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#6 Real Estate Wholesaling: Fast Deals and High Profits (Matthew Miller, co-owner of Fairtrade) · Own More Doors

• 0:00
  SPEAKER_00: All right, everyone.
• 0:01
  SPEAKER_00: Juan Weezart here with another Own More Doors podcast.
• 0:05
  SPEAKER_00: Today we're going to dive into the wild world of real estate wholesaling where the deals are fast and the profits are high.
• 0:12
  SPEAKER_00: I want to welcome my good friend Matthew Miller, um, one of the owners of Fair Trade here in well, I guess you're in Southern California, not necessarily Long Beach.
• 0:21
  SPEAKER_00: And so uh, Matthew, thank you for being here.
• 0:23
  SPEAKER_00: Happy to be here, Juan.
• 0:24
  SPEAKER_00: Matt, um, before we get into wholesaling, which um it's a really hot topic.
• 0:29
  SPEAKER_00: And for me myself, I think it's a hot topic with like uh the younger generation for some reason.
• 0:36
  SPEAKER_00: And I don't know if they think that it's uh the barrier of entry is is easier or the profits are harder.
• 0:43
  SPEAKER_00: I higher, I'm I'm not really sure, but uh why don't you talk to us a little bit about you and then we'll get into how you got started in uh the world of wholesale?
• 0:52
  SPEAKER_03: Yeah, sure.
• 0:52
  SPEAKER_03: Happy to.
• 0:53
  SPEAKER_03: So originally from Northern California and joined the service when I was 17, spent four and a half years in the army.
• 1:00
  SPEAKER_03: After getting out of the army, moved back to NorCal, was going to school, working, doing all those things.
• 1:05
  SPEAKER_03: And I had a couple buddies that got into real estate, um, real close friend that got into it out in Dallas.
• 1:11
  SPEAKER_03: And it was actually very early in I think 2008, and he was working for a small startup that was specifically doing wholesaling.
• 1:20
  SPEAKER_03: And we stayed in close touch, and his career started to take off and said, Hey, do you want to come out here and give this a shot?
• 1:27
  SPEAKER_03: I there's something here, you know.
• 1:30
  SPEAKER_03: I think this industry is interesting.
• 1:32
  SPEAKER_03: I'm being really successful.
• 1:34
  SPEAKER_03: And so I packed up from NorthCall and moved out to Houston.
• 1:37
  SPEAKER_03: Matt, how old were you when you headed out there?
• 1:40
  SPEAKER_03: Uh, I was in my late 20s when I headed out to Houston.
• 1:43
  SPEAKER_03: I'd already sort of had a, you know, professional job, worked at UC Davis Medical Center, went to college, owned a home, and um felt like something was sort of lacking too.
• 1:55
  SPEAKER_03: Wanted some excitement, wanted some upside, and real estate seemed like kind of the vehicle for it.
• 1:59
  SPEAKER_00: How did your friend describe uh wholesale to you?
• 2:03
  SPEAKER_00: And then I guess now how do you describe it for the people who are like, what are you even talking about?
• 2:08
  SPEAKER_03: Yeah.
• 2:08
  SPEAKER_03: So the way he described it is hey, this company buys houses and it sells it to real estate investors.
• 2:15
  SPEAKER_03: And it sounded interesting to me because I didn't really have any desire to be a realtor.
• 2:20
  SPEAKER_03: I had worked with a realtor when I bought my first home, you know, and kind of went through that standard process and couldn't ever picture myself doing that side of the business.
• 2:28
  SPEAKER_03: It wasn't that interesting to me.
• 2:29
  SPEAKER_03: Driving people around in the car, showing them homes, you know, slow process for a closing 30, 45 days, and said it's much quicker paced and it's kind of a business-to-business sale.
• 2:39
  SPEAKER_03: And in retrospect, I think it was a pretty good description of how I think about it now.
• 2:45
  SPEAKER_03: Really, it's wholesaling is buying properties to sell for a profit specifically to investors that aren't going to own or occupy them.
• 2:53
  SPEAKER_03: And most of the time that means a single family house, condo, townhome, even sometimes multifamily.
• 2:59
  SPEAKER_00: Cool.
• 2:59
  SPEAKER_00: So let's go back to Texas.
• 3:01
  SPEAKER_00: So then you head out there and how how uh I guess tell us the process.
• 3:05
  SPEAKER_00: Like, how quick do you get into it?
• 3:08
  SPEAKER_00: When do you see success?
• 3:09
  SPEAKER_00: Maybe tell us about like maybe one of your successful deals early on.
• 3:12
  SPEAKER_03: I'd say the success happens at different paces for everybody.
• 3:15
  SPEAKER_03: I wasn't a natural salesperson.
• 3:17
  SPEAKER_03: So there's kind of two parts to the wholesale transaction.
• 3:21
  SPEAKER_03: There's the property acquisition, there's the group of people that are buying the home, sourcing the deals, putting the deals together, and then the disposition where you're selling it to the investor.
• 3:30
  SPEAKER_03: At this previous organization, I started in the disposition role.
• 3:33
  SPEAKER_03: Didn't have a lot of strengths, didn't have a lot of selling background.
• 3:36
  SPEAKER_03: Took me a little while to get going, probably got my first sale in the first 60 days.
• 3:40
  SPEAKER_03: And uh from there just put in the work, you know, kind of mastering the craft of understanding construction, understanding investor needs, understanding underwriting.
• 3:48
  SPEAKER_03: And then from there went into the acquisitions role, which was a place I was a lot more comfortable.
• 3:52
  SPEAKER_03: Uh, it's a lot more analytical, um, and really enjoyed that piece of the business and then got in the leadership side, started kind of managing people, leading teams, growing the branch.
• 4:04
  SPEAKER_03: We went from uh working in Houston for about 18 months to starting the West Coast operations with just four people.
• 4:10
  SPEAKER_03: We moved out, had no brand presence for that company on the West Coast and grew it to a really large operation with five offices, and then eventually left to start my own company in 2020.
• 4:20
  SPEAKER_00: How old how old were you when when they brought you back to start the Southern California?
• 4:27
  SPEAKER_00: I think I just turned 30.
• 4:28
  SPEAKER_00: Okay, so then you weren't in Texas that long.
• 4:30
  SPEAKER_03: No, not very long.
• 4:31
  SPEAKER_00: Okay.
• 4:32
  SPEAKER_00: Um tell us how I guess for like A through Z, how does the wholesale process work?
• 4:41
  SPEAKER_00: Because I know you're reselling it to investors, but you know, I think some people listening are gonna be like, yeah, but you close it and then you quickly sell it to them without so so how are you different from say like someone who flips properties?
• 4:55
  SPEAKER_03: Yeah, I think there's a few differences, especially from flippers.
• 4:58
  SPEAKER_03: Flippers are holding properties, doing improvements to them, and then you know, reselling to an owner-occupant buyer.
• 5:07
  SPEAKER_03: The way that wholesale works is for the most part, you're finding properties that are non-financeable.
• 5:12
  SPEAKER_03: They won't qualify for conventional loans.
• 5:14
  SPEAKER_03: They need work, um, you know, termite damage, outdated, you know, bad roofs, things that will make it to where it just won't qualify.
• 5:23
  SPEAKER_03: No one's gonna, no lender is gonna lend on it except for a hard money lender.
• 5:27
  SPEAKER_03: So the the transaction works with a seller that's motivated, meaning that I have a desire to sell this house and it's probably not financeable.
• 5:37
  SPEAKER_03: If it was, I'd just list it with a local real estate professional and it would sell to an owner-occupant buyer.
• 5:42
  SPEAKER_03: Um, so they have to be motivated, they have to have some equity in the property because we're buying it below market price, just like you buy anything at quote unquote wholesale pricing, it's gotta be have a margin and be cheaper than retail.
• 5:56
  SPEAKER_03: So you're sourcing deals um from various sources.
• 6:00
  SPEAKER_03: You want to get as close to the seller as possible because the less people between the actual homeowner and uh you means there's probably a better margin in the property, and you contract it and underwrite in a way where there's enough profit for you to either assign the contract or close on it yourself with the intent of reselling it to an investor who's gonna fix and flip it or buy and hold it, depending on their strategy.
• 6:22
  SPEAKER_00: Um, for the people that are listening, how when you say source, that means finding, I guess, finding the the deal.
• 6:30
  SPEAKER_00: And I'm glad that you describe it.
• 6:31
  SPEAKER_00: Hey, Juan, there's really two two portions.
