Category: Wholesaling Houses

 

Guest: Brandon Barnes focuses on virtual wholesale real estate investing in the Atlanta, Georgia market. He does over $1 million per year in revenue.

Big Idea: “That’s a Real Estate Investor’s Superpower: Being Able to Comp Properties & Have a Feel for Purchase Price” Brandon mentions this “superpower” about half way into the interview. He’s spot on. The Real Estate Investor’s Superpower can be summed up in two main points. First you have to know how much to offer so that you get your offer accepted. Second, you have to know how much you can sell the house for once you’re done renovation. Or renting & refinancing if you’re planning to buy & hold.

Brandon believes in Offers Over Appointments. In other words, he and his team would rather simply make offers over the phone than schedule face to face appointments. This is obvious if you’re a virtual wholesaler, but most of us in real estate prefer seeing the property prior to making an offer. You have to at least see photos before making an offer, right? The answer may surprise you. Check out the episode for full details.

 

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine. This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals. For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

Resources Mentioned in this Episode:

https://www.SendMoreOffers.com

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

 

View the Episode Description & Transcript Here:

https://reidiamonds.com/virtual-wholesale-real-estate-investing-with-brandon-barnes/

Dan Breslin: Welcome to the REI Diamonds Show. I am your host, Dan Breslin, and this is episode 183 on Virtual Wholesale Real Estate Investing with Brandon Barnes. If you are into building wealth through real estate investing, you are in the right place. My goal is to identify high caliber real estate investors and other industry service providers. I invite them onto the show and then draw out the jewels of wisdom, those tactics, mindsets and methods used to create millions of dollars and more in the business of real estate.

Dan: Now, most real estate investors, including myself, prefer making offers after physically seeing the house. You go see the condition, underwrite the deal, figure out the values. They have to repair value and then make an offer. Today’s guest, Brandon Barnes, he used to do the same, but now, he prefers making all of his offers immediately over the phone without ever seeing the property or even seeing photos of the property. I mean, how does this work? Do we not need to know the condition of the house to make an offer or at a minimum, see the photos? These answers may surprise you.

Dan: All right. Welcome Brandon Barnes to the REI Diamonds Show. How are you doing today?

Brandon Barnes: Hey, I am well. Thank you for having me there.

Dan: Yeah, for sure. It has been much anticipated. Your name has been floating around the Atlanta Market where I do a lot of business for the past couple years here. I was highly excited to look forward to having you get on the show here once we started getting together with bookings. For those that may not know who Brandon Barnes already is, do you want to kind of give a little bit of a background for us, Brandon? Maybe how you began real estate investing and maybe even the details about your first deal if you could go back to that origination.

Brandon: Yeah, for sure. Look, I am here in the Atlanta area just like you mentioned. I started off my journey whole selling, specifically. I mean, that is just the art of finding off-market properties at a discount and kind of jumping to this game by chance, honestly. I gotten fired from a Corporate America job and I always thought I would climb the ladder and become an entrepreneur at some perfect opportunity, but I got fired. I reached out to a buddy that I knew from Pittsburgh when I was working for the HJ Heinz Company up there and I asked him what this real estate thing was all about.

Brandon: He said he had actually moved to Atlanta and was following a mentor program for wholesaling and I should come by and listen to it and this is a great opportunity to start a business. I was sold. Just a few months in the second month, I sent a thousand postcards and got my first contract. By month three, I had actually done my first deal for 15K and never looked back. I split that deal with them and kept on mailing. It was a great intro into the business.

 

Brandon & I Discuss Virtual Wholesale Real Estate:

• Virtual Wholesale Real Estate Investing
• Making Offers Over the Phone
• The Real Estate Investor Superpower
• Disclosing the Profit Motive-Yes, I’m Going to Make Money

 

Relevant Episodes: (183 Content Packed Interviews in Total)

• How to Find Motivated Sellers with David Lecko

https://reidiamonds.com/how-to-find-motivated-sellers-with-david-lecko/

• Dan Schwartz on Managing Off Market Investor Deal Flow

https://reidiamonds.com/dan-schwartz-on-managing-off-market-investor-deal-flow/

• Josh Hertz on Wholesaling & Fix & Flips Philadelphia

https://reidiamonds.com/josh-hertz-on-wholesaling-fix-flips-philadelphia/

—

Watch the episode here

 

Listen to the podcast here

 

Virtual Wholesale Real Estate Investing With Brandon Barnes

This is episode 183 on virtual wholesale real estate investing with Brandon Barnes. If you’re into building wealth through real estate investing, you are in the right place. My goal is to identify high caliber real estate investors and other industry service providers. I invite them onto the show and then draw out the jewels of wisdom, those tactics, mindsets, and methods used to create millions of dollars and more into business of real estate.

Now, most real estate investors, including myself, prefer making offers after physically seeing the house. You go see the condition, underwrite the deal, figure out the values they have to repair value and then make an offer. My guest, Brandon Barnes, used to do the same, but now he prefers making all of his offers immediately over the phone without ever seeing the property or even seeing photos of the property. How does this work? Don’t we need to know the condition of the house to make an offer or at a minimum, see the photos? These answers may surprise you. All right, welcome Brandon Barnes to the show. How are you doing?

I’m well. Thank you for having me there.

