Why Real Estate Investors Go Broke Chasing Too Many Strategies | Mark Schinzel

Mark Schinzel (00:00)
stay focused. You’ll be really good at the one, the one thing I, if there’s a message, I’ve made that mistake millions of times. Like I’ve done it now for eight years, right? Uh, not new anymore. And I’ve tried subject to seller finance, novations. I’ve done all of them. have those. And every time I’ve done it, I’ve almost went broke because I didn’t just stay focused on the one thing driving our business.

Dylan Silver (01:57)
Hey folks, welcome back to the show. Today’s guest Mark Schinzel is a real estate investor in Pittsburgh, Pennsylvania. He’s focused on wholesale and off market acquisitions. Welcome to the show, Mark.

Mark Schinzel (02:07)
Thanks, appreciate you having me. It means a lot.

Dylan Silver (02:10)
Absolutely. Now, when we talk about the wholesale space, we were talking in the green room, right? There’s a lot that goes into longevity and staying power in this space. And it’s more than just getting properties under contract.

Mark Schinzel (02:25)
Mm-hmm. Yeah, lots, lots more. If you want me to elaborate, happy to do that. ⁓ There is a lot to dig in there for sure.

Dylan Silver (02:34)
Now, this is the space that I cut my teeth in and where I got started in real estate. And I really wasn’t sure where I would start. I just knew that I was tired of the W-2 world and was exhausted and I didn’t really see a way out. And I also felt like the more money I made at W-2, it had this almost ⁓ effect of I was now keeping up with the Joneses and I was surrounding myself with people who are spending more money. There’s a whole lot that goes into that that maybe you can relate to.

But I picked wholesale because that was just what was hot at the time. This was 2023. And I think it might’ve been at the tail end there, but certainly things have changed over time. How did you get into the wholesale space?

Mark Schinzel (03:15)
Yeah, I started a little bit before that. 2018 I started. I graduated college and I was working a job I hated. Very similar. You know, I say hated, at least for me. I worked 70 hours a week walking through a warehouse. I was an operations supervisor. had 200 people that worked directly for me coming out of college, which was ridiculous for our largest shift. Didn’t know really anything, but was a manager. And

I worked a lot of overtime and overnight. And so I Snapchat a buddy that I was reading rich dad, poor dad, which is just crazy. Cause everybody’s story is pretty much similar ish of how they get started with that. And I have the new form of, I Snapchat a buddy that I was reading this book and I just looked up entrepreneurship books. That was all I had with it. It was nothing more or less than that. And he was like, dude, I’m going to blow your mind. ⁓ have you ever heard of wholesaling? Like, no.

Here’s like five podcasts. and I, know, wholesaling Inc was one of them. ⁓ what’s the guy out of Arizona was really big at that time. Still really big now. I’m forgetting his name, but another couple of people. Right. And so just dove down the rabbit hole and, swiped a credit card, that year for a mentorship and didn’t get my first deal until 2019, almost a year. ⁓ but yeah, we got into it, made a thousand dollars off a wholesale deal.

It was wild. The check is framed in the office at home. ⁓ it’s still there, you know, but it became real. So that’s, that’s kind of what got me in there and got started.

Dylan Silver (04:53)
You had that proof of concept. Yeah, I’ve had similar, similar stories and I remember certainly the first deal that actually didn’t end up going through, but we got it under contract and I’m smiling because it for other wholesalers out there who remember their first deal. It’s just such a ride, right? Do you recall the first one?

Mark Schinzel (04:55)
Yeah.

Yeah, of course. mean, everybody has that story. I can only imagine. So I did get something under contract prior. It didn’t go through, but I’m like, Whoa, this there’s a seller. This could happen. and, my mentor at the time, Brent Daniels, and it’s funny, we’re still friends today. ⁓ he, he just came out with a script or part of a script that changed. It’s very heavy cold calling at the time too. And I was cold calling after driving for dollars leads. If anybody’s familiar, you drive around areas that need.

potentially love, pin the property, skip trace it and call them, find the number, call them. So I did that and I called this lady and the script just changed. She said, no. And I said, do you have any other properties you would consider selling? Maybe something that needs some love or some land. And that some land was just coming out and that was a big thing. And I asked her and she said, actually, I have a lot next door that I would consider selling. I’m like, okay. And just continue to walk her through and got her under contract.

