David: Alright guys, welcome back to the Discount Property Investor podcast. This is your host as always David Dodge, my co-host Mike Slane is in the field today looking to buy us a couple more rental properties. I am joined by a good friend of mine who I recently had the pleasure to meet and we kicked it off, we are actually wingmen at a mastermind we attended down in Mexico. So Sharad Mehta is my host, Sharad how are you today, brother?

Sharad: Good, how are you?

David: I'm doing well, I'm doing well. I really wanted to get you on the show, because the way you invest in real estate, the strategy that you have used-- it blew my mind when you first told me about it, because-- I know you work very hard of course, but you seem to work a little bit smarter than most people. The reason I say that is because you flip houses, I am sure you do lots of wholesaling, but your main business is like the full rehab in retail, correct?

Sharad: Yeah pretty much.

David: However, you don't live where you do this at.

Sharad: I don't.

David: So before we jump into all that-- that alone is just awesome, I think it is going to make for a great show, but before we get into that-- how did you get your start in real estate investing? What was it that triggered you to jump in? Have you always been doing it? How long? And so on and so forth.

Sharad: No so I-- bought my first property back in 2010, August 2010. I used to work in an accounting firm back then, so I was doing number crunching. I saved up some money, my wife and I [00:02:24.29 - inaudible], so we had some money saved up both of us, working, making a decent salary.

David: I'm going to stop you right there, because that is already some good information. So you and her have always lived off the lower of the two incomes and saved the higher one, that's awesome just in itself, Sharad, that's awesome.

Sharad: Honestly that has-- where we come from very financially conservative family-- the higher income saved and lived on the lower one. So we had some money saved--.

David: Bought your first house in 2010?

Sharad: In 2010 we paid for cash for it, it was listed for 65, two unit property, less than 65. I think I paid 22 or 25, another 10 or 15 into it, so in all about 35, rented both units out for like 650 each so I was getting 1300, this is while I was still working. Holy cow this is pretty amazing. There is no way I can loose money doing that. That was like August 2010. September 2010 I bought another three unit. I bought it for 44, put five into it, I was in it for about 15, no more than 55. For those three units [00:04:02.11 - inaudible], I was getting rent for about 1500 or 1600 a month. Yeah it was pretty incredible.

David: That's like 3% rule right there.

Sharad: Yeah I mean some-- I had like 4% I think. I bought-- third or fourth property I bought-- three unit I bought for 28,000, put seven into it, I was in for 35. I still own that property, I get about [00:04:28.00 - inaudible] a month rent for that.

David: That's awesome.

Sharad: Values have gone up, it's not 35 anymore, it's 40 maybe.

David: Right, right. But the cash flow is--.

Sharad: The cash flow is ridiculous.

David: Sharad, where do you live right now?

Sharad: I live in north San Diego. [00:04:50.26 - inaudible].

David: So you're not quite half way to L.A? You're way closer to San Diego.

Sharad: Way closer to San Diego.

David: Cool. What market are you flipping houses in?

Sharad: I [00:05:02.12 - inaudible] Chicago but in Indiana. So it's the area called [00:05:05.27 - inaudible] Indiana, Lake County, 300-to 500'000 people.

David: Why did you chose that market?

Sharad: I used to live in Chicago. I am been living in San Diego for about four years, but I used to live in Chicago.

David: You live there a long time?

Sharad: If you look at my investing career I lived half life in Chicago.

David: So you are very well aware of Chicago suburbs?

Sharad: No Chicago but Indiana.

David: Did you live on the Indiana side when-- or no?

Sharad: No I wasn't smart enough to live on the Chicago side.

David: That's alright. So how many houses do you have going right now?

Sharad: We have 13 flips as of right now.

David: Man, that is insane. So you live in Northern San Diego, you flip houses in the Mid West, just outside of Chicago, in Indiana, 13 project at the moment. How many do you think you did in 2018?

Sharad: About 50.

David: About 50. How much rehab are you doing in each of these? Again, your business is primarily-- I am under the impression so again fill me in, flipping to where you rehab to retail, right? I would imagine you come across deals to wholesale because you get them. They fall in your lap whenever you're doing what you're doing. So how many did you think you did in 2018? About 50?

Sharad: Yeah. On average-- minimum is 20'000, right?

