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Today, David Dodge invites Khang Le from Wholesale to millions – Virtual wholesaling Podcast. Khang is from Vietnam he had no education until he arrived in America at the age of 9, at the age of 17, he pulled out of high school and settled into the trailer of his girlfriend’s mom to start a new life. In this episode, Khang shares some tips and tricks on how to wholesale in Real Estate, and also they talk about the Market of Seattle. You can learn a lot in this episode! Check this out!
Things that will cover in this episode:
- Who is Khang Le?
- Talk about the Market of Seattle
- Khang gave tips and tricks about Wholesale in Real Estate
- Does Khang Le is in 100% Virtual?
- What kind of marketing does Khang used in his Business?
- Khang Shares about some of his KPI.
- 3 things that Khang highly recommend to increase the deal spread
- Tips on how to get a first Wholesale Deal
You can connect Khang Lee on Social Media:
Khang: Hey man, I want to say, dude, thank you so so much for giving me the opportunity to be on your bomb ass podcast.
David: Hell yeah, I appreciate you coming on, it’s going to be good to connect with you. So, I saw Khang speak a year and a half ago at Max Maxwell’s event in Dallas Texas. That was over a year ago, about a year and a half ago. I have been communicating with him a little bit here and there on social media and what not. I’ve been following him. Khang is the man, he gives back so much value to his community. He is always online doing live steams, throwing out tips and tricks on how to wholesale. He fits in perfectly with our message. Here at the Discount Property Investor podcast, Khang, we really highlight that you have to be buying at a discount. You make your money when you buy, you get payed when you sell. You make your money when you buy, you get payed when you sell. All things real estate. However we do kinda specialize or really point all of our listeners to learn how to wholesale. Even if you want to be a landlord, or even if you want to be a fix and flip rehabber. That’s fine, but at the end of the day, you still have to get a deal for any of those other things to work, right? So we are all about buy at a discount, find those motivated sellers, seek motivation. That is really the name of the game. So again, I think your message aligns very very well with our message. Again, I am happy to have you here, welcome.
Khang: I appreciate it bro. That’s what we do 24/7, 365. We wholesale, we find the distressed discounted property, bro.
David: That’s right. So Khang, you are up in the Seattle market, right?
David: I’m located in the Mid West, I am right in the middle, I’m in St Louis Missouri. I would just think Seattle would be a whole different beast altogether. But you are absolutely crushing it. Again, I follow you on all the different socials, I see you are doing deals. Your podcast is growing like crazy. Keep that up. I know your YouTube has got a ton of subscribers which is awesome. So tell me a little bit about the Seattle market.
Khang: Well you know what, man. So yes, obviously Seattle is hot. During this right now. I don’t know about everyone else’s market, but as far as my market right now, David, I think the price hasn’t really really dropped. It is kind of at a stand still. There is no up in price, there is no going down in price. It’s kind of at a stand still. As far as my buyers, yes there are buyers that are pretty much very– a lot of them are kind of on the fence. Hey, I want to know what’s going on right now, I’m going to wait. But obviously there are also buyers that are willing to pull the trigger if the number makes sense. I think a lot of– I think for us a lot of– if the property is probably rented, a lot of the buyer’s concerns about it being rented then closing on it, then giving the renter X amount of time to vacate the property.
David: Yeah, because there is uncertainty right now.
Khang: Yeah, man. What we do is, before that, when properties are currently rented, obviously our goal is to lock it up under contract with the seller for as long as possible. We find a buyer and close on it as quickly as possible. Then what we do is if the property is rented, then sometimes what we do is a hold back, like a 2500 bucks, or 2000 or a 5000 dollar hold back at the max. But because of the uncertainty with the whole COVID-19, some buyers need a higher amount. I just got off the phone with one of my VA’s, one asked for a $20’000 hold back. Before that we had them deal with this buyer where they didn’t have any problem with a $2500 hold back. It is rented, so we might have to try and figure out something with them. Seller is actually more motivated that we see that we are getting a lot more deals by following up with the– some of the sellers that tell us no a couple of months before.
David: So you guys are doing a lead mining in your own database?
Khang: You know what? I think everybody right now, I think that’s exactly what they need to do. We decrease our marketing, because we see that there are potential– and stuff that are on the market as well, that you should go back to your old leads and follow up, hit these up hard. I think if you do enough follow up, you will find there are some deals in there, because it happens for us.
