BiggerPockets Podcast 067 with Tim Gordon Transcript
Link to show: BP Podcast 067: Overcoming Inaction, Direct Mail, and Becoming an Successful Wholesaler with Tim Gordon
Josh: This is the BP podcast, show 67.
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Josh: What's going on everybody? This is Josh Dorkin, host of the BP podcast. Here with my co-host, Mister Brandon Turner. What's going on Brandon?
Brandon: Josh Dorkin, how are ya?
Josh: I'm doing good, man. I'm doing real good.
Brandon: Good, good. We just got done recording this episode and it was an awesome, awesome episode. Yeah, I'm excited.
Josh: Yeah, I am too. And what's actually just as awesome is when people are listening to the show, you and I will be in San Francisco and why are we going to be in San Francisco, Brandon? Because we are going to be presenting at?
Brandon: I don't remember. It was a company. It was a small company.
Josh: You know it's one of the smaller ones out there?
Josh: G, g, g...
Brandon: Yeah, that's right.
Josh: That's right. Yes, yes, yes. We're really looking forward to it. Brandon and I are going to be speaking at Google, helping the Googlites-- I don't know what they're called, but perhaps that's what they're called. The Googlites--
Brandon: That's people who use Google. Anyway, yeah.
Josh: We're doing a little presentation on kicking off your real estate investing and I know I'm really excited and it should be a fun trip and should be great.
Brandon: Yeah, it should be fun. I'm looking forward to it. So we'll let everyone know how that went in the following week hopefully. But yeah, alright. Let's get on with the show. Before we do, why don't we do our...
Both: Quick tip.
Josh: Quick tip. Alright. Today's quick tip is a CRM. If you have not heard of a CRM, you need to know what this thing is. A CRM is a customer relationship management software platform, whatever you want to call it. But a CRM can help you stay organized, track leads, remember to follow up and keep you completely stress-free. That's not true, but it'll keep you way less stressed. So hopefully you've got one set up. We're actually going to talk a little about CRMs towards the end of this show. Our guest today is using such a system and he's really, really fond of it so we definitely recommend paying attention. And of course if you have any questions please feel free to ask them in the show notes which you can find at BiggerPockets.com/show67.
But we definitely recommend getting organized and a CRM is great way to do that. So check it out. That said, again I just want to reiterate to all of our listeners, please if you like the show and get value out of it, jump on iTunes and leave us ratings and reviews. We really, really love those. They help us to spread the word. So let people know what you think about BP podcast by leaving us a rating and review. And with that, we're going to get the show started. Today's show is with Tim Gordon. Tim's a wholesaler in San Diego and he's really rocketing. He's another guy who learned his way around real estate through BP and hopefully you'll listen up and learn how he's doing-- what'd he say, Brandon? Several wholesale deals per month now?
Brandon: Yeah, two to three a month.
Josh: Two to three a month consistently. There's a lot of really, really good tips in the show so definitely stay tuned and listen up. And with that, why don't we bring him on. Mr. Tim. Tim Gordon, welcome to the show man. Good to have you.
Tim: It is an honor to be on the BP podcast.
Josh: Ooh, honor.
Brandon: It is an honor, I like that. I like that. Very cool. Well hey Tim, it's nice to see you officially. I know we've chatted online just a few times back and forth. So it's always nice to put a face to the personality.
Josh: The only thing about the face that troubles me is that Detroit hat that he's wearing.
Brandon and Tim: Hahaha.
Brandon: Let's get into that, that'll be fun. But you don't live in Detroit though, correct?
Tim: No, I'm actually in San Diego, California. So I've paid my dues and I don't think I'm ever going back.
Josh: Nice, nice. There you go. There you go. By the way, I don't know if we talked about this Brandon - sorry to cut you off here, Tim - but there was a piece on CNN the other day that I have to rant about a little bit. There was this piece about like this data that was saying how great a place Detroit is to invest in. I was taken aback by it because--
Brandon: Yeah, the title was called like "If you want to make money as a landlord, try Detroit."
Josh: Yeah, I mean literally it was like buy here, buy now. Looked at some data that was legitimate data saying that you know, some of the numbers in Detroit are good, as they are.
Brandon: Like the article I wrote a couple weeks ago.
Josh: Yeah, but the difference between your article and that article is you actually stepped out and said there's more to look at here. And you can't just go and buy a deal because CNN says that Detroit is cheap or that some data says that it's cheap. You’ve got to look at all the other data that says, "Well, it's cheap and it's cheap for a reason." But since we brought it up and it was something that just came up, I thought I'd put it up there. What's your take on that, Tim?
Tim: I think they might want to rename that article "If you're wondering where your copper pipes, you might want to rent in Detroit."
Josh: Hahaha. Well played, my friend. Well played. That's awesome. Alright so. That rant's over. How did you get started in real estate investing? You started working on the side while you were working a full-time job, right?
Tim: Yeah. You know what. I actually did begin at BiggerPockets. It was the summer of 2011 and I was dating a girl who was basically a private money lender. So she had the cash and she would loan it to a partner who would rehab houses and they'd split everything down the middle. And so she introduced me to BiggerPockets website. I would start reviewing deals with her but I was just somewhere on the sidelines. I wasn't actually doing anything but I worked in the corporate world ever since graduating college. And so here I was working for somebody else, probably 60 hours a week, coming home to see somebody's who's been applauding sponsors all day or each, and they're doing a lot better than I am.
Josh: I want that job.
Tim: Yeah. I mean you know the private lender is on the higher level of the real estate investor world, but it started to make me aware more of a different lifestyle that was available to you than just working at a day job for somebody else. And I do like working, I like to be busy. But the idea of not having to work on somebody else's schedule, not having to report to other people. There was thing that you could do on your own. And so that got me into BiggerPockets. I started attending the whole real estate investments clubs in Southern California and after it just took off. It got me interested in researching wholesaling and further my education. And that is where it all began.
Josh: Nice. So wholesaling's kind of your main thing now, right? I mean, that's your bread and butter?
Tim: Yes, it is. I typically wholesale about two to three deals a month. Last year I've kind of fell off the track a little bit. I bought a fourplex and I bought a house and I rehabbed both of them. And it was a lot of fun and it was something that was a goal of mine to do, but it drew me away from I really like doing in real estate, which is wholesaling. If I can do a whole day long on wholesaling, I'm happy.
Josh: Alright so I'm going to jump in and say first, how long did it take you to get that first deal? You decided, "Hey, I'm going to be a wholesaler." How long did it actually take? And then I'd like to hear your follow-up on the age-old question, because there's a lot of debate on this: should new investors start by wholesaling? You had a chance to do something else with--
Tim: That is a fantastic question. So the funny thing is it took me well over a year to get my first wholesale deal and I'm not embarrassed to share that.
Josh: You shouldn't be.
Tim: I want to share that because a lot of people--
Josh: Actually you should be. You should be really embarrassed. That's horrifying.
