BiggerPockets Podcast 102 with Scott Costello Transcript
Link to show: BP Podcast 102: How to Struggle and Still Succeed at Real Estate with Scott Costello
Josh: This is the BiggerPockets podcast, show 102.
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Josh: What's going on everybody? This is Josh Dorkin, host of the BiggerPockets podcast. Here with my co-host, Kris Kringle himself - Mr. Brandon Turner.
Brandon: Who you calling Kris Kringle, you Grinch? Ha-ha.
Brandon: Just kidding. You're not the Grinch.
Josh: That's not very Christmas-like of you.
Brandon: You are not the Grinch. You are like, I don't know. What's another good Christmas person? Like Rudolph. You're like Rudolph over there. You know everyone likes Rudolph because he can fly and he's got a red nose. I don't know why that's like you but trust me, it is.
Josh: Ha-ha. I don't either. Alright, Merry Christmas.
Brandon: Merry Christmas. Thanks. Even though most probably aren't listening to this on Christmas because they're with their families, but whatever.
Josh: That's right. Am I allowed to say Merry Christmas?
Brandon: Of course you're allowed. Wait, Happy Hanukkah.
Josh: There you go. Thank you.
Brandon: I'm called culturally sensitive. Look at me.
Josh: There you go. Awesome. Awesome. But well, what's going on, man? How are you?
Brandon: Oh I'm good. I'm really, really pumped for 2015.
Josh: Oh yeah?
Brandon: I am. I have my goals I'm setting for myself. It's going to be a good year.
Josh: Nice. That's awesome. Congratulations.
Brandon: And I'm going to Hawaii in 2015, in like a month.
Josh: I've been told and you keep reminding me.
Brandon: Every day.
Josh: Yep, pretty much. It's going to awesome. Can't wait for you to be gone.
Brandon: Yeah. Ha-ha.
Josh: Ha-ha. Have a good time. A day without talking to Brandon. I love it!
Brandon: Yeah, there you go. Alright. Let me get to today's quick tip. Today's quick tip is, we've said this before, but I want to reiterate. Almost every single week we do webinars on BiggerPockets. We invite anybody too. If you want to show up, show up. If you want to know what the current webinar is, just go to BiggerPockets.com/webinar and I update that URL every week or two with the new webinar. So if you want to come, it's free. We usually only them saved, the webinar, for a week. If you want to come, just show up. And then if you can't actually make it to the event, just sign up anyway. You can watch the replay later. And then the following week, we'll have another webinar. Anyway, you should come. That's the quick tip.
Josh: Good tip. Good tip. Awesome. Alright, well today we've got a cool show for you guys. Our guest is a guy I've known for years, but haven't really had a lot of conversations with and it's really cool to kind of hear more about his story. Scott Costello. Scott's a very, very savvy web guy and he's the essential struggling investor. And I don't know, I think it's so cool talking to guys like Scott, to hear real estate just isn't as easy as they it is all the time. And for some people, it takes work and it takes time and fortitude. And if you can stick it out, things can start to come together. And I really enjoy this episode.
Brandon: Yeah, I did too a lot. It's nice to hear that people aren't like, "This is easy. Anybody can do this." It's nice to hear somebody who's worked through the struggles and then overcoming those problems and those pitfalls and those snags that everyone goes through but nobody likes to talk about . And Scott's very open about those struggles and I love that. Yeah, it's great.
Josh: Yeah and for those of you who are listening, who may be struggling, beyond listening - really take heed of what he did. Because I think his strategy for getting past the "I'm not going to get started ever phase because of XYZ", listen up and listen to what he did because I think it can prove to be really helpful to everybody out there who may also be having a hard time. So with that said, why don't we get this thing going. I know we've got some word before then. So Brandon?
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Josh: Alright guys. Well, let's bring him on board. Scott, welcome to the show. It's good to have you here.
Scott: Thanks for having me. I'm excited to be here. It's a joy. I've been listening to you guys for a while.
Josh: I can hear the joy in your voice.
Scott: I'm a laid-back person so you might not be able to tell my emotions.
Brandon: Ha-ha. That's alright. Me too. I wish I was more laid-back though. I got to figure out how to get more laid-back. I don't know, I stress too much. Got any tips for that? We're going to start out that one. How do I become more laid-back, Scott?
Scott: Just clear your mind.
Brandon: Clear my mind.
Scott: It's easy for some people.
Brandon: Ha-ha. I'm going to work out that one.
Josh: I don't think it's possible because he started with nothing.
Brandon: Oh. Oh. Look at that. Burn!
Josh: Alright, Scott. How do we do this? How'd you get started, man? Tell us about the origins of you and real estate.
Scott: Well, it was a very slow start. I have always been interested in real estate, at least housing, going through open houses on my free time. Then I decide to take a look at this book I heard about, Rich Dad, Poor Dad, which everybody who I know who's an investor has read that book. So it's not that ground-breaking. But I read it on my honeymoon on our cruise ship in the Caribbean.
Brandon: Where'd you go?
