Ryan Corcoran (03:43):

Maybe we’ll increase the rent just a little bit, but within that first month, we already have it back on the MLS, ready to go. So it’s not a full-blown flip where you’re infusing capital to really boost value, but it’s not necessarily a wholesale where you’re double closing it or you’re assigning the contract. The way I look at it is essentially, it’s a really, really fast flip. You’re buying properties that are essentially undervalued that are already worth more without really doing much, and it’s a good way to boost income pretty quickly, actually. I’ve done five of those and about another five or six double closes this year so far. So between those, that’s what we call wholetailing.

Robert Leonard (04:18):

Where does that name wholetailing come from?

Ryan Corcoran (04:21):

To be honest, I don’t really know. When I moved down here to Rhode Island, his name’s CJ Moss. He’s probably the biggest wholesaler out here in Rhode Island. So if you’re looking for another podcast guest, he’d probably be a good one on wholesaling. But I think he wholesaled 100 plus properties last year. But when I met with him when I first moved here and he was like, “Dude, you’re finding all these really good deals.” He’s like, “If you don’t want to be a full-blown wholesaler and you’re closing on all of them, why don’t you start to just slowly build your buyer pipeline up and then just start wholetailing them?” So essentially just kicking them right back onto the MLS or selling them to people after you spruce them up, just very, very minor, and that’s what I started to do. I would say it’s really hard to build up business around wholetailing itself, because there are not as many properties that you can just wholetail, but it’s worked out pretty well.

Robert Leonard (05:07):

If you’re doing that, and you’re actually closing on the property, aren’t you worried about closing costs, now twice you have closing costs when you purchase and you have closing costs when you sell versus when you wholesale, you’re not actually going through the closing yourself, so you’re just assigning that contract before closing? Somebody else has to deal with those closing costs. How does that play into the strategy?

Ryan Corcoran (05:26):

For me, if I’m going to close on a deal, the deal has to be so good that the closing costs, that 6,000 to 15,000, whatever it is, the closing costs, it has to be enough on the profit end where that’s not going to really cut into it for me to say, “Hey, it’s actually worth me to close on this. I’ll give you a quick example of, we bought a six-unit property for 425 grand, and we turned around and sold it for 700 grand. So that, you see a 200 and whatever, $75,000 sway there, that is a property where I would say, “Okay, I’m going to close on that, spruce it up a little bit and make it a $700,000 property really quickly instead of just assigning it for maybe let’s say, 500 or 550.

Ryan Corcoran (06:05):

I’m able to get it that much higher because I’m putting in just very, very minor work to make it look much better. Maybe it’s painting a little bit on the outside. Maybe it’s cleaning up the landscape, very minor stuff, and again, just kicking that back on within that month to turn for profit. So from a closing cost perspective, that one cost us about 10,000 in closing fees and then another 4% for the agent fee. But at the end of the day on a $275,000 swing, it’s not that big of a deal.

Robert Leonard (06:33):

We’re only in July, which means that you’re averaging just over one flip wholesale or wholetail per month. You’ve done 10 and we’re seven months into the year. Talk to us a bit about your deal flow and how you’re finding these deals that are such great deals. Also, give us some perspective on the markets that you’re doing this in.

Ryan Corcoran (06:53):

I’ll start with the end question first. So I’m located in the Northeast. I buy anywhere from New Hampshire, Laconia, New Hampshire area, like Lakes Region down to anywhere in Rhode Island, and that includes Massachusetts in between there. With that being my area, I have focused really my entire businesses around finding off-market leads. So I do that between direct mail between networking and cold calling, between the three of those and really building this massive funnel, which has driven a ton of deals or a ton of leads my way. Then from there, I’m able to analyze them. So basically, what I do is I take all these off-market leads and I will put them into categories like, “Okay, this one is really, really good for a fine hold, long-term play,” or, “This one is, the deal is good, but it’s not that great. Maybe I’ll try to assign that or I’ll try to wholesale that one,” or, “Maybe this one needs a ton of work. That would be a good flip opportunity.”

Ryan Corcoran (07:46):

I try to almost like, I guess the metaphor is you stick a net in the water and you’re trying to pick up as many fish as possible. Then you have these fish in the basket or the net and you just try to figure out what to do with these deals, because not everyone is going to be a good buy and hold. Not everyone’s going to be a good flip, and not everyone you’re going to be able to wholesale. A lot of them fall out of the net. You can’t actually do anything with them and they get entered in into the CRM and you play follow up with them over the next couple months, years, whatever it is. But that’s really how my model started and I’ve taken it to a scalable level where there’s 10,000 letters going out every month. I’ve got several thousand cold calls going out every month. I’m connecting with a certain amount of agents every week and I’m just building this massive funnel where I can continue to do that at a higher level.

Robert Leonard (08:29):

Are you doing the cold calling yourself or have you hired that out to somebody else? If you have hired it out, who have you hired it out to? What services or platform are you using for that?

Ryan Corcoran (08:38):

I started doing direct mail all by myself and I hired that for cold calling. I don’t mind talking to people on the phone, but I picked that up immediately and hired that to a virtual assistant. I pay her $6 an hour from the Philippines, which is actually above average salary out there, and so she’s thrilled. She’s getting this great salary in the Philippines, pumping out phone calls for me, doing all the work by entering them into the CRM, and then I benefit from it by having all these leads, and I’m paying a very, very small, hourly wage and from a U.S. standpoint. So I found her on Upwork. You can use Fiverr or Upwork. There’s actually some companies, I think it’s Rocket Sphere or something like that where you can go and actually you can pay them a set fee and they’ll actually find you a VA and they’ll pair a VA with you, and then you train them and you get them up and going.

