Show Summary

We’re blessed to have tons of awesome friends that are wholesalers who have shared their knowledge with us during 2014. In terms of a unique approach, and considering that he’s trained a ton of others…the show with Cris Chico wins the FlipNerd 2014 award for best show on wholesaling, with his FlipNerd episode “How to Flip Houses Anywhere”. Check it out!

Highlights of this show

  • Meet Cris Chico, virtual real estate investor.
  • Join our discussion on how to be successful by investing virtually in other markets.
  • Listen to Cris layout his exact process for buying houses in other markets, from lead generation to ultimate sale.

Resources and Links from this show:

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

Mike Hambright: Welcome to the flipnerd.com podcast. This is your host, Mike Hambright, and on this show I will introduce you to VIPs in the real estate investing industry as well as other interesting entrepreneurs who stories and experiences could help you take your business to the next level. We have three new shows each week which are available in the ITunes store or by visiting flipnerd.com. So without further ado let’s get started.

Hey, it’s Mike Hambright from flipnerd.com welcome back for another exciting VIP interview where I interview some of the most successful real estate investing experts and entrepreneurs in the industry to help you learn and grow. Today I’m joined by Chris Chico who’s a successful real estate investor who specializes in virtual whole selling which allows him to invest in many other markets across the country and not be bound by only investing where he lives.

So today he’s actually going to walk us through his entire process of how this works from lead generation all the way to the purchase of a sale so it’s going to be a little bit of a lesson here. Chris is a great guy and we’re excited to get started here, but before we do let’s take a moment to recognize our featured sponsors.

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We’d also like to thank National Real Estate Insurance Group, the nation’s leading provider of insurance to the residential real estate investor market. From individual properties to large scale investors, National Real Estate Insurance Group is ready to serve you.

Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.

Mike Hambright: Hey Chris Welcome on the show.

Chris Chico: Hey thanks for having me on.

Mike Hambright: Yes I’m glad to have you here. For those who don’t know we actually just met in person last week at an event and got to talk briefly so I’m glad that we get a chance to talk a little bit more here today.

Chris Chico: Yes and it’s interesting because you and I have gone back and forth on Evo and I just got stuck on the name. And when I saw you I didn’t want to call you the Flipnerd because I thought it was maybe kind of odd, but it’s always great to be able to meet in person because so many times you just speak over the phone or Skype etc.

Mike Hambright: Absolutely, absolutely. So you’ve got a great system in place from everything I know about it I’m excited to learn more about it today. Before we get started why don’t you introduce yourself to those who don’t know you and tell us a little about how long you’ve been investing and how you got started and how you got where you are today.

Chris Chico: I’ll make my introduction really sweet and to the point so that we can get to the meat of what we’re here to talk about. But I started off as an accountant so I have a degree in accounting and I can’t even balance my checkbook properly, but I started off as an accountant and then I went to work as a real estate agent. And then what happened is that through a contact as a real estate agent a friend of mine that was involved in the REO market. So he was in charge state wide for Aveda Realty at the time here in Florida and he got me on board in helping the banks dispose of their properties.

And that’s really where I really got my start in understanding and understanding the business of real estate investing versus the residential real estate stuff. And I did that for a couple years I got a lot of experience and then I saw that the market were shifting and the banks were getting less inventory. And what happened is actually one of my investors that was buying most of my deals as a REO agent he asked me and said “Hey would you want to come work for me and help me on this side of the business?” So I took the leap of faith which you always think about in life in your pivotal decision that you make and you could go one way or the other. And that’s certainly one of them where I went to go work for him.

And I worked with him for a year only and it’s funny because I went in with the intention of only working a year and then try to do it on my own and the benefit that I had is that for a year I had someone right there by my side that I could go to every single day and say “What about this deal?
What about that deal?” And I helped him buy about 50 properties that year just for me he had a couple other people involved and to buy 50 deals you have to look at a lot of deals so it gave me a really great education very much compressed.

So I got the experience that somebody else would have taken maybe two or three years. Then what happened is that’s when I saw the bank wasn’t getting as many REO’s and I thought that I had to go after private sellers. I’ve got to figure out a way to target people that are not banks or sellers. So that’s when the journey started just like every other investor I went in and I bought courses and I tried a bunch of different things and I couldn’t really get anything to work.

