Not all real estate investors need to work 80 hours a week to put food on the table and build their wealth. On today’s episode of the BiggerPockets Podcast we are excited to introduce you to Aaron Mazzrillo, a real estate investor from the Southern California area who makes a great full time living with just 4 to 5 hours of work per day. Aaron’s smart strategies for wholesaling, buy and hold, and flipping are fascinating and will give you an entirely new perspective on building wealth through real estate – while enjoying every moment of it.
Read the transcript for episode 37 with Aaron Mazzrillo here.
Listen to The Show on iTunes (Preferred Method!)
Click here to listen on iTunes.
Listen to the Podcast Here
Podcast: Play in new window | Download
Subscribe: iTunes | Android | RSS
In This Show, We Cover
- How Aaron was able to quit his job through real estate
- Investing in expensive areas
- Finding properties through wholesalers
- Negotiating with sellers and cash buyers
- Aaron’s exact direct mail strategy
- Why wholesaling isn’t the best strategy for starting out
- Advanced methods for structuring no-money down deals
- How to really determine expenses on a rental
- Dealing with tenants without losing your mind
- Starting a real estate mastermind group
Links From the Show
The New iOS7 BiggerPockets App
BiggerPockets Pro
BiggerPockets Book on Estimating Rehab Costs
BiggerPockets Book on Flipping Houses
Fiverr.com – Get any task done for $5
Tenant Screening: The Ultimate Guide
VFlyer.com
Books Mentioned in the Show
Think and Grow Rich by Napoleon Hill
Getting Everything You Can Out of All You’ve Got by Jay Abraham
Tweetable Topics
Surround yourself with the kind of people you want to become (Tweet This!)
When negotiating, focus on explaining the outcome for the seller (Tweet This!)
If you can’t afford to keep it vacant – you can’t afford to keep it (Tweet This!)
I don’t consider myself a real estate investor…I consider myself a marketer who invests in real estate. (Tweet This!)
Connect with Aaron
Aaron’s BiggerPockets Profile
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks, and techniques delivered straight to your inbox twice weekly!
- Actionable Advice for Getting Started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
208 Comments
Andrew, can you please share any other types of systems you’ve established that allow you to live the “fly fishing lifestyle?” The tip about using an 800# for tenant calls is genius as well as the sequencing software to data mine property owner lists. “Property management from the beach!”…this really resonates with me because it is the epitome of systematizing the business (working ON it, not IN it) and it’s what I’m working towards as I build up my multifamily investing business. Definitely a “must listen” (I took two pages of notes and plan to re-listen). Awesome podcast with tons of actionable content, thanks guys!
Sorry – I meant “Aaron” (blaming it on sleep depravation)
Thanks for the listen, Cheryl!
I don’t let tenants mail me a rent check. I’m often not around on the 1st of the month and I don’t want a bunch of un-cashed checks sitting in my mailbox. I have an account assigned to each door I own. It is a zero balance account meaning it has no money in it. My tenants have to go directly to the bank to pay their rent and the deposit slip is their rent receipt. I can then log into my online banking account from anywhere in the world, typically a beach hence “property management from the beach” and transfer the rents to my main checking account.
Very cool, that’s another great idea thanks. I really like how you set the terms/expectations rather than letting tenants/sellers or anybody else impose their own terms upon how you do business. Definitely a mindset shift for me!
You are the lord of the land – rule with an iron fist, but wear a velvet glove.
Ok I like that too, I also liked the fact that tenants are not reaching you directly for maintenance problems. You approach is great I could see this working in so many ways.
Thanks
Michelle
Great pod castand guest! Listened to half of it on my way to work, rest when I go back home! Question to Aaron, what you described about your process in putting a property under escrow, no earnest money, etc. etc. I guess is state-specific? It may not work for some other states. For example, I am from NJ and the there are legal ramifications one needs to be aware of, correct?
I’ve never done business in NJ so I don’t know your state laws. However, I can’t imagine there is a law that requires and earnest money deposit when buying from private sellers. A seller can sell their property under any terms they desire. If you don’t bring up earnest money deposit, and they don’t ask, I wouldn’t put it in. Better to ask forgiveness than permission.
Thanks Aaron. Perhaps it is a NJ specific thingy, there is something called “consideration” to make the contract legal/valid, an exchange of something of value, it can be even $1, that must be there.
Well, real estate contracts are also ‘supposed to be’ in writing to make them valid. I don’t write contracts, I do them verbally. Closed an $11,000 wholesale fee this morning. Never saw the house. Never met the seller. Never wrote a contract. And certainly didn’t provide an earnest money deposit.
Aaron, great podcast. So you never put the property under contract… you just let your buyer know about it, and if he wants it, let him close, and he pays you a fee?
I’m guessing this works better with properties you found through marketing than it would on properties from mls or another wholesaler.
Generally, the consideration in a buy/sell agreement is each party’s commitment to buy or sell the property. EMD is not required to make a valid contract. Contracts regarding real property must be in writing to satisfy the “statute of frauds”. These are general rules, check with a local attorney as your local laws may vary.
Excellent podcast with great information! Aaron, I enjoy your forum posts as well because there are always things I learn from them. Question for you – who specifically do you market to? Absentees, probates or what?
Thanks for putting this on team and I look forward to the follow up podcast!
Thanks for the feedback, Bernard! Our goal is to make sure that our listeners leave each show with at least one good nugget to take with them. I think this particular show will leave many with far more than that.
Absentee and probate are my main money makers. I have a few other niche lists that I go after, but I can’t share them as they are trade secrets that are not mailed to by many other investors in my market and I don’t want the competition. You will make great money just mailing to absentees. As you get along in the business, you will discover other opportunities within your farm. I call this digger deeper. When looking for opportunities, you can go wider (adding new areas) or dig deeper (exploring other opportunities where you already work).
I understand. Thanks for the podcast Aaron.
Hey Aaron,
Great info on the podcast, thanks!
You mentioned in your above comment “You will make great money just mailing to absentees”. Can you elaborate on that some more?
I see new investors posting on this forum and others where they send out marketing to absentees don’t do a deal then say it doesn’t work.
If it didn’t work for them, they are probably mailing to like 80-100 names. That is a joke. When I see people say they are mailing to such low numbers it is like saying “I went swimming” but all you really did was put your little toe in the water. I wouldn’t even waste my time with anything less than, I dunno, 5,000 names. That’d be a good start. I’d be able to burn through that list in 5-10 weeks. As I mentioned on the call, get a list of 13,000 names, mail 1,000 a week for 13 weeks and hit them 4x a year. It’ll cost you some money, but you’ll get it back if you actually commit to doing it. I closed on a house today that will cover my marketing for all of this year and all of next year.
Aaron – Great podcast today. There was literally a WEALTH of knowledge released on this podcast. You definitely illustrate that RE can make your dreams come true if there’s “CONSISTENT/PERSISTENT ACTION”
Josh – Great choice!
Consistent and Persistent action gets it done. You can’t fail if you don’t give up!
Josh,
Thank you for recording this segment at a louder volume. I work in a noisy environment and have trouble hearing some of the podcasts with my speaker volume at max.
Jason
That’s all Brandon, Jason. I’m not sure what he did differently on post production, but I guess we can see about replicating it going forward.
great podcast!
Thanks for listening! Now, go make some money.. NOW!
Aaron,
I really enjoyed the podcast today- thank you for sharing!
I have been studying real estate investing for several years and the question I keep asking myself-and now I’m asking you- is why go after 100 SFR’s instead of one 100 unit apartment building? It seems like it would be easier to take a hands off approach to the operations and to manage it from the beach.
What happens if your apartment building catches on fire? You lose 100% of your rents. What happens if 1 of 100 of your houses catches on fire? You lose 1 of 100 rents.
With houses you can diversify your portfolio across a city. With an apartment bldg you get what you get and if the area takes a downward spiral, you’re along for the ride.
