Mastering Wholesaling and Flipping: Your Guide to Colorado Investments

John Harcar (00:02.069)
All right. Hey guys, welcome back to our show. I’m your host, John Harcar, and I’m here today with Brian Patterson. And what we’re going to talk about besides his journey is in real estate and business. Uh, we’re going to talk about, you know, how to really adapt and pivot, especially with, you know, all these uncertain market changes. Guys, remember at investor fuel, we help real estate investors two to five X their business. Uh, we do that by providing tools and resources to help.

grow the business you want to grow, helps in turn live that life that you want to live. So Brian, welcome to our show.

Brian Patterson (00:35.166)
Hey John, how’s it going?

John Harcar (00:36.777)
Good man, glad to have you on here. I’m excited to talk about adapting and pivoting. think that’s huge nowadays, especially with the way we know the market’s been. But before we kind of talk about all that, tell our audience a little bit about you, your journey in business and real estate and kind of what brought you to today.

Brian Patterson (00:55.574)
Okay. You know, I’m Colorado native. I’ve lived here my whole life. You know, I’ve been in real estate in Colorado pretty much my whole life as well. My dad was a construction superintendent, so I grew up building houses in the mountains. I lived in Bailey, Colorado. So I got to really see in depth, you know, the whole process of every trade. And it didn’t take me long to figure out, you you don’t meet a lot of women on a construction site. So I was like, man, I got to…

something different, you know, started going the college route and decided I wanted to go to school. You know, and that kind of led me into real estate. While I was in school, I started working for a guy part-time as a mortgage broker. And, you know, I was like, hey, what’s this? I learned about mortgages, you know, really young. And that led me to start working with Keller Williams. Keller Williams, you know, converted me over to, you know, the realtor side of things where I was able to do both back then. This was…

You know, 07, 08 time period. So we had a couple of really good years and then the market kind of turned on us. It was fun on the way up, but then I didn’t want to go back to a regular nine to five job. So I figured I’d find something else inside of real estate that I could do. And I kind of ended up shifting over to property management. You know, I bought a renters warehouse franchise, right? And we started managing properties. say we…

John Harcar (01:57.27)
All right. Right.

John Harcar (02:17.397)
Okay.

Brian Patterson (02:24.462)
My fiance at the time seemed to be my wife. Her and I opened it up and people were just giving us their properties. This was during the downside of the market where they couldn’t sell them for what they owed. We just kind of went to them and said, let us rent them for you. At least it won’t be a foreclosure. We had 200 people come to us with properties and basically have us manage. That was a trial by fire in terms of property management.

John Harcar (02:43.582)
right?

Brian Patterson (02:54.413)
something I really wouldn’t recommend to a lot of people. It’s as bad as you think it is. It was a learning experience. Most of these houses were underwater. The people didn’t want to put any more money back into them. We were just trying to keep peace between the other renter and the landlord. Doing that set me up for my next pivot in the market. I could see that eventually it was going to come back. When it did, all these people were willing to sell me their houses at basically what they owed on it.

John Harcar (03:02.015)
Mm-hmm.

John Harcar (03:09.652)
Right, got it.

Brian Patterson (03:22.477)
So as the market began to shift, I was flipping properties the whole time. I do like one on the side here, one on the side there. Well, suddenly I had 10 people that wanted to sell me all their houses at once. I couldn’t do 10 at once, so I started selling them to other people. Well, that’s wholesaling, right? didn’t know what it was called. didn’t know. just like, oh, yeah, I have this contract and I sold this guy and he flipped it instead. So I kind of fell into wholesaling.

John Harcar (03:40.777)
Yeah, I’d say you started your wholesaling career.

Brian Patterson (03:52.205)
you just on by accident. Well, after doing that, you know, four or five times I started looking into it. I found out what real wholesaling was. I got mentored by Sean Terry in Arizona and he kind of, yeah, yeah, he’s a good guy, you know, and he kind of led me down the right path of how to do things. At the same time, we were cherry picking the ones that we wanted to flip. So we were doing, you know, about four flips a year then, and we, you know, have escalated since then to, 10 to 12.

