Some people would rather go pay more than knock on the door and go through the real work actually having to get the deal closed because knocking on the door is just one tenth of it. You’ve got the whole hurdle of getting the deal closed. I see a lot of people that are super successful with cold calling. I just have never been a cold caller or my team hasn’t. So texting is our big one. Biggest hurdle is there’s always a third party majority of the time, whether that’s a friend, family, realtor, whoever might be. There’s a third party to overcome most of the time. Typically, you see investors over leveraging, undervaluing the rehab, overvaluing ARV, and then the timeline market. You put all three of those things together and it’s a recipe for disaster. So to speak, just confused and spun out with all the different opportunities out there. You’ve got to pick your lane and stick to it. I mean, that’s your thing. Master it and be good at it. You cannot be good at four different things.

Welcome to the Real Estate Masters Podcast where we bring you the top real estate investors in the country. If you also want to be in the top 1%, you are in the right place. Listening to podcasts like this is exactly what helped me to scale my real estate investing business to seven figures, flip over a thousand houses and more importantly, step out of daily operations of my business over a decade ago so I could start and grow other businesses. So get ready to learn from the best and start building a business that works for you and not the other way around. Enjoy. What’s going

On guys? Colton, thank you so much for taking the time. I know you’ve been in the space for a while, but I am curious to kind of take a step back and see how you got into real estate in the first place.

Yeah, yeah, man. Actually, I kind of got into real estate accidentally. I was looking for a spot to put a car dealership and came across a dilapidated building and called the bank and they’re like, “Yeah, we’d love to sell it. ” So I ended up buying this building was, I don’t know, 120 grand listed for like 220. I was pretty young at the time I was like 17 years old, able to pile together enough to get a loan on it. And a number of years later, I ended up selling it for I think like 475. In that journey, I bought some other commercial properties and some residential stuff. I’d done a flip and I was just like, “Holy crap. I just made over a quarter million dollars on accident and I would assume there’s probably some more deals out here like that. ” So I’d say that’s kind of how we got going and transition full time into real estate at a later time. But that was kind of how we got the peaks of interest at minimum.

I love it. I love it. So you started with obviously a commercial building. Are you now more on the residential side, would you say, or still on the commercial or kind of mix of both?

I really haven’t ventured back into the commercial space. Really not familiar enough with it and haven’t dove into it enough. We’re sticking primarily single family. We’ve also ventured into land home packages, so we’re doing a ton of land home packages right now, which has been awesome and really hit that price point on the market these days and keeping that payment low for potential buyers. So we like to touch on your question again though, primarily single family.

Awesome. Awesome. And then just to kind of give the viewers kind of a picture of it, what does your business look like today as far as volume goes, what you’re doing, dispo strategy, whether you’re fixing flip, wholesale, just kind of give a quick rundown of what you’re kind of doing.

Yeah, yeah. I mean, for example, last year we closed 72 deals. I’d say primarily they were split pretty well across the board. I’d say about 35% wholesale, 30% wholetale and maybe 15 or so percent were fix and flips. So we really try to stay away from fix and flips at this point. I mean, just exhaust too much time, energy, efforts, money, the whole bit. So like I said, we try to buy them cheap, sell them cheap, rather that’s to wholesale or an end buyer wholesaling it or putting it on the market as is. Maybe we’re doing some FHAVA government-backed loan requirements while we’re on market and going that route. We try to keep it simple. You get a large deal volume going and you start doing 22 remodels at one time. I can tell you from experience that will not end well. I don’t care how big your team is.

Fair enough. Fair enough. Well, what was the main problem that you were trying to solve when starting this business?

I tell you, I sold everything I had in Iowa. I had a number of properties. Some, like I said, some of them were commercial, some of them were residential. I moved down here to South Carolina. I was like, “Hey, I made a lot of money in real estate kind of on accident here. We’re going to go full into this. ” So I started going to the foreclosure auction in Savannah, Georgia and I’m sitting here with multiple hedge funds in plants. So they’ve got a rep in the area, that guy’s here only to buy houses, rehab them, make a very small profit margin. Also, a couple other big players in that particular market were buying for long-term holds and these prices, I mean, they’re just crazy. I mean, they’re working on such slim margins. So I get to sit in here, I’ve been month after month after month, I’m buying a couple properties making … So it’s about 25, 30 grand a piece. It was enough to get by, but it wasn’t anything substantial. And it dawned on me, I’m like, wait a second, I’m driving to every one of these properties a month ahead of time looking at them all, but I’m not getting out of the car and talking to them. I mean, this is crazy. So long story short, every time I went and looked at them, I just started banging on the door, “Hey, I see you’re in foreclosure. Hey, things are tough. What can we do to help?” And I ended up getting my first deal and it was off to the races from there. We did that for two years straight, just straight pre-foreclosure door knocking and a Google business listing. We were pulling about two properties a month off of the pre-foreclosure list in that particular county, doing well with them. And from there, I never went back to the foreclosure auction to say the least.

