Zero to 5 Million

Mike Hambright (00:33)
Hey everybody, welcome back to the show. Excited to bring a new member of Investor Fuel to you guys today. We’re gonna learn a little bit about his background. There’s a lot of lessons here you can learn to apply to your own business. We’re gonna be talking with Ben Toaff about how he grew his business from basically zero to five million a year, a nationwide real estate investor, and some great lessons learned as we’ve been through navigating the last several years in this market. So, Ben, welcome to the show.

Ben Toaff (00:57)
Appreciate you having me on here. ⁓

Mike Hambright (01:02)
Yeah.

Yeah, man, you’re excited. Your story is amazing and looking forward to kind of get to know you a little bit better and kind of sharing that with the world too. So when we kind of jump in here, talk about a little bit about your background. I want to talk about you a lot today. So just tell us, I guess, when you kind of got started as a real estate investor and maybe a little bit about what your business looks like today.

Ben Toaff (01:30)
So I got started back in 2016. That was pretty shortly after I moved to Miami. I studied engineering at the University of Maryland. I did not want to be an engineer, so I ended up getting into sales. And then my brother was in mortgages, so he kind of told me to get into, he wanted to become a real estate agent. So became a real estate agent, and I quickly realized that everyone and their mother was a real estate agent in Miami. So I was a little bit intimidated by that. And then heard about real estate wholesaling.

⁓ ended up going to a local RIA meeting and getting into wholesaling pretty quickly back in 2016. ⁓ But now today, my company, we have about 15 employees. The majority of them are full-time in our office here in Miami. ⁓ And we buy and sell homes across the nation. We’ve closed deals in about 37 or 38 states at this point. ⁓ But we have a core focus on, I would say, about a dozen states.

Mike Hambright (02:30)
Okay, yeah, that’s great. I can see, I didn’t know that you had an engineering background, but as soon as you said it, I was like, it makes sense now. Because you’re very methodical in our conversations. Like lot of real estate investors have a sales background, right? And not that engineers can’t be good salespeople, but salespeople generally are not very methodical in their approach. So just like, put me in front of somebody and I’ll sell them something, right? And so, not that there’s anything wrong with that, I’m not knocking anybody, but you know, there’s a few conversations that you and I have had.

that I can tell you’re processing this, you’re thinking about like, well, is this worth my time? How does my team feel about this? Like you’re very thoughtful in your approach. It makes sense now that you said that.

Ben Toaff (03:08)
I appreciate that and I think that comes with maturity. I don’t think my approach was always like that. I think that after making a lot of positive moves and some mistakes along the way, think that I’ve kind of evolved into being more methodical with my approach when it comes to everything to do with my business.

Mike Hambright (03:12)
Yeah.

Yeah, to scale up your business and to operate across lots of states and stuff like that. Like you need that mindset because there’s a lot of SOPs. There’s a lot of processes. There’s, you know, hiring processes, being able to manage a team and stuff like that. That’s really critical. just brute strength and brute force can only get you so far in this business, which is why a lot of people that are real estate investors that have a, even if they have a decent business, sometimes they’re stuck is like, ⁓ really a self-employed type situation, right? They might have a couple people on their team.

but the business wouldn’t survive without them very long.

Ben Toaff (04:01)
Yeah, to get to a point where your business is relatively self-functioning and actually can function when you’re not there, you need to have some pretty high-level people on your team. There’s a lot of difference between hiring one or two people than actually successfully hiring a group of successful people as well.

Mike Hambright (04:23)
Yeah. So let’s talk about maybe the early days in your business. So you started out wholesaling. I know you were working with lot of agents and just calling on agents and calling off the MLS and stuff like that. It’s obviously evolved into doing deals in, like you said, 37, 38 states. But let’s kind of talk about the early days and learn about you, but also your lessons learned about why you transitioned to the next thing.

Ben Toaff (04:48)
Yeah, so ⁓ my early days was very much a brute force kind of approach, like you mentioned. Initially it was basically me and I had a small team. It was me initially and then I had one or two people with me. But it was just heavy phone calls, of driving out to properties, meeting agents at properties, making tons of offers, and just kind of getting a feel for what kind of numbers I needed to get these properties at in order so could resell them.

