Scaling Your Real Estate Business with Limited Capital w/ Wes Steimel

Mike DeHaan: [0:00] Really quick before the show starts, in case you haven't heard, we have a growing community of investors called the scale community, which is full of people learning to make massive income with their real estate businesses, so they can reach financial freedom a little bit faster than building a rental portfolio solely over time, because honestly, that takes decades and who has time for that. So if you're an investor who is serious about growing and creating a scalable business without needing to be a slave to it twenty four seven, then go to collectingkeys.com/scale and apply. And if you're a

Mike DeHaan: [0:31] good fit, we would love to

Mike DeHaan: [0:32] have you join the community. So again, collectingkeys.com/scale, go ahead and apply, and see if you're

Mike DeHaan: [0:37] a good fit.

Wes Steimel: [0:38] It dawned on me that I had this gal that I had doing spreadsheet stuff that had phone experience. And so coming back from Keyscon, I immediately got her on the phone. And within, like, three days, she revived the lead, and that's the one that we're gonna list on Thursday.

Mike DeHaan: [0:54] What's going on, guys? On today's episode of the collecting keys podcast, we are here with another episode of the scale show, and we are welcomed by Wes Steinle. That's your last name right?

Wes Steimel: [1:06] I forgot to confirm. Nailed it.

Mike DeHaan: [1:08] Nailed it. Perfect. I'm gonna add that one to the like, my little star chart over here.

Wes Steimel: [1:13] Was that three or four?

Mike DeHaan: [1:14] Then you got that up for Yeah. Three or four out of, like, 300 attempts. But we have a long time scale member here who I am super excited to have on the show today because you are somebody, man, that I would say, like, the way that your business has been built out is one of, like, I I would say the most relatable sort of patterns to so many people because you when you joined scale and, you know, we first met each other, you were doing deals. You understood the fundamentals, and you've just been trying to figure out how to do more, how to get out of your own way a little bit, how to optimize, how to balance, like, flips and wholesales and everything else. And the way that it's all come together for you so far has been really fun to watch. And you're like one of the people that I would say is like a good operator and has so much potential, and we just sort of need to crack that that nut to take you to the next level. You're like the perfect example of that. Right? So, dude, thanks for having me on the show. To get us started, why don't you give us a little, like, three minute rundown, who exactly you are, where you're based out of, and

Mike DeHaan: [2:11] what your team and business currently looks like.

Wes Steimel: [2:14] Sure. Yeah. Appreciate you having me. Wes Steinle. My company is Ren Home Buyers. I live and work in the Kansas City market. For those of you who don't know, Kansas City is both in Kansas and Missouri. So we market both sides of the river, KCK, KCMO, and then also I do some marketing into Saint Joseph, Missouri, which is a market of about 75,000 people, about forty five minutes north of town. Lower price points, you know, you're probably talking a $125,000 type price points. Good rental market was fantastic two years ago. It's not so much anymore, but it's a little less competitive than Kansas City. So

Mike DeHaan: [2:52] Yeah. I feel like the Kansas City market going back, I don't know, six or seven years ago was like everywhere. Everyone was going to buy like cash flow or, like, turnkey properties. I felt like it was Kansas City and Memphis. I heard about a ton for, like, these large I don't see, like, people trying to buy portfolios. It looked like 1% roll or 1.5% roll.

Dylan Koch: [3:12] It was that those turnkey providers really hit those markets heavy. I remember being pitched to those a lot. Yeah.

Mike DeHaan: [3:16] Yeah. Like, all the time. Does that still sort of exist? Are you still seeing those numbers there, or is it a little bit different now?

Wes Steimel: [3:22] The 1% rule has moved out. So I started buying rentals in 2018, I believe, And I was able to buy some one percenters in good parts of town. Now the one percenters are available in the hood. Those used to be two, two and a half percent type properties, you know, four or five years ago.

Mike DeHaan: [3:40] Okay. Awesome. And then what what's your current exit strategy mostly?

Wes Steimel: [3:44] It's a mix, you know, like a lot of guys, I'm trying to monetize every lead however I can. So I'd say we're probably 60% wholesale, 40% flip. Really not keeping anything at the moment. There's not a lot that makes sense and just trying to keep the money moving. I picked up one rail last March. That was the last one that I took down or kept. You start doing more deals and you start realizing why people buy for tax purposes though too. You know, wholesales and flips are not taxed, very friendly. But like how many deals per month would you say you're doing right now on average, Wes? It'd be one to two. You know, we're not blowing the doors off of anything, and you guys know it's one month you might not get any, and then the next month you get four, and you look back on twelve months, and it's a one and a half to two pretty average.

Dylan Koch: [4:36] Did that switch in your years doing this from what I've heard a lot lately is people were very wholesale heavy, and now they've kind

Wes Steimel: [4:42] of flipped to being more flippers just because the needs of the market.

Dylan Koch: [4:45] But did you say that's also true where you're at?

Wes Steimel: [4:47] Yeah. There's more and more flippers in Kansas City that I think are building out their own direct to seller marketing channels. There's still quite a few that, you know, rely heavily on wholesalers for deals. But I would still say that there's less and less buy and hold folks that you're gonna sell to off market. It's either it's flippers or or nothing really at this point.