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Why do you think so many investors overlook the door knocking piece? I know it’s not fun, but it is very effective, especially when you’re starting out, but why do you think so many people overlooked that part?

I mean, it’s nerve-racking, right? I mean, you’re walking up to a random person’s door sometime in great neighborhoods, sometimes in less desirable neighborhoods and you’re just like, you’ll never remove that feeling of like, “Am I going to get shot today?” And I think that probably deters a lot of people, but when you hit that first 60, $70,000 assignment deal, I mean, I’ll walk across the country for those type of deals so it doesn’t really bother me. I think of probably capital positions, different strategies. And I think people are just like, some people would rather go pay more than knock on the door and go through the real work actually having to get the deal closed because knocking on the door is just one tenth of it. You’ve got the whole hurdle of getting the deal closed. I think probably that deters a lot of people. A lot of people, the foreclosure auctions are cash buyers. They’re usually well developed portfolios. Maybe they’re just looking for an easy, they just want a 20% discount and they’re like, “Eh, that’s good enough. Is it really worth my headache doing the other thing?” But I will say after they’ve watched me be very successful at it, I did gain some competition for little bits there, but they found it to be too difficult long term. So I think difficulty and I think they’re probably just walking up to that door and then what? What do you do when you’re there? They answered the door. What are you going to do now? So that’d be my take on it.

What’s your favorite icebreaker when you go to a door?

Do you need help? That’s it. Simple

Straight to the point.

What do you mean do I need help? What are you talking about? There we go. Ice is broken. They’re talking to me. That’s what I want. I don’t want to be talking to them. I want them releasing to me. So that’s my favorite icebreaker there. It works pretty well.

Do you use this to me? You said you did cold calling or was that texting? I know you were doing

One of the two. I’m not really a big cold caller. I think it takes too much energy time and I mean the money’s not terrible on it, but it’s just too much efforts, I think. We’re a digital world now. I mean, I see a lot of people that are super successful at cold calling. I just have never been a cold caller or my team hasn’t. So texting is our big one.

Gotcha, gotcha. What do you think the most common misconception is about what you offer from a seller’s mindset and how do you overcome that during your appointments or phone appointments, whichever one you’re doing?

Or less, are you saying the offer amount compared to what the home is really worth and the gap there? Yeah,

That as well as just any other main objection that you see on the frequency.

Yeah, I would say probably the biggest hurdle is there’s always a third party majority of the time, whether that’s a friend, family, realtor, whoever it might be. There’s a third party to overcome most of the time. I mean, for me, I more or less pitch the or explain. I wouldn’t say pitch. I like to explain hard facts, show stuff that they can go back and look at. The chance of locking up a deal on site the first time is so rare. You really just got to set the presence and you hope you did a darn good job, leave your material so they come back and they feel comfortable. But just making people feel comfortable and showing them like, “Hey, yeah, you can go to market, but if you go to market and your property doesn’t sell, you’re going to get $0.” So that’s probably the biggest thing for me. And obviously at this point we’ve got hundreds of five-star Google reviews. Those can’t be manipulated. Anybody can go and post a bad review. So really just walking them through. We take photos with all the clients, previous clients at closing and you can start getting a couple hundred pictures and it’s hard for them when you’re scrolling through looking at these people not to know somebody. So that helps. My big thing for preform, not even just free foreclosure, people in general, sellers in general is the sell and stay option. We call it the cash and stay. We’ve built a whole program around that. It’s probably can sound more difficult than it really is, but it’s, “Hey, we’ll buy the house and we’ll give you a lease back to stay.” Whatever that needs to be to make it make sense for both of us, that’s the big thing. In foreclosure, they’re holding onto a property because they don’t want to sell it. They’ve had two years of foreclosure proceedings and late payments. If they wanted to sell it, it would be sold. So really just trying to make them feel comfortable, “Hey, you’re going to get your money. You can still stay here and we’ll work it out in the future type thing.” That’s been a huge, huge win for us.