Ryan Corcoran (09:25):

But I went through six VAs before I landed on the one I have right now. Working with VAs are very difficult. It takes a certain skill to train VAs and to stay on top of VAs. When you’re trying to grow a business, the last thing you want to do is try to set up a meeting with somebody in the Philippines whose their hours aren’t the same, there’s a language barrier, the internet connection there is not great, so it’s really difficult. I ended up landing with this one and she’s been great so far and it’s been six months now. She’s got the ball rolling, so it’s going well now. But at first trying to get the cold calling off the ground, it took a lot of work, a lot of legwork to get a system in place to actually see a benefit from it.

Robert Leonard (10:09):

Are you giving her a script to specifically follow when she’s calling these people?

Ryan Corcoran (10:12):

So I did that for the first couple that I tried. Then I said, “You know what? I just need somebody with experience who has done this before, and I’d rather pay an extra $2 an hour for somebody who’s done it before.” So once I went through the first four or five people and I landed on the one I have now, my criteria was you have to have done this before. so she actually worked for a wholesaling company out in Ohio, and so she had been doing this for a year already, so I didn’t have to give her any script. It was more me telling her, “This is what I’m looking for. This is what I need to know, and then just do your best to pull that information out of the conversation and enter it into this CRM. Then from there, I can take over.”

Robert Leonard (10:51):

Is she working for you full-time?

Ryan Corcoran (10:53):

She is 40 hours a week, yep.

Robert Leonard (10:56):

So she has no bandwidth to share with me, huh?

Ryan Corcoran (10:59):

No, but she knows a ton of people. So if you want the contact, I can give it to you after.

Robert Leonard (11:04):

I want to talk a bit more about the direct mail piece as well. Take us through how you started that from the very beginning and where you are now. I think there’s a lot of people that are listening. We talk about direct mail a lot on the show, but I want to hear how you got started doing that. What resources did you look for? Did you outsource it right away? If you didn’t, how did you do it yourself? How did you actually, first steps implement a direct mail campaign?

Ryan Corcoran (11:30):

When I started doing real estate, I was 21. I had no money and I spent $200 on a printer, a couple of packs of paper, some pens, ink. I had a nice table and I had set up shop. I set up essentially a printing press in my bedroom. What I would do is I would go on ListSource and I’d try to basically compile these lists. I’d plug and play. I’d say, “Hey, I want to buy a duplex in this county with somebody who has this much equity,” and I would just start messing around with a bunch of lists. I’d pay for them 20 bucks here, 50 bucks here. Then I would hand write all these letters. I’d put the stamp on, write the return label, everything handwritten. Dude, my hand was falling off after week number one, but I probably sent close to 5,000 letters in the first six months that I actually decided I was going to start direct mail.

Ryan Corcoran (12:18):

Little did I know that there were companies that you could do this, but I didn’t have the money at that point in time to say, “Hey, I can allocate three grand a month to direct mail.” I couldn’t do it. I could spend a couple hundred bucks a month while I was in undergrad at UMass Lowell trying to earn a degree in physical therapy at that point. So that’s how I started and then transitioned a little bit later to now, I went through several different systems to try to get it to where I want now. But now I’m sending close to 10,000 letters a month. I have hired a team, or basically a company who I send a list to and they do everything else from there. I don’t have to do anything else by hand.

Ryan Corcoran (12:56):

Actually, I have a VA that actually scrubs the list and pulls the list for me, so it completely systematized it to a point now where it’s running in the background. I’m basically just the one making the decision on what list to actually pull. If you want to get into how much that actually costs, it can range from anywhere from $.40 to a buck per letter. So if you send 10,000 letters, roughly, maybe six grand, seven grand a month in marketing for that. a lot of people are saying, “Wow, that’s a lot,” but you have to remember that one deal can wipe that out for the entire year. So that’s how I changed my mentality from, “I’m going to do everything myself and maybe I’ll get one or two or three deals a year,” to, “Okay, now I can get 30 or 40 or 50 deal a year just by ramping them.”

Robert Leonard (13:36):

When you were writing these letters by hand, what were you writing in them, and what are you having the company is writing them today?

Ryan Corcoran (13:45):

It’s relatively the same still. It’s very, very, very basic. It’s, “Hey, my name is Ryan Corcoran. I’m a local real estate investor. I’m a young guy looking to grow my portfolio. I’m interested in your property at blank.” If it’s a multifamily property, I’ll specify multifamily. If it’s something else, I’ll specify that, and then I’ll just say, “Hey, if you’re interested in chatting, please give me a call back. I’d be thrilled with the opportunity,” and so something very, very basic like that; handwritten letters and it really catches people’s attention, because when they pick up this letter in the mail, it’s a white envelope. It has got handwritten on the front.

Ryan Corcoran (14:21):

They think it was mailed directly to them for a purpose. So they open that up and they see another yet again, handwritten letter in there. In my opinion, they’re much more likely to give you a call back on a handwritten letter than just a mass-produced letter. Now, these companies like Open Letter Marketing in Lawrence, Fault Point Marketing, there’s probably 15 or 20 of them. They have these things called Autopen, so it looks like it’s handwritten it’s with a legit pen. Nobody can really tell the difference, and so that’s a good strategy to mass produce this handwritten lookalike letter. So people think it’s really personalized.

Robert Leonard (14:57):

You still go with that mass written handwritten kind of style?

Ryan Corcoran (15:01):

I do for certain lists. Okay, so if I’m going to target, let’s say a six-unit property, but on my list I weeded out all the LLCs and corporations. So I’ve got it down to just individual owners, I will send a handwritten letter to them. The reason for that is because likely what I’m trying to target here is mom-and-pop owners, or maybe an older couple who has owned the property for a while or somebody who just inherited the property. People like that, where it’s, “Okay, this guy’s really sending me a personal letter. I’m going to call back.” But if I’m trying to buy a 40-unit property, the likelihood is a mom-and-pop owner, at least up here in the Northeast is very slim because if you’re trying to buy a 40-unit property up here, it’s likely a corporation owns it or a larger business. So for that, it’s going to be a professional letter with a logo on it, a little blurb about who we are, and then it just looks much more professional.

