Ashley:
This is Real Estate Rookie, episode 103.

Derrick:
I was waiting tables at the time. I was taking calls while I’m at the table with people. I would feel my phone vibrate knowing it’s a seller and I would be middle of taking their order and be like, “I’ll be right back,” and I would go talk to sellers.

Ashley:
My name is Ashley Kehr and I’m here with my cohost, Tony Robinson, who has finally for the first time seen the mom glare.

Tony:
So Ashley is … She’s actually on vacation right now and she’s sharing a room with her three beautiful sons and they made a couple of cameos and we saw the mom side of Ashley come out during this episode so it was good to see.

Ashley:
Yeah. I did shoot a couple of glares across the room. A couple snaps under the table.

Tony:
Finger snappings.

Ashley:
You’re breathing too loud. It’s going to come through the microphone. For as much as I travel with my kids I think this is the first time that I’ve actually had to have them in the room to record. Usually I have someone with me who watches them or somebody I know or we have at least a separate room. Like a hotel room with two rooms. But yeah, so it was interesting.

Tony:
There’s also a hermit crab loose in the room right now, right?

Ashley:
Yeah. We were just in Virginia beach and so they got hermit crabs. So as soon as we stopped recording that was the first sentence that came out of one their mouths is Colt lost his hermit crab in the hotel room.

Tony:
Well, today’s episode is not about hermit crabs. Today’s episode is about flipping, it’s about wholesaling. We’ve got a really, really great guest. His name is Derrick Acuff. He’s not a rookie. He’s been in the game for about five years now. Done well over 100 deals in the wholesaling and the flipping space. But we brought him on because he thought his story would still be really cool for a lot of rookies to hear. He started off as a server at a restaurant. Took him six months of cold calling and door knocking to get his first deal but he was able to parlay that now into a full-time very successful real estate business.

Ashley:
This was a really great mindset episode too. Because Derrick actually goes into what was going through his mind when he had a breakdown and how he got through that. Because we all know with real estate there’s ups, there’s downs and you really need either a person or something to keep you on track and to motivate you and inspire you. So I really love that part about it. And then just going through how he stuck with it after six months of not getting a deal and then started gaining traction after that. And the biggest thing he said was consistency. So this is a great episode if you are a brand new rookie and you are getting discouraged because there’s a lot of inspiration here. Let’s bring Derrick onto the show.

Tony:
All right, Derrick, welcome to The Real Estate Rookie Podcast brother. Super excited to have you here man.

Derrick:
Yeah. Absolutely man. I’m excited to be here.

Tony:
Yeah. So Derrick and I connected on Instagram on social media. We had a quick conversation and after chatting with him was like man, we got to get this guy in front of the rookie audience because I think you got a really cool story to tell. So just kind of give us the backstory Derrick. How long have you been doing real estate? What is your business focused on and how did you get started?

Derrick:
Yeah, absolutely. So if anything I would probably take it back to high school and I’m going to run through it real quick. But when I was in high school I visited Houston. My dad lived here. And at that time I was planning on going to college. And what happened was I met a very wealthy individual and just being around him and hearing some things being in his presence kind of changed the whole trajectory of my life and I realized that I needed to be in Houston. So after I graduated a couple years later I was in college in Tennessee not liking it and I decided I was going to move to Houston. So I packed up my car with like $1,000, moved here and was on this path to become a petroleum engineer. That’s what I thought I wanted to do with my life. I thought I would get a good job, make six figures, and then in my late 30s get into real estate. I always had this idea of getting into real estate. And after being here, being in college, still hating it, it was just college just wasn’t for me. But what I learned was when I found real estate it wasn’t that college wasn’t for me it’s just that I wasn’t learning the things that intrigued me.
So what happened was I went to a seminar and they do the big pitch and all of that and I was sold by like day two. And when that happened I found out about this thing called wholesaling and that led me down this completely other path. So it was really just a series of being exposed. And I always say exposure equals expansion. And by being exposed to these new things it just kind of changed what I thought my life was going to be.

Ashley:
Derrick, that’s such a great point where you said that you went to college and realized it wasn’t for you. It wasn’t that educating yourself and learning wasn’t for you it was the topic matter. And I think that’s a huge, huge thing a lot of people don’t think about because … I could read a million real estate books, I could do a million courses but going back to college and doing the … What are the general ed courses that you have to take? Like art history or things like that. I could not imagine going back and doing that again. Because I have no interest in those subjects. So that’s awesome you bring that up. And I think as these rookie investors think about even which niche or strategy entices you guys and interests you guys. Because even if you think, “Okay, flipping’s going to make me the most money right now,” that doesn’t mean that you are going to enjoy flipping just because it makes you the most money. That is not a passive investment. Really if you’re looking for passive maybe buy and hold longterm rentals would be better for you and you might actually find that more interesting. So I think that’s great that you brought that up.
What does your portfolio look like now when you mentioned you were doing some wholesaling to start? How is your business put together now?

Derrick:
Yeah. So right now currently I have a business partner. We kind of found each other when we were both wholesaling and that just kind of grew. And today I have eight rentals total. Six of those are with him and that’s with the whole new short term business model which we can get into later, that we’re starting out. And then we both each have about two to three rentals. I have two, he has three. And so we have those and then we are flipping. I have about five flips that we have going on and we’re about to buy a couple more. So I’m just very active. We still wholesale. I love wholesaling. But it just kind of grew. The more opportunities and exposure that I’ve gotten it’s took me down these new avenues and ways to make money.