Scott: We went to the Eastern Caribbean cruise and then Aruba afterwards. It was a nice two-week vacation.
Brandon: That's awesome. I just did that last year. I did the Eastern Caribbean cruise. It was great.
Scott: Yeah, very good.
Brandon: Yeah. So anyway. You read Rich Dad, Poor Dad on the cruise. I'm trying to throw you off here. That's my goal today. Get you off track. Alright, so you read Rich Dad, Poor Dad on the cruise and what in that ignited you?
Scott: It changed my way of thinking about how I can make money. I mean before I was happy with my stable nine to five job.
Josh: Which was what, by the way?
Scott: Software developer for an engineering company. Create their in-house software and once I read that book, I walked into work and I was just like, I didn't really want to walk down these halls, say hi to the same people every day. No matter how hard I worked, I make the same amount of money and was just making someone else rich.
Josh: You a New Yorker?
Scott: I am from New Jersey.
Josh: Okay. So close enough. Our ugly step sister.
Scott: We share similar accents.
Josh: Yes. Nice. Alright. So your mindset was kind of changed. You said the origins took a little bit of a while to kind of get things going and you've got a website, The Struggling Investor, right? Struggling to get started. So you talk about that. So why do you think it took so long? What was the challenge for you? What kind of kept you from just going right in and doing your 15th deal?
Scott: There was definitely a couple of things were the reason why. I'm kind of a cautious person, in one sense that I like to know some answers before I get started and things. I can't just jump in and then go and then figure things out later. I'm a little too shy for that. And I was just starting a new family and I didn't want to jeopardize that going forward with finances and stuff. Because you always hear about harsh stories on losing tons of money, investing in a bad house. So I wanted to be sure and I couldn't spend a lot of income from our jobs on this because my wife would be less inclined to let me do it. So I had to come up with ways to invest without really spending any money.
Josh: Nice. Nice. And I'm sure and everyone else listening else knows that Brandon wrote a book on that very subject. I had to preempt it and plug it because he was bound to do it.
Josh: The Book on Low and No Money Investing. Find it at BiggerPockets.com/nomoney. It's got all sorts of stuff about that but he was going to do it so I just decided I would.
Brandon: Ha-ha. Thank you.
Josh: Yeah, so there's all sorts of ways to do it, what did you end up deciding would be the best path and I do think it's interesting because you're not alone, right? There's a lot of other people who are like, "How do I get my spouse on board? They don't want me to spend money. I can't really throw down a lot of cash to do this. I got to do something to kind of get them excited." It sounds like that was your plan.
Brandon: She's still not as excited about it.
Josh: Ha-ha. Uh-oh.
Brandon: We don't talk about too much. It's just kind of impasse. I get a check then she's happy but then-
Josh: We’ll use pseudonym on the name of the podcast so she doesn't know this is about you.
Brandon: Okay so what was your first deal? Let me ask you this first. What did you get into? What is your strategy for those people who don't know?
Scott: I got into wholesaling properties, kind of strictly buy, like assigning the contracts.
Brandon: Okay. First, I want to know this. Why wholesaling to start with, and then we'll talk about your first deal. So why did you choose wholesaling as the kind of the avenue to get into?
Scott: Mainly because you could start it from home. You could not spend a lot of money getting into it. You kind of feel your way around before you really jump in full board. And you can send out a hundred mailers here, a hundred there. See at the phone calls coming. Start talking to people without getting overwhelmed with having to see ten properties a week or handle hundreds of phone calls. So it gave me a feeling out stage to where I can start getting comfortable talking to other people.
Josh: Yeah and you bring up a good point and I think a lot of people believe that you have to jump in and send 10,000 mailers in order to get X number of people and create these funnels. And that works, right? But it also works to send a hundred and send another hundred and another hundred. It may take a little bit longer to get more leads because you're sending out less mail, but you go at your own pace and there's no rush. I think a lot of people push. "You got to do a million deals, a million things at once." And you don't.
Brandon: Let me ask you this. Do you think wholesaling is good way for other people to start? Like when you look back on your journey do you think that was a good idea or do you recommend people start a different way?
Scott: It really depends on your personality. I mean if you're a cautious person, doesn't like to throw a big chunk of a change on a rehab or get involved in buy and hold and a rental property, I think it's a great way just to kind of learn the ropes and figure out the business. Because you're going to learn about rehab costs and you're going to learn about what it takes to rent a property. It's definitely a great way to go if [inaudible] [11:04].
Brandon: Okay. Yeah, I don't disagree at all. A lot of people choose wholesaling because it's what a lot of the gurus kind of push as the easy thing but you've kind of always said you're the struggling investor, right? This takes work. This takes effort. And so I always tell people yeah. Wholesaling is a good strategy for getting started. It might not be the best for everyone. It's probably not the best for everyone. But I lie the idea of wholesaling as a beginner strategy. If for no other reason, it helps you see kind of the whole picture of the rehab. You get to interact with rehab people. You get to interact with some landlords. You get to interact with motivated sellers. You get to learn marketing. You kind of learn everything with wholesaling.
