How To Make Big Profits Wholesaling Real Estate – Interview with Cory Boatright
(Click The Video Below To Play)
How to Make Big Profits Wholesaling Real Estate
In this episode of Founders Club, Oliver talks to Cory Boatright about how to make big profits wholesaling real estate.
Cory Boatright is the founder of Real Estate Investing Profits and Phenomenal Results Coaching, serving as a mentor for high achieving entrepreneurs and their teams.
He is an expert in the realm of wholesaling, completing more than 100 deals in 2018. Cory has played a massive role in buying and selling over $75 in real estate and completing over 1000 transactions.
On this episode of Founders Club, Cory Joins Oliver to explain how he earns big profits by way of wholesaling real estate. He discusses the fundamentals of the process, sharing some of the reasons why a homeowner might be motivated to sell and how he serves as a solutions provider who can take their pain away. Cory describes how he finds deals, how he relates to sellers, and how his team gets paid at closing.
Listen in for insight around a few of Cory’s biggest wins to date and learn his proven system for wholesaling real estate.
—
Here is how the interview breaks down:
[1:29] Cory’s ability to hunt and capitalize on great deals
[4:49] The fundamentals of wholesaling
[9:36] Why a homeowner may need to sell quickly
[14:55] How Cory finds deals
[17:12] The approach Cory uses with motivated sellers
[20:44] How Cory determines an offer price
[23:44] Cory’s insight on contracting a property
[26:03] The role of the title rep in the wholesaling process
[28:04] How to proceed if the seller won’t accept your offer
[30:21] How the double closing works in a wholesale deal
[33:17] Cory’s biggest wholesaling wins to date
[42:08] How Cory’s team gets paid at closing
[44:11] Cory’s take on the benefits of investing in multifamily
—
Listen Here:
—
How To Make Big Profits Wholesaling Real Estate (Founders Club Ft. Cody Boatright)
Full Transcript:
Oliver: Hey, it’s all Oliver and welcome to another episode of ‘In the know.’ I’m very excited to be at the Ritz Carlton out here in Orange County in Laguna Niguel and very excited to be talking to Cory Boatright today about how to do wholesale real estate deals. We’re going to be talking about how he makes 12 grand per deal creating equity out of thin air and the real no money real estate investing strategies that he uses to win big in this market. Looking forward to getting started.
Cory Boatright: I love how my skin feels out here in freaking Carly is amazing.
Oliver: It’s that county skin.
Cory Boatright: When I go to Vegas though, God, my lips get chapped all the time.
Oliver: Vegas is worse.
Cory Boatright: So bad.
Oliver: You need like a can of lotion and a bottle of chapstick for real. Very excited to be out here today at the Ritz Carlton in beautiful Laguna Beach talking to a longtime friend, mentor, business boss, the world famous Cory Boatright.
Cory Boatright: What’s up brother?
Oliver: I’m really excited to talk to him because he’s doing a lot of exciting things in the investment space with wholesaling. He’s done over a hundred wholesale deals this year already and over a thousand transactions lifetime. He’s going to go through kind of the art of wholesaling and how you can leverage it to do more deals, get in front of people, get in the door first, different scenarios like that. Before we get too far into the interview, let’s talk about what we’re sipping on today.
Cory Boatright: Absolutely.
Oliver: When I was at the bar ordering drinks, I asked Cory what he wanted and he said, I don’t know, I want the pink one that Sam was drinking. I ordered him and the pink one that Sam was drinking, which is a gin gin mule.
Cory Boatright: That’s fantastic.
Oliver: I’m enjoying the IPA from Green Flash brewery in San Diego. Cheers to that, we can kick this thing off.
Cory Boatright: Cheers.
Oliver: Got the old trusty yellow pad here and a list of questions. Before I jump into those, you told me a funny story the other day and I just wanted to touch on it. You told me that you sold 10,000 Ginsu knives on the Internet per month.
Cory Boatright: Per month. Yup.
Oliver: Before you got into real estate investing.
Cory Boatright: That’s right.
Oliver: Tell me about that ’cause that I’m sure is a good entrepreneurial story.
Cory Boatright: On Ebay I was looking at things to sell and I noticed that this guy was selling Ginsu knives. He was selling them for like 10 bucks for a pack of them. Well, if you’ve ever bought Ginsu knives and you know that those things aren’t worth no $10. I was like, I know he’s been buying those things cheaper. I found out where a wholesaler was basically where you could buy them. I ended up getting a great deal on them and so I basically used marketing techniques and I ended up listing a Ginsu knife for one cent but charging $7.99 for shipping.
Oliver: The old self liquidating.
Cory Boatright: The old self liquidating. It was what’s called a Dutch auction I think, what was something like that back then. It blew up like I’m talking about we had four or 500 orders in a day, started coming through and then it just started blowing up more and more and we started selling more Ginsu knives. Then other guys that were buying them and even stocking them. But we started selling more, so those guys started buying from us actually. Then I started stocking them into my garage.
Cory Boatright: It got to a place I think where I was buying Ginsu knives for fifty cents and I was selling them to the guys for a dollar. Then I was denied shipping and handling on that too. We had wholesalers basically or re sellers buying from us even though we were basically a glorified re seller. It was funny, man. I had my house rented out, my couch was rented out, my chair was rented out by just like roommates. In the morning we would take a FedEx package of Ginsu knives orders and drop them off. Then in the afternoon we did the same thing and it was just freaking selling tons of Ginsu knives every single month.
Oliver: How old were you at this point?
Cory Boatright: I was in my 20s. I’m 42 now, so I was in my 20s.
