137: Buying More Than 500 Properties in Five Years with Tom Cafarella

On today’s episode of the InvestFourMore Real Estate Podcast, I speak with Tom Cafarella. Tom has been a real estate investor for a long time, but in the last five years, he has done some amazing things. He has bought over 500 properties to flip, wholesale, or hold as rentals. He has also started a real estate brokerage that has added over 20 agents in 2 years! On this show, I talk with Tom about how he has been able to buy so many houses and add so many agents. I will give you a hint: the two go hand in hand.

How did Tom get started in real estate?

Tom’s grandfather was a landlord, and while Tom was growing up, he one of the only successful people Tom knew. Tom wanted to get into real estate but instead went the safe route. He got an accounting degree and joined a large accounting company. He was less than thrilled with his job, and it showed. He started spending more time learning about real estate than he did his job, and eventually he was let go. Tom did not have a lot of money, so he chose to start out by wholesaling properties. He did well, and on his fourth deal, he decided to try a flip. The flip was a home run, and he did his best to flip every deal he found. After two or three years, Tom was able to buy his first rental properties.

How was Tom able to scale his business?

Tom was getting most of his deals from direct marketing. He was using a number of sources to set up appointments with people who may be interested in selling their house to him. When Tom was meeting with people, he realized that many people wanted to sell their house but not at the price Tom was wiling to pay. He knew he was leaving a lot of money on the table. If he became a real estate agent, he could be listing these houses for sellers and not wasting the leads. Eventually, Tom hired an agent who helped take appointments, and that agent told Tom they needed to be listing the leads that they did not buy. Tom agreed, and the business changed completely.

By allowing agents to list houses that Tom did not buy, he was able to recoup all of his marketing dollars…and then some. He could basically spend as much money on marketing as possible and still make a profit just on the commissions from listing properties. He was able to buy many more deals for himself because he ramped up his marketing so much.

How did Tom build a brokerage with 200 real estate agents?

Tom found that real estate agents loved working for him because they get paid in multiple ways. They can get paid when they list a house and sell it. They can get paid when they find a motivated seller who wants to sell their house directly to Tom. Tom is also able to give his agents a ton of leads because he is marketing so much. On the show, Tom and I talk about whether he likes new or old agents better. We also talk about the training he offers his agents to make sure they succeed.

How does Tom find enough leads to feed the agents in his brokerage?

Tom gets leads to his agents in a number of ways. His favorite ways to find motivated sellers and listings are:

  • Facebook: He runs ad campaigns targeting specific users on Facebook.
  • Google Pay Per Click: This source of leads has gotten much more expensive, but the leads are very high quality.
  • Direct mailing: Tom uses a lot of direct mailing, but there is a lot of competition.
  • Cold calling: Having an army of real estate agents means you have a lot of people ready to call leads!

Tom is able to get so many leads because he can monetize them in so many ways.

How can you contact Tom to learn more?

Tom has set up training for his agents that he shares with other brokerages as well. He also helps investors set up marketing systems to get the leads to fuel their business. You can reach Tom by checking out Buildateamthatbringsyoudeals.com. Sign up for the webinar, and even if you don’t watch it, Tom will send you some great information.

[0:00:14.0] MF: Welcome to the InvestFourMore Real Estate Podcast. My name is Mark Ferguson and I am your host. I am an active real estate investor. I flip 15 to 30 houses a year. I've got residential and commercial rental properties. I’m an agent with nine people on my real estate team who sold thousands of houses over the years, and I talk about what's going on in my career as well as interview other amazing agents, investors, landlords, flippers, wholesalers and companies who can help those people succeed. 

I want to give a quick shout out to my sponsor, Patch of Land. They funded a flip for me in six days. I emailed them on a Sunday afternoon. They responded in less than 15 minutes. They have rates below 8%, work in 45 states, will fund 85% of the deal and fund the repairs as well. Great company, who I love working with, Patch of Land. 

