Financial Freedom Fast
Building a Six-Figure Remote Real Estate Business w/ Mike DeHaan
What if there was a way to transition your business to a virtual model, enabling you to travel and experience the world while still reaping substantial income? Our guest today, Mike DeHaan, a successful entrepreneur, quite cleverly accomplished just that, going from zero to hitting six figures within just a few months. His journey of transforming his business is nothing short of inspiring, from grappling with the sales side of things to striking his first real estate deal and triumphantly hitting his first six-figure month.
Mike's secret sauce to success is his unique approach to hiring and incentivizing a sales manager. His fearless decision to bring on board someone with no real estate experience was a daring move that surprisingly paid off. Join us as we explore how a simple shift in compensation strategy boosted his sales team's motivation, leading to unprecedented business growth. Not stopping there, Mike elaborates on how he expanded his business reach by strategically partnering with individuals in different markets, effectively spreading out his business risk.
On the marketing front, Mike stresses the importance of retargeting and investing in high-quality mailers as opposed to mass spamming. We also dive into his innovative approach to wholesaling, offering an intriguing blend of wholesale and retail deals. Balancing business success with the freedom to travel, Mike has built a thriving remote business that generates hundreds of thousands of dollars each month. Get ready for some actionable insights on how you can follow suit!
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What if there was a way to transition your business to a virtual model, enabling you to travel and experience the world while still reaping substantial income? Our guest today, Mike DeHaan, a successful entrepreneur, quite cleverly accomplished just that, going from zero to hitting six figures within just a few months. His journey of transforming his business is nothing short of inspiring, from grappling with the sales side of things to striking his first real estate deal and triumphantly hitting his first six-figure month.
Mike's secret sauce to success is his unique approach to hiring and incentivizing a sales manager. His fearless decision to bring on board someone with no real estate experience was a daring move that surprisingly paid off. Join us as we explore how a simple shift in compensation strategy boosted his sales team's motivation, leading to unprecedented business growth. Not stopping there, Mike elaborates on how he expanded his business reach by strategically partnering with individuals in different markets, effectively spreading out his business risk.
On the marketing front, Mike stresses the importance of retargeting and investing in high-quality mailers as opposed to mass spamming. We also dive into his innovative approach to wholesaling, offering an intriguing blend of wholesale and retail deals. Balancing business success with the freedom to travel, Mike has built a thriving remote business that generates hundreds of thousands of dollars each month. Get ready for some actionable insights on how you can follow suit!
Download my FREE E-Book on Scaling Through Partnerships NOW
CLICK HERE
Apply for mentorship with Matt and the FAST FI Coaching Community:
APPLY NOW
Follow Matt online:
Instagram
Facebook
Youtube
The great thing about having it set up in this virtual business style is I can be on a boat in the Mediterranean and I can answer Slack messages if I need to, literally. Something that I did last week is I was there and I needed to wire $160,000 to close a deal, and I did it from a catamaran in the Mediterranean. What is your marketing strategy? So we basically have, I guess, a pyramid for our marketing system, right?
Speaker 3:Welcome to the Financial Freedom Fast Podcast, the show that teaches you how to buy back your time and live life on your terms. Learn how to confidently leave your 9 to 5 from guests who've done it themselves. Whether you want to lay on a beach, travel the world or focus on your passions, this show will give you the tools to do what you want when you want. Now here's your host, matt Emmerbiel.
Speaker 2:What is up? Financial Freedom Fast fam. Today I had so much fun digging in with Mike Dahon. We dug into his business that has been doing hundreds of thousands of dollars a month in wholesale. We dig into his marketing system. How is he getting the lead flow that he needs to be able to generate this type of income and who is he partnering with in certain markets so that he can push out this volume and be a nationwide company? It's awesome to hear how he digs into finding the right partners for his business and that has enabled him to be able to scale and build out his business to the point that it's at While working remotely. Mike just got back from a two-week trip in Portugal. Such a great episode. So, without further ado, let's jump into the pod, mike Dahon. Welcome to the Financial Freedom Fast podcast. My man, my dude, actually for the second time. Welcome to the Financial Freedom Fast podcast. What's going on, brother?
Speaker 1:Not too much, man. Glad to have a second shot at this. One of the good things about recording with other podcasters is we get it. Shit happens when it comes to these recordings and the technical problems sometimes.
Speaker 2:Dude, it's a little rough when somebody's not doing these podcasts all the time. They don't know all the disconnections, all the things that can happen For our listeners. Mike and I recorded this I don't know, probably two months ago or so and killer podcast, killer information that was delivered and unfortunately we got cut off halfway through from some Wi-Fi issues, but we are going to make sure that does not happen today. Super excited to dive in and deliver all the information that we did. And dig a little bit deeper, mike, you just got back from a two-week trip in Portugal and your business was still in the same state, still operating, still doing its thing. Man, what have you built up for yourself that made it so you were able to just say let me go out to Portugal for two weeks, spend time out there and hopefully I'm still making money back states. What is it that you do, mike DeHaan?