I it was for $4,000. And just put it this way, this was in like Nashville outside areas, Clarksville, Tennessee, which is blown up now, of course, just like anything else in real estate. And I ended up having to get her to price drop to a thousand dollars and I sold it for $2,000. And of course I got smoked by that buyer because he just built a new bill right next to it. I have no idea, right? But yeah, it was awesome. I was super excited and.

It was something that stuck with me forever.

Dylan Silver (07:31)
Now, one of the tricky things that I’ve noticed, especially for folks who are getting started now, ⁓ know, kind of the cat’s out of the bag, right? And so people are aware of wholesale, even if they might not understand all the ins and outs of it. You can get a property under contract and it used to be, hey, if you’ve got a good enough deal, the buyers will come. I almost now feel like that’s not true, especially if you’re just getting started. That you have to have some type of brand, you have to do more than just post it in a Facebook group, because there’s so much

noise out there that people just don’t even know what’s real. They don’t know if this is gonna be able to transact. So you can’t just simply get a good deal under contract. You’ve gotta also be thinking ahead of time about the backend Dispo.

Mark Schinzel (08:14)
Yeah, definitely. ⁓ The exit is always a thought process throughout our entire actual sales process, ⁓ underwriting appropriately. And honestly, I would say being a little bit more upfront with your seller, like we take that part very, very seriously of setting the expectation. Hey, here’s what we’re going to do. We can give you a number. How our process is going to work is we’re to walk our partners through.

We have financial partners, we have contractors and other folks that need to approve this at this number. We’ve already pre under wrote it. It looks good to us. We just need there like check the box and we move forward. And that’s our process. We’re not saying like, and by the way, we do buy, we do bring in a contractor because if it doesn’t go through and it’s a deal that I like, I will buy it. Um, and I believe everybody has the possibility of buying power, private money, hard money, have that.

you know, expectation coming in that you can buy it and underwrite it for yourself. And if it’s checking your boxes and you would actually buy it, there’s no reason why you wouldn’t be able to sell it at a certain number as well. So I keep that in mind too, but yeah, building the brand. mentioned that very briefly. We are hyper focused in our local market. I am on Facebook groups every single week, posting things and trying to.

actually generate business from the local investment groups, but also selling the deals, ⁓ posting on our like actual Facebook pages. Again, just trying to show that we are brand, we’re here to stay. And it helps build that local authority. I think that’s really, really important too. It helps sell the deal and just trust with the seller and the buyer experience.

Dylan Silver (09:58)
You know, when we talk about getting a deal from the cradle to the grave, from beginning to end, you know, there’s so much that comes up, right? And I’m smiling right now because it’s, it’s things that, especially if you’re not familiar with the distressed real estate space, you just probably wouldn’t encounter very often, right? Like literally we were talking in the green room, Mark, bringing families together, you know, people that haven’t spoken in a long time, people that may be at odds with each other. Maybe it’s a probate situation and

Mark Schinzel (10:05)
Yeah.

Dylan Silver (10:27)
The family can’t really figure it out. Maybe even the title company itself is confused. And I’ve seen some wholesalers that will just go above and beyond, and I’ve done this at times too, where you’re as much like a triage coordinator and almost like family counselor, if you will, as you are a real estate officer.

Mark Schinzel (11:25)
Yeah, it’s, mean, I don’t, I wish I could just give you, there’s so many stories, even just right now that we’re actively working that are just insanely like, this is why we get paid to do what we do. I don’t know agents and I’m an agent, by the way, I am an act. I’m a real estate agent. am licensed, in the state of Pennsylvania. You must be in order to assign a contract now and, and has not stopped us. As a matter of fact, it’s only built up our business, but I will tell you.

