Merry Christmas! Today we hear from a wholesaler who takes a different approach to how he deals with all potential sellers and buyers. He was in sales for 20 years, eventually leaving his full time job to pursue wholesaling full time. Now about a year into wholesaling, Garth has been averaging 2-3 deals per month. Surprisingly, he says that his real estate knowledge is not the biggest factor to his early success. Tune in to hear why Garth says that operating with integrity is the single most important thing a new wholesaler can do in order to succeed. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Garth Kukla Real Estate Background:
– Founder of Tri-State Discount Real Estate and full time wholesaler
– Over 8+ years of real estate experience to create a real estate investment company
– Finds off-market real estate and sells deals to investors who flip or rent the property
– Has a 20-year sales background and been in real estate since 2008 as a landlord and part time flipper
– Based in Newport, Kentucky
– Say hi to him at: www.tristatediscountrealestate.com
– Best Ever Book: Rich Dad, Poor Dad
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.
With us today, Garth Kukla. How are you doing, Garth?
Garth Kukla: I’m doing fantastic, thanks Joe.
Joe Fairless: Well, I’m doing well and I’m glad you’re doing fantastic. A little bit about Garth – he is the founder of Tri-State Discount Real Estate and he’s a full-time wholesaler. He’s been doing wholesaling full-time since July of 2016, and he is averaging about 2-3 deals a month; prior to that he was doing real estate.
He is based in Newport, Kentucky, which is just a stone’s throw away from Cincinnati, Ohio. His focus is finding off-market real estate deals, and he sells them to investors who either flip or rent the property, i.e. wholesaling. With that being said, Garth, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Garth Kukla: Yeah, thanks, Joe. Well, my background – I’ve been in sales for about 20 years. I started as a copier sales rep in 1997. I’ve been in regional management, and just prior to starting my investment company I led a national sales team in healthcare. But like you said, I’ve also been a landlord and a part-time flipper since 2008, I flipped a couple houses, and I really think that combined experience of selling and real estate has allowed me to create the company that I have today.
As far as my focus, number one is finding deals for my investors, because it seems like I never have enough deals for my investors, but I’m also constantly looking for cash buyers, investor partners to work with. And lastly, I’m growing my team – currently, I have four people including me – because my ultimate goal is to become one of the largest real estate wholesalers in Northern Kentucky and Greater Cincinnati in the next couple years.
Joe Fairless: What would you say has brought you from zero deals to 2-3 a month?
Garth Kukla: Great question. I think a lot of it has to do with the fact that I act with integrity, I know my numbers, and I’m very creative when it comes to acquiring deals and selling those deals. Sadly, if you look at local investment groups – I’m a part of a couple of them – there’s a lot of flippers and landlords that will have one bad story to tell about a wholesaler; for me, I always strive to be straightforward with everyone I deal with, I try to be accurate with my information, and I’m 100% transparent with what I do. I think that’s allowed me to do what I’ve done.
Joe Fairless: It’s one thing to have the intention to give accurate information, it’s another for that information to be actually accurate… So on the “know your numbers” part, what’s your approach for identifying the accurate numbers to then share with who you’re selling it to?
Garth Kukla: That’s a great question. At the beginning, when I started and I didn’t know as much as I know now – and I’ll preface that by saying I still learn every day, so I don’t feel like I know everything now – I would lean on other investors, I’ve built relationships with realtors, so I would speak to them. I’ve got a great relationship with one realtor in particular who they focus primarily on investing in real estate. So when I don’t know the numbers, I would check with them as far as values, locations… I’d even have them come with me to inspect the property to make sure that I’m looking at a proper property, that is both sellable – meaning that it’s in a proper location – but that its condition and everything is appropriate for me to move it to an investor and for them to make a profit. But since then I’ve done enough deals in multiple locations, where — I live in Newport, so I know Newport; I’ve just moved a deal literally a couple days ago. I knew the values, because I live here.
I’ve done multiple deals in other cities, and then I know those values as well as far as, again, what streets to be on, what houses, what condition, and then also what price. Price is obviously a big, important part of this business, and if the price isn’t right, then the deal is not right. So I have to make sure that’s all appropriate, while also allowing me to make a profit because I am a company.
Joe Fairless: And what type of profit do you try to make on each deal?