Speaker 1:Yeah, so my core business is as a real estate wholesaling and investment business. Right, so we say that we're wholesalers, but really what we specialize in is finding off-market opportunities, and then we wholesale the ones that we don't want. We keep the good stuff. So I've been able to buy a pretty decent size rental portfolio using almost entirely profits that we've generated from the wholesaling business. And it's funny because this is a very sort of classic business where people tend to get very tied to the operations of it. They feel like they can't travel.
Speaker 1:We have, like, our mentorship program that we run now, and one of the biggest things that we address with people is how do you build this business in a way so that it doesn't feel like you're tied to it? And the funny thing is it's not that complicated, right, there's systems available for everything, and what we did from the very start is we build the business as if we were going to be a virtual business, even though we do a lot of stuff here locally, and that's how we started out. And if you set the framework from the start, it's very easy to have the freedom to travel and have a good lifestyle. You don't need to be a slave to your business. But I think where most people get in trouble is they start basically in the weeds and they never build a framework to get them out of the weeds. And it's really hard to take a step back, to risk giving up momentum to do that once you're getting rolling.
Speaker 2:But yeah, that is going to be fun to dig into on this podcast man, Setting the framework so you don't have to be involved in all the day-to-day small operations. You can oversee and construct the business rather than work in the business, which is commonly known as a job, which is a reason that a lot of us have actually gotten into real estate is so we could get out of that job and stop working that nine to five. But if you just create a nine to five for yourself, you're doing the exact same thing. So really excited to see how you were able to construct that business from the start to be almost like a remote working business. But for the listeners that don't really know you right now, what does your business look like Like? How many rental properties do you own? How much do you wholesale per year? How many sales are going through? What are some of the stats and statistics that you could share with us?
Speaker 1:Yeah, so we started this business in early 2020. And I will say I didn't come from like a real estate background. My background was as an engineer. That I did for five years. I quit that job in 2018 and got into real estate, even like later than that, just as I was learning about like myself and what I wanted my lifestyle to look like. I had a desire for passive income. I had a desire to be able to make large amounts of money and real estate is a great way to do both those things obviously because you can use leverage right to acquire larger assets and you can get cash flow from rental properties and things like that and started out flipping houses Most people do. And then I got into the whole sailing side of it, purely because I wanted to find more opportunities and wanted to be in charge of my own pipeline. So started in 2020.
Speaker 1:Since then we've done just over 350 transactions. So if you look at an average, that averages about I don't know, it's eight and a half deals per month since we started. A large number of those have been in, like the last 18 ish months as we have grown. It's been exponential growth and over those deals we've done three or three transactions. I've bought like about 38 individual properties 50 something doors at the peak of my portfolio size as the markets turned over in 2023,. I've been selling off some more fringe properties, like ones that were like a little bit higher risk, some of the C&D class properties. We had an eight unit property that we owned that was out in this like lumber town and, just looking at the economy, being highly conscientious of the fact that lumber mill went under, the whole town would collapse, so we offloaded that one and just really being a little bit more conservative.
Speaker 1:But the great thing is, because of the way that we market and the way that we find value in these deals, because we're buying everything at such a huge discount, we make most of our money the day that we close and we just collect it when we sell the property. So our upside is always massive and right now we're operating nationwide. We're doing, on average, 20-ish deals a month right now across the US in about a dozen markets, and how it works is everything is done, complete side unseen. We get as much information from the sellers. We do our comps just based on General assumptions, based off of the information they tell us. We have a partner in every market that goes and verifies and then we just renegotiate as needed if our offers are aligned up and we never walk any properties. My sales team is fully remote, I'm fully remote, and then we just rely on boots on the ground in every location to help us do the actual due diligence.
Speaker 2:Dude, super excited to dig into this man really, because I don't think we dug as much into this when we originally recorded this podcast. But so where I want to start on my questioning here about everything that you just dove into. So now you've done around 300 deals ish since since 2020, and now you're moving like 20 deals or so a month. That's pretty crazy, and you said everything has been within the last 18 months that things have really started to pick up a good majority of those deals. So I'd like to talk about those first few months. So, like 2020, you start this off and you start going into this. What are those first six months? Look, is it like one deal the first month, two deals the next month? What are the systems that you were using then? And then we'll talk about how that's evolved into what it is now.
Speaker 1:Yeah, dude, I wish it had been that productive that early on, like honestly. So when we first started, you know, we joined a mastermind program which kind of helped us build the framework and that helped, you know, gave us the base that we still Operate, mostly for today. The main tweaks that we made were to make it virtual, as most masterminds, things like that. They will teach you to do stuff in your local market because that's what most people know. So those are the changes we made as we wanted to operate a little bit differently, and we started January of 2020 and we all know what happened in March. So that made things a little bit interesting when COVID started and so that put a little bit of a hiccup in our growth. But the biggest challenge that we faced when we got started was we had, like a framework power gonna generate leads. We were sending mail as our main form of lead generation. We're getting lots of leads, but what we realized very quickly was that we were very bad at the sales side of it and Learning to work with the kind of sellers that are typically willing to sell you a property at a discount right. Those kind of individuals usually come some kind of baggage, be that personal, financial, situational, whatever it is, and what we found as real estate investors is we would go into these conversations with people Leading with the real estate, like the actual property at the front of the conversation, when 95% of the time, that's not what matters. What matters is what is this person's problem and how can selling this property help alleviate them of that problem? Okay, and so it took us about five months and thirty thousand dollars to figure that out.
