If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).
Ashley:
This is Real Estate Rookie Episode 240.
Jamil:
Look at the math here. We know that you’ve got to speak to, at minimum, at minimum 200 homeowners before you’ll get a contract. What I see is that if you talk to, say, 50 real estate agents a day, who are each prospecting themselves, imagine if you talk to 50 agents who are each talking to 50 homeowners to try to get listings, how many effective conversations am I having a day if I go that route? If 50 agents are each talking to 50 homeowners, that’s me talking to 2,500 people. So the math doesn’t lie.
Ashley:
My name is Ashley Kehr and I’m here with my co-host, Tony Robinson.
Tony:
Welcome to the Real Estate Rookie Podcast, where every week, twice a week, we bring you the inspiration, information and stories you need to hear to kickstart your investing journey. I want to start today’s episode by shouting out with someone from the Rookie audience who goes by the username, Dudette Three, and Dudette Three left us an honest rating review on Apple Podcast, a five-star review that says, “Love Ashley and Tony. I love their podcast so much. They provide valuable insight and good motivational stories. Both seem to have a very positive and upbeat outlook on life. I’ve learned a lot and look forward to what is to come.”
Then Dudette also dropped an Instagram handle. It’s at Mitten Rentals, so M-I-T-T-E-N R-E-N-T-A-L-S. So make sure to give Mitten Rentals a follow as well for giving us some five-star love. So if you haven’t yet and you’re listening to this podcast, please leave us an honest rating and review. The more reviews we get, the more folks we can help. And I kind of got some beef, Ashley, because I’m seeing some of these newer podcasts coming up, and right out the gate, they’ve got double the reviews that we have. So I want to challenge our Rookie audience to help us out here. Don’t leave us high and dry.
Ashley:
Yeah. We would appreciate it, you guys. Tony diligently looks at the reviews constantly. I cannot, in case there’s a bad one. So I rely on Tony to read all of the good ones when we are recording, and I appreciate every single one of them. So thank you guys so much. So Tony, today we have a unique episode again, just like the past several Rookie replies have been, where we were live at BPCON. But while we were at BPCON, the first day we decided to do an Instagram giveaway, where we announced it at BPCON on stage that we were doing this Instagram giveaway and we had to be tagged in their story. The very next day we picked a winner.
We gave, I think, Ethan, what, maybe an hour-and-a-half notice that he was going to be on the podcast and we’re recording live and to come meet us. So we have Ethan Wilson on, who we just met at BPCON. We randomly picked his Instagram account. We messaged him and he was able to come. So we also have another guest on with us too, Jamil Damji. So we literally took everyone that we knew you guys would want to hear, and we dragged them into our podcast studio at BPCON. So we have two guests on for this episode, and they both provide tremendous value. I mean, Ethan, I think we hit the jackpot. We were shocked like, “Wait, this is your story, and we just randomly picked you? This is amazing.”
Tony:
Yeah. It was so funny. I was in the back of one of the rooms, so it was actually the social media presentation of BPCON. Sarah was on stage, and our good friend Rob was moderating and Brit was up there, a few other folks. I was at the very back of the room, and this kid comes up to me and he shows me his phone, and it’s an Instagram message from Ashley. He’s like, “Hey, is this real?” There’s a lot of fake profiles floating around, so I wasn’t sure. I was like, “I don’t know. There’s a lot of fakes out there.” I messaged Ashley and I was like, “Hey, is this real?” She’s like, “Yeah.” So it was funny how all of that came together. But Ethan was a great story. Then Jamil, if you guys don’t know Jamil, Jamil is first just a fantastic human being.
This guy just radiates positivity and warmth. Not only that, but he’s also an amazing real estate investor, and we definitely have to get him back on the podcast to give a masterclass to all the Rookies listeners around his strategy for finding off market deals. But anyway, before we go too far with Ethan and Jamil, we do want to take a question from the Rookie audience. So if you guys want to leave a question, get active in the Real Estate Rookie Facebook group, or you guys can go to the BiggerPockets forums. Today’s question comes from Heidi Cawood. Heidi’s question is, “When buying from a wholesaler, is the asking price pretty much what you have to pay? Or is there room for negotiation?” Luckily for you, Heidi, there is always room for negotiation. Like most transactions, like most buying and selling, you can always negotiate the price.
We’ve purchased a few deals from wholesalers at this point, and pretty much every time we’ve been able to negotiate a little bit off of the purchase price. Wholesalers are just like regular sellers. Sometimes they’re going to price a little high in anticipation of the fact that people will probably negotiate and the price will come down a little bit. I guess I just do want to share a story. The last time that we purchased a property from a wholesaler, there was a significant amount of negotiation on the purchase price. I can’t remember the exact numbers, but this is a property that we had under contract for, I don’t know, $250,000. I had never seen the property in person, and I’d just seen photos and videos. So we get the property under contract, and I’d worked with this wholesaler before, so it wasn’t the first time I worked with them. So I knew them. We already had a relationship.
We get the property under contract. Then Sarah, my wife and our crew, they go and walk the property without me. As soon as they get to the house, Sarah calls me, all upset. She was like, “Babe, what are you doing? We’re not buying this house.” I was like, “What are you talking about?” I was like, “I know it’s a little rough, but it’s not terrible.” She was like, “The whole roof has collapsed inside.” So when you walked into the living room, the ceiling inside of the living room had literally collapsed. I went back and I looked at the photos and I was like, I would remember if the roof had collapsed on the photos. That wasn’t the case. So I called the wholesaler, I let them know what happened, like, “Hey, my wife and my crew are there and the ceiling has collapsed.”
He was like, “Are you sure?” I was like, “Yeah.” I sent him the photos that my wife had sent me and I told him, I was like, “Hey, this is going to be the cost to get this repaired. We need this deducted from the purchase price.” He was like, “Hey, I’m sorry. We sell all of our properties as is.” I think if I was a new investor, I probably would’ve panicked a little bit. But given this wasn’t my first rodeo, I knew what to look for. So I politely pointed out to him that pretty much every purchase and sale agreement, at least a good one has a clause that says the condition of the property cannot materially change from the time that it is placed under contract until you close. I asked a wholesaler, I said, “Do you think that the roof collapsing would be considered a material change?”
I was like, “Look, we have two options here.” I was like, “You guys can give me a discount on the price, or I can take you guys to small claims court. And it’s up to you. But I would think that if I showed a judge, an arbitrator, whoever that this is what it looked like when I placed it under contract, this is what it looked like today, they would probably agree that a big gaping hole on the roof would constitute me being right and you being wrong.” So a little bit of back and forth, and eventually they were able to negotiate the price down, and we all walked away from that transaction pretty happy. So that was my experience from negotiating on a good wholesale deal.
Ashley:
What happened with this house? Did it turn out to be a great rehab?
Tony:
It actually did. Not before it got really, really terrible because immediately after we closed, we went back to start demo and we couldn’t get in. We ended up finding out there was a squatter in the property after we had closed on it. So we had to kick the squatters out. It was definitely a challenging rehab for us. But the property’s actually done now. We should have our permit here for the short-term rental in a couple of weeks, and then we can put all of this behind us.
Ashley:
Good. Well, thanks for sharing that story with us, Tony. I think it gives a little bit of insight that even as an experienced investor that things don’t always go smoothly, and there are a lot of challenges that we all face every single day. I’ve actually never bought a property from a wholesaler, and I think it’s mostly because there’s not a … I’m investing in rural areas, where there’s not a huge supply of wholesalers going in and buying these markets where there’s very few investors investing in.
But in the actual city of Buffalo, I’m on quite a few buyers’ lists for wholesalers, and it’s always interesting to see. I was at this meetup once, where wholesaler came up to me and said, “Someone said I need to talk to you, that you buy in this area.” It was not even half a mile from my childhood home growing up, and I knew exactly where the house was. So I’m looking at the address and I’m like, “I know something about this house. What is it?” And just by googling the address, it comes up meth house, meth bust, people arrested, all this thing. I was like, “Oh yeah, that’s why.” And I just want to say I grew up in a very nice home life. I did not live in a bad area growing up.
Tony:
No breaking bad.
Ashley:
Literally in the middle of nowhere. My bus ride to school was an hour long. So this little house there had been a meth house, and it probably had been, but when this happened, it was probably eight years, 10 years before that. And the house has sat since then. Somebody has owned it. I don’t know if it’s changed hands or what. But with some place being a meth house, you want to have some kind of remediation. So I asked the wholesaler, “Has there been any kind of remediation on the property?” He had no idea that it was a meth house at all.
So he was like, “Do you think you could send me that information you found?” And this was literally just by me googling the address, all this stuff came up and it was just kind of a shock to me, like, “Oh my gosh, wholesalers don’t even google the properties that they’re trying to sell, just to see any kind of information that’s out there that definitely could benefit them before even putting the property under contract.” So I’ve followed the property a little bit, and I’m assuming they canceled the contract because I never saw that it changed hands at all from the current owner.
Tony:
Yeah. I mean, so would you have bought the house at the right price?
Ashley:
Actually, yes, because I looked into the remediation of it, and it was just like mold. People are scared of mold. I used to be scared of mold. But now that I work with this great mold company, I’ve bought a couple of houses now with mold. They come in and do the removal, and it costs money, but I know what to budget for it. So yeah, you just have to budget for it. But what he had it under contract for, he eventually told me what it was, after I said that I wasn’t interested or whatever, and he wasn’t even trying to make that much off the assignment fee. But yeah, he couldn’t move because he didn’t know when he went into it that it needed that remediation.
Tony:
Yeah. That just makes me think if can, when you’re working with a wholesaler, if you can put off submitting your EMD until you have had a chance to walk the property, that’s always ideal. That’s an area that I shared with that wholesaler. They have a non-refundable EMD, and I want to say it wasn’t a small EMD, it was 15 or $20,000 we put up as EMD, and it was non-refundable from the moment that we wired it in. So that’s why I had to threaten them with litigation to either get my EMD back or for them to discount the price. But if you can, when you’re dealing with a wholesaler, if you can walk the property first, get a sense of what might need to be done to it before you submit your EMD, you’ll have a little bit more flexibility there as well.
Ashley:
Yeah. I smirked when you said it was only 15, $20,000. The last property I put an EMD down, it was $2,000.
Tony:
Wait. Okay, let me share one story about, I think, the best return on EMD that I’ve ever gotten. I don’t even know if that’s a phrase, return on EMD, but this is what it was. So everyone knows we have cabins in the Smoky Mountains, and we bought a bunch in 2020 and 2021. We haven’t purchased anything in 2022 yet. But we got a new construction cabin under contract at the end of 2020. It was December of 2020, and it was a $2,500 refundable EMD, fully refundable EMD, $2,500. The cabin, I think we got it under contract at 780 is what we got it under contract for. It was supposed to be done in the spring of 2021, so six months after we put that EMD down. Well, supply chain issues, labor shortage, I don’t know what, but it got pushed from spring of 2021 to fall of 2021, and then from fall of 2021 to winter or to spring of 2022, and from spring of 2022 to fall of 2022.
So we’re actually just now closing on that cabin in about 30 days. But here’s what’s happened over that timeframe. The cabin is in a new development of short-term rentals. So I think altogether there’s 22 cabins that were built in this one development. Well, out of 22, my cabin was number 21. So one through 10, 12, 15, my cabin has already been built, the same exact floor plan, and some of those cabins have already sold. And my cabin under contract at 780, the exact same cabin sold for 1.2. So we built, what is that, almost $400,000 in equity on a $2,500 refundable EMD. So it was crazy. That was the best EMD I’ve ever put down in my life.
Ashley:
I remember we had a guest on who was doing that in Austin, Texas with new builds.
