BiggerPockets Podcast 295: Using the Web to Land 8-12 Deals a Month with Melissa Johnson

by | BiggerPockets.com

Are you interested in learning how to flip 8-12 houses a month at $30k a pop? Well, this episode may be just what you’ve been looking for! On today’s show, we interview Melissa Johnson—house flipper extraordinaire and owner of the company Lead Propeller, a service that provides websites to help motivated sellers find real estate investors. Melissa provides some incredible information regarding how they find motivated sellers, how they negotiate deals, how they sync up with the best contractors! You won’t want to miss the three things your website NEEDS to generate seller leads, as well as the exact process to estimate rehab costs! Melissa and her husband Danny run the podcast Flip Junkie, and in this episode, they pull back the curtain to reveal the secrets to their business. Don’t miss out on your chance to learn from a seasoned pro!

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 This is the BiggerPockets podcast Show 295.

“We want to capitalize every lead that comes in because every lead that you get is costing you money and has costs you different amounts of money depending on where it is coming from. If you have got a high cost lead source, you want to make sure you get everything you can out of that. Sometimes it means wholesaling, sometimes if it meets my flip criteria then we will take it on as a flip. But a lot of times right now we are able to offer more to sellers and just move those and capitalize on those leads.”

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Brandon: What is going on everyone? This is Brandon Turner, host of the BiggerPockets podcast. Here with my co-host, Mr. David Greene. How are you doing, David Greene?

David: I am doing pretty good but not as good as you apparently Mr. Bacon Jerky Love. You guys got to hear this, right? Yesterday, I am going through a busy business day like always like talking to clients, looking for my next deal, working things out. I get this text from Brandon in the middle of it that says, ‘Dude, try the bacon jerky.’ I thought he is texting the wrong person because that happens sometimes and I realized oh no Brandon actually had a bag of bacon sent to be at my office or like beef jerky stuff. Then he says, ‘I am never eating anything again but that.’ I mean a very serious quote, right? I took the bait. I am like, ‘Brandon, what are you talking about?’ Right? and I had to ask him. Tell us all, Brandon. What is it about this new bacon jerky fetish that you have?

Brandon: Okay, okay. You asked for it. The last couple years I have been getting this meat snack from a company called MissionMeats.co and then delivered to my house. It is like a friend of mine, Pete, it is his business. Honestly, even if I did not know Pete, it is like the best meat snacks I have ever had. I get like a beef stick every single day. Alright, the other day Pete sends me this bacon jerky sriracha stuff and it is a literally the best thing I have ever eaten, like I am obsessed with it now. When I was talking to Pete, he mentioned that he might send me more free bacon if I would happen to drop the website name, MissionMeats.co, on the BiggerPockets podcast someday and maybe even casually mention.

Of course I would never do this, that if you use the code BiggerPockets when you are checking out, you actually get a free bag of bacon. I would never do that of course. I would never stoop so low as to sell my soul for free bacon jerky but it is really good. Anyway, but besides jerky, we have a really good show today. We got to move on, enough of that.

Today we are talking with a fantastic entrepreneur a real estate investor named Melissa Johnson. Her husband has been on the show a couple times but today we got her to get to hear her side of it. But before we get to that and talk about how they are doing numerous deals, like eight to twelve deals every month, let us gets today’s Quick Tip.

David: Quick Tip.

Brandon: Alright, today’s Quick Tip, very simple. We add BiggerPockets because of the size and strength of our community have negotiated discounts with a numerous different companies. Like they are pro only discounts and then there are just all member discounts. If you are a BiggerPockets member of any kind, go to BiggerPockets.com/perks and you can actually save money. In fact, Melissa and her husband Danny actually own a company called Lead Propeller and one of our perks is actually a discount on Lead Propeller, definitely check that out. There is a ton of them in there and we are adding new ones every month. Again, BiggerPockets.com/perks, check it out. Now, we are going to get on to today’s show but before we bring in Melissa to hear how they are doing eight to twelve deals every month, let us hear from today’s show sponsor.

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Brandon: Alright. With that, we got to jump into this thing. Last thing I am going to say before we get to the show, if you have not yet been to one of the weekly BiggerPockets webinars, I just want to invite you, BiggerPockets.com/webinar. I am teaching these things all the time on how to get started with real estates. If you are new or your have less than a $100000 properties, you should probably come, BiggerPockets.com/webinar. I want to hang out with on those lives. Without further ado, let us bring in Melissa.

Like I said, Melissa is a house flipper. They do some wholesaling and her husband Danny have been doing this for a while now. But today, we hear how she is really running the business. We learned how she does that, how she estimates rehab cost, she goes into a lot of detail on that. She talks about the three of the top three lead sources for how they actually get deals coming into their pipeline. Two things that your website has to have in order to attract visitors and what to look for in a bad contractor plus a whole lot more. Make sure you guys listen to this show. You are going to love it, you are going to love Melissa so let us bring her in. Hey, Melissa. Welcome to the BiggerPockets podcast. Good to have you here.

Melissa: Hi. Thank you. I am excited.

Brandon: Yes. Tell us real quick, how did this come to be you on the podcast? You are connected with another person we have had on the show, is that correct?

Melissa: I am very closely connected to somebody on the show, Mr. Flipping Junkie, Dan Johnson.

Brandon: Nice.

Melissa: He is my husband. You were on our Flipping Junkie podcast a few weeks ago.

Brandon: I was.

Melissa: You all chatted and he said that you guys wanted to talk to me. I said, ‘That sounds like fun. Let us do it.’

David: Nice, nice. Yes, Danny is on my favorite people in the entire world. Good job on marrying him. He is a good dude. That actually, that episode, we will link to in the show notes. But I thought that was probably the most fun like interview I have ever done on anybody’s show like before. Anyway, if people want to hear a really fun episode I thought that was pretty cool. Anyway, cool, alright. When I was talking to Danny though, the reason that sparked this is because he said, ‘You know, really, like Melissa just like runs my entire real estate life.’

He bragged about you quite a bit and said that you are very very good at what you do. That is why I thought it would be fun to kind of figure out what are you doing, how do you do it. But before we get into all the future stuff, like what you are doing now and where you are headed, let us go way back to the beginning of your story. How did you get involved with real estate?

Melissa: Fifteen years ago, we were working jobs, just normal jobs, and I really did not have any idea about what real estate investing was. It was not on my radar or anything but my father in law was doing it. Back up, Danny and I were still dating at this time, we had not got married yet. My future father in law was doing it but it just sounded so great. Danny was talking about it and he just really was so excited about the freedom that his dad was having doing it and we started talking about it and so we decided well let us try it, I think we could do this. We worked for a few years part time flipping houses and full time at our jobs and then there came a point actually two weeks before our wedding, super stressful, that the company decided that they were going to lay him off and so we said well let us just do it full time then and so it has been full time 100 miles an hour since then.

Brandon: That is awesome. What did you guys decide to start with like what type of property? Flipping rentals? Is there a story there?

Melissa: There is a story there.

Brandon: Let us hear it.

Melissa: Yes. Our first deal was probably… It was crazy and it was like everything you could ever imagine happening or going wrong in a deal happened that first deal. It was pretty intimidating but we learned so much so I cannot think of a better situation actually just for learning. The house, it was a burnout, half burned down. The people had taken the insurance money, just left the house vacant. Went and bought another house and there was a lot of legal issues with the property that we had to deal with and then we finally got it and then they realized I think there was like no deed or something and so we had to go to this attorney. It was just all this stuff. Basically, we ended up buying a piece of paper and selling it to an attorney and that was our very first deal.

