Episode Transcript
[00:00:00] Speaker A: Welcome to the Investor agent podcast. I'm Steve Seymour, your host, where we help transform the human mindset from scarcity and lack to abundance of wealth one conversation at a time.
Hey, guys. Welcome to the investor agent podcast. I'm Steve Seymour, and I'm here with Drew Farnese. Drew, thanks for being on today.
[00:00:19] Speaker B: Thanks for having me, brother.
[00:00:20] Speaker A: I didn't butcher your last name, did I?
[00:00:21] Speaker B: Nah, man, you did great. You did great.
[00:00:22] Speaker A: All right, good. I've known you for years, but I don't know. I don't know if I've ever pronounced your name in front of you, so that's all good. Drew has revamped 365. We're going to dive right in. So, Drew, what got you into real estate investing? Initially?
[00:00:36] Speaker B: What got me into real estate investing? I was 20 years old when my girlfriend at the time became pregnant. And at the time she became pregnant, she became pregnant.
[00:00:47] Speaker A: Her fault, right?
[00:00:48] Speaker B: It was definitely, you know, it was all my fault. Let's be real.
But you. Yeah, I mean, at the time I was working, it wasn't minimum wage at that point, but it started as a minimum wage job when I was probably 19 years old, I worked up to maybe $15 an hour or something, and I just knew that I wanted more.
I wanted to be able to have financial security for my family, right? And that kind of started me off down the rabbit hole of self development, self improvement went down the real estate rabbit hole. Probably one of the first books that I read was rich dad, poor dad. And that got me started going to different real estate meetups. I started going to Delco property investors, rubbing elbows with a bunch of guys.
[00:01:34] Speaker A: Pretty sure that's where we met, right? At DPI.
[00:01:38] Speaker B: DPI is great. And, yeah, when I first started, like, my whole plan was not flipping houses or definitely not wholesaling. I didn't even know what it was. It was really just buying rental properties so I could build wealth, acquire cash flow and everything. And not too long into that, like, at DPI again, I met a mentor through there, paid him when I was getting started. And at that point, I was like, I feel like I had already read, like, 20 books. And, you know, I was young and stupid, but I was like, oh, I feel like I know everything. You know, I read 20 books on this. I know exactly what I'm gonna do. And it was somewhat a tough pill to swallow paying a mentor. But I also knew for me personally, I was like, if I spend money on something, I know for damn sure I'm going to get an RoI out of it. That is me holding myself accountable because I'm putting someone else in place that's going to hold me accountable.
That being said, that's how everything started. And going through that again, the plan was to just acquire rentals, but when I started looking at and analyzing and underwriting deals, the first deal that I found didn't make sense as a rental, but it made a lot of sense as a flip. So I did it anyway, and the rest is history.
You know, a lot of things have happened since then, but.
[00:03:00] Speaker A: And fast forward to today. Revamp 365, your wholesaling, flipping company.
[00:03:06] Speaker B: Yep.
[00:03:07] Speaker A: Why don't you elaborate a little bit on that?
[00:03:09] Speaker B: All right. So to bridge that gap of that, whatever it was, I guess from 20 till now. So 14 year gap, you know, from starting till now.
As I started doing more fix and flips, I was scaling that company and everything. And our biggest issue was acquisitions. There weren't enough deals to buy, so I started doing some direct to seller marketing that led me down that rabbit hole and eventually kind of got good at it, you know? And in not too long, we had more deals than we really wanted to or had the ability to buy. So I started wholesaling some deals to buddies of mine, other flippers and landlords. And again, apparently we were good at it. You know, like we were talking earlier, how there's kind of this stigma about wholesaling as an industry, and people kind of despise it largely.
And that kind of fed my desire even more to be like, well, I want to be the solution to this. I want to be on the other end of it. I want to. I want to give a better name to the industry. Right now. I kind of don't really care about giving a better name to the industry, but I do care about, you know, our reputation and being able to provide solutions to sellers, solutions to buyers, and bridging that gap for them and helping investors into deals, you know?
[00:04:25] Speaker A: Yeah. And you hear it all the time. There's no deals out there yet. People hate wholesalers. But wholesalers bring deals, and it's like.
[00:04:32] Speaker B: Well, it's really easy from, and I.
[00:04:33] Speaker A: Shouldn'T say people hate wholesalers. I think it's just they get frustrated when wholesalers are making a lot of money. I know, but what they have to understand is the reason they're making a lot of money is because they're providing a solution to a problem.