Speaker 1:Okay, so when we got our first deal, it was the end of May 2020 and literally we had spent 30 grand on our systems in our marketing and we had nothing to show for it. Okay, and then we finally got our first deal. We made seventy five hundred dollar assignment fee and that gave us like a little bit of Belief and from there we were able to start building it up, ironing out our systems, learning how to do sales, and then in October of 2020. We had our first six-figure month. Okay, so that monthly made about a hundred and twenty thousand dollars in October 2020. So, basically, it was zero to one, took five months, from one to six figures took another five months and from there it was off the racism. We're able to start scaling.
Speaker 1:But the thing is, as we've worked with people across the country and as we've also stood up these different markets, it's interesting because that initial ramp-up period like that three to four months to start getting like good traction is very common.
Speaker 1:We find it's just like the typical life cycle of leads and the rapport building process in the sales cycle with these kind of leads Typically takes about 90 days, and I think that's also a big reason that most people, when they start this business, they don't necessarily reach success is because it is very painful to be spending the money and going through the process and not yet having Approval except right yeah, you know it was. We were able to push through because we had the leads coming in, so, like our lead indicators were good and we knew that just after a matter of time, especially because we were in these masterminds and we were seeing people that were doing what we're trying to do, it was possible. So it was all just about refining the process and trying to figure out what we were doing wrong, which we were able to do after a while and we're gonna dig into the marketing a little bit of how you got those lead, that lead Flow, coming in, because it is.
Speaker 2:It does feel good to have to see the leads, the leads, coming in and know that there's a potential to close something, and then let's just figure out how to close it. At least that side of the business was working and that kept you going. I actually just closed Two days ago on my first wholesale deal, made 20 grand off a, though, and like the marketing that went into that Cost me 15k, but then I put another 15k into a different type of marketing. So we'll see how that ends up going on calls there. So we will dive into that.
Speaker 2:But so that initial ramp up period was tough and you got one deal right around like the five months, six month mark. So now I want to talk about one deal to 100k, because that seemed like it was another six month period From the point that you got your first deal to where you were making a hundred thousand dollars your first in one month in October. So tell me, like what was the evolution of that? Is it just that more of the leads started converting? What were you doing differently there that accelerated the business?
Speaker 1:Yeah, and I'm really got driving into this because this was honestly like the turning point for our business and it was learning to Get out of your own way. We were going through this process and I say we weren't good at the sales part of it. We didn't realize that until even months after we got our first deal. Like we always had Excuses about how the leads weren't as good as we needed them to be, like the properties, like their expectations were bad, like whatever. And Ultimately, I went to this meetup for the mastermind that we were in and was meeting with, like our coach or mentor, whatever you want to call him and we were just going through my CRM and he's like looking at our notes and then Looking at our notes and stuff, and he's this seems like it could be a deal. This seems like it could be a deal. This seems like it could be deal. And for every single one, I had an excuse about why he was wrong. Okay, and then ultimately, after half, does iteration of this. He said to me bro, I think you just suck at sales because I think you need to find someone to come in and actually work your leads properly and see what happens. And this was like in late August of 2020 and it hurt my feelings, but I knew he was right and so that's why it hurt my feelings.
Speaker 1:And we went back and I met with my business partner and I was like I think we need to find a sales manager and he's we only have a $4,000. Like how are we going to pay this person? I was like I guess they'd better close some deals. I'm not going to have a job for very long. So we went out and we advertised for this role and we found a person that come into our job, who come in and work for us as a full-time sales manager, whose job was exclusively to just work the existing leads that we have in closed deals.
Speaker 1:And, after talking to a handful of different people that have interviews, we ended up settling with this lady that had no real estate experience, but she had experience working as a bartender and she had experience selling kettle corn at a farmer's market and so, like she had the hard sales experience and our thought process was, if this person is sitting in the living room with the average avatar of our leads, she's going to make them feel good about the situation, right?
Speaker 1:So we figured we could teach her the real estate, and we just need someone that was a good people person. And, sure enough, she came in, started at the beginning of October, working only the leads that were already in our system that we had basically marked as dead and thought were trash, and she closed seven leads in the first two weeks Because she listened to them, she identified their problem, she worked with them to make sure that all of their concerns were going to be addressed and that we were going to truly be able to help them, and that changed everything. And that was probably one of the biggest lessons that I've ever learned in business, and that you can try to learn and practice as much as you want, but there are people that are just going to be naturally better at parts of the business than you, and you should accept that and be willing to find people to fill those gaps. And so, from there, that just changed our momentum entirely and honestly changed the course of like my entire future.