When I sell a house, I sell for the maximum amount possible to an owner occupant. When you sell a 100 unit apartment bldg, you sell to another investor looking for the best deal possible. I’d rather own 4 25 unit apartment bldgs in different areas, than 1 100 unit at one location.
Thanks for the response Aaron.
Aaron, do you currently own small multi families? I am thinking of getting started in marketing for duplexes, triplexes and quads in my area so i can choose some as buy/hold and rest wholesale. What do you think of this strategy?
I own several duplexes, triplexes, and 4-plexes. I am currently negotiating a 6 unit.
I’m glad I came across this reply. I have owning an apartment building as a long term goal, but I plan to update with what you said with owning a four 25 unit building vs one 100 unit building.
That is nice. Diversification. I like small residential families more now.
In fact – we would rather own 25 4-plexes than 4 25-units – easier to sell, bigger pool of potential buyers, much better financing options…
Aaron – great show man. Enjoyed you immensely; don’t agree on everything but agree on the big ones 🙂
Thanks for sharing and keep getting it done!
Ben
If you poll 100 real estate investors and ask “what do you do?” You always get 100 different answers. I don’t expect anyone ‘to do what I do.’ I want them to just take what works for them and that they can use and disregard the rest. Thanks for the kind words!
Hey Aaron,
Great show. Thanks for sharing. Have two pages of notes written. I’m mailing to NOO properties in Rialto and other areas. Have had a few calls from sellers that were motivated, but the equity was not there. Any Guerilla marketing tactics you can recommend as I slowly build up the marketing budget?
Thanks,
Dave
I’ve tried it all Dave, but nothing works like letters and post cards. Just keep after them.
Great Podcast!
I’m strictly a buy-and-hold landlord who’s been getting 100% of my deals off the MLS. But it’s always been nagging at me that if I can get such good and sometimes great deals right on the MLS, there has to be a veritable goldmine out there if I did some marketing!
Although I do have one question — since you are a “hands off” landlord but you indicate that you “self-manage”, what you’re really doing is self managing your manager — do you pay your assistant the amount you put away for management, or is the assistant more just a general assistant that you pay a salary? Or is the assistant just a 1099 employee?
She emails me once or twice a week any questions she has. For example, a tenant called to inform us the gas company was digging up her lawn and she didn’t know what to do. I emailed my assistant back to contact the gas company. She gets paid $150/week. Takes care of all the incoming rents, keeps the books, pays the mortgages, handles all maintenance calls, etc. But remember, all calls go to an 800# and she gets the emailed voice mail attachments. So, she doesn’t have to sit by a phone all day. She probably works a few hours a week. It is a salaried position.
By far the best podcast i have listened to so far – that closely matches my goals! I struggle to find deals on properties and with this specific podcast I am hoping to find more deals that i can keep as rentals (buy and hold)!
Big thanks to #BiggerPockets – Joshua Dorkin & Brandon Turner and for Aaron Mazzrillo you make it possible for the small guy to succeed!
Dave
“Pay it forward!”
I concur with Dave. I’ll be listening to this podcast again just to catch any little nuggets I might have missed. Despite some of the really good podcasts so far, this is one of the best and easily in the top 3.
Jason
Top 3?! I thought surely I’d be delivering #1 status content. Thanks!
Agreed one of the best. You should listen to the wholesaling boot camp with Aaron and Ryan Weber (BP Summit 2012), that is really awesome too.
Great advice, Abdul. For anyone interested, the link where they can get the entire audio from our 2012 BiggerPockets Summit is here.
I think I mentioned on the call that I did that boot camp. If you listen to that from 2 years ago and compare it to my pod cast, you will see that my attitude, business philosophy is quite consistent; More, Now, Faster, with Less Work.
A little late to respond but I wholeheartedly agree with Dave on this. I’ve literally listened to this podcast 3 times and I uncover a different nugget each time. I cannot thank Josh, Brandon, and ultimately Aaron for such a jaw dropping podcast!!!
Wow, so much great info in this podcast. A lot of it is over my head, but I am glad to know that there are so many different tools and approach to real estate investing.
Let me know what is over your head and I’ll break it down for ya.
Great show guys. Aaron, where do you see your REI business in 5 years?
Doing the same thing I’m doing now. I did it before the phenomenal run up, I did it through the devasting crash, and I’m doing it during the recovery. The wonderful thing about the quality of houses I buy is that they are so easy to deal with. Essentially, my product is one of the 3 necessities of life for any small family: Food, Water, Shelter. My business will not change (much) as long as the gubermint doesn’t meddle with it too much.
Aaron i really enjoyed your presentation at the summit, your posts on BP and of course the podcast. In the podcast you mentioned you try and mail 100 letters a day, and I am assuming many of these are repeat mailings. Besides when someone asks you to remove them from your list if you do indeed remove them when asked, do you mail to probate and AO until the house sells or you are asked to remove the name?
If they call in a friendly tone and ask nicely, I happily remove them. If they yell and scream, I laugh a lot, then mail them again. (I secretly love the haters!)
I will mail until I get a NIXIE back. My hope is that they die at their kitchen table holding my card in their hand. They might of been planning on setting it on fire, but the anger caused them a hard attack and their heirs find it, call me, and ask if I had spoken to the deceased about buying the house. (This has happened!, but not sure about the anger part.)
The beauty of real estate, even those crazy old birds who yell at me telling me they will never sell, is that eventually, ALL real estate changes hands. They might not sell, but surely their heirs will.
It hasn’t been a good week if someone didn’t threaten to sue if you send just one more letter. The other day a lady was so mad at a me because one of the letters in my rotation is a small invitation style envelope with the letter all folded up inside. She was so mad I tricked he into thinking she got an invitation to something. Her whole family was yelling at me over the phone as i desperately tried to get her name or address to remove her from my list.
Next time tell her you invited her to an escrow check cashing party and she is the guest of honor!
LOL, Aaron, this is awesome. I was not sure how to deal with these “don’t mail to me” requests (I was thinking not mailing them). Now I am going to ignore their requests.
It just depends. If you manage a small list and are really working the list, I would remove them. If you manage a large list and are constantly getting updated lists, removing them is a waste of time.
Aaron,
I would like to take your advice, look in my own backyard and start with a wholesaler, but how does one find wholesalers in (Northern) California. The magic “search” button on BP did not work well for me in that regard,
Agnes
I would suggest attending any local monthly REIA meetings. I drive to the one in San Diego. That is 1.5 hours from my house ONE WAY. So, I am sure you can find a meeting within a reasonable travel distance. At the meeting, you’ll find your wholesaler or someone who can connect you. Just ask, ask, ask, ask, ask, ask, ask.
Love love love this podcast. I got a lot of great information. The seller finance strategy you talked about was genius. I’m so glad I listened today. Thanks for taking the time to share.
My pleasure. I’ve done that same deal multiple times. I wouldn’t try to make a business out of it, but one a year sure will boost your cash flow after just a few years. Just have to find the right seller situation. They are out there!
This was an excellent podcast. It has really pumped up my motivation for success and look forward to listening to it again. I think this is a must listen for everyone getting into REI. The mindsets and ideas on simplifying the systems are great. I like the idea of “I am a marketing business that invests.” I look forward to learning more from Aaron.
Thanks for the kinds words. I’m not going anywhere so if you have any questions, don’t hesitate.
Aaron, great show dude!!
One thing I took away was that nothing is written in stone strategy-wise, you can use the so-called REI rules that everyone preaches and tweak them to your needs.
I almost fell out when you said you let the buyer give you a price first.
I’m wondering if that technique helps curtail the “offering too much and shopping thin deals”
That many wholesalers have trouble with?
It will definitely weed out some buyers, but I only want to do business with people who want to play by my rules. It’s my game so why shouldn’t I make up my own rules?