[00:04:44] Speaker B: That's exactly right, man. Especially having conversations with agents that have not done a lot of stuff in the investment world that they don't understand at all. They kind of almost look at us as we're stealing business from them, we're stealing listings from them. It's like, dude, in reality, there is no way that you would have ever gotten this listing in the first place, because some of the stuff that we do, as far as marketing and sales, you just would have never done. Most agents don't want to go spend 50, 60, $70,000 a month in marketing and won't.
And the types of sellers that we typically work with are a lot more challenging and difficult than your average person that wants to list their family home to go buy their next family home. It's just different. It's a totally different industry entirely. You know what I mean?
[00:05:32] Speaker A: And one thing that we talked earlier was you were talking about paying a wholesaler in upwards of 80,000 or $85,000 on an assignment fee. I know the highest I ever paid was seventy k. And it hurt, right?
[00:05:45] Speaker B: It does. It hurt.
[00:05:46] Speaker A: But I made. I made well over six figures on that flip. So why do I care? You know? And so going back to that, it's interesting, right?
[00:05:55] Speaker B: Because in the back of your mind, you're like, I don't want to count somebody else's pockets, right? Like, if I made money on the deal and you made money on the deal, it shouldn't matter. But there is something just in us. It's hardwired that way. It's like, well, it could have been a little bit better if 85 grand out of this deal, you know, like, I could have made that, you know? But in reality, you couldn't have because that opportunity would have never existed in the first place.
[00:06:21] Speaker A: That's. It's the same thing with, like, hard money lenders or private lenders. It's like, well, you didn't have the money and they lent you the money, so you're complaining that you had to pay them 12% interest or 15% interest or whatever it is, the interest doesn't matter. If you got the deal done and they, they helped you get to the closing table that you couldn't have in some other way. Obviously, if you had an easier way, you would have taken it.
[00:06:42] Speaker B: That's right.
[00:06:42] Speaker A: Same, same with investing and wholesaling. If you had a. If you had a better deal, you would have bought in a different one.
[00:06:48] Speaker B: But you don't, right? Yep. So that's the truth, man.
[00:06:50] Speaker A: You'll pay for it.
[00:06:51] Speaker B: You'll pay for it. You'll pay for. And you may be frustrated, but you're gonna pay. You're gonna pay, you know?
[00:06:56] Speaker A: All right, so one thing with us being a real estate brokerage, that helps investors build their portfolios. And we always preach buy rental properties, flip houses versus sell houses. I believe in all of it, but you have to find your niche. And one thing that we see is inventory is so low, which that ripples out into the investment world, too, because then you have retail buyers competing on properties that they wouldn't typically be bidding on that need work because there's nothing else out there. So how has the inventory affected you guys over the last few years? And then what are you guys doing now that's actually working to source deals?
[00:07:37] Speaker B: It certainly changed, and we were talking about it a little bit earlier. Like, one of the strangest things to me is that most of our sellers, they're not even trying to get top dollar for their property. Right. One of the first things that we're telling sellers is like, if you want top dollar, you should go to a traditional list agent and listed on the open market, right.
But what we've seen in the past, like year, maybe nine months, twelve months, is our sellers are almost like they need to get every penny imaginable out of a deal, which makes sense when you look at it from a big picture and economically where we're at and everything. But it's weird because most of the people that we're buying from, it's not their primary residence or selling to us. Often it's a property that they inherited and it's a problem. Right. There's tenants in place that haven't paid. And again, the financial side is not their number one concern and it's still not their number one concern because if it was, they wouldn't be having that conversation with us in the first place. But they are much more focused on squeezing every penny possible out of that deal, out of that transaction.
So I don't know if that answers your question at all.
[00:08:52] Speaker A: Yeah, it's just, it alludes to the fact that, you know, it's harder to get a deal done than it was a couple years ago for sure. So what are you guys, how are you adjusting to that?
[00:09:02] Speaker B: It sucks because nobody's going to love this answer, but it's the real honest answer. Change stuff, you know?
[00:09:08] Speaker A: Yeah.
[00:09:08] Speaker B: Shift things around. You got to try new things, you got to test new things. At the end of the day, we are a marketing and sales company, and marketing to me is just a fancy word for testing, you know? And when you're testing things, sometimes you're going to light money on fire and it's not going to work. Right. But that's kind of where we're at right now. And people hate that answer because they want the magic pill, the magic solution. But the reality is, no matter how you look at it, it doesn't matter. It doesn't matter what we're talking about. Everything seems to be changing in a lot of different ways. Right. We talked a little the NAR lawsuit and all these things. Things are changing, and that's fine. People fear change. But if you are willing to adapt, and I don't know what that means, you may not know fully what that means. The truth is, nobody knows fully what that means. But the people that are going to overcome are the ones that say, I don't know the solution, but I know the direction, and the direction is this way, and I'm going to keep walking in this direction, and I'm going to make sure my intentions are aligned, that I'm providing value as best as humanly possible to everybody that I encounter, and I'm going to keep marching in the correct direction. And I may make some missteps along the way. Right. I may try some new marketing things that don't work out. They don't pan out. I light a couple thousand dollars on fire. I've done marketing campaigns in the past, and I've lit $50,000 on fire in, like, a two or three month span. It happens, you know, and you have to kind of be okay with that and embrace that. Failure is kind of a part of it, especially when you're in a rapidly changing environment.
