With the right mindset, strategic team building, and a passion for personal development, you can turn the dream of making 100K a month through real estate wholesaling into a reality. In this episode, Helena Wu and John Galan reveal how to earn a massive $100K per month by wholesaling. They share their inspiring journey, strategies, and mindset that propelled them to incredible success in the real estate market. Helena and John discuss important topics that contribute to their success. They talk about how mindset is crucial, as well as the significance of forming a good team. They also highlight the importance of talent acquisition and street smarts in the real estate industry. If you’re ready to turn dreams into reality and unlock the secrets to a six-figure monthly income, hit play now!
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- Changing the World Order
- The Power of Intention
- Wishes Fulfilled
About John Galan
From the bustling streets of NYC to the dynamic realm of real estate, my journey has been anything but ordinary. Once a dedicated CPA, I found my true calling within the intricacies of property and real estate investment. This transition wasn’t just about switching professions; it was about pursuing a passion that resonated with my core values and aspirations.
While the world of finance provided me with a robust foundation, real estate presented the avenue to make tangible impacts. But it wasn’t just the business side of things that captured my heart; it was the rich, vibrant REI community. This community, filled with diverse individuals and dreams, became my second family.
Now, as a thriving real estate entrepreneur, what fulfills me most is giving back. Whether it’s by mentoring newcomers, sharing resources, or simply providing insights from my own experiences, I’ve found immense joy in supporting others on their real estate journeys. My story serves as a testament to the endless possibilities that arise when one dares to step out of their comfort zone and chase what truly sets their soul on fire.
About Helena Wu
Helena Wu is a University of Pennsylvania graduate with a diverse background in accounting, finance, and behavioral science. She commenced her career on Wall Street, gaining invaluable experience in asset management and investment banking. Driven by a pursuit of financial independence, Helena transitioned to real estate wholesaling, rapidly achieving success in this venture. With a sharp business acumen, she rapidly built a successful wholesale operation that revolutionized their financial landscape. Her expertise in creative financing strategies allowed them to expand their real estate holdings, making strategic purchases that would have been out of reach for many. Later on, she entered into multifamily world became a multifamily syndicator, adept at pooling resources and facilitating real estate investments. Her journey from Wall Street to real estate wholesaling and multifamily showcases the transformative power of interdisciplinary knowledge and a relentless entrepreneurial spirit.
How To Make 100K A Month Wholesaling Real Estate With John Galan and Helena Wu
We are here in mid-November 2023. These big things happen in our personal life. Aside from that, it’s a very interesting time in the market. I’m working on this project.
Tell people what’s happening in our personal lives. You can’t just say that.
We’re having our baby boy.
We’re very excited about that.
More than eight and a half months pregnant.
Still rocking it.
I can’t even believe it because it is our first kid, and then I feel like I’ve been a father to many in my life, but I’m going to get to have my own kid.
We’re having a son.
Maybe we can do a video about this, but let’s get back. Our guests are waiting as well. Right now is a very interesting time in the market. Real estate is cyclical. It’s got four main cycles, recession, recovery, expansion, and hyper-supply. The question is, where are we at in the cycle? In my opinion, we have just almost left hyper-expansion and we’re in a recession. We’re not at the bottom of the market yet. If the real estate market was a 12-hour clock, 12:00 was the top of the market, and 6:00 was the bottom of the market, what time is it right now?
We’re at 4:00.
We’re at 5:00. It also depends on what each hour equates to. Maybe we can do another show about that. Let’s get into our show. Our whole show is about this concept of wholesaling.
I’m looking forward to learning more about it, and we have our guests who are going to demystify the whole process of wholesaling.
I met our guest when I went to the Jake & Gino conference in Orlando. I interviewed a lot of people on this show. I have pretty hard-hitting questions and these guys were answering all my questions and they know their business so well, and they were so enthusiastic. I’m like, “We got to get you guys on our show.”
I learned about the business of wholesaling many years ago. I was a single-family home builder. I would buy a piece of land. I would build a house and sell it as a spec home. I would also build custom homes for clients who wanted to have a home built. In my spec building business, buying a piece of land or an older home, demolishing it, and building a home was the main part. That’s all I did all day long. Finding a lot at a better price was always a huge advantage to be able to find something better. If you could negotiate with a seller and buy something at a better price, it was always big, but it was very difficult to do. The market was extremely hot back in Vancouver many years ago.
I had put a project under contract for $1.620 million. I put in a deposit that was already non-refundable. It had gone hard. I was part of this builder’s WhatsApp group, and there were a bunch of builders on there and other service providers. I was building many homes in this market of Vancouver, which is the city of Richmond. This guy reached out to me from that builder group and said, “I got a lot that I want to sell. Are you interested?” I’m like, “Come over.” He came into my home office and I never forget this story this moment in my life.
He sat right in front of me and he’s like, “This is the project I want to sell.” He put a contract in front of me. It was a lot that was very close to the lot that I purchased. He wanted to sell it to me for $1.52 million. It coincidentally ended up being exactly $100,000 less. The house was in a little bit of a better area. It was a superior home to ours for sure. This guy put a contract in front of me. I started flipping the pages, and I saw that months ago, he had put this project under contract for $1.2 million.
For $300,000 less.
The market was $1.6 million, $1.62 million, to $1.65 million. He had put it under contract for $1.2 million, approximately $400,000 below market. He was trying to sell it to me for $100,000 below market. The first thing I thought was there was either fraud, deception, or scam going on here.
How is this possible?
The first thing my mind thought was, “How is this person able to sell a house for $400,000 less than the market? Who is this guy?” I said, “This sounds good. You bought this for this long?” All these different things that were shocking about the deposit, I believe he had got a nine-month or almost a year-long closing. It was a hard time for me to get more than a 30-day closing. This guy had a year closing for almost $500,000 below market. It’s a complete shock. Anyways, he left.
What did you do with that? Did you go for it?
I couldn’t go to him. My deposit had already gone hard.
You already walked into the other property.
