Cracking the Investor Code - Finding Direct-to-Seller Deals with Greg Helbeck

Christian: [0:00] Hello, hello, and welcome to another episode of the Awesome in Seattle podcast. This is your host, Christian Nossum of the Awesome Nossum Group at Wilson Realty Exchange, Inc. And today I got my awesome, beautiful, lovely wife and cohost-

Shannon: [0:11] Hello … Speaker: Ms.- Ms. Shannon Nossum. Thanks for joining me, babe. Of course.

Christian: [0:15] We have a very special guest, Greg Hellebeck. He is a full-time investor. Has been kind of all over, so New York, San Diego-ish area, and now, about a year ago, moved up to the Seattle area. Thank you so much for joining us.

Greg: [0:30] Thank you for having me on. I mean, I was looking forward to this. I like being the guest more than the host 'cause I don't- Yeah … get nervous being a guest.

Christian: [0:37] Yes. Well, we were just on your podcast about five minutes ago.

Greg: [0:40] That's true.

Shannon: [0:42] We're all having our turn.

Greg: [0:43] Yeah.

Shannon: [0:43] Well, I'm excited to talk to you because you do a lot of direct seller marketing, and also the fact that you've just been in different markets, so I think it's gonna be a really interesting conversation to see… I don't know. I wanna know how Seattle's kinda different from other places. Mm-hmm. And so that's gonna be- Yeah … interesting to hear your take on that.

Greg: [1:00] Yeah. I thought it was gonna be h- just as difficult as San Diego. I lived there for a while. I've found Seattle to be slightly easier, and we can get into that, uh, you know- Mm on the call, but i- it's interesting up here. I'll say it's an interesting market where it's definitely hard, but it's not as bad as people think, and there's a lot of opportunity here, which we spoke about a lot on my show.

Christian: [1:23] Yeah.

Shannon: [1:23] Yeah. Before we get into what you're doing now, how did you get into investing?

Greg: [1:27] So I was 20… So it was 10 years ago now. I was 20 years old. I was in college, was playing hockey at a pretty high level. Couldn't get to the National League unfortunately, so I had to just eventually call it quits, move back with my parents, and I got a, one of those, like, seminars in town kind of things. Um- Oh, yeah a postcard, direct mail ironically. Went to the seminar. They talked about, you know, no money down real estate basically. And, you know, I was like, "This is what I wanna do." Like, I… It was like a light bulb kinda went off in my head when this was occurred. So me and my buddy looked at each other. We were like, "Hey, let's go to the next seminar." It was, like, an upsell. We ended up spending 2,000 bucks, which was half of the money I had in my bank account. They taught us everything about, like, wholesaling, flipping rentals, and, like, I was 20 years old. I had no business experience. I was in college. And I was fired up, and I knew what, this was what I wanted to do, and I knew there was a, obviously a huge opportunity in real estate. There's no limit on your income.

Christian: [2:18] Mm-hmm. Yeah.

Greg: [2:19] So yeah, I basically went out there, started marketing as a wholesaler, you know, how I started, and it was a lot different back then. The business has changed a ton. I mean, we could get into that 'cause, I mean, wholesaling is so much different than it was. Flipping it, marketing. It's like I say real estate's basically dog years. So back in 2015, I went out, put out bandit signs, got my first deal. Wholesaled it with a mentor who we went 50/50 with, and then started inconsistently doing deals every couple months.

Christian: [2:48] Yep.

Greg: [2:49] And then eventually got it to where I had some money saved up and started doing more targeted marketing, and I had more of a budget. And then I started flipping, and then I started buying rentals, and it just kind of evolved over the last 10 years. So that's how I got started. Broke in my parents' basement.

Shannon: [3:02] Well, that's awesome. I mean, I feel like similar to us, started around the same age.

Greg: [3:06] Mm-hmm.

Shannon: [3:06] Pretty cool. Okay, so you just moved to Seattle. Why did you pick Seattle? What was the draw?

Greg: [3:10] Yeah. So I was living in Taxifornia for a while. Did pretty well there with flips and stuff, but I knew that I didn't have any family there. You know, I was there for six plus years. I kinda did my thing out there. I've seen everything you could see, and I wanted to eventually get out of there. I just didn't know how. And I was gonna move back to e- the East Coast, and then that's where the business is basically headquartered. Ended up meeting a girl, actually, in Nevada- Mm … of all places. She's actually in my kitchen. This is my girlfriend. She lives with me now. We moved up to Nevada for a little bit, and then we were living there, and, and that's where she's from. And then she was like, "Hey, like, would you ever wanna move out of here?" And I was like, "Absolutely." And then we actually checked out Seattle on, like, a little weekend, like, getaway, and we walked the house that we're in right now, and it was for rent. And we were like, "Hey, let's go for it," and we ended up getting the, you know, accepted offer on the lease and moved up here a month later. That was it. And there's no income tax in Washington, which helps.

Shannon: [4:05] So you moved to Seattle recently in the, about a year ago, and you got some deals pretty quickly. How did you break into the market?

Greg: [4:12] Yeah, so before I moved here, I started marketing here. So I knew we were gonna move- Oh … in about a one-month kind of runway, so I immediately started sending direct mail to the same list that I was mailing in New York and California. Mm-hmm. So, like, tax delinquent leads, absentee owners, I call them the unknown equity prospects, which are people who've owned their house for so long the county doesn't even have any recording of, like, a mortgage. So I was mailing, like, the same types of lists that I was mailing in the other areas, and just started kind of going out with direct mail. And I spent… I mean, I was spending a good amount. I was probably spending, you know, seven, eight grand a month initially in mailers, and it eventually landed me my first property. So I moved here in May. In July, I got my first deal. Nice. So it took about three months, 'cause I started marketing in April. So it took me about three months to get my first actual deal done in the area.

