Building a “Multi-Purpose” Flipping Operation in 4 years- PART TWO

How to build a real estate investing business for the long runs WHILE being a wholesaler – A part 2 interview with Jeremy Resmer, Tennessee Wholesaler

This is the part two interview, for part 1 go to: https://www.realestateaudios.com/jeremy-tennessee-wholesaling/

And for an exclusive video seminar on 40 ways to find a deal, head over to: www.realestateaudios.com/flipping and subscribe to my daily REI newsletters

Interview Transcription:

Paul do Campo:

Were there any other struggles when you started besides the funding? Any big struggles or any big problems you came across and how did you solve those?

Jeremy:

Finding deals. At first, I didn’t really know, I was trusting a coach who’s telling … Send out direct mail, do this, do that. I really didn’t know how all this was going to work, and so I’m trusting somebody, and then at the same time, I’m traveling out of the country for weeks at a time. I’m sending direct mail, I’m spending a whole lot of money, I can’t follow up with people, so here I am, I just spent hundreds of dollars, thousands of dollars. I wasn’t getting those deals because I wasn’t following up, and I just had too many things going on at once. It was hard for me to find the deals at first, and then once I made the transition, and this is just me personally, I took a huge leap and said, you know what, if I’m going to do this, I got to jump in with all my time and all my energy.”

Jeremy:

Quite honestly, I was having some major personal challenges and I needed to step away from the nonprofit I was at. I mean, I loved it, it was great work, but just things were going on at home and I was burned out, and I needed to be home with my family. So I said, this real estate, I’m doing it part time, maybe I can transition into this full time, and made the leap. There were months where I was flipping houses, didn’t have many wholesale deals at all, and I didn’t know where the money was going to come from. My wife is a stay-at-home-mom. She left the workforce to be with our three kids and to homeschool them, we love traveling, we love the flexibility of our own schedule, and so the challenge was now, I needed to make money. So I was on the hook and it was hard.

Jeremy:

For about 18 months, it was really, really stressful. You close the deal, but what’s next? How are we going to pay the bills next month or six months down the road? That was really, really scary, but at the same time, it forced me to say, listen, I’ve got to figure out a way to make this work. I put in a lot of time, a lot of hours, and ultimately we did, so here we are now operating in different markets and doing different things, working with lots of different folks. Recently, we got to multifamily. I don’t know if this is something you want to talk about, but at the end of 2018, we were midway through December, we had zero rental properties and we had one that just fell on our lap. And then we decided, let’s get a couple more. So literally, in a span of 11 months, we picked up I think 39 doors.

Paul do Campo:

All multifamily or some single family?

Jeremy:

We started with single family. A couple fell in our lap, this was the point where we started to figure out the PPC, and we started to figure out how to generate leads and how to follow up. It was crazy because all these things happened at the same time, we had this snowball effect where maybe we just understood our market better or maybe we just knew what marketing works best for us, but all that started to happen at the same time. And then, I just started to reach out to people that are wholesalers that were wholesaling apartment buildings. I just put it out there, hey, we’re looking for rental properties, duplexes, multifamily, whatever. At that time, my partner was pushing for this, I’m like, man, I don’t really know multifamily, we’ve just got a couple of rentals, we’ve got a couple of duplexes. So little by little, we were picking stuff up. I started to get more comfortable because I was the one meeting with sellers, I was meeting with other wholesalers who had properties under contract.

Jeremy:

So finally, he just said, “Listen, what about multifamily, are you ready to do it?” I’m like, “No, but I’m just going to put it out there and see.” So, I posted on Facebook and I said, “Listen, anybody that has multifamily doors available, I’m looking to buy.” Sure enough, it was within a week, a guy posted a property and it was eight units, and about 30 people said, “Yeah, I’m interested.” But I followed up with this guy and sent him an email, I said, “Hey man, if you get me first crack at this and get me in, I’ll take my property manager there and I’ll let you know right away.” He loved that approach, he loved how hungry I was. We ended up picking up eight doors for 175,000, and those eight doors were bringing in about 3,000 a month. We ended up getting the rents up within just a couple of months. Now, we’ve only owned it now for … we’re coming into our eighth month and now we’re bringing in about 4,500 a month on those eight units.

