Welcome everybody to Extreme Real Estate Investors. Got a pod cast and video here. We’re doing side by side, so depending on whether you’re catching this in video format, or in audio on the pod cast, I want to introduce you to Elio, who is out of Florida, and a recent coaching student and all around great guy. Just posted up on our chat board there that he had closed his first deal and wanted to share a little bit of information with you about how that overall process went, with joining Extreme Real Estate Investors on the coaching side, what he did to lead up to this closing, and what he’s got in the pipeline right now. Elio how are you? Thank you very much for joining me, first of all. I appreciate it and so does everybody who’s listening. I’d like to again thank you for being here, being a part of the group, and how’s your day going so far today?
Elio: It’s going great today. Excellent as a matter of fact.
Michael: All right. Very cool. If you don’t mind, just tell us your story, if you don’t mind, prior to the Extreme Real Estate coaching. What other coaching or education did you get along the way, as far as real estate is concerned? How many deals you did prior, and what your life was like, what work was like. Just give it to us in a nutshell, if you don’t mind. Tell us a little bit about who you are and what it’s all about.
Elio: All right. My experience before, like real estate, I would say, before anything, I was just working. My family did have some properties for multi family properties. My mom had a few, my brother had a few, and stuff like that. I was interested in it, but I didn’t really know anything about it. After my fiancee … After graduation … I graduated. I went to school, college in Kentucky. After graduation I ended up playing professional ball for a few years. It was a short stint. Then after that I got into teaching. When I was teaching, everything was going well, but then the recession happened, so what is is was the teaching was first come is the … The last to come is the first to leave, so if you arrived last you’re the first to go. They didn’t really offer anything, but ended up moving me to another school, so I had to switch schools. I saw [inaudible 00:03:58].
What I did was, I ended up getting another job as well at a hotel. It was okay. [inaudible 00:04:13] Pretty … It was a [inaudible 00:04:15] hotel. I don’t want to say the name right now.
Michael: Okay. That’s fine. You don’t have to.
Elio: While I was working there, it had the [inaudible 00:04:26] … I’m working guest services. I get to meet a lot of people. While I’m meeting people, I asked them, had conversations with them, like different guests that come in. One day, talking to one of the guests, checking them in, [inaudible 00:04:47], “What are you into?” When the guy said, “Real estate,” so I was like, “Hmm. That seems good.” I’m looking at the rooms, like how much the rooms cost, how much it’s going to cost, and I’m like, “That’s pretty good.”Then somebody else, a month later, or a couple of weeks later, I asked them, “What are you into?” “Oh, I’m in real estate.” I’m like, “Real estate,” so I’m like, “Hmm. Maybe that’s something I should get into.”
My whole family, I got that second job, was to buy real estate, but I wanted to buy and hold. I wanted to get a condo here somewhere and rent it out. That’s all I knew. Now, after he told me that, it was maybe another guest down the line, he was telling me he had, at the time he was saying, I’m going to say provident [inaudible 00:05:47]. I guess you know that stops [inaudible 00:05:52] down here.
Michael: Yeah, that’s true.
Elio: He’s on vacation, and I asked him, he was talking about he had to go meet with his property management team, so I was like, “Cool.” I didn’t really know exactly what that was, and I asked him more about what that was, and while I was talking he said he had 15 properties down here. I asked him, “How can I get into that? How can you have 15 properties at the same time?” And all that. I wanted to know a little bit more information. He gave me a number, and I ended up … He gave me a number and an email and I ended up calling it, and it was one of the big national guru’s number, and I ended up going there to one of the seminars that they had. While at the seminar, I was like, “I’m ready to go now.” After they did their whole presentation, I was ready. While I was there, they had the three levels of coaching, and when I had coaching, I didn’t have enough, or I wanted the big one, but that was way too much. I think the … I’m going to say the minimum was like, I think it was like $14,000 at the time.
Michael: Wow. That’s a lot of money.
Elio: I put … I didn’t have all of it on me right then and there, but I put something on it, and they said I could put the rest of it later. Now, I’m thinking, I need to find a way to get this money so I can get the rest of the coaching. I ended up not having enough money to get the coaching, so I just … Before that happened … After I gave them the money and everything, I think like a week later or something, I ended up having a question about it. I ended up getting a house and having questions about it, so I called the number up, and it went to somebody in Colorado. The person, it never worked. I didn’t know that it was somebody from overseas or anything like that. I’m thinking, when I got [inaudible 00:08:12] up, that they was going to be able to pick up the phone for me, answer my questions for me. The person, I didn’t even ask the questions. They’re telling me, “Call back,” or, “We cannot answer that right now,” and I did, I answered like right away for the owner. I was like [inaudible 00:08:31] back home, I was like, “I don’t know about this.
I ended up trying to get a refund. They wouldn’t let me get a refund back. Now, I just cut my losses right then and there. I lost the money. I was like, “That’s not going to work for me.” Now, I just went to, doing a lot of researching. I [inaudible 00:09:04] really about the wholesaling, about … I just thought I was going to lose … I just wanted to get into real estate. I just … Once I got a little taste of it, after the [inaudible 00:09:15] seminar, I wanted to know more about it. I just went to, searching, internet searching, on YouTube, and different podcasts. I was like, “I’m going to learn this one way or other.”
