James was making good money as a W2 worker with benefits and a comfortable life. He looked into real estate investing, started wholesaling, did two deals, and left his job. His family thought he was crazy and so did his friends. Now with his company being worth multiple millions of dollars, clearly he made the right choice. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
James Hawk Real Estate Background:
- Owns and operates a multi million dollar real estate investing business in North and Central Florida
- Full time real estate investor since 2010, has purchased over 1,000 properties
- Bought and sold over $40 million worth of real estate
- Say hi to him at: www.flipmorehouses.com
- Based in Jacksonville, FL
- Best Ever Book: Traction
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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, James Hawk. How are you doing, James?
James Hawk: Good, man. How are you? Thanks for having me on.
Joe Fairless: My pleasure. I am doing well, and nice to have you on the show. A little bit about James - he owns and operates a multi-million-dollar real estate investing business in North and Central Florida. He's been a full-time real estate investor since 2010, and has purchased over 1,000 properties. He's bought and sold off 40 million dollars worth of real estate, and he's based in Jacksonville, Florida.
With that being said, James, will you give the Best Ever listeners a little bit more about your background and your current focus?
James Hawk: Sure, sure. Primarily, we wholesale. I would say that our business is broken down into about 90% wholesale, 5% rehabbing, a little bit of wholetail, and then we also do a little bit of new construction, as well... But not that much.
Basically, I got started in 2010. I was working full-time for a bridge company. We actually did the Woodrow Wilson in Washington DC. We've been featured in Mega Builders, and a lot of other cool stuff like that.
Joe Fairless: Wow, cool.
James Hawk: Yeah, that's pretty cool... But I learned pretty quickly that it was "Where am I really going?" I was making decent money; I wanted more out of my life. At the time, I had a friend that was a full-time real estate investor. He really wouldn't share too much with me; I had just seen that he was successful and he was making a lot of money... And I said I was gonna be an agent.
So instead of going the agent route, I think it was on -- man, you know back then... I know you were in the game as well probably, you couldn't just go to YouTube and five million videos showed up, or anything like that... So what I did is I stumbled across I wanna say a blog about wholesaling. I think it was actually an REI club, or something like that. I had never heard of it before, and I just took the concept and basically just went out -- I just went until I figured it out, more or less.
It was about 5-6 months before I actually did my first deal for $4,000. My second one was for 20k, and then I quit my job and went full-time.
Joe Fairless: Wow, there you go. You did some research, made it happen, and now here you are.
James Hawk: Yeah. I'd say everyone thought I was crazy, obviously... It's the same story...
Joe Fairless: Who's everyone?
James Hawk: My family, my friends... I wasn't making a ton of money, but I had a regular middle-class job, good benefits and everything else. It's just something that -- I don't come from an entrepreneurial family like everyone... They go to school, they get a good job, and they live out their lives. For me to do that, it was just a lot different than what I grew up around.
Joe Fairless: How old are you now?
James Hawk: 31.
Joe Fairless: 31. So how old were you when you left the bridge company?
James Hawk: I think I was 22.
Joe Fairless: You were 22 then... Were you married at the time? I don't wanna make assumptions. No. Okay, I thought it was kind of young to be married, but I just wanted to make sure. Okay, so you weren't married... So your family and friends thought you were crazy, because you left the decent salary job, as you said, and started your own venture. Now 90% of your business is wholesaling, and then you've got miscellaneous stuff... Why did you choose wholesaling over rehabbing, wholetailing and new construction? ...the other aspects of the business you do, but not nearly as much.
James Hawk: Right, and what's interesting - it's kind of been a rollercoaster over the last 8 years, bouncing back and forth between "Alright, we're gonna be..."-- you know, I have a business partner, by the way, now. I didn't at first, but since 2013 I have. But we went back and forth, like "Alright, we're gonna rehab everything. Now we're wholesaling everything." We've gone through just the common hurdles that most people that have been doing this for a fair amount of time probably have, as well... Then we finally settled in the last couple years on the model that we have now, just simply because it's just so much easier.
