Epic Real Estate Investing - Virtual Wholesaling: RJ Bates III's Blueprint Revealed | 1385

Episode Date: November 16, 2024

In this episode, Matt sits down with R.J. Bates III, a seasoned real estate wholesaler with over a decade of experience in the industry. Together, they take a deep dive into their personal journeys into wholesaling, exploring the ups and downs of building a successful real estate business. R.J. opens up about how the wholesaling landscape has evolved over the years, from relying on traditional methods to leveraging advanced lead generation strategies like Pay-Per-Click (PPC) and Pay-Per-Lead (PPL) marketing. He shares invaluable insights into the importance of direct-to-seller marketing, offering practical advice on how to connect with sellers in a way that maximizes results and minimizes costs. Throughout the conversation, R.J. also sheds light on the challenges of navigating regulatory hurdles in different states and how to stay compliant while scaling your virtual wholesaling operations. He emphasizes the significance of optimizing systems and processes to ensure smooth, efficient business management, even when operating remotely. Beyond real estate, R.J. opens up about his passion for music and his unique hobbies, discussing how his creativity and entrepreneurial spirit intersect in ways that fuel both his personal and professional life. The episode touches on the fulfilling aspects of entrepreneurial success, from achieving financial freedom to the personal growth that comes with owning and operating a business. For aspiring wholesalers, this episode is packed with actionable advice, practical strategies, and valuable lessons learned from R.J.'s years of experience. Whether you're just starting out or looking to scale your virtual wholesaling operation, R.J.'s emphasis on continuous learning, adaptability, and innovation in the ever-changing real estate market will leave you motivated and ready to take your business to the next level. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-i-a-s.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. All righty, please help me. Welcome to the show. Mr. R.J. Bates the third. Welcome to the show, bud. What's up, man? Thank you for having me. You bet.

Nice to meet you. And been a fan, man. I've been watching. Love your stuff. You're a killer on the phones. I love watching you and Pace. I learn something every time. I've been doing this for, gosh, I guess 17, 18 years now myself.

And I think about, gosh, if I just said what he said at that one time, that could have been an extra deal. If I just said, if he said or did what he did and then, So you're just always learning, but I think also that is this kind of a testament. You can do a whole lot of damage in this business. You just pick up the phone. Absolutely, man. And we're two old heads on here. You're 17, 18 years.

I just passed my decade mark. Oh, nice. 10 years in the industry, man. It's been one of the best things I've ever done. And yeah, picking up the phones, talking sellers. That's what we do, man. You've got to be passionate about it. Yep, yep.

So 10 years, what were you doing just before this and how did you end up here? So I was actually a contractor. We had our own remodeling company, and I kept getting hired by investors, and then that's what led me to figuring out, like, when I would ask them, the flippers, where did you get this property from? It was always, I got it from a wholesaler. I got it from a wholesaler. So then it was looked up wholesaling and spent $65,000 on a hotel seminar rating program, you

know, on the credit card, and learn how to get deals off to MLS and Dispo on Craig's list and now it's just enough to make me dangerous. We've hung around. So that's how we got started. Sweet. Yeah, very similar. I was an agent for a few years and had a couple investors that were clients. And I was like, you know what?

I think I kind of like them profit things better than the commission things. And I like taking my weekends off too. So that was better as well. Yeah. It was hard the first couple of years with us only doing MLS deals. Now we call it direct to agent, Jamil, and then Jerry. Norden going out there and phrasing it different. The game changer, you brought up, you know, me being on the phones and closing deals,

that was really the huge game changer for us is when we started doing direct-to-seller marketing and really controlling our own destiny there, because we were capped out at how many deals we could get from agent relationships and getting deals off to MOS. So that was a huge game-changer for us early on and then just mastering out of top-to-sellers and solve the problems. Nice. What's your number one strategy in getting to direct a seller right now? PTF, paper lead. I continuously say it. I think we're in the golden age of wholesaling. I think there's a lot of people that are concerned about the regulations that are coming down across the country.

But what I've seen over the past decade is there was direct mail, cold calling, ringless voicemails, texting, all of these different ways for us to generate leads. And what we were essentially doing was it's constantly mining to find someone to raise their hand to say, I have a house that I want to sell, whereas now it's as simple as taking a credit card and swiping it. And you can have as many conversations with someone that's already raised their hand as possible. Now, PPC always existed. The problem is finding someone that was good to run a PPC ad campaign for you or you get it yourself, which quite frankly is broken focus and really, none of us are going to be good at that anyways.