Oliver: I think there’s something interesting there actually and as you said it, it just popped into my head. The thought of like that almost is wholesaling. It’s about finding that great deal and being able to hunt the great deals, which I think is something that you’ve gotten really good at over time, is just being able to find and recognize and then capitalize on those good deals that you come across.
Cory Boatright: At that time I remember seeing there was an opportunity because people were buying Ginsu knives for $10 and then he was charging, I think another $10 for shipping. I knew that there is a ton of room to just crush it and take advantage of the fact that I wasn’t having to keep inventory of them. In the beginning I was just dropped shipping them, and then eventually, once I started drop shipping so many of them, then I actually started taking inventory of it. I felt like I didn’t have anything to lose. I recognized the opportunity to take advantage of that pricing.
Oliver: That’s great. Cory, the king of Ginsu knives Boatright. That’s going to stick now. All right. What is wholesaling? Let’s talk about it.
Cory Boatright: Wholesaling essentially is a lot of folks actually confuse this with fix and flipping. Wholesaling you’re just getting the property, you’re doing absolutely nothing to it. We might change a door, we might mow the yard, might clean the property if it’s really, really bad and that depends. Sometimes we just leave it. The person who’s going to buy it already expect to clean it out. We might not even have to spend that $1,500, a $1,000 to clean it out and we just get it and we turn around and resell it and we don’t fix it at all. We just get a property under contract.
Cory Boatright: For example, we get a property under contract, let’s say we’re in Greater OKC area, so a lot of our deals are under $100,000. Let’s say that somebody has a house that they want to sell for whatever reason they’re motivated to sell and the house is worth $100,000, but they need to sell quickly. They don’t let’s say owe much on it or maybe they don’t owe anything on it and they need $62,000-
Oliver: Cash now.
Cory Boatright: … two weeks from now, let’s say something like that. The fact that we’re able to come in and be a solution to someone that can quickly get rid of their property and essentially, even though they want the money, a lot of these motivated sellers say they want the money, but in reality they want the pain to go away. There is a pain associated with having this property and that’s why they’re calling us and they’re not calling a big block agent for example, because they know that for us, that it’s going to be quick, painless and they can have peace of mind.
Cory Boatright: In their minds, and I think somebody in the mastermind today was talking about this earlier about you have to own. It was a Tristen from lab coat agents. What’s up Tristen, great presentation.
Oliver: Shout out Tristen.
Cory Boatright: You have to own the real estate of the mind. That’s a mic drop in terms of the power of what that can do for you. Because once you understand your target market, what’s your demographic, what Eben Pagan used to say, your customer Avatar. Once you know your customer Avatar so well that you know that they want that pain to go away, then you can be a solutions provider and then you can start focusing on the pain. Once we do that, we set ourselves apart because we want to make the pain go away. We don’t want to go in and say we’re going to go find a buyer and list it. When we leave the property, we want to tell them this is that value.
Cory Boatright: This is what we can pay for the property. We’ll get this thing closed as soon as we possibly can. But I already know that I’m not going to be putting the contract on that property unless I already know that that property is going to be sold. I know my market and most of our transactions are cash transactions. That also helps us get around a lot of lending and red tape there and all that other stuff. There are some other creative things you can do there, but most of our transactions are cash and so it’s very simple. You can put a property under contract for 50 and have someone that says they’re going to pay 65 for it and I do nothing and I can walk away with a $15,000 check.
Oliver: That’s the kind of overall premise is you’re getting it, putting it under contract, have an end buyer already lined up or somewhat lined up to pay a little bit of a premium on it, which is still a discount under retail.
Cory Boatright: Great discount for them.
Oliver: Then that’s where you make the money. You make the spread on that.
Cory Boatright: We make the spread. I explain it like this. There’s A, a B and a C, so A to B. B is always the wholesaler, for example. A is always a homeowner and C is always the cash in buyer. A to B is whatever I’m putting that property under contract for let’s say 50,000 in this example. Then B to C is what the wholesaler is selling the property for that contract for to that new cash buyer for 65. Now I’m getting the $15,000 difference. The cool thing about this is, is because there’s two closings, these folks don’t know what you’re buying the property for. All they care about is what they are buying it, what prices that they agreed to. As long as they feel like they’re getting a good deal-
Oliver: And they do, they get great deals.
Cory Boatright: … they generally aren’t going to care what you got it for.
Oliver: All right. I just want to circle back to something that you just said and it has to do with the way that you’re able to kind of talk to these homeowners is by solving their problems and getting rid of their pain. I’m guessing a lot of these are distressed type sales, but what sort of pain are we talking about here?
Cory Boatright: Perfect. Great question. Most people focus on the price. I want to find out what’s the why, why did they call? They’re usually calling us from a postcard or some paper click or some marketing that they see that we’re buying the property quickly. Why did they call us and then what’s the reason that they need to sell so quickly? Usually we’ll have a question that says, do you need to sell now, in the next 30 days or sometime in the next few months? That’s just giving us basically a hot, a warm and a cold.
Cory Boatright: On the pain, let’s say that somebody needs to move in the next 30 days, they have to move, they have no other choice and they need to sell their property in this time frame too. I’ll start asking them like, what’s going on? The next 30 days you need to move, so let me ask you this question, Oliver, what’s going to happen if you don’t, what’s gonna happen if you don’t sell the house? I’ll shut up and I’ll let them walk into that space-
Oliver: That frame of mind.