Tim: I was doing a lot of things wrong and it took a re-evaluation to learn how to correct those things to become successful in wholesaling. But it took a year because I really wasn't a hundred percent committed to the practice of treating it like a business. I was treating it more like once I am successful at it, then I will invest in this. And that's not the right method for creating any business in order to succeed. You need to be willing to invest, willing to spend the money on the marketing, put in the efforts to generate the leads to grab a deal. And once I made a larger commitment, treated it like a business, put structure and systems in place, it took me three months to get a deal and I was cranking from there on.
And then, in regards to your question, should new people wholesale? I'm not sure honestly. I don't everyone should. I like to say that there's a place for everybody on real estate island, and everyone has different personalities and if you're trying to force yourself to do something that doesn't make you happy and doesn't excite you, I really don't think you should be doing that. So for me, I'm a very outgoing person. I come from a sales background. I like to chase things. So wholesaling to me was a perfect fit for my personality style and for my background training in business. If it hadn't been I don't think it would have been a wise move. I think that partnering with experienced individuals in the field of interest you have is the best way to begin. So if you're interested in flipping, you should shadow an active rehabber and learn the process from them. If you want to be a landlord, then you should shadow a landlord. Etcetera. So I don't think you should start in wholesaling, I think that's really poor advice. I think you should start by partnering up or becoming almost like their mentee to somebody who is the next level above you and who you want to become.
Josh: Gotcha. Gotcha. That's really good advice. Yeah, yeah. For sure. So why inevitably, did you actually end up picking wholesaling to start with?
Tim: To me, there was a low-risk, for one. But also, it almost matched what I was doing from my day-job of outside sales. It was business, it was everything. So that's why it was a perfect way for me to start.
Brandon: Well, I think that's interesting right there is that the people that I know that are the best wholesalers - I mean, I'm not the world's best wholesaler or anything - but the people that are really good at it, are people who come from sales backgrounds. A lot of the best wholesalers I know have been salesmen of some kind because I think that that is a major skill you need to succeed at wholesaling. Because you have to talk to people or you at least have the right people in place to be able to do that for you. Generally, I think that sales background is really, really important.
Tim: Yeah, I mean a lot of it is, "What's going to make you happy?" If you don't enjoy what you're doing every day, there's really not much point of even doing it. We all like money and things, but if you're not truly satisfied of what you're doing every day, why do it? I see a lot of people who they can get a wholesale deal and they're very talented people but it doesn't satisfy them, so what's the point? There's other things you can do that will excite you in real estate.
Josh: Yeah, for sure.
Brandon: Well, hey let's go and actually kind of in to your strategy for finding the wholesale deals? If you're looking at them, you said you didn't really get a whole lot until you started taking it seriously and investing in your marketing. So what does marketing look like? What weren't you doing that you started doing more?
Josh: You're pretty much asking what he did wrong when he started, yeah?
Brandon: Yeah, what did you do wrong and then what did that transition into?
Tim: Yeah, well I'd be happy to cover a bit of both because I really love to motivate other people to become successful in these things. I think sometimes sharing some of the pain or the mistakes is a very helpful way to help other people avoid it. And so at the beginning, I would maybe go to a real estate meeting. Get amped up for a few weeks and I would put out some mailers and maybe 500 yellow letters or something. And the calls would come in, they wouldn't seem very motivated or I was very timid or I was nervous to screw it up. And then the calls would slowly fade away, and then I would sit around wondering why I don't have a deal and then I go to another meeting a month later. And so it's inconsistent marketing, inconsistent follow-up, inconsistent tracking of the leads. Basically, I would just save a number on my phone if I felt it might be a motivated seller. And if they weren't, it was forgotten about. So I kept no database. It was like a hobby instead of a business.
And so all those things were allowing me to really generatING [inaudible] [13:18]. What shifted was I basically created a marketing schedule where this day, this week, we're doing these mailers. We set-up a voicemail system where all the calls go to. All of the leads are inputted to a database now and so I can consistently track and know the follow-up schedule of all those leads. And so really all I did was I just turned it into a business. So everything has structure and methods that will allow it to be easily traced, easily tracked and followed up upon. And as soon as I started doing that and doing it consistently, the deals started happening. The other thing I did do is I went on hiring volume mailers. I spent considerable larger sum in the market.
Josh: So I've got a couple of questions for you. When you say consistent, what do you think-- well, larger sum on the mailing-- if you don't mind sharing, approximately how much money is that a month? And do you think that amount is necessary in terms of being consistent for somebody to have a steady deal flow?
Tim: I think for a steady deal flow, yes. I think if you're just looking to grab deals here and there, you don't have to do it that way. But sometimes it's pure chance. Maybe Brandon's got a property and he just evicted a tenant, and luckily enough my postcard hit him the day he got out of court and [inaudible] [14:41] just says perfect. I am done. So it was timing. Just good fortune. Got my card to land on his hands. But for a consistent flow of deals? Yes. I mail about 45,000 postcards per month that runs me about $1,800 - $2,000 depending on how it's printed: the color, things like that. And all I did was - I'm a big fan of reverse engineering - so I know I need about 25 to 30 leads usually to get a deal. And if my response rate is a certain percentage, then I just reverse engineer it to that and that's the number now.
Josh: And that sounds like that's the sales background kind of working in right?
Tim: Definitely, and it was guidance from other people too. Going on BiggerPockets. Or researching. You notice these trends and they'll say, "This is your average response rate. This is how many deals it usually takes to get from a mailer." And you start seeing it and tracking your own things too.
Brandon: What kind of response rate on your-- you said postcards, right?
Tim: I'm predominantly postcards.
Brandon: Alright. I also want to ask, why postcards? But we'll get into that in a second. What kind of response rate do you typically see? Do you track that, like 1%, 2% something like that?
Tim: I track everything religiously and the response rate can vary from anywhere from a half of a percent to one percent, if you're very lucky.
Brandon: And then out of those, let's say 1%, you send out a thousand mailers, you get 1% of them to actually call you, which would be ten people.
Brandon: And then how many people - you said 20 to 30 phone calls in order to get one deal? Is that what you're saying?
Tim: Usually, and it's funny I've been doing this for a while now so I'm getting much better on the phone. I'm training an assistant right now and I'm nervous because my close rate is getting better and better with each mail campaign. So I did a 4,500 mail piece campaign and I've got two deals already from it and probably another two I'm going to get from it. So that's astonishing close rate because usually that's 45 phone calls, I would say it's one of the 25 and I'm getting 4 out of 45. But I think that was just some good luck too. One out of 25 is the goal.
Josh: That's great. That's great. So what're you using in terms or organization? Do you just use Excel Spreadsheet or are you using some kind of software to manage and organize yourself? What're you doing there?
Tim: Excel Spreadsheets scare me. The idea of running a business through an Excel Spreadsheet-- like if there was a hell, that's one of the things that--
Josh: Hahaha. I guess I'm in hell.
Tim: Haha. It's just not for me. There's a software called Zoho and they make a customer relationship management software. And this again, was some good fortune from my sales background. I used Act! there. So you've got Act!, Salesforce, Zoho, there's tons of them. So you can just pick one that is more suited to you. I like Zoho because it's cloud-based and I've actually completely customized it to my business. And so Josh, Brandon, either of you could log in, you could see what deals are in Escrow, what stage of the closing process, you could see what the new leads are. You could open up a lead and you would know the owner, how we found him, the transaction details, the numbers, the property details and their exact situation. And you could just walk into it and know everything. The reason I did that a year and a half ago was because I knew that eventually I would be hiring in somebody and I didn't want them to be trying to figure out how to work my way. I wanted them to be able to sit down and know everything from the minute they look at it.