Yeah, for sure. It’s been much anticipated. Your name’s been floating around the Atlanta market where I do a lot of business for the past couple of years here. I was highly excited and looking forward to having you on the show here once we started getting together with bookings. For those that may not know who Brandon Barnes already is, do you want to give a little bit of a background for us, Brandon? Maybe how you began real estate investing and maybe even the details about your first deal, if you could go back to that origination.

Brandon’s Early Real Estate Deals: Learning The Ropes

Yeah, for sure. I’m here in the Atlanta area, just like you mentioned. I started off my journey wholesaling specifically. That’s just the art of finding off-market properties at a discount and jumping to this game by chance. Honestly, I had gotten fired from my Corporate America job, and I always thought I’d climb the ladder and become an entrepreneur at some perfect opportunity.

 

Wholesaling is the art of finding off-market properties at a discount.

 

I got fired and I reached out to a buddy that I knew from Pittsburgh when I was working for the HJ Heinz Company up there. I asked him what this real estate thing was all about. He said he had actually moved to Atlanta and was following a mentor program for wholesaling. I should come by and listen to it. This is a great opportunity to start a business. I was sold. Just a few months in, the second month, I sent 1,000 postcards and got my first contract. By month three, I had actually done my first deal for $15,000 and never looked back. I split that deal with them and kept on mailing. It was a great intro into the business.

For that first deal, did you go back to the actual house and the appointment? I know we’re going to get in a little bit of a transition to what you’re doing now, but I’m going out on a limb, assuming you started slightly different than what the business model is now. Can you take me back to like literally you set the appointment and maybe what happened when you got to the living room, if that’s how you did it?

Yeah, for sure. I used to go to every appointment in person, tried to build incredible rapport, talked to homeowners craft the perfect offer and hoped to goodness they signed. That was exactly what happened with that one. I think I got a call from the lady and I don’t think I met her specifically, but that was an outlier because I would go to appointments in person all the time.

I started off my business and started off my career sending a lot of mail, doing a lot of direct mail, and it was just on that first thousand postcards, I had a lady with a tax lien issue and wanted to just sell the property. I probably shot myself in the foot because I got it under contract for about $20,000 and sold it for $35,000. I probably should have at least been able to sell that for $50,000. It was a great little 3, 2 townhome. I was going to every appointment in person driving all around the city. It would be weeks that maybe I got out 3 or 4 contracts and I was never going to get anywhere operating like that, trying to be everything for everybody. These days, we send a lot more offers. That’s to say the least.

This reminds me some of the circumstances when you mention like 1,000 postcards and you get a deal from that amount. I think back to my first deal, the numbers are a little different now, but I was down to my last $100 and I put in a $79 newspaper advertisement in for one week. I ended up getting 3 or 4 calls in that one week. This is 2006. The newspaper, for those who don’t remember, was a much more effective medium of advertising than it is now. I remember when I got there and I’m making the offer and I didn’t really know how to analyze markets and do comps. I had no access to the MLS and it was in like a very high crime, high drug activity neighborhood.

I remember seeing that a friend of mine bought one on Remington Street, a guy I knew from the REI meetings for $6,000. I figured, “I’ll offer $5,500 to this other one around the corner, and then I’ll go sell it to him and make $500.” I get into the living room, I think I might have looked at the house and then came back because I check that on making the offer the first time.

I show up the second time and the family’s there. I got my six-year-old daughter with me in not the greatest neighborhood. My dad had to drive me to the deal and I made the offer $5,500 and they like, talked about it for a minute and they pretty much flat out accepted. My negotiation skills were all but non-existent at the time.

I remember I’m sitting down, Brandon. I had to fill out the agreement of sale. We stopped at OfficeMax and bought a generic agreement of sale. I’m like, “I didn’t do this before. Crap, what information goes where?” I didn’t have the sense to actually practice the agreement of sale way back when. I called a guy on Remington Street and I’m like, “Do you want to buy this one for me for $6,000?” He’s like, “I’ll sell you mine for $5,500.” They call it Remington Street because of all the shell casings all over the ground. Every time I go to pick up the rent, I’m like, “What have I done?”

I lucked out. I sold it for $11,500 and $6,000 later, same as you, I was off to the races. Early on, where I was referencing the 1,000 postcards in my $79 advertising, that’s not the case for a lot of investors who go out and attempt the off-market deal business. What I’m getting at is there’s almost this certain element of luck where you and I got lucky on that. I wish I did a deal for every 1,000 pieces of mail that I sent out since then. Without that luck, maybe we wouldn’t have been so ambitious to keep going.

Yes, there’s skill. Yes, there’s luck. How important is luck or how much is luck and how much is skill, would you say, for people maybe just starting out so that when they get in there, if they don’t see that instantaneous luck, maybe they stick to it and go through the storm and get to the other side where you begin to get that momentum?

The Role Of Luck And Skill In Early Real Estate Success

I was definitely lucky because then, then the next thousands of postcards I was sending out after that, crickets and or just not any good deals. The success often happens in the outliers, and there was no reason that I should have gotten a $15,000 deal from those 1,000 postcards, but there was some luck there.

I hope that a lot of people get lucky in those early days because you just need that proof of concept early on. There are so many people that start and don’t get lucky or they’re beating their head against the wall for months without any traction or any deal flow. Definitely, I think we both got lucky early on because I promise you, I started to send 5,000 postcards, 3,000 postcards every week, and I ended up burning through my cash in those first few months of that very first year, 2016, wholesaling.

