Just a few years ago, Cody was selling insurance and didn’t know much about Real Estate. He heard about a little niche known as “Wholesaling” and got interested. He quickly decided to go “All in” on Wholesaling and generated over $500,000 in his first year and has since created a 7 figure Wholesaling business.
After going to a seminar in Utah, Cody jumped in to wholesaling. He took on what advice he was given and found a mentor. In 2015, Cody started listening to every real estate investing podcast he could find and that was it. He found a mentor and got in to wholesaling as fast as he could!
Wholesaling appealed to Cody because it was a great start. “I started with the end in mind,” he says. “You’ve got to build a cash buyers list. If you don’t have an end game in mind, it doesn’t matter because you can’t do anything with it.”
Building cash buyers is simple. There are a few ways to find them:
1 – Go to REIA meetings in your local town.
2 – Get on the phone on Craigslist. Call land lords or people trying to sell their rentals, they’re always interested in listening to what a wholesaler has to say. You want to look at a vacant landlord. See if those landlords are willing to sell. If they are, great! If they’re not, then try to see if they’re interested in becoming a cash buyer. Take notes from them on where they would prefer their properties to be, and boom. You just got another buyer to add to your list!
3 – Get with a realtor and have them run all of the cash deals that have been done in a certain market. From that list, look for the address and names of the buyer on the title and add them to your direct mail list. By doing this, you can see what they’re willing to buy for, and how active they are in purchasing for cash.
The bigger the buyers list, the better. 600 or more is preferable for such a large market like Salt Lake City. If you can get 20 people to inspect a home at the same time, you’ve just build up a feeding frenzy. Making scarcity and providing competition drives up your properties prices, which makes your profit even better. You want people to pay top dollar for your deals.
Because Cody markets the contract and not the property, he sends out a suggested price for the house in the promotional material material. That way, you can use that as a negotiation point to drive your profit.
Cody does anywhere from 7 – 10 deals a month, and every time there are always multiple buyers interested. Even though the market has been competitive, Cody is still bringing in a great flow of business!
A question Cody gets asked a lot is “Why don’t you just keep the properties to fix and flip?” The answer is simple:
If Cody can focus on one thing really well, and continue to do it really well, then why not keep doing that? With house flippers, you have to focus on so many things. You have to deal with contractors, title companies, realtors, all of that. When you’re wholesaling, you don’t have to. “I’m in and out quick,” Cody said.
When it comes to marketing, it’s about 3 things.
The right thing, to the right person, at the right time.
In his first year, Cody had a budget of $1200 for marketing with direct mail. He was told to get uncomfortable because that’s where the profit comes from. At day 44 in his mentoring program, his first deal landed him $24,000.
That covered the course, the marketing, and still had a lot left over. So now, Cody puts aside 50% of his profit toward marketing so that he can continue to grow his business.
Over all, marketing is expensive. It needs to be. But you have to hit a lot of people or else you won’t hear back. $1200 is a great starting point, but you need to keep your marketing budget up to make sure you’re marketing the right way.
Set for Life: Dominate Life, Money, and the American Dream (Financial Freedom, 1)
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Danny Johnson: This is the Flipping Junkie podcast episode 80. Welcome to the Flipping Junkie Podcast, the podcast for flip pilots everywhere. Flip pilots are the house flippers that work more “on” our business instead of “in” our business by keeping a 30,000-foot view. You’re now part of this small group house flippers that considers themselves flip pilots, that strive to build a life of financial freedom and time freedom so that we can spend more time doing what we love with who we love. In this podcast, I give you a glimpse of the daily life of a flip pilot. So let’s get started.
Back to the Flipping Junkie Podcast. Today we’ve got an excellent episode. We’re going to cover wholesaling with Cody Hofhine. Just a few years ago, Cody was selling insurance and didn’t know much about real estate at all and he had heard about a niche known as wholesaling and got interested. He quickly decided to go all in with wholesaling and generated over $500,000 in his first year which is incredible and has since created a seven-figure wholesaling business. And so, we’re going to talk to him and find out how he ramped up so quickly and has done so well with it. So it’s going to be an exciting episode and thanks for joining us.
Welcome back to Flipping Junkie Podcast. I’ve got Cody here. Hey, thanks for joining me on the show, Cody.
Cody Hofhine: Absolutely. Glad to be here.
Danny Johnson: And how do you pronounce your last name? Because I said it earlier but I’m not sure if I said it correctly, I want to make sure I’m not saying it incorrectly throughout the show.
Cody Hofhine: Yeah, it’s Hofhine. In fact, I was on John Lee Dumas’ podcast and he ended up saying like “Hofleen” or something, I was like, “No, not even close!”
Danny Johnson: Yeah, okay. So it’s Hofhine. I said it correctly then I think.
Cody Hofhine: Yup. Absolutely.
Danny Johnson: Okay. So you have an incredible story. You started wholesaling and then with that first year, how much did you did you generate in revenue and profit?
Cody Hofhine: To go to the quick picture, in the first year I did just a little over 500K. That was just done through wholesaling.
Danny Johnson: Nice. And so, today I promised everybody that you would share how you did that and I’m very interested to see and especially to find out if you started with of like a war chest or something or funds to use to ramp up marketing quickly or sort of that whole process. Do you mind sharing all that with us?
Cody Hofhine: Love to do so. In fact, I think that’s the best part about your podcast. It’s deep diving, getting granular and helping people really get a chance out there to go do a wholesale deal.
Danny Johnson: Awesome. So let’s just get right into it. Do you want to start with how you found out about house flipping and got into it and what made you decide to go ahead and just jump in?
