BiggerPockets Podcast 042 with Mike Nelson Transcript

Link to show: BP Podcast 042: Building a Monster Wholesaling Business with Mike Nelson

Josh: This is the BiggerPockets podcast, show 42.

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Josh: What’s going on everybody? This is Josh Dorkin host of the BiggerPockets podcast. Here with my jolly old partner in crime Brendon Turner.

Brandon: Makes me sound like a Santa Clause on a rampage. Do you remember that old weird al song The Night Santa Went Crazy?

Josh: I don’t.

Brandon: I made a music video in high school to it was awesome.

Josh: Is that on YouTube?

Brandon: No but I should put it on there I do have the VHS.

Josh: Oh you have to. There are lots of people who would click on your video and then point fingers at you and laugh.

Brandon: It would go viral.

Josh: So things are good?

Brandon: Things are great.

Josh: That’s awesome. We’ve got cool show ahead today pretty excited about it.

Brandon: Me too, when we recorded it a couple days ago I learned like a thousand things in this episode so I’m excited for everyone else to get to learn those too.

Josh: Absolutely. Before we do this is show 42 on the BiggerPockets podcast. You can check our show notes at and let’s just dive in. Today we’re going to have as a guest a nice guy named Mike Nelson. Mike lives in the wholesale houses in the Richmond Virginia area. He’s the co-founder of Smith and Nelson properties LLC a company that manages real estate in DC Maryland and Virginia tristate area. Its interesting New York - New Jersey - Connecticut was tristate area when I grew up. I guess there’s all sorts of tristate areas around the country I didn’t even think about that.

Brandon: Washington, Oregon and Idaho are tristate.

Josh: Really?

Brandon: No, I don’t think so.

Josh: Ok. Mike blogs at his site and he’s an active poster on the BiggerPockets forum. Today this show is chalk-full of great tips for getting stated and finding success as a wholesaler. If you have not yet done any wholesaling this is definitely going to be a great show for you to pay attention to. Of course make sure to come and ask Mike any question you have on the show notes and at and you’ll be able to find all the links to all the useful stuff that we’ve talked about. Without a further ado I will give a quick plug to giving us some feedback on the iTunes system. Leave us a rating and review there – we love those. They help us get more visibility for the show. We’re now exceeding 14,000 listens per podcast so the show continues to grow. Let’s get this guy in on the action. Mike how are you? Welcome to the show, good to have you.

Mike: Hey, thanks for having me.

Brandon: We’re glad to have you. Why don’t we start at the very beginning? How did you get started? What’s your pre investing era look like?

Mike: The way I got started in real estate was pretty much reading Rich Dad Poor Dad. I graduated college in 2009, we were roommates and my friend told me once we started working “This is not for us. We can’t do it.” I said “You know what? I feel the same say.” He said “I want you to read this book Rich Dad Poor Dad” After reading that book I called him back I said we have to get started in the real estate, we have to get into this assignments of contracts wholesaling. We went out there and did a little bit more research. Did some research on it and actually got out there and got our first property under contract. To make a long story short what happened after that is we lost $2000 because we didn’t know what to do. I like to tell people, that was an expensive education right there because what happened was we lost that money to the seller. He took it, he ran away with it. Fist he told us he was going to sue us just a bad situation. After that we went out there and did some more research and tried to learn about wholesaling and assignments of contract that lead us to where we are right now.

Josh: I got to dig in a little bit $2000 not inconsequential. How did that go down so that folks listening don’t pull the same mistake that you happened to fall into when you did this deal?

Mike: First off the deal was a great deal. The seller ended up selling the property to a person who rehabbed it and renovated it they ended up making over a 150,000 so we were set to make around 22,000 on a property. We didn’t know a lot but we knew this was a good deal. We got the property under contract and seller told us that he wanted to get the earnest money deposit trough PayPal. He didn’t want us to send it to an escrow. He said “I want to make sure that you’re serious.” He knew it was a good deal come and find out later what happened was they were going to sell his mother’s property at tax auction but he didn’t want to deal with our title company. We sent him the money through PayPal and then what ended up happening was he gave us the contract he didn’t like our title company he said I’m not going to sell it. We had a buyer lined up and everything. We were about to go close it and he said “I don’t like this guy lets switch title companies” and he left with our money.

Josh: You said that he was talking about trying to sue you - seems to be another way around here with this guy running off with your money.