• 6:34
  SPEAKER_00: There's the acquisition, having the ability of of like um what I guess what the way I would say say it is like leads coming in or or you going and finding finding that that opportunity.
• 6:44
  SPEAKER_00: Um how how is it that in the world of wholesale that your firm or people that you know are finding these opportunities where they're not financeable and that they would be willing to work with someone who does what you guys do?
• 6:59
  SPEAKER_03: So I think the top of the funnel is pretty big, meaning that like the lead sources for properties that fit this description, uh it's a pretty broad amount of sources.
• 7:07
  SPEAKER_03: One of the things that's helpful, especially in the markets we're in in California, is that um the housing stock is old.
• 7:14
  SPEAKER_03: When would you say the stuff in Long Beach was built?
• 7:16
  SPEAKER_03: 1950.
• 7:17
  SPEAKER_00: Well, uh in my neighborhood, I guess if you're down here, it could be 1920, 1930.
• 7:22
  SPEAKER_00: Yes.
• 7:22
  SPEAKER_03: Exactly.
• 7:23
  SPEAKER_00: Yeah.
• 7:23
  SPEAKER_03: And so that means that you know, these homes weren't built to be around forever.
• 7:29
  SPEAKER_03: They they have deferred maintenance, they're functionally obsolete.
• 7:33
  SPEAKER_03: Uh family dynamics change.
• 7:34
  SPEAKER_03: They no longer need a two-bedroom, one bath with a one-car garage, like Lakewood or some of these other communities built.
• 7:41
  SPEAKER_03: So that's where the investors really come in and take existing housing stock and transform it into something that is meaningful for the new owner-occupant buyer, right?
• 7:49
  SPEAKER_03: A three-bedroom, two-bath, a three-bedroom, two-bath with an ADU, whatever they end up doing to improve the property.
• 7:55
  SPEAKER_03: The the wholesale operator kind of fits in the as an inventory source specifically for the investor.
• 8:03
  SPEAKER_03: So it's sourcing properties that are priced under market because there's seller motivation and there's upside for the property, and being able to present a property to an investor at a price that makes sense for them.
• 8:16
  SPEAKER_00: That's where I see the complication is that you know, whether whether it's it's your company, Fai Trade, I I always see, man, it's it's tough.
• 8:24
  SPEAKER_00: You so the whoever's doing the acquisition has to try to get the property at a price that they believe there's a profit for uh for your efforts at that moment, like Fairtrade specifically, or or a wholesaler.
• 8:37
  SPEAKER_00: And there still has to be what I would say meat on the bone for the investor.
• 8:41
  SPEAKER_00: And and it seems like the person doing the acquisition would have to know all that because if it's if it's too high, then you can't the investor's not going to want to take it off your hands.
• 8:51
  SPEAKER_00: And it just seems so like what what what's like software, did you guys have to create something for that?
• 8:59
  SPEAKER_00: Or like what is it that you guys do to um to kind of visually see that the numbers make sense?
• 9:05
  SPEAKER_03: Yeah, I think a lot of it is based around doing training because there really isn't um there's not a certification or a course you can really take to become like an expert real estate acquisition person.
• 9:17
  SPEAKER_02: Yeah.
• 9:17
  SPEAKER_03: Um, a lot of it is more like a mentorship or apprenticeship, like a lot of real estate is.
• 9:23
  SPEAKER_03: And I think joining a company or group that has that in mind, our career progression at Fai Trade is our new hires start in the sales role.
• 9:33
  SPEAKER_03: Then after they close so many sales, they get trained to do property acquisitions.
• 9:38
  SPEAKER_03: Then after that, they get into like junior leadership, senior leadership, and the opportunity to like run a region or basically be out of production, but still managing so it sounds almost like the track that you took.
• 9:51
  SPEAKER_03: Exactly.
• 9:52
  SPEAKER_03: Very, very similar.
• 9:53
  SPEAKER_03: And probably a lot of that is myself and all my co-founders, we start in that same role.
• 9:57
  SPEAKER_03: I started off in sales, so did everybody that runs the company, regardless of what seat they're in now, whether it's the C-suite executives or, you know, local market leaders, we all start in sales.
• 10:07
  SPEAKER_03: It's very fundamental.
• 10:09
  SPEAKER_03: I think about it like the military, everybody goes to kind of basic training.
• 10:14
  SPEAKER_03: Every person in any branch of service knows how to shoot, move, communicate, what uniform to wear.
• 10:21
  SPEAKER_03: It's kind of the standard piece of how you operate in real estate is understanding it's a sales job.
• 10:28
  SPEAKER_03: It carries over to acquisitions and then it carries over to leadership and management in a lot of ways, too, even on the professional staff side.
• 10:34
  SPEAKER_03: So I think with the acquisition side, you're right about it being the most complex part of the transaction because there's a lot of moving pieces, not just with the underwriting, but oftentimes the situations are distressed, which I think a lot of realtors can kind of understand if they've ever dealt with inherited properties, multiple siblings, trusts.
• 10:57
  SPEAKER_03: There's a lot of moving pieces on the people side of it that you have to navigate along with being able to underwrite the asset and get it for a price that makes sense.
• 11:07
  SPEAKER_00: Um Matt, so when back when you were in sales, like what was um, and it could be now or or back when you were with the prior company, like what was once you got exper uh experience under your belt, like what was expected out of you in terms of a month performance or in terms of hey, in in a year, this is what we expect uh for you to be able to produce.
• 11:31
  SPEAKER_03: Yeah, I think the expectations are tied to amount of units closed.
• 11:35
  SPEAKER_00: And you and so when you say units, we'd say maybe houses.
• 11:40
  SPEAKER_03: Houses, yeah.
• 11:41
  SPEAKER_03: You need to sell you know three houses a month minimum to be able to make sure that you're doing your job in this sales organization.
• 11:49
  SPEAKER_03: And to sell that many houses, you needed to have so many investors on your books that were verified with you.
• 11:55
  SPEAKER_03: And it's really at the end of the day, it's it's a math equation around prospecting and then it's relationship building.
• 12:01
  SPEAKER_02: Yeah.
• 12:01
  SPEAKER_03: So every single week I would have investor onboardings where I met with local investors, figured out what they were buying, why, how they were financing it, what their kind of like short medium-term goals were, and then help them understand how I fit in as just a piece of that puzzle.
• 12:17
  SPEAKER_03: Hey, I'm an extra source of inventory.
• 12:19
  SPEAKER_03: Consider it like a private marketplace for you to have a few extra deals a month that might fit your buying criteria.
• 12:24
  SPEAKER_03: And from that point, um, answered both their questions.
• 12:27
  SPEAKER_03: And then when you move forward to sell them something, it's it's quite a bit different than it is a traditional real estate transaction.
• 12:34
  SPEAKER_03: They're not living in the home, they're underwriting it in dollars and cents.
• 12:37
  SPEAKER_03: And as long as it pencils out and they, you know, know like and trust you as a professional and think you're with an operation that's solid, it's pretty easy.
• 12:46
  SPEAKER_03: That's why um the expectation is gonna be to have more sales on a monthly basis than you would have in typical real estate.
• 12:53
  SPEAKER_00: Right.
• 12:53
  SPEAKER_00: Um one thing I've noticed, um, you know, the word wholesaling is very popular.
• 12:59
  SPEAKER_00: It's very popular.
• 13:00
  SPEAKER_00: Um, a lot of influencers use it, and and sometimes they're they're driving the fast-looking cars that they may or may not even own.
• 13:08
  SPEAKER_00: And so um, I some people, and I would say even realtors have kind of a bad perception when it comes to like, oh, like I got this offer from a wholesaler, and they kind of get a bad taste.
• 13:19
  SPEAKER_00: Why do you think that is?
• 13:22
  SPEAKER_03: I have a couple thoughts on that.
• 13:24
  SPEAKER_03: Specifically around the realtors, I think that um, I mean, I'm licensed, I'm a broker.
• 13:29
  SPEAKER_03: Fair trade's a brokerage.
• 13:30
  SPEAKER_03: Every agent that works with me is licensed, but at the end of the day, um every agent in the marketplace is competing for the listing.
• 13:39
  SPEAKER_03: That's where the inception of the transaction happens along the whole chain for any transaction.
• 13:46
  SPEAKER_03: And any competitions for listing is somewhat of a threat to an incumbent, you know, player.
• 13:52
  SPEAKER_03: And I think there's a bit of a threat to the uh realtor's perspective from value add that they're able to bring to their clients.
• 14:00
  SPEAKER_00: As an agent, if I get a call and I every now and then we'll get like a fixer up, you know, the exactly what you said.