Cody Hofhine: Yeah. The backstory behind that that’s kind of crazy is, I was in insurance and I started insurance in 2010. I was going through that and then I was busting my tail off. I was going like 80 hours a week thinking all you got to do is just take massive action. You’re going to be fine. Things are going go well. You’re going to make a lot of money and the first year I ended up making $19,000. It was awful. It was not just time away from the family and being awful, but it was come home with next to nothing and explain to your wife like, “Man, this is a miserable failure.” And so, from there the next year I got a little better, but when I say “little”, I really mean little. The second year I made $27,000, so it’s still awful. One thing that I seriously thank the heavens that I did is, I went to a Real Estate Investor Association meeting and I started just talking to investors there because I really thought “Man, this would be like my avatar if I could insure them.” They got rentals. They’ve got multiple homes. They’ve got cars. They’ve got everything. And so, really I went there for selfish purposes. It had nothing to do with real estate and as I started meeting with them and talking with them and insuring some of them, they pass me around. They would share numbers with me, that maybe they don’t share with everyone, but I was just their insurance agent. I’m just the geek behind the desk that wrote a policy. And so they would share, “Oh yeah. I just did this one. I made $40,000.” And I’m sitting there thinking, “Man, you just bought that like last week, right?” “Yeah, I know. It’s so cool.” I’m like, “Man, you’re so disgusting.” Like, I didn’t make that my whole life last year, like, I’m a piece of crap.
And so anyways, we got into it and I started talking more about what is it they’re doing and some of them were doing like the full-on rehab fix and flip, but there was a handful of people that were doing like just the wholesaling that were just flipping the contracts and making money. And so, that absolutely intrigued me and so because of that, I went to – and I still remember it being so hard. This guy was doing a little seminar here in Utah that’s 150 bucks. I’m like, “Man that’s 150 bucks!” Like, “I don’t know if I can do this.” And I ended up squeaking through and getting 150 bucks out to go to it. From there, it just started to get my mind going like I’ve got to either jump in or jump out, but I just got to go do something. So from there I took on what everyone kept telling me and that was get a mentor. Don’t do this by yourself. Don’t blaze your own trails. Get a mentor and just go for it like hard core and just go be successful and so that’s what I did. From there, it was listen to every podcast across the nation and find out who is going to be my mentor and made that choice and from there I’ve never looked back. That was May of 2015 when I actually started wholesaling, so I went a lot of years just watching this thinking, “Oh man, it’s too good to be true.” If someone like Cody is hearing about this, it’s too late, but then finally I just got the courage to jump in.
Danny Johnson: Yeah that’s cool and it’s good because I guess like knowing and talking to the people that you are insuring and seeing that they were doing and seeing that it was possible – And I’m sure a lot of the guys, I myself included, didn’t seem super bright or super smart or special, right? Just the fact that just regular people can get into this and actually do it with the right motivation and being persistent in wanting it bad enough. So once you decided to get started you were learning as much as you can, how did you start getting those first deals? What were you doing to try to start because I guess you knew you wanted to just wholesale right or focus on that?
Cody Hofhine: Correct, correct. Yes. I just kind of wanted that the quickest way to revenue and in my mind that literally the path to me. I just looked at wholesaling and I’m like, “Man this looked like it will be the quickest path to get revenue in.” And then, hopefully start being to buy rentals and get passive. Ultimately I just grabbed the bull by the horns and just took it for a ride, but breaking down granular what I did and what that looks like, it was starting with the end in mind. I can tell you that much right now. So a lot of people still to this day will come up to me and say” Hey Cody, how do I find my first deal?” And I tell them exactly what my mentor taught me and that is you’ve got to get that cash buyers list. You’ve got to build that up and get that in place because it doesn’t matter how hot the deal is or how great deal is that you find. If you don’t have an endgame in mind, it doesn’t matter, you can’t do nothing with it. And so, every – maybe a new listener out there that might be listening to this, it’s go find your cash buyers list. They’re a dime a dozen. They’re in every market. It’s not hard. It’s very simple. I don’t know if you want me to give you a simple granular approach on how you can do that, but there are so many ways –
Danny Johnson: No we don’t want to know how to do that. We don’t want to know.
Cody Hofhine: Okay, perfect. Alright.
Danny Johnson: Of course! Share it. Share it all. Share how you did that. We’d love to hear it.
Cody Hofhine: With cash buyers there are a couple ways you could do it obviously. You go just to your typical real estate investor association meetings and they’re all in there. They’re all sitting in there looking for hungry wholesalers that can go out and find deals for them. A lot of people think, “Why don’t they find their own deals?” I’m telling you it’s a completely different beast. It’s a completely different model. They are happy to pay you money to go find them their next deal. As long as it is a win-win, they’re fine to pay whatever that cost is.
Danny Johnson: Right.
Cody Hofhine: You can go to a real estate meeting, just let them know, “Hey, I am a local wholesaler or a local investor I find deeply discounted properties. Can I let you know about them?” And they say, “Yes, here’s my information.” They’re very aware of what you’re doing. The other way you can do it is simple and I teach this a lot to people is, get on the phone like on Craigslist. In Utah it’s ksl.com. Craigslist is hardly ever used in Utah, but for national-wise, Craigslist is kind of a big site. It’s probably a universal site that I feel safe saying this, but you’ll call that list and just call up landlords. Call people that are just trying to rent their properties. There are two approaches with this that make it super nice. Obviously, they’re looking for a renter. It’s vacant at the time. So first and foremost, if you caught a landlord that’s just tired and worn out and –
Danny Johnson: Trying to buy the house.
Cody Hofhine: Yeah, so I’ll start out first of all like that like, “Hey, I’m looking at your house at 123 Main Street, is that still available?” “Yeah, it’s still available. Are you interested?” “Well, it’s kind of a crazy question. I’m looking to buy a couple of homes in this neighborhood. Would you be willing to sell this home?” And if they say, “yes” great, let’s have that conversation. But in the way of how to turn that conversation into a cash buyer when they say “no” then you could say, “Well, tell me this. Are you interested in acquiring more properties at a deep discount like 40-50-60 cents on a dollar so that you can build your rental portfolio?” And I would say nine times out of ten, but it’s a high majority. I’d definitely say seven times out of ten they’re like, “Yes, tell me more.” “Well, I come across this all the time. I market statewide and so I come across any areas. Are there any specific area Mr. Landlord looking for?” “Well, man, if you can keep it right there in West Valley right next my rental—“ And I just write notes down and now I just added a cash buyer. And so you can pound out – I mean, sky’s the limit – 20, 30, 40, or 50 phone calls a day to get 70% of these people to say “yes” like, “Let me know when you have these deals that are 40-50-60 cents on a dollar.”