David: Absolutely. I just ran downstairs to jump on this podcast, but upstairs in my house right now, I have one of my lead acquisition guys, he drove in to come over today. We’ve been hitting the phones all morning, that’s all we’ve been doing is following up. I have already set three appointments for this week and next just this morning from doing follow ups from our database, from just people that we hadn’t talked to in maybe three or four months that we had on a long term, maybe six month or even a yearly follow up. But what we’re doing is we are going back and getting to those people early. We are saying, hey we told you that we would call you in six months, it has only been three, but the situation has changed quite a bit. So is there any reason that you would need to sell sooner? If so, I am here, I would love to set up and appointment and come out and take a look at that property, make an offer, tell you what I think. I think we are on the exact same page. I haven’t really decreased my marketing recently, Khang, but about four months ago we did. So I think we are kind of in line with where we need to be. I think we are a little bit ahead of the game. We typically are spending anywhere between 10 and 12 grand a month on our marketing. I think right now I’m down closer to 4 or 5 grand. If you don’t mind me asking, where are you at on your marketing spend on a monthly basis?
Khang: Dude, we used to be– oh my God, man, we used to be 30-40k a month.
David: Wow you guys were way up there.
Khang: Yeah man, and now we are taking it down– I think we are down to like 10 or 12.
David: So you were where I was was– even at my highest now on your lowest. It just goes to show, there are different amounts of spends that are required to do deals in different parts of the country too.
David: So that makes sense–.
Khang: Absolutely. The thing is, for those of you who are listening, I don’t want you to get this confused. It’s all about profit. I spend a lot because maybe my market is a little more competitive. So please don’t get it wrong, Khang spends a lot so maybe he makes more? I just want you guys to understand, it’s the net profit.
David: Yeah, that’s what’s important. I love that. Such a good thing to point out. That’s what really matters at the end of the day. If you’re spending $10 to make 11, if you are spending $22 to make $24, you are still making a dollar or two in profit. It all equates out. I think that is a very good point, absolutely. Khang, are you only doing deals in your own market? Or do you do any virtual? With me being in St Louis, we market in St Louis primarily. Occasionally we will get a deal on the outside of St Louis, or even in another city, somewhere close. We will kind of make a deal out of it. We don’t do any virtual marketing essentially, right? We’re not doing any marketing in virtual markets at this point. I am just kind of curious what your approach is.
Khang: Yeah, so listen you guys; man, I hear people say this all the time, a lot of people say [00:09:32.24 – inaudible], maybe it sounds a little bit sexy, I don’t know what it is. But listen, if a property is five minutes away from you, ten minutes away from you, fifteen minutes away from you, if you have never seen the property, if you have never met the seller, you never met your buyer, you get it done all over the phone, you are doing it virtual.
David: Oh I agree.
Khang: Yeah so I want you to listen, it doesn’t mean you have to go to another State to consider that you are a virtual wholesaler. But as for me, man. I mean– we are actually in one or two other markets beside my State. We actually do the whole entire State. So I cover the whole entire State.
David: The whole State of Washington?
Khang: Yep, yep.
David: I love it, man. That’s crazy. I don’t think there is that many investors that cover that large of a region, so that’s really cool that you guys are. Also, lets me realize that your budget of ten to let’s say thirty or whatever it might be, now that makes more sense to me too. If you were spend let’s say thirty grand on one city, unless that city is New York or Los Angeles, that’s a lot, right?
David: I know Seattle is a large city, I have never had the pleasure of visiting Seatle. But yeah, that makes sense. So you do all out, throughout the whole State. I agree, I totally agree, Khang. You could do a property that is five miles or a five minute drive from your house. But if you never go, never meet the seller. That is still considered virtual. I love that. So what percentage of the deals that you do, somebody from your team actually goes and meets the seller versus those that you don’t? Is it about half? How are you weighed in that?
Khang: Zero, man. Zero brosky. We have been virtually wholesaling, so I have been in real estate for about eight years. Been wholesaling for four years, discovered virtual wholesaling three years ago.
David: 100% of your deals–.
David: Even though they are in your market, so why– let me ask you, what is the benefit of having a property that is– ten minutes away where it is super easy to get to in the car and drive there. Why not go? I don’t understand that.
Khang: Yeah man, listen, I think it really depends on how you want to build your business around your life, and how you want your business to look like. Before I get into that, man, I want people to understand that even though I am in Seattle, I don’t do Seattle. The reason why? Is because I don’t get into a market that half a million and above– like ARV. If ARV half a million or above, I don’t go in that market. If you want to take it, feel free. I like to stick with the bread and butter. So I know some of you, if you’re from New York, or from California, or areas where prices are half a million or eight hundred, dude, let the other people play that game. Go ahead and play the hundred, the two the three hundred thousand dollar game. Let me ask you a question. Is there more buyers that have that kind of money? [00:12:52.12 – inaudible] half a million to a million plus?
David: There are more sellers and buyers for those 100-300k range versus the half a million plus range.
David: I love that. So when you say that you do the whole State, that excludes probably most of the Seattle metro, right?
David: Very cool, I love it, man. That’s very cool. I appreciate you sharing that with– the viewers, I think that’s awesome. So you guys do 100% virtual?
David: So let’s run through a typical scenario Khang if you don’t mind real quick. You guys do your marketing, which I am sure looks different depending on the approach or the city, right? What kind of marketing are you guys doing if you don’t mind just giving me a couple of bullet points on what you guys do.