Yes. Unless Nick Perry. And so for me, it's just the simplicity of being able to reach the motivated sellers today is so much more advanced than it was a couple of years ago. I think this is the best sign to be wholesale and real estate. I am so glad you said that. And I was not even expecting that answer from you. I had no idea because I've been, probably the last 90 days. I saw one little ad show up in my Instagram feed.

And I was like, wow, you don't have to pay until you actually close a deal. Like, that's an interesting little approach. I wonder what they're doing. And then, of course, since I paid attention to that one, then I saw another one and then another one. And then it's like every fourth or fifth ad was this done for you, some form of done for you lead generation. I started going and logging in and taking all their strategy sessions to see, like, how the sausage was made, so to speak. And they all had a little different approach. but for the most part, I'm like, gosh, you mean I don't have to, like, set up my campaign no more.

I don't have to figure out what's the newest marketing or mailing piece that's going out right now. And after doing this for so long, and as I started doing the numbers, like, okay, so these are like four or five inbound leads for this much, and that's going to turn a deal. And that seems like about the same as I would do it myself, but now I don't have to do the work. And there's hats that come along with it. I mean, we have someone inside of our community that today he shared, he spent two, dollars on a lead and he closed and funded on it today for $51,000. He went and he bought $180 worth of lead. So there's 90 leads.

And he just, he plowed through those. He got multiple deals. Now, that was because at the time, speed the lead, one of the companies that I use was running a promotion. And they're regularly running promotions where it's,

sometimes it's $50, $29. In this case, it was $2. It was probably on a holiday week. in, which we have the holidays coming up. Yep. I mean, for Black Friday. Yeah, I mean, there's always opportunities that are going to exist out there where you can

really front load yourself with a bunch of leads. And then it's all about your ability to close and follow up with those sellers. Yeah, that's one of the companies I talked to and I just signed up with them. And I was looking at those $29 leads and tell me if you agree with this. And you actually kind of just confirmed it. But I was like, okay, so they're $29. you're sharing these leads with other investors. But I like, most people are going to call.

And if they do call, they only going to call once. Like, all I have to do is call and put in my lead follow-up. And those $29 leads probably got a hell of value. So the coupon club, $29 leads are amazing. I mean, we close deals out of them. Everyone inside of our community does. And here's the thing about it. This thought that there's such a thing as an exclusive lead does not exist.

it could be an exclusive lead from speed to lead. However, what's going to happen is the moment that they fill out speed of leads form, they're going to go down to the next ad, which is going to be property leads or leads solo. They're going to develop their form. And then they're going to go to every other person on the SEO side of things. If they're truly motivated to sell that house, they are going to keep working until they talk to someone that is going to solve their problem. And so really it doesn't matter how many people have those.

The way I look at it is, is there was never exclusive lists that we were getting from ProxStream or batch leads when we were co-calling and direct mail and all that. Why are we now suddenly worried about, hey, is this $29 lead? Someone that's raised their hand and said, I have a house that I would like to sell. Why are we worried if that's exclusive or not? It's just a fear-based mindset. Yeah. You couldn't pull a list of 1,000 people and get a lead that raised an hand for $29.

Nope. Good. My logic is sound. I feel good. And again, I had no idea we were going to go that direction. But now that we did, that makes a whole lot of sense. Yeah, absolutely, man. And listen, there's a lot of different PPL companies out there for us, specifically,

Speed to Lead. We've been working with them since 2021. Leads solo, we've been working with them since 2022. And then property leads, we've been working with them since earlier this year. And they all have their different strengths. Yeah. Speed Lead is value-based with the Coupon Club, as well as they will also cold call leads and generate those as well as the PPC. Lead Zolo, their strength is is YouTube video ads.

And so what's really cool about that is they will see a video of someone saying, I'll buy your house, and there's power that comes along with video. And so those are normally really, actually, I went live on Halloween, while three deals up from Lead Zolo in a two-hour calling session, one of which I just assigned yesterday for a $30,000 assignment. And that was in, two hours of calling. And then the last one, property leads, their strength is in SEO, search engine optimization.

They have a spider web of SEO sites that have been ingrained in the system for years now. And if you've ever done any sort of inbound leads before, you know SEO is like the best because that means we've sought, it wasn't an ad that got them, right? They were seeking you. So those are great. And we love working with all three of those companies.

