Table of Contents - The Source Of The Deal with Chris Rood
Dave Debeau [00:00:09] Well, hey, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. Today, it is my pleasure to be interviewing a very experienced, astute serial entrepreneur and real estate investor, Chris Rood, all the way from today from Florida, but originally from Louisiana. How are you doing today, Chris?
Chris Rood [00:00:29] Hey, man, I'm doing good. I'm in sunny Pensacola, Florida, by the beach, so I can't complain.
Dave Debeau [00:00:35] Well, that sounds a lot nicer than freezing cold, chilly, beautiful British Columbia in the middle of January, I tell you that. But that's that's great. So if you haven't had the pleasure of meeting or hearing about Chris yet, which you probably will, because he's pretty big on the whole social media thing and he hangs out with people like Grant Cardoon and all sorts of good stuff. A little bit about Chris's background. Very interesting fellow, pretty young guy. Chris, compared to me, you're only thirty eight, been married for 20 years, got five kids, serial entrepreneur, all sorts of different kinds of real estate investing, an 18 million dollar portfolio with all kinds of stuff, including mobile home parks and apartments. And and he's definitely a specialist when it comes to wholesaling, which is what we're probably going to be talking about mostly on today's call. So, Chris, tell us, first of all, how did you get into this whole crazy world of real estate investing in the first place?
Chris Rood [00:01:33] Man, somebody gave me rich dad, poor dad, right? Robert, you probably 10 years ago. Yeah. And eight years ago. Let me back up before I even read that I flip muf when I was twenty two years old, arbitrarily by chance, flip my first house and made one hundred and twenty five thousand. That was my first taste. So that was by the luck of the gods, the real estate gods. Bless me, it was a fluke. So what happened after you remember Hurricane Katrina hit New Orleans in two thousand five? Well, I live in Lafayette, just east just west of New Orleans, about two and a half hours when hurricane hit Katrina hit New Orleans. It dislocated all these people. Right. So they went to Baton Rouge, Lafayette, Houston, Atlanta, and this is two thousand five. The real estate market is already hot. And that is like right before the big crash. So it's booming already. And we had a big influx of people come in to Lafayette. And I had just built a house, probably four or five years. Well, two and a half, three years before that, I built a little spec house and I paid my land off cash, but was a small nothing special spec house. But every year, like I saw, like my house kept getting worth more and more and more from appreciation. And then once everybody moved to from New Orleans, got displaced like we didn't have any housing. So it made our houses almost increase another 20 percent in a year. It was crazy. I was like I told my wife, I was like, we've got to flip our house. I'm going to sell a house. You can make a lot of money. So I been watching some of those TV shows back then. I was like, got me all excited. So I painted a few rooms, put some landscaping, put a sign in the front yard, and I sold it within 30 days and made one hundred and twenty seven thousand. That was my first taste of real estate at the time. I had an on site oil change, a mechanic shop that I had started while I was in college. I was making a hundred grand a year doing it out of the back of my truck prior to that and wanted to scale that into shops because I knew I could be driving around, meet somebody so fast. So I took that one hundred twenty eight thousand and I invested it into a quick blue car wash mechanic shop. I don't wasn't a car wash yet. This is just a quick lube and a mechanic shop at the time. So I had one location already. I rented this me scale into two locations and from there I was like, man, you can make a lot of money. Real estate. So I went and the next house I bought actually back up, I bought a piece of land on the bayou by you. It's not a river, it's not a creek. It's like a muddy channel of water that runs through Louisiana. Those are desirable Louisiana. I flip that. I made 30 grand real quick. So that money used that to actually buy some more equipment for one of my shops. Then I bought a pre foreclosure fix that up live in that for 18 months. Flip that made sixty dollars and bought another shop. So that was
Dave Debeau [00:04:16] the real estate to fund your entrepreneurial.