Cory Boatright: … that frame of mind. I know once they walk into there, now they’re putting more weight on, it’s going to feel so much more of a relief. A lot of this is psychology. The psychological aspect of it is that they’re thinking more about, like I’m almost trapped. I’m not going to be able to get rid of that property and if I don’t, I want them to feel that. Then at that point I can have a better rapport with them. Does that make sense?
Oliver: Yeah.
Cory Boatright: Anytime you can connect on a level that’s outside of just finances and business and you can connect on a human level and you have them telling you what’s going to happen if you’re not able to get rid of this property in 30 days and you just shut up and listen, they will tell you everything that you need to focus on, making the pain go away.
Oliver: What sort of things are you hearing?
Cory Boatright: One would be, my mom is sick and I need to make sure that I’m at a surgery that she has to go to. If I’m not there, I’m going to have regrets for the rest of my life. I have my job that’s crazy. Trying to get off work is absolutely horrible and then now I got to deal with this house on top of that. How am I going to get rid of this thing in time to go? Or they got a divorce, and so they’re dealing with that and like I have to have it property sold by x date. The judge said I have to have these things done.
Cory Boatright: There’s a probate situation or an inheritance. An inheritance is really one where it’s like, I don’t live in that state and I just really would like to sell the property as quick as possible. I need to get some money to do whatever.
Oliver: X, y and z.
Cory Boatright: X, y, and z and if I can just start to ask them what is going to be the opposite? If this thing that they want to have happen, if it doesn’t happen, and I let them actually tell me what that feels like and what they’re going to do, they’ll tell me everything that I need to know to focus on, to make the pain alleviated. I want to anchor that to doing business with my company today. We’ll make sure that that goes away. When we leave here today, how great is it going to feel Oliver that you know that this part, the house, all this stuff that goes with it, all the stuff in it, all the stuff that you don’t have to clean out, we take it as is.
Cory Boatright: Don’t have to worry about the roof. You don’t have to worry about the AC, it’s done. We signed this agreement. It’s done. You can sleep well at night and go figure out what else you need to take care of. How good a feeling is that going to be to have that albatross off your shoulders.
Oliver: Exactly. Then they get the cash, you guys close quick, I’m sure.
Cory Boatright: Yes. We close as soon as we get clean title.
Oliver: Yeah.
Cory Boatright: Look at this.
Oliver: Right on cue.
Cory Boatright: Right on cue.
Speaker 3: This mike is working perfect and fully charged.
Cory Boatright: Awesome.
Oliver: Great. Okay, cool. It’s really about solving those problems for people and being a solution because the reality is, I’m guessing 99% of real estate transactions aren’t going to fall into that type of scenario. But that 1%, 2%, 3% of the people that need to move now need the cash, need that problem solved. That’s where you come in and that’s where you’re able to make all the math work.
Cory Boatright: Yeah, absolutely. I just look at ourselves as a fast solutions provider.
Oliver: Exactly. How are you finding these deals?
Cory Boatright: We use all kinds of methods or we use a data scientist used to work at Google that gives us all kinds of data points on motivated sellers. We send out anywhere between 40,000 and 50,000 mail pieces every single month. In the Greater OKC area, mail pieces are still working very well for us. We do postcards, we do letters, we also do paper click, we do some specialty niche lists for probate list and we have referral business that comes in. We get it from all angles.
Oliver: What’s the messaging that you’re putting out there?
Cory Boatright: The messaging is essentially is this your house, which is one of our postcards that shows actually a picture of their house from a Google API that pulls in the image of the house that’s a really high converting card for us. Basically it’s saying, “Hey, do you want to sell this property?” If you do, we love to talk with you and we can even give you potentially a cash advance before we close. The reason we put that in there, that’s just a little hook that might be a way that we can help them with moving expenses.
Cory Boatright: If you know a deal is good enough, I’ll be fine with giving you $500 to $1,000. I’ll be fine with it. But just so I can put that on there, it gives them another reason to contact us out of, everybody else.
Oliver: What sort of a response rate are you seeing on the 40,000/ 50,000? Like how many leads does that generate for you?
Cory Boatright: Roughly about 400 to 450 calls will come in and out of that I would say another 25% to 30% of those are people that actually didn’t have a house for sale, but they call because they were upset that we mailed them and they wanted him to let us know about it. Sometimes their calls are just really mean. But we get that and then from there we’ll anywhere from seven to nine deals a month from the ones that actually do have a house for sale. Then we set appointments.
Oliver: When you come across one of these deals or someone raises their hand, what is the approach with them? How are you approaching the homeowner with your solution?
Cory Boatright: Everything for us, we have it ran to an individual that takes calls, that knows a company, and then we go to an answering service that goes through a script. Essentially first question we ask them is, do you have a house for sale? Yes or no? Because we want to get them off the phone as quick as humanly possible if they don’t.
Oliver: If they don’t, yeah sure.
Cory Boatright: If they have something to say, we want them to say it right then and not have to wait later on ’cause that every one of those calls costs us money. Then with one of our people that picks up the phone and actually talks to outside the answering service, they’ll ask all the same questions, they’re answering service does, follow the script. Once those questions are answered, which is typically, where’s the house located? Do you have a mortgage on it? If you do, how much is left on it? Sometimes they tell us, sometimes they don’t. Is it vacant? Is it listed with an agent right now? What do you think the house is worth?
Cory Boatright: Which is a really interesting question because sometimes people think their house is worth more and sometimes they think their house is worth less. Then we also say, “Well, how much do you want to sell it for?” The next question. Then after that it’s like, well, if we just paid you cash and closed quickly, what’s the least that you’re willing to accept? The interesting thing about just asking that question is, you’ll usually see the person drop another five or even $10,000 just from asking the question. Why is that?
