Wholesaling 500 Houses a Year

Mike: [00:00:00] Hey everybody. Welcome back to the show. Really, really excited to have my buddy Scott Pennebaker on today’s and investor fuel member. And his company is now at a pace of 500 wholesale deals a year and growing rapidly. We’re going to talk about scaling up your wholesale business.

Professional real estate investors know that it’s not really about the real estate. That real estate is just a vehicle to freedom. A group of over a hundred of a nation’s leading real estate investors from across the country. Meet several times a year at the investor fuel real estate mastermind to share ideas on how to strengthen each other’s businesses, but also to come together as well.

And builds more fulfilling lives for all of those around us on today’s show, we’re going to continue our conversation of fueling our businesses and fueling our lives.

I’m glad you’re here.[00:01:00]

Hey Scott. Welcome.

Scott: Hi, thanks for having me, man. Glad to be here. Yeah. Glad

Mike: to have you here and excited to talk about this today. And, um, you know, there are a few people that I know that have scaled up as quickly as you guys have and are running an amazing operation. And I know you’re planning to even kind of 10 exit from here.

So even though it sounds like you run a business, that’s bigger than most people from your perspective. I know you guys think you’re just getting started, which is.

Scott: Absolutely. Absolutely. We still have a lot of ground to cover.

Mike: Yeah. Yeah. Hey, why don’t you talk, uh, tell us a little about your background. I know you’ve done a lot of different things to get you to this point.

Maybe take a couple of minutes and just kind of share how you got here.

Scott: Sure. Um, yeah, I started in real estate investing in 2012. Um, actually started just buying a couple of rental properties. I was a loan officer, uh, in the midnight, knew that I wanted to get back into. Uh, real estate investing, just that I learned that you can build, you know, a balance sheet with banks money.

And I always felt that was really cool. So, [00:02:00] um, Started out, like I said, with a couple of buy and hold projects, then moved into some fix and flips had some good success early on with some fix and flips and base it’s 15 K you know, 20 K uh, profit on those. Then I kind of got where I went into some bigger neighborhoods and get my shirt handed to me on a couple, and I’ve done enough fix and flips now to know that I don’t really want to run an adult daycare.

So, um, Kind of gave up the fix and flips, went back into buy and hold. And really from like 2015 to 2018, bought around 150, um, single family homes and bought all of those really from wholesalers. So that was really where I was kind of introduced to wholesaling and sourcing off market property. And then, uh, in 2018, you know, we look back at all of our, our rental portfolio and all the money that’s coming in.

Uh, we’re leveraged that, you know, 70, 80% on this stuff. And we’re like, Hey, this really isn’t making a whole lot of money, maybe bringing in a lot of rent and the top line, but by the time we pay off the management and the move in [00:03:00] the move outs, the maintenance, um, it’s not really cash flowing. Like we’d like.

Um, we sold off a bunch of those and really just decided to focus on wholesaling. Rebuilt was actually started as a business to kind of seed our SFR business. But then when we were getting so many deals from our marketing, we were like, man, we really can’t. Uh, by all of these. So we started flipping them over to other investors to take down and that’s really how rebuilt was born.

Um, and, and that’s, that’s what I’ve love. Honestly, I love to do that more than I ever did, uh, to run, uh, adult daycare with fix and flips or to, uh, to manage the rental price. Yup. Yup.

Mike: I don’t know if you, I don’t know if you know this about me, but, uh, before I got into real estate, my last couple of corporate jobs were for large, very large retailers.

And I know you came from the textbook, the college textbook business. I mean, I I’ve always, I think I got a lot, I almost had a head start by being, having that kind of merchant mentality of buying things. W our retailers and [00:04:00] your business to you were a wholesaler, right? I mean, you bought stuff at a higher price.

I mean, it’s a different widget now, but it’s very similar business in a lot of ways.

Scott: No, that’s a good thing. You point out there. I hadn’t never really thought about that, but yes, the textbooks were the same thing. I started that business 2005 and we would buy back from students on college campuses. We would buy back from professors on campus.

Uh, we would buy bag, overstock runs from bookstores, and then we’d resell them on Amazon and eBay, uh, direct to students. So just because they weren’t using a book, maybe here at the university of Kentucky, they may be using it at. Washington state. So you put it on Amazon and now you have a college bookstore and all, uh, all 50 states.