Garth Kukla: Right now this year I’ve been averaging about 7k/deal, but that number is growing. I’ve been able to deliver properties to investors where their upside is tremendous and I’m still able to make a good profit as well. It doesn’t necessarily mean that any one deal I make a specific profit. Sometimes it’s thinner, sometimes it’s a little better. The last deal I just spoke of, I was able to make 15k, but the investor is gonna actually live in the property, and he is inheriting 40k or 50k in equity, in almost a moving condition house. So it allows me to make a good profit while delivering good numbers for the investors, so they come back and buy more from me.
Joe Fairless: And when you mention profit per deal, does that factor in marketing expenses and any other overhead?
Garth Kukla: At the beginning it was difficult for me to explain to an investor why a wholesaler should make 5k or 10k on a deal; when they’re usually in and out, they don’t really do per se anything to the deal. My marketing, my expenses, my payroll run about $6,000/month; these deals are harder to find nowadays, so between my team, my marketing, SEO on my websites and everything, it gets expensive. So that number is before expenses.
Joe Fairless: As far as SEO – you’ve just mentioned it – who does that for you?
Garth Kukla: InvestorCarrot, and they’re tremendous.
Joe Fairless: Got it. Alright, so you’ve got SEO from a marketing standpoint; do you do anything else to get inbound leads?
Garth Kukla: Yeah, my main thing has been direct mail. I use YellowLetters.com, marketing to motivated sellers who have at least 30% equity and at least own the property for four years. I get lists from ListSource – that has been the primary way. But that has kind of shifted a little bit. Actually, one of your podcasts — I am a Skip Genie customer now, so I’m starting to skip-trace properties. I’m also doing a tremendous amount of networking; I host a group in Northern Kentucky, I attend your group in Ohio, so a lot of networking allows me to get deals as well, and I also work with newer wholesalers and help them, and they’ll bring me deals and I’ll help them. So there’s multiple ways to find deals, and you have to use that because one avenue will not give you enough deals to keep your business afloat.
Joe Fairless: And for the Best Ever listeners who are curious about the skip-tracing conversation, episode 1065, titled “How To Track Down Vacant Property Owners”, with Larry Higgins… Okay, so out of all those, which one provides you with the best ROI?
Garth Kukla: For me the best ROI?
Joe Fairless: Yeah, all those different – SEO, direct mail, and then Skip Genie.
Garth Kukla: Well, Skip Genie I’ve just started, but I’m excited about it; I think it’s gonna be tremendous. I also have somebody that just does phone calls for me, so I think that avenue I haven’t fully exploited yet.
I think that so far the deal that has been the best for me was found via direct mail, but I’ve also done some deals where people just call me up and know – because I’ve built a reputation of being able to move deals, I actually have a couple buyers who have called me up and decided to not do the deal, and they wanted to sell it just quickly, and they call me up and I’m able to move the deal quickly; that’s what happened with this last deal, and I was able to make 15k. But my best deal ever was through direct mail.
Joe Fairless: Okay. Going from 2-3 deals from wanting to be the largest wholesaler in – I think you said the Northern Kentucky area, right?
Garth Kukla: Northern Kentucky and eventually in Greater Cincinnati. But right now in Northern Kentucky.
Joe Fairless: Okay. How do you know how to go from where you’re at to where you wanna be, in terms of how do you actually get there?
Garth Kukla: It’s really about capacity. What I mean by that is when I first started, I started part-time while I was still working on corporate America before I left my last position; I did a couple of deals, and then I had a Filipino virtual assistant. She eventually went full-time with me in October of last year, and soon after that, my business grew to the point where I couldn’t manage everything myself. I couldn’t do all the marketing myself, I couldn’t answer all the e-mails, I couldn’t go to see the houses myself, and that’s where building the team comes in, and I think that’s where my sales background of managing a team has really been helpful.
So for me to become the largest in Northern Kentucky and one of the largest in Greater Cincinnati would require a team of an acquisition manager, a transactional coordinator, a couple more virtual assistants helping me with phone calls and helping me with navigating making the phone calls necessary via Skip Genie. Right now I’m having my virtual assistant who’s making phone calls for me basically set up phone appointments for me, which allows me to just focus on getting deals and getting more cash fires. So to be able to grow that, it’s gonna basically require more people. Again, getting back to the capacity…
Joe Fairless: Any tips for the Best Ever listeners who are looking to hire a virtual assistant?