For me to walk away from that property, to possibly go through litigation for that other property I had purchased didn’t make sense, but I was wondering, “What just happened? How is this even possible?” I started calling a few guys off the builder’s WhatsApp group. I’m like, “Who is this guy?” They’re like, “This guy’s a flipper.” All those builders didn’t even know what the word wholesaling was. They called this guy a flipper, which now we know as an incorrect term. A flipper is somebody who buys a property, fixes it, and then flips it.
This guy was a wholesaler. Not only did he buy single-family and wholesale them, but he also did commercials. He would do land assembly, buy 5 or 6 lots, sell it to big developers, and would make millions. It was truly amazing. The more research I did, I never found out what was his strategy for finding these properties. If it was mailouts, cold calling, door knocking, or some other way.
I know that this land assembly that he had done was because he knew the city hall was making some zoning changes. He knew that this area was going to change zoning. He went and put a bunch of single-families on their contract, knowing that they were going to be allowed to build townhomes and what have you.
That was my start of it. Ever since then, the more I got involved in real estate and our YouTube show and I’ve all these conferences and all these people who we’ve interviewed, I’ve realized what wholesaling is. Still to this day, there’s some level of stigma that I have on wholesaling. I feel like somebody’s got to lose for there to be money made in this business. You’ve got to be able to buy this property way below market from somebody who doesn’t know what their property is worth for you to be able to make a profit. Our friends are here to demystify this whole process of wholesaling. I hope that story built a foundation for where we are.
If you knew about syndication back then, you could’ve got that other lot for much less and then probably syndicated a project on it.
The other lot, I could’ve borrowed the property from him, but I don’t think its syndication would’ve worked. Probably a joint venture. I would’ve probably brought some. I had no idea about it raising money.
I can’t wait to dive into this guy. Let’s go ahead and welcome our guests. I’m going to quickly tell you guys about our guest. We’re joined by Helena Wu and John Galan. Helena has a background in finance and accounting, and she’s a graduate of the University of Pennsylvania. She transitioned to real estate wholesaling, rapidly achieving success in this venture. We’re going to break everything down. John is a chartered professional accountant. He started real estate in 2021, and now he’s focused on wholesaling. Welcome to the show. We appreciate you being here.
Thank you for having us. First, I wanted to say, I was a certified public accountant. Chartered is more international.
Thanks for clarifying that.
Thank you both for having us on here. Congratulations on the news of the baby. We’re very excited for you. That’s got to be awesome.
Thank you so much.
Tell everybody how you got started in wholesaling, this idea of getting rich quickly. You see it all over social media, “Buy this course or do this and make some money.” You guys are pretty sophisticated individuals. I’ve met you in person myself. What was it about wholesaling that excited you guys, aside from the quick money that this business has to offer? Is it real? Can you make money in wholesaling? How did you guys start? Tell us a little bit about your background, if you may.
First of all, you can make quick cash from wholesaling. The reason for me is that both John and I had two incomes before. My intention was to be able to realize financial freedom and do real estate full-time. I can do different strategies. To be able to walk away from my W-2 job, I need to have quick cashflow happening immediately. That’s why I chose wholesaling as the beginning strategy and thought of building an operation from there and using the cashflow to invest in other deals.
You compared wholesaling to short-term rentals and other types of strategies that exist or even being a broker, but you felt that wholesaling would let you achieve your goals faster.
To be honest with you, I was never interested in wholesaling. I was interested in buying rentals and going that whole route. It’s not that it fell into my lap, but one thing led to another and I remember watching like a challenge. Jamil, who’s our mentor, had a challenge called the Secret Agent Challenge. I was like, “Let me watch it.”
Before then, when I was a CPA, all I was doing was consuming content. I didn’t do anything. I didn’t take any action. I was like, “Let me watch this course challenge.” At the end of it, I wound up getting on a phone call, thinking I was getting on a call for a sweepstakes, but I was getting on a call to see if I wanted to join the mentorship. I was like, “I’m not doing that.” I felt something in my gut. I can’t explain it. I just felt a strong pull to say, “Just do this.”
In that moment, I saw my whole past flash before my eyes and like, “How did I get here? All the things that led up to here. I feel so strongly about this. Let me do it.” I did it. That’s how I got into wholesaling. It wasn’t like an intention. I didn’t plan on it. I didn’t think about it. I honestly told myself I’d never going to do it. I got into it and I started taking action. The mentorship is all about mindset and taking action and doing that. I started doing it and I got good at it, got strong on my mindset and that’s how I got into wholesaling.
How did you guys meet?
We met through mentorship.
You were part of the same mentorship.
We saw you on one of the videos that Jamil Damji had created.
Joining a mentorship program, a lot of people connect and then start a business together. It can be very beneficial. For people who are tuning in, join a mentorship. It’s great to also have a mentor. You can also be business partners.
Let’s break down wholesaling. My understanding as I mentioned earlier wholesaling is a process of putting a piece of real estate under contract and then selling the contract to somebody else and making a spread on it. Is that a fair way of describing it?
We are technically flippers, but instead of flipping houses, we flip contracts.
The business has two main components, acquisition and divestment. There’s no value add or there’s no middle process. You buy something and then you sell it. Initially, when you want to buy a piece of real estate, the most important thing is where are you going to buy it, where is the market? Talk to us about that. As a wholesaler, is it advised, or is the thesis to focus on one certain market where you live, for example? Can wholesaling be done nationwide? I got follow-up questions to that as well.
Both of us were doing it virtually because both of us were in New York before and our market is in Florida, so it doesn’t matter. It doesn’t have to be in your backyard.
When you pick your market, people might be wondering, “You’re in New York. Why not wholesale in Jersey or Connecticut? Why Florida?” When you pick your market, since you’re wholesaling, you see a bunch of deals and opportunities. One thing you have to ask yourself is, “Do you eventually want to maybe invest in that market?”
The second thing was, it’s like the Starbucks effect with multifamily. It’s the same thing with Jamil’s company. It’s called KeyGlee. If they’re in a market, that means that they do a ton of research and they pick the best markets. There wasn’t too many KeyGlees around me. I knew there was stuff in Florida, and again, I had a gut feeling for that. Where their activity was, where people say it’s saturated, that’s where there’s a lot of activity. That’s also a good market to choose from. You don’t have to pick your backyard.
