JF1149: Find Foreclosures In Your Market with Brandon Krieg
The first thing that Brandon does for more success is shift his mindset. Rather than think of people as “motivated sellers” he prefers to think of them as “people that need help”. He has just about every form of finding deals; driving for dollars, direct mail, skip tracing, bird dogging, and SEO, but says that the best deals often times come from word of mouth and his network. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Brandon Krieg Real Estate Background:
- Real Estate Investor at Honeybee Homes, LLC
- Specialize in fast closings, and pride ourselves on being honest, hard working, caring, responsive, and reliable.
- Went from performing on America’s Got Talent to flipping houses
- He made $11,000 on one deal that he sold in 3 days
- Based in Grand Rapids, Michigan
- Say hi to him at https://thehoneybeehomes.com
- Best Ever Book: The Traveler’s Gift by Andy Andrews
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.
With us today, Brandon Krieg. How are you doing, Brandon?
Brandon Krieg: I am doing great. My life is wonderful.
Joe Fairless: Well, I am glad to hear your life is wonderful. You will hopefully sprinkle some of that wonderfulness onto us as well. A little bit about Brandon – he is a real estate investor who specializes in fast closings and prides himself on being honest, hardworking, caring, responsive and reliable. He does everything from fixing and flipping to wholesaling, to all sorts of other tactics within that sphere. He made $37,000 on one deal that he sold in three days. He’s based in Grand Rapids, Michigan. With that being said, Brandon, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Brandon Krieg: Absolutely. So I started real estate in 2011. Prior to that, I had done a whole host of things; I was a professional musician for a while. I toured around the country, I was on America’s got talent a couple times, and a bunch of other jobs on top of that, but I wanna keep it quick and to the point. So when I first started with real estate, I really just was bootstrapping everything, from the ground up. It just took a lot of grinding, and I started really small and built up to where I am now.
Joe Fairless: With America’s Got Talent, I imagine that it’s a competitive process to get to that point; is that true?
Brandon Krieg: Well, it wasn’t for us…
Joe Fairless: Really?
Brandon Krieg: Yeah, actually it was kind of crazy… We were already a touring group. We played Vegas, to Miami, to Connecticut, so the producers of the show actually contacted us and said “Look, all that beginning part – you can just jump right past that. We’re gonna stick you right in front of the celebrity main judges.” So we were pretty fortunate in that. I know a lot of people aren’t so lucky as to be able to do that.
Joe Fairless: Well then scratch my question, never mind… [laughs] I’m gonna take a different approach then. Alright, so just so we have an idea of the type of deals that you’re doing, what’s the last deal you closed on and can you get into the specifics on it?
Brandon Krieg: Sure. The last one was a wholesale deal. It just varies on whatever comes on, which method I decide to use with it. This one was a house that was in the redemption period for a foreclosure. This family was just in a really tough spot, and obviously the Sheriff’s sale had already happened, so they really needed to close on the place quickly. So what we were able to do — this wasn’t a house that I wanted to take on particularly; Grand Rapids is a very hot rental market right now… It’s a hot-everything market, frankly, for real estate, so everybody’s really hungry for deals, so I wanted to wholesale this particular one.
After a lot of back-and-forth – it’s obviously a very emotional thing when somebody’s looking at a foreclosure, walking away from their house. We structured it so they’d have a really great package to walk away with and start their next part of their life with. Got it under contract, the next morning I sent it out to probably 10 or 12 good investors that I know and had a check in my hand later that afternoon. That all closed out, and it was a good day.
Joe Fairless: What are the numbers?
Brandon Krieg: The numbers on that – let’s see… I got the house under contract for $85,000, which depending on the amount for the property, I gave the sellers something around $15,000 to walk away with, and then I wholesaled that for seven to somebody who was pretty happy to have it. So yeah, it was a good deal for everyone.
