We’ve heard about being a real estate wholesaler as a way to make a lot of money with little money in real estate. But what’s “Reverse Wholesaling?” And how is that working better during the current real estate conditions?
Our guest, Nathan Payne, reveals this new strategy that he’s using to grow his real estate business when others are running scared.
Tune in to learn how it works!
Watch the episode here
Listen to the podcast here
How To Reverse Wholesale Real Estate With Nathan Payne
I brought on a special guest that I didn’t even realize was in my backyard here in Utah. His name is Nathan Payne. He came highly recommended by other real estate investors. We found out we are in some of the same circles and mastermind groups. I’m so excited to be able to have Nathan here. To give you a little background on him, here near Salt Lake City, Utah, he does a lot of different active real estate investing, including wholesaling. Our topic, specifically, I want to ask him about his reverse wholesaling and how he’s able to use that to get out of debt. I’m super excited to have Nathan on. Welcome to our show.
I appreciate it. I love that intro. That was great. Thanks for having me.
Fill in the gaps a little bit more. Tell us more about you, who you are, and what even got you down this path.
We were talking a little earlier, but I served a two-year mission. After my mission for my church, I went to college at BYU Idaho. There at BYU Idaho, I discovered my interest in entrepreneurship and sales. I got into door-to-door sales. I did it for six years while I was at college in a little bit after. I would run teams and I would go sell dish network door-to-door. I was like, “I like sales. I like talking to people.”
After I got married, I moved to Utah after moving out of Rexburg. I met my wife. We got married. I was like, “I don’t want this transient lifestyle,” because door-to-door sales, you got to jump from area to area every summer. Go sell, bring your team, and get them out of their environment. If you keep them in their house or home where they live, they probably won’t want to go knock, so you take them out.Go sell, bring your team, get them out of their environment. Because if you keep them in their house or their home, you know where they live, they probably won't want to go knock. Click To Tweet
I was like, “I’m tired of that, but what can I do that will make me good money?” One of my roommates in college, his dad was wholesaling while we were in college. He was telling us about it. He was doing wholesaling lease options in college, but dabbling. He was always like, “Do this.” I was like, “Come sell with me.” We didn’t convince each other, but it was only after I graduated and got married. I hit him up. I said, “I want to get into real estate, let’s go for it.” He quit his job, I quit doing door-to-door, and we went all in on wholesaling. That’s how I got into it.
Tell me a little bit about that. I know some people on this show may not understand what wholesaling is. How did he explain it to you as a college kid? Wholesaling, even for adults is an interesting concept that people are like, “Is that legal? Can you do that?”
Essentially, you can wholesale anything. The way it works in real estate is you take a property that you are planning on purchasing. If someone has a house for $200,000 and I come to an agreement that I’m going to buy their house for cash and I sign a contract with them, and then I say, “I think maybe someone might be able to be willing to pay $220,000 for this.” Without me closing on the property, I can assign my rights to that property for a fee. I know my guy John would pay $220,000. I’m going to assign this to him for $20,000 without having to risk any capital or do anything other than the negotiation and getting the contract. That’s what wholesaling is.
That’s so foreign to people. They are like, “Wouldn’t you flip it?” No, you don’t have to.
What a lot of people don’t know and I didn’t know is in order to flip something, you buy it, so you got your closing costs. You have to either come up and get funded from traditional financing which takes time, or you get a hard money lender, which costs 2 points right now at 12%, but it might go up. Just to acquire an asset, it costs money, just to get in there.
If you want to sell it traditionally, you got to list it. If you want more eyes on it, the highest price, you got to pay the commission. Just to flip a house, you are looking at money costs and commissions of 8% to 10% of the purchase price. It’s not as easy to buy something and then sell it immediately because there are fees. Wholesaling is great because there are no fees because you never acquire the asset. You just assign it. It’s paperwork.
What is this reverse wholesaling?
When I first got into wholesaling, the traditional way to wholesale is to go out and market. Go spend money, go pay for mailers, go pay for texting, cold-calling, any way, bandit signs. When anyone that’s brand new gets into wholesale, they say, “Time for you to go market and find a deal.” They don’t tell you it’s expensive. It’s very expensive to market and find distressed properties. Why? It’s because a lot of people are doing it.
