Austin is an investor in Columbus Ohio who does around 70 -100 deals a year and owns around $7 million in rentals. In this episode, Austin will tell us how to create a real estate investing organization and how to hire out team members to remove yourself from the whole operation, letting you focus on working on the business instead of in the business. He’ll also teach us how to raise private money from other investors in meetup groups.
Austin was a former college basketball player until he got tired of the game. He bought his first duplex when he was 19 years old after reading about most millionaires owning real estate.
He paid $25,000 for a mentor the day he decided he would get rich flipping houses. Ten months after buying the mentorship, he bought his first property, which took him six months to renovate and sell. The house was purchased for $70,000 with $170,000 in rehab put into it. He made $103,000 after selling it for $370,000. To date, this deal is still considered his third-largest renovation.
He was able to finance his first deal through a private money lender, a lady who gave him $240,000. What he did was a lot of networking by attending real estate meetups where he met the lady.
Austin found the deal through direct mail. It took five touches from a direct mail campaign before the seller responded to him.
Columbus is booming right now. It has recently won the Smart City Award. A lot of big companies such as Google and Amazon are building warehouses and offices in Columbus. The average home sale price is $140,000-180,000. Rental properties can be bought for $80,000-120,000 and rented out for $800-1,300 a month.
Some areas look good on paper but are considered rough places that have problems with tenants. There have been cases of tenants failing to pay rent and the destruction of property after they leave. These areas are those in zip codes 43211 and 43204.
Houses located in B- areas are affordable and make good cash flow. These areas are insulated from changes in the market compared with top of the line properties. Austin is no longer investing so much in high-end properties but is focusing on wholesaling in the first-time, home buyer market.
Being hands-on with your property can help minimize any risks since you’ll see when things get out of hand. A lot of hedge funds also exist in Columbus, with whom you can sell properties to.
Austin started outsourcing the past year. He has three people doing acquisitions, an assistant doing the marketing, and a person handling dispositions. Lately, he has been focusing on creating content and doing coaching.
He implements a tiered commission structure for his acquisitions team. Those who do below $50,000 a month get 6%. For those making between $50,000-100,000 a month, they get 8%. Those who get more than $100,000 a month get 10%.
When Austin started, he spent $100-150 a week on direct mail. He made handwritten letters and dropped them off in mailboxes.
Now, his organization spends about $20,000-30,000 in marketing. They send 20,000 direct mail pieces to various lists. Two people are making cold calls every day for them as well. They also send between 2,000-5,000 text messages per day. They do paid advertising on Facebook and Google.
Their goal for this year is to do 100 houses. They usually buy from wholesalers and do smaller rehabs. There’s competition, but everyone has their own niche in the market. Because Columbus has a different price point from the Bay Area, doing 100 houses is possible.
Direct mail and cold call each brought in $500,000 in business the previous year. As more people stop doing direct mail, it becomes more and more of an untapped medium that Austin is keen to keep using.
It starts when direct mail is sent out. Sellers have the option to get in touch by either phone or text message.
If the seller sends a text message, their acquisition team will call to follow up. If the seller prefers to discuss via text message, the team will just keep sending text messages.
Their goal is to answer 95% of the seller’s questions live and get as much information about the condition of the property. Within 10 minutes, they should come up with an offer.
The team will look up the after repair value (ARV). By asking about the condition of the property, they’ll estimate the repairs needed and plugin what the rehab value is in their spreadsheet. From there, they’ll be able to come up with an offer.
Everything will be put in contract over the phone. An inspector will be sent out to check the property and take photographs.
From there, they’ll evaluate and determine if they need to negotiate on the price, bail on the contract, or buy the property.
When they sell a property, the return on investment (ROI) they target is either a minimum 15% or $20,000 net profit, whichever is higher.
They do simple flips with $10,000-30,000 rehabs. Also, they have 30 rental properties such as single-family homes, duplexes, multi-family homes, and buildings. They also do private money lending.
People underestimate the power of social media. Every day, his team puts up content on Instagram and Facebook. Their goal is to get as many eyeballs on their pages.
They’re also selling a private money lending course and a mastermind crash course.
The investment in marketing is not a cost. You are starting a marketing company, not a real estate company.
Marketing more speeds up the timeline of you getting a deal.
Most people who have become successful have been in a position of fear, but they were able to push themselves past that point. You can only learn so much, but you also have to take action.
Being in the right place at the right time makes the difference. So doing a one-off direct mail campaign won’t work. But if you’re consistent, you have better chances of getting a deal.
The more personal and direct you can make it, the higher the chances of you getting a response.
Some strategies Austin’s team do to get lists is to use ListSource or hire some kids for their driving for dollars campaign.
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