Cory Boatright: Because I understand the real estate of the mind. I understand the psychology of what we’re doing is they want to sell quickly and so they just heard if I can sell it as fast as possible, I’m probably going to have to take less even though I didn’t say that. I just said, what is the least that you’re willing to accept if I paid you all cash and closed quickly? Because of that, they build on those answers and then it says, “Hey, when’s the best time that you’d like to have somebody come out? We actually set the appointment from the first call.
Cory Boatright: Whatever the time they say, it’s always fine, that’s great. Then we actually have our acquisition manager will call back and change the time if we need to. But we want to get that micro commitment.
Oliver: Committed, yeah.
Cory Boatright: That’s how we get most of our appointments not canceled.
Oliver: That’s all outsourced that?
Cory Boatright: We have an answering service that answers stuff after six o’clock, which is usually the least amount of calls that come in. Then till six o’clock we have an actual lead manager that handles it.
Oliver: In office?
Cory Boatright: In office.
Oliver: Okay, cool. That’s an interesting point you brought up about the technique of asking what’s the least amount they’ll take because if you watch like the pawn stars and all the pawnbroker shows-
Cory Boatright: Same thing.
Oliver: … where they’re trying to give you instant cash and they’re trying to get the best deal and still give you money. That’s the question they always ask is, what do you think it’s worth? Then what’s the least amount you take for it? To get that instant discount, it’s a simple question away, so it’s great.
Cory Boatright: It’s incredible to see sometimes when the money just their number, when they already said, what did they want for it? It’s just amazing to see that number drop and it 95% of the time does.
Oliver: You didn’t even have to do anything.
Cory Boatright: Have to do anything. Ask question.
Oliver: All right, very cool. Then what about how are you determining your offer price?
Cory Boatright: How am I determining my offer price? We use a couple of different methods. One is WMRP which stands for worth market and then repairs and profit. Worth basically would be like an ARV and then market is what the fix and flipper or what a buyer is typically buying those property for. That might be anywhere from a seventy cents to eighty cents on the dollar depending on where you are. Usually in Oklahoma it’s around seventy cents on the dollar. Let’s say the worth is 100, the ARV is like 70 or the market is 70,000. Then from there we’ll look at repairs. Because we need to make decisions quickly, we often will just find a dollar amount per square footage and so that works pretty well.
Oliver: Bake that into your equation.
Cory Boatright: We bake it into there and it’s actually surprisingly accurate. Off by maybe a few thousand dollars from like if a contractor comes out there ’cause we’ve looked at how much repairs do actually cost and we figured out a dollar per square foot that will be fairly close to at least get a good ballpark.
Oliver: What is that?
Cory Boatright: It’s based on what, it’s called pretty, ugly and scary. Pretty is like pretty house, doesn’t need a lot of repairs at all. Depending on where you are and what the contractor charges, that might be $15, $20 a square foot depending on where you are. Ugly, obviously it’d be higher. That’s usually just like an ugly house may be in a decent area or maybe it definitely needs some paint, maybe some walls fixed and maybe a kitchen whatever. Then scary is like you don’t want to walk in there ’cause you’re afraid the thing is gonna fall in on you or like you’re going to get-
Oliver: Or you need a hazmat suit.
Cory Boatright: Hazmat or you going to get like bed bugs when you walk out. Like you’re actually scared to walk in the house. There you want to put obviously the higher dollar per square foot and but it gives a pretty good actually good range that you can go off of.
Oliver: You’re basically just segmenting into those one of three buckets.
Cory Boatright: One of three men.
Oliver: Pretty, ugly, scary. Then depending on that, that’s how you work your numbers backwards.
Cory Boatright: Yeah. If I’m over, I’d rather be conservative. I’d rather not be too like I want to be if maybe the repairs were only 15,000 and I thought they’re 20, my goal is to basically get the agreement to come out and have the appointment. I can get in front of them, then we can have a lot more body language than just on the phone. If I can get on the phone and we’re there, at the property, then-
Oliver: Belly to belly.
Cory Boatright: … belly to belly. There’s nothing better.
Oliver: That is always the best way. You’re always going to find better deals to be had when you get belly to belly to people because you can feel what they’re saying. They can feel what you’re saying and you can really bring that human element to connect on a deeper lever level and have meaningful conversations around that.
Cory Boatright: Absolutely.
Oliver: Once you’ve kind of determined your number, what’s the next step? How are you contracting these properties?
Cory Boatright: Once we get to a meeting of the minds, there’s like a little gap typically. Someone maybe wants 60,000 for it and we’re at 55 or we’re at 50 and so there’s a gap. Then we just start focusing on the gap, not the dollar amount because the bigger dollar amount sounds bigger, but if I can just say, “You know what Oliver, you’re at 60, I’m at 55 so we have a $5,000 gap.” Obviously I want to make sure that we can get this done for you, but like our cash by criteria, we’re pushing it at 55 right now and I know that you want 60 for it. I want just want to walk you through here, where I’m coming up with these numbers. Then I’ll actually walk them through a scenario of what it cost if they were to list it typically or pay the agents now and then do repairs-
Oliver: Or fees.
Cory Boatright: … the fees.
Oliver: The time.
Cory Boatright: We will walk through that time with them and actually get them to psychologically understand that we’re just not throwing a number out there. Obviously, we’ll have comps that before we go to the property will actually have comps that we pulled that have give us easily the three lowest comps. Then we’ll look at the three highest comps and so that’ll give us a good basis to be able to have a fair discussion with them. Because if a house is 2010, we can’t compare it to their houses 1972. It comes down to having more negotiation tools, but once we actually get to a meeting of mine, we signed the agreement.
