Why Real Estate Wholesalers Waste Leads and How Better Sales Converts More Sellers

Brendan McElhaney (00:00)
People always ask me like, Hey, what’s the best source? What should I get started on? And my thing is like, focus on getting better, talking to people on the phone. And that will lead to better outcomes across any of the marketing channels. Cause you can spend thousands of dollars, but if you’re not good at sales, you’re just going to be throwing money down the toilet. And I know this because I’ve done it.

And we spent, you know, multiple thousands of dollars per month and didn’t have any results to show for it. And when you kind of back the curtain, ⁓ the problem was just sales. Like we just weren’t good at it so.

Dylan Silver (02:04)
Hey folks, welcome back to the show. Today we’re joined by Brendan McElhaney, a Chicago based real estate investor and founder of Cash for Chicago Houses. Over the past eight years, he has built hands-on experience across house hacking, fix and flips, short-term rentals, Section 8 investing, and off-market acquisitions while documenting real-world lessons from the Chicago market. Brendan, thanks for taking the time today.

Brendan McElhaney (02:31)
Yeah, thanks for having me, Dylan. Appreciate it.

Dylan Silver (02:33)
Now you’ve touched almost every corner of the residential real estate space in Chicago, house hacking, flip, section eight, STR, wholesaling. What strategy taught you the most lessons fastest?

Brendan McElhaney (02:48)
Yeah, I would say probably house hacking. I think that was basically the springboard from which everything else came. And it was an introduction into real estate that kind of throws you into the fire of investing, tenant management, rehab, kind of like encompasses everything for the most part that you’re going to deal with. Obviously there’s some more niche things of off-market acquisitions and flipping and that sort of thing. But

House hacking started at all. So I have to just say that that was probably the most important Milestone or step in in the process

Dylan Silver (03:24)
Now, if we can get a little bit granular on locking down a house hack and getting these deals under contract and then making it work, was this something where you were very intentional about, I’m going to get a duplex, triplex, quadplex, and I’m gonna rent out the other half? Or was this almost the happenstance that just came about?

Brendan McElhaney (03:45)
No, so that was very intentional. So when I was younger, I always had the dream of basically working for myself, passive income. I don’t know if it was born out of being younger and just laziness of being like, I don’t want to work for anyone and have that passive income, but went into basically after college, was looking for a house hack, lived with my parents for a few years, paid off some debts and then very intentionally.

connected with an agent who focused on house hacking and found a two flat in Chicago that I was able, well, it was a two flat with an additional two units. So was able to live in one rehab others over time and then get that fully rented out. And at the end of that, after let’s say probably six months, nine months, I was able to live for free.

Dylan Silver (04:34)
At that point in time, did you know that real estate was gonna be your passion in your career? Was that a living situation that was something that you were dipping your feet in?

Brendan McElhaney (04:46)
Yeah, so I was working full time at that point. I always knew I liked real estate, it as a future. I didn’t know how that would progress into going full time into wholesale and flipping. I thought it might’ve been something where I have a W-2 and then I do flipping wholesale real estate on the side. And eventually the income from that would then support myself and my lifestyle. But ultimately I ended up

getting laid off from my job, was already doing host hailing on the side and then just decided to go full time into it.

Dylan Silver (06:07)
Now as a wholesaler, this is how I cut my teeth in the real estate space. There’s so many different ways to be successful in real estate and many ways to be successful in wholesaling. What was your best acquisition strategy as a wholesaler in those early days?

Brendan McElhaney (06:25)
Yeah, so there was a struggle in the early days of just like, what do I do? How do I do it? So best was whatever worked at the time. ⁓ I didn’t have it figured out. I still am figuring it out today, but, ⁓ I would say where we had a lot of success. Initially in terms of like a marketing strategy was doing more like SEO leads and basically just getting inbound from Facebook or just more inbound.

then outbound. And I think a lot of that comes into like sales and how good you are at talking to people, diving into motivation, understanding why they’re looking to sell. Cause you can spend money.

People always ask me like, Hey, what’s the best source? What should I get started on? And my thing is like, focus on getting better, talking to people on the phone. And that will lead to better outcomes across any of the marketing channels. Cause you can spend thousands of dollars, but if you’re not good at sales, you’re just going to be throwing money down the toilet. And I know this because I’ve done it.

And we spent, you know, multiple thousands of dollars per month and didn’t have any results to show for it. And when you kind of back the curtain, ⁓ the problem was just sales. Like we just weren’t good at it.

Dylan Silver (07:36)
We

can get a little bit granular here talking about those conversations because when you’re making cash offers in most cases, that person, especially as a distress seller, may be likely getting lots of other calls, texts, emails, people showing up at their door, letters, right, from lots of other folks. So what was your conversation like? How did you maybe differentiate yourself?

