10k on his first deal to now specializing in doing foreclosures with Chris Cates

All right, everybody, what is going on? This is the Painless Flipping Podcast, Investor Thrive Nation. If you haven't tuned in before, the reason why we do this podcast is so you don't have to go through the pain of learning how to get into real estate all by yourself. We bring on experts, and I have my man here, Chris Cates. How you doing, brother?

Awesome, man. Thanks for having me on.

Oh, always a pleasure having you. You had me on your Facebook group, which we can give you— we can have you do a shout out so everyone from my group, whoever's watching this, can go to yours. But, uh, thanks for having me on there. We got you on here today to talk about how you got your first deal of $10,000 that you ended up splitting and where you're at right now. So let's start off and talk about— well, first off, introduce yourself, give us a quick intro, and then we'll talk about that first deal.

Yeah, so, uh, Chris Cates. Uh, I mean, my main exit strategy is wholesaling today, and I go direct to homeowners, specialize in foreclosures. We're on track to do about around 1.5 million and started off about 3.5 years ago and started off with that one deal, right?

Dang, I love it. Okay, 3.5 years ago, what were you doing before you got into real estate?

So I was in commercial construction. I was a general contractor for a top 30 GC in the nation. Orchestrated projects.

Did that help you at all when you got into real estate and wholesaling?

Oh, it helped me a ton. There's nothing that was scary to me about construction and single-family homes. Compared to commercial buildings, they're kind of cute. That's true. But yeah, it translated very well. Okay. That's awesome.

Well, so let's talk about that first deal. So you came from the construction background. Now it's time to get your hands dirty. How did you get your hands dirty? How'd you get that first deal, $10K?

Yeah, so I didn't like the growth trajectory that was happening in my primary business and how, like, it was, you know, you knew it was a pretty slow pace when you're working a W-2, right? So, uh, you know, I started text marketing and, you know, within 3 weeks, uh, I had someone that, you know, had positive connectivity and just walked him through my list of questions. And it was actually two plots of land that were side by side. Each one was so narrow that they could only be sold as a double, right? And we, you know, I put that under contract for maybe around $20,000, sold them for around, sold them for around $30,000. I had a dispo partner, somebody that I'd been collaborating with that helped sell the deal on the back end too. Nice.

Do you feel like that's a way that a lot of people start is maybe they find the deal and then they have someone help on the dispo side, like help sell the deal?

Yeah, you know, to be honest, it's pretty overwhelming to do it all at one time by yourself and learn both sides of things. Like it's almost like Like when you're doing it for a while, like for us, it takes a team, right? So to build it out, like it's hard to have your hats in all these different places, particularly when you're learning, right? If you're learning acquisitions, how to build all that, and it's like, oh, now I have to learn how to assign it and do dispositions. It's a lot at one time, right? So I was really fortunate to have somebody in my corner to, uh, help kind of sell the deal too.

So yeah. No, I agree. And that's why, like, as you know, my strategy, I tell people to kind of start at least with like a couple buyers to know what they want. So it's easy at that point if you find a deal to just give it to them, right? Because if you don't, you just do acquisitions and you kind of like, well, now I have 7 days due diligence or 4 or 10 or 15 to find someone. It can be a really stressful thing to like try and figure it all out yourself because you don't really even think about that portion when you're doing acquisitions. You're like, let me just find a deal. And then once you do it, then you're like, oh shoot, I have like little to no time to move this, right?

Yeah. Yeah. It's a, it's a good problem to have at the end of the day when you get to that step. But it is a stressful situation to, to not have an exit strategy for the next step, you know? So, but yeah, and like you're telling people, just find a couple buyers because it's very easy to get scatterbrained and focus in 15 different directions and not not be definitive, and that's when you lose the most momentum in what you're trying to accomplish, right? 100%.

Like, for example, I was just on a, like, a coaching call, if you want to say, like, before we hopped on. And this one guy, I'm not going to say his name, but this is something that happens to all of us. So he's like, hey, man, do you know how to wholesale businesses? You know, this question on this call about wholesaling. And I was like, no, I mean, no, no. Why are you asking that? And he's like, well, I have a laundromat that I think might be a good option to wholesale. And I'm like, "Bro, you're talking about wholesaling businesses and you got to stay focused on your wholesale business." And he's like, "But dude, I don't want to miss out on this opportunity, right? Like I want to make money any way I can." So does that sound familiar, bro? Like how many people you talk to in the beginning, you like looked at everything, you're like, "Well, I got to do this and this." And it just really can distract you from being successful.

And myself, man, when you first start, like it's almost like you're like finally off leash and you realize you're in opportunity land. And then you get the shiny object syndrome, right? And nothing can kill success faster than seeking 15 things at one time. There's a quote, somebody that I'm close with says, 'The man who chases like two squirrels will catch neither,' or something like that.

Yeah, it's a Russian proverb. Yeah, that's a good one.

But, and that's, that's really what it is at the end of the day, because I mean, yeah, he's in the wholesaling industry, but a business, like, that's a different— it's just a different beast. And you, you have to be focused on even on that. There's people that make that their thing, right? All they're doing is wholesaling businesses. Um, so yeah, it's a, it's a good point.

So when I bring that up, that makes you smile because you're like, yeah, I get that. You know, that we all— like, this was one, one of my Achilles heels in this business was like people bringing me opportunities from all over the United States. Like, people would be like, hey, I have a great deal. Like, one guy called me today, he's like, hey, I have a deal in Tennessee, could you help me out? And I know how to wholesale deals anywhere in the United States because I know how to find buyers, but that stops momentum. You got to say no to some certain opportunities just because it will stop you from using your time in, you know, where, where I specifically focus. So even something like that can, can kill success momentum.

Yeah, absolutely. Staying focused on a market or specific markets that, you know, can like burn and turn quick and you have good roots, right? 100%. Yeah. And so that's the thing with wholesaling too. You can get momentum in a county, and then you don't realize, you go 3 counties over and you got a different pool of everybody there. You know, your buyers are different, everything. So it's not something that's necessarily easy copy paste.

Exactly. So let's talk about— so you did your first deal. Is there anything memorable about that deal you would like to talk about? Like, you found on text messaging, he dispo'd it Anything that happened that you want to talk about before we hop into what you're doing now?

Well, it was surprisingly easy. Like, it felt like I was cheating and stealing because of how easy the entire deal was. And I know you don't typically hear that, but like, you know, you hear— like, for me, I did a lot of research. I, you know, I listened to Wholesaling Inc. podcast for like 6 months before I started, made sure I was prepared and everything. And then it just, it just happens, you know, I got a deal under contract. I was like, is this for real? Like, like, this really going to close? Like, this isn't going to happen. And then I got, you know, $5,000, which is huge for someone that's just on fixed W-2 income, right? So it was pretty cool. Like, they got the— like, it required its negotiations and a lot of, you know, other components. But, you know, it, it all works out in the end.

So Love it. Love it.

Yeah.

So tell us, so you went from doing your first deal for $10K that you split, uh, 3 and a half years ago. Now you've figured out this awesome niche of working with sellers that are going to lose their home in foreclosure, correct?

Yeah.

Tell us about how you found that and, you know, tell us about how everything's going. Let the listeners know, um, kind of what the business looks like.

Yeah, it's going really well. Like, we, we always did a kind of more mass marketing approach and we never focused on a specific population or group of people. And we found that for this, like, like, we really enjoyed stopping foreclosures for homeowners and just being that, being that conduit for, for people to, to have a different situation than the worst-case scenario, right? And so we saw that, and we've recently kind of made that our thing where that's all we focus on. And so we we cut off everything else, completely cut ourselves off from other marketing methods. And it wasn't easy because it's nice to have your hand in so many pots and that works for some organizations. But for us, we just realized we wanted to be kind of the specialists and create that help with the market and where it's at right now.

Yeah, you're really providing value. Right? Like, you really feel like when you reach out to someone that's in pre-foreclosure, about to lose their house, like, hey, I'm the expert. I can help you out. I can help you keep this house. I can help you, you know, whatever options you give them.

Yeah, 100%. Like, our acquisitions guy right now, we talk a few times a day, and he's emotional support for all of these homeowners. And, you know, I smile, but at the same time, it's very impactful because they are kind of living on an island and they've kind of given up hope, right? And so we're able to kind of create that for them.

So that's amazing. So let's talk about how you find these opportunities. I'm curious, are you just getting the list from, you know, paid service? Are you going to the county? And then how are you reaching out to these leads?

The county has the list and we reach out same way we always reach out by text and phone call and sometimes sometimes even door knocking. And, uh, we are just trying to shake the tree and ruffle feathers and talk to a decision maker at the end of the day.

So, and how's the reception? How do they receive you usually?

Um, mixed, mixed feelings, uh, but if someone truly believes we're here to help them and That's our primary purpose, which obviously we make money, but motives align there where, you know, we're able to stop a foreclosure from going on the record and possibly even clean up their credit, right? Which is huge. And they get to walk away with money in their pocket instead of just losing everything they've owned. Then, you know, we are able to sometimes break down barriers there and help people understand that we're all kind of sitting on the same page.

So I love that. So when you reach out to them, do they sell? Do they say in defense, defense, like, I'm not selling? Is that like one of their things you have to overcome? Or do you work with the people that are like, yes, I need to move, there's something going on? How is that?

Yeah, we know they're not selling. That's pretty clear. We don't call them sellers. We call them homeowners. That's a big difference than traditional, right? And so, you know, we don't ask if they're willing to sell. We say, hey, we know your home's in foreclosure and we can help.

Okay, so you just straight up say— and that— because I know a lot of people when it comes to doing this for a while, like, they don't— sometimes they don't even want to bring it up, right? They just act like, oh, I was just calling you, you're on my list, or, you know, they don't bring it up. So you bring it— you straight up bring it up?

Oh, yeah. I mean, it's an elephant in the room. And if they deny it, we say, okay, did you pay off the lender? Because we see a case number right here.

So, yeah, you're straight up about it. Do you try to approach them and say, like, hey, I might be able to help you stay in the house? Or is it mainly like, hey, we can stop the foreclosure from happening? How does it work?

We say we don't know. I mean, we're completely honest, but a lot of times that's what they say, right? I just want to stay in the house. And it's like, okay, well, Let's— we need the facts. We need, we need a lot of information to be able to know whether that's, that's possible or not. And, uh, that, that could be possible, uh, but, but 99 times out of 100, we already know that they can't pay their mortgage, so they probably can't pay their rent and they need money to move out, right? And sometimes they can pay the rent, um, or— but sometimes they need a lesser amount, uh,, you know, for a monthly rent too. And then the other factor is 99 times out of 100, we wouldn't be comfortable keeping them in the property with the condition that it's in while we own it, right?

So yeah, yeah, if you're gonna buy it, I don't think you suggest that they keep it. Um, yeah, no, if they want to keep it, then, you know, potentially that you'd have to figure out how you could get them to catch the loan up, but you're not going to buy and let them stay in it because that just doesn't Makes sense. So let's talk about a scenario. So you reach out, you get the county data. I know a lot of the times when I'm reaching out to pre-foreclosure lists, you're catching them right as they go into pre-foreclosure versus like a week before they lose the house. So are you reaching out to— somehow reaching out to the ones that you know are about to go to foreclosure? Are you just hitting the list and whether or not they're— wherever they're at in their journey, you just follow up.

So it's different everywhere. For judicial states, typically a lender has to file a notice of default with the county. And so you're able to easily get pre-foreclosure data. But when on non-judicial states, you're just seeing that final foreclosure notice with an auction date. And that's when it kind of— the race starts. But yeah, we're, we're exhausting both, both, both areas, both opportunities when, when there's the opportunity to do that.

So yeah, because when I was at the family, I talked to some guy that they specialize in also targeting foreclosures. And he says that sometimes, like, you know, he'll email— sorry, he'll send mailers to these people on this list for like 18 months because sometimes they'll be able to catch it up, then they'll be— then they'll go back into into it. Sometimes they just aren't— it doesn't hit them until later. So when I first started marketing, I would just, you know, I didn't know what I was doing. I would just send out mail or text or whatever, and I would just try and hit people with like one massive blast. But are you saying that sometimes it requires like a consistent drip on these people? Like you got to be consistent whether or not, you know, instead of just one hit, you got to keep it going consistently?

Yeah, 100%. And, uh, So you're right, there's those people that come in and out of pre-foreclosure all the time because they're catching up, or they do something like sometimes they declare bankruptcy and kick the can down the road. There's different components.

People game the system, man. A lot of people have been in foreclosure years and years and years.

Yeah, yeah, 100%. And I ran the numbers, and in our judicial state, you know, we're in a non-judicial state too, but our judicial state where we get pre-foreclosures 1 in 4 go to foreclosure, the other 3 don't. So 75% of them don't actually go to foreclosure. Got it. So, but yeah, all those numbers kind of help set expectations and develop kind of your target and stuff.

So I'm really, I'm really excited for you in the way you're marketing because when I've been at the family and I've been like networking with a lot of these guys that do a lot of marketing, a lot of the time, like what I'm hearing the most that like always works and like is a great lead source that a lot of people pinpoint is probate and pre-foreclosure. Like, but you master those, right? And like the way that I was taught, it was just like to pull a giant list, kind of like you were saying before, and just blast it. And that can get you in a lot of trouble, can get your marketing expenses super high. And, uh, yeah, that's when people went back to the model that I'm teaching, like for, for newer beginners. And but if— as I don't really market right now because I just do the model I teach, but If I am to, you know, again, go to market, it's pretty much just those two. It's pre-foreclosure and probate.

That's it.

That's all I'm going to mess with.

And I'm going to master it. Exactly. And that, that's what we've actually, we actually kind of have that on our pipeline is we will diversify to probate, but we would love to just be the niche, niche specialist first with pre-foreclosure. And a lot of pre-foreclosures are already involved in probate processes that by nature we have to deal with and we have, but Um, so, but yeah, I totally agree with you. That's— the riches are in the niches, right?

It really is, man. And I, I just feel— I feel for the, the newer investors that like get in like when we did. The, the mass marketing to the mass list, like, it's, it's very expensive and it's, it requires tons of work because you produce a lot of leads. But what would you have to say to people that are brand new that are, are trying that? Would, would you give them any advice like don't do it, try something else, like What's your opinion on that?

So there's positives and negatives to everything. Like, they're getting a lot of reps in, they're getting a lot of, uh, strong reps in by doing that, right? Um, but you know, the, the negatives are exactly what you said. You're dealing with a lot of unmotivated people, and that, that gets exhausting. And so we did that for almost 3, 3 and a half years, and Eventually, we just got burned out by it. And that's, that's one reason we diversified is because we're like, I don't want to talk to another unmotivated human, that's going to be a 6-month conversion cycle. And they're gonna like, you know, they're not actually motivated every conversation we have, right. So, but yeah, so the people that are doing that, I think start small. Is better than start big. And there's no, there's no reason— a lot of people think mass means better and greater, but there's no reason to, to not want to dive deeper and try to go that direction too. A lot of people think that they've exhausted something when they truly, truly haven't, and they have a lot more digging to do.

I, I agree with you 100%. So diving deeper versus wider is smarter, especially when you don't have a big marketing budget, right? Like, even the guys that have giant marketing that spend thousands and thousands, like $50,000, $100,000, they stay within a relatively, like, not that large of an area. They sometimes just dominate a market and are known as the people to go to. So I think I was actually caught up in that. I went nationwide, and dude, nationwide can really crush you just because, like, you have to learn a new market almost every time you get a new lead. It's very difficult. So—

Oh yeah, it's stressful.

Yeah, very stressful. So my suggestion for everybody watching that's new is dive deeper into where you're going instead of diving wider, going wider, because it can exhaust a lot of your resources and we don't want that for you guys. And 100%, Chris, you're doing great off of your strategy of, you know, diving into pre-foreclosures in a specific area, in a specific market, and becoming the best at it.

Yeah, man.

So, so what, uh, what, where can people go to learn more about your strategy and how to network and, and chat with you if they want to learn more about your strategy?

So, uh, well, there's my Facebook profile, uh, The Chris Cates, and, uh, also you can catch me on Instagram, same thing, The Chris Cates. And, uh, we have a— we have kind of a, a, our own mastermind group. It's called The Cashflow Collective. Happy to bring someone in and, you know, uh, help them there as well. Uh, I know you have your, your, your value-add, so if they're already hooked up with you, they probably don't even need any of me, but Oh bro, there's always love.

There's always enough to go around.

Yeah.

So Cashflow Connect— is that your Facebook group?

Uh, Cashflow Collective is the, uh, the mastermind group that we have. The Facebook group, it's called the Multi-Family Real Estate Group. And so that's a 49,000-member group. You're, you're happy to join it. You know, we, we've kind of diversified to focusing on cash flow, uh, and, and how we feed that group and help people. So We probably should rename it at this point. We've talked about it, but yeah.

Foreclosure Experts. Yeah, Foreclosure Experts.

Could do that too. Foreclosure, kind of like Sub2. Yes.

Yeah, that's it. Well, hey, man, it's been a pleasure. Is there anything else that you'd like to leave with the audience that's listening right now? Any, anything, any golden nuggets?

Just don't make it too hard on yourself. Like, it's a lot easier than you think. But, but that ease is in listening to people like, like Nathan Payne Payne Payne and what we're talking about here today. And so, like, a lot of people just make it too hard on themselves by getting inside their own head instead of just getting the reps in with the little things, right?

So, yeah, I agree with you. I think focus, like whenever I interview anyone that's like made it or like even read books about people who have really developed great businesses they're just like really focused, like elite, elite at focusing and, and saying no to other opportunities. And I think that's the biggest problem when you start as an entrepreneur. Like you, like you said, you let off the leash, you feel like everything's an opportunity, which actually helps you—

doesn't help you at all, right?

100%.

All right, I totally agree.

All right guys, we'll hit up Chris Cates at his Facebook, at his, uh, Instagram, or Cash, uh, Cashflow Collective. What was it?

Cash— yep, Cashflow Collective.

There you go, Cashflow Collective. All right, man, well, it's a pleasure. And everybody's watching, we will see you on the next episode of the Painless Flipping Podcast.

Appreciate it. Thanks for having me. Of course.