The #1 Strategy to Flip Houses: How This Investor Made 540 Deals in One Year

Summary

Rich Dad Radio Show Episode Summary: "The #1 Strategy to Flip Houses: How This Investor Made 540 Deals in One Year"

Release Date: February 25, 2025
Host: Brent Daniels
Guest: Scott Pennebaker

---

Introduction and Guest Background

In this compelling episode of the Rich Dad Radio Show, host Brent Daniels welcomes Scott Pennebaker, a seasoned real estate expert from Lexington, Kentucky. Scott shares his remarkable achievement of executing over 540 flip and wholesale deals in 2024, a feat that has garnered significant attention in the real estate community.

Scaling Through Direct Mail and Data-Driven Strategies

Scott attributes his success to a robust, data-driven approach combined with an extensive direct mail campaign. Initially relying on traditional boots-on-the-ground methods, Scott and his team expanded by hiring an inside sales team in March 2024. This strategic move allowed them to cast a wider net across 35 markets and launch their first nationwide direct mail campaign, targeting all 50 states. Scott emphasizes the importance of precise targeting, stating:

“We have a data analyst and our VP of finance who have honed millions of data points to pinpoint sellers with a high propensity to sell” (02:45).

By investing in a supercomputer, Scott's team can process vast amounts of data swiftly, ensuring they reach the most suitable sellers and avoid irrelevant leads—such as high-value horse farms in Kentucky that fall outside their investment criteria.

Mastering Direct Mail: Postcards and Check Mailers

The discussion delves into the specifics of Scott's direct mail strategies. His team employs both postcards and check mailers, experimenting with different offers to gauge seller responses. Scott explains the dual approach:

“You can offer a high dollar amount... and you'll get a lot of people that call but the appointments aren't as great...” (04:32).

Conversely, offering lower amounts incites stronger reactions from more motivated sellers, leading to higher-quality appointments. This balance helps optimize their lead generation effectively.

Handling High Volume and Streamlining Operations

Managing an influx of leads is no small task. Scott details the immense volume of their campaigns:

“We're sending about 500,000 pieces of mail per month, resulting in 4,400 inbound calls and setting 1,100 appointments” (05:48).

Despite operating at such a high capacity, Scott's team maintains efficiency by handling cancellations and ensuring that only genuine seller contracts proceed. This meticulous process results in 200 to 240 contracts monthly, showcasing their ability to convert leads into actionable deals consistently.

Navigating the Market: From Hedge Funds to Mom-and-Pop Investors

A significant portion of the conversation addresses the shifting dynamics of real estate buyers. Initially, hedge funds were prime buyers, offering substantial returns per deal. However, with rising interest rates, their activity has waned. Scott shares insights into adapting to this change:

“Our core customer is still the mom and pop investor... but hedge funds are beginning to return as they seek to deploy idle capital” (18:05).

To accommodate both large institutional buyers and individual investors, Scott's company, Rebuilt Holdings, integrates these relationships into their centralized marketplace, facilitating smoother transactions and expanding their market reach.

Rebuilt Holdings: Diversification and Innovation

Scott introduces Rebuilt Holdings, the umbrella organization overseeing multiple facets of their real estate operations:

• Rebuild Offers: The wholesale arm handling property acquisitions.
• Rebuilt Capital: Provides hard money loans across 46 states.
• National Title Services: Manages title and escrow operations in 28 states.
• Rebuilt Realty: A brokerage facilitating investor-friendly transactions in eight states.
• Prop Tech Development: Creating SaaS products to streamline real estate processes.

This diversification ensures multiple revenue streams and enhances the company's ability to handle every aspect of real estate transactions seamlessly.

Technological Advancements: The Rebuilt Marketplace

One of the most exciting developments discussed is the upcoming Rebuilt Marketplace, set to launch in Q1. This platform aims to centralize the real estate transaction process, allowing investors to:

• Search and filter properties based on specific criteria.
• Access 3D walkthroughs and detailed property analyses.
• Order titles, apply for loans, and bind insurance directly through the site.

Scott envisions this marketplace as an "off-market Zillow," simplifying the investment process and fostering a more connected real estate community.

