On the show today we talk with… Bradley Smotherman – ENTREPRENEUR -INVESTOR – TEACHER!
Listen on: iTunes | Stitcher | Google Play
Show Links:
– Investor Creator Podcast
– BradSmotherman.com
– Glenn Harrold the hypnotism
– Grant Cardone
– London Real Podcast
Here are the show notes
The Vantastic Life is…
– in Mesa Arizona
Brad is in Nashville TN, and Julie is in Seattle WA.
Brad
Raised by grandparents, and they were in farming and agriculture.
Math teacher was a great mentor, and was a realtor.
Got licensed at 18.
A builder picked me up, and I learned a lot until the crash happened.
Most of the realtors were going back cold calling at this time.
Before BiggerPockets.com, there was FlippingHouses.com, and the creator actually called him back.
Julie
We keep running into people that got started really early in life. In this case high school.
Why did you give up your real estate license?
Brad
In TN you have to have full disclosure on every marketing piece, and most of the calls were going to my broker rather than to me.
The day that I dropped my real estate license was the day that I became a real estate investor.
Julie
The problem out here in the NW it’s expensive, and you need to have a license to put more money into your pocket.
Brad
There’s certainly positives to having a license. MLS, listing your own houses.
My hub is middle and east TN, but we buy all over.
Julie
Is that lead flow coming through students or marketing?
Brad
We are marking nationally right now.
Julie
What’s your team look like?
Brad
We have a acquisitions manager, and a few other people (VA’s etc.).
Julie
What’s your marketing machine?
Brad
At some point we were mailing so much that we had our own printing machine.
At one point we were mailing 70k pieces per month.
Now we are all online, but even that’s not as effective as it used to be.
Julie
For online, what are you doing?
Brad
We are all Adwords in 126 different markets for very motivation type keywords. Like… sell my house today.
Because of that our lead cost goes down based on keywords.
Our lead flow isn’t crazy, but we get really good quality leads.
Julie
Are those submarkets?
Brad
Yeah, 126 metros.
Julie
What is the price point you’re going for?
Brad
It really depends.
Julie
What type of budget are you looking at for that type of ad spend?
Brad
Absolutely. When I started, I just had one box of We Buy Houses signs.
I went to school for accounting and didn’t want to do that, so I just got started where I was at.
At lot of times we don’t consider if we are in a buyers or sellers market.
If you’re good at what you do, your marketing should 15X.
Julie
Ringless voicemail is really interesting!
What kind of lists are you going for? Do you have a problem finding a target list…
Brad
The list we use for ringless voicemail is…
We ended up mailing everyone that had equity.
As a real estate investor you run into everything!
Julie
Even if you are trying to avoid pre foreclosure, you will run into them. I find that they are very hard to get under contract, and they are very smart, and even very savvy.
Have you run into this?
Brad
I think that it depends on the marketing piece. If I’m doing direct mail vs. Google Adwords.
Basically push vs. pull.
If someone calls you on an online ad, it’s way different than if they get a direct mail piece. The Adwords callers are much easier to deal with.
If someone tells you their number, it becomes less likely for them to shop the deal around.
We never give a price and we don’t leave offers with people.
Julie
That was badass!
What do you do when they say “you called me”, or give me a number?
Brad
Sometimes they say… you’re an expert, so give me a price. Well, as an expert, I would never give you a number without seeing the house, but if you can give me what you need to get, I will know if I should come take a look based on other houses in the area.
Julie
What do you think about subject to?
Brad
Number 1 we are equity buyers.
Let’s say there is some kind of an issue and the loan get called… we can bring in a hard money lender, or another loan, no problem.
I’m in a deed of trust state, so non-judicial foreclosure.
If you’re buying real equity…
We want to be 100% upfront with these things, and are 100% full disclosure.
If someone is behind on payments, it makes sense for us to buy the property subject to.
You have to negotiate price first and then switch to terms.
I’m a firm believer that people chase what moves away from them.
We are out of almost every house in 45 minutes.
Julie
What’s your exit strategy on subject to?
Brad
I’m not a big fan of BURR because of over leveraging.
I like to buy and then owner finance. I started off creating notes, then got into wholesaling and land developments, but I hated it.
Politics is what I didn’t like with the development. One person can make or break you.
Julie
Can you take us through a full deal?
Brad
Here’s my last transaction…
240k owed at 3.99% fixed – the house is worth 340k, and we want 30k down
We have a wrapped mortgage at 310k
Profit centers
Down payment
Monthly payment
Your 70k note that will appreciate
Julie
When you put that wrap on… the first position will get notified of that?
Brad
I’m not sure, but it is public record.
Julie
I’m sure that breaks the due on sale clause in almost every mortgage paperwork?
Brad
There is wording where a bank can call a loan due if something in the paperwork is violated.
I’ve never had a loan get called, but it is a mitigated risk.
Julie
In the wrap you have sold the house, so you can’t sell it to pay off a due on sale clause, right?
Brad
Yep, and if we needed to… we could bring in a private money lender.
Julie
A lot of people have no plan b exit. And it’s crazy! No body is taught the downside, and they get slapped.
Brad
Well, everything works in an appreciating market, and there’s a reason the Titanic didn’t have enough life boats.
Julie
How have you pivoted your business over the years?
Brad
I would say that we’ve only had to pivot our marketing. Everything works some of the time.
I’m not really good at half way doing something. I might go break our marketing.
Julie
Sounds like Joe!
Joe
Yep, totally!
Brad
I like to live from an abundance mentality. I go through a list of things that I’m thankful for each morning. It’s amazing what we have here in America!
For me, living from the point of gratitude is super important. I mean, entrepreneurship is scary.
Relationship are a great parallel to the business world. You learn a lot from each relationship.
Having the right outlook is super important.
Julie
Do you have any recourses that you listen to?
Brad
Glen Harold the hypnotism
Grant Cardone
London Real Podcast
Julie
It’s amazing if you can ask your kids what they appreciate today!
Brad
That is SO good! My little girls is 3.5, and I’m really into dropping the right programing into her.
Affirmations for her
I’m loved, I’m strong, I’m special.
Julie
What’s your wealth building plan, or how do you handle your tax problem?
Brad
#1 it’s one of the reasons I don’t like to flip. We are playing the long game in note equity.
You are switching from normal income, to a long term asset. Look into Roth for tax savings!
I have a friends that has 2 million in note equity, and no personal income.
Julie
I have so many ideas around this. Look up WatsonInvested.com when you get a chance. He’s an expert on building wealth with your Roth.
If anyone is listening, I have some big news to share, so come see me on any Tuesday for our mastermind. I have some ninja stuff that I’m rolling out! Or email me if you can’t make it.
Maybe we can have you back on sometime to to talk more!
Brad
My wife thanks you for getting some of the real estate talk out.
Julie
Are you ever interested in investing in other types of syndications, or things like that?
Brad
I don’t really know that world, but I would look at whatever!
Julie
If people want to find you…
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