Investor Cheat Code Podcast with Mike Simmons

Today's guest is a successful wholesaler in my local Michigan market who I've actually done business with: Steve Londeau.

I've recently started wholesaling myself, and I really look up to Steve. I think a lot of him and how he runs his business, and I'm excited to bring him on the show to help me and you with wholesaling.

Steve started in real estate in 2006. He had been working at a title insurance company since the mid 90's, and wanted to eventually invest in real estate. He met an investor who did short sales in 2006, who helped introduce him to the business. Throughout the next few years he did short sales here and there until the market meltdown in 2009. He spent 2009 to 2011 exclusively doing short sales in a way that he describes as cutting edge. After that, he went into wholesaling because he found it quick and simple, though not exactly easy. Steve has been wholesaling full-time for about one year now.

If you're not familiar with the basic principles of wholesaling, Steve and I go over the basics in the full episode. A wholesaler finds a motivated seller, signs a contract, finds a buyer, and assigns that contract to the buyer for a fee.

Steve started wholesaling because he really needed money and he needed it fast. He found a house in Detroit using a service called zbuyer and wholesaled it for $2,500, which made him realize that wholesaling, and even wholesaling in Detroit, was possible. While zbuyer isn't free and the leads aren't always great, it's a good place to start if you don't have any connections or experience yet.Direct mail is another way to attract motivated sellers, though it might take a little longer. Steve gives his recommendations for finding target lists to market to in the interview. He personally focuses on targeting absentee home owners and uses both yellow letters and postcards. He finds that there are a few differences between the two, which he goes over in more detail.

Steve obviously has some great systems in place and uses some reliable services in his business; he talks us through them, how he found them, and how he grew to trust them in the interview.

Steve also goes over his very specific technique for talking to sellers to get the best deal possible by asking the right questions the right way and figuring out their motivation. These negotiating tools are essential!

Finally, Steve talks about what happens when, as a wholesaler, you make a mistake and get stuck with a house. It doesn't happen often, but you have to be prepared for it and know how to handle it when it happens. The best advice is to know that, if you have a deal, you will find a buyer. Just get the property in front of as many eyes as you can. Eventually, you will know exactly who to call first to sell each property. On that note, Steve underlines the value of local REA meetings for networking with other investors, especially for a wholesaler, and how to approach them with a desire to help in their business and bring something to the table.

I've set up the wholesaling arm of my business to emulate Steve's process because I really admire his work, so I hope you found this interview very useful. If you have any questions or want to do business with Steve, feel free to email him at [email protected] or contact him on Facebook.

Over the course of this week, I will be taking you through every part of the wholesaling process in more detail. Don't miss it!

Today I want to talk about my philosophy when it comes to approaching a huge challenge in my business, and I suggest that you use the same philosophy.

I know a lot of you are either new real estate investors or haven't started yet. So for you, the challenge is to start your business! There are a lot of steps for you to complete to really get your business going, and you will definitely have a lot of questions and concerns along the way. There are a lot of potential challenges. So how should you approach them?

Break them up into smaller pieces. For example, if you're just starting out, don't worry  about selling or rehabbing right now. Focus on the first step: finding your first deal. And then break that challenge up into even smaller pieces. Start with finding a realtor or going on Craigslist.

When you're faced with a daunting process or challenge, break it down into smaller pieces, and then attack one piece at a time.

Today we're going to talk about having a positive mindset. It can be tough to be positive in business; you're going to have setbacks and challenges along the way. I'm not going to tell you that you're never going to be upset in this business. It takes a lot of perseverance and drive. It takes someone who really wants to do better for themselves.

Especially in the beginning, it will be hard to stay positive because you might keep getting knocked down. But if you wallow in the negatives, you'll have negative experiences. You have to be able to smile and grin through things and accept that they're not always going to go right.

There's a saying by Henry Ford:

Whether you think you can do something or you think you can't do it, you're right.

So if you think to yourself that you're never going to find a deal or a private investor, you probably never will. It's a self-fulfilling prophecy.

I'm not generally an affirmations guy. I don't think that you can just tell yourself that things are great. But I do think that you're never going to get ahead by pouting. It's fine to get upset about something, as long as you can knock the dust off and get back out there. Realize that it's going to go better next time because you learned from your mistake and you're going to adjust and evaluate your methods so that it doesn't happen again. Over time, you'll know how to avoid most mistakes.

You really want to have a short memory in this business; if something goes wrong, don't wallow in it. You have to move on to the next thing and the next deal.

Today I want to continue the conversation on failure. What happens when you do fail? What if at first you don't succeed?

I'm going to keep this focused on real estate, but it really applies to anything in life. If you don't continue trying, you'll never succeed. Very few people are successful right off the bat.

