BiggerPockets Real Estate Podcast - 12: Wholesaling and Marketing with Sharon Vornholt

Episode Date: April 4, 2013

Wholesaling real estate is a popular topic on BiggerPockets and often one of the first strategies used by newbies to build cash reserves. However, wholesaling is a business that requires certain systems, strategies time, and sometimes even cash to prosper at. In today’s episode of the BiggerPockets Podcast, we talk with expert wholesaler and marketing whiz Sharon Vornholt about some of those strategies and techniques that she uses to make an income as a full time wholesaler. Read the transcript for Episode 12 with Sharon Vornholt here In Today’s Wholesaling Podcast, We Cover: An easy, cheap (free!) way to find more cash buyers than you can handle. The first step for wholesalers Sharon’s primary source of leads for motivated sellers The step-by-step process for making money as a wholesaler Double-closings vs. an assignment: Which is best? How Sharon closes deals with no money whatsoever Typical response rates from direct mail campaigns Why “pain” is a great thing to discover… Awesome strategies for negotiating with sellers The mistake Sharon made when starting out… and how you can avoid it. What the key to success really is. Links From the Wholesaling Show: Wholesaling Articles on the BiggerPockets Blog: What Is A Double Closing? A Real Estate Wholesaling How To Exit Strategies For Wholesalers. What Is A Double Closing? How to Start Wholesaling: Getting Past The Education and Into the Field Don’t Start Wholesaling Until You Read This: Wholesale Advice from a Fix and Flipper 9 Reasons You Couldn’t Find A Buyer For Your Wholesale Deal BiggerPockets Podcast 11: Flipping Houses 101 with J Scott ListSource.com – (Motivated Sell Lists for Direct Mail Campaigns) Books Mentioned in the Show Rich Dad Poor Dad by Robert Kiyosaki Success Principles by Jack Canfield Tweetable Topics: “Wholesaling is about relationships.” (Click to Tweet!) “When negotiating, learn to adjust the other person’s expectations” (Click to Tweet!) “Learning how to buy property for the right price is the difference between success and failure.” (Click to Tweet!) “It’s all about marketing. You have to have leads in order to get deals.” (Click to Tweet!) “Anyone who claims to know everything about anything is full of crap.” (Click to Tweet!) Thank You! Thank you again to everyone who has subscribed in iTunes to help make us one of the top business podcasts in all of iTunes! We’re up to 166 5-Star Reviews so far with over 89,000 downloads! Every subscription in iTunes and every review helps us reach more people – so thank you! About Sharon Sharon Vornholt is a professional real estate wholesaler who began investing in real estate in the Louisville, KY area in 1998. While she has done both rehabbing and buy and hold investing, her primary area of focus now is wholesaling. Sharon is a regular contributor on the BiggerPockets blog and an avid blogger on her own site, LouisvilleGalsRealEstateBlog.com. Sharon’s BiggerPockets Profile Sharon’s BiggerPockets Blog Articles Sharon’s Facebook Page Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 12. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. Hey, everyone. This is Josh Storkin with the Bigger Pockets podcast Show 12. With me today, as always, is my co-host, Mr. Brandon Turner. What is happening, Brandon?

Show 12, that's incredible. We're getting pretty far on this thing. That's cool. I'm shocked. We haven't killed each other by now. I know. It's amazing, isn't it? It is indeed.

No, it's going well, man. Twelve shows is great. The first 11 were really good. I think we've come a long way. So certainly excited to knock out yet another. and so this one is this is another good show as always we're exploring a topic

we haven't really gotten into very much the topic of wholesaling Wholesailing. Wholesailing? Yay! Hey, I want to be a wholesaler, Brandon. Everybody wants to be a wholesaler.

That's like the most popular thing in the world because everyone thinks it's really easy and it's free. It's free. you don't need any money or time. And all you have to do is just say, I'm a wholesaler and suddenly you're going to make $5,000, $10,000 a property without doing any work.

Isn't that right? That's completely right. And you can actually do it while on the beach in the Bahamas. I once wholesale the property on the beach in the Bahamas. In fact, I didn't even turn on my computer. I literally just got to the beach, sat down, and suddenly it like blinked my eyes. And I had 10K in my bank account.

It was awesome. That's pretty incredible. Yes. Yes, it is. Well, as anyone who is listening probably knows, that is just not true. And frankly, it's not as easy as everybody says it is. And we're going to talk a little bit about that today. So, you know, it's a good topic because there's a lot of people who want to be wholesalers. And the person that we've got for today's show, Sharon Vornholt, is, yeah, she's been doing this for a while. And she's pretty savvy at, wholesaling. She's also savvy at some of the skills you need to do well at wholesaling. But anyway, we'll get into all that.

Let's first get into today's quick tip. Quick tip. What I have a terrible. Wow, that's terrible. We were supposed to get somebody to do a jingle or something. Yeah, I love to get on Fiverr and find someone. For sure, for sure. All right. So for today's quick tip,

we want to let you know that you should go out and add a photo to your profile. Why should we be adding photos to our profiles, Brandon? Because if you don't have a, if you have a profile without a photo on it, it's a man holding a dollar sign. And I see that a thousand times a day. And frankly, I'm tired of the man with the dollar sign. So make a nice little picture.

