Wholesaling Illegal: How to Pivot

Mike Hambright (00:00.681)
Hey everybody, welcome back to the show. Today I’m here with Andrew Lucas. We’re gonna be talking about how to find more deals right in your backyard. These are deals that are probably, you’re looking right past them right now and there’s opportunity in front of you and you’re just not paying attention to it. So, Andrew, welcome to the show.

Andrew Lucas Deal Finders Club (00:15.16)
Thanks Mike, thanks for having me.

Mike Hambright (00:16.617)
Yeah, good to see you. So it’s kind of funny. I always talk. I just noticed this when I hit just now that you have an arrow, an arrow behind you. And I talk often about having arrow wounds in my back. So I don’t know if that’s if that’s just a faith that that’s there. But I guess you know, you know what it’s like to have lots of arrow wounds in your back, too. I’m sure. Right.

Andrew Lucas Deal Finders Club (00:32.876)
yeah.

That’s right, you you’re always looking behind you funny story actually this came from a property we bought and You know, we’re walking around. Of course. It was like a nasty hoarder property or whatever and this thing was in the backyard So I brought it into the office and now I just like it for for the looks, you know dresses up the wall

Mike Hambright (00:39.004)
you

Mike Hambright (00:55.005)
That’s right. Yeah. I need to get myself an arrow behind for behind. Cool. Awesome. And well, hey, tell us a little about your background, how you got started in real estate. I know you obviously do a lot of deals in South Carolina. You’re also a coach and a mentor, but maybe share how this all got started.

Andrew Lucas Deal Finders Club (01:12.974)
Yeah, well I’ll go all the way back to the first deal we did. It was 2007. So crazy, but that was a long time ago. And if you remember 2007, basically anybody and everybody and even dogs and cats could get a mortgage and get a house. So I was lucky enough to be in that because I had just graduated from college and I was making like $28,000 a year or something like that.

I heard of a mortgage guy. Somebody said, yeah, you could probably buy a house. went and sure enough, he’s like, yeah, we can get you approved. I’m like, what? So I had been renting. I used to manage hotels. So my first job out of college, I was an assistant manager or front desk manager, whatever, entry level management there. And I stayed in hotels the whole time and got that house. And this is a really fun story. It was a terrible buy.

Mike Hambright (01:49.136)
How many do you want? What was your job out of college, by the way?

Mike Hambright (02:02.364)
Yeah. Okay.

Andrew Lucas Deal Finders Club (02:12.93)
We learned a lot of lessons there. I didn’t know what I was doing, I thought that all the landlords I’d been paying rent to through college were the smartest people. They must be filthy rich. They’re rolling in cash. And little did I know that back then I was paying like 250 bucks a bedroom rent and it was, they weren’t making anything. I soon found that out when I became the owner and I was renting the rooms out, but very quickly realized that

The agent I used, his name was on the sign. I went to him and I just was like, is this the price? He said, this is the price. I said, okay, well, let’s go buy it. And then we did an inspection and there was stuff wrong with it. I said, do you, I went to that agent. said, do you think the seller would give me a discount? And he’s like, no, he won’t give me a discount. You know, and come to find out that agent, he was working for the seller. You know, he wasn’t working for me. He was just getting 6 % because I.

Mike Hambright (03:06.973)
Right.

Andrew Lucas Deal Finders Club (03:10.208)
Naively came in without my own agent and I see people doing that today still I’m like Yeah, you’re not you’re not getting any help so anyway overpaid and closed on October 30th of 2007 and if you google the 2008 crash or whatever when did it start? I think it started like November 1st. So I was Two days later after I overpaid paid full price for a house that needed work so

Mike Hambright (03:32.486)
a days later.

Andrew Lucas Deal Finders Club (03:39.374)
Started on, you know, on a foot, probably not the best foot to invest in, but got the job done, got me in, you know, kind of got the bug going for me. 10 months later, I’d moved for another job. And at that time, I met my now wife. And so we were, had that house, had it rented out. 2007, I’m gonna fast forward to like 2015. Michelle and I had moved.

and kept houses, right? So that whole thing of just not selling and keeping as rentals the accidental landlord. We did that a few times. So we had four rental properties in 2015 and then we had two kids and one on the way. And we looked and realized that those four rental houses were not paying us anything because we didn’t buy them right. We weren’t renting them for enough. After you pay taxes, we were probably negative.