And the back-end, what they’re gonna get out of it – they can either rent it for anything like $1,500/month or so… It’s already in pretty good shape, so it doesn’t need much rehab; probably less than 10k of rehab. And if they wanted to sell it as is, they’re probably looking at about 115k-120k. If they really wanna fix it up and hit the top of the market, more like 145k-150k, something like that.
Joe Fairless: I wanna make sure I was writing down those numbers correctly… You got it under contract for 80k, and what was the 15k and 7k part?
Brandon Krieg: 85k was what we got it under contract for. The 15k was what was over and above what it took to redeem the house from the Sheriff’s sale, so that would be the cash that the sellers would walk away with. And the 7k was the fee that I got on top of that, so we wholesaled it for 92k.
Joe Fairless: Okay.
Brandon Krieg: That gap was my cash on this deal. Then those other numbers were what the end buyer could eventually go and rent or sell it for.
Joe Fairless: Okay, I’m with you. Let’s talk about that $37,000 profit you made on one deal where you sold in three days… Tell us about that one.
Brandon Krieg: Well, I wish it was exactly 37k… That was what we sold it for. In it we had about something like a little over 11k, so it wasn’t quite 37k, but that was my first deal, actually. So when it comes to the Lightning Round this is my favorite one, too.
This was a small condo flip. I’d been looking for a very long time to find something, and this was somebody who was about to lose theirs to a tax foreclosure; they hadn’t paid their taxes in a couple of years at least, and by Michigan law, they were gonna lose it on a Friday.
So I first talked to this person on Tuesday, and to this point I had done no deals, by the way. Zero. No flips, no wholesales, no nothing. So I talked to this person, I ran the numbers, I thought “Okay, there’s no way I can lose money on this.” But at this point in my career, I had nothing; basically no money, I was bootstrapping everything, so I called up a really good friend of mine who had been a landlord who had been a landlord at Eastern; I was in Ann Arbor, Michigan at the time.
He had a house and he said “Site unseen.” “Yeah, I trust you. Let’s do this.” So we pulled it off for the closing; the title company was fantastic. We were able to close in, like I said, two or three days. We closed Friday morning, got them the cash that they needed [unintelligible [00:07:03].18] and some moving money as well.
We got it fixed up. The total rehab cost for that place was $4,200, so all-in we were just over 11k for our costs, and then it was only on the market for about three days, and we sold it for 37k or 37,5k, something like that.
Joe Fairless: How did you structure it with your friend in terms of profit sharing?
Brandon Krieg: With him – he provided the funding, I did a lot of it… We actually pitched in and worked together, and then we just split the profits 50/50.
Joe Fairless: Okay. What was the funding? Was it 70/30?
Brandon Krieg: Oh, he did all the funding. Basically, we had a good background; I had known this guy since we were both eight years old, so that drastically helps when you’re trying to put something together like this at the last minute. So he had 100% funded it, both the purchase and the repairs, and then we walked away 50/50/
Joe Fairless: And that was in 2011 when you got started?
Brandon Krieg: Yeah, that was in 2011, maybe 2012. Yeah, I think 2012.
Joe Fairless: I’ve noticed a pattern so far in two deals, and that is foreclosure. Do you still get leads through foreclosures?
Brandon Krieg: I do.
Joe Fairless: And how do you get them?
Brandon Krieg: It’s interesting. I know a lot of people that look for foreclosure lists, things like that. Really, the ones that I’ve found that end up working have either come through my own direct marketing or from other people that have found them, like networking leads that come through, and obviously those people always get a piece when something comes through that, they get a nice chunk. But that’s how I find them. So not from a bank list or anything like that, but from marketing.
Joe Fairless: When someone shares an opportunity with you and they get a piece, what does that piece look like?
Brandon Krieg: It really depends on the deal. Say it’s a little wholesale deal where in the end I just help the buyer, help the seller, make it happen and I make $1,000, then I might just split it with them, something like that.