For my podcast listeners, I've a special discount page for my products, investfourmore.com/discount. That's investfourmore.com/discount. We’ve got coupons on all my coaching programs. Some of those programs involve calls with me, consulting, video training, and much, much more. 

All right, let's get to the show. 


[0:01:47.6] MF: Hey, it’s Mark Ferguson and we have a great guest on for today’s show; Tom Cafarella with Ocean City Development is joining us today. Tom has bought over 500 houses over the last five years, either flip, wholesale, or hold as rentals. He also owns a real estate brokerage with over 200 agents. Sounds similar to a lot of things I’ve been doing, but maybe on a bigger scale, so I’m really excited to talk to Tom and see how he’s become so successful. What he’s doing now to find deals and hopefully we can all learn something.

Tom, thank you so much for being on the show. How are you?

[0:02:23.2] TC: I’m doing awesome today. Thank you for having me on.

[0:02:26.1] MF: No, I appreciate it. It’s funny. We’re just talking a little bit before the show, one of my coaching students Jeremiah Dalton who is actually on one of my podcast last year has been talking with you about some marketing stuff. I’m sure we’ll talk about that in the show at some point, but just put two and two together to figure that out. It’ always nice to see those connections pop up.

[0:02:43.6] TC: Yeah. It’s a small world, the real estate investing world. I feel like I bump into people every single day who either went to a conference that I was at, or has a mutual friend. It’s a small pond.

[0:02:57.6] MF: It is. It’s cool. I think a lot of the good people will stick around in the business and people network and get to know them, some of the other people are at the opposite and don’t stick around so well, but tries to do the positives.

Tom, we always try and start things off with how you first got into the business, how you got started. Can you give us an overview of how you gotten to real estate and what drew you into the business?

[0:03:22.1] TC: Yeah, absolutely. Growing up, my grandfather was a landlord and he was pretty much the only financially successful person that I knew. Growing up, I wanted to get into the business. I was pretty discouraged from getting into the business, because it’s a non-traditional career path. Just like everybody else, I was told go to college, get a degree, get a good job, work your way up the corporate ladder, all that good stuff, even though I really in my heart didn’t really want to do that.

I got an accounting degree in college, graduated, worked at one of the big firms. Pretty much the day I got there, I knew I didn’t fit in, and continued to learn and read everything about real estate that I could, to the point where I wasn’t getting my work done at work. One day I showed up, and they told me that I no longer had a job there.

That was the shot me on per se that made say, “Hey, you’ve got to stop fighting what you want to do and give this a shot.” I gave it a shot and 10 years later, there’s been a lot of progress.

[0:04:32.9] MF: No, that’s funny. Doing my blog and writing articles, I always find that Mondays are the best traffic day for my blog. I think that’s because people in the corporate world hating their life on Mondays and looking for anything else they can do besides actually working. It’s funny  you say that.

Now I’ve talked to a couple people who have done the same thing, kind of accidentally or more on purposely gotten fired and moved into real estate and loved their life after that. What did you start with when you went into real estate? What niche did you begin?

[0:05:04.8] TC: When I was in college, I read a book Rich Dad, Poor Dad, which I think probably every single person who ever started a business, or is in real estate has read. That motivated me along with my grandfather to get into the rental business. At the time when I first started out, I had no cash.

The only way I knew and still today, this is one of the only ways to do it, to get started in real estate if you don’t have a lot of money is to wholesale properties. My first deal ever was a wholesale deal, where I got a property under contract, sold the contract to a developer, who is going to then take the two-family in a city in Boston called Summerville, turning into condos. We did really, really well. We did a few wholesale deals, then we worked that up to flips and then we started buying and holding in a more consistent and bigger fashion.

[0:06:02.8] MF: How long do you think it took you before you moved up from wholesaling, to flipping, to buying your first rental?

[0:06:11.7] TC: Wholesale to flipping, it was really maybe our third and fourth deal where we just said, “Hey, we’re giving the money to somebody else essentially.” At the time, I had one business partner and his dad kept saying to us, “Why do you guys wholesale these deals?” Part of it was that that we didn’t have the money and then part of it was that both of us were white collar workers, and we didn’t have the construction expertise.