Robert Leonard (15:51):

With the mom-and-pops, you’re trying to be more personable. You’re trying to touch on their personal side of things and get that psychological piece going, and you’re going towards the more LLC. You want to be more professional. The mom-and-pops care about the emotional piece, whereas the more professional managers, they want to know you’re going to close. That’s what they care. They care if you’re going to be able to pay and if you’re going to be able to close, and so I think that that makes a lot of sense as to why you would do it that way. So you said you send out 10,000 letters, how many leads would you get from that? How many phone calls are you getting? Let’s talk top of funnel, and then let’s take it down a step further. So say you send out 10,000 letters, how many calls or emails do you think you get from about 10,000 letters? Of course, it’s going to vary, but let’s just say on average. Then from there, how many of those leads or emails or phone calls are actually qualified? How many actually meet your criteria and are actually good deals?

Ryan Corcoran (16:44):

This is where I need to implement almost a statistic strategy where I can actually see where the actual percent, but I can tell you it’s probably between two or 3% of the letters I send where I’ll actually get a solid lead back. That’s not a phone call back that says, “Hey, F you.” It’s a solid call where it’s, “Hey, yeah, I’ve got this property. I’ve thought about selling it before. Let’s chat.” Two to 3% out of 10,000 is a good amount. It doesn’t necessarily mean that if you don’t buy that property today that you won’t down the road. The way I look at it is, if that’s a warm lead today and I set a follow-up for three months and four months, and then every three to four months from there I send another follow up, in a couple of years, I may buy that property that I had sent the letter to three years ago. T

Ryan Corcoran (17:29):

That actually happened to me. I’ll give you a quick example. I sent letters to Gardner, Massachusetts and this individual, he’s in his 70s, he got my letter. He stuck it on his desk and didn’t acknowledge it for a year. Then a year-and-a half later, I got a call from him and he was like, “Hey, is this Ryan?” I’m like, “Yeah.” He’s like, “Hey, my name’s Barry. I got a letter from you a year-and-a-half ago. I have 32 units in Gardner. I’m looking to sell them.” I went there that day and I bought 27 units from him from a letter that I had sent over a year ago.

Ryan Corcoran (17:58):

As I continue to grow here and year-over-year that goes by, I see more and more of that, where people have just collected letters that I have sent, and they’ll give me a call back when the time’s ready. So it’s really hard to say how many leads are you going to convert by sending 10,000 letters? I don’t know. It could be zero, it could be 15. That’s something I’m trying to master, trying to get how much percentage of these letters I’m actually converting into literal deals where I’m closing them. So far this year I’ve closed probably 15, and so if you get to the math off the top of my head, but say I sent 10,000 a month, it’s been seven months, 70,000 letters and I’ve closed 15 deals, whatever that is, that would give you a good number based on percentage of direct mail, at least closed leads.

Robert Leonard (18:40):

What platforms are you using? You mentioned a couple, you mentioned that there’s probably a dozen or 15 or so, but what have been your favorite platforms to send your direct mail?

Ryan Corcoran (18:49):

I use Open Letter Marketing because they are super user friendly. What I mean by that is, you can literally negotiate with them so that they have a price on there. If you say, “Hey, I’m going to send 10,000 letters out, is their discount I can provide?” then not only that, but they won’t send anything unless you go through multiple hoops to approve it, so they send you exactly what it looks like. You can make adjustments at any point in time. They seem like they’re pretty reasonable compared to other companies. So they’re out of Lawrence, Massachusetts, and I really like the owner of the company as well. He basically did what I did when he started investing in real estate. He just happened to open a company doing it, which I think is great. They’re awesome.

Ryan Corcoran (19:29):

I use PropStream and CoStar for my lists. CoStar is really targeted for more of the commercial size multifamily, and it’s very, very accurate, but it is very expensive. PropStream is 100 bucks a month, and it’s good for smaller multis, for flips, for stuff like that. Those are the two companies I use for that. We talked about the cold calling. I hired a VA for that. Then the other thing I’ve been starting is direct-to-seller with email. I actually got this from a partner of mine who he bought a bunch of deals when he first started and he recommended that I try it. I tried it this year and actually bought a 10-unit property up in Laconia, New Hampshire using direct-to-email. So I’m going to try to implement that a little bit more as well.

Robert Leonard (20:12):

When you say that CoStar and PropStream, so CoStar is more commercial PropStream’s a little bit smaller, what are those ranges? Is PropStream good for five to 25 units and then 25 and above is CoStar? What is that breakdown?

Ryan Corcoran (20:27):

CoStar is really good for your five and above or even bigger, like 100 plus unit properties. I’ve seen the accuracy of it much, much better than PropStream for bigger properties. However, PropStream, I’ve bought several six-unit properties from PropStream lists. I think the reason why not many people are using PropStream for multifamily property, or a lot of people who are using PropStream are wholesalers or trying to flip single family houses or full foreclosures, condos, stuff like that. For me, coming in sending these letters to multifamily properties using a software that isn’t really meant for multifamily, it was a little bit like, “Oh, is this going to work?” But it actually dug up a good amount of leads on, like I said, about 260 properties two months ago from a PropStream list, which cool, impressive, whatever you want to call it, it worked. I continue to market with PropStream for six units or larger.

Robert Leonard (21:21):

Whether you use Propstream, CoStar, any other platform, there are a ton of different lists that you can get usually within there, based on equity, age of property, situation, there’s tons of different criteria. What have you found to be the most successful, or at least your favorite characteristics or list types when you’re narrowing it down with these platforms?