And as an added benefit besides my enjoyment, you also interact with people a thousand times better on the site. When you're on the forums, if you have a picture, people are way more likely to talk to you, to give you advice to help you out and to make deals happen. Yeah. Well, it shows that you're going to put the time in to the site and that you're invested in the site and that you care

and that you're a real person. I think people have a hard time identifying real people when they just see some blank generic avatar. So by putting up your personal photo, it makes it easier for them to relate to you. So anyway, that's today's quick tip. Get up your personal photo. Get up your...

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you some help find a co-host at Airbnb.com slash host. And with that, let's get on to the show. So Sharon began investing in real estate in the Louisville, Kentucky area back in 1998. And while she's actually been a rehabber and buy and hold investor in her previous life, but her primary, I'm having a hard time today. Her primary area of focus is definitely wholesaling now. Sharon is a regular contributor on the Bigger Pockets blog. And she's an avid blogger on her own site, the Louisville Gals Real EstateBlog.com. Not to be confused with the Lusville Gals, real estate blog.com. Because if you lived here in Colorado in the area called Louisville, you would call it that. But of course, down in Kentucky, they've got a whole different way of saying it. anyhow, with that, let's just welcome her to the show.

Sharon, nice to have you. Hey, Josh, glad to be here. Glad to have you. Glad to have you. All right, so let's just jump right into this thing. You are a marketing, you're somewhat of a marketing expert and certainly well-known around bigger pockets and elsewhere as a savvy wholesaler. Maybe you can tell us a little bit about how you got into.

real estate. What's your story? What's your background? Well, I started out as a lot of people know in the home inspection business in 1991. And as a result of that business, I became friends with a number of realtors. And one of those realtors in particular took me to my first RIA meeting, long around 1998. And I got absolutely hooked on real estate investing. So I kept that home inspection business open until 2008 and I invested all of those years about 10 years while I had the home inspection business and in 2008 I closed that business and started investing full time. Okay. Okay. So you got so hooked that you said I don't want to inspect properties anymore as a hired gun. I'm going to do it on my own for myself. Maybe really quickly we could talk about the,

that inspection process and the transition, you know, do you find that having that background is an asset, I would assume the answer is yes. But, you know, where does it help you maybe rise above what other people do and they're investing, just having that skill set? Well, I think it's important that you know the basics of the property. Now, bear in mind, I was the owner of the home inspection business, and I had hired inspectors. but I still went to all the trainings, got the certifications, and those sorts of things, even though I was not the person crawling under the house.

I had to know if they were doing a good job. So when I started looking at properties, I had a big advantage in that I could look at a panel box and tell, gee, it's really, really small or, you know, it has fuses. I knew what to look for with structural problems and those sorts of things. So it was a big plus, I would say. Gotcha. Okay. And so, you know, as I mentioned, I guess your focus, we would say, is wholesaling. Maybe you can tell folks what exactly is wholesaling. Well, I think of wholesaling or wholesaler as being kind of a transaction coordinator. Like we talked about before, one of my strengths is marketing. I do a lot of marketing and especially a lot of direct mail. So initially I was doing rehabbing and I was a buying-hold landlord.

And long around 2008, about the time I started investing full time, the houses here started staying on the market a long time. And that's when I started thinking maybe I need to do something else. So I got into wholesaling almost by accident. You know, it wasn't something I started out doing. It was only after, you know, I wanted to let the rehabbing go for a while. And I found out that I didn't like being a landlord. So that was where I ended up in wholesaling. And by that time, I'd made a lot of contacts with other rehabbers and landlords and those sorts of things.

So, you know, you started with the buy-in-holds and the rehabbing, and just naturally it kind of brought you over into this wholesaling space then. It kind of backwards, actually. I would most people probably start the other way. But, yes, I did that to be truthful about in the beginning, I had a hard time rep in my mind around wholesaling and making offers on a lot of houses and cash offers. So I guess it maybe was not the natural way that most people would have done it. Right. Okay. Okay. So when you first got started, Sharon, I guess what did your first few deals look like? I mean, not necessarily like the landlowing part of things, but when you started wholesaling, how did that come about?

was your first deal? Well, as I said, I was just doing marketing and a property came up when I had decided that I was going to try to wholesale it that was just actually a perfect candidate. And I just simply called it, you know, I was a regular little three-bedroom house that was, I'd say, or maybe blue-collar lower in bread and butter type of house. And I just called up some investors in my group and I sold it. and it was just worked out easy for me because I had been in that arena for a while. So from my perspective at that point in time, wholesaling was pretty easy. Gotcha.

