A Deep Dive Into Wholesaling Sales Strategies with Billy Fernandes

Billy Fernandes: [0:00] So our goal next year is to do 365 deals next year. We're doing pretty well to be able to hit that number next year. Wow. We did 20 contracts last month, did 19 the month before. We're pacing to do 21 this month.

Mike DeHaan: [0:14] Welcome

Speaker 3: [0:17] to the Collecting Keys podcast. The show where you'll learn how to use real estate to create massive income, not just passive income. Real estate doesn't have to be a get rich slogan. Listen to the country's top real estate operators, and you'll have all the tools you need to replace your w two income and go beyond in under twelve months. Ready to take things to the next level? Let's jump in with our hosts, Mike DeHaan and Dan Austin for today's episode of the collecting keys podcast.

Mike DeHaan: [0:55] What is going on, guys? On today's episode of the Collecting Keys real estate investing podcast, we have Billy Fernandes, and his wife was on I think it was, like, last year now. Was a little while ago, Tara. And she had one of our most successful Yeah. Popular episodes talking about marketing. And he is the other half of that business focusing mostly on the sales side. And he brought so much incredible knowledge in this episode focused on sales and building a sales team. And he goes into so many different like just tactical pieces that are super, super valuable and something else as well. Didn't realize how insanely much their business has grown since we had Terron last year because their business has like, it's like 10 x, like they have a, like I think we have a big team, they have an even bigger team than us.

Dan Austin: [1:41] Yeah, they are like massive.

Mike DeHaan: [1:43] Yeah, the last three months I think they were at like 19 deals and 20 deals and 21 deals, you know, doing multi million dollars a year just in wholesale fees, not even counting their flipping operation. And they're just really crushing it.

Dan Austin: [1:54] Absolutely. And Billy does give like a legit clinic on kind of running the sales and and talking about some of the ins and outs of like how he runs his business and what their goals are for next year, which are awesome. And he might possibly have one of my top favorite crazy stories at the end when he talks about his craziest real estate investing story. I don't know if I've heard anything like those two. He gave two, so you gotta listen for those.

Mike DeHaan: [2:16] He has some pretty wild ones. And then probably through the episode two, he goes into some sales tactics. He talks about this tactic of doing the, we call it a third party story, which just makes so much sense. It's a great tactic, super actionable, and you guys and do take go and put it into action right away. But, yeah, it's a really awesome episode, guys. This is probably one of the highest level operators that we've had in the wholesale space on this show. So this is one that you should take notes. Let's do a couple times. Reach out to Billy as well on social media. He's a really nice guy and he's always happy to chat with people, so don't be shy. It is why people come on these shows because they want some public exposure. Right? So, anyways guys, enjoy the show with Billy. It's a really really great one and we appreciate you all. Enjoy. Alright. We are here today, guys, with our good friend, Billy Fernandes, who you might have heard. I know I didn't say his name right. After I said his wife's name wrong for an entire episode, and she corrected me at the very end of it. That was like episode 93, I think.

Dan Austin: [3:16] After you'd known her for like three years before that.

Mike DeHaan: [3:19] It was the first name, and then I tried to put the, you know, white guy spin on the last name, and it just sounded super So, but no, no, you guys are some of the best operators that we have met in the wholesaling space based out of the Dallas area. And super excited to have you on the show, Just talk about how you've done what you've done. You guys have done some of the biggest deals that I've heard of in the wholesale space, you guys have built a really awesome business, and you guys were always kind of that, the couple, like I said, would say like the team in the wholesale space you're starting out, everyone was like, what the fuck are they doing? Because they are printing money, and we can't figure it out. So how'd they do that? Super excited to dive into all of your secrets here today.

Billy Fernandes: [3:58] Mhmm. Absolutely, man. I'm looking forward to it. Thanks for having me. Really, really appreciate it. So I hope to be able to have as good of a podcast as my wife. She's definitely the the brains of us too. Because she's a visionary, not an implementer. Yeah. She sees something we that she wants, and she makes me go do it. Yeah. There's a so yeah. So I try to pretend that I'm the visionary as well. I love that. That's awesome. Truly, she she has a vision of where we wanna go and what we want do with our business, and our people, and our walk with God, everything else. So she's she's awesome. Yeah, exactly. Yeah. And don't worry,

Mike DeHaan: [4:30] even if your episode does do better, we won't tell her. Oh, that would good. Oh, you will. Yeah. It's up to you. It's up to you. Awesome, man. So let's dive into I guess, like, so we start from the start from the end first. So what does your business look like right now just to give people some context over what

Billy Fernandes: [4:45] you guys have done?

Mike DeHaan: [4:45] How many deals are you guys looking to do this year? How much revenue?

Billy Fernandes: [4:48] Yeah. Absolutely. How many deals this year? I'll I'll speak in 2024 terms because we're here at the end of 2023. What we're looking to do next year is I came up with I don't know. Maybe it's an an ego goal, but a goal a deal a day next year. So our goal next year is to do 365 deals next year. Yeah. And we're we're doing pretty well to be able to hit that number next year. We did 20 contracts last month, did 19 the month before. We're pacing to do 21 this month. And we're doing that with three acquisition managers right now. Right now, currently have three acquisition managers, one dispo guy, have a second one starting here in January, who will also be kind of quasi listing our properties as well, because we don't just wholesale. That's just a part of our business. It's probably about 60% to 70% of our business. Two lead managers, which I really, really enjoy them. I really try to start people to bond, bring them up. I got a kid working from me who's 18 and just grinds. And then the other in the auction, he's 21. It's crazy. Think of, like, 18, 21 year olds and be like, probably, like, just POSs and don't wanna work hard, and these these two kids grind their butts off. They're awesome. Nice. Got a transaction coordinator that's an absolute godsend. She's awesome.

Billy Fernandes: [6:04] Shout out to Caitlyn. She just handles everything for me and just gets it done. So she's great. And then, of course, as my wife, we have an executive assistant as well that works for us. She's great. Helps get get everything knocked out. And then we have a small team of, you know, VAs in The Philippines that are doing some marketing stuff for us. But next year, like is our our what we collect our growth year. We'll be adding, should be ending the year with six acquisition managers total, possibly seven. Three dispo guys, three LMs, probably adding another TC on there, possibly an assistant to Caitlyn, as well as towards the middle to end the year, adding a a VP of acquisitions and a VP of dispositions. That way, we can kinda stay not out of the company, but back, and we'll run it on the high level side of things to help grow it.