Khang: Yeah man, so we used to do a lot of direct mail. We used to do a lot of that. Let’s say 90% of our stuff, our direct mail. Now we have decreased the direct mail and doing a lot of cold calling.
David: Me too.
Khang: — SMS right now.
Khang: To try and decrease our marketing costs as well, because obviously we both know direct mail is the most expensive. David I also want to go back and answer your question about– well why don’t you go [00:14:12.26 – inaudible], or why don’t you hire someone that can go do that for you? The reason I chose not to do that, bro, is because what I want to do is eliminate anything that has me or anyone to physically go there. Now there is a pro and a con right? Everything that falls in there is a con.
David: Oh yeah there is always a pro and a con.
Khang: Yeah, man. We have a seller and say, hey, man, if you don’t have someone come out here, we’re not going to do the deal. I said, you know what? I am willing to take the loss and say, this is not for us, go ahead and find another investor. The thing is, the reason why, David, I mean, will my business change in the future where I will [00:15:01.03 – inaudible], could be. But the reason why a couple of years ago I decided to go all virtual, and even if the seller said they are 15 minutes away from me, I would not go meet them, and I would rather loose on the deal. The reason I do that, is because I want to set myself up to where I don’t have a choice but to come up with solution. If you want to go off road to a call, and if you have anything the seller said– well you know what, do you want to see my property? If you don’t– basically if you don’t cut it, then the next step you would do is– well, I am going to go see it. Eventually you are going to get caught up doing the same thing. So I decided I wanted to eliminate it. It started getting me asking, well, how can I? Eventually I started getting– solutions. If a seller said, hey, they can’t send me pictures, I don’t have anyone to take pictures. Well, is there a company that can do it for me? Yes, we found a company that can actually do it. It’s like Uber, go take a picture for you and send it to your e-mail. We are like, well now I have to– what about contracts? Getting contracts signed? I can’t go there, so– I used to, but– meet the seller, sign the contract. [00:16:17.17 – inaudible] over the phone, but I would still go meet them, right? To go sign the contract, I said you know what? What if I ‘m on vacation?
Khang: Like I said, man. I decided to cut everything out, my mind starts coming up with a solution [00:16:34.15 – inaudible] which you can send the contract to the seller, they– everything all done electronic. Then when the seller doesn’t have an e-mail, what do you do? That’s what I decided to do that, bro, I want to go virtual, I want to be free like a bird. I don’t want to have any– my whole entire business is operated by VA’s, we have about eight or nine on our team, we have a lead manager, a purchase manager and a transactional co-coordinator, all from the Philippines. They open a contract [00:17:06.04 – inaudible], and they actually sell the deal. All done by VA’s.
David: Wow that’s awesome. I have a couple of virtual assistants as well, but there is a bottle neck in my business and you’re looking at him, right? I have to– me or my partners, we have the final say on if we want to make the offer and how much. But you have even taken yourself out of that rule, to where you have given the power it sounds like, you have empowered your virtual assistants to make those offers, and get those under contract. you have even gone one step further to say, hey, fuck it, pardon my language, but go sell the damn thing too.
Khang: I want everyone to listen and understand. I still want comps because I know my market and I know my area really well. It doesn’t take me much time to run comps. So I will run comps, I will set the offer, here is the lowest price you are going to start. When you’re on the phone with the seller, your job as a purchase manager, as a sales person is to figure out what offer you are going to make to the seller. I run the comps and I tell them what to offer.
David: Man, that’s awesome. I just saw– I think you were over in Vietnam for like a month or something crazy like that.
Khang: Oh man, we were over there for like a month and a half, then we went to Thailand, then we flew all our VA’s from the Philippines in. It was the first time we get to meet them there. That’s when the Corona hit at the same time, bro. It was crazy. At the time I thought it was a joke, the whole Corona thing. Start as a joke, will go away in a couple of days, but crazy.
David: Man, that’s awesome. So– Khang I’m so happy that you are on the show today, man. So you– about three years ago it sounds like, I am going to take this thing virtual. I think a lot of people, they have that mindset, or that have that goal I guess you would say. Yeah, I would like to take it virtual. But, you did it. You have actually done that. You have built yourself out a big team if you ask me, a pretty big team of virtual assistants. Everything is done virtually, and it’s cool, because it gives you the ability, like you said, to be free as a bird. So where if you want to go on a month long vacation, a month and a half, two months, whatever, you don’t have to think quite about it. Everything is already virtual, so as long as you have access to your own cell phone, or you computer or whatever, nothing really changes on your end, which I think is phenomenal, that’s awesome.
Khang: That’s right, bro. So if David text me and said, hey Khang, let’s go on vacation tomorrow–.
David: Where we going, bro?
Khang: Yeah, man, I have nothing holding me back.