Cory Boatright: Then the next thing that we do is we take a picture of that agreement and we send it over to our title company and the title company immediately starts working on it. We already know at that point that we need to, now it’s hot potato, now we need to get the property sold.
Oliver: At that point you’ve met with them, you’ve taken the picture, you sent it to the title rep, is the title rep’s job just basically looking for landmines at that point?
Cory Boatright: Yeah.
Oliver: you’ve already pulled preliminary stuff and figured out loan amounts and things like that.
Cory Boatright: What’s the title company a job is to do, is to make sure they have clean and marketable title to the end buyer. We want to make sure, and I assume that all homeowners are liars. It’s not like their intention is to lie to you most of the time. Sometimes it is, but I just assumed that all homeowners are liars. The reason is, is because we’ve had so many-
Oliver: verify.
Cory Boatright: … they have so many lanes that pop up and it’s the craziest things.
Oliver: Or things that sometimes they’d even forgotten about.
Cory Boatright: They had forgotten about them. We have like a $67,000 auto lien that we got released for a $1,000.
Oliver: Oh wow.
Cory Boatright: Like the person already had a bankruptcy a long time ago and it was already written off and like they weren’t going to get anything and so to get a thousand dollars was huge. Obviously doing short sales back in the day, we had to pay-
Oliver: negotiating game.
Cory Boatright: … ten cents on the dollar, twenty cents on the dollar for a lot of debts and a lot of folks don’t know how to do that. The option to purchase agreement is a wicked cool agreement because it gives us the option to purchase and it tells them that they have to sell to us. We have the option to purchase but they have to sell to us. It’s a really cool agreement and it basically is something that we use whenever we have that gap that we talked about and we can’t get there like they’re stuck on that 60 and we’re stuck at 55 and this we cannot get there, so then we use the option agreement.
Cory Boatright: Then from there that gives us an ability in the verbiage of that option agreement that says that we can market that property on however we see fit and we could put signs in the yard. We can do a lot of things with that property. If they actually give us the right to list it on MLS, [inaudible 00:28:52] which is pretty powerful.
Oliver: That is extremely powerful and I want to talk about that in a second, but let me circle back to just understanding what you just said. You’re saying you’re putting an option on the property.
Cory Boatright: When we cannot get our number for this purchase and sale, then we’d go to the option.
Oliver: Then you go to the options.
Cory Boatright: Basically anytime an acquisition manager goes to a property to meet with them, we want them to work out with a contract no matter what.
Oliver: If you get the number, if they say in the original example that 55, they say, cool, we’ll take it, then you just buy it right there.
Cory Boatright: That’s right. We put a contract on it. They already know it’s sold. There’s no, we didn’t meet. We got our price. Then we’re waiting. We just send it over to title. We’re waiting on clean and marketable title and then we’re going to set a time to close.
Oliver: If they say the other way they say, no, I want 60k, but you think you might still be able to make it work. That’s when you put an option on it.
Cory Boatright: That’s right. Often whenever we do that, the funny thing is, is that I think about one to two deals, maybe more every three months, every quarter, the ones that we put options on, actually end up agreeing because they know that we’ve either talked to other people, we put them on a drip schedule. It’s like, we’re gonna follow up with you in two weeks, see how things go. I can come back and say, “Oliver, I have talked to every one of our buyers, our number is still at 50 and your number is at 60, but I mean I might be able to push it to 52. Something like that.
Cory Boatright: Often we’ll get them to go ahead and give us the price for that 52 or whatever it is because they know that we’ve earnestly went out there, marketed it, they haven’t had time to do anything like that. Then we’ve also got their commitment. They already signed an agreement with us, so we make it real easy that we can just exercise our option and we’ll do an addendum at new price, whatever that is and then we’re off to the
Oliver: Then the option, are you putting money down in that scenario?
Cory Boatright: No we don’t. Well, $10 is what you can have.
Oliver: $10?
Cory Boatright: At the title company you can have a check.
Oliver: That’s only because something has to be given?
Cory Boatright: Yeah, love and affection is really what an earnest is, but we still put a dollar amount. Just in case, but we don’t have any issues with that.
Oliver: Makes sense. That’s probably the safer way to do it anyways. Okay. Cool. Now I want to talk about the other side, which is the disposition. Once you’ve gotten it, you’ve got your end buyer lined up, you know that they’re willing to pay, let’s say, I don’t know, 75 or whatever. Walk me through that. How does that work? How does the closing?
Cory Boatright: We get the buyer. When we talk to the buyer, we’re never assigning our contract. Like I’ll just assign a contract. A lot of people say assign it. Well, when you assign the contract, you’re essentially telling that end buyer that you’re buying it for less. Compared to just negotiating on a price of what they’re willing to pay for the property. In this case, if we buy it for 50 and we’re negotiating it at, let’s say we started at 69.5 and the most they’re willing to give us the 65. Then we just never talk about an assignment or anything like that.
Oliver: Got it.
Cory Boatright: Often, they can care less anyway if we’re going to double close a transaction or not most of the time. We just get a contract for them. Now, our contract with them, we want them to put down a nice strong earnest money. That’s usually a 1,000 and if it’s got a lot of demand on that property, it may be $2,500 just to lock it up.
Oliver: To lock it up.