Awesome. All right. So that was, self-serving conversation, so thank you for that. Let everyone listen in, though, because it's very valuable. It's nice to know someone else experienced and successful, saw it the exact same way I did. I'm sitting in my little four little walls. I don't get to interact with a bunch of other investors all the time. So thanks for that. Absolutely. Cool. So we're kind of on the dawn of the new era over the next four years. How are you seeing

that? What are you looking forward to in the market, or are you not looking forward to something? That was the best result that we could get as entrepreneurs and real estate investors. I think so, yep. I don't know if we're going to get back to where we were in his first administration, where we were with interest rates and things like that, but we know the economy is going to improve for sure. I think we are going to see hedge funds start purchasing again like they were in 2021, where it was like, hey, this is my buy box.

If you hit it there, it's going to be an instantaneous purchase. I do see a lot of that coming back. I'm just excited. I also hope that we see a lot less regulations coming down the pipe in some of these other states. Now, of course, it's natural that there's always going to be new regulations that come out, but maybe where we stand now across the country where the majority of it is a certain political side, maybe that helps us a little bit with less regulations coming down on a whole thing. I think so.

I hope so. So I know you teach students and you've got to people that you guide and mentor. What is your advice to them if they live in one of these states where the regulations might be more strict than others? Well, one, I think it's an opportunity for you to understand the regulation and then find the loophole around it, right? Whether that's either double closing or becoming a licensed realtor, if that's what they want you to do. Whatever the loophole is, that's an opportunity for you where the vast majority of people that want a wholesale in that state are not going to. That's number one. Number two is, with the power of PPL being the main, or in my opinion, the best lead generation source today,

and the opportunities to have systems now like Investor Lift, investor base, deal speed, privy, the ability to find cash fires is easier than it's ever been. So you don't have to do wholesaling in your backyard anymore. Right. You can go wherever you need to go to be able to do. do deals. And so if it's too much of a burden or maybe you're trying to get started and you're in a heavy regulated state, then just find the next state over that is easy for you to do deals and is not as regulated. There's no problem in doing that. And quite frankly, for someone like me,

I mean, we do deals in all 50 states. And so that has opened us up to, yeah, I mean, when a state like South Carolina or Oregon or Nebraska passes ridiculous regulation, we've got to look at it and we say, all right, well, over the course of the past decade, 2% of our deals have been in South Carolina. That doesn't kill us. But if we have been 100% in South Carolina, I would be nervous for my future. So for us, we've always been of the mindset. We're going to cast a wide net over the entire United States.

And then that kind of puts us in a position to not be de-leveraged by a third-party passing regulations. We've cut, I think, from very much from the same cloth because I give the opportunity. speech all the time. I was like, well, this is great news because you just eliminate a 75%

of your wannabe competition, right? Yeah. So that's a biggie. I mean, so what if you have to get a license? I mean,

that's like, it's a very low barrier for you to eliminate all your competition, right? The other part, so, you know, you go in all 50 states,

and I started doing that. Like, I was 100% virtual. And I kept always running like two scenarios or two situations that were challenging. I'm wondering how you guide through them, where one was determining, like,

just getting an actual property values, right, in a place you're not familiar with. I was born and raised in Southern California, lots of suburbs, lots of houses that, a lot of housing tracks. So finding comps in those types of areas is rather easy. But then you go to Memphis or anywhere in the Midwest and you can go one block over and you're in a totally different neighborhood, which I was totally unprivy to at the time. So what is your advice there? What is your strategy for finding good property value? The example they use there, Memphis is a great example. Detroit. Birmingham, Jackson, St. Louis, Kansas City, very similar markets to Memphis, where there are

nicer areas where property values can be higher, but there's a significant portion of the city that the property values are extremely low. And so for us, what we focus on there is the as is comps. Typically, what we do as investors is we go find that nice fix-up properties. We look at the after repair value. We subtract repairs, wholesale fee and all of that. And that's how we come up with the maximum allowable offer. So what we've actually done is just kind of got rid of that bot process inside of our company. And we said, where will end buyers buy? Right now with these disposition softwares, what you now not only have the ability to find

the end buyers, but you're also able to identify where they actually buying these properties at for what. So you can literally go in and you could get into it down to where, like you said, maybe, you know, a couple of streets over property values change. Well, you can dense it down where you're 0.1, 0.2 miles away and you're in that specific neighborhood and you will see like the as is comps, maybe it's $10,000, $15,000 in a place like Memphis or Birmingham or something like that. And then you can see who purchased these properties? What did they do with them? Did they turn around and did they sell them or they keep them as rentals? And now you know, instead of trying to figure out

what that after repair value is. I know now this guy bought three properties in this neighborhood for $10,000. I need to get it for less than $10,000 and I know I can turn around and sell it over $10,000. That's really the way that you overcome some of those areas on the lower property value side. Now, as far as other locations where maybe it's just median, like a Cedar Rapids, Iowa, or an Oklahoma City where you're still looking at $100,000, $300,000, our houses, it's still the exact same thing where you're going to go in, you're going to find that after repair value, but you're still always going to be analyzing those as-is cops and just really trying to, instead of determine what your maximum allowable offer is,

you're just more trying to determine where does my end buyer buy. And if you can do that, that's what enables you to have a much lower contract termination rate. Got it. All right. No secrets there. I was looking for the gold. But, you know, you're right, though, the disposition.