His dad, my partner’s dad said to me, “Well, I’ve got the money and I can manage the crews. Let’s just do one of them and see what happens.” We were like, “Okay, we’ll give it a shot. “ Hit a homerun on our first flip. On the flipping side, I didn’t look back from there. The buying-hold side, I would say maybe two or three into fixing and flipping, we really had the capital necessary in order to start doing it.

In hindsight, we probably could’ve gotten into that side of the business a little bit earlier if we had known what we knew today which is basically that all you need to do is buy, renovate, get it rented and then pull your money back out. But at the time, we didn’t really understand that concept. It took us longer than I would’ve hoped to get into the rental business, but now we’re going full speed ahead.

[0:07:32.0] MF: Cool. That’s great information. I just love for the new people to realize this doesn’t happen overnight. It takes some time.

[0:07:40.2] TC: Anything worth building, any success stories never happen overnight. It’s like if you’ve ever seen that image of somebody in a cave with a hammer there trying to get to the gold, then a lot of people stop right before they’re ready to actually get there and be successful. Because in the beginning, you don’t understand how much failure needs to happen in order to break through.

[0:08:07.4] MF: That’s great advice. Yeah, I’ve talked to a lot of people who’ve lost money on their first flip or second flip. It’s the best money you can spend educating yourself. If you compare it to college, a four-year degree how much money you spend there. The things you learn from your mistakes are almost more important than your successes.

[0:08:27.8] TC: Yeah, it’s an interesting thing, because people – it’s just a mindset thing. People are fine spending $50,000 a year for college. I’m not a pro-college, anti-college. I think it’s right for some people, not right for others. People are fine knowing that they’re basically going to put 50k per year, $200,000 total into their education, but they’re not okay a lot of times with losing $5,000 on a fixing flip. It’s just like a crazy – like I said, it’s just a mindset thing. People are conditioned spending money on something and says okay, and not spending money on some things isn’t okay.

[0:09:08.3] MF: I completely agree with you. Yeah, same thing with me on – College is great for some people not trying to put down college. I went to college for four years. I loved it. Didn’t help me in real estate all, but I networked with a lot of people. Yeah, for others, I don’t think it’s as important as it used to be to be successful in today’s world.

[0:09:26.3] TC: For sure. I mean, for entrepreneurs especially. It depends what you’re trying to do. If there is a specific career path that you need to go down, where it requires a college education. I mean, you want to be a doctor, you want to be an attorney, there’s really no way to get around that. If you want to be an entrepreneur, really college and school necessarily wasn’t really meant for that purpose.

[0:09:52.9] MF: I completely agree. Obviously, you’ve been doing quite a few things with the wholesaling, the flips, the rentals. How did you start to scale that to a point where you and your team bought over 500 houses in the last five years?

[0:10:08.3] TC: Really the biggest scale factor for me was actually building my real estate brokerage. As a real estate investor, you’ve got to find deals that are off-market. You can’t go in the MLS, you can’t go on Zillow, you can’t go on For Sale By Owner. It’s very difficult especially in a competitive market like we’re in today.

I think end of the day for most people and like myself, we spend money in order to get face-to-face with these motivated sellers. The money that we spend to get face-to-face with these motivated sellers also brings us in touch with a lot of people who are motivated to sell, but they’re not motivated to sell at a discount.

What happens in that case and it used to happen to me going back four or five years is that that was just dead leap. If we would go out to a property, and one of their market value, or even if they wanted 95% of their market value, that was a completely dead leap. When I had my daughter almost five years ago, she’s going to be five in two days. We just had her birthday party yesterday. I said, “I got to stop doing these appointments myself.”

We were spending marketing money in order to get face-to-face appointments. I was running around like a chicken with my head cut off and I said, “I’ve got to stop doing this, because now I’ve got kids. I got to find time to spend with them. I can’t be worried about driving a contract to somebody at 8:30 at night.”