So you get this, you find this deal and you just started calling people and suddenly it was sold. I mean, how does that process work? Yeah. I have for a long time kind of simultaneously built a list of contacts. The easiest way people can really do that is through their RIA group. If you can get a list of people that belong and get their emails, then you know those are people that have an interest in buying real estate. Once you have been in your RIA group for a while,

then you're going to figure out who the real players are, who the top five or six or seven cash buyers are. So I built my list initially straight out of my RIA group. anytime I wouldn't have a house sold in a week or so, then I would put it on bigger pockets, and I would put it on Craigslist, and I've gotten a couple of good buyers from bigger pockets. That's something everybody should realize.

It was, I say, like an accident. It's awesome. Hey, we love it. We love it. That's great. That's great. Cool. Okay, so you've got these opportunities, and you know, you just start reaching out to folks

and since you're finding good deals, they're jumping on it. That's pretty much the basics of the wholesaling game, right? It is, but it's about relationships and knowing that, knowing who the people in your spear are, who the cash buyers are. And I will say to people,

you don't always know who the cash buyers are. One of the buyers in particular that came from bigger pockets was a guy, 50-ish kind of guy, who had retired from his corporate job, and he had a great big old 401k, and he had his house paid off. So he was able to just simply go to closing and write a check from his equity line of credit. So you might be surprised at the people that are actually cash buyers. You might not realize that they're cash buyers. Okay. Well, that makes sense. I mean, a lot of times I think people try to build their list by some weird, like, I don't know, you have to hire like some company to bring you cash buyers.

You have to pay for a list of a thousand people online. So I think that's awesome advice to just go to ARIA and find out who the big players are. I think that's probably one of the biggest values in Aria is not so much the education you're going to get. Even that might be great. But it's the connections you make and find out who's actually doing the deals. I think that's where the real value is. Yeah, very cool. So, Sharon, what does your business look like now then?

Like, are you still doing the same thing? Has it changed over the years? I know you're still wholesaling, but yeah, what does it look like now? Well, it looks different. You know, as you grow, I think one of the hardest things for me was to try to outsource some of the things, outsource some of the direct mail. And once you can do that, it enables you to stay on track a little bit better. I also continue to network to grow my buyers list, and I think it's important that people know that you have to nurture that buyers list. You have to let them know that they're important to you, and it's a great day when you have buyers call you and say, hey, do you have anything?

You know then that you've got a really responsive list. But I pretty much do the same things. I market for deals. It's just that my exit strategy has changed. There is one other place that you can find cash buyers that I would encourage people to do too. And that is to go on to your local tax assessor site. In my area, it costs about $25 a month. And you can pull up any street or adjacent streets to your property and start looking on there to see who has bought multiple properties.

That's a good idea. And you can find out pretty quickly because a lot of landlords work in areas. And you can just go through there. And if you see Brandon Turner's name on five or six properties, you know he's an investor and he likes that area. So that's a pretty low-cost way to scope out buyers for your list too. Okay. So generally you would recommend then when you're wholesaling, you're not going to be selling to motivate. I mean, you're not going to be selling to homeowners.

You're probably going to be selling to investors, correct? Always to investors. My end buyer is always an investor and it's always a cash buyer of some sort. They're never going to get a mortgage. Now, they may work with an investor-friendly bank that closes in seven to ten days, but that is still a cash buyer and a wholesaler's mind. Okay. Well, let's go back a little bit and go a little more basic.

You know, like you said, wholesaling is sometimes hard to wrap your head around. I know it took me a long time. I think you said it took you a long time. Let's just walk through the whole process beginning to end then. So the very first thing you do is what, marketing? Is marketing. You market and some people use bandit signs. I don't use those anymore.

My primary source of leads is direct mail and then I think that you should have a website, a website that is a lead capture website where people can put in their information. So once you get the lead, then I will look at the house and when I make an offer and get an accepted offer on the contract, It's always in my contract that I'm going to put a lockbox on the house because all my properties are vacant. They're always vacant and they usually need a lot of work. So I will have a lockbox on that property. I try to buy myself a little bit longer time period to close if I can. Some people close up, say they'll close everything in seven days and I have closed in seven days.

And reality is kind of tough to close in seven days. You know, it takes people a little bit longer than that. But most in my area, most people don't have any problem with closing. If you say, I'm going to put 30 days in the contract or if you think it's going to be tough to sell, you might even put in 45 days. But you can tell them that my goal is to close it in two weeks. I hope to have a buyer in a couple weeks and then we can just be done. So once I have it under contract, then for investors that I have worked with and investors that I know,

I will simply, if it's someone that I know buys in that identical area, I'll just make a phone call or two. You know, I, that's my, I call them my A buyers. They always, they're the phone call buyers. And then if I'll give them a 24, no more than 48 hours head start, because investors are notorious for just hanging out at Starbucks and, you know, being late to go look at house. but then I will just put it out to my list, which is everybody. And once again, if I know them, I will give them the lockbox code. I don't give out a lockbox code from someone on Craigslist or someone that I don't know because I don't want them to come back later that night and take the copper out of property.