Christian: [4:59] Yeah.

Shannon: [5:00] Nice.

Christian: [5:00] What other steps did you take kind of after just mailing? Like, were you going to meetups? Like, how are you gonna dispo this thing? You just- Yeah … found this deal. How'd you know, like, it was- Yeah … a deal and-

Greg: [5:10] Yeah.

Christian: [5:11] Yeah, that's- How'd you get rid of it when you've got a brand new market?

Greg: [5:13] So the funny thing is the first deal was actually in my neighborhood about five minutes down the road on Holly Street in West Seattle.

Christian: [5:20] Yeah.

Greg: [5:20] And I knew that the property could go to a builder. Like, I knew that it was gonna be one of those, like, knock-down, you know, builder's- Yeah … gonna buy it. So what I did was to build my network up, I went to some meetups. That was how I… I think I first met you guys there. Yep. And then I also found this Facebook group where, you know, it's called Washington Real Estate Investing. There's like 20,000 people on there. I'm sure people- Yeah … are familiar with that. And I was able to just, you know, network with people virtually on there and, you know, see a lot of people's, like, buyers they would put on there, and I would type in keywords like, you know, looking for buyers for a s- house in whatever area, and I would see all the emails, and I'd copy those email. You know, kind of just built some momentum up there. And then when I actually got the property, I put it out to the email list that I built through the Facebook group. A neighbor was in there, and she ended up seeing it, and she actually bought it, 'cause she's a builder. Oh. So… And then she still has it. She doesn't know what she's gonna do with it yet. She might knock it down. She might sell it as is. But that's how I got my first property on, like, an assignment deal out here. It was just from straight up Facebook group. I met you guys at that local real estate event, and then just doing direct mail to the list that I know work across the country.

Christian: [6:23] Mm-hmm.

Greg: [6:23] And I, like I said, that was a property where I wasn't gonna do, like, a new construction or anything. I didn't know the market that well. I probably still wouldn't do that to this day, 'cause I'm not terribly familiar with that, and that's not really my model. Yeah. My model's mostly doing, like, cosmetic renovations, and this i- this house needed to just get basically torn down.

Christian: [6:42] Yeah.

Greg: [6:42] So I knew that was gonna be more of an assignment deal, and I actually told the owner I was assigning it. There's a lot of people that want to wholesale, and there's a lot of shady people and they don't tell the owners what they're doing. And I told the owner upfront, "I'm gonna probably assign this. Are you okay with that? I'm gonna find a buyer, and I'm gonna- Mm-hmm … assign the contract. And if you're okay with that, I can proceed with it. But if you're not, I totally get it. You can go sell to someone directly." And he appreciated that and, you know, he allowed me the opportunity to do the deal, and it worked out for everyone. So I would tell you- If you're new and you want to wholesale, the more honest you can be with people, the more they're gonna really, you know, let you have the opportunity to help them. But when you hide- Yeah … stuff from people, that's when I see people get into trouble out here in the Pacific Northwest.

Shannon: [7:22] Yeah.

Christian: [7:22] That's just what I was gonna say. I was gonna ask- Yeah … Patty Ann-

Greg: [7:25] There's a lot of bad actors out there … Speaker: for, for new people, what is your kind of advice? And you just kind of shared it, like, just be honest. I mean, that's just in general in life. Yeah.

Christian: [7:33] Always be honest. Like, just-

Greg: [7:34] Tell them what's going on. They can't get mad- Yeah … if you're, if you're honest with them. Like, I-

Christian: [7:38] Yeah … Greg: I see wholesalers, and, and this is crazy, like they'll- Tell the seller they're buying, and this could be anywhere, this doesn't have to be Seattle. They'll tell the seller they're buying their house, seller thinks they're selling. They write a contract up that's not even valid. They don't put earnest money down. Mm-hmm. They try to find a buyer. They string the seller along. They make them sign an extension. Can't find a buyer, they cancel the contract. The seller already has the U-Haul in their house, and next thing you know, they gotta go sell to someone else. Doing stuff like that is so just unnecessary. We've built our business, 'cause we do some assignment deals still, from being transparent. Yeah. And that's worked for us for 10 years. Yep. It's so much easier.

Shannon: [8:12] So you found that deal, and you did a bunch of direct-to-seller marketing.

Greg: [8:16] Yeah.

Shannon: [8:16] Seattle's kind of known for not being one of the easiest places to market, and especially because a lot of the tech methods that are used in other parts of the country don't work here because people- They do. So yeah, what are the unique challenges with our market as far as marketing?

Greg: [8:29] Yeah, so the first thing I'll say about Seattle is that if you're gonna do direct-to-seller marketing, you need to be willing to spend much more than the average person across the country per channel to get an acquisition. So, like, for example, Seattle, around here it's 10 to $12,000 of ad spend to get an acquisition to hopefully make 30, 40, 50, 100 grand. So it's just gonna be more expensive because your response rates are gonna be lower with mailers. Mm-hmm. The digital, like PPC ads that I run- Mm-hmm … the cost per click is higher because there's more people bidding for those keywords because, you know, there's more search demand here. So you're gonna be willing to spend more on Google. And then also another channel we could talk about is I've bought some good deals from wholesalers out here. But I've found a strategy where you can get wholesalers to bring you deals without having every investor in town see the deal, right? So- Yeah.