That strategy was genius I enjoyed hearing that as well, what I like about it is that since the buyer does not know what you want for the house there would seem to be no haggling over the price they will tell you what they would pay if its over you are good, in a case where the offer is not over your price Aaron do you start to negotiate on that or not can you give an example of that when it happens or if it has. Thank you
Michelle
I know if I buy at my price, there is meat on the bone for the next guy. If he comes in below my buy price, he doesn’t get any deals from me for a while because I know he’s just trying to low ball me. I’ll do the deal myself and then show him the profit I made. I’ve done it more than once before and I have one that I close on 2 weeks ago that I intend to rehab myself for this same reason. Rehabbing houses is so easy. I don’t even ever go out to see them. That’s the contractor’s job!
Great show guys. Doing some minor work today and had this going in the background, realizing I’ll want to listen to it again more actively to jot down implement a couple things I could be doing/doing better. Cheers!!
Thanks Tracy! There was a lot of great info in this one for certain.
Thanks Tracy. Hope you find something you can use to make yourself more money!
Hey Aaron,
That was a great show. Thanks for pointing out that you are on video with Brandon and Josh during the call. I always imagine Brandon scribbling a note on his “to-do” list every time Josh says “and that will be in the show notes”.
You said you started out buying rentals to cover your personal expenses. How many properties did it take and how long did it take you to get there? What was your initial buying like?
Thanks so much!
Karen
I had a good job when I started out. I was just buying out of the MLS, 20% down, and getting conventional loans. If you have a good job and LIKE that job, there is nothing wrong with that strategy. I did like my job, I just didn’t like my boss. Also, the more I hung out with real estate investors, the more I desired to lose that job and the khaki chinos so I could spend more time in cargo shorts, flip flops, and t-shirts. I guess you could say they corrupted me quite badly!
We are all different in what it will take to cover out outgo. I have a very low overhead and inexpensive lifestyle. For me, it took about 3 years of full time work. Like, M-F, 9-5 work. After 3 years, I had enough income to cover all my expenses and enough left over to build reserves even if I didn’t flip any properties. I have friends who have done it much faster. I’d also like to point out that it wasn’t the first 3 years of being in real estate. It was more like the 2nd! But, for the 1st 3 years, I was working my regular job and then had some residual income still coming in from that job for about 1 more year after I quit.
One of my mentors said to me “You can make $1M in real estate in 5 years. It just probably won’t be your 1st 5 years.” For some, they do more than that in 12 months, but for me, that was a valid statement.
Oh, and it took 9 houses to cover my personal expenses. Those are not F&C. Those 9 have debt on them and it is a mixture of private lenders, seller financing, and conventional loans. But to be on the safe side, I got a couple more sets of 9.
I just got listen to this podcast great info much appreciated you mentioned the book think grow rich I have read part of it so far what I have got out of that book is desire determination and to never stop alot of the stuff that got talked about I had herd of but never of it actually being done by someone big help
Awesome. Now, commit to reading the rest of it. You don’t get checks doing 1/2 a deal. You’re all in or you’re standing on the sidelines. Go read it now!
Great show this will be one I listen to at least a few more times!!
I’m glad you enjoyed it, Ronnie!
If you haven’t already, please do consider leaving us some feedback (rating and review) on iTunes about the BiggerPockets podcast. We’d appreciate it!
Thanks Ronnie. Take notes, implement, and make mo’ money!
Aaron,
LOVE, LOVE, LOVE this podcast. Hard to teach at school when you want to be listening to this and jotting notes (which I will do repeatedly to make sure I have all the golden nuggets). I especially appreciate your view on rehabbing as being the “easier” entry point to REI. I always thought it would be harder BECAUSE of the need to manage a team – which brings me to my first question – after you bought your first flip how did you get your contractor/contracting team?
I’m curious what the ARV price is for your target properties out there in CA. I live outside DC and property is very expensive (even the crap, REOs, foreclosures on MLS). Logically I know it has nothing o do with retail but motivation but its hard to wrap my head around sometimes.
Lastly – how long did it take/how did you develop the relationship with the title company to do your escrows like you do (no contract signings)? Did you do several deals with them first to establish credibility before they’d just open up as such w/o a contract?
Thanks in advance for your answers.
Christina
LOVE, LOVE, LOVE this podcast. Hard to teach at school when you want to be listening to this and jotting notes (which I will do repeatedly to make sure I have all the golden nuggets). I especially appreciate your view on rehabbing as being the “easier” entry point to REI. I always thought it would be harder BECAUSE of the need to manage a team – which brings me to my first question – after you bought your first flip how did you get your contractor/contracting team?
> I’m curious what the ARV price is for your target properties out there in CA.
I buy properties in the $125-$300K price range. I’ve paid as little as $100 (I do believe I hold the record for that deal, and as much as $700K). However, I’m looking for the bread and butter. I like the 1950s built tract stuff. Easy to fix, easy to rent, easy to finance, easy to sell.
> how long did it take/how did you develop the relationship with the title company to do your escrows like you do (no contract signings)?
The title company never see your offer/contract. They see the escrow instructions. The offer/contract is what the escrow company uses to write up the docs. That is what title sees. I use an escrow company that has a great reputation working with other investors. Just like a restaurant, which would you chose; the lowest rated one on yelp or the #1 rated? Ask around, get a referral and do business with those people.
> Did you do several deals with them first to establish credibility before they’d just open up as such w/o a contract?
I just emailed her the terms we (the seller and I) agreed to. She typed up the escrow docs according to those terms. She sends them to the buyer and (hopefully) the buyer actually reads them before signing them and sending them back. But yes, I did a few deals through them first, stopped in and said ‘hi’ and dropped off a few gift cards. Amazing what a $25 Starbucks card will do for a person who works a desk job all day. I used to be in that position (desk job) and I wish somebody had given me a gift card to Starbucks!
Oops, missed your first question, but left all your text! Yikes!
> I always thought it would be harder BECAUSE of the need to manage a team.
Managing a team is easy. I control their paychecks. So, if they work, they get paid. If they don’t they get fired. Pretty easy compared to being a teacher! You manage other people’s kids and you can even slap them around. LOL Your job is waaay tougher than managing laborers on a flip deal.
> which brings me to my first question – after you bought your first flip how did you get your contractor/contracting team?
I asked other investors for referrals. Remember, ask, ask, ask, ask, ask.
One quick questions, is the title and escrow under one company or are these two separate companies as a newbie not clear on that one. You know 1st floor is does titles searches etc and 2nd floor is all escrows ? Thanks
Michelle
Depends on which state you are in. I own property in Massachusetts and both title and escrow are conducted by a lawyer. Here in California, we have a separate escrow company and a title plant (also a company) that does all the title research and offers the insurance.
Aaron,
This was a great show. A lot of actionable advice. You mentioned that you get at a very minimum $100 per unit cash flow when renting out a property. How about when you flipped a home? Was there a minimum profit amount you needed before you would even consider flipping a home?
I live in Orange County. Have you ever flipped or would consider flipping here?
When I started, I was looking for 10% of the gross sales price. That worked out very well back in the early 2000s as the market was going up, up, up. Now, I am looking at 12-15% cuz I don’t know what is going on with the market. However, I won’t flip a house unless I can make $50K+ on it. I have one I just closed on today. I talked about it on the call that meets that criteria. I think almost everything in OC would be about that with 10%! So expensive over there. However, some of my best deals ever were in OC. I did a house in Anaheim and a condo in Irvine that I just killed it on both of them.
Thanks for the reply Aaron. I was wondering how you do your marketing in Orange County? Yellow letters as well? I’m especially interested in how you found the deal in Irvine. That sounds so amazing! I didn’t think one can find a deal in a new and upscale community like Irvine, let alone hit a grand slam. Great job Aaron!