Tony:
I can remember that.
Ashley:
Yeah. As soon as was a new development, he’d put a deposit down. It was like $1,000 to have it built. By the time it was actually built, they put in so much equity, and he was doing this every year and house hacking it for a year, then going on. As soon as he closed on that first one, he’d go put a deposit on for one for the following year. Since these were the first houses in that development, by the time people were coming into phase two to buy them, they were paying more than he had paid for that phase one. Yeah, super interesting. Okay. Well, today let’s get into our actual guests that we have onto the show. So you can meet Jamil, and you probably have heard him On the Market, the podcast. Tony and I like to joke that it’s the second best podcast and we’re number one, but it really is truly an amazing and informative podcast. So if you guys haven’t subscribed yet, you really should.
Then also we have our winner on, Ethan, and I’m not even going to say anything about him as to what he’s been going on, except that he is very young and fresh out of college and is doing amazing things. So make sure you guys check out this episode. Ethan, welcome to the show. So we also have Jamil here with us from the On the Market podcast. So this is a super special episode that we are recording live here at BPCON. So Ethan actually won a giveaway that we did on Instagram. We decided to do this yesterday, and he was our chosen winner, the lucky one, and we are so honored to have him here with us. He just gave us a 30-second little spiel of what he has going on, and we are already amazed and can’t wait to hear more. So Ethan, you can tell us a little bit about yourself and how you got started in real estate, please.
Ethan:
Yeah, well, thanks first and foremost for having me. I’m honored and grateful to be part of it. Yeah, so I’m 23. I started my real estate journey just a year ago, a year and four or five days ago. Closing my first single family house down in Huntsville, Alabama. I was in college at the time. I was a busy guy running around. I was playing soccer, taking graduate classes, coaching and trying to make it through school and everything. The opportunity came up to get the house just in the neighborhood next to the college. So I got it. I rented out to my roommates who were my former teammates, and they paid my mortgage and a little extra. I fell into a good group of people. A big fan of Bigger podcast. I found Cody Davis and Christian always good on BiggerPockets, listened to their podcast, loved their story, loved what they were about. It really spoke to me, resonated. So I joined them, joined their mentorship and, like I said, got around a really good group of people. Learned a ton over the past couple months. On Friday we just closed on our first eight-plex-
Tony:
Congratulations.
Ethan:
… down in Texas. Yeah. So, super excited about that. Three weeks ago I quit my job to do this full time, pursue my passion. Real estate’s just what burns my fire. It just wasn’t in … the jobs are dangerous, as they say. It’s comfortable. It’s easy to get stuck in the nine-to-five and just do real estate on the side as I planned. But I’m young. I took on the risk and took the leap, and I’m loving it, under contract for a six-unit outside of Knoxville, Tennessee and going from there.
Tony:
Dude, first, congratulations, man. At 23, I think I was working at Foot Locker, so you’re doing some amazing things, brother.
Ethan:
I appreciate it.
Tony:
So what’s next? So you quit your job, you’re going full time, you got a few small multis. What is the goal for you?
Ethan:
Yeah. So one of my buddies, Eddie from Nashville, we’ve been best friends. We’ve always been hustlers together. We’d work our internships and then immediately after going, start doing landscaping, hauling, moving, stuff like that and saving up our money. He started a business. I bought my first house. Next, he’s going to leave his job soon. I left my job. We’re going to go together in real estate and take it on together. He’s more of a flipping guy. He flips couches and he wants to flip houses. He’s going to be the capital-
Tony:
Very similar.
Ethan:
Yeah, exactly. What’s the difference between a couch and a house? But he’ll be the capital provider for my long-term opportunities and in the meantime find private investors to come in with us.
Ashley:
So being so fresh and so new at doing these first couple deals, what’s your one piece of advice for a rookie listener right now?
Ethan:
Jump in. Whatever you think that obstacle is, it’s probably not as real as you think it is. My obstacle was just the lack of knowledge and just the fear of not doing it. I think a lot of people struggle with, and this is all over BiggerPockets, I know, but analysis paralysis. I read Rich Dad, Poor Dad years ago and started studying, studying, studying, analyzing deals, looking all this, what am I going to do? I finally pulled the trigger. If I had done it earlier, maybe I’d be somewhere different, but live with no regrets. That’s my advice, just jump in.
Ashley:
Well, super cool. And thanks so much for coming on the show. Ethan is actually going to help us co-host today as we talk to Jamil. So Jamil, welcome to the show.
Jamil:
Thank you. Thank you for having me. Ethan, first, it’s evident why you’re the chosen one, bro. So congratulations again. Just phenomenal work.
Ashley:
And you know what? It was random. We got super lucky. Great guests.
Jamil:
Just super random? Wow. Wow. I mean, I would’ve picked him. Really cool, really cool story.
Ashley:
Yeah. So Jamil, tell us a little bit about yourself for anyone who doesn’t know who you are.
Jamil:
Well, thank you for having me, guys. I’m Jamil Damji, the co-founder of Keyglee, in my opinion the best wholesale operation in the country. We are franchised in 130 markets. I started Keyglee in a coffee shop with my sister and two other business partners, Josiah Grimes and Hunter Runyon. It has been a phenomenal ride. We do on average in our corporate store, anywhere between 60 to 80 transactions a month. Then our franchises do hundreds of deals. Outside of that, I am a dad, a loving husband. I love my wife, she’s the best. Also, I am the star of Triple Digit Flip with my best friend, Pace Morby on A&E. So that’s super fun. On top of that, I am the leader of AstroFlipping which is, again in my opinion, the best wholesale community that exists on this planet.
Tony:
Jamil, so not to make you feel like outshined, but what were you doing at 23 years old?
Jamil:
Man. I was working at Taco Bell. Yeah, I was working at Taco Bell. I still had ambitions to be a doctor, so I was living my parents’ dream at the time. I come from an East Indian background and for us, it’s you either be a doctor or don’t come home, right? That’s our life. So I tried to get into medical school and I failed at that. I actually, I did really well in the medical school entrance exam, had a near 4.0 GPA and I bombed the interview. So when I wasn’t accepted into medical school, it was heartbreaking for me because I literally had done everything right. I was volunteering. I was all of the extracurriculars that you could possibly think of, I was doing.
Tony:
Then why do you think you bombed the interview?
Jamil:
Well, I was young.
Tony:
Was it a subconscious thing where you-
Jamil:
No. I was answering truthfully. And I think what ends up happening in those is people rehearse and they come in with a prepackaged, they tell the interviewer what they want to hear. I was very honest with what my ambitions were. I wanted to be a plastic surgeon because I wanted to make money. So I was honest with the panel. And I was told that I was a little immature and that I should try to reapply again after some time, but that was a great candidate. Now what’s funny is that my cousin, who might be listening to this, sorry I’ve been outing you as of late, but he cheated off me on the medical school entrance exam and he got in.
Tony:
Is he someone’s doctor today?
Jamil:
Yeah, he’s prescribing people stuff. So when I think of that, it’s like outside of the fact that I made the decision consciously to never let somebody be able to decide my destiny, and I think that was the moment because I had worked so hard and somebody else could decide. That’s when I knew I had to be in a field where I was driving the boat, and that’s what happened. I went from there into entrepreneurship. It was a bumpy ride. I got into a business at the time, this is now 2001, 2002, and we had started a media company, where we were convincing businesses that they should stop advertising in the Yellow Pages and move their business online, start advertising with a website.
Tony:
Wild idea at the time.
Jamil:
Wild idea. So my job essentially consisted of cold calling businesses out of the Yellow Pages, and explaining to them how some of their funds that they’ve been spending on advertising here could be used to go online so that people could find them, and that it was this revolutionary way that people were going to start doing business. We did really well. I did really well at my job. I was a phenomenal closer. I was selling these five-page websites for 600 bucks a pop. The problem was, is that my business partners hadn’t really ran our costs right. So every time I sold a website for 600 bucks, we lost $100. So I did so well at my job that I put us out of business.
The beautiful thing though is that I was given proximity to my business partner, who was also in real estate. And him and his father were knocking down these old houses, and this is in Calgary, Alberta, and they would build new duplexes on these old lots, and they were having a problem finding more building lots. So thus my real estate journey begins because I basically interjected myself into a conversation they were having, and I came to find out that if I could just help them find some of these houses, I could make some money. So the next day I was walking my dog, called a For Rent by Owner and the rest is history. My first wholesale deal. I made $47,000 after I paid the lawyer their piece and never looked back.
Tony:
So I want to give you a chance to ask Jamil some questions too because this is a great opportunity for you. But before, so Jamil, our audience are mostly rookies, right? So if I’m a rookie and I’m terrified of talking to strangers in rejection, what are some tips you might have about cold calling and being effective with that?
Jamil:
So here’s the thing, right? They’re strangers. So what’s going to happen? I mean, let’s just think about it. What is the worst that could possibly happen? Somebody is mean to you? I mean, okay, right? It’s a person you don’t even know that’s being mean to you. So I think that just understanding the reality of what the fear is based off of. The fear isn’t that someone is going to cuss you out or be not receptive to your call. I think the fear is really, “What if it works? Now what?” Because you don’t know what to do next, right? So many people get stuck and then they think, “Well, I’m all alone in this.”
That’s why I’m just such a big proponent of being a part of a community. There’s so many communities out there. I mean BiggerPockets, for instance, is a massive community of helpful, wonderful people. You can get into the forums and you can talk to folks who are going through the same thing as you. You can squat up with people and really help spread the burden of that fear out. I think once you start to talk to people who have walked that walk, who have literally done the thing that you’re trying to do and they’re alive, nothing has happened to them. They may be richer for it, right? So once you start doing that, I think that the imaginary fear dissolves and then life opens up.
Ethan:
Yeah, I love that. I want to back up first and say, I love what you said about the entrepreneurial mindset. I don’t want to give my time to anybody else. I’d rather work 80 hours for me a week instead of 40 hours for somebody else. So that was always the mindset getting into something like this. And that’s a great question from you, the cold calling, because that was one of my biggest problems was picking up the phone and just calling somebody. I didn’t know who they were, I didn’t know what they did, I didn’t even know if it’s the right number, and I didn’t know who was going to pick up. So I’d call and be like, “Hey.” At first it comes off super salesy. I don’t even know what to say. But I think you hit it on the head with joining a group. I said this already before, but I was in a great group.
There’s guys younger than me, they’re 19 years old, Caleb and Chucky in the multifamily strategy group, they are just wheeling and dealing. And it’s good to have those people who are ahead of you. Christian and Cody, who have shined the light on where I want to go. They helped me from day one all the way to get to where I am. But it’s also good to have people in the group who are exactly where you are and moving along with you. Those guys are same guys who are making the cold calls. And you meet up every night and you’re like, “Dude, I can’t talk to any of these people.” And they’re getting deals and deals. But then you look in the group, and there’s people who are still with you and to help you move through those challenges. It’s definitely good to have those support groups. It goes a long way. There’s a lot to be said for that.
Jamil:
I agree. May I ask, Ethan, the first deal that you did, how did you get that deal? What was your lead generation strategy?
Ethan:
Well, the first one was just the single family house on market.
Jamil:
On market? Awesome.
Ethan:
I offered the asking price. It was just me and one other bidder. It was right after the peak of COVID, so it had just started going down and I think a lot of people were afraid. So I lucked out. I was willing to take the risk and it paid off for me.