Tony:
Quick question. So how many wholesale deals or flip deals would you say you’ve done since you started?

Derrick:
Yeah. I’ve been in the business for about five years and I’ve done over 100 deals. I just kind of quit counting at that point. But we stay pretty active. Like I said, we still wholesale anywhere from three to five deals a month or every two months. A lot of those we started purchasing, relationships came into play, money gets easier, opportunities just start finding you and that’s kind of where we’re at right now.

Tony:
Can we go back to the beginning Derrick? So when you were a newbie, when you were a real estate rookie yourself, what was that first deal like? Kind of give us the backstory of how you stumbled into it, how you put it together, if you did it with a partner, if you did it by yourself. Let’s give the rookies some behind the scenes peek into how you got started.

Derrick:
Yeah. No. It’s a great question because I think partnerships are powerful. And so when I first got started I had paralysis analysis for like eight months and I wouldn’t take action. There’s probably a lot of people listening to the show that’s in that place right now. And what happened was honestly, my wife, my fiance at the time was very upset with me that day. We had gotten into it. And she was like, “Look, you’ve been talking about real estate. You quit college to do this. Either you need to take action or shut up about real estate.” So the next day I was like oh man, I got to do something. So I sent out like 30 mailers and I got a lead. But what that showed me was that this was possible. So after that I got a lead. That was at the end of 2015. In 2016 January came. We do our New Year’s resolutions. I said I’m going to work on this every day until I get a deal done. Thinking that would be a few weeks. I sent out some mailers. I got this lead. This is going to be super easy.
So what happened is, it took me six months to get my first deal. But in between those six months it was a lot of sending direct mail, going on appointments. Just taking action just blindly. Listening to BiggerPockets. Just indulging in a lot of education. But by taking the action I learned a lot. And what happened, it’s funny how the world works. When you put in that action things start to happen. Whether it’s energy, vibrations, whatever you want to call it. But my wife was a hair stylist at the time and she met a guy who was doing wholesaling. And she told him we were excited, we were super excited. We’re doing real estate. We’re about to do this. And he was like, “Don’t do it.” It was like the most depressing thing. He was like, “You don’t want to do this business. It’s a headache and all these things.” What happened is, because we were taking action I just kept bringing him leads. Like I don’t know what I’m doing. I have these people. He was really good at sales. And so after six months of me and him going on appointments, me going on a bunch of appointments by myself, taking rejection, looking like an idiot, just taking blind action, I finally got a seller who was ready to sell. It was a probate deal. Because I just picked one niche and I focused on probates.
And after six months I finally got someone that was ready to sell. And I remember because a week before this appointment happened I was actually at my breaking point. I was going to quit real estate. Once again had a mental breakdown in the kitchen of our apartment and my girl was just like, “Look, we’ve came this far. We know it works. We’ve met people that has done this, just keep going.” And literally seven days later it was my 24th birthday and I actually got my first deal and we sold it and we made eight grand from that. We split it 50-50 and I made $4,000 and that was the best money that I could have ever made. I mean it literally changed my life.

Ashley:
Derrick, I want to talk about that breakdown because as a new investor there’s definitely obstacles and challenges. And even as an experienced investor, what are some ways that rookies can stay motivated and inspired to get through those rough times in real estate?

Derrick:
I think by surrounding yourself with people did it. I think all the things that we hear when we get started on this path of bettering your life or real estate, whatever it may be, is all the things that we hear they sound so cheesy. Join a networking group, listen to all this positive stuff. And as cheesy as it is, there’s a reason why they keep saying it. Because it works. Whether it was the ’30s, the ’80s or the 2000s or now. It works. So I’m an introvert naturally. I think I can figure everything out by myself. I grew up an only child. It’s just who I am. So I didn’t surround myself with enough people and I feel like if I would have had that energy, seen more people that were like my age doing this, it would have kept me in a better head space. But there also is a reality that … And I talked about this my story yesterday is there’s a reason why most people don’t do this. It’s really hard. And the fortitude to keep going … I mean six months, like I had been on like 25 appointments and just keep getting told no.
And I’m like maybe it’s just me. You start questioning who you are as a person. I think it’s surrounding yourself with people who think like you do. And I would have done a lot more networking. I was just in my room listening to BiggerPockets like I’ll figure this out. And I should have put my ego to the side and found my tribe.

Tony:
So it took you six months, Derrick, to get that first deal back in 2016. How much time after that first deal did it take you to get your second deal?

Derrick:
Pretty quickly. It was like traction just caught. So that was in … My birthday’s at the beginning of June so we closed that one like towards the end of June. By the next month I think I had two more deals lined up already. So I was like, it is easy again. Like it’s crazy the emotions we go on. And I’m like, I’m quitting my job. For me, I was waiting tables at the time. I was taking calls while I’m at the table with people. I would feel my phone vibrate knowing it’s a seller and I would be middle of taking their order and be like, “I’ll be right back,” and I would go talk to sellers. I was so over my job and I don’t do good with authority so I just don’t like people telling me what to do. I recognize that about myself. So once I had this and I was like, “Oh, I’m going to be doing deals every month. This is a piece of cake.” So yeah, I did two more deals in July and August and I was like I’m done. I quit my job. They had done some things that I didn’t agree with and I just was like I’m done, I’m done.
It’s funny because I quit that job and a lot of my managers talk crap and stuff and I actually ended up helping one of my managers six months after that with a house I wholesaled. He was about to lose it to an HOA foreclosure. So it’s just a reminder, people may not agree with the new journey’s or what you’re doing but you’re never know how you can serve them in the future. It’s another lesson in ego. Just a different perspective.