• 14:07
  SPEAKER_00: Someone inherited the house.
• 14:08
  SPEAKER_00: Hey, Juan, if you want the listing, come down here now.
• 14:10
  SPEAKER_00: We're we're only here for two days and we got to go back to where we live.
• 14:15
  SPEAKER_00: And I I had an I had an offer from a wholesaler.
• 14:19
  SPEAKER_00: I knew they were.
• 14:20
  SPEAKER_00: Um, it wasn't fair trade back then.
• 14:23
  SPEAKER_00: And I think the one part where the realtors get turned off is is that you go into contract with them, and the way it works.
• 14:31
  SPEAKER_00: So for our listeners, the way it works is, and this is a situation if the property was on the market.
• 14:36
  SPEAKER_00: And so then I get an offer from this company.
• 14:39
  SPEAKER_00: Um, they're a well-known uh wholesaler.
• 14:42
  SPEAKER_00: What they, you know, so then we'll put it in a contract.
• 14:45
  SPEAKER_00: So everyone everyone's in agreement.
• 14:46
  SPEAKER_00: No one's making anyone do something they don't want to do.
• 14:48
  SPEAKER_00: Everyone's in agreement to the price that was agreed upon.
• 14:50
  SPEAKER_00: And then what the wholesale company tries to do is is take it to their um investor clients and and and marks it up some so that it's profitable for for them, for their efforts.
• 15:00
  SPEAKER_00: And so, but sometimes if if it can't, if you can't sell it to the investor, then the uh escrow cancels.
• 15:08
  SPEAKER_03: Correct.
• 15:09
  SPEAKER_03: Yeah, if it's not underwritten correctly, then the esc then the escrow won't go through.
• 15:13
  SPEAKER_03: And I think there's that's probably a frustrating point for agents.
• 15:16
  SPEAKER_03: Anytime an escrow falls through for any reason is frustrating.
• 15:20
  SPEAKER_03: I think there's a lot to be said around just transparency.
• 15:23
  SPEAKER_03: We work a ton with realtors, a lot of repeat business, uh, both on the acquisition side and on the disposition side.
• 15:30
  SPEAKER_03: We have a lot of agents that buy from us, have been repeat customers.
• 15:33
  SPEAKER_03: And I think it's all about just transparency up front and even letting the seller know.
• 15:38
  SPEAKER_03: Um, you know, hey, this is an option.
• 15:41
  SPEAKER_03: You just disclose it in the purchase contract.
• 15:43
  SPEAKER_03: We're buying it with the intent to resell for a profit, you know, especially if the company has a track record.
• 15:48
  SPEAKER_03: I mean, Fair Trade's closed over 1700 property acquisitions since 2020.
• 15:52
  SPEAKER_03: So we're a big home buyer.
• 15:54
  SPEAKER_03: Look us up on public record.
• 15:56
  SPEAKER_03: We're there.
• 15:57
  SPEAKER_03: Um, we actually close on the properties, we're not assigning the position to someone else.
• 16:01
  SPEAKER_03: So I think it's really about communicating between the agent and the seller.
• 16:04
  SPEAKER_03: So the expectations are set the right way.
• 16:06
  SPEAKER_03: Even if that means, hey, let's give this company a shot.
• 16:09
  SPEAKER_03: They're asking for a five-day contingency period.
• 16:12
  SPEAKER_03: And during that time, they're gonna, you know, market the property, see if there's any other institutional local investors, and there might be an opportunity for it to move and you know, we'll see what happens.
• 16:23
  SPEAKER_00: Right.
• 16:24
  SPEAKER_00: Uh I have clients that are investors, and when I, you know, um when they're working on projects, on projects that maybe I didn't help them go find, uh, I'm like, how'd you find that deal?
• 16:34
  SPEAKER_00: And and they're like, Man, the wholesalers, I'm like, they bring you good deals, and they're like, they bring us good deals all the time.
• 16:41
  SPEAKER_00: And so, and so there's, you know, there's um there's a lot of parties involved right now.
• 16:46
  SPEAKER_00: So there's obviously the who whomever is in a situation that they need to sell the property.
• 16:52
  SPEAKER_00: There's no financing to your point.
• 16:54
  SPEAKER_00: And so only so many people could buy it.
• 16:57
  SPEAKER_00: But like on the flip side, like the investors are in a position where they're being contacted, people like like your like yourself and from Fairtrade are saying, hey, we have these properties, take a look at them, and maybe one of them works for you.
• 17:09
  SPEAKER_00: But from the investor standpoints, they're telling me, hey, they bring us legitimately good deals, ones that they're still meat on the bones, but properties where they could renovate, mark, you know, price accordingly and still make a profit.
• 17:22
  SPEAKER_00: So I think there you have people that are really, really happy with um with the process.
• 17:27
  SPEAKER_03: Yeah, I think wholesalers tend to focus more exclusively on the off-market deals.
• 17:33
  SPEAKER_03: I mean, the majority of our properties are off-market, they're not on the MLS.
• 17:37
  SPEAKER_03: The only way to get them is through us.
• 17:39
  SPEAKER_03: And investors see a lot of value of that, especially in a low inventory environment, yeah, like we're in right now.
• 17:44
  SPEAKER_03: I can only really speak for the California markets.
• 17:47
  SPEAKER_03: That's you know, we're in 11 different locations in California.
• 17:50
  SPEAKER_03: Uh, but out here, inventory is still a challenge, especially distressed inventory.
• 17:55
  SPEAKER_03: Um, and investors, you know, they're businesses.
• 17:59
  SPEAKER_03: They're they have cost of capital, they have employees, they have people that they're keeping working, whether they're on the construction side or on the professional service side to help their actual business nuts and bolts back office run.
• 18:11
  SPEAKER_03: So it really keeps um inventory channels open for, especially since there's just no more foreclosure inventory.
• 18:18
  SPEAKER_03: It's not hitting like it was.
• 18:20
  SPEAKER_03: Anyone who's in California knows that's the case.
• 18:22
  SPEAKER_03: I don't, I can't speak on the other states, but this opens up other opportunities.
• 18:26
  SPEAKER_03: And again, these properties wouldn't be owner-occupied.
• 18:29
  SPEAKER_03: The investors like improvements and capital investments in them make them to where they can be financed and owner-occupied and taxed at a higher rate and puts a typically owner-occupant family in the property.
• 18:42
  SPEAKER_03: So the investor plays a huge piece, and the wholesalers pay a piece in sort of keeping the inventory flowing and going.
• 18:49
  SPEAKER_00: For someone who's interested in in learning about wholesale and and and I would say, you know, I see a lot of people selling courses and books and seminars.
• 18:58
  SPEAKER_00: And I don't necessarily know that those people are in the world of wholesale like like you are.
• 19:02
  SPEAKER_00: I mean, you this is this is this is your business.
• 19:04
  SPEAKER_00: And and I just want to add one thing.
• 19:06
  SPEAKER_00: Like, there's I feel like wholesale is done at different levels.
• 19:09
  SPEAKER_00: And like the way that I see Fai Trade do it is like at the most professional level possible.
• 19:14
  SPEAKER_00: And um, how would someone go about getting started, Matt?
• 19:18
  SPEAKER_00: Like, how would you, if someone called you and said, hey, you know, they're selling this class for$2,500, do you think it's a good idea?
• 19:26
  SPEAKER_03: I tend to lean toward get the education from wherever you can get it for whenever inspiration strikes you.
• 19:31
  SPEAKER_03: I mean, if if you're feeling like that's gonna make you take some action and learn and do, I think it's gonna lead to more things.
• 19:37
  SPEAKER_03: It's gonna lead to listening to podcasts and going on bigger pockets and hopefully actually trying to do some marketing of some sort, even if it's gorilla marketing, even if it's knocking on doors and trying to, you know, bring some value to the marketplace, contract a seller who needs to sell it and try to get it under contract for the right price.
• 19:56
  SPEAKER_00: So, I mean, it's possible for someone to spend some time uh educating themselves and without signing up with a with a larger company who's doing it, they could just go do it on their own.
• 20:05
  SPEAKER_03: Correct.
• 20:06
  SPEAKER_03: Yeah.
• 20:06
  SPEAKER_03: A lot of operators are are very small, a lot of them are unlicensed.
• 20:09
  SPEAKER_03: And I think that's that's one of the challenges too for the industry is good intentions, but not able to navigate.
• 20:15
  SPEAKER_03: A lot of the closings don't happen because they don't understand the nuances of what's going on behind the scenes with maybe the title on the property.