Christian: [9:15] Mm-hmm. Let's go into that. Yeah. Yeah. Tell us about that.

Greg: [9:17] I'll tell you about a deal that went down, and then it'll kind of all make sense. My friend, who does Google AdWords all over the country, had a student who was running PPC here. Hmm. And he got this lead and ultimately a contract over in Gig Harbor, which is, like, probably the best area in Pierce County. Like, Gig Harbor's probably, like… It's the- Gorgeous … yeah.

Christian: [9:35] Yeah, yeah.

Greg: [9:36] Good location, right near Tacoma, and he hit me up and he said, "Greg, I, I, we got this wholesale deal I'm partnering with this guy on. Do you wanna buy it? It's in Gig Harbor." And I'm like, "Well, if the numbers make sense, of course." So instead of having him go put it on InvestorLift and hit all his… Because he didn't even have buyers. So they sent it to me first. I sent someone out there to walk it the next day. The guy said, "Go for it." I signed it up. The wholesaler made $116,000 assigning the contract to me. Wow.

Christian: [10:03] Whoa.

Greg: [10:04] I bought it from them, closed right away, and they didn't even know what they were doing with septics. I paid for all the septic stuff. It was, like, very easy to work with 'cause I knew that they were new and- Yep … whatever, and they had a lot of margin.

Christian: [10:14] Yep.

Greg: [10:14] Wanna make sure they got paid. And I literally just bought that house, junked it out, and threw it on the MLS, and sold it as is and did extremely well on it because this guy got the house for 180 grand from the seller.

Christian: [10:27] Wow.

Greg: [10:27] Gig Harbor. So three, two ranch, hoarded. Wow. It was hoarded floor to ceiling, but-

Christian: [10:32] Yeah … Greg: I knew, like, number one- I could just wholetail this thing without even having to rehab it, 'cause that- Yeah … you know, saved me a bunch of time. So anyway- Yeah … the, the lesson here is if you're working with wholesalers, you wanna build relationships with people so they just hit you up first before the masses see these deals. 'Cause I go, I see deals on Whari, I see deals on InvestorLift. Everyone and their brother's seen that, right? And if it was a- Yeah … spanking hot deal, someone would pick that up in two seconds. You wouldn't even see it. So that's how we've been able to do this, obviously in Seattle and in, in New York, to where we get these wholesalers to come to me directly. A lot of them are not in the market the deal is in, but they know me from the social media stuff and from my videos online. So they come to me, they know I'm a legitimate buyer who's gonna close, and that's how we get a lot of opportunities from wholesalers. Because you don't wanna be fighting with, you know, 10, 15 investors on the highest invest on a wholesale deal- No 'cause it's gonna get bid right up. Yeah.

Shannon: [11:25] You mentioned wholetail. Can you explain what that is for any of our- Yeah … listeners who've never heard that term?

Greg: [11:29] So, and I like that up here in Seattle. We've been doing a lot of those. So it's- Mm-hmm … the concept where you buy a house at a wholesale price off-market. Key is it has to be off-market. And then you, you know, depending on how people, like this, sometimes it's 20 grand or less. I say a wholetail, in my opinion, is just a straight junk-out. Junk out, you get all the crap out of there, and then you throw it on the market for the as-is price. So let's say, like in my Gig Harbor example, I think I bought it for, whatever, 180. So I think I bought it, like in the low threes and sold it, I think, in like the low to mid fours or something without any construction. Mm-hmm. Right?

Christian: [12:05] Yeah.

Greg: [12:06] So I just made the arbitrage on the wholesale price I got it from the wholesaler. Mm-hmm. And then the as-is value, and then the buyer still had enough money there where he bought it. He renovated it. Now he's trying to sell it retail for, I think, 675. So you're just- Wow … basically looking at the as-is value of the property and seeing if there are actual comps that are in that neighborhood that are selling at that number, and if you can make that spread without having to do the rehab. So it's kind of like getting the best of both worlds, 'cause with assignment deals, I've noticed that usually people leave a lot of money on the table 'cause the buyer has to rehab it. Yep. Mm-hmm. And then with the retail deal, you know, you're putting in 100, 200 grand worth of work sometimes, and that comes with risk and permits and all that. So this is kind of, like in the middle.

Christian: [12:48] Yeah. Cool. That's awesome. It's

Shannon: [12:49] a good strategy.

Christian: [12:50] So let's talk more about kinda your wheelhouse, which is more direct-to-seller marketing. We kinda touched on it already. You've really built a reputation, even in Seattle, for being super sharp at doing this. W- what's kind of the best channels, and what's, what actually works? Because- Yeah … like we said before, it's, it's so tough in our market.

Greg: [13:09] Yeah.

Shannon: [13:09] And expensive.

Christian: [13:10] And expensive. It is

Greg: [13:11] very… It is expensive. Yeah. So- The thing with marketing, especially in Seattle, is like I mentioned it earlier, you have to be willing to spend the appropriate amount of money that it costs to acquire a property off market. And that's where I see a lot of investors, you know, get disappointed, is they come into Seattle and they're like, "I got 2,000 a month I can spend for marketing." And I tell them it's probably gonna take about five months to get a deal because the average cost to acquire something's around 10 grand. So you have to, number one, go into this area or any expensive area with the right expectations.

Christian: [13:45] Yeah.