Ashley:
Derrick, when you gained that traction, so you got that first deal and then it just started to propel for you, what are some of the key things you think that actually made that happen? Was it because you were learning what worked, what didn’t work and implementing those things as you analyzed and as you started networking with buyers and sellers and going through that whole process?

Derrick:
Yeah. I think a lot of it was all the work that I’d been putting in those first six months started to really catch and snowball. By me staying consistent that time, like sending out mailers every week to probates and like following up with people, I think it finally caught traction. But also like you said just going out. Then I started networking more. I don’t know why I waited until I was doing deals but I started going out and meeting people, surrounding myself with a better environment. It kind of all just came together at once. But the funny thing is what happened after that is I got lazy and stopped doing these things and I’m sure you guys know what happens when you do that. So it was a big learning lesson, but I think just by staying in the right mindset and being consistent and being focused. Like I said, I picked probates for a reason and I stuck with probates. And I did that for like two years. And we still do probate deals but that’s all I focused on. I became a master at that one thing and I just … That’s all I did.

Tony:
Derrick you’re dropping a lot of great knowledge right now brother and I want to get into the probates and kind of breakdown what that is for the listeners. But first, I love that you’re focusing on not even the technical part of wholesaling but you’re talking a lot right now about the mental kind of fortitude that you need to have to be a successful real estate investor. You’re not talking about how good you did on the phones. You’re not talking about the copy of your direct mail pieces. You’re not talking about how great of a closer you were. What you’re talking about right now is having the mental strength, the self discipline to get rejection after rejection, after rejection for six months before you got that first deal. And I think that’s the lesson the rookie listeners need to take away is that all those other things will take care of themselves if you just stick with it long enough, you surround yourself with the right people so thank you for sharing that message with us man.
So I want to talk about the probate. Like define what that is for folks and why you kind of chose that as your niche within the world of wholesaling.

Derrick:
Yeah. So I told you I’m a very self aware person so my budget at the time was $200 which means I had to get list … Everything I had to do was cheap. So I had to figure out how to do that. So why I chose probate was the list came out free every week. It was a process. They come out by single line. You have to go through about 200 to 300 every week just to be able to get 30 to 50 people and then you start that whole funnel. So the reason I chose probates really was just because it was free. I could do it. So every Monday I did that for like way too long. I should have hired a VA but I had to start where I was at. So I realized where I was at. I picked probates because it was cheap and that’s what I did. So I took those lists. I would go through, scrape the records. That was my Monday task. And then I would follow up with the old ones in the evening. And then on Tuesday I would go through and I would hand write the letters with envelopes. Just hand write. And then I figured out if you do a bright colored envelope that works better.
You start tweaking and trying things. And then I eventually realized how to streamline that. I could get a handwritten font and then you kind of start learning more and more things. But I think people over complicate it like you said when you get started and they’re looking for this secret and there is no secret. But the probates too, another reason is there’s motivation. Most of these people have to sell. Because what probate is is when somebody passes away and then their family is either going to inherit a house or they have to go through the will. So in Texas … This is why it’s important to figure out how your state works and their laws. But in Texas you have to either probate a will or do what is called like an heirship affidavit. And that just basically says who the property goes to. And then you go to those people and just say, “Hey, you have this property.” Most of them, their parents haven’t updated in years and needs a lot of work. So they have to sell. Usually it’s behind on taxes or something so it’s a burden. So when you can come in and offer a strong cash price, they’re going to be willing to get rid of some of that equity for speed and convenience. I realized that and I just went head first into that.

Tony:
Yeah. What a great breakdown. I was going to ask what probate is but you just gave a really good definition of what it looks like. And I just want to point out, you said that you chose probate because that’s what aligned with your capabilities, your budget at the time. Like you could have easily said, “Oh man, I don’t have enough money to go out and buy this big list so wholesale’s not for me.” But you said, “Okay, I want to wholesale. What’s the avenue that I can take that fits with I currently have with the resources that I currently have?” So super, super scrappy man. I love it. So you guys have obviously scaled a lot since you first started. Are you still doing just direct mail? Have you started leveraging other avenues to get deals? What’s working for you in 2021?

Derrick:
Yeah. So that was about 2016. So I think I did my last mail piece in probably 2019. Just because we got into more of the cold calling and now we do texting and SEO. Those are our three main lead sources. And then I would also say that if there was a fourth it would be social media. We do a lot of things in our community now trying to give back. Trying to teach people that this is possible but also the ways to do it on that scrappy budget. So those are like our four main ones. Cold calling, texting, SEO and then I would say JV or social media. It’s not that direct mail doesn’t still work. I have friends here in Houston that still kill it on direct mail. They spend thousands a month. For me, I always look at my return on investment and our best deals still to this day probably come from cold calling for sure. Just that random call that these people get. And you never know where they’re at. And the follow up … My partner is amazing about building rapport. I mean, you’re going direct to people. You don’t have to wait for them to come to you. Don’t get me wrong, there’s going to be a lot of bad come from it. A lot of people don’t want to be bothered. But you would be surprised how many of those people just have a lot going on.
And even though they tell you no today doesn’t mean that they’re going to tell you no tomorrow. So those are kind of the things that we kind of shifted into now. We’ve tried other things RVMs and email marketing. I’ve done free Facebook marketing just in groups. I’ve bought houses that way. I think it’s just now we’re more of the shotgun method. I just want as many people to know what I do and whether that’s through cold calling or social media, whatever it is, the more people that know what I do the more houses that’ll I buy.

