Michael McDonald started wholesaling a few years ago in a small midwest market, but he's grown that into a team that does deals all across the country.
But it wasn't always that easy. For the first 5 months, Michael struggled and got ZERO deals. But he pushed through that, encouraged by the success of others around him and ended up closing 6 deals in the next 6 months.
Watch or listen to the episode below to learn how to push through the Beginner Wholesaler Blues.
George Uno (00:16):
Alright, so Michael, welcome to the show, man. It was great to meet you a couple weeks ago. How are you doing?
Michael McDonald (00:22):
What's up, George? Dude, I'm doing fantastic. Likewise. Anybody that I meet at the family's usually a pretty legitimate person and you fit the part, man. I'm glad to have met another legitimate family member.
George Uno (00:38):
Thanks, man. Yeah, it was good to grab lunch with you and kind of talk, and you got me really excited about what you're doing down there in Vegas, man, and all over the country really. Right. So why don't you tell us what that is? What are you up to?
Michael McDonald (00:50):
Yeah, yeah. So for people who don't know me, Michael McDonald. Four years ago I moved from Nebraska, which is where I grew up, and I'm from out to Las Vegas and it was actually a few months after I started my business. And so what it forced me to do is number one, figure out how to delegate because I could not be in that market where my business was located at before I moved, which I had just started anyway, so I know what I was doing anyway, I had no clue. So when I got out here, what I found is that I can do this business over the phone without being belly to belly with these sellers. And so that's what I do. I don't go on any appointments. My team doesn't go on any appointments, very few, every now and then it requires us to, but the bottom line is, man, I'm in this office and we're closing deals and that's it. I mean, I close deals in my main market in Nebraska and we close deals in Las Vegas, closed one in California, Florida, Kansas, South Dakota. I mean, dude, I've done deals in pretty much a lot of the parts of the country. So I think we're up to 15 states where we've closed real estate deals.
George Uno (02:07):
Crazy man. Do you find that it was hard to pivot? You started out wholesaling in Nebraska, correct?
Michael McDonald (02:15):
Yep. Started out wholesaling part-time, struggled a lot in the beginning, which we can talk about if you want to get into that, because I think it's good for people to know where people start in their journey. And so yeah, man, I was working and just trying to figure out how to make money in this business and that actually took place after I paid a guru 20 some thousand dollars. And it was not just, it was not an educator, like a smaller person. It was a huge company. Have you heard of the We buy houses or sorry, show up to this event and make money with little to no money down people. Have you heard of those events?
George Uno (03:05):
Yeah, of course. Of course.
Michael McDonald (03:07):
Yeah. So I didn't know what real estate was five years ago. I had no clue, but I heard on the radio, my buddy hit me up. He's like, Hey, there's a company coming through town, they're teaching us how to make money with little to no money. You seem entrepreneur reminded, let's go. I'm like, awesome. I'm there. It's free. What do we have to lose? So I showed up sitting at this event, man, and I hear these guys just super excited about real estate investing. And they're like, you can make 10, 20, $30,000 without any money spent in real estate. I'm like, this is too good to be true. What do you mean you can make 10 20? I didn't even really believe it, right? But something they said and something that evening at that event told me that, Hey, if this guy up here on the stage can do it, I can do it too. And at that event, I put $2,000 on credit cards and just as a reference for listeners, I had just bought a house. I had just graduated college, I had a bunch of debt and not a lot of money. The day that we closed on the house, I had 3 cents in my bank account.
That was my entrance to figuring out how to do real estate. But it didn't stop there. I went to the event, they sold me again on a $20,000 package, which by the way, I didn't have any money for. They said, Hey, apply for these credit cards right here, sign here. Right. I applied, I got the credit, put the money in the credit cards. So $22,000 deep and I was off to the races, man, six months of failing my way forward, didn't get a deal until finally I called up a for sale by owner off Zillow and they said, yes, I would sell to you the property, my wife and I. Well, I went there and I got the deal. And that was after a couple of failed deals. Is that after many, many offers rejected? I mean, yeah, that first deal was the belief that I needed to realize that this business was for me and that I could do this very successfully and consistently because I made $20,000 on the first deal.