Now the question comes as far as fundamentally understanding the market. Real estate agents don’t even get this right of time. That’s all they do all day long is assess what a property’s worth and then list that property and sometimes they get it wrong. How is it possible for you guys to understand the market so intimately that then you can go in and put an offer on something where there is a margin for profit above it? How do you go about learning about that market?
I would say four components. 1) There are lots of software like Preview. You can do research and see the market activities. 2) We speak with a lot of agents. The KPI is 30 to 50 conversations with agents per day. By having those conversations, we got to ask what questions learned about the market. 3) As John mentioned, we want to go into a market where we have a strong human resource in terms of other big players in the market.
Talking with them, asking questions, and looking at their market research, helped us to pick up the market knowledge pretty quickly. 4) That’s the synergy between the acquisition and disposition side. You call it divestment, but it’s the same as disposition. We speak with a lot of buyers and investors who are our clients. Getting feedback from them forms a feedback loop to help us improve on our acquisition side.
There are two differences between the residential space and your markets. Agents are more on the retail side of things. We’re more on the investment side of things. When they list properties and come up with value, that’s more for retail buyers, and retail properties. We’re not going with the retail route. We’re looking for those dated properties that have the green rugs and the pink bathrooms or something that has smeared stuff all over the walls, not financeable, those properties that you would look at and be like, “I don’t want to live there. I would not live there without flipping it or without redoing it.” That’s what we go after. We’re in the investment space and a lot of agents are more on the retail side of things.
You guys work with realtors. You have a lot of conversations per day to find properties. Those are on the market on the MLS essentially, or do you also work with realtors to say, “I want you to find some off-market deals for me, go door knock, go send out flyers?” What are the strategies you guys use to find properties?
We do both. A lot of the time the initial call will be on one of their listings. We’ll go straight to the listing agent. We want to limit as many people between the seller and us as possible. We don’t want a buyer’s agent to go and talk to a listing agent, and then go talk to a seller.
You see the buying commission side.
They can incentivize that.
They could take both sides. Their listing agents, we know always are getting properties, whereas buyer’s agents usually are going for buyers. We’ll call a listing agent on a property that makes sense for us to offer. We’ll build a relationship that way, either offer on it or not, and then we follow up with them. The power of the game and the wholesaling is in the follow-up. We’re always following up consistently with the agents. When we’re following up, we’re asking more for properties before they hit the market. We’ll get on and off-market properties that way.
Are real estate agents your main strategy for your leads for properties?
No. Another huge is to do JV deals, Joint Venture with other wholesalers in the market because we are very well connected in the industry, in the area. We are pretty strong with our disposition. Usually, other wholesalers trust us. They like working with us. They lock up a deal on their contract and send it to us and we just help them with the disposition side.
We’ll get into disposition because that’s an art in itself. You’re connecting with these agents and you have a certain buy box, a certain buy profile within these markets or you look at anything?
At first, we have a particular buy box because we just pick certain criteria. It fits most buyers’ buy boxes, but that keeps expanding as we keep growing our buyer pool. Now we just look at everything anywhere in Florida.
Now instead of saying, “We live like this,” it’s, “We don’t like this.” I don’t want to see anything in a 55-plus community. I don’t want to see mobile homes that were built before 1990. It’s stuff like that. I don’t want anything renovated really. That’s what we just tell them, no land unless it’s in South Tampa or over an acre. That’s our buy box. Instead of saying what we like, it’s what we don’t like. Because we have such a variety of buyers, we could limit it to what we don’t like.
You connect with all these brokers. You’re chatting with them. Why does it make sense for them to sell to you rather than putting it on MLS?
If they send it to us off-market?
Why would they take that route to send it to you off-market?
There are many reasons, John, if I miss anything, you can chime me. First of all, we have a track record of closing deals. We are performing all the time. It’s a lot faster to say a realtor walks into a house, signs the listing agreement, and texts us getting sold within two hours. Compared to they need to help that person clean up the house, make it presentable, marketable, and go on the MLS, put all the information, pay for the marketing, receive 100, 200 phone calls, organize, show, and then sell a deal, maybe get only half off the commission compared to working with us. They can represent us as well and collect double commission. I would do the first one if I were the agent.
At first, a lot of the time, because like you said, there is a stigma with wholesalers. If you tell somebody you’re a wholesaler who’s an agent, they think you are probably a slimeball.
When I first met you guys, that’s what I thought. As I was speaking to you, I realized, that both of you are educated and professionals. Super nice people. I’m like, “This doesn’t match the profile about what a wholesaler is.” Even in our conversation right now, there is no predatory nature to what you do. You’re helping the agent. You’re helping the seller in this situation. I thought it was, “There’s somebody who didn’t know what their house was worth,” but this is more convenient and more efficient.
That’s exactly what an assignment fee is. That’s what I tell people. Why would people pay you? We get paid a convenience fee. That’s what we do. We’re doing all this research, calls, and running. I would run numbers on 40 to 50 properties a day to find the one that we like. We’re doing all of this work for a convenience fee. It’s convenient for the agent and the buyer. If a seller says, “I want $120,000,” I run the numbers and it could make sense at $120,000, I’m not going to tell them $90,000 I’m going to tell them, “I could do $120,000.” We’re not buying it to get a steep discount.
A lot of times, there’s a difference in the perceived value, what a house is worth, but they don’t realize the condition that it’s in. We’re offering as-is condition. That’s what we offer on properties. We have a convenience fee and we’re not predatory. We’ve done deals for free because we were too high on our numbers. A buyer wanted it and the seller was in a hard position. We’ve done the deal for free. We’re not going to cancel because we’re not getting paid. At the end of the day, we solve problems and we spot potential. That’s what we do. That’s what wholesalers are supposed to do.
In any industry, there’s going to be good apples and bad apples, but for some reason in the wholesaling industry, the bad apples get the spotlight and the good apples get swept under the rug. Nobody knows about them. There is such thing as ethical wholesaling and unethical wholesaling. I deal with a lot of wholesalers. I see it. Some of them are frustrating, but at the end of the day, I wouldn’t judge the whole industry based on a couple of bad apples.