What got me into with you Mike, was that, I don’t think you ever … You don’t know this yet, but I listened to one of your podcasts, and at the time I was trying to get my [inaudible 00:09:50]. It was one of your methods about the bandit sign, how you put it out. I don’t really want to go through all of that now, but it was one of your methods I ended up using, and it really was good on my schedule, it fit in my schedule perfectly, the way I needed to work. Ever since then, I started doing … Not only that. I was doing, looking at the different techniques that you had, and it really fit my schedule, so that’s why I started, I really got into and started following what you did, and got into your podcast, and got into your coaching.
Michael: All right. Very cool. That’s good to know. I’m glad it worked out for you. I haven’t done a podcast in a while, and we actually did a recent interview. I say recent. It’s been a couple of months. I haven’t even posted it up yet, but with Joe Fairless. A lot of people know who he is. He does the Best Ever Real Estate Podcast. That’s his podcast. He interviews somebody. I’ve been on his podcast, he did an interview for mine, and I didn’t have a chance yet to post it. I’ll be posting that eventually.
It’s funny that you say that because obviously I want to be able to provide a great value for people, especially if it’s free. It’s free service. Get your money back at any time. The main goal is that … I have been where a lot of people, yourself and a lot of other people, that are out there listening to this or watching this video, I’ve been there where schedule was tight, money was tight, I needed someone to cut the crap, if you will, and get to the point. How do I actually function in this business? Instead of going and buying, or buying into, a bunch of different coaching products if you will, and services, if you notice the common theme is that, there may be, as you say, a guru out there who has a very specific, and I will call it even a high ticket item for sale out there that is very specific to one particular category of this investing. It may be wholesaling, it may be rehabbing, it may be land-lording, it could be … Whatever it is.
My program, and it’s not a perfect fit for everybody obviously, but it is an overall view of the 12 different steps that I utilize in my business on a regular basis, starting with the easiest, ending with, I won’t say the hardest, but maybe the more sophisticated, more seasoned investor, which is … You start with wholesaling, and you end, potentially, as a hard money lender, where you’re actually funding deals, making money, while someone else like you and me are out there chasing those deals, to say, “Hey, loan me some money and I’ll pay you an arm and a leg to lend me money for an opportunity to be able to get my foot in the door.”
It’s a broad approach to the different aspects of real estate investing. Why did I design that course and my coaching program around it, was very simple. Everybody’s got different needs and wants in their life and in their business, and as you’ve said, if it’s a matter of something that’s going to fit the schedule, and then ideally fit the budget too, it makes sense to be able to do something and say, “Okay, I want to try this wholesaling, and I want to try this … Doing REO’s and HUD properties, and subject to, and lease options,” and everything else. Joint ventures that we go into pretty extensive detail, but we don’t hang you up there for eternity. It’s, “Try this.” Try these couple of things in order and what you like is going to stick and what you don’t like is going to fall off. You’re going to resist it. You’re going to muscle through that month, and, “Thank God that’s over. I want to get on to the next one, something that I actually enjoy doing.”
I understand that about people. It’s a matter of time, it’s a matter of implementation, and a matter of, you have to do that in which you like doing every day, or else it’s going to be a really treacherous work day every single day, having to, “Oh, man. I don’t want to do this, but it’s all I know and I’ve spent a fortune to get here and be a part of this,” which is not the case obviously with my program, but with the other one, like you said, it just wasn’t a good fit. You needed an answer, you couldn’t get one. There was nobody to really help you that could give you any real direction. What happens is, when you ask for a refund, they don’t want to give it to you for a reason, because they know you’re not coming back anyway, they might as well not give you the money. That’s why we do the free month of coaching, is, “Hey, check it out. If you like it, stick around. If you don’t, you’ll find your place somewhere, and I’m glad you felt good enough at what we were doing as a group to continue moving along, and that’s great. I’m really happy for you and so is everybody else.”
If you don’t mind, now you did a deal. When did you start? I think you were in, I think May, if I’m not mistaken. Right? It’s been about four months. Does that sound about right? Four or five months, something like that?
Elio: Yes. About four or five months. Actually, the reason [inaudible 00:15:52] well, was because I did do … I did a deal before, but it was … I did one of these bandit ones, and I put in like … I bought different … When I was researching on the internet, I found different ideas that I could use. One of the ideas was to … I put bandit sign in front, of somebody’s like an bandit house. When the owner came by, the owner ended up calling me and telling me that they wanted to sell their property. That was my first deal overall that I did.
The reason I fit it in my schedule as well was because during the day I’m teaching Monday through Friday. Then in the afternoons is when I was working at the hotel part time. My schedule was real tight. I did … The kind of marketing I had to do was sort of manual, but it’s like passive marketing. I can’t be the one always having to call you, being aggressive, making phone calls throughout the week. I just don’t have the time. I’ll make it, I’ll mail it to you, and then when they’re interested, you give me a call back. That process worked for me. That’s the kind of marketing that I was searching around for, and then once I got with you, I was like, “Oh, this is perfect right here.”
At that time, I’m going to say that … I think the first week … Not the first week, but the first mailing that we did together, I think … I can’t remember the exact numbers right now, but I think I sent over, at least a thousand. Over a thousand. I don’t know the exact numbers right now, but I got … I’m going to say 40 calls back at least. That’s how I knew that, “Oh, this is perfect right here.” During that time, they didn’t call all at once. It was like, maybe two here, three on this day, a couple days later, and that fit my schedule. I didn’t have to … I wasn’t … Sometimes you use, there’s the credit list strategy when you can go on the computer, call the landlords up, or the homeowners who are looking, might not be looking necessarily, but doing that method it takes a while to have time to do that. That wasn’t really fitting for me. When I started doing the mailer thing, this is great. [inaudible 00:18:51]
I did mailings, and I also did some bandit signs as well. Those two, the combination right there was awesome for me.
