JF1289: How To Wholesale Over $250 MILLION Of Property In 10 Years with Jason Lucchesi
Jason bet on himself in 2008 after losing his job at a mortgage company (gee I wonder why) and no other places would hire him unless it was 100% commission. He started his real estate investing company and never looked back. Today we get expert tips on building a buyers list, finding deals, and technical, time-saving ideas. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Jason Lucchesi Real Estate Background:
–Founded real estate investment company Global Fortune Solutions in 2008
–Has been involved in $250,000,000 of closed transactions
-He’s a #1 bestselling author, speaker, mentor and coach to thousands of students across the country.
-Say hi to him at www.noflippingexcuses.org
-Based in Indianapolis, Indiana
-Best Ever Book: The E-Myth
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Joe Fairless: Best Ever listeners, how are you doing? 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 of that fluffy stuff.
With us today, Jason Lucchesi. How are you doing, Jason?
Jason Lucchesi: Good. How are you doing, Joe?
Joe Fairless: I’m doing well, nice to have you on the show. A little bit about Jason – he founded a real estate investment company called Global Fortune Solutions in 2008. He’s also got a non-profit, and the website there is NoFlippingExcuses.org. He’s been involved in over 250 million dollars’ worth of closed transactions, and he’s based in Indianapolis, Indiana. With that being said, Jason, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Jason Lucchesi: My background is I got started in 2008 as a full-time investor, and the main reason for that is I got started because I didn’t have a college degree and I was just coming out of a really bad spot from being in the mortgage business… That’s when the collapse just started. I didn’t have a college degree, I was doing really well at the place I was at, which was Countrywide Home Loans, and essentially, as soon as I got out of the mortgage business, I couldn’t find anywhere that wanted to hire me, unless it was 100% commission. So I decided to go all-in on myself, and not have a back-up plan. I went all-in with real estate and decided to make it happen.
What I’m really focusing on today is mainly wholesaling. I do about 10% of the business is rehabbing, 65% of it is wholesaling, and the remaining portion is buying properties that we could put into the portfolio, that produce income.
Joe Fairless: Sweet. Between 2008 and today, how has that percent breakdown changed?
Jason Lucchesi: It’s been somewhat around the same… I would say rehabs have gone from 20% to 10%. It’s just something that I don’t really enjoy doing, even though I’ve completely systematized it to where I don’t really have to be there anymore. I don’t like having our capital out for a long period of time, either it be our own personal acquisition capital or private funding… I just don’t like having that funding out for a certain period of time, especially with rehabs. You never know what’s gonna come up and what delays you’re gonna foresee, especially since we’re in several different markets, so we could hit a little bit of a snag and it becomes somewhat of a problem. We try and just keep our capital in projects that we know aren’t gonna take long periods of time.
Joe Fairless: Yeah, if I was in your business, I would be doing the same thing… I mean, why risk your capital on a rehab if you can get similar, or as great, or even greater profits in some cases on wholesales?
Jason Lucchesi: Oh yeah, absolutely.
Joe Fairless: Yeah, it’s a no-brainer. So let’s talk about your approach to wholesaling, since that’s 65% of your business… What can you tell us about the way you approach the business?
Jason Lucchesi: So I actually promote it from a backwards position. Whenever I get into any deal – we have a pretty large buyers list now, but for a lot of folks that we work with — we have a lot of training where we train folks, and we always tell individuals “Start off with getting your buyers first. Find out exactly what they want”, because if they don’t want 4-bedroom 2-bathroom homes, there’s no reason for you to be looking at 4-bedroom 2-bath homes.
So we approach it in a way to where we know exactly what our buyers want, so we only go after deals that we know that if we get them at the right price and we could sell them at the right price, we know that deals are gonna go quickly. So we like to find the buyers in advance, and we like to know what our buyers want. With that being said, we approach deals in a way where we’re going after properties that are absentee homeowners; we’re still going after short sales, but short sales that actually have equity in them… And we’re also going after probates and properties directly from hedge funds and banks.
Joe Fairless: Let’s talk about getting your buyers first… What are some tactical ways that we can build our buyers list?
Jason Lucchesi: The three easiest steps I would recommend – and you don’t have to leave the comfort of your own home, or if you have a day job. This is something that I did – I used Facebook, YouTube and LinkedIn to build my buyers list… And you really don’t need a big, gigantic buyers list. So I would find other real estate investors on LinkedIn, I would see how active they are, what type of groups they’re in… That would really help out with finding — there’s literally any type of real estate investor on LinkedIn, and there’s gonna be millions on there that are real estate investors.