If it’s something where I have to put weeks and weeks of effort into it, I’ll usually take a larger portion… Say something was a flip deal where they bought it for me, I make 25k on the flip but it took me two or three months to do it. Well, in that case maybe only 5k for them, something like that… Just due to the balance of work and time and risk involved.
Joe Fairless: That is pretty (I’d say) generous of you to structure it that way.
Brandon Krieg: Yeah, that’s an important thing for me. I really want to make sure that everybody wins, everybody comes out happy. Because if you do that, you form these great relationships and everything you do in real estate becomes a whole lot easier, not to mention everybody’s happier. So I wanna focus on how do I maximize every individual dollar for myself in a business where you really and truly can create win/win situations for everybody.
Joe Fairless: Have you had one person provide you with multiple leads that closed?
Brandon Krieg: I have. A good friend of mine here in the area. We have a nice, good standing relationship; if he brings me something, this is the percentage, the chunk on that, and we go from there. Usually it’s a split. If it’s an easy wholesale lead and he provides and I end closing it, we’ll just split the profits on it.
Joe Fairless: How are they finding the leads?
Brandon Krieg: They do a lot of different marketing things. They do a lot with search engine optimization (SEO) online. I do that as well. I also do direct mail, phone, driving for dollars – if you’ve heard of a method, I probably have done it or am doing it. [laughter]
Joe Fairless: But the two that have been most effective is 1) your direct marketing, which I took that as being direct mail, and then 2) from other people.
Brandon Krieg: It could be direct mail, but I sort of lump that in with everything.
Joe Fairless: Oh, okay.
Brandon Krieg: That’s me either reaching out to people that have — so with any lead generation, any deal finding method that I like, there’s two sides of it: there’s houses that will work great, and there’s people that need help. Different marketing methods work better depending on which set of problems you wanna deal with. I like to switch those up based on what I’m looking for at a given time.
Joe Fairless: Will you elaborate on those two categories and a tactic or two within each of the two categories?
Brandon Krieg: Of course. So if you are looking for — people will call it “motivated sellers”; I prefer to think of it as people that need help. So this would be something like you have your website with a contact form. They go online and they google search “I need to sell my house” or whatever your term is, and then your site comes up. They submit their information to you, and then you have it, and then you contact them and follow up. Methods like that where they reach out to you – I consider those inbound marketing. Other methods – you could do billboards, bandit signs, TV ads or radio, depending on what your budget is… All of those will create people that come to you, typically sellers in rough situations. You then have to figure out if the house fits, because the seller is typically motivated enough to make it happen.
The flip side of that is more outbound marketing methods. That would be direct mail, that would be targeted lead lists, things like that, where you think “Okay, I love this neighborhood. This is a great spot, it’s a great rental area or it’s got wonderful appreciation potential. I wanna buy a house in this neighborhood”, so I’m gonna send it to a lot of people, knowing that their house will probably work if they agree, but I don’t know if they’re motivated or not. Those are sort of the two branches of marketing as I see it, and depending on what I wanna do at the time, I just pick which one to focus on.
Joe Fairless: How do you know which one is better to focus on?
Brandon Krieg: Neither one is better, they both work. It’s really what kind of problems do you wanna deal with? With any business really, you’re solving a problem, that’s your value add, that’s where your money comes from, it’s by adding value or helping people. So you can either help people by — if you’re doing the inbound marketing methods, you’re dealing with people in a rough spot. Do you wanna deal with those kinds of problems?
Otherwise, if you don’t wanna deal with those kinds of problems, you might have to have a ton of skill in rehabbing and getting everything perfect – the timing, the market and the analysis, but the people will probably not be too much of a problem if you’re focusing on a specific neighborhood.
Joe Fairless: With the two options – I guess they are options, because you said you make a conscious effort to decide which one to focus on… With those two, 1) people who need help – I hope how you said it’s not motivated sellers, it’s people who need help; great shift in mindset. And then 2) more outbound – what is the number one tactic for getting leads in each of those, for you personally?