You know, I’m in Miami, is potentially, I think it’s probably a top three most competitive market in the country when it comes to real estate wholesaling, real estate investing. People say like San Diego, Phoenix, Arizona, and probably Miami are some of the biggest, most competitive markets when it comes to investing. so quickly I learned, you know, this was very much a highly competitive, there was a lot of people competing for properties and I had to differentiate myself from the crowd in order to succeed.

I did that by building good relationship with agents, really taking the time to get to know them, but also being very convincing that I was a serious buyer and that I was actually going to close on the property if they decided to work with me. And then in order for me to do that, I had to make sure I get it at the right price. I typically would make 10 or 15,000 on these deals off the MLS, but at the same time, it was pretty good given the fact that there was no marketing cost, essentially. ⁓

But yeah, I mean, that was kind of the early days, just hustling out at properties, making lots of offers, and then locking them up and quickly flipping it to investors. The nice part about that is was relatively straightforward and simple, but it was a grind, and I didn’t feel that it was something I could scale to many millions. Also, when you’re taking properties that are listed and selling them to investors, they’re not quite as excited to buy them when they’re completely off market.

Mike Hambright (06:44)
Yeah, because they can see the history of it or they they can see maybe maybe even what you paid for it. But so you said you would talk agents and basically tell them that you can close. So were you taking stuff down? Basically you tried to assign it if you couldn’t you would take it down either way. Is that was that kind of thing? OK.

Ben Toaff (06:59)
I would never take it down. No, we would

just we would just cancel during the inspection period or we would renegotiate inspection. So we would get it For example, the property is listed at 300 we would get a contract for let’s say 250 try to sell to an investor for let’s say 260 or so 265 and then If we were able to get investor then we would you know Close or even try to get another credit from the seller to get a little bit more on our spread and then if we couldn’t

Mike Hambright (07:04)
I

Ben Toaff (07:25)
sell it for that price, then we would try to renegotiate to a lower price and we were confident we could perform that.

Mike Hambright (07:31)
Yeah, yeah. So when did you start to go outside of the Miami market and basically start to explore new lands, if you will?

Ben Toaff (07:39)
So after about three, four years, I ended up joining Rafael Vargas’ program. I’m sure you’ve heard of him. And he was big on cold calling. I hired, at one point, I had 20 Filipino cold callers that worked for me directly. And we would just mass cold call. We would do mass RVMs. in the beginning, they worked great. And then,

Mike Hambright (07:53)
Wow.

Ben Toaff (08:06)
you we would just basically blanket call people and we would get tons of leads and stuff like that and tons of deals. But it was a lot of work because the leads, they would convert like one in 50, one in 60. So you had to go through a lot of leads in order to get these deals and a lot of follow-up. And it was working great. And then we actually got into a lawsuit from the DNC for the RVMs and stuff. you know, I don’t recommend doing that.

Mike Hambright (08:30)
Hmm.

Ben Toaff (08:35)
And then that kind of made me little bit gun shy with that. like, wait, this is, you know, I don’t like really having to deal with legal issues all the time for cold calling and stuff like that. So then that’s when we started.

Mike Hambright (08:43)
And I think Florida was

one of the first states to outlaw the RVM.

Ben Toaff (08:48)
Yeah, it cost me 100 grand. I lost 100 grand in the lawsuit. So I’m very well aware and it wasn’t fun and I don’t do that anymore and I don’t recommend anyone does it. ⁓ But yeah, mean, Florida and Texas is pretty strict too, I believe. Yeah. Yeah.

Mike Hambright (08:52)
Yeah.

Hmm, yeah, no, nobody likes RVM’s, but I still get

a ton of them. Personally, I get it.

Ben Toaff (09:11)
I don’t

think I get too many of them now, but maybe I just don’t pay that much attention. ⁓ That’s why we transitioned to PBC. Then PBC was great, but then the limiting factor of PBC was the cost per lead was so high. That’s when ⁓ I heard about Investor Lift and I got into Investor Lift, and that allowed us to market our properties in other areas that we weren’t in, and that allowed us to lower our cost per lead by marketing into multiple areas.