Mike: The story was what happened was he didn’t get along with a guy at the title company because the property was his mothers and he was trying to get paid off of selling the property and the guy at the title company he said this doesn’t seem right I don’t like what’s going on. Being that he would not let him go through with the transaction the guy he said I want to go deal with somebody that’s going to let me do this and get paid off of it. Being that we didn’t do that and we used our buyers title company the guy at the title company told us, he said “I will not let buyer buy this property if you go to a different title company” We had it locked up, the contract was getting ready to end we wanted to see it close. I tried to work it out I didn’t work out, he said that he was going to sue us for breach of contract because we didn’t want to change title companies and the guy at the title company was getting ready to close on it so it was his fault. He claimed he was a lawyer we dint know what we were doing, we didn’t have an LLC we didn’t know anything, we were scared. It just worked out that way, we lost the money.

Josh: Sounds like an all-around cluster.

Mike: It was.

Josh: This didn’t work out well. Do we go and give people $2,000 from PayPal up front or do we start doing that?

Mike: Never.

Josh: I’m just making sure because we’ve got people listening. When do we pay our people? We pay them at?

Mike: You pay them in escrow. You put the money in an escrow with the Title Company or closing attorney, never pay them with PayPal.

Josh: That definitely was a mistake but you live and learn and hopefully nobody listening ever tries to pull this off and do that because we all make some kind of mistake and hopefully that was the one for your career.

Brandon: What did you do after that then? You said you went and got more education. Did you make money on the next project?

Mike: Basically hanging on the BiggerPockets was a big part. My partner who told me to read a book Rich Dad Poor Dad we ended up starting an LLC and going out there and flipping properties together. Reading up on BiggerPockets has thought me a lot and the way I actually got into and got my first deal was my grandma was trying to sell her property in Philadelphia and when she was trying to sell her property what I did was I went out there and tried to find a cash buyers in the area so I sent them postcards.

After I sent them postcards I locked out by finding another wholesale by the mistake. I’m in Virginia and my grandma’s property was in Philadelphia and I tried to sell her property. I went out there finding cash buyers. Gentlemen he owned the rental property I sent him the postcard. He wasn’t interesting in selling but he knew that his grandson was a wholesaler he knew what he did so he sent him my postcard. At the time I got a phone call he left a voice message and he told me “I’m an investor, I’m wholesaler and I’m doing about 50 deals a year I would like to do a business with you. It seems that you’re doing your thing and you’re all the way in Virginia you’re sending this postcards.”

Little did he know that I haven’t had my first deal yet but me and him partnered up and on that same [inaudible][09:55] I ended up getting a call from a gentlemen who just recently bought a property he said “I’m looking for properties in the area if you have any come my way.” What I did was I partnered up with the gentlemen another wholesaler and I sent off postcards to the properties around that area and that’s how it all got started that’s how I ended up getting my first deal. Partnering up with that gentleman and just sending out postcards.

Josh: Did you ever end up finding someone to buy your grandma’s house?

Mike: We ended up selling that, we made a little profit on it. We found a buyer, the gentlemen who was a wholesaler who I found trough the postcard he actually found the buyer for that property.

Josh: That’s great. And hopefully she didn’t sell it at too much of a discount to shark infested investors.

Mike: No, she was happy she got out happy.

Brandon: I that a same partner that you have right now or is that a different guy?

Mike: No. This is a different gentlemen. Me and him are still on good terms. He actually exploded after me and him started working together and he actually went different direction but still in real estate. He went into a different market. I have different partners who I work with now but they all do the same exact thing that he would be doing for me.

Josh: Can you tell us a little but about that partnership, I don’t care about the name or anything but I’m just talking about details - how did you guys work together, was it like a 50-50 what did the structure of the partnership look like?

Mike: First off it was a 50-50. Everything we did we split down the middle 50-50. The way that I brought something to the table and what he brought to the table when I first started with him I didn’t know a lot. I just came off losing $2,000 and the way I got stated with him was I will get this people calling me after I send this postcards. I dint really know the market, I didn’t have MLS access so what I didn’t was I sent properties over to him and say “Hey what do you think?” Than what he’ll do he’ll say “You know what if we can get it at this price we can probably flip it will be a deal.” That lead to all the deals that came in I’ll send them over to him in an email and he’ll tell me “This is what we can offer, we’ll call the seller back offering”. Set the appointment with him and then he’ll go out there and take a look at it and get it under contract. We’ll put both of our names on the contract and then he’ll find a buyer and we’ll close on it and make 50% at the assignment fee.

Brandon: just for clarification I just want to make sure when you say flipping you’re referring to flipping contracts correct?

Mike: Yes, wholesaling contracts.

Brandon: Some people say flip and some people say wholesaling and those listening I wanted to make sure everyone’s on the same page that you’re taking about wholesaling.

Why did you choose wholesaling? After you read Rich Dad Poor Dad what made you think I want to be a wholesaler instead of I want to be a house flipper or a buy and hold investor? How did that decision come along?