So, um, yeah, that was the same mentality. Buy low, sell high. And now we’re just having a different.

Mike: Yeah. Yeah, for sure. Um, so it’s a scale up, I mean, you guys are doing, you know, 50 plus deals a month now, and I know you’re just getting started, uh, with kind of rolling out in other markets and things like that, but you have two great [00:05:00] partners too, that really compliment each other.

So what I’ve seen is a lot of the most successful real estate investors have a really strong at least one other really strong partner. Sometimes it’s a spouse. But a lot of times it’s, you know, maybe not as a brother or a father or best friend or whatever. Talk about the kind of importance of your partnership with your partners to allow you to be able to scale this business.

Scott: Absolutely. Uh, Al young and a Brandon Devlin, they, uh, have been, become, you know, two of my best friends, uh, Brandon and I knew each other from a direct sales company that we worked in during college, actually selling, um, books door to door during the summers, it was kind of a crazy bootcamp, uh, sales group.

So he and I reconnected in 2012, he had his own real estate holdings and I’m there in Nashville. And then Al had his stuff and. Um, but really in 2012, I was looking for somebody to come in to help me scale. The textbook company textbooks was, is a prescription industry. So basically if we could get the books, we [00:06:00] could sell them.

Right. We just needed to know which books to buy and how much to pay for them. And so Brandon. I had stayed on with the Southwestern company for that decade and had a bunch of warm relationships with direct salespeople. So he brought over like 40 people to the textbook company in the first year and just kind of exploded.

And he said, man, we really need to talk to my first cousin Al I was working, um, on wall street at BlackRock at the time as a data analyst. And so, you know, Al was able to come in really in the first couple of years as a consultant. Well, I still worked at BlackRock has just helped us kind of figure out our database for how much to pay for the books, how much to sell them for, you know, so we always used to joke that Brandon would, you know, control the sales people that went and got the books.

They’d all come to Lexington and we would sell them out of here. And then I would make sure that we were all making money. Doing that and textbooks were great, but it really just kinda got, um, where more things were moving into the digital era. We really loved real estate. That was where all our passion was.

Um, [00:07:00] so in 2015, when they became equity partners in the book company, then we started, we formed our brand go Al Brandon Scott. And that was our holding company that was. So many of the, uh, the properties through from 2015 to 2018, like I said, in 2018, Al said, Hey, we’re not making money at this stuff. Let’s sell these let’s focus mainly on something that can give us a quicker retired than, than the rental property rental properties.

Great. Um, you know, once the bank bank is paid off, you know, that’s the biggest thing is it’s kind of a get rich slow if you’re willing to stick in there. The banks are paid off then, um, then it’s definitely a great retirement plan. And, um, for us though, where the book income was going down, we had to find something quicker.

And so we knew we didn’t want to do fix and flips and manage large contracting crews. So we decided to, um, to go all in on wholesale. Yeah,

Mike: that’s awesome. That’s awesome. Yeah. I think having the right partners can keep you safe, can help you get to a whole nother level. And I know you guys all have very different [00:08:00] skillsets and I know you guys all respect each other a lot too, so that’s, those are some very important traits that.

Scott: Absolutely. I mean, Brandon really has taken the lead on, on opening new offices and a lot of the direct sales training. And that’s his background. A lot of the recruiting, um, you know, Al has really taken over kind of the CFO and the technology side of the business and overseeing all the data, the data points and, uh, help them with, with making sure our marketing, you know, not just.

Just casting, like a huge net. They we’re actually kind of narrowed in and saving some money on our marketing budget. And then I’ve been really kind of standing up kind of the new business. We’re starting at a title company. Uh, I’ve kind of taken on the head of the lending and whatnot, and really kind of overseeing our, uh, our flagship office here.

Yeah, that’s great.

Mike: So one of the things that has been really impressive about you guys is you, you seem to be able to, you know, move ahead fast with building out teams of people, to support you. And I know that you did a lot of that in your [00:09:00] last business, too, in the textbook side. Talk a little bit. I know you use a lot of interns and things like that.

So, um, and honestly, probably if I could say. What are the two biggest problems that professional real estate investors have? In my experience like from investor fuel members are the things that’s, it’s always building out a team or finding the right people. So you guys seem to have a leg up here. Talk about that a little bit.