Let’s discuss negotiations. We discussed that, but is there any situation where you go directly to the seller and not the broker?
Not use a real estate agent?
Two scenarios. The first one, if there is a listing agreement, we always go to an agent just to be respectful. We cannot go around them. If there’s no listing agreement, let’s say a wholesaler sends us a deal and for whatever reason it doesn’t work out, and where wholesalers are not being ethical, then that’s when we’ll go to the seller directly.
None of your strategies is to be able to go directly to sellers. Your strategy involves a conduit, an intermediary.
One contact can keep bringing us multiple deals. Maybe in the future, we’ll add on direct-to-seller, but at this point, we want to leverage other people to get more deals.
Your guys’ strategy is not direct to the seller. That makes sense here. For some wholesalers, their strategy might be direct to the seller.
Also, that helped us to almost cut off the marketing cost 100%.
I understand now because when I thought of wholesaling, I thought it was people door-knocking or finding an elderly person who needed to sell, getting a good deal on the property, and then flipping the contract. That’s cool with real estate agents.
Let’s talk about other service providers that are needed in your business. You got the real estate agent, you’re putting an offer, you’re putting the property under contract, but you’re selling that contract eventually to somebody else. You’re buying yourself enough time on the contract and we’ll get into the mechanics of the contract, but what other service providers are needed? I don’t think you need escrow or an attorney. Talk to us about that.
You do. Depending on the state you’re in. If you’re in an attorney state, you’re going to need a closing attorney.
You’re not closing though.
The buyer is still closing on it.
Maybe what you guys can do is walk us through the process. You contact a realtor, you find a property, and then what’s the next step?
I got another contract. If you use an agent, you have to use the agent, the realtor contract for that state. If you’re in a state, you would want to read through the agent contract so you know what’s in there. You get under contract and then when you’re under contract, that contract gets sent to, depending on if you’re an attorney or non-attorney state, a title company or closing attorney. In Florida, we use a title company. That contract will get sent to a title company and they will start working on it, running the title, and all that stuff.
During our inspection period, that’s our marketing period. We have to sell that contract during that inspection period. If we put up earnest money and we cancel during that inspection period, we get our money back. If we put up earnest money and don’t cancel before that inspection period ends, we lose our earnest money. That’s your marketing window. Let’s say, we sell a property during that window. We get the assignment signed. We do whatever we’ve got to do. The buyer puts up their earnest money deposit, and then we go through.
Now at closing, we still close with that title company. Let’s say we assigned it at $250,000 to the buyer. If the buyer put up the $250,000 less or whatever they put up for earnest money, let’s call it $10,000, they’ll put up $240,000 plus closing costs. Let’s say, we had a contract at $220,000. At closing, the seller will get the $220,000 and we will get the difference, which is $240,000 minus $220,000. We’ll get the $20,000 and it’ll be a line item on the settlement statement. It says assignment fee to LLC name, and then $20,000.
Canadians don’t have titles and some of our audience might not understand it. Explain what is the need for having a title. They’re checking to make sure that there are no issues with the title. Is that why you involve a title company?
Checking if there’s any lien, code violation, or fine that needs to be cleared up, calculate the total process that goes to the seller when closing. Also, just a third-party intermediary for buyers to send in their funds, EMD. It’s a lot safer that way compared to sending to us where a seller directly.
The main reason you utilize them is that you want to make sure that the property you’re inspecting has a clear title. It doesn’t have any issues or caveats on it. It facilitates the process between you and your eventual buyer as well because of the earnest money, and deposit money going back and forth. Is that fair?
John, you mentioned that you have this marketing period. Is it 30 days or 60 days? Usually how long do you guys have to find a buyer to sell the contract to?
Typically, for a single-family home, it’s going to range anywhere from 3 to 10 days, I would say. I usually put in my contracts it’s business days. The average we see is around seven business days.
That’s pretty long already because a lot of times the agents are pushing no inspection worth three days. If we’re pretty confident with our numbers, sometimes we’re just going with no inspection worth three days. That’s it.
That leads you to our next question. Do you guys have buyers before you put a deal under contract, do you have a buyer pool?
Before we got there, I had some questions. I don’t want to break down. You talked about every different region that you go to, you need to make sure that you’re using the contract for that agent, for that region. In Florida, you’re using a Florida contract. A contract has three main components I want to go over.
It has got many different points in the contract, but the deposit amount, the closing date, and the assignability of the agreement. Talk to us about those points. You touched on a couple of them. You put it under contract for seven days until your deposit goes hard. You do your inspection and your title company’s doing the research there. Now your deposit goes hard. Usually how long till closing?
Nearly two weeks. That includes the inspection period. The total from getting under contract to closing will be two weeks.
That’s still pretty quick. Talk to us about the assignability of the agreement. Are standard Florida contracts automatically assignable or do you have to make some amendments to the contract?
It has three boxes. It has 1) Non-assignable, 2) Assignable but not released from liability, and 3) Assignable and released from liabilities. Typically, we pick the second one, so it’s assignable but not released from liabilities, and the very off chance is if it’s not assignable for the agent or the seller, we just do a double closing. We close with the seller on the AB transaction and sell to the end-buyer on the BC transaction on the same day. Since we have a good relationship with our title company, what they can help us to do is do a flow-through funding. The BC transaction, let’s say, closes at 9:00 AM. The buyer’s money comes in and flows to the AB transaction closes at 10:00 AM or 11:00 AM, a couple of hours after the second transaction.
This is when your seller was not okay with you checking box number two.
As long as it’s assignable, we don’t have to double close. Only if some of them are just super admin of non-assignability, then we have to double close.
On the FARBAR contract, it’s Section 7. It’s called assignability and it’s those three boxes. If no box is checked, then it’s not assignable. You need either box 1 or 2 checked.
What happens is you can work with your title company. Even though you’re technically closing on it, the funds are not coming from you. It’s coming flow through from your end buyer.
It depends on the state. In California, maybe it’s not allowed. In Florida, it’s allowed, but not every single title company has the ability or knowledge to do that. The ones we are working with are pretty knowledgeable. They’re able to help us to arrange that. Let’s say for states in California, if you cannot do that, we just use transactional funding like charging 1% or 2%.