Cory Boatright: We let them know, listen, this money is non-refundable. If so, you need to make sure you go and look at the property. Before you put in your contract, you need to understand we have a lot of interest on this, whatever number you’re putting in, your earnest is if you bail-
Oliver: You lose it.
Cory Boatright: … you’re going to lose it. They know that. Not that we purposely want to take that earnest, but we also don’t want to miss out on other people that came in that we could have got and we had tied up for a week.
Oliver: As far as the double close or the concurrent close, which is kind of a taboo subject in real estate. It sounds like in Oklahoma, that’s business as usual, dry State.
Cory Boatright: Dry state.
Oliver: Tell me a little bit about how that works, how you do both the closings back to back like that.
Cory Boatright: We’ll line up a closing at 10:00 AM and the other closing at 11:00 AM for example, and we’ll come in and basically it really has everything to do with the title agent, how she sets them up. But at the end of the day, they already have our contract to purchase, so we usually have the buyer actually come in, first cash buyer, they’ll close on that and then we’ll have the seller come in and then they’ll sign on their paperwork and they take care of everything else in terms of the HUD.
Oliver: The c buyer puts their 75 in-
Cory Boatright: Escrow or whatever it is.
Oliver: … take your cut or you pay out-
Cory Boatright: They take the 50.
Oliver: … you pay out seller a.
Cory Boatright: Yeah, the 50.
Oliver: The 55 or whatever it is, and that spread is left in the account and that goes to you.
Cory Boatright: That’s right.
Oliver: What sort of profit are you looking for on deals like this or what’s your average profit on a deal like this?
Cory Boatright: Our average to date is around 12,001, 12,077, I believe right around there. We were at like 10 something, 10 like seven or eight, nine last year. Last year was our best year. This year, 2018 has been our best year. We’ll probably get very close to 112 deals this year, which will be awesome. I think last year we did like 103, which is awesome. These aren’t like huge transactions, but for example, some of these you can get these big wins. I’ll give you an example of a big win.
Cory Boatright: A big one is we found a property that somebody wanted to sell very, very quickly. They had their own reasons, I forgot what it was, but it had something to do with they needed money to move and help a family member and they’re kind of weird strange people and I didn’t really want to ask anymore. Like I don’t know anything else. They needed basically $11,000 and the property was worth $90,000. This property was actually in an area that was upcoming and being gentrified and all this. We ended up getting this property for $11,000. We sold it, I want to say for like 69 or $70,000.
Cory Boatright: Think about, that’s a for us in Oklahoma that was a big-
Oliver: That’s like a grand slam.
Cory Boatright: It’s a big hit.
Oliver: In all reality, like even making $12,000 profit on a deal where the retail price is 75,000, that’s really good impressive numbers.
Cory Boatright: Oh yeah. Wholesaling, I work with the students and one of the things that people asked me to say, should Lease options, should I do fix and flips? You can do anything you want to do, but wholesaling is the least risky thing in my opinion that you can do as long as you know how to do it correctly. You’re not shady about it. Someone actually walks you through and how to do it correctly and you know that you’re not going to be caught with a property. In other words, you tell somebody you’re going to pay x amount for it and for whatever reason, you can’t find this buyer. You need to make sure you can actually pay for that property.
Cory Boatright: Sometimes that holds people back, but the numbers that you’re putting, typically people will sell these things at a discount that’s anywhere from 40 to 60 cents on the dollar. For the one that we looked at, that big hit was, probably is worth 90 we bought it for 11. What is that like? 15 cents on the dollar? Every once in a while you’re going to have these-
Oliver: It’s unbelievable.
Cory Boatright: … big hits and-
Oliver: That’s a grand slam
Cory Boatright: It’s a grand slam and there’s ways that we can actually focus in and double down on how can we find what made that deal special. Most of the time people go, I’ll just go with the next deal. Like I’m really big on-
Oliver: How did that happen and how do we do it again?
Cory Boatright: I’m really big on like I want to duplicate the success. How did that deal happen? What are the factors involved with that deal and was it just a one time thing or is it something that’ll be a duplicate? That’s when we look at these data points and the poly gone marketing method and all those things. That is exciting.
Oliver: Is that the biggest one you ever did?
Cory Boatright: No. We’ve done some bigger than that.
Oliver: What’s the biggest one?
Cory Boatright: I think the biggest one, well a wholesale department complex. We made over $300,000 on that. That was a big wholesale. But it was on a multi-family deal. On a single family, I believe it was a short sale I did back in like 2010 or 2011 and I want to say I made like $160,000 and it was a short sale deal.
Oliver: Wow, what sales price on that?
Cory Boatright: I believe it was around 600,000. It was a really, really big home run. There was three lanes on it. It was, the deal where you had to negotiate ten cents on the dollar and I think took fifty cents on the dollar so it created a lot of equity, but it was in a great area.
Oliver: Looked like there was a lot of liens there. But you went above and beyond to not just pay them off but negotiated discount on each one of those.
Cory Boatright: Yeah. People get, so they see a property or they see something that has these liens on it and they think, oh, there’s liens on it so there’s no equity. That is like the kiss of death in terms of what you could do to your profits if you’re going to get into short sales. I don’t really do many short sales now, although I think that maybe short sales 2.0 might be coming back. But I’ve done a lot of them. I mean a lot of sort cells. But it got kind of squirrely and harder to do the deals. But I do think that the process of learning how to do those short sales and negotiating on liens really helps even now.
Cory Boatright: Because when you get anything on title, I know a lot of things will be released off of it. For example, I know that if there is something that has to do with DHS or there’s something that has to do with a tax lien or whatever, it may not be associated with the property. It may be associated with the owner. The owner, that means they can still sell the property and-
Oliver: It moves with them.
