Welcome to another edition Market Hunter Thursday with Herve. Dedric, my man,
what's up man? Happy New Year. How are you doing, Herve? Good to be here.
Specifically Greensboro, population 300,000 folks. About the third largest city in North Carolina
behind Charlotte and Raleigh. Median income of $47,000. Median rent of just under $900, $877.
And the median home value of a $156,000. You've got the headquarters of VF over there,
which is a big apparel and footwear company, The Fresh Market and if you guys know Mack Trucks
also calls Greensboro home. Let's go ahead and dive in it. Tell us,
how did you go about by choosing Greensboro, and what kind of real estate investing specifically
do you focus on in Greensboro? Yeah, I grew up in the Boston area,
relocated down to North Carolina about almost 10 years ago now. I was working
in corporate America. Always wants to be a real estate investor.
There you go. Like Rich Dad, Poor Dad.
Yep. And I said, hey,
I want that cashflow. I want that freedom. I want to move into the business owner's quadrant.
Right. [Inaudible 00:01:06] quadrant.
And then 2017, me and my wife actually started investing in real estate. Our goal was to build
a massive portfolio of rentals, just like The DeRosa group is doing.
Started with three rental units in 2017. Now three years later, we have 24 rental units that we own
in a growing portfolio. Our goal is to add another hundred units this year.
Okay. We love it, man.
We do wholesaling. We take the capital from wholesaling to put into buying buy
and hold multifamily, primarily small multifamily right now. But again, we're
looking to get into larger deals as well. Okay. Man, that's great. That's great. And listen folks,
I really want to hone in on something that Dedric just said, and specifically is we didn't have a
lot of money when we got started, right? Because that's the situation that a lot of
new real estate and investors find themselves when they make that decision
that they want to make that transition. They want to make that shift from their job, full-time job,
or part-time job, into real estate. Dedric, explain to us exactly what is
wholesaling and how have you guys found success in wholesaling?
Actually, it was a gentleman in Winston-Salem doing wholesaling and I started following him
on YouTube and we ended up going to a meetup in Winston-Salem about three years ago,
we met him and it turns out he was legit. He was a real businessman. He was doing wholesaling.
So that's how we fell down the rabbit hole. And then we started getting educated. Again,
we both had full-time jobs. We actually had a business, we owned a franchise previous
to getting into real estate, but we always wanted to be in real estate investing.
So we started part-time and within... It took us a year, a year and a half, to close our first
wholesale deal. Wow.
That whole time, we were getting educated. And yeah, we didn't have that capital but over a
period of time, we hired a coachere, we hired a mentor, we'd go to masterminds, we'd go to these
trainings and really wholesaling is the art of finding deeply discounted properties, right?
But you can apply it to anything. You can wholesale cars, you can wholesale watches,
you can wholesale houses. Right.
Most people don't realize that, but it's really it's for market hunters, right? That's why I
love the name of this show. It's finding something, right, a motivated seller.
Right. They have to be in distress.
Typically, most people aren't going to want to work with a we buy houses investor wholesaler,
but 1% to 2% of the market is in a distressed situation at any point in time. And that's who
you're looking for. Right.
But the reason most people fail in wholesaling is because they don't know marketing. 95% of
wholesaling is marketing. Putting your message out there to find those people who, they don't want to
sell, they need to sell yesterday. Right.
And that's how we've become successful is we mastered the art of marketing
through using various different strategies and tactics to find these motivated sellers.
Marketing is very much, and I've I've found in this industry, is underutilized.
It's not done effectively and heavily discounted for whatever particular reason.
There's not a lot of emphasis on marketing talking about not only talking about building up your
brand, but an effective means to communicate with investors, communicate with brokers,
communicate with homeowners that you are targeting to get a wholesale deal from.
How have you guys honed your marketing skills? How have you sharpened that sword
to make it a true, true asset in really improving and growing your wholesaling business?