Let’s say you buy a house for $150,000, you need that $150,000 for an hour or two hours. To use a transactional lender, charge you 1% or 2%, you just pay $150,000, whatever the loan amount is, times 1% to 2%. They make sometimes $20,000 over one hour.
When I grow up, I want to become a transactional lender. I’ll be done with everything to do with acquisitions. We talked about the region, how you come up with your leads, and putting deals under contract. Anything we missed in the acquisition side of the business?
Nothing on the acquisition side. The only thing I would say is when we’re talking about a title, if you are going to wholesale, even if you’re flipping honestly, you’re going to want a 1 or 2 or even 3 title companies you do all your business with. We do all of them with Virginia Danskin in Fidelity National Title. For every single contract, we’re going straight to her because she’s the best. We have a great relationship with her. She knows how we work. You feel very secure when you have a good title company behind you.
If you’re thinking, “How do I get a good title company?” If you’re wholesaling or even if you’re new to flipping, call a bunch of people you know in that market, and ask them whom they use for title. The names that come up the most commonly, call them up. Introduce yourself and start using them and sending them your contracts, and just stay in touch with them. Take care of them too.
Don’t make the job a lot harder. You want to make it easy. Label your documents correctly, make sure everything’s super clean and organized, and be very communicative with them. Treat them every now and then. If they close twenty deals with you, buy them dinner or send Crumbl cookies to their office. Take care of them.
They call it the Jordan Effect. There’s a story I was reading where they did a research on Michael Jordan and they figured out that he gets called on by referees for fouls less than any other player in the NBA while he was playing. They try to figure out what is the science behind this. Initially, they thought that referees were in awe of the way he was playing. That’s why they’re not calling him out on his foul.
They realized when they did more research that he took care of everybody in the whole stadium whenever he came in. He knew the first names of all the referees. He would go up to them and say, “John, how are you doing? How’s your kid doing? Is he making it to the NBA? Let him know that Jordan says, ‘What’s up?’”
The time he was putting in outside of the actual game and outside of training added to his success in the business. This is the same thing with our business. The time we’re putting in to take care of our service providers is outside of our business. It helps in us having that Jordan Effect. We got a crash course on the acquisition side of the business and the contract part. Now let’s talk about selling this thing. We need a buyer. We need somebody to have the money to buy this deal from us. Go ahead, Ava.
That’s what I was curious about. You guys have a short timeline to flip these contracts. Do you have your buyer pool waiting on the sideline before you go into a deal? What is the process that you guys utilize for finding buyers?
It’s a progress. When we first started, we didn’t have as many buyers. That’s when we were not able to go as aggressively with our terms. Now since we have a large buyer pool, we have buyers all over Florida for all kinds of deals, we can be a lot more aggressive on our offers. That’s how we got it under contract compared to other wholesalers. I wouldn’t say we have a particular buyer for each deal, but we know we have a large buyer pool and they all like this particular deal. We can send it to them with confidence and know we can find a buyer pretty quickly.
We don’t have a buyer like, “I’m about to lock this up. I’m sending it to this guy right now. He already committed.” We don’t market a deal without having a contract because we can’t do that. That’s not legal. It’s a waste of the buyer’s time when we don’t have control over it. There are times when we cancel because we know what we’re looking for.
I’m not going to call and offer on a 1975 mobile home because I don’t have anybody for that. If somebody sends me that, I’m passing on it right away. Also, any mobile home built before 1976 isn’t financial anyway. I know there are some ways around it, but typically for anybody who wants to know that, look for a mobile home built after 1976. We just don’t spend time on deals. We have a very low likelihood of selling.
I’m wondering how you guys originally found buyers in the first place. Here at CPI Capital, we went through all these processes and built all these funnels to get investors through the funnel. When we eventually have a syndication deal, we can present it to them. How did you guys originally start by even finding a buyer where you knew that they were looking for these types of good deals that you could flip them the contract to?
My story is about that guy who found me in the builder at WhatsApp group and that my signs were all over the neighborhood where I built homes and in that neighborhood where he had the lot. That’s why he found me. How do you find your end buyers?
There are a lot of ways. As you said, finding the signs, posting in Facebook groups, and all kinds of networking events are one way, but the more methodic and efficient way our opinion is the property. If it’s a fixer-upper, after a few months, it will be renovated and then resold on the market as a beautifully renovated house. We skip-trace. Who bought that fixer-upper and who is the current seller? That person is a flipper we want to reach out to sell our properties.
Your buyer profile is a fix-and-flipper. Is that the best profile for you?
Some of them want to do a BRRRR and hold it as a rental, which also works.
Even developers too. We might get a teardown property or even some land. Developers as well. Honestly, any other real estate investors use cash, private money, or hard money to purchase their property.
You’re more focused on value-add investors. Investors who are developing or renovating. You’re not looking for the cashflow guy because if some of the properties you buy might not be livable, that guy doesn’t want to go through the process of having to renovate and all the other stuff. It’s got to be a buyer who has a level of sophistication in construction, development, and what have you.
That’s the majority of our business, but we do have the capability of wholesaling creative deals too. It’s just not the bread and butter. For example, if a house is beautiful but has low equity where the sellers have no hardship, we can structure a deal on terms and wholesale to some buyers looking to do like a short-term rental or tax buyer. We have the capability of doing that is just not as much volume compared to our cash deals.
Out of curiosity, what percentage of your deals do you lose your EMD on? Do you have any KPIs on that?
For us never happens, but it happens quite often for some other wholesaler world. We’re pretty cautious about what we do.
Even in our business in multifamily syndication, I know a lot of people who lost $250,000, or $500,000 earnest money deposit. It’s pretty regular in our space. That’s amazing. Good job for you, guys.
I want to get into this next question here. I want to discuss about market price. When you guys find a deal, how do you guys determine the price for then flipping the contract, how do you negotiate with the realtors, and how does it all work?
Our understanding is that for wholesaling to make sense, there’s a market price. You guys got to buy this thing below market, but you also have to sell it below market. If your fix-and-flipper, your developer, or your buyer can buy the same home from a deal on the market, they’ll just buy it on the market. You have to have a competitive advantage which is a lower price to sell it to them. That means you have to buy something below the market and sell it below the market.