Brendan McElhaney (08:01)
Yeah, I mean, at the end of the day, all the conversations are going to ask similar questions, right? It’s like, are you looking to sell condition of the property? And my, my approach is you have to, you have to like humanize these people. can’t just go in as a transaction and just like get the information you need and then say, okay, here’s the offer. Like let’s do business type of thing. Like building rapport and them liking you is probably one of the most important things and getting the right information from them. Like people talk about.

building a pour and sometimes like, I have a dog, you have a dog. Like that’s, that’s nice, but that’s not what we’re after. Right. It’s understanding motivation. It’s understanding impact. It’s understanding what’s next. It’s understanding what it would mean to them to sell because a lot of these people, especially distress sellers and even any seller really, it’s like they’re dealing with an issue today. Right. How does that make them feel? So for example, you deal with someone who’s in pre-foreclosure, like they’re looking to sell because of that, but like

how are they feeling about the being a pre foreclosure? They’re going to feel stressed, anxious, whatever it may be. And you want them to feel, and you should be, if you’re doing this right way, that you want to be able to help them get out of that situation and get to the other side where there’s freedom, there’s, they’re, living stress free. They can focus on rebuilding their lives. And if you go in, I would call like leading with empathy. If you go in with that mindset, you’ll be able to help a lot more people.

which helps you in the process as well.

Dylan Silver (09:30)
No question. And from my vantage point, if more people were to focus on that long-term relational capital versus the short-term ⁓ physical capital, I think that that could translate hugely in their business. Now, you’ve also, pivoting here, Brendan, you’ve been active across several other segments of the real estate space, including Section 8. How did you get into some of these other asset classes?

Brendan McElhaney (10:00)
Yeah, so section eight kind of came just organically through house hacking and owning properties. So, you know, obviously if you’re looking for tenants and someone comes in section eight and

they kind of pass all your underwriting guidelines, then you can work with them. So I’ve had a good relationship with them. Obviously there’s some inspections and things that happen on a yearly basis that you need to rectify, but at the end of the day, they’re there to make sure that

you’re doing right by the tenants and the building really. like the things that they call out sometimes are tedious, like peeling paints and flakes and that sort of thing. But at the end of the day, it’s like for the safety of the tenants and it’s like, it’s not that big of a deal ⁓ from my perspective on like the things you need to do to be able to bring it up to like section eight standards.

Dylan Silver (11:24)
So in these cases, the tenants themselves are actually going through the process and then presenting it to you, hey, I have section eight, can we utilize this in your rental?

Brendan McElhaney (11:34)
Yeah, and your answer should always be yes, because they’re specifically like if you say no to that, it’s housing discrimination. And I think there’s a stigma attached to Section 8 where people feel like they’re not good tenants and that’s why they’re on Section 8 versus it just being a program to help people get either get into areas that they otherwise couldn’t or just to support them. And you still have to go through the same underwriting guidelines of any tenants, right? Just because they’re Section 8 doesn’t mean they’re a good tenant.

It means you may get paid by the government every first of the month, but you still need to do your due diligence to make sure that they’re not going to trash the building and they’re not going to bring in unwanted people and they’re going to be a good steward of the property.

Dylan Silver (12:21)
Speaking of bringing in unwanted people, the short-term rental space, I know you’re involved in STRs. How has that landscape changed over the last few years and then have you had any challenging times in the STR space?

Brendan McElhaney (12:35)
Yeah, so I would say a changing is going to be kind of like city specific. So I’m in Chicago over the last what like five years, I would say they’re they’re kind of cracking down on rentals. Like there’s a lot of three, four unit buildings here. And before regulations, probably like eight years ago, you could just rent out the whole building. And what they didn’t want was a bunch of investors coming in, buying buildings and removing kind of like housing stock from

families and people that are actually going to live there. So they implemented rules where in a four unit building or really any building, you could only rent out 25 % of the units. So for unit building, you could only rent out one. ⁓ You also have to live in the property if it’s four units or less. So they’ve implemented some things where they make it more difficult for people to rent out Airbnbs. You can’t just buy a building and be like, I’m going to throw three Airbnbs in here. And then to answer your second question,

I’ll just like guess unwanted, like things like that. do my best to try and limit, not limit, but I try to just weed out like who’s staying. Like I had someone try to book something for, ⁓ what was it? It was like December 31st to July, to January 1st. And it’s like, clearly they’re throwing a party. So it’s like, ask them a few questions. And then it was like, things didn’t add up. So I have.

Kind of like a template I ask everyone, like, are you coming to Chicago? How many people are you local? So if it’s like, if it’s a few people, if they’re local, or it’s like, I’m booking a four bedroom apartment and it’s me and my girlfriend. It’s like, that doesn’t make sense. Right. So it’s just kind of the same thing with tenant screening. You just need to know what to look for and be cautious and make sure that you’re not inviting someone into your house. That’s going to throw a party and get you in trouble.

Dylan Silver (14:26)
pivoting here, Brendan, content creation and putting out reels and short form video. This can be ⁓ somewhat of an ambitious undertaking while managing all these other segments of the business. How have you approached creating marketing for yourself and creating short form video and such?