Greg: [13:46] You gotta understand, in 2025 there's a lot of people marketing, right? Like the real estate investing, it wasn't an industry in 2015. It was just you'd flip houses, you would do assignment deals. Now it's a whole industry. Like it's changed so much. Direct mail still works. We run it every single month. We run pay per click. We work that really well. That's expensive. There's guys spending way more than me out here. I'm sure you know them. And then we're also running YouTube ads. So we're running to certain audiences, you know, just on the Google YouTube platform, homeowners who've owned their house or whatever. We're just running straight videos like, "Hey, do you want to sell your house in Washington State? If so, you know, click the link below and get an offer on your house." So those are the three channels we're running right now profitably. Mm-hmm. I mean, in terms of like the lists that we're mailing out here that are working, I can tell you. I'll just tell you the lists. I got nothing to hide. Yeah. Number one, we're mailing the tax delinquent owners, so people who haven't paid their property taxes. You gotta make sure they've been delinquent for at least a year. Two per- Yeah … year plus delinquency 'cause the taxes out here are fairly high, I mean, 'cause there's no income tax. So- Yep … you got someone who's three, four years behind on their property taxes Pretty good chance, number one, the house needs work, and number two, they're gonna have to sell it, 'cause there's also most likely no mortgage because the bank would've paid the taxes, right?

Christian: [14:56] Exactly.

Greg: [14:57] Mm-hmm. Yeah. So that's a little hack there. And then we're mailing another list like the one I got down the street, was an unknown equity list with a long ownership length. So-

Christian: [15:05] Hmm … we're

Greg: [15:05] mailing people who've owned their house for a, like at least 20 years, unknown equity, which means that they've owned it for so long the county recorder doesn't even know if there's a mortgage, and most likely there is no mortgage 'cause they've owned it for so long. So those are banged-up rentals, people who've, you know, older people who've had the house for a long time. They never kept up with it. They have equity. It's most likely free and clear, so you can negotiate seller finance there. Another list that we're mailing that's been profitable is just predictive data. There's a company out here called Audantic. They're actually up in Bothell. Hmm. And they sell this kinda AI list, and it's like, basically they're… It's like a glorified lookalike audience, like f- if you're familiar with Facebook advertising. Look at all the houses that sold at a discount for cash, and then they take the people who resemble that avatar that own properties, and they give you that list. So we're mailing that list as well here.

Christian: [15:55] Interesting.

Greg: [15:55] So those are the three core lists that we're mailing that are working.

Christian: [15:58] Hmm. I've never even heard of that last one. That's

Shannon: [16:00] cool. I've never heard of that either. That-

Greg: [16:02] It, it makes sense. Like, let's say for example in King County, there's, I don't know, 500 off-market real estate transactions where the house sold for less than the assessed value.

Christian: [16:12] Yep.

Greg: [16:12] It basically picks up all that data, and then it gives you an audience of people demographically that own properties that resemble those characteristics of those people who already sold. So it's like a giant lookalike model.

Christian: [16:25] Yeah.

Greg: [16:25] And it's supposed to, like, you know, get you better leads. And- Hmm … it does to an extent, but the truth is, in Seattle, it's so expensive regardless, you're gonna have a low response rate no matter who you're mailing. There's no secret list- Yeah … out there. Like, you're gonna spend 3 to $500 per phone call sometimes. Mm-hmm. I mean, that's just the way it is.

Shannon: [16:43] How do you like to track your KPIs?

Greg: [16:46] For, so for mailing, I'll get into that. I'll get into details on that. So let's say I'm doing a direct mail campaign for the next six months in King, Pierce, and Homesh Counties, the three big counties. I'm gonna look at number one, what's the amount of money I've spent on that campaign so far? So ad spend, dollars out, and then I look for the phone calls that I'm getting, right? So callbacks, response rate. That's a low number. I mean, that's .0025% if you're doing well, which is a quarter of a percent. Very low, yeah. It's crazy. And then out of that, though, especially out here, about half those people are taking you off your list. Yes. So you're taking 50% of your calls that are expensive, cutting them off the list, and then you're gonna get half of those are gonna be actual leads. And then from there, around here it's like 20 to 25 leads with follow-up should convert into a deal, which results in about 10 to 12K in dollars spent to acquire a customer and, you know, whatever. Wholesale it, flip it, you know. I don't really BRRR anything out here, but, you know, that's what it costs to get a deal with mail.

Shannon: [17:46] Yeah.

Greg: [17:46] So you have to look, especially, like, in Washington or in this expensive area, like, let's say you're like, "Okay, I need to get a quarter of a percent response rate or else it's not gonna make any sense." If something's broken in that system. So another thing I would say, like, when you're looking at these numbers, is you gotta look at a, like, a direct mail campaign. You have to be willing to mail these people, these same people, up to six times, right? Because the third postcard might get you that deal that makes you 100 grand, right? But the first one and the second one didn't get you anything, but then the third one you just made 100 grand. Mm-hmm. And let's say you spent 30 to make 100. So, like, when you see these campaigns through over time, that's when you can really get a good ROI, 'cause a lot of people will mail people once out here. They'll go try to mail Tacoma, and that's just as hard as Seattle, right? It's super competitive down there, and they won't get any calls. Mm-hmm. And then they'll mail again. They'll get, like, five calls. So you really need to understand this is an investment, and you obviously need to track your numbers. And if it's, you're not getting calls, you gotta fix it. But in order to see a real good ROI direct to seller, you need to be willing to do it for the long haul at a six-month minimum.