David: Dude, that is awesome, that is awesome. Khang: Let’s talk about some of the numbers, some of your KPI’s if you don’t mind.
David: So we know that you guys have scaled back your marketing, but you are still spending quite a lot, about ten grand now. I don’t want to deter the new investor, right? You don’t have to start with a 10k budget, right? The very first marketing I did, I think I spent $1200 on some mail. That was about five years ago. That was on a credit card, right? You don’t have to be at 10, 20 or even 30 grand a month. You can work your way up to that. But it sounds to me like you guys have scaled back a little bit to about ten grand. But that also includes the entire State of Washington. Most people, they don’t have a territory that is that large. So I think that makes a lot of sense. How many deals are you guys generally doing on a monthly basis? And what is the average wholesale spread that you guys are shooting for? What is the internal goal?
Khang: Yeah, so our average wholesale deal is around 20-25. I think we are doing around ten or so, ten or twelve a month. The thing is, I want everyone to listen, to understand that– don’t get all caught up in the number field. Focus on the net profit. Someone you see online saying, hey I did twenty deal this month, or thirty deals this month. But, if they make about two thousand a deal, of five thousand a deal, and you would be sitting here like, man I only get two deals this month. But what if your average deal is 25k?
David: Yeah, who is making more at the end of the month? And probably working less. If you can get that net profit higher, yeah you can work less, do less deals and ultimately make more money than those who are doing more. Man, Khang, I think you are crushing it. Not only do you have an average spread of twenty thousand plus, but you are also doing like ten of these month which is awesome. I know guys– in my business, we do anything from– let’s say six to ten a month. But our spread is typically more like six to eight grand on a deal. You are doing like three times what we’re doing in terms of the net profit on those deals. I think that is so important and so valuable for the listeners and the viewers here. It doesn’t matter how many deals you’re doing, it really doesn’t. What matters is that you do some, of course, right? But the ones that you do, have a good healthy net profit spread. Like you said, you can do one or two deals a month and be more successful than the guy doing thirty, right? If your net profit is better and higher than all of his combined too. I think that is awesome advice. Focus on the net profit of the deal, right? Get to the underlying cause of why they are selling, and solve that problem, right? I think you would agree Khang that– typically when we come across a motivated seller, their true motivation isn’t the house. It is another underlying cause, or reason, or problem. The house just kind of helps solve the other problem. Whenever we go out on appointments, or we are talking to sellers; very rarely is the house the problem. Usually it is one of a hundred other things that they are dealing with in their life. By selling this house and cashing out some money, it allows them to take those funds to go solve other problems that they have. I would think that you probably align with that pretty well.
Khang: Oh yeah, dude. The thing is David– actually man, Brian and I– I just an interview with Brian. For those of you who don’t know who Brian is, [00:23:53.11 – inaudible], dude– we were just talking about– we were just talking about– focusing on playing your own game. If you– listen to me. If you follow too many people, you need to dis-follow a lot of the people. Let me tell you the reason why; you are getting so distracted, and you are not focusing on your own game. When you start looking at people, you will be like, they do these many deals. I am telling you, it’s not about bigger, it’s better.
David: It’s better.
Khang: It’s more profitable. Like, listen; a lot of times– dude, so Brian and I did [00:24:31.13 – inaudible], a lot of times you look at someone’s business– somebody that you look up to, and you are seeing this have this big massive– or they have 150 g’s, 200’000 bucks a month, whatever it is, right? Then you look at your business and you’re like– man, dude, me and one of my VA or employees, we are are pumping out 20k or 40k a month, you know? My overhead is like a thousand bucks or two thousand bucks a month. I’m telling you, sometimes you’re winning but you don’t know you’re winning.
Khang: Because you’re comparing yourself with somebody that you feel like that is success, but it always comes down to the net. Maybe their overhead is extremely high. I am sharing this with you guys, it is not something I read in a book or watched a YouTube video on, but I am actually in a mastermind that– it was exposed. You don’t know until you’re behind the curtain, and where everybody in there is sharing– because basically, when you’re in a mastermind, it’s hard to help you if you don’t expose yourself, right? If you don’t pull your shirt up and show people the scars. The thing is, that’s what happened, some of the guys and gals– I’m telling you, I’m not saying all of them, but I’m telling you. Sometimes you see– things that you see, sometimes it is not always what it is until you–.
David: Yeah, most of the time. I would go out on a limb and say most of the time. Especially with social media, it is the highlight reel. People are not posting the shitty things that happen in their life, or their bills being passed to. They don’t want to tell you that. They want to show you the best of the best. They want to show you themselves on their best day, on their best month, and they are going to keep showing you that in that light. Whenever you get into– starting to open up the books, or open up the curtains on your business, show and compare with other like minded individuals, aka masterminds; a lot can come to light there. I think that is such a good point. I usually don’t have a title to my episode till about half way through, but you just gave it to me, thank you. We are going to go with ‘Better, not bigger’. I think that rings so true with this episode.