Mike Hambright (09:41)
Okay. And I think, and were you first, so a lot of people that buy nationally or I’ve known a lot of people that have by national still still know some, but, um, what gets challenging there is the Dispo is usually harder, which you said to use investor lift. So it helps with that. But a lot of people that truly are national, one of the ways they keep, I guess the front end of the business, they keep the costs down is they end up buying a bunch of stuff. That’s a rural, which is really hard to exit and dispo on the other side. So I know that

Now you’re primarily focused on major markets, but was there a time where you were just blanketing entire states or you would buy leads or cold call or whatever entire states or.

Ben Toaff (10:19)
Well,

we get rural leads all the time and we actually make a lot of money off those. it’s kind of a, know, it’s kind of a, it’s kind of a rural leads are kind of interesting because sometimes, you know, yes, they are very rural and they’re hard to disposition as a traditional wholesale, but as innovation or as a whole tail, some of our best deals come from rural leads. I mean, we had a, we had a lead in Lumberton, North Carolina.

where we ended up purchasing the mobile home, I think from this old lady, for 12 grand. And we resold it in about two weeks for 65,000. So I mean, it’s just like little deals like that that you would never find that in a major market. So sometimes rule’s not bad. You just have to negotiate at a lower price than you normally would.

Mike Hambright (11:09)
Right.

Yeah. Yeah. And so you still get a fair bit of those now, but you’re for a paper click. You’re more targeting, I guess, major markets for the most part.

Ben Toaff (11:20)
We target major markets, but we also target all the counties around the major markets. So it’s not like we’re strictly targeting only the counties or the areas that are major markets. also target, for example, in Philadelphia, we don’t only target Philadelphia. We target like eight, nine, even 10 counties that are in that general vicinity on the side of the state. And we make a lot of money off deals that are an hour or even an hour and a half outside of major markets.

Mike Hambright (11:24)
I see.

Yeah.

Ben Toaff (11:49)
It’s not so important if it’s in a major market. It’s more so important what is the population and also now that the market’s changing, what is the days on market and how much inventory is there. That’s kind of where it’s more important. Rural is not as important as how quickly do they home sell in the area.

Mike Hambright (12:07)
Right. Yep. Yep. And it’s actually surprising sometimes I’ve dabbled in some rural markets where you’re like, there’s hardly anything on the market here. But when something does pop up, goes fast sometimes because there’s just not a lot of, ⁓ there’s not a lot of competition either.

Ben Toaff (12:24)
Also, the price points are sometimes lower in the rural markets and that’s very favorable as well. No matter what kind of buyers there are, you’re listing a home for $100,000 or whatever, there’s just a lot more people in the market that can afford that kind of thing.

Mike Hambright (12:39)
Right? Yeah. So at some point, I mean, guess in part of this model, there are definitely some national, what I’ll call wholesalers that are, ⁓ they’re truly assigning, they’re trying to assign properties, right? They don’t take ownership, but you’re generally doing some creative stuff, whether it’s a whole tailing, you’re taking it down and whole tailing it or doing innovations or maybe some other creative financing options. So talk about, I mean, not everybody that buys across lots of states, most are not willing to take that.

what they perceive as additional risk to kind of take it down ⁓

Ben Toaff (13:13)
I view

it the opposite way because I made the mistake of not buying deals and that’s a bigger mistake. People, they’ll spend all this money on marketing and then they’ll spend all this money on having a team and stuff like that and then they’ll uncover these deals and then, for example, if you were to get a deal, let’s say for 400,000, which is worth 500,000 or 550,000 without renovating it and then you don’t buy it, that’s a way bigger risk than

Mike Hambright (13:21)
Yeah.

Ben Toaff (13:43)
trying to sell it to someone else, in my opinion. So as long as you’re underwriting your deals correctly, if you’re not sure getting a home inspection or someone to walk through the house on your behalf, the bigger risk is not buying it. Because if you don’t buy the deal and you try to sell it someone else and then the seller backs out, that happens a lot, especially in virtual wholesaling. So the reason why we buy the deals is to try to avoid homeowners backing out. That’s the only reason.

Mike Hambright (14:03)
Yeah. Yeah.

Or somebody going around, I mean, it possibly could go around you, all those things, right?

Ben Toaff (14:14)
Exactly. it just, like you taking the seller out of the equation, it’s worth it. And when you use a lender like Kiabi, for example, like we do, you know, we buy houses sometimes for 400,000 and we only come to closing with 12 grand. So the numbers make sense as long as you have the right financing. People sometimes look at it like, ⁓ I’m buying the home for 400 grand. Yeah, the purchase price is 400 grand, but you’re only coming to close it for 12 grand. We’ve had deals where we come to closing with 12 grand.

and we make $75,000. So, you know, do the math on that. The cash on cash return is insane.

