Podcast | Real Estate Investing
Bill Allen is a former Naval Officer with 18 years of military experience turned real estate investor, entrepreneur, and educator. He is the CEO of the 7 Figure Flipping Mastermind which includes 7 Figure Altitude and 7 Figure Runway, dedicated to national volume real estate flippers and wholesalers that share tactics and strategies to scale business. He has a BA in mechanical engineering from Georgia Tech and a Master’s degree in Aeronautical and Astronomical engineering. He runs the 7 Figure Flipping Podcast which focuses on the strategies, systems, and secrets of the nation’s top house flippers, wholesalers, and real estate investors. See details on Flip Hacking Live on the website.
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- 00:00 Welcome Bill Allen of 7 Figure Flipping with Bill Allen
- 01:06 Mechanical engineering to navy to real estate flipper and entrepreneur
- 02:48 The current real estate market Bill Allen is flipping in
- 06:05 Why starting in a secondary market for wholesaling and flipping was so critical
- 07:35 How moving into larger cities greatly increase assignment fees for wholesale deals but what it took to get there
- 10:19 What is a real estate wholesaler?
- 11:03 What most people don’t understand about professional real estate wholesaling and the costs involved
- 12:38 Why most real estate wholesalers have a bad reputation
- 13:31 Building value as a legitimate wholesaler in the market where 90% are bad
- 14:48 The reputation of real estate wholesalers looking for the next sucker
- 15:27 The reason not to include after repair value estimates in wholesale deals
- 19:50 How did Bill scale his real estate wholesaling business so quickly?
- 24:18 Why learning marketing was so critical to scaling his real estate business
- 24:41 How important it is to track marketing KPIs and channel success
- 26:17 What marketing channels in real estate are working well in 2020?
- 26:33 Using data to drive efficiency and identifying weak performers
- 28:00 Dropping direct mail marketing expense by 40% by hyperlocal targeting
- 28:20 Facebook Ads, @Google Pay Per Click and SEO percentage of deal flow
- 28:54 The importance of understanding local laws on things like ringless voicemail
- 29:35 Why to continue to paying marketing phone after you stop direct mail campaigns
- 30:54 The one huge marketing mistake real estate investors make
- 32:26 Why Bill loves postcards for marketing
- 34:05 Is it more important to build a real estate brand as an investor or present marketing that looks completely different each time?
- 35:25 Hypothesize, test and pivot – the key strategy to get branding and marketing correct in your local market
- 38:57 Should you include pictures of your team in your marketing?
- 40:23 Why are ibuyers so awesome for real estate investors and why Bill loves them?
- 42:44 The $5,000 giveaway and the ibuyer that didn’t come through
- 44:01 How real estate investors can leverage ibuyers in their business
- 45:26 Tips to identifying new real estate markets for flipping and wholesaling
- 48:51 What role does a mastermind play in the life of an entrepreneur?
- 49:24 The difference between local real estate investment clubs (REIAs) and mastermind groups
- 54:07 The biggest difference between guru training, real estate coaching, and mastermind groups
- 59:10 What volume real estate pros won’t tell at local levels that they may share in a mastermind
- 59:36 What are the biggest impacts for Covid-19 for volume flippers and wholesalers?
- 1:00:00 The one big takeaway that real estate investors should take away from Wall Street lending partners and hard money?
- 1:05:02 Flip Hacking Live details and how it’s changed in 2020 due to Covid-19
Aaron Norris 00:01Hey everybody, welcome back to this week's episode of the Data Driven Real Estate Podcast. This week we have Bill Allen - he is the CEO of Blackjack Real Estate, and also the CEO of the 7 Figure Flipping Mastermind. This week we talked about how we went from mechanical engineer in the Navy, all the way to a real estate investor who flips over 100 via flipping and wholesaling. Every year. We talk about ibuyers in the market and why he's actually excited to be there. We talk about inside baseball of wholesaling, sometimes it can seem like a little bit of a dirty word. And most importantly, of course, we cover the data that he uses day to day in business, which strategies and channels are driving the majority of his business, and even how he approaches new markets that much more on this week's episode, everybody, welcome to the Data Driven Real Estate Podcast, the podcast for real estate professionals dedicated to driving business success using data. I'm really excited to have Bill Allen. I only met you earlier this year. You've been very busy with 7 Figure Flipping. So who is Bill Allen?