Advice for New Investors: Persistence and Transparency

As the conversation winds down, Scott offers invaluable advice to newcomers in the real estate industry. Emphasizing the importance of persistence, he urges investors to remain committed to their strategies:

“Direct mail has such a long tail... you need to be committed to it” (05:48).

Moreover, Scott highlights the significance of honesty and transparency in dealings:

“Quit misleading people that you're the end buyer because it doesn't matter” (34:33).

By building genuine relationships and understanding seller motivations, new investors can navigate challenges more effectively and establish trust within the market.

Conclusion and Final Thoughts

Brent Daniels wraps up the episode by commending Scott's achievements and encouraging listeners to explore Rebuilt Holdings for opportunities in funding, title services, and real estate investments. Scott reinforces his readiness to mentor and support aspiring investors, emphasizing the collaborative spirit essential for success in real estate.

Notable Quotes

• Scott Pennebaker on Data-Driven Marketing:
  “We have a data analyst and our VP of finance who have honed millions of data points to pinpoint sellers with a high propensity to sell” (02:45).

• On Direct Mail Strategies:
  “You can offer a high dollar amount... and you'll get a lot of people that call but the appointments aren't as great...” (04:32).

• Regarding Hedge Funds and Market Shifts:
  “Our core customer is still the mom and pop investor... but hedge funds are beginning to return as they seek to deploy idle capital” (18:05).

• Advice on Transparency:
  “Quit misleading people that you're the end buyer because it doesn't matter” (34:33).

---

This episode provides a comprehensive look into the strategies and operational intricacies behind executing a high volume of real estate deals. Scott Pennebaker's insights offer valuable lessons for both novice and seasoned investors aiming to scale their businesses effectively.

Transcript

[Brent Daniels]

It is Ryan Seacrest here. There was a recent social media trend which consisted of flying on a plane with no music, no movies, no entertainment. But a better trend would be going to chumbacasino.com it's like having a mini social casino in your pocket. Chumba casino has over 100 online casino style games, all absolutely free. It's the most fun you can have online and on a plane. So grab your free welcome bonus [e-mail] sponsored by Chumba Casino.

[Scott Pennebaker]

No purchase necessary VGW Group void where prohibited by law. 21/ terms and conditions apply.

[Brent Daniels]

This is the Rich Dad Radio Show. The good news and bad news about flipping real estate. Here's your host, Brent Daniels. Welcome back to the Rich Dad Radio show where we're talking about the good news and the bad news about flipping properties. I'm your host, Brent Daniels. And on today's episode, we are talking to Scott Pennebaker. He did over 550, 40 flip and wholesale deals last year and he gets paid multiple times on every single deal. He's going to show you exactly how to do this. Get ready. From Lexington, Kentucky, Scott Pennebaker. How are you?

[Scott Pennebaker]

Good brand. Thanks for having me on, man. Good to see you.

[Brent Daniels]

You did over 540 deals in 2024. How did, how did you find that many opportunities? How do you, how do you find that many deals? Are you in different markets? Like break that down for me.

[Scott Pennebaker]

Yeah, I'm in Lexington, Kentucky. Our headquarters is in Nashville. It's, you know, pretty large operation. We are honestly, we, we started out boots on the ground. My background is in knocking on doors, you know, doing a sales presentation at Mrs. Jones's kitchen table. Right. And so that's how we initially started our business was field sales, going out to the home and meeting with the seller. Earlier in 2024, about March, we hired someone to help us really grow out our inside sales team. And what that allowed us to do is maybe we don't buy the properties as deep. There's a longer time that they're on hold before they go to marketing while we're waiting on photos. But it allowed us to cast a much wider net. So now we're in over 35 markets doing direct mail. However, Brent, we just launched our first mail campaign to all 50 states. And so we're super excited about that. We have our first appointment in Anchorage, Alaska today. So we're excited to see if that goes somewhere.

[Brent Daniels]

Oh, I'm sure you guys will do fantastic. It's actually a solid market. I've got some students out there that are just doing phenomenal business direct mail. Why direct mail?