Chris Rood [00:04:19] Yes, that's exactly right. I use the real estate flipping houses to fund my quick lube mechanic shop and auto glass business that I had from using real estate. I bought all kinds of shops and I had the biggest all change independent mechanic shop in all of Lafayette where I live at four locations with thirty three employees. I was twenty five, twenty six years old, doing pretty well. Make sure I was making, you know, three or four hundred grand a year as a young 20 year. I was doing well for myself so I kind of forgot about real estate. But that was my first taste of real estate before I actually read that for that. So once I had four locations I was busy with turning wrenches, change it all, managing a bunch of people, and I stopped doing real estate and focus on that. So I did that for a couple of years, made a lot of money, took that money. And that's around the same time I read Rich. That poor dad was like, I'm going to invest and buy and hold and took the money I made, bought a bunch of buy and hold. This is like two thousand. Eleven thousand. So I bought like three million dollars worth of single family homes, leveraged it out and the economy was actually booming in Louisiana because we had the oil and gas industry. But a lot of people in the US were still kind of down. But the you guys is two thousand eight was born all over the place, had so much information to you guys with two thousand eight was not our in Louisiana. We were insulated because we had the oil. The barrel of oil was one hundred and seven dollars during the crash. So Texas, Louisiana, Mississippi, all the oil states were still doing good during 2008. So our twenty eight was not the same or twenty eight in Louisiana and Texas was twenty fourteen when oil went from one hundred and twenty eight dollars a barrel to twenty eight dollars a barrel. So in twenty fourteen almost lost my shirt. I bought three million dollars with the single family homes two thousand 12 2014 at 80 cents on the dollar, making a ton of offers on MLS and was doing good doing that until we had the crash and literally half of my houses I bought went vacant because most of the people ratnam them all workers,
Dave Debeau [00:06:18] half
Chris Rood [00:06:19] of them with vacant my shops that I own. I had four locations. Thirty three employees started losing sales every quarter because oilfield companies either going bankrupt, moving out of town, moving to Texas, laying off people. So I literally lost my business. I didn't lose it, but I was losing sales. And on top of that, the single family homes that had were all vacant. So right around that same time, I. I got into wholesaling. And if you don't own a wholesaling is it's the art of finding heavily discounted off market properties to motivate sellers. Well, if you got a crash, doesn't it probably be a lot of motivated off market properties from motivated sellers? Right. So long story short, two thousand foot view. I got into wholesale the same time that the economy crashed, other businesses were tanking. I was losing money with the rentals and my shops, but I got into wholesaling and Africans slaughtered it like made a killing. And I was able to cover all my losses. And that's kind of what happened with me.
Dave Debeau [00:07:13] That's my that's that is that's a very, very cool story. So so folks that are very familiar with wholesaling and yes, it does work up here in Canada, you guys. So listen close. Maybe just give us a run through of what does a wholesaling deal look like to you.
Chris Rood [00:07:31] So what a wholesale deal is. Basically, like I said, it's a it's a professional marketing business, for one. That's all it is we're marketing for motivated sellers, and when I say motivated sales, I mean people with problems like they either went through a divorce, they got a job transfer, they get behind their bills. They made a lot of bad decisions. Maybe they're on drugs. And you see all throughout the whole gamut of people that need to sell their property fast for cash. So I teach people how to market directly to these people to find a retired landlord. Maybe it's a landlord has been on a property for 20 years. He's all these burnt out houses in distress he doesn't want to deal with anymore. He's willing to take a huge discount on his property to make his headache go away. So I show students how to market to these people, get their houses under contract that say, let's just say let's get round numbers to get a property full. Retail is worth one hundred grand. This landlord is burn out. The property needs twenty thousand dollars worth of work to even get it livable. And you offer them, say, fifty thousand dollars. And he's been having this property for 20 years. It's paid off, you know, and I'll take your fifty thousand. Thanks for getting me out of my headache. I get it in a contract for fifty thousand with an assignable contract. Then I go around and I market that contract to a cash buyer, an investor for, say, sixty five to 70 or let's just call it sixty thousand, I assign my rights to the contract from 50 to 60 to him. So he gets it for 60. He gives me a ten thousand dollar time. If he's got a property for sixty thousand he puts twenty thousand into it, he's into it for eighty and it's worth one hundred. So he's got a property for 80 cents on the dollar. Then that motivated seller wins because he gets out of his property. I win because I make ten thousand and the end buyer who's the investor gets a good of market property with some equity.
