Episode 184: Derrick Towns – 10K Case Study – First Wholesale DEAL!!!

David: Which is understandable, the main thing is to get it sold in the first 10. Did you throw in the word business?

Derrick: I don’t believe I did.

David: Pro tip. Here’s why, check this out, this is so cool.

Derrick: The weekends.

David: The weekends man. So, 5 days is 5 days, 5 business days is typically 7 so when you go- and it multiplies, right? So, when you do 10, that’s 14. 15 is I’m not good at math, 19 or something like that, right? But you basically get like 40% more days, so next time use businesses. Pro-tip, but anyway, you got it done in ten, doesn’t matter. So, what did you do to sell this? So, you found the list on Propstream, you got the criteria, you pulled it down, you put in into Batch, you skip traced it, and then texted it. From there, you communicated with him and set the appointment, went out, made a friend, this isn’t hard, you made a friend, you said man let me try to help you, let me buy this, you got it under contract, what’d you do next?

Derrick: Well, I did the same exact thing to find my buyer.

David: Whaaat?

Derrick: Right in Propstream.

David: Right in Propstream, so this is why I was so- when you told this the other on our call, I was like holy cow, like yes Propstream has the ability to pull buyers. I just don’t feel like it’s utilized that often and boom you utilized it. So, you went back to Propstream.

Derrick: Back.

David: Back, and you pulled buyers so how does that work? Tell me the process of that.

Derrick: I actually drew around-

David: Perfect.

Derrick: The neighborhood.

David: And that’s one of the features, you can draw on the map. So, you basically just drew an object that was close to where that was at.

Derrick: Close to the circle around that area, probably about half a mile away and all the surrounding areas and then I found all the cash buyers.

David: And how many do you think- roughly? I mean, it’s probably not that many.

Derrick: It was probably about 250.

David: 250, that’s more than I would have guessed, but that’s a lot of people.

Derrick: Right.

David: And then you pulled out-

Derrick: Pulled that list the same way I pulled the seller’s list.  I imported it straight into Batch-

David: How long did that take you to pull the buyers list?

Derrick: Two minutes.

David: How long did it take you to pull the sellers list?

Derrick: Two minutes

David: Isn’t this crazy dude?

Derrick: Crazy.

David: This is fucking awesome, pardon my language but I’m excited.

Derrick: Yeah, didn’t take any time at all.

David: 10 grand dude, 10 grand. Okay, so you pulled the buyers list, and you did the same thing, you went back to Batch.

Derrick: Yup.

David: What?

Derrick: Back to Batch, skip traced that list, came up with a-

David: And you did the same cold text too, right?

Derrick: Yup, same cold text, I put a little information in those text messages.

David: So, this one looks different though.

Derrick: Yes.

David: The first one was probably along the lines, and you said you had a lot of different- a message template, right?

Derrick: Yes, yes.

David: But basically, it’s simple guys. If you were listening or watching this, it’s you know, hey John, I think you’re the owner at you know, 2222 Clements Avenue. Do you have interest in selling it? Or any variation of that which could be a hundred things, but when you did the buyer, how did that look? I’m curious.

Derrick: It was pretty much the reverse. Hey, I’ve seen you purchased homes in this area for cash, would you be interested in another one?

David: That is so incredibly simple, it’s almost it’s almost hard to believe but that’s it, that’s all there is to it. So, you did the exact same thing, 250 people that you had sent. How did the responses come in and look?

Derrick: Ooh, there was actually a lot of responses.

David: I would imagine- you probably, imagine you had at least 10 people that are like, yeah send me more info, right?

Derrick: Yeah, it’s always a lot of more responses when you’re reaching the buyers as opposed to sellers.

David: Right.

Derrick: So, I had a few people interested, but I had one main guy who pretty much, as soon as I texted him, he said I want to go see it. He went to go see it, it was already on lockbox, made sure it was on lockbox.

David: So, you brought that with you when you went to the appointment?

Derrick: I had to go back and put it on there.

David: Okay, but you knew and now you know.

Derrick: It was on there before I texted the buyers.

David: Hell yeah.

Derrick: So, he went to go see it and he said hey man, you don’t have to go any further.

David: You didn’t even have to meet him, did you? or did you?

Derrick: No, I didn’t.

David: You didn’t.

Derrick: Not at first, no.

David: Next time you’re not going to meet the seller either.

Both laugh.

Derrick: I can’t wait.

David: Okay, cool so, he went- he said you don’t have to go any farther.