• 20:26
  SPEAKER_03: Um, clearing liens, understanding that there's multiple parties that have interest in the property, getting involved too early in the probate process, a lot of things that, you know, it just takes experience to learn.
• 20:38
  SPEAKER_03: And I think accelerating the learning, if you work better in a team environment, joining a company that's doing it is helpful because you're gonna get the actual direct mentorship and the ability to be in a structured environment where, you know, the goal is to train the agents to understand the transaction from A to Z.
• 20:55
  SPEAKER_03: And it just takes time.
• 20:57
  SPEAKER_02: Yeah.
• 20:57
  SPEAKER_03: You know, I think a lot of what you're mentioning about being able to sensationalize like the profits and the upside from wholesaling, it's really there, but those people probably are selling education.
• 21:08
  SPEAKER_03: Um, you know, our modto is around like, you know, local leadership development and the agents that join us, one, you have to be licensed, so there's a barrier to entry there, but they join because they don't want to do traditional real estate, they're interested in investing and they want to flip and own properties.
• 21:24
  SPEAKER_03: And we encourage that.
• 21:25
  SPEAKER_03: And it's really helpful to be able to get to do that because they're in the space and interacting with these people every day.
• 21:31
  SPEAKER_03: The likelihood of them actually doing renovations and holding stuff long term and buying their primary, even in their 20s, goes way up when they're surrounded by it.
• 21:40
  SPEAKER_00: Yeah, I was gonna ask you that, Matt, because be because it's you're one of the owners and you see terrific deals.
• 21:46
  SPEAKER_00: Like, are you jumping all over these deals or are you just playing the role of like, hey, we'll just, you know, either not do the renovations and just do what we're doing?
• 21:55
  SPEAKER_03: No, I won't compete against my own company for inventory.
• 21:58
  SPEAKER_03: So if I do, if I'm Doing deals, it's from channels that are just personal relationships.
• 22:03
  SPEAKER_03: People will call the triplex I own around the street street in Long Beach.
• 22:07
  SPEAKER_03: I bought it from the MLS using my VA loan, you know.
• 22:10
  SPEAKER_03: So our expectation is if you're with us, you like real estate, you enjoy everything about it, and you plan on owning it to hold, but also owning it to do renovations.
• 22:19
  SPEAKER_03: I do renovations usually up in Sacramento.
• 22:21
  SPEAKER_03: We're not physically in that market, so it doesn't conflict with the company.
• 22:25
  SPEAKER_03: And you know, I want as many opportunities for our sales team as possible.
• 22:29
  SPEAKER_03: And the company itself, we're not doing renovations.
• 22:31
  SPEAKER_03: We're strictly an inventory source.
• 22:33
  SPEAKER_03: Fair trade buys specifically to sell the real estate investors.
• 22:36
  SPEAKER_00: But let's just say that an agent says, Matt, I want to buy this house.
• 22:40
  SPEAKER_00: Like it's a fixer upper and it got sourced through the company or however that works.
• 22:44
  SPEAKER_00: Do you guys allow your people to do that?
• 22:46
  SPEAKER_03: Yeah.
• 22:47
  SPEAKER_03: So they can do two projects a year, pay zero commission to the company, whether they're representing a family member or themselves in an acquisition or they're buying their own project to flip or the rental to hold.
• 22:57
  SPEAKER_03: Yeah, we want to encourage that.
• 22:59
  SPEAKER_00: It it seems like, you know, I mean, everyone I know like uh will call me and say, you know, I want your fixer uppers, I want your value add.
• 23:07
  SPEAKER_00: Like, of course, like it I almost tell people, like, hey, be everyone wants to be like, hey, I'm the value add buyer, and like I need to remind them, dude, 99% of people are value add buyers.
• 23:16
  SPEAKER_00: Like it that's not anything special, although they think it is.
• 23:19
  SPEAKER_00: So, but everyone wants to be in front of the deals, and you guys have this unique perspective, more so than even I do.
• 23:24
  SPEAKER_00: And I'm and I'm a broker where be because of how you're trying to find the deals, you guys have some of the best deals in front of you all the time.
• 23:35
  SPEAKER_03: Yeah, I think it allows us to have a really uh big buy box, which is helpful, and that's why you see probably the the quantity of deal flow is that we have just eight offices in SoCal, you know, between LA and San Diego and out into the inland empire.
• 23:53
  SPEAKER_03: But also, we're not just buying single families that feat this criteria, right?
• 23:59
  SPEAKER_03: Like if it's under$3 million and it's a single family home, a condo, a town home, a multifamily, like the deal we did with you, we'll look at anything.
• 24:07
  SPEAKER_03: Yeah.
• 24:07
  SPEAKER_03: And the agents are able to over time learn how to underwrite, negotiate, and purchase those uh, let's say, alternative assets like the multifamily properties that aren't necessarily our bread and butter, which is a single family detached home.
• 24:22
  SPEAKER_00: Yeah.
• 24:23
  SPEAKER_00: Um, let's take a couple steps back.
• 24:25
  SPEAKER_00: Because I realized uh for for some of the people who have never heard of this, like you guys close, close the escrow um after you've done what you know, your due diligence and making sure that it's um that whoever needs to approve it, say, hey, okay, we're ready to close this, and we have an investor.
• 24:42
  SPEAKER_00: You then close it a second time, sometimes within 24 hours, just so for someone to understand how that works.
• 24:48
  SPEAKER_00: Correct.
• 24:48
  SPEAKER_03: Yeah, it's called the concurrent closing.
• 24:50
  SPEAKER_03: And it happens in in California, the way that it happens is there's basically two escros open simultaneously.
• 24:56
  SPEAKER_03: One where, you know, one holding company is in contract to purchase it, the other where they're in contract to resell it.
• 25:02
  SPEAKER_03: And you try to time those escros as close as possible to each other so that the purchase escrow always happens first, but the recording for the second escrow happens as soon as possible because we're, you know, we're funding with a line of credit and the companies own cash, and we want to recycle those funds as efficiently as we possibly can.
• 25:20
  SPEAKER_03: Yeah.
• 25:20
  SPEAKER_03: Yeah.
• 25:21
  SPEAKER_03: That's part of just you know, good financial management from a business standpoint.
• 25:25
  SPEAKER_00: And and I would say so, like it's almost like if someone were to say, well, what's your holding cost?
• 25:30
  SPEAKER_00: I mean, the or the holding period is there's there's no holding period.
• 25:34
  SPEAKER_00: I mean, it's hours versus like if someone's flipping, they might say, Hey, this is going to be a six to eight month project.
• 25:40
  SPEAKER_00: Exactly.
• 25:41
  SPEAKER_03: And the expectation is that the profits are smaller than the flippers because the flippers have more inherent risk.
• 25:47
  SPEAKER_03: They're holding, um, they can use different types of leverage that we can't use.
• 25:51
  SPEAKER_03: We're not really using leverage to buy the property.
• 25:54
  SPEAKER_03: And normally they might get 90% of the purchase price plus some rehab holdback funded on their transaction, but they are holding it longer term.
• 26:02
  SPEAKER_03: Things can change in the market.
• 26:03
  SPEAKER_03: Unknowns come up during construction.
• 26:05
  SPEAKER_03: Anyone who's done flips, myself included, happens on every deal.
• 26:10
  SPEAKER_03: Um but the you know, the risk that the investors take, there's also the upside where they have the bigger spread in order to make profit and keep their businesses running.
• 26:20
  SPEAKER_00: Right.
• 26:20
  SPEAKER_00: Uh when it comes to competition, uh you guys are, in my opinion, one of the largest companies that I that I'm aware of out here.
• 26:29
  SPEAKER_00: How competitive is it at the at the level that you're at?
• 26:32
  SPEAKER_00: And I mean, I understand that someone could really get started tomorrow if they wanted to, but like in terms of competition, how how competitive is it?
• 26:40
  SPEAKER_03: I'd say it's it's fairly competitive.
• 26:42
  SPEAKER_03: I think anything that's focused on the seller of a real of a piece of real estate is a competitive segment to be involved in.
• 26:52
  SPEAKER_03: But us on the distress seller, um, we have public companies that are focused on that, groups like Open Door, right?
• 26:58
  SPEAKER_03: Which I I look at as like our biggest competitor just because they're buying more houses than us, and that drives me insane in Southern California.
• 27:05
  SPEAKER_03: At least right now they are.
• 27:06
  SPEAKER_00: It it drives you insane because you want to be number one.
• 27:09
  SPEAKER_00: Uh of course, yeah.