Danny Johnson: Right. That’s awesome. And then, the fact that they’re landlords, a lot of times they will pay more for property than another investor will to fix and flip.
Cody Hofhine: So spot on, so spot on. That’s so true.
Danny Johnson: Yeah, it’s nice. I like that approach a lot and I thought you were just going to post ads saying that you’ve got deals, so it’s good that you thinking that other approach of find the guys that already have property, so you know that they have done something, they’ve bought more than their own home and are more likely to have the ability to buy your properties from you. That’s pretty cool. I like that. What else do you got? You got you know networking at REIAs, you got Craigslist, any other ways to quickly build that buyer’s list up?
Cody Hofhine: Yeah. One way I have use in this is going to be – I mean, it can be hit and miss in every market, but it has worked well for me. There are a lot of cash deals that get purchased in Salt Lake territory. And so, I’ll literally just get with a realtor and just say “Hey, can you run all the recent cash deals that have happened in—“ such and such area or such and such county and they’ll run all the cash deals. And what I’ll do is then take those addresses and see whose names are on title and then I’ll send them a mailer and so that way you can direct mail people that are buying homes cash and that one’s huge. I think that’s an easy way to tap into because you’re seeing it. You saw the transaction that was purchased cash and you’re able to see and know instantly like, “Hey that guy has cash. Let’s see if he wants more.”
Danny Johnson: Right. And recently he was looking for properties, so yeah that’s awesome.
Cody Hofhine: Correct.
Danny Johnson: And you were there for it. You have a good idea of what they’re likely to pay for those properties.
Cody Hofhine: That’s exactly right. Now you can really look at the market and say “Man, he was willing to pay $75,000. I got this home for $50,000. That means I could make $25,000 if I sell it to him.” So yeah, absolutely.
Danny Johnson: So how exactly are you reaching out to them? What do you find is best to reach out to them and how are you finding their addresses as well?
Cody Hofhine: Yeah. So with that I’ll look him up and do just on county rights, I’ll type in the address that sold and then I look at on the county assessor’s website, type it in, you’ll find who owns it and usually there’ll be a mailing address attached to it. We just send a simple postcard that says, “Hey we’ve been trying to get a hold of you. We just want to know if you want to buy smoking hot deals like 50-60 cents on the dollar.” It’s not an awesome – I mean, like I said, it’s not the highest response rate. Obviously the best approach is get people on the phone instantly. If you have access to the phone numbers, you run skip tracing or whatever you want to do. But we definitely hit them with that with a direct mail and just continually hit them up. So that they see – I mean, sometimes I’ll have a cash buyer that says, “Yeah, I received your postcard eight times and I just want to check it out and see what you guys are doing.” He ends up buying three homes for me and so there is there is wisdom in follow up follow up. Some people just instantly just rip up postcards, but this gentleman finally on the eighth time read messages like, “Man, maybe this guy really does have something.”
Danny Johnson: Yeah, it’s awesome. It’s a good point to be consistent even with the mailings and persistent with the mailings to find buyers, not just one off and nobody contacted me, maybe they don’t want to buy. Keep hitting them because they, as you said, then you’re in their head. They remember you. They’ve seen you enough and it’s like, “Well, this guy keeps mailing me.” They’re thinking more about it instead of just chucking it in the trash. So the age old question for buyers list, do you like a bigger buyers list or a better buyers list like a focused – kind of smaller VIP type thing?
Cody Hofhine: I love big. I want that baby busting at the seams. I want 600 names on there or more. Sky’s the limit. Because what you can do is then when you start sending out these deals, you start sending out the option to buy these homes, with that being said, I mean, if you can get 20 people to go inspect this home at the same time, you can get to a fun little feeding frenzy there that were right now in this market – and this market is so strong, so good and so much more reason why your listeners should definitely get active and start taking massive action because you’ll send out a deal at $95,000 and I’ll send 20 people go up there and they bid it up $115,00 you’re like, “holy smokes” and I’m telling you now is the market. But even if the market was a recession or a depression, wholesale is still going to be around. You’re just following the trend of what the home is worth and what you can pay for it. And so it’s still going to always be around, but right now it’s just super unique. There are cash buyers that are bidding these babies up, which is super nice for the wholesaler.
Danny Johnson: Right. And you know how the market’s always a cycle, right? It’s either harder to buy easier to sell or easier to buy, and relatively of course, harder to sell. And so, right now we’re at a point where it’s harder to find the good deals because there are so many investors which means you should be wholesaling because people are going to pay top dollar for every single deal. If you become an expert at finding the deals because it’s harder, that’s where you make all the money and so that’s why wholesaling makes so much sense right now. Now whenever you send out your wholesale deals to your list, are you saying the price that you want for that or are you saying best offer or do you do anything like that that kind of gets them getting more for the property?
Cody Hofhine: Yeah. A simple message that I do, because remember we’re not marketing obviously the property but marketing that contract, that assignable contract, I simply just say like, “Hey, this is assignable contract that allows you to purchase a home on 123 Main Street and then in the message of just a suggested price $185.”
Danny Johnson: Oh nice, suggested price. I’m going to have to write than down.
Cody Hofhine: Yeah. It’s key spot on because then it’s not “asking price $185.” Someone calls you up and says “I’ve got $185. Where do I need to go? Tell me where I need to go?” And it’s like, “Well, we got a hold—“ “No, Cody. You said $185. I’m giving you $185.” And so now I have to obviously deal with that. It’s more of “suggested price $185.” “Hey Cody, guess what. I’ve got ten people super interested at this point so right now since you gave me a full offer and multiple people are interested, but I’m going to ask you give me your highest and best and I’ll get back to you by 4 o’clock today.”
Danny Johnson: Yeah, I like that. How often do you find that to be the case where there are multiple people like that – a rough idea, a percentage of the deals that you guys put out?
Cody Hofhine: Right now in this market, every deal has multiple people out there just because it is. It’s like you said, I mean, you nailed it spot on. It’s getting harder and harder to find the deal, so if you can be good at it, we’ll do anywhere from about seven to ten deals a month and with that, we will literally, every one of our deals –it’s been months since I’ve only seen one buyer interested. It’s always three, four, five, sometimes 10, sometimes 15 that come out to that property and inspect it.