And as I went to seminars I noticed that a lot of successful real estate investors were doing direct mail in order to generate leads and I saw that as a common theme and I made the decision that’s really important for real estate investors is what’s the one thing that I can focus on? Can I focus on one thing and give it my all and try to make that work versus spread out amongst four or five different or more things just because I’m trying to have my best? And what happened is I decided to do direct mail and really learn it and understand it and really try to become good at it.

That was my saving grace because I literally went from making a couple thousand dollars a month to then when I really focused on it and got it dialed in 6 months later I made the most money I’ve ever made in a year and in a month I made I think $110,000 in cash in my pocket and that was just from direct mail. As I was doing direct mail I was doing it in South Florida however I noticed that the market was softening a little here in Florida.

Mike Hambright: So what year was this Chris when you went out on your own how far back was that?

Chris Chico: 200five 2006.

Mike Hambright: So the market was still about to turn in a couple of years.

Chris Chico: Yes. I saw that other people were doing deals in other markets out of my localized area and yet they were not struggling as much as we were so we saw our cost [x?] position continue to increase in our market so that’s what prompted my idea. Could I just take the same thing I’m doing here and do it somewhere else so the sellers were easy because I knew how to get the list and how to do the direct mail for sellers and we’ll get into all the mechanics and how that works, but the key things were the buyers how do I find the buyers?

And I figured out let’s target the people that recently purchased a property in that area and so through trial and error combined it so I was not only able to do deals here in South Florida, but I started to do deals in Jacksonville I started doing deals in Texas and I started doing deals in a bunch of different states. And so that was great because as the market deteriorated here it allowed me to still continue to do deals in other markets that maybe were not as effected by the housing bust.

And then now one of the great things about what I do is that there’s so many things in real estate investing that change so many different strategies there’s Facebook now and there’s Google. What I find interesting is yes there is a lot of technology out there for us to be able to use as real estate investors. Google Street view as an example I used to have to go and find somebody to take a photo of a property and now I can look at the computer. But it’s interesting that fact that I still do my deals by sending out little yellow postcards and white postcards that were the same back in 2005. And so it’s something to be said were I’m still doing the same fundamentally the same thing I was doing then I’m still doing now.

And that’s pretty much what I do I do that for myself and we do have clients that we do that for and I’ll explain and how the whole system works in a nutshell, but that’s pretty much the gist of my story. I’m trying to condense it. And give you a quick version of it.

Mike Hambright: I was telling you before what’s interesting to me is my motto has always been to just stay in my market and in a lot of way through to interviews on Flipnerd I’ve met people who are investing in lots of different markets and until recently that was so alien to me, but I’ve always wanted to see my house and prove the deals which by nature limits you because you only have so much time in the day and it’s hard to systematize if you’re the bottleneck on everything so it’s fascinating.

Chris Chico: Well, what I want to do is and you tell me is I can in an overview explain how we do everything. How we generate leads and some of the stuff that we do and maybe as we go along you can ask questions. Try to give you the Cliff Notes and then maybe as we go along if you want more info . . .

Mike Hambright: Absolutely that sounds great. I think a lot of people watching this will appreciate that.

Chris Chico: So one of the things for us is our base is direct mail so because of technology we can really go into any market and get a list of sellers. So typically what we do is we target in any particular area we target absentee owners for sellers that’s our primary bread and, butter. So absentee owners would be a landlord and on the flip side that’s for sellers. And for buyers what we do is we target absentee owners that recently purchased a property.

So as an example when we target for sellers and we want to purchase their property typically we target properties where the owner has owned the property for 10 years or longer so therefore the longer they’ve been in the property the better chance we have of something going wrong and now they want to get rid of it. Whereas on the buyer side we focus on recent investor sales we look at people who purchased a property as an absentee owner in the last six to eight months or sooner. We gather up those people and we market to them.

So we are attacking both ends of the list so at one side we’ve got the older guys that bought a long time ago and the other side we have the ones that recently purchased and our objective is to find a match from one list to the other and then we can kind of play matchmaker and do that deal. So we do direct mail and so if you look at us going into a brand new market let’s say a market that I’ve never been in for example let’s say Dallas you’re in Dallas.