Christian: [18:55] All right, so let's go over… I- I've heard you talk a lot about trying to figure out the multiple different exit strategies for each deal- Yeah that, that comes your way. W- w- could you walk us through kinda your thought process when you're underwriting a deal and trying to determine what the different outcomes could potentially be?

Greg: [19:13] Absolutely. So I'll start with assignments because that's like, like elementary real estate, like assigning contracts. I'm doing an assignment deal at this point if, number one, I don't think the numbers are good, but someone else might wanna buy it, or it's like a development deal that I'm just not gonna get involved with. Like, if it's like a DADU thing, I'll call you guys and say, "Hey, I got something for you. I'm not interested in this. I'll assign it to you." So it's either gotta be like a bad n- the number's gotta be bad for me, but maybe not for someone else, but then we'll tell the seller we're assigning it, full transparency. We're not the buyer. Yeah. Or it's a development deal that I'm not interested in or I'm not familiar with. And in that case, we have a guesstimate on what we think the ARV is or what the new construction value could be. We have a guesstimate on what that cost might be, and obviously, that's super subjective. And then, you know, we try to give it to the investor at a number that, you know, would allow them to make some money because, you know, it's gotta make sense for them. So that's an assignment. That's pretty straightforward on properties. If it's gonna be like a wholetail property where I think I can make a good profit on the property out here without having to do a full rehab, what I do is I go in, I see the site, or I have someone see the site. We get pictures of everything, videos of everything, and then I study the comparables on Redfin, especially out here. Like, Redfin is awesome. Like-

Christian: [20:25] Yeah … Greg: so much good data. Zillow, Redfin, all that stuff. And I'll go right into that neighborhood or wherever the property is. I'll look at all… The first thing I'll do is look at pending properties. Mm-hmm. And I'll compare those photos to my property. What is this thing worth just on the MLS? 'Cause I'm buying it off-market. What is this thing worth on-market? And I'll look at the pendings, and then I'll look at the actives and I wanna see how much inventory hasn't sold yet, and how come it didn't sell. Yeah. And am I gonna be stuck for a while trying to sell my property? Yep. So that's the second thing I look at. And then the last thing I do is I go look back three months on the solds. I try to find comps in all three buckets to determine, okay, with this current condition, we can sell this property for this price, and we might have to do paint, floors, and maybe change some toilets out. Yeah. So I'll look for a wholetail if I can. And a lot of the properties aren't that bad when you get past some of the stuff these people live in there. Like, they're not as bad as you think once they're cleaned out. And then if it's a flip, typical, okay, we're gonna go in, we're gonna get a contractor estimate, we're gonna see what the cost is gonna be. We're gonna make sure it makes sense with the soft costs. We'll look at the tran- the excise tax, all that. So that's like my last resort is doing a fix and flip just because they're a pain in the butt, honestly. Yeah. And you get stop work orders, so that's like last resort for me. Like, I got something up in Marysville now. Saw the site, wholetail, floors, paint, carpet, throw it on the market. Makes sense. Like- Nice … no need to rehab. 'Cause, 'cause here's the thing too I've noticed. Depend- I mean, Seattle's a very big area where there's a lot of different communities, but sometimes the difference between, like, a dated property that can get financing that's totally livable but just original and an ARV, depending on where your, your neighborhood is, isn't that big. Like, sometimes it's huge. Like, sometimes- Yeah … there's a giant spread, but then sometimes it's only like 30, 40 grand. Yeah. So you're like, what am I gonna put an extra 40 grand in to make an… Like, it- you just break even. It makes no sense. Mm-hmm. Exactly.

Greg: [22:18] You gotta look at what's the ROI on my construction. So like, if I'm gonna do floors and paint, that's gonna cost me, I don't know, 15 grand. If that 15 grand is gonna get me an extra 30 or 45 in value, of course it makes sense. But if I'm gonna fully rehab a house cosmetically at 60 grand, 70 grand most likely out here- Yeah … if that's gonna only raise the value se- like, it's, you don't, you'll get that back. Nothing. Yeah. Like, just spend the money for no reason and take risks, so. Yeah.

Christian: [22:43] Don't do it. Yeah.

Greg: [22:44] Yeah. And that's why you gotta know the area. Like, you gotta study. Like Snohomish County, Marysville, it's kinda like Las Vegas. There's a lot of track homes, three-two ranchers, you know, like suburbia vibes. But then when you go down into Tacoma, you know, you could be on the east side, and then that's like, you know, hit or miss, you know? Like, some areas it sells for 350, some areas it sells for 550, and it could be three blocks away. So you're like, you really gotta know those comps, and you gotta spend a lot of time studying them 'cause that's where I see guys get hurt out here. Yeah.

Shannon: [23:12] No, that makes sense. So you said your preference, I think if you had the choice, you'd love to do like a wholetail. That would be- Every

Greg: [23:18] time. If I had my druthers, I would wholetail every time. I would say so

Shannon: [23:21] too. Okay. What percentage of your business is assignments versus wholetails versus flips, like?

Greg: [23:27] I would s- out here, like 60% is wholetail.

Shannon: [23:30] Okay.