Speaker 2:Wow, that is a real big turning point there. How did you incentivize you? Had $4,000, you're bringing this person in. How did you incentivize them? Was it salary off the bat or only commission structure? How do you structure the pay?
Speaker 1:Yeah, so we gave them a base pay I think it was like 24 grand a year and then they got a percentage of our deals that were closed. They got a fixed commission like percentage of the commission, which ended up backfiring on us as we built this out. So this has been another sort of lesson in people has been people that aren't entrepreneurs. They're only driven by money up until their comfort levels are met, and this is something that, like as an entrepreneur, a lot of us don't understand. Most people, they will work as soon as they're comfortable. They're not going to work any harder because they don't really have a true motivation to do, and so this is why I would recommend people looking for sales managers incentivize them to do what you need them to do and not necessarily to make what you would like to make in their role.
Speaker 1:And so what ultimately happened with this? She's making 100% of the deals. She had a huge month, like the following March, I think she made like 20 grand or something, and then she decided she was going to coast the next two months, so we ended up having to drop her, unfortunately, but yeah, so now what we do with ours because we're a high volume business is, we pay everyone basically a flat fixed fee per deal, and so that way they're incentivized to close as many deals as possible. No workshop, really.
Speaker 2:And where was your business at that point? I think you said you brought her in August. You had your first $100,000 month in October. You brought her in August.
Speaker 1:We brought her in October so she closed all those deals in her first month. Yeah, wow, she closed all those in her first month. It's like your first, like two and a half weeks, yeah.
Speaker 2:So what was the highest month that you had prior to that?
Speaker 1:Oh dude, like 50 maybe. But I would also say that we did probably 50 in August, but we were like that was basically the build up of all the months before that. So if you up to that point, I think we'd only done five total deals like period. So we had done that first wholesale deal. We done like a $10,000 one, a $13,000 one, a $27,000 one, we done a flip and I think that might have been it. So I'd say we had the larger month, but if you look at it, what we'd made for the year it wasn't a lot, but we did have this massive backlog of leads.
Speaker 1:The opportunity was there and I think that's the key thing is a lot of people what they'll do is they'll be like lightly dabbling in marketing and being like oh, I need someone to come and work these leads so that I have more money to generate more leads. So now we'd already made the investment. When she came in, we'd already spent $50,000 to $60,000 in marketing. So we had $50,000 to $60,000 worth of leads. So she had the treasure trove to dig through and even though we didn't have a huge amount of revenue yet, we'd still done the work to line up that future revenue. We just weren't capitalizing on it.
Speaker 2:And was that all within your local market there, or had you already decided to expand out nationally?
Speaker 1:Yeah, so this was all within our local market. We didn't start going nationally until early 2022. And the main reason that we decided to do it in 2022 was because my market here in Eastern Washington Spokane, washington is right on the border with North Idaho. We were two of the fastest growing markets during the boom in 2021. And we knew that it was going to start tipping over.
Speaker 1:And the biggest red flag for us is we flipped these two little cabins up by a lake here, like the not known lake, and their cabins is a very generous term. Really, they were sheds from Home Depot that were on a parcel and we sold each of them. We sold one for 280 grand, we sold the other one for 300 grand and we're like OK, this is a problem, this is not sustainable. And so when we identified that, we're like all right, we need to start hedging our risk. We know that stuff is going to get weird. Let's go and see if we can just spread across different markets that aren't as frothy. And so that's what we did. And then, sure enough, a month later, everything up here came to a complete halt and most of our competitors went out of business because they were so highly leveraged on properties up here.
Speaker 2:Wow, and so let's talk about how you identified other markets to move into. What were the indicators? What made you say, yeah, that's a place that I want to put my marketing dollars?
Speaker 1:Yeah. So the first thing we did was we went down this rabbit hole of trying to analyze these different markets and macroeconomic indicators and all that sort of stuff, and ultimately we're like, ok, we're going to do this. I don't know, I'm not an economist, I don't know anything about these markets. So what we did instead is we did when we started off, right when we started to first scale, we relied on people, so we did the same thing as we started to scale, and so what we would do and this is the great thing about being a part of GoBundance and we're part of is we started identifying people that we would potentially want to partner with in these different markets, and that became, honestly, our indicator was we find an, a player that has the ability to get deals done in their market and we simply work with them. Okay, and there are boots on the ground, they're doing the legwork, them and their team in each market.
Speaker 1:We run the back end operations virtually, which we're already good at, because even when we were locally here, we still operated our business in a virtual nature, primarily because where we live is very spread out. So if we had to have our team driving around hours and hours between properties all the time. It was a major inefficiency. So we would do things virtually, even on our market, and we found that it was very easy just to copy and paste the process and we just needed to have our point person to help determine values, analyze the neighborhoods, figure out the exes strategies, and that's ultimately what we did, is we said who, not how with this whole thing, and that allowed us to scale very quickly because our process was just so ironed out what we needed to do and we just let them be the experts in their areas.
