SWP: 104 The Mogul of Real Estate and Building a Team to Bring You Deals

Tom Cafarella is a real estate investor from Boston, Massachusetts that co-founded Ocean City Development. He has made a name for himself coaching individuals on how to become real estate investors and has an awesome podcast that you have to check out called “The Real Estate Mogul Podcast.”

Insight of the Week:

3 Skills to Help You Master Your Transactions
1.) Understanding Closing Documents and Procedures
2.) Organizational Skills
3.) Landlording

Spiritual Foundations:

James 4:14

Yet you do not know what tomorrow will bring. What is your life? For you are a mist that appears for a little time and then vanishes.

Psalm 144:4

Man is like a breath; his days are like a passing shadow.

In this show, you’ll learn:

  • Tom’s origin story
  • The book that inspired him to get into real estate
  • When did he decide to take action after reading the books and listening to podcasts
  • Two components that will help you make a hundred and fifteen thousand dollars on your first deal
  • The Goldilocks offer
  • Is it important to get a real estate license or not?
  • His advice to people on closing deals
  • What a mojo dialer is
  • Other things that he is using right now to generate leads
  • One piece of advice that he can give to newbies who are just starting
  • Best practice or best way to approach somebody to mentor you

Quotes

“The older I get, the more mentors I have.”
“What is risky is back in the day when we actually had to go out and haunt everyday for our food.”
“There is no shortcut to success.”

Links

Simple Wholesaling Podcast iTunes 
Mojo Dialer
Google Pay Per Click 
zBuyer
Facebook
Full Service Mailers, Inc.

Books

Rich Dad Poor Dad by Robert Kiyosaki
The 4-Hour Workweek by Timothy Ferriss
Fit for Life by Harvey Diamond

Profile: Tom Cafarella

Thomas’ Email Address: thomas.cafarella@ocbuyhouses.com
Real Estate Investing Made Easy with Tom Cafarella
The Real Estate Mogul Podcast
Free Training Session with Tom 

Thanks for Listening!

Transcription

Brett: Real estate investor in a little coat. Real estate mogul in a little coat.

Brian: What was that, Mogul? Have you muggle over there?

Brett: Bad guy. This is the Simple Wholesaling podcast 104.

Welcome to Simple Wholesaling. A Christian podcast that supplies simple, yet effective content for real estate investors and business entrepreneurs. Get advice, tips, and tricks so that you can stay true to your values and achieve your dreams with real estate investing you can trust. Now, introducing your host, Brett Snodgrass.

Brett: What is going on all you Simple Wholesaling fans out there. Welcome to another episode of the Simple Wholesaling podcast. I am your host for today’s show and every show, Brett Snodgrass, and I am with my lovely co-host, Brian Snider.

Brian: What is up everybody and what is up, Brett? How are you doing today?

Brett: I am doing fantastic. I am super excited about today’s show. We get a chance to interview today’s ‘The Mogul’ of real estate. Brian was actually making fun of me because I do not know how to say and pronounce that word very well, mogul.

Brian: Mogul.

Brett: Mogul. Today’s interview is with the mogul of real estate investing in building a team and that is Tom Cafarella, super excited.

Brian: I know. Yes, he does a little bit of everything. I do not know how he does everything he does, yes.

Brett: I do not know either.

Brian: One of the things he does though, he does have his own podcast he puts out there and he does everything but I want to talk real quick about your podcast, not this one that you do with me, but the one that you are doing with your daughter now. How is that going?

Brett: It is going great, it is going great. Yes, I do not know if we have mentioned that on earlier shows but Kaylin, my eleven year old now daughter, we decided to do a podcast called the Daddy Daughter Show. It is nothing fancy, it is nothing that we are highly promoting out there to the whole world but my family and friends seem to enjoy it and it is really just a time for my daughter and I to connect and just to talk and just that do something together.

Sometimes when your kids reach a certain age. When they are two years old or four years old and they are always jumping on you and wanting to snuggle and wrestle like my boys doing all that, that is awesome. Kaylin, we used to have amazing times together but when they reach a certain age, sometimes it is hard to connect and it is hard to find things that maybe you have in common and that is why we are doing this Daddy Daughter Show podcast and it is a pretty cool so far.

Brian: Yes, it is really cool. It is a really good show, you guys should check it out. Why don’t you tell them real quick about how they can check in out?

Brett: Yes. If you go to iTunes, it is called the Daddy Daughter Show. Search for Daddy Daughter Show. We have a very simple website called daddydaughtershow.com. We just put that together and really is just highlighting the podcast. There is a link on there to go to the Daddy Daughter Show. We have come out with two shows so far. It comes out the first and third Wednesday of each month and so stay tuned. If you guys are interested please, go and leave us a review on that. We actually have quite a few reviews so far and we are excited and we feel like it is a pretty good show.

Brian: It is really cool. I just appreciate the fact that you are doing that just for her to have a voice because girls that age they just do not have a voice. That is so cool. I would have loved to have been on like a radio show or podcast or something that age.

Brett: Yes. It really helps. If your kids are into, I do not know, it helps her like market herself or market something and we all know that when you enter into the real world as what they call it and you are getting a job, we do not really learn how to really market our self. It is a way to her to get to think about what you want to talk about today, how do you want this outline of the show to go? She had to put together the intro which is hard. We had put together the words, the music and what we wanted that to sound like and now we are thinking about should we have guest on it, should we do not have guests on it, do you just want to be us? Just thinking about different life decisions and it just, I do not know, it is pretty cool kind of entrepreneurial.

