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Do you want to know what is the 3 pillars? In this episode, David and Mike discuss the 3 pillars of wholesaling in Real Estate. You can learn a lot from this episode! Check this out!
Things that will cover in this episode:
- How important the 3 pillars in Wholesaling
- The 3 pillars are
- Making Offers
- Following up!
- Why you must Making Offers?
- Don’t chase deals
- Don’t stop Follow up
David: All right, guys we are back! Discount property investors!
Mike: All right, all right. David Dodge, how are you doing today?
David: I’m doing good Mr. Mike Slane.
Mike: Awesome man. We are the discount property investors, the hosts of the discount property investor podcast. Thank you guys so much for joining us again if you are a return listener or for the new people, thank you so much for joining us. We’re super excited to be on the air, to be real estate investing and be sharing some knowledge with people.
David: That’s right. Today’s episode is going to be about the three pillars of wholesaling.
Mike: Three pillars of wholesaling, I like it.
David: And I look at this kind of like a stool, I really do because if you take one of these pillars out, your business will fall- it’ll fall down, it will fall apart. You know, this kind of came to me yesterday when we were doing coaching call with one of our students and I was talking about different types of marketing and he just got his first deal done and we’re talking about you know, some other things that he may want to explore and I said that’s all fine, that’s all good however, there’s so many shiny objects Mike, like so many, like you got this software and you have that software and you can do this to get leads and you can use this software to estimate repairs and this one to run comps and this one to help send offers and this one to manage everything.
Mike: I’m going down a shiny object right now, thinking-
David: Rabbit hole.
Mike: Thinking about the three pillars and how- and what the three pillars originally referred to in a stool, in stool-making and whatnot.
David: So, you’re still trying to comprehend that?
Mike: I’m already Googling it. I’m looking up what’s three pillars.
David: Think about it, it’s a triangle, you drop one, you’re gonna fall.
Mike: 100%. So, staying focused, very important and I really like that analogy about yeah, it’s too easy to go down a rabbit hole.
David: Is there another way to word it?
Mike: We do it all the time.
David: I think it’s a stool, the three-legged stool, let’s call it that. Either way-
Mike: Three pillars.
David: It’s the three pillars so, you know, the three pillars are simple guys, you’re going to hear us say this in this- these pillars in this episode 10 times, but number one marketing to motivated sellers, number two, making offers and number three, following up and that’s it. That’s it, that’s the entire set of pillars that we have. There’s more to wholesaling real estate than those three pillars obviously, but those are the three things that you need to do in your business consistently and you can’t stop doing, right? If you are going to take away from one, two, or even three of these pillars for whatever reason, like the stool analogy, your business is going to fall apart.
Mike: But any one of them- without all three of them, without all three of them, your business falls apart.
David: You kinda have to have all three, right.
Mike: It doesn’t necessarily happen overnight so again like marketing, let’s talk about marketing. If you turn off marketing because you get distracted with making offers and following up, if you turn off your marketing, eventually your lead sources are going to dry up and it doesn’t matter what your lead source is, if marketing to you is mostly networking, that’s fine but if you stop networking, eventually those leads are going to dry up too.
David: Oh yeah.
Mike: So, again, no matter which one, eventually your business is going to come to a stop if you’re not doing all three. I think that’s a hundred percent accurate, I mean a hundred percent of the time.
David: Yeah, so you know, on the call last night, we were talking Mike about me and you been working together for a long time 3, 4 maybe going on 5 years, we’ve both been wholesaling for maybe a year prior to that.
Mike: I like that neither one of us is great with dates or time.
David: No idea.
Mike: Yeah, we worked together a long time.
David: Could be 6, who knows.
David: Call it 5 years, we’ve been in the business 5, 6 years, right? full-time, both of us and together and individually, I’m not speaking on your behalf, but I think you’ll agree.
Mike: Oh, it’s accurate.
David: Okay cool.
Mike: I already know.