Derrick: He said don’t go any further, I’m your buyer.

David: What were you asking? So, you had it under contract at 28 and what were you asking?

Derrick: I knew I could get 34, 35 so I put it out there at 38,500.

David: Okay and then what was his offer to you?

Derrick: He said he wanted to give about 35 so I kind of negotiated with him and he said that he didn’t want to lose this house cuz I told him there was another person interested, and he said let’s do it for the 38,500.

David: So, full asking price?

Derrick: Yes.

David: Damn, holy cow. Okay, guys 2 software’s and a little bit of hustle and you earned $10,000. Found the list on Propstream, added it to Batch, text some sellers, set some appointments, did the exact same thing once you had a deal, Propstream for buyers this time, went to Batch to skip and cold text. Hey, I got this deal, was he the first guy that went in it? Probably sent a couple people over.

Derrick: He was, it was probably about 4 people. He was the first.

David: Okay, but regardless, you had only given the information to a couple of people, right?

Derrick: Right.

David: And then he said, okay, I like it, full ask. Did you send him a contract, did he send you one?

Derrick: Well, actually he’s a little bit older gentleman so I just drove to meet him.

David: Perfect and I love that though because that solidified it, shake a hand. Hell yeah. Okay, and then you brought a contract with you?

Derrick: Yes.

David: And then you take it to the title company?

Derrick: Yes.

David: Closed it up? Double closed?

Derrick: Yup.

David: The cool thing about where we live- where’d you close this at? Investors?

Derrick: Investors.

David: Perfect. The cool thing about where we live at here in St. Louis, Missouri is we can do double closes without any money. Some areas, some states, some counties, you know, they may not allow the dry double closes, you may require a transactional lender to do these, but we don’t.

Derrick: Right.

David: So, you didn’t have $1 invested-

Derrick: I didn’t have to bring one penny.

David: In the deal. Now, –

Derrick: Actually, I did have to bring the earnest money, that’s all I had to do.

David: Okay, how much was that?

Derrick: 500.

David: 500, so you did invest that, but you got it back.

Derrick: Yes.

David: Right, okay so 95 is really the profit though but 10 g’s is what came in the account, that’s cool. Okay, so you took it to the title company to double close. You didn’t have a nickel out of your pocket for buying and/or selling and made about 10. However, and this is what I really want to emphasize on just for a second Derrick, flipping houses with little to no money, you just proved it’s possible with basically no money to buy and or sell however you are paying for Propstream, you are paying for Batch, you’re in a coaching program, you have some costs but at this point you’ve made three, four, five, x on those costs, right? So, it’s all, it’s all good. It’s worth it, right?

Derrick: Absolutely.

David: So, what I’m getting at though is doing deals with little to no money is so possible. It’s simple in fact, however, the caveat is sometimes you have to invest in marketing, most times, right?

Derrick: Correct.

David: Once you start doing more and more of these, you’ll start getting referrals and you’ll have no cost for the lead. So, that’s what I want to just you know, put out there is there is cost in the marketing. How much do you think excluding working with me, on just your Propstream, your skip tracing and you’re texting which is again 2 software’s and you’re only 3 months in, what do you think the total amount of money that you’ve spent on this?

Derrick: I would say about 600 a month.

David: Okay, so three months, you’re about 1,800. So you are, you know, again not including the coaching, you’re looking at almost 4x, 3 and 1/2 x give or take on that deal. Now, you also have a ton of leads I’m assuming from those efforts. Derrick, my average deal takes four to six months because it’s the follow-up.

Derrick: The follow up.

David: So, we’re doing you know, 6, 8, 10 just kind of varies, right? One or two of those that come in a month will be quick, easy. The rest of those require follow-up and they take four to six months of following up to either get the agreement between us and them to work or to wait out their motivation, right?

Derrick: I’m learning that now. Probably working on about 10 to 15 leads that I’m following up, just this one happened to be-

David: Quicker, boom so this is awesome, and this is how it happens, some of them go quick, some of them take longer but the cool thing is you have 1800 in cost, you made 10 grand, but you also have leads that you’re working that you can continue to follow up with that you’ve already spent that money on. So, you know, over time you can drive your cost down because you can build that big ass funnel of follow-ups. Man.

Derrick: Right.

David: So, you know looking back on this, how much time did you, not on all of your marketing but on this particular deal.

Derrick: On this particular deal just downloading the list, sending text blasts, driving to the property-

David: Getting pictures, going to meet the seller or the buyer.