Mike: When I first got started it seemed complex but out of everything investment properties actually going out there renovating properties this seemed like it was the easiest way to get into real estate investing. That’s how I came upon the wholesaling aspect of the flipping contracts and I said “I’m going to do this.”

Josh: I got to tell you I’m listening and I’m thinking to myself “The tactics that you employ here to get that first partner seem like a pretty damn good way to get a go for a new investor to really attach himself to a mentor almost.” You find somebody who’s been doing it for a while you say “Listen, ill hassle I’ll put the money out on the mailings ill attract the leads can I shoot them through you, you can help me evaluate them and we could kind of run through the process.” That’s about as good as it get sounds like to me.

Mike: It definitely is. I do this in several different markets and what I came to realize is that for some people it’s a good thing for as the other investors at the other end. But I found when I go to other markets and I’ll say “Hey I’m going to bring the leads and I want to you evaluate go out there and look at the property” Guys would be just like “I’m not going to pay you 50% for leads” if you can find that right person to work with its definitely going to be their golden ticket to more deals.

Brandon: That comes down back to same thing I always say – it’s better to have 50% of a deal than a 100% of no deal and lot of people just doesn’t understand that. When you go to them and say I want to partner up you get 50% I think that those people are stupid because what are they missing out on really?

Mike: Exactly.

Brandon: And you mentioned that you working in other markets does that mean that you are virtually wholesaling? What are you doing?

Mike: I guess you could say I’m virtually wholesaling meaning that I’m doing the same thing that I did in Philadelphia with people in other markets.

Brandon: How does that work for those who don’t understand virtual wholesaling? What does that even look like?

Mike: What virtual wholesaling is basically I’m doing all of the marketing like I told you guys before and I have to find my, I like to call them, my boots on the ground – my guys who are going to go out there tell me what the value of the property is and they’re going to go out there get it under contract, visit the property and find buyers. What I like to do is I like to find individuals like that in other markets and then I’ll work with them.

Josh: How do you work with them? Are you always doing a 50-50 with them or are you paying them a fee? How does that work?

Mike: It’s a 50-50 split of the assignment fee. If assignment fee was $5,000 they’ll make 2,500 ill make 2,500.

Brandon: How do you divvy up? You talked a little bit about that earlier I’m just rehashing it but how do you divvy up roles exactly? I’m working with a partner little right now, we are just kind of getting started with some wholesaling I guess and so I’m wondering how do you define who pays for what who is in charge of mailing? How does all that look?

Mike: The way that’s we like to do it is I’m in charge of mailing, I handle all the mailing, I have an assistant who takes the calls, sets appointments for them and their main role is to get the property under contract, visit the property and find a buyer. We take the pre-screening and they take everything after that.

Brandon: Do you pay a 100% of marketing fees?

Mike: Yes.

Brandon: I definitely want to touch on your direct mail stuff so I guess why don’t we go into that? We talked about wholesaling before and flipping contracts on the podcasts before but I like to ask everyone what your exact process is so why don’t we just go very basic from the beginning how do you do things? Start with marketing – how does that exactly work?

Mike: When I first got started I used absentee postcards and what I realized was that when I talk to a seller they’ll tell me “Hey I get a ton of these postcards a ton if these yellow letters.” I said to myself well I don’t want to be second third fourth guy there. I want to be a first guy there. That kind of led me to reaching out and trying to find other sources to leads that’s when I got into back property taxes, code violations, evictions, probates. My favorite things to do now is I have a guy who created a tool for me where Ill scrape websites for people who own property taxes and then I’ll take that list and then I’ll go and ill scrape their addresses from public records. That’s my new source of leads right there is back property taxes and basically I cut my marketing calls down by at least 50% because these are targeted leads and not just the shotgun approach where I’m going after absentee owners.

Josh: What markets are you in because I’ve got a guy who’s going to do that for me and I’ll make you a number two again?

Mike: I want to be the first one I have to tell you.

Josh: That’s clever. You’re finding these folks you’re sending them out are you guys internally doing the mailings or are you using a service to do that?

Mike: At one point I used to like yellow letters but like I said I wanted to cut the cost down so I just send off postcards now once we pull the list I have my assistant upload it to Click2Mail and we’re mailing off postcards twice a week.

Josh: Ok so you use Click2Mail then.

Mike: Yes.

Josh: Got it. You’re sending these guys twice a week. When we’re talking about marketing we had couple discussions about this a lot of folks say you need to hit somebody six seven times before it makes sense. But when you’re talking about back taxes I’m guessing you’re probably trying to do some timing and timing your mailings to when it’s getting close to end for these owners, is that right?