Khang: Oh yeah.
David: Because it is not about being bigger. I don’t have a goal necessarily right now of going from six to ten deals a month to twenty. What my goal is to actually take my average deal of let’s say seven or eight thousand and double it. I want to be doing deals that are more like 15-20 grand in net profit. So that’s really what we’re focusing on. That’s why we scaled back our marketing even about four months ago. More isn’t better, right?
David: Bigger– like you said, I’m going to take the words out your mouth, Khang, bigger isn’t better, right? It’s better– better is better, right? So focus more on the leads that you have, work those leads stronger, work them harder. Try to get better prices. Ultimately just focus on the problem, you know? Focus on finding a solution to their problem and the money will come, I love it! That rings so true.
Khang: Thanks, man. Thing is David, the reason why I bring that up, is because I was caught in that. I was caught in–.
David: For how long?
Khang: Oh man, I don’t know.
David: A long time?
Khang: I think for a while, at least six months. I was looking at myself and I was like– dude, I am not winning.
David: I’m busting my ass working ten hours a day. I’m like, man, I’m stuck at like ten deals a month. I don’t even know if it’s even possible to go higher, because there is not extra time in the day, I’m using all of it. I love it. So you kind of– sounds to me like you had an epiphany one day and you’re like, shit! It’s not worth working harder, let’s work smarter.
Khang: Yeah, man. See– dude, see– what I want people to understand is that– when you look– that’s why play your own game, man. When you look at your game, and you feel like you’re not doing what they guys that you looked up to are doing, and you feel like you’re not winning. Then you get discouraged. But what I’m telling you is that sometimes you’re winning, but you don’t know you’re winning, because you are so busy comparing your game to someone else’s game. They are probably doing the same as you or even less than you.
Khang: What I’m trying to get the point is, I was feeling like that for a while, man. I was feeling like that for a while, dude. But I feel like– I’m only doing two or three a month, I feel like I’m not winning because I saw a guy pumping out X amount. But when it comes to getting to the bottom line, I was winning the whole time, man.
David: I love it! That rings so– go ahead.
Khang: No, no, no, I’m done bro, go ahead.
David: I was just going to reiterate, it’s so true. Guys, it is not about being bigger. It’s about being better. That doesn’t necessarily mean you have to be better than the next guy, it means that you need to focus on the better leads, right? The leads that are going to generate more money for you and your business. Ultimately that means if you’re working better leads, right? You’re maybe using your time better, maybe using your marketing resources better. It doesn’t necessarily mean you have to be bigger, right? In theory, and I feel like I have done this recently, we have actually scaled back on our marketing. but we quit chasing bad deals. We said, hey listen, this is what we’re willing to pay for it. If there is a $20’000 different between what I’m willing to pay and what you’re willing to sell, typically I would try and meet them in the middle, or at least get them to come down some and get that deal done. But now, it’s like, listen, this spread is too big. Unless you are willing to come down a whole lot, I’m not interested in being the buyer on this anymore. What I’ve found, and we have had that mindset, Khang, for maybe a year now. What I’ve found is that these sellers will come back to you after four to six months, whereas I might have been chasing them for four to six months, right? I would have– there is this whole thing about meeting in the middle, right? Let’s say your offer is here in my left hand, right? They’re here, right? When I meet somebody in the middle, that typically means I come up 10-15%, they are going to come down 80-85%, right? That’s what a good deal to me looks like. It doesn’t mean that I am going to come up 50% and they’re going to come down 50%. That’s the real middle, I don’t like the real middle. I like my middle to be 10-15% above where we originally started at. When you start chasing, right? That’s the difference there. When you start chasing these people, they see that they have value to you. And without you selling them the deal, there is nothing that can happen. So when you stop chasing these people, what happens, just like a dog, right? You let a dog off the leash, you chase the dog, the dog runs. Well you turn around and walk the other way, well guess what happens to that dog? He starts chasing you, right? It’s the exact same approach. I’ve found over the last 1-2 years I’d say, that we quit chasing deals. It doesn’t necessarily mean that the spread got any bigger, which is what we are working on right now as I just said, but what’s ended up happening is– we are getting deals that might not have been deals, because we stopped chasing. Have you noticed anything along those lines in your 3, 4, 5 years of doing this?
Khang: Yeah man, the thing is– a lot of times you know– first of all I want to go back to what David said. You need to understand, right? The people that make 2-5k on– the one that does twenty or thirty deals a month, do you know how much paperwork that is?
David: That’s a nightmare. You have to have two or three full time people just managing the paperwork.
Khang: Yeah that’s a lot, so if you can just increase your deal amount, right? That profit amount, dude. Less amount of deals, but higher profit. To me that is a better way to go. Less work, but more profitable.