Over the last few years, if you found a discounted deal, you pretty much could go ahead and sell to a hedge fund, but at a slight discount. If you found a property, you could get rid of it. Right now, the market has shifted. Spending all that money, acquiring an asset or acquiring a property, and not knowing whom you are going to wholesale it to is a problem. I’d say 50% or 60% of investors are sitting on the sidelines, “We are buying just to see what’s going to happen in the market.” The traditional way of wholesaling of going out, “Let me go try and find something. Spend money, and then let me find a buyer later.” That’s how they teach you.
Market, then dispo your deal once you have the contract. I don’t think that’s a good idea. I think it’s a waste of money and time. Reverse wholesaling is me going to you and saying, “Are you interested in buying real estate right now?” You are like, “Yeah.” I will say, “What are you looking to buy?” Where are you at right now? Where do you live?
I live down in the south of Provo.
You tell me, “I want a 3-bedroom and 2-bath south of Provo. In this specific area under $500,000.” That’s your buy box. Instead of me as a new wholesaler or the traditional way of not talking to you and blasting everybody in Utah County, and then trying to find somebody I have specifically looked for you on the MLS. When every listening hits it, I say, “I know Chris wants this. Let me call and make an offer that he would accept because he’s told me what to do. Let me go and look on other wholesaler’s buyers list to see if there’s a deal that would meet his criteria.”
Instead of me going out randomly trying to find something, I am like a sniper and I find you exactly what you want. When I find it, we have already talked, you are ready to go, you want something. That’s reverse wholesaling. It’s reverse engineering the way of getting a deal by specifically targeting areas. It’s way faster, easier, less time-consuming, and it doesn’t cost you any money.
You are almost a buyer’s agent in that sense.
For off-market properties.
Are you dialing certain properties and saying, “These are in my buy box. Let’s see if they are willing to sell.” Is that what you are doing?
Yeah. I’m on pretty much every wholesaler’s list here in Utah. I will get your criteria from you or any investor, and then if I see an email that says, “Springville Fixer-Upper.” We are like, “Joseph loves buying Springville stuff. Let me call him. Did you see this deal that just came out? What would you pay for it? I will go beat up the wholesaler. I will try to get you a good deal.” I negotiate. He doesn’t have the time.
A lot of these investors, they don’t want to look at the MLS every day. They don’t want to look through deals. Let’s say I’m not doing it from wholesalers or MLS. I can specifically now mail a campaign or text market to the area that I know he will buy him because he’s ready to go. That’s what I do. I do it part-time right now. I run the coaching business that teaches this 90% of the time, and I do this part-time. I have four houses under contract right now. It’s just me and my VAs, so the overhead’s extremely low. Anybody could do this part-time. You are just keeping your eye on what people will buy and you connect them.
The typical profit, is it very similar to what you have done with wholesale? Does it come out about the same?
That’s the difference. Profit, I would say yes, because if you have a huge team that’s trying to filter all these people, you got to pay everybody. By the time it gets back to you, it’s low. The cool thing about this is, it’s like $5,000 to $10,000 a pop. The overhead, instead of a $30,000 marketing budget, paying acquisition reps disposition, your market, your business. It’s little to no marketing, no overhead. Other than my VAs, but I use them for my coaching business, too. It’s way better in my opinion.
How is it time-wise compared to doing it the other way?
It’s easy. I have done the other wholesaling. I had 3 acquisition reps, 2 leads managers, and dispositions. I had the whole thing built out. It’s a monster. It’s very labor intensive. You have to make sure your guys are motivated. Not saying that the business model doesn’t work. That’s cool if you want to do that. For the lifestyle I want is I want to look at deals because I enjoy looking at deals for myself. They don’t work for me. Pass them on to you or whoever else is looking and make a little fee. I’m not trying to get crazy rich. If you make me $3,000 to $5,000 a pop and do a couple of those a month, I’m good.
That’s one thing I have said on this show many times because sometimes you will have people out there that talk about flipping or wholesaling. They are like, “Make passive income.” That’s not passive at all. You are legitimately creating a business centered around real estate.