So those people I meet. And the other reason I meet those people is I want to talk to them and see if they're really cash buyers. Are they really somebody that I want to nurture on my list? or are they just kind of out looking at houses, and they're not really investors. But I kind of want to vet them. Okay. So let's say you got a house under contract then,

and you used direct mail, you found some really motivated sellers. And now those motivated sellers, those are people, right? You don't do this with bank repos or do you? I don't do that, but you can do that. The bank will always want you to use their title. company and that's fine. But you can, or they will always want to prepare the paperwork. I should put it that way. But in most cases, then you can have that paperwork sent over in my area. We use

closing attorneys. Some areas use title companies. But in my particular case, the attorney here closes those bank-owned deals all the time with a double closing. Okay. And I think we'll talk about double closing, hopefully a little bit later. But so you find, you got this, you find the buyer. I mean, Yeah, you found a buyer now. You know, somebody from your Rhea says, yeah, I like the deal. It's great. So how do you get paid then? What happens?

Well, in most cases, I do a double closing. You know, it costs me about $350 more than if I assigned the contract. I have assigned contracts, but I like to double close. So what's the difference then? The difference is that I've got to just, if you. you do a double close, then your seller, who you have negotiated a great deal with, will not know what you have resold it for. If you have someone to come into a closing and close on the deal as an assignment, they've got to agree to give you a check on the side or separately, or they have

to, you have to get paid out of that closing, in which case your seller is going to know how much you've made. And you can imagine they get upset sometimes. If you've made $8,000 or $10,000, then they're going to be upset, you know, about that. So for me, I just like to double close. It's just cleaner. Hey, Sharon, so for those people who, you know, I, I think this is one of the things that we will see the most confusion about. And, you know, I think you're doing a pretty good job of explaining it, but, you know, let's just, just to kind of reiterate the point, then there's two ways we can close, correct? Right.

Yeah, the first way is that you write up an assignment. It's in my area, it's a simple addendum to the contract. You just, you've got your contract, and then you say, I'm going to assign all my rights to the other person for this amount of money. It's real simple. It's just another piece of paper. Okay. Now, with the double closing, let's,

that I buy the house from Josh and I am the wholesaler and I'm going to sell it to Brandon. I tell Brandon to come at 2 o'clock and I tell Josh to come at 2.15 and they are in two separate closing rooms. We actually go in and sign the paperwork on that is called the B to C or the second closing and then bear in mind this is an investor and he knows I'm doing a double closing. He knows I'm using his funds to close the first deal. Sure. Then I walk into the other room. We sign the paperwork, close that deal. And since they've, you always have to bring certified funds to a closing. So just to be clear, the A to B to B closing is where I buy the house from my seller. The B to C closing is where I sell it to my buyer. So we're going to close the B to C closing with his certified funds. So we know the money is there. He knows I'm doing a double closing. Then we walk. into, I walk into the other room and sign the paperwork with my seller. And then the closing attorney goes off and cuts all the checks.

I shake hands with the seller and then I go back into the other room and thank my buyer for, you know, the transaction. Okay. And in this case then on the double, do you actually own the property? You actually hold the property for X amount of time? Yeah, for five minutes. I actually take title. You know, people have varying opinions about that, and there are some investors that claim that Brandon would give them a $10,000 check and just let them go show up at closing and hope it closes.

I don't personally know a single person that would do that. That's, you know, some people that'll work, and I think people are a lot more comfortable if they're going to just be giving you $2,000 or $3,000. If you've got a big house and maybe a $10,000 or more. payday, it's going to be a difference, you know, and how they want to handle that. Gotcha. Gotcha. Okay.

So I think that definitely clears it up. And I think anyone listening who would probably have a better idea. So that's great. I definitely appreciate that. Let's going to, oh, go ahead, Brandon. Yeah, real quick. We'll also include a few links to some articles on the show notes about that. So that's at biggerpockets.com slash show 12.

So we'll have some articles. I know, Sharon, you've written some really good stuff in the past on. on double closings and why you do that. So we'll make sure we link to all that. So people do want more information. Again, this is kind of a little bit more complicated of a transaction. We'll have some more links there. Great, great, great.

Well, I was going to jump before I was rudely interrupted by that show plug. I was going to jump over to the topic of direct mail because I think it's one of those things, again, that you're pretty good at. And a lot of people may not fully understand. So direct mail, you know, let's go to the real basics. How exactly does direct mail work? Well, direct mail has four major components. The direct mail piece, the message that's on that mail piece, the list and the mailing campaign.

So there's four parts to each one. The first part is your, well, I guess the first two parts would be the direct mail piece. Are you going to send a letter or are you going to send a letter or are you going to send a postcard, the message on that mail piece, and it will change because the message you give to a probate or pre-foreclosure is very much different than what you give to an absentee owner. So that's what I mean about the message is going to change. Then you have your list. You can get your list from various sources, and I personally have gotten my absentee owner list from list source in places like that.

Some of the postcard companies will also go through the list companies and get your list. When I first started out, I got my first absentee owner list from the PVA, from the tax assessor site. The problem with that list was I couldn't put any filters in the list except to exclude zip codes. For instance, I couldn't say I only want houses with 50% equity. That is the real bonus for getting a list from a place like list source. Like I said, there's other companies. That just happens to be the one I'm familiar with. So you get your list and then you set up your direct mail campaigns.

