David: Alright guys, welcome back to the Discount Property Investor podcast. This is your host David Dodge. Mike Slane is out in the field today; my co-host. However, I am joined by a good friend and another fellow real estate investor Don Costa from the Flip Talk podcast. How we doing, Don?

Don: I'm good, man. We have been talking about doing this for a while, and we haven't been able to connect. So I am glad we finally did.

David: We sure have, man. We have talked about doing this-- actually we met originally here in St Louis; my home market. Don is from Fresno if you are not familiar with Don. We were out here in St Louis at a real estate workshop, for those who wanted to expand their business even more. So Don, good catching up with you, man. How are things?

Don: Things are fantastic, we are having a great year, I can't complain at all. 2018 has been really, really good to me.

David: That's awesome. Well today I really want to focus on systems, Don. When I first met you, me and Mike, what do you think? That was about a year and a half ago?

Don: About a year, I think it was this time last year.

David: So about a year ago. When we first met you were flipping roughly rehabbing, not flipping but rehabbing is what you were focused on. About 100 houses a year. I totally was blown away by that. You kind of said something to me that made me feel good about myself. But not so much on the same level, but at that time Mike and myself were doing more than ten wholesales a year, I'm sorry a month. So if you look at that on a scale of a year, we were doing 100 as well, but not full flips. Big difference, man, a big difference. We are still doing 10-15 wholesales every single month. However now, we have started to do a little bit more. Now we have about 20 rentals as a company, about 50 between my partners, company and myself. We are also doing anywhere from 2-4 rehabs at a time. But we are still basically focusing the majority of our efforts on wholesaling. Then obviously as a wholesaler, all the viewers and listeners will know from listening to my podcast, as well as yours as well, Don. That wholesaling is kind of a means to an end for us, at least I would think for you too. It's a great way to do marketing, get good deals in the door. Then of course you can cherry pick those deals, and keep the best for yourself, and wholesale off the rest of those.

Don: Right.

David: Awesome. Well, Don, it's great to have you. I talk a lot so cut me off at any time, it's really not big deal. I could go all day here. But when we first met, you surprised me and impressed me, by the fact you guys were doing 100 rehabs. I am just trying to think of the manpower, and the brainpower. Just thinking about it hurts my head. Tell me about some of the systems you have in place about your business, to be able to get to that level. Then of course you just recently told me you changed it. But let's just talk about those things first.

Don: So yeah, we did 122 last year, wholesales. The rest were rehabs. A couple of wholetales mixed in there, wholetale, if you are not doing wholetale strategy, I am telling you right now; it's a game changer. That's where you close on the property, turn around and put it on the MLS and resell it. But a majority of the 122 rehabs--

David: You said three wholesales?

Don: Three wholesales in 2017, then the wholesales, I think we did ten or something like that, and the rest were rehabs. You know, really before I get into some of the systems we use, I want to frame systems in a matter that I think will help people really understand them. Because I think some people feel like they need to buy a certain system that everybody uses. I will say that all of our businesses are different, and so systems for the most part they are going to fit your organization and maybe not somebody elses. And so you got to look at systems in a manner of-- they are like the boundaries you set your organization for which people perform with it, okay? So if you start looking at it that way, it becomes easier. No one is going to take a truckload of systems and back it up to your drive way and put it on your driveway, and you're going to have all the systems for your business.

David: Right.

Don: You're a wholesaler, a wholesaling company, I'm a rehabber. Our system structures are different. So you got to just-- like I said, take them and frame them in a manner that is easy to understand. They are the boundaries that you set. An example of a system for instance, is how we pay our contractors. We have our contractors bill us on Friday for the week they are going to complete the following Friday. Our gal comes in on Monday, she cuts all the checks, makes reports on what we are paying out for that week, she sends those reports to our lenders, our lenders will give us our reimbursement, our draw for the rehab by Wednesday or Thursday. Friday morning project manager confirms the work is done we give the contractor a check. That's a system, right? Now from the outside looking in, that doesn't look like a system. But that habit, that process controls so many things. One is we force our contractor to set a goal, right? We force him to set a goal for what he's going to complete.

David: I love that. That's awesome.

Don: He's got a goal. He is only paid for the work he's done. That kind of sets that precedent. Two is-- with Cass coming on on Monday and cutting all the checks, we know-- first of all the checks are cut, they're done, that work is done, it has passed us. But we know where we stand on the project at the beginning of the week. We know where our obligations are for all of our projects at the beginning of the week, capital obligations.

