More Wholesale Deals With David Olds

Sometimes the market demand shifts and real estate investors must pivot to fit in the market. But some investors stay in their niche, like the guest in this episode. Today, Melanie engages David Olds, the founder of ezREIclosings, to share invaluable insights on creating more wholesale deals in real estate. He dives into his experience in wholesaling and how he scales up. Unpack some value in wholesaling in the real estate market today. Tune in now!

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More Wholesale Deals With David Olds

  I’m here with our very special guest, Mr. David Olds. Welcome, David.   That is the greatest intro. How are you doing? I am doing great. It’s so nice to have you on. I look forward to this. Why don’t you tell us a little bit about yourself? I’m a full-time real estate investor out of Chattanooga, Tennessee. I started this crazy journey many years ago. I was at the airport and did the most cliché of all things. I bought Rich Dad Poor Dad. I read the book. I’ve always told people I’m not very smart, but I do what I’m told. At the end of the book, he said, “Go find a real estate group.” I went and found a real estate group in Central Florida, the Central Florida real estate investors group. I got very immersed in real estate and started flipping a house in the mid-2000s when it was awesome and easy and everybody could do it, and the end times came. The shortest version of the story was the 2008, 2009, and 2010, and we lost everything. We relocated to Chattanooga. Out of sheer desperation, we had to do something because we weren’t even broke. I tell people, “If this is the number for broke, we were half off.” We lost everything. We had a house foreclosed on. It was terrible stuff. We learned how to wholesale and we got good at it. I tell people we were willing to do what nobody else would do. We worked continuously. It was the thing we thought about in the morning, the thing we did all day and the last thing I thought about at night. I had a wife, two boys, and three fat dogs at the time. My job was I had to take care of them. We got good at that. We wholesaled almost 40 deals in our first year. Along the way, we started adding in rental properties and the market shifted back. We started flipping again, this little nice portfolio here in Chattanooga, Tennessee. That’s how we got started. You all flipped back and forth basically as to what the market demands then?   Yes. One of the great things about being a real estate investor is we can make money in any market, whether it’s down, there’s regulation, no regulation, or investors because most of us run small businesses with twenty or fewer people. Most are five or less, but the big ones are 20 or 25 or less. It was very easy for us to pivot. If the market shifts or something happens, we can adjust. There are certain times when wholesaling is better or rehabbing is better, or maybe you want to be a landlord or something like that. We’ve been able to pivot over the years since we’ve gone through a couple of housing bubbles. At least for us, we have the vantage point of we could see things coming a little bit maybe easier than someone who got in a few years ago. How did you transition from a wholesaler to a landlord? It’s more common than I probably realized, but at the same time, it seems like everyone gets into their niche and they stay there.   People should switch out of being a wholesaler much faster than they did. We stuck with wholesaling for fourteen years, which is five lifetimes for a wholesaler. We shut down our wholesaling company. Here’s what happened. The real reason we moved to Chattanooga was we wanted to buy apartment complexes. We like playing Monopoly. The single-family, duplex, and quad apartment is what we wanted, but in 2009, banks were not lending money to buy apartments or anything. If you remember back then, banks were very busy taking properties back. That was why we started wholesaling. We started doing some advertising, which in those days it was bandit signs, postcards, and handwritten yellow letters. That was how we did it back then. We were getting all of these leads and we had to do something with them. We knew what wholesaling was. We had never done it successfully, but we had to figure it out. At any rate, the intention with those leads was to try to buy properties for ourselves. It’s probably a longer story than anybody wants to hear, but if you remember back to 2009, 2010, and 2011, and you remember what’s going on with the economy, think about a wholesaler. As wholesalers, we’re going to go out. We’re going to try to find a seller who needs some type of help. They’re in some version of distress, either the property or themselves. We’re going to look at that property. We’re going to make them a cash offer and we’re going to try to solve their problem, but when the market goes down, a lot of people have zero to no equity. If somebody owes $100,000 on a house and our cash offer is $60,000 or $70,000, it’s very difficult for them to take that offer. You can do a short sale, but that’s not quick. That is your first problem. That was a problem that we ran up against when we started wholesaling. The second thing is because we had done a lot of training and went to a lot of education, I sat and thought about it for a minute. I’ll ask you this question. Do you know how many properties in the United States are owned free and clear or what percentage rather? Just guess. Let’s play a game. Twenty percent.   Almost 40%. Numbers will always vary. It depends upon who you look at between 37 and 41. I sat there and said, “David, we have this problem. We’re marketing to people and everybody who calls us. There’s not enough equity in there to make a wholesale deal work.” However, I don’t know what triggered it in my brain. I’m like, “Forty percent of the properties are owned free and clear. Let’s try to market directly to those people.”

