The Titanium Vault hosted by RJ Bates III

Why I Love Wholesaling Real Estate

• RJ Bates III • Episode 735

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If you’re new to my channel my name is RJ Bates III. Myself and my partner Cassi DeHaas are the founders of Titanium Investments.

We are nationwide virtual wholesalers and on this channel we share EVERYTHING that we do inside our business. So if you’re looking to close more deals - at higher assignments - anywhere in the country… You’re in the right place.

Who is Titanium Investments and What Have We Accomplished?

Over 10 years in the real estate investing business
Closed deals in all 50 states
​Owned rentals in 12 states
​Flipped houses in 11 states
​Closed on over 2,000 properties
​125 contracts in 50 days (all live on YouTube)
​Back to back Closers Olympics Champion
Trained thousands of wholesalers to close more deals

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With over 2,000 Videos, this is the #1 channel on YouTube for all things Virtual Wholesaling. SUBSCRIBE NOW!    https://www.youtube.com/@RJBatesIII

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SPEAKER_00:

Why do I love wholesaling real estate? Well, first of all, wholesaling is what clicked for me first. Cassie and I were general contractors. We were doing remodels for both homeowners but also investors. And so this is one of those questions that Tyler asked me during our podcast interview, where it was like, How did you guys get started into this? Well, one of the first remodels that we ever did was for a flip. And so it was a house in Dallas, Texas, over by White Rock Lake. And it was a full gut. I mean, we we played HGTV. We had to do, you know, remove load-bearing walls, add bathrooms, pull the permits from front to back, exterior, interior, everything that we had to do in that project. It was the first time that we had ever done any of that. And it was for a customer who was flipping the house. And while we were going through this process, I remembered asking the owner of the property, how did he find this property? How did he come across this great deal? Because I knew how much money he was spending on the rehab. And yet I knew he was doing this for a profit. And he kept telling me, you know, I got it from a wholesaler. And so as I was doing research as a contractor, the initial thought that I had was to get into real estate investing, what I want to do is I want to flip houses. It's what I know to do. I know how to rehab these houses. I have the subcontractors, but as a general contractor, you are a middleman. You have your client, and then you're managing the subcontractors, and you make a profit in between. Well, as a flipper, you're taking on all this risk and liability by buying the asset, the house itself, and then you're going to have the contractors that come in and do the work and you hope to make profit. So you're kind of a middleman, too. So that initially was the thought process. Like, hey, we could get in there and really leverage the skills and the relationships that we have in our contracting business to become flippers. But what I was really missing was one, how do I find the houses? Two, how do I pay for the houses? You know, I'm not flush with cash. I didn't know what a hard money loan was, and I didn't really know how to run numbers. I didn't know how to analyze a deal. I didn't know what a deal was. It just common sense told me, you know, you buy steep enough of a discount from what it could be worth and then rehab it for less than that, and that's what your profit will be. But then when I started learning about wholesaling, I realized that was the closest that I could get to what I was already doing as a contractor, as a middleman, because you're gonna have the motivated seller and you're gonna have the in buyer. And if you can marry those two relationships as a wholesaler, then that's how you get paid, right? Solve the seller's problem, bring a great deal to your in buyer, that's where a wholesaler fits in. So that's what clicked for me. And so when we started getting training and listening to these teachers that got up and talked about all of the different strategies, right? Wholesaling, flipping, land banking, becoming a landlord, seller finance, all these different things. What really clicked from day one for me was wholesaling, because I could see how if you could just be a problem solver and be good at building relationships within buyers, you could have a sustainable business as a wholesaler. And the numbers made sense to me. Like sitting down and looking at it, where it's like, okay, I could see how we can create value for ourselves. Case in point, as a general contractor, a homeowner could always go out and find a subcontractor, a painter, a floor person, a floor installer, but they choose not to. They choose to go hire that manager, that general contractor of the subcontractor, and are willing to pay more. Same thing with motivated sellers, same things with cash-in buyers. Motivated sellers could always take it to the MLS and hire realtors, they could always try to sell their house directly to the flippers, the in buyers, those flippers could always go direct to seller, but they're willing to pay a little bit more for that service for allowing us to come in and do all the lead generation, analyzing the deal, getting it under contract, and then just picking and choosing which properties are the right fit for them. And so I saw the value of what wholesalers brought, especially