Wholesaling HUD Homes
This is the continuation of the Flip2Freedom podcast transcription. In this episode, Sean interviews the nation’s #1 wholesaler, Kent Clothier, and finds out how he created a wholesaling empire – averaging over 50 deals a month.
Kent: You have to embrace the simple fact that you can get a predictable outcome–even in this business–each and every time, but only with a system. We know what’s going to happen with the transaction before we ever buy it, before we ever purchased that house it is already sold. We know who our buyers are, we know exactly where profit is going to be. We have it down to a science, and anybody can do that if you just follow straightforward systems that will teach you how to do that.
Sean: That is a great answer. Now let’s reduce that down to a single transaction, so they can kind of see what the process is for how a property moves through your organization. What is your lead acquisition point right now? Is it a referral from a realtor, is it HUD homes? I know you own the brand 1-800-SELL-NOW. Where is your number one source that you find deals with?
Kent: Our number one source is probably going to be REO’s that we are buying from local banks, so it is very different from REO’s that most people associate with. It has taken us a while to do this, but we have built relationships with a lot of local banks in our market over the last few years that–the president of the bank– will bring us a portfolio of 30 houses in a month. Between that and HUD Home Store, I would think those two probably make up 60% to 70% of our deals.
Sean: Wow. You’re the first person that I have talked to that actually built the relationship with a local bank and is acquiring properties that way, or moving properties. Now, when it comes to that, is it smaller banks–they are not a Wells Fargo, Bank of America. . . .
Kent: No, no.
Sean: We are talking small institutions, correct?
Sean: So, these small institutions tee up properties, or you get them off HUD Home Store. When you are negotiating with that bank, is it something to where you say, “Listen I am the end buyer,” or you say, “Listen I am going to tee them up to my buyer?”
Kent: Banks know exactly what we do. They know we are going to flip that to an investor and that we’re going to ultimately manage that entire process. The reason the banks are selling to us, because–again, I want to be fair to everybody that is hearing this–we are playing at a very different level than most people. . .
Sean: 600 deals a year, 30 to 50 a month.
Kent: . . .I don’t want people to think that they are going to just go out and build these relationships. We are the single biggest home buyer, except for HUD, in the Memphis, Tennessee area. We have earned that reputation where a lot of people bring us these deals, and they know exactly what we are going to do with them.
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