John Harcar (04:04.981)
Sean Terry. I’ll tell you a story about him.

John Harcar (04:12.309)
Mm-hmm.

John Harcar (04:22.345)
Awesome.

Brian Patterson (04:23.112)
So it’s nice to be able to pick the ones we want and then get rid of the ones that we don’t want to do if it’s just too far away or too big of a job. Wholesaling, that’s my business out here in Colorado, Cash for Houses Colorado. That’s our wholesale arm. Lake House Capital is our investment arm where we actually flip the properties or keep the ones we want for rentals. So I was able to kind of bifork the business and be like, okay, let’s keep this over here.

John Harcar (04:29.589)
Got it, okay.

John Harcar (04:44.149)
Mm-hmm.

Brian Patterson (04:49.172)
Now I have three or four guys that work for me on the wholesale side doing acquisitions and dispositions. And I’m able to concentrate on the bigger flips and finding more money to bring into the fund to actually buy properties.

John Harcar (05:02.665)
Nice, okay, let’s go back. And if you’ve ever watched any of my podcasts, I like to go back. Usually my question is like, you know, what influence was, you know, what was there for you to get into real estate and you had told me your father, did you like work with him a lot? Did you, mean, did you ever have thoughts of like, you know, you and him opening up a business together or do anything like that?

Brian Patterson (05:25.877)
Not really, you know, was a, you know, was just a grunt construction guy, right? You know, like we framed, we plumbed, we did everything. And that’s the hard side of it. And I remember seeing, you know, like the realtors come through after we built something and they would sell it and make it a really good commission. And they didn’t have to do any of the hard work. And then, you know, if for some reason the house didn’t sell what we thought it was going to sell for, you know, we’re the ones that took it in the shorts and not the realtor, he still got his commission. So it kind of opened my eyes to that there was an easier side to the business.

John Harcar (05:30.45)
Right.

Brian Patterson (05:55.146)
you know, definitely glad that I was able to learn that first and understand the intricacies of building and remodeling. But I would never want to pick that route again. You know, I’m glad I went the way I did.

John Harcar (06:09.621)
And then when he went to school, I mean, I think he had mentioned like he just were not really into the business anymore and he wanted to get out there and test something new. Like how did that transition go? Why didn’t you just stay in the business?

Brian Patterson (06:23.979)
Well, you know, when I went to school, I thought, I’m going to go away and learn something. Everybody thinks they’re going to go to college and you’re to get a degree and suddenly you’re going to, know, just people are going to throw you a job making a hundred grand a year, right? I was there two years, you know, I was a, a wrestler. So I went there for my, first year on a wrestling scholarship. And, uh, you know, that kind of kept me grounded and gave me something to do. But when I started in my second year and I’m thinking, okay, what do got to do for, you know, I to make some money here. Um,

John Harcar (06:32.757)
Right.

John Harcar (06:41.365)
cool.

Brian Patterson (06:51.817)
And I’d got a part-time job as a telemarketer for a mortgage company. And I saw that we would set these appointments for these guys and they would go run out and do it. And they were making a big commission off of a refinance. So I asked, how do I get on that side of it? And he kind of mentored me to be one of his mortgage sales guys. And then it clicked in my head. I was like, we can use these to buy houses. So then I understood the finance side of how to buy a house with as little as 3 % down.

John Harcar (06:55.925)
Mm-hmm.

Brian Patterson (07:21.61)
Right, so.

John Harcar (07:21.693)
And that’s what’s interesting is like for your experience, like you’re learning, like some people have a mentor and they’ll learn some things, but like you learn kind of hard knocks. You learn the construction hard knocks. got into the mortgage. So you learned all sides of the business in actuality, not by a theory in a sense, right? You were doing it.