Now, you can save all of this stuff in the computer, but I'm a big proponent of putting it up on the wall. You know, if you're going to mail on the first of every month, then I think you need a great big wall calendar and you put absentee on. or mailing down when you want it to go out and then you back up from there and you put your print dates or whatever you have or if you're calling a mailing service put it on a calendar, get it scheduled and then it will go out like clockwork because it's all about the repetition. Gotcha, gotcha, no, that's great.

And you had mentioned probates and pre-foreclosures. So ultimately when you send direct mail, you're going to select kind of the target that you're most interested in, right? So, you know, be it probates, you know, whatever you think is, is, you know, you can set up various different types of campaigns. What's your favorite? My two favorites are absentee owners and probates. Absentee owners may take a while to become motivated, but almost all of them will become motivated to sell at some point in time. And I only mail to absentee owners out of state. And that's because I live in Kentucky, and Kentucky's a relatively small state. So you can get anywhere in three hours just about here. Now, if I lived in

California or Texas, I think what I tell people is you have to figure out how far away do you have to be to invoke the pain in the neck feature? I think it's about three, three and a half hours, maybe a little bit more. People within that window will still drive in to take care of a property. But you get out four or five, six hours. Then it becomes a real challenge, unless you have a management group to manage your properties. So that's what, that's kind of my criteria. So I do out-of-state absentee owners and probates. By and large, the probates, the houses are always going to get sold out of the estate

with few exceptions. So they're almost always very motivated. Okay. So you send out these letters and you send them out repeatedly. I know you've said that a lot on the blog, you just said earlier. You send them out over and over and over and over. that way when the person becomes motivated, you're there. You're the first person they call.

So what does a typical response rate look like when you're sending these things out? I mean, do you get 50% of people to call you or 0.005% to call you? Well, you know, if you get somewhere a low response rate generally in the industry is considered about 1% and average about 3 and anything above that's good. But the thing with direct mail is that your actual purchases, your actual deals will go up with subsequent mailings. Your first mailing or two, you're going to get the people that say, take me off your list or it's not showing up, but I've sold the house. You're going to get a lot of calls. I don't want people to take this the wrong way and think you'll never get a deal from those first mailings because you can.

But the statistics say that after the first contact, you might get a 2% response. After the third contact, you're up to 6%. And then after the fifth contact, you will get 81% of your deals. Now, not calls, deals after that fifth contact. And it's somewhere after the first few mailings that most of the people will quit mailing. So I call it, you want to be the last man standing. you know if they've gotten your letter and I've pulled up to places before and they've got my postcards or my letters all rubber banded together they've kept every single one of them and they'll

say well I had a card here and I had a card here but here you did this every month and that's why I get the call nice nice nice that's great that's great can you just clarify really quick on that 81% so if I'm to understand the the odds you're talking about the odds of receiving a phone call from the person with whom you're sending the mailing through, correct? What I'm saying is that let's say you get 10 deals this year from direct to mail. 81% of those deals will come about after the fifth contact. Gotcha. Okay, I was a little confused, so that definitely makes sense.

And here's an important point, too. People will call sooner, and they may call and say, gee, I've got the house listed. So I don't really, you know, I just wanted to let you know that in which my response is always, well, if it's okay with you, I'm going to keep you on the list just in case that doesn't work out or your circumstances change. Is that okay with you? And they always say yes. And several times a year I get a call from someone who's had the house on the market a year, 15 months, 18 months, and then they are motivated. They just want to be done. Gotcha. Gotcha. How much does somebody make calls that on a deal, Sharon? Well, I tell you what my goal is, and I don't always hit it, is 10,000. Okay. Now, some years ago, three, four years ago, probably four, I was noticing that it was just coming up to be about $7,000. And then I started trying to raise that up a little bit because maybe you'll make 12 on one and you might have to cut down to eight or seven on one because it doesn't, maybe it doesn't sell as quickly or you find it.

yet has a problem that you overlooked, but I like to leave some leeway in there. But the thing of it is, my end buyer is always going to get that deal the way he should get it. 70% of the ARV less repairs. If there's going to be anybody that gets cut on, you know, doesn't make as much, it's going to be me. So my challenge is to buy the property so that I get what I want to make out of it. And sometimes I don't make that much. Sometimes it's still a deal and, you know, who's going to turn down three, four thousand dollars. Yeah.

You know, Sharon, you touched on something really important there, I think. You know, a lot of people get into, they want to get into wholesaling because they believe that's the easiest way to get into real estate investing. And, you know, whether or not you believe that or not, the fact is you have to get deals that are better than even house slippers can get. And I think Jay Scott said that once. I think on his podcast, he said how, actually Marty said that too at one time to me, that as a wholesaler, you have to find a deal that will give the investor profit and you profit. So you're like doubling the amount the deal you get.