David: In terms of net profit?

Sharad: I was talking actual rehab.

David: That's why I was asking. You are talking the cost to fix?

Sharad: Cost to fix is about 20'000 minimum. On the high end 60-75'000. Some of these are pretty big rehabs.

David: That's a good size rehab for sure.

Sharad: Yeah, so-- we are doing one right now, we are doing foundation work. The cool thing is-- out of the 50 houses that we flipped, I think I personally stepped my foot in less than five of them.

David: Okay we are going to get to that; that's cool. So before we get into that, why real estate? What did you do or read? Who did you talk to? What was the reason you got into this? Was it because you bought that first rental and decided this is cool I like the business? You said you had a job when you bought that first one?

Sharad: Yeah I had my job when I bought the first two properties, I left my job when I had the third property under contract which was a four unit. Like I said, [00:08:02.02 - inaudible] so we had some money saved up, and-- not as much, but I used to be into personal finance, I would read a lot about [00:08:13.13 - inaudible] just be obsessed with that--.

David: You wanted to be financially literate.

Sharad: Yeah exactly. I used to read a lot of books, follow a lot of online personal blogs. Put my money in stocks and bonds. When I was doing it myself I was absolutely terrible at it. I would loose money pretty much every single time.

David: That's frustrating.

Sharad: It is, man, it is. I should have been like I should have just sold it and made more money. I lost some money and I thought, this is not working out, I have to do something else with the money that I have. I wanted to do something where I have control of the asset. With stocks and bonds I controlled the transaction part, but--.

David: You can't affect the top line or the bottom line.

Sharad: Exactly.

David: Let's say I own some--.

Sharad: This big--.

David: Let's say I was to go out and buy $10'000 worth of Coca Cola stock. Me going to thegrocery store and buying Coca Cola for lunch everyday is [00:09:24.10 - inaudible].

Sharad: Which is probably not very healthy for you.

David: I don't drink soda, right. But the point is that you don't have the control, and I want to bring that to the attention of the listeners and viewers here, because you don't. I don't like to say it's buy and pray, how else do you look at it?

Sharad: You're right, man. You don't know what's going on, you don't know who is making the decision that is going to control your net worth. That was frustrating. There is so much going on with stock markets that I didn't know what the hell I was doing. At that point I was reading a lot of personal finance blogs, and somebody-- it's funny I was reading-- for some reason [00:10:07.04 - inaudible], I enjoy reading comments more than the actual blog, just to see what other people had to say about it. Somebody actually posted a link to this book called 'Flip'.

David: By Nick [00:10:19.03 - inaudible]?

Sharad: I don't even know, it had like a blue cover.

David: Was it think, like 60 or 70 pages?

Sharad: Not it was--.

David: Different book then. I own a bunch of them-- go on.

Sharad: So I bought that book, you know you go on Amazon-- customers also bought this? And it was another book that came as a suggestion like 'How to be a millionaire real estate investor' by-- what's the guy's name? [00:10:48.08 - inaudible]. I think he was the author. So-- I'm like, that's exactly what I want to be, I want to be a millionaire and want to be an investor.

David: Want to be an investor, right.

Sharad: So I bought that book, I read it, and I was like, wow this is exactly what I want to do. Had some money saved up, so I started buying real estate.

David: Love it. So let's talk more about the flipping business. You have 13 going on, you did 50 last year. You walked in you said like less than five-ish roughly. So you do this virtually. So I don't know if I mentioned this yet, because we talked a little before we started recording the episode here. We mentioned obviously you live in two different places; you live in San Diego and you do this in--. You invest in a different market. So how does that work? Let's start here; how many days are you in Indiana a month on average? I get some months you are going to be there a lot more, other months you might not be as often, but let's say since you started investing, or maybe over the last year or so, how many days a month do you spend in that market?

Sharad: No more than three days a month.

David: No more than three days a month. So I would imagine you have built out a pretty amazing team to help you with that.

Sharad: Right.

David: If I only worked three days a month--.

Sharad: It's not that I work three days a month--.

David: No, no, let me correct myself--.

Sharad: I actually work two days a month.

David: I love it, I love it. So if I was only in my office, which is where my business consists of, three days a month, it would be tough. So you just-- you are only in that market for no more than three days in a month.