David: So I just want to clarify a couple of things, Don. A couple of quick questions, so one-- your contractors submit no only the goal on what they want to do, but the cost on Friday. The next Monday, so the weekend goes by, then on Monday you have a team member who then cuts those checks, is that right? For the next week, then those checks would basically be delivered on that next Friday then?

Don: Basically at the end of that week on Friday.

David: Got it.

Don: The contractors will pick those checks up as long as they hit that goal and finish that work.

David: Right, that's something-- I didn't mean to interrupt you, but basically they have to hit that goal before they get that check?

Don: They have to hit that goal. Yeah, we can talk about some of the implications if they don't.

David: Right.

Don: Essentially now as a company, we know what our capital obligations are, which is huge. For a rehabber knowing where you stand financially, cash flow, capital obligations, making sure that you [00:07:21.10 - inaudible] the company. All of that comes into play from knowing where you stand early on in the week. So then we have transparency to our investors. Early on in the week we can say this is what we're paying out this week. We are very transparent as to what we are paying out and why. Then they have given us their check like I said by Wednesday or Thursday. We got their money in, so now we have capital in our bank account, so we pay out the contractor. That system manages cash flow for us. So you notice that one little thing where we are saying, you have to do this to the contractor. It allows us to accomplish so many things in our business. So it's structure, right? This is the rule you have to follow every single week. You put those things, the accountabilities in place. I can go through my entire organization talking about these systems that we use, that we figured out how to implement that allow our business to run and function properly. So we end up with that one little obligation to the contractor that they have to submit their invoice on Friday. We end up locking out a bunch of different things.

David: So other things come from that? That's awesome.

Don: Come from that, and then by Friday if they have finished the work that they need to complete they get that check. Now everybody asks me what if they don't finish? Well my answer to the back is, if it's someone we work with, because a lot of our contractors we work with for five or six years and great at maintaining relationships; if they didn't finish painting the exterior that was on the invoice-- I know the guy, he is going to have his team there on Saturday to knock that out, I'm probably going to--

David: Pay him, right.

Don: Yeah.

David: Gotcha.

Don: But if it's something where they are like 50% complete, we are going to re-cut the check for 50% complete. If it's a new person we haven't worked with before; we are going to re-cut the check to what they have completed. Now that usually once we do that solves the problem of them not making that mistake of over promising and under delivering.

David: Absolutely.

Don: But it also allows us-- people talk about the issue surrounding the contractors. That little system allows us to on Friday if that guy has been a problem and is not finishing what he's doing this for, I can have him basically cut loose and I can have a new contractor there on Monday.

David: Have a new one right in there, yep.

Don: Right in there, right behind him. I am only out financially what he has finished, what's he's done. So I am not out a bunch of money. A lot of people do draw schedules, right? You do them it's fine, I don't do them. Sometimes you will do a draw and the contractor isn't quite ready for that draw, a big deposit now he's ready for a draw. A lot of investors make the mistake being into the contractor too deep, then the contractor walks, so you've got to fire them and you're losing 10-15-20 grand--

David: Plus time.

Don: Plus time. I don't have that issue. If I see someone as being a problem, it's like Friday comes, forget it, new contractor on Monday. Last time I had fire a contractor I was out like 1500 bucks.

David: That's not terrible at all.

Don: Yeah.

David: It's nothing, it's not that bad.

Don: So that's a system, and the reason that I share that is that it's the easiest one to share, but it just gives your perspective. You look at your whole organization like that, through that lens, how can we put the processes of accountability in place? We do the same every single time. That becomes a system in your organization.

David: Right.

Don: I'm sure you have them without even realizing it in wholesaling. When you get a contract, is there a first step when you get a contract? Is there a second step when you get a contract? Is there a process that you follow every time for your organization?

David: Absolutely. Do you use Podio for your CRM?

Don: We use Podio for our CRM.

David: Awesome. We have Podio and… We have tons and tons of automations. You do one thing and it triggers the next thing and triggers the next thing. It's really helpful to put those systems in place, and keep everybody on the team up to date on where things are at. So absolutely, that's awesome. I love that. So Don, tell me a little bit more about-- you guys getting more into wholesaling. So last year 2017, 122 deals, approximately 10 wholetales, about three wholesales. Are you doing more wholesales now?

Don: Yeah okay so just to put it in perspective. I set a wild crazy goal at the beginning of the year to do 200 properties.

David: 200 for 2018.

Don: 200 properties for 2018

David: Okay.

Don: At the pace we're going we should cross the 200 mark by the end of September and the beginning of October.

David: That's awesome!