Jamil:
Awesome. I want to clear a bit up about my strategies because it’s always been a little bit different from the common conception of how wholesalers will go out and find deals. For the most part, you see a lot of wholesalers out there pulling lists of distress and skip tracing those lists and then calling homeowners direct. I am too lazy for that. I realized that there was a much smarter approach at doing this. I primarily … And the second piece to that is that you can’t build relationships with those people. It’s how do you scale that? How do you scale a business where I’ve got to spend a dramatic amount of money to get one contract? I think the average cost per contract right now in the US going direct to seller is anywhere between 7 and $14,000. I mean, that’s insane, right? That means you’ve got to make at least 10 to 15K just to break even on time and energy.
So my approach has always been a relationship-based approach, where how can I do a certain amount of work but be able to come back to the well and keep drinking? So the approach that I’ve taken is I work primarily with real estate agents and other wholesalers. Now there’s a complete different cadence, technique, follow-up process that is required to do that. You have to be really good at underwriting, you have to be really good at communicating. You have to really be able to take down the guards of these agents who have come to the conversation. When they hear about wholesale, they’re immediately, it’s like their spine stands up because they’ve heard all these horror stories of working with wholesalers. But the facts are is that we provide a significant value to the business place, especially for these houses that are in such terrible condition that they’re not financeable.
And for oftentimes these retail real estate agents don’t have the wherewithal to even handle a house like that. And typically they’re of such low value that it’s not even compelling for them to want to do the deal. So first and foremost, I think that everybody listening to this right now, if you have any ambitions to do wholesale, bet on yourself doing this for a while, right? Believe that you can create an incredible business from building relationships. I look at my wholesale business as one of the most incredible money-printing machines that you could ever have. We’ll do a million, do a million dollars, a million-and-a-half dollars a month in assignment fees. I mean, how many properties do you have to own to have that, right? So this is the approach. And I think that we have to, as a community, understand that we don’t have to go to sellers.
We don’t have to go and try and get one over on grandma to get a deal. That’s not what this is about. For me, I love working with agents who understand what I’m looking for, who know that when you are buying a house that’s in distress condition, that it has an as is cash value. And that cash value has to be compelling to somebody in order to come and make the investment. So this whole question of getting, taking equity, it doesn’t even exist because this equity doesn’t happen until I force it. I’m forcing appreciation on all of these deals by adding value to the situation. So that’s my approach. I’m not a cold caller. I don’t text people. I’m not going to be the guy who’s coming into your phone right now that says potential spam. That’s not me. Everybody that I’m talking to, the real estate agents and wholesalers, they want to hear from me.
Realtors spend thousands of dollars to just make their phone ring. When I call, I’m an actual cash buyer that has the ability to close. I mean, that’s compelling. That’s something that I think that especially if you are getting started in this business, the fastest way. Last thing I want to say to that. Look at the math here. We know that you’ve got to speak to, at minimum, at minimum 200 homeowners before you’ll get a contract. So what I see is that if you talk to, say, 50 real estate agents a day, who are each prospecting themselves, imagine if you talk to 50 agents who are each talking to 50 homeowners to try to get listings, how many effective conversations am I having a day if I go that route? If 50 agents are each talking to 50 homeowners, that’s me talking to 2,500 people. So the math doesn’t lie.
Ethan:
Real quick point, I just want to reiterate the importance of what you said about the relationships. I mean, it doesn’t matter if you’re in wholesale, flipping or multi-family commercial. The most important investment you can make, in my opinion, is relationships, especially early on. I mean, that’s the biggest thing for me is the people I’ve met, the people who I’m going to meet, who are going to provide me with the opportunities and the knowledge that I need to reach my goals.
Jamil:
23 years old, right? You do this for 20 years, man, you’re going to be, I mean, you will be one of those people that people talk about. You’ll be on stage at BiggerPockets. You’ll be the guy that folks will be learning from, right? It’s just so incredible to see young people coming in and being as willing to care about their futures as their parents want to care about their futures. Like you said, 23 years old, man, I was working at Taco Bell. I wanted to be a rapper. What was wrong with me?
Ethan:
Can you rap?
Ashley:
Can you do a little piece for us?
Jamil:
No, no. [inaudible 00:34:49]. Yeah, yeah, I listened to too much Tupac.
Tony:
So I also wanted to be a rapper.
Jamil:
Did you?
Tony:
Literally I have two mixes out on fooling around here.
Jamil:
Get out of here. I got to find them.
Ethan:
I mean, when you first started, what was your biggest focus? How did you go about cultivating those close relationships?
Jamil:
So simply, I literally called between 30 and 50 real estate agents every single day. That was my goal. I could hit that sometimes in a few hours. Sometimes it would take me all day if I got a Chatty Cathy on the other line. But I would make it 30 to 50 calls every single day. And my business exploded. It exploded. I mean, it’s not even close. If you compare our deal volume, our deal size, our longevity in the business and the fact that we franchise now into 130 markets, no one can touch us when it comes to our process and our capacity to get this business done.
So it was absolutely focused on real estate agents. It was minimum KPI. I would try to have my conversations last two minutes to five minutes at most, and that was just it. I was relentless. I never let a day go by. The only day I took off was Sunday, out of respect for people and their time with their families, and if they were going to worship that day, I didn’t want to be bothering them. But beyond that, I was on it, consistent. I showed up every day, and now look at it.
Ethan:
Yeah. I think that’s super important. I think anybody can watch a YouTube video or have a little conversation and get motivated, but staying consistent, being disciplined and putting in that work to kick off those relationships, making those calls, that’s a whole another story.
Jamil:
Absolutely, brother.
Ashley:
Well, Ethan and Jamil, thank you so much for joining us. I mean, that was really awesome. Yeah, the round of applause you hear in the background.
Ethan:
Perfect timing.
Ashley:
So Ethan, can you tell us where everyone can reach out to you and find out some more information about you?
Ethan:
Yes, I am E 7 Wilson on everything. Instagram, E 7 Wilson, Snapchat, Facebook, Venmo if you want to bless me. But E 7 Wilson, that’s my social media.
Ashley:
And Jamil, what about you?
Jamil:
You can find me on IG at J-D-A-M-J-I. Also on YouTube, it’s just youtube.com/jamildamji. But you can also find me on the … I’ll just because you guys, the second best podcast on BiggerPockets, On the Market, where I have an awesome time with Dave Meyer and the rest of the crew there. It’s just so fun to be a part of the BiggerPockets family.
Ethan:
Love it. One more thing. I think I speak for you guys as well. Please do reach out to me. Reach out to these guys. I mean, everybody who’s here is very willing to have a conversation in the DMs, on a phone call if you can find the phone number. I mean, if you’re ahead, next to us or beneath us, I mean, everybody’s in their own path and wants to help each other. So please do.
Ashley:
Well, thank you guys so much for joining us. We really appreciate it. I’m Ashley at Wealth from Rentals. He’s Tony at Tony J. Robinson. And I will say it, we are the number two podcast compared to On the Market. But you’re still right, the whole BiggerPockets host community really is amazing, and just to be able to be a part of this family is really awesome.
Jamil:
Can I say one last-
Ashley:
Yep.
Jamil:
Hey, if any of you guys can find the mix tape, I will pay you $250. So go out there and find the mix tape and make some money.
Ashley:
How much for a music video? Because I do have the link to that.
Jamil:
Oh. 300.
Ashley:
Deal. Well, I have to go make $300. So thank you guys so much for joining us and we’ll see you next time.
Tony:
Later.
Speaker 5:
(Singing)
:215-447-7209
: deals(at)frankbuysphilly.com
CFPB to be lenient on enforcing changes from 2020 HMDA Final Rule
The Consumer Financial Protection Bureau stated on Tuesday that it will be lenient when enforcing changes made in the 2020 Home Mortgage Disclosure Act Final Rule on the closed-end loan reporting threshold.
On September 23, 2020, the U.S. District Court for the District of Columbia issued an order vacating the 2020 HMDA Final Rule, changing the reporting data on closed-end mortgage loans to 25 from 100 in each of the two preceding years going back to the threshold set in 2015.
The 2015 HMDA Rule required the financial institutions that originated no fewer than 25 closed-end mortgage loans in each of the two preceding calendar years and meet other reporting criteria, such as asset and location tests, to report their closed-end mortgage activities.
“The CFPB recognizes that financial institutions affected by this change may need time to implement or adjust policies, procedures, systems, and operations to come into compliance with their reporting obligations,” the agency said in a statement.
The agency added it “does not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data collected in 2020, 2021, or 2022 for institutions subject to the CFPB’s enforcement” as it “does not view action regarding these institutions’ HMDA data as a priority.”
A report released by the CFPB in 2021 found that in general, lenders that are newly exempted under the 2020 HMDA Rule – with annual origination volumes that exceed the 25-loan threshold but fall below the 100-loan threshold – didn’t appear to be more likely to lend to Black and non-White Hispanic borrowers than larger volume lenders, the agency said.
Lenders below the 100-loan threshold appear to make more investment purpose loans to higher income borrowers, trusts, partnerships, and corporations, as well as more loans secured by properties in low-to-moderate income census tracts, according to the report.
“These findings are consistent with a possible explanation that lenders below the 2020 rule’s 100-loan closed-end threshold are making more loans to investors buying up property in low-to-moderate income census tracts for rental or resale,” the agency said in the report.
The HMDA, enacted by Congress in 1975 following the public’s concerns of the lack of mortgages often in minority neighborhoods, is a data collection, reporting, and disclosure statute that requires certain financial institutions to publicly disclose information about home mortgages.
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Lower mortgage rates are stabilizing the market
Since the weaker CPI data was released in November, bond yields and mortgage rates have been heading lower. The question then was: What would lower mortgage rates do to this data? Now, with five weeks of data in front of us, we can say they have stabilized the market.
Purchase application data came out on Wednesday and the week-to-week data was down 3%, breaking the streak of four straight weeks of growth. The year-over-year data declined 40%, the smallest year-over-year decline since Oct. 19.
For months I have been saying we were going to have challenging comps from October to January because last year at this time mortgage volume was rising — a rare event this late in the year.
Because of that, we should all expect declines of 35%-45% year over year during this period. If things were getting weaker, 53%-57% negative year-over-year declines would be in play. However, mortgage rates have fallen more than 1% since the recent highs, so it’s time to look at the data to explain how to interpret it.
The bleeding has stopped
First and foremost, the bleeding has stopped in this data line, but the context is critical here. We had a waterfall dive in this data line and adjusting to the population, we hit an all-time low, so let’s put the bounce from the lows in context. This isn’t like the COVID-19 recovery where the data was getting noticeably better on a year-over-year metric; the purchase application data just stopped going down.
For now, just think of it as stabilization and we need to see more of this to make a valid premise that the worst is behind us.
As you can see from the chart above, the last several years have not had the FOMO (fear of missing out) housing credit boom we saw from 2002-2005. Accordingly, we also haven’t had a credit bust in the data line.
What I mean by a credit bust is that after the housing bubble burst in 2005 into 2006, we saw a massive increase in supply. These were forced credit sellers, which means these sellers don’t sell to buy a home like a traditional seller does. Since they were distressed forced sellers, inventory skyrocketed in 2006 and stayed very elevated in 2007 and 2008.
As we can see below, none of that is happening today because the seller isn’t stressed.
Total inventory levels
NAR: Total Inventory levels 1.22 million
Historically inventory levels range between 2 million and 2.5 million, the equilibrium balance between a buyer and seller marketplace that has been here for four decades. Only from 2006-2011 did we see this break due to forced sellers who couldn’t buy homes.
Using Altos Research, which tracks up-to-date weekly data, we can see that inventory is having its traditional seasonal decline now. Remember that inventory is always seasonal; it rises in the spring and summer and fades in the fall and winter.
One issue that has created a waterfall dive in purchase application data and sales is that new listing data is declining faster than usual. That’s a double whammy on demand and a reason for the waterfall in existing home sales data.