David: Khang, I want you to give the audience and hopefully you can teach them something here as well. But, I want you to give the audience maybe just two or three things that you would suggest or highly recommend that somebody do, or do differently from what they are doing now to increase the deal spread. I think that you are the man to be asking this question to. Maybe just a couple of things, give me some pointers. What are some of the things that you teach your team, or are constantly talking about with your own team that you can do to increase their deal spread? It’s actually kind of funny, because I am just like you, I got a podcast, I’m interviewing people in all these different markets. When I tell them that my average deal spread is 6-8 grand, sometimes people will be like, that’s right in line with where I’m at. Other times, they will freaking laugh at me. But I don’t care, this is just the market that I’m in, right? Other times people will be like, I won’t even touch a deal for less than $17’000. I think it matters a lot on where you’re at, but regardless of where you’re at, what are a couple of tips or tricks that you would use to help somebody increase that spread?
Khang: You got it, bro. First of all, man. I want to say, dude. 6-8k, doing ten deals a month, come on, man. That’s money, dude. That’s a lot of money, man.
David: It’s not bad. We spend about– anywhere from 4-6 on marketing, we have a good amount of overhead with our team. But it is good, we are doing okay. I am not complaining by any means, but I am pushing and striving internally to reach– you know, 12-15’000 on our average deal, versus– let’s call it maybe around 7500 if were just to kind of average that out.
Khang: First things first, if you’re in a market that ARV on a property is 50, 60’000. Most likely that will be your average wholesale fee; 5k, 7k, right?
David: Yeah and that makes sense.
Khang: Yeah, because the spread is just not there. The home run will probably be like 15k or 20k, okay? What I would do if I were you, one, you might have to go into another county or another city. Now listen; I don’t necessarily go to another State. You want to go ahead and dominate your own State. Take on another county, another city. I like to stick to an ARV between 100-350, even 400’000, because within those price ranges, man, your average fee– could be that 15, 20, 25 and get up to six figure.
Khang: If you’re in a market where the ARV is 50-60’000, dude. How can you make 20– how can you make 40 or 50k on a wholesale deal? No way, right?
Khang: So what you wanna do is look at your market, and try and get into a higher price range market, a mid range, not a half million–. Really it comes to negotiating. So when you talk to the seller, start lower. Start where you feel– if I want to make 15, start rolling, man.
David: I think that’s phenomenal. So guys, let me recap what Khang just said; in this case, bigger might be a little better. It is going to vary, right? But what he’s saying is, if you buy a house, or have a house with 100k ARV, and you have a 5% mark up on that, that’s five grand. But if you have that same 5% mark up on a $300’000 house, that’s three times the cost, three times the profit. So still 5% of a mark up in this scenario, which could go either way. But now, instead of a $5000 wholesale, you are at a $15’000 wholesale. Khang, I fucking love it! This is great advice. The reason I love it so much, I agree with you, but it’s almost as if you’re coaching me right now, because the average house that we’re wholesaling in my market of St Louis Missouri, I would say is somewhere between 60 and 80 grand. So if we are getting a $7500 average spread on that. That’s about 10% of the cost of the home, of that ARV, right? We are at about 60-80 grand, making about 7500, that’s 10%. So what I’m going to do, I’m going to take this and run with it regardless– if you know that you’re coaching me here or not. But I am going to start marketing for those $2-300’000 houses, and see if I can– make that equivalent to still bringing in around 10% of the profit from the cost, which hopefully will bump my average fee of my wholesale fee from about 7500 up to let’s say– hopefully double. Guys, that is some phenomenal advice, right? If you’re struggling with your wholesale fees, or you are not happy with those, maybe it is because the property values that you’re chasing are on the lower end, and I think you don’t even know about this other than what I’ve told you, literally in the last 37 minutes that we have been on here, right? But I think you completely nailed it, right? I have another buddy of mine, I don’t know if you’re familiar with Ryan Dossey, I interviewed him recently, he is in a couple of my masterminds– phenomenal investor, awesome guy. He was giving me shit, same thing. Man, you can get those wholesales up. I started kind of looking at what houses he is going after. I don’t know exactly, but just from me looking at what he’s doing, I think his average property that he is tackling is between 150 and 300, which again, makes sense, by the wholesales that he is getting or what you’re getting are essentially double than the average ones I’m getting. So we need to up our game a little bit, and maybe start marketing in these nicer and or higher end neighborhoods to achieve those results. I think that’s awesome. I love it, man, I love it.
So you said negotiation was number two, number one was maybe look at the market and go for homes that will have a bigger spread even though the percentage of that spread is going to be equivalent. Number two would be negotiating. What’s one more tip of trick that you would say would be beneficial for somebody like me, or even one of our listeners that is maybe doing one or two deals a month already, but they are getting really low, maybe two, three, four thousand dollar wholesales? What would be another thing you would say to help them up that wholesale fee?