Anyone that has rehabbed a substantial amount of houses knows dealing with the contractors and just the invoicing and all that stuff is really a pain. There's a lot of money in it, and we've brought people in-house, had project managers... We've done it a lot of different ways, but at the end of the day for our time and the lifestyle that we were looking to have in this business, wholesaling has just made the most sense for us.
Joe Fairless: I hear you. If I didn't do what I did and I was still doing real estate, wholesaling would be the next option I'd focus on. The only reason I didn't get into wholesaling originally is I didn't really know about it... Otherwise I might be in it, because the risk per deal is, like, nothing... Right? You're not risking your own money, so if you don't sell it, then you just don't sell it, right?
James Hawk: Yeah, and that's pretty much it. That was a great point. There is, it's very minimal risk. I will say this - we focus very, very much on customer experience and branding and creating that "We're the authority" in any market that we're in; that's what we try to portray and we try to live up to it. We never try to put anything under contract that we don't wanna close on or we don't have the ability to close on... We always make sure that we can.
The only issues that we might run into every once in a while is that maybe one of our salespeople that gets the contract, and for whatever reason it just doesn't really work - it's rare, but it does happen... Then we usually use an inspection period and then we'll just either have to back out or renegotiate.
Joe Fairless: Customer experience and branding is the focus according to you. How do you apply that and bring that to life?
James Hawk: Well, in a lot of ways. From everything that we do - from the marketing standpoint, from the time that we talk to somebody... We answer the phone first and foremost, always. We're basically gonna make sure that they're treated like family when they call us. That's how everyone in here is. We're really close, and we just do a lot of stuff that not necessarily every other company that wholesales would do. We'll send them packages in the mail after the appointment, thank you packages... Just a lot of different stuff like that, that I've never seen anyone else do.
We have a charity program, it's called "Houses Help." If we buy your house, we basically will donate up to $1,000 to the church, or a charity of the seller's choice. We have another move-in program... Just different stuff like that that really helps us stand out amongst everyone else.
Joe Fairless: The being treated like family part whenever they call you - will you elaborate on how that's executed?
James Hawk: Sure. Let me say it like this - whenever they call, it doesn't matter what they say to us... This happens all the time - they call from (let's just say) mail, or whatever, and they're super, super upset. We'll just kill them with kindness until it turns around... And this happens, I'm telling you, probably once a week, where someone will call and they're super upset; we'll just focus everything on really digging into why they're upset, trying to turn that around, trying to help them understand our position, and then basically getting that appointment and going out there and meeting with them. Once we do that, typically, at least 40%-50% of the time they'll buy that house.
Joe Fairless: Yeah, there's a difference between what I call the customer service smile, where it's just fake... You're calling with an issue and they're smiling, but you know it's just a front, versus what you said, where you're asking questions to get to the root of why they're feeling that way... And why is it? Why are they calling you super upset, by the way?
James Hawk: Just to echo what you've just said - that's exactly right, and I should have said that... It's being really genuine, as well; that's another great point to that, just being really genuine. And I would say the only time people would call and they're really upset is off of mail. We have a lot of different marketing channels - we do radio, we do mail, we do Facebook, Google... But the mail is the only time that we'll ever get a call from someone that's upset, and that's simply because they go out to their mailbox every day and there's 10, 15, 20 postcards and letters.
So even though we write all of our own and try to really stand out, at the end of the day some people just get frustrated that they're getting so much mail... And then we're just talking to them and letting them know why we're doing that, and being genuine with them, and they usually appreciate that. Half of the other people, like they tell us, don't even answer the phone.
Joe Fairless: Do you answer phones 24/7?
James Hawk: Not 24/7, but any time between 8 AM and 2 AM.
Joe Fairless: Oh, that's pretty close.
James Hawk: Yeah, we're close... Not quite 24/7, but yeah, between 8 and 2.