I hired my first real estate agent just to take these appointments for me. What ended up happening was he would come back every four or five or six appointments and basically begged me to list properties and say, “Look, you’re not buying this one anyways for this reason or that reason. Why can’t I just list them?” Finally, I just said to myself, “Look, let’s just do one and see how it goes.” We never looked back.

The reason why that’s important and the reason why that ties into the fact that I’ve done over 500 deals in the past five years is that by getting those listings in the door, it allows me to recoup my marketing money. If I spend $10,000 on motivated seller marketing to getting investment deal, I’ll bring back 12 or 13 or 14,000 just in listings alone.

A reason that’s so important is because it ultimately gives me an unlimited marketing budget. No matter what I spend on marketing, I get that money back just in listings. Essentially, I just ramped up my marketing budget as high as I could possibly go in the greater Boston area and we get tons of opportunities at this point.

[0:12:50.5] MF: That’s fantastic. I’m an agent myself. I’ve been one for 16, 17 years now. I think it’s one of the great perks of being an investor is being an agent. I’ve done the same thing not on the scale you have, but with listing properties that you couldn’t buy. Yeah, it’s a great way to pay for your marketing for sure.

[0:13:13.5] TC: Right now, are you doing that yourself?

[0:13:15.8] MF: For the most part yes. Now that I’m talking to you, I’m sitting here thinking how I can stop doing that myself.

[0:13:22.6] TC: The problem is and I promise you this, you are not fighting for those listings, because you don’t even want those listings. That’s the problem that most investors have is that there is actually more work that goes into getting the listings than there is at getting the discounted deal, because you get the motivated seller that you can walk-in, you can shake their hand, they are ready to go, they’re ready to sell at a discount and you sign them up and you’re done with them.

You don’t want the listing, because the listing requires that you fight for it more. It requires that you give a presentation. It requires that once you actually get that property as a listing that you do work on the backend. What happens with most investors and I’m sure this happens with you, is you take a listing and it takes up a lot of your time, and it’s only a fraction of what you make on the investment side. The thoughts start to go through your head, “Is this even worth it?” That’s really when it was a game changer for me when I had other people taking my appointments.

One strategy for somebody like you that might be a simple way to do it, is if you’re screening your appointments pretty well, you can probably get a really good indication on whether they’re investment potential or retail potential. If you get on the phone with somebody and you know a 100% it’s retail potential, why is Mark Ferguson going to be the one going out and meeting with that person when he doesn’t even really want the listing?

You have an agent that will be underneath you where you’re doing maybe a 50-50 commission split with. You don’t have to then take that appointment or service that listing, but you’re getting your marketing dollars back in the door.

[0:14:55.8] MF: Actually I do do that, because I have a team. I have a few agents on my team.

[0:14:59.5] TC: Awesome.

[0:15:00.3] MF: Yeah, if I know that it’s probably doesn’t have much potential, I will send it straight to one of those agents and be like, “Hey, here’s a lead for you.” Or if I talk to them in person then I might hand it off to another agent. I need to do a better job of training those agents on how to handle those, because we haven’t had very good conversion rates lately. Yeah, I do try to save some of my time for the more motivated leads.

[0:15:24.2] TC: Well, it’s a really specific sale skill. We have sales training built around the back of that, because you’ve got to go about doing it the right way. Because if you go about doing it the wrong way, meaning if you know it’s going to be a listing opportunity and you go out there and you give that 60 cents or 65 cents in the dollar price, and then they say no, and then you start backpedaling and saying, “Oh, by the way we can get you fair market value. We can get you $50,000 more than what I just said,” it starts to create a mistrust with a seller.

You’ve got to go about doing it the right way and we have a specific sales process that we go through. One of the things that we say just really simple is our expertise is in generating office for sellers. We’ve got two pools of buyers, we can pull them from the investment side, which is going to be in this range and we’ll give a really wide range. Or we can pull it from the traditional side, which is going to be in this range and we give a really wide range.

