Are you looking to exit your W-2 and gain financial freedom? You want the time and flexibility to be able to do what you want when you want. In this blog, we will dive into how Michael McDonald was able to do just that by becoming a real estate investor.
We interviewed Michael and he shared his inspiring journey from making $30,000 a year as a nutritionist to replacing his W-2 income through real estate wholesaling. We'll walk through how he got started, how he made $23,000 on his first deal, and the biggest changes in his life since beginning wholesale real estate. There are lots of valuable tips and strategies in this post, whether you're brand new to real estate investing or looking to scale your current business.
Let's dive in!
How Michael Got Started in Real Estate Investing
Michael was working as a nutritionist making only $30,000 per year. He knew his career path was a dead end and wouldn't provide the life he wanted for his family.
When he found out his wife was expecting, he knew he needed to make a change. So he invested $20,000 to attend a 3-day real estate event to learn about making money in real estate with little money down.
He was sold on the idea that he could pay off the $20,000 investment with just one real estate deal. Although he didn't know much about real estate or wholesaling at the time, he had faith that this could work.
Using the Driving for Dollars Strategy
Shortly after the event, Michael met an experienced wholesaler who became his mentor. His mentor encouraged him to start driving around looking for rundown, vacant, or distressed properties.
This strategy is known as "driving for dollars." Michael would write addresses of potential deals, look up the owners on the county assessor site, and send direct mail postcards to the owners.
He handwrote and mailed over 2,000 postcards to distressed homeowners this way! This shows the dedication and discipline he had as a new investor to make this work.
How Michael Made $23,000 on His First Deal
Michael received a call back from a motivated seller on one of his driving-for-dollars leads he sent a postcard. Although the deal ended up being a messy one with lots of complications, he ended up wholesaling the property and making around $23,000!
Here are some of the key things that went wrong on his first deal:
- He didn't properly set expectations with the seller
- 15 buyers showed up to look at the property
- The buyer had an appraisal contingency that wasn't met
- Michael had to help with repairs for the buyer
Despite all these hiccups, the property was under contract for $180,000 and the buyer's lender needed it to appraise for $211,000. This leftover $30,000 in spread for Michael to split with his mentor after accounting for fees.
So after his first deal, Michael had already earned around half of his initial $20,000 investment back and gained invaluable experience.
Continuing to Scale the Business
Michael knew he didn't just want to wholesale one deal, but to turn it into an ongoing business. So after his first deal, he put some of his profits back into marketing to real estate leads.
In addition to driving for dollars, Michael started pulling lists of high equity absentee owners and sending them direct mail as well. He also tried strategies like going to garage sales and estate sales and networking with people there.
He recommends that even if you're wholesaling virtually, you can use apps to look for distressed properties and market them remotely. The key is having a consistent marketing strategy to generate leads, regardless of whether you're local or virtual.
When Michael eventually relocated to Las Vegas, he was concerned about having to start over in a new market. But he quickly proved he could close deals over the phone without ever seeing the properties in person.
For example, on his first text conversation with a motivated seller in Arkansas, he got the property under contract site unseen for $60k below market value!
This showed him that he didn't need to rely solely on in-person strategies, as long as he refined his virtual sales process. His team now has scripts and questions to build rapport with sellers over the phone and set proper expectations.
The Biggest Changes Since Wholesaling Real Estate
Since getting started, Michael has:
- Done over 200 profitable wholesale deals
- Allowed his wife to stay home and raise their children
- Bought his dream car - a Porsche Tycan (white!)
- Taken his family on vacations and treated his parents to trips too
He says the ability to take his whole extended family on vacation together has been incredibly meaningful. Real estate investing has given him true financial freedom.
In addition to wholesaling, Michael has started buying rental properties to generate passive income and build long-term wealth. He plans to continue wholesaling to fuel his rental portfolio growth.
Final Tips from Michael
Here are some of Michael's top tips based on his experience going from nutritionist to successful real estate entrepreneur:
- Treat yourself and buy nice things if you put in the work as a business owner
- Entrepreneurship isn't for everyone - focus on your strengths
- Use answering services if answering calls at a 9-5 job to ensure you don't miss hot leads
- Constantly remember your "why" and what motivated you to start
Michael's inspiring story proves that with dedication and drive, you can replace a low W-2 income through real estate, even with no experience.