Brandon: It might even be like the most difficult thing to actually learn just because of the sheer volume of stuff you need to kind of know. Do you have any tips for people just getting started with wholesaling? They're just starting today, they want to do it. What's your big piece of advice for that?
Scott: Just start sending out mailers and getting people to call you because nothing happens unless people are calling you. You could read up about all the ways to do it. Assign a property, whether you want to go after REOs or probates. Just like me, I spent a year just reading about all those things and I got nowhere.
You just got to send out mailers or call people or get people on the phone and talk to them because it's the most important thing. Without that, it's not happening.
Josh: Nice. Well, so given the struggle - and we're going to get into the kind of what everything looked like - why just stick it out? It sounds like it was kind of tough and you did a lot of stuff with little results, is my guess. Why keep trying instead of just giving up? And I'm stealing Brandon's thunder for our famous four but you know.
Scott: I think it's just who I am. I enjoy the challenge. I need to build something. One of my hobbies, I like woodworking or developing software and this is sort of like the same thing. I'm building on top of my past activities until I can finally achieve what I want to. And sometimes this process is more exciting than actually reaching their goal, to me.
Josh: Yeah, that makes sense. Well tell us about the first deal then. Let's kind of get in to that. How long from, "Hey, I'm going to be a real estate investor," to "Hey, I got a check in my hand! I just did my first deal"? What was that like?
Scott: It's about half my investing career between those two moments. Ha-ha. Well, it took about three total years before I got my first wholesale deal. Half of it was just reading up, sending out a mailer here and there. I'm a shy person so it's getting a nerve to call people back when they left a message and I don't really have a lot of time to spend with my nine to five job which doesn't allow me to make phone calls during the day.
And my son came around a couple of years ago. It's like ten o'clock to midnight is my free time. So I'm not making phone calls. I needed to get a partner and after the first two years, I found a partner. His name is Lance. We work together great because he had no money, I had some money. I sent out the mailers. And that's about six months working together, we finally got a call and this lady, her mother was in a nursing home and she needed to sell her house, her mother's house. And at first, our offer, she didn't accept it. But a couple of weeks later, Lance called me up. He said, "You'll never believe this. She accepted our offer." I was at work. I couldn't really jump up and celebrate which took it away from it but it was still great. So it took about three years from the start.
Josh: Wow, wow, wow. So it took three years. I want to do it to the point I did it. You're the first person we've spoken to in the show that said, "Hey, I went and took a partner to get started as a wholesaler." I haven't heard this strategy before and I think it makes sense. You're a guy who's stuck in that nine to five, you got your kid afterwards. You can't make those phone calls plus you're not the most- you're a shy guy, right?
Scott: Absolutely. No question.
Josh: Outgoing was the word I was looking for. It wasn't coming to my brain here. So you've got the partner who probably has the go-getterness that he wants to get on the phone. He's ready to do it and he'll talk to anybody, right?
Scott: It was a necessity. I wasn't going to get to where I wanted to go unless I partnered up with somebody, there's no doubt about it.
Josh: So what did that look like? How did you decide to bring this guy? How did you find him and was it just like a 50/50 thing?
Scott: Well, I found him in a coaching program that I joined up with. I joined up with that coaching program because I offered to trade some of my technical skills for this guy coaching me. And he was coaching a couple of other people and Lance was part of the coaching program as well. And he was having issues because he didn't have a job and he couldn't spend any money. And my coach actually had a light go off and he said, "You guys should partner up." I was like sold.
Brandon: Well, that just demonstrates why I love the idea the partnerships. I talk about them all the time. I think chapter three in the book I wrote it all about that. And it's because everybody has their strengths and weaknesses. Stuff that you're good at-
Josh: It was bound to come up.
Brandon: I didn't say a word. I didn't tell people that they could go to BiggerPockets.com/nomoney to buy it but Ha-ha. No, but I love the idea of partnerships because there's so many things that I'm not good at in life and one of those is having cash.
Josh: Like I've been tossed through the other 9,000-
Brandon: Ha-ha. Yeah. There's a lot of things I'm not good at. I don't like answering the phone. I'm kind of a shy person as well which will probably shock a lot of people, but Josh knows that. When I get into a crowd of people, I'm like-
Josh: He hides in a corner. Ha-ha.
Brandon: I'm uncomfortably shy.
Scott: That is me.
Brandon: Yeah, so I get you. I don't like answering the phone. Anyway, partnerships really resonate with me quite a bit in that regards. Maybe we can kind of talk about partnerships a little bit because I know a lot there are kind of in the same boat. So you found your partner at that kind of thing. Where do you recommend people today finding partners? Where should they go to look for a partner? Just put that in Craigslist?
Josh: Or how should you go about looking for a partner?
Brandon: How, sure.
Scott: It's a tough thing. It kind of just fell into my lap because I was looking for a partner at that moment. It was sort of a realization after my coach said that you should partner. This could be a good thing. He just happened to complement my weakness very well and that's kind of what you should look for. He should recognize what you're weak at and then just build relationships by going to real estate meetings and just talk to people and eventually you'll find someone who just really complements what your weaknesses are and then you guys can explode from there.