Brandon: That is an interesting way to begin, I guess. Looking back, do you regret any of that like here is where I screwed up and I should not have done that or what went wrong on that or what could you have prevented today if you were in that same position?

Melissa: I do not know if there is anything we could have prevented but I think the great thing was just all the things we were able to learn. Like all the situations, how to talk to attorneys, how to deal with these buyers, or not buyers, but these sellers that had these situations with insurance companies and things like that. It was everything. We had been listening to podcasts and reading forums and stuff like that but nothing really prepared us for the actual experience of going through that.

Brandon: Yes.

Melissa: The learning was the big thing.

Brandon: That is something David here and I talk about all the time. Is that like that first deal is so vital regardless of how well you do on it. Like the first deal never makes you rich, never makes you successful, right? It does not matter how good you did, you make a hundred grand. At the end of the day, it is not really that life changing but it is the lessons you learned during that that is going to change your life. Do you feel that way like that first deal really helped kind of prepare you?

Melissa: Absolutely. The bonus of that was when we got the check for that property. I looked at the check and I looked at Danny and I said this is ridiculous. This is my whole year salary in one freaking check.

Brandon: What did you make on that?

Melissa: At that point… I think we made like $23,000 or something.

Brandon: That is awesome.

Melissa: We did not even touch the place, it was crazy.

Brandon: Essentially, well let us say you basically wholesale that? I mean like you got under contract and then basically flipped it, right?

Melissa: Pretty much, yes.

Brandon: Did you jump into wholesaling then more heavily or did you jump back? I know you do a lot of flipping today.

Melissa: We were just dead set on rehabbing because that is what we knew and that is what we had prepared ourselves for. Wholesaling was not a thing like it is now. I mean we did some but I feel like definitely right now wholesaling is a big thing but back then we were just all about rehabbing and we were kind of bummed that we did not get to buy that house and rehab it. It was onto the next one which turned out to be another burn out.

Brandon: When you say like burn out, is it somebody that lit a fire? You guys remodeled it from… Yes, I have not done that.

Melissa: Yes, I do not recommend it.

Brandon: Why is that?

Melissa: There is a lot of things to those type of properties. You have to deal with the city and permits and of course you want to make sure everything is really safe for your end buyer. There is a lot more to it and you just want to take more care and be careful so I can take more time. It definitely costs more. You want to make sure you are getting rid of anything that is burned, smell of smoke, and that sort of thing. It is a little bit more work.

Brandon: Sure.

David: Now, Melissa, you guys are flipping a lot of houses and let me ask you a couple questions and we will go through getting an idea for what your business does. Can you give us an idea of how many houses you are flipping a month right now?

Melissa: We are bringing in probably about two to three contracts a week.

David: Okay. You are closing, what is that, about eight to twelve deals a month on average?

Melissa: Roughly.

David: Okay.

Brandon: Wow.

David: What is your average profit on just your average flip?

Melissa: Average flip profit is about $30000 and we have been doing more wholesaling lately so those can average anywhere between eight to fifteen. Of course we get ones that are like crazy home runs that are awesome. We have made fifty or sixty on some and then you make five on some other ones.

David: Are you mostly looking at your construction availability and like, ‘Hey, we do not have any crews available. We should wholesale this one.’ Is that how you make the decision whether you should fix it up and sell it or wholesale it?

Melissa: Yes. There is a few things with that. One is I am a numbers person and so I like to look at all the details of everything and see kind of… I keep a good track of where we are revenue wise and so I know that those, the flips, are going to bring… If they are bringing $30000 and we want to hit a certain point then I know we need to pick up more flips and then everything else we try to wholesale. Some other criteria that I have too for the wholesaling is I do not like to do foundation houses anymore. I did a lot of them last year and they are a lot of work and a lot headaches sometimes. That is kind of a criteria for me just. I just choose not to mess with those anymore and there is plenty of other investors that do and it is fine, it is just a personal thing for me that I just do not want to really do not want to fool with those right now. If any foundation work, it is automatic wholesale.

David: You find a deal and then once you find it, you have like a system of what funnel this is going to go into. ‘This is a bang out job, we can get someone in there. Fix it up, we will put our crews on it.’ I do not want to deal with foundation, it is a pain in the butt. This is one of those deals where it is going to tie us up forever. Those are ones you wholesale. Is that about right?

Melissa: Right. Those and also for us the higher priced houses which in our market. Considered higher price is anything over 210, 215, just because then you get into that holding and it is more expensive. Our sweet spots per flips is usually about 130 to 199. I make sure, as another criteria that our ARV fits into those numbers.

Brandon: See. I love that because you have done this for long enough that you know when this comes across my desk, I am going to do this with it. There is not a whole lot of anxiety when you are at this stage of your business that you know this is my system. If it is within this range, 130 to 190 I believe you said, that is a great house to flip. If it falls outside of that range, maybe it is going to sit on the market a little bit longer. Maybe it is going to take a lot more work to get it the way we want it to look in order to sell to a high end buyer.  I am going to wholesale that to someone else and make that their problem. Get my money back and go after the next one.

I really want our listeners to understand that when you first start off, it feels so scary. There is so many things you do not know but after you do it a handful of times, you start to recognize patterns and makes your job a lot easier. If you guys are doing eight to twelve deals a month, that is insane. Especially seeing like your average profit margin, you are doing very very well. You guys are obviously good at what you are doing. I would ask you a little bit about how are you finding these deals? What can you tell us about what systems you are using and what processes you have in place that are getting these houses under contract so you can figure out what to do with them once you have them?

Melissa: Sure. We do lots of marketing, obviously like everyone else does. My top three lead sources are my online, which is just our website. My second highest source is, and I separate these because I am a nerd, but online paid marketing. That would be Ad Words, Facebook marketing and things like that. Number three for me is DirectMail which I was doing a lot more of last year. Not doing so much of it right now. Mostly just mailing to probates. Those are the three main ways that I am getting deals, getting leads, really good qualify and stuff.

Brandon: That is cool.

David: We have had a lot of people talk about the DirectMail, a lot of people are doing that. But you mentioned something that I do not hear us talk about a lot which is more of the website leads and SEO leads. I think for a lot of newer investors who do not have a big budget, they do not necessarily want to go spend $5000 to send out letters. SEO can be like an easy place to start. Can you talk to us a little bit about what systems you are using to generate leads? The internet and how much they cost versus how much mail costs?

Melissa: Just to give you a quick example or a quick kind of breakdown. Last year, I did DirectMail and I spent $72000 which is crazy to me. Seems like a lot of money. But my SEO, I spent $15000. It is like a $57000 difference. What I found was that my online leads, things that were coming through my website, were better leads. They were more qualified leads. They were looking for me. When you got people that are looking for specifically for your services and you are able to rank and be up there at the top, they are going to call you first, right? With that, the organic traffic is we have an SEO optimized website. That entails two things that make that work. It is the on page and the off page.

The on page stuff, in order to rank your site to optimize at the best, is having good content that is relevant to the industry. You want to make sure that what you have got on your site is relevant. Then you want the site to load fast, that is super important. Then the user experience needs to be very easy to use, very clear message and very clear direct calls to action. You want people clicking and filling out your forms and submitting that information to you.

What happens with our website, we have got a Lead Propeller website obviously because we own that company, and so everything comes through our Lead Propellor website and then it goes straight into our CRM which is great because all the details, everything that people add into their form, we get it automatically and then we are able to contact them and set up appointments and things like that.