Ryan Corcoran (21:40):

Like I was saying before, I try to plug-and-play and see what works all the time. I’m always switching things, but a really accurate list that I have found is, first of all, specify the number of units you want. Okay. So if you want to find five plus unit properties, make sure you hit units five, go to a multi-family, hit five plus. But then the other thing that not many people do, and this I’ve found has been super important to weed out the ones that actually aren’t five units, because they’re pulling this data from county websites and wherever else they’re getting the data from, and they’re not always accurate, and so let’s stick with the five. So you’re trying to find five units or bigger. You’re going to go to the bathrooms and you’re going to press five bathrooms as well. So now what this is going to do is it’s going to weed out all of the properties, that number one, units that don’t have a bathroom in it. For me, if I’m looking for a five plus unit multifamily residential building and it has four bathrooms, I’m likely not getting a five-unit building.

Ryan Corcoran (22:32):

So if I set the bathroom there, now I’ve got, okay, I’m classifying it as a five plus unit. I’ve set multifamily five and greater, and now I have five bathrooms, so now I’m weeding out all the ones that cannot possibly be less than five bathrooms. That’s just a way to ensure your accuracy gets higher. The other things I’ve done is, go to equity. You can mess around with equity play. You can do high equity lists. What this will do is if you just think about it, people who have high equity are more likely to sell a property because they have space to sell versus somebody who just bought maybe a year or two ago who doesn’t have that much equity, and that leads me to another point. You can set the last sale date. So I like to do at least five years of ownership, sometimes 10, sometimes 15 and again, plugging and playing and seeing which lists are the most accurate, but those are the big ones. Then lastly, just, I always do non-owner occupied for these again, it’s really difficult to buy a house from somebody who’s actually living in the house today.

Robert Leonard (23:25):

So do they just assume the equity based on how long the property has been owned by the owner, assuming that somebody who’s owned it for two years has less equity than somebody who’s owned it for say, 10 years?

Ryan Corcoran (23:35):

I think that’s how they determine the data, but they also have essentially what mortgage you took out when you bought the property. So they can see essentially, “Okay, did they pull an 80% LTB loan back in 2015?” so then they can infer, “Okay, well, seven years, so the loan has likely been paid down X amount,” and so that’s how you can get your equity split. It’s hard though, because the values that are listed on PropStream, not that accurate. I’ve seen sometimes where I’m looking to comp a six-unit on PropStream and the closest comp is 5 million. I’m like, “Wait, how does that make sense?” Because that person who bought that six-unit bought a portfolio of properties for $5 million and that is what’s recorded in PropStream. So you have to be careful stuff like that. So I don’t rely on for comparable properties on PropStream. I prefer to ask agents or use other methods for that.

Robert Leonard (24:24):

Do you look for cash buyers for potential creative financing opportunities?

Ryan Corcoran (24:30):

I have not done that before, no. Creative financing has been huge for me, but I’ve never looked on PropStream for cash buyers specifically to do that.

Robert Leonard (24:40):

I want to talk a bit about your focus and how you think about focus, because in addition to having wholesale flipped, wholetailed over 10 properties this year so far, you’ve also bought over 50 units. So you could argue there’s overlap, but there’s also three to four different strategies that you’re implementing there. A lot of successful people I’ve recommended to me that people need to focus. How do you think about focus in your business and as you go through your day-to-day operations?

Ryan Corcoran (25:09):

So I actually agree 100%. I think focusing on one thing, at least when you’re starting, is super important. What we haven’t really talked about this podcast is when I started, I didn’t wholesale. I didn’t flip, I didn’t do any of that. I bought 157 rental units. I bought some by myself, some with partners and I focus solely on long-term buying wholes. However, I had been using the same strategy of direct mail and finding off-market leads to do all of that. So as I accumulated these, we’re about to have over 200 units in the next couple of weeks, all of that has been the same strategy, but I got to the point where I was like, “Okay, I keep buying all these properties. I’m using creative financing, I’m using a little bit of my own money,” but you eventually run out of money. You can’t just keep buying and buying and buying and you don’t sell anything, you run out of capital to do things unless you continue to leverage other people.

Ryan Corcoran (25:58):

So I was like, “You know what? I need basically a cash-producing business so I can keep infusing this into the business to keep ramping up the long-term holds. So that’s where the idea of, “All let’s start wholesaling, let’s flip properties.” We’ll probably flip between 30 and 40 properties by the end of this year, and the sole purpose of that is to take that capital and dump it back into long-term holds. So my main play is long-term holds, but if you think about it, I’m really only focusing on just finding off-market leads. So that’s the business model that I’ve developed is finding off-market leads and I’ve mastered that. Being able to wholesale or flip a property, it’s not all that difficult when you’ve got the lead in your hand. If you’re not going to buy it yourself, you I’m just trying to make the use of these [inaudible 00:26:43] Basically, what I’m doing is trying to make use of properties that I wouldn’t buy for myself. By doing that, creating extra cash and infusing cash into the back end of the business so I can continue to buy more.

Robert Leonard (26:54):

If you get a lead in, how are you deciding between keeping a property as a long-term rental or flipping it or wholesaling it? How do you decide between which strategy to implement?

Ryan Corcoran (27:03):

I think that at first it was, when I first started, it was BRRRR, BRRRR, BRRRR. I wanted to do as many buy a property, fix it up, rent it out, refinance it, pull back capital, pay off debt guys, or pay off myself or partner whoever came into the deal with me and keep recycling capital. So that works awesome as the market is going up; however, when the market plateaus or it starts, who knows where it’s going to go? It could down right now, cap rates might go up and therefore, values might start to drop. So to me, I had to pivot a little bit and so a deal that I would typically buy for myself, maybe I won’t buy it right now.