Josh: Yeah. What'd you guys do on that first deal? What did you make on the wholesale?
Scott: We made $10,000.
Josh: Okay. Pretty good. And from the start to the end of the actual deal, it sounds like it was a probate. No, it wasn't a probate. She was in a nursing home.
Scott: Yeah, it was almost like an executor. The woman's daughter had the right to sell the property so we bought it from her. It came together pretty quickly once we agreed on it. It was pretty straightforward. We found our buyer within like a week.
Brandon: Do you remember how you found the buyer?
Scott: It was through a connection we made at one of our local real estate meetings.
Josh: Okay. Nice. And were you specifically targeting that kind of lead when you guys had come across it or where did they come from? How did you come across these people?
Scott: This was an out-of-state owner. So we were targeting out-of-state owners, absentee owners that we got from the tax records that we pulled. IN New Jersey, they're right online so I can just download an Excel file, filter it and then put the mailings together.
Josh: New Jersey.
Josh: Nice. So you got this first deal, it took you three years. It took Lance. You guys closed. You're ecstatic. But you couldn't show it. Then what happens? Now are you super hyped up? Are you motivated to do increase the amount of mailings you were doing? What was kind of like the next progression in your investing?
Scott: Well, after that euphoria that the whole thing can actually work, we got excited. We pumped up the mailings a little bit but not too much because we didn't want to run out of money. We just kept sending them out. We get some closed ones and nothing came for another six months to a year.
Josh: Wow. Man, was that because of the number of- I'm assuming you were getting phone calls. You make it sound like nobody was calling. I'm assuming you're getting the calls, just weren't-
Scott: We get the phone calls. But volume wasn't that high because we didn't have a lot of funds. We only had one deal working behind us. We'd get 30 phone calls a month. After a while, you should get some deals. I don't know if it was on market or just us, but it was still tough. Even to this day, we struggle between deals. Ah, it's tough to say. That’s why I…
Josh: Listen, you're not alone in the struggle though, man. I mean that's the beauty of what we do, right? BiggerPockets, we're all about trying to help one another be successful and everybody's kind of- we don't all go from zero to hero overnight like the TV guys will make you believe. There's a lot of people who are going through what you've gone through. What's unfortunate is there's a lot of people who went through what you went through, but they stopped after year one. They stopped after year on and a half. They stopped after year two. And they didn't get to the point where they got the first deal and the second and so on and so forth. And so, what do you say to those guys? I think you're probably the best guy we've had on the show and what is this, show 102? In 102 show to tell them. What advice do you have for those guys?
Scott: You have to kind of analyze is this right for you after a while. There's many highs and lows and what keeps me going is having a partner helps because you can talk to him, but you have to surround yourself with other like-minded people. BiggerPockets is key because you're always talking about real estate and different ways to go about it and maybe you're just not hitting the right angle for you and you have to adjust and change your way of going. You can't look at how other people are progressing for real estate. You have to kind of take it at your own speed. I see a ton of people starting up last year who are well beyond my point but I just have to keep reminding myself that I'm on the slow path. It's not going to quick right now and I just have to see it through and just keep going at it and eventually things will pick up. I'll have that breaking point where I'll just explode.
Josh: That's great advice. Really, really good advice. I think anybody listening really, really needs to take that in because life is not a race. I'm not racing Brandon. I'm not competing against him.
Brandon: You're not?
Josh: Well, you know.
Brandon: I've been struggling for years to try to beat you. I mean, come on. Ha-ha.
Josh: Woah, woah, woah. Easy, tiger. Hold on, now. Is that what little pointer on my head always is?
Brandon: It is. I'm coming for ya.
Josh: Yeah. No, I mean, we're all kind of living our own path right? And so don't let it get to you if that other guy's kicking butt and you're kind of slow or whatever it is. Take things little by little and do what works for you. As Brandon and I talk about a lot, there's no one path to success.
Brandon: Just to add to one more thing you said too, just to kind of accent it. You talked about hanging out with certain people that are real estate minded is so important. I just want to share one of my favorite quotes of all time, I think Jim Rohn said it first. I've always said it in the podcast before but: "You are the average of the five people you hang out with the most." I love that quote because it's so true. Like the people that you associate with the most in your life are the ones you end up being like.
Josh: I believe it.
Brandon: Yeah. Look around. To all the people listening, look around. Who do you associate with the most? The five people. Write those people down. You are the average of those people. If they're not the kind of people that you want to be - I'm not saying dump your friends - but pick out some new ones. That is why I push all the time. I say like, "If nothing else, if you're brand new, hang out on BiggerPockets. Or listen to the podcast or go to real estate clubs, whatever. Even if you have nothing to contribute yet, just hang around and get involved in those conversations because you will become like the average of those people you hang around with. That's just my call to action to people to start hanging around with those five people.
Scott: It's amazing how you'll notice that your friends will shift once you start really focusing on one aspect, like real estate. You'll forget the people who are in the sports, or just hanging out on the weekends to be more motivated and wanting to get stuff done on Friday and Saturday nights instead of just going out to the bar something.