It was actually just listening to podcasts just was like this one where I ran across the Joe McCall podcast and he had interviewed Rick Ginn, the probate king of Florida. I thought that that was a great opportunity for me to differentiate myself. I started going after probate leads and sending letters at way less volume. That turned into some major deal flow for me. It was really probate deals that saved my business that second half of the year. I probably did $86,000 on like $3,000 worth of mail sending probate letters.

One more moment on our little beginner stories there. Do you remember the phone call when you made the offer and maybe that seller accepted on that original deal? Is there any recollection of that that you could share?

That very first deal, I remember where I was in my house. I remember that I was in the basement and I was scared to death to ask her if she would accept an offer of $19,000 for this townhouse. I remember she thought about it, she said that she had to consider some things, but it felt like she was moving in the right direction and she was actually going to consider this $19,000 offer.

I didn’t know what I didn’t know. And looking back on it, I could have paid a lot more and I could have sold it for a lot more. I just remember that trepidation of, “Should I ask her if this is enough?” It’s something that my mentor always says. If you have that uneasy feeling in your stomach, you’re probably making a good offer. I definitely had that bubbly feeling in my stomach, like, “Is this good enough?” Sure enough, we actually proceeded and moved forward.

 

If you have that uneasy feeling in your stomach, you’re probably making a good offer.

 

I asked for the details there and appreciate you diving just like you did into them, because I think for a lot of people, even people who’ve been in the business a really long time, Brandon, I noticed that the hesitation moment in the real estate business as an investor comes at the moment of making the offer. That’s where for new people who have low experience or maybe no access to the MLS, you got this challenge of getting your hands on the right data to be able to even figure out what the number is.

Let’s say you figure out what the number is, then there comes this other piece of actually presenting that offer to the seller. Maybe that can be more difficult over the phone and even more difficult in person with the seller than perhaps how you’re doing it now. Let’s just talk about the Brandon Barnes now of offers over appointments as a strategy.

Transitioning To Offers Over Appointments: A Strategic Shift

What I started to realize is that if I wasn’t making enough offers and if they weren’t getting out the door, we were generating leads a little quicker. If I wasn’t making enough offers, I was not giving us an opportunity to do deals. Just to double back a little bit, towards the end of 2016, the mentor group that I was in, there was a colleague, a friend now named Brent Daniels that was talking about cold calling.

Compared to direct mail, he was spending way less money sending making cold calls and he was doing some really large deals. I just thought that, “Here’s another great opportunity.” I just had my eyes open for those opportunities. He was an open book. He shared. He said, “If anybody wants to know a little bit more about it, give me a call.”

I did just that. He gave me the entire model and the process. I said, “I think that this is it.” I was on the cutting edge of cold calling late 2016, early ‘17. I actually went on and hired some cold callers middle of that next year, so May, June of 2017. We started to generate enough leads, but I was still trying to scramble and go to every property. I had a buddy that did a video within that mastermind group. He said, “Death to Podio.” He was tired of being in task hell in Podio.

He said, “We’re going to keep our leads in the dialer and you can really do deals just over the phone without seller appointments.” I wasn’t really a believer in the beginning, but as we started to try it out and lo and behold, we were able to do deals that way just by having really good conversations and making offers.

When I found out that I could do that, I really sped up that process. I hired an acquisition manager, which I had to train. He actually was one of my cold callers based in Mexico. He is still my acquisition manager to this day. I had to show him how to come up with that offer price over the phone. This gets into a strategy of mine that a lot of people really like when they hear it. If I could break it down, if you think that’d be all right, I think that would really give the readers some value.

Yeah, it’d be my next question, actually.

The “Maximum Allowable Offer” Strategy

What we do is instead of this ARV times 0.7 minus repair cost minus what you want to make, I start to see this trend and realize that that formula does not include houses that could be just great rentals that don’t need that 0.7 full rehab. I just started to, for every property that pops up in our dialer, any lead that I look at, you text me an address right now, I’m going to go onto Zillow.

I’m going to draw a little circle on the map and look at everything nearby, not crossing over any major roads or highways. I have a square footage filter that’s within 500 square feet and just look at all the comps. As I look at all the homes that sold, if they were sold fully renovated, I’m going to click into them, look in the price history and see what price they sold at before the work was done.

That gives me the price that an investor would pick it up for and what they would purchase it for before they do the rehab. I just started to subtract my margin, what I want to make, which I suggest $20,000 so you have some wiggle room. That then becomes my maximum allowable offer. That allows us to quickly, in conversations with sellers, find out the offer price in a ballpark right there on the phone and power dial all of our leads so that we’re just able to get to these properties faster, speak to homeowners over the phone, make offers and keep it moving.

It pushes us to the front of the line when we’re actually speaking to them about an agreement. That works for fully renovated properties and also works for homes that were fixed up a little bit and listed as a rental. I’ll just look into the price history of all the homes that sold, whether they were fully renovated or just mildly fixed up, the $10,000 investment and turned into a rental. I’ll subtract my margin and that is our maximum allowable offer.

Are you finding that by talking turnkey on the phone with that seller? We do little call calling and a lot of people, it’s a yes no, it’s a binary answer. “Are you interested in selling?” “Yes.” Okay, then we try to get out there and face to face. “Are you interested in selling?” “No, we’re not.” What does the lead-in for your reps sound like to keep them on the phone? Am I right in assuming that because you’re talking turnkey, you’re talking money and offers right there over the phone, that they’re more engaged and open to keep the conversation going with you? What does that conversation look like from the ACT manager’s vocabulary?