It’s not passive at all. It’s the least passive thing you could ever do in your entire life. It is the biggest grind. I’m not trying to deter any wholesalers, but I’m very truthful with the amount of work. You have to do daily training and you have to do weekly meetings if you want to run a successful business. It’s a business centered around basically lead gen, sales, and marketing.
I like what you are talking about the reverse wholesaling because I know especially in certain areas in Utah has a lot of these as well. There are a lot of wholesalers. They got massive budgets. They are going out there, they are dialing like crazy, they are doing mailers, and doing whatever they can to buy these houses. You might be this one person with a one-man or woman show trying to do it yourself with almost nobody to help you out. It’s hard. To be able to do this with less capital and less money out of pocket, that’s a better barrier of entry.
I think people should do this strategy as beginners. If you are brand new and you dropped $10,000, I know because I did this. I dropped $10,000 on mailers when I first started. I got twenty calls. I didn’t convert anything. That’s $10,000 when you are brand new, you are like, “I might be done.” If you do this strategy and you are like, “Now, I know how to communicate with agents. I have made great relationships with people. I can know what they want. It only cost me my time and maybe some software.”
That’s perfect because one thing we teach on this show a lot about creating more income is that you got to figure out how to create value and how to create that win-win. You are doing that. Wholesaling already does it, but you do it in a way that also creates a much easier win-win for someone who’s coming in entry-level. Even if you weren’t entry-level, you might say, “I might like this method better. I might like to keep a smaller team or less overhead and keep it simple.” As you said, you do 3 to 4 deals a month, you are making easily multiple 5 figures a month right there.
The thing that changed my mind was I had a flipper on my podcast named John Maxim, I don’t know if you have heard of him, but he flips a ton of properties here in Utah. Me and my business last year, we did 45 deals, which for me was a lot. He did 90, and he’s a one-man team with some VAs. He’s been in the industry for fifteen years. I’m like, “How did you do 90 and I have a giant team?” He’s like, “I reverse wholesale. I look at properties. If I want them, I buy them. If not, I have 5 to 10 solid buyers or buddies that I know. If it doesn’t work for me, I can send it to them and they will do it because they trust me because I’m a flipper. I’m not going to send them a deal that stinks.”
He had streamlined and made it super easy to be like, “This deal doesn’t work for me. Do you want it?” That’s what I’m doing right now. It’s like, “Let me find out what everybody wants and if these deals don’t work for me, let me send them to these people.” The VAs can do so much of the work. They can analyze the deals, they can send it to me, and be like, “We analyzed this one. I think this might be a good opportunity.” It’s very simple compared to the wholesaling business structure that exists and they teach a lot.
That whole networking. It’s interesting you mentioned that because I know I eventually internalized this after time. I remember I would tell myself early on, in addition to the dollars full of value created was, “If not me, then who?” Just like you, “It doesn’t fit my buy box.” Throw it away. It’s trash. You are like, “No, it could create value for somebody else. Who else could use this?” Having that network of people lined up, now you are creating a win for them as well. You are passing on and creating wealth in so many different ways that most people miss.
This is the real reason out of everything I have told you that it makes the most sense to do this right now. The traditional way of doing wholesaling is to find the deal, then blast it out your buyers list that has maybe 5,000 to 10,000 buyers, then negotiate with all those people. What’s happening is these wholesalers are sending out deals. Nobody’s looking at them because first of all, the wholesaler’s prices are way too high, so everyone’s like, “Forget that.” They are tired of looking at deals and some people might be sitting on the sidelines. With me, if I call ten guys and I say, “You need to take a look at this. I’m telling you. Maybe you pass if you didn’t want to take your time, but this is something that’s a good deal.” Me making 10 calls is going to be more effective than their 1-hour or 2-hour process of getting it sent out.
Go deeper on that. Tell us more about how you go about that process.
It’s pretty simple. For example, today, I have a deal that I’m working on with a seller, and one of the buyers that we had backed out. I’m going to call another guy that I have been chatting with, that I have been talking about. I will say, “I might have someone.” I’m going to call him and say, “Let’s structure this thing out, so you can take it down and we can make it work where I can make a little bit and the seller wins.”