Michael: Very cool. All right. Good. That’s something too that I do want to mention for everybody that, again, listening to this, watching this, you’ve got to understand there are some very compelling statistics that have nothing to do with me. I learned these a decade and a half ago when I got into the business of real estate sales as a realtor, as a salesperson, and it has held true all these years, because again, they’re not my statistics, they’re industry statistics of direct mail and sales and lead conversion.
Those statistics are pretty simple. You have about a three to five percent chance of doing business with somebody that you cold call. You pick up the phone, if you were to sit there and just hammer away at the phone, eventually you’ll find someone. It’s just a numbers game. Eventually, you’re going to find somebody that will do a deal. You’ve got to remember, our process is, the first thing that we go through in our intro call is, what is the percentage of the people you talk to likelihood of them doing business with you? If you remember that, it is a third of a third of one-third of the people that actually call in. To put that in simple math for people to understand, if you cold call … Let’s say I give you best case scenario. You get a 5% response rate on an appointment, and then you get a third of a third of a third of those people to actually do business with you, it’s very labor intensive. You’re going to be on the phone. First you’ve got to buy that list of phone numbers and property owners, and then it’s a ton of rejection, no matter what.
When you send out direct mail, and this is really only true for direct mail, which is why I love it so much. People, “Hey, I got 100% internet business.” You’re paying for a lot of leads that are really not getting anywhere. Not going anywhere. The bandit signs also are very good, but they’re good for specific things. Gasoline is good to run your car, not really good to start a fire in your fireplace. They have something different for that. They’ve got very specific lighter fluid for your bar-be-que. While gasoline will work, it’s a little too much, and could be a little bit dangerous. You have to use what is appropriate for each individual aspect of the business.
Your seller calls are always going to be best. It has been my experience, this has been the experience of a lot of other people. When you can get them to call you, and the basic math on that is, if we get a 3% response rate, and I know there are people that are out there, and remember they’re in the business of selling you their new postcard, or selling you their new marketing kit, so, “Oh, my God. It gets a 40% response rate.” I’ve been in the business 15 years. I’ve never seen anything that got a 40% response rate. That’s the God’s honest truth. Maybe you can send a postcard that says, “Warning, your house is in foreclosure,” to people that you know are not in foreclosure, and people are going to call and be like, “Hey, what are you talking about?” Aside from that bait and switch process, if you are legitimately marketing to get business, on average, with our system, with what we recommend, you get about a 3% response rate. With that 3% response rate, you should, for every one thousand pieces you send out, you’ll get 30 phone calls. A third of a third of a third of those are going to turn into a deal immediately.
The statistics that are very interesting are, that 80% of the people that called will do business, will sell their property, within 18 months or less. Most people are like, “I don’t have 18 months to wait.” No, you don’t. That’s why you’re going to do that one deal per thousand now, and you’re going to continue to mail these people every quarter, and call them to say, “Hey, did you get … Just wanted to check in with you. Did you get our letter?” Our postcard, or newsletter, or whatever it is that we provide for you as a follow up mail campaign. You don’t have to do a whole lot of thinking with it, just get it in the mail every three months. 80% of those people. Those 30 phone calls, 24 deals over the course of the next 18 months is what that comes out to be.
Most people lose sight of it. They’re just like, “Hey, I only got one deal out of this thousand pieces.” Well, that one deal is usually five to eight, on average, five to eight times what you spent on the mailing anyway. It’s all money, right? It’s all pure profit. If you look at what you’ve spent on the mailing, which we’re going to talk about the deal you recently closed in comparison to the money you made, it’s probably somewhere in that neighborhood, four, five, six times what you actually spent to generate that lead, which is a lot better than the cold calling, which is better than Craigslist. I’m not saying it doesn’t work, it just … Craigslist … My system for Craigslist is buyer lead generation. Bandit signs, buyer lead generation. You can put the “We buy houses” signs out there. You can mail postcards. But you’re just not going to get the response rate and the quality of a lead that you would get and putting it all on autopilot, so that people are calling your stand alone number, and they’re leaving a message, and there’s a process to it. It’s not … It’s supposed to, it’s designed for them to feel comfortable with leaving you a message. “Hey, I got your letter. Will you give me a call back when you have a chance?”
There are different statistics for postcards. Postcards you get a lower response rate. The theory is, you get a better quality of lead in that the person knows why they’re calling very specifically. They tend to be a little bit more ready to do something right away. The yellow letter, which I swear by, I run my whole business with the yellow letter, it requires some salesmanship. The salesmanship has to come in the form of the basics of what salesmanship is, and that’s building rapport. Remember, nobody cares what you know until they know that you care. You have to build that rapport, gain their trust, and explain the process to them.
50, if not 60% of the time, I’m always going to advise them, “Hey, you can get more money if you sell the property on the market. I just don’t know when you’re going to get it, and I don’t know exactly how much you are going to get. But if this property is worth $100,000 dollars in current, as-is condition, I can pay you $70,000 today. You might get 100, but then you’ve got to take out your commission, your closing costs, your holding costs, and the what if factor. What if it doesn’t sell? What if if sells for $10,000 less? By the time that’s all said and done, yes you are going to be ahead of $70,000. How much, I don’t know, and when, I don’t know.”