Ashley:
Derrick, you keep saying we there. What does your team look like? You’ve built a business and you had mentioned earlier that you have a partner. So I would like to dive into that partnership a little bit too after you kind of describe your team members and the different roles that you have in place.

Derrick:
Yeah, absolutely. So for me when I say me it’s mainly me and my business partner, Ben. And we’ve been together for like three years now. I always call him my work wife. He doesn’t like it but that’s what he is to me. It’s mainly me and him and a bunch of VAs to be honest. Ben and I are very frugal people. We want our business to succeed longterm. We’ve seen a lot of people fail not just in real estate but in business. And so we run everything, our live, our businesses, very lean. Because I would much rather keep … There’s people that have million dollar businesses but they make $20,000 a year. And there’s also people that make $300,000 a year and they keep $290,000 a year. I would much rather be that other guy that keeps the majority of hit profit. So for us that’s just kind of been our lane. So at the time we currently have three cold callers. We’re bringing on another one. We have a full-time texter, a lead manager. And then obviously we have contractors. We have two main ones that we’ve been working with that kind of manage our flips. But a majority of the people are either stateside or across the pond as you can say. But we believe in virtual for sure. I don’t need an office and a big team and more headaches is what I see.

Ashley:
How are you finding your virtual assistants and do you go through kind of like a training process with them or are you trying to find virtual assistants that already know what to do, what you’re looking for?

Tony:
And sorry to add on to that. What roles are they playing in your company too?

Derrick:
Yeah, absolutely. So a majority are the cold callers. That’s the biggest part. And what we learned is we tried training them ourselves. We kind of try to find a good call center that they handle a majority of everything. Of like the training, the reports. They let us know, hey, this list doesn’t look as good. That’s more hands off. Now our lead manager, Ben works with him weekly. We’re trying to get him to a point where he’s going to be making offers whereas we can focus on bigger things. And then we have smaller VAs that still pull like my probate list and things like that that I’ve kind of trained. You can get Screen-O-Matic free and record something and just give it to them and they’ll figure it out. They’ll have questions. But I kind of just it depends on the VA itself. But with the cold calling we want to hand that off. But if it’s something tailored to our business we want to go in and maybe spend a couple weeks training them or create centered SOPs and stuff so they understand what to do and what we expect of the job.

Tony:
Can you walk through the process of how the VAs are cold calling from these overseas locations? Do they have like a Google voice number? Is there some kind of online software? And then what does the flow look like? Like are they just helping you guys set the appointments? Like what is their duties and responsibilities?

Derrick:
Yeah so, their main thing is to just call as many people as possible. So we use CallTools and Call Mojo. Whatever you want. These are dialers essentially. And this is when it starts to get more pricey. So I don’t want people to think, oh, well I don’t have a dollar, I can’t call. I used to hand dial on Google Voice. You can get a Google Voice for free. I don’t want that to be an excuse for people. But they are on dialers. These dialers can call anywhere from one to 10 people at a time. And what that means is that it’s constantly dialing, as soon as someone picks up it hangs up the other ones and it’ll start calling where it left off. And then so basically what they’re doing is they’re just scraping all these people, just getting someone that might be interested, might have motivation to sell or need to get rid of this property. What they’re going to do is put that … We usually … Ben handles the majority of this but it goes into either a group chat for sure and then it’s always going to get dropped in our CRM. We just use Podio that we had built.
And then once it goes in there, depending on the conversation it will go to our lead manager or if it’s somebody that’s like, “Hey, I want to sell, this is the price,” my partner Ben will just go ahead and try to get that appointment set up. Because we’re both going on the appointment or just him but we’re still very active in our business.

Ashley:
Derrick, how do you guys manage being partners? Do you guys have alignment meetings? What are some things you think that has made you have a successful partnership throughout the past three years?

Derrick:
Yeah. I think that’s a fantastic question. Because I’ve seen so many partnerships implode. So when I met Ben he had a job, I did not. I was just adding value. After about six months of us doing deals I think we had done four or five deals throughout that time. And we had a decent pipeline built. I’m like, “Hey, what if we did more of this and you quit your job?” And over that time of the six months though, what I realized is we aligned on not just business. My partner’s a family man. I have a family as well. He’s big into being just a good person. He’s obviously one of the best people I’ve ever met. Like he genuinely … Like we take care of sellers. But that’s how he lives his life. And he’s a very honest person and very transparent. And it kind of scares me because we’ve never had any issues because we communicate about everything. So I think having the same morals, the same values, whether that be business and life. The honesty is a big thing and integrity and just being able to communicate. We’ve just never had any issues because I’m like hey, this is what’s bothering me. Usually when he says something I’m thinking it or vice versa. We’ve just always been on the same page with that.
And even looking longterm at our goals, we have very similar goals of what we want to accomplish in other businesses that we’ve talked about doing together. But I think finding that alignment and not letting money get in the way because what I see a lot of times is people they’ll do a couple deals together … And I’m very fair. I want you to make a lot of money but they’re like, “Well, why are you making this and I’m only making this?” But I’m looking at the relationship with the person because so many people put a dollar on relationships and I want every relationship to infinitely have an ROI. And because of that that’s why we succeed. I’ve done two or three deals this year that I haven’t made money. I just did them for free for people that I know that relationship is worth more than what I … Even if I would have made a hundred grand off of those deals. And Ben operates in the same way. And I think that’s what works for us. But I also say to newer people that’s … A lot of the times they’re like, “Well, I don’t have a partner.” I didn’t have a partner. Ben and I had been in this for … He had been doing it for three years, I had been doing it for about two and a half. We just kind of met at this perfect point.
But a lot of times people don’t need partnerships because they’re not okay splitting that money. They’re not okay with talking to people. They don’t know how to communicate as an adult. So those are just some of the problems that I commonly see. It’s usually money but a lot comes into it. Money’s just kind of the cherry on top.