Brian: Yes, my favorite part is the rapid fire questions that you guys do.

Brett: Yes.

Brian: Yes.

Brett: I know. Each show we do a section that is the daddy daughter rapid fire round. I either ask her questions about something that is kind of adult like interested in. I think I asked her about money one time and then I ask her about like jobs on time and then she has me about slime on the last episode. Yes, it is really cool. She asked me something that she is interested in. Cool show, check that out guys. If you guys love this show, please go also to iTunes and leave us a review for the Simple Wholesaling podcast because we talk about life, we talk about real estate, we talk about the love of Jesus and we are really just trying to promote this show to give you guys the content that you want to hear.

Brett’s Insight of the Week

Now, simple tips and tricks that make real estate investing easier, faster, and better. Brett’s Insight of the Week.

Brett: On today’s Insight of the Week, we are going to talk about the three skills that help you master transactions. If you are into fixing and flipping or wholesaling in general, you need to have a few ideas about how the transaction is going to go. We actually have a transaction coordinator. His name is Gary Town in our business. He handles all of our closings and our transactions but in real estate, a lot of people do not know how the rules or even you have to go through a title company or not go through a title company or the difference between a quick claim deed and general warranty deed and those are some different things that you might not know about.

It really helped me by actually going to the licensing school to get my real estate license and they taught me all about these different types of deeds, these different types of trusts and how the disclosures that you have to have and all these things that you have to have in a legit real estate transaction. A lot of people cut the corners and so I really recommend you guys, if you are interested in going in depth and really learning about real estate transactions, maybe check out the licensing school.

These are three skills that helps you master transactions. Number one, understanding closing documents and procedures. Again, go to that licensing school, super important. There is also certain title companies that they hold classes. I think Cochran & Associates is one. They will actually hold a class on HUD settlement statements. They will just say here is what these numbers mean, here is the different disclosures that you need, here is maybe a correct first agreement that you need to have certain language in there and then go through that. Understanding closing documents and procedures is number one.

Number two, organizational skills. I think that is crucial if you are doing wholesaling or any type of real estate transactions. There is a lot of documents that you have to keep track of. For me, as a broker, I have to keep track of all of my HUD settlement statements, all the closing documents whenever I close on a transaction, buy or sell, and even if I am just a broker in the transaction, I need to keep track of those documents. Having a folder, maybe a Google Drive folder that you keep everything in is super important. Then just keeping track of all those documents.

Like I said, in Indiana we have to have the lead based paint disclosure, a seller’s disclosure for each transaction that we sell. Keeping track of all that is super crucial. Then number three landlording. We kind of put this in there because as wholesalers or investors in general, it is just good to know about the whole transaction part of if you buy a house, put a tenant with in it because we do that all the time.

What are the logistics that we have to go through when we have a tenant? The lease that we have to get signed, the rules and regulations of property management or what repairs do we have to do as the landlord? What are we responsible for? What does the lease say? Then if you have to evict, what is that procedure that you have to go through? We just really recommend that if you are going to get into real estate investing, go through these three organizational skills to master the transactions.

Spiritual Foundation

Do you dream of a life that is purpose-driven and makes a difference? Spiritual Foundation.

Brett: On today’s Spiritual Foundation guys, I am going to talk about a couple of Bible verses that really been hitting home with me lately. My wife and I got to go see the movie, Paul: The Apostle of Christ, this past weekend and it is probably out at theaters now. I really highly recommend going and seeing that movie, it is really cool. But I do not think this is actually in the Bible but one thing that Paul was telling, I believe, the Roman guard in this movie, Paul is in prison and he was talking and kind of administering to the Roman leader of the prison there and he said the story and he was talking about life and he said imagine you are out at sea and you are in this boat and you are sailing, right?

You just look out and you see this huge ocean and let us say you take your hand and you reach down into the water and you pull your hand out and now you have water clenched in your hand like a fist. You are watching the water oozing out of your hand and you are trying to hang on to this water but you cannot because you just cannot do it, right? Which is your hand. He says this is pretty much the way everybody views and handles their life here on earth. We are trying to hang on to this life as hard as we can but it is always slipping through our fingers, right? But then we look up and we see this vast ocean, and this is what eternity is.

This is what God wants us to really view and to look at because we are looking down at our hand and we are trying to clench this water that is slipping out of our hands, this life that we are totally forgetting about the vast ocean. That is what God wants us to really look at and that is what eternity is. Really just hit home with me just because as a Christian, and this is anybody, we focus so much on this life and we do things that are going to get us ahead in this life whether it is money or success or power or just trying to just to hang on and when we get sick we do everything in our power to get better, to live the longest life that we can and just trying to hang on so tight when we all know that in the end it is all going in the same way.

This is a temporary life and God wants us to look at his life, the eternal life, and really to focus on that. A couple of Bible verses that has been sticking out to me is James 4:14. It says, ‘Yet you did not know what tomorrow will bring. What is your life? For you are a mist that appears for a little time and then vanishes.’ Psalm 144:4, ‘Man is like a breath. His days are like a passing shadow.’ I do not mean this to be a ‘Debbie Downer’ or a morbid section of the show but sometimes it is good. It is good for us to look at our lives like that because it puts everything into perspective, because if right now you are in the trenches and you are working eighty hours a week and you are just super stressed out like I am sometimes and you are you are going a 100 miles an hour and you are just trying to hang on.