Mike Hambright: Don’t come here.

Chris Chico: No. It’s too big of a market.

Mike Hambright: I’m joking.

Chris Chico: And actually I want to give you a tip about how we got that deal in Dallas and I’ll get to that in a second. In Dallas for example Dallas is a huge market a lot of ZIP Codes. So anybody coming in you might say how do you go into a market like that and how do you target that market and know where to go in and where to be out.

So what we do like in a market like Dallas I’ll go and pull the buyer’s list and I want to know the buyers say between six to eight months ago I want to know all the investor buyers that have purchased property in the last six to eight months and I’ll download that data. And I do a bit of an analysis so I want to know in every ZIP Code how many number of sales we had in that particular ZIP Code as an investor. So in other words if we have a ZIP Code that had only two investor sales over the last six months then that may not be a ZIP Code that I might target initially because there’s not that much activity.

Mike Hambright: And when you say investors how are you defining that is that cash transactions?

Chris Chico: We typically are not looking at cash we’re just looking at as an absentee owner because we don’t want to limit it because in that mist we’re going to find landlords that may have purchased a property as an investment, but maybe got conventional financing which we are ok with, but we just care that there’s investors actually purchasing in that market.

Mike Hambright: Okay.

Chris Chico: So we look at the number of sales in each ZIP Code one of the things that we do is that in your market for example Dallas there’s a lot of hedge front activity so one of the things we do is before we analyze the list we remove all the hedge front activity. So we go in and we see this particular hedge front bought 150 properties we actually delete those from our list. The reason we do that is we want to normalize the data.

Typically when a fund buys properties they’re usually buying within a very specific criteria, very specific criteria sometimes in the area regarding to when the homes were built and so they’re not our typical buyer. They’re not really the buyer that we normally work with so we don’t want to make the decision about a ZIP Code that might have a lot of hedge front activity and we perceive it to be a good ZIP Code for us, but when we remove that activity we realize that it’s not as good as we thought it was going to be right? Makes sense?

Mike Hambright: Yes.

Chris Chico: Okay and then the other data points we look as is we look at say the list of buyers that we downloaded we’ll look at frequency of transactions in each ZIP Code we’ll look at the average asses value in your market it’s a non-disclosure state so we can’t look at average sales price so we’ll look at the average asses value. In other markets we’ll look at average price. So we want to know so we look at average price we also look at average year built as far as the properties are concerned.

So what we’re trying to do is we’re trying to figure out what we’re trying to do is whenever we are going into a market and doing a mailing especially if we don’t know anything about the market we want to get a sampling we don’t want to mail a bunch of ZIP Codes where properties are selling 2five or 30,000 and we don’t want to mail on the high end too.

So we want to get a mix a variety of different ZIP Codes so therefore when we get a sampling we’re targeting areas we’re making the price points really low we’re targeting a few areas were the price point is higher so that initially what we’re looking to do when we do our first mailing in a market we’re looking at doing deals, but more importantly we’re looking to acquire data. We’re looking at acquiring data so when we make adjustments on subsequent mailings and then really fine tune.

In our market for example in Miami we’ve been in Miami for a long time and Miami has a lot of ZIP Codes probably like 3five or so ZIP Codes. But over time we figured out that we do deals in only 10 of those ZIP Codes and no matter how much we mailed in certain ZIP Codes we’ve never done a deal before and so why waste. So our objective is to really figure out where is that 20% where is the 20% of those ZIP Codes that is going to give us 80%
results and then we can eliminate the rest. Does that make sense?

Mike Hambright: Right. Yes. What typically drives that that there are some ZIP Codes is it because they’re typically more higher end and not as responsive to your pieces? What do you think drives that?

Chris Chico: Every market is different so let’s say for example I might see a ZIP Code in Dallas that has a really high number of investor sales and however it may be that those investor sales are driven by HUD so maybe they’re buying a lot of HUD properties so it might be difficult for us to do a deal there because we’d have to buy the property at such a much lower price because HUD is in there and we’re competing against HUD with regards to the inventory that we offer the other investors and so that example that ZIP Code may not be a good ZIP Code because of that.