Jeremy:

We found a lender, we asked several different lenders, and many of them said, “Hey, no, we won’t fund it.” Or, “Hey, this is a little bit of a unique property. This looks more like a single family.” We just kept knocking on doors, calling lenders and trying to see who would fund it. We found one that would do it, and we ended up putting in … I don’t know, probably 15,000 of our own money. We made some basic improvements when units turned over and a little bit to the exterior, but maybe $1,500. I mean, nothing, hardly. The rents were so under market, and we were like, “We can raise rent, we need to raise rents.” As the leases were being renewed, our property manager just said, “Hey, listen, these right now are going for like 385, 395 a month, they should be closer to 550, maybe 600.” Literally, we started that process of increasing rents, forcing appreciation. Just this week, we are going to refinance that property. Like I said, we’re coming into our eighth month of ownership, we’ve done really, really well with this property so far and we got an appraisal value of 290,000.

Jeremy:

That was an eight unit. And then, literally a couple of weeks later, I got a call from someone who said, “Hey listen, we got 19 units, are you interested?” I said, “Well, here’s the price I need to be at.” “Okay, we can make that work.” I went out with my property manager, it was a very, very basic inspection, but I realized this was a huge opportunity and rents were somewhere in the range of 590 … I’m sorry, 490 a month for a two, one for 19 units. Market rent was anywhere between seven and 800, and we just said, “Hey listen, this is a killer deal.” We ended up getting under contract right then and there, and now, we’re in the process right now. We’ve owned that one for about three months, and we’ve pushed rents all the way up to … We were between 750 and 800, and we bought it all in for about 850,000. That’s the wholesale fee and closing costs and all that.

Jeremy:

We’re working with a lender right now who thinks our valuation here in the next two to three months is going to be between 1.1 and 1.2 million, and we’re going to refinance that one as well.

Paul do Campo:

Awesome, dude. That’s awesome. Yeah, we could probably do a whole show on just multifamily because … Yeah dude. Going back to when you were struggling, it didn’t seem like you quit your day job at the time and you’re going from deal to deal every month. Was there a turning point for you where you went from being worried about getting food on the table to having consistent inflow of deals and turnover and having ongoing business to actually say, looks like it’s going to work?

Jeremy:

Yeah, it took us probably … I mean, I’m still working on that. I mean, I’m getting the right people on the bus and putting them in the right seats, but it’s taken probably a good 18 months to really transition. To be honest with you, it took at least 12 months to get to stabilization where I’m like, okay, I’m not stressing every single day about putting food on the table. If you can avoid that situation and still continue working your job and earning enough income on the side, when you get to that transition point where you could jump ship and say I want to do this full time, if you can do that, I would recommend it. However, people like me, my personality is just jump head first. I have a lot of faith, a lot of belief in myself, and I knew that I could potentially fail, but I knew that I wanted to do real estate, and like I said, I had to move out of that position that I was in because of all the personal stuff going on.

Jeremy:

I didn’t want to go and hop into another job just for the security of the income when I felt like, I’m going to be back in real estate anyways. So I just said I want to make this happen, I was thinking long-term. It took at least 12 months to get to a point where I had stable income, but I also burned through $25,000, the safety net that I did have, which really wasn’t that much. But eventually, we were able to work our way out of that and get stable income from the business, bring new people on and have them focus on different aspects so that we can really focus on having a business. But it was hard, man. Definitely, huge.

Paul do Campo:

That transition you’re talking about like the 12 months, were you doing all the acquisitions by yourself or you already had your boots on the ground with the team member?

Jeremy:

Well, I was doing everything at the time in Nashville. I was doing all of the lead followup. So a lead comes in, boom, I’m answering live calls. I would be at the house, we’d have one or two projects going at once that we’re flipping and I would be there. Sometimes, I’d be swinging a hammer, doing some of the work, a phone call would come in, I answer the phone, “Hey, Mr. Seller,” have that conversation. “Okay, you want me to come check out your house? Okay, what time works for you?” And then, maybe it was that day or a different day, I would run over to that appointment and I meet with them, try to get it under contract. Presumably, I want to wholesale it if I can, and then it would be back to the property managing contractors or run around go and getting stuff from Lowe’s or Home Depot. It was crazy man. I was running all over Nashville trying to do a little bit of everything, and it just wasn’t scalable, it was burning me out. That wasn’t why I got into this business.