David: We go down rabbit holes, we find this new thing, this new software, this new system, this new process. Now, when we get this process set up it ultimately will help our business, but the problem with these new things- they’re shiny objects, the problem with them is we dedicate a lot of time to them. We go down these rabbit holes and if we stray, I think that’s the right word, away from the three pillars- marketing to motivated sellers, making offers, following up- the number of deals we do a month drops, it cuts in half, it goes away completely in some cases. I don’t think there’s been a month we haven’t done a single deal ever since we started, but it goes- it goes way down, 10, 12 deals goes to 3.
Mike: What I think of is when I was starting out, and again I know we’re talking to our target- again, we always like to talk to the new guys, again cuz it’s fun to teach people how to do this. What I think back to is when I started out and it took me six months to do a deal, you know why? Because I didn’t have the three pillars in place. I would spend way too much time tinkering with my website. Oh, I need a website so that I can you know-
David: Does my business card look okay?
David: Are you freaking kidding me?
Mike: Well, its- and if I’m going to send out a postcard, I need to have a website on it cuz that’s gonna make me look credible and then the website, oh well I have to tinker with this and tinker with that and it has to be perfect and just right before I can do that before I can send out the postcards. No, no, no, no, no, that’s the exact opposite thing you should be doing. You don’t have a business until you’re doing those three things, generating leads, and actually making income then you have a real business, then you can worry about your website, then you can worry about your articles of incorporation in forming an LLC and all that stuff. Unless you prove that you can make money, to me there’s no reason to even form LLC’s or to put together a website or any of that stuff until you know that you can wholesale. So again, focus on the three pillars. I cannot overemphasize it, super important, make money first before you worry about those stuff.
David: And I’m not- Yeah, I love it. I don’t know about saying don’t use softwares, I’m just saying don’t chase two rabbits. Your one rabbit needs to be these three pillars- marketing for motivated sellers, making offers and following up. Let’s dive into each of these briefly. Marketing to motivated sellers, you ain’t gonna find deals if you’re not marketing to motivated sellers, you might get lucky, right?
Mike: It’s possible. In this market, it’s going to be very difficult.
David: It’s gonna be tough.
Mike: I mean, this market is- it’s competitive, it stayed competitive through the whole coronavirus lockdown.
David: Prices didn’t drop, they’re going up.
Mike: We are still seeing, yeah, a lot of excitement in the real estate market so you absolutely will need to market to find leads, 100%.
David: You got to market, and you can’t stop because when you do marketing in waves, then you’re going to have leads in waves, so you got to keep your marketing consistent.
Mike: And this is what Dave mentioned before, not speaking for me, this is my biggest fault.
Mike: Yeah, was I’d mark it really hard, really really hard like I would put out- I didn’t buy-
David: 10,000 letters and you don’t do it for 4 months.
Mike: When I bought bandit signs, I didn’t buy a hundred. I bought a pallet full- I had a pallet full of-
David: 600 pallets, 600 signs or 800 signs.
Mike: It’s not- I don’t think small when it comes to marketing, but my problem is, I would do that and I’d do really really hard and then I would stop and I’d follow up with leads and all this other stuff and my leads would dry up so again, it’s a consistency in those three things very, very important Dave. So, marketing was the first one.
David: So, marketing is number one, number two making offers. Mike, tell us a bit about making offers. Why we need to make offers right? Got it in inventory.
Mike: Making offer, this is my favorite analogy too is that people don’t understand, or they don’t think about wholesaling like they think of a normal business and I think this is just a super simple way to look at any wholesaling endeavor, any business venture- any business venture-
David: Or endeavor.
Mike: Endeavor, exactly. Would be that if you don’t have inventory to sell, you’re not going to make money, so when you sell something you hopefully sell it for more than you bought it for, make a little bit of profit. So, that’s how all businesses work is you’re selling either a service or a product.
David: But you have to have something to sell.
Mike: You have to have something, exactly, and that’s inventory. So, as a wholesaler, if you do not have a property under contract, you do not have inventory. So, as a wholesaler, if you don’t make an offer on a property, you are not going to get inventory, so you have to make offers. We make offers literally-
David: We made 5 yesterday.