Is that right? Yeah, it's definitely harder if the rehabber finds the deal, then he doesn't have to, he can pay that person more. And I'm trying to find a balance here because most of the homes that I buy, I need a lot of work and the people know they need a lot of work. And there's a certain, you know, way that you, there's a certain skill involved in even getting the deal. But in the end, like I said, my buyer, that's why they buy from me over and over again. They get the deal with the 70%.

You know, I work the formula and I put in, you know, what I call a fudge fund, a what if I don't, you know, didn't find it originally or it shows up, that they buy for me time and time again. because I give them good deals and I don't try to fudge on their end. If I have to fudge on something, it's my fee that gets cut. Okay, nice. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real,

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issue that turns into a five-figure problem because no one caught it early. That's expensive. A good property manager isn't overhead. Their protection against small mistakes turning into big losses. And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. They obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score. And they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. Hey, Sharon, so what do you, you know, what do you say in these letters?

What, you know, what are the mailing say? Obviously, I'm assuming they're going to differ based upon the different types that you're sending. But you had mentioned absentee owners and probates. You know, maybe you could kind of, you don't have to read your script, but kind of give us the essence of what you're talking about in there. Well, I have about four or five letters that I, and I kind of tweak these letters up. you know, with a probate, I might start out, and there's different views on this, whether to acknowledge they have a loss or they don't have a loss.

But the first question they're going to ask you is, how did you hear about me? So I like to just put it out there and say, you know, I'm sorry, sorry for your loss. I understand that you're handling the estate. And then the next time I might say something like I'm checking in to see if you've gotten started, you know, if you might be interested in selling the property. And it kind of goes down to where I get, you know, I'll say, well, you should be getting ready to finish the estate now. It's just kind of a natural progression. It's the same letter, but with the words change. And with absentee owners, I don't vary too much from that letter.

It's just you need to go over what their pain is. You know, I have a house that's, and I live 7,000 miles away or hit upon maybe the different situations. If you're sending out a more generic letter, it might be, how can I help you with this situation? Are you an absentee owner? Have you inherited a house you don't want? Have you lost your job? Did you relocate? You've got two houses.

So you have to hit upon the pain and the pain and the pleasure. What are the benefits that you can provide them so that they get rid of their pain, whatever that pain is? Okay. Yeah, that's awesome advice. So cool. So you get this, you got a, you find a motivated seller, you find out their pain, you got them through direct mail, you know, all this. So what happens next? You're talking to them. Do you go and meet with them in person if you can? They, you know, presumably they either call you with a number or they enter in some information on your website. But what happens next then? Well, whenever possible you meet with the person. Now with absentee owners, unless they happen to be in town, they're probably going to give you a contact to, go and look at the property.

And I've done that many times. I've looked at the property. I've made an offer. They've accepted the offer. And I never meet this person. I've talked to them on the phone. And all the documents are sent out, you know, FedEx or UPS overnight. They signed the documents.

And many times we've actually closed those easily in a week if I had a buyer like on hand. But with probates, it's a very different conversation. You have to acknowledge that this is a tough time for them, and it is gut-wrenching for them to look at their mom's worldly possessions, which really are nothing. You know, they have no monetary value, and it's gut-wrenching for them to have to dispose of them. Oh, definitely. So I always try to ask whether it's an absentee owner or a probate. I mean, in addition to money, there's always something else they want. Maybe they need help cleaning out the house, or they've got backtok.

or they've got, I bought a house once that had a $3,000 lien from code enforcement on it. So I always try to find these things out and they'll, they will usually tell you, you know, what is your situation? Just keep asking better questions. And once they tell you, gosh, I don't have any money for closing and I don't, and I have a $3,000 lien on the house from the code officials, then you know your offer has to be $3,500 less than what it would have been. in because you're going to offer to pay for those.

You know, whenever you can just tell the seller what they are going to net out of the deal, then that's easier for them to understand than to understand all your figures with the closing costs and that I'm going to pay this and that. That's great. So how do you decide if it's worth actually pursuing? I'm assuming you talk to a lot of duds, a lot of deals that aren't going to work out. How do you decide? Well, I talk to a lot of duds.

and see if you're a buying whole landlord like I know I know you are Brandon you've got some property you can do different things with deals that have less equity you can maybe do a a lease option scenario or you can do something that a wholesaler can't do now they often give you a price and that's just a price I'll even say where did you get that price oh I just thought it up or the house down the street sold for this. And it's all, but I'll say, yeah, but I see that in the comps, but it's completely renovated. Yeah. See, they really know, but you can't blame them for throwing out a ridiculous price. You've got to try to bring them back into, I like to say, adjust their expectations. And it's a process. You can do it. I try to start

the process on the phone. If I think I can turn it into a deal, then I'm going to start that process on the phone. Once I get out there to the property, then I'm going to continue that conversation, and I'm going to continue to just ask them questions. What you want to find out is what is their motivation? Money is certainly always part of it, but it's not always money. You know, they may need something else. They may need you to say, I will clean out this house that has two feet of stuff everywhere. That's great. Cool. All right, well, we probably should be wrapping this thing up pretty soon. So before we go, I do have one final question before we get to the final questions. I'm just curious, we touched on this a little bit earlier. And a lot of beginners, a lot of

beginners want to do wholesaling. It's kind of like the guru choice today. It's like, oh, get into wholesaling. It's the easy way. It doesn't take any money. Is that, I guess, what do you say about that? Well, I think I made the same mistake that most investors make when their brand new investors, I paid too much for the property. If you have bought the property and you've paid too much and you're going to be a landlord, you've just got to kind of suck it up and figure it out, hope you can work out the rents. But if you pay way too much for a wholesale deal, you're going to be stuck. You know, you may sell it, but you're probably not going to make any money.