Mike DeHaan: [6:54] Nice, man.

Billy Fernandes: [6:55] And and that's where we see acquisition and disposition side. We also do have a we have an in house property manager. We have an in house project coordinator and a project manager. So those two guys, project coordinator and manager, run as a team. We flip roughly 50 houses a year right now. And our goal next year is so what I call a wholetail. Many people are familiar with that. Gonna wholetail another 50 houses next year. So the 365 deals will be taking down roughly a 100 of them. That's crazy. So you have

Mike DeHaan: [7:26] a freaking corporation, dude. Like, you got a lot going on.

Dan Austin: [7:29] Yeah. That's a that's a big deal.

Mike DeHaan: [7:30] And I guess for context for everybody, I first met Billy in person, you guys did a stop up here in Spokane, you're heading up to White Fish. And you guys have just gotten started. And this is in 2021. So you've done all this in two years. Do you mind sharing like your revenue numbers so people have context? Because obviously you have a huge corporation going on. What kind of money are you making to a be able to support that, and what are you making yourself? Because obviously, if all your money is just going back in your business, and you're sitting there living off of rice and beans, kinda what's the point? Right?

Billy Fernandes: [7:58] Yeah, absolutely. I'm horrible at remembering numbers, I would have to like pull up the spreadsheets where

Mike DeHaan: [8:02] it's all kept. Everyone's always horrible at remembering the numbers when it comes down to hard questions.

Billy Fernandes: [8:07] Yeah, know our margins, and I know what we operate at. So for context, we sit at about a 40% profit margin in our business. Year, we should finish with roughly $2,000,000 total in wholesale deals. Nice. And you're hearing, like, three sixty five deals next year. 2,000,000 doesn't sound like a big number this year, but I had some growing pains that I went through on hiring people. I really, really learned how to hire slow and fire fast. So really, that that number were the first, like, six months of the year was, like, me, one eight. Where we were doing just, you know, eight, nine, 10 deals a month, and now we're doing 12 a month. So revenue wise, essentially, for every million dollars of gross revenue brought in, we're doing roughly a, you know, $400,000 profit. Okay. Yeah.

Mike DeHaan: [8:53] If you're 2,000,000, right, it's about a million bucks.

Billy Fernandes: [8:55] Those are good margins.

Mike DeHaan: [8:55] So the great thing is because your business partner's your wife, you're keep all that money. See, Dan and I have a year like that, I gotta share it with him and that sucks. But Yeah.

Dan Austin: [9:02] Yeah. I just pilfered off into other accounts that he doesn't know about.

Mike DeHaan: [9:06] Yeah. Well the crazy thing is, is we're both just skimming money, just either of us know. Exactly.

Billy Fernandes: [9:13] Yeah, we have really terrible profit margins. I just, I served acquiring properties in different LLCs, that way I has no clue at all. Right.

Dan Austin: [9:20] Yeah. Yeah. Your margins are actually 60%, but 20 goes to you before her.

Mike DeHaan: [9:24] Yeah. Right. So did we really need 80 air conditioning units? I don't think so. But

Billy Fernandes: [9:29] Anyone's embezzling money from me, that's my wife, because she control all our finances.

Mike DeHaan: [9:33] Yeah, right. Yeah, that's funny.

Dan Austin: [9:35] That's funny.

Mike DeHaan: [9:36] So that's like crazy growth though, right? So, I mean, we all know people too that have been trying to do this game for as long as you guys have, and are still trying to get to the phase of like, oh I wanna do a couple deals per month, and you're over here doing like 20. Right, you're doing a couple deals a week, which is insane. Mean us included in that, you guys are And crushing it's funny because I didn't realize how large your team is, because I feel like we have a big team, but your team's even significantly larger than ours. So now I feel better about telling you our numbers because your team's bigger, so it makes more sense. What kind of ad spend are you doing? Or I guess, what is your main form of of lead flow to get all these opportunities?

Billy Fernandes: [10:09] Yeah. Main form of lead flow is definitely instill direct mail. Second to that would be mainly, like, referrals, believe it or not. Just other people saying, hey. Have this deal. Like, check this out. We're gonna be interested in it. Actually, probably website. Sorry. Website is second, then referrals. And then after that, we we started doing some MLS prospecting, and we've kind of been ticking up on that. But I would say that's probably less than, right now, less than 10% of our deal flow.

Dan Austin: [10:39] Yeah. So do you focus a lot, like, as far as ad spend on the on your website, or is that just kind of like a trickle in effect just because you have it, and you guys are doing a lot of direct mail, people come to your website, or do you guys actually do a lot of SEO and PPC type stuff?

Billy Fernandes: [10:54] Event is something that we're working and dialing in more on the website. And website is very hard to track too because it's like you go in, you're like, oh, this was a web lead. We closed a web lead. And you go and you look that person, you're like, oh, we emailed them five times as well. Right. So it's hard to, like, justify. Was it just a website lead or was it purely just direct mail with Drummond website then filled out the form. So the website is almost more supplemental than anything. Mhmm. But the ad spend on the website, we were using a company. I'm not gonna say who because we're looking at switching, and I'm not here to bad mouth anyone, but just couldn't dial down certain things. We're we're talking to some people because we're definitely getting a lot of traffic to our website, but we just weren't getting, like, the full launch build out. So I'll work on doing some tweaks there to see if we correct that for a better conversion rate to have we'd spill it out so that they then inject into our system and we can reach out and

Mike DeHaan: [11:47] close them. Yeah. That's awesome. I mean, it's there's there's no perfect way to do it. Right? Like, there's always gonna be inefficiencies someplace. I think the biggest thing which you can probably attest to is committing to something and doing it consistently over a long period.