Josh: That's great.
Brandon: That's awesome. I have not used Zoho, but I've heard about it and I really need it actually because I am also in that hell of Excel Spreadsheets everywhere. Well, I shouldn't say Excel. I use like Google Docs, which is probably worse because it's-- it's cloud-based at least but it's not as fancy. So anyway, yeah. I've been needing to do that for quite a while now. Let me go back to the phone call thing. You said when you were starting, you weren't very good at it. This is an area I absolutely suck at. I just don't like talking on the phone. Which is ironic for co-hosting a podcast.
Josh: That is rather interesting for a guy who doesn't shut up.
Brandon: Hahaha. I do not like talking on the phone. Like I just hate it. My voicemail right now: "If you call me, don't call me. But if you call me--"
Josh: What's your number? Haha.
Brandon: My voicemail is: "Hi, I don't answer my phone, so if this is important, leave me a message and I'll call you back, maybe." Like that's my voicemail.
Josh: That's awesome. Way to have a good voicemail to check clients.
Brandon: That's not my business voicemail. Like my lead voicemail. But anyway, I want to go back to the phone call. Can you kind of walk me through this. How should I, as somebody who's terrible and does not like using the phone, how do I get better? What do you do? What do you say when people call you or when you call them back? I want free advice here.
Tim: Before that, I will tell you, there a lot of sellers who share that trait with you. So there's a lot of people who share these traits and so they might actually prefer to text message with you. And so with some sellers, you can actually read that they're that into speaking on the phone too and the calls will only transition to text messages. I've bought houses via text message from sellers before because you could tell he didn't want to speak on the phone. You just have to have a friendly enthusiasm to it and the more you do it, the more comfortable you get.
I actually feel very Californian saying this - but if I know I have a day full of phone calls to make to sellers, I will actually meditate for about half an hour prior. And I don't know what about it does, but it just gets me in the zone and I start calling them. I think it puts me in a happier mood and I just start getting friendly and really what I like to do is I like to kind of be a chameleon. I match my tone with their tone and I will record all my phone calls so I can listen to them later and also for training purposes for my new assistant. And so being aware that I'm recording the phone call, for some reason makes me more aware to be better while I'm on the phone with them. And so if they're speaking slowly, I'm speaking slowly. If they're speaking fast, then they're just saying," Gimme the number. What're you going to pay for my house? What do you want?" Then I go right back out with the exact same speed.
Josh: Hey and just a quick thing on the phone call-- anyone listening, be careful recording phone calls because there are things called wiretapping. In some states, if you don't have permission of the other person, you can get yourself in a lot of trouble. So make sure you know your local laws and make sure it's okay. And if it's not okay and you have to put disclaimers in the call, make sure that you do that. Something really important to know.
Tim: I did not know that.
Josh: The more you know...
Brandon: Good advice. Alright, so you got a person on the phone, you talk to them, and they say, "How much do you want to pay for my house?"
Josh: "What do you want to buy my house for?"
Tim: I might hit him right back and say, "Why do you want to sell it?"
Josh: "I don't like my wife."
Tim: And I'll say, "Okay," and while I'm on the phone with him-- so the lead comes in and they leave their address and their phone number. A better situation is I already have their address. I looked it up online and I got a quick idea. If I just had to throw a number off because they’re putting pressure on me, then I'm going to throw a really low number out. And if they have a bad reaction, then I would say, "You gave me ten seconds to think so that's my price. If you want to use more time, I'll get a better number if you let me research what I think it's worth." If they're coming at you aggressive, you have to be just the same to them. I don't think they'll respect you otherwise. It's probably a bum lead anyways, if they're being that aggressive with you but you want to take them all seriously. So I would throw them the ride back down just as quick as they asked me for a number.
Brandon: Alright, let's say you send out what we talked about earlier. You send out 3,000 mailers and at 1% you get 30 phone calls out of that. They leave 30 voicemails. Do you hit all of them like once a day, once a week, once a month? How do you return those phone calls?
Tim: Right away, we're going to try and get them because that’s hot lead. So the minute that call comes in, all time is dedicated to returning them as fast as possible. If we succeed in speaking with them, then we got to the next step. Whether it's setting up a meeting or getting an offer, etcetera. If it goes to voicemail. we're going to leave him a voicemail every day, every other day, pretty much until he calls back. Then we're going to get them - if they're not very motivated or they're mediocre - we're going to set them up into a follow-up cycle. So once a month, twice a month, we're going to do a follow-up call to them. Because sometimes, the best deals come from the follow-ups, and honestly that's where a lot of the new wholesalers fall short. They do a mailer, the calls come in, they don't have a way to track them properly and then they forget to start following up with them?
Josh: Now the daily phone calls sound kind of like the collection agent. I don't know because I'm not tracking your numbers but I would wonder, does it come to a point where that almost annoys people in terms of, "Oh, this guy's being a pain. He's too aggressive." I don't know, it's just one of those things I would question. What are your thoughts?
Tim: Yeah, I agree with you. I think for the first week we're going to build pretty aggressively. And after that first week, it'll start to start to taper off, usually because there's other tasks that we're trying to focus on. But that's actually an area that I'm trying to structure better because I'm bringing in help and so before they would taper off because of my schedule, now I do agree to be not too aggressive. They should taper off, but we're going to start to design whatever we deem fit be the best follow-up practice.
Josh: I got you.
Brandon: I mean, if it's working - not that I'm saying we want to go annoy people - but if you're annoying nine out of ten people but one out of ten people sells you a property you can make a $5000 profit off of, I mean nine out of ten people can be annoyed for me to make $5000. You know what I mean. I'm not saying like let's be jerks in the industry--
Josh: Wow. I'm annoyed right now, jerky. Yeah wow.
Tim: You know, it's very good point, Brandon. Here's another one. So you don't like talking to sellers right? What if I get you ten grand for making a phone call? You do it, right?
Brandon: I would.
Tim: So that's what you're missing out on. That could be one of those $10,000 phone calls that you're not making right now.
Josh: He just called out you out. He just said, "Get over yourself," and you know...
Brandon: Well, I know I need to do more of it. Kind of what you said earlier, right? Some people excel at certain things. I figure I really like small, multi-families. I can buy them from banks all day long. I mean, things like that are easy for me because I don't have to talk to anybody, ever. And I get chocolate at the Escrow company. They give out free candy.
Tim: I got a butternut. Who'd get a butternut?
Josh: You get a butternut for closing?
Tim: Yeah, with an engraved butter knife.
Brandon: That's funny, that's funny.
Tim: I felt like Wayne in Wayne's World where he was like, "Dang!" I don't have butter. Why would I have a need for a butter knife?
Josh: Haha. Alright so I want to step back a second here too. Earlier you talked about marketing schedules and follow-up schedules and that kind of stuff. I wonder if you'd be willing to dig in on that a little bit. What do you? What is your marketing schedule? What is the follow-up other than beat them on the head until they call the cops on you?