Think back to the first time you tried to ride a bike. You fell! But you didn't stop there; you got back on that bike and tried again. As a kid, there's no ego involved in failure. You weren't embarrassed that you failed, and you got back up there because you really wanted to ride a bike!

This podcast and many podcasts like it basically give you the bicycle. All we're saying is sit on it and pedal. If you don't succeed right out of the gate, you're perfectly normal. Try again.

Now, failing in real estate should not mean losing thousands of dollars. I lost money on my first deal. I failed. I could have stopped there and never done it again, but I got back out there and made good money on my second deal!

So if you don't succeed on your first deal, you're in good company. I know tons of very successful investors who lost money on their first deal, but they learned from it and kept going. Get those first little failures out of the way quickly so you can move on to success.

Today we're going to talk about a big problem for those of you who are just starting out. I know a lot of the listeners of this podcast have already learned a lot about real estate, but haven't actually started investing. For many of you, the reason for that is fear of failure. Even if it's subconscious, I believe that fear of failure is keeping you back. It kept me back too. We've talked about "yeahbut-ers" in the past. They're always going to find a reason not to start. And honestly, most people will tell you you're going to fail and they're going to put that fear into you. So here's what you need to think about:

What's worse than failure?

What's worse than trying and failing? If you say there's nothing worse, then I don't think your motivation to be successful is great enough. If your motivation is great, then the only thing worse than the fear of failure is the fear of never trying; the fear of  keeping your life exactly the way it is. If you're unhappy with your current situation in terms of career and money and you're motivated to change things, the fear of never trying should be greater than the fear of failure.

So what's worse than failure? Staying in your current situation: unhappy but familiar and comfortable.

Allow yourself to think about and experience what makes you unhappy, and let that motivate you to start your real estate investing career. Get started, and if you need help don't hesitate to contact me. I will gladly either coach you one-on-one or point you in the right direction.

Today I interview Michael Smith, a residential mortgage loan officer and real estate investor in Central Florida. He began investing as a house flipper and landlord after graduating from UCF with a degree in finance as a way to secure and expedite his future retirement. His goal is to scale a business that will give him and his family financial freedom. Michael is a new investor and he's not doing this full-time, but he's had great success so far. I think you'll find his story very inspiring and relatable!

Michael describes having the entrepreneurial bug as a kid, and he decided to go to school for finance after reading The Total Money Makeover by Dave Ramsay. He initially was interested in personal finance and financial planning, but while in school he took a class on real estate investment analysis and that got him so passionate and excited about real estate. His professor was an active investor himself, and that was an inspiration to Michael.

When Michael was still in school in 2011, he bought his home for about the third of the price it had originally sold for. This was a great deal, and it encouraged him to get into real estate. After graduating from college in 2012 he started doing more thorough research and found sources of information like Bigger Pockets. Last year, he decided to take the plunge and buy a rental property. When choosing a property, it was important to him to be able to sell it easily if need be in the future. In the interview, he goes over the details and numbers of that rental and how he went about it with a focus on future cash flow. Michael also talks about his first setbacks and mistakes, which are very important to learn from.

So after buying his primary home, Michael spent about two years reading and researching before he set up an LLC and bought his first rental property using a private money lender. He found his private money lender through his financial planning job; having someone trust him enough to lend him money is really impressive given how new he was in the business. He ended up using the same private money partner on his first flip as well. Make sure to listen to the full interview to find out exactly how Michael structured the finances for his rental and his flip, and the important differences between funding the two.

Michael is very happy with his rental and his tenant. (He recommends the Bigger Pockets Guide to Tenant Screening.) His long-term goal is to eventually own 100 units. He started looking into flips as a way to fund down-payments for rentals, but he's had such a positive experience that he's now thinking of focusing on house-flipping. He also talks us through the details and numbers of his first flip in the interview.

Recently, Michael transitioned from finance planning to a job as a residential mortgage loan officer; that way he can stay within the industry and make important connections. This new job also gives him a lot of flexibility, which allows him to catapult his real estate investing a lot faster. It really is a perfect marriage of career and real estate investment business!

Finally, Michael gave the listeners of Just Start Real Estate some words of advice on getting started:

Learn from other people's mistakes. Read books, listen to podcasts, do your research, and figure out what strategies work or don't.

Don't be afraid to make your own mistakes.

Be conservative. Learn how to evaluate a deal and do the math. Run your numbers by someone and get a second opinion if you're not 100% sure.

Take action. Make something happen.

Since yesterday I gave you a little bit of tough love, today I want to talk about celebrating success.

And by that, I don't mean celebrating the big accomplishments, the huge sales--most people have a very easy time celebrating those moments. I'm talking about not waiting for the humongous success, but celebrating every small success along the way. Maybe you got your first deal under contract, hired your first contractor, overcame an obstacle or fear, or found a great mentor or resource. Celebrate that! You haven't made any money yet, but it's worth celebrating.