softwares have just made it so much easier because when I started, they didn't exist, right? They didn't have that type of data, access that type of data. But now we do. So now it is way easier. The other thing that was always a challenge, and it still is a little bit today on the acquisition side when it's virtual, is actually you can still have the same conversation. You can still build the same rapport.

You can still get to a yes. But, you know, still you lose a certain amount more of those deals just because of trying to finalize and getting the signature, right? we've kind of like adapted the way that we do it now is kind of set that follow-up appointment. Like when it will be the best time we can reach out to you when you'll be sitting in front of your computer and hopefully we can go ahead and get that signature sign right there. Is that the way you do it or do you have a better way of doing it? I'd like to get it signed on that call for sure.

The way that I'm going to overcome not being there in person is is really how we navigate the entire conversation kind of leads to us assuming the close. We do price up front. So the way that I navigate conversations is, is I saw that you fill out of form on my website or are you still looking to sell. Yes. Awesome. How much are you looking to get for it? We get a number up front. And then we explore the motivation. We find out why they're looking to sell the property. And then we come back and we revisit the price. And we're really, what we're trying to determine there is the price and the motivation. And then based off of that, we determine if this is already a

closeable deal at the price that they're giving us, or if we really need to get them significantly down on price, which is the most common scenario, right? Highly motivated, but the price is wrong. So we do that. They're educating them through the numbers and having the motivation kind of match the numbers that we need to be and explaining to them how we're coming up. So we very rarely ever get the, you're low balling me, right? Because we are very transparent with the numbers and explaining that math to them.

Yeah. Then at the end, we explain our process on, you're going to sign this contract. We come out. We do an inspection. Once we've done the inspection, that's where we're going to let you know if we're good to close to that price and timeline or if we need to revisit it. So kind of mirroring and copying what open door does in their process. Same thing.

Like, we're giving you a number today, but it's contingent upon an inspection. Then we're going to revisit, renegotiate the price. And then getting it signed, it's if there's an objection as the, why they can't, then it's very specific about, yeah, when are we going to be able to do this? We go ahead. We send the contract. We put an expiration date and time on the contract, but there's going to be a specific appointment set for when are we going to be able to talk on the phone together to go over

the contract so we can get this sign. Nice. Cool. So you flipping everything? Are you holding anything? Actually, no. We used to flip a lot. We used to do a lot of buying holes.

At one point time, we had by close to 200 doors. We sold all of that, the entire portfolio. Flipping wise, we flipped a couple hundred properties at this point time. But this, I am very focused on only virtually wholesaling at this point. One of the things that I saw was we had great success early on with wholesaling. And then when we decided to start flipping and becoming a landlord, those are three separate businesses. if you do not have the SOPs in place to be a landlord and understand what comes along with that. And if your attention is not solely on that, then you're going to have problems.

And especially with flipping, if you're not solely focused on that, there's going to be issues. And so what we saw was is we were good at some things, but we were never great at anything. And so 2020, when COVID hit, basically we had a bunch of bad flips. We had properties that we owned everywhere. and we got rid of all those. We really bought into, hey, we're going to solely focus on virtual wholesaling. Nothing else. I would use the Jim Collins good to great hedgehog concept.

This is what we are solely focused on. This is what we're going to be great at. If it doesn't fit that hedgehog concept, then the answer is no. So it makes it really easy for the entire company to know, like, hey, where our hedgehog concept is nationwide virtual wholesaler. So we do marketing and all, but these things. States. We never go on belly to belly appointments. We do everything virtually from this office. And the only exit strategy is the wholesale and it makes it super simple. And because of that,

we've seen enormous results over the past four to five years. That's awesome. So we're doing with all your money. Just shoving it under the mattress? There are some things that we have invested in. One of the things that I do like to, I call it collecting. I will just buy vacant land, specifically vacant land that's kind of has no value to it right now that I can just dump money into and specifically in areas where I don't have to worry about any maintenance that goes along with it. So Colorado, Nevada, Arizona, New Mexico, places like that where I have to worry about mowing it. Property taxes are super low and just kind of dumping that money out there. But, you know, I'm also just enjoying life. I think sometimes

as entrepreneurs, we're always worried about that tax burden and things like that. I'm also looking at and I'm going, I've been an entrepreneur for 15 years. I've been a wholesaling for 10. I just turned 40 last month. I'm loving where I'm at in my journey and in my life because now the things that I begged for when I got started into this are now available to us. Tonight, or as soon as I'm done with this podcast, I'm hopping in the car. I'm driving to Arkansas. I'm going to spend the night there and then head over to Nashville. My son's played in a hockey tournament over the weekend and it's just about enjoying and reaping the rewards as an entrepreneur. Sometimes we just, we don't ever think about that.

