If you haven't closed a wholesale deal yet watch this video
Jesus Gabriel Mendez walks through closing a wholesale real estate deal from lead generation to sale. He covers finding motivated sellers through paid ads or cold-calling, calculating offers using ARV and repair costs, and selling to investors. Mendez shares that he lost over $1 million in bad deals before learning the systems that work.
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I learned this quote yesterday, actually. I knew part of it but not the full extent of it, and it goes like this: a mentor had a student that wanted to learn the skill that the mentor had, and then they were out of water. Water was up to here. The mentor said, put your head underwater. He held his head, he held his head underwater until the last second, and then once he got out of the water, he asked the student, what did What did you want more than anything while you were underwater? And the student said, to breathe. Teacher asked him, I thought you wanted to learn from me. I thought you wanted to learn the skill. I thought you wanted it really, really badly. He said, no, at the moment I wanted to breathe, but I still want to learn. And the mentor asked the student, he didn't ask him, he told him, the moment that you want to learn the skill and make it happen as bad as you wanted to breathe while you were underwater, That's when you come to me, and that's when I will teach you every single skill set that I have, right? And I say that to say this: a lot of you guys go into this industry with the wrong mindset, and any industry in general. I'm talking just about entrepreneurship in general because I've tried multiple businesses, right? It just happened to be wholesale, the one that I landed on and I kept persistent on. A lot of you guys jump from ship to ship to ship to ship to ship. Me and my friend group, we like to call it the woman with the red dress. She's so beautiful, right? You find one with a yellow dress. Oh, she's cool. But she doesn't have this, this, and this, and then she doesn't want to give it up, right? And you see the woman with the red dress, she's so beautiful. So you jump ship. And now the woman with the red dress doesn't want to give it to you, or she doesn't like you as much, right? Then you jump ship to ship to ship to ship because everything looks beautiful from the outside. Everything looks easy from the outside because of the way we market it, right? I'm guilty of it, right? I like to tell you guys, you got— you do this, you do this, you do this, you do this, and you make $10K. Reality is that is true, but it's a lot of little details and a lot of little roadblocks that you will go through to actually make that happen, right? You might get lucky on a couple deals where you don't have any issues, but to get to the point where I'm at, it's taken me 6 years, right? To get to the point where I can only work for 4 or 5 hours a day and then be able to relax and take vacations like this, right? And that's because I actually went through the experience. Not only did I also pay for mentorships to help me get there faster, but a lot of it is from experience, right? Learning all these mistakes, learning from the mistakes, losing a lot of money in deals. I've probably lost over $1 million in deals just because I didn't know what to do, just because I didn't say the right thing, just because the contract wasn't written the right way. Right? That's why I can look at myself in the mirror and go to sleep at night knowing I'm helping people doing it the right way because I didn't drop a course, or I didn't sell mentorship 3 years ago, 4 years ago when I just started like a lot of other people do. You know, I've been doing this for a while and I know I get the results from it. And I know I can teach somebody else. But I would love to teach everybody. But the problem is that not everybody has the mindset to do it. And that's why I brought up that example that I mean, I heard from an Uber driver yesterday on the way to the club, we were speaking about stuff and he mentioned persistence. And that's really one of the biggest key factors to success that I believe will take you further than anything. If you have the drive of never quitting, of never giving up, of you want it as bad as you want to breathe, you want it as bad as you want to see your family happy, right? It's all about the external factors that will guide you to that discipline. If I just wanted to have this apartment, have my car, and then I don't know what, whatever else materialistic thing, a nice watch, right? I would never be here because that would never guide me to the right amount of discipline to actually be persistent, to actually go through all the tough times and keep going, right? Because if it's just for a watch, anybody can buy a fake watch. Anybody can rent a car for a month. Anybody can rent a car for a day. Anybody can post on Instagram and say, hey, I'm living the rich life, but the Instagram is only the highlights. You guys don't see when I'm on a call and a seller is cussing me out and I have to go through it to get the deal under contract. Or sometimes I go through it and then I don't even get the deal, you know? So it's all these trials and tribulations that you don't see on the other side of the wall, which if you have the right mindset, it's not a problem, right? But a lot of you guys, this might be the first business or the second business you