Clint from Anderson Advisors interviews Mojo Michael!

 

Clint Coons:

Hey, what's up guys? It's Clint Coons here, and in this episode what I want to do is actually talk to one of my clients who's involved in wholesaling now. I've been working with him for over eight years, and I've seen what he's been able to accomplish with this wholesale business. And what I thought is, hey, everyone's out there talking about wholesaling as an opportunity to make money in real estate, and they teach you high level what that is, but why not hear from somebody who's actually putting these deals together? And then not only we're going to talk about that, we're going to talk about some of the important things that if you're going to be considering or if you want to get involved in wholesaling or you're currently wholesaling property, you should be looking at to make sure you're protecting yourself on your deals. And I'm not talking about asset protection here. What I'm talking about is protecting yourself from a seller when you're putting these deals together to make sure you can make money off your deals. And then we're going to go into some of the things that you might be looking for overall in building the business. Because my special guest, Michael Jeffs, as I say, has been doing it for over eight years. He's a client and I'm so happy to have him on. Michael.

Mojo Michael:

Hey, thanks for having me.

Clint Coons:

Yeah, it's great. I mean, you and I have been going back and forth and you actually teach some classes down in Texas on this, and you've brought me in before to work with your investors, but this is about you. So it'd be great for the people who are watching this right now. If you were just to tell them a little bit about your backstory in real estate and how you got started in wholesale.

Mojo Michael:

Yeah, so I've got 25 years in the corporate world. About seven or eight years ago. I said that's it. I need a change of pace. Got involved in real estate investing and I do fix and flips. I do buy and holds and I do wholesaling. But at the end of the day, especially with the economy changing and the interest rates, wholesaling has been a primary function because there's so little risk in terms of holding, rehabbing money costs or anything like that. So I've spent years, I've built a buyer's list of over 50,000 strong. I have talked to thousands of sellers and really fine tuned the way of working well with sellers and buyers and wholesaling.

Clint Coons:

So for people who are watching this right now or listening in and they don't even know what wholesaling is, could you just describe that technique?

Mojo Michael:

At its most basic form, it's getting a contract and then turning around and finding an end buyer. And in Texas, what we say is your assigning your equitable rights. Those are very key terms because I'm in essence taking an end buyer and replacing them where I was on that contract, they perform on the contract and I get a fee in the process.

Clint Coons:

So you're tying up deals. And one thing about Texas is that all contracts there are freely assignable where other states, it's not always that way. So you may have to do it a little different.

Mojo Michael:

Very true, yes, absolutely.

Clint Coons:

Okay, so with wholesaling then, before we talk about actually how you put one of these deals together with this market right now, how do you think that strategy fits?

Mojo Michael:

Yeah, so the one thing that I see people making the biggest mistake on is they don't take into account or real a RV or after a pair value. And that has shifted, as you said with the market. So you need to know what your real RV is and then work backwards account for your fee account for the rehab costs, account for all of that so that you can market it at the right price so that you can actually find an end buyer.

Clint Coons:

Okay. So how are you finding your sellers now in this market that where there's enough meat on the bone where an investor can come in and say, yeah, there's value here and I'm willing to pay you for this deal.

Mojo Michael:

And that is the art of negotiation because guys, there are some deals that you just need to say no. If you get a bad deal under contract, it makes it much more difficult to wholesale a bad deal. So you need to help really influence and help negotiate and find these, whether they be foreclosure, whether they be absentee landlords, whether it be somebody who just really wants to sell, it's been listed for six months and they can't sell it at their overinflated price, and you need to sit down and talk with them and negotiate it at a price that will allow you to then put some profit and resell it or rather assign it.

Clint Coons:

Okay. So the way it works then is what you're saying is that if I'm going to wholesale deal, I'm finding a seller who is willing to sell me the property or use the word discounted value. And I assume that there's more that these deals do exist right now because it's hard for a lot of people to qualify because of the increased interest rates. So sellers are having to realize that. So you find the seller who hasn't been able to move their property, you're able to tie it up at a lower price, and then you're going to go out and you're going to find an investor who's going to pay you a fee in order to step in and close on that property at that price you've negotiated. Correct?