Mike Hambright (14:45)
Yep. So talk about some of the lessons you’ve learned kind of transitioning from a single market to multi-market transferring from just assigning to being willing to take, take, you know, bets, whether it’s a funding them yourself or doing innovations or things like that. What are some lessons you’ve learned along?

Ben Toaff (15:04)
⁓ Well, you definitely need to consider all your exit strategies and you need to be able to analyze the markets correctly. When you’re making a decision as to what to do as far as the correct exit on a property, whether it’s novate or wholesale or buy it yourself, you really need to analyze the costs correctly. You need to take the opportunity to look at…

How long are properties sitting on the market here? What is the population of the market? How far is the property from a major city? If you need to do renovations to the home, how difficult is it going to be to find a local handyman or someone to do renovations to the property? And you need to make sure you’re always comparing apples to apples, because in some markets, you have a property on one street and two streets down. It’s a different area.

really make sure that you’re analyzing the properties correctly. And the other thing is sometimes homeowners typically exaggerate the condition of their home. They usually make it seem a little bit better than it actually is. So you really need to get a home inspection or at least someone to walk through the home to really make sure that there’s nothing wrong with it that you don’t expect. I’ve made both mistakes. I’ve made the mistake where ⁓

you know, we bought and ⁓ the house took forever to sell. And I made the mistake where we bought the home and it needed more repairs than we initially anticipated. So you need to be, you know, careful when you’re doing this, but as long as you’re dotting your I’s and your T’s and you’re really making sure that the numbers make sense as well as the condition of home makes sense, buying the homes do make sense a lot of the time. ⁓ I would say that anything over, you know, any deal where you’re going to make over 40 or 50 grand.

⁓ you need to at least consider ⁓ taking the property down and not trying to sell it prior to purchasing because it’s a lot of equity that you’re risking by trying to flip it to someone else.

Mike Hambright (17:11)
Sure, yeah. And to be your boots on the ground, you using agents to list these ultimately? Are you using agents to go look at properties? There’s some services that go do this. How are you managing that on a nation, essentially a nationwide standpoint?

Ben Toaff (17:26)
Well, I two really good full-time transaction coordinators that kind of handle most of that for me, but we typically get a notary to walk out of the property or we’ll find a handyman on ⁓ TaskRabbit or something like that, and then we’ll have them walk the property. if it’s a more risky purchase, then we’ll get a home inspection. ⁓ 400 bucks, it’s worth it. At least you know what’s wrong with the home. And then…

Yeah, I mean, we either get a notary or we get a home inspection or we get a handyman, one of those three to kind of really dial it down. But sometimes we get deals where the numbers are just so good that we don’t need to do anything. Like we get deals where the home, we’re buying it for less than the land value. So in that kind of case, we’ll just risk it. There’s nothing so low that there’s not really that much risk. And those are the best deals. We had deals, for example, one in Nashville, Tennessee, where

We bought it was a mobile home on like a large lot. We bought it for I think it was like 70 grand. It was in a probate and then we immediately were able to resell it for like 250 like the next week. So we’ve gotten plenty of deals like that. So it’s just a matter of, you know, really looking at the numbers and making sure that everything makes sense.

Mike Hambright (18:42)
Yeah. And from a state standpoint, are there ⁓ we won’t we won’t get too political here. I know which your beliefs are. We’re not too different here. Yeah. I mean, there are many real estate investors that have Trump embroidered on their shirt. So but anyway, anyway, have you learned you said you buy in, you know, thirty six, thirty eight states. Are there states that you just stay out of? mean, and the reason I preface that is

Ben Toaff (18:50)
How do you know?

Ha ha!

Mike Hambright (19:11)
A lot of people will just stay out of blue states just because they do this on a national standpoint, just because there’s just risks with, ⁓ you know, the process. Yeah.

Ben Toaff (19:20)
I know all about the risks in the blue states. So

the blue states, a lot of the ones in the Northeast tend to have the biggest spreads. But we actually just recently, bought a property, this is going on right now actually, we bought a property in Connecticut and we purchased it for 150 grand. And the owner, we, you know, the owner moved out, we took some photos of the home and we listed it on the MLS for 300,000 or 320,000, the two days after we bought it.