Brendan McElhaney (14:49)
Yeah, so I’ve struggled with this. think a lot of people have of like, do I post? And I kind of like Gary Vee where he just talks about like document, like F’t create, just talk about what you’re doing anyways. ⁓ So what I did was I’m trying to do 10 flips this year and what I’m doing is just documenting every single day. Now a lot of that is me just talking about like, Hey, what I did, what I didn’t do. ⁓ I’m going to start construction on my first flip here shortly. So

very behind schedule on the 10th flip. So we’ll see if I actually reach that goal. But

my purpose was just to document what I was doing. Hopefully people can learn from it ⁓ and then just share both like the wins, the losses, the mistakes, everything that I’m going through. Cause I’ve had a few videos where I’ve done walkthroughs of before and after just so people can see kind of what the plan is, how it turned out. And just kind of talk about the mistakes I make. I had one flip where it just went

probably like double the time and over budgets and just talked about the mistakes I made on that. What I could have done with the contractor. I would have managed him better. Cause at the end of the day, I can look at it as either I had a bad contractor or I, which is also true, or I did a bad job of managing the contractor and I didn’t have safeguards in place to catch it early. So I look at it more as the ladder where I take the responsibility of the, of the mess up. Cause all projects are going to have hiccups.

They’re going to have delays. They’re going to have things. But our job as investors is to be able to anticipate those and or rectify those very quickly.

Dylan Silver (17:07)
Now, working with contractors and just managing a flip as a whole can be challenging. If you had to break it down to steps in the process for folks who are getting started, what would you say are some of the foundational components of doing a successful flip?

Brendan McElhaney (17:27)
Yeah, I think it all starts with the scope of work and being very clear on what the contractor’s responsibilities are. And then they’ll tell you, right, you have your scope of work. They’ll tell you how long it’s going to take them. And then you should pay them via milestones, right? They hit, ⁓ they’re done with, let’s say like roughs. So rough plumbing, rough electrical, whatever it may be. Then they get paid. And so I think it all flows from a good scope of work.

Because what you don’t want, and this is one of the mistakes I made, is having a scope of work, then six weeks into the project, be like, I think we should actually do this. And then now you have to go back and get the framers out there or get the electrician back out there. And it just delays everything because a good GC, which my guy was not, would plan everything out where it’s framing, plumbing, ⁓ electrical, HVAC, whatever it may be.

And then if they have to go back now, it sets every other dependency down the line a little bit further out. And the crews are also busy. So you have the drywall crew who’s supposed to start in a week. Now they’re waiting for the electrician to finish some change that they had to do. And now everything else gets pushed back. And this is how you get delays because those stack over time. Now the drywall guys can’t get out for another two weeks. And now everyone else after drywall is also delayed. So you can’t get the kitchen cabinets in. You can’t do this. You can’t do that.

So having a defined scope of work and then never deviating from it unless you have to. So if you open a wall or take up the subfloor and the floor is rotted, then of course you have to deal with that. But it shouldn’t be a self induced change order. Like you shouldn’t go in and say, actually I want this instead of that. Like that’s where mistakes start to happen and it will happen. I’m not going to sit here and act like that’s probably not going to happen to me again, but you do your best to avoid that.

And then the project will go a lot smoother. And then we can also talk about just managing contractors and how to do that and what the cadence of communication should be. so I have things in my business where now like every week I have a call with the GC of saying like, Hey, what was done last week? Right. And you want pictures and videos just to confirm what was done last week? What’s going to be done next week? Are there any delays that you foresee? Are there any things that you’re struggling with or is there something I can help in terms of

I don’t know, materials being on site. Like this should all be talked about, but these are just common things that happen in projects that delay them. So my responsibility, and it depends on how the, how the conversation is with the contractor, if they’re handing materials, but usually I like to get labor only quotes. So then I can handle all the materials and then I can get everything on site beforehand so that there’s no delays from a material standpoint. Cause that’s the other thing. If you wait to order windows or you wait to order cabinets and they’re three weeks out.

It’s like, okay, well, your project’s going to sit there for three weeks and now you have holding costs, you have taxes and that stuff adds up over time. We’re talking on a hard money loan, you know, a few thousand dollars ⁓ every month potentially that you’re just sitting there not getting anything done.

Dylan Silver (20:31)
No question. We are coming up on time here, Brendan. Any new projects that you’re working on and then also anything you’d like to say directly to our audience.

Brendan McElhaney (20:42)
Yeah, new projects. Basically, I’m just documenting everything on my Instagram. So talking about a flip that I’m doing in suburb of Chicago. So gonna have walkthroughs of that before and after, you know, just content around that. And then for myself, I mean, if anyone wants to connect, I’m happy to JV with people. We have a lot of people reach out who are out of state wholesalers that are looking to find buyers on the ground or will partner with people on flips as well.

I always like just connecting, talking about real estate. So if you’re interested in the space, always recommend just reach out to me on Instagram and happy to connect.

Dylan Silver (21:21)
Brendan, thank you so much for joining us today. Thanks for your time.