So it’s a combination of the fact that many times it has to do with the neighborhood demographics. There’s a market that we were in we were trying to work on recently where we picked up some deals we thought they were good deals, but now as we talk to investors we realize that the area is not really an area that a lot of investors like to buy property there. Or if they do they need a really huge discount and so we might make an adjustment of we know we need to buy lower at that ZIP Code.

Or we may extract that from our list and say you know what let’s focus on these other ones that potentially we have a better chance of doing deals and finally the other thing would be price points when we look at our average assignment fee because most of these deals all of these deals we’re assigning we might have a couple ZIP Codes where we could buy deals at $10 or $15,000, but on the upside we can only make $two or $3,000 each versus other ZIP Codes we have a chance of making $15 or $16,000 so we might push our marketing more towards those ZIP Codes. So going back to your question it’s not a set answer it’s more like really just analyzing the data and trying to make some assumptions and try to because every market is different.

So let’s say If I decided just an example If I decided I’m going to go into Dallas Texas and I’m going to do marketing. So let’s say I do my research and I figure out I have these 10 groups of ZIP Codes that I’m going to mail to you. So typically what we do is our main marketing method is by postcards we use 4×6 postcards they’re usually in yellow or white the yellow or white is dependent on the message and to mail those cards we use a service called Click2mail Click2mail.com and we use that service to create and mail the cards to acquire the list for sellers we use either Listsource.com or another option is REOquest.com. They’re owned by the same company and that’s where we get the list the mechanism that we use for these people to respond back to us and I’ll go into detail on these we use a 24-hour recorded message and there’s particular reasons why we use the 24-
hour recorded message and generally we use what I call blind property on those cards.

So let me cover the 800 number and the blind property. So let’s start with the blind property so I publish a course that shows people how to do what we do. And in our market there’s a lot of competition and so I was thinking how can I go about in differentiating myself from other people that are mailing in the same area? And if you look at what most people get as a message the message says we buy houses in some variation. And as much as I try to be creative there is only so many ways I could say that right?

So I thought to myself if you imagine a seller sitting on their kitchen table with 10 cards and they all say “We Buy Houses,” how can I get my card to go to that next step. And the next step is not for them to decide to sell the house to me, but rather the next step is for them to pick up the card at least and now I’m in front of them and everyone else is on the table. Does that make sense? So I thought well my thought was instead of transitioning the workforce from being the postcard to being the 24-hour recorded message. So in a typical postcard the postcard says we buy houses cash call us we’ll take care of your tenants and so on. So the card is attempting to convince the person right then and there with the card to go ahead and make the decision and say yes I like what this guy says let me call him and see if I can get an offer. All off that one card.

What I wanted to do is how can I transition I wanted to minimize the decision so if you look at that card that says we buy houses the seller has to make quite a bit of decisions. They have to make I want to sell my house I want to go with this guy I like what he has to say so really what I want all I want is the decision all I want is for them to pick up the card that’s all I want them to do. So instead what we do is our cards don’t say anything about us wanting to buy their property or card in general might say Urgent notice about your property 12three Main Street it’s important that you call this 24-hour recorded message so that you can hear the message about your property.

So we do that all of a sudden our average response for nationwide is about 8% to 10%. So 8% to 10% of the people a very high number will pick up that card because they’re just curious they want to know what is this notice about, but now the moment they pick up that card we are now one step closer than the rest of the people that are on the kitchen table because now they’ve picked up our card and now they call the 800 number now the 800 number is the workforce that is what is going to try and convince them to say I like what these guys have to say let me leave a message so that way I can go ahead and get an offer.

What I’ve done is I’ve transitioned the work from the postcard to the actual voice call back because I’m just trying to get them to make incremental decisions I don’t want them to make a decision about them selling their house I want them to make a decision about picking up the card when they call the number I want them to make a decision about leaving a message so that way little by little I can bring them along. And what that does is enables us to gather more leads from a couple different perspectives.

Now we use a 24-hour recorded message because if you send out any sort of large amount of mailing there’s no way that you can handle those calls on the fly going to your direct phone I don’t care how many staff you have we’ll do a mailing and in the course of a hour we’ll have 100 people simultaneously call within the hour all of them call the number. There’s no way that that can be handled.