in comparison to what we were already doing in our career as a general contractor. So right off the bat, wholesaling is just what clicked. And I saw that it was our opportunity to transition from being in the contracting world, which I didn't want to be in. That is not what I ever wanted. It was just basically out of necessity that that's what we were doing inside of our business. And so I saw this as a path of getting away from needing to be on site at properties, going to Home Depot, managing contractors, managing the disgruntled homeowners when contractors weren't performing on a timeline or on a budget. I saw that as our opportunity to move into real estate investing. The next thing I saw was wholesaling is purely a numbers game once you develop skills. Once you're able to understand how to do or handle lead generation and closing and getting properties under contract, and then having relationships with your end buyers, it's purely just a numbers game. And it should repeatly get us the exact same amount of money in our bank account, and we've been able to sustain that over the course of time, which is always something a business wants to be able to achieve. Whereas I saw other exit strategies or real estate investing um business models that I didn't feel were as numbers-based, right? Flipping houses, there's a lot that could go wrong there. The cash conversion cycle can be a lot slower. There's outside influences, contractors, budgets, city permits, things that can go wrong inside of those projects. Being a landlord, there's issues that can come up where you're relying on lenders, where you're relying on tenants to pay. If something terribly goes wrong, you could lose a whole year or two years worth of cash flow that comes along. And so I just saw this as like this is the easiest, most repeatable business model inside of the real real estate investing realm for me to get started in and really kind of live in. Could we get sued? Of course, but you could get sued for pretty much anything that you do in business, so that's not really a risk. Are we risking money up front to generate leads in all the systems? Yes, but it pales in comparison to the other business models inside of real estate investing, and so the loss aspect is very minimal. It's really more about can you sustain any losses that you have in your wholesale business mentally and financially long enough before you start seeing the overwhelming success that will take over any losses that you do have? Quite frankly, if you are moving deals, it's kind of hard to actually run a non-profitable wholesaling business. Now, does it happen? Sure. I see people work themselves all the way up to being highly successful, running multiple six figures a month, and then be out of the business. That's normally because they try to scale too much, they try to have too many people inside their organization, too much overhead, and they really try to step out and go do something else, and that's what eventually ends up killing the wholesale operation. Very rarely is it just purely based off of the wholesale business that seeing any sort of success fail on its own, and so for me, the ability to avoid risk and loss was so attractive, and it always has been, and especially where I am today, where I've been able to sustain this business for a decade. Now I look at it and it's like we're in a really good spot where there's not much that could ever crush us as a business. The next thing is it's virtual. Now you have to understand that our first business that Cassie and I ever ran was Fairway Solutions, where we were a nationwide roofing company supplement, like we were doing supplements for roofing companies. So insurance company comes out, tells the homeowner there's ten thousand dollars worth of damage on your roof, and they would write all the line items out shingles, turbines, starter, ridge cap, all the things that need to be placed on the roof. Well, insurance companies are always trying to save themselves money, so there would be things that they wouldn't put into the scope of work. What we were doing was called a supplement, and we were taking pictures from the roofer of items that the insurance company had missed and then negotiating with the insurance company to get them to pay for that, and then that would increase the claim, giving the roofer more money to do the roof, and then we were taking a small percentage of what we boosted the claim for. Now it's kind of what a public adjuster does, but we were working as independent contractors for each roofing company. That was completely virtual. We did it for roofing companies in many different states. So I got this taste of doing business virtually where we weren't as impacted by local markets. Case in point, if you were only doing this for a roofing company or roofing companies in Dallas Forward, Texas, you would be overwhelmed if a hell storm hit in Dallas Forward, Texas. But then you would also have no business if there were no storms in Dallas Forward, Texas. So we spread ourselves across the United States and had roofing companies that we're working for. That eventually led to us becoming a general contractor because I saw that my employees did not know how to speak to the insurance adjusters like a roofing salesman could. So I said, Well, as an entrepreneur, let's just go sell roofs. So we started doing that. That's what inevitably led to our company transitioning to becoming a local remodeling general contractor business in Dallas, Texas. Okay, well, I