Mike Hambright (04:11.975)
Right.

Andrew Lucas Deal Finders Club (04:37.772)
And then we were spending all of our free weekends or free nights to fix the toilets, know, the tenant trash, dealing with all that. So we were about to quit. It was like we had not got into this business very well. We didn’t know what we were doing. We made bad decisions on buying and managing and fixing. But one of the agents that we had used gave us a book, gave me a book. It’s called Hold. It’s the yellow one. It’s over there.

about how to actually buy and manage and profit from rental houses and It had a lot of pictures and numbers, which is great for me. I like numbers and pictures I went through it and actually read through it and and I convinced my wife I said babe I think we can do this. I think we can actually do this correctly And make a business out of it. So we got together we prayed about it. We had long discussions and

Basically, I twisted her arm and she said, okay, let’s try it. And she said, this is, I still remember this. She said, we can do this as long as you don’t touch our money, our like the money for the house, right? To buy the diapers. So had to do it all out of our own, out of the rent that came in, the investment money, all that had to stay in that business. Couldn’t come over, touch our W-2 income, right? So that was actually.

I a blessing to make me get creative, make me try to figure out how to do the business with essentially nothing to start with. So one thing that Mike, we were talking about is when I was however old I was, don’t know, 20, 20s in 2007, I had all the time in the world, plenty of time to make mistakes and errors and figure it out. But going up until like 2016 with two kids, one, another one coming.

There was no time for trial and error. There’s no time to figure this thing out. So that’s when I hired a coach, Michelle and I hired a coach to help us flip properties to generate income profit to them by the rentals that we needed so that we can make a business out of it. And then we had a coach to help us analyze and set up the rental properties so that we could actually live off of those. And so

Andrew Lucas Deal Finders Club (07:02.222)
That’s what started in 2016 and we did the math of how much, how many rental units did we need so that my wife could retire from her day job. And it was 35, 2016 to 2018, we got from four to 34 and she quit. And then I quit because we learned about wholesaling. So since 2018, we’ve been full time. I know that’s a lot. I would say that was, yeah.

Mike Hambright (07:30.162)
Now it’s good stuff. That’s great.

Andrew Lucas Deal Finders Club (07:32.45)
We didn’t know it was coming going to be like that But we just kind of kept going and giving us what what the Lord handed us and what the business opportunities were in front of us and you know using using mentors coaches Community like people around us asking questions and not being afraid to take the next step Allowed us to get to here today. We’re now we have

We’ve bought and sold hundreds of houses, probably thousands of houses at this point. We currently own 96 rental units. We buy and sell at least six or eight every month, whether flips or wholesale or whatever. yeah.

Mike Hambright (08:13.586)
Yeah, that’s great. Yeah. think, know, honestly, stories like that, which there’s a lot of them of people that have been in the business for a while, is there’s a lot of hardship, right? And I think at the end of the day, a lot of people give up before they use, you know, they don’t use those as lessons or.

as you will, arrows in your back to figure out how to like not do stuff. And I think that’s where a lot of people are looking for that immediate gratification these days and they’re just not willing to kind of fail forward. So I think that it’s a testament to like.

Andrew Lucas Deal Finders Club (08:33.41)
Yeah. Yeah.

Andrew Lucas Deal Finders Club (08:44.686)
Yeah.

Mike Hambright (08:47.708)
you know, keep going forward, keep going forward, surround yourself with people, hire coaches, like find people that can help you climb that learning curve faster because you’re really in a race against yourself to the end of the runway to say, okay, this isn’t working, we’re out, right? And so it’s better to kind of make those investments early on because you can climb a learning curve a lot faster that way. And essentially you won’t need as long of a runway.

Andrew Lucas Deal Finders Club (09:02.296)
Yeah.