Brian Patterson (07:40.414)
I did, I walked through it, where I was like, okay, once I entered, somebody told me you could buy a house FHA with 3 % down. And I was like, I can scrounge up six grand or whatever it was at the time. And that made me think, was like, you can buy one house with six grand down. was like, and my wife and I actually bought our first fix and flip. And we bought it with her commission, because she was a licensed realtor at the time. And then my mortgage commission, we used all that money to flip it.

John Harcar (08:05.661)
Okay, okay.

Brian Patterson (08:10.314)
We did all the work ourselves and we probably made about $10,000 and we thought we were rich. We were like, this is amazing. I look back now, I would never have bought that house. Knowing what I know now, that was not a good deal. We just got lucky. But it opened my eyes. It got my foot in the door and I was like, okay, this can be done. Then I was able to going down the path, bought a rental.

John Harcar (08:22.037)
Sure. Right.

Brian Patterson (08:35.37)
bought another rental and I could just see, was like, this was a lot easier than working every day all day. So, you know, wouldn’t say this is an easy job. You know, you’re definitely working for it, but it does have the opportunity to help you, you know, compound wealth very quickly.

John Harcar (08:44.894)
Right.

John Harcar (08:52.245)
as you started getting, you know, growing and getting more into this, what were kind of some of the earlier struggles you think you had, you know, when whether it’s flipping houses or, you know, buying, buying properties, whatever it might be, what were kind of some of the early struggles you had to overcome?

Brian Patterson (09:06.683)
You know, initially it was figuring out the money side of it. You know, I think so many people think, I want to go flip a house. But you’re like, when I work with people here in Colorado, I tell them, you know, got to find it, you got to fund it, you got to flip it, then you got to do it again. Right. And the funding side of it seems to baffle people. And most people only do a couple of mortgages in their life. So once I figured out the money side of it, where I was like, okay, I just need enough money to buy one property.

fix it up, well now I need the money to do the rehab, right? So we were using credit cards and hard money or whatever. But once I understood that, then I could do multiples at a time. So that was my biggest thing to overcome was finding the funds to do it.

John Harcar (09:39.636)
Mmm.

John Harcar (09:45.193)
Right.

John Harcar (09:51.249)
Awesome. what, what, as you touch a little bit on it now, like what does your business look like? Are you strict? mean, are you, how many are you flipping a year? How many you wholesale in a year? What does your team look like?

Brian Patterson (10:02.343)
So I set up my structure based off of kind of like Sean Terry’s original flip to freedom system where you can run it with about four people because I didn’t want to be in charge of a whole bunch of people again. So the way I do it now is I have a full-time GC for my flips who is also my uncle. And then I have an office manager slash lead manager. he does pretty much everything.

John Harcar (10:10.292)
Mm-hmm.

John Harcar (10:22.431)
Okay.

Brian Patterson (10:31.193)
As the leads are coming in from different sources, he’s the first touch to the lead, and then he puts him in the CRM and sends them out to our actual sales guys.

John Harcar (10:40.349)
Okay, so he’s the one that calls them and responds to the leads as they come.

Brian Patterson (10:44.145)
Yep. And before, you know, that was all flowing to me, but now we have multiple channels flowing to one spot. So he’ll warm them up. We still run an appointment in person here. You know, we go out look at the property, evaluate it. So my acquisition guy does that. We try to get the contract and then we figure out what we’re going to do with it. You know, if it’s something where he’s like, hey, I think you would want to flip this one. Then I take it down myself. You’re using hard money or our own investment money, you know, inside of the fund.

John Harcar (10:49.727)
Awesome.

Brian Patterson (11:12.937)
From there, if it goes to a wholesale, well then we have a disposition side. And we have you guys that call all the local investors and we send out our flyer, we put it on investor lift. All the channels that everybody’s using right now, but we actually still call people, right? Because I think everybody’s kind of lazy now. Where they think, they do, they think they’re just gonna send you a text message and you’re gonna buy a house. And I still make them call them and say, tell the guy about the house.

John Harcar (11:31.093)
Yeah, they are.