Brandon: That is cool, that is cool. I want to dive a little bit deeper in before we get… I kind of want to talk about CRM too because that is kind of an advance strategy with a lot of new investors do not even know exists, right? But before we get there, I want to talk about this like using online paid marketing. I am assuming are you talking Google? Are you guys doing anything with Facebook or we are just talking about the little ad that when somebody searches ‘Sell my house quickly in San Antonio,’ right?

Melissa: Yes.

Brandon: Sell my house quickly in San Antonio, is that what we are talking about or what are you doing for that paid marketing?

Melissa: Right. Yes, the face is things like Ad Words, Facebook, marketing Bing ads are another one that we use. Those are all based on keywords and it is an auction system so you put your keywords in and then you basically bid on those keywords and when people click, then that is how you pay for that. It so Pay Per Click. What people call Pay Per Click is app words, Google app words. Ours is even super specific so you can have a keywords but then you also want to target specific areas to like mine is even down to zip codes because I have studied now the source of all my leads. I am able to see a lot of leads from this zip code, in this zip code, and I am able to target the ones that I want so the areas of town that I want like I have got specific areas where I like to rehab and so I have got those zip codes in there. Any time someone goes in looking for that, I am there.

Brandon: That is awesome. Essentially, you are saying people go… They are going to Google and they are typing in I do not know what terms you are the ranking forwards or  targeting but like ‘Sell my house quickly,’ ‘How to sell my house?’ Is there like how to find an agent maybe? Things like that, right.

Melissa: Right.

Brandon: Then they will see your little ad there on the side and it says something like ‘We buy houses fast and quick,’ or ‘We buy homes cheap and easy,’ or whatever. I am not sure what your message and I actually love to know that as well. You see this little ad and they are like oh I a going to click on your website. Then they land on your website and now from there they fill out a form and that form goes to you, it goes into your CRM, and now you have somebody calling them, following up with them, checking up with them but you only pay when somebody clicks. Am I summarizing this correctly.

Melissa: Correct. That is correct, yes.

Brandon: I love this stuff. We do a little bit of this little bit of it with BiggerPockets, not much and then I have done a little bit of that over the years of my real estate. I have never had a lot of success with it because I live in a very small area so I very quickly maxed out who I could reach, I mean a few thousand people. It was like okay, well, I stop but if I have it in a big city like San Antonio I think that would be a lot of fun to do that because there are a number of people that are legitimately searching. Like you said, the real power of that is that with DirectMail, you are sending something to somebody who does not really necessarily want to sell.

You have to convince them to sell and then you convince them to sell to you. With the online marketing, they are coming to you because they are looking for you like they are specifically looking for you. Like they are specifically looking for help and you are like, ‘I can help,’ and you guys are able to work to that. I am assuming those leads are way more qualified, they are way more motivated. That is it. Are you guys finding… I mean in today’s market, I do not think anybody is unaware of the fact that we are in a really really hot real estate market nationwide, right?

Melissa: Right.

Brandon: I think most people know that. Why would somebody search ‘Sell my house’ or ‘I want to move,’ or whatever. Why would they search that instead of just contacting an agent and selling through a real estate agent?

Melissa: Yes. I think it is we provide so much of value I think for people that are in specific situations and we kind of address this in our marketing to why sell with us first as an agent. I think we offer so many benefits like being able to close quickly and they can leave stuff in the house. I think people have sometimes get a lot of anxiety about all the things that come with dealing with their realtor, right? Because they come in, and they are like you got to take your pictures off the wall and you got to be available for showings and lock up your dog.

David: What is funny is just this morning, I put my house, the house I live in, I put on the market last night. This morning, about a dozen agents from my town, every week they go through all the new listings on the area. About a dozen agents came to my house, I had to pack up my dogs, I had to go take all the photos off the wall like it is really of obnoxious. Like I just felt like we were leaving as they were coming and I was like they are all just sharks looking at me like like judging my house and it is like jerk. Even though they are all like great people, I am sure, but I was like why are you judging me and tearing my house apart on your head. Like I do not know, like I totally get that anxiety thing that sellers have.

If somebody could offer me a fair price that I was comfortable with without having to deal with an agent, I totally would at least entertain that conversation even if it meant getting a little bit less because it will just save that hassle. When I first got into real estate, one of the early podcasts we did back like at our first ten or fifteen, twenty, I talked to somebody. It might even been Danny about this. About how I felt like I always felt I was taking advantage of people and it was not until I changed my mindset that I am offering somebody a different option. It might be less money but there might be other benefits that matter more to them. Once I realized that, I was like, ‘Oh, this is way better.’ Now, I have no problem talking with people and I am fine. I can tell them. Look, you can probably get a little more if you went with a real estate agent. Like I do not doubt that at all but here is what we can offer. That is basically what you are saying, right?

Melissa: Right, yes. We just like to let people know, I mean we are selling them solutions to their problems, right?

Brandon: Yes.

Melissa: They have got this problem, they cannot see their way through it or they are confused. That is what we find too. A lot of people, they just do not understand the process and one of our big things is just really being there for them throughout the process and contacting them. We have  processes in place to make sure that we are getting we are getting in touch with them twice a week and making contact with the title companies so that they are not in the dark because I think that is a big fear for those sellers too, right?

David: Definitely.

Brandon: Which is also a good lesson for us as a real estate agents right, David? Like that is what sellers are worried about. If you are a real estate agent like do not let your clients be in the dark.

David: Yes. What you guys are describing is exactly right. I have people who say they want to sell their house and I want to come look at it and tell them, ‘Hey, do not worry about spending money on this. No one is going to care. We really want to find someone they could do this, let me start to look for someone they can put in these counter tops or whatever. Everyone is afraid because they do not want to see their houses messy or they think it is not in great shape and there is like shame associated with it. ‘If I do not keep a clean house, I am not a good person.’ That is exactly right.

A lot of them, they just will not let me come see the house it all and then they spend all this money that they did not need to or they spent it on the wrong things and now it is like, ‘Oh, I got to have this difficult conversation that it is great that you like put this really expensive mural in your house but your front yard looks horrible. Like $50 could have made such a bigger difference than what you did and I mean that is like the worst part of my job. I really hate having those conversation but you are right, there is people that just…

There is so much anxiety with that that they would totally just Google ‘How to sell my house fast?’ or “Sell my house easy?’ or whatever and then they find a website and it says, ‘Hey, we will buy your house without a real estate agent.’ What you are really saying is without any of the anxiety, we will come by your house and there is a value in that. What I want to know, Melissa, is if somebody wants to start their own website, it is relatively cheap I am assuming, can you give us some advice for how easy it can be to put up a website? What is the first things that they need to know to get started and what is the most important part to get it right?

Melissa: Like I mentioned before, you want a website that is going to load fast. If it is taking forever to load, the thing is spinning, they are getting frustrated because darn it I just want to get some information. That is super important. Then want to make sure it is clean design. I think a lot of people fall into this trap with their websites where they want to put everything on there and it is so much and people do not want to read on them. I mean I do not want to. Do you want to read all that stuff? I do not.

Brandon: Yes.

Melissa: It is just that it can be a lot. Just keep it simple and keep it to what are you going to be able to give them that is going to help them make this decision to sell their house to you. That is important, not a lot of techs. You want clear calls to action everywhere so you want to make sure that they know where they can reach you, how can they call you, can they e-mail you? You want to have all that stuff very clearly on your website.

Brandon: Yet.

Melissa: We use kind of a pre-qualifier form, which is really nice that we offer on our websites, where they can put in information and send it to you and it knocks out a lot of stuff like it already asks what do you owe on the property, what is the most you are willing to take, what is the least you are willing to take? Details, how many bedrooms and bathrooms, that sort of thing. But all these things that are helpful when you are going to negotiate or contact them the first time. Then on ours, we have a picture of our family  because we are a small family business and that is important to us, our reputation is really important to be known as we are not some big company which those are fine too but finding a lot of sellers feel more comfortable with people who just seem.