• 27:10
  SPEAKER_03: And so so do all of our agents, all my co-founders, all our team members.
• 27:14
  SPEAKER_03: Yeah, we we our plans for our company is to be the largest private home buyer in the nation.
• 27:19
  SPEAKER_03: And I think we're gonna have market share in California in the next three years.
• 27:23
  SPEAKER_00: Which brings me to my next piece.
• 27:24
  SPEAKER_00: Uh I I know you mentioned early on that you started Fair Trade um four or five years ago.
• 27:29
  SPEAKER_00: Is that correct?
• 27:30
  SPEAKER_00: July of 2020.
• 27:31
  SPEAKER_00: Okay.
• 27:32
  SPEAKER_00: We're almost almost on our four-year anniversary.
• 27:34
  SPEAKER_00: Congratulations.
• 27:36
  SPEAKER_00: I've I had the luxury of meeting Matt a few years ago, and I've seen I've seen the growth happen like in front of me.
• 27:44
  SPEAKER_00: Matt, why don't you walk us through kind of how it started?
• 27:47
  SPEAKER_00: I know you said that there was four, I think you said four founders.
• 27:50
  SPEAKER_00: Uh, tell us how many people you started with and how quick did this escalate.
• 27:54
  SPEAKER_00: And and did you expect it to grow this quickly?
• 27:57
  SPEAKER_03: Yeah, the it's funny going up on four years, I've been reflecting a little bit on the story of the company.
• 28:03
  SPEAKER_03: And originally it was um myself and seven others that were either like core founders or co-founders of the company.
• 28:13
  SPEAKER_03: Um, when we started it, we wanted to do things differently.
• 28:19
  SPEAKER_03: We saw the way that the other company that we'd work for, um, their main focus was on the investor.
• 28:28
  SPEAKER_03: That was the core customer.
• 28:30
  SPEAKER_03: And I think one of the biggest things we did differently was change the core focus of the organization to be around the agent and their career development.
• 28:37
  SPEAKER_03: And we knew that that was the customer we were gonna serve.
• 28:39
  SPEAKER_03: Of course, we needed to provide a lot of value for sellers as well as real estate investors.
• 28:44
  SPEAKER_03: There's sort of three customer buckets, but the agent was always gonna be at the center for us.
• 28:48
  SPEAKER_03: Um, it this industry wholesaling had changed my life in a dramatic way and my seven co-founders.
• 28:56
  SPEAKER_03: Um, and we wanted to be able to bring that opportunity to agents who wanted to come into the industry, but didn't fit the box of coming in to work at a traditional brokerage.
• 29:04
  SPEAKER_03: It just wasn't something they wanted to do.
• 29:06
  SPEAKER_03: And they were interested in investing.
• 29:07
  SPEAKER_03: And they'd always been excited about investing.
• 29:09
  SPEAKER_03: And we really found a way to tap into those types of typically young professionals, some with college backgrounds, some on their first or second career changes, some just out of high school, and give them a roadmap where it's not easy, but if they follow it, you know, they can have a ton of financial success as well as like the leadership development.
• 29:30
  SPEAKER_03: And, you know, in the end, we want them to own property too.
• 29:34
  SPEAKER_03: And we've had a bunch of agents, you know, buy their first investment property while they've worked with us, buy their primary residence, and knowing that they've been able to do that in a couple short years of starting in real estate and the gratitude they have, but also what that says to the people around them that, oh, if this person next to me on my left can do it, I can absolutely do it.
• 29:54
  SPEAKER_03: Maybe no one in my house has ever owned property before.
• 29:57
  SPEAKER_02: Sure.
• 29:57
  SPEAKER_03: So that sort of being able to drive that in our agents and drive them to higher levels of leadership where they're like leading and managing bigger groups of people, that's been the primary driver of Fairtrade and what's sort of allowed, I think, a lot of the growth.
• 30:10
  SPEAKER_03: And we just have a bunch of really talented people.
• 30:12
  SPEAKER_03: And how do you quickly go from one office to eight offices?
• 30:17
  SPEAKER_03: Um I think the the goals you set really big goals for people and high expectations, and then they like meet and exceed them.
• 30:25
  SPEAKER_03: And you know, we move into a shared space, and before three, four months in, we're ready to bust on the seams and go find a new location.
• 30:33
  SPEAKER_03: We have a really a huge group of great leaders at the organization, and we just try to empower them as much as we can to have a lot of local autonomy over what they're doing, um, how they're growing their teams, and try to do it strategically enough, but without complete oversight from the HQ office.
• 30:50
  SPEAKER_03: So some of the stuff just happens organically.
• 30:53
  SPEAKER_00: You said earlier that hey, inventory is low, um, and so there's uh less deals going on, right?
• 31:02
  SPEAKER_00: But yet your guys' growth is tremendous.
• 31:04
  SPEAKER_00: And so is the deal flow low for call it us, looking at the market in terms of what's out there, but because a lot of the things you do is off-market, is it possible that on your end it's not the case?
• 31:18
  SPEAKER_00: Meaning like uh you're not impacted by it.
• 31:22
  SPEAKER_03: No, I think the acquisition team has to work just as hard as everyone does in the industry to get deals in the door.
• 31:29
  SPEAKER_03: That means more offers, more contacts, more time on the phone, more time with you know, the lead vendors that they're using, more time nurturing and following up, and more relationship building, just the stuff that it really takes that you know, you can't put on a short reel, but is the reality of the business is that it just takes time to build trust and to build your skill set to where you can actually bring in a deal a week for our sales team to buy or buy for the sales team in order to sell.
• 31:58
  SPEAKER_03: And and that just it really just does take time.
• 32:00
  SPEAKER_03: But we're we're feeling it just like everybody else is.
• 32:03
  SPEAKER_03: You know, we've widened the top of the funnel to where more marketing channels, more you know, direct seller-lead vendor relationships that the company has with national lead vendors, more ad spend, all the stuff that goes into trying to get more in the door, but it continues to be competitive.
• 32:18
  SPEAKER_03: And I don't think that's gonna change.
• 32:19
  SPEAKER_00: Okay, okay.
• 32:20
  SPEAKER_00: What what are the characteristics that you see in someone where you where you now know like they're gonna be good in this industry?
• 32:30
  SPEAKER_03: The person that jumps to mind right away, I think, is our first hire, a guy named Jason McKinnon.
• 32:35
  SPEAKER_03: And uh he was he was going to uh school at Long Beach State.
• 32:40
  SPEAKER_03: Him and my wife were both finance majors, and so met him before he graduated, but was just incredibly interested in real estate, was you know on bigger pockets, reading the Robert Kira Kiyosaki books, and just like he knew he wanted to be in the space and uh not a natural salesperson, but he came on and just adapted with the company, started in our very first office in Santa Ana, which we still have, and uh went from us having very unrefined startup systems to just having the drive and grit and ability to adapt and continue to learn.
• 33:14
  SPEAKER_03: And now he's running his own team at El Segundo.
• 33:17
  SPEAKER_03: Wow.
• 33:18
  SPEAKER_03: So seeing his career progression from sales to acquisitions to a leadership role um has been really rewarding, but also sort of highlights some of the characteristics we're looking for in our in the agents that are coming on.
• 33:30
  SPEAKER_00: That's amazing.
• 33:30
  SPEAKER_00: No, and I had the chance to work with Jason, he's great.
• 33:33
  SPEAKER_00: In fact, he emailed me yesterday, so that was cool.
• 33:36
  SPEAKER_00: Um, what's next for FaiTrade?
• 33:40
  unknown: Well, no.
• 33:40
  SPEAKER_00: Okay, well, well, talk to us about the plans.
• 33:43
  SPEAKER_00: Go back to the statement, the the the bold statement that three years from now, um, it we could revisit that statement.
• 33:51
  SPEAKER_03: Yeah, well, we are going to be the largest home buyer in California in the next three years.
• 33:54
  SPEAKER_03: That means we are going to be buying more homes than Open Door, um, more homes than Wedgewood.
• 33:59
  SPEAKER_03: Those are the really one is a private home buyer, professional flipper that we have a ton of respect for and we do a lot of cross business with, both on the acquisition and disposition side.
• 34:08
  SPEAKER_03: The other is a publicly traded company that um doesn't exactly compete in the same space we do.
• 34:13
  SPEAKER_03: They buy a lot of properties that don't need a ton of work, fit sort of a smaller buy box.
• 34:18
  SPEAKER_03: But um, when I look at the stats and see that they've closed more than we have in LA County, you know, I I know that that's sort of the pace that's been set on what a market can do for cash sales.