Andrew Lucas Deal Finders Club (09:13.23)
Yeah.

Mike Hambright (09:18.398)
So.

Andrew Lucas Deal Finders Club (09:18.476)
You might want to… Can we pause this real quick? I see this thing is blinking.

Mike Hambright (09:27.122)
So tell us a little bit about how to find deals like right in your market. I mean, that was one of your epiphanies where there’s deals right in front of you and you just weren’t finding them.

Andrew Lucas Deal Finders Club (09:35.439)
Yeah, it actually goes all the way back to when we first started is First house was from driving around saw a sign out there second house was the same and Then you know has we started kind of trying to do this business for real I didn’t know I didn’t know what wholesaling was. I didn’t even know that was a word until 2018 2017 2018 so when we were out shopping for flips and for rental properties

It came from using agents to help us driving around looking for properties that needed some work or that had a sign out that actually said, buy me for sale by owners and stuff like that. that’s how our business began. it didn’t really, it wasn’t really like an epiphany at that point. It was just what was out there and it was just what was available. And I didn’t start realizing that it was

Uncommon until I actually became a know real estate professional and I was in this business and we had our we have our meetup That we started long time ago 2018 and people started coming in and saying Where are all the deals? Where’s all the properties? I can’t find them and and and I just started saying well They’re everywhere. What do you mean? They’re you can’t find them, but I realized that people just didn’t know where to look or how to look

Maybe there’s a little bit of fear in there. So So I kind of went back to Looking back to where we got our deals and I actually have a podcast to Mike. So I asked everybody Hey, where did where’s your first deal come from? And I think well everybody except for one guy who’s he admits he was crazy They have found them in their own backyard their own community through one of our Handful of different ways either an agent brought it to them or a friend

friend, family member, somebody from work said, hey, you should look at this one. Or it was literally in their backyard. like out their door, they took a walk around the block, talked to a neighbor and got a deal. And you might, you know, lot of investors and you might have the same sentiment, right?

Mike Hambright (11:51.815)
I think early on a lot of real estate investors have to find deals through more like what I’ll kind of call hustle tactics, right? So as you scale your business, obviously to grow your business, you have to start relying more on.

paid advertising and things to bring in leads, you can’t, hustle is a season as they say, you don’t have 24 hours in a day, you only have 24 hours a day, you can’t hustle all the time, but a lot of times for people getting started, especially if don’t have a lot of money, you’re not independently wealthy, you gotta use sweat equity to kind find those things.

Andrew Lucas Deal Finders Club (12:21.753)
Yeah, yeah and I’ll actually kind of challenge a little bit of the fact of going and needing to pay for advertising. Now we do, you know, we spend a lot of money on advertising. However, our free leads, quote free leads, the deals and the contracts and the properties that come from what I say is the free methods being other wholesalers, agent referrals, our own network, driving for dollars, that sort of thing.

we actually get about 25 % of our deal flow or profits from those lead sources. And now that can be, that is a very good salary or income for a single operator. Like, you know, we have employees in overhead, but if we didn’t, we could, we could just support ourselves with that.

Mike Hambright (13:06.098)
No doubt.

Mike Hambright (13:12.22)
Yeah, yeah, yeah, it’s kind of, you you ultimately don’t want to all your irons in one fire or all your eggs in one basket or whatever they say, right? But when you first get started, you just got to do what you got to do to get over that hump, right? So yeah, yeah.

Andrew Lucas Deal Finders Club (13:26.351)
Yeah, so I’ll tell you a quick story of what really drove this home for me is Michelle and I 2013 we moved into a new home we actually debated on buying this home because the house across the street was was a Nasty rental like that’s cars everywhere. It’s just it didn’t fit the neighborhood and we said well, they’ll be kicked out soon enough, right? They’ll be evicted. Well come to find it. Yeah, they got evicted

While we were moving in so my wife’s You know, we had our it’s a three-month old at that time our first kid My wife’s mom and dad are there to help us move and this house across the street is getting evicted So other stuff is on the front line. So, know, look like a great husband at that point and But as that property developed we used to sit on the front porch and just rock the baby right across the street the Tenants got evicted and I said man

That’s going to be a good deal. Somebody should get that fix it up. then it goes into foreclosure and I find out that it’s being foreclosed. I said, Ooh man, that’s going to be good. Somebody should, you know, somebody should flip that or that’s going to be a great house one day. And then it goes on the market. There’s a sign in the yard is for sale. The bank is selling it. And I look at it I’m just like, yeah, someday somebody’s going to really do something with that house. Then it sells to a general or Colonel, whatever in the army. He comes over and he’s flipping it himself and a friend.