Sharad: Right.

David: However, you just do everything virtually.

Sharad: Right.

David: So you are flipping houses virtually, but in a different context to how most people look at it. Most people say, or when they want to become a virtual wholesaler for example, they are marketing a foreign market, and they are finding buyers, they are linking them up. You are actually purchasing these houses in a different market, putting 20-70 grand on average into it then flipping them off. What kind of profits do you estimate-- I shouldn't say estimate, what's the goal with the profits on a house? What's the average? What are you shooting for?

Sharad: For low end houses about-- minimum to 15-20, I am talking for houses you sell for less than 100k.

David: Okay, so your purchase is between 50 and 20 ideally?

Sharad: Purchase would be 40-50'000, put about 20-30 into it. So net profit at the minimum--  I am talking--. Any cost that can be directly allocated.

David: Anything that is going to come out of your pocket.

Sharad: Right. Then on-- on some of the properties that are bigger rehabs, our profit expectation would be about 25-30 minimum.

David: Okay. So 15 on the smaller end, 25-- that's about right in line. I am in the Mid West.

Sharad: I imagine your market and my market as very similar.

David: I would imagine so. Mine is a little bigger--.

Sharad: Right.

David: But it's very similar.

Sharad: In terms of demographic and property type and what not.

David: Right.

Sharad: So that's kind of the market we're in.

David: So tell me a little bit about the team, then I am going to ask you a little bit about what you're looking for as well as what kind of market you're doing. Let's start with the team. What does your team consist of? I would love to only come in the office three days a month. Obviously I would work at home with my laptop and my cell phone, or just anywhere in the world. Basically you don't have to-- if you are only spending three days in your market, of course you're working when you're not there, but you don't have to be in Northern San Diego, you could be in the south of Spain, could be anywhere.

Sharad: One of the craziest closings I've done, I sold a property while I was in Tanzania South Africa.

David: That's what I'm saying.

Sharad: My dad used to live there, [00:15:05.11 - inaudible]. That was an interesting process to get done, get the documents authorized in Africa, that was interesting, yeah.

David: That's cool though, man. You can't do that with a 9-5.

Sharad: You can't man. That was the whole point of being financially free at an age-- I started out buying rental properties. It was actually only in the last three or four years that I have been pretty active in flips, but I did start out buying rental properties. I own about 75, and a majority of them are paid for. That was kind of my base was starting out buying rental properties. Have a base, you know? Okay anything [00:15:42.04 - inaudible] this much money-- on a day to day basis. But that's kind of how we started.

David: Are your rental properties multi's or singles? Or do you have a mix?

Sharad: I would say most of them are single family houses. I did start our buying 2-4 units, but-- I get the second half of buying my rental property-- after the first couple of years I started buying more single family. Just because the area I was buying in didn't have many multi units, predominantly single family houses.

David: Right, okay. So again, I don't want to get too granular, I mentioned that from the get go. But how do you find these houses to flip? 50 houses in a year, that requires a lot of marketing efforts--. Whenever you are real estate investing, and you are going direct to the seller, there are a lot of ways to get houses, right?

Sharad: Right.

David: There are so many ways to get a deal, right?

Sharad: Right.

David: Typically you go direct to the seller, you avoid the commissions.

Sharad: Right.

David: Avoid agents, which I don't want to say negative things about agents, but they often get in the way in our business. They can be very helpful. But they get in the way. One of my pet peeves is-- whenever I'm selling a house is that I have to pay the buyers and the agent. Their job is to get the best deal for the buyer. It's so counter intuitive that I have to pay them. That's their job, right?

Sharad: Right.

David: So what are you looking for and how do you find these deals?

Sharad: So we have done some direct mail, we send about 40-50'000 letters, every six weeks. We do PPC, we do text messaging. We do ring-less voice mails, we did cold calling, we picked up one deal from that, and bought a few houses.

David: Right, so you guys are doing a lot of marketing. It has probably being 70-80% mail?

Sharad: Yeah.

David: You guys are doing a lot of mail. What are you looking for, for both-- when determining who to mail, then on the flip side, once you get the phone ringing, what makes a good deal for you other than just highly motivated? Obviously as real estate investors, we want to go direct to the seller. We want to solve a problem. Somebody told me this the other day, and I didn't look at it this way, but as a real estate investor, specifically a wholesaler but same for you for the rehabs, our service is providing ease of use and or a quick close. In return, we are asking for a low price, right?