Greg: [23:31] 60%, yeah. I love that model 'cause it's a simple model. You don't feel like you're leaving too much money on the table. Mm-hmm. I just did a rehab in Tacoma. It wasn't even that big of a rehab 'cause the seller left, like it was in decent shape. But that one, I think we put 30,000 into that one or something. Mm-hmm. We just did that because I knew that if we put that plan together with that specific house- Based on the condition it was already in, 'cause they had new countertops and stuff, it would make it, like wait. Like, the 30 grand made it sell for a lot more. Yeah. 'Cause it makes sense. And it looked like crap before the 30 grand, but the stuff we did, like painting the outside, it was a very-

Christian: [24:06] Inexpensive stuff … Greg: yeah, very interesting situation there. But then I had another one in Puyallup where I thought it was gonna be a complete disaster inside. I actually locked it up before I saw it. And then it was in a condo, so I was like, "Ah, a condo, I don't really care. Could be whatever condition it is." Doesn't matter, yeah. Think if this thing's a heavy fix. I go in there, it's like it smelled like new construction in there. And I was like, "Oh, boy." I said, "Let's go. Let's go right now." And we just literally threw that on the market, did no work. That's good. But the guy needed to sell quickly. Like, it was just like I- Yeah … I couldn't, it… Sometimes I don't understand why the people sell, but- You can never understand. Like, I walked-

Shannon: [24:44] Some- sometimes it's mental health reasons. They're just like, "I can't handle…"

Greg: [24:47] Yeah,

Shannon: [24:48] exactly. And it doesn't logically make sense, but it's what- It doesn't

Greg: [24:50] make any sense.

Shannon: [24:51] Yeah. Like,

Christian: [24:51] well, it's the same reason, like why did they do this random work inside this house? Like- Yeah.

Greg: [24:56] I see that … why would you do it like that? And that's when they have to move house.

Christian: [24:58] Yeah. Yeah.

Greg: [24:58] A lot of choppiness. Yeah. Yeah. I'm like, "What are you doing in here, buddy?"

Christian: [25:00] Why would you do that? Yeah. You can have people do what they do at the time 'cause it makes sense.

Greg: [25:05] Yeah. It's so crazy. And then another thing that we've done, not in here yet, but I'm open to doing them, is in your contract. Mm-hmm. Are you guys familiar with that? Yep. Doing the novation?

Shannon: [25:15] We've- we've heard people try to explain it a few times.

Greg: [25:18] Yeah, I can get into that if- Always unsuccessfully … I think you're familiar with how it works, yeah.

Shannon: [25:22] You wanna try to explain ? Greg: Yeah. It- We've

Greg: [25:25] been- No. So this, this really, so, so this really is interesting because you, you would think, why would someone ever let you do that? But then when you actually think about it, I understand why they do it, and I can walk you through this. So a novation agreement just means a replacement. So to give you the terminology, it just means you're replacing your contract with a different contract. So it's like the cousin of an assignment deal. Yeah. With an assignment deal, I assign my contract to Christian, Christian closes on the house, I get an assignment fee. Mm-hmm. Yeah. A novation agreement has no- it is, you're not assigning anything. You're getting basically paid from the seller to get your contract replaced. So the way that it goes down and how you can add value to a seller in this situation, and number one, it's gotta be the right seller. This is not gonna work with everybody.

Christian: [26:13] Yeah.

Greg: [26:14] You basically agree to a net number with the owner. Like, that's you're paying the excise tax, you're paying the escrow fee, all that stuff. Yeah. So you and the seller agree to a net number that the seller's gonna walk away. Let's say it's 400 grand. Let's say you know that property on the market with five grand worth of work would sell for 520, right? So you got 120K spread there. But you, like as the novator, have to understand you're not gonna make that. You're gonna have to pay the commissions, 5, 6%. You're gonna have to pay the excise tax of whatever that percentage is depending on the county and the town out here. And you're gonna have to pay escrow, you're gonna have to pay for the repairs, and you gotta make sure there's enough margin there to where you can still make basically like an assignment fee after you pay all those expenses. So the reason a seller does something like this is they have a number in their mind they wanna get, and they don't wanna do any work, and they don't wanna be involved in the process. They just wanna net the number they want. And that's why I said it's like you gotta find the right person for this 'cause most people just do this themselves. You're gonna see it on Zillow. There's a realtor involved. Like, you'll let them know what's going on. If they're okay with that and you explain to them how the process works, so you sign a purchase and sale agreement with the owner that says they're netting 400 just like an off-market deal. And then your contract has language that says you're allowed to novate it, which makes you, you know, able to hire the realtor, sign the listing docs. You can have the seller sign that if you want. It depends on your, you know, level of comfort. And then basically you take care of all the work. Like, you deal with the realtor, you deal with the showings, you deal with the closing, you make sure the buyer's pre-qualified. You do all that stuff. When the closing occurs, the way that it goes down is that the seller ends up signing a separate contract with that end buyer. So the A signs with the C, and now they're together, and then your novation agreement is between you and the seller that says any proceeds over 400 go to you. The seller actually pays you So that, that's what a novation is. You have to h- make sure the property is gonna sell for, like, 5 or 10K worth of work. Yeah. And you gotta let the seller know what you're doing. It makes no sense. Yeah. So-

Christian: [28:24] Maybe they don't have the cash to do the work that it needs to get done. They don't have the time. That's, yeah. They don't have the desire, the knowledge, like-

Greg: [28:30] They're stressed out. They don't want- Yeah. Yeah. Like, we have one right now where the owner, we're adding a lot of value, 'cause she has a buried oil tank that's leaking.

Christian: [28:39] Oof.