Brandon: Yes, yes.

Melissa: That is actually one of our core values, just keep it real. We do not show up in  fancy cars and suits and stuff like that. We are just regular people just talking to other regular people. Then the biggest thing that I cannot stress enough for you to have on your website is testimonials. If you are new getting started in the business and you have not done a deal yet, you can get testimonial even just it is just a character reference or something from somebody that you have done business with before. Maybe a realtor that you used or a loan officer that you use or somebody that you have a relationship that can attest to your character. Just anything that points to you.

Brandon: That is so good.

Melissa: Yes. Those can be written or video, they are both great.

Brandon: Yes.

David: Melissa, by any chance, do you have a sample website that we can go and check out to see what a really good one looks like?

Melissa: I can direct you to our website.

Brandon: Okay.

David: What is that?

Melissa: Our website is dannybuyshouses.com.

David: That is pretty easy.

Brandon: Not melissabuyshouses?

David: Yes.

Melissa: I know, right? There is something wrong there. I always tell people, ‘Danny does not even buy houses anymore.’

David: You could not get a domain name dannybuyshousesmelissarunsactualbusiness.com.

Melissa: I know, I totally should. Like that needs to be on a t-shirt, right?

Brandon: It should be, it should be. That is a good domain. I am going to go steal that one right now and I will sell back to you for like ten grand.

David: You could put in dannybuyshouses in big letters and underneath the parenthesis, butmelissadoesallthework.com.

Melissa: Exactly, yes I like that. That is awesome.

Brandon: That is awesome. That is funny. Alright, I love what you are saying about like the website needs to be like clear. I mean a lot of people screw up and they just put way too much stuff like there is a… I cannot remember what the test is called but it was called something like, I am going to totally say this wrong, but it was like the drunk five year old test or something like that. It was like could somebody who is like just wasted or a five year old go to your website and within three seconds know exactly what you do, right? It is not like small fun and a million thing. It is like this is what we do. Like I buy homes in this town for cash and can close quickly.

Things like that just make such a big difference and people are like oh that is exactly what I am looking for, I guess I will move forward with this. I actually have one of you guys’ websites as well, one of the Lead Propeller websites, for my like apartment buyer site. It actually ranked really well on Google. Like nice work, thank you.

Melissa: You’re welcome.

Brandon: One thing I love that they have in there is like up front somebody can submit just like their name and the property address and that is like it, right? It goes to me… Then the next page is like more information and I love that. Because if you scare people with like give me four hundred pieces of information, no one is going to fill up the form. But if you ask for a couple simple things, now I have their e-mail, their phone number, and their property address. If they want to fill the second form out, then I get that as well in my inbox. But if not, then I have to worry about that. I thought that was genius when I saw that you guys do that.

Anyway, that is super super clever. Then you mentioned this idea of like once, and the testimonial thing by the way is I am like I do not have a single testimonial on my site and I am like why do I not have some? I know, I am like totally feeling really horrible right now.

Melissa: You need to get those.

Brandon: I am going to totally do it. I love what you said about it does not have to be like this person bought my house and now I am so happy. It can simply be like I love this person or they are such a ethical person or whatever. Could be like a character testimonial and I think that is fantastic as well.

David: Yes, good stuff. Okay. That is cool. You talked about, let us kind of recap a little bit, we talked about the three lead sources that you are getting as website which we talked about. We talked about SEM or Search Engine Marketing or SEO, what you want to call that. Then DirectMail marketing. Those are kind of the things that you are using. Then you mentioned that have been increasing the number of wholesale deals you are doing. I am wondering why that is. Actually, let us go back. For the people who do not know the difference, what is wholesaling versus flipping? Can you cover that real quick?

Melissa: Flipping for us is buying a property and then rehabbing it and then reselling it for retail price. Then we do wholesaling which is basically a signing of contracts, signing of equitable interest in a contract. Basically, we get the house under contract for a certain price and then you find an end buyer and then they close on the property and then we collect the difference. That is just a very simple way of explaining that I guess.

David: Sure. Why would you choose one over the other? Why would you decide to wholesale and get a smaller amount probably than flip and get a larger amount?

Melissa: Well, the big thing that I have noticed right now, the way the market is where we are at, people are just they are offering more, they are paying more and we have got pretty big buyers lists. What we are finding is that there is landlords, they pay more. We have it like kind of broken down. Like we know that landlords will pay a little bit more than like a regular investor would pay. Somebody that is going to fix it and then flip it.

David: Sure.

Melissa: We get a lot of out of state buyers too in our market so that kind of they are used to paying more. Actually our prices seem so cheap to them. It just allows us… My big thing with running the companies, I want to be all about efficiency. If we have got projects rehabs going on and we do not want anything sitting, we will just move them  because that is efficient but also being efficient as far as we want to capitalize every lead that comes in because every lead that you get is costing you money and has cost you different amounts of money depending on where it is coming from.

If you have got a high cost lead source, you want to make sure you get everything you can out of that. Sometimes it means wholesaling, sometimes if it meets my flip criteria then we will take it on as a flip. But a lot of times right now, we are able to offer more to sellers and just move those and capitalize on those leads. That is kind of where we have been going lately.

Brandon: Okay.

David: For the houses that you are actually going to keep and you are going to flip, my understanding is that you are the rehab queen. You know how to ask for me rehab cost,  you know how to talk to contractors. I would like to quickly get into this for our listeners who are intimidated by the rehab process. Tell us what every beginner needs to know about how to find the right contractor. What should we be asking and what answers are we looking for?

Melissa: I have a guy right now that I have been using for a long time and I am prefacing with this because I think it is so important to build a relationship with your contractor first of all. If you find somebody that is good you want to keep working with them, you want to keep them busy. That is super important. I set very clear expectations with the contractor when I have not worked with them before. After I find them, I just tell them when we meet, ‘Here is how I work.

We are going to sign a contract, all the details are going to be on the contract. You are to be charged $50 a day every day that you are over the due date.’ I use a draw schedule, I use a material spec sheet, and a scope of work. If you are good with all that, then we can move forward. If you do not like that, then we will not. I have had guys that they just will not sign my contract or they do not like the draw schedules. Things that you do want to look for is somebody that if somebody tells you they are not going to sign your contract and they will not even look at it, you probably do not want to work with them.

David: Yes.

Melissa: Because we need to be the ones in control of the situation, not the contractor. Anyone that asks you for money upfront on a job, do not do it.

David: Yes. Brandon, you have a story like that, don’t you?

Brandon: Yes. Well, I lost five grand once.

David: If you want to circle back to that.

Melissa: Yes. Those guys are never a good thing. The way I get around that is just by using that draw schedule. The first draw is always demo. It is like it did not cost you anything to demo except some labor. You get the demo done then you get a check and then we are started in the process. Now you get some money, now you can buy materials for the next thing. I do not buy materials for my contractors, they are responsible for going and picking up stuff. I do not have time to run around and pick things up for them and I should not, we should not be doing that as investors.

It is not our job, that is the contractor’s job in my opinion. When I had them bid things, I have them bid at labor and materials. I know people do that differently and it could work differently in different markets maybe but I found or I try to keep as much off of me as possible because we have a lot going on and so it is not efficient for me to run around buying materials and stuff like that. It is just crazy so I am not going to do it. I think those are some big thing. People that do not have references, you do not want to work with those guys. You want to make sure that if you want to licensed person, check that out. If you are okay with them not being licensed, check their other jobs or other people that they have worked with.