Traditionally, when mortgage rates rise post-2012, home sales trend below 5 million. This time the hit on demand is much more challenging as we are working from a savagely unhealthy rise in home prices since 2000, and mortgage rates have skyrocketed in the most prominent fashion in modern history.
Mortgage rates went from a low of 2.5% to a high of 7.37% — purely savage. Naturally, with those two variables in place, demand will collapse.
Since the summer of 2020, I have believed the housing market could change in terms of cooling down, but it would require the 10-year yield to break over 1.94%. This was something that wouldn’t happen in 2020 and 2021, based on my forecast.
However, 2022 was going to be the first year this could happen if global yields rose. Well, not only did that happen, but with the Fed’s aggressive pivot, the Russian invasion, and the stronger dollar, the 10-year yield and mortgage rates have had a historical ride this year.
Also, I believed the risk to the housing market was if home prices grew more than 23% over the five years of 2020-2024. Well, that happened in just two years, so my affordability models are off the charts. Since 2013 I have said that mortgage rates over 5.875% would be problematic to housing. Rate above 7% made things even worse.
With that said, bond yields and mortgage rates have been falling noticeably since the weaker inflation data. We are on the verge of mortgage rates getting below 6% soon.
So what to make from all this data? Think of it as a stabilizing impact; for now, it doesn’t represent a rebound in demand or anything in that light.
If mortgage rates can get toward 5% and stay there for a while, that would be the best thing to try to get the housing market out of a recession. We have to remember that purchase application data looks out to 30-90 days, so the recent stabilizing data line most likely won’t show up in the reports until January or February, which really means the months of February and March since the data is backward looking.
Also, we need significant context with this survey data line; it just got hit with a massive demand destruction wave that impacted first-time homebuyers and sellers, who would typically buy homes as well.
All we have done here in the data is stop the bleeding. The peak year-over-year decline was 46% on Nov. 16, and now we are showing a drop of 40%, so even the better year-over-year data needs context.
We will know when housing is getting better when the year-over-year declines get less and less, and then at some point, we will show positive growth since the bar is so low. However, we aren’t at that stage yet. For now, as long as mortgage rates head lower, that is a positive move for the housing market.
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San Diego Real Estate Market Trends
The San Diego metropolitan area features a robust housing market—with some of the highest historical rent and price appreciation in the United States. Anchored by a growing economy, low unemployment, and a significant military presence, the San Diego real estate market offers investors a stable base with strong long-term growth prospects.
Economic Overview
San Diego, located in Southern California, is the eighth largest metropolitan area in the United States, with a population of about 3.3M people. From 2010-2022, San Diego County grew nearly 7%, but recent estimates show a 0.4% decline in population from 2020-2021. For context, the state of California overall had an estimated decline of 0.8% during the same period.
Wages in San Diego are very high, with the median household income coming in at just above $82,000, compared to a national average of $65,000. Poverty rates are relatively low at 9.5% compared to the national average of 11.6%. These strong economic indicators are partially driven by a highly educated workforce, with nearly 40% of citizens holding a bachelor’s degree or higher.
One of San Diego’s greatest strengths is its labor market. Unemployment rates remained solidly below the national average for many years pre-pandemic and have returned to very low lows in 2022.
An important economic factor for real estate investors is the diversification of employment in a target market. When an area is highly dependent on one industry, it makes the market more susceptible to economic cycles. San Diego, however, has a well-diversified economy with a strong representation in education, hospitality, trade, professional services, and government.
Housing Prices
San Diego has a strong track record of property appreciation, growing a staggering 270% from the lows of the great recession in 2009 to current day, according to the S&P/Case-Shiller Index. As a result, San Diego has a relatively high entry point with a median sale price of almost $828,000 as of October 2022.
As with many markets, the San Diego market is showing signs of changing course. Since June, inventory (as measured by months of supply) has increased from pandemic lows and has started to level off near pre-pandemic averages.
This shift presents both opportunity and risk for real estate investors. With high-priced markets that appreciated rapidly during the pandemic, the risk of price corrections is considerable. It’s likely that prices will come down in San Diego in 2023.
However, increasing inventory and price declines mean that the San Diego market has shifted from a seller’s to a buyer’s market. When buyers have pricing power, they should focus on buying properties below asking price to insulate themselves against potential future price declines.
Rent Trends
For investors, one of the most attractive reasons to invest in San Diego is the strong rent growth. The median rent in San Diego is above $3,100 and has grown 10% in just the last year alone. While rent growth is starting to slow down, San Diego still has one of the country’s highest year-over-year rental growth rates. It’s a highly desirable place to live, and the demand for rental units is strong.
Find a San Diego Agent in Minutes
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Cash Flow Prospects
With potentially falling home values combined with high rents, cash flow prospects in San Diego are likely to increase in the coming months. That said, cash flow is relatively hard to come by as measured by the rent-to-price ratio (RTP).
Generally speaking, the higher the RTP, the better. Anything with an RTP close to 1% is considered an excellent area for cash flow, but it’s not a hard and fast rule. But that doesn’t mean cash flow cannot be found. There are good strategies for real estate investors to employ to generate excellent returns in San Diego.
Winning Strategies
According to David Greene, a local market expert, short-term rentals, medium-term rentals, and house hacking are all excellent ways to find cash flow in this market. Traditional buy-and-hold investing can still work but will likely require some value-add work to make the numbers pencil out.
If you can generate a good cash-on-cash return with some of the strategies mentioned above, San Diego could be a winning market for investors, given its reputation for great appreciation. Appreciation might slow down or reverse in 2023, but the long-term prospects remain very strong.
Getting Started: Invest in San Diego
To learn about investing in San Diego, partner with a local investor-friendly real estate agent like David Greene, who can help you find, analyze, and close the right deal.
Here’s how to contact David on Agent Finder. It’s easy:
David is a nationally recognized authority on real estate—he’s an agent, lender, investor, author, and co-host of the BiggerPockets Real Estate Podcast. He’s been featured on CNN, Forbes, HGTV, and more. David is the first to know which strategies work, when the market shifts, and the best areas for investing that will meet your goals.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
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How to reach the growing segment of Hispanic American homebuyers in 2023
As interest rates remain volatile and demand continues to suffer, lenders across the industry are seeking new avenues to reach borrowers. Often, that means analyzing target markets to determine fresh ways to connect with growing demographics. For many, this analysis is unearthing a noteworthy trend: In many pockets of the U.S., Hispanic Americans represent a fast expanding segment of borrowers with an increasing number seeking home loans and homeownership.
Over recent years, the pool of American borrowers has evolved, with Hispanic borrowers rising as a proportional share of new homeowners. According to Freddie Mac, the Hispanic American homebuyer segment has increased by 25% in the last decade. By 2030, this growing sector will represent an estimated 56% of all new homeowners. Across the U.S., Hispanic homeownership is expanding rapidly, making this demographic a growing force in today’s housing market.
Even with the introduction of more digital tools to provide home buyers with a technology-enabled user experience, Spanish-speaking borrowers often encounter obstacles to homeownership during the lending process.
Mortgage loan applications, their terminology, and substantial documentation and information requirements pose challenges to native Spanish speakers in the early stages of home buying. In fact, limited English proficiency (LEP) is one of the most significant barriers to homeownership among Hispanic Americans, second only to credit score challenges.
How can lenders help Hispanic Americans through the mortgage process, facilitating better access to homeownership and opening up new avenues for borrower leads?
To better understand the experience of Spanish-speaking home buyers, Maxwell recently conducted a survey of more than 1,000 Hispanic borrowers. Through this survey, we sought to identify common barriers to entry, ways the industry can better support Spanish-speaking applicants and strategies lenders can use to connect with Hispanic Americans.
A need for support during the application process
Applying for a mortgage can be challenging for many Americans—and Spanish-speaking applicants are even more likely to find the process time-consuming and hard to understand. Of those surveyed, nearly a quarter (24%) took three weeks or longer to fill out the mortgage application.
That lengthy timeline caused a sizable amount to consider abandoning their application, with a third of those applicants (33%) citing that the process was too confusing and 46% saying they couldn’t get the necessary paperwork. Perhaps most disheartening, nearly half (49%) thought about giving up on their home loan because their lender didn’t provide enough support.
Much of the frustration and complexity Hispanic Americans encounter during loan application and beyond stems from LEP. Almost a quarter (23%) of respondents said that language acted as a barrier, with 34% of that segment saying they needed to bring a family member to translate in order to move through the mortgage process.
A sizable percentage (38%) also reported not being able to find a Spanish-speaking lender in their region, signifying the need for dedicated bilingual services among loan providers.
The opportunity to connect with a rising homebuyer demographic
These statistics illustrate the struggle that many Hispanic Americans encounter on the journey to homeownership, along with the strong opportunities lenders have to step up as a go-to resource for this growing borrower cohort.
With 41% choosing a local lender (credit union or bank) for their mortgage, it’s clear that these borrowers are searching for resources in their local communities to meet their lending needs. What’s less clear is which lending business will effectively connect with the Spanish-speaking audience, offering bilingual resources and creating a more straightforward, streamlined process.
In working with the lenders on our platform, many of whom serve Hispanic communities, we’ve found that the best way to connect with these borrowers is by offering an intuitive, culturally empathetic experience. To create that experience, we recently launched our Spanish-language loan app, offering a fully translated loan application with bilingual functionality from landing page to submission.
Unlike many point-of-sale systems, which rely on translators or only offer a Spanish landing page or subtitles in the loan application, our loan app provides an immersive Spanish language experience. Built with input from our in-house Hispanic American processors and underwriters, our Spanish mortgage application strengthens cultural context and retains industry-specific nuance, helping lenders attract, convert and engage native Spanish speakers.
This kind of functionality is key in building relationships with Hispanic American homebuyers. Nearly a quarter of these borrowers make their lender choice based on recommendations from family, friends or colleagues. That means the experience a lender provides is vital to growing repeat and referral business and becoming a known resource for this growing segment.
With 2023 a prime opportunity to rethink business strategies and build new lead funnels, now is the time to shape your mortgage process to better support Spanish-speaking borrowers. Doing so will help Americans into homes during a historically tough housing market while creating new opportunities for strong borrower business in years to come. To learn about catering to your Spanish speaking client base, visit Maxwell.com.
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As title insurance volume shrinks, workers take on more tasks
As the mortgage rate environment became increasingly volatile in August and early September, one in three title insurers reported order volume that was below or far below average.
That’s according to PropLogix’s fifth annual “State of the Title Industry” report.
With homebuyer demand having cooled considerably since the survey was distributed in August, PropLogix believes that this trend has only worsened.
On the other end of the spectrum, 41% of respondents said their order volume was “average,” while 20% said their volume was “above average,” and 3% noted that their volume was “far above average.” In addition, 22% of respondents’ transaction volume were refinances.
“The last two years was like drinking from a fire hose and we’re back to more like 2019 levels right now,” David Townsend, the president and CEO of Agent’s National Title, told attendees listening to PropLogix’s State of the Title Industry report webinar Thursday afternoon. “I think it’s been more cyclical and we are going to have that spring and summer rush.”
Of the 421 respondents, 44% closed transactions in the South, 20% in the Midwest, 19% in the West, 15% in the Northeast and 1% in the U.S. Territories.
The vast majority of respondents (82%) work at independent title companies or law firms and 67% have 25 or few employees at their organization.
While the title industry is commonly believed to be male dominated and to skew older, only one of those beliefs is accurate. According to the report, 76% of respondents are female, while only 21% are male. However, 67% of respondents are over the age of 45, with the largest age brackets being 45-54 and 55-64 at 28% each. The second largest age bracket was 35-44 at 19%.