Ashley:
Derrick, do you think you could break down one of your deals for us? One of your wholesale deals as to how you found the deal, how you negotiated it. What the purchase price was. How you assigned it and what you netted off of the deal. I think that would be really interesting for us to kind of see that whole process.

Derrick:
Yeah, absolutely. So we have a deal that we just closed. And on that one we made $14,000. It was a cold call lead. Or it was a text lead initially and then Ben got him on the phone. We went through it. He came down the price. He wanted … I think it was like 15,000 more than we were able to offer. We told him hey, that’s totally fine if you can get more. What happened after that is he tried to sell it to other people that were wholesaling. I’m sure he told them his price and they were just like, “Yeah, I can do it.” And they were not able to. So we got the property locked up and we went to show it. He was a little upset because he was like, “I know you guys are wholesaling.” We had been completely honest. But he was just starting to get cold feet and he was like, “I don’t think you’re going to close.” And I was just like, “Hey, your goal is to get this house closed right? I’ve never met you. So far along this journey we’ve done everything we said we’re going to. Just give me a week and I assure you will close. If it doesn’t close with a buyer I’ll buy the house myself.” And he was like, “Fair, okay.”
So the week went on and we closed the deal and it worked out. But I think a lot of that is just because Ben and I take care of people. We’re able to communicate. And the negotiation, Ben built that rapport with him and just told him our price because sometimes with people you’re not going to have this big song and dance. They just know what they want and it may work, it may not and he was just a red personality. That’s how he was. And since he didn’t get his price at first he didn’t want to do business with us but four months later he came back and we were able to lock it up. And I think that deal total only took three and a half weeks. We had a little bit of title issues or we would have been able to close it sooner.

Ashley:
Derrick, I want to go over some morals and ethics here. So you mentioned that you were honest, upfront saying that you were going to wholesale the property. And I can expect that may deter some sellers from selling to you because you’re going to do that. Where do you draw the line from being completely upfront and honest? And we had a guest where they mentioned that they say that her and her sister are looking for a property and kind of go along that lines and then they do wholesale it afterwards. What do you think about that and what is kind of your stance on how if you tell a white lie to a buyer because in the end they’re still getting the money they wanted and the outcome they wanted. What do you think about that? Is there a fine line, a gray line?

Derrick:
Yeah. So I would say this is … And I hear this fear a lot with people. Because we always want to be very truthful in what we do. I would say today the conversation’s a lot different because I know I can close a property regardless. But back then my mentor as well the guy that kind of taught me this business, we’re very similar and he’s a very truthful person. And I think you should always be 100% honest. I also think how you say things … What happens is a lot of newer people as they go into these houses and they shoot themselves in the foot. The main thing that people want to know is are you going to be able to close on my house and at this agreed amount? That’s always the biggest concern. How we explain it is the same to any other seller is, “Hey, we’re going to be bringing in money partners.
“I’m either going to close on this myself or I’m going to have one of my partners close on it. Regardless, this amount, as long as we can get it to you, you’re okay if we make a profit. Whether we close next week and I go ahead and resale it or I go ahead and it takes me three to four weeks. As long as you get this amount is that fair? Is that okay with you? Is there anything that would … If you don’t want to do that … I’m not going to do 10 showings. I’m going to have people in here once, worst case, twice. And I’ll need to see it the day we close.” So I think just by being straightforward. And most people are fine with that. What happens is you don’t tell these people this and you’re like, “Yeah, I’m buying the property.” When you know you’re not buying the property. And then you bring these other people in. You haven’t set expectations so they’re like, “Who are these people?” And then you didn’t talk to the buyers and they’re talking numbers in front of the seller and then you just have this issue that you created because if you had just been honest upfront you would have diffused the bomb.
But I think a lot of it is just explaining to these people what you’re doing. And then some of these sellers nowadays because they deal with so many wholesalers like him, they know what wholesaling is. So even by you being shady and that’s not what I’m doing. Like yeah, I’m selling it to someone else. I’m going to make a profit. It doesn’t matter. You think I do this for fun? And they’re like, “Oh yeah, well I understand.” Like bro, I just drove for an hour on a rainy morning across Houston traffic. Do you think that I do this for fun? But they can relate with that. Like a lot of things you just got to lighten the mood and just have a real conversation. Something that a seller told us at the closing table on a recent deal that we just bought. The reason they went with us, we were 10 grand less, was because my partner Ben. And he said this on the video too that says, “Ben just treated me like a man. He was straightforward with me. He didn’t try to BS me. He just gave it to me straight and this was his price. And the other guy offered 10,000 more but he was trying to finagle and snake oil salesman and that’s why we didn’t go with him.”
Usually the price, it’s definitely a factor. But by being honest with people they appreciate that. I know I appreciate when people are honest with me.