Don: Yeah. I am hoping now for 250, 260 by the end of the year. But needless to say, we wouldn't be able to accomplish that number without putting wholesale into the mix. One of the reasons we are able to do that many properties this year is because-- as rehabbers there is a box everything has to fit in. If the numbers don't work the numbers don't work. You can overpay for something, rehab it and expect to make money every single time, it's not going to happen.

David: Right.

Don: In a fluke you might get overbid, but most of the time you are going to break even or lose if you don't buy right. So what this market, this crazy market is doing right now, there are people who are coming in, institutional buyers, you name it that are willing to pay 90 cents on the dollar, 95 cents on the dollar, for whatever reason they are going to hold them, they don't have to make as much. And so we want to take advantage of that. We are in a cycle right now in the market where-- honestly let's face it, it's hot.

David: It's hard to get good deals right now, or harder I should say. If you know what you're doing you can find them. But it's getting harder and harder.

Don: On the flip side of it, it's real easy to get rid of properties, and I want to take advantage of that. So we put some structures and systems in place, processes in place to allow us to get my contracts. We are capitalizing on the fact that buyers are willing to buy thing. So stuff we normally wouldn't touch, we are selling off. So the wholesaling just makes sense at this point in time, so we decided to go in that direction. It has done really well for us, we did 29 properties, 29 contracts in June, I would say 50% of that we are going to wholesale off.

David: I love it. So you are going to be doing 100 wholesale deals this year probably then?

Don: Probably yeah.

David: That's awesome, I love it, it's so cool. So tell me a little bit about how you guys go about getting your deals. To me, whenever you were not doing all these wholesales, and you were doing 100, let's say last year you did 122 last year. Are you buying most of your properties from wholesalers? Or are you guys doing your own marketing and have your own department to do that? I would think you have to have your own, because you could buy 122 properties in St Louis from wholesalers, but you're not going to get 50 deals. So you know how that goes.

Don: Okay so basically, that's a great question. I started in this business dead broke, I didn't have two quarters to rub together. I couldn't do marketing so I did a lot of networking when I started. So for a a lot of this business, I have been referral based. I'm working with agents who bring me deals, I am working with wholesalers who are bring me deals, doing some of our own marketing, shaking every bush. 50% of what we are doing is come from outside sources. People-- you build the right relationship with agents, they might be good for two or three or four deals a year, but you have ten of those people.

David: That's a ton of deals, right. So you guys are getting 50% from your own efforts though?

Don: Up until 2018 absolutely, and the rest were from outside sources. I will be honest with you, to tell you the truth-- I think there is a battle sometimes between flippers and wholesalers. Wholesalers don't always get what flippers go through, and flippers don't understand sometimes that wholesalers spend a lot of time spinning their wheels.

David: Right.

Don: Money marketing just to get the deal. So--

David: They're both hard. The fact you are doing both of them is amazing. I do a little bit of flipping, but mostly wholesaling.

Don: They are both hard and I want to acknowledge that before I say what I'm going to say, because what happened is, a wholesaler in my market made me mad. I did a lot of business with him, and it's not wholesalers in general; I am acknowledging wholesaling is tough, it's a hard business and you guys bring a lot of value. This guy had kind of done the whole, you get a contract on this, and then I didn't hear from him, oh I gave it to someone else kind of thing. So going into 2018 that's one reason, but I decided I was going to drop a bomb on the market and...

David: Cool, I love that, that's sweet.

Don: Because he made me mad. But also, the cost of marketing was getting so expensive. We were pushing $6000 a deal through direct mail. So the other sources were climbing as well.

David: That's your KPI for one deal basically?