Josh: Yeah. Nice. Back to the partnership thing, what if somebody feels they have nothing to being to the table? Like you know, they're brand new. They're like, "Hey, I don't know what I can bring." What would you tell that person? Maybe they don't have money and they don't know a lot. Maybe they're willing to work. Is that enough? The hustle?
Scott: Could be. I mean, I needed someone to work to do the hustle things because I couldn't. There's always something that you can complement someone else on. If it's hustle, it's hustle.
Brandon: And you said something earlier that I meant to touch on earlier, but you mentioned that you got connected to that coaching guy who helped you kind of mentor you and how to do stuff based on the fact that you knew how to build websites or software development, right?
Scott: Yeah, I helped build his websites.
Brandon: Right, yes. And I love that point. You had a skill that was not real estate related. Maybe sort of but it was a real-world skill that you just had from your day job that you could then apply to help somebody else. There's so many tasks for like an experienced real estate investor that people can do just like that. Maybe you don't have to build websites but maybe you know how to fix a leaky faucet, or maybe you know how to drive a car and door knock. There's so many things that investors need and the fact that you did that I think it's just cool.
Josh: Driving a car and knocking on doors is a highly sought out skill, Brandon.
Brandon: It is, right? If you know how to drive, that puts you better than half of the world population. Like you said, everyone's got something. Ha-ha. Alright, so talking a little bit more about the partner things, what do you recommend I guess? Let's I'm a brand newbie right here and I have no idea what I'm doing and I find a guy and he says, "Yeah, I want to be partners with you." What next? What do I do? How do I look into that person? What happens?
Scott: Well, the main thing that has to work is, you kind of got to be have the same morals and values. I mean if one guy is all about the money, and you're not, it's not going to work out. If he's always trying to scam someone and you just don't feel comfortable with the way- maybe he's walking the gray line all the time. If that's not you then the partnership won't work. You'll get into a fight. I don't believe you can be partners with a close friend either.
Scott: Yeah, business will just get in the way. I've seen it in money. Just in your morals. Because you'll find out a lot more about your best friend that you ever thought you did beforehand.
Brandon: That's funny. I think people choose their best friend because it's convenient sometimes. Like people choose partners based on conveniences and not based on quality or skills. I think that's a mistake. I think that's probably kind of what you're getting at. Yeah, just because it's your best friend doesn't mean you're going to be good in business together.
Brandon: Looking back, if you were to start over, in looking at the past few years of your investing from the very beginning - what would you do differently today?
Scott: I would cut out the year and a half of educating and just start getting the mailers to come and calls to come in because that stunted my growth greatly. And it's far behind because of that.
Josh: But you're not behind anything though right? What are you behind? Ha-ha.
Scott: Yeah, it's true. My expectations, I guess. That's all.
Josh: Okay, there you go.
Brandon: Okay, starting over today, would you still do the mailers. Like the actual, physical mail. Would you send that out or would you focus more on online? Would you focus more on other avenues to get leads?
Scott: I'd change a few things. I'd start up a web page right away. Whether I'm driving leads to it or not, I'd start it up because there's value in the age of the website. Whether it's been around for two years or seven years, it makes a difference and you can't make that up. I'd also hire out putting the mailers together. Met a few people on BiggerPockets that can do that type of thing and it would save me a lot of time because I was in charge`of putting the mailers together and I didn't like those nights.
Josh: Yeah and I think that's something that people can budget for, right? Your time is worth and staying up stuffing envelopes, getting paper cuts, licking things. It may not be for you. Save up and pay somebody, pay a service to do it. But then in the budget-
Brandon: I'm totally doing this out of order. If I could just interrupt you Josh. I just want to make sure I said this before we gloss over it. The fact that you said get a website right now, because time matters. I just want to emphasize that point that if you are out there, a listener listening to this show right now and you don't have a website, even if you don't think you're going to need one for another six months to a year, like you said get one today. Just put up something now so that way, a year, six months from now, whatever. Two years from now, it's starting to get seasoned and kind of more friendly in Google's mind. Anyway, I didn't want to gloss over that because that's a really, really important point.
Scott: And it's cheap too, it takes like $10 and you're on. Seriously.
Brandon: Yeah exactly.
Josh: Yeah and you know straight up if you don't have $10 to put into a website, you shouldn't start investing. I'm the guy who keeps this waiting people for real estate. If you can't cobble together $10, don't do this. Go get a job. Start saving money. You need a little bit of money to start doing this. You really, really do. And we're going to come back to websites. We're going to talk about that. But before we get there, I had a couple of really, really quick questions on more of the deal stuff that you've done. I'm not sure how many deals you have done, but what was the coolest deal that you've done?
Scott: I can't say there's one that's been cool outside the one that's made me the most money.
Josh: Okay what was that?
Scott: We made about 15 grand. It's a straight up wholesale deal. It took a little bit to get working because Northern New Jersey, sellers always need to get a lawyer involved. So it takes months sometimes just to get through all the lawyer back and forth. Just working on their time. It was frustrating at the time but it was cool and the best deal in the end because it made the most money.