Brian Patterson (11:40.871)
see if he’s interested, if it’s not, what is he interested in so that we can, you know, reverse wholesale and then go find him a property.

John Harcar (11:46.837)
I was about to say that phone call is yeah, I mean you want that personal touch you want to sell that deal but also too it can give you more insight into your buyer and what the next deals down the road are gonna be.

Brian Patterson (11:56.732)
It is. I always tell my guys, it’s a carrot, right? That’s your opportunity to dangle the carrot. And you have a legitimate reason to call that person so you’re not wasting their time. And you’ll start that conversation and they’ll say, hey, I’m going to be done with one in about 30 days. I need another one around 500 grand. So every property we get, we make sure we send out a flyer and call some investors on.

John Harcar (12:07.923)
Mm-hmm.

John Harcar (12:15.817)
Yeah.

John Harcar (12:22.173)
I love it. What does your lead gen look like?

Brian Patterson (12:25.544)
Lead gen, that’s always a moving target, of course, right? Like PPC here in Colorado, the Denver Metro market is very competitive. Our cost per acquisitions, right around five grand, but our average wholesale fee is 15 to 20. It’s not what makes sense, but I’ve had a lot of months where you’re like, wow, we’ve been paying this PPC for a while and we haven’t gotten anything, and then it’ll break loose in month three. I still do direct mail. Agent outreach is a big one for me.

because coming from Keller Williams, they’re very educationally based. So I still go in and do lunch and learns with them and kind of tell them, like, hey, if you got something that’s just a dog and it’s not going to sell the way it’s sitting or there’s a problem with it, send it to us. We’ll still pay your commission and you’ll get the deal done a lot faster.

John Harcar (12:59.989)
Mm-hmm.

John Harcar (13:14.517)
Are you seeing a lot more agents being more open to that now? At least in your, know, the Cali Williams you’re working at.

Brian Patterson (13:18.47)
They are.

Yeah, Keller Williams and Metro Brokers are my two biggest brokerages that I work with. And I actually just did a talk with them, like explaining them to them what like sub two and owner carry financing was. Because most realtors don’t know what that is. They’ve never seen that market cycle. So opening their eyes to there’s other ways to still get your commission. Are you like, you can sell it to us wholesalers, you because they think it’s such a bad word. You know, we’re just unlicensed guys out there.

John Harcar (13:35.464)
cool, okay.

Brian Patterson (13:50.983)
causing happen. And it is we get a bad rap. But just showing them like we want to this transaction to go smoothly as possible. You know, we use the Colorado State real estate contract here. When we when we do stuff out of state, we just use the simple two pager. But they’re more receptive to it. If you can explain to them how they’re still going to get paid. Right. Because that’s really that’s really all it is. You know, I’ve had them

John Harcar (13:51.121)
Yeah, bad raps, man, bad raps.

John Harcar (14:14.378)
yeah, I mean that’s what they want in the end.

Brian Patterson (14:20.295)
I’ve had realtors red face mad at me because they think I’m doing something wrong. And I’m like, it’s in the contract. It’s in the Colorado real estate contract. We can do owner carry financing, just check the box. And they’re like, oh, I didn’t know. So it’s a very strange place in our time where all these realtors who just used to have to stick it on the MLS and they got a commission, now they’re having to learn to be actual realtors and use the contract effectively, learn how to negotiate.

John Harcar (14:47.797)
Yeah.

Brian Patterson (14:49.678)
So it’s definitely thin the herd out here.

John Harcar (14:53.673)
Are you only in Colorado? Because I heard you say something about if I use out of state contracts. Are you in virtual markets?

Brian Patterson (14:59.791)
Yeah, we do. Virtually we do Dallas, Houston, Florida and some Arizona. Arizona. I just for whatever reason we seems to get leads there and I’ll generally just co wholesale it over to somebody I know there, but we. All PPC so you know we try to do the Denver Metro and then I just within the last couple of years I’ve expanded to like a national market because it’s a cheaper lead and.