[00:10:45] Speaker A: Yeah, I love that you talk about marketing as testing and failure being part of it. So with that, let's go back from where Drew is today with the knowledge and experience you have. Obviously, we don't have a time machine, but if you did, you went back five years from today knowing what you know now. Oh, my goodness. What is the biggest thing that you would change or the biggest mistake that you would, you know, do differently?
[00:11:12] Speaker B: I'm pretty sure you know this answer, but I probably would not have wholesaled anything.
[00:11:18] Speaker A: Tell me more about that.
[00:11:20] Speaker B: I would have kept every single deal, you know, especially just looking at, like, if we're using five years as that hypothetical time construct, how much values have gone up in the last five years? Like, I think I did it last year just because I'm a glutton for punishment. And I looked at, like, in 2022, the number of deals that we wholesaled. Cause we track a lot of things, like our estimated, like what percentage of current value we're selling those properties at and what the end buyer should have bought it as far as, like, equity they should have had in a deal. And I just looked back at the transactions from that year and I'm like, man, this was only a year later, right? And I'm just looking back and I'm like, man, if I kept, like, half of them, I would have added like $5 million in my net worth.
[00:12:05] Speaker A: Crazy, right?
[00:12:06] Speaker B: It's big, man. That's big. Yeah, but, you know, so you go, when you build that time machine, let me know. I'm not selling anything. I'm not going to be drew with revamp, the wholesale company. I'm going to be drew with this giant rental portfolio that has crap tons of equity.
[00:12:23] Speaker A: Well, I've interviewed a bunch of people and it's a very consistent message.
The biggest regret that most real estate investors make is not holding property. It's buying and selling, because it's hard when you know you're going to make that quick dollar. And yes, your return on investment does typically go down over time, but when you look at it in the long haul, when they look back and then that, because that money seems to always go into something else and disappear.
[00:12:50] Speaker B: Always does.
[00:12:51] Speaker A: Where when you leave it in the deal, it tends to just accumulate. Right. I mean, your biggest, your biggest value add is when you buy. If you buy, right, 100%, that's where you're getting that biggest bump. So then it's always hard to be like, well, what if I reinvested or, you know, but I've heard the same thing over and over again. I like to highlight that. So what's putting that aside, what has been the biggest challenge that you've had to overcome over the past five years?
[00:13:18] Speaker B: The biggest challenge over the last five? Well, really, I mean, it all breaks down to literally where we're at right now.
I don't even want to say that it's economically or the market entirely. Right? Like, for me, it was kind of chain of events and timeline and how everything stacked up together. Right. It's like I went through a bunch of changes in my business and in my life in the last 18 months. Like, we bought an office building and, you know, I guess I'm so bad at timelines when I guess it was probably 18 months ago at this point that I'm in a mastermind collective genius with a bunch of the top wholesalers and real estate investors, flippers, landlords, property managers in the country. Right. And I started to see a lot of guys at a really high level like guys doing hundreds of deals a year that have wholesale businesses that are doing 10 million plus guys with massive rental portfolios. I started to see a lot of people kind of struggling and bleeding out a little bit, you know, and at that same time I was growing and scaling. So I'm seeing everybody laying off, cutting their marketing budgets to almost zero. A lot of the times I saw some really successful people that I looked up to for years exit the industry entirely. And at the same time, like, I'm growing, I'm hiring people left and right. I'm literally anybody that has a pulse that wants to come in and do a sales based position, I'm bringing them in. And I kind of couldn't put my finger on like what we were doing right, which was kind of a weird feeling as well. You know, it's easy to pat myself on the back and be like, oh, well. Cause I'm really good and I do believe that I know a lot and I've done a lot and have a lot of experience, but I'm like, I'm no better than a lot of these guys. So I can't really put my finger on it. So that was a really weird thing. But we were growing and we were scaling nonetheless. Couldn't put my finger on why. Bought the office building, made a bunch of changes, started building some software and everything. Because as a result of that success, I had a crap ton of money to reinvest in things. And that software that we talked about earlier, revamp 365 AI, I wanted it to exist for years. And I thought, also being naive, I thought that I could probably build this software for like 50 grand. And a year later and quarter million bucks later, it's like, oh yeah, we almost have a minimum viable product. So it is what it is, but now it works and it's pretty awesome. But making all of those changes all at the same time and it put a burden on my sales team. And then couple that with, oh, well, now the market changed even more and inventory is even tighter. Right.