Mojo Michael:

Yeah. So what we do is we'll negotiate at a lower price than where we want to assign it so we can make the delta and we make the difference. And the other thing is, the worse off a house is, the more I like it, the more work it needs, the more room there is. For me with profit, some of the biggest houses I've made money on are houses that you would think are virtually, but if you get it at the right price and you help with the seller to understand that even if they're in foreclosure or they're not in foreclosure, remember if somebody wants top dollar, they can try and get top dollar, but they're going to sit on it a long time. So you need to find the people that need faster action and a discounted price for that.

Clint Coons:

Alright, so when you've entered in the contract with the seller to tie it up and you're out there looking for another investor, how do you stop that seller? Because you're not using a real estate agent that's representing 'em. How do you stop that seller from selling the property to someone else and then you lose out or possibly you've already negotiated sell to somebody else and then they're going to lose out and they're going to come after you and sue you. So what's to prevent that from occurring?

Mojo Michael:

And that's a really good question. There's something in Texas, I do what's called a memorandum of contract. I don't do it on every deal though. I only do it if I feel as though the seller may be going sideways on me or there may be a problem because there are also a lot of unscrupulous buyers that will come in knowing you have a contract, especially if you market it now, they're going to go after your seller and try and offer them a little bit more to entice them to not form on that contract. I put a memorandum of contract, it gets registered with the county and it shows it's a notarized document that I actually have a legally binding contract on that property. But here's the caveat guys, you can't put a memorandum of contract if you do not have a fully legally binding contract. And you need to be ready, willing, and able to perform. You can't just go tying this up. Otherwise at that point it could come back and bite you

Clint Coons:

As slander and title. Alright, so explain to people what is a memorandum of contract.

Mojo Michael:

So it's basically, it's a one or two piece of paper. It gets measured with submitted to the county, it gets notarized and it says, I Michael Jes have a legally binding contract with the seller, whoever it is to purchase this contract. And typically what you're going to do is attach the actual signed page here in Texas to use a trek contract with the buyer's signature and the seller's signature on that to prove that you do in fact have a fully executed contract.

Clint Coons:

So this gets recorded against the property. And the reason why that is important

Mojo Michael:

Is because a title company is going to, or at least they should in their title search, go ahead and this will come up against that property as a cloud on title of some sort. Now there is a little bit of a time delay from when you actually file with the county till the time it gets recorded and showing up. So if a house is getting foreclosed on, let's say next week, and I file an MOC today, there's a high likelihood that by the time it gets in the county system, it won't show up in a title search. So you need to do this as soon as you think there's a problem.

Clint Coons:

Yeah, well, why not just file it every single time? You mentioned that you don't do this with every seller.

Mojo Michael:

Look, there are a lot of contracts. I mean, I don't even know how many hundreds of contracts we get a year from a sheer. First of all, there's a cost associated with it. And second of all, just from a paperwork point of view, you don't want to go adding this undue burden for needless, needless, you need to be focused on making deals and making money not on needless paperwork. So again, I'll only do it if I feel like the seller, one of two reasons. Either the seller may be going sideways on me or it is such an amazing deal that I just want to ensure that the money that I'm going to make on that doesn't disappear.

Clint Coons:

Okay, so I'm going to put on my attorney hat now and I'm going to explain to people why this is important what you just said. Number one, when you file a memorandum of contract against someone's property, you are putting essentially a mark against their title. And as Michael stated, you're not ready able to perform on that is you have to be able to come up with the cash itself or have someone that an investor that's really strong is going to be able to buy this deal or already committed to you on it because now you've slandered their title and if you slander title, they can sue you for that because you've just prevented them from selling that property to a third party. So that's what he means by the risk. And I think the second a statement he made is that you don't do it on every deal. And the reason why you wouldn't do it on every deal is because if you don't go through with the deal, then you have to file a what

Mojo Michael:

If you don't go through with the deal, then they can come after you for that.