Joe Fairless: If I call at 1 AM, where is the person located who I'm talking to?
James Hawk: The person at 1 AM would be in the Philippines; that would be a VA. But we will answer the phone.
Joe Fairless: [laughs] Your marketing - you touched on it. You said customer experience and branding tend to be the focus... So we've just talked about customer experience... What about branding and -- I'll group in marketing there. You said radio, direct mail, Google... What else do you do?
James Hawk: We also do Facebook ads, and we've really spent quite a bit of money and really dialed in Facebook. Something that I hear quite often -- I'm in a couple high-level real estate masterminds, and the common theme is "Facebook for motivated sellers is just very difficult. The lead quality isn't that great, it's really expensive..." And this is just every day, on average, we spend for a lead, let's just say direct mail, $100 or maybe a little over $100 for a direct mail lead. On Facebook, we can bring in leads for about $40, so less than half of a direct mail lead... And typically, they can even be higher quality, because they're actually taking the time to submit the form, and in essence, we're kind of more in the driver's seat versus with direct mail... They're just responding, so that's reactive instead of proactive.
Joe Fairless: What about radio? What are you getting per lead?
James Hawk: Well, radio is interesting... We've just started testing radio the last three weeks. We are getting calls. We haven't got a deal off of radio yet, but we're gonna see. We have a local, very popular DJ that's endorsing us, and I'm curious to see what happens. We're also gonna test TV, but the majority of our money goes into Facebook, Google, direct mail and relationships and networking.
Joe Fairless: What's your cost per lead on Google?
James Hawk: On Google we stay around $175 or so for AdWords... The lead quality is always extremely high. What we do tend to find though is if you get a lead on AdWords, 9 times out of 10 they also went to five other sites, which we really don't mind, because we go out and we have a full-blown presentation that we give them; we have a leave behind folder with a credibility kit we send them when we book the appointment... They'll get a link that will show a video of who's coming out to their house, with an introduction...
So we do all these little cool things that we really don't see anyone else doing, that for us just seems like it's business fundamentals.
Joe Fairless: You bring up an interesting point - I never ever thought about where it's not just about cost per acquisition, it's also about where those individuals are coming from, and if that platform lends itself to them also easily reaching out to your competition... And you mention that it's not a big deal, but ideally, it would be nice if it was a platform that they weren't naturally coming across your competition, right?
James Hawk: Sure.
Joe Fairless: That's interesting, I've never thought about that. So you said 175 - I assume it's 175 dollars, not $1,75, right?
James Hawk: Right, right. Yeah.
Joe Fairless: That's what I thought, I just wanted to make sure.
James Hawk: [unintelligible 00:13:34.14]
Joe Fairless: So there comes my next question - with Facebook being $40/lead and you said it's pretty high quality, why not just go all-in on the Facebook ads and not do direct mail, radio, TV or Google?
James Hawk: Well, I'll tell you why, and that's a very good question. The reason why we wouldn't do that is just simply because we like to at least have a few lines in the water... You just never know. I recommend to everyone, make sure at least you have three or four marketing channels, just simply because you just never know what might happen. If something with that channel dies, or Facebook changes their algorithm, or whatever it is, that could really affect your business.
An example would be even direct mail. Back in 2011-2012 I felt like we were the only postcard or letter that these people were getting; it was very rare that we even had much competition at all, because things really hadn't picked back up. But now - geez, every single day we go to appointments and there's 30-40 postcards just stacked up on their counter, and that's what my salespeople tell me all the time... But yeah, that's why. I highly suggest that you just don't have one resource that your entire business is depending upon.
Joe Fairless: Let's talk about your team... How do you structure the team?
James Hawk: We have eight people now. We have two outside sales, we have one lead coordinator that's during the day, and then we also have a lead coordinator/data specialist that's at night. We obviously have my business partner, we have a full-time marketing person on staff, and we also have a full-time dispositions manager as well. I think that's everybody; don't tell them I said that... [laughter]
Joe Fairless: I think you got it. Your business partner - how do you divide up roles and responsibilities?