• 34:31
  SPEAKER_03: So that's what we're that's what we're gauging uh our performance on is making sure we're the one that is doing the most transactions and most trades.
• 34:39
  SPEAKER_03: That also means our agents are continuing to be successful and being able to grow.
• 34:43
  SPEAKER_00: Well was being the largest home buyer in California the goal from from the onset.
• 34:50
  SPEAKER_03: I think we went into this wanting to be the biggest home buyer in the nation.
• 34:54
  SPEAKER_03: And I think that's gonna happen.
• 34:56
  SPEAKER_03: I think it might take a little longer than we were all hoping.
• 34:58
  SPEAKER_03: But four years in, California's in sight, and you know, bigger picture plans.
• 35:04
  SPEAKER_03: We're not we're we're already in Austin, Texas, we're gonna be in other states, so we're gonna be doing a national expansion as well.
• 35:10
  SPEAKER_00: I love it.
• 35:11
  SPEAKER_00: So so that's it's possible that your growth now, I mean, to to where you made it in four years, maybe it's not too shocking for for you and the founders because you had such such huge goals.
• 35:24
  SPEAKER_03: Yeah, I think if you knew the other founders, you'd be shocked if we didn't make it there.
• 35:30
  SPEAKER_03: It's a very diverse but incredibly talented group of uh guys that are very focused, very strong leadership skills that have only gotten better over the last four years.
• 35:41
  SPEAKER_03: And uh, you know, as a business owner, there's a lot of ups and downs and a lot of change, and being able to navigate that um has made us all a lot stronger.
• 35:53
  SPEAKER_03: It hasn't been easy, but nothing worthwhile is.
• 35:57
  SPEAKER_03: And I think we're all excited about this next challenge because we've set a really strong foundation, including major investments in our technology and stuff that's going to support the agents.
• 36:06
  SPEAKER_03: And, you know, now that the foundation's built, it's it's time to continue that growth.
• 36:10
  SPEAKER_00: I I love that you put the goals out there, you know, publicly.
• 36:14
  SPEAKER_00: I think that that's terrific.
• 36:16
  SPEAKER_00: And and that says a lot about you.
• 36:17
  SPEAKER_00: The way that you describe your founders is the way that I describe you to people that, you know, to my friends.
• 36:22
  SPEAKER_00: I'm like, man, this this guy, Matthew Miller, so impressed by him.
• 36:25
  SPEAKER_00: And it's interesting.
• 36:26
  SPEAKER_00: And I've not met the other guys, you know, and and maybe I get to meet them soon.
• 36:29
  SPEAKER_00: But um, if they're anything like you, you you guys are solid.
• 36:34
  SPEAKER_03: I mean, we're all different, but it it does in a lot of ways feel like uh feels like a family or like when you get together with your cousins, it's uh you're gonna accomplish anything that you go after, but you're also going through the ups and downs of business ownership, deal doctoring, you know, your agents having very serious personal and professional problems that you have to navigate and deal with.
• 36:58
  SPEAKER_03: And, you know, I think we get judged as an organization on how we treat everybody when things aren't going well and when the chips are sort of down because everyone's great when the market's booming and everyone's making money and everyone's doing transactions.
• 37:14
  SPEAKER_03: But when your agent's dealing with a substance abuse problem, or you've got major family issues with one of your leaders and you need to cover and move for those people.
• 37:23
  SPEAKER_03: And I see what the agents do to support each other and the relationships that they have outside of work.
• 37:29
  SPEAKER_03: And, you know, that tells me that we have something special with the culture.
• 37:32
  SPEAKER_03: Yeah.
• 37:32
  SPEAKER_03: And it wasn't, it wasn't by accident.
• 37:33
  SPEAKER_03: It was, you know, by design and also just because we have really good people and the co-founders and the leadership and junior leadership of the company.
• 37:40
  SPEAKER_00: One of the things that I respect, uh, Matt, is that we were looking at a deal together, and then I tried contacting you on Saturday, and I think your response was like, hey, I try not to work on the weekends.
• 37:50
  SPEAKER_00: And I and I thought that that was so it wasn't rude.
• 37:53
  SPEAKER_00: I thought that was like, man, he's Matt's made it so he listened in the world of real estate, you could really work 24-7.
• 38:00
  SPEAKER_00: You know, people are like, hey, Juan, are you taking the next three days off?
• 38:02
  SPEAKER_00: I'm like, not really, because I have my phone on me.
• 38:04
  SPEAKER_00: And if my clients need me, I'm gonna take their calls on a Sunday night, on a Saturday morning.
• 38:08
  SPEAKER_00: And I I guess I've not set those parameters.
• 38:12
  SPEAKER_00: It seems like you have.
• 38:13
  SPEAKER_00: Uh how'd you manage to do that?
• 38:16
  SPEAKER_03: I think it took time, and there was definitely a lot of time in my career where that wasn't the case, and my wife will attest to that, uh, where it was seven days a week.
• 38:25
  SPEAKER_03: But the beauty of having uh a business that's a business-to-business sale and not a business to consumer sale is that it really functions around banking hours.
• 38:36
  SPEAKER_03: We can't transact unless escrow's open, the title company's open, the banks are open, our professional staff is at the office.
• 38:42
  SPEAKER_03: So, like Memorial Day coming up, no one's there.
• 38:46
  SPEAKER_03: We can't record properties.
• 38:48
  SPEAKER_03: Yeah, the agents are probably all traveling, having a great time.
• 38:50
  SPEAKER_03: We had got a whole group of them that are in Mexico City for a contest that they won last quarter.
• 38:54
  SPEAKER_03: So, you know, we'll get back to work on Tuesday.
• 38:57
  SPEAKER_03: And I think that that balance is something that appeals a lot more to the younger generation, which you mentioned that wholesaling is something that you see sort of being attracted to like new real estate entries.
• 39:08
  SPEAKER_03: And there's maybe a reason behind that, just preferences and having a little bit of balance to where they they don't necessarily want to be grinding seven days a week.
• 39:17
  SPEAKER_03: They're happy to work hard, but they also want to be able to, you know, spend time with family and friends, hobbies, that kind of stuff.
• 39:24
  SPEAKER_03: So, you know, we if we don't model that at the top, we're not gonna see the same result from the junior leadership or our agents or our other professional staff.
• 39:35
  SPEAKER_00: Right.
• 39:35
  SPEAKER_00: No, I and that totally makes sense.
• 39:37
  SPEAKER_00: Matt, how long has wholesaling been going on that you know of?
• 39:43
  SPEAKER_03: Well, I mean, I think you can look at some pretty old, um, I think it's been going on for decades and decades and different forms.
• 39:53
  SPEAKER_03: Um whether that's a signing of contract, land contracts, just just different ways.
• 39:58
  SPEAKER_03: But I think it really started to get refined in the like let's say late 2000s, and you had a couple players who are now national and have built incredibly impressive businesses just around this one niche.
• 40:12
  SPEAKER_03: Okay.
• 40:14
  SPEAKER_00: Um I've I've heard that some states are starting to ban it.
• 40:19
  SPEAKER_00: And I don't know if it was Alabama or something like that.
• 40:22
  SPEAKER_00: Um what are your thoughts around that or what do you know?
• 40:25
  SPEAKER_03: The only thing that I'm aware of right now is it it's I believe it's banned in South Carolina, and I don't know if the if it's actually signed into law, but I think pass pulled their houses.
• 40:37
  SPEAKER_03: Um, and that's pretty interesting because there's a lot of support for it amongst NAR and the real estate groups, which I understand why.
• 40:47
  SPEAKER_03: And yeah, I think that it's gonna fundamentally change how it's done in multiple states.
• 40:52
  SPEAKER_03: They have raised the barrier for entry to be able to be involved in it uh in several states already to where you maybe have to be licensed.
• 40:59
  SPEAKER_03: But the South Carolina law is really interesting, and I can share the links with you to maybe put in the notes for people.
• 41:05
  SPEAKER_03: It's an interesting article on bigger pockets, interesting podcast, and then there's a copy of the bill.
• 41:09
  SPEAKER_03: But yeah, it's effectively banned and not allowed.
• 41:13
  SPEAKER_00: Interesting.
• 41:14
  SPEAKER_00: Um, I know you brought up NAR, that's the National Association of Realtors, and you know, they just came in with some changes that are gonna impact uh us on the brokerage side.
• 41:23
  SPEAKER_00: Does that does that impact you guys at all?