I’m now an agent. I’m in that space. I don’t know people willing to go the length that we are, whether that’s just putting up. We have to put up like $8,000 to deal with a sewer line issue for a seller ⁓ on a property that we are novating. So agents don’t do that. I’ve never met an agent that will do that. But then you also have a situation where a seller inherited a property. They’ve never been in it. The tenant was under a lease to buy the property. They don’t want to leave.

it’s just a whole, you know, the experience is insane, right? But that’s why we get paid. This is literally the value that we bring to the marketplace. And the more value you bring, I’m hoping that you get paid more money. And many times it’s, actually, I would say, I say the more value, the more hoops you jump through in many cases, believe it or not, I’ve seen that I don’t get paid as much, but I get the best review I could ever imagine.

Dylan Silver (12:25)
Yeah.

Yeah, I said that.

Mark Schinzel (12:54)
We talked about one

of those two, you know, we talked about it prior that you’re looking through our reviews and it’s like, that’s, this is what we do, you know.

Dylan Silver (13:02)
It’s oftentimes the harder deals where you don’t necessarily make the most money, but I will say this to your point, you you get these glowing reviews and that does have a trickle down effect. One of the other things too you mentioned is in Pennsylvania specifically you have to be an agent. Now I’m an agent in Texas, but not by necessity. Frankly, it might actually be more beneficial currently for wholesalers to be unlicensed because then you won’t have to.

disclose as much, your fiduciary responsibility isn’t there to the seller. And so right now, as we both know, and I’m pretty sure it’s the same in Pennsylvania, if you’re going to do some type of ⁓ creative deal, you have to disclose, disclose, disclose to the nth degree. Like you said, we’re gonna have people walking the property, We may be the end buyer here, but this isn’t set in firm right now, however people are wording it. And I think,

especially in states where you don’t have that ⁓ bar to meet, meaning you don’t have to be licensed, being active as a wholesaler is totally different, right? You don’t have to meet that same bar, meet that same hurdle.

Mark Schinzel (14:12)
Yep. think, by the way, I don’t think it’s a bad thing to have the hurdle. I think all it’s doing is giving slightly more transparency. Like in the of Pennsylvania, there’s, and I would butcher the exact verbiage that’s in the contract that you have to legally have, but it’s straight up saying like, we’re not the end buyer. And by the way, our marketing company, we buy property, we’ll never be the end buyer. I will put it into an LLC. I have a team. Our holding company is going to get

pay it like they have to pay an assignment to our marketing company, no matter what. So even if we are assigning this to our own company, legally, we have to put it in there because we’re not the LLC to close on it. So I just think that it is weeded out so many people that were starting out and smaller and weren’t buttoned up, weren’t confident for us as a company. mean, I mean, we’ve only done better. That’s what I say that it’s.

Dylan Silver (15:09)
Yeah.

Mark Schinzel (15:09)
I don’t think it’s a bad thing. It’s weeded out a lot of folks that weren’t confident on the deal, didn’t know how to have that process or the pitch to the seller. And again, it’s not like we’re lying. We’re not lying. We have the capital. We have proof of funds. We have money partners. We have private money, hard money. So it is something we exercise and we’re just telling them how we’re going to run it. And in our contract, we’re telling them too that we’re going to make as much money as in the least amount of time possible.

We could wholesale it. We can assign it. We could flip it. We could rent it. We want to just make money. That’s what we’re here to do. Right. And I think the legal part has only made that as long as you are upfront and you’re telling the story exactly how it is, how we do our business. It’s not, nothing’s really changed for us. More paperwork, seller disclosure, consumer notice, like lead-based paint. Like I will tell you that is more of a headache for sure.

Dylan Silver (15:47)
Yeah.

Mark Schinzel (16:08)
I can’t stand that part of it. ⁓ But if that makes my broker happy, I’ll do it. That’s fine.