Sharad: Right.

David: What are you looking for--? Let's start with this, whenever you are determine who to market to, is it high equity?

Sharad: High equity and five years of ownership.

David: Five years of ownership with high equity, I love it, so simple, nothing crazy. Do you guys also buy lists that are more targeted for potential distress along the lines of like-- probate or divorce etc?

Sharad: We don't but that is something we are going to look into. It's so we can list stack it, right? So list stack-- basically like if you have a seller showing up in your high equity list, showing up in your tax delinquent list, they are showing up in your divorce list, probate list, then you know they are showing multiple signs of [00:19:51.13 - inaudible], we cold call them we send them a text message. Everyone else that is on a big equity list, we are dropping direct mail to them.

David: Direct mail to them.

Sharad -- we can target them in a couple of different ways.

David: Okay. So on the flip side though, that's great thanks for sharing. I like the big picture on this. So then on the flip side the phone starts ringing. What makes that particular lead-- obviously I can answer this for you, motivation is the first-- but once they start talking about the house-- so you are obviously I would imagine also looking for ones that meet your criteria of low end, purchase maybe from 40-50-60 grand that need about 20 work, so you guys are not looking to buy houses that need more work than the purchase price, right?

Sharad: We would, I am buying a house tomorrow for $6500, so it's going to need more than $6500. We bought it, we are buying another for $30'000, it's going to need $40'000 into it. So in terms of what houses we would buy, they need to have motivation obviously and they need to have equity. If they have high motivation but no equity--.

David: So that's one thing I had left out was the equity, I don't know why I forgot that, that's the most important part because you can't-- I shouldn't say can't, it makes it more difficult to get a good deal if there is no equity. I have had sellers bring 40-50 grand to the table-- but that's rare. I once had two sellers bring 40 grand or more in the same week.

Sharad: Wow.

David: Crazy, but I have only had that happen a few times where they bring that much.

Sharad: Right.

David: Yeah I totally discounted equity, but equity is so huge. So high motivation, they have to have equity. Is there any particular type of house up in Indiana, or area that you guys either avoid and or like better than the other areas?

Sharad: [00:22:11.15 - inaudible] Indiana for example we don't buy anything there.

David: Why is that?

Sharad: It's really run down, very run down--.

David: No appreciation in that part of the--.

Sharad: It's not even no appreciation, it's just-- it's a D class and [00:22:30.07 - inaudible] management company, then we have a few people in our property management that are all female, so we kind of just look out for their safety, we don't-- I wouldn't want to go, I wouldn't want anyone else to go there, so we don't buy there. There are some sections of the city we would buy. That is a very small section. We [00:22:51.14 - inaudible] a lot of properties in that area. Pretty much if it fits the area we are buying, they have motivation and equity, then we will buy anything. There is no project we will walk away from.

David: I love that, okay. Hey, we have to circle back to the team, we kind of skipped over that. You have to have a team in order to A, only spend three days a month in the market, but B, to be able to walk less than five houses out of 50 that you flipped.

Sharad: Right.

David: Let's talk a little bit about the team if you don't mind sharing.

Sharad: Yeah sure.

David: We would love to hear it, the listeners, the viewers and of course myself, I would love to hear it too. So what-- how many people and what do they do?

Sharad: So my office manager, she actually lives in California. We don't see each other that much, only seen each other once this year I believe. So--.

David: How long has she been with you?

Sharad: She has been with me about three years now I think, yeah. Almost three years. She has been to Indiana two or three times.

David: That's it?

Sharad: Yeah she only goes to attend the [00:23:53.11 - inaudible] party, once a year we throw a party for our contractors. She is actually going there next week, I am going to be in Indiana next week, I asked her to come because we hired a new person. She would be my office manager slash integrator. Then I have a project managed in Indiana, I have an acquisition manager and we have a virtual assistant in the Philippines. We have a bunch of contractors.

David: Right, so the contractors-- I love that you are including them on the team. But, regardless of the contractors-- because those people-- they are contractors, they get paid on a contract, it is project by project.