Yellow letters for me is kind of a generic term and I think most people say yellow letters, but they just mean some type of letter, kind of like Q-tips or Kleenex. I don’t actually send letters on yellow paper. I send a more formal letter and I no long market to OC. I used to, but I live in Riverside now and I own a lot of rentals out here so I am looking to focus my direction to where I already have success.
The deal in Irvine was wholesaled to me for a $20K fee.
Aaron:
Great podcast and very informative. I am also an angler so I understand your passion (obsession most likely).
A question regarding the escrow docs that are sent to your seller. In addition to a deed, are they also signing a closing statement or HUD1 document? If so, are they seeing the buyer’s side of the document which would potentially include your assignment fee? I guess the question is do the sellers find out how much you are making on the transaction (based on the closing docs they receive) and have you had any issues arise from them learning that information?
You mentioned that you basically sell to one buyer, so you are obviously able to have his buyer side documented however it is convenient for you both.
If you can elobrate a bit on that aspect of the closings you are doing, that would be helpful.
Thanks.
Sellers get all those docs from escrow, but they don’t see the buyer’s side, only their’s so they don’t know if there is an assignment or not.
Josh & Brandon… as always, a great show
Aaron, I liked your detail on the direct mail system your using but and I plan to implement some of your ideas but I’m left with one question. I don’t have a problem with a mail merge and I’ve gone to the extreme of printing on smaller yellow notepad paper but I haven’t figured out how to print postcards. Will you elaborate on printing postcards?
Sure. I use http://www.click2mail.com
I might have degree in computer science, but I abhor computers. I like printers even less. I couldn’t imagine sitting here in my office trying to print postcards.
Aaron, if you are using Click2mail which I am familiar with, then I’m assuming that your postcards aren’t being individualized ie. Mr. Owner at 123 Main I’m interested in your property at 123 Backstreet? I’ve never figured out a way to mail merge a postcard in Click2 mail?
You can do a mail merge with clickmail. It is a little more difficult and their site doesn’t format properly with firefox, but it is possible.
I just have to say Aaron after you talked about going to youtube for tutorials on how to do your own yellow letter I did just that and you are right it is very easy. I knew how to do the merge because I do that at work, my dilemma was they yellow letter paper it self I got it now. lol Thanks to your suggestion.
P.S Hi Dick there is a tutorial on doing post cards there as well, did not try that one but it looks easy enough looks like the hardest part for that would be making sure you have the correct card stock. Good Luck.
Michelle
Just use click2mail.com if you are going to do postcards. It is quite a challenging website to figure out, at least when I last used it, but once you get the hang of it, you can turn and burn a lot of money dropping post cards. They have excellent customer service as well.
“You can’t steal in slow motion”. That didn’t make the Tweetable Topics???
Really enjoyed the podcast. I want to be Aaron when I grow up.
LOL. Thanks! That line is from a guy I learned a whole from, but unfortunately is no longer with us; the godfather of single family house investing – Jack Miller.
* a whole ‘lot’ from. Missed that word. Too much caffeine today.
Aaron, you mentioned in the podcast that you basically sell to one buyer. Questions:
1) Is this a hedge fund?
2) If someone were looking to duplicate what you are doing, how do they find that “one buyer”?
3) Doesn’t it make you uneasy to have everything you sell go to just one buyer? What if that buyer stops buying?
1) Is this a hedge fund?
No. I’ve had zero luck in selling to hedge funds. I know there is a guru out of Florida who is preaching that it is the new secret way to do real estate, but their prices were way below what my rehab/flip and landlord buyers would pay. Just to be clear; I mainly sell to one buyer. I will sell to others, but I always go to my preferred buyer first.
2) If someone were looking to duplicate what you are doing, how do they find that “one buyer”?
Sell a lot of houses and then weed out the chisels, snivelers, and whiners.
3) Doesn’t it make you uneasy to have everything you sell go to just one buyer? What if that buyer stops buying?
I have lots of buyers I network with. This one guy is just easy to do business with. If he stops buying, and he has threatened to retire in the past, I’ll find someone else. I have real deals with equity spreads. There is always a buyer out there for that type of deal.
Man, way too much caffeine today. I have to stop eating these chocolate covered coffee beans! I meant to type:
Sell a lot of houses and then weed out the chiselers, snivelers, and whiners.
It sounds much better with chiselers than chisels!
“Sell a lot of houses and then weed out the chiselers, snivelers, and whiners.” You have a solution to all problems newbies face. Be excellent. Easy to do (if you work hard). Easy not to do as well. Courtesy Jim Rohn. Btw, who is a chiseler, what does he do to piss you off? :P. The discussion in here is turning out to be awesome in its own right.
Hey Abdul,
A chiseler is a buyer who tries to grind you down on our wholesale fee.
Hi Aaron,
This is definitely a show worth listening again.
I still can’t picture how you make offers without looking at the property? Do you at least just drive to the property and look at the ouside? What if the inside looks much worse thank the outside?How do you ket your buyer look at the property? When a seller calls you on a house he wants to sell, after you test his motivation level, do you get off the phone, conduct you ARV estimate research and call him back with numbers? Would you pay a little more if its buy and hold comparing to the rehab?
Again, thank you for being on the show and share your knowledge and experience.
My average purchase price over the last 4 years is 52% of ARV. Not much can go wrong buying at that price point. I don’t drive by the house, but my assistant does. He is very smart and goes by the name Google. I will typically give a seller an offer within 10 minutes of calling while on the phone. I’ve done enough deals that I’m not afraid to buy the house if he says ‘yes.’
Trustee sale buyers don’t get inside to look at he foreclosure properties they buy at auction and they at higher prices than I do so I figure I don’t need to see inside either. I can only at what the available financing allows me to pay on rentals. If I get great seller terms, I can pay more. If I have to borrow the money, I have to pay less.
Is there a service you use for the 800# or is it just a regular 800# with some software that emails the message? I suppose you could set up a Google Voice # to similar thing.
Freedom voice.com
Hey Aaron – game changing podcast! Thanks to you and Brandon and Josh for nailing this one!
Quick (and possibly stupid) question – when you email your title co. for lead lists, what are you asking for?
I gave the content on the call.
Aaron-
Thnx for the answers to my questions above – but I have curiosity questions if you are so inclined to answer . . .
how many properties do you currently own?
how many do you flip a year? how many do you b & h a year?
do you own any land?
thanks again
I do own land. I own quite a few properties. I only rehab a few a year. I wholesale a lot more than I flip or keep.
Hi @Aaron Mazzrillo,
Sorry if you already addressed this question but I didn’t see it. I’m mailing again and the thought was to mail to the same people every month unless they specifically tell me they aren’t interested. Sounds like that might be over kill? You’d still recommend a drip of just quarterly for any individual owner? I want to be as efficient as possible with my marketing dollars.
I think every month is overkill unless they called and you didn’t close them or you don’t have a very big list.
This was a really good podcast!
Thanks!
Aaron, I need to take the vitamins that you are taking!!! Great podcast, great energy, even greater content
Thanks Ryan. You don’t want to take the vitamins I take. I’m 41 so I take lts of glucosamine and other middle aged man vitamins. LOL
This iPad…. “I take lots” not “lts”
Hello Aaron
I don’t know how to thank you so I won’t! Great article.
You made me realize that I have been taking mailing much to seriously so with the time saved, my dog and
will be shopping for a fishing pole. She knows a great fishing hole much closer than Peru. 🙂
If people concentrated on the really important things in life, there’d be a shortage of fishing poles.
Hello Aaron,
Astonished by the podcast! You unleashed a fury of questions about the no-contract real estate acquisition process. I am sure that folks are still scratching their heads while trying to figure that one out. I know that the first thing on my list to do on Monday is to call my title agency and find out if it can be done in my state.