Ryan Corcoran (27:37):

So by criteria, I don’t really have a specified, “It’s got to be this number per unit, blah, blah, blah, blah, blah.” However, if the deal looks good enough where I can pull most of my capital back out, I will do that deal myself. If it’s like, “Hey, I’m going to leave $100,000 of my own capital into the deal after it’s fixed up, rented and refinanced, well maybe that would be more beneficial for me from a cost of capital standpoint to wholesale it or sign it for 50 grand. Or flip it and make 100,000 grand. From the buy box I guess you could say for me personally, it’s got to be a very compelling deal right now.

Robert Leonard (28:14):

So that leads me to a inherent question is, you’re cherry picking the best deals for yourself, how are you able to wholesale something to somebody, you’re like, “Hey, I have this subpar BC quality deal that I don’t want to buy myself, you want it?” I understand there’s some people that have different criteria, different people that are just willing to buy those types of deals, but walk us through that thought process and how you’re able to sell these or wholesale these second-tier properties.

Ryan Corcoran (28:42):

The best way I can put this is that I want infinite return on my capital. This is a business that I’m trying to scale up, and so for me, if I leave money into a deal and I’m making a 10% return or a 15% return, that’s not what I’m looking for. But a lot of people, if they can get a 10 to 15% return on an investment, they’re going to jump on that. What asset class, when you say continually goes up in value, rents keep going up. I’m going to continue to get a 10 to 15% return on my money in this multifamily asset, that’s a relatively stable asset. So I’ve basically built up a list of people, it’s not even just a list.

Ryan Corcoran (29:20):

You post things on the MLS and people are buying properties that you think are way overpriced, they’re probably still getting a decent return, from a wholesaling and a flipping perspective or I’m going to wholesaler flip a six-unit property, invest this person’s going to get a 15% return, that’s a really good deal for them. So I’m not necessarily looking at it like, “Hey, it’s a bad deal.” It’s just, “You know what? This is not going to promote what I am looking to do in my business, but it’s a really good deal for somebody else.” Now, if the property is just so overpriced that it doesn’t make sense for me and it wouldn’t make sense for somebody else, that’s not something I would try to push along with somebody. Again, I’m not really a wholesaler at heart here, I’m a long-term buy-and-hold investor, but I’m just trying to convert leads that are still good deals, but they’re not amazing deals to individuals who can do something with them.

Robert Leonard (30:07):

You mentioned your buy box, let’s go through that. I know you said you don’t have necessarily a specific number of units, but let’s talk through some of the other criteria. I know you set the location, Massachusetts, New Hampshire, Rhode Island, which I want to know why you don’t invest in Connecticut, because that’s right in the same area, but also, what about age? Is it only a certain age type of property condition, et cetera? Take us through some of the other criteria in your buy box.

Ryan Corcoran (30:35):

First of all, location, population is really important when I’m looking to buy properties. If I see stable population or increasing population year-over-year, that’s a green light. If it’s decreasing population, that’s a no-no. I won’t even entertain it typically. Next is you look at, “Okay, let’s say I want to buy eight units and larger. In the Northeast, there’s a lot of eight-unit properties, six units, eight units, 10 units, there’s a lot of these. They’re almost like pieced together properties because there’s a lot of mills up here in the Northeast. So when they were building these, they were basically pumping a bunch of individuals into these buildings that were close by to mills. If you look at the breakdown in the composition of the actual properties up here, there are a lot of those mid-tier, multifamily properties, but if you look down at Florida, the odds that you’re going to find an eight-family property is very slim.

Ryan Corcoran (31:25):

But if you want a 100-unit property, there’s a good amount of them down in Florida. How many 100-unit properties are up here in the Northeast? Like a handful, not many at all. I’ve found a lot of success, and some of my partners up here found a lot of success buying those six to 20-unit properties where a lot of the larger investors don’t look and a lot of the smaller investors can’t touch yet. Typically, they’re built in the 1900s, so they’re older properties, but you’re usually able to get them for a pretty steep discount because they all need work. That has been really my buy box. Is the population good? First of all, is it in good shape, but it’s it an older building and I can infuse capital and make this thing worth a lot more? Are the rents super low? Is the property mismanaged? Those are all things I’m looking for, personal buys.

Robert Leonard (32:09):

You say that the three most important things to ensure success are finding deals, creative finance, and getting in the room with people doing big things. We just talked a bit about how you find your deals, how you source your deals, we walked through that whole process. Now I want to learn a bit about your creative financing, how you’re financing some of your deals. For those listening, I just did a two-part series with Pace Morby on episodes 131 and 132 all about creative financing that people really loved. So if you haven’t heard those yet, go check those out. But Ryan, once you find a deal, you sent out a letter, you got to lead in, qualified it, seems like a good deal, you want to buy it, talk to us a bit about the creative financing strategies that you use. If you can’t use a creative financing strategy, what are some of the other methods that you’ve used to fund these deals? Are you using partners, are you using your own capital? Walk us through how you’re closing these deals?

Ryan Corcoran (33:00):

So first of all, I listened to those two podcasts, not before this but with Pace. They were really good, great job. I don’t know him personally, but what he’s been able to do in the sub two world is unbelievable, but he also talks a lot about seller financing and other creative ways. When you’re first starting off in real estate, besides finding a really good deal, to me, finding the deal is the most important thing because you literally can’t do anything without a deal. There is no real estate without a deal, but a very close second to that is if you have a deal, how are you going to be able to fund this thing? First of all, you can use your own capital, which not many people do. I don’t really know any investors who really buy things in cash. Like he was talking about, I don’t really know anybody who buys things in cash, because that’s not the best use of their money. So the first thing we do is when you find a deal is you try to go find a bank, conventional, let’s just use a 1600 property.