So what we do is we get them to call into the 800 number and then a certain percentage of those will leave a message a certain percentage of those will hang up what happens is that the ones that leave a message we obviously follow up with the ones that hang up we actually will call back all the hang ups and say hey this is Chris I don’t do it we have a VA that does it he’ll say he this is Chris or this is whoever the person is Donna is the person we have so hey this is Donna we just missed your call we sent you a little postcard about your house for sale you listened to the message where you interested in selling your property?

And what we’ll do is we’ll actually get more leads from that because now it’s a targeted list we’re selling to so what we’re trying to do is increase our net. Trying to move them away from everyone else on the kitchen table and onto our side so we have a chance of trying to convert them because in the end I don’t want to convince them through marketing that they want to sell their house I want my sales person my acquisitions manager to be the person that does that because that’s going to give me a better chance of trying to get that deal versus just a phone message or just a postcard.

Mike Hambright: So you’re saying you get about an 8% to 10% that’s the number of calls you get? Is that converted to a call whether they hang up or not so you can follow up later?

Chris Chico: Yes exactly.

Mike Hambright: What percentage of people would you say actually leave a message?

Chris Chico: It depends on the market, but in general we’re talking about 30% or so.

Mike Hambright: Okay.

Chris Chico: And that’s reasonable because it’s such a wide net. Now as an added tip I want to talk about the buyers on that on the cards so let’s say we send out the postcards the calls come in so what happens is people leave a message the minute they leave a message that message gets routed into our CRM we’re using Podio [SP] for our CRM. It gets dropped in there. And now we have a new lead now we have a three person team I’m not the one that personally speaks with the sellers so we have a three person team that encompasses two VAs and an acquisitions manager and so with that three person team we can handle about two or three markets depending on the mail volume. So we have a tier one VA and a tier two VA. A tier one VA is the one that will listen to the message will transcribe the message if the seller leaves all the information about the property then we’ll pull the property information the we’ll pull the Real Quest reports and we’ll pull all the information copulate the record if the seller does not leave enough information we’ll call the seller back and go through a questionnaire. Even if the seller does leave all their info they will still call the seller back and go through a questionnaire regarding price tenants condition of the property and even including asking the question if we were to pay you all cash and close quickly what’s the best that you can do?

Now once they’re done with that it gets moved to a tier two VA that tier two VA and these VAs are all located in the Philippines the tier two VA is the one that interacts directly with my acquisitions person. And the tier two VA is the one that will actually call the sellers and make that initial offer onto the property they’re guided by the acquisitions manager based on certain formulas that we have in every market as regards to offers and how we make offers etc. And then what will happen is they’ll make the initial offer and then at some point the acquisitions manager will step in.

Sometimes the VA will be able to make that offer and be accepted other times there may be some back and forth and the acquisitions manager may step in and say hey this is Steve you spoke with Gill and we love the deal we’d like to try to work something out and then we’ll try to get the deal done.

Mike Hambright: So your acquisitions manager I guess with your tier two VA typically they would call and make an offer?

Chris Chico: Yes a tier two VA will most of the time make that offer.

Mike Hambright: And that came from analysis from you acquisitions manager who is looking at comps and looking at the information based on property condition and coming up with what their offer would be?

Chris Chico: Yes exactly. And so then now if the seller agrees on price then we will send them a contract. Now the contract we send either we ask if they have an email address or fax if they don’t will send it priority mail. What we do is we have a contract template that we have in Google Drive that they will copy and they will populate with the appropriate fields for that seller deal. Then we will convert that info PDF and we’ll send the PDF by fax or email or if they want it by mail then we upload the PDF to Click2Mail and send that off priority mail through Click2Mail.

So all the offers are all done by the VA they have the signatures already signature image already on all the documents so we never really print or signed anything by hand and everything is sent out to the client that way now that’s what we call an agreed upon offer. We also have what we call a pre-sale offer. A pre-sale offer is when we at an impasse we’re not really able to come together on price and terms with the seller, but however we want to get something in front of them I’ll use an example of a deal we just did in Dallas we just did deal in Dallas about three weeks ago where we wholesaled the property and we made $16,000 in the wholesale fee for Dallas in the neighborhood we were working with that’s a pretty good fee.