Billy Fernandes: [11:58] 100%. And that's, like, absolutely, I I tell people is, like, they're like, what you know, what's wrong with my business? How can I be better? I'm like, let's just be consistent. Like, if you knew that you had to make 100 phone calls to get one deal, how quick do you like, if you knew you had, like, 100 no's to get one yes, like, how quick do you go get 99 no's to get that one yes? The same thing with, like, pass offs, which, you know, is basically what that's what I consider the lead manager passing lead to the acquisition manager. If you knew that you had to pass off five leads to the acquisition manager, how quickly do you go find those five to pass off? For the acquisition manager knows that they have to make four offers to get one contract. Like, it's just all a numbers game, basically. Just be consistent on what you're supposed to be doing and put it to work, and it it pays out in the end. So and you'll get weird weeks and months where, like, you know, I just had one of my best AMs, been an absolute stellar of a dude. Like, win a month and got, like, one contract. And he's like, Pam, what am I doing wrong? I'm like, you're not doing anything wrong. Like, it was just a rough month getting beat out here or there.

Billy Fernandes: [13:04] All of our leads were out robins who had maybe dealt us some bad leads, but like, had a rough month. And then like, he was probably ending this week with three, maybe four contracts. So Nice. That's awesome.

Dan Austin: [13:15] That's awesome. So that's actually a really good point, you're talking about these KPIs and at these hand off points, and I'm assuming Tara does a lot of this for you guys, I'm just making the assumption, maybe you do, because I know you do a lot of the sales side and stuff, but like, how do you guys implement that with your team? Because what I'm really interested in hearing is your hiring process and how you're managing the staff, and for Mike and I, a big part of what we have to do day to day is like, how do we manage the proper KPIs to incentivize these guys to do the right things?

Billy Fernandes: [13:43] Yeah. So I'll kind of just give you the KPIs that we're tracking at this time. Oh, yeah. So like for our KPIs, I wanna know how many leads came in. Of those leads that came in, what percent did we make contact with? And it should be above a 90, right at a 90%. People call in and they never answer their phone again. Of that ninety percent that answered, what percent were passed off, meaning they're qualified to go to the acquisition manager. Of the ones that were passed off, what percent of those were given an offer? And then the ones given an offer, how many of those became a contract? And then of the ones that became a contract, how many became a deal? Because no one ever wants to talk about their fallout rate. Yeah. Where people will say, like, I don't have a fallout rate. Like, bullshit. Yes. You do. Yeah. Yeah.

Dan Austin: [14:29] You do. You have to.

Billy Fernandes: [14:30] Yeah. And I'll be upfront. Like, our our fallout rate sits around at 25%, which seems high, but every escrow officer I've talked to that's in the wholesale industry is like, that's pretty standard.

Mike DeHaan: [14:41] Yards about 30%, so it tracks.

Billy Fernandes: [14:44] Yep. Yep. And and it's, you know, sellers ghosting you, buyers going around you and screwing up a deal, title not becoming clear. And then like my least favorite one is like just you just gonna find a buyer and you locked it up too high. Like that sucks. Like it's we I feel like at that side, we didn't get you to sell what we what we said we would. So those are the KPIs we we track there.

Mike DeHaan: [15:05] Yeah. That's awesome. Yeah. That that's always such a challenging thing, you're trying to build a team. Let's dive into just like sales in general, because so many people I mean, when they reach out to us or they join our instant investment community or anything else, they always think that marketing is kinda like the most important part, which it is. But you know, as well as we do, that marketing is kind of a repeatable thing that anybody with capital, consumer startup, can do repeatedly. But what makes the people in this business that are great, different from those that just do okay, is the sales skills. Whether that is as yourself when you're starting out or as you build a team. And this, in my opinion, is one of the reasons you guys were able to do so well at the start was because you had really good sales skills. You know, you were gonna do the negotiations and then obviously as you grow it, you're gonna be better at training and instructing people. So I guess what's your sort of view on that for people who maybe don't have like the sales side of it? Why do you think you were able to be successful at it? What were some of the tricks that you like did early on to be able to close more deals when you were kinda just starting out?

Billy Fernandes: [16:07] Yeah. In our business, a lot of people, like, we're we're not used car sales, and we're not car sales. People like that want a car, like know what they want, they go get it, and like, you could hard close though, right, on a car. In real estate, like, it's more than likely someone's biggest transaction that they've ever done in their life or one of their biggest if they've had multiple homes. So it really comes down to engaging with people and, like, building rapport. We probably have two or three deals a month where we are not the highest offer, but they trust my guys the most. One, we were literally 10 k lower than the other guy, and we saw his contract. And we're like, no. We're at $1.40, another at $1.50. And they're like, that's fine. We're still gonna deal with you. Like, same close time frame, same option period, everything. Went with us as just a rapport Mhmm. And having that engagement with them. So I say it's it's huge. Like, if you're, like, starting out in sales or starting out in in this business in particular, just having that relationship with that seller is far more important than, like, just knowing how to close somebody and that trust with them. Because it, again, it's their biggest transaction they've probably ever made, especially if it's like a Yeah. You know, $2,300,000 home. It's probably their biggest transaction, and it's terrifying for them. So having that trust in that process, and that's where I started out was like, I don't know much about real estate, but I know I can get anyone to like me, and I'll just go Yeah.

Billy Fernandes: [17:27] You know, build some excellent rapport. That that's what I'm fighting for.

Mike DeHaan: [17:31] What do you think are some of the best ways to do that with sellers? Because I think one of the biggest areas that a lot of people find themselves is they are frankly a different walk of life than their sellers, right? Most people that are getting into this business, they come from middle or middle upper class backgrounds. You know, they usually, you know, can pay for themselves. They've had decent jobs, like they're not financially distressed. And all of a sudden, you're getting thrown into, you know, mobile homes that are heavily distressed that people have lived in for thirty years. You're getting thrown into family dynamics that we've never seen before. You're getting around crackheads. Right? Like, what do you think are some good tips for, you know, to build relationships with those people when you've just never been around them before?

Billy Fernandes: [18:12] Yeah. Absolutely. So two things there. And one is kind of answers your question, but not really. And, like, I think why I was successful in it is because, you know, if I had, like, a superpower, like, I don't know if it's really a superpower or not, but, like, I can relate to, like, that crag whore on the corner, and I could have a good conversation with her. And I could go talk to a billionaire at a gala and relate to both of them. Like, I can or, like, at least hold a conversation. I've never been a crack whore on the corner for the record. I'm not working on that either, but I could relate and have a good conversation with either.