Same thing goes for Facebook – I would find people in real estate-related groups on Facebook, I’d reach out to folks… Not be salesy. I’d actually wanna get to know the person before I started doing some sort of a pitch. I like getting to know people first, before letting them know “Hey, I’m coming across deeply discounted, off-market properties. Would you be at all interested?”
Same thing goes for YouTube – most people don’t even think about this one, but you type in “We buy houses” on there, or you wanna do it from a geographical standpoint, “We buy Indianapolis houses” and you look at all the channels that are on there, you’re gonna find people that are already looking for properties. Or they could be potential partners, like [unintelligible [00:07:59].04] Their e-mails, their phone numbers – they’re all gonna be available, so you don’t ever have to leave the comfort of your own home. Or some people like to work at coffee shops – you don’t have to leave the coffee shops.
So it’s very easy to get them, and then what we do from there, Joe, once we find some people that are good, we like to find out their title companies, because those could be good title companies that we wanna close at, but instead of asking for a proof of funds right off the bat, we talk to their title companies and find out when is the last time they’ve actually closed on a transaction. If it’s crickets on the other end of the call, we know it’s probably not a real individual that has access to capital to where they could close on deals if we do send them deals. So that’s a way that we vet people too, without having to ask for a proof of funds, which a lot of new investors face, and they don’t know how to overcome that.
Joe Fairless: Yeah, that’s a nice tip. With YouTube, LinkedIn – you talked about that… I might have missed your Facebook example for how to build our buyers list on Facebook.
Jason Lucchesi: Sure. So what I do is we go on Facebook, and in their little search engine area I just type “real estate”, and it will automatically pop information up for you… But what I do is I just click on the little magnifying glass there, and what I do is I click on groups, and it’ll bring up all of the real estate-related groups on Facebook, and there’s literally thousands if not millions of groups on Facebook. You can just start going after — I like just going after regular groups, and if you’re looking in a geographical area, you could put “real estate indiana” or “real estate chicago”, or whatever it may be, wherever you’re at. It’s very simple to find folks in a geographical area, just from looking at the Facebook groups. You go on there and you could just start looking at other members, and it’s very easy to join groups. There’s an unlimited number of groups that you could join on Facebook, compared to LinkedIn. LinkedIn is at 100. But still, you could go on Facebook and you could look at all the members that are in that group, and you could just start sending them messages… And I recommend that you don’t send off spammy messages, but just messages like “Hey, I wanted to reach out; I saw that we’re in the same group together, and I wanted to see if we could potentially do business together.” You know, just a simple message like that, Joe, really goes a long way and starts building up relationships with people.
Joe Fairless: If I got that message – and I know I’m gonna be picking apart words – I think “spam”, because I don’t know who you are, and “potentially do business…” I have no idea what that means. But does that type of message work with other people and is it just me, or is that not the exact message that we should be sending?
Jason Lucchesi: It works I would say about 6 out of every 10 times. But like I was saying, I would make sure that it’s gonna be personalized. So I wouldn’t just say “Hey.” I would put “Hey, Joe. My name is Jason Lucchesi. I saw that we’re a part of the Real Estate Indianapolis Group here on Facebook. I wanted to reach out to you, I’m doing some business here – I’m coming across some deeply discounted off-market deals and I wanted to see if you would be interested at all in looking at any of the deals that we’re coming across.”
Joe Fairless: Okay.
Jason Lucchesi: You could change up your messaging to whatever suits you as a professional, but we try and make it in a way where it’s gonna get them interested and wanna respond back. Normally, when I send off a message that’s just like I said, the response rate is actually between six, seven out of every ten people that we send the message off to.
Joe Fairless: On the second part, if I was interested in buying homes like that, I would be inclined to respond back, for sure. “Yeah, put this e-mail on your e-mail list and let me know.”
Jason Lucchesi: Yeah, absolutely.
Joe Fairless: With your business, can you tell us maybe the last wholesale deal? Let’s talk about a case study, the last wholesale deal that you did.
Jason Lucchesi: Yeah, it’s actually a pretty good one. It was a probate transaction, it was a referral from our attorney, and he made an introduction for us; the executor of the estate is out of the state, and she was interested in selling the home… She didn’t know the best way to go about it, she didn’t know if she should have it listed with an agent or if she should try and sell it by herself, like a for-sale-by-owner.