It’s the equivalent of that cash discount. People have to really accept that and understand it, wrap their mind around it, that it’s not the best fit for everybody, but it is a great fit for a lot of people. The convenience of being able to call and talk with them on your schedule, on your time, is really the key component to the system that we have. You don’t have to be attached to the phone. There’s a script to follow. There’s a process to follow. Everything just falls into its place. I think you might have noticed that yourself.
Elio, if you don’t mind, tell us a little bit about this deal, how you got the lead, what happened, how it went down, everything, so people can get a good feel for what it looked like there on your end, from your eyes.
Elio: You’re breaking up so I didn’t get to hear what you were saying.
Michael: I was just saying, if you could tell us a little bit about your deal. The deal you just closed, how that came about, and where the lead came from, what the environment was with the seller, and how you sold it, and how much money you made. Everybody wants to know that too.
Elio: Of course. With this deal right here, it started with … He got letter in the mail. He made a phone call to me and then I went over pretty much the script that we have, in your own words, and then I did a follow up. He wasn’t interested at the moment. Maybe, let’s say about a week later … He told me he was still interested, but not at the moment. He just wanted to see … He was kind of fishing for a price, pretty much what it was. He was dead set on getting his price, too. It wasn’t really a hot lead. I didn’t really go after it like that. I didn’t think it was anything that much at first. I just, somebody just called who was interested.
Now, after a week later, I called him and set up an appointment. Then when we set the appointment up … It still wasn’t a deal or anything. I just did a presentation. I explained … I went over, evaluated the house, and told him how much I think I can give him. At the time, the house … He wouldn’t agree upon the price that I told him, but then, said, “I’m going to do your numbers.” When I did the research, the house was ARV. He had four houses in that area that sold for 160 pretty much. They were all like 157, 163. Around that same number. I just said 160 was the ARV average. I told him I can give him about 100 on the … No, he wanted 105, and I told him I would give him 100, for the profit. We agreed upon the price.
After we agreed upon a price, I went to marketing the property real hard, bandit sign, put it on all the different websites, post lists, Craigslist, everything. Facebook, everything. I was getting potential buyers … First of all, I checked with my buyers first. I had a few people who were interested, but nobody real concrete that really wanted it.
What ended up happening was, after nobody was really concrete about it, that’s when I went ahead and did all the other, within a day or two later. After that, I was kind of like iffy on the situation because everybody who I thought who were interested in coming to look at the property, they ended up backing out of it for some reason. It was nothing really wrong with the property. There was tenants living in there. The tenants were, the rent for the month was $1,300. It was $1,300 for rent. It was maybe like $10,000 dollars of risk, really. Other than replacement … All it needed was like paint. Paint, little patchwork, updating, cosmetic updates, and it was very good though. I was kind of wondering why nobody was … I thought it was a hot deal.
Now, I’m not getting anything. Within like a week before my contract ended with them … I got a 21 day inspection period, and that was 21 business days. It was about a month in total really, about 30 days, if you counted out the weekends. I’m thinking, “Why is nobody really serious about the property?” Eventually, I ended up going to my local [inaudible 00:32:18] go there an I’ll be able to find somebody there. That person wanted a price, he wanted the property at … Before I got it to … I was asking after 105. I got a price reduction for … Because nobody was interested. Nobody wanted to get it at 100, so I had a price reduction of $5,000. The price was $95,000. When I went to [inaudible 00:32:50], I was pitching it for $95,000. My buyer at the time, he pitched me … He wanted at 89. I was like, “It’s not going to work right now.”
What I did was … I knew he was serious about the property. I went back to the seller, and I told the seller … Let’s see. Before it was at 95, still didn’t get anybody. Now I went back to the seller and told the seller that when I looked at the comps … I went back to show him the comps and everything, but the comps that I looked at at first was the ARV cost. Now I went back to see what the investors were buying the houses for in that area, and they were about, in between 89 and 83. I went back to the seller and I told the seller, “In order for me to buy this property, I’m going to need it at least at $85,000 in order for me to … In order for it to be a win-win situation.” He agreed upon it, and now … I started going back, and I told the guy at the [inaudible 00:34:17], when I was pitching it, I was pitching it for 95, so I could make a profit on it.
The eventual buyer, the guy from [inaudible 00:34:27] told me $89,000. Once I had the property locked up, at that particular time, because he had to put the money into the title, his deposit into the title company. Now I’ve got the property locked up at 89. I went back to the seller, and I told the seller … I tried to renegotiate some more. [inaudible 00:34:55] of that was the seller … He agreed on the $85,000 from the beginning, but I never had him sign the paper, sign the contract at 85. Now, when I went to do another reduction, he was mad that … He wasn’t mad. He actually agreed upon it. This was like the Labor Day weekend. He agreed upon the price, but I told him I need the property at $75,000. He agreed upon that because it would have been $14,000. I told him I’m going to need the property at 75, and he agreed.
Now, I found the documents, the addendum, for him to sign, and this is right before the Labor Day weekend. At that time, I told him, “Can you please send it right back to me so I can have it ready by that Tuesday,” because Labor Day was on Monday. That Tuesday I needed that property, I wanted to have it ready to go. [inaudible 00:36:09] started the closing. On that Monday, I still didn’t receive any documents back from him. I started calling him up to see what was going on, what happened here. He ended up changing his mind and said that, “No, I’m not comfortable at $75,000 anymore. I’m going to need it back to $85,000 that we did agree upon.” That put a wrench in what I wanted to do, and in my [inaudible 00:36:41].