Greg: [28:39] I'm paying for all that remediation- Wow … and we're doing all that for her, and we still have enough margin to make some money. But she would never wanna be involved with that. But because we're novating it, like, that's part of our agreement where we're responsible for all the work. So, you know, you can add some value from time to time, but I certainly wouldn't build a business off of this. It's a tool. It's not a business model, in my opinion. Yeah. Some people have models off of this.

Christian: [29:02] What is it costing you to do the oil tank?

Greg: [29:05] We still haven't gotten the final quote yet, but just to abandon the… So we were gonna abandon the tank. Yeah. The tank was leaking, so we no longer can abandon it.

Christian: [29:13] Oh.

Greg: [29:13] So that was 2,300 bucks just to abandon the bad boy. Yeah. Found out it's leaking. Now we gotta get permits to cut the water off, drill the sidewalk out, cut, like, all the gas to the whole… I mean, it's a mess, but it's probably gonna cost me 15,000 bucks to get that thing all said and done, plus my 20, so seven, let's call it 17 Gs.

Christian: [29:35] Yep.

Shannon: [29:35] Wow.

Christian: [29:36] I usually tell people, you know, it's around 20 grand. So-

Greg: [29:39] Yeah … Speaker: I'm right there. Depends on how bad it's leaking. Yeah.

Shannon: [29:42] Well, thank you for explaining that. I feel like I-

Christian: [29:44] That was the clearest- … understood now … explanation I've ever heard.

Greg: [29:46] Yeah. Yeah. Well, I, I've tried to learn this for three years. I couldn't wrap my head around this for two, three years. Yeah. And I'm like, "Why would someone do that?" Yeah. Sellers will never do that. Yeah. And then we did our first one and we made, like, 30 grand, and I'm like, "Oh my God, this works." Makes sense.

Christian: [29:59] Well, good job. You

Greg: [29:59] gotta have an escrow company, though. The escrow company needs to understand how to close them and what, what is their process for closing them. Like, Ticor Title needs the seller to sign all these different documents. Other escrow won't even do it, and then there's other ones down in, like, Pierce County. So you have to work with the right escrow company or else those deals are gonna die fast-

Christian: [30:18] Yeah,

Greg: [30:18] makes sense … in Washington.

Shannon: [30:19] I have one other question that we haven't talked about, which is that you are… So you're a wholesaler, and I know there's some new laws coming- Mm … in Washington State. Have you explored these at all? Are you a licensed- I have … agent?

Greg: [30:31] I hope wholesaling becomes illegal. I really think if that happened, it would be better for everybody, because it will get all the bad actors out, hopefully. You would think. Oh. Yeah. Maybe not. The thing that I don't like about the new laws, and I've definitely studied up on them, is it, the way that I'm reading them is that it's implying any, like, off-market deal, whether you're wholesaling it or not, I think you have to pay for an appraisal.

Christian: [30:55] Yep. That's right.

Greg: [30:56] The owner has the ability to cancel. But if I'm not assigning that, if I'm buying that thing straight cash, like- You know, I see where they're coming from, but I do think that that's gonna result in sellers basically calling investors to get, like, free appraisals, sign purchase agreements, and then ultimately cancel them and use the law in their favor. Yeah. So I think, you know, obviously I'm not in politics and I'm not the governor, but I really get more nuanced on, like, if you're assigning the contract, you need to do that, but if you're the direct buyer, you're putting down a $30,000 earnest money. That might not be the case, 'cause you're ultimately closing on the house, therefore it would be very hard to screw an owner over if you have a 30K earnest money deposit on a property you're buying for 500 grand, which I think would be reasonable, 'cause that's another problem with wholesalers is they don't put any skin in the game.

Christian: [31:43] Yeah, exactly.

Shannon: [31:44] Yeah.

Christian: [31:45] I'm sure there will be some workaround. Like, if they do have to do the whole appraisal thing where if I'm the wholesaler I have to pay for that, if the seller backs out, maybe they start adding in some clause saying, "Okay, if you back out, you're paying me back. You're reimbursing me-

Greg: [32:02] Yeah

Christian: [32:03] for that appraisal."

Greg: [32:04] Yeah.

Christian: [32:04] Something. I don't know.

Greg: [32:05] It's gotta get more clear. I see where they're coming from, 'cause I do believe in protecting consumers. Mm-hmm. For sure. You know, there's a lot of predatory wholesalers. Absolutely. The shady people out there. I call it the Seattle jungle for that reason. It's like gorilla in the jungle and people shooting arrows at you all day. Yeah. But the thing… Here's the thing with assignment deals, especially in Washington, 'cause like I said, I've seen this a lot now, is these wholesalers, what they'll do is they'll go out, they'll wrap a deal up, and then they'll never put an earnest down, and then they'll record their contract with the county as a memorandum, and then they won't ever perform on it. And then the h- seller will cancel. They'll never remove the memorandum, which is like a lien. Yeah. They call me for me to buy the house directly. Now I gotta… Like, this wholesaler wants 20 grand on a property he couldn't perform on, so then I gotta sue him, but before I sue him, I gotta close 'cause she's gonna not… Her property taxes are due. Yep. So you're in this situation. We had this happen in Lakewood, actually, where this, this happened. Yeah. So yeah, it, it's a tough situation, but- You know, if you transparent with people, like I've never had a seller get mad at me for wholesaling their house, and I've wholesaled hundreds and hundreds of houses, and I've never had a seller pissed off 'cause they know what we're doing.

Christian: [33:14] Yeah.

Greg: [33:14] Wow. It'll be interesting.

Shannon: [33:16] Yeah.