Danny Johnson: This is all in Salt Lake huh?
Cody Hofhine: Yes. So I’m in five major counties now in Utah, but I started just right here. My stomping ground is right here in Salt Lake and then when I had the capacity to expand, I saw the opportunity and now I have all the surrounding counties as well.
Danny Johnson: Oh, nice. Are some of those smaller towns that you focus on or are they mostly bigger metro?
Cody Hofhine: It’s still pretty big cities. They’re still pretty big cities. I wouldn’t say there’s anything out in the sticks or out in the nowhere. It’s all connected. I mean, all of them are literally all connected off of the freeway from all from Salt Lake, so they’re all counties that are all connected to each other.
Danny Johnson: Okay, cool. Okay, so the biggest rebuttal I think that I hear from people when you talk about wholesaling is, with wholesaling you’ve got to find a lot of deals and to me that’s the hardest part. I’m finding it hard to find deals to fix and flip and if I’m on a wholesale I’ve got to find even more. And so, I don’t want to do that because it’s so hard to find the deals and you’ve got to buy them even cheaper because you’re selling them to other investors. What do you say to that?
Cody Hofhine: That’s a good question. I just had a lunch with a gentleman that has a cash buyer of mind and a hard cash lender. And so, I sit down with them at lunch he says, “Cody, I don’t understand. Why don’t you keep these deals and fix and flip them yourself. I still don’t understand why you wholesale them. I mean, you’re making this much money plus you can make the fix and flipside. I don’t get it. Why? And my answer is I literally focus on one thing and that’s it. One thing only. I don’t want to focus on six things, two things, three things. If I can focus and be the best at one thing, I don’t need to fix and flip. I can do just the wholesale be just fine. And so, he does about 27 fix and flips like rehabs every single year. He said his average is about $25,000 to $27,000 every home he does. And so I said, “Good. Take that 27 homes, times it up by $27,000 see what you get.” And I said, “We did about 103 homes last year at an average of $16,700. Type that in and tell me why I don’t deal fix and flip.” I don’t have to worry about contractors. I don’t have to worry about the guy who didn’t show up. I don’t have worry about high prices, low prices or “Hey I got this crew on this and now I have a crew to do this when one.” I said, “I have zero headaches. I’m in and I’m out.”
Danny Johnson: Yeah. It’s the amount that you’re making for the time spent and the effort in it and it’s just incredible. I think a lot of people find that hard to believe probably that you’re making 16+ on average on wholesales, but it’s completely possible in this kind of market.
Cody Hofhine: It is.
Danny Johnson: Okay. And then the other side of that is well you’ve got to find a lot of deals, right? So you’ve got to find more than the guy that’s only doing 27. I want to hear first though about when you get started and you like ramped up so quickly and made so much in that first year. How many deals, if you don’t mind sharing, was that and then how did you build your marketing machine to be able to get that many deals?
Cody Hofhine: Yes. So right out of the gates what I started with and a good rule of thumb is to start getting that phone ringing because it’s a game of numbers. A lot of people think there’s a lot more secret to that, so marketing is huge. It’s definitely the three that I love in marketing: It’s the right message, to the right person, at the right time. And if you can nail that, you’ve got to get out there and just get consistent, send out mail pieces. I started sending out mailers and I had about a $1200 budget a month when I first got into this knowing that it was from a mentor that made me uncomfortable. H was like, “Get uncomfortable.” And I’m like, “Man, this is uncomfortable. Comfortable for me is like $600.” He’s like, “Good. Double it.”
Danny Johnson: Nice.
Cody Hofhine: And so, I did it just put faith in it knowing that he knew what he was doing and his fruits were easily like, they’re visible. He was doing well himself, so I was like, “Yeah, I can do this.” I know it’s uncomfortable. My wife’s going to be like, “What are you doing? You’re crazy.” And we ended up doing it and I would say it’s about day 44 into being in that mentorship program. I did my first deal for $24,000 and from there it paid for the coaching. It paid for the marketing and it still had plenty of money over. Now it’s at $1,200, the following I bumped to three grand now and I what I do now is I just put 15% back in. So whenever deal closes, 15% set aside for marketing and that budget continues to grow to where fast forward two years we’re about $30,000 a month we do marketing.
Danny Johnson: And I think that’s the thing. Anybody you’ll find, anybody doing a lot of deals, if all you heard was how much you’re spending and marketing you might freak out and be like “Whoa, are you serious?” It seems crazy, but it’s all about the return on the investment and that’s the whole thing. So many people try to get into online marketing using a website or direct mail and like you said want to stick to like 600 bucks a month. It’s not enough to get enough traction to really make a difference and I would even say that 1,200 isn’t really enough to get things going pretty quickly.
Cody Hofhine: It’s a starting point. I agree with you. It is a starting point to get you uncomfortable but yeah you’re going to have to start getting at in there a lot.
Danny Johnson: And it’s scary. It’s super scary and I think that’s where people struggle and they kind of – even $600 to a lot of people is going to be a big commitment, a big risk and get them out of their comfort zone. But you’ve got to understand that you got to hit a lot of people. You’ve got to send out a lot of mail and send it consistently to that same list and take a lot of calls to get those deals and the lower budget means less calls, means less leads, means a less likely chance of having the deal. And so, if you’re below that threshold of a certain number of leads to get a deal, you could spend months of throwing this money into what seems like a black hole before getting that deal. Are you guys mostly doing direct mail?
Cody Hofhine: Direct mail is probably 80% of the budget. The rest goes into pay per click, goes into Facebook, goes into door hangers, bandit signs. I mean, yeah, we have a lot of forms of marketing but a good chunk of it is still direct mail and I tell people like, “When someone tells you don’t direct mail. Get in that market and start direct mailing ‘coz you’re going to be blessed.”
Danny Johnson: So for a good idea, based on what I was just talking about, do you know your numbers roughly for direct mail for how many leads you’re getting before you can get a deal?
