All Forum Posts by: Chris Clothier

I'm currently over a year out of college and since then have built up a full service wholesaling operation, completing about 15 transactions thus far.

It seems every time we make money, we seem to spend it almost immediately on marketing and education! My business partner and I are now trying to save up to purchase our first rental and start building a portfolio to help us leverage ourselves into more investments as well as increase our passive income stream.

Dan -

You are already off to a good start doing 15 deals almost as a hobby. It is time to turn to the operations aspects of your business and Steve already alluded to them a little.

Look back and see what you spent 'marketing' to get those first 15 deals. Just look at direct costs to acquire those properties. You now have a good idea of what it costs to produce each deal. With that knowledge you can construct an actual marketing budget and you should have a good idea of which marketing techniques have worked to get those deals.

You should also have a list of buyers and be familiar with why they purchased the properties from you. They like the area? They like the price? Whatever the reasons, it gives you a picture of what properties to buy, what price to pay and which areas to concentrate your marketing.

When you know these things, you can actually plan a business and decide how much money you need to make per deal to cover marketing cost for the next deals as well as profit for you and your partner.

There is A LOT more to producing a good business plan, but you have already done a decent amount of deals and should have enough info. to put together a plan to get started. The wholesale deals should be able to generate the revenue to begin to look at other ways to invest like building a cash flowing portfolio.

Very impressive that you are starting out early and having success. Treat it like a business that you are proud of and it will treat you well.

Jamie -

Whatever you are doing - dont stop! If you have been able to generate two good leads in a short amount of time, then the marketing you are doing is working.

Short term solution for the owner financed deal is to get the seller to pay you a commission for bringing the buyer or the buyer to pay you a commission for bringing the deal. Be up front and clear about any money you are going to make and only try to make it on one side (that's my advice). Like Jon said, if the first property is a deal, then I would begin to market for a buyer that doesn't need seller financing.

Good luck

I would say that is a good thing, that means at 21,000 he is not overpaying. As J Scott noted, this is probably an area where an investor has to be committed to a long term hold. I would be more concerned with length of stay for tenants and number of similar properties in the area that are rentals as George pointed out. You could end up with a property that is never worth more than you paid simply because EVERY property is a rental.

If the numbers are correct on rental then it looks really good for a long term buy & hold strategy.

I've yet to meet an international investor who could get backyard financing for purchasing overseas property. It's hard enough for California (insert anywhere usa) investors to get backyard financing for out of state purchases.

The foreigners who have purchased from our company are more than happy to find any leverage and 40% down at 8% sounds very cheap to them when purchasing investment properties. They view it as opportunity to buy more property with the same cash and their options for financing are very limited if they can find it at all.

Vic - I will have to use that suggestion for our foreign investors and see what happens. I think you are correct that the strength and ability of the investor will make all the difference if they are to get a loan like this.

Terry -

We used a custom system built by MyPropFolio for 4 years which we really liked, but we began to outgrow the functionality of it and have recently moved to Salesforce.

For comparison purposes, we are producing about 300 leads a month of varying degrees of interest and from several different funnels. We track every touch with investors whether its email, phone or mail and have multiple automated processes in that drip campaign. We also use the system to track clients and every interaction we have after the sales process.

It also serves an inter-office communication function as we have multiple departments that communicate with our clients and each department needs to be able to see what the status is and what other departments are doing.

Lastly, we manage right now 927 properties for 309 clients so we integrated a property management software into it so everyone in the company who speaks to a client can literally know everything they need for that client.

Salesforce can be very robust and we hired an outside company to customize it for us which was relatively inexpensive. So far, we are very happy with the move and are finishing the transition from MyPropFolio.

Fell free to reach out to me if you have any specific questions on Salesforce and how we choose to use it.

Chris

Mike -

Take Jon's advice and approach the lender that will lend at 65% of ARV. If you ARV calculation is correct and the lender is comfortable with your abilities to complete the project, he very well may lend the full amount to you.

I have never heard of a HM lender accepting second position, just as Jon said, and I do not know of very many new RE flippers that are able to secure 100% financing in a deal.

This may seem unreasonable, and I know it does not fit every investors' situation, but if I had to do everything over again, I would use some of my own money on every project. I have found myself in trouble on deals where I have no vested interest and yet, when my own money is on the line, I have never had a problem. There is definitely something to be said for having some accountability to yourself on a deal and that tends to help us think very clearly.

Good luck on getting the funds you need!

Greg -

We always replace the AC unit on properties we are doing for a retail sale more as a selling feature regardless of the age or condition of the unit. Since we own a large number of rental units ourselves as well, if the AC unit is in good condition and especially i it has the life left in it that J Scott refers to, we will pick the unit up and store it and place it at the next rental property where the AC needs to be replaced.

In some cases, you can sell a used unit from a property with some life span left to an AC company to use for parts and put that income toward the costs of a new unit.

I will note that here in Memphis, partly due to the fact that things are less expensive and the fact that we do such a high volume of business, I can replace a unit for usually under $1,500. That makes it very cost effective and it does have a positive effect on buyers which can lead to a quicker sale.

R John -

I do not see these types of opportunities as a good option for an investor with limited resources and based on the description you gave, I'm not sure they are good options for investors who have more resources. It makes much more sense to look for opportunities outside of professional turn-key companies. There are many investors who are "tired of being landlords" or investors who have put many years into their properties and would like to assist a new investor. I have purchased several properties with owner financing directly from the owner and the deals we put together were very good for both of us and allowed me to have a performing property producing cash flow and allowed them to retire from being a landlord.

Simply my opinion, if you have meager resources, you do not need to tie them all up in a deal that has little upside for you as an investor.

Hey Bill -

I'm with you 100%, i think in the end it is a mountain out of a molehill in TN at least. You are correct and my original use of the word illegal was too strong. Bottom line is I don't assign contracts and I'm not a licensed agent. I act as a private seller. This weekend I was in a master mind with other companies and one was from Florida and apparently Dennis does have something to worry about as it pertains to his state.

So Dennis, I think enough feedback is on the post here to warrant you either getting your license or buying the properties, because the whole felony situation is not worth messing with, IMO.

Good luck and let us know how it is resolved.

Chris

Hey Courtney -

When we were first getting started both in Memphis and in Denver, Colorado, we used two different vanity numbers companies to build a brand and get exposure. We used 1-800-Buy-Qwik (which I think is out of business now) and 1-800-Sell-Now which was started and is still owned by my older brother (for full disclosure!). We did really good with both numbers because they were easy to remember, came with pre-packaged marketing like radio, tv, bandit signs, postcards, letters - really whatever we wanted to use including billboards.

Those two numbers helped us get a ton of leads because they looked much more professional than traditional yellow letters or DIY mail pieces and bandit signs. As far as numbers are concerned, you can count on a good direct mail piece to get you a response rate of 1-3% and that is a standard number that any good marketer will tell you. Over time, if you continue to market to the same list or in the same areas, to the same people, your response rate will go up.

So by those numbers, you would want to send 100 pieces to get on average 1-3 calls.

Best of luck!

Chris