James Hawk: That's a great question as well. What we do is we're like "Look, you're gonna focus on this side of the business, and I'm gonna focus on this side", and we base that around what our strengths are.
My strength is more on the sales and marketing side, so that's what I focus on. His strength is more on the going out and raising money, managing any construction... That's what he focuses on. It's a divide and conquer model.
Joe Fairless: Yeah, you complement each other.
James Hawk: Right, absolutely.
Joe Fairless: How did you meet your business partner?
James Hawk: We both had our own wholesaling business, and this was like at the end of 2012 - we just kept running across each other on Craigslist, looking at each other's properties that were for sale, and then we'd call on them, not realizing it. After that happened like 3-4 times, we were like "Hey, let's just meet up."
I just happened to have a lead in a phenomenal area in [unintelligible 00:16:33.13] and I was like "Hey, why don't you meet up with me and let's take a look at this house that I think I'm gonna get." So he met me over there, we walked the house... We just hit it off really well, our values aligned, and it just made sense. We made an agreement that it's "Okay, I'll go out and I will lock up this contract on this house. You go out and raise the money, and then we'll just rehab this house together and see what happens."
It was on a whim, to an extent, I guess you could say. And we did that house, and we absolutely crushed it. It was probably the best worst thing that could happen. We actually made over 100k on that house...
Joe Fairless: Wow.
James Hawk: ...and that was our first rehab. We just happened to do it together, and it was the first rehab for each of us. Then we decided "Hey, why don't we just partner up and do this?" $100,000 will get you really excited, so you're ready to partner with everybody.
Joe Fairless: It does. Now I have to ask this question - you focus on wholesaling, but you made $100,000 on rehab, and that was how you and your partner did your deal... So why did you get away from rehabbing?
James Hawk: We still do...
Joe Fairless: But 90% is pretty -- you said 90% is wholesaling, and 5% is rehabs.
James Hawk: It is. Well, here's the thing, and this will put it in perspective for everyone... We actually make a good amount of money, even on our wholesale deals. Our average profit per wholesale deal is around 23k-24k. Obviously, every rehab can't be 100k. We actually had two wholesale deals last year that were over 100k.
Joe Fairless: Wow.
James Hawk: So we just look at it as like "Okay, if we can make 23k-24k or whatever that is right now, versus maybe 35k-40k if we buy it and rehab it...", that's kind of the way that we look at it. If it's substantially more, if we can at least double our money rehabbing it, then we will.
Joe Fairless: We've got to talk about these two wholesale deals last year where you made over $100,000 each. Let's talk about each individually. Pick whichever you want first.
James Hawk: This is one before we had salespeople, at the beginning of the year. I think it was like February 2017. It was the Atlantic Beach, which is a highly desirable area; the seller called, I went out to the appointment, and he had literally stuff stacked to the ceiling throughout the entire house. His mother was living with him and she had just passed away, and he had some financial hardship.
I worked with him, I released some money early, helped him move out, and really walked him through the process. That deal - we actually sent out and it was within an hour we actually got over what we were asking for it. I wanna say we sold it for 272k, and we had it for 169k under contract. It didn't close though for a couple months, but yeah, that was a good one.
Joe Fairless: How did you find it?
James Hawk: That one came from direct mail.
Joe Fairless: Okay. What about that other one?
James Hawk: The other one was actually direct mail as well. It was in another highly desireable area called [unintelligible 00:19:45.19] There's like an equity membership just to be in there; I wanna say it's 20k or 30k that you need to put up front just to live in that community... And we got a great deal on the house. From the hurricane, it had flooded it a little bit, and they had already relocated to a different location, so the house was just sitting there. This one was one of our salespeople.
By the way, we always try to get video testimonials, just because we love getting the social proof, and we love being able to show that to everyone else, and for anyone that's skeptical, they can see that it's real. So we also got him to do a video testimonial, but we also sold it to someone that lived in that neighborhood.