Three questions, if I may…
1. You are not on the contract (that does not exist anyway), hence there is no and/or assigns. Furthermore, even though buyer vesting clause is in your escrow instructions, your name and/or entity are not included anywhere on the actual escrow docs. Since your end buyer is the grantee with the original seller being the grantor, do you then have an assignment agreement with your end buyer on the side? And since there is no sale and purchase agreement with original seller (as “Exhibit A” to refer to), what is your assignment agreement based on? Sorry in advance for wasting your time with technicalities, but I am sure endless amount of wholesalers here are confused (just like I am) and are just too afraid to ask the question.
2. My second question pertains to your earlier comment to another listener about the frequency of mailings. I am concentrating my attention on probates at the moment. My mailing goes out every four weeks in the first 6 mo, different types of letters every time. Why do you think it would be overkill? PR is bombarded by other mailings at this first phase. With reduced mailing frequency, I stand a risk of losing to my competitors. How often do you mail to probates?
3. I know you said you do not keep a track of conversion rates any more. But if you guessed, what would you think it is currently for your probate mailings? Please share…
Your help and wealth of knowledge is greatly appreciated!
David White
1. I put the property into escrow at X price. My buyer tells me he will pay X+. He wires into the escrow his X+ and escrow fees. Escrow sends X to the seller, and the + is mailed to me. No assignment contract. I don’t do business with people I don’t know. This is a relationship business. I’ve gotten as high as a $45K wholesale fee with no contracts whatsoever.
2. I was mailing probates quite consistently, but have found better opportunities elsewhere. My friend only mails probates and actually tells me that mailing them in the first 1-2 months doesn’t do much good. He is under the impression that mailing them 3-6 months gets more deals as they have sat on the property for a while and are possibly more motivated to sell at that point.
3. I don’t know, but my absentee owner conversion rates are much higher.
Aaron, thank you so much for the podcast, but especially for recommending jay abrahams book. I had never heard of him. I got the book from a local library and love it so much I just bought a copy! phenomenal book.
Yes, one of my favorites!
Great podcast Aaron, I learned so much listening to you. I was so inspired I went and bought Millionaire Real Estate Investor, thanks for the great insight!
An excellent investment on your part!
What happens if you buy a house to flip with hard money,your term comes up with the hard money lender and you can’t find a buyer or renter?
Hasn’t happened. My hard money lender analyzes the deals he lends on and won’t lend his money if he thinks your margins are too skinny. He has never not funded a deal for me, but he tells me he has refuses people every month. They either over estimate ARV, or under estimate the rehab. Either way, if the house isn’t selling there are typically on 2 reasons; it is overpriced or under rehabbed.
But to answer your question, if you can’t find a buyer or renter, there are definitely some issues that need to be addressed. Are you asking too much for the property? Did you do a rehab that is consistent or better than your competitors? Have you checked recent sales to see what they look like, how much they sold for, and how they differ from your property? Your best option is to contact the hard money lender, ask for an extension, they contact anyone who has seen the house, or any agents who have shown it and get feedback. Ask why their client didn’t make an offer. Ask why the tenant isn’t interested. Be nice and polite and you should get some solid answers to help make some decisions that will get that property out of your life or occupied by a tenant. Good luck!
Aaron,
Cleaning up today and found a scribbled note that says “ask Aaron about tile floors”. I’ve been pondering installing tile in my low income units. Tenants quickly trash carpet, linoleum, Pergo, and even the waterproof Allure. My husband thinks I’m crazy to consider more upfront costs and time. You tile all but the bedrooms? Ever had any problems? What about resealing the tile? Tips? Ammunition to use with the skeptic?
Thanks for sharing!
The only downside is disgusting grout when the tenants move out. I was walking a property yesterday as part of a 3 day bootcamp I was attending and it had tile floors throughout, but the grout was filthy. I commented to another investor that I was going to start doing black grout!
I prefer tile on all floors. I live in CA though and it is very acceptable out here. I don’t think I’ve ever met a tenant that owned a vacuum cleaner anyway so no carpets in common areas for me any more.
I have a 6 unit building that I am going to be updating soon and did a search on here for flooring and it seems porcelain tile and the Allure are very popular. I don’t much like the laminate flooring because it chips and warps. On the 2nd floor units or on any raised foundation houses that is what I use though. I just have not found any better alternatives.
Aaron,
Thanks for the very knowledgeable and practical cast. I really enjoyed your insight and personality. I wanted to know the name of the author of the Millionaire Real Estate Investor book you mentioned at around 1:14:00 since it is not listed in the Links from the Show section above. Here is a link to the book that I think is the correct one by Gary Keller.
[affiliate link removed]
Thanks!
Yes – Gary Keller. One of the best books I’ve read on the subject… And I’ve read hundreds of books.
Thanks for the fast response. Will be ordering it as soon as possible. Take care.
im going thru my notes and i wrote down:
clause in contract with seller: buyers investing to be determined in escrow
im trying to figure out how a seller would agree to sell without a price. thanks
If you write a contract, of course you need to have the purchase price. It is line #2. Line #1 being the address.
The verbiage you are quoting is actually “Buyer’s exact vesting to be determined in escrow.” Meaning, how I intend to take and hold title will be submitted to escrow at a later date. I typically tell the seller, if they ever ask and they hardly ever do, that I need to consult with my CPA.
Aaron,
You mentioned that you recommend fixing and flipping over wholesaling. Can a person no money and bad credit get into fix and flip?
Yes. You might not be able to find, fund, and flip a house, but you can certainly find and partner on a deal. Instead of wholesaling the property, why not partner with the rehabber, let him buy it for what you were going to pay, and then split the proceeds? I do deals with a local rehabber where I find the deal, borrow the money from one of my private lenders, he covers all the expenses and sells the house, then we recoup our expenses and split the proceeds 50/50. He has even offered to give me a smaller fee up front to cover my marketing expenses. Be creative. It is just a game we are playing.
That sounds good but a little complex for me as a newbie. Is it very risky if I borrow hard money when I am not sure what a real deal looks like as a beginner? And what would I do first in the process? Look for a partner or send out letters for the property? Would I find the rehabber on a buyers list or at a rei meeting? And what would I say to the rehabber to get him to see the benefit of hooking up with me?
I was starting wholesaling and I didn’t like acting like I would buy a house when I reall would not. So this might be a better solution
You probably can’t borrow money unless it is a deal. Any experienced hard money lender is going to want to know what you think it is worth, what you expect to put into it, and how much you think you can sell it for. If the numbers don’t add up, they won’t fund. Wholesaling is a tough business. Yes, you can wholesale a house or two, but that isn’t a business. That’s basically getting lucky. Find an experienced rehabber in your market. Tell them you have time and energy and you want to bird dog deals for them. Ask them very specifically what they are looking for. Find out what they spend on average per sq/ft for rehabs. Let’s say she comes back with $25 per sq/ft. You now have an idea of what kind of budget to apply to any deal you find. If you find a 1,000 sq/ft house, your rehabber is going to need $25K of that equity set aside for rehab. Sales costs are about 10% so you need to deduct that. Acquisition fees and money costs also need to be deducted.You’ll also need to deduct off their expected return which is typically a minimum of 10% of the sales price and then a little bit more for your own fee.
You know, the old standby rule: 70% of ARV – repairs works almost every time. If you can find a $100K house that is 1,000 sq/ft (easy example) and deduct 70% and $25,000 for repairs (based on the example of $25 per Sq/Ft rehab) and you can buy that house for $45K or less, you should get a check out of it. Sounds crazy to buy a $100K house for such a low price, but that is what being a wholesaler is all about. And doing it again, week after week.
Great. One last question. I am thinking of breaking into rei via purchasing my first rental using seller financing, subject to, lease sandwich or private money. Do you think this is a good way to start as well or do you think working with a rehabber is better?
One can never know exactly how the first deal will come. You should study all those strategies and when an opportunity presents itself, you will have several tools and it will be easier to figure out which is the best fit for that particular deal.