Josh:And what was the most harrowing experience you've had, from a deal perspective?
Scott: We had one deal where we negotiated a contract and we couldn't find a buyer because they just weren't going to give us enough money. Luckily, we were able to go back to the seller and we negotiated so we can make $400 on the deal. Because we had a buyer, we knew exactly how much they were going to pay us. So who's going to聽wholesale deal for $400 but we had the money in hand, so why not?
Brandon: Better than nothing.
Josh: But why did they do that? They got a contract with you. I guess, you could have just walked? What was their incentive to renegotiate?
Scott: The house was on the market for a long time, they needed to get out. They didn't want to go through the whole process again. It's just easier sometimes to take what you got and go.
Josh: Makes sense. And have you done anything other than wholesale deals? Or has that been-
Scott: That's it. I have dreams of rehabbing a property. I debate all the time about being a landlord but I'm not too sure about that.
Josh: You'll figure it out man. You'll figure it out. Cool, alright. One of the keys to wholesaling is marketing, right? You got to get leads. You got to get good leads and not wait around for three years and pulling your hair out for those leads, right? You've become pretty adapted at website lead gen. I guess what would tell somebody who says, "Alright, you said I need a website. Great. So now what?"
Scott: Well, now if he decides he wants to get leads from that website instead of it just being a company website, you got to start putting in a lot of hard work in terms of attracting those people to your website. And that's where it comes in you start having to write articles that show up high on Google and that's where having the age on your website comes in handy. You have to know how to do keyword research and eventually you hire it out and you have someone else do it for you.
Brandon: Nice. It is pretty time-intensive. The whole SEO process, search engine optimization, is a time-intensive process. It's one of the jobs I do here at BP, is writing good articles and stuff. And it takes a long time to research and to write stuff. So what can people do I guess? What kind of articles should people be writing? Are you writing about how to make popsicles in your freezer? Like what do you write about on this website?
Scott: You basically have to put yourself in the mind of your target audience. They deal with probates, you have to put yourself in their shoes and figure out. You're going to have questions. And as an investor who's creating the content, you have to answer those questions. And then using like keyword research, you find the best term to include in that answer and you write an article. I mean, it doesn't have to be long but it has to be good and it has to build trust with the reader.
Brandon: Do you have any suggestions at what are the questions that people are asking? What are people typing into Google? I don't even know your exact keywords, but what kind of things do people ask for on the internet to try to get to your site?
Josh: Really? Do you really want to know, Brandon? What people ask on the internet? Because I've seen some of your searches. And I can't talk about them here because it'll offend a lot of people.
Brandon: Ha-ha. Yeah, yeah, yeah. Alright, so yeah what are they searching for besides cat videos?
Scott: They're searching for like, "How do I sell my house within the probate process?" "Can I sell my house before the whole estate has been settled?" "What do I do with the house that I inherited?" "Are there any taxes?" That sort of thing. It's down to the nitty-gritty. You want to be as specific as possible. You need not ask after a wide audience. You're after a small subset of that audience. And by writing multiple articles about small, precise things, you'll eventually build up to where you're getting a lot of leads.
Josh: Now are you targeting your content to specific localities? "How do I buy probate in Southern New Jersey?" "What's the probate process in Atlantic City?" Is it that specific or are you doing a little broader?
Scott: You can. Since New Jersey's not very large, I've target the entire state. But the more specific you are, the better. If you can just target a specific city, that works out to your advantage because you have less competition and people are always going to be looking for "How do I sell my house in Morristown, New Jersey?"
Josh: Yeah. Alright, so you got people coming to your website. You've got this content that you produced. What are they going to do on your site now? They've made it to your website. What next?
Scott: Well, they're going to hopefully read the article, enjoy it and have some trust in my answer and then they'll most likely be funneled toward a content fill-out form where they enter in their basically information. I don't want them entering in everything right off the bat because it's too daunting. So just like their name and their phone number and their address. I'll get a notification and it'll get forwarded to a secondary form if they choose it. Which will give them opportunity to give me more detailed information about why they're selling, number of bedrooms and bathrooms, and what kind of repairs they need and what they're looking for. So it's kind of a two-step process that is proven to work much better than the single form.
Josh: Interesting. Makes sense. Is Google the only place that matters? Or do you get leads from Bing and from... I don't know, are there actually other search engines? Yandex in Russia?
Scott: Ha-ha. I don't think I've got one from there yet.
Josh: There you go. There you go.
Scott: I mean it's the major player in there. You'll definitely get leads from Yahoo and Bing and some other like AskMe.com and some weird places but i just focus on Google and then the other ones kind of fall into place after that.
Josh: Beyond the SEO, are you using like Facebook or any kind of like paid traffic to your website? Putting up ads like, "We buy houses" or "I buy houses" and "Wherever the heck you are". Are you doing any of that stuff?