If you think about these verses right here, it puts things in perspective and you can sit back and reflect now. Like you know what, what do I need to change in my life to really start thinking eternally? What are the things I need to change to put my priorities in check? That is what this really does to me. I really, as a Christian, as a fellow believer, as a follower of Christ, I do not want to hang on to this temporary life so hard that I forget about the eternal life. What am I doing in my life to live, to make that legacy, to pour into someone so they can have eternal life, you know? Those are some things I really had been thinking about that and really just hit home with me.

Brian: I think I mean just you talking about time and that you and I actually just had a conversation about yesterday of like how are we actually spending our time? Are we saying yes to too much? I think that is very easy to do in any kind of anything that you are doing. Being able to just… You and I both have sort of heart where we want to help people out. We want to do it. But also at the same time too we want to put our business out there as best we can so we are constantly saying yes to all these things. But is it really worth it to us, our business, our families and everything I get into just our faith. Are we doing what we need to do best for our heart and sort of that heart of actually saying yes? Maybe there is, maybe we would be better off by saying no sometimes.

Brett: Yes, definitely. I think we are both kind of yes man. We are, yes, and that is okay but we have to learn to say no when it is not… There is a certain point when you say yes to everything, you cannot fit anything else into the suitcase of your whole life. That you just have to say, ‘You know what? This is enough, I have to take care of myself, I have to take care my family. This is not where I want to go and I want to do something different.’ I hope this helps you guys out today. We are going to transition into the meat and potatoes part of the show with our interview with Tom Cafarella.

Interview

Brett: Alright, guys. We have on today’s interview with Tom Cafarella from Boston, Massachusetts. Tom co-founded Ocean City Development and he has been spending the last many years wholesaling, fixing and flipping, and buying multifamily units and building up his cash flow. He has also been involved in some coaching individuals and how they can become successful real estate entrepreneurs. He has one of the most amazing podcast out there called The Real Estate Mogul podcast. Let us meet Tom. Tom, how are you doing?

Tom: I am doing awesome. Like I just said, I am sitting in about 16 to 18 inches of snow right now in Boston but other than that, I am all good.

Brian: Well, thank you very much for joining us today. We appreciate it and glad to have you on here.

Brett: At least you are snowed in. We are not taken away from your golf.

Tom: That is awful. No, I do not have any other hobbies outside of real estate. I love real estate. I think for anybody that gets into real estate, it is a blessing. It is like one of those things where you wake up and you feel like you are never working.

Brian: Perfect, there we go. That is what I like to hear. Let us go ahead and jump into that. You said you are all about real estate, you love real estate. Let us talk about this, how did you get into real estate? When did you first kind of know that you are passionate about it? Kind of dig a little bit of your origin story here.

Tom: I knew I wanted to get into real estate after I read the book Rich Dad Poor Dad which I am sure a lot of your listeners have probably heard of or listened to or read. I was a pizza delivery boy in college, I was pre-med and I wanted to become a doctor because I thought that doctors made the most amount of money. While I was working my way through college delivering pizzas, I came across a book Rich Dad Poor Dad, actually the audio book Rich Dad Poor Dad. While I was taking the pepperoni pizzas from one house to another, I had the audio book, the cassette tape, playing in my car as I was driving around. By the time I got down with that book, I completely changed course. I was a 100% done with basically getting into medical school. I passed the test I needed to get into the [inaudible][16:15].

I did all my required course work and it really hit me that I wanted to be in business and more specifically I wanted to be in real estate. Now, I was probably about 20 years old at that time. I did not do my first real estate deal until I was about 24. I spent four years not knowing what to do. Like I am sure a lot of your listeners that have never done deal before you do not really know what the first step should be, so I spent four years basically trying to figure out how to do things until I finally actually found a local area mentor that basically laid out the blueprint for me and I did my first year and then I got did my second deal and the rest is kind of history. But it took me four years because I did not what I should be doing on a day to day basis and I just spent all day listening to podcasts, listening to audio books, reading books. I just never knew what the first step really should be in real estate.

Brett: I want to dig into that. Number one, I want to ask you, when you are listening to Rich Dad Poor Dad, was it a cassette version, a CD version or an MP3?

Tom: I do not know if back in 199…

Brett: 1919? You are dead.

Tom: No. You know what… Actually…

Brett: Must have been a cassette.

Tom: Yes, definitely a cassette. There is no doubt it was a cassette. I was driving around in my 2000 Kia Sephia. I had a brand new Kia Sephia, I thought it was the best car in the world.

Brett: That is awesome. I am just playing with you. I just like to ask those questions because a lot of times the millennial these days are always I got it on my iPad. I had to listen to with my Walkman so I get it, I understand. But let us talk about that a little bit . I want to talk to the newbies out there that are in that exact same spot. They are listening to podcasts, they are going to seminars and they are frozen with fear or whatever they are doing and they are not taking any action, they are not doing anything, I see that all the time in my local meet ups, everybody sees that all over the place. What prompted you? After that three years, you kind of mentioned it a little bit, but take us a little bit further in when did you decide to take action and why I guess?

Tom: Well, I was always trying to take action but I never really had the guts to pull it off because to be honest with you I was never completely sure if what I was doing was right. During the course of that three years, I listened to a lot of books and read a lot of books and listen to a lot of podcast and all that good stuff and bought DVDs and things like that. I would go out and I would maybe make an offer on a home. If I got that offer accepted, I would end up backing out because I did not really know that you could even make money on properties if you did not have the money to close on them. I did not know what that process was right.