John Harcar (15:03.914)
Nice.

John Harcar (15:13.705)
And these are all PPC.

Brian Patterson (15:26.726)
And with modern technology, we can find buyers in just about any market. One house out here costs 500 grand. We can buy houses in Dallas for 150. So it makes your money go a little farther.

John Harcar (15:38.513)
Yeah, big big difference Let’s let’s touch on our topic here, you know adapting and pivoting I know you’ve made a lot of changes you’ve kind of you know You’ve rolled with the punches and pivoted when he needed to what do you contribute? Maybe some of your key things of success to being able to pivot when necessary

Brian Patterson (15:59.098)
I think one is, mentorship is big. If I didn’t know, I’ve never been afraid to ask, because I’m like, hey, who’s been doing this longer than me or who has a better way of doing this? And most people will tell you, some people will charge you for it, but it’s better to pay them and find out. Exactly. I’ve had deals blow up where I thought I had structured it correctly, and then you get to the table and find out you didn’t. So I’ve definitely done it the hard way.

John Harcar (16:17.331)
Pay some now than a lot later.

Brian Patterson (16:29.766)
But now that I’m older and wiser, I say, I’m like, hey, if this guy already knows, I’m just going to ask him. You hear sub 2 being thrown around a lot now, subject 2 mortgage. And I think it’s a buzzword, but not a lot of people really understand it. It’s good. In our market cycle, it is good because we are seeing people who are at that not quite negative equity, but not enough equity to pay their realtors and get out clean. So we’re starting to see a lot more of those in our market. Where I have guys that

John Harcar (16:39.999)
Mm-hmm.

Brian Patterson (16:59.329)
have never seen one before don’t understand it. They saw something on YouTube from Pace Morby and they’re like, yeah, we’re going to do sub twos. I’m like, it’s pretty difficult if you don’t have the right paperwork or you don’t have a good attorney. Most title companies won’t even close them. Yeah. So it’s like knowing how to do it and protect yourself and protect the two people you’re putting into the transaction.

John Harcar (17:12.894)
Right, a lot of them don’t.

John Harcar (17:22.697)
Yeah, that’s when I when I did my first sub to I use a transaction coordinator I mean I use people to make sure that it was all dialed in people that have done number of these successfully knew exactly what it was because I’m not gonna lie I was scared you know what of that do on sale clause I’m like man what happens if this happens man? I don’t got the you know, got the money for this I mean, I know there’s ways to remediate it but That’s just something I you know, I started looking for for

Brian Patterson (17:39.747)
Yeah.

John Harcar (17:52.297)
Seller Finance.

Brian Patterson (17:53.604)
Yeah, and that’s the better way for sure. But if all you got is sub 2, you’re going to sell what you got,

John Harcar (18:01.405)
That’s awesome. So how else did you you pivot? mean, obviously, we mentorship is big masterminds, those type of things. But how else did you kind of grow and pivot?

Brian Patterson (18:10.566)
So, you I think my first pivot was at the beginning when I said, hey, we were selling houses. All you got to do is stick a sign in the yard, you sell the house. So we were able to profit on the sale, profit on the mortgage, you go on to the next one. When the market turned and suddenly houses were worth 50 % less overnight, I’m like, I’m not that smarter guy. I’m not going to go find a job making this much money, you know, in the normal tech field or anything else. I was like, I got to figure out how to keep the wheels on the bus.

John Harcar (18:28.309)
Mm-hmm.

Brian Patterson (18:39.809)
So that made me look at it and I said, hey, these people can’t sell these houses. The alternative is foreclosure. I was like, they’re going to need property managers. And that’s when I saw the need in the market and we pivoted to becoming a property manager. I was always big and interested in creative financing. So initially when I did that, I thought there would be a way for me to finagle a creative financing way to get some of these people out of the hole, but the hole was just too deep back then.