Brandon Krieg: For me personally, the number one tactic for inbound marketing is my website. I spent years really building it up, so it ranks well, it’s very helpful, it’s an informative source for people… So that’s become really a self-rolling machine for lead generation. The flipside of that is you can’t build that overnight. It takes a lot of time and effort and writing and engagement in all kinds of things to make that happen, so it’s not a quick fix. But for me it’s the website.
And then for outbound it’s still direct mail. You find a lot of tire-kickers, but it’s still a great source, even in today’s modern day and age of e-mails.
Joe Fairless: How many are you sending out?
Brandon Krieg: I’m not doing any direct mail campaign right now; I’m focused more on inbound, based on my market and what I wanna deal with right now. There seems to be more of a need here. But when I do, it’s anywhere from, say, 600/month to 4,000/month, depending on which markets I’m targeting and how likely I think I am to get a response. If you’re less likely to get a response, you need to send more to keep your pipeline full.
Joe Fairless: What services do you use to help with that process?
Brandon Krieg: I use Mail House – they’re some wonderful people. I can include some links in the show information – down in Texas. A guy name Jerry [unintelligible [00:15:26].21] runs a direct mail service and he’s the one that I use.
There’s a lot of great ones. YellowLetters.com – I’ve heard great things (Michael Quarles) and it’s another resource that I know a lot of people use. So I use a full-service mail house.
Joe Fairless: And how much does that cost?
Brandon Krieg: It depends on how much of the work you wanna do yourself. If you want it to just be not in your hands at all, anywhere from $1 to $1,5/letter. That’s with you never touching it. If you wanna do more, just have them ship it to you and then you can mail it off, it’s less… Something like $0,40 to $0,70.
Joe Fairless: Based on your experience as a real estate investor, what is your best real estate investing advice ever?
Brandon Krieg: For somebody like me, who does all these different things and really started by just grinding through, by bootstrapping it through, rather than offer technical advice – because it’s not good real estate advice, it’s the best advice, that’s what we’re shooting for for our Best Ever listeners – it’s that we really need to focus on getting your mind right and keeping it right through really tough times.
A lot of people are in a really great situation when they start; maybe they have a really good job that they can pull income from, or they have a lot of experience, or a good reserve base… I didn’t have any of those things when I got started. I’m sure you’ve seen a hundred of them, people in your online forums, or local networking groups that say “I have desire, and a little time”, and you’re like “Well, good luck…” You know, that was me when I first started. [laughter] It’s brutal. It probably took me eight months to get my first property under contract, almost a year to actually buy that first condo.
So for me, that mindset at that point – and even now, six years into it – is incredibly important for keeping myself strong and able to look for deals, even after something turns South or a deal goes bad. So it’s find out what works for you to keep yourself in a good mental place where you can jump back in and just get ready to fight again and really be persistent.
Joe Fairless: How do you keep sharp, from a psychology standpoint?
Brandon Krieg: It’s a lot. I read so much of this stuff that I forget who — I apologize if I’m misattributing some of these quotes… I think it was Zig Ziglar who said “Motivation is like bathing; it’s not something you can just do once and then be done with it”, it’s something you should do every day. So a part of it is little things, like I try to not bury myself in the 24 hours news networks – even though I was a political science and history major and I love that stuff – because so much of it is so negative.
You want to be around positive people, you want to have positive health habits, you wanna try to get up early, read good books… All of these things on a little daily basis – 10 minutes here, 15 minutes there – make a huge difference on how you feel. Also, good breathing, meditation – I know some of this stuff sounds pretty new agey and I bet half of the Best Ever listeners are rolling their eyes, but at the same time it does help keep you calm in what can be sometimes a very tough industry to stay calm in.
Joe Fairless: Yes, especially when you’re on the frontlines with people who need help; they’re getting their places foreclosed on, and you’re experiencing a bit of what they are experiencing, because you have to empathize with them along the way.