They’re doing all the work and I go over there. I actually help them I’m like helping put it up light bulbs and stuff like that Like this is a really good deal for you. This is gonna be great and the whole time We had rental properties. We were already quote investors, but my brain was not turned on to what a deal is what opportunities are right in front of my face because The fact that I wasn’t looking or listening

an opportunity I let literally watched it happen and he made $75,000 ish from flipping this house right in front of me across the street and so from now on that’s what that’s deal finders is right it’s actually having your head turned and tuned towards opportunities that are right around us today

Mike Hambright (15:27.313)
Yeah, that’s crazy. That’s crazy.

Mike Hambright (15:38.333)
Yeah, there’s, you know, there have been people that I know that kind of hire quote bird dogs to go out and look for them, but a lot of us have friends, family, relationships, network with people that are kind of by default bird dogs, as long as they know that you’re looking if you tell them that, Yeah. Well, what are some of these other ways in terms of kind of finding deals? Like what are, I think we were talking ahead of time and you said,

Andrew Lucas Deal Finders Club (15:54.905)
Mm-hmm. Yeah.

Mike Hambright (16:03.632)
I read a great book last year called Who Not How and a lot of it is like who could help bring these deals to you,

Andrew Lucas Deal Finders Club (16:10.669)
Yeah, absolutely. And so and so that’s what we’ve done in our home buying business is kind of curate that and and identify who and Let them know what we’re looking for and to call us. So we talked about wholesalers, which Wholesaling is a dirty word in South Carolina right now Yeah, it’s illegal and we can talk about that but they’re still out there they’re still out there and we call them more like Bird dogs now, right? I mean, they’re still talking to sellers looking for deals

Mike Hambright (16:27.506)
Yeah, it’s illegal now, right? Yeah.

Mike Hambright (16:33.811)
Yeah.

Andrew Lucas Deal Finders Club (16:39.757)
they still need someone to buy it. So influencers is another thing and I say influencer not like an Instagram influencer but an influencer in the life of a real estate transaction thinking of a distressed transaction. So distress seller, distress property. Who might that be? It could be an estate attorney. It could be a probate clerk, judge, officer, somebody that works at the office.

someone that does probate transactions. It could be the emergency services type companies, right? So restoration companies, water, flood, fire, all that. these are people that, So they are influencing different pieces and parts of the transaction. You got CPAs that do this. So anybody that…

Mike Hambright (17:18.507)
yeah. Title companies and. Yep.

Mike Hambright (17:30.365)
Yeah.

Andrew Lucas Deal Finders Club (17:35.117)
you know or see or companies you can let them know. Estate sales and so any of those influencers talk to let them know you’re available that what you’re looking for. Driving for dollars I mentioned that the big piece I say is a lot of people want to drive for dollars because it’s really impersonal you can just drive around look for houses and you just say that’s a good one but actually driving is not just looking at the houses it’s

writing down, making contact with the owner. I like to challenge our partners or our community members to get out of the car. If you have a nice fluffy dog, it’s really, this works. Like go for a walk with your dog. Doesn’t have to be your neighborhood, but if you’re walking in neighborhood and there’s a house that looks distressed and there’s a neighbor outside, just start asking like, hey, what’s up with that house? What do you know? Oh, you know them? You know, you’ll be surprised what you get.

Mike Hambright (18:31.1)
Yeah.