It’s just a conversation to structure the deal sometimes. If they are absolutely like, “I need to be way lower than what you have it.” It makes it difficult. If we are close, then I almost go back to the seller 90% of the time and say, “This is a buyer that I’m working with, we are partnering, and this is what he is offering.” Even though I have it under contract, I still can go to them and be like, “The market’s shifting.” We will have that discussion, but it’s a text or a call to explain the situation and try to get them to commit.
What I love about this is this can be done in any market. This could be done all around the country. This is not just a Utah thing. This is something that people do nationwide all over the place.
I have outlined the step process for something I give away absolutely free because I want people to do this. For my network, a lot of people are asking tons of questions. I made an outline mind map. It’s cool on MindMeister. I don’t know if you have ever used that, but that thing’s awesome. I made an outline that outlines the whole thing. If you are a full-time job, but you want to make some part-time money on the side, just get tied with three flippers in your market and look on the MLS or get on a buyers list. Look, bring, and be like, “Do you want this?” Ask them if they would pay, and then you are the middleman.
I want to get to this as well. Where would people find this? How would people get ahold of you or your information?
It’s pretty simple. I’m on every platform. My company is called Investor Thrive, so InvestorThrive.com. If you go to YouTube, it’s Nathan Payne, if you want to add Investor Thrive, I have a YouTube Channel. Pretty much anything, anywhere you go on any platform, Instagram, Facebook, it’s going to have links to where you can access everything that’s free. I make all my stuff readily available because I know that information should be free, in my opinion. I just give it out, and then people come if they need clarification, mentorship, or help. That’s my mindset. I’m the go-giver. Tom Krol, he’s in the family. I work with him. He’s helping me out. He’s like, “Just give everything away.” If you hit me up, I’m going to give you everything, other than obviously all my time, but I can give you all the resources you need.
Nathan, this has been great stuff. I want to ask one final question because I’m curious. You mentioned before that you paid off your debt using wholesaling. Tell us more about that.
Wholesaling is good because if you do it the wrong way, it will get you in debt. That’s what got me into debt because I started doing a nationwide wholesaling model where I ran a pay-per-click campaign all over the United States. We started getting leads and these sellers were motivated. We are like, “Yes, we got 40 contracts.” What happened is it was extremely hard to sell these properties to other buyers. We had no idea about it. We might think it’s discounted in Peoria, Illinois because in Utah, if you can get something at 60% of the value, that’s a great deal. In Peoria right next to the railroad track in this specific area, people won’t even take the house. They will give it away.
We were running issues where it was hard to comp deals accurately to find buyers. That got us into debt because our pay-per-click budget was high, but then we took it a little bit more in-house. We took it into areas that we knew. We were able to get an assignment fee of $50,000, and another one for $25,000. I started doing what helped me out, which was JV-ing, which is called Joint Venturing.
If a wholesaler has a deal and they do not have a buyer or they can’t find someone, they can reach out to me and I will partner with them on that deal. They bring the deal, I bring the buyer, and we split it 50/50. That’s what was able to help me get out of debt. It was the fact of serving others, being available, helping others, and using wholesaling to pull myself out of $60,000 of debt. For me, I have never been in debt like that. Wholesaling helped me. It got me in it, but it got me out of it.
It goes to show. If you want to solve any financial problem in your life, create more value for people. Find ways to serve, add value, or solve a problem for somebody and that’s how you can get paid. I appreciate your time on the show today. It’s been great. Everybody, be sure to go check out his stuff. Nathan, again, thank you so much. Everybody else, you can be a reader of the word all day long, but until you become a doer, your life will stay the same. Go out and make it happen. Make it a wonderful and prosperous week. We will see you later.
- Nathan Payne
- YouTube Channel – Nathan Payne – Investor Thrive TV
- Instagram – @NathanPayneOfficial
- Facebook – Payneless Wholesaling Group
About Nathan Payne
Nathan grew up in the suburbs of Atlanta Georgia but currently lives in Salt Lake City Utah where he runs his business. After graduating from high school, Nathan went on a 2 year mission for his church. After his mission, he went to college at BYUI where he learned to love the arts of sales.
Nathan worked in door to door sales until he decided to get into real estate after graduating college. He had no prior experience in real estate but decided to learn by the trial of fire. 4 years now he has closed hundreds of transactions and is the co-owner of Offer On Homes, his real estate investing company, and Investor Thrive, a company dedicated to helping people close more deals with less leads!