David: Yes.

Melissa: Stuff like that. Do not hire any man that shows up to a job, this is for the ladies by the way, he is wearing undershirt that says FBI on it. I had a guy show up one time.

Brandon: I do not know the story but I know the shirt.

David: I know this is coming.

Melissa: I know, yes. It is bad ladies, I am warning you now. I was at a house and this guy pulled up, and the other thing he was driving a giant truck which is never good either, so he is driving a $65000 truck, pulls up, gets out. He is wearing this FBI shirt and I looked at it and I looked a little closer and it says “Female Body Inspector’ and just like you need to go.

Brandon: David, you have that shirt, don’t you?

David: Yes. It is my lucky podcast shirt whenever I get interviewed on other podcast, that is the shirt that I wear. Or when I go to meet new clients, that is like how I win them over. ‘Hey, you guys called for a female body inspector, right?

Melissa: It was bad. I think his belly was hanging out the bottom of it too.

David: This guy sounds like the perfect storm of horrible. He shows up in a $65000 that says I make a lot of money on your rehab that I probably should have been making because I could buy this truck then he has that shirt on then he has got his gut hanging out over the bottom of it so you are like well I do not think anyone is inspecting your body. Is that how you became the FBI? That is funny.

Melissa: I think he gave… I thought like to add insult to all of that too. I think he quoted me like $30000 to paint a house that was like 1100 square feet.

Brandon: Oh, man.

David: Shocking. That came out of the guy.

Brandon: Do you find that contractors because you are the one dealing with them more often? Like do you find that they try to push the limit on what they are charging you or they pretty like… You seem like you are probably a pretty good like taskmaster for them but do they try to take advantage of you because you are a female?

Melissa: Yes, sometimes they do you. Actually, I was talking to a friend about this recently. There is a roofer that we had there was a roofer that we had for a long time and Danny would use them forever when we were working together. The guy always responded, he was cheap, so fine. Well, when I started running in the rehabs, it is like I need a roof. I better call Ray, Ray would never answer my phone calls ever. Finally, I told Danny, ‘Can you call him? He is not answering me.’ He would answer every freaking time and that he would call. Like there is something wrong here, he would never respond to me.

Finally, I went and found another roofer and who did a great job and he cost maybe a little bit more per square but I was willing to pay that just to have the peace of mind that it was a job well done and that he was going to be respectful of me. That was a big one but it does happen sometimes. They do try to get away with stuff but I try to keep that in check.

David: You mentioned cost per square… Go ahead Brandon.

Brandon: I will jump back to that. I had a contractor one time, well he is a resident manager who later on the relationship refused to talk to my wife or my mother in law who manage most of our properties. Like she helps a lot with that because they were women and women did not belong in business and like he flat out said that and then just would not answer their phone calls anymore. After that shift in his mind happened, we fired him very quickly but it was just he could not handle taking instructions or direction from… Yes, it is sad that there are people like that out there. My wife is fantastic at this way better than I am.

Melissa: Funny thing was a few months after all that happened, then he called me looking for work and I said no.

Brandon: Yes.

Melissa: Sorry, I got nothing for you.

David: I think something… I think for a lot of women that is just going to be a struggle they are going to have. It is contractors and other people. They are not going to treat him with the same respect or they are going to take advantage of them. I hear a lot of women complain when they go take their car to the mechanic that their mechanics are always trying to say, ‘Well you need to do this and this and this,’ and because they are not as familiar with the mechanics of a car they are more likely to say yes.

The remedy to me is that you know your stuff really well and when you go speak to them they can tell that you know your stuff. They are less likely to think oh this is inexperienced damsel in distress, I could take advantage. They think oh I better bring my A game or I am going to lose this contract. Tell us a little bit, Melissa. For those listening that are not familiar with rehab costs, how do you know a good cost per square is for a roof? How do you know what a kitchen remodel should cost if you are looking at properties and you think it is a good deal? How do you know how much flooring or the bathroom remodel should be? Can you give us some of the rules of thumb that you used to know this is about what a rehab should cost and then you could tell if the contractor jerking you around?

Melissa: I think the good way to start with that is by doing a good scope of work. That is how I typically start a rehab is I do a scope of work and I pull together my material spec sheet so that I know what I am looking at material wise.

Brandon: Can you explain what scope of work is?

Melissa: Sure, sorry. Scope of work is basically when you first close on a property, we go out and I just look over the whole house and I take a notepad and a pen. I am sure there is probably some other easier way to do it but I am kind of old school like that. I just start with the outside and I go all the way around the house and I just look at everything. I look at the roof, I look at the siding, I look at the windows, the doors, the trim, the patio, the saw-fits, like everything, the landscaping, the concrete, like sidewalks porches, things like that. Then I go inside and I just start by going through the front door and I just write everything down like living room needs new ceiling fan, needs whatever we need to take this wall out or something, whatever it is, bathroom we need to get.

I break it all down by the room and what needs to be done and then I have a section on my scope of work that just kind of covers general things so like we always change the switches and the plugs to white and if you are not doing that, you need to be doing that in your rehabs. Changing hinges on doors if they are brass or something, those need to be changed. Changing out the air vents. Just things that applies to every room, smoke detector, those sort of things. Try to list out that are just specific for the entire house and then I break it down by room. When I am doing that, then it gives me an idea of what things are going to cost.

If I walk into the house for example and the bathroom is completely outdated and it is nasty, I know just as a typical standard bathroom, I budget $2500, that is just to keep it simple. Because I know my vanity costs $250, I know that a tub cost $100 depending on if I am replacing it or refinishing which I do a lot of that too. I have all these little things that I like to do to save money because I like to save money.

Brandon: It is good.

Melissa: Let us go say cheap but that sounds bad.

Brandon: Thrifty.

Melissa: We do very quality work. Thrifty, that sounds…

Brandon: Responsible, physically responsible, there you go.

Melissa: I am very… I like to stick to the budget.

Brandon: Yes, that is hard.

Melissa: Kind of freaks me out being a numbers person, going over at the budget, but also being mindful too. You do not want to over rehab certain things so do not go sticking granite in a house. It needs to have laminate, things like that. I know a bathroom are going to cost me $2500, the kitchen if the cabinets are good, I know I am probably going to spend about $1200 in there. By the time I put lighting, replace fixtures, paint the cabinets, change the hinges and handles, just something I do a lot and saves a lot of money and time.

I usually budget, and this is all just a standard size house for us like a normal rehab, I can usually get it done for about $20000, $15000 to $20000. That is with no foundation issues or major electrical or anything like that. I know their roof is going to cost me about $5000, unless it is two storey, then I throw on $1200 or so for that because that usually costs a little bit more with it being higher. Bedrooms, a couple hundred bucks. I estimate paints and flooring by the square footage of the house so I know that I am paying a $125 a square foot for paint and I am paying about $225 a square foot for flooring and that is combined because I tend to do laminate, the LVT tile.

Brandon: I love that stuff.

David: Yes.

Melissa: Amazing, yes. I use that in every house now. Then I will mix up carpet in there too like for bedrooms and stuff. I took the carpet price and the laminate price and just kind of average it together to get the $225.

Brandon: Okay. Do you add like at the end of the process, you have got all your numbers, you are basically broke. You start with the scope of work which is perfect, right? Just one thing that I do, I am not saying everybody else has to do it but it is what works for me. I take a video, I take my phone every time I go to a project and I walk through the exact same thing you do but I talk out loud to my phone. I do not know if it because I am more of a visual person but I will walk around outside and then I go inside and I just talk to myself, right? Like yes looks like this trim is pretty, this wall is going to torn down here. When I get home, I got this 20 minute video and either I or I will outsource that to like an assistant.