Mike: For that particular source, yes. We like to hit them in the beginning of the year and in the middle of the year. In the beginning of the year they’ll get their tax bill, In the middle of the year they will get another tax bill because the areas we work in they’re doing it twice a year. That’s when we like to hit them. I do evictions as well. I usually just hit them one time because they will go to court we’ll get their information and it turns out well if we just hit them one time before they go to court that works out well.

Brandon: Does that mean that you’re hitting landlord for eviction and stuff?

Mike: Exactly, yes.

Brandon: That’s a great idea.

Josh: That is a good idea. Find tired landlords, folks that are tired dealing with evictions.

Brandon: Last month when I was dealing with my eviction and if I’ve gotten a letter I would consider it because you get really emotional.

Mike: That’s why my grandmother decided to sell her property, tenant gave her a problem she couldn’t collect money from them and she was saying “Get rid of it.”

Brandon: That’s awesome. I am totally going to do that. I love tips like that.

Josh: Back to marketing. Did you completely then disband the other tactics where you were number two? You say “Listen, I don’t want to do this I don’t want to compete with these guys. I’m going to look for a market where there defiantly isn’t a lot of competition.” Or are you still marketing but you’ve tweaked it up a little bit?

Mike: I deal with a lot of investors here in Richmond and this is not my main market I rarely do deals. Couple of close friends here they’re looking for properties and they’re saying “Mike why aren’t you doing anything in Richmond?” just past week I sent off an absentee mailer. That’s the first time I mailed to absentees in about probably little over a year. Absentees are definitely great sources because its people who don’t live in the property that they own. I like absentees I would not tell anybody not to mail them. Definitely mail them they are good leads.

Josh: Folks here probably listening to the show since this is primarily a wholesaling show, I think we’re going to have quite a few newer investors, I was hoping we could take just five seven minutes or so to kind of go start to finish.

I want to be a wholesaler I want to do my first deal. What do I do? Step one, step two, step three – walk me through the process really quickly.

Mike: Beginner wholesalers if they’re saying this sounds interesting, this is something I want to do what I recommend them to do is to go out there and get into their car drive around their neighborhoods and look for properties where the grass is tall, it looks like it may be vacant no one lives there. That’s a good place to start. What you want to do after that is you want to contact these people and the way you can contact them is you can go to the county website and it will tell you the address of the property and the mailing address of where they send the tax information. If that address where they send the tax information is different from the property address that’s usually a good sign meaning they don’t live in that property. If the address is the same that doesn’t necessarily mean walk away from it you may still be able to lock that property up. What you want to do next what I like to do is I like to look at yellow pages or I have a service I use called Accurint which is what private investigators use. I use that to get a phone number of the person that lives in that property or that is associated with that property. After you do that ask them if they’re interested in selling their property?

Josh: Can I stop you really quick? You said it was called Accurint?

Mike: Yes, Accurint by Alexis Nexus.

Josh: Ok, got it.

Mike: It’s a service that lets you find public and private information on individuals.

Josh: We can hopeful link to that in the show notes at I want to know about contacting these folks. You get a phone number and you say alright I’m going to call this guy. You said you just find out if they’re interested in selling the house. But is that it? I’m sure there’s more to the picture than just that.

Mike: Most of the times when you find these types of properties you’re not going to be able to contact the individual at first - it’s going to be hard. What I like to do is snoop around I’ll get the neighbor’s phone number, person across the street, I’ll get a relatives phone number and the way you can get a relatives information is because service I use Accurint it gives you that information on these people. I’ll just simply call them up and say “Can you help me I’m looking for a person that owns this home?” most of the time, probably 80% of the time, I’ll be able to get a phone number out of these individuals. Once I get the actual homeowner or the decision maker on the phone then I will talk to them.

I’ll say “Hey I was driving around the neighborhood, came across this property, doesn’t look like anybody lives there, what’s your plans with the property? Are you planning on living there, is it vacant, are you thinking about selling it?” After that I get a feel for what they’re doing with it and I’ll say “Listen I’m a cash buyer I will be interesting in purchasing your property if you’re interesting in selling. I’d like to come out there and get a look at the property.” At that point they may say “Yes, I’m interesting in doing that, you can come and get a look at the property.” From there I’ll say “What I want to do is I will get an estimate as to what we may be able to pay for the property so that we don’t waste your time and I’ll call you back with an estimate and let you know in what I would be interested in paying for the property.” So I don’t waste my time going out there if they’re thinking they want a $100,000 for a property and I’m around 20,000. To get my estimate what I’ll do is I’ll look at the recent cash sales in the area. I don’t like to do the RAV minus repairs all of that. I like to go after what investors are willing to pay for properties and I’ll look at sales from the last six months, absentee owned properties meaning that person who bought the property doesn’t live in it and then I will see what they pay for similar properties that are like the one I’m interested in.