Ryan Corcoran (33:46):

For example, I’m going to either go to a broker or I’m going to go to a local bank. I’m going to say, “I have this property under agreement. Will you give me 25%, or will you give me 75 to 80% of the loan value?” So that’s step number one in my opinion, because it’s the cheapest debt you can get, typically. If they say yes, they’re now an 80% partner, essentially. They’re putting out 80% of the deal. It’s on my responsibility to put up the 20%. Now that 20% can come from anywhere. It can come from hard money. It can come from private money. It can come from your own money. It can come from the seller. I have personally used almost every possible creative financing strategy I can possibly think of. Well, just my favorite thing to do is simply that, go to a conventional lender, get a 75 to 80% loan-to-value.

Ryan Corcoran (34:31):

If the deal is good enough, which every single deal I buy has to be good enough, I will then raise the down payment from somebody who wants to earn an eight to 10% interest-only payment, essentially with a balloon at the end. Why I do this is because let’s say you’re buying, let’s just call it a million bucks and somebody’s coming and they’re going to bring 200,000 to the table as private money. They’re going to receive interest-only payments as I’m doing rehab on this property, increasing the rents. Then when I refinance that property, that cash out is going to pay off that private lender and now I own the property, but solely with the bank, essentially. So they’re now going to be an 80% loan- to-value and I’m going to own it by myself, the debt partner is paid off, so that’s a creative way to essentially do a BRRRR. We talked about earlier direct-to-email I was going to start ramping up.

Ryan Corcoran (35:21):

So this 10-unit that I purchased earlier this year, it’s in Laconia, New Hampshire, the guy responded to me and he was like, “You know what? Make me an offer. Be creative. I don’t really care. I’m an older guy, whatever you want to do.” So I said, “Okay, well how about you hold the note.” So we started messing around with some terms. So he ended up agreeing to doing a 100% seller financing. I literally brought $0 to the table to buy a 10-unit property. The interest rate we agreed on at the time was 5% because everything was four something, and he felt like he wanted to make a little bit of money on me. I was like, “You know what? That’s totally fine because they’re probably going to go up at some point,” and so now they’re almost 6% and I’m locked for 30 years at a 5% interest payment on a 10-year property that ever brought $0 down to. You’re probably saying, “Why would somebody do that?”

Ryan Corcoran (36:07):

If he had sold that property to me for the 600 grand that I bought it for, he would’ve been nailed with capital gains tax and probably would’ve paid close to $150,000 out of that profit. Now, he’s not paying really any capital gains tax because he seller financed the entire thing to me. That’s a strategy where I wish more people would do because sellers are often very inclined to do seller financing for that specific reason. Not having to pay capital gains is huge, especially as you grow in real estate, you realize that the single largest expense that we have as business owners is taxes. It’s not your lattes or the gas you put in your car, it has nothing to do with that; it’s taxes. If you can minimize your tax liability every year and find ways to make more money without paying tax on it, it’s very advantageous for sellers like that. So for him, he’s in his 70s, he’s owned the property for a while. He would rather sit back and go down to Florida and collect a $2,300 check for me every month, instead of managing everything, so yeah, there’s two ways.

Ryan Corcoran (37:07):

Then the last one I’ll talk about real quick is, I’ve utilized hard money, quite a bit and hard money is expensive, don’t get me wrong. You usually pay a point, maybe a point- and-a-half on it. It’s eight, 10% interest payments on it. But for flipping properties, hard money has been huge, because they’ll usually allow you to bring maybe 10% to the table, so it requires not that much cash out-of-pocket to get in. Then you can combine all of these strategies together and that’s where you can get really creative. You can combine seller credit, seller financing with hard money and private money and go get a conventional loan all at the same time. It’s about just playing with deals and being creative. Funding a deal, I think maybe you should start with funding in mind before you actually lock up a deal. How are you going to fund this deal before you actually lock it up? Because funding itself can create a deal alone and you can actually out-price people and you can actually basically beat out competitors with your specific available funding compared to theirs.

Robert Leonard (38:07):

For that seller that you bought the property in Laconia, New Hampshire, did he understand the tax benefits before you brought that deal to him?

Ryan Corcoran (38:16):

He was a business owner. He had owned some real estate. He owned a landscaping company, and so he definitely knew what I was trying to get at by telling him that he wasn’t going to pay capital gains tax, but I don’t think he completely understood it that well. I think he knew that, “Okay, if I don’t take any money, I’m not going to pay taxes.” But when I actually broke it down to him and showed him the total profit that he was going to make like $300,000 more than the actual sales price over the course of 30 years. So once he saw that, he was like, “Well, holy crap, why would I say no to that?” So that’s why I’m saying I wish a lot of people would educate possible sellers on this, because number one, it preserves your capital and it creates these deals where it’s a more of a win-win for everybody.

Robert Leonard (38:57):

Yeah. The tax benefits are amazing. That’s a huge selling point, but what I think is interesting is if anybody listening has ever done a calculation on their mortgage and seen how much interest they’re paying, it’s a lot of money, especially over a 30 year period. Now, you take that instead of it going to a bank, it’s going to the person that’s seller financing it to you, so to your point, if you buy a property for say 600,000, just to use some round numbers here for easy math, but let’s say they’re going to get another interest of 250, 300,000. Now, they essentially sold that property for what 850 900,000 instead of really that 600,000? Then on top of it, of course, there’s the tax benefits, there’s the passive income, et cetera, but I think that interest piece is not talked about enough.