Benefits Of Talking Turkey With Sellers And Following Up Effectively

It starts just like you mentioned, from our initial prospectors, our first phone call is just the introduction is everything going really high. “John, look, I’m sorry this is out of the blue, but I was just actually just calling about a property I believe you own at 123 Main Street. Yeah, look, we’re looking to purchase a home in the area. Just wanted to see if you consider selling it.”

If they say yes, we’ll continue on getting condition. “It sounds like a great home. Why would you consider selling it? What’s the best price you would consider if we paid all the closing costs?” There was no real estate commissions to pay. We’ll ask them for their email address and send that over to my acquisition manager very quickly so that he can dig in a little deeper.

As he’s talking to people, he’s trying to get a ballpark and get them to close, get them to agree to a price in that first phone call by using exactly that strategy that I just mentioned. Even when we’re not close on price, we’re still going to let them know, “We’re going to send over our best offer and follow up with you and see if you got it,” and we’ll take it from there.

Using that method, we’re really able to get 50, 60, 70 offers out each and every week. From our metrics, every 25 offers, I’m expecting to sign contract back. We’ve just sped up that process instead of like, here’s a lead, let me send it over to a CRM like Podio and then hand dial them. We’re instead keeping that lead in our dialer, having our acquisition manager power dial those homeowners. As soon as they pop up, he’s clicking on Zillow, looking at the comps, looking in the price history, finding the sale before the sale, subtracting that $20,000 and making that offer. It just helps us speed up that process so we’re able to get 50-plus offers out the door. To your point, it’s the offers over appointment strategy.

Yeah, it’s slick. What would be the split between the ACT manager gets a commitment and someone says, “We’ll take the $110,000 versus you send in the offer for $110,000 and do a little follow up after they initially said, “No, the price isn’t going to work.” Is that like a 50/50, the deal’s coming on the front end, the instant close versus the follow-up or some other different balance?

It’s different. Only about maybe 25% of the time we’re able to get them to agree to our price that very first conversation. On average, about nine touches until we’re getting assigned contracts. Most are in that second group of folks that we sent over our best offer, and then we followed up with them making sure that they got the agreement and trying to continue to build rapport over time and get them to sign.

It’s more in that second group of just constant follow up, but he’s just able to do his follow up so much more efficiently by keeping our leads in the dialer. When he says, “I need to get in there and do some follow up,” he’s power dialing these leads and getting through them and connecting with homeowners live follow up faster than if he was hand dialing.

I prefer that. I prefer a live follow-up touch over some automated system that sends text messages and RBMs with some interval. I’d rather him do live follow-up and talk details of the deal, details of the document versus the person that’s still calling and just trying to convince them to agree to some pie in the sky number. I feel like it allows us to cut in front of the line because we said, “We sent over an agreement. We’re ready to move forward.” They’re taking us a little bit more serious than the next person that’s just calling still trying to get them to agree to terms.

The Importance Of Negotiating Offers And Overcoming Hesitation

That makes sense. It underscores the most valuable time that a real estate investor is going to is going to invest in their business, is going to be in the process of negotiating offers on the purchase side. I’ll go out and say that that’s more important than negotiating the deal on the sales side. If you didn’t buy the deal right in the first place, your sales side is already going to be severely impacted no matter how great your sales side of the negotiation goes.

 

The most valuable time that a real estate investor is going to invest in their business is in the process of negotiating offers on the purchase side.

 

Dealing with contractors or going out and picking out cabinets and light fixtures and all the stuff you see on HGTV, forget it all. Not necessarily forget it or disregard it, but the highest value time you can invest in your business is on the offers. If you think back to the beginning of our conversation here, Brandon, that is the same thing that a lot of times is going to stop a newer and experienced or an investor that’s not getting a level of consistent results. It’s probably because they’re not putting 50, 60, 70 offers per week into the market.

Whether you are following up and dealing with agents and you’re investing the time that way, or you’re literally talking and communicating with the seller who you’ve already made an offer, either way, that time investment is the most valuable portion of the transactionally driven real estate investor’s business. Fix and flipping if you’re on the acquisition side with your buying whole rental portfolio.

If you’re on the side where you’re just managing your portfolio, obviously, this is a different thing and they probably checked out of this episode by now. The other thing I’m wondering, and probably the audience is, too, at this point, but how do you know the condition of the property? Are you doing this blind? Are they texting you photos? What’s the deal with underwriting for condition?

Evaluating Property Condition Without Seeing It: Expert Insights

That’s a million-dollar question. Honestly, I did not see a major drop off in cancel contracts or renegotiated agreements from when I was going to the property trying to estimate repairs versus once we just started to send offers based off of what’s sold in the market. Honestly, it was just the same type of contract fallout rate where there is going to be some deals that work and some that don’t.

If we’re basing our offer for subject property off of other homes that have sold in the area, we already have a feel for what an investment deal will sell for in this particular area. If we’re able to offer our property contract at a similar rate, at a similar price point, it’s a deal because at the end of the day, the first thing that a buyer’s going to do is they’re going to look at comps in the area and say, “I see that this property sold for X.” If we’re able to offer a contract for our property at a similar price point, then it already makes sense.