George Uno (05:36):
Dang. Yeah, that's a really good assignment fee on your first one. How long did that take? So you go to the seminar, you buy the package, you said six months of just grinding it out, but how long did this deal take from first contact to close?
Michael McDonald (05:51):
A little bit longer than usual. I think we were pushing probably 50 days, at least a month and a half, which I mean, come on, 20 grand in 45 days. That's ridiculous. Especially when at the time I was making 35,000 a year at the job that I was working. And so that was a lot of money for me, man. And that was all I needed to see to basically give my wife actually the belief that, okay, this is going to work. It was like a relief. And for me, obviously I had credit cards to pay off, so I had to pay off the credit cards and then get back to work from July, the first deal that happened from basically February to July, it was painful. Failing, failing, failing. July got the first deal. From July to the rest of the year, I closed five more deals and my wife came to me and she said, Hey, I think you're onto something here.
I'm like, alright, what do you mean? She's like, well, I think we should sell our house and you should quit your job. And I am like, alright, that's not what I was expecting, but why do you say that? And she was like, well, because you made more money doing a couple of these deals than you made your whole job. And clearly you're burning candles at both ends of the stick here. You're burnt out. I had a new baby, my daughter was born that same year, and I was just tired, man. I was tired working, running a business, working a job, being a dad, trying to balance all that. It was a lot of work and a lot of pain. My wife just recognized that. And man, thank God she did, because quitting the job was the best decision that I ever made that beginning of the next year.
George Uno (07:57):
So wait, you're closing multiple wholesale deals and it hadn't even crossed your mind to quit your job yet you're just like, yeah, I'll just do this as a side gig.
Michael McDonald (08:06):
Yeah, because I still had that debt. So what I didn't finish off was that 20,000 was only one of the programs that I invested in. I invested into another program that was another 25 K, so I had $45,000 of credit. And I was scared because I was splitting some of the deals with a mentor, and all I could think about was this $45,000 credit card bill that was going to become 16 to 20% interest in a very short amount of time if I didn't get this paid off. And so my number one priority was to get out of debt, to give me some breathing room to be able to make that transition. And dude, I talk to people every single who want to do what we do. That leap of faith is scary. Looking back, it's like, yeah, why wouldn't you if you made 20,000 here and probably 10 over here and all this? And it's like, well, because that comfortability is it's, it's a killer man. It's so comfortable having that paycheck, even if it's not that big of a paycheck, that it makes that leap of faith really hard. And thank goodness I wasn't making that much money. I've talked to people who are making multiple six figures a year at their W twos. That would be a hard job to leave.
George Uno (09:33):
Yeah, no kidding man. That stability, the golden handcuffs. But luckily for you, I mean, like you said, you're in your first job out of college and you figured it out pretty quickly, which is awesome. So did you take your wife's advice? How'd that go? What'd you do next?
Michael McDonald (09:50):
Yeah, yeah, of course. I took my wife's advice. She's the only reason I continued to stick with it when I felt like giving up, honestly. So the funny thing is it wasn't just quitting a job and then going all in my local market. I quit a job first off, I sold my house. So I told you that. I'm like, okay, well we could probably get $20,000 of cash out of this. I appreciate it a little bit. I'm like, that's some more cushion. So once you brought up that idea, it took me a while, but then I'm like, okay, I can see this. I can see this being just enough time to get me to be able to figure this out consistently. But dude, you got to keep in mind, George, even though 20,000 when that first deal was everything, the next five or six deals weren't that big. I mean, I think I snuck out with a couple thousand on a couple wholesale fees. They were just squeaking by just to be a deal basically, just to keep the concept going. But anyway, fast forward to when we did sell the day that money hit the bank. I quit in my two week notice and quit, and then we found a short-term place to live until we moved across the country to Las Vegas. And obviously the rest is history. We live here and things are a lot different.