Tim: Currently, it's very simple and I'm looking forward to stepping this up on more professional ways. But right now it's basically we map out San Diego County and there's high-network areas within San Diego Country. There's no reason to mail to those. So we're shooting for properties that are between $600,000 and below. And we map out those zip codes and we're going to pull on the data and then we mail those. And the goal is to mail them three to four times a year via postcard. We'll do one region and then we'll set them up to be hit again in three months and then the next month we'll do the next region. And so that gives us the steady flow of calls coming in and we're kind of blanked in the area. It's a rotating marketing campaign basically.
Josh: Gotcha. Gotcha. Are you marketing to absentee landlords? What kind of motivated sellers are you reaching right now?
Tim: Absentee is my favorite. I've done on owner occupant but I think it takes a far greater volume to hit owner occupants. So absentee is hands-down my favorite. It's pretty much anything. I'd own anything from a four-unit down to a townhouse, I will hit. So I mail condos, townhouses, single-family, duplex, triplex, fourplex, absentee owner, purchased-- I think I'm going from my 2003 and back now. I don't do anything with equity. Don’t care If they're upside down, then I'll refer it someone to do a short-sale. So I get a pretty broad list.
Josh: Gotcha. Gotcha. What're your deals typically look like? I think most wholesalers that we probably have spoken with - and I think, I'm going to generalize - most people I think who are probably wholesaling or probably doing sale on cheaper properties than $600,000. Maybe, I'm wrong. But I haven't spoken to a lot of people that really target as high as that. So what're you making on a typical deal?
Tim: It'll vary. It's kind of funny. It's usually pretty darn close to what a realtor would make. In most cases, I'm actually still saving homeowner money by just listing it. Because if you look at 6% on a $600,000 house, that's a large sum. Wholesale fee can vary anywhere from $50,000 to $2,000. I've got other friends who close much larger ones in this area. The high volume of properties allows for a larger spread so that is an advantage that we have, but it is a more competitive market. But on average, I'd say $10,000 to $40,000.
Josh: Gotcha. Gotcha. Go ahead, Brandon.
Brandon: Well, you see you mentioned a bit of competitive market. So these people are probably getting multiple mailings, are probably talking to multiple wholesalers. Why do they pick you? Why do you even succeed above the other ones?
Tim: That's a very good point. Certain lists - and everyone has agreed on this - that sometimes these lists, sometimes you get lucky, sometimes it's timing. Sometimes you are competing against the other wholesalers, and if you're competing against other wholesalers, we've got some really savvy individuals here in San Diego. You've got to know your numbers very well and you've got to know the buyers that will buy the absolute most for a deal. And that's one of the way that you're going to succeed. But you've also got to be genuinely liked by the seller and they've got to know that you're there to do what you say you're going to do. So you've got to come across as very confident, know what you're doing, and you've got to be able to deliver on any promises that you make. And if you can express that effectively to the homeowner or to the seller, you've got a pretty good chance of succeeding.
Josh: Hey, I've got a question, and I think I probably asked this everytime we have a wholesaler, but again there's so many people getting into it that I think it's important to re-ask the question. For a new wholesaler, I think one of the biggest fears for those guys is, that they're not going to be able to sell the property. And it's also talking to the seller and trying to lock the deal in, without saying, "Hey, I'm going to buy this from you but I'm not really buying it. I'm actually kind of buying it and then I'm going to find another buyer and they're going to come and you're going to close with them. Not with me." How do you get past that? How can new investors overcome that? Is there any just easy one-liner that helps them get through that or what?
Tim: Well, I will say this. I was absolutely terrified that first time I had to try and lock up my own deal with the sellers. It was scary so you're not alone if you're in that place right now. What's important is that you keep pushing forward and trying to improve yourself and go through this, because the next time it's going to be easier. It's really no different than a rehab who's got a hard-money lender or a partner. They're going to lock up a deal and then their partner's going to review it. Double check the numbers and then they're going to agree or disagree on whether or not they want to close on that deal. That's exactly what I'm doing. I'm looking at a deal. We're going to secure it at a certain price and then we're going to bring it to all the partners. We're either going to decide yes, we're going to buy it or no, we don't.
So it's the same practice. It is slightly different in terms of who's actually rehabbing the property but, "I have partners and we're going to introduce you to one of them, who's going to invest with me on this property. They're going to have the final say and if they think it's a good buy."
Josh: Gotcha. And then in terms of the actual dialogue, so you are telling these folks, "Hey, listen. I'm a buyer of this property." Do you explain the ends or assigns or do not explain that to them in the agreement? How do you handle that?
Tim: It'll vary on each deal. If there's someone who's personality style was that they want to know every nut and bolt to the process, then they're going to be made aware that this property will be closed on in another company's name, because they're the person with the money and they're the person that rehabs it and I'm the person that finds the properties. So my purpose to this partner is I'm the deal finder. They're the deal fixer. And so I take on the acquisitions role, basically. That's what I'm here to do. I'm not the fixer. And if it's someone who-- that's not an interest of theirs, then it's not really discussed because there's really no need to bring up something that they're not interested in.
Josh: Gotcha. Gotcha. No, that make sense. Cool. Alright so you're wholesaling, sounds like you've got a pretty steady deal flow going. Are you still working? You still got a full-time job or how does that work?
Tim: I do. I have a full-time job in outside sales. It goes on a flexible schedule and it's a job I've had for five years. I'm fortunate to have it because it's allowed me access to some really sweet loans. Which is why I bought these properties. But yes, it's been an interesting job. I do enjoy it, but I do think my goal is to transition to 100% full-time real estate investing.
Josh: Gotcha. Gotcha. And you brought up something that I know that we always harp on when we hear it or when we have an opportunity. You know, working and having a job and having a paycheck coming in. Definitely gives access to more money. It certainly helps when you're trying to get a loan. I think a lot of people will go and say, "Well, I'm just about making enough money. I'm going to quit today because I want to quit today." I think a lot of other folks might say, "You might want to hold on a second. Keep that job for a little bit until you really don't have to worry as much about the financing side."
Tim: Yeah, and I think evaluating your own personal situation is very important because I admire the guts it takes just to leave a job and you are going to go harder at your new venture, but I own a rental property. If something catastrophic happens there, I'm responsible so I need to be very well-funded. There are certain risks that are not wise for you to play it, being a landlord, even if I want to pursue my wholesaling on a greater level. And so for those reasons alone, it's wise for me to be a little more cautious than my practices.
Josh: And what does that mean to you, as a landlord, presumably you're talking about having reserves. What does that mean from your perspectives? What kind of reserves do you think a landlord needs to have? Because again, that's another place where I think new investors sometimes will find themselves in trouble. They don't have enough and they end up in trouble. So what do you try to hand on-hand to protect yourself?
Tim: That's a really good question and I haven't really considered that in great detail but I think I would want enough to take the property going afloat for at least six months if something or $15,000 for any kind of major repair and or if say I’m paying half of the mortgage or all of the mortgage. I want to be able to cover that. I'm in the process of getting a wholesale deal right now from someone who has no reserves, both tenants decided to stop paying the rent and he's going to either lose the property or sell it to me because he doesn't have any cash reserves. So seeing that makes you wise up to what you need to have when you hurt.