Bill Allen 01:01Then, that could be a lot. It could be the whole podcast right there. Right? You know. So I love that kind of concept of this data-driven real estate investing data- driven items, right. So like I'm a flipper and wholesaler. But before that I was a mechanical engineering undergrad at Georgia Tech. So I'm a numbers like science and math are everything to me. I was not good at English and writing and oh, it's just horrible, all that stuff. And I actually joined the Navy right after college. So I got a mechanical engineering undergrad degree, got commissioned into the Navy as a pilot. And then I went to I got a master's degree in aeronautical engineering, which was more science and math and things like that. And so right after that, I went down to flight school, and for 15 years, I was active duty Navy pilot, and I still am in the reserves. But during that time, I was trying to figure out my finances and becoming financially free and at some point along that journey, about seven or eight years ago, I found real estate and that's kind of what you know, drove me into trying to understand rentals and Then I started I did a flip and I made a ton of money and I said, This is exciting, can I do this again? And then I started repeating that and then you know, I wanted to build a business so I went from you know, college graduate engineer, pilot and thinking I know everything to flipping a house and then figuring out I don't know everything and getting beat up a little bit in the real estate world and then trying to scale a business because it was frustrating only doing one deal a year I wanted to figure out how to do more than that. And so we've done you know, and in the, in the tune of 150 to 175 are the most that we did in a year was 187 was about three years ago kind of flips and wholesales and that's primarily what I do now is is flipping wholesale in my real estate business and then run that other mastermind group so I'm figure flipping is where I spend a lot of my time now so that's kind of like background on me, I guess.
Aaron Norris 02:48Yeah no, what, what markets are you in right now?
Bill Allen 02:51So we started in Pensacola, Florida, so around he panhandle and so Escambia and Santa Rosa County, and then I moved to Nashville because we had our middle son had a heart condition and needed open heart surgery after he was born. So we decided to move like leave Pensacola and that's about the time I got out of active duty in the Navy. I wasn't ready to go deploy again. And then we moved to Chattanooga, Tennessee like our we went into a second market of Chattanooga, so I lived in Nashville, but I didn't think that I could afford it. And we can talk about that a little bit because that's the data-driven approach of what is it going to take to start investing in a big city versus a smaller city like Pensacola? So I went to Chattanooga, so that was a second market and then we went to Nashville after that. And now we do a little bit of business in Huntsville. We do some business in Kentucky pretty much anywhere in the southeast. We've done some deals in Atlanta, we've done some deals in Indiana. If some stuff pops up, we'll do it. We're also moved into New Jersey, we actually happen to have another investor who was ready to get out of the single-family business and move into the multifamily business. So we kind of bought their company we decided to find a way to partner with them in the beginning, understand the market a little bit and you know, they had a great buyer's list. They had a great business there. So we just started kind of took over their business, basically, because we had the operational side, and they wanted to move over the multifamily and still cash flow a little bit from that business. So that was a cool venture that we did. So pretty much we're trying to figure out how to do deals anywhere where it makes sense that we get the return that we can on more of a virtual kind of wholesaling model in the southeast.
Aaron Norris 04:19Okay well, mechanical engineering seems out the window at this point.
Bill Allen 04:25Yeah, yeah. I you know, it's funny because the whole engineering side of things I look at, so I was a I got a, you know, a bachelor's degree in mechanical engineering, a master's in aeronautical engineering. I only knew anybody that made like $200,000 a year I thought it was like a cap that a human being could make I thought rich people were like, over there like people, nobody makes a million dollars a year and that kind of stuff and then becoming a pilot. It was just kind of like showing up punching the clock doing my job. I really enjoyed doing what I was doing, and I still do it part-time. But there's something kind of missing And that was pulling me towards real estate. And it was kind of fun. And now this entrepreneurial side it was was like hiding inside me for so long. And what happened with this whole real estate thing is it just let out this, this entrepreneur that I that when I look back, the story is told when I was you know, 6-7-8 years old, I was always trying to turn $1 into $2, I was always hustling, and it was just kind of hidden, and then when it came out, it's like, you can't put that you can't put that back in the box once it comes out. And so I'm never gonna go back to work for somebody again, engineering is not the most interesting thing, although I would, I would be interested in jumping into a business like that and figure out how to how to turn the dials and make it more efficient because that's what I think's really cool about what we do but I don't need to like markup drawings and do CAD or anything like that.Aaron Norris 05:46Or say a natural fit for that as you know, you get into adding square footage building construction, but that's not where you've landed yet. So well let's let's backwards engineer like how you ended up in Tennessee started with the affordability question so yeah, that tell me how you ended up there.