Speaker 2:Right. And how did you underwrite? Were all these guys from GoBundance or did they come from different groups? And then, after you answer that, how did you underwrite these people and make sure that they were the A player that you could confidently partner with? How did you find these A players that you decided to work with? I know a lot of these guys were GoBundance. Did you find them from other groups? And then, once you found them, how did you underwrite them to know that these were people that you could confidently work with to build your business?
Speaker 1:Yeah, yeah, and that is a great question. Ultimately, we started entirely in GoBundance just because that was the largest group of guys with money and guys with some sort of track record that we knew. We have extensive, expanded outside of that a little bit. Honestly, it took a little bit of trial and error with people, especially when you come with an opportunity of hey, we can find all these different discounted deals, we can do all this. Everyone wants to play on the varsity team, right, it doesn't mean they're a varsity player, and so the first couple iterations of this stuff didn't go great.
Speaker 1:Like we started with three different people. Out of those, only one of them was successful. The other two, they just couldn't hang with the volume that we were bringing. They didn't necessarily have their process figured out for how they were going to be able to close and move opportunities that we got. One guy didn't even really understand his market, even though he fancied himself a successful investor, and so that was a big learning experience there. So what we actually ended up shifting towards as well is how we would run it is we would do the back end, they would do the front end. Sorry, we would do like the front exit, they would do like the back end exit and we would split profits, and so instead of what we do is, if people want to partner with us, we actually make them buy into our system and they have to have money on the line. So they are actually paying into our process and covering a good amount of the cost, because what that does now they have downward risk and ultimately, before, when we were like we'll carry that risk and we're just going to give you like upside.
Speaker 1:The unfortunate thing is when people like they have the opportunity to make more money, especially if they are already wealthy, which everyone in GoBundance is stuff's going to take priority. Like they're going to miss appointments to go to soccer practice, they're going to go and have dinner with their wife instead of being able to work on the weekends, whatever, which is totally fine. But the problem is, from my perspective if I'm being fully honest, I don't care about that Like when I am paying money to bring you opportunities, right, okay, like just to be brutally honest. And so now what we have people do is the first gate is they need to be willing to pay into the process. If they're not, then we know that they're not going to be a good fit for it, because they're not going to put their money where their mouth is. And then second from there, what we'd look for is we would want them to have some kind of system in place for being able to find buyers being able to close properties have to have some sort of track record of doing flips or run some sort of networks. We have a lot of guys that we work with that their main track record is they run the local meetup. Okay, so they're going to be able to move properties.
Speaker 1:Amongst that, and if they show that they have that experience, that background, they're willing to hedge, risk some other own money for it, then we consider it a good, good opportunity to give it a try. And it's still not 100% successful, but at the same time, it's not like we need people to already have it 100% figured out, because we have the opportunity to train and coach people. Honestly, that's a big reason that we started our coaching program was we would have these partners that would come in and they wouldn't know the stuff that they didn't know. So we would start to train people up and do these different things and then ultimately, as word got out, it just became something that more and more people asked for. So it's almost like you like train your partners, right, which is an interesting thing, whereas I feel, like most people, they want people to be eye to eye with them, but that's not always realistic, right? You can all make money together, as long as people are willing to learn and willing to, I guess, like put in the work for it.
Speaker 2:Right, and it's similar to almost your look at it, like buying into a franchise, almost right, like you're going to buy into this franchise. They're going to give you systems and operations, a training manual, things to follow, and then you get trained up on how to best operate with the systems that they're providing for you. So I think that that model works pretty well and allows a mutual growth and a mutual expansion of both of the ends of that business there. So I love that. So wholesale has basically two ends, right, we've got acquisitions and then we've got dispositions. So your company acts almost as the acquisition side and then you expect, with some training, obviously you expect the other partner to be some boots on the ground and dispositions. Is that correct?
Speaker 1:Correct, yeah, and dispositions whether they're going to buy it and they're willing to pay us a reasonable fee, or they go and they find a buyer and we just split the fees, whatever that looks like.
Speaker 2:So what it's. So you mentioned like having this meetup background or some way to offload deals. What does your ultimate best partner like? How? What do they look like? Are they doing right now like a deal a month? Is it five deals a month? Is it two deals a year? What are the other criteria that you dig into to find your perfect partners for local markets?
Speaker 1:Yeah. So, like our best partner right now, he's actually one of the three that did really well when we first started. He's still with us and he said he should be making about 500 grand this year off of just working with us, which is pretty awesome and, honestly, what he brings is just a ton of hustle and he's in a pretty small market too, and like it is the willingness to assist in the transactions. So, to understand where these sellers are coming from with their situations and identify that these deals are not going to be cut and dry Like a retail deal, there's going to be stuff that we have to do to figure out the situation whether we're helping them move, we're helping re-home tenants, we're even fronting a little bit of money to get them into a new place, whatever that looks like.
Speaker 1:I would say we look for someone that's sympathetic to that and they understand that, and then, outside of those, it's just do they have an open network that they are able to and willing to tap into to get as much as they can out of every opportunity?