Josh: Yeah, I like the idea of having a float. You know, you want to assume the works, right? I mean it sucks to think that you might have completely empty units for X amount of time but I think if you're conservative, six months is probably not unreasonable to say, "Hey, I want to make sure I can cover all my payments for six months and have some room for some big capex in case that comes up."
Tim: Yeah, because what are your alternatives? If you don't have that money and something goes wrong, you're going to go borrow it from somebody or... it's going to create unnecessary stress.
Josh: Well, you become a slumlord or whatever else exactly.
Josh: Yeah, right on. Before we dig in a little on the landlord stuff, I'm actually curious. We were talking about the mailings and things like that. I wanted to ask you what your postcards say. What's your messaging?
Tim: Okay. Well, everyone can't see it but I can show it to you guys through the camera. But it basically has, vertically down the side of it, it says, "Notice" in big letters. So when you're getting this is in the mail--
Josh: You think you're in trouble.
Tim: You think you're behind a bill or something's happened. It instantly makes you think--
Josh: Yeah, put that back up on the screen.
Tim: So you're thinking, "Crap."
Josh: Oh yeah. That's not good.
Tim: And it's a very simple-- I mean this cost me under 40 cents apiece and I've made a point to personalize them. I actually had someone create a formula in Excel so when the full name shows up on the title, you know it could be "Smith Family Trusts" with the date or so and so. The formula will actually turn on to "Dear Smith Family" or "Dear John Smith" or "Dear John and Mary" and it'll include every owner's name in there just so it's a little bit more personalized and just says, "My name is Tim Gordon. I'm interested in buying your house at 1234 Main St. in San Diego. I buy several houses each month and I'm looking to buy more in the area."
And I actually just changed the copy on it a little on the last one. I'm trying to do more calls to action. It says: "Find out why the timing is right in 2014 to sell and call now." And so it kind of teases them that there's something going. I have been getting more calls from people who are at about a break even and they are accidental landlords and they're seeing that it's about that chance where they can get out. And I really enjoy those leads actually, because it's people who don't want the house. They don't want to own it and they're sick of the problems. So someone like me to come in and I'll take it with or without the tenants, with or without repairs, right now - they're thrilled. I mean, to them it's the best thing they've ever heard.
Josh: Listen, I had some property that was problematic for me and I sold it direct to an investor. I t was the same thing. I wanted this thing gone. All the properties around mine were going belly up and vacant and I was like trapped in this bubble of hell. And literally the only option I had was to just dump it, right? And sometimes you got to do that. Sometimes, circumstances come in and bite you. I think when an investor could come in and save you from your hardship, that's going to be a net benefit and I think that's part of the pitch obviously on the side of the investor is, "Hey, I'm not here. I'm not the bad guy. I'm here. I'm trying to help you out of this difficult opportunity because you know what? The realtor's going to come in and they're going to try and sell it for the most money and they may not always have the same interest at hand." Your interest when you're in that trouble, is to dump. You want to get rid of this thing and get rid of it fast And it typically doesn't mean trying to sell it for the most money possible, it's trying to sell it for as fast as you can.
Tim: Yeah, I'm a problem solver. That is my purpose to the sellers. The fourplex I purchased had heroin dealing in it. The old lady that lived in a nursery home, her family saw the liability with that property and they wanted it gone and I took it with everything the way it was. So I was a problem solver. That's all I am as a wholesaler, is a problem solver.
Josh: Yeah, I think that's well put.
Brandon: Well, hey. Before we leave the wholesale topic, I want to find out a couple of questions about cash buyers. When you're selling these things, are you primarily selling to flippers or landlords or both or which one do you prefer?
Tim: It's a mix of both and this is where my love of sales comes to my advantage. The best deals to wholesale are going to be rehabs to cash buyers. And what I like to do is every couple of months we'll have a title campaign to give us a report of all cash transactions in our target markets. We can then see what companies are buying the most properties and that gives us a good indicator of one who the big dogs are - everything in California is public record, so you can go and look at that deal - see what is what bought for, what is sold for. We can then find the buyers who buy at the thinnest margins. Those are the people that you want to sell your deals to. In most cases, I'm buying a deal to the same price the average rehabber would buy it for. It's just that I'm selling to the rehabber who would buy at the highest price. So anything that's a flip will go to them. In San Diego, not too many are going to make sales as a rental, but the few that do - I have wholesale to buy and hold buyers and it's a more detailed process cause a flip is a six-month decision. You're going to be dealing with that for six months. Whereas in rental, you've got long-term.
So now that I've owned a fourplex, I can present a rental in a more professional manner. I'm going to get a more profit amount sheet. I'm going to be able to tell them what the market rents. I'm going to be able to tell them what the tenants are paying for, what the lease is stating. So we're really presenting it to them as an investment opportunity and less of a flip. And it takes a much more detailed, professional approach if you're going to succeed at selling a buy and hold deal.
Josh: And those prepared reports that you've got, the professional package, that you put together, is one of the advantages that you have over the next as well, isn't it?
Tim: Yeah. You can answer every single one of their questions before they ask it. We wholesaled a triplex to an individual. We actually got a conventional loan to buy and close in three weeks. And we sold it for more because we knew it as in his target market. He owned other rentals in that area. We found that from a title search. So we called in and said, "Hey, you own two on the street. You want another one?" We know that he is the person who wants that deal more than anyone, but we had to present him with all the details so that he could move forward. And in California, they need to know about the tenants. If they've got problem tenants. What the lease estate, who's paying for what. All of those items are critical. If I was going to buy a deal, I want that. So I know I need to present that to whoever's going to one of mine.
Brandon: Yeah, makes sense. Different properties for different types of people. So you need to just do your research and find out who wants what. So speaking of that then, how many cash buyers do you have on your list and how many do you need? How much does a wholesaler need?
Tim: I think I've done about 200 on my list and I've probably only sold to six of those people.
Brandon: That's actually a really good point, right? You don't need 200 necessarily.
Tim: You really don't. I'm kind of torn. I think it depends on your availability at times. For me, because I'm doing so many things, I would rather find the deal and then find the right buyer for that deal. So we just wholesaled a tear-down. Literally it's in a tremendous zoning with three townhomes on it. So we tied up the deal. I shot it out to some of my regular buyers. They're all rehabbers. They don't want to develop a deal. SO we had to reverse engineer and find a local individual who is developing in the area and he bought it right away. So there would have been no need for me to go out and find those types of buyers until I have that type of deal. I think you should have rehab buyers but then find the rest when you have the deal.
Josh: So you think buyer's list comes after the deal, obviously?
Josh: Okay. So newbies - those folks are telling newbies, "Go build a buyers list. For $9.97 I'll teach you how to build the biggest buyer's list in the world." That's a bad idea. A waste of your time probably.