Cory Boatright: It moves with them. There’s also ways that you can talk with the owner that if they’re found to be in a situation where they can’t pay their bills, they may actually be able to apply with their CPA or the tax guy and get a write off from the government that they won’t even owe those things. Just by working with us and letting us tell them some of those things that they might consider, we’re not CPAs, we’re not those professionals, but at least they can go consider it. Then that can be just another benefit for them.
Oliver: I think that’s a hugely important lesson overall, even for real estate agents, like if you have a seller that has two or three mechanics liens or different things like that on there, and may not think that they have equity. Imagine what a hero you would be if you took that deal, negotiated their $60,000 lien down to a 1,000 bucks and all of a sudden you’ve made them a ton of extra money or in your case, that’s work that you do to increase your profits. I think that’s a huge takeaway because all of those things are negotiable and if you just reach out and to your point, a lot of those people have forgotten about it long ago.
Oliver: Never thought they were going to get paid. If it goes to foreclosure, they’ll get nothing. Oftentimes they’re willing to take a lot less than the amount that’s actually owed and that’s a win-win for everybody.
Cory Boatright: Absolutely is. On deals in California, are there are a lot of liens like pop up?
Oliver: Yeah. Mechanic’s liens, tax liens, all sorts of stuff pops up there.
Cory Boatright: All stuff.
Oliver: It’s all negotiable.
Cory Boatright: All negotiable.
Oliver: You can reach out directly to those people and say, “Hey, I’m representing this sale and we want to get you paid.” That’s the magic words. We want to get you paid, but there’s not enough there to get you paid this. Would you be willing to take this? In that scenario everybody wins because they’re getting cash in which case they would get nothing. The homeowner is getting a discount or the investor is getting a discount and everybody’s winning.
Cory Boatright: Yeah, absolutely. It’s a great way I would think ’cause obviously in San Diego, California you’re meeting houses $500,000, $600,000 or whatever and in Oklahoma is like 120 or 30, so three or four times difference. But that would be even more significant. If someone really learned an agent really understood the power of negotiating second liens. Negotiating anything that’s an encumbrance on the title, and I’m talking about working with attorneys. The best way to negotiate an attorney’s lien is hiring your attorney to negotiate for the attorneys lien.
Cory Boatright: You don’t go in and negotiate with the attorney. They speak legally.
Oliver: Exactly.
Cory Boatright: It’s like golfers golf and musicians being a music. There’s an understanding that is harder for you.
Oliver: And a professional respect.
Cory Boatright: Professional respect.
Oliver: Professional courtesy [inaudible 00:42:32].
Cory Boatright: I think there’s a big opportunity for agents to potentially learn about that negotiating aspect because they may not to have that property sell because all of a sudden this lien pops up, but if they have someone that there’s the go to and maybe they give that person a piece for helping
Oliver: Of course, why not.
Cory Boatright: Then a little bit of something is better than a whole lot of nothing.
Oliver: I like that. Then so how are you getting paid as the wholesaler?
Cory Boatright: We get paid at closing. Then from there, we distribute from guys on our team. It’s right at closing. We get wires, and this happens very, very quickly.
Oliver: Then everybody gets their cut.
Cory Boatright: Everybody gets their cut.
Cory Boatright: Most of these deals are all cash. It’s a really simple transaction and we pay, acquisition managers different percentages and we pay our sales guys a different percentage. Then we have a cut for how we’re working with our partners. But at the end of the day it just comes down to the net wire. We call the net wire and then we distribute from there. Right now that number is like says around 12.01 and we spend like on our marketing. I don’t know if that’s something that’s interesting to you. On our marketing we were spending right now probably in the neighborhood of 20,000 to 25,000 a month. Not a whole lot of marketing.
Oliver: Have you figured out what that is per deal?
Cory Boatright: Yes.
Oliver: Like how much marketing dollars per deal are you spending?
Cory Boatright: Yeah, man.
Oliver: What is that number.
Cory Boatright: It’s actually shocking.
Oliver: I see you smiling so it’s got to be good.
Cory Boatright: It’s what’s shocking. When you actually look at a cost per deal, it can be anywhere from like 2,800 to $3,200 cost per deal. But you can also look at each one of these marketing mediums, like paper click is different. The cost per deal for paper click is much different than for example, a postcard. Or if you’re tapping into a niche list where your mailers were small, then your profit can be just exorbitant. The numbers can be pretty exciting for sure.
Oliver: That’s very exciting. I’m very excited for you. I think you’ve really got that figured out, which is very cool. It’s kind of a niche within a niche and I think that you’ve done a great job kind of inserting yourself into it, learning the game, learning how to do it the right way. Then, like you said, getting better and better at it to where the number of deals you’re doing is going up, the amount of profit per deal is going up. Yep. Kudos to you. What is one thing that you wish you knew when you started or what’s one thing looking back that man, if I would’ve just known this, it would’ve made such a difference earlier on.
Cory Boatright: Beyond a shadow of doubt, buying multifamily apartments. If I would have known more about buying multifamily apartments, we just took down a 128 units. I’m raising money for another 294 unit. We’re looking at other ones now. I just believe especially, during 2005 and ’06 and I just believe I would have thousands and thousands of units. Investors watching this right now or even the agents watching this right now, learn multifamily, learn about multifamily apartments, learn about NOI, learn about gross rents, learn about forced appreciation, learn all of these cost segregation, learn about all of these benefits that come from multifamily investing because that is legacy stuff.