Really what prompted me to do it, to basically execute on it, not necessarily to take action because I was taking a little baby steps but it was really having a mentor that could help me locally. What ended up happening was I got a property under contract after starting to work with this mentor and I wanted to do the same thing, I wanted to back out after I got the property under contract. He said to me, ‘If you will not buy this property, I am going to.’ Then he said, ‘But you should not sell it to me because I am actually not going to be able to pay you the most amount of money for the deal. You should market it to a bunch of other people,’ and I did that. Long story short, on my first deal which was an assignment contract that I did not put any of my own money up, I made a $115000.

Brian: Woah.

Brett: Wow. Where was that at?

Tom: It was in Somerville which is basically almost Boston. It is basically one or two towns outside of Boston. But I got lucky. I mean that is not a typical first deal. That deal instead of being a $115000, it could have been $15000 or it could have been $5000. It really did not matter what the amount was because I need to get my first deal under my belt and I need to build the systems in order to replicate that deal. That was really the biggest thing. I mean it is one thing to do your first deal. Some people do one deal and then they cannot figure out how to do their next deal. It is important to be able to just replicate that deal over and over and over again.

Brian: How did you handle that and what did you… When you made a $115000 on your first deal and then you probably quickly realized not all your deals are like that, how did you deal with that? How did you cope with that?

Tom: It was a blessing and a curse to make so much money on my first deal. In order to make a $115000 on your first deal, there is really two components of that. First, you have got to be in a decent price point, right? Some people are in markets where maybe the after repair value might be a $115000 so you will never make a $115000 on a deal where the ARV is $115000. What being a decently priced market in Somerville was so the numbers on our property where we got it under contract for 300 and then we assigned it for 415. The only way, like I said there is two ways to get a really good deal like that, first you got to be in a little bit higher of a pricing point but the second thing is that you get to make super low offers.

Making super low offers is okay. You can get some of them accepted but as we stand right now with the market being so competitive, sometimes that will cause you to not do a deal ever. When I talk about making any offer and I talk about the people that I am coaching, I really want to do what we call the Goldilocks offer which is that the offer is not too high, it is not too low, it is just right. Because if it is too low in this market right now, you may never get an offer accepted. This deal was done in 2009 when the market was at its bottom and where sellers who were at that time the weakest point. But because I made an offer so low, because I thought okay I can replicate this, I did not do my second deal for about six months because I just went around making offers that were similar to that first deal.

Really, the learning curve for me there was you got really really lucky on your first deal. You can keep making those really really low offers but you might only do one or two deals a year. I did not only want to do one or two deals a year. For some listeners, doing one or two home land deals a year might fit what they are trying to do but for me I really want to do a lot more volume and now I do over a hundred flip and fix deals a year. The learning curve there for the next six months was if you make offers to low you might not get anything accepted. Once I kind of figure that out, then things started to really click.

Brett: Yes. I am kind of like you, Tom. I likely know for one, I do numerous deals as well and I like to have that taste of success each month because if I was only putting in so many offers and only getting one or two accepted in a whole year, I would be discouraged a lot.

Tom: Yes. Honestly, I almost gave up.

Brett: Yes.

Tom: It might sound crazy. You made a $115000 on your first deal but six months later you might be thinking to give up but at that point before I did my second deal, it was almost like wow maybe that that will never happen again, maybe I will never do another deal again.

Brett: Yes, you thought maybe it was a fluke definitely.

Tom: Yes, absolutely.

Brett: Yes. I want to go really into you own your own brokerage, is that right?

Tom: Yes.

Brett: Okay. You have a massive brokerage, how many people? How many agents do you have?

Tom: We have 226 as of today and we built that over the course of two years.

Brett: Wow.

Brian: Wow.

Brett: That is a lot of agents. I think I have like four, yes.

Tom: Yes.

Brett: That is a lot. One of the biggest questions out there, if you look on different forums all over the Internet, as a real estate investor, do you have your license? Do you not have your license? Obviously, you have gone the way to have your license and actually built a brokerage to help with your real estate investing business. Talk to our audience about why do you think it is important to go that direction and should they or should they not get their license?

Tom: It is one of the craziest arguments that I have ever heard which are essentially people saying you should not get your real estate license because of the liability or you should not get your real estate license because you cannot do the same things as a real estate investor. It is totally false, it is 100% false. It kind of relies on the promise that when you go out there as an investor you are going to be making below fair market values, right? We go out and we have 226 agents as of today, we make below fair market value each and every day.

The problem is not that we are making below fair market offers, it is that people think well you are going to get in trouble somehow by being a real estate agent and making a below fair market value but when we go out and we meet face to face with the seller, our primary objective is to help determine what makes the most sense for them. We know that as real estate investors, only 5% to maybe 10% of the people that we meet with are actually going to want to take an investor off after they find out all of the information. For most sellers, it does not make sense to sell to an investor and where you get in trouble is by trying to force somebody who should actually list their house to selling their house to an investor.