Ok. Correct me if I’m wrong, but on the podcast, you mentioned using post cards but in the comments above, you mentioned more formal letters. Do you use a combo of both? Letters for the first mailing and post cards for subsequent ones? Do you think one is particularly more effective and is there a reason why you stay away from handwritten yellow letters? Lastly if I have a budget that does not allow me to do 1k mailers a week is there a cheaper marketing method to still get deals and results that you can recommend?
I like both postcards and letters. Letters are more personal and personalized letters get a great response rate. Postcards have no need to be opened so your message is staring them in the face when they get it. If you have a smaller budget, I would stick with postcards.
If your budget is very small, I’d probably pick 500-1000 addresses and mail them 1x per month for 3-6 months. If you mail post cards, that will cost you about $200-$400/month.
Great, great show! Just started listening to the podcast two days ago and it’s been a RIDE so far. Thanks for the excellent job you guys are doing.
Thanks for listening and the nice comments. Hope you can extract something you can implement today to start making you money,.
Great show!
As a newbie I really appreciated your suggestion to start as a rehabber, that will enable me to learn what it will cost to make the repairs and in turn help me in wholesaling and buy &hold. I was a bit still unsure on which niche to start in but I think this podcast just solidified that decision for me.
Thanks for sharing!
Klee
You’ll get more deals working as a rehabber and that will allow you to bank more capital to fund your wholesaling business down the road.
Wow Wow Wow, the show notes were as good as the podcast almost. Man, you were BORN to do this. Thank you for all you’ve taught me through this. I’m just hoping you can help me better understand the escrow as opposed to contract method. Would you mind telling EXACTLY how that process works? I’m a newbie so please don’t over-simplify. I see your comment above about finding a Escrow Company ( is there a specify TYPE to look for? ) & establishing rapport with them but once you agree on the price with the seller what do you tell them? That the “your” escrow company will be faxing them the agreement? And since this is not actually a Contract does anything stop the seller from selling the property directly to an end- buyer who may see your marketing? Wow & since you bypass the Title Company does the escrow company do the title search? I’m really confused. Help me out please.
Once we come to an agreement, I let them know that escrow will be sending out the escrow docs. I email my preferred escrow company exactly what the terms are that the seller and I agreed upon. It really is that simple.
I’ve never had another buyer take one of my properties, but I don’t send my deals out to a list of unknown people. I only send them to about 3 people who I know perform and are always looking for deals.
Escrow contacts the title company and orders the prelim.
Wow that’s really something else. I guess I was expecting it to be more complex. Just the simplicity is shear genius. So, The verbiage “Buyer’s exact vesting to be determined in escrow.” Is what you have the escrow company include in all your docs along with the exact terms that were agreed upon? Why, is that how you are able to clear the path for your potion of the total of what the end buyer sends in? So, WAIT A MINUTE…do you ever even personally go to the closing table??? You are friggin’ rockstar!!! Guys like you are why I Love RE. I can’t wait to actually close my first deal. In my inexperience I just blew a wholesale deal in the contract phase that had I known this methoed I could’ve made 30k off of. A house that could’ve actually sold As-Is to a retail buyer. Didn’t even need paint because the sellers had just pulled it off of the MLS unhappy with the lazy agent listing it. The appliances where only 3 weeks old.( Literally Turn-Key )smh. But I KNOW NOW.
“Buyer’s exact vesting to be determined in escrow” is what I used to put on offers that I mail out. I don’t make written offers any more. Now, I just get a ‘yes’ from the seller, find my buyer, then email escrow all the terms with my buyer’s name and the amount I’m wholesaling it to him/her/them for. She writes up the deed with his/her/their name on it and mails that with the rest of the escrow docs to the seller. The sellers never ask “Who is _______?” NEVER. They talk to Aaron, but deed the house to some random entity or title holding trust (land trust) and never question it.
I’ve NEVER been to a closing. What a waste of time and perfect opportunity for the seller to say… “Well, I’d really like $10K more.”
Here’s a script you can use after your seller says ‘yes’ and basically how my business works;
The seller says, “OK, I like your (verbal) offer, I’ll sell to you.”
You say:
“Great, I’ll contact escrow and let them know the terms of our agreement. They’ll send out escrow documents right to your address. You don’t need to make the drive to their office unless you really want to (sometimes they do.. I have no idea why??). Once you get the paperwork, just sign where indicated, get the deed notarized, $10 at any local UPS Store, then put everything back in the envelope and mail it back to escrow and I’ll wire in the funds. Escrow will mail you a cashier’s check or wire your money (always use the word ‘money’) right into your account if you prefer. Just let them know how you want to be paid.
And yes, it really is that easy. I have 4 houses in escrow right now totaling $99,500 in net profit to me. February was a good month.
I just listened to this and it is awesome! I am brand new and there were tons of helpful advise. Thank you so much! I
Leticia Cheek
Glad you got a lot out of it. Catch me around the forums if you have any questions.
Hey Aaron, I just finished reading Gary Keller’s The Millionaire Real Estate Investor which you mentioned in the show, and I wanted to thank you. Excellent book! He covers a lot of the specifics much better than so many of the ‘hype’ books.
I’m reading his “The ONE Thing” book now. Also an excellent read.
WOW! great Podcast. Listened to the 4th time. Learned so much and took lots of notes.
This is what I summed up after listening to this podcast.
*You have to be mentally tough to be successful in real estate
*Consistence and persistence
*Learn other techniques of real estate, don’t just be wholesaler or rehhaber
*Grow mentally by reading and surrounding oneself with like minded people
*Honesty and Loyalty
*Hard work in the beginning pays off later
*Automating your business
*build long term wealth /passive income
Thank you Aaron for the wealth of knowledge you provided to us.
Sounds like you’ve figured out my investment philosophy.
“Sow today if you want to reap tomorrow.” Jim Rohn
Honesty and loyalty aside, because you should also be both, after reading your list again, I think this one has by far given me more results than any of the others;
Grow mentally by reading and surrounding oneself with like minded people
Read, read, read and surround yourself with the type you want to become. They’ll pull you up.
Hi Team, great podcast.
just thought i will share with you that in New Zealand wholesaling Real Estate is “Illegal” if one is not a licensed RE agent / Buyers agent.
until few years ago we could have assigned contract and contemporaneous settle contract with no worries and no money in the deal. in the last few years the Real Estate Agents Authority (REAA) have been targeting wholesalers known as “Property Finders” and deeming them to be illegal agents “bringing about transaction”. — one can be fined up to $200,000!
Many of us stopped wholesaling, some got licensed and started fresh as licensed buyers agents.
for me the problems of not been able to operate as wholesaler was an opportunities in disguise which trigger me to become a full time rehabber / property trader effectively making more money and having more spare time to spend time with family and hobbies
As far as i know NZ is the only country in the “modern world” that assigning contract for a fee without license can get you in real trouble.
Cheers
Me.
There’s always a way around things. Laws are written by humans and humans tend to not cover every single aspect and often leave loop holes. What if you purchased the property in a trust and assigned the beneficial interest? How about in an LLC and sold the LLC? If you want to do something bad enough, you’ll figure it out.
Nice job!! Very practical information..Thanks
Thanks for listening and the feedback. Hope you find something you can use in your business.
I guess I’m a little late to the party here. I had wondered why in the world you hadn’t been interviewed yet (I think the pic of you in a suit jedied me somehow).
I hate to hammer you anymore about the whole escrow/title thing but what kind of weasel clause, If any, is built into that process? Of course we don’t EVER want to back out of a deal but just saying…
Thanks in advance, excellent interview.
I have no weasel clauses. If they accept my offer, I close. Many, many of the deals I do are singles and doubles. Rarely do I get a triple and in my opinion, I have never gotten a home run. But, what do you think the batting average is of the player who gets up to bat and hits a single every single time?
Hi Aaron,
I know this podcast happened a while back, but I see you are still fielding questions. That’s fantastic.