We had five agents that wanted to show the property. But what happened is the owner moved back, he broke back into the home through the window after he changed the locks. And now he’s claiming that he had cerebral palsy and he didn’t mean to sell us the home. So now we’re basically having to go through a situation where we’re having to try to evict the homeowner and we’re having to try to claim that the owner was in fact, you know, legitimately sold us the home. So that can happen. then the fact that it’s a blue state, you know, it’s not helping us.

Mike Hambright (20:11)
Yeah.

Ben Toaff (20:17)
We don’t avoid those states ⁓ that much because those are some of the currently in today’s market, some of these Northeastern blue states, New York, Connecticut, those are actually some of the better markets as far as the inventory situation right now. ⁓ You just have to, you know, have to really be wary of those kinds of things that can happen. you know, if the numbers are there, that doesn’t, we still take the risk.

Mike Hambright (20:34)
Okay.

Yeah, yeah. So where are you going from here? You’re operating at a nice level. I’m sure that you have goals to take your business to another level. talk, I want to talk about a couple more things. One is where do you see your business going from here over the next three to five years? And then I want to talk a little bit about the current market and where you think that’s going to. But let’s talk about your business and your business model first. Like, where do you go from here?

Ben Toaff (21:12)
Um, so I think that, you know, we’d like to, you know, we’d like to get to the point where, you know, we’re doing, I’d like to get at least 10 million, eight figures. Um, you know, I was hoping to get there in the next year or two, but right now just the market is slowing us down. I mean, cause some of these properties that we’re buying, it’s taking us, you know, a little bit longer than I’d like, you know, 90, 120 days to exit versus.

what it did before when we used to be able to exit in weeks or a month. So it’s not necessarily the best ideal time for this. right now we’re having to dial in our processes and we’re really dialing in kind of like making sure that we’re handling our leads correctly. Because when you generate hundreds of leads a month,

that are each lead costs several hundred dollars, you need to really make sure that you’re maximizing these leads. And that’s what we’re doing now. We really are dialing our follow up processes, dialing our lead management. that’s, we’re showing a big difference in that. We’re lowering our, what it costs to stay the contract and lowering what it costs to actually acquire a deal at this point, which sometimes is more important than actually just scaling up your marketing.

Mike Hambright (22:29)
Yeah, yeah, it’s very possible. I mean that you could double your business by just having a better follow up process ultimately.

Ben Toaff (22:36)
We’ve seen that and that’s something we’ve gotten a lot better at so we’re working on that ⁓ But as far as you know where we’re growing to I think that I think that you know right now we’ve kind of reached this this this point where we grew to five million very fast and We want to dial in our processes and dial in our kind of our systems things like that and then we want to scale efficiently to

you know, 10 million and still be very profitable as opposed to some of these companies as they grow more and more, they lose a lot of that profitability. We’re trying to avoid that.

Mike Hambright (23:13)
Yeah, for sure that that happens. One of the great things about you and your business where it is now is like if you get it dialed in in this market when when the market gets better, because it’s just a it’s just a cycle. It’s just a time timing issue. You’ll be that much better off. Now, the key is when the heydays come back is that you don’t get too sloppy to where when things tighten up again that you can’t adjust right.

Ben Toaff (23:37)
I think that, you know, because it’s, I’ve done this in the good markets and it is a lot easier. I’ll tell you that. I’ll tell you that. Cause I did, I did $3 million in back in 2022 and that was with a very messy operation, very messy operation, you know, no multi-luxes strategies, no, you know, we barely even tracked our marketing and our end and how much we were making and things like that. So it was very sloppy, but we made money.

Mike Hambright (23:55)
Right?

Ben Toaff (24:05)
And now we track everything. We track how much we spend per lead, how much we spend to get a contract, what is our return on ad spend, how many leads does it take to get a contract. We track everything down to the T. And so when we go back to that market, I already know that I think that if Trump actually fires Jerome Powell and lowers the interest rates by 3%, which is what he claims he was going to do, if that happens, I believe that we could scale to $15 million in six months.

Not even kidding because it’s going to be so easy once the market’s good.