• 41:26
  SPEAKER_03: The way that I look at the NAR settlement, um, and the way that it's likely going to impact the brokers is that I feel very confident I'm gonna be able to continue to offer an actual career path for a brand new entry into real estate.
• 41:41
  SPEAKER_03: Um things changing with buyer agent commissions, which is where the majority of a new agent would let's say cut their teeth or actually be able to earn a living in this industry.
• 41:53
  SPEAKER_03: That being disrupted is gonna be a little bit challenging and a little bit bigger challenge for new entries into the space.
• 41:58
  SPEAKER_03: And I think that Fair Trade offers a pretty compelling alternative path that doesn't rely on um agency commissions because we're, you know, we basically earn profit as a company.
• 42:10
  SPEAKER_03: We buy it for one price, sell it for the the rest, and then the agents get a split of that profit.
• 42:14
  SPEAKER_00: Okay.
• 42:14
  SPEAKER_00: So so it's possible that someone who is newer in real estate listening to this and maybe wasn't thinking wholesale, maybe thinks, hey, I could work.
• 42:22
  SPEAKER_00: I could potentially, you know, this might be a good fit for me.
• 42:25
  SPEAKER_00: Correct.
• 42:26
  SPEAKER_03: And what I see in California is that successful listing agents are very entrenched.
• 42:33
  SPEAKER_03: They're usually have been in the business for a while and they're usually local to an area that they've got a pretty good stranglehold over.
• 42:41
  SPEAKER_03: And they have the reps, they have the reputation, they have the relationships.
• 42:44
  SPEAKER_03: If you're a 20-something getting into the space and trying to get a listing and win one from one Weezar that's a that's a multifamily in Long Beach, good luck.
• 42:52
  SPEAKER_03: Yeah, it's not gonna happen.
• 42:54
  SPEAKER_03: So having a path where you can go into the investment side if that's what interests you and realize that low, oh, there's no there's no agency rep.
• 43:03
  SPEAKER_03: Um, we our agents only represent our holding company.
• 43:06
  SPEAKER_03: It's not the same kind of client relationship.
• 43:08
  SPEAKER_03: And you know, we're providing this inventory source for investors and opportunity for agents to offer on behalf of the holding company, not putting any of their cash out to buy these properties all over SoCal and the Bay Area markets.
• 43:21
  SPEAKER_03: There's a lot of upside there for a new hire that wants to come in and put in the work.
• 43:27
  SPEAKER_03: And, you know, traditional listing offices are excellent breeding grounds and have excellent training for traditional real estate.
• 43:33
  SPEAKER_03: But if that's not the path people are looking to go, and if the changes are affecting people and they're concerned about being able to continue to have a path forward, this is something this industry is one to look at.
• 43:43
  SPEAKER_00: You know, there's a lot of different ways, Matt, to make money in real estate.
• 43:47
  SPEAKER_00: And yeah, you have people who flip.
• 43:48
  SPEAKER_00: Now you have people that do short term rentals, midterm rentals.
• 43:51
  SPEAKER_00: In fact, I had we did a podcast earlier.
• 43:54
  SPEAKER_00: Um, and that's what we covered.
• 43:56
  SPEAKER_00: And and now there's wholesale.
• 43:58
  SPEAKER_00: In 2003, when I got into Real estate and chose real estate over uh a career in accounting and being a CPA.
• 44:05
  SPEAKER_00: Um no one talked about wholesale.
• 44:08
  SPEAKER_00: I didn't know what that meant.
• 44:10
  SPEAKER_00: In fact, it wasn't until years later.
• 44:11
  SPEAKER_00: So like it's not like I know that it's a kind of a popular buzzword that I hear from people that reach out to me, uh, but it's not something that is known by everyone, right?
• 44:21
  SPEAKER_00: It and it's it's this industry that's operation that's operating, it's successful if you're good.
• 44:27
  SPEAKER_00: Um, and it's it's working in the world of real estate, but what you're saying, it's it's not your your your typical way of helping people buy and sell a home.
• 44:38
  SPEAKER_03: Correct.
• 44:38
  SPEAKER_03: And I can really only speak like for the California market.
• 44:42
  SPEAKER_03: Yeah.
• 44:42
  SPEAKER_03: I think wholesale works differently in other states, and I think the sophistication level of the operators, both the sellers and buyers and the margin expectations are very different in different parts of the country.
• 44:54
  SPEAKER_03: If you're going into like the Rust Belt and you can actually buy a home for$80,000 that maybe rents for$800 a month, I don't know the unit mechanics on that.
• 45:03
  SPEAKER_03: You might be able to buy that house over the phone.
• 45:05
  SPEAKER_02: Yeah.
• 45:05
  SPEAKER_03: With a phone, having a call center and reaching out to people.
• 45:09
  SPEAKER_03: Um, the effectiveness in a higher priced, more sophisticated market like California, it's just different.
• 45:16
  SPEAKER_03: Um, you know, everything not just costs more, but people are more aware of property values.
• 45:23
  SPEAKER_03: There's a lot of local regulation that you have to consider when you're underwriting properties.
• 45:28
  SPEAKER_03: You have to consider where the property is for hold time, you have to consider plan approval, certificate of occupancy, all this kind of stuff to where you better be really good at underwriting the property properly.
• 45:39
  SPEAKER_03: And if you can underwrite it properly, you can and contract it, you can bring it to the investors at a price that's compelling.
• 45:46
  SPEAKER_00: Um, would you mind sharing a story with us on a property that was a complete nightmare?
• 45:51
  SPEAKER_00: I mean, you could have still made money on it, but just uh it was just something that I'm like, man, I can't believe this happened, or this was the first of it of its kind.
• 46:00
  SPEAKER_03: Boy, I think we get a first of its kind um on a monthly basis now.
• 46:06
  SPEAKER_03: But uh I'll talk about the last one that I did an acquisition on.
• 46:10
  SPEAKER_03: I moved out of out of uh actually doing transactions um at the start of 2022.
• 46:17
  SPEAKER_03: One of my partners, basically both of my partners, Deeke and Saad, were kind of like, we need you in the executive team, we need your full energy here.
• 46:24
  SPEAKER_03: You know, we know you can do deals, but that's that doesn't need to be the focus if the company is going to continue to grow.
• 46:30
  SPEAKER_03: Yeah.
• 46:30
  SPEAKER_03: And uh it was just an escrow with every headache you can imagine.
• 46:35
  SPEAKER_03: You know, seller ended up being more than one person on title that didn't show up on the title report, didn't pop up until later on.
• 46:42
  SPEAKER_03: We get a statement of information, find out there's a bunch of child support liens, there's liens from the city.
• 46:47
  SPEAKER_03: We had a very we bought it for a good price, and the investor we were working with was um patient, understood, realized we kept good communication, but escrow extended for like 60 days, finally got the deal done.
• 47:01
  SPEAKER_03: You know, everybody was happy.
• 47:02
  SPEAKER_03: But that the work that went into that simultaneously that while that was happening, I'd built a relationship with a national lead vendor, and we'd closed enough volume transactions to do about 10 times more transactional volume during that 60-day window from that relationship.
• 47:19
  SPEAKER_03: And that sort of put things in perspective of like, oh, at some point you have to elevate yourself out of the transaction when it's time and allow your agents to manage it.
• 47:29
  SPEAKER_03: Because at this point, my my like the leadership, the acquisition team, the junior leadership, they're better acquisition agents than I am.
• 47:37
  SPEAKER_03: I still stay in the game and I still do rehabs because I want to feel it and be in touch with it and understand what the investor is going through, but you know, they'll they'll outperform me on an acquisition any day of the week.
• 47:48
  SPEAKER_02: Yeah.
• 47:49
  SPEAKER_00: Um, I'm gonna let you have the kind of the final say if there's anything that you want to wrap up with, if there's anything that you um certainly want people to to maybe uh follow you on anything.
• 48:01
  SPEAKER_00: You know what's interesting, Matt, as as I as I criticize the uh the influencers that are pretending to do what you're doing, you're you're not an influencer, you're not on TikTok, and and you're here telling me that, hey, in a few years we're gonna be number one in California, and in uh several more years we'll be number one in the country.
• 48:20
  SPEAKER_00: You're the real deal.
• 48:21
  SPEAKER_00: And so I I want to have people on this podcast that are the real deal.
• 48:25
  SPEAKER_00: So I want people to say, follow Matt.
• 48:28
  SPEAKER_00: But I know that Matt, you don't put yourself out there like those people do.
• 48:30
  SPEAKER_00: You don't drive the Lamborghini, although you probably could if you wanted to.