If we’re going about doing it the right way, meaning we’re asking a bunch of questions and we call those qualifying questions, we’ve already spent 30 or 45 minutes with the person before giving our number. We’ve already built rapport, we’ve already built trust, we’ve already ask them the right questions, and so your conversion – my conversion used to be really low. My conversion used to be about 5% or 10% of all of the appointments we got, would turn into listings. Now for my best people, it’s between 40% and 50%.

It’s a huge game changer. You need the right sales people, you need to get them trained the right way, you need to make sure that obviously they’re going on the right appointments seeing all that good stuff and it just makes a big difference. The other thing, are your agents also working your old leads too?

[0:17:14.5] MF: They are a little bit. We try and keep it – We have a database of all the leads and calls that come in. We try and follow up with them, but we could probably do a better job of that.

[0:17:24.3] TC: Yeah. What I do for my agents, it’s a requirements. You’ve got to work the old leads, or you’re not getting new ones. We use a dialer system called Mojo Dialer. They’re required to go back and hit those leads over and over and over again. Depending upon how many old leads you have will determine how much value there is there.

For a lot of investors that have spent a lot of money on marketing, there is absolute gold sitting in that database. Yeah, somebody might not have been ready to sell to you three years ago when they filled out the form. Now all of a sudden something changed. Three years ago they might’ve got a letter because they’re behind in their mortgage, well maybe they got a loan modification. But now all of a sudden, that loan modification is in default again.

For most investors, they never get that lead back because they’re not constantly calling through their old database. For somebody like me, my team is constantly calling through those people. The second that they are in default again of their loan modification, or the second that that life situation does change, we’re ahead of the curve. Those leads cost us a lot of money on day one, so we might as well work them.

[0:18:36.3] MF: That’s awesome. I have a question too, when you’re looking for agents do you have better luck with experienced agents who have been around the business a while, or brand new agents you can mold and train how you want?

[0:18:49.5] TC: We have both. Just general characteristics. A brand new agent signs on on day one. He’s going to say, “Mark, what do I do today? What’s my routine?” Brand new agents are really good to follow your systems. For example, in a lot of cases we want to have them dialing through our old leads. We also have them prospecting for new leads for us.

We’ll buy cellphone records in the cities that we want to buy homes in and we’ll have the new agents call through those leads. A new agent will do that. They’ll say, “Oh, you want me to call from 9 to 12, Monday through Friday and then you want me to do training from 12 to 3. Then from 3 on, I’m doing my face-to-face appointments. Yeah, Mark that sounds awesome. I know you know what you’re talking about, because you’ve been in the business.” That’s how a new agent in most cases operates.

An experienced agent, depending upon how long they’ve been in the business is less likely to do that. They’re less likely to buy into your systems, they are less likely to do whatever you tell them. However, the experienced agent has something that the new agent doesn’t have, which is the experience. If you just said to me I’ve got one appointment to go on. Who am I going to send? The brand new agent who follows your systems, or the experienced agent who’s already sold a lot before, but won’t do anything you ask? I’d rather send the experienced agent. Again, there is plusses and minuses to both of those.

[0:20:17.5] MF: Great information. I found the same thing and one thing that’s always tricky too is with the new agents, you can spent a lot of time, a lot of money training them not knowing how well they will do for a few months, or even a year to see what you’ve got. It can take a lot of time, love, effort to get some real good agents on your team.

[0:20:37.9] TC: We completely built out that system. For my office we’ve got a bunch of staff that helps them in the beginning, gets them trained every single day. I found that there was such a need for this. We actually created like a brokerage building program behind it, so that investors that are in other locations who want to get agents trained like this can actually plug into my systems.

I’ve got multiple training sessions every single day that will be on Facebook Live, so that if you aren’t sure if you want to take the agent on, you by default will take them on because we’re going to get them trained. We’re going to get them on mojo. We’re going to teach them what they need to know and they’re going to be able to jump on Facebook Live and see those training sessions Monday through Friday and actually literally ask questions live if they need questions answered.