I’m wondering what would be the preferred method for generating potentially motivated seller lists in Texas, since you mentioned using title companies for this purpose was not available/legal here.
Scouring county records seems labor intensive and creating an automatic system to pull, organize, and scrub records for up to 16 counties in the Austin and Dallas metroplex areas seems cost prohibitive. But I’ll do it if that’s the best way.
Thanks,
Jason
Contact Jerry Puckett on BP. He can help you out.
Aaron,
I have to start with a thank you and sincere appreciation.
I just got to listen to your podcast yesterday morning and it was filled with great insight. Thank you!
But the appreciation comes from the fact that I just lost a deal yesterday afternoon. It had come out of the blue about a week ago and though I wasn’t sure exactly what I was going to do with it, I knew I was going to do something with it. Extremely motivated seller – check; 100% Equity – check. But a whole lot of baggage: City Demolition notice of the 9-Unit Building, an inherited and potentially problematic tenant in the 4-unit building, no parking for 13-units, major rehab on both buildings, etc. etc., which made it unattractive to everyone else and two weeks away from City’s fix or demolish deadline.
We had gotten onsite Saturday morning, made an offer by Saturday afternoon and had it accepted shortly after. Problem was (and I told my team this Friday night) is that we hadn’t gotten the offer locked up via executed written agreement. My team was properly trying to do all of the due diligence necessary to protect ourselves and investigations on what all the possible exit strategies would be and figured that this deal could be dragged out during this process (focused on Defensive strategy). I got everyone to agree that we needed to make an offer but got I was wrangled into dragging out our firm commitment and another investor snuck in with a contract (though less protective offer to the seller whose only concern was a contract that got them out as quickly as possible).
I was pretty frustrated and upset because I saw this coming and could have positioned ourselves better than I did. In listening to your podcast again this morning, I took away even more relevant insight.
Quote of the Week = “You can’t steal in slow motion.”
Actually, the better concept was surround yourself by people that lift you up and make you better. I’m a big believer in this idea and that’s where I am most appreciative. Your podcast had some strategies that could make me and my team better assuming we learn from the loss as good intentioned as it was. Learning from this not so much the deal itself and our need for due diligence because that needed to be vetted especially if we decided to keep it or even to protect our reputation if we decided to flip it. Rather, we could certainly have locked it up better than we did.
Thanks for dusting me off and making me laugh this morning realizing there is always the next deal to get focused on.
Continued success to you and your wife and know that your involvement in BP is most appreciated.
Cheers!
-PRJ
Thanks for the nice words. Don’t let this sour deal get you down. Last time I was up in an airplane and looked down, I noticed lots of other properties down there. There’s always another deal waiting to happen.
Hi Aaron,
No idea if you’re still reading comments on this page (I know the podcast was almost a year ago now), but in case, you are, newbie here who’s still trying to figure out where to begin, and am considering wholesaling and flipping. I had always assumed I would start with wholesaling, but then I listened to this podcast and started having second thoughts. However, I also just read the J Scott book on flipping (referenced in this podcast), which got me even more confused!
Basically, you argue that wholesaling is a tough way to get started because it requires skills such as marketing, negotiation, and the ability to estimate rehab costs and determine ARV. I agree 100% that those things would likely be difficult for a beginner, but here’s the thing: after reading the J Scott book, it seems pretty clear that those skills are required for flipping/rehabbing as well — he devotes entire chapters to these subjects. That is, it seems to me as if for that argument to be true (that wholesaling is tougher for a beginner because it requires those skills), it would also have to NOT be true for other forms of real estate investing, such as rehabbing. But, it seems like those skills ARE, in fact, required for rehabbing. That being the case, I’m just curious — why do you say that wholesaling is a tougher way for a newbie to get started?
Thanks.
I’ve made my case on many occasions. Wholesaling is all about deal flow. If you have lots and lots of leads, you can possibly make a living from wholesaling. If you don’t, you’ll starve. On the other hand, rehabbing and flipping is typically much more profitable. You only need to do a few deals a year to make more than what most make working 40 hours a week. Your job as a rehabber is to manage money and people – two skills easily learned.
Great Aaron,
see you around!!!
Where you been hiding? Sell me a house!
Just listened to your podcast Aaron. Freaking awesome! Among my favorite so far for several reasons. You’re doing it IN So Cal, where I live, and you’re running the business, its not running you. Prepare to be contacted directly. : )
Thanks,
Trevor
I’m always around.
@Aaron Mazzrillo
Hi Aaron,
I’ve listened to your podcast a few times and it’s a great resource. Thanks for all the valuable info!
I had one question about negotiating. You mentioned getting 52% of ARV which is great. I was just curious about the negotiation. Do you insist on getting a number out of the seller first? How do you handle it if they claim ignorance. I’ve heard Mike Quarles say that he asks the seller to get a realtor or give them a number. I guess any insight you can provide would be fantasic.
Thanks!
No. If they offer one up, great, but I’m not going to get locked in a stalemate because I need them to give me a number first. I might say “I’m in the range of $100-110K. If that sounds like it might work for you, I’ll take a drive by the house (I actually won’t) and see if I can firm up that number.”
If they say the number is too low, I’ll ask, “What are you thinking?”
The only thing that makes my company money is buying houses and I can’t buy houses if I don’t make offers.
I don’t care what they are asking or even if they give me a number first. I make my offer (over the phone) and if they try to haggle, I make it very clear that I make my best offer first and can’t pay more. The whole “seller needs to say a number first” is just nonsense thought up by some guy selling a book a few decades ago. When I do get a number out of the seller before I make my offer, only on very rare occasions has that number been lower than what I would have paid. However, even if I paid what I was thinking, I still would have made money – just not as much. Not trying to skin the sheep on every deal – just sheer it so I can get the next deal too.
Excellent podcast very informative. This is what I needed to hear to figure out which direction I will go in to start. Thanks Aaron!!
Glad you found some info you can use.
Hi aaron. you mentioned that you hold title in land trusts, which is a great way to hold title. I called around many title companies in my area (in Northern Cal), they all told me they don’t do land trust. which title company do you use for doing land trust? thanks
In California, they are referred to as Title trusts. Same banana, different color. I use Chicago at the present time.
Aaron,
Despite listening to the particular portions of your podcast several times I still don’t have a clarity ( being a novice ) as to the sequence of the steps you undertake from the moment you speak with the seller on the phone till the moment you close and are paid.
I don’t understand at which point you are sending the offer to be signed by the owner, does the escrow mail it, how does it happen that the verbal contract becomes valid, at what point? Do you contact your buyer and escrow in the same time ? If you don’t make an offer in writing how do you lock it ?
I would greatly appreciate if you could briefly explain again the process and it could be perhaps in a simple manner like below in order not to take too much of your time
ex:
talking on the phone with the seller–making an offer—contacting an investor-buyer –etc.
Thank you in advance
Best
John
P.S Your podcast is not only hugely informative but entertaining as well
I live in Corona, even one advise or suggestions for me would be highly valued .
1. I make a verbal offer which the seller (hopefully) accepts.
2. I contact one of my proven buyers on my very short list.
3. I email all details to escrow along with my buyer’s name and wholesale fee amount.
4. Escrow sends out all the paperwork to both buyer and seller which includes my “marketing fee” on the buyer’s HUD (which the seller doesn’t see).
5. Seller sends back signed docs.
6. Buyer wires in funds to close along with my wholesale fee.
7. Escrow sends me my check.
It’s all quite simple. Don’t get caught up in all the details.
Thank you Aaron.
In nr. 3-“wholesale fee amount” is it the price the buyer is willing to pay ?
nr .4 what does HUD mean in this case?
I have just watched your other interview on YouTube with Andy Mc Farland and am attaching the link for whoever would like to watch it
3. “wholesale fee amount” is it the price the buyer is willing to pay?
