direct mail prior to merging our companies. So Dave had actually got a call from this gentleman from his previous efforts, i guess to his cell phone. So he had set up an appointment as well. So Dave shows up and you met one of our junior associates.

David: So we sent one of our guys out to go buy the property...

Mike: I didn't mean to call you out on it.

David: No, you are not calling me out at all; that is perfect. Just goes to show you that whenever you drop a big bunch of mail and you don't get any calls right away, it doesn’t mean that people didn't get your letter, and or saved your letters. That is a great point; I mailed this guy like 15 months prior. He got a letter from me, then I joined Mike and Bill and Ray at House Sold Easy properties here at Discount Property Investor; and we had mailed him too, so he actually called both of our letters and I just didn’t put two and two together. Also on that same topic; a good pal of mine here in town Jeremy, had not done direct mail in five years. Five! And he got a call from this guy. This guy was essentially saving every letter that was mailed to him because he was out of state, and he know at some point in time he was going to have to sell this thing.

Mike: I bet he did a sly broadcast...

David: He might have. So it was pretty interesting to see all the people that were there, so it was pretty crazy.

Mike: Competition is pretty high.

David: Competition was super high on this one. That was kind of our lead source of motivation.  So, so absentee owner, his motivation; out of state, guys. He didn't want to deal with the turnover anymore. He had some pretty decent tenants in there for 12 years, out of state coming back and forth. He was just done; he was just tired of it.

Mike: So we come in with a pretty competitive offer and... our thought is; we are going to wholetail it. We kind of knew... we put in an offer at a price that we didn't necessarily thing we would be able to wholesale easily, right? We are higher than our typical numbers. We do that to be competitive, so the seller gets the best deal.

David: Right.

Mike: So creating a win:win, that's always our..

David: I will give you a quick little information about it. So when we were there... we had done some previous episodes about a credibility packet, being prepared and having comps. So we went out there, again we had one of our junior buyers out there, our associates out there. So it was... we teamed up at that point because we were on the same team; we were not trying to pay each other up.

Mike: Right.

David: But we both had credibility packets with us... we asked the seller straight up, "What do you want for this property?" We already had comps and knew what the value of the property was. He said, "I would like to get somewhere between 150-155 for it." We thought that was already a very fair offer. We didn't think he was crazy for asking that, because we thought the property would be worth over 200 when fixed up, and it didn’t need much work. With that being said, we pulled out a contract right then and there. We said... to the seller, "Hey if we paid you 156 for it, will you sign our deal right now?" We didn't want him taking our offer and shopping it against other investor buyers here in town and creating a bidding war. We are not really into the whole bidding war... game. Especially if we can provide value and say, "Here is what you are wanting; here is what we will pay you. This is exactly what you want; this is what we are going to give you." So in this scenario it was a win:win. We said, "Here is what we will pay you." He said, "No, I can't sign right now because I am in the middle of an open house and I want to at least get other people through the door." We said, "Okay that's fine, we understand. However we are going to give you a contract today for 156." Again he was only asking for 150-155. So we actually came in $1000 higher than his asking price. However, we told him that he had till 10pm that night to sign. So we essentially gave him an acceptance period. Here is what we will pay you, it is more than what you are asking, but again we don't want you shopping us off, that is not fair to us and we don't play that game. So if you want to sell this property to us for 156; you have till 10pm tonight to sign our agreement, and we can close this deal in two weeks. Sure enough we called him at 7pm to follow up with him, to remind him he only has a couple more hours. He had a couple of verbal offers but nothing else in writing. We were the only ones to show up with a contract in hand, signed it and gave it to him. So sure enough we won the deal.

Mike: Again I think because... a bit of a testimonial to using a credibility packet and showing up prepared. Which is... you go back and listening to the credibility packet episode... that is basically our message; show up prepared to your appointments, be ready to win the deal. You are there to buy houses, let's go buy some houses, guys. That is the whole point of what you are doing. You are not going there with the intent of hanging out and making a friend. You are going out there with the intent of hanging out, making a friend with the seller; but you are also there to buy that house from that person, you want to help them. So again be ready to do it, Dave was as well as our associate buyer there.

David: We left our nice little folder with our proof of funds, a little tri-fold in there, had our contract; in this case we used a one page simple contract. This guy... I could just tell when I met him, that he was a simple guy. I didn’t think using our state board seven page contract was necessarily. So I just had a one pager in there, and I took the other contract out and shoved it in my back pocket and I pulled it out. We walked through the contract; it took me maybe 90 seconds. Here is my offer, here is when we are going to close, it's cash, and so on and so forth. He was like, this is great. Didn't sign it right there but got it signed that day.

Mike: Absolutely awesome.

David: It was. When we bought it, we knew we were paying a little more than we wanted to pay. However it was still a pretty good price. At that point that we thought that we are going to buy this, we are going to close on it. We are either going to list it or...