Cory Boatright: The wholesaling thing is, every month it starts over essentially. That’s good cash now. It’s cash now. There’s really not a lot of risk really. I don’t have to go out and get a mortgage on the property. Not a lot of risks or cash transactions and pretty, profitable. The way that we have it set up right now pretty automated too. I’m a big fan of automation tools and things, so I’m not spending a whole lot of time having to manage a big arbitross of things. Wholesaling is a really small business and you can blow it up as big as you want, but you don’t have to have a huge payroll.
Cory Boatright: A lot of people are being paid on commission. A lot of them are on 10.99 depending on how you set it up. If you have set up the employees, okay. But so you have this opportunity. Well, with multifamily apartments, it’s this passive income that comes in essentially forever and depending on how you structure it and if you get into it where it’s cash flowing in the beginning and you get into it where it’s non recourse debt, meaning that if there’s some reason that the property didn’t perform for too long, it went into foreclosure, that they’re not going to go after you personally.
Cory Boatright: You didn’t personally sign, you didn’t personally guarantee it. You have a non recourse debt, so they take the asset back. You’ve heard of asset based lending. Essentially it’s at 60 units and above typically, there’s a asset based lending aspect of that that is non-recourse.
Oliver: You’re not personally on the hook for it.
Cory Boatright: You’re not personally on the hook. That’s super exciting too, not that you want to, but things happen or whatever.
Oliver: It’s just inner peace.
Cory Boatright: Peace of mind, sleep at night. Then we’ll just by raising rents, Oliver, and you know this ’cause you have some multifamily apartments just by raising rents $10, no one’s going to move out. If I raise the rents for $10, I gotta be more of a hassle to move out, but what that does on like a hundred units by raising rents by $10, now my extra money that’s coming in is like over $12,000 a year. Then that adds another value to the apartments.
Oliver: Increases.
Cory Boatright: Which the no then goes up. The cool thing about multifamily apartments, it’s not what Lance, I can’t think of his last name, but there’s another multifamily investor basically says feel estate in real estate. Feel a state is where I am, single family homes it’s feel estate. You walk in the kitchen that feels kind of strange, you walk through the bedroom. I don’t know, the layout feels kind of strange. You walk into a bathroom, the bathroom feels weird. Your feel estate. But with multifamily apartments, it’s real estate. It’s how many units, what’s the T12, what’s the rent roll? What are the financials?
Cory Boatright: Then you can find out your values. It’s exciting to me to see the learn more about that. Then you can not only get these great deals that pay passively for potentially ever, ’cause you can defer to, you can do 10.31s into another multifamily apartment complex. You can have all kinds of incredible tax benefits, which all of us have a partner, which is Uncle Sam. The benefits of multifamily investing just from the tax savings is tremendous. I know, dude, I wish I would’ve known more about multifamily apartments.
Oliver: There it is. Multifamily apartments, I actually did another episode on that as well. If you want to check that out, ‘In the know with Kevin Easterlies,” shout out to Kevin, great apartment investor. If anybody wants to get ahold of you, how do they do that out?
Cory Boatright: Then go to coryboatwright.com. That’s my website. They can go on Facebook, Cory Boatright. Go on Instagram real estate investing profits. I’d love to have you listen to our podcast, which is real estate investing profit masters where we bring on amazing investors and they tell their story about what apps they like to use and why they do what they do. Do they get eight hours of sleep a night and what’s their best investing strategy and all these other things? It’s really, really cool. What books they like. We have a lot of listeners for that several countries and love to have them check that out.
Oliver: Love it man. Definitely check his stuff out. Super legit. Great Guy to follow. Really appreciate you being on the show. Had a great time. Very informative and-
Cory Boatright: Cheers.
Oliver: We’ll have to do this again soon for sure.
Cory Boatright: Absolutely.
Oliver: Now you’re in the know. Cheers.
Speaker 3: Love it.
—
Pullout Quotes:
“A lot of these motivated sellers say they want the money, but in reality, they want the pain to go away.”
“You have to own the real estate of the mind. Once you understand what your target market … you can be a solutions provider.”
“Anytime you can connect on a level that’s outside of just finances and business, and you can connect on a human level and … you just shut up and listen, they will tell you everything you need to focus on to make the pain go away.”
“Belly to belly. There’s nothing better.”
“Assume that all homeowners are liars.”
“The option to purchase agreement is a wicked-cool agreement because it gives us the option to purchase, and it tells them that they have to sell to us.”
“Wholesaling is the least risky thing (in my opinion) that you can do, as long as you know how to do it correctly.”
“I want to duplicate the success.”
“I think there’s a big opportunity for agents to learn about that negotiating aspect.”
“Learn about all of these benefits that come from multifamily investing because that is legacy stuff.”
“Just by raising rents $10 … now my extra money that’s coming in is over $12,000 a year.”
—
Cory Boatright is a social connector who believes in servant leadership. He’s s a serial entrepreneur who coaches his achieving entrepreneurs and their teams to getting the results they want in their businesses. You can find all of coaching platforms and achievements here: Real Estate Investing Profits
—
Resources
Cory Boatright
Big Block Realty
Real Estate Investing Profits
—
Other episodes:
Mike Ferry – How to Crash Proof Your Real Estate Business
Cory Boatright – How to Make Big Profits Wholesaling Real Estate
—
Thank you for watching!
If you’d like to see more episodes go to: www.OliverGraf.tv/FoundersClub
If you have any questions, comments, or ideas on How To Make Big Profits Wholesaling Real Estate – Interview with Cory Boatright contact me here.