start, and you don't understand that There's a lot of bullshit going on in the industry. There's a lot of stuff that happens that is just completely out of your control. You can know everything. I know everything all the time. And if, I mean, if you guys watch my stories yesterday, I posted about a deal that I just lost. And I've been doing this for 6 years. You know, it's, it just keeps happening. It happens all the time. There's really no way to avoid it. You have to count it into your numbers that you will lose deals. And I'm okay with that because I do volume. I know that losing 1, 2 deals a month is not going to affect me because I'm doing volume. Because I'm to a point where I know the right way to pull a list, I know the right way to talk to somebody, I know the right contract to use, I know the right way to find a buyer, right? And that's the gap between me and you, right? But I also want to give you guys some game, not just motivation, because a lot of people will just sell you motivation. So if you are a beginner, if you were a beginner and you have zero knowledge, number one, This is from zero. So if you guys— you guys probably skip about maybe a minute or something like that. I'm not going to edit this video. You need to find a way to market to get these leads. By leads, I mean motivated sellers that are interested in selling their property, right? They can either be interested from two ways. They can be interested from getting full price or just getting rid of the house. The reason we make money in this industry is because we provide value. We help somebody in a tough situation such as they're such as a tired landlord, such as a person that just isn't making money with their properties, right? That's where we come in and we provide value by getting rid of that property for them. We obviously don't buy them. We're just the middleman, same way as real estate agents. They're the person in the middle. They're the person covering the gap between somebody trying to sell their property for the highest price possible to a retail buyer. We do low-key the same thing. We find a motivated person that is willing to sell their property for a low price miss out on equity for the efficiency, right? A lot of you guys might ask, I get this question a lot, why don't sellers just sell it on the market? Because a lot of different ways, you know, with a real estate agent, you got closing costs. A lot of times you normally wait 30 to 90 days if the seller is stuck up and he wants a specific price and he doesn't listen to the real estate agent on what price will actually sell. What's another thing? You've got a bunch of random people going through your property.. And if it's in really, really bad condition, nobody's really going to pay attention because it's a retail market, right? When you're on Zillow, when you're on Trulia, when you're on Redfin, Realtor.com, a lot of these people are looking to move into a house. So if your house is in bad condition, a lot of people would just skip over it, right? And a lot of the investors that are looking on the marketplace, on the MLS, on all these investor websites, are looking for a crazy deal because they know all the retail and all the retail buyers in the market have already seen it, right? The same way that if, I mean, what would be a good example? The same way that if you're in your city, right, and you know a girl has been with multiple other guys, you know, hey, if I want a good connection with this woman, I probably want one that hasn't been with many men, right? You don't want her because she's been with everybody, right? And it's not, it's not a shot against women. I mean, You guys do whatever you want to do, but it's just an example to putting a property on the market and let it be seen in its worst condition, right? So when a retail buyer comes to zillow.com and he sees the transaction history of, okay, this property was in terrible condition 3 months ago and this guy just came in here in 3 months and just put some lipstick on it and is wanting $120,000 more than it was listed before. They're not going to be too interested in that, right? Because it was on the market. Now, we don't deal with on-market, we deal with off-market. So back to the point of you need a marketing source. I recommend either paying for leads, paying an agency. Make sure you look out and make sure they're trustworthy and you can see testimonials for them to run ads. They can either be YouTube ads, Google ads, Facebook ads, social media, TikTok, Snapchat ads even work, which is crazy. You wouldn't think so. Which is those things that you— I mean, if you guys are looking into wholesale on the internet in general, you're probably going to get the ads of, do you want to sell your house fast? Do you want to sell your house for cash? Fast, easy closings. We buy your house in cash. We're local investors. We want your property. Those types of ads, those are people that are putting money behind marketing for people that own properties in a specific area to sell to them for a lower price. Because they want to wholesale it. Now, I'm kind of jumping point to point here, but why won't the— a lot of you guys ask me, why won't the investor just find the deal himself? The same way that you don't go out and try to kill a cow if you want to eat tonight. You know, you want efficiency, you overpay technically, right? A cow, I mean, you could probably go kill a cow for free, but it's going to