What we found over the course of the last ten years is that it does not matter what you want, right? You might want as an investor for that seller to take a below fair market value. But if it does not make sense for that seller to do that, they are not going to do it. What we have found is that the best thing to do is to go out there and educate the seller. Educate them on what it looks like to sell their home the traditional way. What are the pluses, what are the minuses, what are the financial impacts? Then to educate them on what it is like to sell to an investor? What are the pluses, what are the minuses, what are the financial impacts? If we do that and we really serve the sellers, now we are going to not only get more deals, we have more investing deals by doing that. We are also going to get more listings from it.

When we look at our listing side of the business, I do not really look at the brokerage like I want to make a ton of money. I look at it more like I want to recruit my marketing dollars. If I do a mailer and I spend $10000 on a mailer, I want to make sure that I am getting back 15000 or 20000 listings. What that allows me to do as an investor is it allows me to having unlimited marketing budget. For most investors they will spend $2000 or $3000 on marketing and if they do not hit on an investment deal, it is a total loss. The next month, when you have to go and think about putting more money into marketing, it is like oh man I do not know if this makes sense to do. I do not know if I can go another month without anything.

You constantly feel like you are kind of gambling but with the system the way that I do it, if you spend $2000 or $3000 on mailing, you should get back $4000 or $5000 or $6000 on listings alone. When you go out there and you are an investor and the person if it does not make sense for them to sell to an investor, then you have the retail option. We feel like it is the best of both worlds not to mention if you do not have your real estate license, how are you going to get access to MLS? If you do not have your real estate license, who is going to lease you flip, right? There is so many benefits and I could probably talk for about an hour about the benefits of being a real estate agent and there are so many benefits and the negative is not even a true statement. For me, it is just a no brainer to be a real estate agent if you are an investor.

Brian: Definitely. Thanks a lot for sharing that. I appreciate that and yes I think that is great advice for our listeners and stuff.

Brett: I am right there with you too. Just to kind of piggyback on that a little bit, I decided to get my real estate license back. I think I have it seven or eight years now. I got it because I had an agent, and at that time we were putting in a lot of offers through the MLS on bank owned REO properties, that was what the market was back then. I was seeing her collect a lot of commissions and…

Tom: Oh, yes.

Brett: I thought she made I think $70000 in one year off of our deals that we had bought from the MLS and I said I want that $70000 so I decided I am going to pay the $1000 or whatever it was to get my license. That is why I got it. I did not even realized the access to the MLS and like all those other benefits that came with it. I can list my own properties now and very easy how many benefits I got.

Brian: Yes.

Tom: Listen, you were probably throwing… You are talking about $70000 just on the buy side but you are probably throwing away more on the listing side so you might have been losing a $100000 a year or because you did not want to take a test because somebody told you that there is liability, I mean that is nutty.

Brett: Yes. It is actually funny because I took the real estate class and the teacher of the class, when she heard that we were investors, she said well you do not want to get your real estate license. She talked me out of taking the test and I did not take it and I had to take the class again.

Brian: Oh my gosh.

Brett: Yes, so crazy.

Tom: It is so frustrating and that is just on the agent side. My thing is I built out a brokerage. Right now, are you guys familiar with what Mojo Dialer is?

Brett: Yes. Can you explain it though for our audience?

Tom: Yes. Mojo Dialer is a free line dialer and it is just a piece of software that allows you to call home owners and basically ask them, ‘Hey, are you thinking about selling your house now or at any time in the future?’ Right now, as it is snowing 16 or 18 or 20 inches, I have got thirty to thirty agents on Mojo Dialer right now that are calling home owners in the areas that I want to buy house. From the cell phone that I bought, prospecting for me.

It is really generation for me as a real estate investor. People spend a lot of money on mailers or Facebook Ads or Google Pay Per Click, I have 35 people working for me for literally free, prospecting for deals for me, and it is just a win-win for the agents because if the agents find a deal, they are incentivized by that. They make money, they go in with the cash offer, instead of them saying, ‘Hey, we should consider listing your home,’ they are able to say, ‘Hey, would you consider a cash offer?’ It gets them more face to faces and again I am checking my Mojo stats right now like so far today we have dialed for thirty hours. There are thirty hours of talk time for people in my mind market and they are calling on the lists of the sellers that I want to buy homes in.

Brett: Wow.

Brian: Wow, that is pretty cool. Let us keep going to that though. When you guys are looking for sellers, you mentioned mailers and the dialers, something like that. What are some other things that you guys are using right now that are working for you guys to generate some of those leads for sellers?

Tom: I think there is only a few that work really well. I mean if you Google it, you would probably find 50 different things that are suggested. I am going to tell you the ones that I have been in a bunch of mastermind groups, I ask everybody. That is the first thing. If I meet a successful investor, how are you generating leads? The ones that are working really well are Mojo Dialer which is just simply cold calling in the areas that you want to buy homes in. Google Pay per Click, Facebook ads, mailers and then there are some online lead generation sites where you can just buy leads from. Are you guys familiar with say the zBuyer?

Brett: Yes. We have never tried it but yes we are familiar.

Tom: Yes. Those are the ones that work really really well. That does not mean you cannot generate leads from other sources. Like we have billboards up and we have all of our vehicles wrapped and we do a lot of different things but at the end of the day, those five that I mentioned, Mojo Dollar, Google Pay Per Click, Facebook mailers, and then online lead sources like the zBuyer are the ones that are very very consistent, where you can get a really really good idea of what your cost for a lead is going to be. They are all things that newer investors could do if they have a marketing budget. If you do not have a marketing budget, Mojo Dialer is going to be the way to go. Because for a $150 a month, you can call an unlimited amount of people. That does not take barely any money in order to do.