To dive a little deeper into that question, when I’m looking at my subject property, of course, there are going to be homes that are in better or worse condition. When I’m looking at the comps that have sold and I see what they sold at before a renovation, there’s still going to be a range. If I’m looking into an area and I see a bunch of fully fixed up, fully renovated properties also for $250,000 in the area, and then I look in the price history and most of them sold a little below $100,000, there are some that sold closer to $100,000 and some that closed sold closer to $60,000. I would assume that the ones that sold closer to $60,000 were more in the need of repairs. They were in worse shape before the renovation started.

My subject property, if the owner tells me, “It was vandalized. It’s completely messed up. It’s going to need a full gut job,” I’m going to be a little bearish on my offer and get closer to the homes that sold in the $60,000. Versus if a homeowner says, “The fundamentals are there. We actually replaced the roof a few years ago. Yes, it needs a complete update and renovation, but the water here is good. The AC unit is good,” I’m going to be a little bullish, and my offer is going to be on the higher end of what those other homes sold for before they were renovated. It’s still an estimate. We’re still estimating the value of our property based on its condition.

What the homeowner tells us is the closer that we can get to the price point that these other properties sold for before they were renovated. Once something goes under contract, we immediately go out, we immediately tell the homeowner, we need two times to get in there. Once for photos and then a second time for our purchasing partners, contractors, any potential agents.

Furthermore, if any wholesalers are reading, the quicker you can get to the point where you’re letting homeowners know that oftentimes, the majority of the times, you’re going to immediately resell their property for profit to your network of buyers, the better off you’ll be. All of us started off saying, “We’re going to buy your home and we’re going to fix and flip it or hold it as a rental.”

The quicker you can get to the point where you’re telling them the truth, being a truth teller and a truth seeker, the smoother your transactions will go and you’ll be able to say, “I’m providing you value by quickly and conveniently allowing you to sell your property at the price point that we agreed upon. That’s the value that I’m providing. The way that I do that is my prerogative, and sometimes I’m going to immediately resell it for profit to someone in my network.”

Letting them know, being honesty is the best policy is going to be super helpful. If you do get something under contract that’s a little too high, renegotiate the moral way and letting them know throughout the process the entire time. We do not go under contract with properties with the idea of renegotiating. Most of the time, we’re able to hit the right price point just basing our offer off of what other homes that sold in the area.

Are no photos being sent during that negotiation at any point?

Not most of the times. There are some times that homeowners are adamant about us seeing the property prior. Sometimes they are. We’ll send our guy out to take photos or we’ll ask them to send photos. Majority of the times, I would say 6 to 7, or really 8 out of 10 times we’re able to go into contract without any photos and without the seller almost forcing us to come through their property, but it does happen.

You have a point. As I hear you talking, I’m thinking through my own experience. I’m in Philadelphia, I’m in Chicago, and I’m in Atlanta, and we do a volume of deals in all three of those markets. New Jersey, Delaware, Maryland. We’re in quite a few markets. As you’re talking, I’m thinking, “You’re right, Brandon.” As I think through, I have like my South side Chicago properties and the cash comps go through a certain range, and the ranges are for certain conditions.

It’s like an anomaly when I have a burned-out shell in the South side of Chicago. That’s going to be significantly more money than one that at least had a family maybe living there in within recent history. I go to Atlanta, and there’s certain neighborhoods in Atlanta where the year of construction is around the same time.

If we’re talking 30310, 30315, beltline, Southwest Atlanta area, we have older home inventory that’s going to need significant improvement to be retail ready. It’s probably only going to be this investor fixing and flipping type of mentality there in most cases versus finding one that was renovated 3 or 4 years ago. Yeah, they come through sometimes in their rental condition, but age of the inventory that sells to cash buyers in Southwest Atlanta is going to be different than some other areas where the construction is all newer construction built in, like, let’s say ‘70s, ‘80s, and ‘90s, like up in Beaufort and Hall County.

A lot newer construction in the suburbs for the most part. Summing it all up, you can actually underwrite the condition almost by looking at the comps and like comparing the year of the build of the subject property to the year of the build of the properties around it and getting a feel for the pictures. That’s not a skill that’s going to come easy on the front end. I’m curious how long it took you to get the acquisition manager that you have running things up to speed on this range thinking that you described about, the conditions.

I really think it was about 3 to 6 months before he started to feel comfortable. What he always does is we use Slack to communicate within our business. If he has something that he had a question on, he would just send me over the address, the condition of the property, what the homeowner want, and I gave him real time feedback. Just a few addresses a day each day over time would just allow him to get it and see it better and better over time. Also, I was able to just show them on the map, just to your point, different areas around the city where most of the price points will be for a wholesale transaction.

Southwest Atlanta, like inside the perimeter and South of I-20, which cuts across the city, it’s going to usually be around this price point. You probably need to be under $100,000 or if it’s in a really high area towards the city, you can probably get up to $150,000 on your offer price because those homes fully fixed up are well above $350,000. If you’re outside the perimeter and North of the city, you’re able to offer X. I was able to just show him on the map assumed averages just based on history and experience. Also, just always give him feedback on a daily basis.