Jeremy:

However, that said, I knew that it was do or die, I needed to make a living, so I was going to do whatever it took to get to that point to be able to, at some point, get out of that rat race. My guys love looking at properties really early, because they’ll drive and they want to avoid Nashville traffic, so they’ll get at a house sometimes 4:35 o’clock in the morning. I’m like, “Listen guys, I want to wake up and have breakfast with my kids.” And so, I’m going to be at the house maybe 7:00, 7:30, and that was early because my kids aren’t really up that early, but I would try to do a little bit with the family and then head out, and then I’d be working until 8:00, 9:00, 10:00 at night. Everyone goes to sleep, and I’d still be working on my website. Hey, we got a testimonial, so I’m sending out Google reviews. Hey, will you please send me a review for this property, Mr. Seller? Thanks for working together, this and that. It was just crazy, it was nonstop because all I did was work.

Jeremy:

But I needed that to understand how the business was running. I needed to understand what I didn’t want to do, what I like to do, and then figure out, okay, how do I get myself out of this daily grind so that I can actually run the business? Ultimately, we did find another market, we did find boots on the ground. And then as time allowed, we were able to build up the business in that market, and then no longer was I forced to run all over town and we were able to make enough money to support that. There were so many competing factors intention that we needed to work through, and it just took a long time. Like I said, it’s been at least 18 months, maybe 24 months. We’re at a really good place right now, but I’m even still too involved in the day-to-day, so I’m looking for our next team members to be able to take some of that workload, and again, for me to continue to focus on where we need to be in the next couple of years.

Paul do Campo:

What’s your website by the way? I’d like to check it out, for motivated sellers.

Jeremy:

Yeah. Myrtle Beach Home Buyers. That’s just myrtlebeachhomebuyers.com.

Paul do Campo:

Is that a carrot site?

Jeremy:

It is a carrot site, yeah.

Paul do Campo:

Cool, I will check that out then.

Jeremy:

Then we’ve got in Nashville, TN as in Tennessee, tncashoffer.com. That’s our Middle Tennessee Home Buyers.

Paul do Campo:

Are they both pretty equivalent as far as getting leads from the search engines, both of those?

Jeremy:

Yeah. Well, our Middle Tennessee Home Buyers, so the TN Cash Offer, that’s been around since 2016. We’ve had a lot of time, so our site has been able to build up authority. We’ve had other citation pages and other things going, we’ve had SEO, we’ve had three different companies now do SEO for us. I mean, if I didn’t even have an SEO company doing anything for me right now, in fact, I did for six months where there was a gap between anybody managing that, we were still getting leads, we were still closing deals. That’s the beauty of it, is if you need leads now, SEO is not the way to go, but if you’re looking for the longterm, then if you’re able to spend the money, SEO is going to drive a lot of motivated people. Because those are folks who they’ve had an opportunity to look and see all the other home buyers that are out there. They look at your credibility, your Google reviews, what other people are saying about you. They’ll find you on Google, and from there, they’re looking at you and maybe three or four or six other companies.

Jeremy:

For me, when someone calls me and it’s an SEO lead, I know they’re motivated, I know they’ve vetted our site and they’ve seen all of our reviews and they’ve seen what we’re doing. Our Myrtle Beach Home Buyers is the one we’re really focusing now. We’re doing a lot of video testimonials. I don’t have any on our Tennessee site. We focus previously on the Google reviews, so we’ve got like 31 or 33. Myrtle Beach is still new for us, so we’re only in this 11 months, so we’re starting to really focus on getting those video testimonials and we’ve got to do a better job with our Google stuff. The online, both of those sites are doing really well. We’ve hired a firm that, now, they’re doing both of those sites and they’re doing really, really well for us.

Paul do Campo:

Today is your acquisitions guy, is he meeting with every lead or is he doing some closing over the phone?

Jeremy:

He doesn’t do any of the initial screening. He only gets the leads after they’ve been screened. I know a lot of people are talking about closing deals over the phone, but we just haven’t got to that point for two reasons. One is, we like to build rapport in person, and we’re so … What’s the word? For us, if we’re going to wholesale a property, we personally want to make sure that we’re putting out a good deal, and so we want to know what are the repair costs? Of course, every flipper’s going to have different repair costs, but we want to know for us, do we want to flip this house? We want to be able to go in and have a good eye on that property. Some people, they get under contract and then they go do that in their inspection period and their 14 days or whatever it is that they do, we like to do it on the front end. And so, when we’re meeting with that seller, that’s how we do that.