got the taste of both local and virtual in our first two businesses that we ever ran. So now, when I get to wholesaling, I immediately wanted to go back to that virtual model because I saw how great it was to never leave your desk, but be able to make money and how quick and efficient you could be. Now, I've always said this: if you are a local wholesaler and you have the ability to go do belly-to-belly appointments and sit down with homeowners, of course, you are probably going to have a higher close rate per lead than I will as a virtual wholesaler. You get to sit down, they get to see you in person, build that credibility and rapport, and get that signature right then and there in their living room. But as a virtual wholesaler, I can speak to so many more sellers and homeowners than you ever can. I also have the ability to cast this massive net over the entire United States, knowing that I have access to the buyer database anywhere in the United States. So, from a virtual perspective, it was always what I desired. That's my personality. I want to cast that wide net and I want to be able to lower my cost per leads and know that I have all the opportunity in the world. And so I've been using this example lately. The hurricanes that hit in Florida last year significantly impacted negatively the Florida real estate market. Florida was one of our top wholesale markets going into last year, but we weren't negatively impacted by it because we still had all other 49 states that we were getting leads in and we were closing deals. And so if I was solely a Florida wholesaler, I could have been really negatively impacted. So I lean on the fact that we are completely virtual from that aspect where regulations come down in South Carolina, Nebraska, and Oregon and makes things a lot more difficult. Well, that's okay. I have the other 47 states. Next up, the need for wholesalers will always exist. I think this is one of the things that really I've I've fallen in love with is the fact that realtors have always been the go-to for sellers and the majority of buyers when they're brand new. It's what people know when they think about how do I buy and sell real estate, they're thinking about a licensed real estate agent or realtor. But when they really start getting into flipping houses or their highly distressed property, they start realizing that there's more opportunity out there for people like me to come in and be their solution. And so most people don't know, like just the majority of people that I speak to, like on my son's hockey team or my daughter's dance company, they don't know what a real estate wholesaler is, but they're blown away when I tell them how many transactions we're able to do per year. They're like, What? We just played a team, my son played a team from West Peoria, Illinois. And one of the moms was standing next to me and she goes, Where's Peoria? I was like, Oh, well, it's Peoria, Illinois. She goes, How did you know that? Oh, well, actually, I've done a ton of deals in Peoria, Illinois. And she goes, You've done a bunch of deals. What does that mean? I said, Oh, I'm a I'm a real estate wholesaler, and so Peoria is a uh hotbed for us. We've done a ton of wholesale transactions there. And she's like, Really? That's crazy! Like, how many? And I was like, To be honest with you, I don't even know how many. I just know that back in 2020, 2021, hedge funds were buying a ton there. SFR3 was buying, and since then it's been a great market for us. Now, most people would not understand that need for a wholesaler, but we realize it because the in buyers they're not going out and they're sourcing their own deals, otherwise, they would never buy deals from us as a wholesaler. A great example of this is what happened last night. Titanium University had a new member sign up. I recognized his name because he's been making posts inside of the vault, our free Facebook group. And I saw his name come across as hey, run his card. Okay, his card went through, he's he's onboarded. And so I went and talked to Justin, who was the sales guy, and I said, Hey, did he talk to you about the deals that he has under contract? Because I've seen him talking about it in the vault, and he said, Yeah, he actually submitted one in Ohio to us and we denied it. I said, Really? I said, Okay, well, it's in Ohio. Did you tell him that he needs to reach out to Tyler Osborne? And he was like, No, actually, I told him to go make a post in the vault, and I would tell you, and then you would tag whoever could handle it. So I hopped into Discord, saw Tyler was on Discord with nine other TU members. I said, Hey, Tyler, this guy just signed up for TU. Here's the link to his pictures, here's his phone number. Uh, take a look at this. He's like, Okay, where's it at? Got it. Call the buyer. Buyer answers the phone. Tyler says, Hey, I got a property over here. This is what it looks like. Blah, blah, blah, blah. Buyer says, Yeah, yeah, yeah. When can I get in there tomorrow to go take a look at it? Tyler says, I'll find out here in just a second. I'll let you know. He says, Hey, sorry about calling you so late tonight. And the buyer says, You don't ever worry about what time it is when you've got a deal for me. You call me and you let me know, and I'll stop what I'm doing because I know you're bringing me a good deal. The need for wholesalers will always exist. That deal just got assigned. Tyler said the assignment this morning, buyer went and saw it, walked it, said, I'll take it. So