Ryan Corcoran (39:40):

I agree. I think it’s a super powerful strategy, but you really have to understand taxes and how it works to be able to educate a seller on this. If you just told a seller that, “Hey, you don’t have to pay any taxes on this.” They’re probably going to be like, “You’re full of crap.” You actually have to understand the rules, understand what’s going on in the background and the actual tax code on how this works,” because he was like, “Well, why don’t you give me 100,000 dollars down?” I was like, “Okay, well that’s reasonable.” But then when we started talking and I’m like, “You’re going to have to pay taxes on that $100,000 that I put down, because you’re accepting that and that’s going to get taxed as capital gain,” and he didn’t understand that. He thought, “Okay, well, if I’m holding the note on the whole thing and you give me a down payment, I don’t have to pay on the down payment,” but that’s actually not true. He does have to pay taxes on that initial down payment. So that’s how I was able to get into this deal for $0 down.

Robert Leonard (40:33):

Do you happen to have a CPA or a tax professional handy that would be willing to talk to these people? I’ve considered doing that is, when I talk to people about seller financing, I have a decent level of knowledge about the tax benefits of it, but I’m not a tax professional. So I’ve considered setting up something with my CPA or a tax professional to say, “Hey, I have a seller who has some questions about the tax implications of this seller financing deal, can I just send them to you to a answer some questions?” Have you done anything like that?

Ryan Corcoran (41:00):

I don’t want to drop his name on here so everyone starts bombing him. But no, I have not thought about doing that before, but I think that’s great. I think most CPAs should understand at a base level what the implications are of selling a property from a capital gains standpoint. They would certainly be able to advise on how to have that conversation with somebody, or at least what to tell somebody. So yeah, I think that’s a great idea, but I’m not going to drop mine’s name right now.

Robert Leonard (41:26):

For the private money that you’re doing interest-only with the balloon at the end, what is the period that you’re locking up that money for? Are you doing a year with the balloon at the end, two years, three years, five years? What does that look like?

Ryan Corcoran (41:37):

It’s going to depend on the actual property. So if it’s a flip, maybe it’s a six-month note, but if it’s a full-blown 25-unit, 30-unit rehab project, maybe it’s 24 months. So I’ve done everything from one month all the way to 36 months. It also depends on the lender. A lot of people that do this, they’re looking for a stable return and they’re investing in you as an operator, not necessarily the deal. So I don’t think I’ve had one private money investor who has said, “Okay, show me the numbers on the actual deal.” It’s more, “Hey, Ryan. I know you’re doing really well at this. You’re crushing it. I see you making other people money. You’re doing well,” and they’re investing in me, as me, Ryan Corcoran. They don’t care what happens to the deal. They just want to make sure that they’re going to get paid every month and they trust me to make them money.

Ryan Corcoran (42:27):

From that perspective, it really comes down to, “Well, how long do you want your money locked up for? You’re looking for a 10% return, do you want that over the course of three years or do you just want it for six months to get the lump sum back?” As you build this network of private money, which I think everybody should start today, it could be friends, family, every, everybody, where you should get to know people who have money because they’re going to be huge assets in the ability of you to grow in your business, but you really start to pick and play deals. What I mean by that is, if I have a flip and I know somebody who wants short-term interest-only payments and get their lump sum back within a year, I might try to pair those two together. But if I know somebody who’s got a couple 100,000 sitting around and they’re looking to just earn basically a work-free 10% on their money, then maybe a long-term hold is a good spot for them.

Robert Leonard (43:17):

Do you typically have a prepayment penalty with your private money or do you just eat that? If you agree with 12-month and you finish sooner, you just eat that cost for the remaining period that you finished?

Ryan Corcoran (43:31):

I’ve never had a pre-payment penalty with any private money lenders and that conversation actually has never come up. Actually, I always just say, “‘You’ll likely get this payment back before that balloon payment’s due.” None of the people who have lent me money from a private standpoint have ever said, “Well, is there going to be a 1% fee or something?” No, never ever, because almost everybody I know personally, I know these people personally. Again, if it comes down to just, I’ll just make a 10% return, and no points either. I hadn’t paid any points on private money either, and so that’s why I think private money is the cheapest way to buy real estate besides using your own capital. So if you don’t have it, private money, you can typically get into it with, again, no pre-payments, no points needed. You agree mutually with the other person on an interest rate, terms, it’s all flexible. There’s no real regulation on it, that’s why I really recommend that people start building out their private money pipelines.

Robert Leonard (44:28):

Who are you using for your lenders up here in the New England area? You mentioned that you work with some banks. I’m curious who those are.

Ryan Corcoran (44:35):

I’ve got a good relationship with a handful of banks. I’ve used quite a bit, actually I’ve used Franklin Savings Bank, and the reason I was using them for a while was because they were allowing me to do 80% loan-to-value at a 4% interest rate amortized over 25 years with all the rehab covered with an interest-only for the first year. That was super enticing for me because not only did I not really have to raise that much other money to get these deals done, like private money or hard money, because they were funding all the rehab for me, and then essentially what it is, is they have this as complete appraisal. So as long as you get the property up to where you said you were going to get it, they basically refi that property at that appraised price, which is super beneficial to know that before you start getting into the project, so they’re one. A good hard money lender out here is called Renovo. I don’t know how good they actually are as a company, I don’t really know, but the guy that I use, his name is Erik DeMiranda.

Ryan Corcoran (45:32):

If you guys are interested in chatting with him, I’m sure he’d love if I gave his information out. The guy’s closing 200 deals a month. He’s really awesome from a hard money standpoint. Other banks I’ve used, I’ve used Main Street Bank before, Bay State Bank. I’ve used Bay Coast Bank, so there’s three or four solid credit unions. Then if you’re looking for a broker, the absolute best loan broker, in my opinion, is the Brady Capital Advisors. His name’s Pat Brady. He is unbelievable. Now, you do pay brokers a fee, but they do all the work for you. They vet out the banks, they essentially find you the loan product and you don’t have to do any work anymore. Actually, what I should have started this conversation with is something you should do if you’re looking for funding is to really get and buddy up with a broker, because if you can get a really good broker on your team, you’ll be able to find these loans without actually putting in all the work to find the loans, if that makes sense, because they’re doing it all for you.