What happened was we started pulling lists and data for people who own their properties free and clear, especially free and clear, vacant, absentee, and that type of stuff. We started sending direct mail, yellow letters, and postcards to those people. Now, what was happening is it was very easy. We could make a deal with them. Whether they chose to accept our offer was separate, but at least we were putting the right people at the top of our marketing funnel. Now, we’re doing some wholesale deals as well. A good wholesaler closes 1 out of every 10 leads. That’s a good wholesaler. You’re like, “Ten percent is awesome,” but then the thought is, “What the heck are you doing with the other 90%?” The flip side of that is, 9 out of 10, you’re throwing away. Back in my real estate education back in 2004 and 2005, we were learning way back then how to market to or make offers to pre-foreclosures. I modified that a little bit. Let’s say you were my seller. You told me you wanted $60,000 and my cash offer is $40,000. You’re like, “I got to have $60,000,” but I know you own it free and clear because I could see that on public record. Melanie, let me ask you a question. Do you need all the money at once? It’s got to be the first time I’ve ever thought about it. “Do I need all the money?” Sometimes they would say yes, sometimes they would say no, but now I’ve got 9 out of 10 chances here because I’ve already got my 1 out of 10. I’m trying to get to 2 or 3 out of 10. Sometimes they would say, “Yes, I do,” but a lot of times, they would say no. Now, I would say, “How about this? I love to work up a couple of ways where we could buy this property from you. I can probably get you closer to what you’re looking for. Would you be interested in that?” “Yes, I would.” “Great. Let me go back to my office and work a couple things up.” We got good at buying properties on terms. We bought over $10 million worth of properties on terms where the seller carried the note, not subject to or any of this goofy stuff. It was a straight old-fashioned owner carrying notes. It’s because that was what we were putting at the top of our funnel. It gave us the opportunity to make those types of offers. One of our guiding principles is to start with the end in mind. Whatever I’m putting at the top of my marketing funnel is what’s going to come out of the bottom. If I want pineapples to come out of the bottom, I cannot put watermelons on the top. It’s not going to give me what I want. We see so many people make that mistake. At any rate, we were able to buy a lot of properties, some apartment complexes, duplexes, triplexes, single-families, land, and all kinds of stuff all with owner financing and almost all of it with no money down. Whatever you put at the top of the marketing funnel will come out of the bottom. Click To Tweet I added it up. In all of our purchases, we have $6,000 in upfront money. That was closing costs. Our biggest deal was $1.2 million. It was 27 doors, 4% interest over seventeen years and we got money back at closing for property taxes and deposits. You can do it, and it still works. There’s no difference. Get a little bit creative and think about how we can solve these sellers’ problems. That’s interesting. A big aspect of it that a lot of people don’t look at is the other nine customers or potentials.   That’s always how you should look at your KPIs, “We’re contacting 3 out of 10, 5 out of 10, or 1 out of 30. What are we doing with the other leads? We don’t want to throw them away. They all cost money. All we send out is a little soldier, and it needs to come back with 9 or 10 friends. Don’t come back by yourself. Come back with at least 3 or 4.” We want to be 4X-ing our money. That’s how we’ve always looked at our business to make sure that we’re monetizing it correctly. We want to take that orange and squeeze every drop out of it. Who is your ideal customer?   We still have our rental properties. We stopped grabbing a few years ago when we saw the market was starting to shift. It was a few years ago when I did my last rehab. We transitioned. As we were wholesaling, we brought in some partners over the years. Eventually, we went and we had a nationwide wholesale company, which is awesome. Everybody wants to say that they’re nationwide. It’s fraught with a lot of issues. You don’t want to be blanket marketing to the whole world because what’s going to happen is you’re going to be sending or paying for PPC, postcards, or whatever it is in Nebraska where it’s two cows, a goat, and an outhouse and one guy who wants to buy it in the whole state. Again, what are you putting at the top of your funnel? We made that mistake as almost every nationwide wholesaler does. We slowly started to bring it back. We wanted to be in places where there was high demand for what we were going to be selling. Eventually, we settled on pretty much the Southeast corner of the US. We did that for a number of years. We’re very successful. This was a little before COVID. We had this big operation. We had 15, 16 employees, or maybe 17 counting the owners. We were in these two little offices side by side and we knew we needed something bigger. COVID wasn’t a thing yet. We found this 6,000-square-foot office. It was beautiful right down the road in Eastern Tennessee. I went to Europe for a month and came back. The landlord was fixing it all up, and then COVID happened. It was July by the time