Clint Coons:

So you have to release it. And if you don't release it, because that's still going to stay on their title, when they go to sell it again, that's going to create a problem for them. And so you can get sued that way. So this technique, I think is genius. It's awesome to tie up those deals that are really important to you, that you're ready, you know, can go through on this deal. And you want to stop a seller from realizing, Hey, I screwed up. I should have asked more for this property. And then they go out there and find someone else and they tell you, well, just go ahead and sue me if you don't like it. And we know that, hey, we're in the business of selling real estate. We're not in the business of suing people. It's too expensive to do that. And so the sellers know that, and that's why I think it's a good idea to protect yourself. But you and I have talked about this before. Let's say that you file that memorandum of contract and the seller still goes through with it of the title company refusing to honor it. When they contact you up, then what happens?

Mojo Michael:

Yeah. So the first thing I do is if I get to the point where I file a memorandum of contract, I am upfront and I tell the seller that. And the reason why I tell the seller I filed the memorandum of contract is because I'm doing everything I can to prevent it from having to escalate. I don't want to have to reach that point of having to now take a bigger level of action. So what happens is if you then find out that the title in fact has changed hands and they've closed on it. Now guys, keep in mind if they do not go through a title accompany an MOC isn't going to protect you because there's usually not a title search in that regard, but it'll still stay against the title. So if what happens is a title company has for whatever reason missed it or ignored it, usually they miss it. Then what I do is I will reach out to the actual escrow officer, prove that I had a legitimate MOC, prove that I had a legally binding contract and say, you need to make this right somehow. And usually that is with them paying some sort of fee to make you go away.

Clint Coons:

And so what's happened, because I know that you've run into this problem with title companies before who threatened or basically told you they were going to ignore it.

Mojo Michael:

Yes, yes. I actually had a very major title company refer to me as a dumb investor that I had no idea of what I was talking about and dared me to sue them. So I did. And not only did I sue them, but I sued their seller and I sued their buyer and I brought them all into the lawsuit so as to enact the maximum chance of success on this.

Clint Coons:

What happened?

Mojo Michael:

They ended up writing me a check for five times the original amount I would've settled for.

Clint Coons:

Yeah, nice. And that's because I would assume being an attorney that you've got the buyer who wants to close on the property, the seller who wants to close on the property, and the title company doesn't want to get crossways there because they're going to be on the hook. So they're negotiating behind the scenes saying, we got to make this guy go away because it's going to screw up our deal completely and they're not going to be able to get title insurance because the title company won't then insure it. So yeah, that's awesome. It turned out for you in that manner.

Mojo Michael:

Yeah. I do want to warn people though, guys, you better be really sure when you put an MOC, because I've gone up against people who've left MOCs on for years, and the first thing I will do is I will get an attorney involved. I will demand that they provide everything that they were ready, willing, and able, and that it was the seller that defaulted and not the buyer that default. So this is not a toy, you better be prepared to back this up if you put it on, but if you do it right and you do it legally, it's a powerful tool.

Clint Coons:

And as they stated, because it's so powerful, there's also a risk to it. Yes. Why you have to understand when to use it, when not to use it and how to properly use it as well.

Mojo Michael:

Exactly.

Clint Coons:

Anything else about wholesaling that you think people are considering getting started in it or maybe they've been doing it for a while that you're seeing right now that you think you want, that they should be aware of?

Mojo Michael:

Guys, your reputation is everything. Alright. And I will tell you that most of my buyers are repeat buyers. And the reason being is because I'm not going to put out a deal with bad numbers. I'm going to put out a deal with good because I want there to be enough meat on the bone for them to make money. If they make money, they're happy and they're going to come back and buy more from me. So make sure that your word is everything. Remember that there's a higher level that you need to operate than being legally correct. You need to be morally and ethically correct. And what I say by that is I don't daisy chain other deals I'm going to promote. I'm not going to see somebody promote a deal on Facebook, and then I'm just going to turn around and flip it and try and offer it for more. I'm only going to offer deals I'm actually a party to or have a JV on so that you can control it. It's the right messaging, it's the right numbers because again, my name is now tied to that and reputation is everything.

Clint Coons:

Well, when you talk about investors, that brings up another question. How did you find or how somebody is considering starting this? How did they find the investors that are going to buy their properties?