We will just go through and create the scope of work for me. Ideally, I would want an assistant to do it but normally I just end up doing it because I have trust issues but like that works out well for me. That is kind of my techy way of trying to do it. Then the nice thing is that I usually have like video which,  I can then pause and then a screenshot of and then like highlight, I use an app called Skitch. I do not know a lot, you guys probably use it. It is like a mac. I think they have a PC.

Anyway, just lets you like highlight and draw pictures on other pictures. Anyway, I use this and I like draw arrows in like mock up little things I want to do based on that and then I have the original video too so afterwards I can make good before and after pictures of projects. Anyway, hey, you got scope of work, you go through, you divide up everything and do you do more by room? Like you are saying, $2500 $1200 for the kitchen or $25 for the bathroom or are you more like electrical total is going to be this much, plumbing total is going to be this much, or is it kind of a combination?

Melissa: It is kind of a combination. My scope of work is very detailed but then my estimates are very, it just basically it says kitchen, bathroom, which would include however many bathrooms, electrical, landscaping, just anything that is major. I just kind of mentally or on the notepad just like jot it down and average it out. Then I always add 10% to that total.

Brandon: I was going to ask that to you. Do you do like buffer at the end?

Melissa: I do, I do.

Brandon: A couple of couple quick plug here. With all of our resources I will point out. First of all, BiggerPockets now has a rehab estimation calculator. If you are listening to this and you want to a little help with the scope of work and going through. It is kind of cool. I like it actually quite a bit because it basically walks you through exactly what you are saying here Melissa. Like let us go through the kitchen, let us go trim, let us go paint, let us go this room, this room, right? Then you can add prices. You can do price per square foot or you can do just a fixed cost or you can do like labor materials. There is three ways to divide up any of the rehab things and then at the end it prints up a nice scope of work and a rehab summary that you can then go plug your number then or you can take to a contractor or whatever. Anyway, just point that out there. If you want to check it out, go to BiggerPockets.com/calc.

The second resource I will point out as well is that actual Lead Propeller which is you guys’ company that does the websites which I use for one of my own lead generating websites. We actually have a BiggerPockets Pro Member perk with that. I think it is 10% all of our pro members are getting on that right now. If you are not a Pro Member, consider that as well. There is a lot of cool perks you get. Alright, moving on. I am wondering what do you do when you go over budget? Like if you go over budget on a project? How do you deal with that?

Melissa: First, I come to my office and I close a door and cry.

David: Me too, me too.

Melissa: Sometimes I want to. When I go over budget, I really trying not to but it does happen sometimes. Things that you do not anticipate and I like to be prepared so that is kind of difficult for me but one of the things that I do is see where I can make something else up somewhere. For example, I had a house. I was at the end of the budget and I had not done any landscaping yet and I am like oh man. I budgeted  $1300 for landscaping and I have used that $1300 somewhere else in the house. Some unexpected thing came up and so I am thinking, I am thinking what am I going to do? I do not want to go over if I can help it. What I ended up doing was walking around the house and noticing there was all these great bushes and stuff like on the side of the house and so I had my yard guy go and dig them all up and put them in the front and then just throw some mulch in the bed and it cost me like $100 to do that. I went over budget but it was not yes like way over budget.

Brandon: Yes.

Melissa: I try to watch too as things are going along. I do use that drawl schedule which helps really keep us on task with spending. I have it broken down by what they are doing and if something comes up then obviously we have to deal with it.

David: Cool, cool. Anyway what I like about your business and what you are doing, you are very like systematic about it, right? You are like this is the scope of work, this is how I do it, this is how I deal with contractors and this is you are able to do eight to twelve potential flips or wholesale deals every single month because you have to be organized and systematic about your business. Everything that you do just screams like you are on top of this as a business owner. Like I do not see you in there like swinging hammers and getting too emotional and everything. You are just like this is the business and I am running this business really well. Anyway, kudos to you on that. That it is awesome.

Melissa: Thank you.

Brandon: Alright. But we are not done yet. We got the next segment of our show. We are to move over to it is called the Deep Dive.

Deep Dive

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Brandon: Alright, everybody. Time for that part of the show where we dive deep into one specific deal from our guest to kind of get the who what where when and why of that deal. You got one in mind, Melissa? A recent something?

Melissa: I do.

Brandon: Alright. We are to fire a bunch of quick questions at you. First of all, how did you find this deal?

Melissa: To my amazing website.

Brandon: Nice. Very good. Alright. How much did you… Actually, let us go back. What is the deal with single family house, I am assuming?

Melissa: Single family house, I think is about 1300 fifty or 1150 square feet and it came to us online through an organic search through the website.

Brandon: Alright. Organic, of course, means you did not pay for it. It was not like a page traffic. It is somebody typed into Google and happened to rank well in Google or Bing or file or whatever people are using these days. I think it is mostly Google. But alright, how much did you pay for the property?

Melissa: When the lead came in, they were asking $65000 and we ended up picking it up for $57000.

Brandon: Alright. Then how did you negotiate it?

Melissa: It was actually pretty awesome because the guy that owned the house, he inherited the house and it was being used as a rental and he was an out of town owner. He had no idea what kind of condition the house was in because there were tenants in there and even the other neighbors had told me after we closed on it they were disgusting. The house being at way worse shape than he anticipated was definitely in our favor to be able to say hey it needs a lot more, you said, it just needed paint in it. Clearly needed way more than paint.

Brandon: Yes. Most sellers will say that. Man, it just need some paint and carpet. Yes, sure, alright.

David: That is good though because if you lock them into that, well I sound like a cop right now, lock you under your statement then we can find discrepancies in that later, right? It is like a way that makes someone look guilty. In this case, they said oh I want $65000 for my house, all it needs is some paint. You said, ‘Okay, I would be happy to pay you $65000 if all that it needs is paint.’ Then you realize oh it needs another $8000 of work, you can negotiate the price down. Was it $57000 you said you got it for?

Melissa: $57000, yes.

Brandon: Yes. That is a really good way to like approach that for people that are afraid to negotiate or they do not like that conflict. Well, you just say, ‘Hey, that works for me if it does not need any work. You are telling me it does not need any work, right? ‘Yes, all it needs is some paint. Boom, you just gave yourself, your escape route when you want to get down to a lower price. Can you tell me how you funded this deal?

Melissa: That deal is funded using private money and we exclusively use private money. We have got several private lenders that we have been dealing with for years and built relationships with them so I cannot stress enough how important that is and the reason why is because terms. We funded that property for the purchase price plus the rehab costs and it was 8%, $200 origination fee, no payments. Everything is paid at closing.

David: Nice. Cool. Very nice.

Brandon: I like doing that the no payment thing because I mean like the person still gets the same amount, it is just a cruise all until the end and so it just make a little bit more breathing room while you are doing the flip. That is usually built by trust with private lenders but when you get that it just makes sense.

Melissa: Definitely.

Brandon: That makes it awesome. Cool. Alright. What did you with it?

David: What did you do with it?

Brandon: Nice.

Melissa: I rehabbed it because it was a good one. It was the ideal thing, right? It was like full of fleas, it was all the walls were just like black and then I found out it was actually dust but it was built up on the walls and it was pretty nasty.

Brandon: Ick.

David: Sounds like you are describing Brandon’s beard.

Brandon: That is not dust, it is food. I leave it for later so I can just have.

David: The fleas.

Brandon: Well, the fleas are pets.

David: You ended up selling it after you rehabbed it, how much money did you make on this one?