Tim: Yeah, you could honestly do both. We just got a new website up so we'll have a link where buyers can go to the website and opt in to the buyers list. What I like to do is send mailer to all the cash buyers for the last 90 days and saying, "We're wholesalers. Go to this link. Add yourself to our buyers list." Then we've easily added more buyers that way. I think people should do both. But if you're going to ask me what's more important? Hands-down, the deal.
Brandon: Nice. Yeah. I'm with Josh. I always see ads online all the time that just say things about cash buyers. And I think the reason why is because that's something that's very easy and attainable, right? If you pay a thousand dollars to learn how to build a cash buyers list, you think you have a thousand dollars' worth of work, because all of a sudden you have a cash buyers list.
Josh: You got a list, that's all you got. You got nothing.
Brandon: Doesn't matter because it doesn't give you anything. It would never produce without the other half, which is the more difficult half. It's finding the deals. Not even half.
Josh: Well, even before that. You got to know what a deal is, right? And we haven't talked about that. We have not covered that at all right now and we probably should chat about that. You can't just go and say, "I'm going to lock in a contract on a, ehem, deal without it being an actual deal." Otherwise, you can't get it out to the next guy. You got to buy at some kind of discount to what that thing's going to retail at, particularly if you're buying it to send to a flipper. Because they got to make their money. So what are you buying these deals at? What kind of discount are you buying to a future ARV?
Tim: Obviously, I'm trying to get as low as I can. I know that typically a rehab, it has to-- the highest low that used to sell around here is about 82% of ARV. That might sound high but the spreads are larger in California, so people are still making decent margins on their money. I was listening to a really good podcast with you guys and Mike Nelson and he said, "Look, I don't care about the ARV. I look and see what people are currently buying flip side in my market." And that is exactly what you should be doing because my market is different than a lot of other individuals. And so you look for trends. you look for what the market is telling you. And if you see deals are closing at one number and then being listed at another number, the market is telling you where they're being bought and where they're being sold. So you just have to offer it within that range. It really just comes down being very aware of hat is actually going on in your market.
Josh: Gotcha. And where have you found-- like the seven guys who've actually been your real buyers, your actual buyers list versus your fantasy buyers list? Where did those guys come from? Were they all through the website or they people you met at clubs or BiggerPockets or what was that?
Tim: One of them actually messaged me through BiggerPockets a year before we did a deal. He's actually one of my favorite people to work with. Most have come from the real estate meetings or title searches because you'll see who the big players are. And you want to work with the big players for your standard bread and butter flip. In my market, the person is who's going to pay the most for it, move the quickest, is my big buyer.
Brandon: Nice. Well, cool. Well hey let's move on and talk a little bit about a question that I love to ask people. What is the best deal you've ever done?
Tim: Oh man.
Brandon: Off the top of your head.
Tim: My favorite one was a $48,000 wholesale fee over a round of beers.
Brandon: Wow. Let's hear that story.
Josh: We have to hear that story.
Tim: So it's generally one of the greatest friendships I've ever had in real estate too which is probably worth more than the money you made but I spoke at the Investors Workshop, Orange County. They have a little bonus session, Shawn and April. They have me speak at the beginning. And it was kind of a story of a new person who had failed and struggled and the steps that they took to implement to become successful. So I was kind of going through the whole experience and another gentleman named Sean Katona afterwards. We're drinking beers and he goes, "I got this deal," and he usually rehabs, "I just [inaudible] [47:03] for a rehab. Nobody has the money. I'm a wholesaler." I was like, "Well, cool. What're the numbers? Tell me the numbers." He was, "Okay, well. It's worth..." I think he said it was worth $600,000 and he's going to wholesale it for $410,000 or $420,000. He was going to make ten grand.
And I knew instantly that there's a lot more he made on this deal and so I said, "Sean, can I have one day to try and sell this deal? So how much will be you happy getting a check for?" And he thought about it for a second and he goes, "If I get 30 grand, I'm happy." He gave me one day. So I made a couple of phone calls and I had a buyer lined up and the next day I called him, I said, "Well, I got your 30 grand." "Really?" "Yup, we got it." So we lined up the buyer, we opened Escrow. "Just out of curiosity, how much are you making?" And I said, "$18,000" And so I made $18,000 for a phone call but I also made him a lot more than he expected to make. So over a round of drinks we generated a $48,000 wholesale fee and a fantastic friendship. We've done two or three more deals since then. He's taught me a ton about this side of the business and then I taught him a lot about wholesaling and how to get the most dollars for your deal. Hands-down, one of my favorite deals.
Josh: And that phone call was only possible because you-- did you have relationships with the guys that you were calling at that point? Or they weren't just cold buyers list people? They were folks you knew about?
Tim: That was actually my BiggerPockets referral buyer and I actually text messaged. He likes to talk via text message. So I sold a deal via text. I don't think we even spoke.
Josh: Nice. Nice. And that's the day you went Pro on BiggerPockets, right?
Tim: I think today is that day.
Josh: Haha. Nice. Really quick for everybody listening, this is show 67 of the BiggerPockets podcast. And you could check out the show notes at BiggerPockets.com/show67. Alright so that was the best deal. That sounds like a lot of fun.
Tim: It was great and everything was so relationship-based and that was so great about it. It's a win for everybody and I'm learning now from this person.
Josh: Yup, for sure. What about the worst deal or your least favorite deal? They might be different, won't they?
Tim: My worst deal, it was probably my first deal honestly. I'm very sentimental about it but basically I was helping a friend. He called me out on being a half-assed wholesaler and said, "Maybe this isn't for you." That stung. It really stung. It was two houses in Desert Palm Springs, California which is just scummy desert properties. It's probably Detroit of the desert for Josh.
Josh: Yeah baby. Detroit.
Tim: The contract had expired on it with the buy, with the seller. I managed to find a buyer. So we went out to the seller and said, "Hey, we can close. We're ready to go." And the seller changed their tune and basically said, "We want $10,000 more." That was our wholesale fee. We kind of thought we were done and this has been year, guys. I'm trying to get my first check. I am like foaming at the mouth just to get a piece of paper in my hand that's telling me I did not waste a year of my life. So we went back to the buyer and just said, "Look. We're so sorry but the seller is re-negotiating and he wants $10,000 more. That's our wholesale fee. Is there any chance you can just give a little more just so we can cover our costs? Can you just give us $2500?" And he said, "Okay." It was a fair deal already so he was okay with it.
Well, there was two other individuals involved in this deal. And one of these individuals was having very hard times. So his power has gotten shut off. I'm doing very well at my day job, my other friend is doing very well wholesaling. We made a decision basically to close the deal and give all the money to the other individual. So I just asked for a check for a dollar. I just want a check for a dollar so that I can say I closed my first deal. And it was actually a hard experience because you're taking something that you wanted more than anything in your life for the last year and you're basically letting it go and saying, "Somebody else needs this more than I do." And so I agreed to do it. And I remember I had this little bottle of champagne a friend had given me to drink when I close my first deal. And I remember just kind of like sitting there at my desk and the deal's closed. I'm thinking about the dollar that I just got and drank the entire bottle of champagne.
Josh: But listen, I think that says a lot about you man. I think anybody in SoCal who's listening to the show is getting ready to add you to their "I got to get in touch with this guy" list because that's pretty cool of you to do that. You know, putting them ahead of yourself. I think that's really admirable. Kudos.