Mojo Michael:

That is a lot of work. And I mentioned I had 50,000 people on my buyer's list. That's been almost a full-time job for going on eight years now. But you can it go to your local auction and start asking people there, Hey, you want get on my buyer's list? You could email people and say, message them and say, oh, we're in the same Facebook group. Can I add you to my list? However, guys, do not simply scrape email addresses off of Facebook and add 'em to your buyer's list because not only is that a violation of terms of service and depending upon what state of the country you live in could be construed as illegal. It will absolutely get you blacklisted in the email domains. And that is the worst practice you can do. So don't just add people to a list.

Clint Coons:

Well, so what it sounds like is what you need to do is understand that if you're going to wholesale property, you need to build out a business and you've got to have proper procedures in place to ensure that A, you're not screwing it up and you have support that goes around it as well. And so you created a site called mojo michael.com, and I think it'd be great if you could tell them, the people that are watching this and listening in right now, what is the purpose of that site and how could it help me as a real estate investor?

Mojo Michael:

So I have taken that everything I have done personally for eight years, I have knocked on thousands of doors. I have talked to thousands of sellers and I've boxed it into a turnkey concierge solution. What we're going to do is we're going to have professionally trained lead callers that I have personally hired and trained. They are going to call the motivated sellers lists, the foreclosure lists, whatever list you want. They're going to book you warm appointments, they're going to put it into a CRM. You're going to get notified. And then what you need to do is you need to contact me and our turnkey power team because we're going to help you analyze the deal. We're going to help you close the deal, contract the deal. If you want to assign it, you want to fix and flip it, whatever it is, we've got people there ready to help you be successful.

And here's what I liken this too. If you try and have a hat for everything you do in a business, you're not going to be successful. I hired Anderson because I didn't want to have to mess with my taxes, my bookkeeping, my legal, my LLC creation. I let you guys handle that. That makes me more successful. You can't be the person that's spending all this time calling and still have time to close deals, still have time to manage deals, still have time to find new people. So you need to partner with the right people and that will make you more scalable and successful.

Clint Coons:

So with Mojo, Michael, I've been through the site and I've looked at it. You're helping people find the leads and you're also helping them put the deals together. Because if I'm just getting started and I realized, hey, this is an opportunity for me to make extra cash, but I don't know enough about it, you're going to come in there and hold my hand and walk me through that. I assume, of course I'm going to pay for the service that I get.

Mojo Michael:

Correct? Yes, correct. There is a monthly flat charge for the service. There's no signup fee, there's no additional costs for me to help you. There's no additional cost to use our Power team, but we are there to make you scalable and successful. And there's, frankly, there's a lot of people that do this and there's a lot of people that have W2 jobs. They just want to focus on the warm appointments and not calling 250 people a day hoping somebody picks up.

Clint Coons:

Yeah. You just don't have the time for that. Yeah. And it's getting that person, that interest, getting someone to the setter is really what he's talking about is there's a skill in doing that and getting somebody that actually is willing to talk to you to take that next step. And that's typically a committed buyer, someone that's already raised their hand or seller that is, and they're willing to move forward. So yeah, that's important. I mean, you've built out the systems because these, as you stated, I've watched your business grow. These are the same systems you've used and growing your own company.

Mojo Michael:

Absolutely. And that's a tried and true proven system that I know works through trial and error. And I guess the biggest thing that I'm trying to convey, I remember what it was like to be a new investor like it was yesterday. It was overwhelming, it was scary, but I've made so many mistakes. Putting Mojo Michael together is an effort to keep the new investors from making the same mistakes I've made and to help them hit the ground running.

Clint Coons:

Awesome. Well, hey, I appreciate you coming on and sharing that story about the memorandum contract and explaining to wholesalers how important that is to look at utilizing that tool. But he also talked about the risks involved if you're going to go down that road. So you got to use it carefully, but a tool that I think every wholesaler needs to be aware of so that they can protect themselves in those situations. Is there anything else you'd like to leave in passing,

Mojo Michael:

Guys? Don't ever dare somebody to sue you if you're not prepared for them to sue you.

Clint Coons:

Nice. Or have a good attorney on your side either, right?

Mojo Michael:

Exactly. Yes.

Clint Coons:

Michael, thanks for coming on.

Mojo Michael:

Thanks, Clint.

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