Dan Austin: [18:45] Oh, man. I feel so offended. Both of you guys are saying crack, crack head, crack. I don't know why, it just feels

Billy Fernandes: [18:49] so offensive. Yeah. I didn't mean to offend you, Dan.

Dan Austin: [18:52] No. You didn't offend me because we talk about it all

Billy Fernandes: [18:54] the time. I just haven't heard

Dan Austin: [18:55] it in like a couple months. We haven't had to deal with one in a while.

Mike DeHaan: [18:57] The problem is is Dan's up Spokane local, so

Billy Fernandes: [18:59] it's too close to home for him. Yeah. It hurts my heart a little bit. So I think that's being able to relate to those people, I don't know how or why, but like, could always pull something out of my hat that makes me relate to a a person in poverty and a person who's a billionaire and anywhere in between. But the way I find best to relate to people and in their situation is that you might not relate to them, but you could always pull into what we call a third party story. Now And are you familiar with, like, a third party story in sales?

Dan Austin: [19:27] This is new to me.

Billy Fernandes: [19:29] Third party story of sales is, say that you are gonna sell me your house and that your, like, biggest holdup is me an objection. What what would be your holdup? I've got nowhere to move. Nowhere to move. Excellent. Hey, Dan. I totally get it. Like, you have nowhere to move. This totally reminds me of that time that we we bought a house just a few months ago from Cindy. She also had nowhere to move. And we found like the best option for her, we could shut it. She had a contract on her house, was that we put her into a contract with a sixty day lease back to her, and we held back $5,000 that she got once she moved out on date 60. And we set her up with the absolute best agent in the city we know for finding new homes or leases for people to to. And she was able to take that, sign a contract so that they knew she was serious about moving. She knew what amount she was gonna get from closing, and she was then able to go and find a place she wanted because she knew she had the paper and hand that made sense for her.

Dan Austin: [20:25] I like it.

Mike DeHaan: [20:26] That's the story. You call that a third party story?

Billy Fernandes: [20:29] A third party story. Like, where you're using an example of someone else in a story, so that you could be whatever, like Yeah. You literally tie that

Dan Austin: [20:36] to anything. I wanna throw so many things at you and see how you pivot on it. Right now, like Yeah. What third party story you got for mom died?

Billy Fernandes: [20:44] Totally get it, man. Like. I'll say,

Mike DeHaan: [20:46] you guys should go list that again. I've never heard that before, and Billy probably paid someone $25,000 to go to a weekend course just to tell them that. So, that's a really valuable information you just got right there. I mean it makes sense, the funny thing Absolutely. If you've ever been around like salesy people, they'll always do that. Right? I've just never heard it phrased that way or like Mhmm. You know, that sort of tactic put in a box.

Billy Fernandes: [21:09] Yeah. For the seller to know that someone else has been in that exact same situation and came out on the potholes Yeah. Ahead of things, just reinforces that it's gonna be okay, and built that trusted rapport.

Mike DeHaan: [21:19] Yeah. And the crazy thing is too, is once you've been in this business for even like a mediocre amount of time, you can make those real stories. You don't have to like make shit up. Because there's, you know, all of our sellers are kinda different, the basic way that they go down, eventually you've kinda done all of them. Like very rarely is there a deal now that is completely new. You can always relate the current deal to one you've done in the past, what you've done, a few dozen. So, yeah, nice, that's really awesome. What about the follow-up process when you're starting out? That's always a huge thing that so many new people get caught up on as well. There's too many people that are trying to scale. I mean, we just we just had our first Keyes Con event a few weeks ago, and like follow-up was like the number one thing that every single person there was struggling with.

Billy Fernandes: [22:04] Yeah. That's so I I have a saying. I have a lot of sayings in my office, like, and my wife makes fun of me for them. Absolutely. One of them is time kills deals. Time kills all deals. That could literally be the time from when that lead came into the system, so the time it took you to con contact them. That could be the time from when you first made contact with them, and they said, oh, call me in. Call me in a month. I'll be ready. And you actually just waiting a month. Yep. Like, I have a rule. If they say a month, you call them in half the time. Call them in two weeks. If they say a week, call them in three days. So time kills deals. Same thing. Like, someone's like, yeah, send me a contract. I'll I'll sign it tomorrow. Like, you letting them hold that contract for a day is gonna kill that deal. They're gonna call someone else and then show someone else that contract, and that's gonna be gone. Yeah. So with the follow-up, my rule that was when a new lead comes in, we're calling them twice a day, every single day for the first seven days. Then after that, it's once a until they pick up. And then we're calling them once a day for the next seven days. And then we're calling them every other day for the next seven days. So we call them once a week, the next seven days. And then we now. And then so that's just like on, like, new leads coming in that you haven't made contact with.

Billy Fernandes: [23:11] And then I have a rule that no one should ever go past a three month follow-up. Like, I don't care if they say they're ready in a year, because you could ask anyone out there. Doesn't matter who you are. Everyone has a, what I would call, like, a major life event Mhmm. Happen to them every three months. That could be like a mother passed away, a childbirth, a job change, an illness, whatever it might be. They couldn't make payment. Now they're in a foreclosure. So many changes happen to someone in, like, every three months that if you wait past that three month mark, you're probably missing a major life event for someone. So never long enough three months. But if it's three months, like, that's usually a more unmotivated lead. That's just not like a cold follow-up every three months. Typically, someone's like a hot lead. Like, you're calling them every single day to the point where you're almost in the way, but not to the point where they're gonna block your number. And you gotta gauge your relationship with them and and how that's going to know how how hard you can push. You know? You gotta know when to back up and when to push. But for people that are on that follow-up and want to opt in to follow-up, like Mhmm. You should be falling to the point of where you're not

Mike DeHaan: [24:23] gonna know. Yeah. You gotta just read the room. Man, hope my sales guys listen to this, they can hear you say all this shit that I harp on all the time, and they just ignore me about. Right.