Don: For one deal in 2018, yeah. So I looked at my organization and everybody is saying direct mail is dead, this market is dead, and this market is dead. I looked at my organization and said, what if it's not dead, but people are on the wrong seats? What if they just got comfortable? I've had these people in these positions for a while, we have been doing this the way we have been doing this for however many years. What if they just got comfortable and just need to shake things up? So our process, we originally would do marketing, the call would come in, our acquisitions guy would take the call, he would set the appointment, he would go out on the appointment he would close the deal. That was our process. I felt like we were losing something in follow up, I felt like we were losing something in that process that-- it didn’t’t allow us to capitalize on everything. One of my acquisition guys who was great at acquisitions but felt he would be better in dispositions, I moved him to dispositions. Another acquisitions guy-- I basically pulled him out of that role and he went and did something else with the company. Then I brought in three lead managers to answer the phone. I brought in three because I thought two was…right? But anyway all are great, brought in three lead managers to answer the phone. Over the next couple of months, January, February, and March I hired three more acquisitions people and-- basically turned the marketing on. I turned on direct mail, turned on the process, implemented systems and processes to follow up. It took a little while to start to ramp up. But once it kind of hit and people got in their stride. I basically threw it against the wall and was like, where are the cracks? We will fix the cracks as we go. So as it started to ramp up and people got their feet under, and we started kind of phoning the roles of communication, it just kind of opened my eyes because of the fresh blood, fresh life, putting my acquisitions guy in the position where he really belonged. Being in the right seat, a lot of people talk about the right seat, just really opened the door to so many opportunities for our organization. Again, having him in the right seat, giving us permission to lock up properties that we normally wouldn't touch was huge. We just-- the numbers started to climb like I said. In June we did 29 contracts, probably going to hit 30 contracts by July, might go with 40th, but July 4th still in there. So we are going to shoot for 40 in August. Starting to kind of-- we have so many leads coming in right now, so many good leads. We have another acquisitions person starting next week in our market. I have already entered two new markets. We got our first contract in one of them actually yesterday. We have a six figure wholesale another one—

David: Oww! Love those! Done a couple of those, those are fun.

Don: Yeah those are huge. So just looking at things through a different lens I guess, right? I put it together and it's working. I will say, cut me off anytime you have a question, but I will say they are two different businesses. Wholesaling and rehabbing are two different businesses. You buy differently, you analyze properties differently, you think differently.

David: Right and you do, you really do; you have to.

Don: My struggle going into wholesaling as a rehabber, for you rehabbers that are listening to this, what if they have an easy way out? They have a buyer at 90, and the seller won't go below 80, in these conversations do they take the easy way out? Or do they do what we used to do which is you work on that seller until you get them down where you need them to be? So I am trying to find that balance still. But I am not complaining because we are moving a lot of properties.

David: I love that, man. That's awesome. So a couple of things; you said that your KPI's are six grand per deal.

Don: In 2018.

David: In 2018, so-- I love that you added that date in there, that's what I wanted to get at. The reason is--

Don: 2017 I apologize.

David: But the reason it is so high is because you-- those people are not necessarily in the funnel from before before, they are being added into the funnel now. On average in St Louis, we probably work a lead for six to eight months on average before we can get them down to where we need them to be to get that deal done. So as time goes on and that funnel gets larger, the cost of those deals and leads will actually get smaller and smaller and diminish to a certain point. Because yeah it's not a deal today, but it might be a deal in six months, so on and so forth. So kind of a good lesson out there for our listeners and viewers. The cost per lead or per deal is going to be higher in the beginning. The more and more you do it, the cheaper it's going to become, which is awesome.

Don: I agree 100%. One of the reasons I think we were so high in 2017 is because we were not really as good on follow up as we wanted to be.

David! Ow! That's 80% of the business in wholesale. It is, marketing is 20, 79 follow up, 1% closing.

Don: We implemented follow up apart, our lead managers are not taking calls they are making calls. We have our acquisitions people on follow up like crazy too. So our cost per lead, not per lead, per closed contract went from down to just under $6000 a deal down to $1800 closed contract now in 2018. Part of that is making sure that we are marketing right, like we figured out how to track our lists and how we are doing it. I'm micro tracking, I'm taking 100% [00:21:09.02 - inaudible] on its own, 70-90% … on its own.  I'm figuring out, okay this list produces a contract and 30 calls, but only gets half percent response rate, this one gets .8% response rate.

David: Doing all that in Podio?

Don: I am doing that outside of Podio.

David: That's a lot.

Don: That's a lot, but I'm breaking it down and-- the other thing I'm figuring out is that this is a mistake a lot of people make. I am kind of excited about this, kind of nerdy. I mailed to a list at the end of January, that produced calls and appointments but no contracts. That was in January. I had a hand full of lists that I mailed to that produced calls, appointments and contracts. I thought, okay list number one is a dud and these two lists are all I'm going to mail to, not just that I mail too there are a few others I mail to. These are all I'm going to mail too. So I did the math, and I was like okay at that time I think it was in March, I am almost $60,000 into direct mail, $28,000 of it produced and the other 32 didn't produce. So if I had just saved by not mailing to that 32,000, that would actually cut my cost per lead down even further, right? My cost per contract even further. That's the nerdy part of it. So I decided I wasn't going to mail to that list, but we were going to stay maintaining it with follow-up. In May and June, 50% of the contracts I got came from the list that produced nothing on the front end.