Whatever the case may be, celebrate the little things so that you don't get discouraged and you don't feel like the good things only come along a few times a year. Really take time out to make sure that you're enjoying the process. And I don't mean you need to splurge on something big, but you should reward yourself with something meaningful to you. You're going to enjoy this business and you're going to do much better if you're not just focused on drive and money.

Don't make it all about money. Find little meaningful ways to reflect on the good things you've done so far.

Today we're going to talk about feeling overwhelmed and what to do when you are feeling overwhelmed in the business. And let me tell you, if you're in this business and you're not overwhelmed, you're not trying hard enough!

Most real estate investors, or at least those who flip more than one or two houses a year, feel overwhelmed. And even if you're only flipping one house a year, you're going to feel overwhelmed when you're taking big steps in the process.

I'm not here just to teach you how to do real estate--you need more than that. I want to help you break through certain big psychological barriers as well.

When you're overwhelmed in this business, it usually has to do with poor planning. I make this mistake too; I sometimes don't make the best plans and don't lay the groundwork the way I should to avoid stress. A lot of times the stress can be avoided or minimized significantly if you plan accordingly. For example, don't get three houses under contract simultaneously! You should always have a plan for the funds you might need.

Even if you're planned pretty well, you can often be caught by surprise. You should not allow things to surprise you if they've happened in the past. Plan for things not to go well, and have contingencies and back-ups.

Look at the important people in your business the way a football time looks at its quarterback--they always have more than one quarterbacks in case something goes wrong. For example, you should always have back-up contractors that can jump up if necessary. Otherwise you might end up scrambling and that creates stress.

Investors who have good systems in place, plan ahead, and try to forecast what might go wrong are less overwhelmed than those who don't.

Today we're going to talk about systems. Like I said yesterday, if you want to be a full-time real estate investor, hiring someone to help you in your business is going to be one of the most important things that you can do. So the next step is training them and telling them what to do. How do you do that? You need to create systems.

Creating systems is just looking at what you do to buy a house, to hire a contractor, to set everything in motion, what paperwork is required. Creating systems requires that you've done the business yourself first. You don't have to be an expert, but you need to have gone through each process. Every time you have to do something, document it. What did you do and how did you do it? Write all these things down on day one, and as you're writing them down, you're basically developing your systems. What you'll end up having at the end of your first couple of projects is a rough outline of your system, and as you do more deals, your system will get better and more refined.

When you hire someone, you can just hand them those notes and assign them a part of the playbook that they will be working on for you. Your system will take anyone you hire into your business from A to Z.

And if you hire virtual assistants, you can do voice recordings or screen captures showing them how to do certain things on the computer the way you do them. They can learn from those recordings and follow your systems.

Your systems will create themselves as you go; you just have to document them and edit them. You want to be able to hand off a system to somebody in part or in whole and they can follow that.

Today I want to talk about something that has really made a difference in my business in the past year or so, and I waited way too long to do it. I think that every real estate investor, from the new to the experienced, should think about when to hire help in their business.

For a long time, my business was a one-family show. My wife and I did everything, and I thought that I couldn't hire somebody to help me unless I was making crazy money. I couldn't understand why to hire someone to do something I can do on my own. Technically, I could do everything on my own, but if I do that, I am going to be very limited. One person can only do so much. If you don't have anyone helping you, you're going to be working in your business rather than on your business.

This isn't intended to be a long, detailed discussion about the topic, but I want to make you think about when is a good time to hire somebody. Do you wait until you're flipping many houses a month, or even if you're just flipping one house every three or four months.

The easy and quick answer is: it depends. It depends on what your goals are. If you want to ramp up your business in some way, I think you need to hire someone sooner rather than later. I'm still guilty of doing things that I should not be doing instead of hiring someone to help me or just assigning tasks to the people who already work for me. But if you want to ramp up your business, or if you still have a full-time job, you absolutely need someone to have someone working for you when you can't.

Of course, there are high-level things that you should be doing yourself; you have to steer the boat. But if you're constantly driving around to meet contractors or writing up contracts and agreements, you're going to be severely limited in what you can get done in the course of a week, or a month, or a year.

Usually, you'll find that the money you spend leveraging somebody else's time, energy, and skill-set is going to come back to you ten-fold. I would suggest hiring someone who has skills that complement yours, so they can take care of things that you're not good at, or just keep putting off because you don't like doing them.

When do you do it? If your goal is to flip one or two houses a year, maybe you don't need to hire someone. But if you want to ramp this into a full-time business and want to have time to work on your business, hire people and train them sooner rather than later. It could even just be a virtual assistant who helps you with paperwork. Take that step, make that leap of faith, and I think you will see your business grow as a result.