Mike Hambright (24:39)
There’s a lot of pent up demand for buyers, know, home like owner occupants, right? And so it’s just going to take rates don’t even have to go down 3%. I mean, I think if rates even went down 1%, we would see a massive kind of movement. So it’s an interesting time for sure. With that said, where do you see the market? I mean, without talking too much about, think it’s inevitable that rates will go down, whether it’s now or when Powell retires in May, if he’s 40, unless he’s forced out earlier, but

Where do you see the market kind of going even over the next 12 months?

Ben Toaff (25:14)
I mean, I just think it comes down to when they lower that rate. I think that I’m hoping it’s sooner rather than later, but you think that if they lower by one point, that would make a big difference.

Mike Hambright (25:25)
I think it’ll make a, I mean, it’ll it’ll, it’ll improve like with, with each cut, it’ll, it’ll get better, right? But I, but I don’t think it has to go down. I don’t think mortgage rates have to go down to four or five again for it to have a massive transformation for investors. I think it’ll, it’ll just going down at all will signal that it’ll just create more opportunity than we’ve seen in the past, you know, a couple of years for sure.

Ben Toaff (25:54)
Interesting. I feel like it needs to go down like at least a point or two to make a significant difference. Obviously even if goes to half a point it’s great but you know to really see that kind of bull market where you had multiple offers and that kind of thing I think that’s going to require a little bit more.

Mike Hambright (26:10)
One of the things that I talk that I talk about all the time is like if you think as real estate investors, I feel like historically from having done a ton of deals myself is there’s two types of sellers. There’s the classical the classical kind of distress seller, death, divorce, inheritance, problem, entire landlords, like all those. Right. And and those still exist like those haven’t gone away because, you know, people don’t stop dying just because the markets changed or anything like that.

And then there’s the other half of the market, which is the convenience seller. And that convenience seller is like, they’re willing to accept a discount for their property ⁓ because it’s distressed. Like they know it needs a lot of work and they just want an easy button to get out. But that seller is usually going to somewhere else and they can’t afford the somewhere else right now. So I feel like not only will ⁓ we talk about a lot of buyers coming back into the market with interest rates change. I think it’s going to free up, you know, the half of the market.

that wants to sell that’s just frozen right now because they can’t afford the next thing. So I feel like it’ll help from a buyer and a seller standpoint.

Ben Toaff (27:17)
Yeah, that makes sense. That makes sense what you’re saying. I mean, yeah, I think that we’re on the same page. think once interest rates come down, the markets will improve. But I think it is kind of right now, unfortunately, at a little bit of a standstill until we do see that drop.

Mike Hambright (27:36)
Yeah, so Ben, if folks want to connect with you, learn more about you, sell you some deals, buy some of your deals, any of that stuff, where can they go to connect?

Ben Toaff (27:43)
Yeah, my Instagram is the best way to get a hold of me, America’s Top Wholesaler. do actually, that’s interesting, I forgot to mention that, I do buy a lot of deals off of wholesalers now, because it’s one thing that I’ve noticed is kind of nice to get a nice deal that makes sense for me without having to go through the whole, you know, paying for marketing and stuff, because we do a lot of that, but it is nice to pick up a couple deals off wholesalers too. So any deals that people have that are, you we like newer builds, 1990 or newer in Florida.

We buy a lot of those off other wholesalers. So if you have something like that, definitely connect with me and send it to me. Something with a lighter rehab. We’ll definitely take a look at it. And yeah, Instagram is probably the best way to get a hold of me as well.

Mike Hambright (28:26)
Okay, we’ll add that in the show notes down below. So good spending some time with you today. Thanks for joining me on.

Ben Toaff (28:31)
Appreciate it. Thanks, Mike. Appreciate you the time to chat with me.

Mike Hambright (28:34)
Yeah, of course. Everybody, hopefully you got some good value from today. If you’re looking to scale up your business, there’s some lessons in here for how you can kind of take your business to the next level. If you’re a solopreneur right now or run a small shop, ⁓ if you listen to shows like this and you surround yourself with people like Ben and folks inside of our investor fuel community, it’ll allow you to kind of take your business to the next level. Doesn’t mean it won’t be a lot of hard work, but you got to get around people that have learned some of the hard lessons before so you don’t have to. So appreciate you for joining us today. We’ll see you on the next show.