So we just ended up managing them, but I saw if I held on long enough, then it would give me my next pivot. So I think looking down the road and saying, hey, I may not get to sell these today. It’s kind of like when you’re watering your garden. I was like, I’m planting seeds. I know that I’m going to have this many properties that are going to eventually be worth more.

John Harcar (19:28.201)
Yeah.

bright. Now that’s awesome. So where do you see your business in the next 12 months? mean, what’s your growth path?

Brian Patterson (19:38.232)
You know, we, I say with the wholesale, we could be bigger wholesale wise. In Colorado, I don’t really want to be bigger because it’s so expensive, right? So that’s when we’ve started to look at the other national markets and say, okay, can we be in and out of these markets easily? Do we have partners down there that we can work with and trust? So kind of shifting to that national side on the wholesale. On the fun side, you know, we’re looking at assets that we want to keep long-term.

rentals in Colorado are tough, tough nut to crack. You know, when you buy it for 500, you know, you got to rent it for you have three, $3,000, $3,500 a month to make any money.

John Harcar (20:17.301)
Yeah, and that’s difficult for a lot of people to afford.

Brian Patterson (20:19.905)
Yeah, so we’re starting to look in places like Texas and places like Florida where we can rent them at a reasonable rate. Multi-family is something that, you know, we’ve always done five units and below. As of recently, we’re getting thrown a lot of these bigger deals where they’re in a similar situation. Yeah, like we just picked up two in Colorado Springs. Apartment complexes where their loans have come to maturity and they’re being called to.

John Harcar (20:27.358)
Okay.

John Harcar (20:47.669)
Mm.

Brian Patterson (20:49.252)
Well, the guy’s at 70 % occupancy and he can’t go get it refinanced. we can, yeah, it’s ugly. So we can step in and buy them for 105 a door when they’re worth 120 to 130 a door. So once again, that’s where the financing thing came and saved me again because I knew how to find that money. We were able to get a bridge loan to do that. Now we’re working on getting the occupancy back up and then we’ll refinance it out of the hard.

John Harcar (21:03.189)
That’s nice.

John Harcar (21:16.221)
Awesome. That’s awesome, man. Any last advice if someone wants to get into the business, wholesaling, flipping, whatever it might be, any last advice that you would maybe give them to set them up for success?

Brian Patterson (21:29.796)
Yes, my advice would be this, don’t quit your job. Because you see all these guys out there, they’re like, oh, you can quit your job in 60 days. I’m like, this is a tough business. You can’t. Just because you get one big check doesn’t mean you’re going to get one the next month. And it’s a lot easier to finance stuff when you’re employed. So I see a lot of people shoot themselves in the foot by jumping off the employment bus too soon. Keep your job, get a couple under your belt, and start.

John Harcar (21:38.953)
No. Yeah.

Brian Patterson (21:58.723)
slow and easy. Like it’s better to take your time and do one right the first time than think, oh, I’m going to go big out of the gate and then buy two at the same time when I’ve never managed one. Right. So don’t quit your job and go slow.

John Harcar (22:08.329)
Yeah, good advice. Great advice. Great advice. Brian, if people want to get a hold of you, they’re in the Colorado market or Dallas or Houston or these other Florida wherever at nationwide, I guess is where it’s going to really be. But if they’re anywhere they want to get in touch, how do they reach out to you? How can they how can they talk with you?

Brian Patterson (22:26.147)
I think they can go to our website, you know, cashrousescolorado.com and same thing. I’ll give you my contact info if anybody wants to reach out to me directly. They’re welcome to do that. Not great at the social media thing. I’m still working on

John Harcar (22:38.13)
all good man me neither that’s why we have people that we pay people to do it right Brian thank you so much man for coming on and sharing all your knowledge guys I hope you took some good notes it seems like Brian’s got a really good business rolling and if you guys you know maybe want to reach out and talk with him a little bit or maybe do some deals together definitely do so we’ll put the info in the show notes guys yep I see you the next one cheers

Brian Patterson (22:42.572)
Yeah.

Brian Patterson (23:00.61)
All right, John, appreciate it.

Bye.