take you multiple hours, you're going to need a weapon. You're going to need a place to sanitize it. You're going to need a place to cut up the meat and make it sanitized. It's a cow, it's a live animal. It's a lot of work for you just to eat dinner at night, right? So you go to the grocery store, you buy it cut up, and you pay a markup, right? So the same way the investor is a professional at flipping houses, is a professional at exit strategies with a rundown home, why would they go out of their way, split their bandwidth? Because you got to think, the same way I tell you guys focus on one thing, The investor is focusing on one thing because he knows that's where the majority of his money comes. This is his bandwidth right here. All of this is going into flipping, into creating rental properties, into updating a property to make the value as high as possible. If they try to go and source their own deals and save $10,000, $15,000 per deal, this is the bandwidth that they now have to do what they're good at. So they're not going to do it at its highest potential. They're going to be mediocre, right? The problem with a lot of you guys is you're mediocre because you're trying a lot of other things. And I'm not faulting you, I was in the same position a couple years ago. I was being mediocre because I tried everything. So, back to the point. You need marketing. You can do paid, or you can do cold calling, which is also paid. Because I would recommend you use a dialer. If you're just using your phone, you will waste a lot of time. It is 2024, it is July 27th, right? We're like 60% into the year. We don't have a lot left. You want to make a change, you want to make a lot of money. We need efficiency. So those are the two channels. You pull a list, you talk to them outbound, or you pay if you have money already for inbound marketing, right? You pay for advertisement, people come in, you vet them, you have a full sales process, you have a funnel, and then you talk to them, you nurture the lead, you close it, right? Two ways. Now, that's inbound. That's the leads coming in. That's the leads coming in. That's the first part. That's acquisitions. Acquisitions. Acquire. We acquire contracts. We acquisition contracts. Act. Whatever you want to call it. Because it's two parts of the transaction. Wholesale is you get a property under contract, you take it to the title company, make sure that the contract is valid, the seller is the actual seller, and then you turn around, you start marketing, and then you find a buyer. That's a second contract. You bring those two contracts together, to the title company, funds gets paid out once closing happens. You have the two ways of marketing. Finding a title company, it's as easy as finding a Google search. I recommend title companies ran by lawyers because they're more open to working with wholesalers since a lot of people in the industry are not doing the business the right way, right? Because of that, it gives us a bad look. That's why a lot of people, when even you talk to real estate agents, if you bring up the fact that you're a wholesaler, they're gonna be like, ugh. Oh, you're a wholesaler? Yeah, I don't want to— I don't really want to work with you. I don't want to talk to you, right? Because there is a bad look, because a lot of people think it's low barrier to entry and they get into it and they fuck shit up. They don't do stuff the right way. Now, I can't fault you for that. I was the same place when I started. So you got the first part. Now you have to nurture the lead. I've made a video on it, but I will pull up my notes and I will show you how to nurture the lead on the phone. You have to do it through the phone. So when you're talking on the phone, especially the first conversation, because this is a 2-call close for acquisitions. You're going to go over ownership, condition, tenants, timeline, motivation, and price. At the end of the call, before you structure the next call or book in the call, however you want to say it, you double down and you make sure that that information is accurate. So ownership— who is the actual owner? Are you the owner? Are you on the deed? How long have you owned the property? Why do you own the property? Condition— what is the condition of the property? Give me a small walkthrough of what the property looks like. From 1 to 10, is it 1 where I walk in and then the floor caves in, or 10, the property was just renovated and it's brand new, ready to move in, right? That's condition. Tenants. Is there somebody living in the property? Especially us, because we target non-owner occupied, because it's sometimes harder to get somebody to move out of their personal home that they're actually living in. So we want to make the process as smooth as possible. So we're talking about tenants, we're talking about are they good tenants? How much money do they pay a month? What's another thing? Are they on a month-to-month agreement? Are they on a yearly agreement, right? When can they move out? How comfortable are they about moving out? Have you talked to the tenant about you selling the property, right? It's a lot of these little details that you have to know for the transaction to go the right way, because if you miss out one of these, that might fuck you in the end. So timeline, how fast do they want to sell? Do you want this? Do they want to sell in the next 15 days or they want to sell in the next 6 months? Right? That's