David: Absolutely it's the follow up.

Don: It's the follow-up. So the point is, now I'm mailing to it again obviously, you have your high hanging low hanging fruit list right. But-- I think the mistake a lot of new people make is that they will mail to something, not get a result, and think it doesn’t work.

David: Absolutely, 100%. That's what I tell all of my students as well, and all the listeners and the viewers out there. I love sharing information, I know you do too. Your podcast is awesome it rocks. But absolutely, and that's the thing. As you have those people in the follow-up, or as you start mailing them, they are going to start calling. You might not get appointments straight away, but after time you will. After you do a couple of appointments on those you will get people down. It just goes down, absolutely.

Don: It starts to stack on itself, and pretty soon-- I never even believed I could do that many contracts in a month.

David: Right, absolutely. And there are services that can do bulk skip tracing too. I am sure you guys are doing that. So we skip trace, we use two really cheap services. We used Whitepages.com actually, and we use one called Intelus. Very similar to Spokio, people have heard of that one as well. They are like $20-30 a month. We just subscribe to them and use them, and they work really, really well. If all else fails, and or we want to search a business we use TLL. It's a dollar a search, it can add up quickly if you are doing several hundred of these things, but we use it a couple of times a day, so the bill is not too crazy. But we skip trace them all. Even that is time consuming. So typically before we even do any of that, we send our list off to a bulk skip tracing company. They will provide us back with some of the information. That information is not always right, hence the fact we have-- there are other things to go find those names and addresses and phone numbers and all that other good stuff. Sure you guys are doing the same.

Don: Absolutely.

David: Bulk skip tracing. There is a lot of people recently-- I feel like it has mostly been--  a little bit of 2017 but mostly 2018 where you have a lot of people on podcasts and blogs, and just out there in the space; Facebook talking about T2P, talk to people. That's what they are doing recently. They are still mailing, but I know people out there now, there are guys in my market place that actually have quit mailing altogether. They purchase their lists, they do the bulk skip trace and they just call the people up. There is a lot more time involved, but it's a lot more cost effective. If they make one phone call to somebody and-- that individual says, I just bought the house, I am not selling to you, quit calling me. They are probably not going to want to follow up with that person very often if ever. Versus the old guy who is not ready to sell today, but he's getting old and he is going to need to sell soon, so call him back in six months to a year. Those are the people you want to get. By doing that you are not having to mail them a second, third, fifth, seventh and sometimes even tenth time right off the bat. This is a lead not worth spending any more time or money on. So it can help bring that cost down which is awesome. Love that you're doing that. Let's jump back into your business and the 250 deals you should do this year. Of those do you have a good estimate of what will be rehab, wholetale, wholesale?

Don: Yeah 50-60% of that is going to be rehab. We are more cherry picking our rehabs now. Our average profit on rehabs has been about 50 grand which is pretty decent in our market. We're in California but not in the million dollar home markets, the average house is around 250. We are averaging about 50 grand on our rehab profits which is really good.

David: That's the ARF, the after sale price?

Don: No, 50 grand profit

David: The 250?

Don: That's the medium, that's the first time price point is between 125-250.

David: I want to pause just for one second. We had mentioned-- great my Alexis is talking to me here. No thanks. But anyway we are-- you're in Fresno, I'm in St Louis. So St Louis has about 2.8 million people in our market. That includes basically the surrounding counties, like the metro area. I am looking up on Wikipedia here now, it looks like you guys have a population for the city of about 500, 594. So 500,000 people. The metro area about 972 so probably a million. In the State it could be-- is that about right?

Don: That's about right.

David: Half a million to a million. I'm on Google maps here. I have been to Fresno for about half an hour. I drove through, I think I stopped and had a sandwich. This is many, many years ago. So are you doing most of your business in Fresno? Or are you guys going down to-- I am going to say this wrong, … Are you doing business up there too? Or is it just Fresno.

Don: No, our core radius is about an hour which is Merced, Visalia, Tulare. So we do kind of an hour radius where the majority of those 29 contracts came from. But last month we actually go all the way up to Mount Modesto right now. We have done some stuff up in Sacramento in the last couple of years.

David: That's a good drive.

Don: Yeah, so this yeah we are concentrating on Modesto down to about Visalia, Tulare. I am actually in six cities in the bay area right now. That's where our six figure, over six figure transactions are coming from. We have entered Orange County California where we got our first contract from yesterday, we had just entered Orange County. In some of the cities I have strategic partnerships, we won't get into that right now, but I'm actually in another city in California and in another State. I figured out the system, the structure of how to handle an inbound lead, and the whole seller experience in our organization, the seller experience is huge. That's why McDonalds and every fast food restaurant whether they are good at it or not … well your seller is your customer, right? We have this process of driving them through, now I am just kind of duplicating that.