Billy Fernandes: [24:30] It's not

Dan Austin: [24:30] just us, right? Well, and like, people ask me about follow-up, I say like, you will be highly surprised about how aggressive you are with follow-up, how much follow-up we put in on these leads. Like when people step into the business, and they're looking to get started, like Mike said at KeysCon, a lot of folks were like, this was their biggest pinch point, because they just didn't have context for how much they should follow-up, and it's like, whatever you think is a lot, do more. Exactly.

Billy Fernandes: [24:54] Yep. Exactly. I stress that to my guides too is like, just like the time kills deals. Like, just get accurate. Call them. Don't let Yeah. If if you're not calling them, someone else is. And I and I tell them, I'm serious. If you're not calling them, someone else is, and they're gonna lock that deal around because that one emotional point where that that's always ready to go. Mhmm.

Dan Austin: [25:13] Yeah. My my saying that you can go and take it to your office, Billy, is your warm leads are someone else's new leads.

Billy Fernandes: [25:19] Yep. Kind of a spin off of that, that's the one my wife hates fun before, is that leads don't die. You do. Oh, there you go. It's that, like, well, right off their leads, I'm like, now like, and they're like, oh, I marked it dead. I'm like, that lead didn't die. You you gave up on it. We recently contracted a lead. Mhmm. Think it last week, a week before, that was marked dead in our system, and they wrote I love that. Back in. I'm like, who the hell marked this debt?

Mike DeHaan: [25:42] Yeah. Yep. We've had that marked dead or even better. We we let go of one of our sales guys the other day, and literally this was yesterday, I guess. And literally that afternoon, one of our other sales guys locked up one of his deals that he had been Yeah. Lack of follow-up. Yeah. It literally happened over like like three hours later, and we're like, well, decision justified right there. That was easy. That's So, as a so you've covered the sales, your wife does a lot of the marketing stuff, let's talk about your flips, because I think that's another thing that a lot of people will have interest in. I know you're doing a lot of flips a year. A, how are you paying for all these flips? You just like using your own money? Have you raised money? And b, managing flips is a tricky process to do at scale. What does that look like in terms of your contractors, project management? I know you have a project manager, but I'm sure you have some processes in place. You have people on staff. You sub everything out? Like, what does all that look like?

Billy Fernandes: [26:37] Absolutely. So I'm actually I use monday.com for managing our our workflow of projects. My younger brother, Aaron, he's I just turned 24 a couple weeks ago. He's our what I call our project coordinator. What he's doing is he is essentially going and getting the bid with with our project manager of, like, this what the house is, what we need to do to it. These are the stuff we know, like, kind of putting all that together. And then he's also in charge of, like, when people should be paid and ensuring, like, the job is done. And he, essentially, a Thursday, sends Tara a list of all the subs and who gets him out what amount of money, and we just we set it off. Mhmm. It's nice that he's a brother, so I have a lot more trust in him. Yeah. Where we'll send it off, he does an excellent job doing that. Especially like a 24 year old kid, and like, he's he's awesome. He's got more air than I do, and he's got a way deeper. So you might think

Mike DeHaan: [27:29] he's gone.

Dan Austin: [27:30] Nice. So with that, when he's getting the bids, do you guys have like contractors that you consistently work with, or is he always, like, looking for new bids and new contractors? Because that's always like, just like you need flips in the pipeline, you also got any contractors in the pipeline.

Billy Fernandes: [27:44] We have the same contractors that we're pretty much using on all of them, and they almost with the exception of, like, the electrician or the plumber or HVAC or roof, those guys are doing their own thing or whatever. But, like, we have, like, three different crews that are in our houses that almost primarily just work for us. If we're a little slow, they might peel off and do another job and come back. But like these guys, they're there seven days a week or six days a week, just set up to sundown, get the jobs done. Like, we we just knocked out an entire 2,100 square foot flip that included, like, 600 feet of addition on it, and it was literally not to the studs, but it was electric plumbing. Like, it was everything, and we did it in ten weeks. Nice. Wow. And they're just they're fast and they're efficient. So Aaron, project coordinator is more controlling, like, when are we paying people? Here's the bid and tracking the bid. And the project manager is actually more in charge of getting the subs to the job at the right time right behind the next sub to where, like, I would say, like, the average if there is even a down day at a flip, there's usually like, if there's no one there, it's probably never longer than two days. We're just one after another working through there. So Uh-huh. Your your other question was how are we funding the our flips?

Billy Fernandes: [29:03] Private money. We have a hard money lender we use a little bit on, and then we self fund

Mike DeHaan: [29:09] Yeah.

Billy Fernandes: [29:10] Some of them as well. So at any given time from things that we, like, I guess you say, like, own at that point or, like, they're in escrow to sell or whatever, there's probably eight at a time, roughly, maybe nine. That's awesome.

Dan Austin: [29:25] Yeah. How do you track that? That's actually an interesting thought I just had like with your private money lenders and when you have like eight all the time kind of in process, how do you track that for them? Because that's kind of like a big deal to make sure they're getting paid on time, and that you're you're kinda keeping them up to date. Because they're really, it's kinda like you're running on a little fund for your private investors when you're doing it at that scale.

Billy Fernandes: [29:44] Yeah, absolutely. And when I what we have worked out with our private money is that we tell them to pay them all the interest at the end. It's just so much easier. We're like, hey. It's way easier to, like, just know that, like, every day we have your money, we owe you $28.57, and we literally go to the day of closing. We multiply all the days we've had it, that's what we pay you. Makes it super easy. And then they like it because then, like, Printful's not being paid down or we're not, like, throwing them check every month. They're they're fine with it. Totally. Haven't had a lot of them complain on it yet. So just goes right to the day of closing, and then they get the payoff and from and we send them the payoff for them to sign so that, like, it's easy for them. They're not trying to figure out what it actually is. And we'll walk them through the map of, hey, started this day, closed this day, interest per day was $30. That's, you know, $900 a month and then took us four months. You have $3,600 and your point is being paid now as well. Nice.