“Every year since I have been in this role and even before that, attracting and retaining talent has been one of our top strategic priorities,” Diane Tomb, the president of the American Land Title Association, said. “We do have an aging work force and it is something that we think about a lot. One of the things that we are currently working on is a new consumer facing website that is focused solely on bringing talent into the title insurance field.”
In addition to improving consumer outreach, Townsend is working at the college level to recruit younger people into the industry and has written courses for the University of Missouri law school.
“What we are seeing now with a lot of title agents, it is not the traditional search and exam that it used to be where you would go over to a dusty title plant and get in the card file,” Townsend said. “Now we are a data industry and a lot of what we do, the search, exam and commitments are provided by the underwriter or a third party. So, you are having to make sure that you understand where the data is coming from and more and more. I think you are going to see the jobs in our industry be data driven and technology driven and I think that is critical for us and that will skew younger to a certain degree.”
Perhaps because of the small labor pool, 46% of respondents said their largest struggle was “juggling too many different responsibilities,” while 28% of respondents said “not enough time” was their greatest challenge. A year ago, the top challenge among respondents was “unexpected delays,” which moved down to the second place slot this year with 44% of respondents citing it as their largest challenge. Other top challenges included “educating real estate agents and consumers” (26%) and “generating new business” (24%).
However, as the market has slowed, PropLogix believe the percentage of title agents feeling that generating new business is their greatest challenge has increased.
As title firms work to find new ways to bring in business and build relationships with agents and lenders in a more digitally driven environment, 49% of respondents said that their firm had someone in a role dedicated to sales and marketing, while 51% said those duties were split up among employees whose primary role involved another part of the title and closing process.
“All those small businesses, they are doing a little bit of everything,” Tomb said.
Townsend added: “All those people who said they don’t have someone dedicated to marketing, that is the top of that chart that is juggling too many roles. They are selling, closing, searching, doing exams, and they are feeling overwhelmed and underappreciated.”
In an attempt to control their workload, many title firms are outsourcing. According to PropLogix, the most common tasks outsourced are municipal lean searches, title searches, tax reports, judgement searches, UCC searches and HOA research. Compared to 2020, there was a 68% increase in the number of title professionals reporting that they outsource HOA research (47% in 2022 compared to 27% in 2020). Despite this and other increases in outsourcing for things like title searches and judgement searches, respondents were still far more likely to do title curative in house.
Looking ahead, industry experts said they feel the topics that will dominate the industry in 2023, include the regulatory environment surrounding title, including discussions over attorney opinion letters (AOLs) and navigating the “volatile” housing market environment.
“Attracting talent and retaining them is obviously something that is going to continue and then the education piece of it and training folks to be prepared for this challenging environment,” Tomb said.
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The significance of data in cultivating long-term customer relationships
Everyone recognizes the importance of data when it comes to understanding the customer, but the real question is how to deploy it. Recently as the real estate industry has shifted from a buyer’s market to a seller’s market, it’s become paramount for Realtors to continually meet their clients at critical life touchpoints to extend the longevity of that relationship. This involves creating an experience that is both seamless and relevantfor the consumer during the initial transaction and at pertinent moments after.
A new trend in the industry is leveraging customer data to not only provide relevant protection products for their home, but for any number of life events they might encounter. While there are many companies out there that offer these products, not all of them have the capability to embed protection at thoughtful points in the customer journey. By working with a partner that understands how to utilize customer data effectively, they’ll find that there is actually abundant opportunity to engage their renter even beyond the signing of the lease.
Typically, when someone rents a home, their property management company may suggest (or even require) that they get renters insurance. This process should be seamless, with protection offers presented during the application process or the execution of a rental agreement. If done effectively, this is one of the first moments in the renting journey that the property management company can use data to personalize their offerings — but it doesn’t have to stop there. If their tenant eventually adds a pet to the lease, their property management company can offer them pet insurance options, building a purposeful relationship with them rather than one that is simply transactional. By offering them relevant protection products at the right time, informed by significant data points, real estate companies and agents can give their customers the convenience they want.
Creating meaningful touchpoints can take on many forms, but the common throughline is finding ways to show your customers that you’re invested in their care and happiness. When you offer them protection for their purchases, you’re letting them know that you’re looking out for them in the long run. By looking at the data collected during the customer journey, you can build a framework for effective outreach campaigns that can meet undiscovered needs they might have.
Another example is the lifecycle of car ownership. When a customer goes through the home rental process, data is collected on their vehicle, which may include, color, make, model, year and more. Using this data, customized marketing messages can be created and dispatched at relevant points in the car owning journey. If the customer has just purchased a new car, they might be offered car warranties or auto insurance. If they’ve owned their car for around a year or so, their property management company might recommend a reputable local mechanic they can schedule a maintenance check with. Staying top of mind with relevant, personalized content strengthens customer relationships and demonstrates a kind of thoughtful utility that will go a long way.
Data can also improve existing customer touchpoints by automating maintenance requests or streamlining communications, for instance. Quicker and more effective services such as these can extend the relationship with your tenant and keep them happier for longer. They can also help you cut down on operational spend, so you can allocate those funds into more growth opportunities for your business.
When it comes to something as fundamental to their everyday lives as housing, consumers have an increasing desire for a more meaningful and long-term relationship with their real estate companies. Purposeful outreach in the form of protection or other complementary products is a growing trend in the property space, but not one that will wane anytime soon. Especially as the consumer controls the renting or home-buying process, it’s more important than ever for realtors to differentiate themselves by offering them a data-driven experience that resonates with their lifestyles and needs.
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How to Get a Better Price on That Off-Market Property
Off-market real estate deals can give investors like you HUGE discounts on what would be expensive investment properties. Either due to the property condition or the state of the seller, these real estate deals sell for sometimes hundreds of thousands less than their on-market equivalents. But finding them can be a challenge. As a result, most new investors rely on real estate wholesalers to bring them a deal. But what if the price point still doesn’t make sense?
Welcome back to another Rookie Reply, where we’re joined by real estate wholesaling master, Jamil Damji, and newly self-employed investor, Ethan Wilson. Jamil and Ethan both have a taste for off-market, underpriced deals and are here to share their wisdom with you. In this episode, you’ll hear how to negotiate with a wholesaler who’s firm on price, how to find off-market deals WITHOUT cold-calling sellers, and Jamil’s killer deal-finding strategy that costs far less than the competition!
If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).
Ashley:
This is Real Estate Rookie Episode 240.
Jamil:
Look at the math here. We know that you’ve got to speak to, at minimum, at minimum 200 homeowners before you’ll get a contract. What I see is that if you talk to, say, 50 real estate agents a day, who are each prospecting themselves, imagine if you talk to 50 agents who are each talking to 50 homeowners to try to get listings, how many effective conversations am I having a day if I go that route? If 50 agents are each talking to 50 homeowners, that’s me talking to 2,500 people. So the math doesn’t lie.
Ashley:
My name is Ashley Kehr and I’m here with my co-host, Tony Robinson.
Tony:
Welcome to the Real Estate Rookie Podcast, where every week, twice a week, we bring you the inspiration, information and stories you need to hear to kickstart your investing journey. I want to start today’s episode by shouting out with someone from the Rookie audience who goes by the username, Dudette Three, and Dudette Three left us an honest rating review on Apple Podcast, a five-star review that says, “Love Ashley and Tony. I love their podcast so much. They provide valuable insight and good motivational stories. Both seem to have a very positive and upbeat outlook on life. I’ve learned a lot and look forward to what is to come.”
Then Dudette also dropped an Instagram handle. It’s at Mitten Rentals, so M-I-T-T-E-N R-E-N-T-A-L-S. So make sure to give Mitten Rentals a follow as well for giving us some five-star love. So if you haven’t yet and you’re listening to this podcast, please leave us an honest rating and review. The more reviews we get, the more folks we can help. And I kind of got some beef, Ashley, because I’m seeing some of these newer podcasts coming up, and right out the gate, they’ve got double the reviews that we have. So I want to challenge our Rookie audience to help us out here. Don’t leave us high and dry.
Ashley:
Yeah. We would appreciate it, you guys. Tony diligently looks at the reviews constantly. I cannot, in case there’s a bad one. So I rely on Tony to read all of the good ones when we are recording, and I appreciate every single one of them. So thank you guys so much. So Tony, today we have a unique episode again, just like the past several Rookie replies have been, where we were live at BPCON. But while we were at BPCON, the first day we decided to do an Instagram giveaway, where we announced it at BPCON on stage that we were doing this Instagram giveaway and we had to be tagged in their story. The very next day we picked a winner.
We gave, I think, Ethan, what, maybe an hour-and-a-half notice that he was going to be on the podcast and we’re recording live and to come meet us. So we have Ethan Wilson on, who we just met at BPCON. We randomly picked his Instagram account. We messaged him and he was able to come. So we also have another guest on with us too, Jamil Damji. So we literally took everyone that we knew you guys would want to hear, and we dragged them into our podcast studio at BPCON. So we have two guests on for this episode, and they both provide tremendous value. I mean, Ethan, I think we hit the jackpot. We were shocked like, “Wait, this is your story, and we just randomly picked you? This is amazing.”
Tony:
Yeah. It was so funny. I was in the back of one of the rooms, so it was actually the social media presentation of BPCON. Sarah was on stage, and our good friend Rob was moderating and Brit was up there, a few other folks. I was at the very back of the room, and this kid comes up to me and he shows me his phone, and it’s an Instagram message from Ashley. He’s like, “Hey, is this real?” There’s a lot of fake profiles floating around, so I wasn’t sure. I was like, “I don’t know. There’s a lot of fakes out there.” I messaged Ashley and I was like, “Hey, is this real?” She’s like, “Yeah.” So it was funny how all of that came together. But Ethan was a great story. Then Jamil, if you guys don’t know Jamil, Jamil is first just a fantastic human being.
This guy just radiates positivity and warmth. Not only that, but he’s also an amazing real estate investor, and we definitely have to get him back on the podcast to give a masterclass to all the Rookies listeners around his strategy for finding off market deals. But anyway, before we go too far with Ethan and Jamil, we do want to take a question from the Rookie audience. So if you guys want to leave a question, get active in the Real Estate Rookie Facebook group, or you guys can go to the BiggerPockets forums. Today’s question comes from Heidi Cawood. Heidi’s question is, “When buying from a wholesaler, is the asking price pretty much what you have to pay? Or is there room for negotiation?” Luckily for you, Heidi, there is always room for negotiation. Like most transactions, like most buying and selling, you can always negotiate the price.
We’ve purchased a few deals from wholesalers at this point, and pretty much every time we’ve been able to negotiate a little bit off of the purchase price. Wholesalers are just like regular sellers. Sometimes they’re going to price a little high in anticipation of the fact that people will probably negotiate and the price will come down a little bit. I guess I just do want to share a story. The last time that we purchased a property from a wholesaler, there was a significant amount of negotiation on the purchase price. I can’t remember the exact numbers, but this is a property that we had under contract for, I don’t know, $250,000. I had never seen the property in person, and I’d just seen photos and videos. So we get the property under contract, and I’d worked with this wholesaler before, so it wasn’t the first time I worked with them. So I knew them. We already had a relationship.
We get the property under contract. Then Sarah, my wife and our crew, they go and walk the property without me. As soon as they get to the house, Sarah calls me, all upset. She was like, “Babe, what are you doing? We’re not buying this house.” I was like, “What are you talking about?” I was like, “I know it’s a little rough, but it’s not terrible.” She was like, “The whole roof has collapsed inside.” So when you walked into the living room, the ceiling inside of the living room had literally collapsed. I went back and I looked at the photos and I was like, I would remember if the roof had collapsed on the photos. That wasn’t the case. So I called the wholesaler, I let them know what happened, like, “Hey, my wife and my crew are there and the ceiling has collapsed.”