Tim: Thank you. I've been very lucky to have a few good friends who express the importance of charity on me. The nice twist to that story is we went to Escrow to get our check and we opened up the envelope and there's two checks for $2500 there. The buyer misunderstood me when we asked for $2500. And he thought it was per house, not for the whole deal. So we had $5000 in there. My friend, we split the $2500 and we gave the other $2500 as we intended, to the other person who's really in need. So we ended up being rewarded for our charitable efforts.
Josh: That's nice.
Brandon: That's cool.
Josh: That really is cool. Hey, you talked about rentals and we're starting to run out of time here a little bit, but do you have more than just the one rental, or do you have multiples and are you looking to build that side of your business out or what's up?
Tim: My ultimate dream is to own a trailer park. I do own a fourplex that I purchased via the ever elusive FHA 203K rehab loan. And I love that fourplex. I just bought a house this summer in Oceanside. It's right by the beach and I rehabbed that. So I'm happy with what I have right now honestly. If I can pick up something small and simple, I will. But my goal right now, honestly, is to simplify my life. I went like a bowl in china shop last year and I paid for it with my sanity.
Josh: So does that mean, by simplifying your life that you want to do less wholesale deals? Do you want to do less business? Just kind of enough to get by? Because I think there's always this, "Well, you got to keep building your business. You got to keep building your business." I think it was Paula Pant, the show we did with Paula, where we had talked about building this lifestyle business. I think there's definitely a difference right? Do you want to build a business so you can chill out and hang out on the beach? Or do you want to build a business that you're going to be working at for the next X amount of time?
Tim: I was at BestBuy the other day buying a microphone for this podcast and the girl said, "Oh you're not working today?" I was like, "Yeah, I'm working." I'm wearing sandals and shorts and I'm very happy that I'm working this way. So I'm after more of a lifestyle to be honest with you. Last year I turned wholesaling into a job, which was what I was trying-- I was wholesaling to get out of a job and I've fallen right into the exact same thing.
Josh: Yeah, and I'm glad you said that as well because I think most folks who don't know see flipping houses and wholesaling is a way to get out of quote unquote "rat race" however both of those are jobs. They are absolutely jobs.
Tim: Yeah, I'm in the process of training someone and until I can go away for two weeks and the business still earns money - it's a job. It's a job until then.
Brandon: That's a good tweetable topic right there. I'll put that up on the show notes at BiggerPockets.com/show67. Final question I want to ask before we head on is, how do you plan on using those people? You're training somebody underneath you. How do you want to implement other people to help that lifestyle business develop.
Tim: That's kind of two parts for me. They're probably in the back trying to hear me say this and call me out if I lie about this too. Haha. My personality suits the more going out, meeting sellers, going to the event, selling deals. So I'm training someone who can handle the backend operations. I want them to be screening the calls to the motivated sellers. I want them to be logging all the data. I want them to be doing follow-up work, monitoring all the systems. Basically, I want someone who's going to run the back end of the business for me. And then I can free to-- kind of like I get like an APV that we get a hot lead in this place and then it's on to me. My job is not to deal with the filtering anymore. It's just to deal with the hot leads.
Brandon: You're the closer.
Brandon: Nice. And it makes sense. That goes with the whole 80/20 principle that Tim Ferris kind of popularized. Whatever you're good at, that 20%, focus on that. Outsource the rest. Let other people take care of that and you can work four hours a week or whatever it is. Very cool.
Josh: Pareto’s principle. Not Tim Ferris principle.
Brandon: Haha. I'm just saying he popularized it.
Josh: Yeah okay. Just clarifying here.
Brandon: Alright. Why don't we move on to the…
It’s time for the fire round…
Brandon: Alright, fire round. These are questions that are straight from the forums. So we're going to throw them at you and you have no idea what's coming
Tim: Alright, let's do this.
Brandon: First of all, do you sell only to cash buyers? And because you already kind of answered that question, I want to re-frame it to - what should a new investor do? Should they avoid only - like financing buyers? Or only work with cash buyers? How should a new investor do that?
Tim: They should stick to cash buyers? That deal that we did with the finance buyer was one of the most complex real estate transactions I've ever been a part of. And to start out doing it would've been an absolute mess. So stick to the cash buyers. There's other ways to turn a lead like that to income generating and that could probably mean referring it out to another wholesaler or to a listing agent. It's a poor use of your time.
Josh: For those people listening, how can somebody make money referring a lead to another wholesaler? How would they monetize that? If you could expound on that for us?
Tim: Sure, that's one of my favorite ways to work. About a quarter to a third of my business, is working with other wholesalers. Basically, they might have a deal and can't find a buyer or vice versa. And you've got a leverage your strong suit. So for me, my strong suit is selling. So if someone else has a deal and they can't find a buyer. I can take the time to reverse engineer who the best buyer and turn what is probably a not so great deal into almost like, generate an income and it's like we're playing like a buyers’ agent or list agent or we're specifically targeting that exact perfect buyer and we wholesale it to them
Josh: Gotcha. So you collect a wholesale fee and they collect a wholesale fee and everybody collects a fee and that's it?
Tim: Yes, and it builds great camaraderie in your local investor community too. You always want to be there to help the other wholesalers. They're not competitors, they're your allies.
Josh: Tweetable topic, right there. Boom. Boom. Boom. Alright, if somebody only has about $500 a month for marketing, is it worth it?
Tim: That's a tough one. I think I would tell them to go door-knocking and get some serious rejection and get used to being really on their feet and I think if they've got the guts to go door-knocking and try it and no matter what happens they're still enthusiastic about real estate, then yeah I think they should send out some mailers to get the phones ringing. But the first thing they should do is get up off their feet and go knock on some doors and see what happens.
Josh: I agree and I'll tell you what. That was the first thing I did when I was an agent. I found a farm that I wanted and I created these really cool door hangers that I printed with my face. You know all sorts of stuff. I literally knocked on every door in the neighborhood. And that was terrifying. Absolutely terrifying, but taught me a lot. And taught me people aren't going to bite you and the ones that do, you just kind of move on and that's it. You get to learn and really know those neighborhoods that you're farming.
Tim: It's like a commitment by action. If I knew somebody had gone door-knocking and then they ask me for help, I would ten times more likely to help them because I know they had just gone and done one of the scariest things you can do in business.
Brandon: And that might be my favorite tip from this entire show is right there, that if you're out there, if our listeners want to get into wholesaling and they want to find a mentor of some kind, like what you just said there is perfect. Go out and do something scary first. Go out and prove that you're serious about this business and then go and talk to somebody about, "Hey do you want to work with me and help me out?" That makes all the difference in the world. I love that. Very good.
Tim: Yeah, that's exactly it.
Josh: Well done.
Brandon: Alright cool. Alright next fire round question. Somebody called on my direct mail and they were extremely angry. They left a voicemail, should I call them back?
Tim: You know, I do. This is part of my metrics. I know the cost per phone call and it averages to $40 to $60. So I just paid $60 for that person to tell me to f-off and I'm going to call them back.