Dan Austin: [30:37] That's a really good point, no pun intended. When we talk to people about like how to make the relationship with their private money lenders better, is like take the workload off of them, because oftentimes they're not real estate experts, and that's why they're lending to you, because they don't know how or don't want to know how to do all that stuff. So get them, get documents prepared, get everything put in front of them, and teach them, and show them what you're doing, build that trust with them, and then just take all that work off. Because even for some of the stuff we do for our lending, like we have to do payoffs and things like that, but the people we lend to that are on top of their shit are so much easier because they already do what you said, they have a payoff ready, they wanna check with us of course, hey is this right? And those sorts of things, the documents are prepped for us, it makes it so much easier for Mike and I to do alone. Makes us wanna do it with the people.

Billy Fernandes: [31:17] The easier you can make it on them, the better.

Mike DeHaan: [31:19] Yeah, I will say though, if you are an individual who's going to lend money to somebody, do your own freaking docs and protect yourself because otherwise you get all your money stolen.

Dan Austin: [31:28] Yeah. Do your own due diligence on everything you should. Right?

Billy Fernandes: [31:31] Did you get your money sold or something?

Mike DeHaan: [31:33] No, we haven't. But I mean, it can happen. We've heard some crazy stories over the last little bit about people who've gotten wrecked on stuff. We can tell you to offer actually talk about on on other episodes on here. But there was like one in particular where these people, you probably know of them, that they stole a bunch of money from another person that they had partnered with on a deal just because they the thief basically supplied the documents and the investor didn't read all of them, and they had they had a way that they could just steal the money.

Dan Austin: [32:02] You gotta read them. Yeah, not everybody's gonna do business like Billy is going to, where you're gonna actually try to protect them. Some people do like the slide shade Yeah. And they're like, oh yeah, I can just steal your money.

Billy Fernandes: [32:11] That's too bad. Like, I love my private lenders. Like, they they make my job easier. I don't get why people do people wrong. I just

Mike DeHaan: [32:19] It's short term gain. Right? Like, and right now is the mark starts to get weird. You're starting to that more and more all the time. We've all seen the big rise of scammers. All the loss of fractures out there. That's awesome, man. No. You got you got a lot of good stuff going on. Let's your rental portfolio as well. I think you're keeping some properties. I don't think you mentioned that at all. What's your rental portfolio look like?

Billy Fernandes: [32:39] Yeah. We're up to somewhere around a 120 doors or so. I'd have to go somewhere in there. Around a 120 doors or so.

Mike DeHaan: [32:49] Plus you have your storage unit that just prints money.

Dan Austin: [32:51] Yeah. That's a great deal.

Billy Fernandes: [32:53] So we are we did purchase a bunch of properties at end of this year that were, like, literally not cash flow, which I know everyone's like, oh my god. Like, that's just a horrible, like, rule, and you don't do that. Like, they break even every month. They're good, like, bed, two bath break columns, but literally just did it for depreciation and appreciation. Mhmm. Not the cash flow. It's hard to get anything in cash flow with, you know, eight and a half percent rates anyways. And I'm like, I'll buy it now and not cash flow for one, two, three, four, five years, and then refi out $75 and then not cash flow again when I have $75. So Yeah.

Mike DeHaan: [33:28] You're also in a different position than most people, though, because your real estate business is making multi 7 figures a year. So who gives a shit about $300 a month in cash flow? You want the depreciation.

Dan Austin: [33:37] That's a higher ROI. Yeah. You're gonna get what, 35% tax bracket all day long, and you need to get that down. That's gonna save you a lot more money when you're talking a couple million bucks.

Billy Fernandes: [33:46] Exactly. And and the more and more, like, if if someone like is like, oh, I wanna people are in this, like, it's what I call it the bigger pockets, like, frenzy of where people are like, I wanna buy a single family home so I can become financially free. And I'm like, it's a lot. The math? Like It's hard

Mike DeHaan: [34:02] to do.

Billy Fernandes: [34:02] It's like

Dan Austin: [34:03] So hard.

Billy Fernandes: [34:03] It's like, okay. You want to do let's say someone wants to make $10,000. Right? $10,000 a month, and let's just say each door cash flows, true cash flow is $200 a door. Is it? That means you need 50 properties. So do you know how hard it is to get to 50 single family doors? Like, it's not easy. Let alone to get them, especially now, to cash flow $200 a door, especially in Texas with our property taxes. It's like, it's it's just not something that's, like, super achievable. To where I'm like, I'd rather and I'll probably screw this up because I'm on a podcast. But I'm like, for me, like, I we are basically acquiring 25 rentals a year. Yes. Sorry. 24. Two a month, 25. And, like, the amazing power of, like, appreciation and doing a cash out refi. So if you start with a house that is worth right now a 150,000, and it rents out for the 1% being $1,500. That here in Texas breaks even on on, like, pity, and you put away, like, a little bit of property management and a little bit for, like, repairs and maintenance. But, like, when we also do a house, like, we are bringing them up to like new. So I shouldn't have much repairs or maintenance. Take that $150,000 home and over, I think it's ten years with a 4%. Let's see one, two, three, four, five. Over ten years, that home is now worth with a 4% increase every year, like $230. Oh, I told this on a scoop on podcast.

Billy Fernandes: [35:39] 150 is what we're quite up for. It's worth 200 as is. 200,000 over five years with a 4% increase. I believe me, someone's gonna fax you out my numbers at five, but I think it goes to about 260,000 is what that ends up to. Take that number 260,000 and do a cash out refi at 75% in five years. That's $1.95, and your debt pay down has probably gotten down to around like, probably roughly 135,000. Mhmm. You just cash out where you find $60 in five years.

Dan Austin: [36:12] Tax free.

Mike DeHaan: [36:12] And if

Billy Fernandes: [36:12] you're doing 25 homes a year, that's $1,500,000 a year. You're pulling out tax free every single year because you're just taking the lump of houses you did every year. So if those numbers are closed, someone's able to give you a bunch of shit for that number paying off, but go do the math on your own and just figure it out, but you get Yeah, your yeah. Totally. That is

Dan Austin: [36:28] the value of holding real estate, people, like Mike and I talk about this a lot, we're not discouraging from property ownership, you're you're actually encouraging it through your process. Just don't think you're gonna quit your job and live off of cash flow, because it's incredibly hard to get, to your point, $10,000 a month in real clean cash flow, but that tax free benefit when you're doing these refinances over the long term is amazing, and it sounds like you treat your portfolio similar like Mike and I, we treat our portfolio now, because we do have cash flowing properties as a shock absorber, so that we can take those big home run swings on these other properties and do these big appreciation and refinance exits.