Dylan Silver (16:13)
You know, the other part of this too is that, ⁓ you know, people, especially agents, established agents who are not involved in distressed property, you know, aren’t assigning contracts, aren’t necessarily working with investors. They haven’t done, and the industry as a whole, and I’m saying this as a realtor, so the industry as a whole hasn’t really done a great job addressing the concerns and the needs of people who are distressed, right? Of people who are.

in a spot where they’re either facing foreclosure or that’s down the line, they’re kicking the can down the curb, right? And when that happens, something has to come in to fill the void, right? If there was an abundance of people that were super knowledgeable and were able to execute short sales, right? If there was an abundance of people who really were going in and helping folks who may be facing foreclosure or who may need to move quickly.

and who had a big investor network, right, you know, for pocket listings and this type of thing, then this need wouldn’t be there. But I’m sure as you’ve seen, as I’ve seen, you tend to have agents who are like, no, I don’t want to really work in that realm. Like, find me the people that are not losing their home. I’ll work with the buyers who are looking to buy, you know, X property at this price.

Mark Schinzel (18:12)
Yep. That’s, that is definitely it. Uh, it’s funny. We have two or three properties right now from agent referrals, uh, that did not take it. One is actually, it is on market significant price drop was listed for one 40 got an inspection report back. under contract for 72 five. Uh, we’re going to sell it. We’ll make almost nothing. Right. It’s, really not a large deal, but I know that the agent relationship will really blossom when we get it done.

then we have another one we’re under contract with to buy actually. ⁓ she just brought us another one that’s off market yesterday or the day before. It’s like the places, I mean, will conventional loan get approved? Maybe, but probably not on this one. And she just doesn’t have the time or, know, I heard the pitch and we we’ve done this, we’ve done outreach to these agents. Hey, we’re looking for the properties that you walk through and you just want to throw your shoes away after kind of thing.

Right? You’re the one you just don’t want to go back there because your time is really valuable. And we’d rather you walk through a high end listing than have them to deal with it. And it Midwest ish market in Pittsburgh, like we pick up houses, 25, 50, 60, 45 K that is not unrealistic. ⁓ and for those agents, they’d rather sell something that’s more close to the two 50, 500,000. So where do they go? You know, I’ll still give them a referral fee.

Dylan Silver (19:30)
That’s true.

Mark Schinzel (19:36)
I mean, I could give them commission on it for sending us something, right? That’s not crazy for us to do, especially being an agent now. ⁓ And they didn’t have to do anything. Hook me up the seller’s name, the phone number they want to sell. I’ll take it. I’ll go from there.

Dylan Silver (19:40)
Yeah.

I’ll say

this too, Mark, to your point, this is something that I’ve experienced, again, I don’t know if you’ve seen this, if I’m looking to send a referral out to agents for a listing or for a buyer, right, and this is a good listing, it’s a good buyer, oftentimes, a lot of the agents that I’ve seen just aren’t that hungry to go after referrals. I’m like, this is someone who wants to buy a home, right? I haven’t qualified them to the nth degree, like that’s on you.

Mark Schinzel (20:04)
Yeah.

Yeah.

Yeah.

Dylan Silver (20:19)
And I just think in general, most agents are not, unless they’re brokers or unless they’re really high level, they’re not looking at purchasing leads or acquiring leads through referrals. And that’s just a foreign idea to them. Whereas investors and wholesalers, they’re doing pay per click, they’re buying leads. So if someone sends even a cold lead to you, probably, you’re calling them that day, you’re putting them in a CRM, you’re following up with them. Maybe you’ve got automations ready.

Mark Schinzel (20:35)
best. Yeah.

Dylan Silver (20:47)
And it’s just a totally different follow-up mindset.