Dylan Koch: [5:09] Have you personally flipped more

Wes Steimel: [5:11] than or you there was it been basically consistent sixty forty the entire time that you've been doing this? It just depends on what deals end up in the system, you know. Sure. I like I like paint and carpet in a low days on market area so I can cherry pick them. And those are the ones that I'm taking down and doing myself. If it's, you know, big heavy rehab, 100 year old home or it's in the hood, I find people that specialize in those properties and and pass them off.

Mike DeHaan: [5:35] Yeah. And what what's your team currently look like?

Wes Steimel: [5:37] You're looking at me, the team. I do have a part time VA, Christine. Got her through Rocket Station. She's fantastic. She started out doing just data, pulling stuff from county websites, collecting some of that data that you can't get to PropStream. But one of the reasons I hired her was because she had some experience on the phones with a previous company that she'd worked for. And it took me last year at KeyzCon twenty twenty three. I think Dylan, we were in a small group saying breakout and talking about him adding maybe an AM and it dawned on me that I had this gal that I had doing spreadsheet stuff that had phone experience. And so coming back from Keeska and I immediately got her on the phone and within like three days, she revived the lead and that's the one that we're gonna list on Thursday. So she revived it, the guy took a way better offer for me than my original cash offer. So he took the cash offer price and then gave me seller financing at 0% for a year. There you go. There you go.

Dylan Koch: [6:37] Yeah. I remember that conversation, Wes, though. It just proves, like, the more people you have on the phone and if they're even 80% at a confidence level of what

Wes Steimel: [6:44] you feel, it's probably worth at least experimenting with that person. Right? Yeah. She's been great. How are you currently sourcing the deals that you're bringing in? Everything's direct mail. So I started off with texting only, and then I added some cold calling, and I just didn't like the way that that filled up my time with a bunch of not very warm leads, and didn't feel like I wanted to work at a call center. So I start actually, I started listening to Mike and Dan's podcast then just because they really preach the direct mail thing. So it's I'm a 100% direct mail now. You get warmer leads. It gives me more time. You know, with being kind of a one man shop, there's a lot of things you gotta manage. And if you're just sitting trying to keep leads fresh from all the texting leads that come in, that's it's really difficult to do.

Mike DeHaan: [7:31] Yeah. I mean, I I like that you said that because this is something that I really firmly believe in, but people always wanna argue with me about it because, like, you're completely right. When you're balancing all the hats in the business, it's hard to perfectly maintain the pipeline. Right? And so you realistically need to make sure that you are talking to as good of leads as possible every single time. And if you are paying for lead generation through SMS, cold calling, you know, you're getting these colder leads, What happens is exactly what you just said is you spend a ton of time talking to not warm leads. And with direct mail, sure, you're probably gonna get less leads, gonna be a little more expensive per touch. But there's so much more like certified leads just with like the nature of how they're marketed to you and the fact that they reached out to you. But for some reason, people just latch on to the cost of it and like the cost of the lead. And I don't know if it's like a scarcity mindset or like or lack of belief in their own abilities or what it is.

Dylan Koch: [8:27] So they can post and make a reel and say that their cost per lead's $2.

Mike DeHaan: [8:31] Exactly. But who gives a shit if there's not any deals, right?

Wes Steimel: [8:33] It's your cost per deal. Yeah. Exactly. It's like you gotta get it through the funnel.

Dylan Koch: [8:37] Yeah. No, 100%. What's worse is I'd have some of those leads I did, and they'll pull you. They'll know they've had experience, and they'll be like, Oh yeah, I'm the seller, and they'll lie to you, and then they'll waste even more of your time. Or go out to an appointment to a house they don't even own. So I've done that before.

Mike DeHaan: [8:54] We've had a couple of those too. But yeah. But on that vein, though, how did you recognize that those cold calling SMS leads, like, weren't doing what you needed and you were you optimistic on the direct mail from listening to us? Or had you tried it before? You just hadn't, like, learned to scale it, but, like, what was that that change?

Wes Steimel: [9:12] People have talked about direct mail for years and years. It's one of those things, like, marketing, you know, whatever's in vogue changes year to year, but direct mail is always there. People always do it. Texting was starting to get more and more regulated. I didn't want a business that was built fully on something that could just disappear overnight and not have another marketing channel developed. I think I was afraid of it because it was expensive. I had done, you know, single campaigns like a lot of people that do direct mails like, I sent out 500 postcards and I didn't get a single call, this doesn't work. And it's like, listen to you and Mike and Dan long enough and realizes like, alright, I just gotta be committed. You know, it's whatever, 3,000, 5,000, however many per month and just stick with it for ninety, a hundred and twenty days and you'll start to get leads in. And, you know, it's basically essentially how it happened. Started in November, which is a terrible time to start because the holidays, it's super slow anyway. But took me till April the following year to get my first deal, but then I had consistent leads to work. Were much warmer and things started to kind of flow. I love that Wes, especially because I had a very similar timeline when when I started online. So when you first started, you know, you're being consistent with the mailing, those leads started coming in.