Andrew Lucas Deal Finders Club (18:32.175)
One of our students that worked with us, they right out of the gate had no experience in real estate. And I said, try this. You’re in a really good neighborhood. Try this. And they walked around and got three houses from a landlord who was, he was working on one of them and he was just, he was like, I’m done. So they struck up a conversation and got the deal done. Facebook, this is another tip. Facebook, not the investor groups, right? We’re all in the,

You know discount property groups or investors local investors, Texas, South Carolina, whatever but go into the community groups so The buy-and-sell group for your town community, you know HOA whatever and Go in there and look for those properties that people are talking about They might be they might be complaining about

Mike Hambright (19:06.472)
Right.

Andrew Lucas Deal Finders Club (19:28.527)
Or they might be actually offering say hey, I need to sell this does anybody know anybody? Oftentimes in our current neighborhood we get the hey, I don’t want to use an agent I’d like to sell this without going that route. Does anybody know anybody?

Mike Hambright (19:42.46)
Yeah, or estate sales and even like big garage sales, right? That might be a leading indicator to somebody’s going to sell that house eventually too.

Andrew Lucas Deal Finders Club (19:51.951)
Every time there’s an estate sale my kids are so tired of it now But if they’re with me on Saturday, and there’s an estate sale we’re popping in and I’d say they’re all I mean they’re all selling that house at some point and And yeah, so strike up a conversation real estate agents of course. This is the the fifth or sixth way and Most people that are getting started or looking for deals Don’t really

Mike Hambright (19:59.795)
Yeah.

Andrew Lucas Deal Finders Club (20:19.671)
go about it the right way with their just tell agents, hey, do you need, do you have anything? Send it to me. know, agents get that all the time. Now agents love to talk. They want to talk to you. but it’s, I encourage people to be a little bit more specific. tell them exactly, you know, Hey, I’m looking for something in this area, this price range that needs a lot of work or a little bit of work. something that’s going to stick with that agent.

If you got a story, some kind of connection to the agent is very helpful because they get, hopefully if it’s a good agent, they’re talking to a lot of people. So the better, the more specific you can be, the better help they will be to you. And then the final way is your own network. This is the mental game we were talking about where investors are a little bit shy about.

talking about buying discount deals or talking about investing and buying a flip. Sometimes they’re afraid they will fail so they don’t want to share it with their family. We talk about the Thanksgiving table where you go and there’s nobody there talking about entrepreneurship or taking their life in their own hands for not financial freedom. They’re all complaining about their job or politics or whatever and it’s kind of hard to be that one at Thanksgiving that says, I’m

I’m out there looking for some discount real estate. I’m going to flip a house. It’s a little tough to do that. So we encourage people to just rip that bandaid off and get uncomfortable and tell people what you’re looking for. And you’d be surprised how many of your friends and family, the people that love you the most will be willing to help you find a deal.

Mike Hambright (22:07.486)
Yeah. I know you’ve ultimately you had a real estate club for a long time. Didn’t really use it as a source for finding deals when that’s probably one of the most obvious ones, right? Is that maybe even start a community or just get active inside of an existing community? It could be a physical group or it could be a Facebook type of group, right?

Andrew Lucas Deal Finders Club (22:27.631)
Yeah, absolutely. That’s the first thing we encourage people to do if they’re like, I want to get started. Well, locally is the best. know, of course, COVID opened up all the virtual groups, but I’m still a big proponent of get, get started in your own backyard. If you find out that you want to change, go different, whatever, that’s fine. But connecting in your own backyard is the first place to start and find, find that meetup group. You know, we have ours.

We meet, we do things basically once a week. And yeah, if you can find a group like that and you can lean in, great place to start.

Mike Hambright (23:06.206)
Yeah, that’s great. Hey, one question for you. I know that wholesaling recently became illegal in South Carolina, and I don’t know how many states there are now that have essentially outlawed it or trying to, right? Maybe you could just share some thoughts on when that happens or if that happens, like how to pivot, because there’s still plenty of opportunities out there. You just have to pivot. And some people can’t pivot and they just hang it up or they start doing things that are now illegal, but they keep doing it anyway. Or they just find a way to pivot and say, hey, I’m going to find a way to make

Andrew Lucas Deal Finders Club (23:32.109)
Yeah.