Mark Schinzel (20:50)
Yeah, I think a big part of that’s going to be the fact that most agents are getting their cousin’s best friend from work to just give them a deal. And like, that’s the one that they pursue. So it is a referral. It will be a referral, but it’s usually through someone that they really, really know well, or it’s a direct like cousin that needs to list or most of the agents that we’re, we’re, talk to, and even inside the brokers we work with, they have other jobs. They have the base salary going to where like,

They’re not willing to travel literally 30 minutes, 40 minutes to a property to deal with. so that hustle, that grind, which again, we’re teeing up most of our referrals to say, Hey, they’ll call in the next 30 minutes. You know, this is a listing. already told them that it’s a, type of brokerage, this type of where we think they’ll list at. already kind of negotiate commission. Like, so the expectation of commission of where we think they’ll be. ⁓

But you’re right. Yeah. We’ve found that that is very difficult. In many cases, I prefer to just get them on the listing myself. If I go that route and then co-list or do something where I basically overpay for a transaction coordinator, in my opinion of just bringing on another agent to do it. ⁓ it is insane, but versus like, we have a couple of boroughs here that their code enforcement love us to where they are referring us to stuff. I mean, I, kid you not almost daily, a couple of boroughs and

They’re giving just an address, by the way. They’re just bird dogging at this point. and I’m not going to name any of the burrows or anything like that, but. They are the best and they are so hungry to go find a stuff and it’s the coldest. It’s an address. That’s it. So I, I begged them for phone numbers. My question, I know you guys have data. If you can get me like a phone number, man, like this would be a cold call. I need something, but I’ll tell you what.

Dylan Silver (22:39)
you

Mark Schinzel (22:45)
When they give it to us right into the CRM, we’re creating a process around skip trace same day outreach same day, like drip campaigns and different touch points. ⁓ because that lead costs, even though we, pay, you know, referral fee marketing fees, right. For these types of things. I dance around that marketing fee, right. So we pay marketing fees and they’re still way cheaper than a PPC deal would be for us. We run PPC.

Dylan Silver (23:13)
Yeah.

Mark Schinzel (23:15)
know, $2,500 is a deal. Me sending 500 or 1000 bucks to marketing, you know, marketing agent, all day, send it in, you know, we’ll hustle around those referrals.

Dylan Silver (23:22)
Yeah.

Absolutely.

Yeah, and the PPC too, I mean, it sounds like you’re well into that. A lot of times when people are getting started in that, they’re trying to find their niche, right? They’re trying to find exactly how it works. There could be, you know, three months, four months where they’re trying to figure it out and they’re buying leads and they’re trying to figure out how much should I offer for this lead? And, you know, just learning that space in and of itself can be challenging. So yeah, you’re right. If you get something that’s even remotely teed up for you, that can be a faster turnaround, even if it seems like a larger cash outlay initially.

We are coming up on time here though, Mark. Any new projects that you’re working on and then as well, what’s the best way for folks to reach out to you or your team?

Mark Schinzel (24:05)
Yeah, you know, it’s funny. I, the new project, ⁓ I will say, I knew is not always better to me. think making tweaks to what you’re doing and making it more efficient or maybe that emerging technology, which every everybody’s talking about AI, right. And implementing that into your business, small ways. That’s our focus. I don’t want new, like I don’t, I’m not going to all of sudden turn out to be, I’ve done the flipping. I do buy and hold. ⁓ I hold tail. I know they, but I’ll tell you.

stay focused. You’ll be really good at the one, the one thing I, if there’s a message, I’ve made that mistake millions of times. Like I’ve done it now for eight years, right? Uh, not new anymore. And I’ve tried subject to seller finance, novations. I’ve done all of them. have those. And every time I’ve done it, I’ve almost went broke because I didn’t just stay focused on the one thing driving our business.

Um,

You know, so that would be my message. I don’t even want to talk about something new. Small tweak in the business, small tweak, right? Measure it. How did it work? stay focused. ⁓ you can reach out to me. I’m on Instagram, first and last name, first name, Mark_Schinzel, S C H I N Z E L on Facebook as well. ⁓ check out our website, we-by-dashproperty.net, especially if you are a seller and somehow find your, your, your way here and you’re in Pittsburgh market. We would love to work with you.