Cody Hofhine: Yeah, yeah. In fact, I’ll give you an easy breakdown. If you can reverse engineer this, I’ll give you my numbers for Salt Lake. It’s going to vary a little bit, but it’s going to be pretty close nationwide and I’m seeing this just through people I know was 12 students. But with that being said, look at right around a 1% return on your response rate, so if I’m sending out 10,000 I’m going to get, what is that, 100 phone calls. So I you sent out 10,000 postcards to get 100 phone calls. Now of that 100 phone calls, let’s break that down. Seventy five of them are going to instantly literally be thrown away. They’re going to either call you and tell you to pound sand, “f” off, they’ll use verbiage that you’re like, “Man, I hate that I had to pay money to be told that.” Awful. Wow. You do it because it’s all about numbers and I’m telling everyone that’s listening today, if you are not hearing those message, you are not in the right place. You’re not sending out enough mail if you are not getting those messages. So when you get it, put a smile on your face and just know, “Man, Cody told me this. Danny told me this. I knew this was going to happen. I am in the right place.” And put a smile on your face because you are in the right place when you’re hearing that. But of a hundred phone calls about 75 are literally going to be like take me off your list, remove me, don’t do this ever again, you guys are crap — whatever. Literally, they’ll break you down, so that leaves 25 leads.
Danny Johnson: 10,000 mail pieces and then 25 leads.
Cody Hofhine: Yup.
Danny Johnson: You have to be realistic and that’s what you’re looking at, right?
Cody Hofhine: Yeah, yeah. And with that 25, you’re going to have probably, I mean, lowest of one, but I would say two to three. They’re like go over to their house and just put it under contract and lock it up. Easy, easy, easy. Just go over there talk to them, find a win-win solution, put it under contract. Some of them could be so easy, maybe my eight year old – I could say, “Hey, just walked out the door and tell them to sign here and here’s the amount of money we’re doing.” And it could be that easy. Then there are probably two that you have a little bit outside the box and see the different ways to help them. it could be that they they’re going through probate and they still have to go through the attorney, but they can’t afford the attorney to do the probate. And so you think outside the box on how to do that structure them and maybe fund some money upfront, but there are things out there. So I’d say for every hundred phone calls, it ends up being about five deals to us.
Danny Johnson: Well that’s actually really good.
Cody Hofhine: It’s how that looks. It’s because we really think outside the box. Like I said, typically it’s probably going to be one to three that are really motivated. Anyone could go out and find something to make it work and then there’s two that you just got to think outside the box.
Danny Johnson: Yeah, nice. I can vouch for those numbers. It lines up pretty well with what we experience with direct mail as well. So your campaigns, what do you like to do? Are you a postcard guy, letter guy, you mix it up? What do you—
Cody Hofhine: That depends. I’m a postcard guy and again it all comes down to numbers. I can send out a yellow letter and my response rates can be 6%, 7%. It’s going to be through the roof but it doesn’t necessarily raise my conversion rate and I’m looking for conversion. I don’t care about response. I want what is converting.
Danny Johnson: I have to say that’s what drives me nuts when people talk about things like yellow letters. It just drives me nuts when you hear “our conversion [sic] rate is crazy.” I don’t care about what your response rate is. Your response rate is through the roof and it’s 20% which is insane and I don’t think is even realistic for anything. But it’s like you an incorrect message if you get that many people calling you back, but it doesn’t matter like, that’s actually more work.
Cody Hofhine: But then you ask them, how many deals did they close? And they’re like, “Oh, I haven’t closed a deal, but my phone’s ringing off the hook.” I’m like, “Man, that’s a J-O-B. That’s not even investing.” So that’s what it is for us. It’s postcards. It’s all about numbers. I can get out a postcard for 35 cents. That means I can do probably four or five postcards for the price of one yellow letter. Which one am I going to pick? The one that gets five for the price of one and I’m going to talk about numbers all day long. It’s going to be how many people can see my message. How many people can know about what I want to do so that my phone rings, so that ultimately I can put homes under contract.
Danny Johnson: Nice. So what size of postcard are you guys using? Are you using a local print house or do you guys use a national?
Cody Hofhine: You can do local. You can do national. I would say just get on the phone and see who has the best rates and go with them. But, I mean, I don’t have a postcard on me I wish I did. But you’re looking at it like it just a little simple like a piece of paper folded up, the map is being about this size. So, what is that?
Danny Johnson: Yeah. So small.
Cody Hofhine: Like a 4 x 8 I guess it would be, maybe. It’s small. It’s just simple and the message is simple. I think what happens is so many people get caught up with what they see in the mail and they look in the mail and think, “Oh, let’s just match what someone’s mail and do it. So it’s got to be working, otherwise they wouldn’t be doing this.” And I can tell you do not do that. You’re crazy. You’ll be throwing a lot of dollars away. There’s nothing worse than being marketed to, so you got to make sure your message isn’t screaming a marketing piece like “the spider that’s upside down.” You know a pest control company is saying, “Hey, let me spray your yard” right? It’s like rip, shred, see you later. Or you got a realtor standing and gives the for sale sign, you got the cash in the guy’s hands and maybe smiling. And you’re like, rip, see you later, right? And so mine has zero pictures. It doesn’t have a picture of me. It doesn’t have a picture of a home it doesn’t a picture of money. It is just a message. That is it. That way they have to look at it and physically read it to know is this from the scouts? Is it from the local church? Is it from the community? Is it from the city? They don’t know because there’s no pictures that instantly tell them I’m being marketed to – rip it up, shred it, see you later.
Danny Johnson: What’s your headline?
Cody Hofhine: Simple. And I would say, don’t think too deep on this but keep it simple because you just want a small message that gets your message clear like, “My name’s Cody Hofhine. I’m interested in buying your home at 123 Main Street for a cash offer. Please reach me at…” and then a phone number.
Danny Johnson: So it says who you are, what you do and they need to do – call to action.
Cody Hofhine: Correct. It’s so simple. Don’t overthink it other than keep it simple and then don’t put pictures on it. I’m telling you, your response rate will go from 1% to a quarter of a percent.
Danny Johnson: That’s interesting to hear. I hadn’t really thought about that. It’s something I want to test out too because I think we do have some images of some things on there.
Cody Hofhine: Test it. I would love to hear your feedback when you do it because we tested this in literally every state and then the numbers continue to prove that get that picture off and you’ll get less shred rate.
Danny Johnson: Yeah. I wonder if the Better Business Bureau logo would be included in that. Probably not.