Mike: On every property that we look at.
Mike: Every time. Again, it may not be a-
David: I made two this morning while I was making breakfast.
Mike: Well, that’s really good Dave, I did not do that.
David: I had another wholesaler send me 2 deals and he said I can’t move them, and I made- I said, what’s the asking price? and they sent it to me, and I took it and multiplied it by 1/2, 50% and I sent it right back and I said this is my liquidation number. I don’t need these two deals of yours that you’re trying to peddle.
Mike: Yeah, you want me to buy them, I’ll buy them.
David: Get the seller down a bunch and I’ll cash you out.
Mike: That’s awesome. I was chasing a toddler around for breakfast.
David: Offers were made though, offers were made.
Mike: That’s great.
David: So, absolutely but you gotta have inventory guys, you have to make offers, that’s how you get inventory. You get properties under contract by making offers, that is number two pillar- making offers. Number one, market to motivated sellers. It’s very hard to make a freaking offering somebody if they’re not motivated to sell a property.
Mike: If you don’t have leads coming in.
David: You got to have leads so you gotta market, you gotta make offers I mean, number two is really in my opinion, the most important because people don’t do it, right? But you got to do all three, you can’t really put a power or a label on which is most valuable. Number three guys, so simple, follow-up okay? Mike and I, our average deal’s 4- 6 months, so let’s take the real number I mean, if we’re going to do a true average, we’re talking five months. What’s 5 * 30?
David: So, it’s 150 days from the time that the marketing triggers them to call us or our own marketing of hunting triggers them and gets them in our system, on average 150 days from the time that leads entered in the system to the time that we’re able to make a dollar on it or wholesale it or I’ll get a listing or convert it, right?
Mike: Yeah, it’s a really long time. It’s almost- it feels embarrassing just when you- when you broke it down like that.
David: But it doesn’t though because you’re doing 10.
Mike: Dude, don’t get me wrong. I’m just saying like cuz-
David: Well, that’s why it’s a pillar Mike cuz if you don’t, then you’re doing one or two deals a month not 10, and that’s the point 80% of the deals, 80/20 principle guys perfectly at play here. 80% of your deals are going to take you 5 months, 20% of them are going to happen in a week or two or three or four or five or whatever it is, right? Same scenario with 80/20 principle though and I told this to one of the students yesterday, don’t chase deals cuz if you do chase deals, you’re going to end up spending 80% of your time on the ones that make you 20% of the profit.
Mike: And I think part of that could be the reason why we are in a 150-day cycle. If somebody else is like oh, that’s terrible we do deals, 30 days is our average or something like that, that’s probably why.
David: Great, you’re chasing deals.
Mike: Yeah, we don’t do that.
David: I’m not trying to chase shit.
Mike: We have a very different philosophy. We also- we’re very low-key on our sales approach and our-
David: We just want to make a friend. We don’t have any special secret tactics, you know, we do a little mirroring of course and we try to make our appointments last long. We’re not in and out, we try not to be. The goal with us- our sales approach is so simple, make a friend, can we help them? But the same time, we know that our level of convenience is very valuable, and we demand a discount. That’s it, we don’t pay retail, we tell them right when they call.
Mike: We’ve- well, and Dave and I have worked together long enough. We’ve made enough mistakes in this business and we’ve lost money guys. We’ve lost money on deals we bought before for ourselves. We learned enough from that to not do it anymore so we don’t pay too much, we can’t. We’ll help someone out of a situation if we can. We’ll provide other options that are not necessarily selling to us all the time and we’re happy to help people. I mean, that’s I think the- yeah, that’s the bottom line.
David: That’s the bottom line.
David: So, there’s three pillars guys.
Mike: Three pillars, get after them.