That was the biggest struggle for me in the beginning like you just mentioned is you get in – I took on mostly experienced agents in the beginning because of that reason. I don’t want to answer how do you log on to Mojo. I don’t want to answer these little ridiculous questions. That’s why we built the platform behind, so that no matter where anybody is located, they can just plug in.

[0:21:50.6] MF: That’s awesome. Have you had a lot of different agents across the country join up with that?

[0:21:55.7] TC: We have. Most of the people that signed up are investors who spend a lot of money on marketing, who want to build a brokerage, kind of the same way that I did. We went from in two years zero agents to 200 agents as of today. Most of the investors that I work with are spending money on marketing, not doing a good job of converting their leads into listings.

Or, I mean in a lot of cases there will be an investor who’s spending money on marketing, they’ll screen the call land once they think that it’s only retail potential only, they won’t even go out and meet with the person, which is really dangerous because how often do sellers lie to us on the phone.

I’ve been told more times than not, you better not be coming out here to lowball me. Then we go out there and we make the cash offer and they’re jumping up and down. They’re so happy with what my number is.

As a principle by having agents behind you and by you not being the person that takes the appointments, you’re going to force them to go on every single one, because you really, really don’t know.

[0:23:01.3] MF: That’s a great point. Or we’ve all had the situation where they said, “Don’t lowball me, or here is what my price is. I’m not budging.” You don’t go out there and you see it sold for $50,000 less later.

[0:23:12.5] TC: Happens all the time. It even happens when you go out there, you make an offer and then they say no and you don’t follow up. Then a month later you see it sold for $10,000 less than you’re asking.

[0:23:26.1] MF: Yeah, exactly.

[0:23:27.8] TC: You just have to, and that’s why it’s so important to follow a sales process and do things that same way each and every time, because you just don’t know. A lot of people aren’t completely honest with you. Then a lot of people aren’t. Then a lot of people don’t even know what the deal is. They may reject your offer on day one and get three other investors out there, get lower offers and then by the 5th investor, they’re just fed up, they’re just done. That extra $10,000 doesn’t even mean anything to learn at that point.

[0:23:58.9] MF: Exactly. I think having a system in place no matter what you’re doing, what business it is is so important. It sounds like you’ve got a pretty solid system and that’s the reason why you’ve been so successful. Congratulations on putting that together.

[0:24:15.5] TC: We do, but having said that everything is always a work in progress. We’re always analyzing what can we do better, what system isn’t working the way it should right now, what we can do to improve. When you’re building a business, every single day you need to get better than the day before. If you do that and that’s your marker, one day you’re going to wake up and say, “Wow, I have a pretty significant business.”

It’s all perspective. There’s people I look at and I look at their business and I’m like, “Man, they’re so light years ahead of where I’m at.” Then of course, just below that are below me that look at me and say the same. But again, it’s all about taking that step and making progress each and every day.

[0:24:54.7] MF: Yup. Exactly. Well Tom, awesome information so far on your business and generating that. I know something else I really want to talk to you about was how you’re getting these leads. I know you’ve used a lot of Facebook, other tactics. What are some of your most successful ways of finding these motivated sellers?

[0:25:11.3] TC: Yeah. To me, there’s only four ways to do it. There is probably 30 different marketing methods, or maybe even more that you could think of if you Googled it, but there’s only four that really work well.

Number one, tried and true which is mailing. Number two, is cold calling. Number three is Google pay per click. Number four is Facebook marketing. Those are really the only four right now that really dominate. I mean, you can do other things like you can do [inaudible 0:25:36.5] signs, but they’re hit and miss and not as predictable. You can knock on doors, but most people aren’t able to do that consistently. You can do a TV or radio or billboards, but those are super high cost per lead.

The four that I mentioned, Google pay per click, Facebook, mailers and cold calling are all ones where you can get a decent cost per lead, and where the sellers are going to be fairly motivated.

[0:26:05.0] MF: Awesome. What do you think you have the most success with? Like is on a cost per lead basis?

[0:26:09.4] TC: Cost per lead as of today and this always changes is Facebook.