Khang: Yeah, man. So David– okay, number two– obviously this is going to come down to your negotiating. A lot of you, when you talk to sellers, you are afraid to come down so low. You can always go back, you’re afraid to come down so low. But what it is, is you need to start low so you can arrive at the price you want. I think everybody, if you do this, anybody can get an extra $2000– because– whatever market you’re in. You do this– I know you can get a little bit more money on your [00:40:42.06 – inaudible]. One, once you have a seller locked in, you have a buyer locked in, buyer is ready to go. All you need to do now is go back to the seller and renegotiate.
David: I do this on every one of my deals.
Khang: That’s it.
David: Every one of them. You know– I am probably– I don’t refer to myself as being a great salesman. I do feel like I am really good at making friends, right? I am really good at listening to people. I am really good at trying to help solve their problems. Every deal we do, I try to go back to the seller and get something off. I would say I fail probably about 80% of the time. So what? If you don’t try the answer is no. So on the 20%, so let’s say I got ten deals coming in this month. I go to every one of these sellers, and I try to negotiate them down a little bit more after I have found that buyer. Shhhh, right? 80% of the time they are going to say, no Dave, I think we are going to stick with where we’re at. That’s fine. But the 20% of those deals, I am able to get them down at least a couple of grand. I’m not trying to negotiate five hundred bucks off, I am usually trying to get them down three, five, maybe even ten thousand dollars. 20% of the time it works. The deal was a deal before I even made that phone call. So I love it. I think that third tip is probably my favorite tip, guys. Go back to the seller, renegotiate with them, even if you have a healthy spread. You never know. Often times when you go out and make an offer to a seller, right? Let’s talk about the beginning of the cycle here. You do your marketing. The motivated seller calls either you or your team. Your team takes that call and they are working with them and making offers to them. A contract gets sent and signed, right? Well that contract obviously is going to have a lot of contingencies in it, inspection period and all that. But, in the seller’s mind, that property is sold, right? It’s sold. So if you come back them in two to three weeks, or even two or three months depending on the terms of that agreement, they thought the damn thing is sold. They don’t want to start all over from scratch. So often times they are willing to renegotiate with you, and they still feel like they’ve won, and– you are always shooting for that win win here, Khang, you know that. But often times they will still feel like one, even though they have to part with 5, 10, even 15 grand of renegotiation, the reason is because they are not having to start all over. They thought it was sold a month ago whenever that contract was signed, now you are getting down to the crunch time and closing maybe next week, in order of them to get the funds next versus starting all the way over, they are willing to part with a little bit of that. Again, phenomenal advice. Khang, you are just filled with gold nuggets, buddy.
Khang: Thanks, buddy.
David: I love it. Well hey, I don’t want the episode to go too long. Let’s go ahead and try and wrap this up here. What would be some parting words you would definitely want to give to the audience or the listeners, the viewers here about what they can do to get out and do their first wholesale deal if they haven’t done one yet? Well where would you start?
Khang: Got it. Well first of all I want your listeners to understand that it doesn’t matter who you are or where you are today. What matters is who and where you are tomorrow. When I dropped out of high school when I was 17, living in a little shed behind a mobile home park with my wife and I, some of my friends and family looked down on me, man. Said I was never gonna make it, right? But regardless, I put my head down, grinded and hustled. Those of you, you have to understand it doesn’t matter who you are today, what matters is who you become tomorrow. If you chose to stay the same person, dude, that is your fault, right? Listen, for those of you who are anxious to get your first deal, what you need to do is stick with the game, alright? And take massive actions. A lot of you are not taking action. You do a lot more talking than you do doing, come on, man!
David: I know, that– so I don’t know if you have a coaching program or not, but we do. That is the number one thing that students come to us with. Lack of action. Often times, Khang, they will already know everything they need to do, and these are my favorite students, right? Because I don’t even have to teach all that much. Instead I just get to motivate, right? It’s like, listen, you know that you need a CRM, you know you need to be doing marketing. You know you need to be following up. How many people have you talked to today? Oh you haven’t talked to anybody today? How about this week? Have you talked to anybody yet? No? Okay. Well before we even start going down the road to all the things we need to do, none of it matters if you’re not marketing. Let’s start there. Let’s get some marketing out the door. If you can’t afford it, let’s put together a schedule where you can trade time. That’s the same thing, right? Money or time, or both, right? You can either pay for yellow letters and other types of marketing that is going to get your phone ringing, or you can ring their phone, it is one of the other, period, right? So do you have a budget? If you do, great, let’s figure out a good strategy. If you don’t, then let’s put together a time budget, how much time are you willing to allocate to outbound cold calling, cold texting, networking, door knocking, bandit sign hanging, whatever that might be to get those deals? That’s it, that’s where we start. Take action. This business– I like to say this, Khang, this business is so incredibly simple, but it is not easy.
Khang: You got it.