I think learning how to buy property is probably, or how to buy it for the right amount of money is probably one of the things. that people, nobody knows in the beginning. So some people, wholesaling may be the way to go, and it's certainly a way you can get in with little or no cash, but it's possibly not the best strategy to start with in that you don't really know what you're doing. You don't know what a good deal is. Yeah, that's definitely true.

Hey, Sharon, what, I guess then, would you say would be your best piece of advice for new wholesalers, somebody who's just totally fresh off the boat who doesn't really know too much about real estate investing, but has heard that wholesaling's great. How should they go about kind of getting into it? Well, the best case scenario is that you can align yourself with a mentor with an experienced real estate investor and that, you know, you can learn what a good deal is. I've had people call me with properties that didn't even know what the 70% formula was.

They bought it $10,000 under retail and they thought they had a great deal. So if you can find a mentor and you can usually find someone at your rear group, that's a great place. Bigger Pockets is a great place to find somebody. You can go on there and say, I'm looking at buying my first property and I don't have a clue what I'm doing. And people will jump in and they will help. But I think education is the key. But there's also a certain amount of practice. You just have to go out and talk to people and make offers and get over.

for that fear of a fear of dread that most people have. Yeah, for sure, for sure. And I think, you know, bring up a great point on the mentor thing. You know, a lot of folks then you have to think you have to go out and spend a lot of money to go get a mentor. And exactly as you said, I mean, if you go to your RIA, if you go to your local group or your local meetup, I mean, you're sure to be running around with folks who are successful, who are doing business and doing deals.

And frankly, there's a lot of people who are just happy to help you out and happy to mentor you. And so, you know, I'm glad you mentioned that. And I do want to reiterate it, how that's really, at least in my opinion, that's the best way to find a mentor, find successful people in your local area who are out and about doing it. Yeah, because they know your area. And by and large people, I've never had anybody turn me down.

Now, when I first started in real estate, we had a mentoring group in our RIA group, which is something, I know why they stopped because it was a lot of work, but it was the best thing because they had a different investor come every week for 10 or 12 weeks, and it was the hour before the meeting. And maybe one week it was on filling out the paperwork. Then it was on the formula for the offers. And they had a natural progression on down to where they spoke about lease option, wholesaling. but it was one person for one week.

And you left there at the end of that. And you had gotten so much education in an orderly manner. You know, that's part of the problem too. You jump on and you learn about landlording. Then you say, well, maybe I should learn about wholesaling. You don't always get the information at the right time or in the order that you needed. Sure. For sure, for sure.

Hey, so, you know, great advice on the RIA. and I think there really is a lot of value in going in that personal person-to-person interaction. But overall, I guess, can you tell us in like really, really quickly, I'm going to jump in, I want to be a wholesaler? What are my first actionable steps to take? Marketing. Marketing is your first thing. You have to have leads to ever have a hope of getting a deals. And anybody starting in real estate should plan on spending about two hours a day. marketing. Now, maybe you don't do that every day. You might do it on Saturday in an evening,

but you find your list, you get your mailpiece going if you have to handwrite them or order them or whatever you do. But you have to market or you'll never have a deal. Awesome. That's great. All right. So let's wrap this thing up with our four famous questions here at the end. Number one, what is your favorite real estate book, Sharon? Well, I have a lot, but probably the one that made me think about money differently, the most was rich dad, poor dad. Ooh, nice. There you go.

We haven't heard that before. That's a good one. How about your favorite non-real estate business book? The Success Principles by Jack Canfield. It's a great book. I've written all over the book. It's a little short chapters and everybody should read that. Nice.

That's good. I never heard of that one. No, no. How about hobbies? You know, surely real estate is not the only thing that you. you do. I know you're, you're, you know, you like to write, but anything beyond that. Oh, yeah. I'm a, I love to travel. I don't get to travel as much as Brandon. Love to go to the beach. I like art fairs.

Jesus. Oh, Brandon. Brandon. Brandon, the world traveler. So travel to any beach, art fairs. I'm an avid reader and I have a granddaughter who's 12 that I spend a lot of time with. Oh, great. Great. And Brandon, I know. You've got the big final question here for Sharon. All right. So, Sharon, there's a lot of wannabe wholesalers out there, probably more than any other sealed of real estate. I mean, people that come and go every damn bigger pockets who say, I want to be a wholesaler and then never do it. So what makes them stand out, the ones who actually do succeed and the ones that are making it happen and those who don't?