He was like, “Are you sure?” I was like, “Yeah.” I sent him the photos that my wife had sent me and I told him, I was like, “Hey, this is going to be the cost to get this repaired. We need this deducted from the purchase price.” He was like, “Hey, I’m sorry. We sell all of our properties as is.” I think if I was a new investor, I probably would’ve panicked a little bit. But given this wasn’t my first rodeo, I knew what to look for. So I politely pointed out to him that pretty much every purchase and sale agreement, at least a good one has a clause that says the condition of the property cannot materially change from the time that it is placed under contract until you close. I asked a wholesaler, I said, “Do you think that the roof collapsing would be considered a material change?”
I was like, “Look, we have two options here.” I was like, “You guys can give me a discount on the price, or I can take you guys to small claims court. And it’s up to you. But I would think that if I showed a judge, an arbitrator, whoever that this is what it looked like when I placed it under contract, this is what it looked like today, they would probably agree that a big gaping hole on the roof would constitute me being right and you being wrong.” So a little bit of back and forth, and eventually they were able to negotiate the price down, and we all walked away from that transaction pretty happy. So that was my experience from negotiating on a good wholesale deal.
Ashley:
What happened with this house? Did it turn out to be a great rehab?
Tony:
It actually did. Not before it got really, really terrible because immediately after we closed, we went back to start demo and we couldn’t get in. We ended up finding out there was a squatter in the property after we had closed on it. So we had to kick the squatters out. It was definitely a challenging rehab for us. But the property’s actually done now. We should have our permit here for the short-term rental in a couple of weeks, and then we can put all of this behind us.
Ashley:
Good. Well, thanks for sharing that story with us, Tony. I think it gives a little bit of insight that even as an experienced investor that things don’t always go smoothly, and there are a lot of challenges that we all face every single day. I’ve actually never bought a property from a wholesaler, and I think it’s mostly because there’s not a … I’m investing in rural areas, where there’s not a huge supply of wholesalers going in and buying these markets where there’s very few investors investing in.
But in the actual city of Buffalo, I’m on quite a few buyers’ lists for wholesalers, and it’s always interesting to see. I was at this meetup once, where wholesaler came up to me and said, “Someone said I need to talk to you, that you buy in this area.” It was not even half a mile from my childhood home growing up, and I knew exactly where the house was. So I’m looking at the address and I’m like, “I know something about this house. What is it?” And just by googling the address, it comes up meth house, meth bust, people arrested, all this thing. I was like, “Oh yeah, that’s why.” And I just want to say I grew up in a very nice home life. I did not live in a bad area growing up.
Tony:
No breaking bad.
Ashley:
Literally in the middle of nowhere. My bus ride to school was an hour long. So this little house there had been a meth house, and it probably had been, but when this happened, it was probably eight years, 10 years before that. And the house has sat since then. Somebody has owned it. I don’t know if it’s changed hands or what. But with some place being a meth house, you want to have some kind of remediation. So I asked the wholesaler, “Has there been any kind of remediation on the property?” He had no idea that it was a meth house at all.
So he was like, “Do you think you could send me that information you found?” And this was literally just by me googling the address, all this stuff came up and it was just kind of a shock to me, like, “Oh my gosh, wholesalers don’t even google the properties that they’re trying to sell, just to see any kind of information that’s out there that definitely could benefit them before even putting the property under contract.” So I’ve followed the property a little bit, and I’m assuming they canceled the contract because I never saw that it changed hands at all from the current owner.
Tony:
Yeah. I mean, so would you have bought the house at the right price?
Ashley:
Actually, yes, because I looked into the remediation of it, and it was just like mold. People are scared of mold. I used to be scared of mold. But now that I work with this great mold company, I’ve bought a couple of houses now with mold. They come in and do the removal, and it costs money, but I know what to budget for it. So yeah, you just have to budget for it. But what he had it under contract for, he eventually told me what it was, after I said that I wasn’t interested or whatever, and he wasn’t even trying to make that much off the assignment fee. But yeah, he couldn’t move because he didn’t know when he went into it that it needed that remediation.
Tony:
Yeah. That just makes me think if can, when you’re working with a wholesaler, if you can put off submitting your EMD until you have had a chance to walk the property, that’s always ideal. That’s an area that I shared with that wholesaler. They have a non-refundable EMD, and I want to say it wasn’t a small EMD, it was 15 or $20,000 we put up as EMD, and it was non-refundable from the moment that we wired it in. So that’s why I had to threaten them with litigation to either get my EMD back or for them to discount the price. But if you can, when you’re dealing with a wholesaler, if you can walk the property first, get a sense of what might need to be done to it before you submit your EMD, you’ll have a little bit more flexibility there as well.
Ashley:
Yeah. I smirked when you said it was only 15, $20,000. The last property I put an EMD down, it was $2,000.
Tony:
Wait. Okay, let me share one story about, I think, the best return on EMD that I’ve ever gotten. I don’t even know if that’s a phrase, return on EMD, but this is what it was. So everyone knows we have cabins in the Smoky Mountains, and we bought a bunch in 2020 and 2021. We haven’t purchased anything in 2022 yet. But we got a new construction cabin under contract at the end of 2020. It was December of 2020, and it was a $2,500 refundable EMD, fully refundable EMD, $2,500. The cabin, I think we got it under contract at 780 is what we got it under contract for. It was supposed to be done in the spring of 2021, so six months after we put that EMD down. Well, supply chain issues, labor shortage, I don’t know what, but it got pushed from spring of 2021 to fall of 2021, and then from fall of 2021 to winter or to spring of 2022, and from spring of 2022 to fall of 2022.
So we’re actually just now closing on that cabin in about 30 days. But here’s what’s happened over that timeframe. The cabin is in a new development of short-term rentals. So I think altogether there’s 22 cabins that were built in this one development. Well, out of 22, my cabin was number 21. So one through 10, 12, 15, my cabin has already been built, the same exact floor plan, and some of those cabins have already sold. And my cabin under contract at 780, the exact same cabin sold for 1.2. So we built, what is that, almost $400,000 in equity on a $2,500 refundable EMD. So it was crazy. That was the best EMD I’ve ever put down in my life.
Ashley:
I remember we had a guest on who was doing that in Austin, Texas with new builds.
Tony:
I can remember that.
Ashley:
Yeah. As soon as was a new development, he’d put a deposit down. It was like $1,000 to have it built. By the time it was actually built, they put in so much equity, and he was doing this every year and house hacking it for a year, then going on. As soon as he closed on that first one, he’d go put a deposit on for one for the following year. Since these were the first houses in that development, by the time people were coming into phase two to buy them, they were paying more than he had paid for that phase one. Yeah, super interesting. Okay. Well, today let’s get into our actual guests that we have onto the show. So you can meet Jamil, and you probably have heard him On the Market, the podcast. Tony and I like to joke that it’s the second best podcast and we’re number one, but it really is truly an amazing and informative podcast. So if you guys haven’t subscribed yet, you really should.
Then also we have our winner on, Ethan, and I’m not even going to say anything about him as to what he’s been going on, except that he is very young and fresh out of college and is doing amazing things. So make sure you guys check out this episode. Ethan, welcome to the show. So we also have Jamil here with us from the On the Market podcast. So this is a super special episode that we are recording live here at BPCON. So Ethan actually won a giveaway that we did on Instagram. We decided to do this yesterday, and he was our chosen winner, the lucky one, and we are so honored to have him here with us. He just gave us a 30-second little spiel of what he has going on, and we are already amazed and can’t wait to hear more. So Ethan, you can tell us a little bit about yourself and how you got started in real estate, please.
Ethan:
Yeah, well, thanks first and foremost for having me. I’m honored and grateful to be part of it. Yeah, so I’m 23. I started my real estate journey just a year ago, a year and four or five days ago. Closing my first single family house down in Huntsville, Alabama. I was in college at the time. I was a busy guy running around. I was playing soccer, taking graduate classes, coaching and trying to make it through school and everything. The opportunity came up to get the house just in the neighborhood next to the college. So I got it. I rented out to my roommates who were my former teammates, and they paid my mortgage and a little extra. I fell into a good group of people. A big fan of Bigger podcast. I found Cody Davis and Christian always good on BiggerPockets, listened to their podcast, loved their story, loved what they were about. It really spoke to me, resonated. So I joined them, joined their mentorship and, like I said, got around a really good group of people. Learned a ton over the past couple months. On Friday we just closed on our first eight-plex-
Tony:
Congratulations.
Ethan:
… down in Texas. Yeah. So, super excited about that. Three weeks ago I quit my job to do this full time, pursue my passion. Real estate’s just what burns my fire. It just wasn’t in … the jobs are dangerous, as they say. It’s comfortable. It’s easy to get stuck in the nine-to-five and just do real estate on the side as I planned. But I’m young. I took on the risk and took the leap, and I’m loving it, under contract for a six-unit outside of Knoxville, Tennessee and going from there.
Tony:
Dude, first, congratulations, man. At 23, I think I was working at Foot Locker, so you’re doing some amazing things, brother.
Ethan:
I appreciate it.
Tony:
So what’s next? So you quit your job, you’re going full time, you got a few small multis. What is the goal for you?
Ethan:
Yeah. So one of my buddies, Eddie from Nashville, we’ve been best friends. We’ve always been hustlers together. We’d work our internships and then immediately after going, start doing landscaping, hauling, moving, stuff like that and saving up our money. He started a business. I bought my first house. Next, he’s going to leave his job soon. I left my job. We’re going to go together in real estate and take it on together. He’s more of a flipping guy. He flips couches and he wants to flip houses. He’s going to be the capital-
Tony:
Very similar.
Ethan:
Yeah, exactly. What’s the difference between a couch and a house? But he’ll be the capital provider for my long-term opportunities and in the meantime find private investors to come in with us.
Ashley:
So being so fresh and so new at doing these first couple deals, what’s your one piece of advice for a rookie listener right now?
Ethan:
Jump in. Whatever you think that obstacle is, it’s probably not as real as you think it is. My obstacle was just the lack of knowledge and just the fear of not doing it. I think a lot of people struggle with, and this is all over BiggerPockets, I know, but analysis paralysis. I read Rich Dad, Poor Dad years ago and started studying, studying, studying, analyzing deals, looking all this, what am I going to do? I finally pulled the trigger. If I had done it earlier, maybe I’d be somewhere different, but live with no regrets. That’s my advice, just jump in.
Ashley:
Well, super cool. And thanks so much for coming on the show. Ethan is actually going to help us co-host today as we talk to Jamil. So Jamil, welcome to the show.
Jamil:
Thank you. Thank you for having me. Ethan, first, it’s evident why you’re the chosen one, bro. So congratulations again. Just phenomenal work.
Ashley:
And you know what? It was random. We got super lucky. Great guests.
Jamil:
Just super random? Wow. Wow. I mean, I would’ve picked him. Really cool, really cool story.
Ashley:
Yeah. So Jamil, tell us a little bit about yourself for anyone who doesn’t know who you are.
Jamil:
Well, thank you for having me, guys. I’m Jamil Damji, the co-founder of Keyglee, in my opinion the best wholesale operation in the country. We are franchised in 130 markets. I started Keyglee in a coffee shop with my sister and two other business partners, Josiah Grimes and Hunter Runyon. It has been a phenomenal ride. We do on average in our corporate store, anywhere between 60 to 80 transactions a month. Then our franchises do hundreds of deals. Outside of that, I am a dad, a loving husband. I love my wife, she’s the best. Also, I am the star of Triple Digit Flip with my best friend, Pace Morby on A&E. So that’s super fun. On top of that, I am the leader of AstroFlipping which is, again in my opinion, the best wholesale community that exists on this planet.