Tony:
So you did a good job I think of getting this seller down to the price that you guys wanted and you mentioned that part of it was just kind of building that rapport. But when this person initially reached out to you, when you initially reached out to them via the texting and the cold calling, there was no relationship there. So do you guys have a script that you’re following to try and make sure that you hit these same points in every seller conversation? Do you just kind of let it flow freely and see where it goes? How do you guys go about building that rapport but also negotiating from a point of strength.

Derrick:
Absolutely. I think you definitely need a framework or an outline. I know a couple years ago everybody was big on having the perfect script and it’s like, I think the biggest part is, people turn into a robot when they start reading the script. Ben is really good at just being a person and just having a genuine conversation. And like the amount of things that these people tell us … Like we’ll go to their house for a showing and they’re like feeding this man gumbo on the couch and I’m like bro, what are we doing here? But it’s by him like, “Oh, your kids? I have kids too. What kinds of sports are they into?” And he’ll be talking to them and they genuinely feel like family. And then when you come in and you back that up with your actions of what you’re going to do, then the trust is there. Then they’ll go to bat for you. But I think you need to have a framework. You need to make sure that you’re not wasting time and you do need to disqualify people and there’s a way to do that. But it also starts with being a real person. Having a conversation.
Like when you call someone and you’re just like, “Hey, is this Bill?” And they’re like, you already know like, “Man, somebody’s trying to sell me something.” But if you’re like, “Hey Bill, how are you doing today?” They’re going to talk to you for five minutes and then they’re like, “Wait, who is this even calling me?” And then it’s like, “Who are you?” And it’s like, “I saw you have this property. We just bought one down the street. Would you ever think about selling?” And then maybe they’re like, “No, not at all. Don’t call me again.” But then you call them back in two weeks and they’re like, “I do remember you. He has a very soothing voice. Actually, I would consider an offer.” And then six months later you bought the house and then you buy the neighbor’s. But by being a genuine person and caring, most of the people we deal with, or all of them usually, are in a situation and they don’t know how to deal with that situation. Most people never sell more than one too two houses ever in their life. On top of that you’re now trying to convince them to do that with a complete stranger and you’re going to give them cash. And you want them to trust you.
So you’re not going to get in that relationship … I always equate it to being a guy, going up to a girl in a bar. You’re not just going to go up to a girl in a bar and just be like, “Hey, be my girlfriend.” She’s going to be like that’s weird and probably mase you. But if you maybe buy a drink or crack a joke or you start the relationship slow, that’s just how humans work. We want to build relationships. Everybody does even if they act like they don’t. You just have to be a genuine person. Because people can smell when you’re trying to … We all know when somebody’s trying to get something out of you. You can smell it from a mile away so just be a good person. I think that’s the best place to start.

Tony:
So one last follow up on how you guys kind of handled the relationship building, the negotiation. What does your framework look like when you’re reaching out to these sellers? You said there was a way to kind of quickly disqualify people. What are those questions? What do you guys usually look to get out of folks?

Derrick:
Yeah. So I think it’s like … I know they talk about this in TTP. The four pillars of motivation. You want to make sure price, timeline, motivation and condition of the property. They don’t need to have all four. We used to make sure that they would have three of those. Now it’s more of like one to two because we’re starting to do like creative bills and stuff. But price. They need to be able to sell at a discount. If not they need to be willing to accept terms. Condition. Is it excellent condition? Like we do buy some homes that are perfect condition but these people have money and they just want to offload the property. What does their timeline look like to sell? Do they need to get this done in 30 days, six months, or a year? And then what is their true motivation? Because we all lie. We all say that … Like my mentor always said, there’s a reason these people are reaching out. Don’t let them lie to you. But it’s just because as humans once again, we’re always … I feel like we have our BS detector on. It’s like when you go to the store and they’re like, “Can I help you with something?” And you’re like, “No, I’m just looking.”
As you got in your car and you drove to the store we know we came here for something or we’re interested in buying. But as humans we lie so it’s like how can you open that up? “Oh, that’s great that you came in. Did you have your eye on something or do you have kids?” You want to start just trying to figure out what is that reason they’re looking. And then you find out, oh well my dad had a kid with this other … You start finding out everything and by being a good person and listening they’ll tell you everything you want to know. I think a lot of people just want to talk, talk, talk. They want to talk about themselves. It should be like, they say 70/30. I think it should be 90/10. 90% the person talking and 10% you listening and asking questions that are going to open up the seller by being a genuine person and just knowing when to ask, when to mirror people. All the sales things that we’re taught to do.

Tony:
Yeah. Just one quick comment. When I was in high school I worked at Finish Line, like the athletic shoe store, and I would do that all the time. I’d be like, “Hey, what are you guys looking for?” They’re like, “No, no, I’m just browsing. I don’t need any help.” And what I started doing was if they said that, I’d say, “Okay cool, nice to know that you’re looking. Just so you know, here are our specials that are happening today or here are our shoes that are on sale. What size you are? I’ll bring one out for you.” And that’s like a totally … Like they’re not ready for that dynamic. That kind of throws them off. And they’re like, “Oh okay, I wear a size 11. I guess bring it out.” And if I brought something out I wouldn’t just bring the shoe that they asked for. I would bring the show they asked for plus two others that I think they might like. Like you said, there’s a lot of different ways to kind of get around that psychology part of people kind of shutting you down. Random facts about Tony Robinson that he used to work at Finish Line when he was in high school.