Jeremy:

So, the lead comes in, we screen it. If we find that there’s motivation equity, whatever our criteria is, then we say, “Hey listen, now we’re going to pass this on to our acquisition manager.” We set the appointment, he goes out there, we make the offer in person and that’s our preferred way of doing business.

Paul do Campo:

Yeah, awesome. Last question, because we’ve been talking for a good hour and 20 minutes now. This is great stuff, man. I really do appreciate you coming on here. Do you think that the strategies for finding deals have changed for you from market to market?

Jeremy:

Honestly, not really. I used to think, oh, man this marketing channel is not working or … We’ve tried direct mail several different times, and it just hadn’t been that effective for us. I went out to a mastermind this January out in Salt Lake with the whole salient guys and I absolutely loved it, because what I realized is those guys out there close in about 100 deals or more a year. What I realized is we’re doing a lot of the same things that they’re doing, we’re focusing on a lot of the same marketing channels, but there were one or two tweaks in a couple of the channels, direct mail being one of them, where we realized, this is probably why we’re not being successful with direct mail. We literally changed up the way that we were doing direct mail. Some of the lists we were targeting or how we were focusing on them and how we were following up with them, and it’s been night and day. In a matter of … I don’t know, it’s only been about five weeks since I’ve been out there, direct mail is doing really, really well for us.

Jeremy:

So, it’s not that one channel, I think is better than the others, it’s finding out how to make that channel work. I think the lesson that I learned is make sure that you don’t just go and pick a new channel and start doing it, you go to someone that’s really successful with direct mail, you go to someone that’s really successful with PPC or Facebook, you find out, hey, are you managing that yourself? Okay, no. Okay, who are you working with? Are you working with the firm? How is that working? Understanding what it is that they’re doing, and then you figure out, okay, this is what I need to implement in my business because this guy is already successful, I don’t need to reinvent the wheel. Let’s do the things that are working for other folks. That’s been really, really huge for us, is that we’ve figured out how to have success with SEO where I used to …

Jeremy:

I mean, at 1.4 years ago when I started out, I was paying like 2,500 bucks a month for SEO. I don’t know why, I didn’t know what I didn’t know. Now, we’ve got it down where we’re paying about 700 bucks a month and the SEO is absolutely crushing it in two markets, Nashville being one. They’ve been working for us for a month, and we’re generating a whole lot more leads just because we’re doing SEO with the firm that knows what they’re doing. It’s priced really good for us, and so we just have to tweak some things. I’m happy to not be paying 1,500 bucks or 2,200 bucks or whatever it was that we were paying, and we’ve just continued. We said, “Hey listen, this isn’t working right now, what do we need to do to make it work?”

Jeremy:

Now, we’re approaching every channel that we work with to say, who’s having a lot of success with texting? Who is having success with cold calling? Okay, what are they doing? Let’s model that and let’s figure out how that works for us, rather than just saying, okay, well, let’s throw some things together, let’s assume some things. You can get 80 to 90% of what those guys are doing, but until you actually talk to them or until you actually see their operation, it’s that five to 10% that makes all the difference in the world. That’s the approach we’re taking going forward, work with people who’ve already done it.

Paul do Campo:

What are the changes that you’ve made in direct mail that turned that success?

Jeremy:

Some of it is the list that we’re targeting, we’re not doing the shotgun approach, we’re not trying to … You just go out there and hit high equity, some of the things that a lot of people have done for a long time. You have to pay a lot of money for that because your response is going to be low and those people don’t necessarily show motivation. So, we’re looking at multiple lists, we’re looking at smaller lists that are focused, we’re looking at the frequency. So, instead of just saying, for every list, we’re going to mail them every six weeks or every eight weeks, we stagger that, we adjust it based on the list. We’ve just found out some of the things that we put on the postcards versus some of the things that we don’t put on the postcards have more effectiveness.

Jeremy:

So, what other people have said, we just said, let’s test this out for ourselves, does that really work? Like I said, for us, direct mail has been super effective just in five weeks where we couldn’t hardly get deals off of direct mail previously because we had these little tweaks that were costing us time and money.