He tells me like, “Look at these addresses,” and I was able to give them that feed by looking at the map. For me, it’s something that I built over time. I’m somewhat of an analytical thinker, but I’m not too analytical where I absolutely have to look at all the numbers. I have a touch and a feel for what buyers will pay. As soon as you start thinking about these properties as a buyer would, like, “Would this be a good deal for me? Will I have enough room to do this work and still make this money?”

The better you are going to be at making your offers. Thinking as a buyer will help you really key in on your ability. That’s a real estate investor’s superpower. Being able to comp properties and have a feel for a purchase price is our superpower. Always be working on that if you want to be successful in this business.

 

A real estate investor superpower is being able to comp properties and have a feel for purchase price.

 

Disclosing Profit Motives And Handling Seller Objections

The other thing I want to circle back to again here for a moment, but you’re disclosing the profit motive to a seller at some point early in this thing, or maybe when you got the contract out and you’re saying, “I’m going to sell this property to someone in my network. I’m make a profit.” It’s implied like, “Why else would I be buying a property if I wasn’t going to turn around and sell it at some point to make a profit?” It can be offensive if you’re not disclosing that in some fashion upfront.

How often does that torpedo a deal, if at all? If it does torpedo a deal, how do you mitigate that? Is it a good enough deal that you’re willing to close on it? Is there any other way to handle the objection that a seller might have if all of a sudden, they find themselves offended that you’re planning on making a profit on the deal for doing business?

It definitely can turn people off where they say, “I absolutely do not want you assigning this contract to purchase my home,” or wholesaling this property if they’re really savvy. We’ll pivot very quickly and say, “We do have other exit strategies. We do have lending partners where we can purchase this home and then do whatever we want with it after we’ve purchased it from you.” That’s exactly what I’ll do. I’ll reach out to a private lender in my network and actually purchase homes and at that point, I’m going to list it on the open market, but it has to be a good enough deal. Yes, to your point, it can turn some people off, but not everybody. You sometimes have those really nice homeowners.

There’s one that we, that we have under contract currently. We mentioned because it was in such great shape that we listed on the MLS even while we’re just still under contract. We say, “I absolutely don’t care what you do with it. I want to receive X amount of money and I want to be able to close within 30 days.”

On that particular home, it’s such a good deal, as far as just being retail ready, that I am still going to purchase it and then list it on the MLS so that I can accept the conventional home buyer’s offer. It’s just letting them know upfront and if they have an issue with it, we’ll remove whatever language out of the agreement. Honestly, you sometimes can just double close on the property and steal, have a simultaneous transaction where we’re purchasing a property using an end buyer’s funds and then immediately reselling it. We have options to go around what they see as us assigning their contract.

It’s funny, though. If we had hesitation, we talked about around making the offer. I experienced people never wanting to bring up the profit motive the way you just described. It’s like, “Don’t bring that up. It’s taboo. I’m not saying anything like that to jeopardize my contract,” and they back themselves into a corner because they don’t mention that ever. Now it creates, like you said, all these speed bumps further down the line in the deal. If they’re trying to get contractors, partners, buyers, etc., through the deal, and now all of a sudden, the seller’s wondering what’s going on.

“Why are all these people at my property? I thought you were purchasing this property.” You just don’t want to face those issues during your inspection or especially at the closing table.

Brandon Barnes’s Atlanta Real Estate Market Insights

Yeah. To me, it’s like, “I’m going to make a profit. If you have a problem with that and there’s someone else that you have lined up to buy the house, that’s great if you want to go explore that option. I’m here now. I’m ready to sign, and I’m the one that’s going to put a check in your hand. Of course, I’m doing this because I’m in the business of making money.” I win some, I lose some, but at the end of the day, I’ve got to make a profit here for the business to continue on. It is what it is. Let’s switch gears again here. Let’s talk the Atlanta market. Tell me where you came from. I think you said you moved to Atlanta. Was the reason that you moved to Atlanta because the real estate market was hot?

No. I was born up near Chicago but moved here when I was one year old. I’m raised here. I’m from Atlanta. I went and graduated from Purdue University in Indiana. My first job out of college was with the HJ Heinz Company in Pittsburgh. They were going to move me to 3 different cities and 3 different years. They got purchased. They moved me out to Illinois, Iowa and then they got acquired and canceled my job. I had a young child and I was driving back and forth but I found a job with the Kraft Oscar Meyer company. They got bought out by the same company that bought the Heinz Company. We lived there for a little bit, and I started to look for opportunities back here in Atlanta.

I found a position with Unilever and we were able to move back home. Before the year was up, I was fired. Literally two weeks after getting married to my wife, I got fired. I think that just goes to show that I was not the best employee. I needed to be charting my own path. I knew nothing about real estate whatsoever. I got fired right in October. I reached out to my buddy in December and as soon as he told me about wholesaling and I could follow this mentor program, by January 2016, I was fully in, burned the boats, doing my own thing. I hired my first team member in June of 2016, my administrative assistant, she’s been with me ever since.

She’s my right hand, keeps my business together. I’ve been operating it as a business since day one. That really helped out. All the corporate experience that I had allowed me to lead the team of cold callers and acquisition managers and have a systematic approach to the business. Though I’m not using my degree directly, the Operations Management degree and corporate experience that I got right out of college definitely played a role in my success. There is something to say about going to school and getting your education. You can’t leverage that in the business world in the right sense.

The Value Of Education And Learning From Experience

I think that’s good to say. Congratulations on getting fired, by the way.