Yeah, so early in our career, one of our coaches who we hired, we paid her $5,000 to teach us how
to flip houses. But after we paid that money and we learned how to flip, we realized we didn't have
the capital to flip. So she's like, "Listen, you guys need to learn wholesaling." She was like, :Go
to this bootcamp. There's a bootcamp being held, a marketing bootcamp in St. Louis, Missouri."
[Inaudible 00:04:42] two or three grand. We went there and it was all about how to target
motivated sellers to buy their houses, and either flip wholesale or buy as a rental. And
that's where we started learning about direct mail marketing, cold calling, text messages, ringless
voicemail, all these different mediums to reach out to sellers en masse so that you can generate
leads and get your phone to ring with deals. So that's how we went down the rabbit hole. We
started out with cold calling. So again, we were both working full-time jobs. So we hired
a cold calling company, outsourced it to call 2,000 or 3000 people a day.
And lo and behold, a couple of weeks later, we were getting two or three leads a week.
These were for single family properties. Sure.
What we found is that a lot of these cells would call us, some of them
wouldn't just own one house. They will own 10 or 20 rentals. They had a little small portfolio.
Okay. Some people owned small
multi-families, right? Some of them own mobile home parks. So that's how we started getting
into buying the multi-families is working with these sellers through our marketing efforts.
So again, we started out with cold calling, which is very effective if you do it in bulk, then we
moved to something called driving for dollars. Yeah.
And that's what really started working for us. Wow.
So for folks who don't know, driving for dollars is simply driving around your neighborhood or your
community wherever you live and opening your eyes and looking for distressed properties.
We all have them, the properties in your neighborhood that are boarded up,
the properties where the grass is tall, right? Properties with broken windows.
Every community has them. So once we started doing that, and we
had a few hundred mailers going out every month, that's when the phone started ringing
consistently. And then we closed our first few deals off of that marketing method.
Do you wholesale any particular type of properties based on the
neighborhoods that you're driving in? So two things. As far as who we target,
we try to target sellers with a high likelihood of being distressed. So first of all,
vacant properties, right? If the property is sitting vacant, there's a likelihood the
seller may be distressed financially or the property's in physical distress.
Right. Secondly, absentee owners.
So we all know that we're in the middle of a pandemic. So a lot of times absentee owners,
there may be a rental property. Maybe they're getting rent, maybe the tenant's not paying rent.
A lot of times the seller doesn't know they're motivated until you call them or they get a
postcard saying, hey, I'm a cash investor, would you be interested in an offer?
Right. And we would have those calls like,
hey, I wasn't thinking about selling, but I got your postcard. I figured I'd just give you a call
and see what you're offering me. Absolutely.
So that's what we look for. And then once we get a property in our pipeline and we're in
negotiations, our goal is to take down everything is a buy and hold. We're buy and hold cashflow
investors. Got you.
So we try to take it down to buy and hold. If we can, great. We'll add it to our portfolio.
If it's not a good fit to take it down as a buy and hold, we cherry pick the best
ones to keep ourselves. And the rest we sell off to other investors for a fee.
How did you decide what to expand into next? What's your focus on 2021?
Yeah. Like I said, we started out wholesaling and then we got, that allowed us to buy and hold
and build a portfolio. We'd have flipped multiple properties in this timeframe,
but we don't like flipping. I don't like putting in all this work in flipping and paying taxes.
We've actually made more wholesale deals than some of our buddies who were fix and flip investors.
I believe it. I believe it. So our first wholesale deal, we made
$5,000 wholesale fee. Little to no cash out of pocket. Second one, we made $11,000. Our third
one, we made $105,000 on one wholesale deal. So it actually highlighted that deal in a book by
Ken Corsini, who's a BiggerPockets guy. He highlighted that in The Best Deal Ever book.
But again, that made us legit cash buyers at this point. So we took that money and
we started buying a bunch more rentals. We had had other wholesale deals where we
made $90,000. And this is without swinging a hammer, no rehab. We got it under contract
for a very low price. We found a cash buyer who's looking for a off market
deal at a discount. We assigned our contract and that's the fee we made off one deal.