[Scott Pennebaker]

Honestly we just, we have a data analyst and on our staff and between him and our VP of finance, they have just honed down like millions and millions of rows of data to be able to pinpoint with quite a bit of accuracy propensity to sell. We just invested in a supercomputer so they can like process and do a lot of that stuff at a much higher clip. And we really like that. We can target who our sellers are versus other forms of marketing. You're just kind of casting a general net and you might get somebody that wants to sell. You know, here in Kentucky it's full of horses, horse farms. Somebody may call wanting to sell a two million dollar horse farm. Not really our buy box and don't have really anything to do with, with those type of leads. And so we really like direct mail because we can be very specific and targeted for the, the homes that we have. The seller who we want to talk to.

[Brent Daniels]

Are you sending postcards or are you sending letters?

[Scott Pennebaker]

We're doing postcards and check mailers. Check mailers really took off for us in last year which was just basically it looks like a real. And of course you get a lot of hate mail or hate calls or poor contact center on the check mailers. And there's a couple strategies with that, right? You can offer, you know, a high dollar amount or you know, more than you would want and you'll get a lot of people that call but the appointments aren't as great or you offer a lower number and you get a lot of hate calls because people are like how dare you. But the appointments you do get, you've already kind of price anchored I would say. So you know, that's those actually we test both and play around with both. Both of those models with the check mailer.

[Brent Daniels]

It's really interesting. I was listening to the Wholesaling Inc. Podcast in 2016. It was all direct mail. All direct mail. All direct mail. I just interviewed Mark and Cody with Joe Homebuyer. They talk about direct mail. I did Tiffany and Josh High out in Columbus, Ohio. They're doing a tremendous amount of direct mail. Now. You're the third one. People are going to get sick of this. But these are trends. This is what sets trends. This is what, what's really working out there. Now I will say in my experience with direct mail I get between a third and a half percent response rate. We send out the. And that's in Phoenix, Arizona in Maricopa county specifically, and we answer the calls live. Actually, it goes, you know, they call in, it's press one to get your cash offer, press two to be removed from our list. So my team is too, you know, trapped by people that are angry. They still press 1 and yell @ us, but it doesn't matter. Are you, are you, are you getting around those percentages? And more importantly, do you think that there is a minimum budget that you need to really make direct mail impactful for your lead generation source?

[Scott Pennebaker]

I do think direct mail has such a long tail that if you look at cohorted data, you would see like you may be getting appointments this week from six months ago, mail stream. Right. So direct mail is definitely something that you need to be committed to. Right. You don't want to just get in and get out because you didn't get results quickly. It just doesn't work that way. We've been doing direct mail since 2018 when we first started, and so definitely a backlog of a lot of stuff that comes through from maybe even a year ago. Also notice that on direct mail, your average age of seller is typically older. Right. Where I've seen in our PPC campaigns, the folks that are more sophisticated and can use the computer and, you know, the Internet and the Google, they actually will go on and fill out a PPC form where a lot of more older sellers are leery of putting their information online. Sure. But that kind of aligns for what we're looking for. We get 50% of our deals are retiring landlords, you know, or just they're, they're other investors that just want out of the property for one reason or the other. The other 50% are more owner occupied and then only a small percentage of them are actually even in the, in a distressed situation. So I know sometimes people think wholesalers are just targeting distressed people, but that's a very small percentage of the deals that we get. You know, on average we're sending about. This might be kind of crazy, but we're sending about 500,000 pieces of mail per month. Out of that, we'll target around 1000 to 1100 appointments set. Right. So that's not inbound calls, that's just appointments that inbound calls is about 4400. So we target a 25% appointment set rate. So 500,000 pieces of mail, 4400 calls in a month, 1100 appointments set, and then we don't even get to run all those appointments. Unfortunately, you get seller cancellations or you look under the hood and you know, the person that's trying to set the appointment doesn't even own the house and things like that. So we'll run about 700 of those 1100 appointments, and then we get about 200 to 240 contracts a month out of those.

[Brent Daniels]

If I have 200 to 500amonth to spend getting started in this business, should I do direct mail?

[Scott Pennebaker]

It's gonna be. That would be hard, maybe. I don't think so. No.

[Brent Daniels]

And why not? Why? Why?