Brandon: That's a good way to look at it. That's a great way of looking it out is figuring out how much you make per phone call. I love that, that's great. I've never heard anyone say that before.
Tim: It is hard not to follow up when you're looking at that lead and you know that $60 is sitting there and you're not doing anything with it. You never know. The odds are that is probably not a motivated seller but I think there's good practice in doing habits consistently, so yes I would call them.
Josh: So what was the worst thing somebody's ever said to you?
Tim: Well, that person didn't call me back and I called in a few times. I think someone called me a vulture, someone's called me things like that. I could care less. I’m not affected in the least by these things. I just wish they have a great day and move on to the next lead.
Josh: Nice. Alright in wholesaling, when a house is put under contract to be assigned to a buyer, who's responsible for the property being inspected? Is it you, the wholesaler? Is it the end flipper who takes care of that?
Tim: That is 100% on the buyer and this is another way to weed out your tire kickers or other wholesalers because I require a $5000 non-refundable deposit to tie-up my deal. You do not get inspection, period. I will give you full access to the property so that you can do your due diligence and I want you to be comfortable, but you cannot secure this deal until you're ready to buy a check for the entire property. So you're going to give me a $5000 non-refundable deposit. The buyer's responsible for all due diligence.
Josh: Got it. Got it. And did you do that all along or did that come out of getting burnt?
Tim: That was actually guidance from another respected wholesaler and it eliminates the tire kickers and it really pushes you towards the serious buyers. As long as he's not hanging off the side of a cliff, he'll be able to tell you within half an hour if they can buy it and what their number is and those are the people you sell your deals to.
Josh: And I just want to be clear because I may have missed it, will you let somebody see the property?
Tim: Oh yes. Definitely. I want to give them full access. They can view it. They can get a contractor in it. I want them to be 100% comfortable with the purchase. I'm just saying you cannot secure to purchase until you've done all these things and you're willing to fund a non-refundable.
Josh: Sure, of course.
Brandon: Hey, I want to go back. Now that you've said that. I know this is fire round, but whatever.
Josh: Breaking the rules.
Brandon: Yeah you know me, I'm a rebel. Alright so if you get a property under contract, how does that whole process work then? You talk to a motivated seller. They want to sell it. Do you get a key for the property? Do you call the cash buyer and arrange them to meet the seller at the property? Do all three of you go there? Does it depend on the deal?
Tim: It's been a mix. One of the things about being a good wholesaler and or real estate investor is you're going to have to adapt as the situations allow. My favorite word in all of real estate is vacant. We put lock box, we get a key and then buyers can go look at it. If it's occupied by a tenant, we want to be really respectful of the tenants. I'm preach on that a lot. You want to treat anyone who lives in the home with respect. That's their sanctuary. As long as they're paying. If they're a scumbag, then whatever. You know, you're going to schedule it within the tenant's schedule. You're going to say, "What works for you? When can we get it here? We might schedule one or two buyers to come view it." You have to adapt as the situation permits, but you've got to get them in quickly and you've got to give them full access and you have to figure out how you're going to do that.
Josh: Nice. That's awesome. Well, fantastic stuff. Why don't we move on to the final segment of the show. This is the one we finally call the...
Josh: First question of the famous four is what is your favorite real estate book?
Tim: Omigod, I listen to this on the podcast and I still don't know. I don't read a lot of real estate books.
Josh: And we actually do prepare our guests to let them that these are the four questions we're going to ask them. Haha. Clearly Tim, you are unprepared.
Tim: I really enjoyed the book Good to Great. It's more of a business book. That one lately has been a big impact on me. I do like Think and Grow Rich as well. I'm actually probably one of the few people who has never read Rich Dad, Poor Dad and don't ever will.
Josh: There you go.
Brandon: Just for principle.
Tim: I don't like their sales pitches and so I count them off.
Josh: I feel it man. I feel it. Alright, what about your favorite business book? Another favorite business book?
Tim: I guess so. I just read a book recently called Lifeonaire. It's like millionaire but replaced mil with life. And it really flipped my life upside down in regards to what's important and I don't need a lot of money. I want more experiences. I want more time with my friends and my family and that book-- it was a little unusual but it had the most impact on me, out of any book I've probably read in the last three years.
Brandon: I haven't heard of that one. Alright, what about your hobbies? What do you do for fun?
Tim: I am an adventure person so I like scuba diving, surfing. I like doing stupid things with anything that has a motor. I like traveling. I love to travel. I went to Belize last year and Australia the year before. My entire goal is just to free myself to travel more actually.
Brandon: Nice. Very cool. Alright, final question from me. What do you believe sets apart successful real estate investors from those who fail or never get started in the first place?
Tim: I thought about this really hard when I heard this. To me, it's awareness. There's a level of awareness within certain individuals which I think allows them to succeed or not. And that can be awareness that you're doing things properly, awareness that you're afraid, awareness of bad habits and so I think a general awareness of who you are and what you want and what's important to you and truly how you're acting. I mean a lot of might say that we're going through the steps to do deals, but we're taking little baby steps because we're scared and we're not admitting to ourselves that we're scared. Or we're not admitting to ourselves that we're doing the wrong thing. So for me, a level of awareness is necessary to take things to that level where you're going to succeed and be happy.
Josh: Right on. Right on. And that was Psychology 102 with Tim Gordon.
Josh: Alright Tim, listen man. It was a great show. Really, really appreciate the time and there are definitely a lot of fantastic nuggets in there for both the wholesaler and everybody else listening. I think that's great. Where can people find out more information about you?
Tim: You can go to my website. It is gordonbuyshomes.com and there's information there. I've got a little blog running and if anyone ever has any questions regarding wholesaling or real estate investing or Psychology 102, you're welcome to send me a message. I love to help and encourage new investors or seasoned investors. I'm very thankful to BiggerPockets for having me here. Today felt like the day before Christmas. I was so excited. The honor of that, I just want to pay it back by helping anyone I can.
Josh: That's awesome.
Brandon: And you do in the forums all the time. I just noticed that today. You had a lot of recent stuff in there. Thank you for that.
Tim: I love that. I want other people to succeed at this and you guys should be commended for building a community that encourages that.
Brandon: I just clean up around here. Josh built it.
Josh: Thank you, thank you. That's the ideal. That's what we do. That's what we strive for and you're the guy that we want. You're the people, so to speak, that we want. We want people who are there to not only go out there and change their own lives, but try and be helpful to others and it's great that we fostered that. That's great. Speaking of the day before Christmas, I'm sorry that you had to put up with the Grinch on the other side of the mic over there. But he's alright sometimes.
Josh: Alright Tim. Listen man. It's been a pleasure. Really appreciate having you on the show. For all the listeners, be like Tim. Jump in, get involved, read up, listen to the shows and BiggerPockets can help you improve your investing and really can help you change your life. So come onboard and be a part of the community, Otherwise, as always, we'll see you on Facebook or LinkedIn or any of the other major networks. Feel free to keep in touch with us there. Last but not least, get out there and make it happen guys. We want to see you be successful. We want to hear about it. Share your stories with us and we'll see you back in BiggerPockets. I'm Josh Dorkin. Signing off.
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