Dave Debeau [00:09:17] All right. Well, that's a great explanation. And and people that aren't familiar with the business buy everything. Why doesn't the seller just listed with a realtor
Chris Rood [00:09:26] that a lot of people don't listen to the realtor because it's speed and time they don't want for one is there's so many differences. For one, a lot of people are embarrassed by a lot of houses from people that the houses are really messed up and they're embarrassed and they don't want anybody to know how messed up the houses are. They don't want
Dave Debeau [00:09:42] to have to stage or be showing it to.
Chris Rood [00:09:45] Exactly. They have dog urine and they have cats and dogs. And it's just, ah, they're hoarders or they're there's all kinds of stuff or they don't like maybe they just got a divorce. I've seen this happen like the wife finds out the husband's cheating and they they all friends with the neighbors and they don't want the whole neighborhood to know that the house is for sale. So they want a quick sale to where they sell it and they just move out and nobody knows. Their business does a number of different reasons. So before you say, well, Chris, why would they let you that's kind of taking advantage of people. Why why would they just listed with a realtor? Good for retail. Not everybody cares about the money. I get this all the time. Like realtors bash me where you an ambulance chaser, you're like, listen, not everybody's worried about the money. I lost forty thousand dollars in a deal this year because I had a tenant that trashed my house and I didn't want it. I didn't want to deal with it. I said, you know what? I sold it to another guy. It was a great deal for him. I lost forty thousand dollars just to get out of it. Right. So it tells you that not inviting the motivated seller, I was a motivated seller. Tables are turned. So is a number of different reasons. Maybe they're in a time crunch like they have to sell their property within two weeks. They can't take the risk of putting it on MLS with a realtor. And it's not selling or and a lot of times it's just the house is too distressed like it needs everything, right? It's so dated that house is totally destroyed or semi destroyed. It just wouldn't sell well, are so good on MLS.
Dave Debeau [00:11:11] All right. Well, that makes sense. So, Chris, way back in the day when I first got into real estate investing, I was looking for motivated sellers as well. I wasn't doing well. I actually had to do a few assignments, but doing some other creative strategies. And, you know, back in those days, it was bandit signs, it was vehicle signage, it was terror tab signs in the convenience store was I buy houses. Ten business cards all over the place, it was ads on Craigslist, it was ads in the newspaper for crying out loud. All these kind of things, what are you finding works better these days or what works these days for finding these motivated sellers?
Chris Rood [00:11:56] Whatever you actually do, do it well. Is it all works? Yeah. I mean, I've done it all. I've done direct mail and bandit signs. Do Facebook ads have been calling up that it all works. It's just a matter of how deep and how thoroughly you're going to push into that market channel to dig deep enough to get motivated sellers. Now, with that said, are there channels that are more productive? Maybe, yeah, productive. I'm looking for the right word. Yeah, that's a great word. Productive than others that I recommend. Yes, but here's the thing. Every market is going to react different to different marketing channels. I'm in six different markets in four states. Facebook ads doesn't work that well in Baton Rouge versus direct mail works better in Lafayette, are calling, works better in Panama City or PPC works better in Mobile versus Bannatyne. So you have this split test measure and adapt and change to a market. There's not one thing. It's not a universal thing like oh, fantasize work in Baton Rouge, Louisiana. That does not mean benzenes are going to work in Mobile, Alabama.
Dave Debeau [00:13:00] So basically you need to kind of look at what the whole gamut of different options are and test and see what's going to work best
Chris Rood [00:13:06] in your test. I talked about this in my book. Pick up my book. The source of the dot.com free copy of eBook is the source of the deal that I talk about this. You got a split test measure, adapt and change that. The different markets that you're in, that's all right now. But if you just get started, you have a low budget. What you need to do is you need to start with a one or two market channels. I started my whole business with Bandit it like I love being inside. Now, you sometimes get in some trouble with bandstands with the local municipality.
Dave Debeau [00:13:35] That sounds right.