Brett: Got you. Out of all of those right now, those are some of the similar ones that we use as well, would you sway one over the other? Which one is working the best for you? Like if you could just eliminate all of them, just leave one, and just say hey I am going to this one. Which ones is the one that is working awesome?

Tom: They all have pluses and minuses, that is the thing and it is really difficult to say which of them I would select. Let me give you an example like Google Pay Per Click. Somebody goes on Google, they type in ‘sell house fast Boston’ and then they click on my ad. For someone like right now who is at home, to go on a computer and typing sell my house fast, you know they are an incredibly motivated seller. But that does not mean that they can sell to an investor. Their mortgage balance might be too high, their property may already be listed on the MLS, there could be a lot of different reasons.

With the Google Pay Per Click, I would say that some of the most motivated people because they are actually directly reaching out to you and that is the pro’s of a Google Pay Per Click. But the negative of it is that they might be filling out a form for a type of property that you are not even interested in. If I had to pick one, I would go with the tried and true which is mailers. The reason I would do that is because mailers you can really target who you want to hit. You can pull specific demographic information, obviously you are going to only mail properties in areas that you like to buy so you can get super specific.

If somebody calls off a mailer, they are fairly motivated because they had the action in order to do it. The only thing I do not love about mailers as of today is that everybody is doing them. If it is not that uncommon, then we will do a mailer and we will show up on an appointment only to see a stack of five or six other investors. They all have pluses and minuses but I guess if I had to pick one today, I would pick mailers.

Brett: Yes, it is who we have seeing to. It is has been working and it still works. Does it work as well as it did two years ago? Yes, I would say probably not but that is still the one that we really gravitate towards. Let us talk about you and it seems like you have coached some individuals, is that correct?

Tom: Yes, I have coached over a hundred people in the last year.

Brett: Wow. When someone comes to you and you are going to coach them, do you have a system or do you have a structure? What do you start out with in your program? Do you just get right into real estate or do you show them some lead stuff, what is all that looked like when you are taking someone under your wing to coach them?

Tom: The first step is marketing because this is a sales and marketing business first and foremost. Like where I see people fail as newbies, if they do everything besides the sales and marketing piece. They will read how to calculate on how to value offers that we search and read books about everything and everything, anything and everything, but they do not do the one thing that you need to do which is fine off market deals. The first thing that we do is we put together a marketing plan and we figure out how you can get face to face with sellers.

If you cannot figure out how to get face to face with sellers and it is not complicated but if you do not start doing that, the rest of the stuff does not matter because it is irrelevant. If you are talking about setting up an entity or figuring out which accounting you are going to use but you do not have a business yet, you are kind doing things backwards. The first step for me is to create the marketing plan so that we can get you face to face with sellers. The second thing is creating the sales process. I talked about it being a sales and marketing business.

You market to get face to face appointment with off market sellers and then you use sales skills in order to close those sellers. There is a big difference between just going out and firing off an offer or following a sales process that takes about an hour or you are going to walk through from building rapport to asking qualifying questions, to trial closing, to tie downs, and all the other sales tools that we need in order to get the highest conversion. Motivated sellers who sell to investors, their primary motivation is not money. If you do not walk through a sales process and check off all the boxes, even if you make them a fair offer, they still might not sell to you.

We focus on the sales and marketing piece. Our program has everything else in it as well, have the value properties and all that good stuff. But if we cannot get you pass that point, then we are never going to be able to help you.

Brett: Yes, definitely. I mean the biggest thing is just putting yourself out there, get in front of sellers, and then yes go into that process. Do you encourage people to give handouts or presentation, a PowerPoint presentation anything like that? Is that part of your sales process?

Tom: Not a PowerPoint because that will come up to kind of contrived. I mean it has to be natural. We do have a sales process that we go through that they basically need to memorize before they go out there. They are going to walk through all of the steps of the sales process. We are face to face with the seller, we will ask them are you an audio or a visual type of person. If they say audio, we are not going to start giving them handouts because it is going to kind of throw them off.

If they say they are visual, we will give them a couple of documents but the one thing we do not want is we do not want them kind of focusing on a piece of paper that we are giving them. We want to build a relationship more out there. We might give them one or two small things that do not have ton of information on there just to look at but we do not want to focus too much on that type of stuff because they can all take away from the building of the relationship which is the most important thing.

Brett: Got you.

Brian: Yes. Thanks. I just want to just kind of… Let us do one more question before we move on to the next section here. If you could give like one big tip or one big piece of advice for those newbies out there that are just getting started, kind of in that phase of hey I am ready to kind of make my first deal but maybe I am still kind of leaning back and forth, maybe I want to back out, what is that one big tip or one big piece of advice that you give those people?

Tom: My big tip is finding someone that you can work with and I think it is something. When I was first starting, I mean I am 35 years old right now, ten years ago I was 25. From 21 to 25, I did not do a deal. From 21 to 25 I thought I could do everything on my own, I thought I did not need anybody, I thought it was stupid to find a mentor. What I have realized is the older and older I get, the more mentors I have. I am in a ton of coaching programs right now, in a ton of mastermind groups right now.