Speaker 1:Because, like our guy in, he's up in Maine and not only is he able to make money on deals that through wholesale and through flipping and different things. But because he has such a large network there locally, we actually convert a lot of the deals to retail deals, so like we'll do these wholesale style where it'll close, but he already has a retail buyer lined up because he has just has such a large network of people on the realtor end of it so we're able to monetize as many opportunities as possible just because he has the whole thing figured out. So he's, I think, is our most profitable, our guy that's doing the most deals right now. We're getting three-ish a month for him right now, three or four months in his market and he's great because he's very well off. He's just an buyer, he spies everything, so we're basically just like a private wholesale company, yeah, and it works out very easy.
Speaker 2:Do you do any work in innovations?
Speaker 1:It's interesting. So this has come up a lot recently. This is going to be like the new flavor of the month. I think was sub two's over the last little bit. I think innovations are going to be the new thing, and one of the challenges with innovations is like pitching them to sellers is always hard, and the problem is just like with sub two and creative financing deals. I'm finding a lot of people they are using the innovation tactic to try and justify bad deals. They're something that the seller is not willing to come down to their wholesale price. So then, instead of negotiating and like doing the appropriate process, they go cool, we're going to innovate it instead.
Speaker 1:And there is going to be issues with this because traditionally with a innovations style deal if you guys aren't familiar with that it's basically where you this isn't like the correct, totally correct way, but you almost like partner with the seller to flip the house, okay. But typically what you need it to be is very low cost renovation. You need it to be like a pretty clear transaction, no weird title situations, no baggage with like tenant stuff like that. But what you're starting to see is people doing these innovations with like larger and larger renovation projects. Okay and the problem with that is like when you're novating you don't take title to the property. The seller still has title and even if you have them sign a power of attorney for the house and do all these other stuff that you're supposed to place a lien, they can still just not perform and take all your money and stay in the house and you're now out a bunch of money without even the asset to fall on as a backup plan.
Speaker 1:And even just yesterday I was talking to a guy and he was talking about wanting to do this novation with a house that has like foundation issues and needs two full bathrooms redone but has like major damage and stuff from like pets that had been like pissing all throughout the house.
Speaker 1:So there's going to be a ton of cleanup that has to be done. I'm like you're looking at a $50,000 bet and then we looked at his numbers and he will hopefully make 30 grand, but the problem is like the lady isn't willing to come down on her price. Is really what you need to do is work with her and sit her out and get her down to your price over the next couple of months as she gets more and more desperate and realize she's not going to be able to sell. So I don't know. It's just. I don't know if you've seen many of the creative finance people over the past couple of years, but they're starting to try and justify wholesaling these retail properties, doing these like wraps and these like other crazy stuff that doesn't make any sense, just because they're trying to squeeze juice out of these deals that are not good deals, and I think novation is going to be the next iteration of that.
Speaker 2:The thing, a tricky thing about novation is this actual contracting aspect of it, though, because I know some local guys in my market who are doing similar work. They're not doing any renovations to the properties, they're just going out and they're identifying that little bit of equity that is in the property. So if it's, if it would sell on market for 92 and they can get it for 70 right now, maybe there's not enough juice in there for them to be able to wholesale it and find that buyer right away. They'll put it under contract for 70,000 and then they'll novate it at 92. But then they run into all these back end issues where the buyer wants price reductions here and they want different things. But you already guaranteed the seller that they are taking out 70,000 out of that. So unless you go on the back end, or at least on the front end technically, and renegotiate that price with the seller, you're going to be taking that hit on the novation deal.
Speaker 2:And is it ethical, is it moral to be able to call it stealing equity, because that seller could just put that property on the market. But if they don't want to deal with any of the issues of putting it on the market, that's where there is some opportunity. That lies there. So, mike, we're coming towards our end of this podcast. So what I know you are an expert at and something that I want to hit on deeply being on the acquisition side, the front end side, getting this lead flow in. What is your marketing strategy mainly, and how can our listeners, how can I, how can other people execute on this marketing strategy as well as you have?
Speaker 1:Yeah, so we basically have, I guess, a pyramid for our marketing system right where we try to reach out to more and more people with the lower cost items, okay. So like the base, which is where most of our deals come from, we do very targeted direct mail, okay. So we go on, you know, prop stream, with source, whatever your main data provider is, and we find everyone that has bankruptcies, liens, tax delinquencies, code violations, all that sort of stuff. We send all those people letters, okay, and we will do either a combination of letters or like branded postcards. We basically send postcards once a quarter. We send letters like every month in between those and the whole point of that is to build a story around the brand and to engage with, get people to engage with you and get familiar with you. That's how you have to stand out in such a competitive space. So that's the base, that's where most of our stuff comes into. That's our most expensive cost per touch.