Derrick: No more than 2 hours.

David: Wow, let’s say 3, right? Let’s go higher, 3 hours. That’s breaking that down to 10 grand, 10 grand for 3 hours. You know, you’re looking at like 4- 35 hundred dollars an hour. So, it’s pretty simple, this process is simple.

Derrick: Absolutely.

David: And hopefully, you’ve proved to yourself that this can happen, and this can work.

Derrick: Yes.

David: Cool man. I’m excited for you, $10,000 wholesale fee, first deal, 3 months. We have liked to have gotten you there in 1 to 2 but doesn’t matter, you did it, you proved it to yourself. You got a couple more leads that are in the pipeline, you said about 10 right now.

Derrick: Yeah. about 10-15. What’s funny is that I actually got a property I would say one weekend I started wholesaling.

David: Boom.

Derrick: But I priced it wrong, it was a learning lesson for myself as far as the rehab is concerned and that one didn’t close. So, it was a learning lesson when I went to this one.

David: Probably offered to pay more, couldn’t sell it for that. You know what? Lessons are learned that way all the time but regardless, you got to do that sometimes. You got to because so here’s why, sometimes you’ll think that you’re in too high and you’ll find a buyer eat anyway, right? Other times, if you don’t at least try, I tell this to a lot of the students that are new and they’re not making offers Derrick, if they’re not trying to get properties under contract, it’s impossible to sell something that you don’t have, right? If Walmart didn’t have any inventory on their shelves, how can they turn a profit? You got to have inventory so the fact that you made the offer, sent it over in writing, had it under contract and had to back out is okay. You gave it your best efforts and you didn’t have any malice intention anyway, right?

Derrick: No, not at all.

David: It was all let’s try to get this done. So, talking about the deal that you did though, triple-win. You helped the seller who’s an agent, he could have done it himself, get rid of a problem property to reduce his liabilities. Boom, win, you found a buyer in the area, which I’m impressed by you, by the way, because the tactic in which you did it is just simple and you did it just simply, you just put the pieces together. So, you found this guy and what was his plan? Did you ask him? Is he gonna rent it?

Derrick: I think his plan was to give it to a family member, rehab it and his brother’s going to stay there.

David: Perfect, so he’s going to rent that property out. Triple win, you won 10 g’s.

Derrick: 10k.

David: What was like the biggest lesson from this? Just that it’s possible? like, opening up your mind?

Derrick: Yeah, just going through the process. I just wanted to prove to myself, of course I knew it was real, but I can do it.

David: It’s hard like truly understand it though until you see it, and you get that deposit in your bank account and you’re like, holy cow. So, this was a more inexpensive house, but you can do this with million-dollar houses too. You don’t necessarily need money to buy and sell because at the end of the day guys, we’re selling paperwork. That’s really what we’re selling, we’re not selling houses. So, you can make it work to where you’re flipping the paperwork, the cost, or another way to word it would be the investment that you have to make as an end to the marketing. Derrick, I’ve said this a lot of times and I would think you would agree with me at this point, wholesaling is the marketing business, wouldn’t you agree?

Derrick: Yes, absolutely.

David: It’s not a real estate investing business, kind of cuz you’re kind of doing that. The way I look at it is you become an investor when you start taking risk. You are doing that, you got some- you got a rental, you have got two flips in the work. You are- that’s risk. When you’re doing wholesales, the risk is so limited because of the CYA clauses, the inspection period, you know based on the partners approval or subject to successful acquisition or whatever those contingencies might be. Boom. Derrick, thank you for coming in, thanks for coming in on the show.

Derrick: No problem, thank you.

David: What else can you tell us that you’ve learned about this deal? I mean, this is- me and you sitting here right now, it’s simple but before, 3 months ago, you’re like man, there’s so many different pieces, there’s really not.

Derrick: Right.

David: Wholesaling is actually really simple, you just got to-

Derrick: It just takes grime and persistence.

David: You said it, persistence.

Derrick: That’s it.

David: Persistence. There’s 3 things that I would want to highlight on that topic that you need to have persistence in. One is your marketing, you agree with me on that?

Derrick: Absolutely, yes yes.

David: You gotta. Number two, consistently sending offers. What good is marketing if you’re not sending offers and I just mentioned if you don’t-

Derrick: Right, I know you told me that I always try to send offer even if it’s not in writing, I’ll text it or I’ll call, give them the offer.