Sharad: Yeah but it is a little bit different. These guys, these people we have been working with, I have been working with them for about four years now, four or five years. 90% of the work that they do is for us. So let's say they get a 10-99 at the end of the year, they are pretty much getting one 10-99 from us, they don't get anything else. They are--.

David: They are part of the team for sure. You are not restricting them from taking on a side project, because it's a project by project--. What I was getting at though, I wasn't discounting the contractors as being part of the team, don't take that the wrong way. I know you're not. What I was getting at though, your team isn't 12 people, it's 4.

Sharad: It's 4.

David: You, your office manager, you have an acquisition manager, and you have a virtual assistant in the Philippines.

Sharad: Right, the VA we just brought in a couple of months ago.

David: Are they full time?

Sharad: They are full time.

David: So what does the office manager do? What is their kind of core duties? Obviously the acquisition person is in charge of-- walking homes, contracts, making offers, doing due diligence. So what does the office manager do, and what do you have the virtual assistant doing? Again, I have virtual assistants, I have an office manager. A lot of our listeners and viewers that-- probably have that 9-5, that are interested, they don't know. Give me a quick run down on what those people do for you and why you have them.

Sharad: The virtual assistant, what she will do is she will see a lead come in, if somebody is just calling in [00:26:31.00 - inaudible] today, a majority of them are off the list, she is going in [00:26:37.04 – inaudible].

David: This is the office manager?

Sharad: This is the virtual assistant.

David: Sorry the virtual assistant, okay.

Sharad: The calls go to [00:26:45.28 - inaudible].

David: No matter what?

Sharad: No matter what, 24/7. We get e-mails from them, the virtual assistant will look at the e-mail and she will-- based on the information we have she will go in and update the CRM, if it is somebody who wants to be taken off the list she will go and move them to [00:27:08.04 - inaudible], she will remove them from our mailing list. That is what she will do, clean the list, clean the CRM.

David: Got it.

Sharad: If it's someone more [00:27:19.24 - inaudible] she is going to [00:27:22.14 - inaudible] and let the acquisition manager know this is a good lead. The acquisition manager is also getting the [00:27:28.11 - inaudible]. We just had this call this morning with the acquisition manager and the VA that the-- acquisition manager, we are paying her, we just want her to focus on getting deals done. It's not the best use of her time to--.

David: To qualify.

Sharad: Exactly--.

David: I try to spend as little amount of time on my CRM as I possibly can. However, it is almost impossible not be in there for an hour or two a day no matter what. I just did a podcast right before I had you on, I was actually the guest on a buddy of mine's podcast, Joe [00:28:04.13 – inaudible]. He always says, show me an expert at a CRM, and I will show you a broke real estate investor.

Sharad: I am huge on delegation. Another thing that we got really good at is that we all focus on one thing in the business.

David: Okay.

Sharad: My acquisition manager, she brings the most value to the company by getting deals done. She doesn't bring the value to the company by cleaning the CRM. Same thing with my project manager. She brings the most value to the company by making sure our projects are done on time and on budget. If she can do one thing in the business that is what she is going to do. We try to be super focused on what our one thing in the business. My one thing in the business is to make sure we growing enough so everybody in the business has work to do. Whether it's contractors, project manager, acquisition manager. That is kind of my one thing to make sure--.

David: Five people in the company, right? Four people not including yourself.

Sharad: Correct.

David: But if you include yourself than it would be five, I gotcha.

Sharad: The lead comes in, the VR updates the CRM, we have a Whatsapp group where if it's a good lead or what not, the VA will sent a notification to the acquisition manager saying, we have a good lead come in, see what's going on. The acquisition manager will go on an appointment, she will just stay focused on--.

David: Making the deal.

Sharad: Any notes she has from the appointment she will leave a voice mail on Whatsapp, the VA will update the CRM based on that.

David: We do the same thing, I just use dictation, which is probably a worse way to do it than you're doing. I have to go in an edit it once it's done, but at least I can do it while I'm driving. Yeah send it over to the VA and say, update this lead, create a task to follow up in six weeks or whatever--. So all calls go to Pet-live, you have a VA to clean the list and clean the CRM. Leads go to the acquisition manager assuming that they are motivated and have equity which we talked about earlier--.

Sharad: Right.