Paul do Campo:

Last thing, I always ask everyone this, what’s some advice you can give to people starting out or people who are in the game right now but struggling?

Jeremy:

If you’re just starting out, again, find a coach or a mentor or someone who’s in your market or another market that is already effective and crushing it. If you want to be a flipper, go work with a flipper, volunteer your time, or go sit down with them for coffee, go be part of their crew, whatever that is, and understand how it is that they’re doing the volume they’re doing. If you want to be a wholesaler, go meet with other wholesalers that are crushing it. People that are doing four, eight, 15 deals a month, what the heck are they doing? Where are they getting their leads from, where are they getting their deals? They’ll tell you what lists are working and not working, they’ll tell you, but you really got to commit to it. For me, you hear people sometimes on bigger pockets or in other places say, “Oh, don’t spend money on gurus, it’s not worth it, the $5,000, the $25,000 or what.” I can tell you that I have paid for wholesaling coaching, which was worth every penny. I would have probably paid five times what I paid for wholesaling coaching.

Jeremy:

I couldn’t have gotten that on my own without probably three years of trying to figure it out. I just went to a mastermind, it was a $10,000 mastermind. My business partner and I, we thought really long and hard, do we really want to do this, is it really going to help our business? I believed that would, and I know that there were things that we needed to tweak and that it would make a big impact. I can tell you right now that I would have probably paid another two or three times what we paid for that mastermind group. What’s crazy is, just in some of the nuggets that we got, things that we weren’t doing that we now are implementing, I think we’ll make an additional anywhere from 200 to $300,000 worth of revenue this year from what we learned.

Jeremy:

I don’t know for sure, it could be more, but I don’t think it’s going to be any less. People say, don’t spend the money, you can find everything on bigger pockets, you can figure it out for yourself, go on YouTube. I don’t believe that’s the case, I totally disagree.

Paul do Campo:

I disagree as well. I went that route, trying to do it yourself, and I spent a lot of money on marketing not knowing what I’m doing. So, I completely agree with you.

Jeremy:

I would say that’s a big one, find those people that are doing it and then focus. If you want to be a wholesaler, focus on wholesaling. Don’t go back and forth between wholesaling and flipping because if you do, it’s what Gary Keller says in The One Thing. He says, chase two rabbits, you catch none. It’s the same thing. If you want to do flipping, then go find out how flipping works. If you want to be a wholesaler, go and work with a wholesaler or learn everything you can about wholesaling. And then, within that, find one channel, is it direct mail? Go and figure out how direct mail works, or if you’re going to do PPC, and that’s how you’re going to get your leads, go and master that channel. Once you do, and then once you master the followup, move on and add a second channel. Once you do that, then add a third.

Jeremy:

If you do that, you’re not going to be wasting all this money and not being able to serve those leads. Because there’s nothing worse than trying to grow your business and you grow it at a point where you can’t service them well, and so now you’re paying for your leads that you never call back or you can never get to, just don’t do it. I’ve done it, I have heard so many other people do it, but yet new people, they make that same mistake because, again, you don’t know what you don’t know until you go through it yourself. But I’m just saying if it was me all over again, pick one channel, don’t focus on too many at once. Once you master that one, that one thing that you want to do, move on to that next marketing channel, do it well and then move on. To me, that’s a scalable approach. I’m telling you, within six months to a year, you’re going to find you’ve got three, four channels going and you’re closing a lot more deals. That to me, is the way I would do it knowing what I know now.

Paul do Campo:

I appreciate you being on the show, man. Maybe we’ll chat some more. I appreciate everything you’ve been sharing dude.

Jeremy:

Awesome, man. Thanks for being on, I appreciate this time that we could have to chat it up.

Paul do Campo:

All right, that’s a wrap. I hope you enjoyed it. If you did, please go ahead and subscribe to it on iTunes, Google Play, Spotify or whatever you use, it really helps me keep producing these. Just search for the Deals Today podcast in your podcast directory, podcast app. If you’re not on my daily email newsletter and you want to be, and you want to receive the free 40 days to find a deal seminar, go ahead and go to realestateaudios.com/flipping. Again, that’s realestateaudios.com/flipping.