another key factor because that'll predict either, okay, we need to get this property under contract in the next couple of days versus we need to get this property under contract in the next couple of months and we need this type of follow-up schedule to make sure the lead doesn't get lost or they sign with somebody else. Then we got timeline. I already did that. Motivation. Why do they want to sell? Why, besides the fact that I called you or besides the fact that you just saw the ad on the internet, You're interested in selling your property. Tell me why. Is it— mm-mm-mm-mm-mm. That's not a good text. Okay, price. So now we got motivation, now we got price. How much do they want for the property? Now, if they're not willing to give it to you off the bat, which, I mean, if you're doing inbound, you should have something in your form saying, hey, what is the price you're looking for? But if you're doing outbound, the price, you can do, Like I was saying, if they don't want to give you the price, you can do multiples of things. You can look at the tax records and look at the tax valuations and see, hey, the property is worth this much by the county. Is that something you're looking to get? And obviously these tax valuations are only a percentage of what it's actually worth. So they're going to be like, uh-uh, no, I definitely want more than that. And then that opens the door for them to say, I want something like this, right? Or you can say, hey, this property in this area that's not too far from you was sold for this price. Is that something you're looking to get?, right? We normally want to get a price out of them because that kind of, that's where we can gauge where we're going to negotiate from, negotiate from, and also see if they're just bullshitting, right? Because you'll have a property that's only worth $50,000 in its current condition and the seller wants $150,000, right? And that can be a multiple of factors from either that's just personal opinion and I don't know, these are questions you can ask them. Is it from an emotional sense? Do you have an emotional tie to the property? Is it from money that you put into the property, which was obviously not well spent because the property is only worth $50,000 when he's wanting $150,000? Or maybe he's just not motivated, right? A lot of the people that we're going to talk to are just not motivated. We're looking for that diamond in the rough. Now, if you're consistent with the numbers, you will find that diamond in the rough consistently over and over and over again. That's why I'm able to close multiple deals a month, right? So we went over ownership, condition, tenant, timeline, motivation, and price. Then we go ahead and double-check everything. One thing I like to preface on these calls is, hey, I'm just the information gatherer. We're a small team, it's me and my brothers and the underwriters. We all work in cognizant to get you guys an offer and for us to get properties under contract and then go ahead and fix them up and sell them to a retail investor, right? So when we double-check everything, I come at it from, hey, just to double-check, The condition is a 6 out of 10. The tenants are ready to move out in 30 days. The timeline is in the next 15 to 20 days that you want to sell. Obviously, we have to push that a little bit forward because of the eviction timeline. Then we got, you're wanting to sell for this reason, you're wanting to sell for this price. Is that correct, Mr. Seller? Beautiful. Okay, then we go ahead and move on to booking in a call for another time, right? Because we got the information, now we have all all the tools, all the ammunition for us to actually run the numbers and see, hey, what is a good offer for this property where I will make money and the investor will make money? One of the best advice that I can give you, which I will go over when I'm talking about dispositions, disposing of the contract, is put yourself in the investor's shoes. If you put yourself in the investor's shoes, that's the buyer, that's the customer that we're looking to provide a asset to, right? Something that they're going to make money off of. So if you look at a deal, the seller wants $100,000 for a property that's worth $50,000, and then after repairs it's worth $150,000. He wants $100,000, right? Closing costs, let's just put $5,000. That's $105,000. The property needs $20,000 in repairs. We're up to $125,000, right? And that's you not making any money. So let's say you just want to make a $5K profit. He's all in for $130,000. Right now, let's say holding costs, that's another, let's say, $2,000, $3,000 a month. We're up to, I don't know, another $10,000. That's up to $145,000. Yeah, $145,000. An investor is not going to buy that property for $105,000 to make $15,000, $10,000, because you got to think, he's not going to list it on the market on its own. He's going to either keep it as a rental property because they there's not just enough equity in there, or he's going to try to sell it on the market and just even break even. Because you got to think, the same way that a seller is working with a real estate agent, the investor is also working with a real estate agent to get the biggest price possible, right? So you got to pay the agent his commission, you got to take in also holding costs. The property is not going to sell in a day unless it's a crazy price, and if it's a crazy price, tough luck, you know. So that's acquisitions, Right? You got the first conversation, you're booking a second call for you to actually give out the offer. Rule of thumb, if we're talking about running the numbers, right? You got all the information. Let's go ahead and pull up the notes. So, when we're talking about something over $250,000, the property value, we want to stick to 0.77 to maximum 0.85, right? So you do ARV, which let's say a property— let's use the same example. After repair value, a retail buyer will pay $150,000 for this property in Bumby, Texas, right? Let's just make something up. $150,000 is the ARV, meaning we have to take away from that— let's do 0.75 because it's around 150. So over 250, we're talking about 0.75. 