Billy Fernandes: [37:02] Exactly, and that's what we're buying. And not only will, like, those refis in five years make us, like I I think it actually too much to 1.2 if I remember correctly, which was a $100 a month is how I thought of that. And that's doing 25 a year. So, like, you could cut that into half and kinda, like, refi out, you know, $600 a year. Well, let's go, damn. We got that.

Dan Austin: [37:25] 600. That's not bad for not doing much.

Billy Fernandes: [37:28] I think people can become financially spree if they, like, worked on a five year stretch of acquiring 10 homes a year or even five homes a year. And then every fifth year, you're doing a refi on them. That money you're pulling out becomes, like, your what you live off of, not necessarily the cash flow. Or you can never refile them in five and they are cash flowing at that point. They are. Mhmm. You could chop it up a 100 ways,

Dan Austin: [37:52] but The way you just said there, Rise of Alex Hermosy says this, where he's like, you can tell somebody's wealth based on their timeline. Like so many people think on a thirty day timeline or a one year timeline, you just said you have a five year vision here, like that's a longer timeline than most people that wanna get into real estate can think of. That's the reality of a five year, a ten year, a fifteen year timeline in this business.

Billy Fernandes: [38:13] Yeah, and I love that you brought up Alex or Mozi. So our ten year goal is to do a $100,000,000 gross revenue over over the next ten years. So that's between flips, wholetails, and wholesales. And, like, that number is, like, terrifying to people. Like, $100,000,000. Like, that's that's a lot of zeros. But, like, when you break it down to what that looks like in a team and the amount of flips you're doing, it's not crazy. It's really not. It's more achievable than people think it is. Right. So that that's our goal the next ten years. I hope someone clients me in ten years and ask me if I did a $100,000,000 because I'm gonna say yes. I'm gonna do it. So

Mike DeHaan: [38:49] There we go. Alexa, set a reminder for ten years to text Billy about his $100,000,000 goal. Don't worry. We got you.

Billy Fernandes: [38:56] Let's do

Mike DeHaan: [38:56] that. Awesome. Well, really good stuff, Billy. It's really, really awesome. And again, just to reiterate for everybody, Billy just started doing this business in 2021. And it is as of recording 12/05/2023. Yeah. So that is not very long. So he probably has hit most people's ten year goals in like two and a half years. And Billy's smart dude. He definitely works hard, but a lot of stuff that he does is repeatable. It is process oriented. You can all do the same thing if, you know, you put on a little bit of gusto. So right on, Billy. We are going to dive into the end of show questions here. The first question, which is always the group favorite, is what is your craziest real estate investing story? And you're not allowed to tell the dog joke, the dog story, which I'm glad it wasn't a real estate story that you still have to hold the meetup several years ago.

Dan Austin: [39:47] That was a awesome story.

Billy Fernandes: [39:49] So that's a childhood problem.

Mike DeHaan: [39:50] Yeah. But, yeah, craziest real

Dan Austin: [39:52] estate story. I'm sure you have plenty. That's an amazing story.

Billy Fernandes: [39:55] Yeah. Let's say you need four four bourbons at least story.

Mike DeHaan: [40:00] I want you to tell that that joke at a as like a stand up bit, like on a stage because I feel like that would crush. That

Dan Austin: [40:07] would crush.

Billy Fernandes: [40:07] It probably would. So craziest real estate story. I'm gonna tell you one that's a little bit longer than the second one. This is like, oh my god. And it's like a quick one. But the first one was it's actually a home that's here, like, not far from my house, like, fifteen minutes down the road. And basically, one of their, like, pick up a contract from these two brothers that live in this house. Like, I've been there before, like, a few times to meet them. They've always been, like, weird dudes. They were painters. Like, they just huffed way too many themes in their day. For the record, I carry every house I go into, and I encourage my team to do it as well.

Mike DeHaan: [40:41] I thought you were about to say, for the record, I have nothing wrong with huffing pain. I just didn't know what they did.

Billy Fernandes: [40:48] Yeah. So I feel carry every house I go into. And I go to this house, we get the contract signed, and, like, these two brothers, and, like, they're, like you know, the house smells like weed and, like, cigarettes and, like, I think one them's drunk. Like, it's just it's awkward. And, like, they're being, like, friendly. And and they're keep in mind, they're brothers. They're not, gay lovers. Maybe they're a bull. I don't know. And I'm in that kitchen. Like, we we signed the contract. I'm almost kinda cornered, and I felt cornered, but, like, I also felt like I could whip the shit out of these guys anyways. You know what people have, like, no sense of, like, personal space? Like, they just kept getting closer and closer and closer. And, like, it came to a point, like, where I was, like, backed up on a wall a little bit. And I was like, hey. Like, give me a little bit of room, like, jokingly. Like, oh, like, you're getting close. Like, I can't breathe. You know, tried joking about it. And one guy, like, reached out and he grabbed my bicep. He's like, you have really nice arms. Oh, man. And I was like I was like, don't touch me again. He's like, don't touch you again? He's like, what's wrong? I'm like, just don't touch me. Like, that's don't like being touched. And he he said something that was, like, really mouthy. And, like, then, like The other brother's like, you got a fucking problem?

Billy Fernandes: [41:54] And we're kinda filled in the corner. Yeah. I I pulled my pistol out. I was like, let me out. And I worked every Oh, damn. They moved. That was so that was, like, my crazy, like, oh, shit story.

Dan Austin: [42:04] Wow. Did you buy the house?

Billy Fernandes: [42:06] So I had the same contract.

Dan Austin: [42:08] Oh, you did?

Billy Fernandes: [42:09] Yeah. I had the same contract. I will not. Of course, you did. I called the buyer. I would note for it. He's like, yeah. I want in. Like, let me go see it. I'm like, I'm gonna s four you into this house. So I called my sellers, like, get into the house. I'm like, maybe they forgot about it because of amount of paint they popped. I call them, they're like, f you. We're not selling you the house. Blah blah blah. You come here. We got our guns now. I'm like, alright. I'm gonna send you a travel nation. Oh, man. That shit. No. I'm just gonna contract. Wasn't worth it. So that was like that was definitely like my most like like feared appointment that I went on. The other one was like a hoarder house, another wholesaler route made. This is a fast one. Walk the house, hoarder house, get into the bathroom. I wish I could find a photo for you. Get into the bathroom. Can I look at the toilet? And it's see if I can find that photo while we're going here.