Bill Allen 06:05Yeah, so the, you know, when I when I moved it, so I was in the small market of Pensacola, it's about 350,000 people. And it was looking back, it was kind of like shooting fish in the barrel at the time. I didn't think so because I was kind of growing the business. But I mean, I was getting a deal for like $700 bucks. So we're getting, like, most people that are in the mastermind group that I was in my network, they were talking $2,500, $3,000, we were under $1,000 of kind of cost per contract for wholesale deals. And there just wasn't a lot of competition in that area. Not a lot of sophisticated like bigger time investors that were scaling and growing. And so when I went to Nashville, I said, I don't know if I have the amount of money or the skill set or the understanding to go into a major market, you know, a couple million people. And so I had the decision to make of where am I going to go I was moving to Nashville, and I had my team When my team was built out and I was going to be virtually running my team in Pensacola there, I said, Why can't I do this everywhere I have the infrastructure, I have all the systems and processes, all I need to do is actually put somebody on the ground in a new city, one person, and use all my whole infrastructure of the company. And so what I saw then was my net profit is going to go up, like the money that goes into the owner's pocket in the business makes more money that way. So the next question was, where do I go? Do I go to a major market or another submarket that I know the difficulty that I had with my submarket was I could get deals cheaper, but the buyers were a little bit hard to find and my assignment fees weren't that high. So I was averaging about $8,000 on the assignment at the time, where I saw some of the other people that were in like Dallas or Salt Lake City or San Diego, some of the bigger cities, they were seeing assignment fees of $20,000. So and their deals would sell really fast when they found one it would sell really fast and we'd have to work a lot harder to sell that contract. And or to do that flip or to you know, find that end buyer for what we were doing on the wholesale side. So there's pros and cons to both of them. And what I said was, I already know this, like I have this thing wired this 350,000 person population, we've got it figured out, we have it wired, we're starting to get the assignment fees up. We're starting to build a buyer's list, we're starting to understand the pros and cons of being there and leaning into it. So instead of reinventing the wheel and going to Nashville right away, which probably could have hurt me if I didn't go in and have success right away, because it was more expensive. And there are bigger players in there and more sophisticated investors that I was gonna have to compete with. I said, Why don't we go to another place? That is that has a look alike audience to where I already am. And that's why we chose Chattanooga. The other thing about Chattanooga that I thought was interesting, from a data side is an hour and a half away in Nashville, and all these buyers that I was watching in Nashville at the Ria meetings and the Facebook pages and all the meetups. They were complaining about not finding deals in Nashville anymore, but they hadn't gone over to look at Chattanooga yet. It's so close. I was like Oh, I could just network and meet with buyers and build my list here in Nashville, but push them over to Chattanooga where the returns are a lot better and start building my buyers list with Nashville buyers that could flip or buy rentals in Chattanooga, and just kind of educate the market a little bit here. And so that's what I decided to do. And it turned out really, really well. I mean, I remember we didn't have a great sales rep. He was, I mean, he's a great guy. I love him. We just weren't, we just weren't hitting home runs all the time. Like he's kind of all over the place. And now we know what our acquisitions rep should look like. We got it really dialed in. But we were we just came out of the gate really strong. Like there wasn't a lot of competition there. We were dropping contracts, I was able to sell them to Nashville buyers and be the person here in Nashville that was kind of helping to move the contracts in Chattanooga push people over there. And we built our buyers list really, really fast and kind of took off and kind of own that market for a while before people started getting a whiff of it and kind of came over. So that's one thing that I think really helped the profitability of my company in the beginning and the number of deals and we were able to do because we can almost double our deal size and volume with just adding one more person to the business. And it was cool. It was cool to see.Aaron Norris 10:08So you started a sort of became an expert in a secondary market and then worked your way after building the reputation. That's, that's good to know. Looking at the data, knowing that that's the journey. Now you say the word wholesale. And if you say that word, if you're new and you show up, club owners will say to you, they're like, Oh, really, you're a wholesaler Good, good for you. It's typically the word that means I don't have any money and any experience. I'm just looking for a way in. So what does a wholesaler look like for you?