0.77 to 0.85. Under $150,000, we're talking about 0.75, sometimes 0.70, depending on what you can get away with. Every single market is different. This is just an example, right? So we're talking about $150,000. $150,000, we multiply that by 0.75, that's $112,500, right? Now we have to take in repairs. Let's say this property is only 1,000 square feet, which is about I want to say $15,000 to maximum $20,000 in repairs. We take away that minus $20,000. That's repairs. We're down to $92,500. Now we have to take away our fee, right? Let's say we want to make $10,000 on this property. We're down to $82,500. Now my recommendation is, on numbers, this is your maximum allowable offer, right? Meaning this is the price that you would offer for the property to the seller. Hey, Mr. Seller, this is our offer. This is how our process works. Are you interested? Are you ready to go? Are you ready to sign the contract right now? I wouldn't start at $82,500 because $82,500 is 10 on the dot. Everybody loves to negotiate. I would honestly start this negotiation at $75,000. Why? Because the first offer you want to have, you want it to low-key be a little bit disrespectful. You want it to be like, oh no, that's way too low. Because now you can negotiate, right? You started off here, meaning you have— let's do $82,500 minus $75,000. That's $7,000, $7,500 that if they say yes to the first offer, you're making $17,500. Now they say no, you have a spread, a negotiation room of $7,500 that you can go up on the price and still make $10,000. I just gave you some game right there. Cool. Now you have the offer. Now you have the call for the next day. I like to do around 5 PM because that's when I'm done with my cold calls. I go ahead and call them with high energy. You want to come in with high energy because you're about to lowball the shit out of them. So you go ahead and talk to them. Hello, Mr. Seller. Just to double-check, you're still interested in selling the property? Cool. This is a little bit about how our process works. Let me go ahead and talk to the team that's still in the office. They wanted to know this, this, and this. Just extra little details that you want to get out of the seller to know that he's still motivated and still interested in getting that offer. One thing I will tell you though, when you start off the call, you want to ask them if they have time to actually have the call. Hey, Mr. Seller, do you have a couple minutes to go over the offer that we have for you? Beautiful. Okay, so now you got time to talk, you got the intro done, you have the report built. Another thing about the first call is you want to build rapport between all these questions., right? Because if you are known as the guy, oh, this guy's just trying to buy my property, this guy's just trying to lowball me, this guy's just an investor, you're not coming at it with the right frame, right? You want to come at it as, hey, Jay's calling me, right? Because now you've went from a random person calling you to a cool guy because you may be related on something or you just look very, very professional. You can have rapport from two different ways, from business report of, I'm the right guy you want to work with, I know exactly what the fuck I'm doing, I helped somebody in your situation not too long ago. Or you can come at it from, hey, I also have a dog that broke his leg 2 years ago, right? We're wholesalers, right? We have to finesse a little bit. The perfect time— not the perfect time— the perfect way to do this is mix both, right? So you build that little bit of a rapport, but you also come at it from a professional standpoint, as if I can help you because I know I've helped somebody in your situation before. Beautiful. So now you have rapport, now you're calling them back, now you got the intro out of the way, you know they have time. You ask the questions to get more details out of the property. You already have the numbers ready to go. You say, hey, this is how our process works, boom, boom, boom, boom, boom. Here's the offer that I just got from the underwriters. Are we ready to go? They say no, cool. Let me actually do this. I actually want to give you the best price possible. I'm on your side, Mr. Seller. My team of underwriters, sometimes they get really mad at me because I try to give everybody the best price possible. So what is the price you're looking for? Okay, you're not looking at $75,000, you're looking at $78,000, right? Okay, Mr. Seller, I'm not too sure if I'm able to do that, but let me do this. I'm gonna go back there for a couple minutes, I'm gonna put you on a brief hold, And then we'll go ahead, we'll go ahead and see what we're able to do, right? And is that $79,000, is that $78,000 the best you're able