Scott: I haven't started doing that yet. It's a plan for next year possibly depending on my budget. Get a few more deals I'll definitely do it. But it's a tricky trial and error process where you kind of got to hone in on which keywords you want to use because you can spend a lot of money and get nothing if you do it wrong or not paying attention to it.
Josh: Yep. Absolutely. And we do that a lot. We do paid traffic and if you get it wrong, you could spend a lot of money. You can definitely blow a lot of cash. What other tips do you have in terms of using a website? Or in terms of just building one? Should somebody have a website if somebody were going to be a wholesaler? Should they have a buyers site to track buyers? Sellers site to attract sellers? Should they have separate sites? Should they have them on one single site? What's your theory on that?
Scott: I'd definitely go with having separate sites for your main focuses, like sellers and buyers and then your company's site just because you don't want your potential sellers to see all the information about your buyers. It's either you're hiding that from them or you just don't want to them with information. You just want to have them focused. You want to get them to the contact form. Have them fill it out and that's it. You don't want them browsing around, see what you do after the property or anything like that. It keeps the website simpler.
Josh: Makes sense. Do you have any other final tips about just building a website? Creating leads on websites? Anything like that?
Scott: If you can find someone to write the content for you. I mean it's your business site. The keyword content it's kind of boring to write in, it's not worth your time. So if you can hire out someone for $50 to write an article, do it.
Josh: Yeah. You know a good friend of mine, I'm going to give a shout out to him. He's got a company called Blog Mutt. It's a professional blog writing service for pretty much any article, they've got professional writers and they'll do it. But there's other companies that do that as well. Yeah, it's not a terrible idea to outsource that job.
Scott: It sounds like it costs a lot of money but it's not really. Saves me so much more time. I'm a slow writer so it's been a godsend when I found this person to write them for me.
Brandon: Cool. And that is another thing. Just an idea for you people. If you are a BiggerPockets Pro member, go write in the marketplace. Put up a marketplace post and "Hey, looking for somebody to write articles for me and my site." Because some people, going back to what we talked about earlier, are really good at certain things like writing. They can knock out a 500-word article in 20 minutes. If you paid them $50, they'd be ecstatic for that. Or even $20 they'd be ecstatic for that, right? And some people aren't good at that. Anyway, if you're a Pro member, go put that in the market place today
Josh: And if you're not, there you go, that's a good reason to do it.
Brandon: BiggerPockets.com/pro. Alright, why don't we move on to our deadly...
It's Time for The Fire Round!
Scott: I've been waiting for this.
Brandon: Alright, these questions come to you straight from the BiggerPockets forums. I know you're in the forums so you've probably seen some of these. Let's get started here. Number one. Is Craigslist a good source to start with when searching for buyers and sellers to start wholesaling.
Scott: I've always found it better for buyers than sellers.
Brandon: Okay. Interesting. Why do you think that is?
Scott: I don't know. Probably a trust factor in terms of people going on there to sell. They may not trust the people that they attract is my guess. I haven't been a big Craigslist person so I don't know.
Josh: Cool, cool. What about your favorite strategies for finding wholesale opportunities?
Scott: Favorite strategies would be direct mail and the website. Just the website I like just because it works passively in the background. I get emails at night when I'm not even doing anything and throughout the day. But it doesn't bring in the volume that direct mail does.
Josh: And really quick because we didn't ask it before. You talked previously about targeting out of the state owners. What other strategies in direct mail do you use? Do you target anyone else?
Scott: We target probate and out of state owners.
Brandon: Alright cool. Next question. Do you have any good advice for creating a buyers list?
Josh: And can I add to that? Is one necessary?
Scott: For me, I haven't put much effort into creating a buyers list at all. You hear about it, that's the first thing you should do but I've never had problems finding a buyer once I had a good deal. I probably have four people on my buyers list.
Brandon: You don't need a hundred?
Scott: No, definitely not. Basically you just need one or two good ones.
Josh: Come on our software, we'll build a buyers list. Today. Buy now.
Brandon: Ha-ha. Alright, next question.
Josh: Alright. Is it necessary to discuss how much you would make wholesaling a deal to a seller? So if you're talking to a seller, do you need to say, "Hey listen. I'm going to take this deal. I may transfer it to a partner." Do whatever language you use. "And I may make X amount.." Is that something you talk about?
Scott: We don't talk about it. If they ask, probably will them but we're not going to disclose it to them and say we're going to sell it for $15,000 afterwards to another buyer. They should just be happy. That sounds terrible.
Josh: Ha-ha. You're getting rid of a problem for them.
Scott: Yeah. They're happy just selling the house.
Brandon: I wouldn't rock the boat with you know. Alright, is it good to find wholesale deals using the consumer MLS? Can you find good deals on the MLS to wholesale?
Scott: I'm sure you could but I've never found any.
Josh: There you go. Alright, my last question. How does somebody write up an assignment contract and what clauses should they include? And mind you, Scott is not an attorney, so talk to your attorney please on this question. I don't know why I'm even asking it. But what's a key to a wholesale contract Scott?
Scott: Well, we simply just use the standard New Jersey state real estate contract which doesn't say you cannot assign the property. So it's assignable so we just assign it from there.