Christian: [33:16] Because of the, the few bad actors, unfortunately- Yeah … that kind of ruin it for everybody.

Shannon: [33:20] It's gonna change how we buy off-market direct seller deals, even though we're not wholesaling anything.

Christian: [33:25] Mm-hmm.

Greg: [33:26] Yeah.

Shannon: [33:26] To, to change all of that

Greg: [33:28] process. So one more thing I'll mention. I know we got the, the hard stop in a little bit, but so I… That wholesaler I bought the house from, he made 116K assignment fee. Mm-hmm. So there's, out here if people aren't familiar, there's this like equity stripping in Washington State, which you gotta be careful about with like distressed properties.

Christian: [33:42] Mm-hmm.

Greg: [33:43] So I, this one wasn't in that situation, 'cause I checked. There was no foreclosure. But I'm thinking in my head, I'm like, "Okay, this person…" I've never met the seller, 'cause I'm buying from the wholesaler. Velocity House Buyers bought the house for 180 grand, 'cause you don't see an assignment. It's not public record. Mm-hmm. So I made the wholesaler sign s- like extra hold harmless agreements to protect me- Mm … in the event the seller came back and tried to go after the buyer, because ultimately I had no negotiations with the owner. I just knew that it was available from the wholesaler, and the wholesaler agreed, and he understood where I was coming from. 'Cause I'm like, "Dude, you never find a house in Gig Harbor for 180 Gs. Like- No. Mm-hmm … that looks like shady, honestly. It looks weird." Yeah. I protected myself, and I made escrow do all of it. I was like, "This has to happen." Yep. And everyone was in agreement, because I was like, "This isn't… You're not gonna see this for another five years." Yeah.

Shannon: [34:29] Yeah. Wow.

Christian: [34:30] Super smart.

Shannon: [34:31] That's crazy. For our investor friends who are listening to this who want to get deals from wholesalers, you talked about building a relationship. What's the best way for them to do that with wholesalers, if they wanna be the one that gets those deals first?

Greg: [34:44] Yeah. You gotta stay in touch with them, and, you know, become friendly with them and like really build a relationship with them that's not just business. Mm-hmm. And find a way to like just stay in their life, like, without like stalking them, obviously. Yeah. But like just become friendly with them, and maybe go out to a Mariners game or see how you can help them. Like, maybe they have no money and you have capital, and maybe you have a private lender. Whatever. Like, build some sort of like concrete relationship with them to where like they- they're your friend, and then like when they have a deal, like you're already their buddy, they like you, and then like they'll just text you like just kinda automatically. So I think you wanna make it less transactional. And then also like something that I've done is like be known online as someone who's doing deals. Like, I post my deals every single week, and I share the numbers, the breakdowns, like where we got it from, I'm the buyer. So people see the content over and over and over again, and they wanna come to me naturally versus just putting it on Craigslist or whatever.

Shannon: [35:39] Yeah.

Christian: [35:39] Yep. More

Greg: [35:39] investor- Just be the value

Shannon: [35:41] Yeah.

Greg: [35:42] That's what I would tell you.

Christian: [35:44] You got any other last questions?

Shannon: [35:45] No, that was amazing.

Christian: [35:46] I learned a ton. Thank you so much, Greg, for coming

Greg: [35:48] on. Novation, the novation class today.

Christian: [35:50] Exactly.

Shannon: [35:51] Finally, finally understood it.

Greg: [35:52] Replacement of contract.

Christian: [35:53] Yes,

Greg: [35:53] replacement. That was the whole thing. Yes.

Christian: [35:55] Why a seller would do it, I still don't

Greg: [35:57] understand. I… We've had some bangers, too. I'm like, "Geez, like, w- what's going on here?"

Shannon: [36:00] Greg, if people wanna follow you, how do they connect with you? If they have a deal they wanna sell you or they wanna watch- Well- … your journey online, how do they find you?

Greg: [36:08] Well, if it's a Dadu deal, you gotta call them first. True. If it's not, if it's a wholetail, I'll take a look at it. You can follow me on Instagram @grego_37. You can email me, greg@velocityhousebuyers.com, or you can check out the YouTube channel/podcast at Greg Helbeck REI on YouTube.

Christian: [36:25] Perfect. Well, Greg, thank you so much for joining us here on the Awesome in Seattle podcast. This was a lot of fun. I learned a lot. Novations I now understand, thank God. And, and you shared a lot of good tips, like, especially the direct-to-seller stuff. I don't think we've ever had anyone that was as open as you were. Yeah. So thank you for doing that. There's so many deals, and this is what people need to understand. There's so many deals out there. You do not have to hide

Greg: [36:51] your knowledge.

Christian: [36:51] Totally. Share it, because it's gonna come back, and you're probably gonna get more deals in the long run by sharing it and being open. Absolutely. So thank you for, for doing that- Yeah … because I do think you'll probably get some deals, extra deals- Yeah because of that, so.

Greg: [37:05] Hey, it's, it's an abundance. You gotta have that abundance mentality. And, you know, what do they say? Knowledge is one thing, executing is different. So you can learn all you learn, but you gotta go out there in the, in the Seattle jungle and implement it. Consistency, persistence will get you, get you that bread.

Christian: [37:18] Yep. There you go. Well, thanks, Greg. Really appreciate it, and we'll see you in a couple weeks on the next podcast. All right.

Greg: [37:24] Absolutely. See you guys.

Christian: [37:25] See ya.

Shannon: [37:26] Bye.