I ended up just, since he did have [inaudible 00:36:48] at 85, I ended up going back to 85, but what I had him do was, he paid all his closing costs, and I had the buyer pay all of his closing costs. I was able to make that profit there.
Michael: That’s very cool. That’s good.
Elio: In the future, once I get a price, or once I get an agreement at a certain price, I need to get all the documents signed right then and there. Don’t just put it off to the side and wait. Even though it’s verbal, you have to get it signed right away, because he can always change his mind.
Michael: Yeah. Always try to get your deal locked up. Obviously you did everything right. The only thing is here, what can I tell you? Hindsight is 20/20. Looking back, you won’t make that same mistake moving forward. I’ve found myself in that position on a number of different scenarios from working with sellers to working with contractors, buying property, selling property, whatever it is. You can’t win them all, but you do your best. Part of doing the best is saying, “Okay, I’m going to put a contract out there that is designed for you to be able to get out of, assuming you do a few things that you have to do.”
If you can’t find a buyer, if you paid too much, say, “Look. You know what? Have an inspection done on the property. Look, there are a lot of issues. I didn’t realize how serious they were, so I either have to buy it at this price, this new lower price, or I just have to walk away from the deal,” because if you are trying to wholesale the property and you’re not able to get a buyer at the price you have it locked up, you have one of two options. Walk away, or renegotiate. The art of renegotiation is a bit of a lost art I think. There’s nothing wrong with it if it’s legitimate. The legitimacy is that, maybe you over valued it, maybe you were a little bit speculative on what you thought you could get for it.
The real point I want everybody listening to wrap their mind around, and I get so many people that email and post and ask these questions, the reality is, yes you can buy a house that’s worth $165,000 dollars for $75,000 or $85,000 dollars. They are out there. You are in Florida. I’m in Chicago. I do it all the time here, which is effectively 50% of what the after repair value is. Is it worth 165 today? No. In its current condition, no. That’s what people … The missing link is. “How can I buy a property for fifty cents on the dollar?” Because you have to evaluate its future value, and look at its current value, and discount that current value.
you said it was maybe worth 105 or 110 as it stood, but if you want cash in hand today, and he agreed to 75, which is unfortunate, but again, when you lose, don’t lost the lesson. Next time, get that contract signed. But you still made $4,000 dollars.
Elio: Another thing [why I thought 00:40:12] that was that, the reason I didn’t push the 75 was because at that time my inspection period was ending. When it was Labor Day and it went over, that’s when my … That Tuesday after Labor Day, my inspection period, that was the last day. Now, my money in the title company went hard. In order for me … You can put whatever amount of money you want for inspection, but in this particular one, I put $1,000 dollars down for my deposit. In order for me not to lose that thousand, and mess the whole deal up [inaudible 00:41:03] at the moment. I was like, “Let me just go ahead and go with the 85.” Everybody is a win-win situation.
Michael: That’s awesome. You did it right. That’s for sure. Obviously, when it comes to the wire like that, you want to make sure that you make something versus nothing. Realistically, on this particular deal, how much time and money do you think you had into it? This was a part of a mailing that you spend how many dollars on, and how much time did you spend with the seller and posting your bandit signs, your online ads, and talking to buyers? All in all, how many hours do you think you have in it, and how many dollars do you think you had in it?
Elio: Hours, I would say less than an hour when you really look at it. For this one particular deal. It had to be less than an hour. I’m going to say like 45 minutes, really, actual time. With the price, I think, the number, I’m going to say about $400-$500 dollars. I don’t remember the exact, how much the mailings cost. I had to get a list, too. I can’t remember what all that cost, but it was no more than $400-$500 dollars.
Michael: Okay. Let’s say it was $500 bucks and one hour. You made 800% on your money, right? You made $4,000 dollars on the deal for $500 invested and an hour’s worth of your time. You net $3,500 dollars in an hour. That’s pretty huge. I always say on average you can probably figure that you’re going to be around anywhere from $700, maybe $800 bucks to a thousand bucks an hour, and that’s if you’re going out there and you’re going to the closing and doing all of that legwork that you have to do. That’s awesome man. The return is great. I’m happy for you. Again, next time, you know where to pick up that extra $10,000 dollars on the deal, when you get started, get them under contract, because you can always go back to try to push that price down if need be, but it’s a little bit different when they start going up on you and you’ve got nowhere to go. There’s nothing you can really do at that point.
If you don’t mind, as we wrap up for today, if you could tell us what you’ve got going on now, and how many deals, where those deals came from, and what you think your profit margin is going to be here in the next 30-60 days. I know we had talked a little bit before we started the interview, so I want to share that as well.
Elio: Okay. Currently I have six properties under contract. That’s not even including, I have two other JV deals, joint venture deals I’m doing, and one of those deals, next week I should close it. The title should be ready and everything and I should make $12,000 on the JV deal. The other six contracts I have, I got them in different avenues. One of them was a bandit sign. The guy told me, I asked him, “How did you get in touch with us? What made you call me?” And he was like, he was at a stop sign … Not a stop sign, but red light, a stoplight. He was with his son, and what happened, while he was at the light, his son said, “Hey Dad, look up!” And the dad looks up, and he sees the bandit sign, and it says, “Elio buys houses,” on there. He’s like, “What? Who would put that way up there?” And he saved the number, and he gave me a call, and it just so happened that he was getting a divorce and he just wanted out from the property. He was moving like two weeks later. He moved to New Orleans. He’s actually over there now. It’s kind of crazy how that happened.