Melissa: We bought it for $57000, we ended up… I just want to share this because this is, I think this is kind of a cool thing, when we bought it we had set the ARV at $118000 and something I started doing with all these market changes is right before we go on market, we were in comps again and look at everything again. We had picked it at $118000, we actually ended up selling it for $125000.

Brandon: Nice. That has happened so many times over the last two years. We are just going back and checking again on that ARV right before you go to market with it has got us thousands more.

Brandon: Yes. There is actually been numerous times in my career where I have flipped a house and then sold it and not done that. I kicked myself later, I could have sold it for more. Or sometimes my agent is there to be like yes, you could definitely push that higher. But other times like agents will just do whatever I tell them to do because I assume that I know what I am doing. But then like I make a mistake and I do not check my ARV and it has been four for five months and like you said that could be thousands or even tens of thousands of dollars in today’s crazy market. Yes, nuts.

Melissa: Definitely.

Brandon: How much did you put into that one then? Did you say?

Melissa: That one, we had estimated the repairs, I think I said like $21000.

Brandon: Okay, cool.

Melissa: Yes. I actually came in at $18000 on that one.

David: Under budget.

Melissa: Yes. We are pretty conservative with the rehab estimates just because I always want to try to watch out for those things like we talked about going over budget so I would rather plan to spend a little bit more and then come in under.

Brandon: That is awesome.

David: Which market are you in, Melissa?

Melissa: San Antonio.

Brandon: San Antonio.

David: Okay. This house was in San Antonio.

Melissa: Yes.

Brandon: Is that everything you do in San Antonio?

Melissa: In the surrounding areas, there is a lot of little towns around San Antonio. It is all the same area but different names.

Brandon: Okay. You bought it, so you had roughly $75000 into it by the time you are all done. You sold it for $125000 which is like $50000 total gross. Obviously pay aging commissions and all that, right? But at the end of the day, you are still walking away with, I do not know, $35000 to $40000, right?

Melissa: Yes. It was $32000 I think after it was all set and done with closing cost assistant and realtor fees and all that sort of thing.

Brandon: I love that. How much total time do you think you spent on that deal between negotiating and acquiring it, managing people?

Melissa: That house we purchased, the rehab took two months. I think all said and done it was probably like three months or three and half months.

Brandon: Cool. Of course you have got contractors working over there and you are doing numerous deals every single month. It is like this is not a 40 hour week on one job. This is a few hours to maintain it right and keep the plate spinning, to use an analogy, right?

Melissa: Right.

Brandon: That is cool. Alright, last question, David of the Deep Dive.

David: Can you tell us what you learned on this deal? I think that was the first one that we had started rechecking that ARV and so that was a big one. But also, like we have talked about before in the negotiation and just knowing that that those people had no idea how bad that house was and really using that to our advantage. We ran into that sometimes but we get so used to things sometimes that you forget about that and really being able to say… To help somebody out of a situation that they were not even aware of.

Brandon: Yes.

Melissa: The house was so much worse than what they thought it was. Even the neighbors had come over to me after we bought it and said, ‘God, those people were disgusting.’ It was like a free for all over there and it was really bad and now it is just being able to use all that stuff is kind of helpful.

David: There you go.

Brandon: Cool. Alright. Well, that is the end of the deep dive of today’s Deep Dive of course. Come back next week you all folks and listen to the next week’s Deep Dive but we are not done with today’s show because we are moving on to the next segment which we call our Fire Round.

David: Fire Round.

Fire Round

It is time for the Fire Found.

Brandon: Hey. It is Brandon. I wanted to ask you a very simple question, are you looking for the best way to achieve financial independence? Look, maybe you do not love your job or maybe you just want to be able to work when you want, where you want, how you want, or you want to spend more time with your loved ones. Whatever it is, I firmly believe that small multifamily properties are one of, if not, is the best ways to get there. That is why I buy them a lot. But there are some huge dangers to be aware of and just because something is a small multifamily property does not make it a good deal. I am going to host in a free online class this coming week called very plainly, How To Buy Small Multifamily Properties?, and it is going to be a blast.

Look, I am going to cover some of the ways to find them, some of the ways to finance them and will even analyze a deal right there on the webinar. Sign up today for this class by going to www.BiggerPockets.com/webinar2. That is www.BiggerPockets.com/webinar2 and then let us work together towards your next multifamily property. Space is limited so sign up now, www.BiggerPockets.com/webinar2.

Alright, let us get into the Fire Round. These questions come direct out of the BiggerPockets forums and we are going to fire them at you in kind of a quick Q and A sort of time here. First one I am going to grab Melissa. I am going to invest in an area I have never invested in before. ‘My concern is how to find a contractor when I do not know the city at all. What is the best way to go about finding the dependable trustworthy contractor in a large city that I have no connections?’

Melissa: My top way of finding contractors is I am sure everyone has heard of Driving For Dollars. I drive for contractors.

Brandon: Nice.

Melissa: I drive around areas and stop if I see somebody working on a house. I stop and talk to them and this is great way to find contractors by the way because you can see their work which is really cool because if they are just some random guy calling off a Craigslist or something you do not know what their work looks like. But if you are driving around and you can see the job and build a little rapport with them and let them know who you are. Make sure you let them know that hey I do a lot of deals, I can keep you busy. That is a big thing with them too. It is a pain in having to go find work all the time. That is a big thing that I do.

Another thing you can do is search for cash sold on MLS or have your realtor do that for you and drive by those properties. Most likely an investor bought them and they are working on it and then you can talk to those contractors. One other thing that I do is just talk to your realtor friends or realtors that you know. My realtor refers contractors to me all the time because they are always calling realtors looking for work. That is another way to find them.

Brandon: Alright.

David: Alright. How about, Melissa, using a project manager for a flip? Somebody wants to know that they are talking to General Contractor and they are looking for someone who is in charge of making sure the contractors are actually getting the work done on time. Do you use a project manager and if so, how much do you pay them?

Melissa: Actually, I am the project manager but I am… I actually have just started training someone to take over that role for me which has been really helpful but they do need to be trained and so I think that is an important thing too just to make sure that when you find a project manager make sure that they are into details and that they are strong enough to stand up to contractors when they need to and to make sure that they understand like you share with them the expectations just like we talked about before we use contract, we draw a schedule. The guy that I am training because he is training right now so it might be kind of a weird thing but I am just paying him basically for his time hourly to go find new contractors for me and go check on jobs so he gets paid hourly and then I am paying for his mileage on his car. Once we kind of get him going, I probably put him on a salary.

David: Cool. Next one, ‘I am new at flipping and I am wondering, do you set goals for your flipping business? Or should I just like do what comes naturally from my work? Like how do I know how much to aim for when I do not have previous years of flipping to compare it to? I think this guys is saying like should I just aim for eight to twelve a month like some people or it is like one this year good enough? Like how do goals come in to your business?

Melissa: Well, you do not want to set a goal that is going to be demotivating, right? Especially if you have never done it before. You do not want to say I am going to go close 20 properties this month and then the end of the month you do not close anything and then you are sad and totally not motivated.

Brandon: Yes.

Melissa: That is not a good thing. I think setting reasonable goals and maybe if you have not done it before, maybe not even setting the goals to be like how many deals to do so much as how much am I going to market? How many marketing pieces am I going to send out and maybe coming at it from that way first?

Brandon: I love that.

Melissa: Then because the deals are going to come from that, right? But if you are not doing any marketing, you make a goal that well I am going to go talk to this many realtors this week and I am going to send out 500 postcards this month to this area and be very specific with those goals. Then when you hit those, then the other things will start to happen. I am going to go find one contractor or you know what I mean? Just like start with all that back end goals that will bring the deals to you and then I feel like you have a good point to set goals for how many deals you are going to do because you know what you have got coming in at that point.