George Uno (11:34):
So when you sold the house and quit your job, were you planning to move to Vegas already? You'd been wholesaling locally, but did you think, oh, I can just do this from across the country. It's not a big deal.
George Uno (11:46):
Hey, this is George. If you're enjoying the show, please leave us a comment or drop us a, it really help us out in getting the show out to more people to learn more about real estate. And I can do that without running a bunch of really annoying ads, which nobody wants to hear. Just me. You just want to hear my beautiful voice. So please drop us a comment, leave us a really appreciate it. Thanks so much.
Michael McDonald (12:07):
Yeah, so I had a business, I have a business partner, and by the time that I quit my job, my business partner didn't come into the picture until the beginning of the year that I quit my job. And not only did I have him to get that blessing from as well, we just started business together. I also had to kind of get a pipeline going. I had to get deals in the works before I felt confident enough to leave. And so we were grinding the first year. So I had pipeline, we had flips in the works, we had wholesales in the works. We had done our first deal before I quit my job as a business partnership. And so we knew that the worst case scenario, even if Michael doesn't contribute and do what he says he's going to do out in Las Vegas, that we're still going to make some money and we're still going to be okay. And me just being me, I have a family to provide for, I wasn't going to not figure it out. Even if I had to go knock doors in Las Vegas, I was going to do whatever it took to make sure that we were successful. And I mean, that was when we were a one man show. It was me and my business partner and that was it. Since then, obviously we've added team, we've added people, and it forced me to delegate.
George Uno (13:42):
So that first business partnership, that's always a tough one for any entrepreneur I talked to. They're like usually the first one. I mean, it's probably like a marriage. It's probably a coin flip about 50 50, succeed and fail. What do you think contributed, because he's still your business partner now, and what do you think going into that, what do you think was set you guys up for success?
Michael McDonald (14:03):
It's a great question, man. I think a big part of why we are still partners in doing so aligned together in the vision of what we're trying to accomplish. A big part of it was number one, we didn't just jump into the business partnership. We had done several deals together. He was actually my cash buyer. Funny story. I actually cold called his for rent sign to see if he wanted to sell me his house. And that led to us having lunch, right? So how funny is that?
So that happened and then after we had done business together, it's like, okay, I kind of know how this guy rolls. I kind of know how we act in these types of situations if things maybe don't go the best in the deal or go good. And so we had a conversation at lunch, talked about each other's goals and aspirations, so on and so forth. And he invited me over for dinner and he made the proposal. He got down on his knee, no, I'm just kidding. He got down, him and his wife had my wife and I out, and he brought up the concept and he was like, Hey, I want to quit my job. You told me at lunch you wanted to quit your job and you seem very ambitious, and what do you think about going into business together? I'm like, I definitely didn't see that coming.
I didn't necessarily plan on, I'm a new wholesaler, I'm cool, I got deals going, I'm feeling good. I didn't necessarily think I needed a business partner. And then I started to really think about where my skillset was and then where his skillset was. And what really made sense, George, is that my skillset was marketing and sales. I had figured out how to find deals. I was pretty good at talking to sellers and closing these deals. And his skillset was, he's a flipper. He was flipping these houses. And so collectively, aside from obviously beliefs, core values, a lot of other factors that anyone who's listening to this should consider before they go into business or any relationship with anyone is that we just had two different skill sets. He was at a different phase in his life. I was at a different phase in my life, but all of it made sense and it continues to make sense because of the dynamics of who we are and what we bring to the table.
George Uno (16:39):
Yeah, very long
Michael McDonald (16:40):
Answer to your question.