Wes Steimel: [10:26] Do you

Dylan Koch: [10:26] think you had a lead problem? Did you have any issues converting some of those leads? Or do you know, like,

Wes Steimel: [10:32] kind of the lead to offer ratio that you guys were working with at the beginning compared to now? At the beginning, actually, my lead to offer ratio was what you call low. Like, I wasn't giving out very many offers and I was getting most of those deals. And I think a lot of that was just I didn't have much of a pipeline and like you spend tons of time underwriting it and like pre vetting buyers and like you basically know it's a deal before you even offer, which what I know now, that's not how I operate. There's far more offers than than I did in the past, but I just didn't have that many leads to work. So you sit down, you know, you got eight to ten hours today, what are you gonna do? You're gonna underwrite the hell out of this deal. You're gonna figure out everybody that buys in that area, what they've been buying at, basically put the whole thing together before you put out her.

Mike DeHaan: [11:17] Then just get shot down anyway because they don't want your offer. Yeah.

Wes Steimel: [11:21] Oh, yeah. Is that the worst thing is when you're new and you finally get a contract and you're like, I got a contract. This is a great deal. And everybody's like, nah, no deal. And it's it's probably still a deal. That's just part of their negotiation. But it's just so defeating. It's like

Mike DeHaan: [11:37] Yeah. I mean, and the funny thing is is, you know, it's fine. I did a an Instagram reel kind of about this today is when you're starting out and you do have kind of that scarcity mindset around opportunities, you don't have an abundance of them yet. Right? Like, every person who gets into real estate kinda does the same way where you focus on the house, you learn to analyze the deal, you go and you get, like, the deal analyzing calculator, you sign up for BiggerPockets Pro or whatever. So you get their fancy calculator, which is basically just an Excel spreadsheet that's on a web page. You know? And then when you get a a deal that comes in, you, like, analyze them forever. And, like, even now, I don't know if you guys do much dispo to, like, newer people, but they'll be like, I need until this evening to analyze the deal. I'm like, what the fuck are you looking at? Like, it should be a fifteen minute process, honestly.

Dylan Koch: [12:21] Yep.

Mike DeHaan: [12:22] And realistically, what you should be doing is be spending that three hours, you know, that's the deal, calling more sellers. Right? Or like, you know, doing something to generate those leads.

Dylan Koch: [12:32] It's funny because now that you like, and Wes, this is probably true for you too, but

Wes Steimel: [12:37] if I know the zip code and the, like, bed bath and, like, style, I can pretty

Dylan Koch: [12:40] much tell you it's a deal right off the bat.

Mike DeHaan: [12:42] Like Yeah. You start you start to know really quick. Or or do you guys where where you guys work, do you have, like, the spec homes from, like, the forties, fifties, sixties, seventies sort of time range where there's, basically

Dylan Koch: [12:52] Not really. It's

Mike DeHaan: [12:53] not really here. Saying? Okay. So here we have that majorly. Do have this where you're at, Wes, where there's, like, the same house that is, like, five block? Yeah. Like like, we we've had them up here where, like, off of where it is and if I know the square footage bed bath count, I know what the house looks like. Right? Because I've walked so many of them. And I remember we would bring on new AMs locally, they'd like, oh, yeah. So, like, you kinda go down the hallway. I'm like, yeah. And there's the the bathroom kind of in, the back on the left, and then you go down the stairs. And there's probably a bedroom kind of tucked underneath the stairs. And they're like, yeah. Have you, like, seen this house? I'm like, pretty much. I know exactly what it is. I guess as you were were going through as a single person operator starting to grow, you know, you're getting into those zones, overanalyzing all sorts of stuff. How did you start to optimize that sales pipeline to be able to start taking down more deals more efficiently while also managing your flips, while also working on dispo and everything else?

Wes Steimel: [13:45] A lot of it just comes from experience and necessity. Like I said, I didn't have a ton of leads coming in from cold calling or texting. I had my direct mail leads in in a month. You know, when I was sending out 3,000 postcards, might get seven or eight leads and you know, it's not a lot to work. So I would underwrite deals, know, I'd look at other wholesale deals just to kinda understand neighborhoods and stuff. But as things started to pick up and you started to get more leads, like, you just have to become more efficient and build out processes. I'm still not great at, like, having SOPs and processes. Like, when it comes to dispo, I feel like it's just a, like, start calling anybody and everybody, and then three days later, it's like, I don't even know who the heck I've talked to about this deal. It's like Yeah. Well, Wes, I'm curious, like, now that, you know, that's, like, the beginning, what does your kinda day day to day look like nowadays? Generally, I get down here, start around 09:00, try to clean up the CRM with if I'm out and about looking at flips or projects, you get calls that come in, I still answer all my inbound calls. She'll update the stuff in the system, get names and notes and all that stuff added, close out open leads, do all that stuff and trying to have tasks for every lead in my system so I'll, you know, start knocking out tasks whether it's follow-up calls, underwriting deals that appointments or something that maybe I looked at a day or two prior so I can get offers out and it's just trying to work through all that stuff and

Dylan Koch: [15:12] Do you use Ari Simply?

Wes Steimel: [15:14] I do. I did not at the beginning and I just switched to it probably a month or two ago, and it's been Mike smiling because he knows I should have done it a year ago.

Dylan Koch: [15:24] Well I'm asking a follow-up question is like, so did you use just like the default tasks that they give you, or have you created any of your own during that sequence from no contact made, contact made, appointment, due diligence, offer, etcetera?