David: I love it, man. I was going to say, I feel like there are a couple of other big guys in my market, I would consider myself or my company to be one of them. Off the top of my head I can think of one, two, three, four other companies, really three companies and one guy, but he has his own company it's just small, that are each doing anywhere from 50-100 deals minimum on the wholesale side.

Don: Right.

David: I am doing that. I'm doing over 100, my company is as well. So it's-- and we are three times the size of the market, as you guys are, that's why I'm asking. So we can give our listeners and viewers understandings. So you guys are 1/3rd of the size as I am sure you have other people in the market that are doing big deals as well, maybe not as many rehabs, but definitely wholesaling. So you kind of have to branch out into other areas. But once you have the systems in place, it doesn't make it that difficult to do so.

Don: Right, but I will say that we have competition. Every market is competitive. Our market is competitive like any other. We have big, big fish in our market, it's a small pond. We have big fish in a small pond. The 29 we did last month were in our main market. It can be done, and one of the reasons I went into some of these hyper competitive markets like Orange County, the bay area, is because everyone was telling me you couldn't do it. Like this marketing channel doesn't work on this market because of X. I was like, I am going to prove I can figure it out. You watch API's, you track properly, you test properly, test your marketing. Because what Dave does in St Louis isn't going to work in Fresno necessarily. It may or may not. What I do in Fresno isn't going to work in New York or wherever else.

David: Each market is so different too. Which is really interesting to me. It's crazy.

Don: You take our advice for your foundation, and then you test the variations that work best in your market. I wanted to prove that theory. Even though I've got basically-- a couple of six figure wholesale assignment fees coming from outside markets that people tell me I wasn't going to be able to do a deal in. So I am going to prove I can do multiple deals in those markets.

David: I love it, that's sweet. So let me ask you this, Don. I've pivoted, we are still doing direct mail here in St Louis. However I have really slowed down my direct mail and I have really ramped up my marketing for all the online space. So at this point we are doing Facebook, we are doing Adwords, we are doing some Bing. I haven't broken into Youtube quite yet. But Facebook, Adwords and Bing-- we are getting a majority of our deals from that. Now we still do some direct mail. We still do bandit signs as well. Then of course networking, network marketing, along the lines of going to REIA's and getting deals, having agents bring us those pocket listings, or even those listings that aren't selling, so on and so forth. Are you doing most of that same stuff in your market too?

Don: I was to a certain degree, I was shaking every bush. When I rebooted my operation I basically decided that through the process-- when you asked me about systems at the beginning I am building my system for the operation how it looks today. So we are having a meeting every single Tuesday, going okay, what's working, what's not. How to better do this, how to better do that as we build those systems. In order for me to do that, I was like, we are going to master one marketing channel through this process. And so direct mail was that marketing channel. So we are at the point now where I am going to be turning back on PPC this month. I have some SEO stuff that has been in the works for the last handful of months. So we are adding back other marketing channels. But to tell you the truth, everything I've done and what I love about direct mail being dead is everyone else is getting out of my way.

David: People are either slowing down or they are stopping. Guys like you, you're the pioneer, man I love it. It's awesome.

Don: So I've spent-- including this month to this date, I have spent $134,000 on direct mail. I am really good at flying discounts that equals a little over half a million mail pieces that have been sent out. Just to preference that, that's not-- I am not in a big enough city to send out that many, hundreds of thousands in one shot. I have already hit some of my lists three or four times in that half million. I'm in multiple markets, so I have spent about $134,000, we have booked-- I think we are pushing 2 million dollars in either realized or potential profits on the books, deals on the books already. So you are looking at-- for every dollar I spend I am getting somewhere between $12 or $13 back from direct mail. That is a really good ratio.

David: That's a really good ratio, absolutely.

Don: That's because I did the work, I was disciplined, I figured it out, watching my numbers. I am tracking, I'm paying attention. I am tweaking things as I need to tweak things. And I am being really, really aggressive. I've learned-- I learned I think a big lesson at the beginning of the year. Sometimes if you're timid and you stick your toe in, you are just throwing money away.

David: You really are.

Don: Yeah, you need to go big or go home. You don't have to go as big as I went, but you need to be serious about what you're doing. Otherwise you might as well throw a money away, light it on fire or something else with it.