David: The acquisition manager's job, correct me if I'm wrong, to go build rapport, walk the property, take pictures, maybe make an offer. So once the offer is made, who follows up with these people? We both know that a lot of these deals take time for either the seller's motivation to change, or for them just to realize that they need to sell and that you are going to solve their problem. Does the VA do the follow up? Or is that the acquisition manager?

Sharad: No, once-- if the property comes in where we made an offer or we have the property under contract, then the acquisition manager will sign off on that, unless they go MIA [00:31:10.18 - inaudible]. If they are being responsive, our acquisition manager will-- my acquisition manager is he one that has made a rapport with them, so you want to make sure that continues.

David: Got it. Okay so then after you guys get a property under contract, either by the acquisitions manager or the efforts of a VA following up, because it could go both ways, then I would imagine your office manager kind of steps in to co-ordinate closing, funding, and to talk to the seller. I would imagine you are doing some wholesaling, but most of these acquisitions I would think, correct me if I'm wrong, would be for you to rehab and retail, or just buy the rental, right? So you are marketing for multiple purposes.

Sharad: Correct.

David: And why wouldn't you?

Sharad: Yeah exactly--.

David: Yeah, multiply the efforts of the marketing into different types of exit strategies, I love that. So the office manager comes in, they co-ordinate closing and funding and all of the above. Then, you push if off to the project manager, right?

Sharad: Yep, exactly.

David: You've got a good system here Sharad, I love this, okay. So the project manager, they work with the contractors to kind of figure out-- so at what point do you do anything? That's a joke of course. You're in charge of marketing and managing the people? Because I love that you've delegated it. I didn't mean that as an insult. I'm jealous, I want to do that too, that's great.

Sharad: This year I have been to Indiana four times, and I haven't-- I've actually gone to one house and haven't gone to any other house. One house we bought through online auction so I just wanted to check it out.

David: Sure.

Sharad: So year I mean--.

David: You have a dialed in acquisition manager that essentially knows, A what you're looking for, you guys are only getting calls most of the time unless it is bad data from high equity individuals that have motivation.

Sharad: Right.

David: You assume they do. Your acquisition manager knows what to look for and what to make offers on, I would imagine that took a little bit of time to train and get that dialed in, but you have it dialed in.

Sharad: Just my acquisition manager and my project manager are both [00:33:46.19 - inaudible] agent. My project manager is a licensed contractor also.

David: Cool, okay. So like in the State of Missouri you don't have to be a licensed contractor, do you have to do that in Indiana? Do you have to be a licensed contractor. I know in Florida they require that.

Sharad: Licensed contractor for [00:34:03.07 - inaudible]?

David: Yeah okay. So in the State of Missouri anyone call, however you have to have the licensed individual, like a plumber, electrician, HVAC and so on and so forth sign off on them. But, I could go up to the local city or county office and get the permit.

Sharad: Oh really? Wow.

David: Yeah, it's all different here.

Sharad: No so we have our own permits, a licensed electrician [00:34:29.15 - inaudible]. We pull out all the permits.

David: Got it. Okay cool. So the project manager and the office manager are both licensed. Once the project manager gets the hand off from the office manager, then their job is to work with the contractors to get the houses ready to be sold.

Sharad: The project manager would get involved-- during the acquisitions phase if [00:35:02.07 - inaudible] rehab--.

David: Got to start prepping.

Sharad: Exactly. We have an acquisition group, the VA is on that group, my acquisition manager and my project manager. The acquisition manager will go out--.

David: Talking all day, everyone is communication about what might be in the pipe line, or what's coming up.

Sharad: Everybody is on the same-- develop their own platform. We have everybody from our VA to acquisition manager on the same system. Our leads and our inventory, everything stays int he same system. We can go in, we have tasks set for everybody, here's what we need to do once you get a property under contract and what not. So our project manager will get involved during the acquisition stage. She will look at the video and just kinda of say, this rehab is going to be 40-50'000. Just so the acquisition manager has some idea of what number to negotiate on.

David: Dude, I love that. I am going to have you back on in a couple of months, because I really want to talk in more depth about the software you're developing. Let's not get into it today. It's not ready, but one thing I really picked up from you, you probably don't even know it, and I have been trying to implement in my own business is-- so we do wholesale, we do rehab, and we do rental, we do all three, right? A lot of the times we will think, oh we are going to make 30 grand on this rehab project, but we have owned the property for seven months, and we used a private lender to buy it--.