Wes Steimel: [15:37] I've got a couple just kind of whatever the template tasks. Mhmm. Yep. And basically, that's just like if I make a call or send out a text and I don't get a immediate response or they don't answer, like it's set up for check the next day, did they respond? If they haven't, check-in again. So I've got a handful of them, but I haven't gotten really deep into, like, the automations and templates and stuff that you can do in here. Just, again, got a lot of plates spinning right now, and that's one of those things that needs to be done, and you just gotta find time to get it done.

Mike DeHaan: [16:11] Yeah. So as a single person operator, doing the sales, managing your flips, going appointments, how do you, like, manage your time? Because you have the area that you live into is also not a small geographic area. Like going from Kansas City Kansas to Kansas City, Missouri, that's quite a stretch. I know you're gonna that northern market. How do you make sure that you're actually, like, staying on top of everything? Like, are are you, like, going to the flips as well still to manage that or do you have a good contractor?

Wes Steimel: [16:41] I've got a good contractor but I end up there a fair amount. This one that we're listing Thursday, I've been there doing some punch list stuff just to get it finalized. I would say if I had to describe how I manage my time as poorly, When I'm going up to Saint Joseph, I try to schedule all those appointments the same day and I may be up there for six hours just appointment after appointment. So they're not getting hit like the day the lead comes in, I'm not going to walk them. It's a less competitive market than Kansas City. Kansas City, if I get a good lead that comes in, I may be out there that day just because it's it's that competitive. But it's just a matter of, you know, if I've got an appointment, I run it, try to get back to the house, get through my tasks. Like, the main goal is to get through all the tasks that you have in the CRM for the day and set the new tasks whenever it is next week, next month to do those follow ups just to make sure you stay on top of follow ups. Wes, if you get a hot lead in Kansas City or something like that, are you to

Dylan Koch: [17:37] the point where you feel comfortable filling out a contract and offering on the spot? Yeah. Are you still going back, okay, running

Wes Steimel: [17:43] the numbers and give them a call later? I will. There's a lot of as you know, there's a lot of feel to how that phone call sounds. Mhmm. Whether or not they're gonna be receptive to an offer right there on the phone. Like Mike said, you know what the house looks like before you even walk in it or know where you need to be. There's a lot of folks that market in Kansas City that are completely remote whether they're out of state or out of the country and they do a lot of calling and texting. And so sometimes folks just wanna see that you exist and you can get there within thirty minutes because they've dealt with some of these other companies that I would bet have a 50% plus fallout rate on the contracts. Totally. Just the way that they operate.

Dylan Koch: [18:23] Yeah. And that's probably more true in a market like you are that's a little bit more competitive. Mhmm. But even my accountability squad inside of the scaling community today, we are literally talking about, do you make the offer over the phone and only lock the properties that lock the properties that you lock up? Or do you actually go to the appointment, get that rapport? And I'm pretty much on the latter side of this, and I

Wes Steimel: [18:42] think that's helped me close deals. But is it the

Dylan Koch: [18:44] most scalable method? Probably not. But it's gonna be very dependent on your market and the seller, honestly.

Wes Steimel: [18:49] Yeah. I've tried the not walking it and giving out offers and I just didn't feel like I was having much success there so I've kinda stuck with the walking the houses and just getting those reps in, building rapport person to person. I enjoy operating that way. Again, it's not the most scalable. In the future, I'll probably have to hire an AM to do that. But that's just like that's how I like to operate and has worked best for me. Yo. If you don't follow me on Instagram, which is

Mike DeHaan: [19:19] at mike underscore invest by the way, then you might not know that we officially have a new mission as a brand, and that is to help 2,000 real estate investors build million dollar businesses. Obviously, to do that, we need to get in front of as many people as possible. So quick little ask to help us reach that goal. First, shoot me a follow on Instagram at Mike underscore invests. Second, follow collecting keys podcast on Instagram. That's at collecting keys podcast all written out. And third, every time the algorithm is kind enough to show you a post from either of us, share it on your story, or in your post and tag us. If you do that, I'll DM you and we can have a little DM conversation about what is preventing you from having that million dollar business that everyone is seeking. And we can see if we can come up with a plan to help you make that massive passive income. So again, if you see any of our posts, just go ahead, reshare them, tag us and let everyone know that you enjoy the content we produce. It will help us a ton. And then I'll be happy to help you as well.

Mike DeHaan: [20:20] Yeah. Well, honestly, when you're a small operator, that's the best way to be competitive because there is something to be said for that, you know, like soft touch or, like, the personal touch. When you there's a reason that, like, when you people start to scale their businesses, like, we know a lot of people, you guys have heard them on the show, that are scaled to ten, fifteen, 20 deals plus a month. They start to get dropping rates of 30%. It's because you kind of need to be shooting more shots. You need to be making offers slightly faster, slightly unseen. You know, when you're a smaller operator, you're not getting quite as many leads in. You have less chances at goal. You need to be, like, more clinical with them. Right? Otherwise, you're going to struggle to get by. So what do you think is your main thing stopping you right now from, you know, you're doing one to three deals a month on average to going to four to six or five to eight deals a month?

Wes Steimel: [21:13] Just be marketing spend to get the more leads in, obviously. And then I think I've got a mental block about dispo and my confidence in dispo. I've got a handful of pretty good buyers where I get stuff that doesn't fit inside their buy box. I get very conservative in my underwriting. I don't get stuff doesn't pencil for me and I'll see it, you know, it'll transact. Somebody in town's doing it. So

Mike DeHaan: [21:37] Well, I guess, me ask you this. Do you have the desire to build, like, a five to eight deal a month business?