My other deals, it pretty much, all of them were from the letters, from the mailing. I got them all from the mailing, so I just do a lot of following up. The first time you go give them a call, they’ll call you back, they might not be ready at the time, so you always have to follow up and stay on track, because you just don’t know when they’re ready. When you’re doing the letters and you send it out to a certain list, you know that potential is there, you just can’t really tell the exact day or time that the person is going to be ready, so you have to always follow up and get as much information that you can from them, because it makes it a lot easier to, just keeping in touch with them.
They don’t all have to be a phone call. Sometimes, I’ve got another property, the owner actually, she’ll text me back and forth. We’ll do texting back and forth, and sometimes we do phone calls, but she likes to text a lot. It all depends on how the homeowner is and what kind of communication that they’re actually comfortable with. I have an older … One of my other contracts is an older lady, and this is a condo, and she had the condo for maybe 20 something years now, and she just wants to move into something smaller for her. The condo is a four bedroom, three bedroom condo, and she’s pretty much by herself right now. She doesn’t really want all that room. She just wants something smaller where it’s just her there, so she don’t really need all that alone. She’d just rather sell it, it’s too much for her.
The price margins on the properties are … It pretty much ranges, but pretty much right now I’m trying to get at least … In total, I’m going to say about at least $120,000 profit.
Michael: About $120,000 in profit from all the deals you’ve got in the pipe right now? All right. Cool. The next thing that I have to at least recommend is … I have to assume that you are doing it, but continue the marketing. Get another round or two of new pieces of mail to new addresses. Obviously you want to touch base with those people that have responded already. The reason I say this, a lot of people miss this point now. I’m glad that this is not necessarily my truth now, it’s yours as well, that you said that all these deals, or most of them if I understood you correctly, are all old leads, right? They’ve called in before, they just weren’t ready at that time. But you did what most people don’t, and you stayed in touch with them over time. That’s the hardest part for most people. It’s not hard, it’s just inconvenient. Everybody wants that lay down.
I did a podcast a long time ago about hunting versus farming. If you heard it, maybe it might ring a bell. The idea is this. In the short term, the quickest way to provide that food for yourself would be that hunter/gatherer mentality. You’re out there and you’re just foraging. You’re going to grab whatever you can. That might mean that you’re going to have a deer. If you’re out hunting you might have a decent sized meal that night and plenty for the family and whatever else. It could also mean that you might wind up with a squirrel, and everybody is going to be pretty hungry. You just don’t know, because you’re kind of of that attitude of, let me just throw a lot of crap against the wall, so to speak, and that’s your big mailing, and let’s see what sticks. What comes immediately out of that.
While that is good in the short term, the true money in this business, regardless of the process, whether you’re a wholesaler, a rehabber, a hard money lender, subject to person, doesn’t matter. The real money is the farming side, where you are putting a lot of seeds out there, and you’re tending to them. You are watering them, you’re making sure that there’s the sunshine, and you’re there doing the work necessary, but then you’re going to reap a huge reward when the fruit is ripe, if you will. When it’s ready, you’re not going to wind up … When your apple tree is ready to product fruit, it is not going to produce only one apple. It’s going to have a whole tree full of apples. That’s just how that is. That’s awesome.
You’re turning into … What most people would have considered garbage, “Well, these people just aren’t ready,” because of follow up, because of you tending to it, you’re 100%, 1,000%, whatever you want to say, ahead of everybody else. Because this is how deals are lost to other investors. you send a letter, someone raises their hand by calling you. They say, “Yeah, I’m interested. I got your letter.” They might have thought they were interested, or they’ve been thinking about it for a little while. But then all of a sudden, they don’t return your phone call right away, they don’t want an appointment. You go on the appointment, they’re not ready to talk money. Whatever it is. We’ve seen it all. It is in the follow up that the money is made, the deals are made.
Now, you played professional football. Here’s the question. Did you play more games, or did you go to more practices?
Elio: More practices.
Michael: Every … Nobody wants to accept that as a part of this business. As realtors, as real estate investors, nobody really respects the practice. The practice is that day to day, that may mean phone calls, that may mean knock on the door, “Hey, how’s it going? I was in the neighborhood. We met a couple months ago. I just wanted to see how you’re doing.” You’re front of mind consciousness. You’re ready, you’ve positioned yourself to be ready for game day, for when you have to be there and they’re ready to play. If you don’t take that attitude, that, “I’m going to practice six days a week for that one day this month, or that two days this month that I need to be at my best game.” You just have to have that attitude and that understanding.
Yeah, while you could spend a lot of money in marketing, you build a list of 1,000 people, you start with a list of 1,000 people, and you’ll get a deal out of it, that’s a fact. You could … When you’re really, really good at converting – not you, I mean whoever – when you’re real good at converting, you can usually get two deals out of that initial call, unless you just have a lot of dumb luck, which happens. It happens to me, it’s going to happen to everybody out there, but the general idea is that in your best day you’re going to get two right off the bat within 30 days. You’ll close them, you’ll get paid. The vast majority of those … Again, remember, within 18 months, 80% of the people that called will do business. The question is, will they do business with you? If they don’t remember you exist, no. The likelihood is very low.