So what happened with that deal was that the seller wanted $60,000 and our offer to them was $45,000 and we couldn’t come together on price and terms so what we did is we actually sent them what we call a pre-sale package which is a package of about four or five pages includes nice written letter some other paperwork to try to convince them and tell them we’re the right guys for you to sell the property to. And included a contract in this case we included a contract for $45,000. So we sent that off so our objective is we get an agreed upon price or if it’s close then we’ll send a pre-sale we sent a pre-sale and about 45 days later the seller calls us back and says my tenant moved out and now I want to sell this and I have all these cards and letters from everyone else, but you’re the only one who sent me a contract.

I would like to sell the house and I want to sell it now so all of a sudden now we go back to the idea of the kitchen table and our postcard the same analogy applies here we put a contract in front of them whereas everybody else just sent them letters and postcards when they were ready to take action they called us.

Obviously, we renegotiated we ended up getting the deal for $40,000 sold it for $16,000 so we made $16,000 on a deal where potentially if we hadn’t sent that contract we wouldn’t have been in that position now that doesn’t preclude us even though we send out an agreement we still following up with them over the phone we’re still being aggressive in our follow up. But it’s just one other thing to get us a little bit closer than everybody else. And so then now let’s say at this process we go through this process we get a deal and then at this point our objective is to go out and sell the property. And so to sell the property . . .

Mike Hambright: Hey, Chris, let me ask you first on the acquisitions side given that you can’t see the properties you’re relying on what the seller told you on terms of the condition of the house maybe making assumptions based on square footage like hey we know we’re going to have to paint it so it’s going to be this much per square foot? Somehow you’re coming up with a repair estimate right?

Chris Chico: No. Typically we’re not it depends on the property so sometimes we do need interior photos let’s say if a property has been vacant and it’s been vacant for a while we usually want interior photos because no one has been living in there so we need something to really get a better feel for things so on that instance we use a service called Wegolook.com. You pay $59 and you’ll get somebody to go out and take photos they do a real good job typically they’ll get somebody that’s in the industry so for example they do that for a lot of different stuff so for example most of the time when we get something done for a house it’s usually a real estate appraiser that goes out there just looking to make extra money so they really give you it’s not just photos they give you a good description of the property and any potential issues that they may see.

Mike Hambright: So you do this after you get it under contract?

Chris Chico: Yes, we never do anything until we get a contract signed.

Mike Hambright: Okay. And then I assume you’re putting some sort of termination agreement or something in place to where if you overpaid and or you have a hard time selling it you have a way to?

Chris Chico: Typically we put on the contract that we have a 15-day business day 15 business days to inspect the property and then we can decide if we want to go forward or not. So 15 business days equates to about three weeks and so that’s a clause in there. And to answer your question initially though how do we make a determination about these properties typically if a property has a tenant inside then our offer is really based of ROI and we use a gross ROI just to make things simpler so as an example in a particular market we’re in right now typically we’re having to make offers at about 30% ROI and it’s just cash on cash you don’t calculate any of the expenses we just say if we could buy that deal if the deal is getting $1,000 a month and we multiply that by 12 and we divide that by .30 we get what it would be if somebody bought that house paid cash what would be that return on investment just gross.

And so the way we make the offers we say in that market we know if we buy a house at 30% ROI we can then sell it at maybe 25% to 26% ROI. So that 4%
ROI spread may account depending on the price point could count to $five or
$6,000 to as much as $10 to $15,000 depending on the spread does that make sense?

Mike Hambright: Yes.

Chris Chico: Okay. So that’s how we’re making so most of our offers our objective is more of a numbers game so we’re not looking to buy and fix up the property or close on the deal. We’re not putting up any money for deposits or down payments so our objective is really a numbers game. We’ll put 10 properties on a contract two will probably figure out it’s too much money we may go back for a price reduction, but in the end we may let it go. The other couple may end up falling through because of other reasons and in the end we’ll end up with a net four deals that we’ll do and we’ll make money from those.

Mike Hambright: Okay.