Colton, I know you mentioned Google. You mind sharing maybe one or two strategies or maybe lessons that you learned last year that you were kind of taking into this year, either doing the same or different?

Yeah, yeah. I’d probably say number one is make sure you’re tracking and your conversion data is really set up well. I mean, this happened to us. It happened to everybody. I don’t know anybody that was really prepared for this particular matter, but all the AI bots hit and they completely derailed our campaigns, years of learning and it was smoked within 72 hours. I mean, it hit so fast there was no spam measure. We had every spam measure under the sun set up. I mean, it was set up and I mean, it was out of this world. That really dilapidated us terribly on them campaigns. Those certain type of Google Ad campaigns, they’re getting paid. Those ClickFarms are getting paid to fill out those forms when they’re being advertised on a particular site. So they did have an incentive. I’d say just making sure your spam measures are set up, making sure that your conversion data that’s feeding back to Google and all your tracking is the best it can be. You want to feed Google the best cycle of information. It’s giving you bad data. Well, you need to tell, “Hey, Google, this is bad data. Do not send me more of this. ” If you don’t have your stuff set up, it’s going to send you more junk because it thinks it’s working. So I’d say that’s probably the number one major lesson that we took off last year. We’ve spent a lot of time really dialing that in and making sure the loop is feeding well. So I’d say that was a learning curve. That

Was tough. Yeah, that’s definitely a big lesson to learn for sure, especially depending on how long it takes to catch it, could be detrimental for sure. What mistakes recently besides that, I would say, have you seen investors making that you think could be really easily avoided?

Yeah, I’d say typically you see investors over-leveraging undervaluing the rehab, overvaluing ARV, and then the time on market. I mean, you put all three of those things together and it’s a recipe for disaster, especially if you’re a newer investor, maybe you don’t have a ton of deals under your belt, you’re doing a fix and flip. Check the numbers. You don’t have to rush into buying a deal. I mean, if you spend six months of your time and you make no money, you lost money because you have six months tied up in making none. So really running those numbers well, making sure your numbers are accurate. Account for those days on market. It’s not a two-week sale anymore. I mean, it’s a 60, 90-day process and make sure you’re accounting for your seller concessions because they all need … I mean, everybody’s billing government-backed loans right now because you get a better rate. Even with the PMI, a lot of times their rates still might be a little better than your conventional. So really, I guess underwriting. Underwriting the deal well is number one right now. I think there’s a ton of opportunity for people that are still actively buying and looking for deals. We’ve seen a large drop in the end buyers that would typically buy wholesale type properties from people looking to offload those and they’re just scared. I mean, A, maybe they’re smart, but they’ve got a little bit of shyness, shall we say, a little gunshy than they used to be. Rents have dropped 30% or so, 20, 30%. Home values have came down. These guys have been in the game 20, 30 years with large portfolios. They’re still trying to … They want to hit that 1% rule. Well, if rents drop 20% and they were already coming down, it makes it really tough to offer them a house and that they can rent for 1% of total all- in cost.

Yeah. What do you think separates top operators from everyone else in your experience?

That’s a tough one. Top operators separating. Really, I would say long-term operators that stay in the business and continually can sustain is probably not just buying deals to buy them. I think we’ve all made the mistake and just you get so excited and rather it’s a cool spot or cool looking house or whatever it might be, but at the end of the day, if the numbers don’t make sense, I mean, you can’t buy the deal. So really just your underwriting process. I mean, I think that and sustainability in regards to how much you’re spending per month to get more deals or how you’re getting the deals. I mean, there’s 8,000 gurus across my Facebook every day. I’ve got a really, really good friend, super smart individual. Actually, when I was new, I was like, “Man, one day I’m going to be like him.” And I kind of watched him go in all different directions. He’s bought seven different programs. He’s just spinning out of control. I mean, one day he’s rolling with Nick Perry innovations. The next day we’re going to buy 30 rentals on sub two. One day we’re going to do fix and flips. Now we’re doing nationwide wholesaling. I think people get so, so to speak, just confused and spun out with all the different opportunities out there. You’ve got to pick your lane and stick to it. I mean, that’s your thing. Master it and be good at it. You cannot be good at four different things.You may be average at them, but you’re not going to be the best at four different things. So staying on task.