• 48:34
  SPEAKER_00: You're just not choosing to do that, but you're the one actually doing it.
• 48:38
  SPEAKER_00: And so I just want to say thank you for sharing your knowledge.
• 48:40
  SPEAKER_00: But for for anyone out there who says, Man, I I think Juan's right.
• 48:44
  SPEAKER_00: I gotta like maybe follow the people that are doing it right.
• 48:46
  SPEAKER_00: How can they do that?
• 48:48
  SPEAKER_03: I'd say that I'll I'll link myself in the show notes to collect on on LinkedIn.
• 48:54
  SPEAKER_03: That's probably the easiest way to reach me that professional networks.
• 48:56
  SPEAKER_03: That's the only social media that I have, and probably the only one I'll ever have.
• 49:00
  SPEAKER_03: Okay, it's just something that I like to keep a fine line between my personal life and professional life.
• 49:06
  SPEAKER_03: And a lot of the agents at Fair Trade, I think if you search Fair Trade Real Estate, you'll find probably a lot of our agents because our agent demographic tends to be younger.
• 49:16
  SPEAKER_03: They're uh very active on those platforms, as well as the company itself, just posting stuff about you know what we're all about.
• 49:22
  SPEAKER_03: But I really think just encouraging people, um get involved and educate yourself and do what you can.
• 49:30
  SPEAKER_03: And if if this is a segment of real estate that you're interested in, uh there's a there's a real opportunity to learn a lot and become an investor yourself and eventually get to the spot where I think everyone endeavors to be, which is owning multifamily, whether that's through syndication, partnerships as an individual, to have that passive income coming in, to have that K1 write-off for you high earners, and also um to build that generational wealth, which is really transformational.
• 49:59
  SPEAKER_03: And I think you see a lot of that drive in a lot of the agents in the business.
• 50:02
  SPEAKER_03: Um so yeah, just get started and uh don't let the licensor, the licensing portion in whatever state you're in, um, you know, as long as you're following the local regulation, you don't necessarily have to be licensed.
• 50:17
  SPEAKER_03: You don't have to be licensed in California to do it.
• 50:18
  SPEAKER_03: And hey, if you have a contract and you got it at the right price and you want to assign it to somebody, call a fair trade acquisition agent.
• 50:25
  SPEAKER_03: We'd be happy to, happy to not just buy the property from you, but actually walk you through what's happening to where you're gonna be smarter on the next contract you go to because you're gonna get to see every step of the escrow.
• 50:36
  SPEAKER_03: And because we're closing on it, you get to stay involved.
• 50:40
  SPEAKER_03: And I think that's one of the main reasons that both brokers and and the wholesalers out there that sell us deals like to work with us, is because it's really transparent on what's going on on the acquisition side.
• 50:50
  SPEAKER_00: So that's an interesting thing.
• 50:51
  SPEAKER_00: Um you are the wholesaler, but someone could wholesale to you also.
• 50:55
  SPEAKER_03: Correct.
• 50:56
  SPEAKER_03: Yeah, we we buy from a lot of the clients that um that purchase from us, and we have a network of folks that just sell us properties and a lot of groups where we're just the the one buyer that they typically call.
• 51:07
  SPEAKER_00: What if, what if someone's listening to it to this and they're like, you know what, I'm about to inherit a property that it's a distress situation.
• 51:13
  SPEAKER_00: How do they how do they reach out to you?
• 51:16
  SPEAKER_03: Well, they could, again, they could reach out to me on LinkedIn.
• 51:18
  SPEAKER_03: I'll give my cell phone on the show notes.
• 51:20
  SPEAKER_03: So they can always reach out to me directly with one of those properties.
• 51:23
  SPEAKER_03: What I tell people is the same thing that I tell family members, if it finances, list it with a broker.
• 51:30
  SPEAKER_03: If it's going to finance and someone can move into it, unless you need to sell it immediately and you need cash and you're okay selling it a discount, um, that's where we come in and provide value, right?
• 51:40
  SPEAKER_03: When it's non-financeable or the timeline needs to be really fast, you need some certainty.
• 51:45
  SPEAKER_03: Um, if it's if you have more time and it's in good shape or, you know, needs just paint or something like that, you know, depending on your family situation, I would be talking to someone like Juan to list the property.
• 51:59
  SPEAKER_03: But when it's a when you need a cash offer and you need to sell it or sell it soon, you can reach out to us.
• 52:05
  SPEAKER_03: And we're basically buying all over California.
• 52:07
  SPEAKER_03: We're in so all the SoCal counties and in the Bay Area Sacramento Metro, but we haven't done a ton in the Central Valley.
• 52:13
  SPEAKER_03: Yeah.
• 52:13
  SPEAKER_03: Okay.
• 52:13
  SPEAKER_00: Yeah.
• 52:14
  SPEAKER_00: Um, what if you're someone's listened to this and they want to be on your investor list?
• 52:19
  SPEAKER_00: How do they how do they get on that?
• 52:21
  SPEAKER_03: Yeah, there's a fair trade realestate.com.
• 52:23
  SPEAKER_03: There's a way to just put your basic information in, and one of our disposition agents will reach out to you.
• 52:28
  SPEAKER_03: You can connect with us on social, you can connect with us on the chat feature on the website.
• 52:33
  SPEAKER_03: And it's a very simple onboarding process.
• 52:35
  SPEAKER_03: You end up having a a virtual video meeting with one of the agents, walk through your buying criteria.
• 52:41
  SPEAKER_03: You also get to understand our process, and then from there, you provide approval of funds, whether that's you know a bank statement or you showing your hard money lender pre-approval, sign a general disclosure, and you start getting the deals that are in the county that you're looking to buy in.
• 52:56
  SPEAKER_03: Yeah.
• 52:57
  SPEAKER_00: Yeah.
• 52:57
  SPEAKER_00: No, that's amazing.
• 52:59
  SPEAKER_00: Um, any last thoughts, Matt?
• 53:06
  SPEAKER_03: I think people that I think the younger group that's coming into the space um needs to understand how much work goes into becoming a professional in any field.
• 53:18
  SPEAKER_00: Correct.
• 53:19
  SPEAKER_03: Whether you're a real estate professional, um, a builder, a flipper, and uh realize that's a component of it.
• 53:29
  SPEAKER_03: And, you know, the get rich quick piece is I think the reality of it is not quite as glamorous.
• 53:37
  SPEAKER_03: Um, you can make a great living and make a lot of money and make a lot of money fast, faster than you would working in a corporate job, but you also are not gonna have a pension, meaning, like you better be okay having your own multifamily portfolio, doing your own saving, whether that's a self-directed IRA or 401k.
• 53:55
  SPEAKER_03: So it's for entrepreneurs.
• 53:57
  SPEAKER_03: Yeah.
• 53:57
  SPEAKER_03: And the people that like taking those risks, the people like you and me, there's nothing else we'd rather do.
• 54:03
  SPEAKER_03: We don't want to sit in an office or work for a company for 25 years.
• 54:06
  SPEAKER_03: I couldn't do it.
• 54:07
  SPEAKER_03: And be told what to do and act the way they want you to act.
• 54:10
  SPEAKER_00: I couldn't do it either.
• 54:11
  SPEAKER_03: And there's a place for it, and I respect the hell out of it.
• 54:14
  SPEAKER_03: My parents were both um engineers, both work for the state of California and retired from the state.
• 54:19
  SPEAKER_02: Yeah.
• 54:20
  SPEAKER_03: And uh the discipline it took to do that, well, they had a bigger, you know, they had an impactful and rewarding job because of what they were doing.
• 54:29
  SPEAKER_03: Um that's a lot of repetition of the same thing every day for a really long time.
• 54:35
  SPEAKER_03: You got to love your family to do that.
• 54:36
  SPEAKER_03: But, you know, we just express it in a different way as entrepreneurs.
• 54:39
  SPEAKER_03: We're comfortable taking those those risks, and we're also willing to put the work in.
• 54:43
  SPEAKER_03: So I want the the people getting into the industry to understand how hard it is and how uh the people that are really good might make it look easy the same way a professional athlete makes it look easy to, you know, uh run up and down the court or run up and down the field, and it's not.
• 55:00
  SPEAKER_00: Yeah, it takes a lot.
• 55:02
  SPEAKER_00: Well said, Matt, thank you so much for coming in today, sharing all your knowledge.
• 55:06
  SPEAKER_00: Um, make sure to like, comment, and subscribe.
• 55:09
  SPEAKER_00: And until next time, appreciate you, one.