If you send them a quarterly letter, so let me break it down in small numbers. You send 1,000 pieces of mail. 30 people call. You do one deal. That means 29 people still, you’ve talked to, ideally you’ve talked to, and they’re going to do something within, statistically 80% of them will do something within the next 18 months. If every quarter you send them a reminder letter or postcard, and follow up a few days after you drop that in the mail, it’s only 29 letters you’ve got to mail out now, because the other 970 people that never responded, you can re-mail them in six months. It doesn’t matter. They didn’t call anyway. The people that did call are the ones, those 30 people, or 29 people that are left, they’re the ones that need to be contacted again, at least on a quarterly basis, to say, “Hey, here I am.” You’re living proof of it.
Let’s say worst case scenario, and you make half of what you expect to make. You make $60,000 dollars. But let’s say it’s what you do expect to make, it’s $120,000. That’s $120,000 dollars somebody else was going to make, but you got it, because you did what other people are not willing to do.
I really congratulate you on that. That’s huge. It is a very rare skill that people, and work ethic that most people just don’t have in this business. They think that it’s like a … I always say this, and I’m not the one that invented, or coined the phrase, but it really stuck with me. There is not a baseball game in history that was won on home runs alone. It’s base hits, it’s double, triple, grand slam, home run. It’s a combination of efforts that bring that team to win, and that bring that World Series winner to win. If you don’t keep up with that general attitude … If I only want to do deals that I make $50,000 dollars or more on … There are deals I won’t take because the money is so little. That’s why I always recommend, make it four, five, six thousand dollar be your minimum, but if you start really doing a big number as your minimum, it’s going to be kind of tough. You’ll be able to do it, but it’s going to be few and far between. I was going to jump to the next subject.
We had a meet up, a local meet up, where we had a group of about 10 or 12 people that came through the door, and we just talked a little bit. There was a guy there, a real nice guy, and he said, “I’ve been trying to get in real estate for a while now.” I said, “Okay. How long?” He says, “27 years.” If you’ve been trying to get into real estate for 27 years and you haven’t been able to do it yet, the problem is not out there. The problem is that guy. He’s either super afraid of stepping outside the comfort zone … I won’t even say risk, because the least you could do is make some stupid, ridiculously low offers that most likely won’t get accepted, but at some point you’re going to get one accepted. You’ll make a deal. You’ve got to do. There is a little bit of doing. Everybody, again, in the real estate info product circles, “Buy my software, push two buttons, and watch the checks show up in your mailbox after 30 days. Just pay my $997 dollars,” and then they’ll pressure you to sign up for coaching for another thousand, or two thousand a month. It’s a hit and run game, unfortunately, out there, and I’m not naming anybody specifically, but when it comes … I’ll say it the way it is in my reality.
My reality is, I’ve been in the real estate business for 15 years. I know what it takes, and I also know that there is not a software system that will take the human element out of a relationship business. It’s not possible. You have to be on the phone. You’ve got to talk. You’ve got to build that rapport. You’ve got to bring a buyer through. You have to, to some degree you have to work. If you’re not working in your business, as that person where you’re at right now, where I maintained my position, you have to have people doing it for you, and then you have to manage those people. Then there’s someone who’s going to be listening to this saying, “Well, I’ll hire a manager.” All right. Fine. If you’ve got that kind of money to hire a manager, pay their salary, hire acquisitions people, okay maybe they’ll be on commission, maybe not. You have to have an office. There’s a lot to it. You have to be involved. It’s a business. If you’re not doing anything, if the idea of sitting on a boat drinking a glass of champagne and not having to worry about money really appeals to you, that’s great. In a bizarre way, maybe all of us have some version of that dream, but at some point you’re going to get sick and tired of sitting on that boat and not contributing anything to society, to yourself, to your world.
There’s got to be that certain point of contribution I think in everybody’s mind. This business does take a little bit of work. Not a lot. Again, you made $3,500 dollars an hour on this deal. Let’s say every other deal, these other six, or I know you said you have eight all together, but let’s say it’s eight deals and it takes three times the amount of time. That’s 24 hours that you’re going to have invested. Divide that 24 hours by $120,000 dollars. How much are you making an hour? That’s still quite a bit of money. It’s a tremendous amount of money. You keep that momentum and that never stops. Keep the marketing up, and keep going.
In closing, where do you go from here, Elio? What’s the grand plan?
Elio: Grand plan? Eventually leaving my other job that I have and going full time into it. I just have to ramp it up a little more. Instead of sending just $1,000 letters or [inaudible 01:00:22], probably sending, start off with at least 1,500 to 2,000. Ramp it up, slowly but surely. Then add on, build a team.
Michael: You will. That’s awesome. All right, man. Congratulations. You got anything you want to say in closing to anybody listening? Any thoughts, advice, and if you don’t mind sharing an email address so if people have questions they can reach out to you and if you care to help and answer a question or two that’d be awesome. If not, no big thing.
Elio: Yeah. My email address would be leinpropertysolutions, that’s L-E-I-N-P-R-O, like property, then solutions, @gmail.com. Some advice that I would give out is, whatever you do, you have to be persistent. A lot of people like to think it’s a one time, you send out a letter one time, and instantly you get a deal. When you’re beginning, it’s not that easy. You have to really understand what you’re doing, especially with … One thing that really did it for me was, with the script, to read it over and over until I really … I understood it, but I wanted to get comfortable with it, so I wouldn’t have to be looking down to see exactly what to ask them next. I wanted to make it seem natural. I kind of, at least read it like ten times before I really got comfortable with it.