Chris Rood [00:13:36] Right. But it's better to ask for forgiveness than permission. Right. So if you're on a budget bandit, signs is great driving for dollars where you go around, look for distressed properties, write down their address or go door, knock them out, put a door hanger or write them a letter. Listen, you've got to hustle this this like it ain't. If you don't have a lot of money, you're going to have to you have to spend your hustle muscle. Right. You're going to have to put some elbow grease into it. Now, if you have money and you're doing well, like I am, I spend a lot of money to generate my own needs. Like I do a lot of direct mail. I do a lot of Facebook ads, Pepco, I do a lot of these different things that work now that I don't have to spend my time. I still do bad designs. But if I were a young whippersnapper doing it all over again, I mean, you can't be bad. It seems nice. We've got to put a bunch of that. You can't go put five and say, man, why is that working? Like you put out like five hundred.
Dave Debeau [00:14:29] So let me ask you a question, Chris, and forgive my my ignorance. I'm not sure of the market size of some of the places that you're in. And I know you've got a lot of students all over the place as well. What's kind of the the smallest area that you've seen wholesaling work reasonably well in like market markets?
Chris Rood [00:14:48] All this area, the smallest is wholesaling right now is probably the smallest city. We're probably Panama City Beach, Florida is only one hundred and sixty thousand people there. But I'm actually I'm in Pensacola wholesale and flip throughout the whole panhandle of Florida. That's the smallest city to host the Panama. I'm from Lafayette, Louisiana. I do a lot of deals in Lafayette and Baton Rouge. Lafayette got probably a quarter million people. Baton Rouge is eight hundred seven, eight hundred thousand. So Mobile, Alabama is six seven hundred thousand. I'm in Biloxi in Biloxi, Mississippi. Those areas are small areas, too. But the minimum I mean, I would go wholesale in a spot that's got ten thousand people in some rural areas. You need at least, I mean, to make a dent, you would need at least eighty eight hundred thousand people.
Dave Debeau [00:15:32] OK, that's very different in the state, that's for sure. We're one tenth the population of you guys. So, yeah, that's that's good to know. Now, another thing, we're just about out of time here, my friend, and I'll I'll extend it here a little bit. But, you know, a lot of a lot of our viewers and listeners are Canadians and they're thinking, well, that sounds great. You know, there's there's Chris down there in Pensacola, but I'm up here in Kingston, Ontario, a red deer, Alberta. Regina, Saskatchewan. Does this stuff work in Canada?
Chris Rood [00:16:06] Absolutely. I've got one of my most successful students is out of Canada, a guy named Ben-Meir sent out of Windsor. He made a lot of money in my program this year. He made he made just just north of seven hundred eighty thousand first year my program. Now, granted, I'll give him the benefit out here. Real estate flipping business. You just didn't understand the old selling piece and how to find his own deals once you learn that you just dealt with this business. But I've got Ryan DeLaurentis out of London. He did three hundred fifty thousand. I know Ryan is one of my students. Nice, Ryan. His first year in my program, you'll probably do seven fifty eight thousand this year on my program. So he's one of my students. I have a guy named Anthony. I forget his last name. He's out of Niagara Falls. He did a couple hundred grand.
Dave Debeau [00:16:49] Anthony was that is his last name, Romeo.
Chris Rood [00:16:53] Anthony Romeo. His dad's a big real estate guy to own some apartments, interests
Dave Debeau [00:16:59] school and a world, small world. But the bottom line, yes, it does work up here in Canada, Chris. And people are interested in finding out more about you, what you're up to and and what you do with wholesaling. What should they do
Chris Rood [00:17:13] if you're go to Chris through dotcom that are as rude or dotcom book to call with my sales team? If you're interested in getting in real estate, you start with this. I wrote a book about this called This Source The Deal, because it makes you the source of the deal. You want to be in first position and find deals. And when you start a wholesaling business, that's what it does. It gets you unlimited access that heavily discounted off market properties, motivated sellers. If I could do it all over again, that's where I mess up, starting almost daily. Business is the foundation. If you ain't got that piece and if you don't how to find deals, you dead in the water is a real estate investor.
Dave Debeau [00:17:47] Yeah, definitely. Excellent. Chris has been a lot of fun. Thank you very much for sharing your your experience and some of your wisdom, too. Thank you.
Chris Rood [00:17:55] Thank you. Appreciate you.
Dave Debeau [00:17:56] All right, everybody, take care and we'll talk to you on the next episode. Bye bye. Well, thanks very much for checking out the property profits podcast and you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review it. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom. Take care.