[0:26:15.6] MF: I have not used – we just started using Facebook a little bit, but I have not done much with it. How are you using Facebook to find those leads?

[0:26:23.5] TC: Yeah. I mean, it’s pretty simple. The mechanics of Facebook is you just tell Facebook who you want an ad to be shown to. Obviously, there’s certain demographics, there is certain cities, there is certain – people that are more likely to move. The crazy part about Facebook is that Facebook knows every single thing about us.

We can get pretty granular with the information that we want. We can get pretty granular with who we show an ad to, and then of course it’s just a matter of what your message says. Then on Facebook, the image is actually super important too.

The negative about Facebook and there’s plusses and minuses to all of these different campaigns. The negative to Facebook is that people aren’t on Facebook to sell a home. We are interrupting what they’re on there to do. Because of that, we need really good graphics and we need a really good and compelling message, or else they’re going to continue to scroll through.

As opposed to Google pay per click, somebody is going on Google typing ‘sell my house fast.’ They’re meaning to actually search. Google pay per click as of today is about 10 times more expensive than Facebook leads. Personally, I would rather tend leads on Facebook than one on Google. The one on Google is probably more likely to be motivated.

[0:27:47.6] MF: That makes sense. I’ve seen those cost as well, where Google pay per click ads have skyrocketed for motivated seller leads. Facebook has gotten up some as well. They’re starting to change their models a little bit, but it’s definitely more affordable.

What about as far as the mailing goes? Are you still finding success with direct mailing?

[0:28:06.8] TC: Absolutely. All four of those methods we have success with. The difference today versus five years ago on direct mailing is that today every single person in the investing space is mailing. The problem with that, I mean supply and demand just like we don’t like deals that are on the market and we don’t like marketing channels that everybody else is doing. Typically speaking, you show up to an appointment where someone’s calling off of a mailer, you are one of 10 letters that they got.

There is a little bit more competition and they’re a little bit less likely to call you back. Because again, if they get 10 letters, well some people will call one, some people will call 10. The cost per lead on mailing has gone up extremely. Again in today’s market, it’s definitely a great lead source, but the cost per lead has gone up.

[0:29:02.4] MF: Then you mentioned cold calling too. I’m curious, how do you guys handle cold calling and how does that work?

[0:29:08.0] TC: We cold call. I mean, I think at the end of the day there is a difference between inbound marketing and outbound marketing. Outbound marketing is when you’re reaching on to somebody, and so mailing and cold calling is outbound marketing. Inbound marketing like the Facebook and Google is when somebody sees something that you put up and they click on it.

Our outbound marketing, the cold calling and the mailers and all that good stuff we have a database of every single home in the greater Boston area that we want to buy. Then we just hit them over and over and over again with mail and cold calling.

The way of the cold calling works, there is two pieces to it. There is my agents who are doing a lot of dialing for me, like we referenced a little bit earlier in the conversation. I’ve got a brand new agent who will say, “Tom, what do I need to do to be successful?” I’ll explain to them that one of the quickest and cheapest ways for you to get face-to-face appointments with sellers is to cold call. We’ll give them list to actually cold call in in the cities that they want to target.

The list that I’m giving them are all properties that I want to buy. They’re going to be people with equity, they’re going to be people on the pockets of towns that I want to do business in, etc. That’s 50% of it is my agents. My agents are doing these calling for me, which is another reason why it’s so great to own a brokerage as an investor.

The other component is we just have overseas people that hit these sellers over and over and over again. The benefit to the overseas people is you’re paying them, so they have to show up to work and there is no, “I’m out. I don’t feel like working today. Or I’m going to focus on my listings today with the agents.” They’re just hitting those dialing numbers every single day.

[0:30:50.1] MF: Awesome. A ton of great information. I know, it’s taken you a lot of time and work to build this up. Like you said, you’re always growing, you’re always changing things as well. Very impressive how you’ve put these altogether. I’m curious, how much right now do you think you’re doing as far as the flipping versus wholesaling versus holding rentals?