Chris Chico: It’s really more of a numbers game because it’s more of a low hanging fruit approach. Versus because you really have to put your money down and close on property and make that investment. Whereas with us you don’t really have that risk that we’re looking to take. So then now let’s say we have a property on a contract and now we looking to go ahead and sell it so our primary method of selling it of selling our property or finding buyers is through direct mail or through Craigslist. Typically and so if you see me writing down I have to write things down so as I’m telling you this things I’m making notes to myself to make sure I tell you a couple things.

Mike Hambright: Me too this is the most notes I’ve ever taken in an interview I think so.

Chris Chico: So direct mail so direct mail the same approach that works for sellers in the blind copy approach works extremely well for buyers. When I started I used to do the postcards sending it to buyers that have recently purchased property in the last three to 6 months and I would have an URL on the card for them to visit my website. And that was back early 2006 2007. Not a lot of people were using websites now that’s more prominent and so our objective is really the same thing as the sellers we use a blind copy approach Hey Mike urgent notice about your property 123 Main St. call this number when you call the number it says Hey Mike the reason I sent you the card is because I notice you bought a property on 12three Main St. and I have another property below market value near that one and I’d love to tell you about this property. It may not fit for you if it doesn’t fit what you’re looking for perhaps I might have others.

And so then the objective is for us to get them to leave a voicemail message. And then what happens is they leave a voicemail message that gets routed into Podio and the VA will go ahead and call the investor if the investor leaves an email address then they’ll process the lead right within Podio we have some integration with the two called Zappier [SP] which then takes that prospect and pushes them out to Mailchen [SP] which is our email platform and they automatically then will get an email saying thanks for leaving a message here’s our information to our deals and all of that will happen automatically.

If they don’t leave their information a VA will call them back will get all their information gather their information and then we’ll do the same thing process the lead and it’s a one click thing we devised in Podio where they click on that one, button and then all the info get sent over the Mailchen puts them on our list gets them the property then our acquisitions manager gets notified because he kind of works both angles we have him because he’s working with two VAs he doesn’t have to talk with every seller so he’s able to handle both the selling and the buying aspect simultaneously.

Now same as direct mail, but even better the list that we send to when we target buyers like that is relatively a small list we’ll pick the ZIP Codes where the property is located and we’ll do a circumference around that ZIP Code so maybe depending on the market that may be 300 or 400 names, but we know they bought a property recently so what we’ll do is the same thing people will call into the hotline some will leave a message the ones who don’t leave a message we’ll call them back and say I sent you a card etc. and then we’ll scoop up additional buyers and those are pretty good people to talk to because again we know they purchased a property recently. And so therefore we are able to take a mailer that would maybe potentially give you a %five or %6 response rate we’ll get 30% to 40% response rate on just the calls coming in and we’ll get a lot more buyers into the mix.

With that concept and I split tested that the reason I came about it is I was doing a website and I was like I’m not getting any buyers and I said I really in the past when there was a hot market you could gather a list of a thousand buyers and it was just a numbers game now it’s more a relationship and you don’t want to you don’t need 100 buyers if you had 15 to 20 and that’s even a lot if you had 10 real solid buyers in your market that’s all you need. You can get rid of all your product so our objective is to really talk to them get them to leave a message and we just want to build that small list of buyers that we can go to and sell these deals to not a 2,000 list of people that we have no idea what they’re about.

Mike Hambright: Right.

Chris Chico: In addition to that we will go into Craigslist we’ll post ads on Craigslist to try to get people to respond and for us to try to engage them and put them on our buyers list. If we’re in a market brand new then we go in Craigslist specifically looking for other wholesalers looking for people that are selling handyman properties investment properties and communicating with them finding out what they would do if they had a property for sale and getting some info so in the beginning when we’re going into a market it’s very likely that we’ll sale most of our deals through another wholesaler and through someone else simply because if you don’t know the market we’re looking to get input on these deals we’re looking to get distribution and we may not have that distribution right now and as we progress in that market as we slowly build the list then our dependency on other wholesalers begins to diminish so that we build up our own buyers.

Mike Hambright: Right, right.