Tony:
Jamil, so not to make you feel like outshined, but what were you doing at 23 years old?
Jamil:
Man. I was working at Taco Bell. Yeah, I was working at Taco Bell. I still had ambitions to be a doctor, so I was living my parents’ dream at the time. I come from an East Indian background and for us, it’s you either be a doctor or don’t come home, right? That’s our life. So I tried to get into medical school and I failed at that. I actually, I did really well in the medical school entrance exam, had a near 4.0 GPA and I bombed the interview. So when I wasn’t accepted into medical school, it was heartbreaking for me because I literally had done everything right. I was volunteering. I was all of the extracurriculars that you could possibly think of, I was doing.
Tony:
Then why do you think you bombed the interview?
Jamil:
Well, I was young.
Tony:
Was it a subconscious thing where you-
Jamil:
No. I was answering truthfully. And I think what ends up happening in those is people rehearse and they come in with a prepackaged, they tell the interviewer what they want to hear. I was very honest with what my ambitions were. I wanted to be a plastic surgeon because I wanted to make money. So I was honest with the panel. And I was told that I was a little immature and that I should try to reapply again after some time, but that was a great candidate. Now what’s funny is that my cousin, who might be listening to this, sorry I’ve been outing you as of late, but he cheated off me on the medical school entrance exam and he got in.
Tony:
Is he someone’s doctor today?
Jamil:
Yeah, he’s prescribing people stuff. So when I think of that, it’s like outside of the fact that I made the decision consciously to never let somebody be able to decide my destiny, and I think that was the moment because I had worked so hard and somebody else could decide. That’s when I knew I had to be in a field where I was driving the boat, and that’s what happened. I went from there into entrepreneurship. It was a bumpy ride. I got into a business at the time, this is now 2001, 2002, and we had started a media company, where we were convincing businesses that they should stop advertising in the Yellow Pages and move their business online, start advertising with a website.
Tony:
Wild idea at the time.
Jamil:
Wild idea. So my job essentially consisted of cold calling businesses out of the Yellow Pages, and explaining to them how some of their funds that they’ve been spending on advertising here could be used to go online so that people could find them, and that it was this revolutionary way that people were going to start doing business. We did really well. I did really well at my job. I was a phenomenal closer. I was selling these five-page websites for 600 bucks a pop. The problem was, is that my business partners hadn’t really ran our costs right. So every time I sold a website for 600 bucks, we lost $100. So I did so well at my job that I put us out of business.
The beautiful thing though is that I was given proximity to my business partner, who was also in real estate. And him and his father were knocking down these old houses, and this is in Calgary, Alberta, and they would build new duplexes on these old lots, and they were having a problem finding more building lots. So thus my real estate journey begins because I basically interjected myself into a conversation they were having, and I came to find out that if I could just help them find some of these houses, I could make some money. So the next day I was walking my dog, called a For Rent by Owner and the rest is history. My first wholesale deal. I made $47,000 after I paid the lawyer their piece and never looked back.
Tony:
So I want to give you a chance to ask Jamil some questions too because this is a great opportunity for you. But before, so Jamil, our audience are mostly rookies, right? So if I’m a rookie and I’m terrified of talking to strangers in rejection, what are some tips you might have about cold calling and being effective with that?
Jamil:
So here’s the thing, right? They’re strangers. So what’s going to happen? I mean, let’s just think about it. What is the worst that could possibly happen? Somebody is mean to you? I mean, okay, right? It’s a person you don’t even know that’s being mean to you. So I think that just understanding the reality of what the fear is based off of. The fear isn’t that someone is going to cuss you out or be not receptive to your call. I think the fear is really, “What if it works? Now what?” Because you don’t know what to do next, right? So many people get stuck and then they think, “Well, I’m all alone in this.”
That’s why I’m just such a big proponent of being a part of a community. There’s so many communities out there. I mean BiggerPockets, for instance, is a massive community of helpful, wonderful people. You can get into the forums and you can talk to folks who are going through the same thing as you. You can squat up with people and really help spread the burden of that fear out. I think once you start to talk to people who have walked that walk, who have literally done the thing that you’re trying to do and they’re alive, nothing has happened to them. They may be richer for it, right? So once you start doing that, I think that the imaginary fear dissolves and then life opens up.
Ethan:
Yeah, I love that. I want to back up first and say, I love what you said about the entrepreneurial mindset. I don’t want to give my time to anybody else. I’d rather work 80 hours for me a week instead of 40 hours for somebody else. So that was always the mindset getting into something like this. And that’s a great question from you, the cold calling, because that was one of my biggest problems was picking up the phone and just calling somebody. I didn’t know who they were, I didn’t know what they did, I didn’t even know if it’s the right number, and I didn’t know who was going to pick up. So I’d call and be like, “Hey.” At first it comes off super salesy. I don’t even know what to say. But I think you hit it on the head with joining a group. I said this already before, but I was in a great group.
There’s guys younger than me, they’re 19 years old, Caleb and Chucky in the multifamily strategy group, they are just wheeling and dealing. And it’s good to have those people who are ahead of you. Christian and Cody, who have shined the light on where I want to go. They helped me from day one all the way to get to where I am. But it’s also good to have people in the group who are exactly where you are and moving along with you. Those guys are same guys who are making the cold calls. And you meet up every night and you’re like, “Dude, I can’t talk to any of these people.” And they’re getting deals and deals. But then you look in the group, and there’s people who are still with you and to help you move through those challenges. It’s definitely good to have those support groups. It goes a long way. There’s a lot to be said for that.
Jamil:
I agree. May I ask, Ethan, the first deal that you did, how did you get that deal? What was your lead generation strategy?
Ethan:
Well, the first one was just the single family house on market.
Jamil:
On market? Awesome.
Ethan:
I offered the asking price. It was just me and one other bidder. It was right after the peak of COVID, so it had just started going down and I think a lot of people were afraid. So I lucked out. I was willing to take the risk and it paid off for me.
Jamil:
Awesome. I want to clear a bit up about my strategies because it’s always been a little bit different from the common conception of how wholesalers will go out and find deals. For the most part, you see a lot of wholesalers out there pulling lists of distress and skip tracing those lists and then calling homeowners direct. I am too lazy for that. I realized that there was a much smarter approach at doing this. I primarily … And the second piece to that is that you can’t build relationships with those people. It’s how do you scale that? How do you scale a business where I’ve got to spend a dramatic amount of money to get one contract? I think the average cost per contract right now in the US going direct to seller is anywhere between 7 and $14,000. I mean, that’s insane, right? That means you’ve got to make at least 10 to 15K just to break even on time and energy.
So my approach has always been a relationship-based approach, where how can I do a certain amount of work but be able to come back to the well and keep drinking? So the approach that I’ve taken is I work primarily with real estate agents and other wholesalers. Now there’s a complete different cadence, technique, follow-up process that is required to do that. You have to be really good at underwriting, you have to be really good at communicating. You have to really be able to take down the guards of these agents who have come to the conversation. When they hear about wholesale, they’re immediately, it’s like their spine stands up because they’ve heard all these horror stories of working with wholesalers. But the facts are is that we provide a significant value to the business place, especially for these houses that are in such terrible condition that they’re not financeable.
And for oftentimes these retail real estate agents don’t have the wherewithal to even handle a house like that. And typically they’re of such low value that it’s not even compelling for them to want to do the deal. So first and foremost, I think that everybody listening to this right now, if you have any ambitions to do wholesale, bet on yourself doing this for a while, right? Believe that you can create an incredible business from building relationships. I look at my wholesale business as one of the most incredible money-printing machines that you could ever have. We’ll do a million, do a million dollars, a million-and-a-half dollars a month in assignment fees. I mean, how many properties do you have to own to have that, right? So this is the approach. And I think that we have to, as a community, understand that we don’t have to go to sellers.
We don’t have to go and try and get one over on grandma to get a deal. That’s not what this is about. For me, I love working with agents who understand what I’m looking for, who know that when you are buying a house that’s in distress condition, that it has an as is cash value. And that cash value has to be compelling to somebody in order to come and make the investment. So this whole question of getting, taking equity, it doesn’t even exist because this equity doesn’t happen until I force it. I’m forcing appreciation on all of these deals by adding value to the situation. So that’s my approach. I’m not a cold caller. I don’t text people. I’m not going to be the guy who’s coming into your phone right now that says potential spam. That’s not me. Everybody that I’m talking to, the real estate agents and wholesalers, they want to hear from me.
Realtors spend thousands of dollars to just make their phone ring. When I call, I’m an actual cash buyer that has the ability to close. I mean, that’s compelling. That’s something that I think that especially if you are getting started in this business, the fastest way. Last thing I want to say to that. Look at the math here. We know that you’ve got to speak to, at minimum, at minimum 200 homeowners before you’ll get a contract. So what I see is that if you talk to, say, 50 real estate agents a day, who are each prospecting themselves, imagine if you talk to 50 agents who are each talking to 50 homeowners to try to get listings, how many effective conversations am I having a day if I go that route? If 50 agents are each talking to 50 homeowners, that’s me talking to 2,500 people. So the math doesn’t lie.
Ethan:
Real quick point, I just want to reiterate the importance of what you said about the relationships. I mean, it doesn’t matter if you’re in wholesale, flipping or multi-family commercial. The most important investment you can make, in my opinion, is relationships, especially early on. I mean, that’s the biggest thing for me is the people I’ve met, the people who I’m going to meet, who are going to provide me with the opportunities and the knowledge that I need to reach my goals.
Jamil:
23 years old, right? You do this for 20 years, man, you’re going to be, I mean, you will be one of those people that people talk about. You’ll be on stage at BiggerPockets. You’ll be the guy that folks will be learning from, right? It’s just so incredible to see young people coming in and being as willing to care about their futures as their parents want to care about their futures. Like you said, 23 years old, man, I was working at Taco Bell. I wanted to be a rapper. What was wrong with me?
Ethan:
Can you rap?
Ashley:
Can you do a little piece for us?
Jamil:
No, no. [inaudible 00:34:49]. Yeah, yeah, I listened to too much Tupac.
Tony:
So I also wanted to be a rapper.
Jamil:
Did you?
Tony:
Literally I have two mixes out on fooling around here.
Jamil:
Get out of here. I got to find them.
Ethan:
I mean, when you first started, what was your biggest focus? How did you go about cultivating those close relationships?
Jamil:
So simply, I literally called between 30 and 50 real estate agents every single day. That was my goal. I could hit that sometimes in a few hours. Sometimes it would take me all day if I got a Chatty Cathy on the other line. But I would make it 30 to 50 calls every single day. And my business exploded. It exploded. I mean, it’s not even close. If you compare our deal volume, our deal size, our longevity in the business and the fact that we franchise now into 130 markets, no one can touch us when it comes to our process and our capacity to get this business done.
So it was absolutely focused on real estate agents. It was minimum KPI. I would try to have my conversations last two minutes to five minutes at most, and that was just it. I was relentless. I never let a day go by. The only day I took off was Sunday, out of respect for people and their time with their families, and if they were going to worship that day, I didn’t want to be bothering them. But beyond that, I was on it, consistent. I showed up every day, and now look at it.
Ethan:
Yeah. I think that’s super important. I think anybody can watch a YouTube video or have a little conversation and get motivated, but staying consistent, being disciplined and putting in that work to kick off those relationships, making those calls, that’s a whole another story.
Jamil:
Absolutely, brother.