George Uno (16:41):
No, that's a good one though, man. I love that you guys just kind of met in such a weird way. You can never ever script these things, but it's so funny, like, oh, I just called his for rent sign to see if he'd sold me his house. And he's like, I like this guy. You got some guts calling me. Let's have lunch. Those are the best stories and the best things that we can take from this is like you never know where your next partnership or your next really good friend is going to come from. You just got to get out there and hit the phones and man, good things happen when you do. So Michael, he's still in Nebraska and you're, you're on the acquisition side remotely?
Michael McDonald (17:21):
Yeah, I do manage a acquisitions team, and from time to time I'll jump in and make calls. I got two contracts on Monday, but it's really just the team now. So one of my biggest, I guess next steps in business is to become the best leader for my people that I can. And that's going to allow me the freedom that the whole reason why anybody starts a business. I mean, I didn't start business to work 80 hours a week, but that's what happens. If I wanted to, I could probably go make a bunch of calls and continue to do a lot of business every single day, but that doesn't give me the freedom that I started the whole business for in the first place. So my job is to manage our sales team at this point, and I want to replace myself with that. I want to find a rockstar sales manager who can manage my sales team. And so that's where we're at at this point. And yeah, we have a few acquisition managers and they're in the system making calls, and typically those leads come to them.
George Uno (18:39):
Interesting. That's really insightful that you're already looking to replace yourself and move up and scale and stuff. You are pretty ambitious after all. When we were in Tampa though, we were talking about the challenges of managing a sales team and what is something you find that you didn't expect? That's the main challenge you see over and over in managing your acquisitions team.
Michael McDonald (19:06):
So yeah, this is good, man. So everyone watching this has seen the energizer bunny, the bunny that just keeps going. When you own a business, you must be that bunny. You must be that excited about your business to be able to communicate that message to your people. Otherwise, why would they even work for you? Why would they keep showing up? So you've got to have a vision, and one of the hardest things about running a virtual team is we can't come into the office and give each other a high five. We're all working remotely. And so I would say the hardest part has been just the overall excitement to continue to make the calls even when things might not be going the best. And even when things are to show up day in and day out, talk on the phone for three hours a day and be excited as much as you were yesterday, the next day.
And so we've had to make a couple of tough decisions lately. It's part of business, but we have expectations. And so I've had to fire some people. I've fired a lead management, I've fired an acquisition agent who weren't cutting it. And so that's been the hardest part for me, is it hurts me to let these people go, but it also hurts me to see bad performance. And so I guess to answer your question is really just been finding and keeping a players operating at that a player level, because people can get complacent pretty quickly. And when you're a driver, when you're a business owner, that doesn't fly. That's not cool for me. So it doesn't, yeah, that's the hardest part though.
George Uno (21:01):
Yeah, I can tell that from our conversations in Tampa that you were not one of those people who's like, yeah, I'll just fire people. It's fun, whatever. No, you still feel it in your heart, which it's good to see, but I'm sure it's hard for you. So on that topic of letting those people go, did they come in as A players and then just lose their steam or what happened there? Just give us the big picture.
Michael McDonald (21:30):
So the best part is I suck at hiring, so I didn't hire 'em, but the reason this is important is because they were, in my eyes, A players at the time that we brought them in. And so I have a recruiter, she interviewed 'em three interviews. We're very slow to hire. That's why this hurts a lot more because not every home buying company in the industry or even in sales in general, takes a lot of time. And that's what a lot of people who we interview say is like, man, I really appreciate the fact that you actually cared to get to know me and ask me these deep questions because sometimes people will hire anybody with a pulse, and we didn't. And so that's why it sucked to fire them is because they were seeming they were going to be A players. And then after some months of maybe just, and a little bit could be on us as a new business owner, maybe we didn't have the most clear expectations, and that led to them being complacent. So it was actually when we started implementing things about expectations, scorecards a little bit more tighter ship is when these people got, I think just couldn't live up to it. And that's what led to those decisions.
George Uno (23:10):
Yeah. So you mentioned expectations, and earlier you mentioned three hours on the phone. Are those the KPIs you use now with your team?