Well, they just don't quit. That's the first thing. when things get rough as they inevitably do, they don't quit. They are lifelong learners. That is vital. And they change with the market. When I was in my Rea group about a week ago, there was a fellow there who's been investing since, well, probably 45 or 50 years. And he said, I sold and bought real estate when interest rates were 17%.

And I've sold and bought real estate when interest rates were, you know, where they are now. you just have to change what you do and change your marketing as the market change. And he's very successful. Oh, that's great. Great advice. I want to actually pick back up upon Brandon's question here for a quick second. You know, wholesaling really is the field where, I mean, I can't tell you how many countless, you know, tens of thousands of people we've probably seen over the years

say, hey, I'm going to be a wholesaler, cool, cool. and then they're gone within months. How can those guys, beyond just having that sheer perseverance, how can those guys make it? I mean, how do we stop these guys from falling off? How do we get more of these people to be successful and to actually make it? Is there anything that we all can do other than what we're doing now, which is writing, trying to educate people, trying to give them the tools?

I think it's all in the learning and having a mentor. because I think for so many people they jump in, they think it's going to be easy. They think it's going to be one way or the other. And when they get some houses under contract, they didn't buy them cheap enough, they can't sell them, you know, whatever happens, they just get frustrated instead of saying, okay, that didn't work out. Now, let's sit back and dissect this whole thing and see what happened. Okay, I paid too much or I didn't have a buyer's list.

I think if you look at it from that perspective and then you just go, next, but it's in the learning. If you go out there and you think you're not going to have to learn and change and learn every day, you're just sadly mistaken. Yeah, for sure. Well, I tell you, oh, sorry, I was going to say really quickly, that that is one of the reasons that I started Bigger Pockets. I mean, I started the site because I needed a place to go. I needed a place to learn. I needed to find, I needed mentors. I needed help. And so I created the site because I personally, for my own real estate investing needed a place. And so that's a really, really good point.

I mean, you know, having the ability and knowing that you need help, not just quitting, but, you know, going out and having the guts to say, you know, I don't know. I don't know. You know, what do I do? Well, one of the hardest things to do, I think, for anybody's to come onto bigger pockets and say, on the forum and say, boy, I really screwed this up. Yeah. What did I do wrong?

But you have to be willing to do that. And that's another benefit of belonging to your local RIA group and actually meeting people, that you can call them up and say, gee, I don't know what I'm doing wrong or what am I doing. And they will just flat out tell you. And it's just great. But, yeah, your site has provided education, certainly to me. And because even as many years as I've been doing it, I don't proclaim to know everything or, you know, I'm the first one to tell you. it's kind of changed tomorrow or next week. Right.

Yeah. Well, I tell you, anybody who claims to know everything is full of crap, stay away from. Yes, they are. All right, Sharon,

well, listen, this is, oh, wait, actually, you know what, Brandon, didn't you have something you were going to add,

sorry. Yeah, real quick, I just wanted to add, something you said earlier about finding mentors and local guys, like, just from a personal standpoint,

I would love, like, personally, I mean, I'm a cash buyer. I can close in two weeks and I don't have time to find deals. Like,

I mean, I struggle, finding time. So like find a guy like me in your area who can close in a couple weeks and just say, hey, what kind of deals do you want? What are you looking for? I mean, if somebody in my town came up to me and asked me that, I'd say, yeah, I'm going to want this, this, this, this and this is how you're going to go find it. And I would walk them step by step through that process. And there's nobody around to do that. So out of the millions of a wholesale are out there. Do that. Yeah. And boy, you should have somebody like that because one of the first things I like to do is I

ask the person, where do you buy, what price range do you buy? Where won't you buy? And I get that criteria down, which is how they get the call. You know, for me, you're a dream person. I want to have a brand on my list and, you know, to call. And I want to have a Sharon, but. Oh, it's a love connection. All right. Well, Sharon, lots of really, really good stuff, valuable information, lots of really great tips. I think this will help a lot of the new guys out. So I definitely want to thank you. We really appreciate having you. Sorry that this is a little bit shorter than usual.

But thank you so much for coming on the show. Well, thank you for having me. I loved it. Awesome. Well, thank you, Sharon. All right, everybody. That was our show with wholesaler and expert marketer, Sharon Bornholt. Of course, you can review all the show notes as well as find links to all the stuff we talked about over on biggerpockets.com slash show 12.

before we go, I just want to say thanks to everybody for listening to the show as always. We're now up to a 166 five-star reviews in iTunes. So thank you guys very much. Thanks to everybody who's left us a review. If you haven't already done so, please take two minutes, go over and leave us one. It definitely helps us out. And finally, please be sure to come and like us on Facebook at facebook.com slash BiggerPockets. As always, we'll see you back on the site at

BiggerPockets.com. If you haven't been around in a while, please jump in, get involved in the conversations, welcome some new members, get engaged in any of the activity that's happening on site. It'll definitely help you expand your network and grow. So hopefully you'll do that. And that's about it. So thanks so much for listening and we'll see you next time. I'm Josh Dorkin with my partner here, Brandon Turner. See you later. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small.

If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform, our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more

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