Ashley:
Well, Ethan and Jamil, thank you so much for joining us. I mean, that was really awesome. Yeah, the round of applause you hear in the background.
Ethan:
Perfect timing.
Ashley:
So Ethan, can you tell us where everyone can reach out to you and find out some more information about you?
Ethan:
Yes, I am E 7 Wilson on everything. Instagram, E 7 Wilson, Snapchat, Facebook, Venmo if you want to bless me. But E 7 Wilson, that’s my social media.
Ashley:
And Jamil, what about you?
Jamil:
You can find me on IG at J-D-A-M-J-I. Also on YouTube, it’s just youtube.com/jamildamji. But you can also find me on the … I’ll just because you guys, the second best podcast on BiggerPockets, On the Market, where I have an awesome time with Dave Meyer and the rest of the crew there. It’s just so fun to be a part of the BiggerPockets family.
Ethan:
Love it. One more thing. I think I speak for you guys as well. Please do reach out to me. Reach out to these guys. I mean, everybody who’s here is very willing to have a conversation in the DMs, on a phone call if you can find the phone number. I mean, if you’re ahead, next to us or beneath us, I mean, everybody’s in their own path and wants to help each other. So please do.
Ashley:
Well, thank you guys so much for joining us. We really appreciate it. I’m Ashley at Wealth from Rentals. He’s Tony at Tony J. Robinson. And I will say it, we are the number two podcast compared to On the Market. But you’re still right, the whole BiggerPockets host community really is amazing, and just to be able to be a part of this family is really awesome.
Jamil:
Can I say one last-
Ashley:
Yep.
Jamil:
Hey, if any of you guys can find the mix tape, I will pay you $250. So go out there and find the mix tape and make some money.
Ashley:
How much for a music video? Because I do have the link to that.
Jamil:
Oh. 300.
Ashley:
Deal. Well, I have to go make $300. So thank you guys so much for joining us and we’ll see you next time.
Tony:
Later.
Speaker 5:
(Singing)
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
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Mortgage Coach integrates with Polly’s PPE
Sales Boomerang and Mortgage Coach announced an API integration between Mortgage Coach and SaaS technology provider Polly on Thursday.
Real-time data from Polly’s cloud-native Product and Pricing Engine (PPE) will feed into Mortgage Coach Total Cost Analysis (TCA) presentations through this integration, providing home loan comparisons for borrowers.
“Now, lenders can merge the benefits of our high-performance PPE with Mortgage Coach’s ability to multiply borrower conversion,” said Adam Carmel, founder and CEO of Polly, in a statement. “And stay tuned; there is much more to come from Polly’s partnership with Mortgage Coach.”
Sales Boomerang and Mortgage Coach merged in June, about six months after a Philadelphia-based private equity firm LLR Partners invested $80 million, buying stakes in both firms. Together, they formed the Borrower Intelligence Platform (BIP) by combining borrower intelligence with interactive TCA presentations, which allowed mortgage advisors to contact borrowers at strategic times.
In March 2021, Polly raised $15 million in Series A funding led by 8VC and in January 2022 raised an additional $37 million in a Series B funding round led by Menlo Ventures. In May this year, Polly’s mortgage SaaS technology integrated with mortgage insurance providers like Arch MI, Enact, Essent, MGIC, National MI and Radian.
“Lenders invest significant time and money into building diverse portfolios of loan products designed to meet borrowers’ unique needs, yet those products often sit underutilized,” said Joe Puthur, chief lending officer at Mortgage Coach and Sales Boomerang, in the statement. “Piping Polly’s precise product and pricing data into engaging, data-rich Mortgage Coach TCA presentations solves that problem by making it not only possible, but easy for mortgage advisors to present a wider array of financial solutions to every borrower, every time.”
Sales Boomerang and Mortgage Coach laid off at least 20 employees last month amid significant mortgage market challenges.
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How smart home technology increases property value in a challenging market
Over the past few years, we’ve seen an increased demand for smart home technology as consumers continue to embrace a digital lifestyle.
“Smart home technology, whether it be keyless entry locks, smart thermostats or leak sensors, these are all things that, five or six years ago, were still pretty new to the marketplace,” said Andre Sanchez, COO of Rently, a smart home and self-guided touring solutions provider. “Now, however, renters actually expect to see this technology in their living spaces.”
The call for smart home technology is coming from inside the house, as it were — but during times of economic pressure, how can investors and property managers justify the effort and expense of upgrading their communities?
Why smart home technology now?
Interest rates are at their highest level in 20 years, and housing inventory is only at about a quarter of what it was in 2008, according to National Association of Realtors Chief Economist Lawrence Yun. More people are renting but still seeking the premier amenities enjoyed by homeowners.
“We are heading into a more turbulent environment in the coming years, and it’s very important that investors and property managers assess their needs,” Rently CEO Merrick Lackner said. “It may seem counterintuitive in this climate to invest, however, there are many economically sound reasons to deploy smart home technology now.”
As an example, Lackner pointed to current staffing shortages leaving leasing offices with fewer people on staff to conduct tours for prospective renters. Self-showing technology like Rently’s can help make up for those losses in productivity.
“Whereas a leasing agent might find it hard to find the time to show properties every day, our technology is essentially allowing somebody to tour any day without being limited by the agent’s schedule,” Lackner said. “It’s a much more cost-efficient way to show properties when we’re in a recession. When you don’t have the headcount to facilitate traditional agent showings, self-showing is a wonderful tool that can keep your leasing goals on pace.”
In addition to enabling a greater number of tours, self-showing technology also maximizes an existing staff’s efficiency and output, he said.
Sanchez added that smart home technology also enhances an operator’s ability to monitor and protect a vacant property.
“With economic conditions being what they are, we hear about more incidents in the field where there’s potential for property breaches and things like that,” Sanchez said. “With smart home technology, you can see if there’s been activity at the property, especially during a vacancy period – have lights been turned on, have thermostats been turned on, have locks been unlocked? – and that really helps an operator maintain a higher level of security.”’
Lackner said he believes the current economic environment will ultimately increase the use of smart home technology.
“It allows owners and operators to maintain their properties better, to be more efficient in their leasing operation, to save money on utilities and to protect their assets,” he said. “In a more turbulent environment, you need to be taking these efficiency and automation steps to be able to reduce costs and keep your portfolio operating at the same caliber. So, I think economic pressure will actually be a catalyst for more smart technology deployments.”
How does smart home technology benefit investors?
Lackner described two groups of investors in rental properties – groups that directly own and manage their properties, and groups that manage properties on behalf of others. He said both of these groups are motivated not only by the benefits listed above but by the ability for smart home technology to differentiate their properties on the market.
“In this environment, it’s much, much harder if you want to sell an asset to do so unless there’s something more compelling and differentiated,” he said. “It’s the homes that are better maintained, better painted, have better technology – those actually end up, in a difficult market, having more value for resale or long-term investment.”
Ultimately, Sanchez said that smart home features maximize real estate values both operationally and as investments.
“Number one, it’s easy for your management company to deploy the technology; they’re not just spending money on a platform and not utilizing it,” he said. “Number two, the popularity of the tech helps them lease faster, making sure there’s not a vacant unit that’s sitting on the market, not generating revenue. And third, smart home technology also helps keep that resident and satisfied and less eager to move, stabilizing revenue streams.”
If the renter has a better experience by renting a property that’s equipped with smart home technology, the renter will ultimately be happier and stay longer, reducing churn loss, he said.
“Retaining residents ensures that operators maximize their investments,” Sanchez said.
Rently’s Smart Home Technology
Rently’s self-guided touring streamlines leasing by automating property showings, and its smart home technology helps property managers fulfill key operational tasks including property access, energy management, property security, and damage prevention.
Because Rently follows an open and flexible product integration approach, all of their solutions can be easily integrated with most popular property management systems, eliminating technical frictions that sometimes occur when properties change ownership – something that happens more often in turbulent economic times
Rently’s newest product innovations include a dynamic mapping feature that renters use to navigate property tours and a common area access panel that secures shared amenity spaces, such as pools, gyms or package delivery areas.
“At the end of the day, it’s all about being that customer-centric product that provides property owners with everyday benefits and long-term value,” Sanchez said.
For more information on Rently’s smart home technology, visit Rently.com.
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Powell’s speech was a direct hit to mortgage rates
The Federal Reserve Chairman Jerome Powell said during a Wednesday afternoon speech at the Brookings institute that monetary policy affects the economy and inflation with uncertain lags, and the full effects of the ongoing tightening have yet to be felt.
The mortgage market, however, tells a different story.
So far, the market has quickly reflected the impact of the Fed’s moves. To illustrate, mortgage rates are on a downward trend amid signs that inflation has started to cool down. In turn, the Fed may reduce the pace of the federal funds rate increases.
The tightening monetary policy has resulted in a cumulative 375 bps hike: 25 bps in March, 50 bps in May, and four subsequent 75 bps increases in June, July, September, and November. Fed officials will meet on December 13 and 14, and the bets are on a 50 bps hike.
“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting,” Powell said at the Hutchins Center on Fiscal and Monetary Policy in the Brookings Institution.
Powell’s statement alone was enough to bring the Treasury yields down. The 10-year note went from 3.75% on Tuesday to 3.68% on Wednesday. It then dropped to 3.59% on Thursday morning.
“Bond yields fell when Powell talked about the fact that the Fed officials don’t want to raise rates too much,” said Logan Mohtashami, lead analyst at HousingWire. “The bond market found some buyers, and mortgage rates should be lower Thursday.”
“The last time we saw a big drop in yields was after the CPI report came in lighter than expected in November, meaning inflation targets were missed. It dropped mortgage rates too,” he added.
The mortgage market reaction
Mortgage rates tend to align with the 10-year U.S. Treasury yield. This means that when bond yields fall, mortgage rates will typically go down, a relationship that has existed since 1971, according to Mohtashami.
As expected, the 30-year fixed-rate mortgage decreased to 6.49% this week, down nine basis points compared to the previous week, according to the latest Freddie Mac survey. The same rates averaged 3.11% one year ago.
“Mortgage rates continued to drop this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Even as rates decrease and house prices soften, economic uncertainty continues to limit homebuyer demand as we enter the last month of the year.”
Mortgage rates differed slightly on other platforms. Black Knight‘s Optimal Blue OBMMI pricing engine, available on HousingWire’s Mortgage Rates Center, measured the 30-year conforming rate at 6.54% on Wednesday, down from 6.56% the previous week.
The current measure at Mortgage News Daily shows the 30-year fixed rate at 6.29% for conforming loans as of Thursday noon, a 34 bps decline compared to one day prior.
“The Fed is indicating that the aggressive rate hikes this year have been enough to start slowing inflation. Markets also welcomed today’s PCE price index—the Fed’s preferred inflation metric—which showed that growth is slowing,” George Ratiu, Realtor.com’s manager of economic research, said in a statement.
Mohtashami said rates should be even lower.
“If the mortgage back securities market was working properly, rates should be under 6% today,” he said. “But the mortgage back securities market isn’t running great still because the biggest buyer of the market, the Fed, over the years has left and has no desire to get into this marketplace for now – it’s not worth the risk.”
The Mortgage Bankers Association (MBA) also expects rates to continue the downward trend, according to the trade group’s president and CEO, Bob Broeksmit.
“The 30-year fixed mortgage rate has fallen nearly 60 basis points over the past four weeks, which has drawn some prospective buyers back to the market,” Broeksmit said in a statement. “With signs of economic slowing both in the U.S. and globally, mortgage rates will remain volatile but are likely to continue to trend downward.”
The latest MBA forecast indicated mortgage rates will finish the year at 6.7%.
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