Michael McDonald (23:19):
So that's where I want it to be on the talk time.
I haven't pushed the talk time as much as I should be on that front. So that wasn't as important of a metric as it is to me right now because it's kind of changed. Talk time was never a big priority. It was more of like, Hey, quality conversations obviously leads to talk time, but it was okay, how many processes did we have? How many offers did we make? And that's going to result in the deals for your goal or your commitment. But what I found is with the way that we run our business, we're not necessarily cold calling. We're not giving our team a bunch of cold, cold leads. That stuff works. We've basically given them a silver platter with people. And dude, I'm just being honest. Here is somebody who called us off of a Google ad industry standard tells me that we should be able to close one in 12 of these leads. There are thousands in the system that we've spent hundreds of thousands of dollars to acquire, and that should be the easiest close for any salesperson here because these people are calling us. They are very motivated to sell their house. It's not, Hey, you called me. It's like, no, you actually called me and I'm actually on offense because, or whatever you want to call it, right? I don't need to buy your house. So it puts you in a position of power really, in a negotiation.
George Uno (25:13):
Yeah, that's interesting. A lot of people that are running teams are doing straight cold calling. And the challenge, I think they see, I mean with motivation with all that stuff is that man, when you're cold calling, it's like ice cold leads. That is brutal. It is. I don't know if anybody listening has done that, but man, it's emotionally exhausting for a lot of people. I mean, there might be some special personalities out there that enjoy that, but man, getting told no, and hearing all the swear words in the book as it gets old, but I mean, you're serving up warm leads, you're doing a ton of marketing. I heard you say PPC. Did you land on PPC as a result of trying other marketing methods? Did you find that? Did you try and scale cold calling first and then kind of figured out that wasn't working?
Michael McDonald (26:04):
Yeah, it's a fantastic question. How do people typically learn, right? Is they fail, they try something that just didn't work for them. So yeah, I mean, I've done everything. I've done bandit signs. Guess what? Here's the best part. Bandit signs work. I've done billboards. Billboards work. I've knocked on doors, it works. I've cold called, I've texted, I've ran all sorts of digital advertising. I've done tv. The best part, guys, is everything that I just said works. But what you find is you kind of pick your battles. How many sellers do I want to talk to before I buy a house? Well, there are industry standards and with cold calling, maybe it was because we didn't have the best follow-up system, but my team just got burnt out and they weren't closing enough deals. And it may have been because I didn't give enough time, but we went pretty hard on cold calling for a while, man, I'm talking five full-time callers and all on the table, let's go.
And I know it works. We closed deals. But what it became is just a return on time and a return on investment for that marketing channel. And if we continue to do cold calling, it would pay for itself. And then some just for us though, and our approach is, I don't know, it's so much better for me to just have, I'm willing to spend the money as an owner to have these hot leads coming into the system to be able to do a high volume of business that way. Really just, it's a game. I mean, really, if you think about it, how much money do you spend to get a deal? Well, if it costs me 5,000 to get a deal, if I spend a hundred thousand, well, I can get 10 deals or whatever the math says. And so that's what it really just became for me. It was kind of like a game. How much can I put in this machine and how much can it spit back? And that's kind of the way I look at this business.
George Uno (28:35):
That's interesting. I mean, you said you had that, you guys went all in on cold calling, I believe that because that's how you got your start. But then as you tried to scale it, you ran into like, wow, my team is just getting beaten up out there. And I'm sure you realize like, Hey, instead, it's a cheaper lead to call, but it's also a cheaper lead, so it's going to take more time, more stress, more just getting beaten up on the phones for your team. So then you made that switch to paying for better leads to come in. So you worked with less leads, but you saw a better conversion rate, and as a result, your team was happier, you were probably happier, and now you're just optimizing things, playing that game. Is that right?