Brandon: Yes. I love that, I love that. Hal Elrod who is a buddy of David Greene and I and have been on this show a couple times, he has this great quote that says like when we are talking about goals, it says if you focus on the process…  I am going to butcher this quote, when you define your process and commit to it for an extended period of time, the results will take care of themselves, right? If you want to have a six pack, if you just tell everyone you want to have a six pack, that does nothing. But if you set a goal for the number of crunches you are going to do and the number of calories you going to eat, that is like a process goal versus a results goal. Yes, I love that. Cool, alright. Moving on, let us get to the last segment of the show which we lovingly refer to as our Famous Four.

Famous Four

Brandon: Let us jump into the Famous Four. These are the same four questions that we ask every guest, every week. Now, we are going to ask you. Melissa, number one, what is your favorite real estate related book?

Melissa: Flipping Houses Exposed.

Brandon: Is that Danny’s?

Melissa: It is.

Brandon: Nice. Well, we will give it to you. It is all yours.

Melissa: I actually really love that book. It is so good though.

Brandon: There you go. Alright.

David: Okay. What is your favorite business book?

Melissa: I have a lot of those. I have a really big stack of books next to my bed. Patrick Lencioni, The Five Temptations of a CEO, has been really really good. I also like his but The Advantage and I love his process. I took our whole business through that process and we really worked through that and got a lot out of it. Very good stuff in there.

Brandon: Cool. Josh Dorkin, just the other day, told me I needed to read those books. I will them on my list. I am not going to listen to Josh but I will listen to you, Melissa.

Melissa: You should read them. They are really really good and they are really easy to read, super fast.

Brandon: That it is good for me.

David: How about some of your hobbies?

Melissa: I am also a mixed media artists and I have…

Brandon: What does that mean?

Melissa: I make arts and I use different medias. I make art journals and I have had things published in magazines. I have got some of my art work published on some product packaging. It is kind of cool.

Brandon: Cool.

Melissa: Yes. I really enjoy that. That is kind of my thing and then spending time with the family. We have five kids, lots of swimming and just hanging out with them. I do not know if that is a hobby.

Brandon: I call it.

Melissa: Mostly just the art. Yes, I do love to read. I try to read a lot. I like to read things and just learn.

Brandon: Cool.

Melissa: I could not pick one. Work out too, I love working out.

Brandon: What is your workout routine look like? What you do? Are you like class person or aerobics person or a weightlifting bench press person?

Melissa: I wish. I like to wear fanny packs and leg warmers.

Brandon: Me too, me too. Weird.

Melissa: Yes, that is weird. I boot camp twice a week and then I like to run kind of and then I started a couple years ago taking Muay Thai lessons. That is Thai kick boxing and it is freaking amazing, lots of fun.

Brandon: That is cool. I have not done that.

Melissa: Yes, it is fun.

Brandon: David is a Thai kick boxing champion actually.

David: That is not true.

Melissa: What?

David: Just kick boxes, just kick a lot of things.

Brandon: Alright, last question for me. What do you think separates successful real estate investors from all those who give up, fail, or never get started?

Melissa: You have to keep at it. I know that sometimes it seems, and this is probably so basic, but it really is the heart of it. Things, it seems like you want to quit or it is too hard or nothing is happening and almost always the change is right around the corner if you just hang in there. We spent so much time in the beginning just Driving For Dollars all the time and we just we had it hard for a long time before we even got our first deal. I mean it is not like we just said we are going to do it and got a deal. It took a lot of work, it took a lot of sacrifice and dedication and time away from our kids and stuff just trying to get everything going but then once it started going you cannot give up. Always learn, always be learning something.

There is so much to learn in this business and there are so many great people to learn from like you guys. Just do not get stuck where you are learning and you are not taking action but it is good for you to always just something comes up, you learn about it. You evaluate even if you run into a problem. Learn what you can about that.  I was dealing with the contractor, just real quick example, I did not know anything about roofs. I did not know what a soffit was or ridge vent or anything but I spent some time studying about that and then so it was great because then I was able to go talk to this guy and climb up on a roof and surprise him and myself.

Brandon: Yes.

Melissa: There is always a thing to learn and it is fun. Just be looking for those opportunities to learn something new and just do not give up and do not stop your marketing, whatever you do.

Brandon: Yes. That is actually… I mean that is a lot of really good advice. I just got finished reading grit the book Grit, the book Grit, by Angela Duckworth.

Melissa: Duckworth.

Brandon: Yes, good book. It is all about kind of like not giving up. It is like moment, it takes time to build something, anything. The people who are successful tend to be the most greedy. But anyway, good stuff, good stuff. Moving on, last question of the day I am going to give to David Greene. David?

David: Where can people find out more about you?

Melissa: They can find me on flippingjunkie.com. That is where we have our podcast and resources for people. Also leadpropeller.com for the websites and services that we offer, manage services. Also, we have a YouTube channel, Flipping Junkie and there is a lot of cool videos. Just some of our before and afters. Me going through some rehabs and talking about deals and things like that that you can find there.

David: Awesome.

Brandon: Cool. Melissa, thank you so much for joining us today. I love hearing your perspective on all this stuff. Without further ado, we are going to get you out of here. Thank you so much.

Melissa: Thank you.

Brandon: Alright. Take care. That was our show with Melissa Johnson. Yes, she seems like a rock star just managing that whole process. Doing something I could never imagine like trying to flip numerous house. I mean I have trouble with like a one house but two is tough. I think I have never done more than two at a time and she is over there doing eight or nine. Just you can tell why, because she is very very good at what she does.

David: She is very thorough, she is very organized, she has a process for everything and I can see how that helped them to scale past where someone you really just got wings that flies [inaudible][01:11:18] pants really cannot.

Brandon: One thing that they do better than almost anybody else I know is their online marketing. Like I am glad we got to kind of dive in that on how they are doing that because again there is a lot of people are doing DirectMail, not as many people are trying the online route. Definitely something. If you are listening to this, you are like hey that sounds interesting. Make sure you check them out, learn what they are doing. I know they have a lot of content out there, the Flipping Junkie podcast is fantastic and Danny and Melissa are just both great people. Yes, learn from them. Keep going and grow your own business. With that, we got to get out of here. I am going to eat some more that bacon jerky and I am kind of obsessed with and what are you up to today? Anything fun?

David: Just another day grinding in the business, learning more about real estate. Helping more people, probably going to get a video from you munching out bacon jerky, mumbling about how great it is and just a typical Tuesday.

Brandon: There you go. Alright, well, with that, let us get out of here. You want take us out?

David: This is David Greene for Brandon “Bacon Lover” Turner, signing off.

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In This Episode We Cover:

  • Melissa’s story of getting into real estate
  • How everything went wrong on her first deal 
  • Why she doesn’t recommend a “burnout
  • Their amazing average flip volume and profit (hint: 8-12 deals a month!)
  • Her top three lead sources
  • How she uses SEO to her advantage
  • Advice on putting up a website
  • A discussion on flipping vs. wholesaling
  • How to find the right contractor
  • Tips for figuring out rehab costs
  • Things to do when you go over budget
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Fire Round Questions

Tweetable Topics:

  • “We are selling them solutions to their problems.” (Tweet This!)
  • “Sellers feel more comfortable with people who seem real.” (Tweet This!)
  • “We need to be the ones in control of the situation, not the contractor.” (Tweet This!)

Connect with Melissa

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners — without the non-stop pitch prevalent around the industry.

With over 180,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!

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