Bill Allen 10:43Yeah, you know, that's an interesting thing. Because what's in what the way that I look at it is you have so many people are teaching the fact that you can start as a wholesaler you don't need any money. You don't need to know anything. Just go in make an offer, get it under contract, so I saw the contract. You don't really need to know the number have money, all that stuff. I don't really love that. I definitely like it's a it's a decent place to start. But it doesn't have to be where you start, like you can start as a flipper. And in fact, I think starting as a flipper, it actually reduces your risk people think they're like wholesaling is very easy. It doesn't mean you don't have a lot of risk, you can just cancel a contract. Well, I mean, we spend, we spent $45,000 a month on marketing before we even get a deal. So like, that is money that I put out as a company upfront, to go out looking for things. As a flipper, when you buy a property, you actually have equity into this property that you're purchasing. When you buy it and you have an asset that's tied to it when you put your money on the table. I put my money on the table ahead of time. So people talk about risk a lot and they think that wholesales not a lot of risk. Well if you're putting like number one, how do you value your time? So it's either time or money that you're putting into market to go find properties. So for me, I really I love I thought the same thing when I started like wholesalers were like sleazy and they were scammy. And they like fast talker sign on the hood of the car kind of people. And that's that's just what was portrayed in the almost like the real estate media, if you will at that time for me like REIA meetings and free forums and stuff like that. But when I started meeting like, like, really ethical, awesome wholesalers that were running a business, not just like a side hustle where they do a deal here and there and make some money and fall backwards into it, it changed everything for me, because I did start as a flipper. And during that time, I identified myself as that and I kind of pushed those other people I was like, I don't want to be associated with these other folks like that. I don't trust them. I don't believe what they're saying they're trying to sell me this high ARV or these, like low repair costs and all that stuff. And so what I decided to do was like just kind of piggyback off of some of my mentors. And I think you know, Andy MacFarlane. So Andy was a huge mentor of mine. When I saw his business I was like, wow, like, this is somebody who I trust. He's amazing. He, he treats his his his business like a business. He treats his team with respect, just come very admirable and coming from a military background like honor, honor, courage and commitment are our core values in the military. And coming from that, it's like, I just, I was picking up a lot of great, you know, vibes from him. And for me, like I wanted to emulate that in a business. And so then I said, Well, what, you know, why, why do we have such a bad reputation out there? And how can we change that? So like, the way that I look at it now is we, we provide valuable, valuable items to the marketplace like if I go to a grocery store, there's wholesalers that bring the food to the grocery store, like in any business, there's a wholesaler that is making money by adding value to that customer, someone way or another. They're adding value to the grocery store. They're bringing the lettuce, they're adding value to the farmer, they're actually moving more product and things like that. So as long as we can show up in the marketplace and add value, then I don't think that the word wholesaling has to be a bad word. It just seems like in real estate, you know, I hold, I hold a real estate license in Florida too. So, you know, there's, there's just some of it is a little bit of education and just understanding that there are good people out there. And I don't know, it's like the top 10% of any industry, there's like really great people. And there's the other 90% that give us a bad name, in whatever we do. So it's a challenge, I think.
Aaron Norris 14:24 I think here in California, some of the more professionally organized wholesalers, their their game was to find the next sucker that would overpay for something and bury them, but maybe it wasn't burying them, maybe their target buyer with somebody who's going to hold the property and not flip it. So there wasn't enough juice left in the deal to really make it make sense as a flip. But it was really that one and done strategy. So I don't, I personally don't know a ton of wholesalers in the California market, that leave enough juice in the deal to where somebody can successfully flip it. It's just gotten harder. So...
Bill Allen 15:01 Yeah...talk to that a little bit, I think you get to a point where like I we don't put ARV and repair estimates on our marketing material anymore. What I found was, nobody told me that my ARV was too low ever. And nobody told me that my repair costs were like, we were right. They were always like, Oh, no, it's gonna take way more money than that, and your ARV is so high. So I just said, You know what, look, you figure it out. And you tell us if this is a deal for you, because we run the numbers, we get the contract, we're adding value if we can't add value to somebody's business, and it's a relationship business, like, our name is important to me. And we got to do right by these folks. And we have people that come back and will buy contracts from us over and over and over again, and they're looking for deals. So you know, I and I have trouble with that. There's a lot of wholesalers around here that are definitely like you said, looking for the next sucker and then they're just going to burn that relationship and go look for the next person again. And that's just not the way to do business in any business. Like whatever you're talking about. It's about the people. And if you take care of the people in the business, you're going to be successful. And if not, your success is going to run out really, really fast. Like we've basically doubled every year for the past five years. And to see that happen and the team and their satisfaction that they get, it's really cool to see. And it's all because we are doing the best that we can. I mean, there are times where we contract a property to high, we have to go back and we have to say, look, we missed this or we missed that. And there's plenty of people, I'm sure that are on our buyers list going how are people buying these deals, but some of them are landlords, we had we've had people who will buy a deal because they just want to keep their crews busy,