[Scott Pennebaker]

It's just, I just think, I mean, you're gonna send a thousand pieces of mail. You're gonna get like, you know, one appointment. You better hope it hits, right? So I just don't think that that's a big enough budget to effectively do direct mail.

[Brent Daniels]

What do you think people should do with that budget?

[Scott Pennebaker]

Maybe ppc? I don't know really. The cost associated with that as much. We've done PPC but done it poorly. We weren't quick enough with speed to lead. We realized that we are going to do more PPC in 2025. But our problem right now, the company is not at the top of the funnel. We have plenty of leads. We have plenty of deals to work. So our marketing team's like, why don't you solve down the funnel and get conversions up and get dispo percentages up, then we can talk about, you know, adding to the marketing budget or diversifying it, you know, more so.

[Brent Daniels]

Yeah, I mean, if you have 200 to 500amonth, you better knock doors or pick up the phone and call people. That's what I mean, Scott.

[Scott Pennebaker]

I mean, it's like networking.

[Brent Daniels]

And pay per Click, your minimum 5,000amonth to 10,000amonth if you're in a major market. If you're in a smaller market, 5,000. But if you're. If you're 2 to 500, it is hustle season.

[Scott Pennebaker]

That's right.

[Brent Daniels]

Went through it. That's right, through it.

[Scott Pennebaker]

100.

[Brent Daniels]

And I mean, don't you feel like that it really set the foundation for when you do spend money, you know, that you can actually convert it?

[Scott Pennebaker]

Yes. 100. Yeah. I mean, the way you get, you know, the. Your way started is you go to the meetups, you talk to people, you meet with agents. You know, you just become a sponge and kind of learn from Everybody around you. 100.

[Brent Daniels]

By the way, what's your company name?

[Scott Pennebaker]

Rebuilt.

[Brent Daniels]

And that's not just it, though. That's your wholesaling and flipping business that did over 540 deals last year. But you guys have three other businesses under your umbrella?

[Scott Pennebaker]

We do. So Rebuild is a holding company and kind of under Rebuilt holdings there's Rebuild Offers. That's our wholesale business. There is Rebuilt Capital, which is our lending business, Hard Money Loans. There's National Title Services, which is our licensed title and escrow company. That's in 28 states. And we have Rebuilt Realty, which is our brokerage, which is in eight states and then just recently launched. It's not a separate entity yet, but we have a ton of prop tech that we've been spending money on building and developing to really create SaaS product in this space as well.

[Brent Daniels]

That's amazing. What you said eight states. You have a brokerage, I assume, considering you guys are doing that many deals that you are investor wholesaler friendly with your brokerage?

[Scott Pennebaker]

100.

[Brent Daniels]

Do you recruit wholesalers and investors that have a license into that brokerage?

[Scott Pennebaker]

We. Well, we don't recruit them in the brokers. Right now we're only hiring for our wholesale business. But we only hire people with wholesale experience.

[Brent Daniels]

Sure.

[Scott Pennebaker]

We used to not have that luxury.

[Brent Daniels]

You're not going out there as like a traditional real estate brokerage.

[Scott Pennebaker]

No, our brokerage is more of a way to give us legitimacy. We do do some attorney, in fact listings through our brokerage. And then it's another way for us to get paid referral fees for leads that, you know, we're not going to process.

[Brent Daniels]

What's an attorney, in fact listing?

[Scott Pennebaker]

So essentially on all of our contracts, another piece of paper that gives us essentially the authorization to sign listing documents and offers before we take title. So what that allows us to do is to put it on the MLS while we're still under contract doing our due diligence and try to field someone or an agent off the MLS versus someone that's maybe not on our buyers list as an investor.

[Brent Daniels]

Is this an ovation?