Josh: And where do you find that information?

Mike: That’s on MLS. For people who don’t have MLS what I like to do and I actually use this site right now – Zillow. Zillow works wonders for me in my local market in some other markets it doesn’t work at all. But in my local market what I like to do is look at recent sales of properties that are in good shape, renovated properties ill look at them and then I’ll look at properties that gave sold recently within that area in the last six months that have sold for less than what the renovated properties sold for. I’m going to assume that that property the ones that are selling for less are investors just purchasing those properties. It may not always be the case but it’s a good number to go by. I’ll give them a range that is between what I want to purchase the property for and what that other property sold for. That’s when I will say “I’ll be able to pay between let’s say 30 and 40,000 for this property” Depending on the condition if you’re interested we can go ahead and schedule an appointment if not we can go our separate ways and I put them on follow-up.

Brandon: I love this idea that you’re talking about, I don’t we had anybody who talked about it quite like that, say for beginners to start out with driving for dollars essentially. The reason I like that so much is a lot of people recommend just go start direct mailing. You can waste thousands and thousands of dollars on direct mail if you don’t know how to close a deal or how to negotiate. By doing it on a small scale and perfecting your skills once you’ve got that down then you translate that and scale it upward. I love that.

Mike: You’ll be able to practice talking to actual sellers on a phone as well.

Josh: I think that’s somewhere where these new investors in particular are fearful. It’s scary to get on a phone and talk to somebody for first time.

Brandon: I still remember Danny Johnson on the podcast we did with him he said the first time the phone rang he took the phone and threw it across the room to his wife. I’m sure I did the same thing or something similar.

Josh: We got a deal, we got this guy, we say 34-40K and he says “Yes, that could work”. Now what?

Mike: Now we go out to the property we’ll take a look at it. The only way that will change if the property is a complete shell, that number will change, or if the property is in better shape we’ll go up maybe a little bit. After that we’ll tell the seller our final offer. If they accept it then we will get the contract signed. Once the contract is signed we now have an equitable interest in a property so we can go out there and market is as it’s our own. At that point we will then go out there and market the property. I’m telling you guys how to do this if you’re doing it in your own market, as I said earlier I do a lot of virtual wholesaling so other people find the buyers.

You go out there you market the property on Craigslist, plan the signs, you can send postcards out to recent buyers in the area in the past six months. Once someone tells you that you’re interested in the price that you market it up as. If you get under contract for 30,000 and you mark it up to 40,000 if somebody is interested into that $40,000 then what you will do is say “You are interested in this property, give us a deposit for a $1000, we’ll put it in an escrow at the title company.” Then what we will do is sign what you call an assignment contract. We’ll sign this assignment contract, they’ll purchase the property from me for $40,000 for my position in the contract that I had with the seller with the original contract is $30,000 in order to take my position they’ll pay me $10,000 which is the assignment fee.

Brandon: Do you get that at closing or do you get that right there?

Mike: It’s possible to get it right then but I haven’t done that way you can get that at closing. Most people get that at closing. What you’re going to do is you take those two contracts, the original contract with the seller, the assignment contract with a buyer, you take that and take it to a title company or closing attorney and they will run title to make sure that the property is clear to make sure that the owner is the owner who they say they are and to make sure that it was properly transferred in the past.

Depending on what area you’re in title can take up to two weeks three weeks. It will take between one and two weeks for them to run title after that they’ll say it’s clear, schedule the closing between seller and the buyer and then what will happen is seller will come in there and sign the paperwork, they will get their check, buyer will come in, they will sign their paperwork they will wire the funds in, they will get the property and then the title company will call you up within maybe a day or couple of hours and say your check is ready and you get paid.

Brandon: Just a reminder for everyone out there that was confusing to people if it’s your first time hearing this whole concept definitely hit the rewind button and listen again because that was brilliant right there. That was wholesaling in a nutshell it was great.

Josh: I’ve got a couple questions. You’re talking with that initial seller - are you telling then that you’re not the end buyer?

Mike: What I usually tell them is that either myself or partner will purchase this property. That doesn’t make it seem like you’re actually trying to get over one on them or you’re not telling the truth so I’ll say myself or a partner.

Josh: And have you ever had that turn sour and the seller get angry and just lose a deal over something like that?

Mike: No, I’ve never had an issue with that.

Brandon: Money is money to them.

Josh: What about situation where you don’t find a buyer in time? I think that’s the biggest fear from new wholesalers from, obviously, getting on the phone with people which I said earlier was the biggest fear. What if you can’t find somebody? Then what?