Derrick:
All right. Awesome.

Ashley:
I want to transition us into our mindset segment. Derrick, what is something that your mindset really changed, it shifted, it pivoted as to what you expected real estate investing to be to what it actually was?

Derrick:
Man that’s a deep question. I think that I can build this business how I want to. I think for the first couple years when Ben and I met I was like, this is it. I got a partner, millions of dollars, give me the yacht. It’s coming. And I was like we’re going to build this big thing and this big team and he kind of started pushing back on it. And what I realized is doing social media in this day and age sometimes we can get caught up in what other people are doing and what we need to realize is the beauty of real estate literally is that you can build this business around your personality or however you want it to be. That doesn’t mean what does for us works for you and vice versa. So I think just realizing, who do I want to be as a real estate investor? What do I want it to look like? What do I want my future wealth to look like? And it doesn’t have to be the big office and doing a hundred deals. We can do less.
Because what happened is during corona and the world shut down we did less deals but we made more money and I was like why am I running so hard and I have what I need right here? How about I just sit back and build things that are more profitable and that I can build that monthly income. That’s really where I’m at now is residual income that I can travel with my family and do more things. A lot of my friends, I’m seeing them go to Tulum and these other countries for a month and I was just like, why have I never thought of that? I can go for more than a week or two. I want to go for a month or two months. But if I have this big team and this big operation maybe I can’t do that but if it’s me and my partner we can do that and I can do that with a laptop and some air pods. You know what I mean? So it kind of changed my perspective. I think corona just really, for a lot of people, slowed everyone down. And I think that’s why so many people are starting new jobs and starting new opportunities because they realize the world isn’t what you thought it is. I think it just kind of shook up the whole word and it’s what we needed.
And for me, a lot has changed since corona’s happened. For the better though. And it was definitely what I needed. And I think most people will say it was one of the best things to happen, given the bad things occurred as well but it was definitely a shape shifting year.

Tony:
You make a really good point, Derrick, about building your business around your life and not the other way around. You hear a lot of new investors, when they talk about their goals in real estate, a lot of times they talk about their goals in terms of the number of doors that they want to own. Right? Like they say, “I want to get to 50 doors. I want to get to 100 doors.” And when I think about my goals in real estate, it’s always been in how much money am I putting in my pocket? Like if I want a million dollars a year in revenue or in personal income, I want that on the smallest number of units that I possibly can. If I can do that on 1,000 doors or I can do that on 100 doors, I’m going to pick 100 doors because it’s easier to manage, you have more flexibility. So for the rookies that are listening, when you’re thinking about your goals and you’re laying this foundation for your business, make sure that you’re setting those goals up in a way that supports the lifestyle that you want so that way one day you can go to Tulum with Derrick for a month and not have your business hold you back.

Derrick:
Yeah. Absolutely.

Tony:
All right. Derrick, I want to take us to our rookie request line. So rookies, if you guys want to get your call featured just give us a call. It’s 8885-ROOKIE. And if you guys got a good question then maybe we’ll feature it on the show here. Derrick, are you ready for today’s question?

Derrick:
Let’s do it.

Jay:
Hey guys. My name’s Jay and I’m from Seattle, Washington. My question is that I am a graduate student. I’m getting my PhD in engineering and I’m 23 years old. I am looking to break into real estate. I’m a rookie. Been listening to the podcast for some time. But since I am still in school I do not have a lot of equity, myself personally. What steps would you say that I should take to establish either relationships or leverage capital through various means to break into the market? Thanks.

Derrick:
Gotcha. I think number one is get involved in the investing community. It doesn’t sound like you may have a lot of free time but there’s always events. I mean, now that things are opening back up I think by submersing yourself in the real estate community locally and then figuring out what it is exactly you want to do because there’s so many ways to do real estate. Figure out where can you start? Because that may not be where you want to end, but it’s because of starting wholesaling, that’s the reason we’re doing flipping and creative finance and looking into getting into short term rental and all these other things is because I got started where I was. So I think just taking one step forwards, getting surrounded by the right people and then figuring out what you want to do. And then once you know what you want to do, just take action. I wasted eight months being the best BiggerPockets supporter that you could ever be and it never once got me paid. So that’s what I would say is get out there and take action. It’s not as scary as you think.

Ashley:
I think there’s a lot of ways to get involved with real estate without actually being an investor and owning a property right away that kind of open doors for you such as getting a job as a property manager, a leasing agent. And these are things that you can do as part-time. Or even maintenance person. I met this sheriff once who, when he was in college, he would fulfill maintenance requests in between classes for a local investor in the area and that’s how he learned about real estate investing. But the biggest thing is there’s the access. Taking on these jobs and these roles for people means the access to things you have such as the lease agreements. What do apartments in this area look like? What are people looking for? Also you’ll get an understanding of the market you’re in. And then just networking with other people.
When I went to go get my first loan from a bank on a property it was no problem because I had a relationship with that bank because of the investor I was working for. And it made it such a smoother, easier process. And he knew from pulling financials from this other investor that I had it together and I took such good care of everything and knew everything I needed to. So that really was a huge, huge benefit for me. So I think that might be a solution for you too, Jay, is going that route. And the best part is you get paid for it too.