Yeah. And there’s a million ways to make money in real estate. So it’s hard to hear nine different gurus tell you nine different things. Half of them maybe don’t even do what they’re teaching. So it’s hard to really believe what people are saying, but also stay in that lane that you’re talking about.

Tax returns, that’s what I want to see. Show me all that crap you want. I want to see the tax returns.

I like it.

Pay.

Oh yeah. When it comes to the word success, everyone kind of defines it differently, strives for it differently and measures it differently. How do you define the word success? And then how do you measure it and strive for it?

Man, I’ll tell you that’s a tough one because I struggle with this with myself and my company’s huge. It’s kind of a big question, but overall, I think just finding that what you are happy with because it’s so easy to get caught up in the, you have a huge year, a huge month and you’re striving for that success factor month after month and you lose track of reality and life and all you’re doing is locked in this little office I’m in and kids are asking to play and you’re like, “No, I got a seller call.” And I think that happens to all of us. So really just finding that’s really before you get started or take a break and just think, what is really going to make me happy? As soon as computer all day to grind out 70 deals, what’s going to make me happy or is getting to enjoy some of this money and fruits of the labor, what makes me happy and feel successful. So I think that’s probably a huge one there. I know it kind of went off there, but I mean, I think as it needs to be touched on, I mean, we all get stuck in the grind.

Yeah, 100%. Let me ask you something. So let’s say the business completely goes away. You get to keep all the knowledge that you’ve learned over the years. What would you focus on first? What would be the first thing that you do if you were trying to rebuild what you have now?

Rebuild my current company if I just started fresh.

Or if you want to go a different direction, if you would be doing something different if this wasn’t the case, but yes.

I mean, if I started over, I still think that … I mean, I’ve tried a ton of different industries. I’ve always been self-employed. I had one real job in my life and I was a busser when I was like 15, so I’ve been grinding it out for, I don’t know, 20 years or so. I think probably I don’t like businesses that have employees. Employees are a headache. I don’t care what they are, how they are, how much you pay them. There’s always a headache with them. They’re never going to perform like you want them to or your expectations or ever work as hard as someone that has it all to lose. So I think probably finding something that is you can keep a small group of people and not have to go crazy with a big team and rely on a bunch of people. I know this seems all the gurus you might say or they want to hire a bunch of VAs and systematically do all this. Yeah, that’s great and all, but at the end of the day, is it working? And I mean, do you want a $5 VA underwriting your deal and putting the comps up? If they’re going to do that, but I have to go back and recheck that, what was the point of them even doing it? Because I mean, it’s the same time. So small group, simple business, limiting what my end buyer needs to be. I don’t want to have to deal with the public 700 times selling a $10 item. So high ticket items, limited resources needed. And I would say that’d be what I would do. What that would be exactly, I don’t know, but that would be approach to what I did.

If someone was interested in learning more about you or asking any questions, where can people go to reach out to you?

Yeah, great question. I appreciate that. You can find me on Facebook, Instagram, YouTube, Trusted Homebuyers, or Colton Henley, C-O-L-T-O-N H-E-N-L-E-Y-Y. That’s my socials and check out there. We’re posting all the time, so happy to do that. And you always can ring me on my cell phone, 319-775-2312.

Awesome. Awesome. Any final advice for investors that are looking to grow, scale, or maybe even simplify their business?

Yeah, I mean, I think just staying focused, finding your niche and mastering it. You don’t have to go out there and spend a ton of money on paid advertising to get deals. There’s a ton of people that have deals and don’t know how to get them to the finish line. I mean, I work with a lot of great wholesalers that need a little help getting those deals, rather it’s bringing them to me to buy personally or maybe even me JV and with them to get them moved. And I think there’s plenty of opportunity out there and don’t get hung up that I don’t have a website, I don’t have Google, I don’t have this, I don’t have that. If you want it, you’ll go and get it. So don’t tell me that you can’t find a lead or you don’t have the systems or you don’t have the money.

Yeah, I love it. I love it. Well, I really appreciate you coming on today, Colton. Everyone, thanks for watching and we’ll see you next time. All

Right, man. See you.