Mike: One thing you want to make sure you do before you even consider this is make sure you have the right contract that has an out clause for you. Because without an out clause you could possibly be sued. If I have a 30 day contract if I don’t find a buyer within 15 days I will then let the seller know we may need a discount or a continuance on this property. If I feel like there’s not a lot of buyers biting on it then within at least five or ten days before its actually supposed to close or before the contract ends I’ll send them a letter stating that we can’t purchase this property due to whatever clause you have in the contract. Due to my partner not approving or due to not being able to receive financing for this property or whatnot.

Josh: Obviously, presumably, you get your lawyer to draft up a good contract for you.

Mike: Or get them to review a contract that you have.

Brandon: Do you have a minimum wholesale fee that you will do a deal for?

Mike: If it’s locally here I want to at least make $5,000. In some other markets some deals will be 2,000 some deals it will be 10,000. I would say no I don’t have a minimum but I would say make sure you make at least $5,000 on a deal. There may be some deals where you come across where you just want to help out that seller and you may get by making 2,500-2,000. I’ll say do those. Like you said earlier it’s better to make some money than no money.

Josh: What’s the most you’ve even made on a wholesale?

Mike: The most I’ve made was 56,000.

Josh: So you made 56,000 and there was still room there for the buyer to rehab and make his profit too.

Mike: Yes.

Josh: Can you tell us about that deal?

Mike: It was a virtual wholesale deal. It was in a market it was a commercial property I had no idea what I was doing. It was actually more than me. Another wholesaler he put the deal together, he made the numbers workout, he found the buyer for it. Took about four months but we made it work.

Josh: Where did you find commercial property?

Mike: The list that I pull for evictions there’s no telling if it’s a residential property or a commercial property. He was processed in an eviction and he called us and said “I have this 34 unit I want to get rid of it.” It told my guy, he said “I know somebody that could help us out with it. Let’s go ahead and see if we could make it happen.”

Brandon: Really, really cool.

Josh: Mike you’re going to have Brandon calling you.

Brandon: How did you find a guy to buy that property in that area? Obviously you had to find a cash buyer that could close on a 34 unit.

Mike: Like I told you I didn’t know anything about commercial properties. My partner on the ground he talked with someone in there that knew commercial properties and he worked it with them.

Brandon: This is just another benefit of partnerships.

Mike: Exactly. You have somebody with more expertise than you.

Josh: You had mentioned Craigslist earlier and the signs and the things like that. Are there any other great tactics for finding your buyers? Well you’re not even doing that work it is usually your partner?

Mike: Yes, it is usually my partner but actually I’m getting ready to go to an auction here now in Richmond and the reason why I’m going is I want to meet guys, network. Because if you go to an auction those are cash buyers. Those are people interested in properties, talk to them, hand out your cards and see what they’re looking to buy.

Brandon: Travis Daggett said that in his podcast I think, too. I love that tip.

Josh: What about your tips for building report with sellers? Because obviously you’re hitting people up at challenging point in their lives. What do you do besides being a nice guy?

Mike: Pretty much ask them how can you help them. Try to solve their problem, try to find out what’s really getting to them. Friend of mine he told me sellers have a headache. They have this headache, it’s a throbbing headache and you want to be their Advil, you want to be their medicine, you want to fix their headache. That’s all you have to do really to build that good report with them.

Josh: Hopefully we can get Bayer to sponsor BiggerPockets podcast. BiggerPockets the world of headache solvers.

Brandon: We talked earlier about your best deal you’ve ever done. Do you have any terrible mistakes or really bad deals other than that first one? Have you had any major problems since then?

Josh: I thought I was grinding at him Brandon you’re going to make him feel bad. Because you made a really big mistake there. By the way I feel kind of bad because I feel like I was digging on you earlier but my goal was not to dig on you but make others understand what’s happening.

Mike: My biggest mistake was a property here in my local market. I got greedy and I got the property at a super deep discount I believe it was about 13,000. I had a buyer, he’s a good friend of mine, he went over to the property with me and he looked at it and said “Ok, I will pay you 16,000 for the property” I know it was less than 5,000. My mistake was I went back to the seller and I said can we take off maybe a thousand or two thousand because I wanted to make it 5,000 even. She said “No, I’m not coming down on a price” and what ended up happening she ended up not answering any of my phone calls after that. She went out there and she found somebody to list her property for $46,000 and it sold. That was my biggest mistake. After that I never re-negotiate price any more unless i need to – If I can’t find a buyer. Not just out of I want to make this amount a money on a property.

Josh: Did you have a contract with her prior to this or?

Mike: I had a valid contract. That’s another mistake I did do I tried to record the contract but I didn’t not get notarized so my county would not let me record the contract.

Josh: Interesting. You didn’t have a valid contract because it wasn’t notarized.