Chris Chico: And then we put the property on the contract and when we put a property on contract we will most likely agree with whatever the seller says. If the seller says I want the tenant to stay in there we’ll say fine not a problem you can leave the tenant in there because in the end it’s really not our decision the decision is with the buyer with who we sell the property to. We agree as best we can we’re not going to agree to unreasonable things right because we know what a buyer may or may not want based on our experience and our past experiences.

But then now when we find a buyer and they say you know the tenants in there and, but I want them out and if he’s the only buyer we have then we’ll go back to the seller and say we need to make some changes in the agreement and the deal structure in order for us to get us to closing. And one really good advice that I can give everybody is that anybody who calls a seller never takes the position of being the actual investors. So as an example when Steve calls and anybody calls we don’t call as I am Chris Chico, I’m a real estate investor; I’m going to write a check and buy your house. It’s always I’m calling on behalf of whatever the company is. And so what that allows is it allows us to better interact with the client because it allows us to deflect the blame. You know, Mr. Seller, it’s not me that’s making the offer it’s the company. This is what the company can pay for the property because we’re really paying around the set value however let me see what I can do. Tell me the best price you can do let me go back to them and see if I can get that approved. I can’t guarantee anything, but let me see.

So it allows us to have an easier time interacting with the client and really putting ourselves aligning ourselves on transitioning from being across the table to being on the same side of the table. When we’re dealing with them so when we go back for price reductions changes in the contract terms and conditions it’s you know what I know we agreed upon this however our funding source and that’s how we always explain it our funding source came back and said they’ll approve the deal, but we have to make some changes. It’s not my fault, but I’m here to try to help you to see if we can make this work so in the end you get what you want which is the property sold and closed.

And sometimes that might be a price reduction they approved the deal, but they approved it at a lesser price and here’s the lesser price and here’s the reasons why and can you help me with this. So that’s how we interface with the seller to help us. And then the rest of it once we have a buyer and a seller put together then it’s just a matter of pushing the transaction through and dealing with all the say that the fun never really begins the hard work never really begins until you actually sell the property most people believe that I’m going to get a deal I’m going to get a buyer I’m going to sell it and I’m going to just jump up and down and that’s half the work you and I both know that from that moment on there’s a myriad of things that happen in that transaction to have the whole thing just go down the tubes so I always say that that’s where really the hard work begins is navigating through the process, but in essence that’s an overview of how everything works and so I work virtually everybody on my team works virtually we have overseas VAs and we have the acquisitions so everybody works virtually. So that’s how everything is run.

And I don’t personally talk with buyers and sellers the best analogy I could give is that I’ve been able to transition from being the pilot to being more of the traffic controller if we use the analogy on an airport. So my role is a traffic controller more of an overseer of things and a facilitator and I’d rather get a nibble of a bunch of deals and do less work than to get more of the same deals, but have to put in more work.

Mike Hambright: It’s something that can be scaled up?

Chris Chico: Exactly so the same thing I just described we also do that for clients so we have clients that come to us a say hey Chris I want to do direct mail, but I need help in getting all this set up and doing the direct mail and getting the VAs on board and everything else so we then have figured out that we can do that for other people and partner up with them on deals and help them and facilitate it so that’s kind of our business motto. So we do our own deals and at the same time we help facilitate other deals for other people for we in turn have a proper participation within those deals.

Mike Hambright: Great well we packed a lot of information into one show there so if folks want to learn more because I’m sure some folks heads are spinning right now which website should they go to learn more about this kind of process and for the best place to work with you?

Chris Chico: The best place to go visit is our main website which is flipanywhere.com and you can go there we have free materials for people and they can get more information about me and the other products and services we offer.

Mike Hambright: Awesome. Well, Chris, thank you so much for your time today. That was a lot of information and after folks absorb it maybe they’ll come learn a little bit more about what you’ve got going on.

Chris Chico: No problem. I appreciate it. I hope everybody got some great information and actionable stuff from it.

Mike Hambright: Absolutely. Hey, thanks, Chris. We’ll see you around. Okay?

Chris Chico: Okay.

Mike Hambright: Thanks for joining us on today’s flipnerd.com podcast. To listen to more of our shows and hear from incredible guests, please access all of our podcasts in the iTunes store. You can also watch the video versions of our shows by visiting us at flipnerd.com.