Mike: Let’s talk about that real quick. Why didn't he want to list it himself? I already know the answer. Because... he didn't want showings when he wasn't around. He didn't want to disturb the tenant, that sort of thing, so again he just wanted to be done with the property as soon as possible. So again, he didn't want to deal with that hassle. So we are solving that problem for him, he can come in one day he has scheduled who knows how many investor buyers to come out and look at it. He just wanted to be done with it, so we solved the problem; we got him more than he was hoping to get for it. Again, win:win situation. We got a property for $156,000 that we thought was worth mid 200's, 240/250. I mean depending on how you finish the property.

David: The property was occupant ready. It wasn’t something that you are going to be able to sell high end as be able to get the highest ARV comparable to the comps that we there. But, it was liveable, you could move into it today. It definitely was a dated home; they had not updated it since... hadn't done any work to it since they purchased it 25 years ago. So definitely needed some updates in terms of cabinets, flooring, light fixtures.

Mike: The tile work...beautiful pink and greens.

David: But with that being said, it was in good condition, even though it needed updated and have a fresh look, the house was sound, the structure was great, it was clean and people were living there. Great point, Mike.

Mike: Cool, so let's talk about wholesale/wholetail back and forth, what happened with this deal. So our point was, we are primarily a wholesale company. That is kind of our preferred method to quick cash is to wholesale most of our properties. We also do a lot of wholetailing. So on this one we figured we were going to have to wholetail it. We were going to buy it a little bit higher, okay we are going to have to clean this one up and list it. So that was really our plan from day one. We bought it back to Ray and Bill, discussed it amongst the managers and said why don’t we go ahead try and list it as it is and see what we can do.

David: Now when you say list it Mike, we... didn’t just put it on our website and shop it to our buyers. We did do that, but that's not all we did. We listed it on the multiple listing service, on the MLS.

Mike: That is legal; we listed it as owner by contract, so you have to disclose that you are the owner by contract.

David: Sometimes you are going to have sellers or property owners that you are going to buy a property from that are going to resist that; they are not going to understand what is going on and they are going to have a problem with. In this case though, we told the individual that we are investors, we may do a rehab on this property and then sell it for a profit, we told him that from the beginning. Or we may sell it as is. He didn’t really care because regardless of if we found a buyer or not, we were going to close on it, we made that very clear. We had proof of funds, we said if we can flip this before we even have to close on it; good for us, we might even do that. But you don’t need to worry because regardless of what we do with it, we are going to pay cash and close on it period.

Mike: No out contract.

David: We had no contingencies, it was as it. So he could have essentially sued us for breach, and I think the earnest money was like 2500... a couple of thousand bucks. So he knew he was going to get something as a minimum. But back to the point though; we got his approval to list it owner by contract on the MLS, and that's what we did.

Mike: Okay so we listed it owner by contract, we may have to close on it and hold it. It depends on who the buy is and all that. We actually had a side bet with one of the managers.

David: A steak dinner.

Mike: Yes. So we had a side bet that said we bet this is not going to investor. There is no way an investor is going to pay more than what we paid for it, I think it is too high. I said, "Bill, right now the rule is, whatever you think it is going to sell for..." It's not you, it's not me. Add 10,000 and send it out. That really has been holding true for a lot of our deals, and we are able to pay more. So we are not really profiting that much more but we are able to...

David: Do you remember what we listed it as, Mike? Sold it for 180, but I think we put it out at 187?

Mike: 186, something like that.

David: We added a couple of grand knowing they were going to negotiate us down and... it wasn't on the market for more than what? Four or five days maybe? We had quite a few people want to go look at it, we did have to coordinate because it was occupied. We were not able to put a lockbox on it, we were not able to use a super box or any of that type of stuff. So essentially what we did was herded all of the interested parties into small windows. So we will list this on a Monday, show it Wednesday from 1-3 and Friday from 2-4. Come ou and pick a date and essentially we got somebody who walked through and said they wanted it, they were a rehabber, investor. They said they would pay 180 for it and...

Mike: We said sold.

David: Sold.

Mike: Then we transitioned and said let’s try and get a double close out of this. We sold it much more quickly than we thought, at a price much her than we thought we would be able to. So we went ahead, let’s try and double close it. We worked with the seller and...

David: What would have been the advantages of doing that, Mike vests what we prior wanted to do?

Mike: Double close? The advantage to double closing... you don’t have to fund the deal, zero money out of pocket. So if you can close it the same day; you don’t have to fund it.

David: Check your state, check your title company. In Missouri where we live; we are able to do what is called a dry fund double close. So if we can like up our A to B and B to C, we essentially have zero money out of pocket, we don't need to go out and hire or work with a transactional funder. We can essentially just get both people to show up at the title company on the same day. The C buyer, the end buyer's money just flows straight through us to the seller and... we wouldn't have to do a dime. So again, we try to set this up, we worked really hard to try and get these two dates to align which would have essentially turned our wholetail into a wholesale.