If the seller accepts my offer of $100K and my buyer is willing to pay $110K, I get a $10K wholesale fee. I’ll email escrow that the purchase price is $110K and the seller is to net $100K.
4. what does HUD mean in this case?
The settlement statement.
Hey Aaron, not sure if you already mentioned this but based on your wholesaling model if a buyer wanted to inspect the property before committing to it how do you go about getting your buyer into the property? I know you said you only deal with the same hand full of buyers but a lot of wholesalers including myself are always selling to new buyers.
I only deal with experts. Experts don’t need to see the inside, but sometimes they might if the exterior is a mess. I’ll schedule a walk-thru with my buyer and the seller. I don’t go.
Hey Aaron,
I’ve listened to you podcast quite a few times, great stuff my man. I have read a lot of the posts you have put here on BP and I remember you saying that the two most important things you look for when it comes to a buy-n-hold deal is 1- Vacancy rate and 2- Local Unemployment.
How do you personally determine a local area’s vacancy rate? Call a property manager?
Thanks,
Rich
The data is published by a few different sources. Not sure where you are located, but you might want to check with any local apartment owner’s associations, a property management company that has a few hundred rentals, or try your local board of Realtors. They might be able to help you find the information for your area.
Aaron,
Thank you so much for the quick response. I would have responded to you sooner but I never got the alert! I live in central New Jersey, about 45 away from NYC. I will call them asap to see what info I can get. Have a great weekend my man.
Rich
Thank you for this pod cast. I’ve been a home owner in LA for years and have always wanted to invest out of state due to our over priced (in my mind) market. I have confidence about finding deals at home now thanks to your advice!
About a year ago I was laid off from my well paid corporate “we own you” job. I found another day gig but I just can’t do it anymore. I know what I need to do. 🙂
Well, I hope being laid off turns out to be the best thing that ever happened to you. Sometimes life hands you lemons… you know the rest!
Thank you Josh and Brandon for having Aaron on the podcast WOW!!! What a great show, I started listening to this podcast in my car this morning and all day like 3 times as I took notes while at work. Then again on the way home I was really impressed I must say. I learned a lot!!! I no longer want to start with wholesaling for all of the reasons Aaron mentioned. Not truly knowing all a wholesaler does until now. Thank you I am now looking at the suggestion of starting with rehab and flipping and them moving up to wholesaling. I have J Scott’s books both hard copy and eBooks so I will be reading those in between listing to pod casts. I can’t wait, now I am going to read all the comments to learn even more. Again I can’t say enough about this show I really loved it. I especially like the process you used when dealing with the seller and buyer and doing it all over the phone. One question I do have right now is on your direct mail campaign so you are sending either the letter or post cards are all your leads from the mailings you send out. It does not sound like you drive for dollars or anything like that is that true Aaron.
What an eye opener, Thank you
Michelle
Hi Michelle,
Thanks for the kinds words. Sounds like you found something that appeals to the way you want to do business! Glad to hear it!!
I do some driving for dollars, but in my market it rarely results in a deal for me. I’m in a very competitive area and there are dozens of people doing what I do so finding beat up houses isn’t easy. I have a friend who owns a few dozen rentals (around 60) and he has a full-time guy mow all the front yards. That guy is out there every day sniffing out deals and he does get a few every once in a while so it does work. For me, with the ability to run on a large marketing budget, my time is best utilized elsewhere.
Fantastic Podcast Aaron! I have listened more than once. Question for you. What is your favorite list to mail these days and how much mail do you find you have to send out to get a deal?
The more niche your list is the better your opportunity for big checks. A great way to find niche lists is by merging two lists and looking for matches. I once got a deal from an absentee landlord who was in foreclosure. You could merge absentee, BK filing, eviction, code enforcement, long time ownership, etc.
Dig where not many others are digging and you’re more apt to find deals most don’t even know exist.
I don’t track how much it takes me to get a deal. I just mail, mail, mail. People who say they are constantly tweaking and testing are pretty much liars. They don’t really do what they say they do. In the marketing for deals business, I guarantee it is more of a timing issue than a copy writing issue. Example: You mail last week to an absentee owner. Tomorrow is June 1st. Rent is due. I mail on June 5th after the rent hasn’t shown up… Again. For the 3rd straight month. Who do you think the seller is going to call? Me. Because he/she got my marketing piece at a time when the threshold of pain had finally been crossed. I get the deal. You get no response. Just the way this business works. Mail, mail, mail, mail. Never stop marketing.
Awesome advice Aaron!! Love it, thank you. I have created a list for motivators but had failed to include BK as part of it. Great advice. I market in the San Diego area and doing research for evictions noticed that the county only makes them available to the public 90 days after the court date. Do you think it is still worth the time to follow up and collect that list? It requires a trip to the court house to fully search records. I can still market to it independently as well as look for matches with some of the other selling motivators. What do you think?
So, you mail to evictions and you mail to BK. But, you cross reference the list and find those that have an eviction and a BK. You mail them a special piece because this is a HIGHLY motivated person and it is worth it to mail something more expensive to this very targeted list. I sent out a cash bank bag with an offer in it. Yes, you can mail those! That trick got me a deal worth tens of thousands of dollars.
You won’t find many that match that criteria, but when you do find one, it’s like a map to a real gold mine.
Just to clarify, I would mail to the lists you stated above. Even though the evictions are 90 days old, I’ve purchased houses from landlords who just gave up and left the house vacant because the last tenant forgot to “clean up” on their way out when the eviction dust settled. You should be sending a very specific piece that creates pain regarding this situation and then solve it by offering to buy the house.
Seasoned professional advice.. Your all over it Aaron. Thank you for giving back :0)
Well, thanks for taking the time to listen!
After the 4th time listening to this podcast I’ve uncovered another absolutely incredible nugget!!!! ” If you can’t afford to keep it vacant you can’t afford to keep it” ABSOLUTELY GOLDEN!!!!
That’s one of my favorites too! That mentality kept me from renting to anyone who showed up with money. As bad as I needed it sometimes, not letting them in and waiting for the right tenant trained me to find good tenants willing to stay long term. The way I figure it, if they stayed 3+ years, that is when I really started making money because I got to recapture that 1 month vacancy I had built in when I purchased.
What I wouldn’t do to be a part of a Tuesday mastermind group with you in it LOL!!! When you speak or post I’ll try my best to act as a sponge. Keep shooting nuggets our way.
Yeah, that Tuesday lunch can be a lot of fun. If you haven’t watched my 2 hour interview, just scroll up about 24″. Someone posted a link to it. Lots of good content in there as well.
And just because you can’t attend our weekly mastermind, doesn’t mean you shouldn’t start your own! We go to a Sizzler. Everyone pays their own lunch bill. There are no checks to split, no entry fee and no format. It attracts 10-20+ people every week. Just get the word out and you won’t need to show up every week. It will be there when you want to attend.
Yeah I was incredibly fortunate to catch that interview which I believe is where I heard you speak about it. In order to start one of those don’t you have to have some substance to bring to the table?
I don’t think so. You could talk about what books you’ve read recently, different strategies you’ve heard about, marketing, etc. We don’t have a format so there are lots of micro conversations going on and sometimes a person will get everyone’s attention and pose a question to the group. Mostly, we get lunch and talk shop with the people around us for 1-3 hours then get back to work. If you have a few new investors show up, you could talk about what you’re trying and what your results have been.
Great podcast, Aaron!
With regard to your SFR 20-30% ROI rule, is that a net net net number? Is a 20-30% cap rate your target?
20% on the cash I have into the deal. Cap is based on overall selling price and NOI (before debt service). I don’t use Caps on houses.
I’m obviously a late listener, but that was the longest list of comments ever to get down to this section for me to leave a reply. I’m only a quarter of the way in, and you just said flippers are just project managers. Not sure what you mean by that, it’s quiet the job too. Are you just saying project management isn’t actually that much about real estate?