By market, don’t worry about the list price. We sold a deal of $23,000 over the list price before. That was also because it was just listed. Again, the market value for the house as-is condition, that’s going to depend on what the value of the house is once it’s flipped up, or the value of what you could do with the house. When we see a house that needs work, we run the comps in the neighborhood. We see what we think it could sell for if it was done beautifully or if you needed to add a second bathroom or whatever the best use of the house is. Which is why I say we spot potential. It’s up to us to try to figure out the best use for this house.
Based on that, we know, from talking to buyers consistently, what average repairs are going to be and what the average profit they’re looking to make is. I know, from having the relationships with the title, what the average closing costs are going to be when they resell it. We work backward. We get the ARV. We take out usually around 10% for closing costs and holding costs for the flipper. We subtract out the repairs and then subtract out the estimated profit. We know that’s where we have to sell it to a buyer. Give or take $10,000. If we know that’s where we got to sell it at, we just have to be below that number.
Now some flippers will offer $30,000 below that number, and then we’ll have some flippers that come in at that number. On the whole you have to get it at a discount and sell it for less than most people, not necessarily true. I just got to get it to somebody where it makes sense for them where they could make their profit appetite. If it’s a horrible-looking house and it needs a ton of work, if it’s worth as is $175,000, we could sell it at $175,000 but guess what it gets listed at? $220,000 or $235,000.
I’m not low-balling anybody. Your offer and asking price are usually just too high. There’s a difference. It’s a different way of perceiving things. Instead of saying, “I’m sending you a low-ball offer,” you’re asking for a high amount. I’m giving you what it’s worth. You are just asking for too much. Sometimes, we might be a little too conservative and we might be a little low. Again, it’s all about the perceived value of the house. You come off of that number is where you get your offer.
John, when you guys go to your buyers, do you put together a package saying, “If you accomplish these renovations, you’re going to be able to sell it for this,” or do you just give it to them as it is?
We’re giving the number.
We include some ARV which is After Repair Value. It is the value of the house after you fix it up. We give some comps to substantiate our number for ARV. Sometimes you’ll ask us how much renovation costs are you estimating. We don’t like to give that number because first of all, we don’t know what you want to do with the house, or what renovation you want to put into it. If you want to use a super expensive cabinet for a rental, we don’t know what exactly you want to do. Secondarily, off buyers have their in-house crew, which is super cheap. We don’t want to give him a number that’s too high or too low to impact their offer number.
That makes sense. You’ll send them essentially comparables of newly renovated properties in the area that have sold and say, “This is what you can accomplish doing way.”
That comes from ARV.
Some of them might think the only place is to do this. An experienced flipper might be like, “I’m just going to build a shed in the backyard and turn that into an ADU and then add a second bathroom and I’ll get $100,000 more than what you think I could get for it.” They’re not going to tell me that they would’ve offered $40,000 more than I asked. If we tell them an exit strategy, we then limit their imagination. We let their imagination run wild, “Do what you want to do. You’re the flipper. We’re just giving you the price that we could sell it to you at. We could give you our opinion.”
At least we want to make sure for at least fix and flip. Whereas a normal rental, the number makes sense.
You’ve never lost an EMD. Have you ever had to close on the deal?
We haven’t double-closed yet because we were always able to convince an agent to make it assignable.
You never went in, put in a deposit, your time ran out, you couldn’t find a buyer, and you had to close on it yourself?
No. If we cannot find a buyer by the end of the inspection, we pull it.
We’ve taken risks. We’ve had a buyer saying, “I’m good, but I can’t put up money until Monday.” Our inspection period ends on Friday and we’re like, “It’s worth the risk. If we risk $5,000, we can make $30,000. Let’s just do it.” We’ve risked money before, but the buyers always came through. How much do we trust this buyer? How serious are they? If we’re like, “I don’t know. It’s not worth it. Let’s not do it.” I’ve risked it three times and they’ve always come through for us.
That gives us a good understanding of the wholesaling business. When I met you guys at the Jake & Gino conference, we had a shortened version of our conversation. You guys were on point. You knew all the answers to the questions that I was grilling you with, but I also saw how much money you guys were making in this business, and surprised me.
I asked you what’s your current pain point. Why aren’t you guys scaling this business even bigger? Your answer to me was talent. It’s difficult to be able to clone yourself. It’s hard to train people enough to be able to take those critical positions within your firm. Talk to us about building the company and where you’re at right now. What are the pain points? How to scale? Give us the inner workings of your business, what you’re seeing short-term and long-term, and what’s your vision.
It was hard to find the right talent. We just didn’t have the right talent. The right talent is out there. We just weren’t effective at finding it or using the right methods. Now it’s a little different. We brought on a business coach. We have a recruiter working for us to bring us talent and we’re building the team. We hired another four people, some VAs and another one’s a non-VA. We’re getting that talent situation figured out. With the business coach, we’re also building out our systems to be more organized and cleaner, and have our onboarding process a lot more dialed in.The right talent is out there. You just are not effective at finding it or using the right methods. Click To Tweet
Before then, our onboarding process was a lot more hands-on training. Now we’re building out the videos to train you well. We’re getting it almost like its own mini-course. Each department has its mini-course. They watch all the onboarding videos first, and then they come on shadowing. The onboarding process is a lot cleaner and smoother.
We’ve started to fix that problem because we were aware of it. Everybody knows it’s Awareness, Intention, and Action. AIA is the key to anything in life. You can’t solve something you’re not aware of so you got to become aware of the problem. You have to set the intention on how you’re going to fix that problem, and then you have to take action. We did that with our problem of talent. Now we’re taking care of that.
As far as the vision for the company, we’re so very big into the mindset as I said. I’ve already seen this vision happen every single day 1 million times. We are going to build a wholesale national franchise, and originally, it’s going to be around five corporate stores, give or take. We’re going to franchise out the model and we want the franchising company to make us each net $1 million a month.
The Alex Hormozi’s gym launch type of style or thing. It’s similar to wholesaling. It’s like the gym launch, but for wholesaling. It’s a franchise business.