it was done because it took forever because nobody could work. We’d already signed a lease on this big office and we’re like, “What are we going to do? Everybody’s working remotely.” We initially thought we’d do a shared workspace for investors in one part of it. That didn’t work. A good portion of it was sitting empty. For me, it always comes from a bunch of little different things. We had this office that was big and empty. We were wholesaling across a big part of the US. We were doing a lot of joint venture deals. One of the things in joint venturing with wholesalers is somebody gets a deal, they bring it to us, we would sell it, and we would split the money 50/50. Typically in that business model, people will bring you a deal until they do 2 or 3 deals and they’re like, “I got this figured out. I’m going to go do it on my own.” We had some people that kept coming back over and over, which was out of the norm. One of them was Mario. I talked to him. One day, he called me. He got me on the phone. I was like, “Mario, what’s up? Thank you for giving us another deal. Let me ask you a question. I love taking half your money. I never wanted to sugarcoat it. We do love taking half of your money, but why do you keep coming back? Most people do 2 or 3 deals.” “First off, you guys do a great job selling my deal.” I’m like, “Thank you.” He said, “Also, I don’t have to deal with the title company.” I then started talking to investors and realized that that was a real pain point. What I came to realize is wholesalers, in general, are banana heads. We are 100% off. We very much got that hustler mentality. We’re the, “Jump out of the plane. Let’s build a parachute on the way down. Let’s quit this 9:00 to 5:00 job. Let’s go out and start this new biz.” You’re a little tweaked in the hip. There’s something about people that can do that. That is your superpower. However, the thing that they are terrible at is paperwork. I know because I’m one. My accountant hates me, the bookkeeper hates me, and the insurance guy hates me. Anybody that requires paperwork from me, it’s a lost cause, and the same for every wholesaler across the country, 9 out of 10 of them. All those things came together, and I’m like, “I think there’s a real opportunity where we can step in and help investors grow their business by taking all that paperwork and administrative stuff off their plate.” Those were the things that came together a few years ago that pushed us to start and open ezREIclosings. Our goal as a company is to help investors across the country make more money, do more deals, and have more freedom. It’s because what we’ve realized with doing thousands of deals is about 30% of your time is spent on the transaction part. Most people were not scaled up to the level that we were scaled up to with the big office. The podcast room where I’m sitting here was originally our transaction coordinator’s office. They don’t have 2 or 3 full-time transaction coordinators that are handling all their stuff. Instead, what they’re doing is they’re trying to do the marketing themselves and talk to the sellers, get it under contract, do the buyer, and then deal with the title company. Most of them aren’t good at it. They don’t want to do it because you don’t get that adrenaline high from calling a title company. It’s not like talking to a seller and solving a problem, talking to a buyer and selling your contract, and knowing that you’re going to make $40,000. That’s how it got started. We saw a need in the marketplace and something that we were uniquely qualified to help them with. In what ways? How do you help them scale up?   In 2022, our first full year of operation, we did $69 million in closings and helped our clients generate $11.7 million in assignment fees. We have the testimonial of clients saying, “Now that I’m not having to do that nonsense, I have all that time to be put back into my company. It allows me to focus on the reason I got into this business, which was talking to sellers and buyers.” Every wholesaler is generally going to be good at 1 of those 2 things that they don’t have to. We had one real big wholesaler out of Phoenix who was spending $80,000 a year for two transaction coordinators in his office. He’s like, “That was $80,000. I got rid of those two. I flushed that money directly back into my marketing. More marketing dollars, more deals.” That’s how we can help them by taking all of that bandwidth completely away from them. All they have to do is focus on marketing, talking to sellers, and selling their deals. For us, it’s like a relay race. It’s handing off the baton. As soon as they have the contract with the seller, they hand that to us and they’re out. We take over from there. We will do everything. We will call the seller. We’ll gather up all the documentation. We tell the seller, “We are going to be your point of contact from here all the way to approval. If you need anything, give us a call. We are your person.” We’re that third-party trusted resource that the sellers and the buyers can upload all of their documents. We keep it all safe and secure. What we’re doing with the way that helping them do more deals is also we’re very big in trying to compress time. Melanie, here’s the example I give people. I said, “Have you ever get in your car and you put something in the GPS and it says, ‘1 hour and 22 minutes?’” What’s the first thing you think of? Be honest.