Cody Hofhine: No, no. You can put Better Business Bureau because some people love to see that, right?
Danny Johnson: But just not the images of like happy–
Cody Hofhine: A hot cup of coffee that keeps you warm, right?
Danny Johnson: Yeah. Okay, cool. I’m going to try that out because we’ve been looking at changing up our message. I want to do crazy stuff sometimes but I’ve seen some where people are paid copywriters and come up with really crazy stuff and they always say, “My conversion rate didn’t change.” It’s more about like you said, the message the right person, at the right time. And you never know who the right people are exactly, you can get a better more targeted list. But the right time, you don’t know that, so it’s a matter of mailing people multiple times. How many times do you guys mail the same list?
Cody Hofhine: Some people just restrict it from budget. They may do it like every eight weeks then put on a cycle and maybe do it two, three, four times. I am a guy of consistent – he who stays consistent wins in this game and so I don’t have a number. My number is infinite. It just—
Danny Johnson: Keep going.
Cody Hofhine: Get my mail piece and put on repeats. Mine is six weeks. I do a six-week cycle, so every time I find a new list or added new people, new names, I just add it to the current list and just put it on repeat every six weeks, so every six weeks everyone’s getting that message.
Danny Johnson: And same exact postcard.
Cody Hofhine: Same exact postcard. Yeah.
Danny Johnson: Keep it simple.
Cody Hofhine: Keep it so simple and it’s a branding thing, right? At some point they’re going to be like, “Man, this guy’s been on me for three years and I’m finally at the point where I just inherited mom and dad’s house. We have no money. Us siblings have fixed it up. It’s not even list worthy because it’s in such poor shape. I’m calling Cody because this guy is marking me for three years.” And it’s as simple as that.
Danny Johnson: Right. Are you branding your name, are you branding your business name or both?
Cody Hofhine: You can do both. So we kind of split test that to see what one converts because some people want to work with a company or a corporation, some people want to work with an individual, they hate companies. And so yeah we’ll switch that up a little bit, so it could be Cody Hofhine or Utah Sell Now and then from there, that’s really kind of hitting them with both of them. So we switch off every now and again just to give them a different feel to see if it connects with a different mindset if somebody wants to work with the company vs. an individual.
Danny Johnson: Yeah I think that has been the big thing I think and it’s different for different areas, different cities and different target markets – higher-end home or versus the lower end home, stuff like that. Do you include the website on your postcards?
Cody Hofhine: I do, yes. I love that because those are the ones that if someone is ready and they’re motivated, they’ll call me. But there’s also motivated people that are like, “Oh, I hate talking to people. I hate confrontation. I hate talking to people. I hate it.” And also they look at the website and they fill out my webform and I’m like “Perfect.” I love it. So yes, I absolutely do. That way you get multiple personalities to respond to that mail piece because there’s people that don’t want to talk to us or anyone for that matter. They just may be ashamed or “I’m behind on my mortgage. Why would I want to talk to Cody about that? That’s going to be hard.” So they go online and like, “Oh man, this guy helped this guy that was behind of the mortgage and left a testimonial. Okay, so they work with people like me.” And then they call me and that’s key. I would never tell anyone that’s just starting to go get a website. I think that’s a waste of money. I think it’s all about revenue first. See I’m a guy that’s like revenue first. [Crosstalk] when you’re profitable, go get a website because at that point you have a place to post all these amazing – because again, it’s all about a win-win. If it’s not a win-win, I don’t do business. And so, when I make it a win-win I get a testimonial from every one of my closings where they say, “Oh my goodness. We love Utah Sell Now.” “We love Cody. We love his team. It’s been amazing.” I put that on my website. Why? So when someone goes in there says, “Oh man, this guy was behind on taxes.” “Oh man, this guy got divorced and they helped him out.” “Oh man, this guy just inherited mom’s and dad’s house just like us.” Those testimonials are huge.
Danny Johnson: Yeah for sure. On mail pieces those help out a lot too. Same things that work on direct mail work on websites, websites-direct mail, Better Business Bureau – all that kind of stuff. So direct mail is the majority of where you guys get your leads from. Let me see, let’s go through the process a little bit of your wholesaling though.
Cody Hofhine: Okay.
Danny Johnson: So you get a call from your marketing.
Cody Hofhine: Yup.
Danny Johnson: What’s the process? What’s the process of talking to them, scheduling appointments and all the kind of stuff?
Cody Hofhine: So we’re in the process right now. We’re split testing, so we still have 50% go to a voicemail. That’s just simple. Everything’s done where we purchase numbers. I do it through CallRail for example. I purchased a number for every different mail piece. So if you send the probate, have a number for all postcards related to probate. If you have a tax delinquent have a separate number for tax delinquent. That’s where you can track data. This is so crucial to know your numbers, so you know where to invest your money. But essentially, we have 50% go to voicemail. That’s simple. That’s, “Hey, thanks for reaching out to us. If you’re interested selling your home please leave your name, your number and the address of the property that you’re looking to sell and we’ll get back to you just as soon as possible.” If you get someone to leave all three of those, call them back. They just listened to your voicemail in depth and they did exactly what you asked them to do – so name, number, address. Some may leave half. Some not even leave a message. Does that mean not call back? No. No lead left behind like, no lead left behind. Get back at it. Just prioritize it. Prioritize the people that left all, to the people that left two, to the people left one, to the people left none and just call the ones that left everything first and work your way down.
Danny Johnson: Right. Why is it that you’re sending them to voicemail? I mean, do you find you get better – well, I don’t know how you get a better response. I mean, why not answer all calls?
Cody Hofhine: That’s a good question. That’s what we’ve been testing since January and the numbers still are proving a better conversion rate if you answer live. Now I will say with that being said, there are a couple deals that you don’t know, but I think I have a feeling that I’m leaning towards, there are a couple of deals that you’d call like the low-hanging fruit that by answering in live – it’s no different than me and you, right? I want a set of tires for my truck and I’m on lunch break and I have 15 minutes. I can tell you the person that’s going to get my business is the first shop that answers the phone and says, “Yes, we have those tires in stock. Come on up at 4:00 and we’ll put them on” versus if someone doesn’t answer I’m hanging up and I’m picking up and I’m calling the next one until I get someone live. So there are low-hanging fruit that I would say that I probably would have missed out had I not been the live answer, but my whole thing is when they call into the voicemail, our team gets back to them in three minutes or less. We’re super quick. It’s not like we were waiting 30 minutes, 40 minutes. Three minutes or less is my criteria because there’s still that chance you can get that one that’s needs to know right now.