Speaker 1:Next up in our, I guess like our pyramid is we'll send out SMS marketing to like the wider niche lists. So we do absentee owners, high equity, but other ones are in there, people that have owned properties for super long periods of time, and the reason I like SMS with that versus like cold calling per se is it's less invasive. When you're doing cold calling, the problem is no one wants to talk to you on the phone. When you call them, they're always like eating dinner they're at their daughter's ballet practice, whatever. It's a very negative first experience, whereas with the SMS, even though it's very impersonal, they can still respond on their leisure. And SMS is getting tricky right now with these different licensing requirements and things like that. But we saw this coming a year ago so we got licensed, so we're actually able to do it legally. We just have to follow the appropriate rules and it's not that complicated to do. You just need to do some research and put the time in to get licensed to SMS marketing, and so that's like our middle cost per touch.
Speaker 1:And then at the top of it, we do a lot of, I would say, like general area web marketing and like retargeting, and so the point of the first two layers is to get people to engage with us, know our brand, go to our website and then from there we retarget people heavily through Google and social media. So if they go and they visit our website and they're in, like the areas that we're targeting. Then they'll start to see us on all their YouTube videos, their recipe articles, their whatever else they're at online. So we become omnipresent. And what that does is, over time, that makes you start to stand out more and more against all the other people that are trying to operate in that market and in that space, because so many people they like say I'm due direct mail. So what they do is they go and they find the cheapest little flimsy thing that they can send. That's like a yellow letter that says oh, you're going into foreclosure, you need to call us right now. That just instantly goes in the trash.
Speaker 1:We send like high quality stuff and I don't know if you can video, but this is one that we did for Christmas. So it's like an envelope. It has my name on it, it's written with a pen We'll do stuff that's printed, and so this looks like it's a letter from somebody Right, and it's instantly going to have a much higher open rate than everyone else. It's funny. We actually don't do even the colorful ones anymore. We just do white envelopes and keep it super simple. But in this it will say oh, here's our business website. I'm the guy in the glasses on the website, they can start to learn very quickly who we are, and it makes us so much more human than just like the yellow letter spam that so many other people send out.
Speaker 2:And for our listeners who aren't watching this, what that look like that Mike just pulled up is it's almost like a postcard, like a Christmas postcard that you would receive from a family member or something, so something that's going to make you like grab it. Initially, and it looked like it was handwritten on there.
Speaker 1:Yeah, so these ones are handwritten, yeah, but this one's actually an envelope too, right? So there's a letter inside there. That's real, and tons of everywhere, and they are very expensive cost per piece. But we found that our response rates are significantly higher than just sending, like, the junk mail. And also, too, we will get more people that I would say are like put together, that respond to those that are more skeptical. Back when we were operating here locally in Spokane, I don't know probably 80% of our deals, we had no competition and we'd be the only people that they would call because they had every opportunity to do all their research and decide that we were the trustworthy person that they wanted to help deal with their situation.
Speaker 2:Man. That's awesome. That's a way to make yourself stand out is make yourself seem genuine, look genuine, and you are genuine. That's what you're going up. You're trying to solve a problem, help them out with the situation that they're in, and that can only end up great for everyone. Dude, I love the information that we have covered on today's podcast. I think it's so valuable. And one thing that we haven't yet hit on, and then we'll dive into our final questions, is how did you build this business out as the remote business that you've created? What are the systems that you put in place so you were able to go to Portugal for two weeks? What do those systems look like?
Speaker 1:Yeah, so it all starts with communication. Right, we don't have an office. We run our entire business through Slack. We have a series of reports that are required to be completed every day by our team that report on what they were done, since they can't walk around the office and see what everyone's doing. And then within our CRM, we have different checklists and things that keep people accountable. So it's all just leveraging technology and it's one of those things that it takes a lot of time to build it out and it takes constant maintenance as your business evolves. But once it's there, you have so much more freedom that's almost like a heavy initial upfront investment for never ending rewards with it. Because I just got back from Portugal for two weeks Last year, I traveled for 12 weeks out of the country for over the course of the year.
Speaker 1:So I went to Costa Rica, I spent three weeks in Spain, I went to Morocco, I went to South Africa and did the big loop around South Africa and several countries down there for an entire month, and then I just got back in Portugal and then in November I'm going to Japan for two and a half weeks. I'm going to Thailand for a month next year. It's all doable, and I will say that it's not like I go there and I'm just like completely offline because you still need to do maintenance. But the great thing about having it set up in this virtual business style is I can be on a boat in the Mediterranean and I can answer Slack messages if I need to. That's literally something that I did last week is I was there and I needed to wire $160,000 to close a deal, and I did it from a catamaran in the Mediterranean. So I'm like it's not rocket science once you have the base of it figured out, dude that's amazing.
Speaker 2:That's an awesome story dude Wiring 160 grand from a catamaran in the middle of the Mediterranean. What are the spots in your company? What are the roles that you currently have, that you have built out? You have a salesperson, a marketing person. What does the organizational structure look like?
Speaker 1:Yeah, it's me and my business partner, so we're at the top. I run mostly the sales and marketing piece. He runs like the operations and the transaction coordination piece of it. We have five sales guys, five acquisition managers that work the leads in all of our markets. Those are all US based staff. We have two lead managers who work our cold pipeline, that are overseas and they're just the ones that are stirring up all the old leads all the time.