Wes Steimel: [21:44] Yeah. I do. It frees up my time. Like, I don't wanna do five to eight deals just as a one man shop with a VA or two.

Mike DeHaan: [21:51] So, I mean, your number one thing is spending more money on marketing, why don't you just increase your marketing spend?

Wes Steimel: [21:56] Well, I could, yeah. I'm like so Is that

Mike DeHaan: [22:00] on your twelve week tracker that's right behind you from Keyz Gone?

Wes Steimel: [22:04] No. It's So actually where I've found myself right now is like most of my deals have, and I've we've talked about I've talked about this, is this super long tail on where your money comes back in. And so I had one deal that another guy in town, like, I was under contract with him and he said that the lady called them and wanted them to come look at the property and blah blah blah. Well, their guy said, well, we would offer this and she started crying. So he signed a contract with her And for $20 more than I offered her. And I don't know. So I called the guy. We talked it out. I've got a JV deal on the back end of his deal. So I stepped out of the way, but we've got an agreement where I'll still get paid. So I'm waiting for that to close. I've got these three slips that I'm waiting to close. That's just waiting for this revenue to come in. It's the cash crunch that we always find ourselves in. And here in six weeks, I'll I'll be sitting on a pile of capital, I hope. I hope everything's closed out by then. And then I'd feel more comfortable pumping it back into the marketing.

Dylan Koch: [23:08] But And this is where, like, it's determining, do I wholesale or do I flip it?

Wes Steimel: [23:13] It's not just a house thing or property thing. It's a how much capital do I have? What's my outspend look like? And it's almost like accounts receivable versus accounts payable type of situation. Because if you need money fast, you're more likely to wholesale that deal than you are to flip it. Right. I would love to wholesale more. And again, this is probably this mental block of my dispose. Like, I'm in it too high, can't find a buyer, screw it. I'll close it. I'll flip it myself and I'll make money. It just takes me a hundred and twenty, hundred and eighty days to get my money back. When if I would've just put my head down and made more calls, I probably could've made 10 to 15 k. So Wes, let ask you real quick. What does your dispo process kinda look like right now? Is it just Facebook groups, email blasts, or what is it? So yeah, I get a lot of contacts through Facebook groups. I'll reach out to them. I've got, you know, phone numbers from meetups, call agents, I'm trying to unload this buy and hold property. So I've been calling property management companies up there to try to see who they have that are is still buying in this market. But, yeah, it's basically connections. A lot of it's through Facebook groups, finding people that have responded to other posts in that same area code or similar type property and then reaching out direct.

Dylan Koch: [24:26] Yeah. You probably know this, but for any maybe for the audience, this is something I've had great success with with DISPO is price is the number one determinant, but the second is proximity to that property. Good. So if you can use PropStream or InvestorLift and find the cash buyers you have bought within a mile of that subject property, reach out to every single person on that list and they are more likely to buy it than maybe someone else.

Wes Steimel: [24:45] Yeah. I actually had one of those earlier this year, similar situation. I just found the right buyer. The guy's son lives three houses up. They really like the house. They wanted their other son to live next door and he paid me probably $10 more than anybody else would have.

Dylan Koch: [25:01] Yep. Exactly.

Mike DeHaan: [25:02] Do you have one of our investor list seats, Wes?

Wes Steimel: [25:05] I don't. I've asked about it several times and then I just keep trying to do things the hard way. Mike, this is gonna be like Yeah. The re

Dylan Koch: [25:11] Well, Mike, you heard he's gonna have a pile of money here pretty soon, you

Wes Steimel: [25:14] Yeah. Can ask me be in a couple This is like the re simply thing. You're sitting over there shaking your head a year from now, oh, I should have done this a year ago.

Mike DeHaan: [25:22] So we have a basic community investor list account for scale community for people listening. And we've had great success finding buyers on there because they have their god mode functionality with the tier that we have where you can just go and see everyone who with, like, with verified contact information who's bought properties in the immediate area. You can see what they bought, what they paid for it, what they did with it, if they flipped it, how much money they made, all that sort of stuff. And so it's really powerful. So so much help with your dispo a lot.

Wes Steimel: [25:48] Yeah. You'll get this St. Joseph deal moved that way. There you go.

Mike DeHaan: [25:52] On the cash crunch question, though, I just wanted to dive into that a little bit more. How do you balance the operations with paying yourself? That's one of the biggest questions we get asked all the time is, did you pay some salary? Are you taking distributions? Do give yourself a profit share? What does all that look like?

Wes Steimel: [26:10] So last year, basically, the only thing that went into our bank account was the commissions that my wife made on the flips of our or on our flip. Everything else that I made stayed in the business. I made myself a nice little profit first spreadsheet this year, and I've got what I should have paid myself, but I still haven't taken any money out of the business. I was fortunate to have a fair amount of money saved before I started doing this. So I just continued to live off of that savings and, you know, we replenish it every once in a while when we sell a flip. My wife's commission goes in there, and I've left all the money in the in the company. I will take distributions this year.