this kid who's been posted in the vault joins TU before he even gets onboarded. He's already done his first JV deal with Tyler Osborne, who's been with us since day one, 17th student for TU ever. They JV'd on this deal. It's going to be his first ever conversation. Close and fund a deal as long as the title comes back clear. The need for us will always exist. The big takeaway there, that buyer. You don't ever worry about what time it is. You pick the phone up and you call me. So that's something that's always stuck with me. And I love the fact that we are secure in the fact that we will always be needed. Next up, wholesaling has a faster cash conversion cycle than most other real estate models. And that's extremely important for me personally, because of how my mind works. I don't, I really want that easy cash conversion coming in. I want transactions coming in, you know, daily, hopefully, right? Even when we have like a few days that go by in between closes, it kind of irks me. You know, it's like, what's holding us back? Flips take forever. Even if you move super fast, it can just take forever. Even wholetails, that's why so many flippers have developed the model of going to wholetales and ovations so you can have that faster cash conversion cycle. And it's a need for most real estate business models. And so, wholesalers, we have the luxury of having the fastest cash conversion cycle, and so because of that, as long as you're producing, we rarely run into cash flow issues. Whereas flippers can run into cash flow issues all the time, especially if you're waiting on a big payday, an extension comes up, whatever comes along, that can really hinder your cash flow cycle because your big pops and then all the money disappears. Big pops, it's really hard to stay on top of that unless you're running mass massive volume. So on the wholesale side, much lower pops, easier for us to have those consistently. Next up, it's easy to run a debt-free organization. Okay, and that's extremely important for me. You have to understand like where I come from. I don't come from, hey, I had this silver spoon in my mouth and I had a bunch of money as a young kid. I had no money. I mean, I but the only real job that I ever had was uh basically minimum wage jobs, Pizza Hut, and working as a cart boy at a golf course. Right now, at Pizza Hut, I worked my way up to becoming a shift manager, an assistant manager, and then uh a uh a general manager, but they were still so low paying. So I've never really had money, but I did always have debt, always had credit card debt, and and so to be able to run a debt-free organization, whereas we regularly hear inside of our TU sales calls, people coming to us and saying, I am hundreds of thousands or millions of dollars in debt because I was flipping houses, or I was a landlord, or I was a gator lender, I've lost all this money, and you just don't really see that in the wholesaling industry. You might see people not closing deals, maybe they've gone in debt because they paid for education and it didn't work out, but rarely is it that I went into an extreme amount of debt to try to be a wholesaler strictly based off the expenses of wholesaling. Now, the expenses of being a flipper, landlord, Airbnb super host, or a gator lender or something like that, absolutely. We see it in the six figures, seven figures all the time. But you don't see that in wholesaling. It's easy for you to get to the point where even if you do accrue debt at the beginning to be able to pay that down and not be overwhelmed by debt or consumed by it as an organization. The bottom line, if I need to make something happen for my business, wholesaling is the easiest way that I can make something happen today. Like, even though I don't talk to sellers on a daily basis because that's what my team's doing, if I needed today to make something happen, I could pick the phone up and I could place enough calls to get a property under contract and go move that and close it as quickly as possible. I can make that happen as a wholesaler. Whereas almost every other strategy out there, there's no way that you can do that. That is the thing that I just love the most. It fuels my spirit. The fact that every day we wake up with the opportunity that we can go get something under a contract or we can assign something today, and we can get that closed and funded as quickly as possible, and that money is in our bank account, and it's not relying on an additional task or something that we have to accomplish in order for us to receive that payday, and that is what clicks for me. That is why I ultimately love wholesaling. So, just to reiterate, it's what clicked at first, it's what I realized we could actually get into. It's how we could get away from what we were doing inside of our business to become a part of the real estate investing industry. It's purely a numbers game. Once you develop those skills, you understand X amount of leads, you get X amount of contracts with X amount of contracts, you get X amount of close up funded, and that leads to a certain amount of money in your bank account, and it's very repeatable, whereas most other real estate investing models are not. It's easy to avoid risk and loss. I can be completely virtual. The need for wholesalers will always exist. There's faster cash conversion cycles, it's easy to be debt free. And at the end of the day, if I need to make progress in my business, I can do that for those reasons. That's why I love wholesale and real estate.