One of our buyers lived in there, and he was looking for another house in that neighborhood. We got it for 370k, and then we sold it to him for (I think it was) 483k. So the final check was just over like 101k that we made on it. He ended up buying it, and he fixed it up to live in it, and then he sold his other house in that same neighborhood.
Joe Fairless: Based on your experience, what is your best real estate investing advice ever?
James Hawk: The best real estate investing advice ever - I would say that it goes in line with marketing. Someone once told me always to be consistent, and don't always make it about you. It's always about what's in it for whoever your prospect is.
Joe Fairless: That is so true, and in the world of social media a lot of people get away from that. There's a lot of chest-pounding out there, versus thinking about how that content will be valuable for the people receiving it.
James Hawk: 100%.
Joe Fairless: We're gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
James Hawk: I'm ready.
Joe Fairless: Alright, let's do it. First, a quick word from our Best Ever partners.
Break: [00:21:42.24] to [00:22:20.00]
Joe Fairless: Okay, best ever book you've read?
James Hawk: Traction, by Gino Wickman.
Joe Fairless: Best ever deal you've done that you haven't discussed on this show yet?
James Hawk: Best ever deal I've done that I haven't discussed on the show - obviously, I would go back to that $100,000 wholesale deal, but I'll tell you what, we've just completed a project... It was just a lot - we tore down the house, and it was actually a double lot. We're gonna be right at $100,000 on that. It was minimal effort, minimal time, and it's 100k, so that was a great deal.
Joe Fairless: What's a mistake you've made on a transaction?
James Hawk: A mistake... [laughs]
Joe Fairless: You haven't made any of those yet, have you?
James Hawk: Oh, man... I would say that a big mistake that you can make in wholesaling, that I've made so many times, is typically we use with a wholesale deal our buyer's funds; now we always have our funds there, just to back it up... But before we didn't do that, so if the buyer's money don't show up or they back out at the last minute, then you're in a bad situation.
Joe Fairless: What happens if you don't have money and they don't have money, but you're supposed to close? I don't think I know that answer.
James Hawk: Typically, we always do have the money; it just might not be there at the time, or whenever we did it that way... If they fell out at the last minute, or the lender didn't send their money or whatever the case may be, then now we're scrambling, trying to go to the bank, talk to our lender or whatever we have to do to get that money over there.
So typically, we would just go to the seller and say "Hey, there's an issue, but we're gonna get the money over there as soon as possible. Work with us." Luckily, it hasn't gone severe, but that's always an uncomfortable situation, and I would highly suggest -- now, we always even have our buyer send in their money 24 hours in advance as well, just for a comfort level.
Joe Fairless: Best ever way you like to give back?
James Hawk: To our Houses Help program. That's really cool, we love that.
Joe Fairless: What is it?
James Hawk: Like I said earlier, it's the program that we offer to all the sellers.
Joe Fairless: Oh, sorry, yeah. If you buy the house, you donate up to $1,000 to charity... Or if you buy their house, you donate up to $1,000?
James Hawk: Yeah, of their choice. It could be a choice, a charity... Whatever they choose, then we would donate the money. And it's at closing, so we show up on the HUD and they would see it happen.
Joe Fairless: How can the Best Ever listeners learn more about what you're doing and get in touch with you and your company?
James Hawk: You can find me almost everywhere @flipfuel - Instagram, Facebook, YouTube... @flipfuel, you can find me.
Joe Fairless: Excellent. And your website is linked in the show notes. James, thank you so much for being on the show, talking about your business focus, which is wholesaling, as well as getting into the details - I love it; you got into the cost per leads for Facebook ($40), direct mail ($100), Google ($175) and some pros and cons for each of those. You got into the team, and then got into two case studies for those 100k wholesale deals.
Thanks again for being on our show. Really valuable stuff for the listeners. I hope you have a best ever day, and we'll talk to you soon.
James Hawk: Thanks, man. I appreciate it.