David: I have a couple of students right now, I am sure you do as well. A couple of my students that I have right now-- the main barrier that I'm trying to get them break through is like you said; you got to go big or go home. You don't necessarily have to be spending $100,000 by any means. But I tell my students, you need to have about $1000 minimum a month to be putting into a direct mail campaign minimum. I will have students who will send me screen shots of receipts for 150-200 bucks. I tell them, hey I'm glad that you're trying, and I am glad you're getting into this space, and that you are doing marketing. At the end of the day, a wholesaler is worthless without marketing to the world, this is what they do and they are looking to buy something. But you're absolutely right. I'm agreeing with you 100%. You have to have a good size list, and be consistent when it comes to mailing that list, or your efforts are going to be wasted.

Don: I agree. For those-- I always say-- because people come to me and say I only have 1000, or only have 1500 I can spend each month. Driving for dollars, building out a niche list maybe from tax defaults, or code enforcements, or getting on List Source and really filtering down your list to a manageable number you can hit every single month for the next 12 months.

David: Yep. So you're telling people once a month for 12 months, 12 times.

Don: 12 times, or if you can't afford to do that, hit it every eight weeks, but make sure-- don't go out and buy a big list--

David: I would say six minimum which is a spread of two numbers obviously, but that's the minimum. So really I would like you to do it seven to ten times, twelve even better. The more the better.

Don: Find that list you can afford to mail to every single month. Because really it doesn't matter, Facebook, cold calling, EBC. It's a consistency game. It really comes down too-- there isn't some magic piece or process. What it comes down to, is the person ready to see the message when the message appears.

David: Right. The message is going to be appearing 12 times in your case. So you are going to hopefully get it in front of them when they need it.

Don: Right. And so that's the key to doing that. I think a lot of people misunderstand that. The other thing-- when you talk about PBC as an example. Marketing is like a hockey stick. If you are here you are throwing money away, if you get serious about it, then you are competing, you're going to be more consistent, and you're going to be successful. When you're looking at marketing channels and some markets PBC, you might need to be at ten grand a month before you're not throwing money away. In some markets it might be two depending on the size of the market. Look at the marketing channel that you can afford to be consistent in. Don't feel like you have to do what Dave is doing, or what I'm doing, or what someone else is doing. Find that channel you can be consistent in; master that channel, master the consistency. Once your money starts coming in, then turn on the next channel.

David: And the next one and the next one. Absolutely and I love that. That's what I tell my students too. Don't try and go out and do ten bandit signs a week and mail this list here, then do this and do that. Focus on one or two things. Typically one thing and master it, then move onto the next thing. Don't stop it once you've mastered it; keep it going. But at that point you know how to do it, what you're doing and so on and so forth, then you can start the next one and the next one and so on and so forth. One thing I have noticed-- we kind of turned out Adwords, Facebook on just a couple of months ago, added up to a level where it's substantial. Probably spending $7-8000 on Facebook, Bing and Adwords. Then we typically spend anywhere between 3-5 on mail, there's other things we're spending. Our costs are sometimes as high as $15,000 a month. But it kind of varies. But for the most part, the leads you pay for the most for typically seem to become the most profitable leads down the road. I am still working on my KPI's for-- it there is more appointments that way or so on and so forth. I can tell you this. If I'm paying $30 or $40 for that lead, per one click for example, then I might only get a certain number of clicks to get somebody to actually fill out the form. Then obviously that's a lead that comes through. But there may have to be ten, twenty, thirty leads that come through before I can get an appointment and a close and so on and so forth. But the more money I spend on my marketing per thing, it seems to profit higher. Do you feel that way in your market too? Or not yet?

Don: You know, the more I take my marketing seriously, I don't know if I can say I have looked at it like that as far as like the lead, the more I spend on the lead. But definitely the more I take the marketing seriously, and the more consistent I am with the spend. I went from this month I am already at $34,000 in ad spend. I am in multiple markets so I am going to be sending out 200,000 post cards this month because I have opened up a few more markets.

David: Wow.

Don: By the end of the month I will probably be somewhere between 45-50,000 maybe, roughly in direct mail. It seems like the more I take it seriously, the more I put fuel on the fire, the more profitable, the most consistent things become. So Yeah I will say that definitely.

David: Wow that's awesome. So you're just a behemoth, you're crushing the game, I love it.

Don: I'm trying.