Mike Hambright (23:36.16)
lemonade out of these lemons. So how do you pivot when wholesaling becomes illegal in your state?

Andrew Lucas Deal Finders Club (23:41.529)
Yeah, so you made a good point there some people continue to do it even though it’s illegal and it’s been spelled out and And I tell you know, I’m the first one to say that you can’t you shouldn’t be making a business out of an illegal activity So you might get away with it for a little while while they try to figure out how to punish you or you know, whatever but ultimately

Creating a business that will sustain and a life, you know, for yourself that will sustain is should be the goal, right? It’s not just a money grab to do a few wholesale deals and disappear. So what we did, and I think this is probably one of the best ways for anybody that faces this new legislation is to actually go…

Find the good deals and be good at finding the deals. Be good at running your numbers. Be secure and confident in your numbers so that you’re not afraid to close on the deal. A lot of wholesalers don’t really know how to run the numbers. They’re not confident in the numbers. So they are just hoping somebody will pick it up before they need to try to close on it. Because they don’t know if it’s profitable or not.

Getting really good with that really good with running the numbers understanding what you’re buying what you’re looking at and then Closing on the deal, right? It’s it’s you know, it’s simple. It’s not simple. It’s pretty simple It’s closing on the deal now how you close Can depend on who you are what resources you have? We started we pivoted

year before the law came because we it was you know talked about it was coming around we knew it was happening one of our friends was kind of like the leading edge of the get a slap on the wrist when it was coming down the road and so we started finding private lenders so we took our track record put it out there and said hey we would like to have some private lenders to help us close on these so we could turn around and sell them and so we started what we call a hotel so we close on it clean it up

Andrew Lucas Deal Finders Club (25:53.443)
put it on the MLS and get you know the access and eyeballs to the most people. The other way if you don’t have access to the private lenders is to find a way to creatively close on it where it takes less money up front. So we’re big the way I like to do it and this is how we’ve done it is to do what’s called an installment sale was it deed

Mike Hambright (26:07.517)
Hmm.

Andrew Lucas Deal Finders Club (26:22.745)
There’s couple different names. I think it’s called something different in Texas. But basically you start paying payments on the property day one. And once you start paying payments, you are now the owner and you can do whatever you want with it. There’s a little bit more obviously legal nuance to all that. Bond for title. Is that what they call it there? Deed for title.

Mike Hambright (26:24.286)
Right.

Mike Hambright (26:41.79)
no, I haven’t heard of that before, the owner, mean, the owner can finance it to you, right? And you, you essentially have the ability to pay them off after you fix and flip. Maybe it’s like a six month owner finance or something like that. Yeah.

Andrew Lucas Deal Finders Club (26:46.863)
Is owner financing? Yes.

Andrew Lucas Deal Finders Club (26:55.577)
Correct. It’s a very niche piece of owner financing. trying to find a way, working the deals, working the terms so that you’re getting some sort of owner financing is the other option. Either you close on it or you owner finance it where you’re closing on it with less out of pocket.

Mike Hambright (27:13.606)
Yeah, yeah, good stuff. Well, Andrew, I appreciate you sharing some thoughts with us. If folks want to connect with you, where do they go?

Andrew Lucas Deal Finders Club (27:20.239)
The best place would be you know our main website so deal finders club comm I have a link up there if anybody wants to chat you just click on the button and we’ll chat You can check out our Facebook group Instagram all of that’s you know, everything’s there deal finders club comm

Mike Hambright (27:36.927)
Awesome, we’ll add links down below. So thanks for sharing with us today. Everybody, there’s deals right in your backyard. You just have to be looking for them and you have to tell everybody else you’re looking for them too. And you’d be surprised at how many of those things come back around to you. if nothing else, it’s a nice supplemental income to add to the top of everything else you’re doing. So hope you got some good value from Andrew sharing some knowledge today. Appreciate you guys. We’ll see you on the next show.

Andrew Lucas Deal Finders Club (27:39.545)
Yeah, absolutely. Appreciate it.