All Forum Posts by: Cornelius Garland

I wouldn't argue one strategy is better than another. When you've been around for a while, you develop an exit strategy "tool belt" of sorts. I wholesale some properties, and others make sense to take down as rentals. Also, novations are nothing new. This is a catchphrase that people started using a few years back.

I was essentially doing "novations" way before it ever became a thing, with a limited durable power of attorney, back in 2016. One of the first deals I did was take down a 26-parcel deal in a highly distressed neighborhood and listed it on the MLS. The POA gave us the ability to list it. I'm not a fan of novations where you don't get the purchase agreement notarized and filed at the courthouse. It's too flimsy otherwise. If you're going to go that route with listing it, do it the right way or else you may find yourself in legal trouble, or a buyer may snake the deal from you.

Again, novations aren't anything new, and most experienced investors are shying away from them these days because they're operating in a legal "grey area". I never want to place a Realtor in a compromising situation, so I always get a notarized POA and file it at the courthouse. This helps the process move much quicker on my virtual deals. In Cleveland, I'm taking down duplexes as rentals and Cuyahoga county requires us to communicate with 3 - 5 departments just to get payoffs. If I had to wait on the seller to do this, it would drag out my closings for months, potentially. There are multiple benefits of using a POA to list the property rather than getting a purchase agreement e-signed with a "listing clause" in it.

I highly suggest using IDI data. It's the only dataset I've used since 2019. The only downside is that you'll need an account, and they lock you into a contract. Consequently it's not accessible to most investors who are skip tracing fewer than 100k searches a month. Me and a few folks I met at a mastermind group all went in on a joint account a few years back so we could save money. Also, the credits are "use them or lose them" - meaning, if you pay $12k a month for a 100,000 skips, then you have to use them all that month. At least we know with 10 or so people using the account, all the credits will get used monthly. It's not the best arrangement, but it's worth it because the data is accurate. 

I've tracked my metrics over the years and I'm getting 99% hit rates with fewer than 1% wrong number percentages. I determine the wrong number percentage based on how many people text or call us back saying "wrong number". It rarely happens these days. Not all skip tracing companies are created equally, and I'm a stickler when it comes to data. I feel like most investors focus too much on the right side of what I dubbed "The Wholesaler's Timeline". Most investors focus on finding buyers first when it is all the way toward the end of the process. 

They spend so much effort finding buyers that they treat the areas to the left of the timeline as an afterthought. Every part of the wholesaling process is linear and sequential. If you do not do your market research correctly, it doesn't matter how great your list is because you will pull a list in a bad market. If your skip tracing provider is poor, it doesn't matter how great your list is. If your cold callers are the highly skilled, but your market, list, and skip tracing is poor, then it doesn't matter how great your cold callers are. Every step of the process is built on the previous step. Let me know if you need some assistance with skip tracing if you're doing large volume. We usually have unused credits each month.

For manual and one-off skip traces, check out familytreenow.com. It's free and doesn't require an account. I found that the addresses are highly accurate. I used it back in 2015 when I was first starting out wholesaling because bulk skip tracing wasn't available. I found that the phone numbers aren't always available or accurate, but it's worth a shot. If you want to verify the mailing address and send your sellers a mail piece, this data source works great. I hope this helps out.

Welcome to the world of investing. This is why many investors focus their efforts on generating off-market property owner leads.

You could put a small marketing campaign together to test the waters. For instance, pull a list of homeowners who purchased their houses before 1999 and target distressed / gentrifying areas. These homeowners are more cooperative than targeting affluent areas, and you can add value to the homes, which will justify the homeowners selling for a discount.

Lead gen and marketing is a deep rabbit hole, and there are a lot of opinions on BP as to the best route to take. My opinion is that you will need to have a steady flow of leads coming in if you want to turn this into a business.

Usually, the good deals are sold directly from agents to their network of buyers and they may not even make it on the MLS. It might be good to go to your next REIA or local real estate investing group meeting and get connected with the bigger wholesalers in your market.

All the best,
C.C.

I definitely hear you. This industry is not for the faint of heart, especially when you first get started. I had several losses when I began. The deals I lost were expensive lessons learned. Even if this deal doesn't go through, just dust your feet off and get back to it. There's another deal around the corner.

However, this is why I am very adamant about not putting all of your eggs into one basket. It is important to have a consistent pipeline of leads that you can target. If one doesn't close then it's not the end of the world. I found that many new wholesalers become fixated with one or two leads then when they do not close, they are devastated. 90% of wholesalers who start never close their first deal. Very few make it past the 3-year mark. Even fewer make it to 5 years.

It's not easy and it takes tremendous fortitude. However, this industry has taken me to places I never would have imagined. It has been tough. Very tough some days, actually. But I ended up getting on A&E doing this - a show called "50/50 Flip. I appeared on there as the Director of Marketing on the first season. The show recently got picked up on Hulu. It is one of my proudest accomplishments to date. But guess where I started? Just like you, right here on Bigger Pockets in 2015 very confused and lost.