It's always about what's the next big thing. Am I going to move into multifamily? How do I alleviate myself from this tax burden? You know, it's not that those things aren't important, but sometimes we forget to just reward ourselves and not worry about the next thing that we need to do. It's just, hey, live in the now. Amen to that, brother. I just think all my money in the golf club.

A hobby or advice? Yeah. The whole company, we actually have a membership for the entire company at the local golf course, about six minutes down the road. Okay. The entire team goes golfing together. I got a bunch of 22-year-olds that work for me. They kick my ass every Monday.

I think it drives me crazy. But yeah, brother, I love golfing. Didn't even know that. Awesome. Yeah. I play hockey myself. Just big sports guy. I guess I could say have a new hobby of writing songs.

I'm not a musician. I can't sing. I know play an instrument, but I'm good at making relationships with people. And so I've actually made a relationship with a band that I actually like called Dropout Kings. It's like a heavy metal band. And I've written two songs now with them that we've actually released on Spotify,

Apple Music, all that. Now I've been connected to other bands. And I'm now creating music with bands that I love. So I guess we could consider that off. That's awesome. So you're writing the lyrics? So you just kind of using technology? to write the music. So basically what I'm doing is, is I'm saying, hey, I have this idea,

this vision behind this song. And here's how I could like see the lyrics playing out and like the ideas behind it. And then they take it and kind of make it their own. And then I'll pick the beats and then they create the music on top of the beats. Pretty cool little process. I guess technically I would be considered more of a producer than anything. But yeah, it's been a fun experience. This is crazy, Arz. Because I was in the music business for 15 years before I in real estate. Really? Doing that very thing.

I couldn't play a lick. But at the sampling and I was able to program and I just had a good ear. So I made a huge business out of that until the digital download came along. Yeah. The way the relationship started was we went and saw Dropout Kings play. And then I saw the lead singer at the bar grabbing a drink. And so I walked up and I was like, hey, man, I got to tell you a story about the way that I found out about your band. I said I actually flew out to Phoenix to be on Steve Trane's real estate disruptors.

And I said when I was there, I was renting a car and your dad was working the rental car counter. And he said, what kind of music you like? And I said, you know, rock, heavy metal. And he goes, oh, you got to check out my son. Dropout Kings are on Series XM Optane. So I got the car and I just turned you guys on on Spotify. And he goes, no way, that's so cool. And he goes, wait, are you, hello?

This is RJ from TikTok? And I said, yeah, how do you know me? And he goes, because you use our songs on TikTok. And he goes, dude, this is so cool. He's like, I've watched all your videos. He's like, I want to learn real estate. And I was like, that's how the relationship started was he wanted to learn real estate. I was like, dude, I'd love to do a collab of some sort with you.

And so the first song we wrote was the King Closer. That's what I'm known as. Right. So I gave him a bunch stuff. They had my kids names and there and all kinds of fun stuff. So, yeah, it's been a fun experience. I love music. It inspires me.

I listen to it all the time. I have it playing when I'm working. And so it's just been a really awesome opportunity to be able to do that. That's awesome. That's amazing. Cool, man. It's been a pleasure. Are you in Collective Genius?

I am not. I am in family national. I think we're in that together. Yeah, we're in family together. All right. Cool. Well, I'll see in the spring at the very least, but I'll see it before that. If people wanted to get in touch with you, what's the best way for

them to do so. Obviously, go watch me on YouTube. I release a new video every single day. It's just under RJ Bates III. You need to connect with me. Send me a DM on Instagram or Facebook, either one of those. Love to connect with you guys and appreciate you for having me on, Matt. You bet. It was my pleasure. Let's stay in touch, all right? Yeah, absolutely, man. All right, take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream.

Yeah, yeah, we got the cash flow. You didn't know home world. We got the cash low. This podcast is a part of the C-Suite Radio Network. For more top business podcasts, visit c-sweetradio.com.