Brandon: Okay. And I know some states are like that. I know Texas is like that too. Unless it specifically says you can't assign it, you can. I don't know if all states are like that, but I know that some are. Anyway, another reason why you should talk to an attorney because every state is a little different. Cool. Alright, let's move on to our world-famous...
Brandon: Famous Four. Let's see. Number One. You know these are coming, but number one. What's your favorite real estate book?
Scott: Rich Dad, Poor Dad just because it changed my thinking.
Brandon: Cool, me too.
Josh: Nice. Right on. What about favorite business book?
Scott: Favorite business book. I don't know if this is considered a business but I loved the How to Win Friends and Influence People.
Josh: Dale Carnegie, good book. I wonder if we should add a third book. Like a personal development book.
Brandon: We can ask like what's the last book you read. We could add that and make it a famous five. What's the last book you read, Scott?
Josh: I mean mine would be like what's your favorite sports team? That would be my famous five.
Scott: It'd be the Yankees. The last book I've read, I haven't read one in a while to be honest with you.
Brandon: We're not going to add that question yet anyway. I like them as four. No point rocking the boat just because we're in the new year. Whatever.
Josh: Ha-ha. So we got business book. What about hobbies? What are your hobbies then? Since this is a New Year show-
Brandon: This is a Christmas show actually Josh. Come on.
Josh: Well, New Year's is coming. What is your plan for 2015? So what are your hobbies and I'm just screwing this whole thing up. Let's start with your hobbies and then you can tell me what your plans are for 2015.
Scott: My hobbies I love playing sports as long as I don't hurt myself which I did last year and I just came out ankle surgery. So that was fun. Yeah and fantasy sports. Playing golf. Those are my free time hobbies that I enjoy doing.
Josh: Now knowing that golf is the one sport that you really can't get hurt, I hurt myself every time I play.
Scott: You can get hurt playing golf.
Josh: Oh man. I threw my back out. It's so bad.
Brandon: I had a vision Josh, of you golfing. And then going back to swing and then hit yourself in the head with your, what's it called, golf club, right?
Josh: It's embarrassing, bam! Golf is like the least machismo of sports. It's the one sport I cannot play because I keep hurting myself.
Brandon: That's funny.
Josh: Alright 2015, your plans? What have you got lined up?
Scott: My plans for 2015 are fairly similar to 2014. Just kind of keep advancing my website. Try some paid advertising and get some more wholesale deals and maybe look into rehabbing. I try to keep it simple because I don't have a lot of free time so it's only usually two or so goals that I set every year.
Brandon: That's good actually. Alright, my final question. What do you believe sets apart successful real estate investors from those who give up, fail, or never get started in the first place?
Scott: Wooh. That's a loaded question.
Brandon: Yeah. Ha-ha.
Scott: Just determination and to keep your head down through the bad times and just having proper mindset. It all comes back to that. It's the most important and it helps you build relationships because you're positive and people want to be around you. That's the way it goes.
Josh: Awesome. Alright so where can people find out more information about you? You got your website so plug away and your blog.
Scott: My website's strugglinginvestor.com is my blog. It's the best place to find me and ask me questions or just to figure out what I'm doing.
Brandon: Cool. And we'll link to that and to your BiggerPockets profile in the show notes at BiggerPockets.com/show102.
Josh: Well listen man. We're very thankful for you coming on the show. Definitely appreciate you talking a little bit about the struggles. Before I let you go, anything you want to add? Any wisdom you want to bless us with? Anything you want to impart upon the listeners?
Scott: Go to BiggerPockets.com. Ha-ha.
Josh: Aww, there you go. That was great. That was awesome. Cool man. Well, listen. Thanks again for being part of our world. Thanks for coming on, we definitely appreciate it and Happy Holidays to you and yours. We'll look forward to seeing you around the BiggerPockets community.
Scott: Well, thanks for having me. Same to you guys.
Josh: Alright guys, that was Scott Costello here on Show 10 of the BiggerPockets podcast. Once again, thank you to Scott for coming on board and being so open about his story. Otherwise, big thanks to everybody. This is Christmas and my Christmas gift to me is having all these awesome success stories that you guys have shared with us. If you haven't shared one already, please do. Please let us know how the site has been helpful to you. That would be a really, really great gift for me and for the whole BiggerPockets team to hear how the site is impacting you and your life. Take a few minutes and share with us how you're doing.
And not only does it help us kind of feel good about ourselves, but it also helps you get more business because when people see that you're successful. They're attracted to you. Success begets success. Sharing success stories does that and you can find those on the forums at BiggerPockets.com/forums. Otherwise, that's it. Merry Christmas. Happy Holidays. Be safe. Enjoy your family. Follow us on Facebook. Follow on Twitter and all that for all the latest updates from BP. Enjoy your holidays and we'll look forward to seeing you next time, Show 103 which is our New Year's episode, isn't it Brandon?
Brandon: That it is.
Josh: Alright, looking forward to it. Alright guys, I'm Josh Dorkin, signing off.
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