Robert Leonard (46:29):

Yeah. One of my lenders down in Texas where I buy a lot of my properties does the exact same type of as is, or after repair, or a refinance that you mentioned that Franklin Savings does. As we get towards the end of the show. I want to talk about the third factor that you mentioned that you say is crucial for success, which is the one that we haven’t talked about yet, and that is getting in the room with people doing big things. There’s a lot of different things we can talk about, or I want to ask about this, but let’s start off with, why? Why do you want to be in the room with people doing big things?

Ryan Corcoran (47:01):

This is probably the thing I am most passionate about, and this is not just a real estate industry specific thing. This is any business, it could be sports. It doesn’t matter what, literally anything. You want to be a good writer, get in the room with people who are really good writers. If you want to be a really good athlete, you need to get in the room with guys who are doing things way bigger than you. Look, we’re going to real estate, so I just want to tell a quick story. I moved down here to Rhode Island about a year-and-a-half ago. When I moved here, I didn’t know anybody. I had a business going, I had bought property in New Hampshire, Massachusetts so far, but I knew nobody down here. So what I did was I said, “Okay, who helped me buy the property? So I had an attorney. I had an agent. I went to both of those guys and I said, “Who are the biggest investors, agents, and attorneys in this area?” And they gave me some people.

Ryan Corcoran (47:48):

So I went to go talk to those people, and I said, “Okay, who are the best at multifamily property?” So I was compiling a list of individuals and they would give me their emails and their numbers, and I’d start reaching out to people. One guy sent me to this attorney who he closes 450 deals a month, something crazy when I saw the stats. So I went and talked to him and I said, “Mike, who is the best agent in the area?” He sent me to this guy named Kyle. Now, Kyle, his name’s Kyle Seabolt. He closed 530 deals last year. I think it was like 200 something million. He was the largest real estate agent in Massachusetts, and Rhode Island. I’m like, “There’s no way he’s going to answer my phone call.” So I’m like, “What can I do to get in the room with this guy?” I brought him deals immediately. I started shuffling him deals and we ended up doing a deal together. Then after we did that deal, he invited me to a mastermind.

Ryan Corcoran (48:37):

I sat down in this mastermind. I’m 27. All these guys are 30, 35. One of them’s 55. These guys are all worth 50 million bucks, and I’m not saying I’m not worth anything, but at the point in time, when I met them, I’m like, “Wow, these guys are way ahead of me.” So the first thing we did was we went around the room and we said, “What are your goals?” So I said, “I want to own 250 units by the end of the year.” Everyone was like, “Yeah, that’s a pretty good goal.” The guy next to me goes, “I want to make 10 million a month.” The guy after that goes, “All right. Well, I’ve made 1.2 so far, I need to make 2.5 this month to hit my goal.” I’m like, “What? Where am I?” I felt like an ant. Since then, though, all five of those guys, I’ve partnered with all five of those guys on different properties and different projects, and I’ve eight X-ed my income in seven months since January.

Ryan Corcoran (49:25):

Just by being in the room with those people, you automatically elevate up. You may not get to their level immediately, but you elevate up so much higher than you ever thought you could possibly imagine. All right, so it’s hard for me to really explain why it’s super important, but really giving that example, it’s mind blowing because then you turn around and you say, “Well, look how far I’ve come just by getting in a room of people who are doing things that I couldn’t even fathom.” I really can’t stress this enough. I don’t know if anyone knows what it is, but GoBundance. I just joined GoBundance, because it’s $10,000 a year, so I just paid 10 grand to literally be in a room with people doing things that are way bigger than me. Again, I can’t stress how important it is to do that. You learn things that you didn’t even know were possible. You start making money and you start living a life that you really didn’t even know was possible, essentially. Yeah, it’s crazy.

Robert Leonard (50:14):

There’s a reason why there’s a saying that you are the five people you spend the most time with. It’s getting in the room with those people, spending time with those people, it rubs off on you. Whether that’s good or bad, whether it could be doing things that you don’t want to be doing, if you spend time with those people, you’re going to end up like those people. If they’re doing things you want to do you’re eventually going to lift to that level as well. I think there’s a lot of truth that as well. Ryan, as we wrap up the show, I want to give you a chance to tell the audience, everybody listening where they can go to connect with you, and find you.

Ryan Corcoran (50:44):

Social media and I, we don’t get along that well. I haven’t really spent a lot of time building up a following, but over the last couple of months, I’ve started to ramp it up a little bit. That’s really my next goal is to try to really get going on social media, YouTube channel. So I’ve got an Instagram, it’s rjcorcoran08. TikTok, it’s at the same thing. Instagram, I’m sorry. YouTube is just Ryan Corcoran, so you can find me on all those. It’s all very educational, almost like vlog type stuff. So if I go see properties, I’m just taking pictures of what I’m doing, walking around with videos of what I’m actually doing. It’s really cool. I think a lot of people get a lot of educational value out of the channel. Give me a follow and connect.

Robert Leonard (51:26):

I’ll be sure to put a link to all your different resources in the show notes below for anybody that is interested in checking them out and connecting with you. Ryan, thanks so much for joining me. I really appreciate it.

Ryan Corcoran (51:36):

Yeah, man, this has been awesome. I hope everybody learned something out of it and continue to follow along in the show because it’s super awesome. You guys are putting out a bunch of good content, and you got a bunch of great guests on the podcast and you’re crushing it. Keep it up, man.

Robert Leonard (51:47):

I really appreciate it, thank you. All right, guys. That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (51:56):

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