Scott: Yeah. I mean, you’re right in our textbook. I mean, Brandon’s background was recruiting on college campuses. I mean, we recruit college kids to go out in the summer and sell books, door to door, you know, hundreds of miles away from home, you know, away from their friends, give up their summers for experience.

Right. Um, so that was his background. When we, uh, when he came over to the textbook company, we kind of kept that up. You know, we started a student buying program where we recruited college kids on campus, uh, to download our app and buyback books from their friends and whatnot. Um, so we thought, you know, how can we apply that skillset to what we’re doing now?

And the good thing about real estate, um, that kind of falls in our [00:10:00] favor. With HGTV and, and all the exposure that this generation coming up has had to that real estate is very sexy to them. You know, it’s not like we’re out here trying to convince them to sell insurance, or we’re not out here trying to convince him to sell health care or something like that.

When we talk to people, you know, even man university of Cincinnati has like a real estate major. I mean, a lot of these schools are starting to add real estate as a major. So when we talk to these kids or when we post jobs on handshake, which is like the major, um, kind of platform that these colleges and universities have to post jobs on, we get a ton of interest and people are excited.

I mean, people would come, we do pay our interns, but we have a lot of them say, we’ll come work for free. We just want to learn what you do. Um, so that’s good. We already have kind of a baked in, um, interest in what we do with, with the younger generation. So that’s where we’ve spent a lot of our focus. You know, we, can we talk about all the time we can go buy a talent or we can build talent.

And we’ve [00:11:00] really focused on building talent out, um, from the college. You know, our longest tenured employee here now is, uh, actually still in college. He graduates in December. So it’s kind of funny. He’s worked for us for, since he was a sophomore. Um, but he loves it and he knows he has a job right. When he gets out.

Right. So, um, that’s been a lot of fun to work with the younger generation. They’re coachable. They’re more flexible. They’re excited to be here. Um, and to be honest, you know, not tied down. So as we’re scaling an operation, they’re willing to move, you know, a state away or two states away for a larger opportunity.

Um, and it’s not as big of a deal with having to uproot kids out of school and things like. Yeah,

Mike: that’s great. I think you’ve got a, you know, one of the, you guys, I know you guys are really focused on your culture too. Right? And so I think those are powerful things. And honestly, I think that is one of the struggles that a lot of real estate investors have is they go try to find somebody that’s done it before or worked for somebody else before.

And then they come in with all these preconceived notions about how it should work or how it worked over [00:12:00] there. We didn’t use to do it this way, or maybe it’s not even investing maybe. The retail side. Right. And that you still have those same challenges. Like we didn’t do it like this and, uh, you have all those problems, but if you’re building them from the ground up, um, especially at the.

Scott: Yeah, we can really try and them in the rebuilt way. Right. They don’t come in with a preconceived notion of how things should, should go. And, and, uh, like I said, there are a lot more coachable. We’ve really done well, too, with, with hiring college ex college athletes or former athletes, um, you know, they come with all the characteristics of, they want to win.

You know, they’re competitive and those are some of our, um, some of our core values that we preach around here. Yeah. That’s

Mike: awesome. That’s awesome. And of course you can’t scale up an operation like you guys have and where you’re going without being really good at putting the systems and processes in place.

So talk talked a little about what you guys do or kind of what your thoughts are on building out the right systems and processes to scale up your business.

Scott: I’ll be honest, Mike, [00:13:00] for a. Just the testimonial to invest or fuel. It’s been, you know, imperative that, you know, all the stuff and the sharing and the distant different platforms and softwares and things that we’ve been exposed to from investor fuel has been huge.

You know, um, just taking a little bit here and a little bit there, and now we’re working on some more proprietary software. Uh, we just think we do need something like that to kind of build out where we’re going, but you know, everything from, you know, launch control to, um, you know, some of the different CRMs and things that, that you guys have promoted from members of the group have been huge.

And, you know, the systems and processes, that’s really a lot of, a lot of Al’s background. You know, he was a data analytics that at, uh, at BlackRock and like really was over top of a lot of the tech and would go to. Few times a year and, and, uh, you know, meet with programmers there. So what we’ve built out now, um, or to this point, it’s pretty good for, for just kind of bootstrapping [00:14:00] it.