Then once you … Everything at first, when you first start, is going to be a little bit … I don’t want to say hard, but it’s new, so it’s going to feel uncomfortable. Once you start to get comfortable, it begins to get a little easier. That was everything. By making the phones calls, doing the home visits. That was probably, I think the home visit was probably one of the scariest parts at first. Once I went there, I was like, “Oh, shoot. I have to do home visits. I have to go out her and present and everything.” Might get 40 calls and all, but once you get through that, it’s easy. That’s probably one of my strongest points now is the actual home visit. I actually … You build rapport with them through the phone call, then once you see them, it’s like [inaudible 01:03:06].
Another thing is to trust the process. Whatever Mike is telling you to do, you actually have to do it. You don’t have to do it, but if you really want to get successful in this, just follow along. He’s telling you to do something because he already has done it already himself or before, and seen … That’s the only way you’re going to get through it is by listening to whatever your coach, or Mike, tells you to do. That’s the only way. If you try to wing it, you might get it, and you might not. At the end of the day, you’re going to still not have a plan if you’re trying to wing it out there.
Michael: That’s great advice. I’ll tell you, the reason I say that is, my girlfriend and I, once a year we go to … There’s a lady here in town, Karen Calabreeze, and she has been a raw foodist and vegan for like, I don’t know, 30 some odd, maybe 40 years. Once a year we go, for the past four or five years, whatever it’s been, we go for a month long vegan detox. This has nothing to do with real estate, but just to clean your system out of the meat and dairy and everything else. You just eat what she tells you to eat. Week by week for four weeks.
First week is, just eat vegan. No animal products whatsoever, which you can have cooked food, you just can’t have any meat, cheese, dairy of any kind whatever. Eggs, any of that. The next week is raw vegan. The third week is just juice, believe it or not, so it’s like, “Man, I’m hungry.” Day three, I’m like … I can’t even get out of bed. I’m like, “I’ve got to take a week off, knowing how I’m going to feel.” Week four, she slowly gets you back on food, exactly what she did, so raw food for a couple of days, and then vegan food, cooked, then go back to your ways if you want to. That’s it.
I make no exaggeration, and I know it’s not the conversation to have on this, and I’m getting to a point here, but every time I do this, the first two to three weeks, I lose pretty darn close … I haven’t broken 20 pounds, but I lose about 17 pounds, 18-19 pounds. That’s just very consistent with me over the years, every time we do it.
The thing that stuck with me is really what you said. She said, “Here,” because she’ll have a class, you go once a week for a month. People say, “Well, what if I do this? What if I do this?” She says, “Look, if you want to start changing the system, you’re going to start creating your system. I don’t know how that’s going to work, but if you do what I have designed here for the past four decades, I know how my system will work. I know what the results will be, I know how you’re going to feel, I know what your health levels are going to be. I know my system will work. When you start changing my system, you make it your system, and I don’t know how that’s going to work.”
She had a really good point, and you made that same point. Find somebody … I think this is my advice to the world, everybody listening. If you’re new, and even if you’re not. If you’re experienced and you need somebody to keep you accountable, whatever it is, but if you’re new, find somebody that fills a couple requirements. One, they know what they’re doing. They have been in the business a while, and long enough, and can prove it.
Two, they are available to help you as needed. When you have a question, last thing you want to do is get shuffled off to someone who is reading off a teleprompter or a script, and can’t answer a question, because that’s when the rubber meets the road if you will, is like, “Okay, I’ve done what the system told me. Now, I’m paying for this coaching, and I need my coach. I do not know what to do, and I need you to tell me, because you’re out there on the sideline, you can see the whole game. I can only see the ball right in front of me, and I need to go to you and say, ‘Hey, look, now what do I do? You know the whole game. You’ve been observing. You see. You’re the coach.'” But when your coach isn’t the coach, or the coach is, like you said, somebody in … I don’t know if you said they were in Philippines or in Colorado, or whatever you said, but when they really can’t answer a specific question, it’s just not the right fit. Unfortunately you found out the hard way. There’s a no refund policy because they know when you’re asking for a refund you’re not going to come back anyway, so might as well just not give the guy his money back.
I don’t really agree with that. That’s why we do … Our coaching is ridiculously inexpensive. It’s a group atmosphere. It’s a month free. Try it out. If you like it, great. We’re happy to have you. If you don’t, no big thing. It’s something for you to try out. Try it before you buy it, if you will, and it’s there to really help people. I don’t make really a whole lot of money doing it. It’s more of a past time, but I do believe if people don’t … If they don’t pay, they don’t pay attention, so we charge a little bit of a fee to just say it’s something you’re going to show up for, at least occasionally, and take part in, and have it be something that benefits you. Last thing I want to do is ever take money from people that don’t show up for the calls. That’s when I send an email, “Hey, look. Are you planning on coming back? Because if you’re not, I don’t want to continue taking your money.”
Again, I don’t make my money out of the coaching. It’s more something I like to do, again, to help people that are … I remember the time in my career when I was eager to learn and I couldn’t find anybody to help me. It took me years to be able to grasp the business. If I can shave some time off and help people advance their investing, that’s what I want to do. We might not be the right fit for each other, but hey, it is what it is.
I’m really glad you brought that up. That’s great. Elio, thank you very much. We appreciate your time, and I know you’re a busy guy. It’s a heck of a lot busier than I thought when you posted that check up there, so I’m going to show people a picture of that here. Hopefully we get to see a lot more of those coming down the road here.
Elio: If you can see that.
Michael: Yeah. All right. Perfect. Awesome. Gotta get that thing in the bank, man.
Michael: All right. Thank you very much. Have a good night, and we’ll talk with you soon.
Elio: All right. No problem, Mike.
Michael: All right.