So what happened was the attorney said “Hey, I’ve got a real estate investor, he’s been working with me for the past couple of years… I’ve sent him some folks that have gone in a similar situation like yourself, they just wanted to sell the property” and next thing you know, we’re having a conversation, me and the executor of the estate. She was letting me know “Hey, I wanted to sell the property and everything that’s included with it.” She was including the personal property in there as well, so I went and took a look at it… I noticed there was a car in the garage; it wasn’t like an awesome car, but it was a nice car.
We ended up picking up the property right around 60% of after-repair value, which was a really good deal for us, because the car – we ended up taking it to CarMax, and CarMax gave us a $6,000 check right on the spot… Because we bought the property with personal property included, so the title of the car transferred over to our company as well. Then we had some random stuff in the house that ended up being like close to $1,000… Some old magazines and some memorabilia that people wanted and we just sold those on Craigslist.
We ended up wholesaling the property — we ended up buying it, but we did a wholesale still on it. So we still sold it same day, we just wanted to sell those other things before we got the A to B, B to C transaction. So we bought it for 60 and we sold it for 70, but keep in mind, we got a $6,000 check from CarMax and around $1,000 from some of the goods that we sold in the house.
So we ended up making after closing costs – it was a little over $16,000, and it was a deal that literally took maybe about 17 days from start to finish.
Joe Fairless: That’s a fun one. It’s got a couple of wrinkles that aren’t typical, with the CarMax thing and with the $1,000 in memorabilia that you sold.
Jason Lucchesi: Yeah, absolutely. And to be honest with you, Joe, we find a lot of folks don’t wanna go back to mom and dad’s house and go through all that stuff themselves, so they end up wanting to do a lot of the “Hey, I just want to sell you everything.” We go over there and take a look at it, and if it makes sense we’ll do it.
Joe Fairless: Who goes through the stuff in the house and cleans it up and identifies what to sell, what not to sell, then takes pictures of it, puts it on Craigslist? Because there is time involved in that.
Jason Lucchesi: Oh yeah. It’s typically my acquisitions manager that goes over there and does all of that. That’s how they get paid – they get a base salary with the company, and then I also pay them a percentage of the transaction. They get about 10% from transactions closed, and then they also get a base salary from me.
Joe Fairless: Does the attorney receive a referral fee?
Jason Lucchesi: No, we can’t do that. We can’t send them any type of a referral fee here in the state of Indiana. I haven’t done that in any other states, but typically what I do is I send all referrals to him as well. Then we also have him listed on all of our sites, so he gets plenty of business from us in return, so that we can do business that way. Then every once in a while too I’ll send him a really nice gift card to a nice steakhouse, or something like that. That’s completely legal.
Joe Fairless: Based on your experience as a real estate investor since 2008, what is your best real estate investing advice ever?
Jason Lucchesi: I would say keep it simple. So many people do the whole analysis paralysis thing. They read so many books, they take so many educational courses, they become doctors when they go on Google… I like to just say keep it extremely simple. If you wanna wholesale, get 8-12 cash buyers, start going out finding deals, and then go and get those deals closed. I know it’s easier said than done with what I just said, but the less complicated you make it, the easier it’s going to be. And especially for brand new people, once they get through 5-10 transactions, then you can really start implementing systems in your business to where you’re not working in the business, you’re working on the business. Because if you’re always gonna be working in your business, you really don’t have a business, you have a job.
My big thing is, yeah, it’s good to get educated, you need to get educated, but there’s a point to where you get yourself too educated and you really don’t take that leap of faith, knowing that this business is gonna work. That’s some of the best I would give – just keeping the business really simple, especially in the beginning.
Joe Fairless: Now let’s talk about as you went through your beginning stages and then scaled and worked on your business, not in your business – as you were doing that, who was the first person you hired? I don’t need a name, but what was their role? And then what were the subsequent hires?
Jason Lucchesi: Sure. The first person I hired was an acquisitions manager. He went around, he would do the door knocking, he would be responsible for doing the direct mail marketing, he would be responsible for taking inbound calls and also making outbound calls, he would be responsible for getting deals under contract. From there, I would still have my hand in the jar by – once we get deals under contract, I would get them sold to our buyer, so that’s when I brought on our liquidations manager and taught them how to properly sell deals that made financial sense for us… Especially if we get a deal under contract, how do we get that deal sold for the maximum amount of money, but also make it a really great deal for our cash buyer to make sure that they continue to buy deals from us, not just one-off transactions.