Speaker 1:We have an, I would say, like a client manager who works with all of our partners, make sure that they're doing what they need to be doing. We have a data analyst that pulls all of our data and maintains our database and then we have what we call like our systems operations manager that maintains our technical systems, helps works on optimizing different situations as they come up, helps us stay more efficient as a US based guy. And then we have basically a CRM auditor. And what his job is? He just goes through our CRM every single day and makes sure that all client responses sorry, all sellers are being responded to in appropriate time, all tasks are getting completed and that no stones are getting unturned. And he just stays on top of the sales guys. For me, since I'm technically the manager, he's basically like my role to do the accountability piece so that I don't have to do it all the time.
Speaker 2:So you've got about 17 to 20 people working on you.
Speaker 1:Yeah, so on. In our wholesale business, we have 12. And then, if you include, like our podcast team and our marketing team, we have an additional five, so we have 17 total. There you go, perfect.
Speaker 2:And guess it right on the head. All right, dude Love that. I feel like we just laid out an entire way that somebody could build out a wholesale business for themselves. We've got the roles, we've got the marketing. We've got at least on the acquisition side, there's a good amount. And then we can dive into dispositions. I've got some other podcasts out there on dispositions being able to push those deals so be sure to go listen to those. We're gonna dive into our final questions, mike. What is one actionable step our listeners should take today to start on their path towards financial freedom?
Speaker 1:Yeah, I would say choose, like your outcome first and figure out what style of business is gonna get you there. Okay, so, like some people, they want like massive wealth generation. Multifamily or some of these larger assets is a great way to do that, because, even though it will take a long time to make revenue, you can have huge wealth generation in that. Some people that want to have like larger income, maybe a little more flexibility, things like wholesaling, are awesome, and I think that, looking back, that's probably one of the biggest mistakes that I made when I first started entrepreneurship was I didn't start with the end in mind, so I spent a ton of time just screwing around thinking that I didn't have a passion, when really I just didn't have a direction. Okay, and when you have a direction and you have a goal, it's much easier to find that passion, the fact because it will be whatever, will drive you towards that goal.
Speaker 2:What type of life do you want to create for yourself and then work backwards from there? I love that. That is that's like an area that I find myself struggling right now and I keep saying I haven't found that passion, that thing that wakes me up and drives me every single day. But it is almost create that life for yourself in your head and then work backwards. What's gonna be able to create that for you? All right, mike, last question that I've got for you what is one question that you wish I would have asked, or a topic that you wish I would have covered, and how would you have answered that question or how would you have expanded on that topic?
Speaker 1:Yeah, that's a good question. I felt like we were pretty thorough, especially this is our second time around, as we've covered all the bases. At this point, I think one of the good questions that you could have asked would have been how, what my background was to get into what I was doing, because this is always something I like to emphasize. For people and you hear other people's interviews do it's always interesting to see how they got to this knowledge base. But I had literally no real estate knowledge background or anything sent when I got into this business. Right Like, I didn't come from a real estate family.
Speaker 1:When I first started in the real estate world, my parents bought the house that I grew up in the 1980s and they still live there. So even the concept of getting a modern mortgage and those sort of things wasn't stuff I'd ever had exposure to, and I guess for me personally, I always think that's a good question to ask, because a lot of people tend to assume that if you've had a real estate base that has scaled that, it's because that came from your history, when for me it didn't. It was all just trial and error, school of YouTube. Even when I was first flipping houses, it was me and my wife watching YouTube videos for, like, how to install a shower, and I'd never done any of that before. We just figured it out.
Speaker 2:So Awesome man, awesome dude. I think these conversations have been awesome today and I'm definitely gonna talk to you about some stuff after this podcast. But, mike, where can my listeners and watchers find you online?
Speaker 1:Yeah, if you wanna hear more long form stuff about my businesses. The Collecting Keys podcast is my podcast and we do three episodes there a week. We do interviews with top people, we do a deep dive business show and then we'll do an episode where we answer questions from listeners. So check me out there if you like a long form style. Otherwise, you can follow me on Instagram. I'm at Mike underscore invests. I post a lot of different educational things there. You'll also see some of the insights into my travel and then also, to have a wrench, that in becoming one of our partners, you should shoot me a message on Instagram at Mike underscore invests and I'd love to see if you'd be a good candidate for it.
Speaker 2:Love it, man. Reach out to Mike if you are interested in partnering and check him out on all those different platforms. Mike, I've had such a good time talking to you for the second time around. Brother, and from the Financial Freedom Fast podcast, I'm your host, matt Ammobile. Today we had on Mike DeHaan and we are signing off. Thanks, mike, awesome. Thanks, matt.
Speaker 3:Thanks for listening to the. Financial Freedom Fast podcast, the show that teaches you to buy back your time and live life on your terms. Be sure to subscribe to this podcast wherever you're listening, and follow us online at Matt Ammobile. That's Matt AMA B I L E. Be sure to tune in Monday, wednesday and Friday for our weekly podcast drops. Thanks for listening. Let's retire together. Lel致�ulu.