Again, we've transitioned to that. And now we do a lot of creative financing.
So the four unit that we just acquired last week, that's a seller, he's in his nineties.
He owns a portfolio of about 40-50 doors. Obviously he's older so he's
looking to sell off his portfolio. And he was open to seller financing.
Okay. So this particular four unit,
he wanted $160,000 for four doors. It's bringing in about $2,800 a month. So I said,
how about we structure it like this? I'll give you the $160,000, but here's how this has to be.
I'll give you $5,000 down. Okay.
I'd like you to take a note for $155,000. I'll pay you, what was it, $750 a month
for the next eight years. And then at the end of eight years, I'll give you a balloon. And he said,
you know what? I'm probably not going to be around eight years. I hope to, but I'm 92.
He wanted the cash flow to continue to come to his wife. He wants his wife to be taken care of
if anything happens to him. So he said, yeah, let's do the deal. So literally we did that,
we did that deal, so that deal just closed last week. It should cashflow
about $1200 bucks a month off that one deal. Wow. Congratulations, man. That's a great story.
What is it about the Piedmont Triad that is really, really just acting like a magnet for
so many folks to move into the area? North Carolina's one of those underlooked
sweet spots. Yes, sir.
It's one of those honeypots because you have Charlotte, which is booming right now,
especially in the single family, multifamily apartments going up, everything. You've got
Raleigh, right, which is second in the Carolinas. But then you've got that third city Greensboro,
Winston-Salem, that Piedmont Triad. And again, I think that's the sweet spot because
you don't have all the attention of Charlotte. Is not as big as Raleigh,
but it's right in the middle and there's still a lot of opportunity there.
Right. So you got people moving from Boston,
Jersey, New York, these expensive housing markets where a single family house is $600,000, $700,000,
a million dollars. And you can get a three bed, two bath, 1,500 square foot for $140,000 here.
All right. I'm a new investor. How do you recommend the best way for me
to get started? Where do you see the best opportunities lie right now?
The residential because that's what I know more so in my background., Again,
we focus on anything under $200,000 because interest rates are still at record lows.
Yep. And inventory, it's only about two months of
inventory in the market, especially from a fix and flip perspective. You're going to sell the house
quickly if you buy, fix and flip. But even as a buy and hold investor, we buy a lot of properties
$60,000, $70,000, we'll put $40,000 in renovations in the ARV is now $180,000.
Right. And we'll keep them as a rental and what we're
actually doing now is we're turning those single family rentals into Airbnbs. Well, Airbnb? Why
are you doing that? It's a simple ROI, right? Why make $250 a month cashflow? With the Airbnb,
We're making close to $2,000 a month cashflow off of one single family house. So it's cashflow like
a multifamily, but it's a single, right? And these areas down here are not overrun
by Airbnbs like New York and the big major metropolitan-
Major metropolitan cities, sure. Sure. There's not as many Airbnbs down here. So
that's a great opportunity as well. Do you guys property manage yourself?
Is that something that you're going to look to outsource at some point?
We're building out a team, right? That's what impressed me about yourself and Matt is that you
guys have a A-team. So that's what we're looking for is more A players to add to our team.
Got you. Myself and my wife run
the company. We have a property manager that's full-time. We have construction crews that do
our rehabs. We have a cleaning crew that does our cleaning for our Airbnb. So we have a team,
but we are looking to grow. We're looking for more
acquisitions managers. We're looking for more dispositions managers to plug into our system.
And it's all about attracting A players to the team to continue to grow.
We were able to leave corporate America. I was making multiple six figures in corporate America,
but I've been blessed that our real estate investing business has grown to the point
where a year ago I was able to leave that and I'm able to do what I love now full-time.
And to your point, I recognize that real estate, especially multi-family, is a team sport.
Yes.