It all comes down to how bad you want it.

I got bamboozeled out of a deal once. This happened in May of 2017, and it was the first and only time a buyer cut me out of a deal. I did not get my money from the assignment fee. Legal action would have cost me the amount of my assignment fee. Since then, I've become a shark. I do not mess around with my business. If I sense any shadiness, I will pursue legal action in a heartbeat. I have attorneys on retainer for this. I've pursued legal action against previous business partners as well. I'm not one to be messed with.

Thick skin is required, but I had to develop this thick skin after being screwed over a few times.

I'm really sorry to hear this. I've had this happen to me several times before, and it is stressful not knowing if you will get paid when you put so much time and effort into the deal.

I would try and call the buyer again and tell him you would like to be put on the HUD. Also, you will need to review it before closing. Be persistent about this. See how he responds. If he tries to give you a reason not to then that should signal red flags. I would contact your seller and ask them if they were contacted by anybody else regarding the transaction. If they were contacted by the buyer or title company then you know there is a high likelihood that they're attempting to backdoor you - essentially, close the deal without you.

Your suspicions are correct. I always suggest using my closing attorney for this very reason. Whoever has the deal has the power. Buyers are a dime a dozen - deeply discounted properties are not. Always remember this. If I must use the buyer's title company/closing attorney then I always demand to be on all correspondence between the title company, seller, and buyer. It should raise suspicions as well if you're in an attorney state and he says he's using a title company.

You have to be on the HUD and you should receive it no less than 24 hours from closing. If you are not on the HUD, you will likely not get paid. I would call the title company ASAP and request to speak to a paralegal or closing representative regarding your deal. If you signed the original purchase contract with the seller then you have a legal interest in this property, and they should be corresponding with you every step of the way.

Always, always, ALWAYS make sure you are on the HUD settlement statement. Your assignment fee should appear on lines 1303 or 1304 on the second page.

I have had buyers close deals behind my back and also try to reduce my assignment fees before closing without speaking with me. There are a lot of shady players in this industry, and with the market tightening up, I only anticipate the shadiness to become more prevalent. Protect yourself. You are the only one who is representing yourself in this transaction. At least if you chose the closing attorney/title company, you would be the primary point of contact. However, in this deal, you are akin to the third wheel in a romantic relationship.

There is no need to go into panic mode. But I do suggest having a bit of urgency on this because once the deal is closed, it's done - nothing you can do. You could pursue legal action, but I found that this is more trouble than it's worth and not worth the negative energy surrounding this. It can end up stalling forward progress in your business. Nip this in the bud. Get some clarity. If you do not hear any word from the buyer or title company within 24 business hours, I suggest filing a memorandum of contract to cloud the title. This can be bypassed by savvy attorneys, but at least you will show up on the title for having an interest in the property.

All the best,
C.C. Garland

Greetings Jonathan, I just sent you a colleague request. I can help out with systems like this. It took me 8 years to figure this out.

Nicely done, Mark. With single-line dialing, it may be more tedious, but this is truly the best way to get the most out of your marketing list. I found that there are a lot of wasted dials when I outsource my cold calling, but it's necessary for me to scale - or else I'll be the one dialing! It's the cost of scaling. Similarly, McDonald's could have PHDs making their burgers, but their profit margins will be little to none.

Curious - what area are you in and what type of list are you dialing?

How many hot leads would you say you have? I found that it's taking me around 30 leads to convert to one contract. Over a month, I'll have 3-5 ready to sign a contract, but only 1 - 2 that actually do. So don't get discouraged if they aren't smoking hot. You just might need a few more in the pipeline. Follow-up is also crucial to converting.

Also, one suggestion regarding the KPIs. I would separate the dead numbers out into a separate KPI or combine it with the wrong numbers. This isn't crucial to your conversions. However, this can help you gauge over time how accurate your skip tracing is. I found that my "wrong number / dead number" percentage is around 2% - 5%. Pretty good. Hit rates can be high for some data resellers, but that doesn't mean anything if 50% of them are wrong numbers. This is getting in the weeds, though, and it is not mission-critical.

Again nice work. It'll be nice to see a follow-up when you get your first contract!

Thank you, Don! Your response is very much appreciated. I was raised to do things the right way. I give the same care and attention to my wholesaling business as I would if I owned a brick-and-mortar store.

@Jennifer Durkee You're welcome, Jennifer. I own a skip tracing company and I collate data from 3 main data providers, which is why the data is so accurate. I saw this as a need a few years ago and created a company for my joint venture partners and their cash buyers to use. It helps offset my marketing costs as well. I use the profit from the company to funnel back into my wholesaling company. I would mention it here, but BP is strict about users promoting their services, even if it could be of value. I wish they would be more lenient about this, but I see why.