Mike DeHaan: [26:48] Yeah. Yeah. It's it's such a challenging thing. I don't know if it's like all businesses because most of my experiences with real estate investors, but I think it's because it's such a capital intensive business that has these potentials to, I don't know, either have a bunch of opportunity all of a sudden or have, like, a major expense all of a sudden that kinda wipes you out. We have this inclination to, like, wanna keep a bunch of capital to, like, in the business and available. But if you think about that fundamentally, it honestly kinda throttles you a little bit because it I don't know. It gives you, like, a way out, right, rather than forcing you to, like, be a little bit crafty or to, like, make more money. You know? And a lot of the, like, smart entrepreneurs that I've, like like, much more successful than we are that I've met over the past few years is they they kinda live by this mantra of, like, you wanna have as little capital in the business as as you need to. Right? That is you can to, like, operate maybe, like, a tiny bit of reserves in case your receivables are late or things like that. But otherwise, you should be paying yourself and should be putting it towards something.

Mike DeHaan: [27:51] I mean, even if it's, like,

Mike DeHaan: [27:52] sitting in a treasury, right, where it's, making something and not just, like, sitting in a bank account. And then if you need to make an investment in your business, that's fine. You go ahead and do that. But to just like leave it sitting there, I don't know, it's like a little

Dylan Koch: [28:04] Even anecdotally, like, if I know I have a big month coming, I'll maybe chill and, like, not be as aggressive or hit the phones as hard. Yeah. So there's something to be said for that.

Mike DeHaan: [28:14] Yeah. But, obviously, everyone's risk tolerance is different. I'd say it's just always interesting to me to, like, dive into the psychology of of where people are with that. Because the funny thing is I'm the same way. Like, I've had in my, like, my little rental reserve account for my own personal rental, have a 150,000. It's been a $150,000 for, like, two years.

Dylan Koch: [28:29] How many properties does that include?

Mike DeHaan: [28:31] So that's, like, my own personal rentals. So now it's six.

Dylan Koch: [28:36] See, like, to me, that's that's a lot.

Mike DeHaan: [28:38] It is a lot. That's what I'm saying. It's way too much. Like like, should I shouldn't have that in there, but I can't get away from it. I don't know why. Yeah. But

Wes Steimel: [28:47] Yeah. My intention was once I got to the end of the year, and this it's never gonna happen this way where all the money's back in, there's no projects, that I would pull everything out except for whatever the $40,000 worth of operating capital that I feel like I need. It's, you know, whatever. Three months worth of operating capital And we would start every year that way. But it never works that way. It's gonna be tied up in a project or something. So yeah. Because you have

Dylan Koch: [29:13] to take the opportunities when they present themselves. Right? It's not just like it can't be a perfect world.

Mike DeHaan: [29:17] Yeah. So do you mind if I ask, Wes? I'm curious. You know, I'm sure that you don't want to. If things go out the rest of the year as they have been going, how much money do you think it'll make this year? Kinda like top line?

Wes Steimel: [29:29] Top line? Yeah. We should be somewhere 2 to $2.50, I would $2.50?

Mike DeHaan: [29:33] Okay. Yeah. Yeah. So I mean, like, that's, you know, relatively lean if you have marketing expenses. Yeah. So and then what's your current spend on marketing or anything else?

Wes Steimel: [29:45] It's 55 to 50 500 to 6,000 just on mail. My overall, I'm probably eight k in overhead between all my systems and my VA. Question.

Dylan Koch: [29:57] Do you do anything with your return to senders?

Wes Steimel: [29:59] I tag them as RTS in the system. I haven't skip traced and called them. I should probably get my VA to start, pull that list, skip trace, have her start calling them. I need to get better about managing her time. Yeah. That's a very low dollar per hour task for something for you. If you're spending out that kind of marketing spend, you're

Dylan Koch: [30:19] getting several 100 return to senders per month probably.

Wes Steimel: [30:22] Oh, I've actually got a tote here because when I switched over to re simply, everything moved over and I didn't pull out the RTS tag when I sent my mail, so I got like 1,900 RTS on my my last mailing campaign.

Mike DeHaan: [30:38] Yeah.

Dylan Koch: [30:38] It's funny. I just pulled up my I have a breakeven analysis on my computer. Might not be totally updated. But if I put in $3,000 a month in marketing spend, it's about 55 or 8,500. So about about the same between all the subscriptions, you know, stuff that you have on the back end.

Mike DeHaan: [30:54] We say two fifty top line. And with the current spend, you have about a $100,000 left over. I think a 60% profit margin business. I think the biggest thing for you is, yeah, it would be super uncomfortable for you to do this at the start because, like, the numbers themselves aren't that big yet. But if you can increase that top line, you know, two x and go to a 50% profit margin business, that's a huge that's, like, 200% more money for you. Right? With a ton more opportunity for upside and and capital availability to be able to move yourself in the business a little bit. So I know it's not on your tracker. We should we need to get you increasing that marketing spend though because

Wes Steimel: [31:31] I doubled my mail spend this year from last year. And so far, it's been tracking because last year was like kind of a deal a month. I think we did 14 deals total. Five of them came within like a seven, ten day period. Like, assigned five of them and it just one of those, like, moon phases. Like, everybody that called wanted to sell and was, willing to do it at a reasonable price. So intention is to do, like, 18 to 20 deals this year. The assignments have been better this year than last year. I just gotta build out that dispo and feel more confident in it. I'm getting the opportunities. It's that lack of confidence on the dispo side that's in the ego of, like, having to cancel a contract if you're into it too high.