The intention is to make us $1 million a month, but it’s not purely a money-motivated thing either. It’s because we would’ve solved, figured out, and recreated in different markets. This is the blueprint. This works. It’s not “printing money.” I don’t like using that term, but it’s almost like printing money if you do the work and follow this.
We want to be able to help other people. Our franchisees are able to go ahead and build that business, create the choice and freedom that they want for themselves and their family, and be able to help other people get out of that poverty-stricken mindset, and all that stuff. It’s a lot more involved than just the money. The more money we make, that means the more successful other people are. We want to be able to help as many people as possible make some money.
Also, to teach other wholesalers in the industry to do things ethically and in the right way. That was another pinpoint. We did not have the right people on the team or the processing system because both John and I were visionary and we didn’t have an integrator on the team. The only integrator we were putting that person on the sales roll the whole time and was struggling. After repositioning the whole team, now everybody’s in the right seat doing the right job for them.
Let’s go back to the talent. When you bring in talent, they’re working in those but two positions. They’re out there talking to brokers, underwriting deals, analysis, and then on the sales side, they’re out there finding your sellers for you. Is that fair to say?
Pretty much. Those are the major roles on the phone sales role, speaking with agents, wholesalers, and buyers, underwriting property, and there are some other VAs who are helping us with some admin data work.
That’s a great question to have all about the mindset. I love it.
We love the mindset. John has done some videos on YouTube about mindset. I appreciate this more than I do.
I’m all about the mindset, so I connected.
I appreciate that guys. Thank you for all the wisdom and knowledge you shared with us. We’d love to get you back at some point come back when you have when you’ve scaled your company and relaunched a franchise or other businesses you’re looking to venture into as well. We discussed before the show, that you’re looking to scale your business get into the multifamily syndication side of the business, or grow your business and what have you there. We’ll touch on that later on. Let’s get to the second segment of our show.
The Ten Championship Rounds to Financial Freedom. Whatever comes top of mind, I’m going to ask you ten questions, and Helena, let’s start with you. Are you all set?
First question. Who’s been the most influential person in your life?
That’s hard. I would say one of my teachers in my middle school because she is big on mindset and self-power, especially for women. She changed my mindset in terms of how we need to keep building, focusing on ourselves to have to create more options for ourselves. She is very important for that teenage or childhood state in my life where people are always getting distracted by all kinds of things. She got me focused on what I wanted in the long term and put in the work.
I saw in your profile that you went to Shanghai University or one of the universities in Shanghai. Was this middle school in China or the US? Where was this?
I came to UPenn for my master’s. That was college.
The teacher you talked about, that was where?
That was middle school when I was a kid in China.
John, who’s been the most influential person in your life?
It’s got to be my man, Jamil. Before him, I didn’t take any action. I was stuck on my W-2 job. Not that there’s anything wrong with it, it just wasn’t for me. I was not big on mindset. Every day, I used to say, “I’m not negative, I’m just being realistic.” That’s the whole quote that I used to say. Ever since meeting him, joining the mentorship, seeing how big mindset is, and then going down that rabbit hole, he shifted my focus that way. Ever since I got into this mindset, I’ve never been happier. Any problems are now opportunities because that’s all I see. I thank him for shifting my view on life and everything. It’s had the biggest impact on my business and my personal life. Got to give it to him.
Next question, guys. What is the number one book you’d recommend, Helena?
I like Changing the World Order by Ray Dalio. He’s my icon in the finance world. He reviews all the history, discovers the pattern, and explains where we are right now. He says the whole world is going to the next chapter, and his wisdom is all in that book. I like it.
John, what’s the number one book you’d recommend?
The Power of Intention by Wayne Dyer. In the beginning, if you’re new to mindset, you might start reading it and be like, “This dude is out there. He’s gone.” When you start working on your mindset and you have the intention to build your mind, it’s one of the books that changed my view on everything. I highly recommend it.
Change your mindset, change your life.
I saw an Instagram post about that. I’m still stuck in being a realist and you’re more mindset.
I got to be on him every day with the mindset.
One of the quotes he says is, “When you change the way you look at things, the things you look at change.”
Next question. Helena, if you had the opportunity to travel back in time, what advice would you give your younger self?
Be more adventurous because the background, how I was raised is always climb the career ladder, focusing on a corporate job, and go down the path that thousands of people are going down. I reach that which can completely change my mindset and start doing things about entrepreneurship. I never thought I was an entrepreneur until I became one. I would say just see more potential in myself and try things out. Don’t cage myself in the framework created by society or by the family.
John, if you had the opportunity to travel back in time, what advice would you give your younger self?
I would tell myself, “Don’t change anything. Just go through life. Don’t take yourself so seriously and know everything’s going to work out the way it’s supposed to work out and the way it’s supposed to work out is going to be beautiful. Keep living your life. Smile every single day, and don’t worry.”Know everything's going to work out the way it's supposed to work out, and the way it's supposed to work out is going to be beautiful. Click To Tweet
Enjoy the moment. John, I’m going to put you on the spot first this time. The next question is, what’s the best investment you’ve ever made?
AstroFlipping program. I invested in myself and it’s changed my life and I’ve made my money back tenfold by far.
Helena, what’s the best investment?
I would say the same.
Helena, what’s the worst investment you’ve ever made, and what lessons did you learn from it?
I haven’t had any, to be honest.
Was there a time investment you made that maybe, looking back, might have been a waste of time? It doesn’t have to be a monetary investment. It could be an intellectual investment or a time investment. Was there anything in life you can look back and say you didn’t get?
Throughout middle high school, even in college, I was putting too much time into how other people perceived me and that’s a complete waste of time, so I wouldn’t do that again.
John, how about you? What’s the worst investment you’ve ever made? What lesson did you learn from it?
Honestly, crypto. I knew nothing about it. I threw some money in it. I shouldn’t have gone the whole altcoin route. If I was going to buy crypto, I should’ve just bought Bitcoin, not all these other things. I’m not day-trading crypto. That was probably the worst investment I ever made.
That’s what I would say as well. Altcoin was the worst investment I ever made in my life.
I was trying to be a day trader for crypto. I had no idea what I was doing.