Garth Kukla: Yeah, I use UpWork, and I’ve done well with them. My first assistant is still with me. It took a little time to find my second one. Have a good job description, have a good interview process. Our interview process now is my first virtual assistant does the first interviews, another team member does the second interview and I do the third, and if all three of us love the person, then that person joins our team. That just happened the last week. But then also just understanding — I like Filipino virtual assistants because they speak really well, English is their second language; understanding good English is important, especially when most of the motivated sellers I speak to are older, and maybe they don’t have the best hearing, so you have to be very clear in what you say. But just having a good interview process and having some good questions, but also having clarity in what you’re trying to achieve, and also stability as far as there’s a lot of people that start this business thinking it’s relatively easy, so you wanna be able to show the people you hire, “Hey, I’m gonna be here tomorrow, I’m gonna be here next year, I plan on being here five years from now.” That will allow you to hire some really talented people at a tremendous value.
Joe Fairless: The process that you mentioned, it intrigues me. When you do the interviews you first have your first virtual assistant interview, then another team member, and then you… What questions do you ask that they haven’t asked?
Garth Kukla: I like to ask questions like big picture questions – where do you see yourself in one year, three years, five years? What motivates you? What makes you different from other people that we’ve spoken to? But also, I’m a big proponent of building a team, so one of the questions I asked is “What did you think of the process so far?” and “Did you like the questions and the people you spoke with?”
Lastly, I think preparation – how prepared are they? When I was a salesperson, everytime I interviewed I would over-prepare, just to show the person I was talking to that I wanted this position really badly, and I’d like to see that. So I wanna make sure that when they get on the phone with me, that they’ve spent some time preparing, looking at our websites, understanding our business, understanding the role, and then how they could add to the team. Does that answer your question?
Joe Fairless: Yeah. You’ve got a 20-year sales background prior to doing this full-time… What aspects of that background do you apply to closing more deals as a wholesaler?
Garth Kukla: Great question. First, honestly, negotiating the deal on the front end, but that’s also where the integrity comes into play. When I’m speaking to, let’s say, a 65-70 year old woman, obviously I have better negotiating skills than they may have, but making sure I can find a deal but then acting with integrity is — if the situation isn’t best for me to do a deal with them, I’ll literally tell them that.
For example, if somebody has a house that’s in great shape, and they’ve got six months to sell, I will tell them I am not their best option. I come into play when, generally speaking, the house is in rough shape, a lot of deferred maintenance hasn’t been done, and/or if they just need to sell quickly and/or if they just don’t want people going through their house [unintelligible [00:15:15].12] But if they’re okay with that and if they have time, I’ll literally tell them. That’s where I feel like I act with integrity, because that’s where I treat everybody like I want them to be treating me or treating my mother, if you will.
Sometimes I actually talk people out of doing deals with me, because it’s not in their best interest. But that action has also garnered a lot of my reputation to this point, of being somebody that’s straight with people, both from a buyer’s standpoint, as well as a seller’s standpoint. I think that’s what has allowed me to grow the company as far as it has been to this point.
Joe Fairless: I’m gonna preface by saying I totally get that the acting with integrity part isn’t to get more deals done, it’s just to be able to look at yourself in the mirror and be proud of who you are, so I get that, but now I’m gonna ask a question that I can ask because I just said that… The question is have you noticed when you, for example, talk someone, you mention points that turn the deal away from you, but it adds to your credibility in the market amongst the community, have you noticed a specific cause and effect with one of those times where it then lead to a closed transaction?
Garth Kukla: Yes. If I’m speaking to somebody and they’ve got six months to sell, and their house is in good shape, and they’re okay with the realtor, I will ask the question “Do you have a relationship with the realtor?” and if they say no, I’ll say “Since I invest in real estate every day, I have built some relationships with some very honest, trustworthy realtors. May I have one of them call you?” and I’ve literally had four different transactions where a realtor was able to list the property and sell the property for them. One of those realtors has actually taken a deal where it didn’t fit them back to me, if that makes sense. And I was able to move it quickly for them because the situation was they didn’t wanna list it, they had to sell quickly, and that realtor who I gave them a couple listings gave me back a deal as well, and to this day we’re friends, we’re gonna be having lunch next week just to continue our relationship. So that’s how that’s worked in the past.
Joe Fairless: And do you get any referral fee on those four other ones that they closed?
Garth Kukla: I do, typically, because I’ve worked out a deal with them; obviously, I’m spending thousands and thousands of dollars on marketing, so they’ll give me a small marketing fee back, which usually works out to be a couple hundred dollars. It’s nothing that I would call anything that adds to my bottom line, but it helps me defer my costs of finding that lead. Typically, I’m spending around $3,000/month in direct mail marketing, so if I find a deal from that and I transfer it to somebody, I do try to recoup or monetize a little bit to offset some of those costs.