Mike DeHaan: [32:11] That's not so bad. Was getting used to it. This may like, be transparent and go with your honor your due diligence and don't screw people over. Yeah. People always get super tied up. That's probably one of the top questions I get asked from, like, new new people. I I was hoping to get asked this question from somebody that's like, hey. I'm I'm gonna start wholesaling, but I have I have a problem. What happens when I get a contract and I can't find a buyer? I'm like, don't worry about getting the contract first. Yeah. Don't even worry about that part. But people always stress about it. And, I mean, I don't know. It happens in retail real estate all the time. It happens in other businesses where a contract needs to be terminated because one party can't perform.

Wes Steimel: [32:48] Yeah.

Mike DeHaan: [32:49] It's just part of the business. Right? And ultimately, if you're not being malicious about it, you're not leaving somebody in a worse situation. You're not using it as leverage to screw somebody over.

Wes Steimel: [32:57] We've just been trying to get offers out of folks. So if I do have to go back and price drop like I have somewhere to anchor off of, but it's like the worst thing to do is go price drop somebody and then cancel Mhmm. Two weeks later because you still can't move it. Yeah. No. Exactly.

Mike DeHaan: [33:10] What we'll actually do is we'll get it assigned at, like, a lower price. So let's say let's say we have it for $2.50 and a buyer's gonna pay us $2.45. We'll assign it at $2.45 with our $2.50 contract, have the buyer pay earnest money so their money's in hard. And, technically, for the deal to go, we'd have to bring $5 to close. Then we'll go renegotiate with the seller. If we're not able to renegotiate, then deal's off, so I wasn't able to perform whatever. Buyers usually understand that, which return them earnest money. If we are able to, the buyers would be locked in. Mhmm. And so that way, you're not getting, like, a verbal, like, I'll pay $2.45, and then you would do the price drop. And then And then they back up. The then the buyer's like, actually, I don't wanna do this anymore. And then Yeah.

Wes Steimel: [33:51] Makes sense.

Mike DeHaan: [33:51] Bad guy.

Dylan Koch: [33:52] Yeah. Everybody's screwed. Well, Wes, before we dive into the last, like, three questions,

Wes Steimel: [33:55] I just got one overall question, because I

Dylan Koch: [33:57] know you have two kids at home. How do guys manage, like, life and, like, the whole work life balance relationship that everyone likes to preach about?

Wes Steimel: [34:05] I would say that's probably the hardest part of it. My old w two, I would leave the house by 6AM, I'd get home at five, so I was leaving before the kids, the wife woke up, and then I'd see the kids, you know, for a couple hours before bed each night. So now I'm home, you know, I get to make them breakfast, get them off to school, I can go pick them up from school, but then, you know, dad's also available. Like right now, it's summer. They're both home, they're at summer camp this week, but it's like during the day sometimes it's just you gotta, you know, lock the door and say give me some time, I gotta make phone calls but it's difficult. Right. And I'm trying to get better about time blocking and, you know, just letting them know when I'm not available but it's just part of, you know, doing this business that we do. You have to be super flexible on times like last night at 08:45, I was getting the kids to bed. I was getting text messages from a lead that, you know, entered the system back in February and she's ready to sell them. So Right. You almost have to be on the leads schedule sometimes, which is hard to do. Yeah. It is. It's like leaving to go walk appointments at 08:00 at night when normally everybody's going to bed at 08:00 at night. But my wife's super supportive.

Wes Steimel: [35:16] She's been fantastic throughout. She was the biggest cheerleader getting me to do this on my own. Honestly, if it wasn't for her, I'd probably still be sitting in my cubicle just gunning it out for the next twenty years. So that's good, man. That's huge. Having a significant other that's on board. You know, I know Mike's the same way. My wife's the same way. So it's a definitely a big piece of it.

Mike DeHaan: [35:35] Yeah. Awesome, man. Well, good stuff. Alright. We're gonna dive into our end of show questions here. Thanks for coming on the show, man. So it's cool to sort of hear you, you know, going through the struggles that we can all relate to on one level. We were all there not that long ago. Like, it's funny. Like, even me, that was really realistically, I was in the same position as you, I don't know, three years ago. At this point, we had, like, literally just fired our first AM, and we were trying to figure out how we're gonna make more money. This is about the same time where Dan and I were back to taking sales calls and trying to piece it all together before we were able to get things ironed out again. So the first question is, what is your craziest real estate story? This is always the classic question for the podcast, and this can be a crazy tenant, crazy deal, big win, whatever you got.

Wes Steimel: [36:20] I'd have to say, I mean, I did the I was a deal deep dive or case study show with the Carol Baskin story. I mean, if you do what we do for very long, like, I you just kinda get jaded or, like, desensitized to some of the crazy shit that you see. And it's like, oh, yeah. It's just kinda normal life. Like, you know, guy showed me a house up in Saint Joseph. He's like, I'll show you the third and fourth bedroom. And we went downstairs into this 120 year old house. The ceilings were five foot high and the floors were dirt, and there was beds down there. And as their kids kids were sleeping down there, but it was perfectly normal to him. He was walking me through the house like he was a showing agent, like, yeah. Let's go check out the third and fourth bedrooms. Great place. Look, Like, you're safe from tornadoes. You know? We're in Tornado Alley. But, yeah, the Carol Baskin thing, there's a murder for hire plot. There was blood on the door. There was her name was Carol Baskin. So wild. Her ex husband was like a police officer, ex special forces guy. Just crazy. And then, like, the I think I spent more than sixteen hours on the phone with her, 300 some odd text messages to get the deal done. And finally got the deal done, I think, October of last year, and they found her DOA in her apartment, like, three weeks later.