Throughout that time period, there were a couple different waves of investor buyers that were lined up on deals where their funding kind of fell apart for one reason or another.
There's been a lot of different weird things that have happened probably in the last year and a half. And really to that question, circling all the way back, um, the biggest challenge has probably been the last 18 months.
[00:16:27] Speaker A: Yeah. Just going through the cycle.
[00:16:29] Speaker B: Yeah.
[00:16:30] Speaker A: As a real estate broker, I mean, I talked to other broker owners last couple of years. Probably the most challenging I got in in 2006, I didn't really know anything different. Right. So when 2008 happened, that was like, that wasn't even a bump in the road for me because I was just starting. Yep. So it's kind of similar where you were seeing, like, I was seeing people having challenges then, but I was like, well, I'm growing, I'm doing fine, but it's because I didn't know any better. Right. And I was small, and it was nimble.
And then fast forward to today. I mean, we saw the. Probably the biggest shift that I've seen in the market over the last 18 months with the interest rates. It was just interest rates went up, deal flow stopped, sellers. It's not just about people's motivation to sell, but it's where they're going to go.
You might have a lot of people that want to sell, but then they look at, with the prices, how much they went up, interest rates, where are they going to go? So, I mean, that may not be the impact that you're seeing, but I'm sure it's affecting it to a degree that definitely plays just this market.
I'm a huge proponent of not blaming our financial situation on the weather or the climate. Take full responsibility, accountability for everything we do. Um, with that said, we've been in an interesting real estate storm for the last couple years.
[00:17:48] Speaker B: Yep.
[00:17:49] Speaker A: So, yeah, cool stuff. Drew, I know you. You mentioned having a mentor. I like to point out similarities in my conversations with people. Some of the biggest things that I've seen is, you know, obviously buy and hold long term. Can't go wrong.
Surround yourself with the right people. You said have a mentor. So can you talk a little bit about that and how that really. That really probably. I mean, I don't want to speak for you, but did that catapult you to a whole nother level that you would have never gotten to?
[00:18:19] Speaker B: It's tough to say. Like, would I have ever gotten there or not? But I think for me personally, like, with that first mentor speaking to specifically, I know that it definitely held me accountable. And did it speed anything up? I don't know. Like, that's my honest answer. Like, I don't know. But here's the reality. I was, thankfully, since I was so young, I still had the logic because it definitely wasn't wisdom at that point. I was too young and stupid, but I had the logic to know that, man, I'm stepping into a world where transaction size is significant. Right. It's like the deals that we do, we may buy for 200,000, put a hundred thousand into them and sell them for 500,000. And if I make a little mistake, that can cost me a lot. So if I plug into somebody that has years of experience of doing what it is that I want to do that I've never done before, just mitigating my potential risk, that alone kind of made it a no brainer. It's like, it sounds like it gave.
[00:19:23] Speaker A: You the confidence to take the action. That definitely gave me the confidence, yeah.
Before we wrap up, any last words of wisdom for anyone looking to get started in real estate investing?
[00:19:33] Speaker B: If you're looking to get started, the honest truth is right now. Yeah. Like, buckle up. It's a little bit harder than it has been in the past. But the truth is anybody that can navigate these waters when we come out the other side, whatever that means, whether that's a month from now, three months from now, six months from now, but the people that are able to navigate successfully right now, you're going to go to the freaking moon once everything stabilizes. And I say all the time, like, specifically in what we do with the distressed seller market, specifically, right.
It doesn't really matter if the market is up or down or left or right. There's always going to be distressed sellers that need a solution other than a traditional listing for whatever reason. And that goal post is going to shift. Right. It's going to be different as times and market cycles happen, but that will always exist and there will always be investors that are looking to park money in real estate. The dynamic of what that seller profile looks like or what that buyer profile looks like is going to change the marketing that you need to do. And I won't say the sales because the sales is kind of always going to stay the same. Right. Sales is just the solution, problem solving and having conversations with people.
But as far as the marketing and everything else, it's like that's going to change depending upon the market. But if you can navigate right now, going to do pretty, pretty well.
[00:21:00] Speaker A: Awesome. Well, I appreciate you being on today, Drew. Thank you so much.
[00:21:04] Speaker B: Thanks, bro.
[00:21:08] Speaker A: Thank you for tuning in to the investor agent podcast today. We hope you found it valuable. Please tune in weekly at the investoragents.com.