Um, but our goal really is to we’ve, we’ve started, we’ve engaged with another company to really help build out a full-scale platform for mobile apps. Um, you know, all the way down to a new CRM and it all really starts the back end with. And how to bring all that in and be able to filter it and things like that.

But, um, so that’s more on the tech side. I, you know, I don’t do a whole lot with the tech tag. That’s more Al’s part, but just as far as our, our, um, kind of our structure and, and what we’ve tried to build out from an office level, you know, we started out with having an office director in each location and then you’d have your lead intake condition manager.

Honestly, even with interns, it’s hard to hire and scale to 50 offices with, uh, having to staff everyone. So we’ve kind of gone to like a hub and spoke model where we’ll have a hub office like Lexington and our office director here will oversee the Louisville and the Cincinnati office. And then we just need a couple [00:15:00] interns and a couple of acquisition managers in those markets.

And let us run a little bit more lean, um, but also, you know, cast a wider. Sure. Yeah.

Mike: Yeah. So talk a little bit, share your thoughts on, I mean, there’s a lot of real estate investors. I’d say most get into this business for hopefully financial freedom, making more money and time freedom getting some of their time back.

And a lot of people assume when I scale up my business, then I can. Uh, put the right people in place and get my time back, which we know plenty of people that have done that. And you guys were not happy with that. You’re still kind of building, there’s nothing wrong with either of those. I mean, a lot of people have an amazing lifestyle business.

You guys are on a mission. I know we were talking about doing 50 deals, uh, you know, $500 a year right now. I know your goal is to be doing 500 deals a month. And so I know you guys are still working really hard to get there too. So talk about that balance for those that are listening that have a pretty good sized business or aspire to have a big business, like how do you, how do you decide whether you want to go all in on bill and [00:16:00] something like you guys are doing, or just be happy with probably having a way better life than you ever would have had anywhere else?

Well,

Scott: I don’t know. Um, I’m Brandon and I, we, we were scaling the book company. I mean, at the time when we closed down right at the beginning of the COVID, cause all the schools shut down. Um, and then with more things going digital, it seemed like a good time to stop. But at that point we had 125 sales reps out in the field, you know, from, uh, and probably all lower 48 states.

So, um, we are just, we love to scale. That’s just part of, kind of our DNA, uh, You know, we’re looking to have more of a life changing event than we are just a, um, a lifestyle business, if that makes sense. So we want to grow this thing so big that, you know, we get an eye buyer or somebody attending. Uh, that’ll come in and buy us.

So we think we can do that. We think the market’s right for disruption right now, um, and that if we can control the deal flow, which is at our core core level, what we do, there’s a ton [00:17:00] of attachment services. You know, that’s what makes it appealing to private equity and to our buyers is that we can attach it’s on a different thing as well, too, to the deal.

So we have the wholesale deal, but we can attach the title. We can attend. The lending, we can attach the brokerage services and things like that. So as far as we’re concerned, we want to grow, you know, a juggernaut here and it can be tough with finding life and, uh, and home or home and home and work balance.

Um, but I do have a great team, you know, we try to hire, like I said, the younger team and the younger people are willing to work hard and put in the top. You know, they’ll stay til six or seven at night, and I have to leave at five to go coach soccer, coach T-ball and everybody’s kind of supportive of that.

And on the same page, the same with, and Brandon, you know, they, um, are they. Brandon has twins that are four and Al has four kids. And I have two kids that are six and eight. So we have eight kids between us and [00:18:00] three wives that like nice things. So we definitely, um, stay, try to find, try to find the balance to do it all.

Um, You know, with, with that, but I think it definitely comes down to hiring the right people and having a good team so that, um, you know, you don’t have to be there 24 7. Now we definitely have texts, texts, threads that go well into the evening. Um, But everyone’s on the same page and everyone, I think, like you said, with the culture, people really enjoy being here and what they do.

So it doesn’t feel like a job, you know, we have a lot of fun with it. Yeah. That’s awesome.

Mike: That’s awesome. Well, Hey, um, you, you guys have been in investor field for a little while now. Would you mind just kind of sharing your experience, uh, of being a member of the group and maybe how it’s benefited you and maybe how others could benefit as well?