Doing your first real estate deal is a big deal right and some people will say just do it, just take action, but the reality is if you take action on a deal that you should not have taken action on, you can lose real money in real estate. You can make real money in real estate, you can lose real money on real estate. To me, in the beginning, you absolutely need to have a mentor, right? Does not have to be me, does not have to be you guys, has to be somebody that you can go to and just get a quick question answered. Is this a deal? What should I do? Should I wholesale it, should I flip it, should I buy and hold it, how should I find the exit? Because I think at the end of the day, people tend to fall into two categories without a mentor.

There is category one where they say, ‘You know what? I am going to do my first deal. I do not care, I just want to get it done.’ Those people who just “take action” without any guidings, I think a lot of times get themselves into trouble and they may lose money on their first deal. If you lose money on your first as a real estate investor, you may never do your second deal. That is category one, the people who just say I am going to take action no matter what. Then you have a category two which is basically where I was in, where I was kind of, I do not want to say scared because scared was not even the right word, I was just unsure. I did not know if I should do that first deal and just having someone above me saying yes you should do that first deal and this is how you do it and by the way you are not going to take any financial risk the way we are talking about doing it made all the difference.

Brian: Yes, definitely. I just want to piggyback off that just a little bit and just kind of ask you. We have a lot of people that just come up and approach us like, ‘Hey, can you mentor me? Can you coach me? Can you do this?’ What do you think? Is there like kind of a best practice or best way to kind of approach somebody that you want to mentor you?

Tom: Well, there are so many good people out there that can mentor you that have businesses set up exactly for this. I do not really necessarily think it is a matter of finding a person that is already maybe not already mentor, right? I do not think you need to approach. You do not really need to hunt for mentors these days because there are so many good people that do it. I think it is a matter of really finding the person that you think can help you the most and then going from there. I mean if you literally do a Google search or you go into a lot of these different real estate investing Facebook groups, you will find 10 or 20 or 30 mentors and I think it is just a matter of finding somebody that will work well for you.

There is both people that are on the local level and people on a national level but I do not really think that you should try to convince somebody who is not a mentor to be one because they probably do not know what to do. I talked about the fact that I mentor over a hundred people in the last year and really that was year one for me as a mentor. Honestly, the first three months that I did it was very frustrating for me because I did not really know exactly what I need to do so there was a bit of a learning curve. I do not think trying to convince somebody to be a mentor and to be next for a student is the best thing.

Brett: Yes. Definitely there has got be some structure to it. It is like real estate, it is like you got to walk down that road a little bit before you really start to get the hang of things.

Tom: Honestly, I made that mistake. I did not really realized what it was going to be like for the first few months. What ended up happening for me is I just had to spend a lot more individual time with the people because I did not personally have the system set up and now I have built out those systems but in the beginning for me it was kind of rough.

Brett: Yes, definitely. Well, guys, make sure you go to our show notes. We are with Tom Cafarella. This is episode 104. Go to simplewholesaling.com/episode104. Brian and I are going to go into the section of the show that we like to call Going Deep.

Brian: Going Deep.

Going Deep

Brett: In this section, Tom, we are going to talk about more life questions. Before the show, you talked about your passion about real estate and if you have worked your nine to five job you got out of that because you are very passionate about real estate. Talk to that person out there right now that is working that W2 job, they do not really enjoy their work, why are you so passionate about real estate and why is it so special?

Tom: I think for anybody working a nine to five which I had in the very early stages, we are not on this earth for that long, we are really not. I am 35, it seems like just yesterday I did my first real estate deal. People talk about real estate investing being risky but if you really think back to human kind, what was risky is back in the day when we actually had to go out and hunt every day for our food. The type of risk that we are talking about today, leaving a full time job, or doing a real estate deal, it is not real risk. If you live in America in today, you can recover very easily, right?

You are not taking the risk that we are talking about. To me the biggest risk is you working the 40 40 40 plan, right? The 40 40 40 plan is you work 40 hours a week for 40 years doing something that you hate to take a 40% reduction in pay and spending 40 years which is I mean honestly it might even end up being more than 40 years. The average amount of time that people work nowadays, spending 40 years doing something you hate is pretty much the bulk of your life, right? If you are going to do that to me, that is the risk. Real estate is awesome. I mean right now like it is 1:40 PM on a Tuesday. What am I doing?

I am talking about real estate. I mean there is nothing hard, I worked a lot by the way, when I first started getting into real estate, I read the book The 4-Hour Workweek by Timothy Ferriss, I thought I wanted to work four hours a week and I thought I wanted to work four hours a week because I hated my full time job so much. What I realized is when you actually love what you are doing, you are passionate about what you do every day, you do not want to work four hours a week, you want to work 80 hours a week because it is what you love. There is not a day that goes by that I do not do something real estate related. If I am on a beach in Hawaii, I want to know what is going on in my real estate business because it is exciting.

Some people will say to me when I am on vacation, ‘Tom, you have got to shut off. You have got to shut down, you have got to check out.’ I feel bad for that person because they do need to check out from something if they are working a nine to five job. I do not need to check out from anything, I am doing what I love every single day. I think most people that I have talked to in, I do not know if you guys feel the same way, but I just feel very lucky that I am in real estate.

Brett: Yes. I mean I definitely love real estate. It is obviously a tool and I do like to check out though sometimes to spend time with my family.

Tom: I am not telling people that they cannot check out.

Brett: Right.

Tom: I am just saying like for me personally, when I go to check out, I find it less interesting that when I am checked in. It is like I do not want to check out but real estate can afford you that luxury though. It will afford you tons of time to check out if you wanted to. I mean like the coaching business that I started. The reason I started the coaching business is because I had my fix and flip in investing business on autopilot. I got bored and I needed something else to do so I started coaching but I could have checked out for a while at that point.