to do, right? So if I'm able to get you somewhere close to that $78,000, we can make a move today, we can get something on paper today. Beautiful. Okay, you'd go talk to the underwriters. Keep in mind, because you started at $72,500, or what was it, I think it was $75,000, because you started at $75,000, now you have room to spread, and now we're talking about $11,000, $12,000 deal., right? Instead of just starting off with just 10 flat and then going down to $8,000, $7,000, right? We don't want to do that. We don't want to lose money and leave money on the table. So boom, you go back, you come back, you say, hey, we're able to do instead of 75, we're able to do 76.3, right? Oh, you don't want that? All right, let me do this. Let me get this, this, this, this, this, and this will help my team of underwriters get more information about the property and try to give you a better offer because I didn't know you had that. I didn't know you fixed the roof instead of 20 years ago, you fixed it 10 years ago. That'll help us, right? Go back to the underwriters, come a little bit higher. Never jump too high when you're negotiating. You want to jump little bit by little bit by little bit instead of starting up here. So this is the negotiation, right? This is the middle, this is closing. This is you, this is the seller. You want the seller to come boom while you go boom, boom, boom. Boom, boom, boom, boom, boom. That way, yeah, you're getting a little bit closer to the closing line, but they're coming a lot down, right? So now you have the contract. Now you got that signed. Please use DocuSign. For the past 3 years, I've made a free DocuSign account every 30 days. I make a new email. I'm not paying for DocuSign. That shit is ridiculously overpriced. So I recommend you do that. Cool. You've got it signed through DocuSign. You come back, time to find— you can either do it both ways. You can find a title company first. That's what I do personally. Some people find it after. A good thing is investor ran title companies. They work the best. Make sure you call them before. If you think you're pretty sure you're going to get the contract, I would call them before and say, hey, I have an assignment of contract. Do you guys work with wholesalers? Do you guys do blind HUDs? Do you guys do assignments? Do you guys do double closings? Beautiful. Any upfront fees? No? Amazing. I'm gonna have a contract sent to you. What's your title officer's name and their email? Beautiful. Okay. And then I'll go ahead and send that over before the end of the day. Beautiful. Now you have that, you put it on the contract, you get this signed. Now you've got the contract signed with the title company. You go ahead and send it over to there and double check that everything is good with the contract. Great. Now, Time to find a buyer. We marketed using outbound and inbound marketing to find the seller. You can do the exact same for investors. You can do inbound marketing by placing ads. Are you looking for cash properties to buy? Are you looking for ugly houses to buy? We are looking for investors to buy single-family homes in this area. You can do that. I've done that before and it works. Or you can just do the simple of going to PropStream and pulling out a list of cash buyers in the area You can also use Investorbase. I found it, Investorbase. You can pull a list from there. I don't think it's too expensive of cash buyers in the area. Boom, you reach out to them. You don't really need much of a script for them. Just reach out and say, "Hey, Mr. Investor, my name is this. I work with a team with off-market properties in this area. I wanted to see if you're still interested in buying cash properties or investment properties." because I saw you bought this one in cash not too long ago, right? And you reach out to them using that way. Please build out a visually appealing package of the information. Don't just send it out through text. And then what's another thing? Another way you can do is reach out to realtors that have sold investment properties in the past, properties that have been renovated. You can do that. And then once they say yes, you negotiate. Make sure you have them Make sure you don't negotiate until they go and actually walk the property. You want them to have some type of skin in the game. Earnest money, put around, I like to do $3,000 to $5,000 just to make sure they have skin in the game and they're actually serious and will go through closing and not ghost me. Again, use DocuSign, simple assignment agreement. What's another thing? Another way you can find some is reaching out to title companies, having them use their network. Yeah, I mean, and you just wait till closing, right? But it's a lot of more details. Like, this is a 30-minute video, and I gave you guys a lot of game on how to start and how to actually do this, but there's a lot of little details missing. But yeah, if you guys have any questions, any— anything else I should make a video about, just reach out to me on Instagram, comment on this video, and then yeah, I mean, I hope to help you guys out a lot. I hope this video video gave you a lot of information. And let's go ahead and close some fucking deals. If you want to— if you want me to teach you one-on-one, you can just go ahead and look at my Instagram. I got a couple free trainings in there. I got some content in there. Go watch that. I wish you the best, my friend. I'll see you at the top.