If they’re not in a group

Scott: now? Absolutely. We. Investor fuel. I love the meetups. Um, you know, it was frustrating during COVID that we weren’t able to get together in person, but, um, just the, the whole culture of investor fuel and just [00:19:00] the willingness for everyone to share and come together and really be, um, you know, each other’s biggest cheerleader has been awesome.

You know, I’ve made some great friendships and. Um, you know, that, that will last the lifetime and, and the benefit of the group is, you know, is unmeasurable. So I’m really thankful to you and, and to, to the team you have there for, for putting that on and as much work that you guys put in. Awesome

Mike: appreciate that.

We’re glad the glad that your guys are members and it inspires a lot of other members to see that growth that you guys have. And, you know, the cool thing is we even talked a little bit before this, like some connections that I can make for you. And some things that we talk about, I mean, just to have this network of people that are willing to kind of share who do you know, do you know anybody that does this?

I mean, you see it in our Facebook group all the time. People are everyday. Somebody know how to get this, or is anybody doing this right now? And people just chime in and try to help each other climb that learning curve, even fact.

Scott: No, you’re exactly right. It’s it. And honestly, it’s propelled us to where [00:20:00] we are.

Just the tips that we’ve gotten from, you know, the direct mail with yellow letter from, like I said, mentioned launch control, um, with Aaron Aaron’s group there, you know, and other things that you guys have sent our way and that we’ve picked up on at the meetings.

Mike: Well, Scott, if folks wanted to connect with you guys, we didn’t go over the markets you’re in right now.

If you want to rip them off, you can, but just whether they want to work with you in the markets, or just learn more about what you guys are doing. I mean, maybe you can just kind of share how people might connect with you.

Scott: Absolutely. Um, you can reach [email protected].

We’d love to hear from you. We’re currently in Lexington Louisville, Cincinnati. Uh, in Tennessee, we’re in Nashville, Chattanooga and Knoxville. We just opened up, uh, our, our Huntsville office in Alabama. So we’re moving south to Huntsville and then look to open land in Birmingham early next year. We’re in Philadelphia.

That’s where Al is. And then we’re also in Austin, Texas, and [00:21:00] San Antonio.

Mike: Okay. Okay. Awesome. Awesome. Well, we’ll, we’ll add your links down below. And if you guys, if anybody that’s listening to this, you know, is in those markets, these guys are high volume players and looking to find ways to JV and partner with

Scott: we’d love to work with folks to work with you guys.

Yeah, absolutely.

Mike: Awesome. Well, Scott, Hey, thanks for first off. Congrats on all the success you guys have had. Uh, I don’t even remember when you first joined investor fuel, what kind of volume were you guys doing?

Scott: Oh, man. It was like five deals a month. Okay.

Mike: So you gone from five obviously. Uh, I know you got some benefit from the group.

Obviously you guys have done a lot of hard work too, but it’s just amazing seeing that in a two and a half year period,

Scott: right? Absolutely. I mean, like I’d mentioned, I mean, initially we had our licensing office, we started in 2018, but we really didn’t open our next office. You know right around COVID. So a lot of that stuff has been added in the last 18 months.

So we’re confident that we can scale this thing to 50 offices, um, in the next 36 months, that’s that’s our goal. Um, and then hopefully we [00:22:00] can have, you know, a nice exit. Yeah.

Mike: Awesome. Well, uh, thanks again for sharing your story with us. It’s inspiring, very excited to see you guys where you see, see where you take this from here.

It’s pretty impressive stuff. My

Scott: friend. Thank you, Mike. I appreciate it. I look forward to seeing the million dollar. Yeah. Yeah.

Mike: And everybody, Hey, thanks for joining. Hopefully you got inspired today. Uh, learned a few things from Scott and their team to doing some amazing things. We appreciate you following us along.

If we haven’t yet talked about the investor fuel mastermind and you’re a professional real estate investor. We’d love to talk, just go to investor fuel.com and you can schedule a call with us to talk a little more about it. Uh, other than. We’ll see you on the next episode,

Mike: Are you an active real estate investor? If so, and you want to latch onto the power of surrounding yourself with over a hundred of the nation’s leading real estate investors, all committed to building stronger businesses and living richer fuller lives. You should jump on a call with us to learn more about Investor Fuel, simply visit investorfuel.com to get started.

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