Brett: Yes, definitely.

Brian: Yes. I know you say you like to work, you love to work, you love what you are doing so you have your fix and flip business, you have your coaching business, you have your podcast and everything, how are you able to make sure that you have a personal life? You take trips to Hawaii, you give time to your family, how are you able to do that as well?

Tom: Good people. The biggest thing is having a good team. That obviously does not happen all at once. It is like I built the businesses all at once, I built them one by one. When you have the right people in the right places within your companies, there is really not a need for you anymore. I have systematized all of my businesses and so theoretically even though I do a lot, I do not have a lot of obligation to be anywhere at any specific time. If I look at my calendar tomorrow, for the whole day I might have two hours where I am blocked out and I am really doing something specific, the rest of the time I am kind of just looking at the business and saying where should I put my energy?

I put my energy where I think I am going to get highest ROI. But if I decided tomorrow I just want to take my kids to the park, I can use those two hours that I have blocked off that I needed to be somewhere or do something and I could theoretically just take the rest of the day off. For me, the bulk of my time every single day, is saying what systems within my business should I work on today?

Brett: Yes. Definitely, when you are building the team out and building those processes and systems, I am only working on that aspect of the business and you never perfect it. It is always something changing or whatever you are doing. You are adding a new lead generation source or something, you are always changing something.

Tom: You are always changing and there is always better ways to do things and, like I talked about, finding a mentor. Part of that is finding one mentor but the other part of it is finding other people that are in the business that you can network with.

Brett: Yes.

Tom: Because everybody does something. I do not care if you have only flipped three houses or you flipped 300. The person that flips three houses probably does at least one thing better than you. They have one system or one piece of software or something that you can learn from. You are always constantly evolving your systems and I see the coaching program I started, it is funny because I get people that have never done a deal before and I got people that have fixed and flipped a few hundred houses.

Some of the people in those groups make me feel bad about myself. I am like man this person has the best mailing system I have ever seen, how do I not have that? I do triple the amount of deals they do and so I will look at that and say, ‘Hey, how can I am not that into what I am doing?’ Now, my business is better. I have learned from the people that I have coached.

Brett: Yes, definitely. That is cool man.

Touch of Randomness

It is time for a Touch of Randomness.

Brett: Hey, thanks for sharing. We like to end our show with a little bit of a touch of randomness. We have two questions for you today, Tom. Please feel free to play our games. Number one, if you could have any guest on your podcast, a real estate mogul, that was non real estate so it cannot be a real estate guest but it could be any guest you want, who would that be?

Tom: Gary V. all day long.

Brett: Alright.

Brian: That was pretty quick.

Brett: Have you been trying to get him?

Tom: I have not. I mean you can book him for speaking in engagements for like $50000. I do local events and my goal is within the next couple years to actually get him to come up to one of my events. He talks about hard work and I am all about that, there is no shortcuts to success.

Brett: Yes, definitely.

Brian: Last question of the day for you here, Tom. If you could only pick one food to eat for the rest of your life, what would that one food be?

Tom: Man, that is a lot tougher, that is a lot tougher. I am a pretty big health nut. Am I trying to be stick with that and be healthy or am I talking about just pleasuraful eating for the rest of my life?

Brian: Let us do pleasureful. What is that pleasureful food for you?

Tom: As you know, as boring as it is, I would probably go with pizza because I could probably eat pizza every single day for the rest of my life, no problem.

Brett: Me too and Brian.

Tom: But I only will eat pizza probably every couple of months because I am really bit into health.

Brett: That is good. Definitely goes with the entrepreneur. I have read a book recently called Fit For Life. It actually talked about eating fruit until noon and I have been doing that. The elimination, you eliminate the toxins that your body until noon. Anyways, check that book out. It would be in the show notes. Anyways, Tom, if one of our audience members wants to reach out to you, where do they go?

Tom: The best thing to do, and regardless of whether or not you want to watch my webinar or not, is signing up for my webinar which you can go to at is www.buildateamthatbringsyoudeals.com. Again, that is www.buildateamthatbringsyoudeals.com. When you go into that website, you can put in your e-mail. Now, once you put in your e-mail, you will get on my e-mail list and then you will get my e-mail. That is the best way to reach out to me.

I mean the webinar is really good too. I would recommend watching the webinar but if you are all webinared out you do not feel like listening to it, that is fine. You will get on my e-mail list and then you will get my e-mail. Like I said, I love real estate and I am a workaholic. Any questions that anyone has, I am way more than happy to just answer them for free and send them over to me.

Brett: Awesome. We appreciate you so much for being on the show today. You, if you are listening right now, you can find that information about Tom Cafarella and his webinar in his website at simplewholesaling.com/episode104. Thank you so much, Tom. We wish you so much success in the future and taking time out of your busy day.

Tom: Thanks, I appreciate it.

Brett: Enjoy the snow.

Tom: Yes, it is part of New England.

Brett: Alright. We will talk soon.

Brian: Thanks a lot, Tom.

Thank you for listening to Simple Wholesaling. If you enjoyed today’s show, please head over to iTunes, give us a rating and leave a review. Be sure to pick up a copy of our free e-book, This Simple Wholesaling System, by joining our community over at www.SimpleWholesaling.com/OurDashSystem.

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