It’s the best thing that ever happened to me.

You’re not the only one. We’ve heard that a few other times on the show, and I know a lot of people personally who that was the case in the catalyst for getting started in real estate, but I like to underscore the part about you saying that the degree did actually translate into what you’re doing now. I think it is something. I’m of the, “I dropped out of college and got right to doing stuff,” but that’s not really the case. I dropped out because I wasn’t disciplined enough to finish it, and I got bored quickly with that and wanted to get off and get to work. That was the end of engineering school for me. I think that you are absolutely right. A lot of the stuff that I had to learn from books and self-teach and through hard one experience.

I know for a fact that stuff is quickly available and you can assimilate that into the way of your thinking through business school management and a lot of other courses that you could take in college. And I know that a lot of people in the real estate thing and even in the world right now, there’s this like anti-higher education backlash amongst entrepreneurs. Everyone wants to quit and be Bill Gates or quit and be Mark Zuckerberg but that’s not always the entire situation. That’s a great point there to highlight your experience.

I have 4 young children and by the time of this release, we’ll probably have announced that 1 more is on the way.

Congratulations.

I appreciate it, but I’m still going to allow them to go to school and have that experience, by all means do so. I will also offer them the option is if you are starting a business, if you’re doing the entrepreneurial thing in high school and things are looking good, I will allow them to choose whether or not they want to continue on going to college. If they don’t have anything in the works, definitely, I think that there is value in a degree.

That experience, the fun that you get, the comradery that you have from your college experience. I still have all my engineering buddies. We meet on a Zoom call or Google Hangout every few months. Those are lifelong friends, White guys out of Indiana that I’m still kicking it with from virtually. We do a little reunion every once in a while, too, so I want them to have that experience. There is something about that that you can’t replicate just jumping into the business world with bills and issues. There’s some value to an education, for sure.

My daughter’s at Temple right now, and obviously with the pandemic going on, it could have been done virtually. She knew enough that she wanted the experience, so we got the apartment. They’re canceling the dorms, now they’re back on. They’re allowed to stay there. Now they have a couple in-person classes, so it’s been a whip solve a year, but she’s getting the experience. I’m in Chicago, she’s in Pennsylvania, and she’s away at school.

That to be crazy for these kids that are going through COVID. I can’t imagine. Hopefully, she’s still enjoying herself and that’s good that she’s still allowed her. Does she want to be an entrepreneur as well?

She’s scared of that, and she feels like, “I can always come work for dad at some point if I can’t figure out something else.” She is into occupational therapy. I think it was one of them. She switched her major. She liked personal training and wanted to do her own personal training business, but there’s a certain amount of experience that comes in selecting the right business opportunity also, which I think she’ll probably develop that at some point, but she’s doing her.

That’s awesome. The kids are a blessing.

That’s why I moved out to Chicago. I’m from Philadelphia and 2005 or ’06 is when my daughter moved here with her mom and then I moved to Chicago so I could be here for her middle school and high school years right before she left to go back to Philadelphia for college where I’m originally from. You’ve got to love it. Let’s talk books. We get our wisdom and we get our knowledge. Is there a book or two maybe that you recommend to people or that you found pivotal, business, real estate or otherwise, that you think would be valuable for the listeners to check out?

Recommended Books For Real Estate Success

Yeah, there’s a few great books. I definitely always suggest Profit First as you’re getting making sure that you have a game plan for your money. The one thing is something to try to live by sometimes tougher sit than done. The E-Myth if you’re really wanting to be an entrepreneur and then Traction as you get going. You’re building a team and you’re wanting to have some structure to your business and your meeting schedule and meeting rhythm. For anybody out there that’s cold calling, I highly suggest Fanatical Prospecting by Jeff Blount. That’s something that I think everybody that’s going to be on the phone should definitely listen to or read. I gave a slew of book there.

I wrote them all down. That’s a new one. Fanatical Prospecting by Jeb Blount.

Yeah, that’s a great one.

All right, so this is the REI Diamond Show, Brandon. At the end, we talk about our crown jewel of wisdom. I’m going to set the stage here. Let’s say it’s like 2015, 2016. Your bank account is at near zero. No deals waiting on the board to close. Yes, you did it with the postcards originally, but if you had to restart your career, knowing what you know now, how would you get started?

Brandon Barnes’s Advice For Starting Over In Real Estate

I would go directly to the courthouse and I would pull the probate records and the eviction records of recently filed evictions and probate. I would do that every week and find a way to contact those, either the petitioner that petitioned for probate or the plaintiff that filed the eviction. I would be contacting them by any means necessary, preferably by the phone.

If you’re really hungry and really gritty, go knock on the door if you absolutely have to. Those will be the immediate steps that I would do in any city. You could drop me anywhere in the country, I’m going straight to the courthouse, find the records from the source and trying to contact them as quickly as possible from the moment that they filed these cases.

You talk about how quickly as possible, and you also mentioned doing this every week. These lists are sometimes available, usually on a monthly pool. How important is it to do it every week? Is that because there’s other people doing the same thing and you’ve got to get there first? Is that why this is part of the crown jewel of wisdom for you?

A hundred percent. I think you get the first mover advantage if you cut the curve and go weekly because every week in a major county, you can get 30 actual leads. In our major counties, there’s probably about 50 records filed a week and 30 of them own real estate. There are so many list providers and vendors that only allow these lists to make these lists available to their clients monthly. Go weekly. Beat them to the punch and be the first person to reach out.