Derrick:
And if I could just add one thing on top of that is … I’m about to do a eBook on this, is just there are so many side hustles that, like you said, revolve around this ecosphere of real estate that is like maybe you start doing one of those and you realize you don’t want to do real estate but you want to be involved in real estate. Whether that’s being a home inspector, an appraiser. You can do loans for hard money or conventional. You can do pictures. You were talking about interesting. I heard a new one the other day. This guy, with realtors sell their homes, all he does is take care of their signs, like placing and picking them up. And then when they sell the home he puts on ribbons, like bows. And I’m pretty sure he’s making six figures a year doing that because there’s enough in Houston to keep him busy. So there’s always ways that you can pierce or get into this market and it doesn’t have to be … And then maybe you do it and then you’re like, “I just want to buy rentals,” and you start doing that. You don’t get into flipping. You figure out what you really want to do. But I think just getting in the water really and figuring it out.

Tony:
And you’ve been a great example of that throughout the entire episode, Derrick, of just taking action, having the right mindset, diving in feet first and kind of figuring it out along the way. So as we wrap up, I want to take us to our random questions segment of the show. I guess my first question for you Derrick, is if you think back to that very first time that you picked up the phone to cold call the seller and asking them to buy their house, what was your feeling inside before that happened? Were you nervous? Were you scared? How did the conversation go? Did you get hung up on? Did you get cussed out? What was it?

Derrick:
Yeah. I hate cold calling. I’m going to be honest with you. I still … If you give me a warm lead, like a hot lead probably, I would still get nervous calling them. That’s just me. My partner, vice versa. That’s why we work well together. I’m better at in person. So yeah, very nervous, very scared. But once you do it and you get that first one … And yeah, I think the first one they were just like, “Don’t call me. Get out of here.” In not a nice way. But very nervous, that happened. And then once it’s over, you’re like, “Oh, I got to …” And then it turns into a numbers game and you keep going and you figure out how many calls is it going to take and you start looking at it as more of a statistic rather than cold calling. But no one’s ever died from making a cold call. These people probably are never going to see you. Even if they did, they wouldn’t recognize your voice. I think the most important part is that I actually did it even though it made me uncomfortable.

Ashley:
Derrick, my random question to you is how did you decide to start building a buy and hold portfolio? What did that look between you and your partner and say, “Okay, we’ve been wholesaling. Let’s get a couple rentals under our belt too.”?

Derrick:
Yeah, absolutely. It’s just getting around smarter people and realizing that I enjoy wholesaling and flipping. At the end of the day it is a job. I’m young now. I’m a hustler. I don’t mind doing it. But come five years, I do not want to be wholesaling. I don’t even know if I want to be flipping. I want to be working on bigger deals, like I said, so I can just travel more and get residual income. But I think just meeting people and then realizing it’s not as hard. It’s ironic is when the BRRRR book came out I was in the process of my first BRRRR and you guys sent me an advance copy so it actually helped me and I got to promote the book. So that was really cool. But I got paid 30 grand to buy a house that now produces income for me every month and that’s an asset. And it’s went up like 80 grand in the first three years. It’s just crazy. So once you realize it’s not that hard and you just take action on it, it’s … You’ll do one and then you’ll like, “Hey, I can do more.”
And then I started listening to people like Tony and I’m like I really want to do short term rentals and we start buying those and you get all these new things that you want to do. So yeah.

Tony:
Awesome. Well, congrats on that Derrick. I want to take us to our rookie rockstar. This one’s a pretty good story. So if you guys are listening or if you’re watching and you haven’t joined the Real Estate Rookie Facebook group, make sure that you join. That’s where we find the majority of our rookie rockstars. But today’s rookie rockstar is Alberto Medallin and Alberto just finished their first flip. So they put about 30K into this deal. They actually found it on social media. They posted on their social media saying that they were going to give $1,000 to anyone that helped them find a deal and I guess an old friend of Alberto’s helped him find this deal. They got under contract, they completed the flip. And they netted $33,000 on their very first flip. They said they learned a lot from the podcast and they feel spoiled because this first deal came out so well. But Alberto, we’re super happy for you and can’t wait to see the next one.

Derrick:
Absolutely. That’s awesome.

Ashley:
That is really awesome. Yeah. Well Derrick, thank you so much for being on the show today and congratulations on all of your success so far and we can’t wait to see where you continue to take it. Maybe into some short term rentals with Tony or something. But can you tell everyone where they can reach out to you and find some more information on you?

Derrick:
Yeah. I’m big on social media. Instagram is probably the best place. It’s @flippingahouse, just one word. I know it’s crazy that I got that username, but it worked out. But it’s flippingahouse on Instagram, TikTok, and I’m working on building my YouTube. You guys can reach out to me any time if you’re in the Houston market. I’m buying deals. I’m looking for deals always, always, always. So if you guys have a lead I’ll help you lock it up, sell it, flip it, whatever you want to do. So yeah, I’m very open, I don’t mind helping you. But also understand it’s not going to be a free ride either. But I think that’s the best place to reach me is Instagram, is @flippingahouse.

Ashley:
Derrick, next time we have you on you’re going to be on here saying how you sold your username for $50,000.

Derrick:
Yeah. Right?

Ashley:
Some big flipping company.

Derrick:
Yeah, maybe. It is copyrighted and everything so I’m planned on an exit.

Ashley:
Yeah. Well, thank you so much for joining us. I’m Ashley, @wealthfromrentals, and he’s Tony, @tonyjrobinson, on Instagram. Make sure you guys check out the BiggerPockets conference. It is coming in October and tickets are on sale now. Thank you guys and we’ll see you on Saturday.