Brandon Krieg: Absolutely. That’s what draws you in to do this kind of a business, it’s that desire, but at the same time it can just bury you with emotion, if you tend to be empathetic and sympathetic for people… So keeping yourself in a good spot is very, very important.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Brandon Krieg: Absolutely.
Joe Fairless: Alright. Well, we will absolutely do it. First though, a quick word from our Best Ever partners.
Joe Fairless: Best ever book you’ve read?
Brandon Krieg: Keeping in line with the “keeping your mind right” theme here, I’m gonna with The Traveler’s Gift, by Andy Andrews. It’s not real estate-specific, but it has been a good helper to me and one I’ve re-read many times.
Joe Fairless: Best ever deal you’ve done that you haven’t mentioned already?
Brandon Krieg: That I haven’t mentioned already?
Joe Fairless: Yeah, I saw it coming…
Brandon Krieg: There was a 100-year-old house, a total mess in a neighborhood that was up and coming; I loved it, simply because it was such a challenge. I learned so much from it. We ended up making a little bit from it, not a ton, but just the challenge of diving into a house that’s 120 years old and turning it from a dump into something fantastic… And seeing how appreciative all the neighbors are when you do a flip like that is wonderful, so that’s probably my next favorite one.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Brandon Krieg: Most of my mistakes come from when I back off too much in a given deal. Because I care more than anybody else most of the time, I will happily pass something off, maybe pass it off to a realtor I haven’t worked with before, or another investor to close something and just make sure everything’s good with the title company. My advice for the Best Ever listeners to learn from is don’t do that. Mind your own business; it is your business, take care of it. Watch it, monitor it. If you have to be the squeaky mouse to get the cheese, so be it, but really make sure all the details are happening at the speed they need to, that you’re getting the quality of service, and his is if you’re working with realtors, contractors, other investors, sellers – anybody. Just be on top of it, because you can make or lose deals in a heartbeat if you’re not being careful.
Joe Fairless: Best ever way you like to give back?
Brandon Krieg: I like to be involved in the local community here in West Michigan. I run a networking group here, I’m part of the board of directors for the Rental Property Owners Association; I meet people for coffee, no matter if they’ve done a thousand deals or are just getting started, just to try to do whatever I can to help them a little further down the road.
Joe Fairless: You mentioned earlier the number one source for the people who need help is your website, and you’ve grown it, you’ve increased the search rankings – how did you learn that? Or did you pay someone to do it?
Brandon Krieg: I did it all myself. One of my many jobs before this was in tech, so I have some ability in website creation. So I did it myself, and mostly by hook or by crook, trial and error. I would build it, I read some different sources, really probably five or ten different books, several different blogs, and just synthesized it myself into what to do. But if I were to synthesize it for the listeners, it’s “Just offer value on your site.” Don’t just be somebody who’s there flash-bang, get it all fluff and no filter; really provide value for people, and then the dividends will come back to you multiplied.
Joe Fairless: How can the Best Ever listeners get in touch with you?
Brandon Krieg: My website is probably the best place. It’s thehoneybeehomes.com. Drop me a line, shoot me a line, give me a call, all that good stuff. I love it.
Joe Fairless: Excellent, and that will be in the show notes page, thehoneybeehomes.com. Brandon, thank you for being on the show, thanks for talking about your experiences as a real estate investor since 2011. Some things that stood out to me, one was how you don’t call them motivated sellers, but rather people who need help; it’s a different mentality and it’s just a slight shift in the phrasing, but I suspect that shift has a large ripple effect, once you think of it as people who need help, versus motivated sellers. I suspect it tends to be a more win/win approach when you approach it that way, than you taking something from someone.
Two is the mail house that you use with Jerry [unintelligible [00:24:28].19] to do your direct mail, and then your overall approach, the inbound and outbound, as well as some of the case studies that we talked through, like the first deal that you did, and a couple others.
Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Brandon Krieg: Thanks!Follow Me: