Study Hall: Real Estate Wholesaling with Max Maxwell

An illegal alien from Guatemala charged with raping a child in Massachusetts. An MS thirteen gang member from Al Salvador accused of murdering a Texas man of Venezuelan charged with filming and selling child pornography in Michigan. These are just some of the heinous migrant criminals caught because of President Donald J. Trump's leadership. I'm Christy nom the United States

Sponsored by the United States Department of Homeland Security.

All right, guys, So a lot of people asks us how do they make a podcast? So I'm let you on a secret on the easiest, most productive way to start a podcast and get it up and running. And that is the app called Anchor is free. They have all kinds of cool creation tools that allow you to record and edit your podcast right from your phone a computer.

Let's do it.

My graduates from my school being forts bad, drop bags, drop Mike, drop bag, drop.

Wholesaling, one on one, right, So it's a couple of things that I had looked at and preparing for this interview.

Is that correct?

Yeah?

So understanding like your area, your city, and like every city has what they call gentrification, right, Like what happens is you're you have neighborhoods that are going to transition into mid class likeness. That's what gentification is. So that's going to happen all the time. Whether you're a part of it or not is up to you. So essentially what happens is you need to know what part of your city.

Is up and coming. That's all it means.

And once you find out that part, whether you can do visually are driving around because you know your city you've been there since you were a kid, or you can use technology which we use list source and do a free method of finding this.

You then find what zip codes are hot. And how they do it is they say, all right, how.

Many cash transactions has happened in this county, and then we break it down by zip code and then the ones that have the most cash transactions that mean somebody's buying these properties.

Follow the money cash transactions, like somebody's buying a home and cash cash. Yeah, And so by doing that, you know if more people are buying homes in cash, more affluent people are moving into the neighborhood.

Yeah, because what happens is when somebody buys a house in cash more than like there's no financing involved, that means it needs a flip.

Right, So, because you can't really buy flip property.

With bank financing where they won't they won't, they won't, and they won't loan you money on something that needs work. The bank is never going to take an upside down

One of the big things that you talk about is driving for dollars? Can you talk about that technique and the interests of that.

That's how I got my first deal was driving for dollars. And that just basically means you're driving around looking for distressed property physically distressed, right, and these are Yeah, it could be like your gutters.

Are hanging down.

Nope, somebody hasn't cut the grass, The bushes are high, old junkie cars in the driveway that have it moved. Now, what happens is we see these every day, but your mind has already been trained to block these out. I know, if you untrained yourself and and and look, actually look, you'll see houses as.

Yo, the house been there for ten years. Ain't nobody ever looked at it?

Because I was really trained to see like, yo, that's the nicest house on the block.

Correct, and you go past the ugliness. It's just the way we look.

I mean even as a kid, I remember being on a school bus and you can always tell like the house is the worst house on the neighborhood. They never cut the grass, they never the paint's always chip. But growing up, you just thinking that people don't care about their home, thinking that maybe nobody lives there.

Correct, maybe it's a distressed property.

Correct.

So once you find that distressed property, you need to find the owner. And so my buddy Dave Lecho created a map called deal Machine, which allows you to drive around, take a picture of the property, and it pinpoints it and it actually will send a postcard to the owner asking if they want to sell it on your behalf, on your behalf for you called deal machine Yeah, with your number on it. Wow, so you can customize this postcard. So but that that's like fairly new to achnology. When

So we got we got the property and were driving dollars and then you had something called skip tracing.

Yeah, so that's important. So skip tracing essentially where that word skip tracing came from. So I used to be a bounty bounty hunter, bail bondsman. Yeah, like house better than Doug TV show, This guy shuts it all. So skip tracing means that you're skipping a trade, you're tracing a skip. Essentially, what that means is somebody who does not go to court is considered a skip and you need to trace them down. So that's where the word comes from. But now we're not really dealing with that.

Yeah, yeah, wow, what's it called?

Skip skip trac dot com RII skip dot com r E I skipped that's yours. Yeah, So that was part of that was part of how I got big big because I knew because of my old background of skip tracing humans. It's the same thing I got skip trace humans, but now I have.

Their name in or address. Did you get this from military training?

Like No, it was just something that we developed as bounty hunters.

So you flipped it because before you were looking for people that you actually had to arrest. Yeah, and flipped it into it now I'm looking for the person that owns this house.

I need your number. I'm calling you up.

That's it went off topic a little bit. When when were you a bounty hunter?

Yeah, you got that.

I got ten, I got ten. I used to have a car lot. I used to have all types of stuff.

Man, I was a bounty hunter in between while building that app and getting in the in the real estate.

Wow.

Yeah, it actually traveled into like I'm still licensed. Yeah, I'm still licensed bound here because jobs. Yeah, jobs, because I had to have I'm still a licensed bounty hunter and I'm still licensed bonds because I got access to data most people don't get.

I get the same data in the cops. And you've leveraged it.

Yeah, I leveraged that small you know, license into me.

Now you know. I like because like a lot of our guests have similar stories where they've had troubling times and he had to like figure things out. And then a lot of our guess have seen someone the stories where they they use things in their past to help them, Like you ever heard John Henry, Yeah, of course, so John Henry shout to John. He was telling you know his story. He was a dormant dormant and he came

He paid them.

But long story short, he was saying, like, he can't call himself a genius for that because that's what he knew. He knew the dormant in the street because he was a dormant, like you were a bounty hunter. But it's like you knew like I can get people's information from this. Now I'm in real estate. How can I co mingle this and actually make it all work?

And that's why your failures are your biggest successes because that failure taught made me make millions.

You know, you just put me on and put me in a different category.

And that's important for people to understand too, because a lot of times everybody's doing something and even like your path to success might be totally different from what you're currently doing, but you could still use what you did in the past in some capacity to help your success in the future.

Absolutely, yea.

So now we go at that, we got the address, how do we get the property under contract?

So you're gonna call a person and you're simply gonna have a conversation. A lot of people, there were a lot of people fall short. People hate talking to people that they don't know.

Elevator script.

Yeah you So we've developed a lot of scripts over the time. But it's real simple. Immediately, you need to identify who you are. Hey, my name is Max. I'm a local real estate investor. Right that puts their guards down. But if somebody calls you and says, hey, in a moment of your time, yeah done, I'm hanging out, you ain't even getting past that. Especially in New York. You're not getting past that at all. You mightn't get pick up banging on you. Yeah, so then somebody's intrigued. Okay,

All. That's simple.

You're gonna get yes, no, or maybe or you're going a lot of f us in between there, right so, or you got the wrong number?

Right? Do you?

Well?

Do you know who owns that property. Oh yeah, I owned that property. Okay, well great, are you thinking about selling it? Well, I got it from my mom and I actually live in the city now, and you know, I don't It's need some work and I really don't have you know, the time.

And I don't want to keep paying the taxes.

Okay, Well, I'm a real estate investor actually specialize in buying properties like this. Would you be interested in the cash offer? Actually I would be, And then that's when you start that negotiation. Well great, well what type of what number were you looking for? You know, what can I give you cash that would just make you walk away from it? Then that starts. That's called anchoring, giving somebody that making somebody give you a price to anchor themselves on.

And that doesn't happen just in you know a lot of people think that can't happen in a fluent neighborhoods.

But you said, all absolutely, that's what should be looking.

Yeah, I mean for us in the South, like a two hundred and fifty thousand dollars house is a nice neighborhood, right, So I own a couple of those right off of people that you know, just it happens a lot people inherit things that they don't want. I mean not in our culture, but there's a lot where people like really will inherit.

A quarter million dollar house.

Was makers and be like, I live in Denver, I don't want to go back to mom's house. I remember having Christmas there in ninety three. I don't want to trying to I'm not trying to go back. So things like that, and then just there's so many different ways where people don't want a house.

It's like a car.

It's pretty common, Like you said, not in our communities, unfortunately never happens. It's pretty common in other communities, and you'll be surprised.

But you know, actually it happens more than we actually think of our community. We just don't realize, you know, like because it's considered the hood, so you don't want grandma's house, and you just let it go for taxing Linquin, and then somebody like me comes and buys it for ten thousand dollars.

Yeah.

So as a wholesaleer, the person you're always offering cash offers, it's always have to be casual.

Yeah, because no bank is going to find a bank.

Yeah, so you got to go find somebody else that's in the business of flipping property.

So we're telling private or hard money loans.

Typically, yeah, they can have access to private or hard mini loans.

Private is through relationships.

Hard money is going to be through your resume essentially, right, you know you flip seven houses this year, of course, will loan your money because you know what you're doing. Private money is based off of yo. I know you got some money sitting in your IRA and you want to put it to work. But yeah, you want to

And people that have money always want to make more money.

That's how they live.

They eye quadron of day life. So we got now, we got the contract. Now we got to get to the closing.

Before so I had a question. Sorry, So cold calling, this essentially is cold calling when you're people are because very few people understand cold calling. Yeah, I've done in coke calling before and I don't I don't like it, so but I can see how this can stop people from actually moving forward, right, this is a big thing.

It's not.

If you don't if you've ever done it before, you can't fully appreciate. It's like one of the most nerve wracking things you can do. Like literally, like you make up every excuse in the world not to Coco. Like you like walk around the neighborhood, you get lunch and you say it's too early, It's it's too late, call tomorrow. You make all kinds of excuses. So how do you because you have to either that or you're knocking on somebody's door.

Every comm every deal ends on the phone.

Every single deal you do, whether you like it or not, is gonna end up on the phone at some point in time.

To like what do you tell people to like ease their nerves to co call.

One thing we do is we give them scripts. Oh they have to make it up.

Yeah, So I want to give you your scripts and then you're going to give you most common rebuttals so that you can have an ends.

Right.

So, like I like if you go to your if you're going to ask your mom and you always what she's gonna say, it's more easy for you to ask a question because you already got the answer because you know her response. So it's the same thing like when you go talk to these strangers, these people you don't know, you're gonna, You're gonna they got three answers, three or four different answers they're gonna give you, and you need to be able to rebundle those things.

You know what got me over my fear of cocon in too personally, I still don't throw a lot of cocone, but just got me out of my because I had I was terrified by it.

I had this.

I had to sit down and say, am I going to die? If you're not gonna die, it's not that bad.

Did you make money from go call liver?

I have? Yeah, I have.

And at the end of the day, the worst nobody they don't know you, and the worst they can say is no.

Or cuts you out. Who cares? We're gonna go to the next question. Yes, it's just they don't know you. Yeah, just keep going, keep moving. You get cussed out on the subway, here, all the time, anywhere, so that normal. Don't take it personal.

It's not gonna kill you. It's not that serious. That's how I look at it. So what is the maximum allowable offer?

So the the the m o A is the maximum amount of money that you can offer on this property and still make a profit. So I'll break it down, so like, if a house is worth one hundred thousand dollars fixed up right, we did. We found that out by doing comparable properties. We've seen that the house down the streets sold for one hundred thousand, very similar square footage, bedrooms and baths. The house up there sold for ninety eight. So now we're in a one hundred thousand dollars range.

Now in my.

Market, it's lukewarm. It's not like an La or a Phoenix or New York where you properties go above.

This episode is brought to you by P and C Bank. A lot of people think podcasts about work are boring, and sure they definitely can be, but understanding a professionals routine shows us how they achieve their success little by little, day after day. It's like banking with P and C Bank. It might seem boring the city plan and make calculated decisions with your bank, but Keeping your money boring is what helps you live or more happily fulfilled life. P

With Robinhood, not only can you trade individual stocks and ETFs, you can also seamlessly buy and sell crypto at low costs. Trade all in one place. Get started now on Robinhood. Trading crypto in false significant risk Crypto trading is offer thro an account with a robin Hood Crypto LC. Robin Hunt Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Crypto

Then beyond asking price a bunch right, so we take off we minus thirty percent from the actual ARV the after repair valuable property.

Right.

So now if you did that one hundred thousand minus thirty percent, you're at seventy thousand and let's just say you walked that house and you went in there, and you think it needs twenty thousand dollars twenty five thousand dollars, and just say twenty thousand, twenty thousand repairs. So you know that this flipper is gonna spend twenty thousand to get it to the point where he can actually put it on the mark for one hundred, so you're gonna

But you ain't made no money yet right.

Assale and those wholesaless you didn't get it right.

So if the flipper himself knocked on this door, talk to him, he'd be able to buy a fifty. But you need to make some money, so you need to throw a pad or a buffer in there. So you need to be offering. If you want to make ten thousand, your offer needs your maximum allowable offer needs to be forty thousand, right, So now you're gonna sell your contract for fifty forty for the forty that they got to buy the house ten for your assignment total of fifty.

Thirty.

Yeah, so you do over thirty. So typically fifteen percent below what you want is where you want to be at. So that you do that, you put you around thirty six thirty four thousand.

Dollars to have the wind built in exactly the wind built in, and you never know, they might take thirty. You never know, right, you can come up with twenty.

So let me ask you this because essentially it's like a middleman situation, right.

This whole world's about most richest companies in the world are middleman.

True Amazon, Walmart, True Uber, Airbnb, Airbnb. They don't own anything. They're middlemen. Amazon is a logistic company. They make products, They house products that other people make.

And you buy. They have cloud stores.

Part dealerships. You can't buy a car in America without going through a dealership.

They're middlemen. They don't make the.

Car, they're middle they're middle men.

Middle Men make the most money in America. You got to solve a problem with convenience.

True, this is true. So that's true. But so my question is a question is all right, but why not? Why is it more appealing in your opinion, to be on that side of it as opposed to just buying it, like just being an investor. Yeah, it's more risk involved, being arrested, It's a lot more risk, more money involved.

More risk and more more risk, more money. But do you want a a a fast nickel or a slow dime? Depends on your business model. I see, so I see this a lot. I see where wholesalers think it's a negative connotation to the name and they want to be flippers. And then I see flippers looking at wholesalers and wanting to be wholesalers because.

They see the proput margins higher, the.

Risk versus reward. Now, can Amazon make every single product they have in the store? Absolutely? Do they want to take that risk of holding inventory that they own for.

What a fast nickel or a slow down? I like that.

So if we're doing this, if we're wholesaling as a side thing, right, how much did you how many properties you think we have.

To do it before it becomes a full time situation.

It depends, right, everybody has their free their freedom mark.

You know.

I always used to say if I made six figures, I'd be great, right, you know that's not you figures, so like it's not, it's it just depends where you want to be at right now. Some people love their job. So I've spoken to school teachers. They love their job, they love their passionate about what they do. But if they can get one property a month, they make an extra ten grand a month.

That'll start teaching.

No, they're gonna keep teaching because they just supplement your life because it gives you what you want.

Now, I've had people say that and then actually quit.

Yeah about that teaching, Yeah, it's not coming to work tomorrow.

So if it.

Depends on your lifestyle, where you want where you want to be at. For me, I wanted to run a multi million dollar company. So we do between like seven and twelve deals.

A month sometimes, okay.

And you know that's where we're at, and we're not We're not the largest. You know, we got guys across the country doing way more deals than that.

But my overhead is pretty thin and we have a good lifestyle doing what we do.

So what would be the obviously depends on the market, Like in your market, what's the profit margin on average.

Deal for your average deals?

Thirteen three thirteen three hundred.

Yeah, we track our KPIs pretty well.

What's KPI?

That mean Key performance indicators? So you're you're your need to know. I need to know how much money I'm spending to get a deal?

Right? How many calls do I need to make to get a yes? Right?

And then did you start to get an average how much money do I spend on this marketing effort before it turns into an appointment? How many appointments do I go on before it turns into a contract. And if you know your numbers and your business, and this is any business, then you scale.

So you're doing thirteen one thousand a deal, you're doing thirteen of those a.

Month, so it's like one hundred.

Well, our top ends twelve, right between seven and twelve deals a month, so we're average around like ten.

Let's say if you do test, you're talking about one hundred a month.

A month.

Yeah, good calendar, yeah a good month.

Yeah.

Okay, So what is assignments? Now you have to catch buy you have assignment.

Assignment is Essentially, you have that original contract with the seller, and you're going to sign your contract to that person. So let me give you an example. So let's just say you pull up. We're sitting over at the bodega. I'm in New York, can use those words, sit at odega. You pull up, and you be like, Yo, Max, I'm out of here, bro, I'm going to Living Vegas.

You know, I just got this new Mercedes right here. I don't want it.

I paid cash for it. I paid one hundred thousand for it. I got it two years ago. Yo, give me forty five thousand cash. You can have this.

That's a brand new S five fifty. Take that right. So do I have the money sitting at the bodega? Nah?

But I know my man down here gotta use car dealership. So I said, all right, meet me back here Friday with the money. I'm gonna have the money for you. It's Monday, so I ain't got the money, but I'm gonna go get it right.

Because it's important.

So I'm gonna go hit you up and say, Yo, you know I got a two thousand and eighteen S five fifty for fifty thousand dollars for Friday. But you gotta buy it Friday. My man said, cool, I'll bring you the money Friday, all right, meet me at the bodega. You meet me at the bog They with fifty You said you wanted forty forty five.

I may hand you the money. You're gonna hand me the key. I may hand you the keys you're gonna give me.

I got the middle part. You go sell it because that's your job. Your business is selling cars. You wash it up, you clean it, put some tire set on it, stick it on the car, lote for seventy five thousand.

It's still a deal. And you may five thousand.

I made five thousand you on a plane in Vegas cause you just sick and.

Tied of New York life.

And you just supplementing your business. You just made a profit by investing your money. So so I signed my contract to him that I had with you. Now, when I signed that contract with you for Friday, between Monday and Friday, what can you do with that car?

So it says nothing.

You couldn't sell it because if you sold it, I would assued you for pacific performance of a contract.

So you couldn't.

You already said to me, Yo, all right, Friday, I'm gonna I wrote a contract. You're gonna You're gonna give me that car on Friday, and I'm gonna pay you the X amount.

Now, But do you keep an attorney with you? Oh? You just write in these contracts? How does this work?

Once you have a standard template contract, you have it. But this is real estate, like you, nobody's gonna run off with the house, right but people know that you know you made an agreement.

And here's here's what happens.

When you when you put up with that car and we signed that contract. This is one part I did forget. We have what they call a I gave you consideration on that contract, which means money. So when we sign that contract, I was like, Yo, here go one hundred dollars. Hold on to that, and now I'm gonna get you the rest of the money Friday. So now you accepted this hundred bucks on this contract. Now mean you in

Due dillage period.

And usually at one hundred dollars in my market will buy you ten days. So I know from the day I signed the contract with you on your house. I got ten days to go out and find a buyer. If I can't find a buyer by the seventh, I'm a no in twenty four hours because I'm gonna shot the property out. If I can't find a buyer's I'm gonna call you up. Hey, man, you know I miss something on that house. Either we're gonna renegotiate or we are going to just cancel the contract.

How do you find a buyer?

Well, they sharks, they have to spend money.

I was just thought about something, so correct me if I'm wrong. But all business is kind of the same. So these kind of business principles are very relatable. So this is how I'm understanding it from my thirty minute education so far, the easiest way to go was to be there's people that buy home. There's real estate investors, right, that's the job. But they may not necessarily have time or they don't want to knock on doors and cold co and all that. So now you as essentially the

You've got correct Yeah, you bringing a consistent product. They need to spend money. That's how they make their money. They decided to be on that side of the equation. They don't want to go And that's why this business takes no money because all it takes is hustle. It ain't cost you nothing to go knock on that door, ride down the street. But once you have that house, now you need to be in the relationships where you find people that when.

You started, Yeah, how did you develop the relationship to get a buyers?

I put it on Facebook market Place that was it.

Yeah, And the guy called his wife called me, and then that weekend he agreed to buy it.

So do you have like a team of investors and enabled in your area now that you kind of like work with on a continuous basis.

I'm six hundred, six hundred.

So how do you like email blasted out?

To be email blast and text blasts? So we use mail Chimp to send out emails and we sell this send out. We use call loop dot com to send out a blast text message?

Are they like fighting over the deals sometimes? Oh? Yeah, that's what you want. I'm frizzy. So you don't want to come buddy buddy with no investor. No, it can't be too close because I'm in a marketplace.

Business is business.

Yeah, so you say you're going to give me fifty but you say fifty two. That's where I'm going. Everybody gotta eat.

I got to eat all facts.

This is dope. This is actually pretty dope. I got actually pretty dope.

Now for the clothes. I got a question.

I saw this in one of your is a double closing? I've never heard that before. What is a double closing?

So essentially, people that are now not good with setting expectations. I like to say with the buyer or seller, with your client, they don't know that you are going to make profit from this deal, or sometimes the profit is too much.

Now we'll say not all the time. Sometimes the profit is just too much.

So a double close is where you said, just to say that house down the street we're talking about instead of thirty, you got it for ten thousand, right, and.

Now you're selling it to the end.

Now you're selling it to the flipper for fifty thousand, so you're making a forty thousand spread. And sometimes if you don't have the right buyers, they may be like, I'm not paying you fifty thousand. You got it for ten, right, But the numbers really work for him, but he not giving you that. So sometimes you go ahead and use transactional funding to close on that first ten thousand and then turn around the next minute and sell it to my guy over here. But what happens is on a hudsheet,

Be upset with me making a ninety nine thousand dollar fee? If they say yes, kick him out.

Because when you change your mindset, you realize money is not a limited thing. When I started to think that I had to get these properties because you know, you got money, when I changed it and said, there's guys out here that if they don't flip houses, they don't eat, they need me, you know, so I no longer look at some money as a limited commodity.

Attorney state versus title state, what's the difference with that?

Let me see, New York is an attorney state and North Carolina's an attorney state. So in states, you have two ways you can close the real estate transaction. Title companies, which essentially due to title research and look up the property and make sure it's free and clear, are called title states their actual companies. And then you have attorney states, where only attorneys are allowed to close real estate transactions. And North Carolina and New York is an attorney state.

What's the process of setting up a closing with the title company.

Yeah, so, once you get that first contract with the homeowner, you're gonna send the contract to the title company or attorney and tell them to start title search. And all title search does is to make sure the property is owned free and clear, no lians on cumbers is on the property, and that it can be transferred smoothly to

And the contract depends on each date, it's different.

Yeah, yeah, typically it's just different. Easy.

Once you have on it's like a template that.

Yeah, you keep filling it out.

Yeah, my graduates from my school being force.

Back, drop Bag Drop, Mike, drop Bag, drop Drop.

Hey everyone, this is Tatiana Manning post of Real Talk with PGEN.

We know small businesses are dealing with rising costs and looking for ways to boost their bottom line. That's why we're doing the show to help customers save with simple and easy to do steps like making sure that they are on the most optimal rate for their business. So check us out on pg dot com, Ford Slash, Real Talk, and all other streaming platforms.