Joe Fairless: If you’re making $7,000 a closing and you’re spending $3,000 in marketing, and assuming some of your other overhead costs aren’t extraordinary, then you’re making a good profit margin per deal.
Garth Kukla: Yeah. I’m really proud of this – from July to December of last year I was able to make a profit after expenses and after taxes of 25k, in just that short amount of time. It wasn’t a tremendous amount of money, but I was able to basically kind of replace my base salary from my company that I left.
This year obviously I’m looking to exponentially grow that, because I’m not just looking for a job, I’m looking for a company, I’m starting to build a relationship in the real estate world, where realtors have heard of me, flippers know who I am, that I deliver good deals, that I’m one of those people that just gives as accurate of information that I can possibly give.
But there’s a funny thing where sometimes people don’t like to admit they’re wholesalers to people. I had somebody that I did a deal with last year, a seller who read my contract, he wanted to review my contract for a couple days, and after we were sitting down, he actually asked me “Are you a wholesaler?” and I said “Yes, I am.” Then he says “Are you gonna wholesale my house?” and I said “Yes, I probably will. But we agreed on the price and you’re happy with the price, so let’s just do this deal.”
That’s where my selling experience comes into play, where I’m able to overcome that objection and then just close the deal, while being honest with the seller. And I say that because I’ve been called before by wholesalers who are going after one of my great deals and I ask them “Are you a wholesaler?” and they say “No, I’m an investor”, when they’re actually a wholesaler.
So just always be straight with people, though your perception might be that might cause you to grow your company a little slower. If you build your reputation on integrity and just being straight with people, in the long run that will benefit you down the road. That’s what I do every day.
Joe Fairless: I 100% agree. Based on your experience, what is your best real estate investing advice ever?
Garth Kukla: Great question. Always be straight with everyone you deal with, have an abundance mindset, and make sure that you have your monthly and annual goals written out, and work every day towards those goals.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Garth Kukla: Ready.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:20:31].18] to [00:21:29].06]
Joe Fairless: Okay, best ever book you’ve read?
Garth Kukla: Best ever book I read – Rich Dad, Poor Dad. It changed my life. It got me thinking about real estate as a career, and it was literally the best decision I ever made.
Joe Fairless: The story of the best ever deal you’ve done.
Garth Kukla: Best ever deal I’ve done – I would say the last deal I did. I was able to sell it in a day, I made a great payday, 15k, and both my buyer and my seller were extremely happy with the transaction.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Garth Kukla: Great question. My fourth deal, not communicating correctly with a new buyer who is represented by a realtor, and that realtor wasn’t familiar with closing a wholesale deal.
Joe Fairless: So what happens?
Garth Kukla: Well, you have to explain that closing a wholesale deal is much different than closing an MLS deal. The inspection period, the out clauses on the contract etc. And you need to have the experience and confidence that allows you to explain that to somebody who isn’t familiar with that process.
Joe Fairless: Did you end up closing?
Garth Kukla: Yes, I did. It was difficult, and I’ve since gotten those again, and I know what to say. It’s mostly about properly explaining that somebody has just never done a wholesale deal. It is very different than closing from an MLS deal. So just having the words to say it, and the confidence and experience to back it up.
Joe Fairless: Best ever way you like to give back?
Garth Kukla: Since I have an abundance mindset, I’ve personally helped over five new wholesalers learn the business by sharing my experience and answering any questions they ask, and if any of your listeners wanna reach out to me with their questions, I’d be happy to do the same.
Joe Fairless: How can the Best Ever listeners get in touch with you?
Garth Kukla: You can find me on Bigger Pockets, or on my real estate investor website, www.tristatediscountrealestate.com, or you can e-mail me directly at Garth@tristatediscountrealestate.com.
Joe Fairless: That link to your website will be in the show notes page. Thank you so much, Garth, for being on the show and talking about how you have not only replaced your income that you had as a base salary in your first – what was that, six months or so? …of wholesaling, but then also now you’re focused on the next stage, which is growing the company into the largest wholesaling company in Northern Kentucky and eventually the Cincinnati area. How you’re doing that, the different ways you’re getting deals – SEO, direct mail, testing Skip Genie after listening to one of the episodes on this show, and attending meetups, and the numbers behind your business, and what you look for, payroll, overall averaging profits per deal, etc.
Thanks for being on the show, I hope you have a best ever day, and we’ll talk to you soon!
Garth Kukla: Thanks, Joe. Have a great day!