Helena, next question. How much would you need in the bank to retire now? What’s your number?
I would never retire because I like the work and the nature of the work itself. If you ask me what would be a number in my bank account that makes me happy now, it’s $1 billion.
There you go.
Nobody’s ever said the B word on this.
Helena should be flipping for life.
Got to get those shirts made up.
How about you, John? How much would you need in the bank to retire now? What’s your number?
Helena took my answer. I was going to say $1 billion because I’ve always wanted to hit the B mark. The real answer is I wouldn’t want to retire because I feel like when I retire, I stop growing and I want to continuously grow and get better every single day. I wouldn’t want to stop the challenges. I would want to continuously have more roadblocks to overcome these obstacles so I could always get better and each day, I’m better than I was at last. To me, that’s more than money.
That’s how you’re going to make it to the B. Let’s switch it one more time, John, you’re first this time. If you could have dinner with someone dead or alive, who would it be?
Wayne Dyer. I would love to speak to the man and pick his brain. Every single morning, he’s one of the people I listen to. His outlook changed a lot of high entrepreneurs’ lives.
If you don’t mind me telling us, who is he? Just a quick background.
Wayne Dyer’s a big self-help guy. He was a psychologist and he’s written a bunch of books on your consciousness, the way you view things, and connection to source. He’s a big personal development guy. He’s got books like Wishes Fulfilled and The Power of Intention. There’s a spiritual solution to every problem. He’s got a bunch of great content. Unfortunately, he’s no longer with us, but if you start listening to him, he’ll change everything. He’s very good. I listen to him every day, so I would love to be able to pick his brain and just talk to him.There's a spiritual solution to every problem. Click To Tweet
Were you going to say somebody alive as well? You don’t have to but initially, when you started talking, I felt like you had set out already two people, but it is totally up to you.
Wayne Dyer has always been the one. Wayne Dyer and Bruce Lee were the two people that I was tossing up between.
Helena, if you could have dinner with someone dead or alive, who would it be?
Chamath. He’s alive. He’s a venture capital guy. Several billionaires. He’s the host of the All-In podcast. He’s the smartest among all of them. I appreciate his perspectives and I would love to meet him.
He was one of the first people on Facebook. He got a big piece of Facebook. He was one of the first engineers on Facebook. He’s doing some great things. I love the video and I keep watching his video, I’ve sent Chamath’s video to more people than any other video. It’s a video of him saying about being a big great copycat, “You don’t have to reinvent the wheel, just learn what other people do. Do it a bit better. Be a great copycat.” That’s a great video.
Helena, next question. If you weren’t doing what you’re doing these days, what would you be doing now?
Any dreams you had in life. Would you be a race car driver, a pilot, or a dancer? Was there something you would’ve been doing now if you weren’t doing this?
I would be very deep in the fashion world, attending shows and networking with those people in the fashion industry. I love fashion.
Me, too. I would’ve been in the fashion world.
Mr. Fashionista over here. John, how about you? If you weren’t doing what you’re doing these days, what would you be doing now?
Would I be able to do it?
I don’t think you have to be able to do it. It’s something that you would’ve dedicated your life to. You don’t have to have the skills to be able to do it now.
Knowing what I know now and being here now, if I wasn’t doing real estate, the only other thing that gives me energy is helping other people with their mindset and being able to break limiting beliefs. I’d go down the personal development route and motivational speaker.
Believe me, I’ve been feeling that the whole show. I was about to retain your services as my personal development coach already.
Next question. What do you think is better book smarts or street smarts?
Street smart, 100%. You can always find some book-smart people, but you have got to be street-smart to find them.
I like that.
This is the problem going second. Helena just keeps taking my answers. I sound like a copycat.
John, book smarts or street smarts?
Street smarts. I’m not the most book-smart person there is, but I would say having street smarts and knowing the way to interact with everybody. With more street smarts, you get the power of persuasion. When you have book smarts, you think too logically sometimes and you can’t bend rules. I would say street smarts.With more street smarts, you get the power of persuasion. Click To Tweet
Just to note both of you guys are book smarts, so just keep that in mind. You have street smarts, but you both have gone to college and are well-educated. You fall under the category of book smarts already.
Last question. We’re going to go to Helena first. If you had $1 million in cash and you had to make 1 investment now, what would it be?
It would be a bunch of multifamily, but I just buy them. Not big ones but maybe in a certain area and they’re close to each other. I have one property manager managing on-site, but there are smaller ones and I buy all of them 100% so that I can roll it into 1031 exchange to double or triple the number in the future. They’re all close to each other but smaller. That’s easier for me to do the 1031 exchange.
John, if you had $1 million in cash and you had to make one investment now, what would it be?
I would start my not-for-profit school. That is going to be my passion project. The whole reason why I’m doing this wholesaling and wanted to get into multifamily space is to start my not-for-profit schools that are going to teach financial literacy, mindset, and personal development in all of the underprivileged neighborhoods in the country.
I want to have at least one in every state. I would like to have as many in each state as there are in those neighborhoods to help eliminate the poverty-stricken mindset. I do believe poverty is a mindset, but it keeps getting pushed down to a certain area in the country. I want to help eliminate that through those schools and give opportunities to a lot of entrepreneurs in those hard times. I want to be able to give opportunities and give the gift of a healthy and positive mind.
A quick comment on that. The school curriculum needs some education on financial literacy, let alone the underprivileged. Overall, the school curriculum focuses on things that you might never use for the rest of your life, but things that you use every day like how you even change a flat tire, things that they should have been taught in school, taxes, simple bookkeeping, or things that would’ve much more beneficial in life than some of the things we learned in school. Thank you so much for all your questions. Thanks for your transparency. Thanks for taking the time with us.
I appreciate it. John, I want to let everybody know the best way that they can reach you and then Helena, you after, please.
Helena, what’s the best way people can reach you?
Thank you so much and appreciate your time.
Until next time you, guys. Go do a bunch of flipping contracts.
Will do. Thank you.
I appreciate that. Thank you so much for having us on here. August, you got to let me know how I could get my beard looking as nice as yours because I’m lacking in that department.
Just stay on after the show and I’ll give you some tips.