Mike: It was valid contract just wasn’t valid to the city.

Josh: Your recourse was limited.

Brandon: Let’s move on to one last section before we begin to wind things down and that is something you talked about little bit on your site is using virtual assistants in your business. Can you explain to people what that is?

Mike: Virtual Assistants or for short VA is basically someone who works from home or they’re in a different location than you and they do whatever you want them to do. The way I use my Virtual Assistants in my business now is I use them to answer the phones for me. Actually I use them to return phone calls for me. They’ll talk to sellers they’ll build up that good report with them, they will take their information down, they will send my leads off to my boots on the ground, they will wait for them to get back to them for how much we can pay for the property and then they will call the sellers back, make that offer and then set appointments up. That’s how I use my Virtual Assistants.

Josh: Where do you find these guys?

Mike: They are located in the Philippines, I find them on a website I go out there, I hire them, bring them on, send them on training and bring them on board.

Josh: What do you pay a Pilipino virtual assistant?

Mike: I started off by paying them $3 an hour and that’s actually a good rate for someone in the Philippines. One of my assistant she’s done a great job for me I pay her off strictly on commission now.

Josh: How’s the English? I know most of the people go to the Philippines because English is a primary language there but is there any confusion or you feel like you’re talking to somebody in the Philippines?

Mike: Their English is great. Some people thinking about large companies when you call and you get somebody on the phone and you can’t understand. I don’t know where they hire their folks but they need to hire them on oDesk because their English is great.

Brandon: That’s good. Do they work then? You’re on a 15 hour difference or something like that. How does that work, do they work overnight in their time?

Mike: Yes they work overnight. The way that my assistants work is they don’t answer my phones for me anymore I have a call service who answers the phones for me. I have it setup where it’s a Google Form they will type the information in, it will go into excel spreadsheet, my assistant will then get all the information forwarded to our partners on the ground. The way that they work is they used to work from 8AM to 12PM and then from 5PM to 9PM because what we realized is that they can catch people in the morning before they go to work or they can catch them in the evening when they come home, that’s worked out great for us.

Brandon: How do you make sure that your virtual assistant is actually working? I had assistant that I hired, she said she was working 40 hours a week and she maybe did two hours a week. I fired her and got a new guy who is doing better but still probably not working 40 hours a week.

Mike: The way that I like to do that is I put a lot of trust in people and one of mine assistants she’s one of the best assistants that I have she’s worked with me in for hiring other virtual assistants and she said the reason she wanted to work with me and she liked to work with me is because I trust her. I didn’t track her time, I didn’t go out there and put her on one of those tracking software’s and I was open with her and I communicated. The way that she put it was “I love working for you, you’re not always on my back about things, you let me be flexible” and that’s what they want. They want somebody that’s flexible and I don’t keep track of their time I can tell by how much work they’re putting in and the output to say “Ok if my assistant is working 30 hours a week and I’m paying her for 40 if she’s doing a good job - I’m ok with that”

Brandon: The last question I have about that – if somebody wants to go get a VA and they want you use oDesk do they go on there to search for somebody’s profile or do the put in the posting? How should someone start that process today?

Mike: The way that I like to do it is I like to do both. You can go out there you can put up a job posting but then also what I like to do is what I like to search for assistants that have experience. Somebody told me “Make sure to find someone that has experience” it may simple but that was the best advice I received because once I got out there and started looking for people with experience then my whole outlook went higher in virtual assistants changed. When you bring someone on your team who has experience with call centers then you don’t have to train them as much.

Brandon: Why don’t we move on to fire found.

How do you deal with angry people when they call you?

Mike: It’s a good question. I don’t actually talk to them anymore. The way that we used to deal with that was we used to just let them leave voicemail messages and I’ll just save them and listen them to a later date because they were so funny. We just don’t call them back.

Brandon: That works. Speaking of that really quick, I was going to ask this earlier and I forgot – when your virtual assistants call those people back at what point do you personally or your partner get on a phone with them? Is that never?

Mike: I never talk to seller anymore. Only time my partners will talk to sellers when they go out and look at the property. Even then my partners on the ground they don’t make the offers my assistants when they get back and give us the information they make the offers.

Brandon: So your assistants are doing market research to see the price that they can offer?

Mike: No they get the price they can offer from my partners on the ground.

Brandon: Ok, I see.

Josh: So the person who actually physically signs the contract with the sellers is who?

Mike: That would be my partner on the ground.

Josh: How do you frame up wholesaling to the seller?

Mike: I don’t. We just told them that we were purchasing the property.

Brandon: I like that what you said “Either me or my partner will do it.” I really like that a lot. It’s not being dishonest at all it makes them feel comfortable.