Danny Johnson: Right. And those can tend to be the best deals too. So it would be a shame to miss out on those because they’re so easy when somebody is like, “I just want to get rid of this piece of crap.”
Cody Hofhine: Right.
Danny Johnson: And come over and take it from me.
Cody Hofhine: And I have 15 minutes. I’m on lunch break and I have to find someone now.
Danny Johnson: Yeah. So when you’re talking to the sellers, do you guys typically go ahead and schedule an appointment and then run your numbers and then if it’s not a decent deal or you don’t think you can make a deal out of it, you cancel the appointment or something like that?
Cody Hofhine: Yes. That’s a good question. What we look for is motivation. I think so many people get caught up because we’re in the real estate business that they think we’re talking about real estate. I can tell everyone that’s listening. This is so little to do with real estate. It’s all to do with people’s problems and see if I can be a fit to help them out their problems, and the by-product is I’ll get a contract that allows me to purchase their home, but I could care less. Yes, I got to ask them how many bedrooms, how many bathrooms, but do I care? I really, really, really don’t. What I care about is the “why.” Why are you selling your house? And so we look for strictly 100% just motivation and the motivation could be inherited mom’s and dad’s house and it’s beat up, behind on taxes, behind on mortgage, getting divorced and they have to split up assets, transfer in the job and have to move to Arizona and they’ve got to be gone in two weeks and now the traditional way of listing the home is just not even a option. Whatever it is, that’s what I’m looking for and if there’s motivation there, I don’t even care what price they tell me on the phone. I’ll book the appointment based off motivation and then I’ll run my numbers on the way of what it is I need to be at and then we just see if we can make it a win-win when we go to the home, but I always do a business face-to-face. I think that’s the best way to do it because it gives you the upper hand to actually establish that relationship with trust and let them know I’m a good guy and I’m here to help you out.
Danny Johnson: Yeah. I cringe sort of when I hear people saying that they’ll just email or offer a contract without looking at the house. I don’t get it. It may work from time to time, but I find it hard to imagine that it would work.
Cody Hofhine: Yeah. They’re losing 99 out of 100 to me for those people.
Danny Johnson: Yeah, it’s crazy. Since you’re going to be looking to market the contract, you’re going to sign a new contract, what is it that you’re telling, I mean, do you let people know that, “Hey, look we’re going to find a buyer.”
Cody Hofhine: Yeah.
Danny Johnson: I mean, how do you go about that with the seller?
Cody Hofhine: I think it’s simple because I think that’s a good common question. I like that you brought that up. There’s lot of ways that I do it. It’s right in my contract that this contract is assignable. But also on top of that, I literally will tell them sometimes I partner with people to do stuff with on this home. It may not be me that actually purchases the home, but we got you taken care of. As well as, as simple as, “Hey I’m going to be having contractors run by here on Wednesday at 4 o’clock to do an inspection of the home. Are you okay with that?” Yes they’re okay with that. And so, I have never had a problem with it. I just haven’t and it’s because we’re upfront. I think so many people hesitate and hide and there’s nothing to hide about. These people, they don’t care. You gave them a price, they accepted they’re happy. They don’t care what you do with it or how you do it or what money you make. They just know you made a win-win situation with them and now you’re able to do what you want. Be forthright with them and upfront with them. There are so many people that do it bad and do it wrong that could add a bad name to just investing in general. I’m just telling you, there’s no need for it because people are fine with it. They’re absolutely fine with it.
Danny Johnson: Yes. What do you do when you can’t – because this is also the big thing with wholesaling, what do you do if you don’t find a buyer for the house, for the contract?
Cody Hofhine: Yeah. So those deals that I can’t either buy the home myself because now that we went in there there’s a cracked foundation. It’s something I didn’t see before or my buyer’s like, “Oh, there’s a crack foundation. Your numbers are way too tight.” What I’ll do is I’ll literally just go back to cancel the contract. It’s all about going over there and saying, “Mrs Seller/Mr Seller, I am so sorry. I wish I could do this. There is one area that came up here. The cracked foundation that makes my numbers skewed on this at this current price. I’m going to have to cancel this contract. If it’s something that you would reconsider, I’m still here to listen. But we have this currently running at 120. What is the best you can do because right now at 120, I can’t do this. I’ve got to cancel this contract.” And then let them tell you because they might tell you, “Sorry I’ve got someone else. He said he will say buy it at 120.” Awesome. And find about the option. I’m okay with that because if I could just truly go in there and serve them, find the best option regardless if it’s me or not, I know more deals are going to come to me in the future. So just be upfront and honest with them. Some of them are going to be like, “Yeah, I can understand that. That cracked foundation is going to add a lot of costs.” And so I’ll just ask them, “So what’s the best you can do?” “Well, we can do 105.” And if that works, put it right back under a contract at 105.
Danny Johnson: Yeah, nice. So try to renegotiate it. Don’t feel like all is lost.
Cody Hofhine: Correct.
Danny Johnson: Try to renegotiate and hopefully you’ve got a couple of buyers that already said, “Hey, can’t do 130 but I can do 120.” And then you got to go back and try to get a little bit lower, so you get a little bit of room in there.
Cody Hofhine: Yeah. Did that sound abrasive? That’s the whole point I want your listeners to listen to. Nothing about that sounded like abrasive like, “Sorry, I can’t do this. It’s a piece of crap home, like, no.” It’s how you present it. Just say, “I can’t do it. We came across some things that you just make the numbers really, really tough to do and I apologize I have to cancel at that price, but is that the best price you can do?” And then let them tell you.
Danny Johnson: Yeah, it’s nice. Yes, it’s awesome. So let’s say you found a buyer, you got the house and a contract, good price. You put it out to your list, you get some people interested, they look at it, an investor says, “Hey, I want that.” What do you do to put it on a contract with your buyer?