Mike DeHaan: [37:37] That's a crazy ending that we didn't hear when Yeah. We did But what happened Yeah. To

Dylan Koch: [37:44] Do you know?

Mike DeHaan: [37:44] I don't know.

Wes Steimel: [37:45] There was like there was this through line of all of her stories that she was like working undercover to like shut down doctors that were prescribing pain meds. I think she was she partook. And I think

Mike DeHaan: [37:59] that might

Wes Steimel: [37:59] have been what got her. I don't think she was working undercover. She that was the story she probably told herself to to go in and get them. But Yeah. How are supposed to catch them if you don't know what they do? Right. It was strange strange story.

Mike DeHaan: [38:11] Man.

Dylan Koch: [38:12] Wow. That's a good one. That's gonna be up there.

Mike DeHaan: [38:14] Yeah. That's crazy.

Wes Steimel: [38:15] Wes, if you could if you go back to the the very beginning, what's one thing you would do differently from the start? I probably would have started with direct mail earlier just as a marketing channel because I was nearly a year into my journey before I started it, and then you got that kinda three to four month ramp up period. So, you know, I was sixteen, eighteen months in doing it full time before I really started to get that pipeline built from direct mail. Totally. And, you know, I started mailing my texting leads. You know, I pulled that, and I did end up getting a deal from it, but it would have been nice to have eighteen months of warmer leads already in the system. And I I had the capital set aside to do it, I was just afraid. It's really hard to earmark $25.30 grand and say I might not get a dollar back from this. Totally. You know, you just gotta have faith, but that's very typical. Like, you may spend three or four months of spending money sending out mail before you get that first deal. But by the end of that calendar year, I think my return on marketing spend was like three to one. It's not great. I know a lot of guys get five to one on direct mail, but all the money came back and it brought some friends with it. So Yeah.

Dylan Koch: [39:29] Three to one is still

Wes Steimel: [39:29] a good metric. Like Yeah. You know, if you ask if I ask you if I'm gonna

Dylan Koch: [39:32] give you a $100, you're be 300 back. I do

Wes Steimel: [39:34] that every day of the week. Yeah.

Mike DeHaan: [39:35] Building off that really quick. So somebody was gonna start with direct mail. They go back there in the beginning of their journey.

Wes Steimel: [39:40] They go

Mike DeHaan: [39:40] on and start with direct mail. What should they spend their time doing, do you think, while they're waiting for those leads to come in? Are they're trying to ramp that up over the first six months?

Wes Steimel: [39:49] Where I'm sitting now, I would say start building out buyers list, go talk to people, don't be afraid to tell people what you're doing. At the beginning when you're just sending out mails, I don't even have a single lead yet, but tell people that you're, you know, marketing direct to seller. You know, get information from them, build that seller pipeline, learn how to underwrite deals if you don't know how. There's gonna be wholesalers in your market that are sending stuff out, get on their list, look at what they have, kind of back into their numbers, so when that lead comes across your desk, you know what to do with it or you feel pretty comfortable. You're not trying to learn everything right there because that's pretty nerve racking. And you'll end up wasting a bunch of marketing money.

Mike DeHaan: [40:27] Yeah. That's probably one of the most important things people do is they start getting those leads that come in and they are shocked that it actually worked and now they don't know what to do next.

Wes Steimel: [40:36] Yeah.

Mike DeHaan: [40:36] Right? Or they have zero plan. Even if you even if you aren't sure, like, have, like, 5% of a plan. It's better than having nothing. Where can people find you, follow you, reach out to you, Wes?

Wes Steimel: [40:45] It is back here. It's posting more on social media. That that did make the twelve week planner. Although, I think I've done it maybe three or four times. But it's Wes, w e s, steimel, s t e I m e l, and that's on Instagram. And I've found Wesley steimel or Wes steimel on Facebook as well. There's not a whole lot of us out there. Pretty it's not a generic name, I guess.

Mike DeHaan: [41:06] Yeah. It's a generic name for sure. And you guys, if you guys wanna buy any deals in the Kansas City market, because you can tell Wes is really struggling with dispo. So you could come and lowball the shit out of him on some of these deals right now.

Wes Steimel: [41:18] You will have to resell these. Go back and renegotiate. Just give me an offer.

Mike DeHaan: [41:22] Exactly. So be afraid to reach out to Wes on Instagram, guys. Let him know you're looking to buy in the market. Let him know you're in that market. I'm sure he'd be happy to connect with you. And, yeah, dude, thanks so much for coming on show. We really appreciate your time.

Wes Steimel: [41:34] I appreciate it, guys. Thank you. See you, Wes.

Mike DeHaan: [41:36] Awesome. Thanks for listening, everybody, and we'll talk to guys next week.