David: And that’s the point here, you got marketing, you got making offers and you got following up and if you consistently do those three things over and over and over again, it’s almost impossible that you’re not going to do deals, right? I mean, over time you’re going to learn all the things that are there keeping you from doing deals, you’re going to start doing deals so if you’re new and you’re listening to this, I get five or six text messages a day from people through Instagram or whatever, Dave I’m in analysis paralysis, I’m in analysis paralysis and it’s like, okay, I was too, I get it. How much marketing have you done? or have you done any? Start there, like stop thinking, start marketing literally, say it again stop thinking, start marketing. Next, okay now you’re marketing, right? How many offers are you making? Oh well Dave, I didn’t really get that many deals that came in from the marketing approach. Shut up. The answer should be every lead that comes in, you should be making an offer on. Really, literally, make offers. The more offers you have, the more possibility and opportunity you’re going to have to get them under contract therefore making them inventory. Mike said it earlier you can’t make a freaking dollar if you don’t have anything to sell. If Walmart shelves were empty, they would go out of business, they keep them stocked. So, as a wholesaler and as your wholesaling company, focus on keeping your shelves stocked which may just be a website or a Google sheet, but that’s inventory, right? And then last but not least, yes, you can go do a deal or two and get it closed in a week from the time you talk to the seller but 80 to 90% of them are going to take a couple months and if you stop following up, you are going to be throwing money what your cost per deal if you don’t follow up is going to be 10 times higher than if you follow up. Why? because the leads in the system, it’s paid for, it’s sunk- the money, you can’t get it back. So, if you don’t, you know, follow up, I’m not saying a chase, I’m saying follow up, you’re throwing money away and that’s the easiest way to reduce your cost per lead and to maximize the efficiency of your marketing is to add them in the CRM or get a VA to help you with that and follow up. You call that individual, text them, email them, send them offers every week, every other week, every month until that property sells to you or somebody else. You don’t stop unless they say of course, but you got to be persistent guys. So, that’s it I mean this is probably going to be one of the shorter episodes, but the point here is that there’s three things that you need to do, we’re labeling this the three pillars of wholesaling cuz you know, we’ve been in this for 5 years and we’re thinking you know, how do we simplify this business to the core? What is the most important three things that we need to do? Is there even a fourth or a fifth or a sixth? and there’s really not, its three. There’s lots of ways to do those different things but at the end of the day, you need to be focused on marketing, you need to be making offers, you got to be following up and that’s it. That’s all that it’s going to take to be successful. That’s it, that’s all I got Mike what do you- anything you want to finish on that note?
Mike: I got nothing else man, I think you said you know, it’s not chasing and the analysis paralysis thing, I just want to comment on that is get out of your own way. Like, I know that I’m my biggest enemy when it comes to being successful. You just got to get out of your own way sometimes-
David: The focus is what makes you successful so turn your phone off, quit checking emails, I’m not talking to you but I kind of am.
Mike: Well, you know, it is what it is. To be fair, I am following up on an offer right here, so I did just make an offer while we were chatting.
David: Ooh, I like that. You see, I’ll let that one slide, but you’re right and the thing is you know, once you start doing deals, if you’re listening or watching and you already are doing deals, this is really when the rabbit holes and the shiny objects will really be your demons in my opinion, because you know, let’s say that I’ve been doing this 6 years. I don’t know the exact number, let’s say six years. I would say I wasted a year and a half of that 6 years by chasing shiny objects, setting up systems. Yes, I may have those systems today or I might not, right? Some of that I’ve just thrown away, but I wasted a lot of time trying to do these things that weren’t related to the three pillars and they didn’t really get me anywhere, right? So, my suggestion to you new or veteran investors, doesn’t matter is stick to those three tiers and I can almost guarantee you success, so to end, one of the three tiers Mike.
Mike: You got to start marketing.
David: Simple, number one.
Mike: You got to follow up your leads.
Mike: And you got to make offers.
David: Three guys.
David: Simple as 123. That’s it for today. Thanks for listening but truly though I mean, there’s no reason to keep harping on this, do those three things. Signing off guys.
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