Cody Hofhine: So we have an assignable agreement which allows them to now close on that home and then we always ask for earnest money. I’ve seen people do it where they just collect the earnest money and then I see other people where they have to go to like a title company to be in escrow. And so, really what it is, is the first person to sign that assignable agreement as well as put earnest money down, non-refundable and the only reason it would be refundable is if we can’t provide a clean title. But if it’s a clean title, they’re like “Oh actually, you know what, we don’t want it anymore.” They also don’t want their earnest money anymore. You got to hold these cash buyers accountable.
Danny Johnson: Yeah, yeah. So what is your typical non-refundable earnest money that you request on these?
Cody Hofhine: For our market, we do $5,000 earnest money. And so, each market I think you got a good look at it as how many cash buyers you have, how many deals you come across, what’s the difference, “Oh, I’m only going to make a thousand bucks.” You probably should only do maybe a $250 earnest money. But yeah, if you’re going to, let’s say, you make $20,000 you probably should get a good piece down, so get that $5,000 earnest money.
Danny Johnson: Especially like you said, if you’ve got the investors fighting over these and bidding them up and paying more, you want to make sure that person that you choose is going to actually go through with it and the $5,000 ought to do it.
Cody Hofhine: That is. It is. I’ve had one person walk away that’s it. One person said, “This isn’t for me. I don’t want it anymore.” I’m like, “Okay, so you’re fine losing the earnest money?” And he’s like, “Cody, I’m a man of my word. I know what I signed. I’ll lose the $5,000.” And then we turn around again. Just stay true to it and they also respect the fact that they know what they’re signing as well because I’m very upfront with them in a nice way like, “Hey, so this is earnest money that’s non-refundable, so you’re ready move forward.” “We’re ready for move forward.” “Perfect. Because I don’t want the conversation if you back out that, ‘Man, I want the money back.’ I just want to make sure that’s not going to come up. Is that going to come up?” Ask them. “Nope. That’ll never come up for me Cody.” “Perfect. Let’s move forward.”
Danny Johnson: Yes, so you don’t have people just signing it and then deciding whether they want to do it or not. You don’t have time or want to deal with and then put the seller of the house, the owner of the house in that position where you get to closing and someone doesn’t show up and buy it and they’ve made decisions based on thinking it was sold.
Cody Hofhine: Right.
Danny Johnson: Yeah, so you got to do as much as you can and make sure that it’s a done deal for sure. Man, this has been really helpful I’m sure for a lot of people about wholesaling and covering the typical questions. Is there anything else that you hear from other investors that are considering wholesaling, but they have objections to it that you commonly hear?
Cody Hofhine: Yeah. I called the MLM theory, right? The pyramid theory, right? It almost sounds too good to be true and everyone’s like, “Oh, well it’s a great market.” And if someone like Cody is hearing about this, it’s too late to jump in. I’m telling you right now let that theory hop right out of your mind. It is a fantastic time to jump in. Would it have been fantastic five years ago? Absolutely. When’s the best time to plant a tree? Five years ago. When’s the second best time? Today. And so, hop in today. You’re not going to miss out on anything. Yes what could have been should have been in the past, but guess what wholesaling is amazing. Wholesaling is still going strong. It’s going to be strong. It’s going to continue to go strong and the market’s awesome. I mean now’s the time to capitalize on this fantastic market which is a seller’s market. And really, what makes the buyers, your cash buyers, paying you top dollar. I mean, if you learn how to find these deals over and over again, you can do really well at wholesaling. I absolutely love it. It’s been a great change to my life to where I’ve been able to invest in two rentals and to where in the last, I’d say, last seven or eight months I’ve picked up 10 doors and I couldn’t have done that being an insurance agent. It just wasn’t there and so I absolutely love it.
Danny Johnson: Awesome. So for everybody listening out there, if anybody wants to get in touch with you, is there a way that they can reach you?
Cody Hofhine: Yeah, yeah. If they want to learn a little bit more about me and what I do, it’s wholesalinginc.com that’s wholesaling-I-N-C dot com and I am always – in fact, something that you could do for your listeners, if they subscribe to that e-mail there, we send out tips, tricks, gold nuggets that they can implement instantly with wholesaling that’s super super simple and then we’ll have to get you on our podcast, but we have a podcast that they can listen to as well where we interviewed just our students that are out there nationwide doing this exact same thing all over the place, making great money, changing their lives, being the owners of how they want to live their life and that’s what that’s why I love what we do. It really is something that can truly change your life. You truly can live the dream, life that you want to live and really live it on your terms.
Danny Johnson: Yeah, absolutely. Awesome. I’ll include that in the show notes page as well. So if you weren’t able to write it down, it’s easy to remember flippingjunkie.com/80 for episode 80, so flippingjunkie.com/80 and I have a link to the website there for Cody and other information in the show notes about everything that we covered today. Thank you so much Cody and thank you everybody for tuning in.
Cody Hofhine: You’re very welcome. Thank you for having me.
Alright. And if you’re wanting to be able to include that website on your direct mail like Cody does to give a chance to the people who don’t really want to call somebody because maybe they don’t even know what they’re going to say when you pick up the phone and want to just head to the website find out more and contact you through there, by all means, get one through Lead Propeller. We offer websites for real estate investors based on the over 10 even 12 years of experience generating thousands of motivated seller leads online ourselves for own flipping business all right in Lead Propeller and all the innovations that we currently make get added to Lead Propeller so you can stay on top of everything that’s going on online with technology to help you respond to sellers faster to get that edge of your competition.
So check out leadpropeller.com and then also if you haven’t yet joined the Flip Pilot Facebook Group, I urge you to because it’s incredible. It’s grown so fast and everybody is helping everybody out and if you’ve got certain questions that you haven’t heard answered on the podcast or if you’re trying to do some kind of flip and then you’ve got something that comes up that you’re aware of how to handle, that’s what the group’s for. You can get in there and ask questions and we will help you and other people in the group will help you. There are a lot of experienced investors in the group, so by all means join the Flip Pilot Facebook Group. You can get an invitation. It is a closed group, but you can get an invitation right away instantly over at flippilot.com. Thanks for listening to the Flipping Junkie Podcast.
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