[0:31:10.4] TC: Again, this is market-dependent. As of today, because the inventory is so tight and because we’ve got to get amount in capital, we’re flipping almost everything. When a deal comes across our plate, even though we’re doing a hundred deals a year, they are still few and far between. That might sound crazy based on the volume, but they’re not easy to get in this market. You’ve got to spend a lot of money on marketing in order to get them.

If we get a good deal right now, we’re pretty much fixing and flipping outside of a location thing, because my partners have still got to go out and manage the rehab, so if it’s too far. We believe that the markets can change fairly quickly. Again, that might be a year, two years, three years, but it’s going to get there soon.

If we get a new construction possibility, in most cases we’re going to wholesale that too, because we just don’t want to have a deal that goes on for too long. Then the buying and holding side is slowed down a lot, just because of where the values are compared to the rents. We’re always looking at the rent to price ratio and making a determination whether or not it made sense to hold it based on the numbers.

Unfortunately, in the greater Boston market right now the prices have gone up so much that you’re not cash flowing quite as often. Because of that, we’re holding up on our rental portfolio a little bit, even though we really don’t want to.

[0:32:37.4] MF: That’s almost exact same thing that’s going on here with me is where I was buying a lot of rental properties from 2010 to 2015 and in Colorado our prices have almost tripled the last six or seven years in some areas. The rents have not come close to doubling. It doesn’t make sense anymore. We’ve almost gone to all flipping as well.

Like you said too, there is a lot of market exposure on the bigger projects, the new construction, so I’ve stayed away from that as well. Although, it’s so hard to know what the market is going to do. I could definitely see it slow down coming here soon. That’s very interesting. Your take on things is almost exactly the same as what I’ve been doing in my business as well.

Tom, I think those are all the questions I had on my side. Anything we missed or anything else you want to talk about before we head out of here?

[0:33:29.0] TC: Anything we missed. I could probably talk about this stuff all day long. There is so much. I think at the end of the day, you mentioned a couple times like that my scale is a little bit bigger than yours, but really it’s just all to do with the fact that we’re able to really convert on the listing side. It gives us an unfair advantage.

I think for anybody that’s thinking about doing that, or spending money on marketing, it’s actually a no brainer. To me, it’s the biggest no brainer in the history of real estate investing is to get your real estate license and to build a team. You don’t need a 200-person team, but a five or a 10-person team will do wonders for you. It sounds like Mark you’re already doing that. That’s the biggest takeaway I would probably give to people.

[0:34:16.1] MF: That’s awesome. I would agree with you. It’s just a fantastic advantage to be an agent and an investor as well for just so many different reasons. What is the best way for people to get a hold of you if they want to learn more about your marketing, your team, getting training from you?

[0:34:32.5] TC: Yeah, the easiest way is to just register for the webinar that I have. It’s a completely free training session. Even if you don’t want to watch the webinar, once you put your e-mail in, you’ll get on my e-mail list, which will then give you my e-mail. If you go to www.buildateamthatbringsyoudeals.com, again that’s www.buildateamthatbringsyoudeals.com and putting your e-mail then you’d be on my e-mail list. You’ll have my e-mail and pretty much every single day, I send out free educational information on doing exactly what I’m doing, which again, is not difficult to do, but it just requires some work and it requires doing the right type of work.

[0:35:15.9] MF: Awesome. We’ll have notes on the show notes as well for that website, so people can go to investfourmore.com and click on our podcast and see those. Awesome, I think that’s all I had Tom. Fantastic information. I learned a lot from you. I’m sure our listeners did as well. I’d love to pick your brain some more as well at some point.

[0:35:36.1] TC: Absolutely. I’ll come on anytime you want me to.

[0:35:39.2] MF: Cool. Awesome. Well, again thanks a lot for taking the time to do this. You’ve done some great stuff and I know you’ll continue to grow and tweak things to make them better. Yeah, we’ll definitely have to keep in touch.

[0:35:49.7] TC: Thank you very much.

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