David: Bit ass difference between simple and easy, right? The simple part is something I can teach you really quick, right? The easy part, or the not so easy part is the action. That’s where you come in. How much are you willing to hustle and grind to get that deal? Man, we align so perfectly with our messages. That’s what it is. Taking massive action. I want to say one more thing real quick. When I saw you speak for the very first time at Max’s event, this is probably 15 or 16 months ago–.
David: I had already been wholesaling for four years. I wasn’t at that event to like– learn how to wholesale. I was at that event to meet four or five people, you were one of them– that I could take away from, that had something that I didn’t, right? I’m not stranger to hustling and grinding. But when I heard your story about growing up being poor, having a dirt floor. Hopefully that’s the same story I remember. But you were just like, man, I got myself out of that situation and I’m wealthy now, right? I did it because I worked my ass off, right? That’s what stuck with me the most. Man, it is possible for any and all of us to be successful, it is just how hard and how bad we want it, right?
Khang: You got it.
David: I could tell when I met you, man, this guy works hard. But, he is successful, and that’s what it is. I think that’s awesome.
Khang: David, I want to say thank you so much for the kind words. Instead of– basically we talk about the mindset. Why don’t I give you something you can walk away with? If you promise me that you can commit to this over the next 30 days and execute and take massive action, there is no reason you can’t get one deal under contract. Here is exactly what you need to do. I want you to hook up with an agent, ask the agent– this is free, this costs you no money, man. So there should be no excuses. I want you to call the agent up and tell the agent to send you over anything that is an expired listing, seven to eight years back. Expired listing, let me tell you–.
David: Wait, wait. Hold on. Seven to eight years back?
David: So you’re saying– like expired from today? All the way back?
David: I just want to say one thing; guys, if you live in a somewhat decently good sized market, that’s going to be thousands of leads, not thirty leads, not a hundred leads, that is going to be thousands of leads.
Khang: Then what you want to do– once you get that list, man, once you get that list, what you want to do is skip trace using TruePeopleSearch.com. It is completely free. Put that list in, pound the freaking phone and call them up. Let me tell you why pending listings is so great. These are people who want to sell, put their property on the market, but for some or whatever reason, they can’t sell it. When you go seven or eight years back, that’s when the price was at a different price, okay? Let’s say they want to sell for 100k, now they probably appreciate, 150, whatever the case may be. In their mind they are going to start negotiating with you at the price they wanted seven to eight years ago.
David: Man, I never even thought of that. That’s a killer nugget!
Khang: Guess what? Then you take off the realtor commissions, you know, the repair costs, that is where the negotiating comes in, that’s where you get deals, man. When I first started out, I hit expired listings hard and dude, it got me so many deals. Promise me [00:50:05.13 – inaudible] execute every single day, I can’t see why you can’t get a deal when going with expired listing.
David: This is great, I 100% agree with you, Khang, I want to re-emphasize a couple of quick points. Guys, it doesn’t cost a think to call an agent and have them send you over that list, right? I am literally maybe going to up stairs once I am done with the podcast and pull a list just like that and go skip trace it. Number two, you can skip trace for free on TruePeopleSearch.com. It is funny that you mention that, because I use that as well. We use TLO, we use Batch, but we start with TruePeople, because– I don’t know, what would you say the percentage of the time the data is right? 50%, maybe more?
Khang: Yeah man, see– the thing is, you guys are just so over analytical. Over analysing dude, it’s free, you can just do it, man.
David: Yeah, just do it. Hit the phone.
Khang: What if the search only gave you 5% accuracy? Do you have another solution? No, you got no money man.
David: I freaking love it, you nailed it. But, the cool thing is, it’s not accurate 5% of the time, it is closer to 50% of the time. So even if it was 5%, it is worth doing. You nailed it. But, we have found crazy amount of leads and deals from TruePeopleSearch, and this sounds like a commercial but I promise you it’s not, but start there, guys. It’s absolutely free. You can do one offs in there, and that’s where you need to start. So expired listings, seven to eight years back. Go hit those people, use TruePeopleSearch to do free skip traces. Call them up. There is a reason they can’t sell or haven’t sold. Find out what that is, try and solve that problem. Boom! You nailed it! Khang, I want to thank you so much for coming on today. There has been a crazy amount of value and gold nuggets exchanged here. I am grateful for your time. I appreciate you and– on that note we are going to sign off. In this episode right here is going to be called better not bigger with Khang, the man.
Khang: Thank you so much, I appreciate it.
David: Alright guys, until next time, we will be signing off. Remember, you make your money when you buy, you get payed when you sell. Last but not least, if you’re in the wholesale business, you have to understand one simple concept; you are in the marketing business. You are not in the real estate business. You get into the real estate business in my opinion when you start taking risks, and you start rehabbing, flip, buying rentals. But as a wholesaler, you are really in the marketing business. So make sure you understand that when you get into this business, because it is going to be very difficult if you don’t have either a time allocation for marketing or a monitory budget for marketing. Khang, thanks again for coming on the show, signing off, guys.
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