David: You are absolutely, awesome. I love it, man. Well the system in my business, I am recently and actually over the next few months, that is kind of my number one goal is to help my company by implementing more and more systems into place so we can scale not only our marketing, but the number of wholesales we're doing, and also increase the number of rentals my company holds and rehabs. So right now we are doing-- maybe two-- we are trying to add two or three rentals a month. Trying to sell two flips a month. But I would love to double those numbers of the next four to six months, maybe sooner even. So by putting those systems in place will definitely help us. The fact that you guys are doing 250 deals, that is probably where you will be in at the end of 2018, it's just mind boggling to me. I love it, 50-60% rehabs and the rest will be a mix of wholetales and wholesales. It's awesome. But there is no possible way that myself, my company, you and your company could even get to a fraction of those numbers without having these systems in place. Wouldn't you agree?

Don: I do, but let me tell you the secret to systems; people.

David: Absolutely.

Don: You have to have the right people. If you don't have the right team, it doesn't matter what your system is. Either the foundation of systems, the first system you put in place is the people or how you hire the people. If you're not hiring the person, people try to hire the experience, right? If you're not hiring the person, someone teachable, coachable, somebody who is loyal and hardworking. Somebody who can get behind your company and love it the way you do. If you're not hiring the right people, it doesn't matter what system you have in place. I wouldn't be able to do any of what I do, have any of the systems in place if it wasn't for the team. I have literally not been in my office for four days-- well basically Wednesday through Sunday, so five days out of every week for the last six weeks. In other words I have been in Monday and Tuesday only for the last six weeks. Again, we put 20 on houses [00:41:49.17 - inaudible].

David: Wow, that's sweet.

Don: But that is because I have great people in place. I have been able to go camping, go to my son's water polo tournament, just spent this weekend at a mastermind. I have been able to do all these things, come back and still have my company running better than it was when I left it, and that's because of people. So that is your first obligation to yourself is starting to build a team with the right people.

David: Man, that's the best piece of advice I've heard in a long time. I love that that is awesome. But you're absolutely right, you have to have good people in place. The systems are worthless if the people won't follow them. Like you said, they need to be coachable, they need to have the same goal in their head as you do as the owner of the business if they are working in the business. Don, I love that, man. That's awesome. Is there anything else that you want to talk about? I definitely want you to talk a little bit about your podcast

Don has his own podcast called Flip Talk, it's an awesome podcast. If you haven't listened to that yet check it out. iTunes and Stitcher just like ours. Don, you do a coaching program too, don’t you

Don: I don't actually. No, I do live events every once and a while.

David: Well that's cool.

Don: I do some two days events and stuff like that. You're the guy to go to if they need coaching.

David: I wanted to bring that up, that's awesome. I am going to have to get some information about your events. I would love to get out there and check out one of the events. If you're doing it in your area I'd love to get out to California for a couple of days too.

Don: Absolutely. I will definitely let you know when we do the next one. But yeah I have the podcast. I love doing it. We have the Ricky Playbook series we have been doing, which is on Mondays, and we have started on week one. Know nothing about real estate, what do you do first? I think we are on week twenty something, now we are into building the team, what does my team look like? That kind of thing. We are going to go through a year of that.

David: Is that part of the Flip Talk podcast?

Don: That's part of the Flip Talk podcast. Of course we have the Wednesdays where we do the interviews. I am looking forward to interviewing you on mine. Just talking to high level people like you do, swapping some great content. Every once in a while on Fridays we release a round table, where we kind of have high level discussions of what we're doing in our businesses.

David: That's awesome.

Don: So we take it very seriously, I love doing it. I wouldn't have met you if it wasn't for the fact I was out there doing the podcast.

David: Absolutely.

Don: They are a lot of work, I won't lie about doing podcasts, but it's been a lot of fun too.

David: We have fun doing it too. But I am sure you have a system in place for that too, we do. We have a virtual assistant that takes the video and sends it off to a transcription company, then that comes back. We have another virtual assistant that goes in and does the editing for us, adds in the intro and the outro. That comes back and it all flows and processes in Podio. It is a lot of work in the beginning, a lot of work for other people. But once you get those systems built, which is the topic of this show, it comes back and makes it easy, it's awesome.

Don: I agree 100%..

David: That's awesome. Well Don, thanks for coming on the show today. It looks like we are roughly 45 minutes in, a good time. Again, thanks so much for coming on the show, tons of value, the best system you can have, my favorite quote of the show, the best system you can have is your people, that's perfect. I love it, man. Very cool. Well Don I will talk to you soon, thanks for coming on the show. Again guys, if you have not checked out FreeWholesaleCourse.com check it out, it's a great way to started wholesaling properties, and until next time we will see you then.