Michael McDonald (29:20):
Nailed it, man. And guess who the team was? At first it was me. So who was burnt out? I was tired of cold calling people who didn't really want to sell. It was like, oh, my cold calling team pushed three leads in today, one per person. Alright, so I got to call all 60 of these people to maybe find one person that I have to work a deal with. Man, that was brutal, but it's part of this business. So if you're doing that right now, if you're listening to this, stick with it. It's worth it. Trust me, you're going to make a lot of phone calls and you're going to hear a lot of people tell you to F off, and that is just part of the business.
George Uno (30:05):
You got to push through that, build up your capital, and then you can start marketing and bring in better leads, getting some inbound stuff instead of just purely going out to the people. Michael, that's super insightful on how you've grown your business and some of the challenges that we can expect to face and how you've overcome some of those. So I want to ask you this one last question. What's next and what are you excited about doing next?
Michael McDonald (30:33):
Alright, so what's next? Well, as far as business, as far as real estate, home buying, investing goes, I'm actually looking to narrow my focus and go laser focus and actually go deeper into a market. One of my probably biggest lessons is that bigger and wider and whatever, it's not always better. We went into a market and failed. We had spent $35,000 in marketing. We got a deal. It paid for itself, but it was just three months of basically a lot of moving parts and a lot of pain to realize that sometimes we can't spread ourselves. Two things for me, what's next is simplification, helping other people. One of my favorite things to do these days, man, which is why we're in the family together, is to help people and to save them the pain that maybe some of us went through. And so that's where I'm most passionate about is getting on the phone with people, helping them work through a deal or a situation or showing them, Hey, this is what works, or don't do that and then continue to buy my time back. I want the freedom that business should provide people.
George Uno (32:07):
Well, you got in forever, the freedom, and five years later, I'm sure you're still working your butt off looking for that freedom, but you've grown and scaled a company along the way. It sounds like you've learned a ton and really developed as a leader, not just for yourself, but for other people. That's pretty huge, man. It's really cool to see.
Michael McDonald (32:28):
Yeah, yeah, for sure, man. And it certainly hasn't been easy, but I tell you what, it's fun. It's worth it. And yeah,
George Uno (32:37):
Wouldn't trade it for the world, would you?
Michael McDonald (32:40):
Well, it depends on the day, but no, I wouldn't. This is the best business. I might be biased, but this is one of the best businesses in the world, and I think people, everyone should invest in real estate. I mean, come on now. There's so many benefits to real estate investing. If you're not just flipping property, flipping property becomes a very high paying job. And so anybody can make a lot of money, but it's the wealth building that you can really get from this business.
George Uno (33:15):
Yeah, that's all about wealth and freedom for us, I think. Well, Michael, if anybody wants to get in touch with you, how can they do that? What's the best way to reach out?
Michael McDonald (33:25):
So you can check me out on Instagram. It's Michael McDonald REI. You can also check out my website. I have some free education on there. Scripts, the virtual millionaires.com and yeah,
George Uno (33:44):
Sounds great, man. Well, guys, head over there if you want to learn from Michael, grab those free resources, those scripts and stuff that he's put a lot of time and effort into, they can really help you out. If you are on the phones a lot, you are struggling with talking to sellers, man, check those out. I've downloaded. I love 'em. I've put a few of those little tweaks that you've come up with into my stuff and I like it. I just like the way it feels when I'm using your stuff, man. So thanks for all that. Thanks for giving that to my audience and Michael McDonald. Thank you guys for tuning in. This has been a great episode of First and Worst on the REIClub podcast. Thanks guys.
George Uno (34:20):
Hey, I hope you enjoyed hearing that story. If you want to have your own nightmare deal, go out on the internet and download a free proof of funds letter the next time you're making an offer. Then when the seller or their agent calls that number, no one picks up the phone and you lose that deal. Or if you'd actually like to get the deal on a contract and be taken seriously, go to REIClub.com/proof and download a proof of funds letter today from one of America's best private money lenders in the space. So that's REIClub.com/proof. Go get your proof of funds letter today.