So the liquidations manager would have a role as well; not as big as the acquisitions manager, but they still had to maintain our current cash buyers list and also increase that cash buyer portfolio and database as well.
Then as we started to scale a little bit more, I started hiring an assistant to help out with day-to-day operations to make sure that the acquisitions and liquidations manager was getting deals and everything was going through the system properly from a day-to-day.
Then the liquidations manager eventually started adding on to where they’d start making sure the title was clean, and closings were being scheduled, and all parties were notified, and that they would show up at the scheduled time that we had for the closing. And to get a little off the plate, I did hire somebody just to do marketing from a part-time basis, to run some pay-per-click ads for us, to be responsible for doing our direct mail marketing, which we started outsourcing that to another company. We started using GoBigPrinting.com and also YellowLettersComplete.com to outsource that, so we wouldn’t have to do that manually anymore.
Then I also hired somebody just to keep our books clean and making sure that we are operating the right way. The bookkeeper would only come in like 1-2 times per week, and they were just paid when they would come in.
Joe Fairless: That’s outstanding. Thank you for talking through that and also giving the marketing vendors that you use, because I was gonna ask about that. We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Jason Lucchesi: [laughs] I’ll do my best at it for you.
Joe Fairless: I know you’re ready, I can sense you’re ready. Alright, let’s do it. First though, a quick word from our Best Ever partners.
Joe Fairless: Best ever book you’ve read?
Jason Lucchesi: The E-Myth.
Joe Fairless: Best ever deal you’ve done that wasn’t your first and wasn’t your last?
Jason Lucchesi: My short-sale.
Joe Fairless: Can you tell us about that deal?
Jason Lucchesi: Sure, it was a deal that we were able to find and we got it negotiated and we were able to have the auction that was going to be going on the next day stopped, and we were able to close on the transaction and the individual homeowner didn’t have to have a foreclosure on their credit.
Joe Fairless: What’s a mistake you’ve made on a deal?
Jason Lucchesi: Not having private money lined up. My very first deal could have brought in six figures easily, but I didn’t have a private money lender lined up, so I ended up making right around $3,500 because of a lot of mistakes that happened with closing costs. But having a private money lender, even if it was a hard money lender, I still would have made close to six figures with a hard money lender.
Joe Fairless: Best ever way you like to give back?
Jason Lucchesi: Best way to give back right now is giving back to folks that have a disability and they need help getting around from room to room. Right now we’re working with a gentleman that’s a quadriplegic, and we are remodeling the whole entire house for him to make it wheelchair-accessible. It was probably about 3-4 weeks ago for the first time ever in their house… We had heat turned on and we were able to get them hot water. Now we’re gonna be working on the foundation to where he can actually go and use the shower, and we’re gonna make the transitions from room to room easier for him, since he has a power chair. That’s just one of the individuals that we’ve worked with. We’re working with several others to do the same thing. That’s what our organization is all about.
Joe Fairless: And how can the Best Ever listeners get in touch with you?
Jason Lucchesi: The best way I would recommend is I’m on Facebook, I’m on Instagram, and also we have NoFlippingExcuses.org, you can check us out there. We’ve got a ton on content as well on YouTube, and hopefully I’ll be able to have Joe on our podcast as well, which is The No Flipping Excuses Show. Maybe we can line that up to have you on there, Joe.
Joe Fairless: Well, I believe in the approach of having no flipping excuses, so I would love to be on that show.
Jason Lucchesi: That’s awesome, man.
Joe Fairless: Well, thank you for being on this show and sharing your experience, and also your lessons learned. The approach that you take, from choosing to wholesale primarily (65% right now of your business is wholesaling), and some tips for beginning wholesalers on how to build your buyers list – Facebook, YouTube, LinkedIn… Just being resourceful, and then some messaging that you can send your potential buyers, and then how to qualify them without getting a proof of funds, so just talking to the title companies about when was the last transaction they closed…
Then for a more experienced investor that is listening, who is wholesaling, how to scale your wholesaling company, and the hires you brought on and the sequence in which you brought them on – acquisitions manager, liquidation manager, assistant, marketing (you started doing some automation on the marketing), and then the bookkeeper.
Thanks for walking us through a process that talked to us about beginning, and then also if we’re looking to scale from a wholesaling standpoint. I hope you have a best ever day. I enjoyed it, and we’ll talk to you soon.
Jason Lucchesi: Thanks, Joe.