Sharad: Right.

David: We might owe ten grand in interest. If it's paid on the back end you don't even know unless your proactive. But you don't even know until closing, then you get the pay off from the lender. So one of the things your system does really well is help track the duration, which a lot of people forget. They don't look at the big picture, they look at the numbers. I bought it for 60, I put 20 in it, I am selling for 110, 60 plus 20 is 80, 80 to 110 that's 30 grand of profit. But if you're paying ten out, we have been really focusing lately on making sure these projects are not sitting--.

Sharad: Every day-- basically the way we look at it, every day that somebody is not working on it, it is costing us $100.

David: Right.

Sharad: Every single day.

David: Every single day. Saturday, Sunday, you name it.

Sharad: Yeah it doesn't matter. When we buy it, let's say I get-- and this is very important for your listeners. Sometimes what happen is-- let's say I get a bid from a plumber. He gives me a bid of $2500, but he can not start for two weeks. I get another bid from a guy who will do it for $3000 but is going to start today. We will go with the $3000 guy because the $2500 guy--.

David: People don't look at it that way.

Sharad: They don't. That's real money it's costing. Another thing we do in our rental business is-- I don't want to get into the software part of it, but I bet there is a very small percentage of investors that are actually tracking-- you own a bunch of rental properties, right? For me personally it is very important-- I don't just want to know when the property becomes vacant, because that is just part of the story. I want to know-- so basically we divide our vacancy into three parts. Once the tenant moves out, [00:38:39.20 - inaudible] nobody is working on it. The contractors start working on it, then it's listed on the market. [00:38:47.25 - inaudible] vacancy might be 60 days, I want to know how did it break [00:38:52.22 - inaudible]. Did it just sit there for 30 days before somebody started working on it? If that's the case I know we need another rehab.

David: If you don't know the numbers--.

Sharad: If you don't have the data, yeah same thing, what if one of the properties is sitting on the market for 45 days before we find it, I can go to my property manager and say, I think we are asking too much for rent. If our listing is on the market for 45 days we are asking too much for rent. We can start--.

David: Start making those adjustments and those decisions. But, without having good data you are just guessing. That is one thing I picked up whenever you gave me the demo of the software, which again we are going to circle back to that-- but yeah, it's slick, I can't wait--. We will definitely do that. So you have-- to sum it all up, I do want to ask one piece of information that is a little bit more private but you're not going to care. How much is your bill a month for Pet-live? The only reason we ask is because we have used them in the past, they are good, they are really great actually. But, obviously the more usage the higher the cost.

Sharad: Right.

David: Every call is going to them, so spending 500-600 a month or less?

Sharad: I would say it is on average of 800-1000.

David: Okay, so it's high, it's very high. I thought the bill was high at 300-400, but again, we only had them doing it after hours and on the weekends, so 50% of the time. So you're spending a lot there, however--.

Sharad: They take every single call.

David: Every call, that's what I'm saying, right. You guys call-- you either have your acqusition manager, or your VA call and set those appointments.

Sharad: Right.

David: Versus spending a lot of time--. So those calls are probably not very long, they are probably short, but you get a ton of them though. Even people who say take me off the list.

Sharad: What happens when you first drop your mail, first time you are sending someone, that's when you are going to get a bunch of calls. The second and third time the numbers start going down. Hopefully you are getting more quality callers and less volume. Yeah I think on average 800-1000 bucks a month.

David: Okay, I appreciate you answering that. I am not trying to get into the personal items within the business. But, that's a good question to ask, again, if you are new to this, I think Pet-live has like $100-150 minimum a month, and you get a lot of the minutes. Probably different packages, but once you go over you start paying per minute or what not. I was just curious because you are sending a lot of mail, you said 30-40'000 pieces every six months.

Sharad: Every six weeks.

David: Every six weeks, I apologize. But that's a lot of mail, that is a big amount. I would imagine you have really high call volume. So are you happy with them?

Sharad: Yeah we are happy with them. Honestly, I haven't tried another service, so I don't have a reference point. I like the fact they are 24/7.

David: Me too.

Sharad: -- where the lady called on Saturday at 9 in the evening, right? Nobody would have picked up that call. We got an e-mail from them saying this lady wants to sell, wants her mortgage paid off. So my acquisition manager went to the apartment the next day, got the view done, bought it for 80'000, sold it for 140'000.

David: That's a deal there.

Sharad: I don't know what would have happened if they did not picked up that call.

David: Absolutely. You have to be quick sometimes.

Sharad: I don't know if the seller [00:42:46.17 - inaudible] I am not going to pick up the next postcard and call the next person. I have heard from some people that Pet-live can be slow, sometimes they can take five or six rings to pick up the phone. I don't know if that's Pet-live or just the nature of the business, getting some sellers to pick up the phone, meh I changed my mind.

David: Are you doing anything to the people that hang up? Is that data recorded anywhere or not?

Sharad: Yes it is, so even if somebody hangs up, we get an e-mail that somebody hung up. If they just call and before anybody picks up they hang up and we call them back. In the nature of the business it's so hard sometimes, these people will sound super motivated, like hey I want to sell, I want to sign the contract today, right now. When you try to call them back they are nowhere to be found.

David: That happens, man.

Sharad: That is something everybody deals with, nothing you need to--.

David: Well Sharad thanks for coming on. You have provided tremendous amount of value. I usually don't have an episode title until the end. I think I might name this one 'Time is money', because you have talked a ton about how to remove yourself from the business. Not so much the business, but more the market in which you're working which is awesome. There is a couple of gold nuggets in there about not letting these projects sit, because there is money that is being spent when they are. Your calculation is roughly $100 a day for every vacancy, for every property-- maybe not vacancies, but properties that are sitting, that are not being worked on, or they are not being listed. One last question for you. You mentioned earlier that both the office managed and the project manager are licensed real estate agents.

Sharad: Acquisition and project manager.

David: Acquisition and project manager--.

Sharad: No, the acquisition manager and the project manager, they are both licensed agents.

David: My question was, do you have them help on the disposition side? Are they listing this and you're paying them a fixed cost? Do you have a relationship with the real estate agent? We talked about that earlier, are you doing anything to try and minimize or cut that cost?

Sharad: For anything [00:45:30.22 - inaudible] market, the project manager will get that listing. She is a licensed real estate agent, so she will list it at 4.5%.

David: There you go, so you are paying 4.5% to the project manager, is that correct?

Sharad: Correct.

David: Okay, so the project manager-- they are keeping 1.5 roughly, maybe 1.7 or something--.

Sharad: Yeah after paying the broker 1.7.

David: Okay cool, man, I love it.

Sharad: My project manager [00:46:01.04 - inaudible] beautiful. Our acquisition manager, she gets 10% off the net profit.

David: I wasn't going to even ask that question but I'm happy that you shared. They may 10% of the net, is that person salaried? Hourly?

Sharad: Straight commission.

David: So they only make 10%, but it's net which is good, so they get paid on the back end I assume?

Sharad: The way we do it is that we will pay them when we close on the property, we pay them $500, then the remainder will be paid--.

David: So they get paid something today then later. If you wholesale is it the same thing or is it different?

Sharad: Same thing.

David: Same thing, I love it, that's great. Well Sharad again thank you so much for coming. I usually do episodes that are 30-40 minutes, we went way long, but I am happy we did, because there was a ton of information--.

Sharad: Thank you for having me, man.

David: Absolutely. Ton of gold nuggets. If you guys are wanting to learn how to do this virtually, this is the episode for you. Listen to it a couple of times, I know I am going to listen to it again probably this evening. I am impressed, man. 50 flips in 2018, you have 10-15 going at any time, good spreads, and you are only in the market a couple of days a month. You are a master at automation and delegation in my opinion. I can't wait--.

Sharad: Having a great time.

David: Having a great team, absolutely. I am excited to have you back here, hopefully in the next month or two to talk about your software that you are going to be launching, let's do it, man.  Well, Sharad thank you so much for coming. Guys if you are new to real estate investing, check out our free wholesale course. It's located at FreeWholesaleCourse.com. We also just published our book 'The ultimate guide to wholesaling real estate', it's available on Amazon. Sharad thanks again, buddy, we are signing off. Until next time guys.