  I’m going to beat that time.   “I can beat that time.” Nobody’s ever not got that right. We are constantly tracking in our business the average time that it takes to go between phases of closing, and we are the exact same way. We can beat that. We are always trying to compress that down. I feel like we can close a deal about ten days faster than anybody else because this is all that we do. When I say wholesalers, I mean me because I’m a goofball too. I remember when I started. I did my contract. I would take it to the title company. The title company who call me, “Is Joe married?” I’m like, “I don’t know.” Now, I either got to go over there or call Joe. I’m like, “Joe, are you married?” “No, I divorced that.” “Great. Divorced.” I can call the title company. “No, good news. Joe’s divorced.” They’re like, “That’s not good news.” I’m like, “What do you mean?” “Is he divorced before or after he bought the property?” “Joe, when did you get divorced?” “After. She’s out. She’s not getting anything.” “Cool. Great.” The title company, “After, good news.” “Nope. Now, we need the divorce decree.” “Joe, I need the divorce decree.” This is all that stuff that they’re doing and it never ends. This is 1/100th of a deal. What happens is this is what’s tying up wholesalers and this is what’s keeping them from going and doing more deals or talking to the next seller or buyer. You’ve then got the guys who are going virtual. “I have a deal in West Virginia. Fantastic. Where do I get a title company in West Virginia that I know will work with an investor?” It’s because not all of them will. Not all of them are created equal. Most of them don’t want to fool investors because our stuff is bananas. We take the biggest pile of messed dung that you could ever come together. You ball it up and you’re like, “Here, title company.” They’re like, “It’s not our job to unwind that. Get me an obituary, give me a death certificate, a monument of title, and a couple of affidavits.” Now, the wholesaler is doing that instead of the thing that they’re in this business to do. Now, they have the ability to leverage our team of real experts because the people that we’re hiring to be coordinators on everybody’s behalf are ten-year title agents, mortgage collection people, abstracts, or people that are in this business and understand how to solve problems. That’s how we are. That was a long answer to that. That was interesting. It’s brilliant to be able to start to handle that for the wholesalers because they are an unusual bunch and, honestly, to each his own without them. It’s the same as you with that. It’s great that you’re able to do it for them.   We do an orientation because we certify all of our transaction coordinators. Wholesalers are an A personality, and transaction coordinators are not. They’re paperwork and head down. I like to have music in the office and I go over to the side. We have eleven coordinators, and I’m like, “It’s so quiet over here. What are you doing?” It makes me anxious. All their heads pop up and they’ve got little earbuds in. They’re like, “They love quiets.” They’re in their zone.   If this was a sales floor, salespeople would be out of their minds. They hate that energy. Their personality is completely different, and it’s fascinating sometimes to go over there. I have to explain to them. I’m like, “Our clients can be a little goofy. They make a ridiculous amount of money.” It is like me too. I don’t know how I get through the day with my shoes tied because they’re so good at what they do, and that’s why they need us to get these files over the line. Can they do it themselves? They can. You can go check the oil if you want to. They don’t want to do it. I get stuck like Winnie the Pooh if I crawled underneath my car. It is once they realize that, “There’s a better way.” We get testimonials all the time from people like, “I signed up and you guys did my first deal. It changed my life. I couldn’t ever go back to that. It’s nonsense to deal with titles.” It works out well with people. We’ve been able to help a lot of companies grow. For our readers, you can get more information from FullerWalletMedia.com/davidoldrei. Before we close out, is there anything else you want to leave our viewers with? You’ve given some great information.   Thank you. I appreciate that. Being an entrepreneur is hard. Many people that aren’t in an office, are working out of Starbucks, or working out their living room table, what I tell them is to get around other people that are doing the business. Get yourself a tribe of people. If you don’t want it to be people or you’re nervous about hanging around people in your town because they’re going to know what you’re doing, that’s crazy but get around and make friends with other people that are in this business because it can be a lonely existence. If you’re sitting at your kitchen table and you’re all by yourself, you don’t realize that other people are on this journey with you. The sooner you could do that and be around people who are having wins and you see them winning, it reinforces your belief that this is a business that works, and it does work. Are there going to be bad days? Of course, there are going to be bad days. Nobody guaranteed you when you got your LLC license or whatever paperwork that every day it was going to be sunshine and roses. Get those people that can help you. Probably the last thing that I’ve been asked on different shows was what was the thing that helped catapult us when we did go nationwide, get successful, and scale up. It was I had to realize that I’m not the best at everything. All entrepreneurs have a little bit of narcissism. Sometimes that’s a hard pill to swallow.   I’m going to tell you, it is. Once I realized I’m great at some things, but I’m not great at everything, you can be okay and good. Once I learned to surround myself with people and outsource to people who were amazing in that part of their business or of your business or whatever it was, that was when I was able to start making huge leaps and bounds in my business. I don’t want to figure out PPC marketing. It’s not the way my brain works. I had somebody who’s good sit down and teach me. After fifteen minutes I’m like, “I’m not doing this. This is stupid. How many clicks, buttons, and keep track of this and that?” I’m like, “Who can I pay to do this?” It’s the same thing with transactions. Find somebody that can do it better and cheaper than you and let the professionals do it. Go focus on the things, your core competencies, and the things where you love to be. That would be my advice. Find somebody who can do it better and cheaper than you. Click To Tweet Those are some great pieces of advice. For our readers, you can find it at FullerWalletMedia.com/davidoldrei.   If anybody wants to follow me, it is the same thing. It’s @DavidOldsREI on Instagram. We post a ton of real estate investing content from wholesaling to transaction stuff, rehabbing, interviews, and all that stuff. We’d love to have you there. I do my very best to answer all the messages myself.

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