That little extra with the probate process, though, is if you can go under contract with a homeowner and write in the agreement, this transaction will close after the probate process is complete. There’s going to be people that say, “I can’t sell it to you right now.” We can still go under contract so that as soon as they get their letters of testamentary, you could be closing literally the next day. The one little gem I’ll add in there is if I needed to find my buyers, I would go out and put bandit signs around the area, the major intersections around where the property I have under contract is located. Desperate, 3 beds, 2 bath, cash investors only, and my phone number.

Do you still do the bandit signs now?

I don’t. I did it ‘16, ‘17. That’s really how I built up a lot of my best buyers, from that original way of getting buyers. I really grew my list by swapping with other investors in the city, one-on-one swap of our list. I had gotten up to like 15,000, 16,000 and then deleted out all the people that weren’t opening the emails. I have about 8,000, 9,000 strong buyers on my email list.

I appreciate you coming on the show here. What should readers do if they want to get more Brandon Barnes?

Head over to SendMoreOffers.com. All my links to my social are there. Anywhere that I’m putting content out, you can follow me. If you’re interested in learning more about how we send more offers and want to talk about your goals, see if you’re a good fit for the program and want some additional resources, book a call with me. You can do that right on the website. Thanks, Dan.

One tip too is put in the www. I’m not sure if it’s just my browser or not, but the first time I tried to punch it in without the www, it gave me like a, some Google error, but once I put the www in there, it actually went straight to the site.

Yeah, that’s why I said like that. I don’t know why. I’ve got to get that fixed, but yeah, definitely put that in. I look forward to hearing from you, guys.

Yeah, for sure. Thanks again, Brandon. I really appreciate you being on the show, and we will we’ll catch up soon.

Thanks, Dan.

—

Creative Financing And The Mortgage Note Business

Are you interested in doing deals with no money down? Creative financing. It sounds like a good idea, right? You might consider diving deeper into the mortgage note business. The mortgage note business is the creative financing strategy in real estate. First, negotiate no money down deals with sellers, then find a buyer willing and able to put some money down and continue making payments until the deal is paid off with a profit for you and in between.

One of the things with creative financing is that you can sell properties from much higher prices using creative financing. Here’s an example. I bought a package deal a few years ago, and as part of the package, I think there were five houses that I really wanted because they were in the right area, and there was a sixth house for $20,000, not in the right area.

That house that I had to buy for $20,000 as part of the package, it was worth about $20,000. I tried selling the house on the market for $20,000 plus or minus leaving the room for the commission but to no avail. The house did not sell. I removed the listing and I wrote a Craigslist ad offering that same house for $45,000. This time, I added creative financing.

The deal sold for a price of $45,000 with $8,500 down and $443 per month for 10 years. The deal was off my plate collecting payments. If the deal runs all the way through the 10 years, I’ll end up with a total of $61,660 on a deal I couldn’t sell that I had to buy for $20,000, which amounts to a profit of $41,660. Not a bad deal on a deal that I couldn’t even sell to break even.

What’s the best way to learn about creative financing, no money down deals and the mortgage note business? You’re in luck. My friend Brian Lochner is hosting a full day virtual workshop on exactly that topic. Normally, this costs $97 to attend. As a reader, you can attend free when you register at REINoteSchool.com. This class is a full day of content, tons of examples of real deals, and of course, many of these deals are the crowd favorites. No money down, and extracting a nice chunk of cash upfront followed by years of additional payments. Go check the schedule and sign up.

Thanks again for tuning in. Remember to review and subscribe. Just search REI Diamonds and click subscribe. To receive the episode highlights via email, sign up at REIDiamonds.com. At that site, you can also access the full episode archive of Wealth Building Real Estate Investment Jewels of Wisdom. My main business, Diamond Equity Investments, is that of buying, renovating and selling houses, 283 in 2020 and 30, bought and sold so far in 2021. We have another 114 houses in our inventory, either under construction for sale or awaiting closing.

Here’s how we can do business. Number one, are you interested in having access to the best real estate deals in your market? In other words, access to deals you can buy at low enough prices to actually profit after renovating and reselling. If so, go now to AccessRealEstateDeals.com. Number two, are you an accredited investor who enjoys double-digit returns? If you’d like to potentially invest passively in my real estate deals, go to FundRehabDeals.com and sign up to receive my private mortgage investment opportunity emails.

Number three, finally, I am always buying houses that I can flip and I buy occupied apartment buildings with below-market rents. If you have a deal that fits that description in either Atlanta, Chicago, or the Philadelphia region, please send me an email with the details. We are at the conclusion, my friend. Next up, we have Avery Carl joining us to discuss a few of the hottest vacation rental real estate markets in the Southeastern US and exactly how you can get your peace. Catch you next time.

 

Important Links

• Brandon Barnes
• Profit First
• The E-Myth
• Traction
• Fanatical Prospecting
• REI Note School
• REI Diamonds
• Access Off Market Deals
• Become a Private Lender & Earn Double Digit Returns
• REIDeal Machine

 

Relevant Episodes

• How to Find Motivated Sellers with David Lecko
• Dan Schwartz on Managing Off Market Investor Deal Flow
• Josh Hertz on Wholesaling & Fix & Flips Philadelphia