Mike: That would have been beautiful.

David: But unfortunately... the buyer was using the line of credit and needed to get an appraisal I believe, don’t quote me on that. But we just were not able to get them to close on the exact same day.

Mike: We have a seller who is out of state...

David: We had already made a promise to the seller and we wanted to keep our word. So we said no problem, we will just close on this deal. So we went to the title company with 156... and bought it. Then... maybe 3-5 days later... maybe a week?

Mike: It was a couple of weeks later. I think it was maybe two weeks later.

David: Two weeks later... so we had two weeks of holding costs. But we have a line of credit, so we were essentially paying 12/15 bucks a day.

Mike: The other thing we want to point out is that we also get the property insured. If we are closing.. you want to get an insurance policy on it, because quite frankly you are almost gambling at that point.

David: You are if you don’t have insurance on it. That's a great point, Mike. So we had 150,000 invested, plus closing costs...

Mike: If that property burns down...

David: We would have owed 156, every penny of it.

Mike: So again...

David: I think we paid 250 for the short term insurance policies on vacant houses.

Mike: We are investors, not gamblers.

David: Absolutely. That is a great point.

Mike: It stinks to pay it, but it is worth it in my opinion.

David: Absolutely. Long story short; two weeks later we went back to the closing table with the same property, we sold it for 180... so we were able to pay back the bank loan which essentially was line of credit, plus interest, plus closing cost, plus $250 which we paid to insure it, covered our rear ends on any crazy thing that could have happened, fire or whatnot.

Mike: Pro tip; if you are going to wholetail a property, it is going to make sense for you to use the same title company if you can.

David: Absolutely, that is a great point, Mike.

Mike: Why do you need to do that?

David: From past experience; if you use the same title company, it is going to be a hell of a lot easier to ensure that property... for the second time, for the end buy. The reason is, sometimes it takes the title company a little bit of time to get the documents recorded and... get all the leans paid off, all the type of stuff. Not only paid off, but record of them being paid off. So if you use the same title company; they already have all the paperwork. Hey, this transaction was successful a week or two or whatever ago. It could have even been two days ago, and when you are going to sell it... just sort of stream lines the entire process for the title insurance.

Mike: Right so title insurance... if you went to a different titel company, that transaction may or may not have even been recorded with your state, city or county or whatever it was. So the other title company may not even be able to see that you own the property. It can create headaches, so it makes sense if you can, if you can make sure to use the same title company.

David: To sum it up, we had a successful wholetail to wholesale back to wholetail. We were trying to line up that wholesale, but we were not able to line them up; but not big deal... we were able to purchase it, we paid a reasonably fair price for it... we found an investor buyer who wanted to rehab it. He got a good deal as well because he was going to put maybe 35 grand into it. But he could have sold it for 240/250... so he essentially probably made 25-30 grand on the deal.

Mike: He could be holding it as a rental himself.

David: That's possible too. Long story short, what did we profit on that deal, Mike? How much did we make?

Mike: So the gross was $18,405. It depends on your interest rates and insurance rates. But it was pretty close to $17,000 for this deal. So it is important to be able to pivot... make sure you kind of know your market and... roll with it. This deal we didn’t know what was going to happen, we just knew it was a good deal and we were going to make something.

David: It was a great learning experience too, because not only did we get a free steak dinner out of it... which we still need to redeem.

Mike: We do.

David: We were testing the market a little bit, we didn’t know... exactly how much we would get for it if we were to list it owner by contract... worst case scenario we would rehab the house. We were going to get it at a decent price anyway. So we threw it out there and sure enough we got an offer, we took it, it was a great offer, it was a win:win, everybody wins. The seller won, us as the middle buyer, we won because we were able to make 17,500 on it. But the end buyer, the guy that is either going to hold it as a rental or rehab it, he got the property at a great price too. Complete win:win. Great case study, Mike:

Mike: Guys, thanks for listening to our wholesale wholetail episode here. If you have not gone out and checked out the free wholesale course, please do that. Freewholesalecourse.com. You can check out any of our properties that we have available at Discountpropertyinvestor.com. Closing quote for the day, Dave. What do we want to end it with?

David: Well, you mentioned a quote to me earlier but I totally forget it but I am just going to go from the hip here. "Consistent, persistent action". I have said it before on a quote; I am going to say it again. Consistently be persistent and take action. That is the key to success in any business. It doesn’t matter if you are a real estate investor... or teaching piano lessons out of your basement. If you are consistently persistently acting to build your business and improve yourself everyday; you will be successful.

Mike: That's great. Thanks for listening guys.