David: You gotta have inventory. You can’t sell what you don’t have in inventory, love that. So, number one marketing, number two is consistently sending offers and then finally is follow-up because you paid for those leads, they’re in your system, either your offer isn’t high enough for them or more importantly the motivation on their side isn’t high enough for you and I always want to emphasize this and if you can leave here Derrick with one gold nugget, other than the business which I gave you earlier is you now know that what you do, this service provides a shit ton of convenience to your sellers, so now this hopefully this will help speed up the next deal for you, right? But now know you’re- what you’re worth. You can provide a crazy level of convenience so when a seller is asking retail or close to it, pull back.

Derrick: Okay.

David: Pull back. Why should I go out of my way to give you all this convenience if you aren’t going to give me a discount? I’m not saying be rude, that’s not what I’m saying, what I’m saying is pullback. Well, maybe this deal isn’t for me. I’m looking for something that I can get at a discount, right? But in exchange I’m going to provide a crazy level of convenience. What’s that look like? close quick, pay cash, little to no inspections, as is. You don’t have to repair it, clean it, fix it I mean, that is a lot of convenience. So, the reason I say this is because I had- after about a year-and-a-half in this business, I had a mindset shift of man, I’m undervaluing this convenience and what happened is I stopped chasing bad deals. You’ve heard of the 80-20 principle, 20% of the deals are going to be 80% of your profits, so I quit chasing these bad deals because I started realizing hey, this level of convenience that I’m offering is extremely valuable and if somebody isn’t willing to offer me a discount, it doesn’t have to be half, that’s not what I’m asking for but a discount, we’ll then I’m probably not going to be interested in closing quick, paying cash or buying it as is. I’ll pull back on one of those three things just to level the playing field but if they do decide to give you that discount, give them all that convenience. So, know the value of the convenience is a lesson that I just wanted to throw out there because boom, 10 grand. You helped two other people in the process, and it’ll help you from chasing those skinny deals. Again, I’m not saying don’t follow up, what I’m saying is don’t go out of your way to chase them if they’re not-

Derrick: The convenience is there-

David: 80-20 man, you know, you’re going to spend 80% of your time. This is true. We just closed a deal yesterday for 1900 bucks dude. We worked on this deal, we closed three this week, today is Thursday. The other two we didn’t do that much on, the one that we- and we made like 6, 7 grand each. The one that we got for 1900 dollars, we spent three months working on, two different title companies had to clear a judgement, had to pay agents, we spent you said earlier 2 hours up to 3?

Derrick: Yeah.

David: On this deal that we did, we probably spent 15 and made 19- so, what I’m saying is don’t chase them, let them come to you. Let them know that you have that level of convenience but in return, you demand a discount. Again, it doesn’t have to be crazy big, but it’s got to be something in there.

Derrick: Right.

David: So, Derek again, thank you for coming on today. You’ve been one of my favorite people to coach because you are a hard worker, and you got that grind. Again, you said the thing to take away from this was persistence. Guys, if you are listening to this if you are watching this, just be persistent. Derrick doesn’t even have a CRM yet.

Derrick: I don’t.

David: Which is okay, we’re going to have to get you into the CRM stage.

Derrick: Immediately.

David: Immediately, cool. But the cool thing about Batch is they have the ability to mark a lead warm, cold, hot, whatever to where you can kind of compile those and go back. It’s not a CRM but it does allow you to basically filter or put them into folders which was sufficient for the first deal but now that you’ve made it, you’ve proven to yourself and you have money to reinvest in that marketing which I’m assuming is going to look very similar to what you’ve already done, just duplicate this man, go find some more lists or other types of marketing, you know, bandit signs, direct mail, so on so forth.

Derrick: Just time to do what I did but on steroids.

David: Exactly but honestly, I wouldn’t change it too much.

Derrick: Okay.

David: Just get really good at this and then eventually you can outsource this to a virtual assistant and then you don’t have to do that anymore, you just gonna start running appointments. That’s what I do cuz I enjoy it, you see what I’m saying? Either way though, thanks for coming in.

Derrick: No problem.

David: Happy $10,000 first closing. Congratulations my man.

Derrick: Thanks.

David: Derrick, I’m grateful for you, any last words for the audience today?

Derrick: I just keep the grind, stay persistent.

David: That’s it guys, it is that simple. Keep the grind, until next time you heard from Derrick Towns here in St. Louis, first deal $10,000.

Derrick: 10k.

David: Boom, thanks Derrick.

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