Mike DeHaan: [42:56] Yeah. If you find it, you can send it to us to open up the shipping amounts.

Billy Fernandes: [43:00] I'll send it over to you. So we get over to the I get over to the bathroom, and I'm looking in there, and I'm like, it's just the toilet is, like, just full to the brim and nice and God dang it. Like, to the top. I'm like, god. That's messy. Not the first time I've seen a toilet like that. I was like, whatever. And I look over, and the bathtub, I'm like, god. Is it just, like, stagnant water in it? No. Like, the toilet plugged, so they started just shitting in the bathtub.

Dan Austin: [43:26] And it was

Billy Fernandes: [43:27] just to the brim and crap.

Mike DeHaan: [43:30] That's a lot. That's like a long time.

Dan Austin: [43:34] What? That's a lot of doo doo.

Billy Fernandes: [43:37] It was was bad. It was to the top, like and, like, you could see, like, where it just, like, was like, where they kinda hover over the edge or just coming down the side of the toilet. And they've, the oh, dude. It was the nastiest house I've ever been in. But I sold it for 20 reds. So Oh my gosh. There you go. But Hoop sells. Guys bought it. I was like I am told. Was like, dude, the bathroom's disgusting. He's like, bought my guy's house mats.

Mike DeHaan: [44:01] Yeah. They they sent in the intern to clean that one up. Like, it'd be fine. New guy?

Dan Austin: [44:06] Yeah. Right. The new guy that quit after that?

Billy Fernandes: [44:09] Yeah. By far, that was the nastiest house I've ever had.

Dan Austin: [44:11] That's incredible.

Billy Fernandes: [44:12] And someone lived in there two weeks.

Mike DeHaan: [44:13] It's just the the state of things that you see in this business are insane.

Billy Fernandes: [44:17] It's that and Mind blowing how people live. Right. Yeah.

Mike DeHaan: [44:21] Yeah. That's wild. Is Well, I'm glad that you didn't get raped, Billy. That would that would left a mark on

Billy Fernandes: [44:26] That's it. Yeah. I'm glad that. Yeah.

Dan Austin: [44:29] And you didn't get pink eye either.

Mike DeHaan: [44:31] Alright. Awesome. Alright. Second question. What is the number one tip you would give to an investor trying to scale their real estate business?

Billy Fernandes: [44:39] No more tip to someone trying to scale their real estate business. If you're trying to scale like your real estate business, I'm gonna speak more in terms of of your wholesaling business. One, I don't believe you could scale a wholesaling business without a good reputation. Wholesaling already gets a bad reputation. And if you come out of the gate and just give your name a bad rep, like, you're just you're not gonna make it very far at all. So if you want a scale part of having a good reputation with with buyers, sellers, investors, lenders, everyone is is keeping your reputation clean. That's great advice. Yeah. I mean and that's huge.

Mike DeHaan: [45:17] Yeah. That's for some reason, especially these days in the world of the PACE Morbys and like just throw people under the bus and don't protect the sellers. We're seeing a lot of people not do ethical stuff.

Dan Austin: [45:29] It's just mind blowing to me.

Mike DeHaan: [45:31] I had a guy to

Billy Fernandes: [45:32] Yeah. I mean, my own deal the other day. He cold called me and asked me if I wanted to buy this mobile app. And I'm like, yeah, send me the photos. I look at them. I'm like, that's a deal worth selling.

Mike DeHaan: [45:39] Oh my god, I tried to daisy chain it. That's the worst. Yeah, these are my photos. Last question. Where can people find you, follow you and reach out to you if you'd like to do so?

Billy Fernandes: [45:51] Yeah, I I'm not crazy on the social medias. You can plug your wife's again if you want to. I mean,

Mike DeHaan: [45:57] I know I know you use her for your money raising needs.

Billy Fernandes: [46:00] Ours are ours are very similar. Mine is billy underscore ferns, f e r n s, and hers is terra underscore ferns, the true finance, and then Billy Fernandes on the Facebooks. And that's what I'm on. Again, I I don't post a lot, but I should. I know that your brand is everything. But when I do post, it's usually gold. So we're ready to have to sift through a million videos to find the good stuff.

Mike DeHaan: [46:23] Yeah. Yeah. You do post some good stuff. And, you know, it's funny. You guys should go look at Billy's Facebook page because his clean-cut profile picture on there is probably not much you're expecting for a guy that goes and walks through houses with bathtub full of shit

Billy Fernandes: [46:37] for living. Yeah.

Mike DeHaan: [46:38] So do do. Awesome, Bailey. Well, thanks so much for coming on the show, man. We really, really appreciate it. And congrats on your success, dude. It's so awesome to see how far you've come. It's just a short period of time.

Billy Fernandes: [46:47] Yeah. They thanks for having me, guys. It's been great talking to you. We need to meet up again soon. So

Mike DeHaan: [46:51] I know. I know. Are you are you going to any GoBundance things over

Billy Fernandes: [46:54] the next little bit? I will be in the next one in Wyoming. Okay. Cool. Next year. In Spring. I think it's not till June, but I'll be at that one. I might be at the regional event in Scottsdale as well.

Mike DeHaan: [47:05] Cool. Yeah, I'm planning to go maybe to the Wyoming one. We'll see you there before then. But cool. Right on. Well, thanks for listening, everybody. You should go and give that one a second listen, if you want some inspiration, and also some really awesome tips for an awesome off market operator in Billy Fernandes. And, we appreciate you all for listening and fumble that one up. We appreciate you all for listening and we'll talk to you

Dan Austin: [47:27] next week. See you. Thanks

Speaker 3: [47:30] for listening to collecting keys. Drop us a five star review on iTunes and send us a screenshot to Mike@collectingkeys.com for your chance to receive a free collecting keys t shirt.