Billboards – did you use them, should you use them?

Mike: No I have not used them. Should you use them it depends on your market. You could use them and have great success if see a lot of “we buy houses” signs out there. Some of the big wholesaling companies have their signs up there and if they continue to stay up I guess they do work.

Brandon: There’s a billboard in my town that you can rent and I looked into it its $250 a month for me to rent this big billboard. Granted I have to pay for the thing but 250 a month, I don’t know. My area is really cheap.

Mike: That’s really cheap.

Josh: Brandon is just going to rent it out and put a picture of him with his cats on it.

Brandon: I thought about it, honestly. Just a big picture of me out there says “Have a good day”

Josh: How important are business cards?

Mike: Business cards are very important. I realize that when I go out to network an event tonight don’t have a business card I’m inconvenienced in other individuals by saying “Can I get your number put into my phone?” They want to go out there and meet other individuals as well so business cars are very important. I say you should always have some on you.

Brandon: Great suggestion. I don’t carry them with time because unless I’m going to a networking event but you’re right it inconveniences people to have to sit there and program into the cellphone.

Josh: Here’s the tip – Take three or four cards and put them in your wallet and you’ll always have them in your wallet. That’s just the way to do it and that way as you start to get low you go and you refill it. Personally I don’t think there’s excuse for not having a card at any point in time. I could see going to an event and running out but you’re definitely inconveniencing the other person. I think part of it is saying “I don’t think you’re important enough to give you information to.” It’s like “I’m better than you and ill reach out to you if I care to” versus kind of a mutual relationship.

Mike: Exactly.

Brandon: Final session of our little podcast here is the famous four.

What is your favorite real estate book?

Mike: Has to be Rich Dad Poor Dad.

Brandon: Good choice.

Josh: That was a tough one.

Brandon: I thought it might be it.

Josh: Your favorite non real estate book? I’m guessing it’s The 4 Hour Workweek.

Mike: You know what, that and the E-Myth.

Brandon: Both good choices.

Josh: Yeah, they’re great.

Brandon: Josh on what page are you on this week?

Josh: I’m still on 27, Brandon. I believe I was on page 27 on show 40 and perhaps on show 39 as well.

Brandon: We’ll keep bugging you. I love bugging you to read The Lean Startup now. I told you to put The 4 Hour Workweek down for a bit and read The Lean Startup instead.

Josh: We’ll see what’s good.

Hobbies – what kind of stuff you do for fun outside of real estate?

Mike: I love CrossFit, I’m a big Crossfitter. Love working out. I like to find stuff at local flea markets and sell it on eBay.

Josh: That’s one of my guilty pleasures, that picking show, I forgot what it called. Seems like it could be fun. Maybe one day when I retire.

Mike: It’s a hobby.

Brandon: What do you believe sets apart investors who succeed from those who do not?

Mike: Just a firm belief in themselves. You just have to tell yourself that you can do it and just be your biggest fan and go out there and make things work.

Josh: Alright Mike, listen, I think we certainly covered a lot in a short period of time here. Where can people find out about you?

Mike: If you guys would like to find out more about me and learn about the techniques that I use in wholesaling you can visit my blog witch is

Brandon: You do have some really cool videos on there so I do encourage people to check the videos out.

Josh: You are also on BiggerPockets of course.

Mike: Yes, of course, I’m on BiggerPockets as well.

Brandon: We do appreciate you always jumping in to those wholesaling forum threads so we do appreciate it.

Josh: Absolutely.

This is show 42 of the BiggerPockets podcast you can find show notes at and Mike we definitely appreciate having you on the show and we look forward to seeing you around.

Mike: Alright, thank you guys.

Brandon: Thank you, Mike.

Josh: Alright everybody that was Mike Nelson. Really cool show lots of great stuff for those of you who are interested in the topic of wholesaling.

Brandon: Like me.

Josh: There’s tips in there for everybody. If you’re not a wholesaler I hope you got some value. We definitely appreciate Mike’s time and hopefully you enjoyed it. Make sure to ask Mike any question you’ve got for I’m on show notes on Find him on his profile, we’ll have a link to that on the show notes and come connect with us on the usual networks. The most usual one being BiggerPockets. Connect with us on BiggerPockets, come hang out, do some reading, share your thoughts if you’re just a browser, if you’re just somebody who doesn’t engage – you’re missing out. Jump in and hang out. Hangout on Facebook and every else and come play with us there, too. I don’t know, I think that’s all I have to say for today. Brandon do you have anything?

Brandon: I got nothing. I am speechless.

Josh: You’re never at a loss for words.

Brandon: I am at a loss for words.

Josh: I’m Josh Dorkin, signing off.

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