[Scott Pennebaker]

We double close them because it's cleaner when an agent calls and say, hey, we're an investment company, we're under contract with the current owner, we're going to close on it, take title and then resell it to your end buyer, your investor. So on your contract, Rebuild offers should be listed as the seller. We do Novations, but really only in two instances. The first one is if the buyer on the other end is an FHA buyer, because FHA has a 90 day hold rule, meaning I would have to close. If I double close, I have to close and wait 90 days before I can resell that property. So in that instance, I'll do a Novation and our. Our end buyer will just buy it directly from our seller, and then we get paid on the seller side of the settlement statement on the spread the difference. And then if some of these counties, like Philadelphia county in PA, 4% transfer tax. So that's huge, right? So if you're doing a double close, you're paying that on both sides. And so there we'll do innovation as well, where we can only. Our buyer will buy directly from our seller and they split the transfer cost or the transfer tax. And we're not in the middle of that.

[Brent Daniels]

And for everybody who's head spinning, I want to invite you. That's the reason we put these conversations on YouTube is so that you can go in the comment section. I want you to imagine every time that you're watching one of these interviews with incredible guests like Scott that are just top, top level. If there's questions, if there's verbiage, if there's things that you don't understand, don't let it just go by you and go like, oh, I don't get it. This, this is no value to me. Everything that Scott is saying is next level. And you will get there a lot faster if you put in the comments section your questions. I will make sure Scott gets in there and answers them, or I will answer them in the comment section. So don't let anything go and be like, well, I don't understand what this term is or what that term is. We will answer it for you. All right? There's no gates that you have to get through to, you know, where. Nobody's guarding this information. You know what I'm saying? This is all open, everybody. So invite everybody. If you do have any questions, put it in the comments. There is no silly questions. Trust me, I have asked. That's how I sped up my whole career, was asking all the. Anytime a question came up, I was just, boom. Like. It's like if you went to a meetup and somebody speaking on stage and they do a question and answer after and they're passing around the microphone to ask questions, they. That's what you need to do in the comments section. I think I beat that up enough. Let's keep going. So, Scott, you have. You're doing all these deals. You're doing 540 deals, flipping and wholesaling. You've got the brokerage, you got the lending, you've got the title. Is this. Are you just saying. And you said it's all under one umbrella. Is that because you're like, okay, there's so many verticals in this business that we want to get paid multiple times in every deal.

[Scott Pennebaker]

Absolutely. And that's really the concept behind our technology as well, Right. Is that we have our marketplace, which right now just houses, rebuilt deals. Right. So it looks like an off market Zillow. And you can filter by state, you can filter by different criteria. But the idea is that an investor in New York can find a property in Texas. He can click on the, see all the video, see the Matterport 3D imaging. There's interactive pro formas on there for flips and for rentals. They can order title right through the site. They can order, apply for a loan right through the site. They can even bind their property insurance right through the site. Right. And so there's so many partners and stakeholders to pull off a real estate transaction. And it's really difficult to go into a new market and try to spin up all of those relationships. So we're really trying to streamline that through, through the rebuilt marketplace.

[Brent Daniels]

It is incredible. I think that we looked at it and it was like between 17 and 40 different individuals get paid on every single real estate transaction. If you look at all the people that work in title, all the people that work in the lending industry, all the people that are realtors, the buyers, the sellers, the inspectors, the home warranty people, all of things on a traditional deal, there are so many different ways to get paid multiple times on every single deal. But here's what I want to hit you with, Scott, because you're coming out with something that's pretty exciting. It's kind of got, it's kind of got Bambi legs right now. But you guys are really starting, starting to, to figure it out. And that is the ever elusive hedge fund buyers. Yeah, hedge fund buyers that were so dominant. So I mean, we were making so much. I. Scott, you were saying you were making like $40,000 a deal in 2021, 2022. We were at 53,000 a deal here in Phoenix because we were selling to these hedge funds, which is basically just a big pool of money that look for long term assets to buy. And single family houses became an asset class during that time. Interest rates go up, so that affects how they position their money. What are you seeing and what tools do you have for people to be able to do some of these deals?

[Scott Pennebaker]

100%. I mean, the hedge funds were a feast. And fortunately we didn't hinge our whole business on selling to hedge funds. I know quite a few folks out there did. And when they dried up, when Interest rates shot up to over 7%. That definitely impacted them. Our core customer is still the mom and pop investor, and that's really the market share that we're trying to gain. But why wouldn't we sell to hedge funds too if they're paying more than anybody else? Right? And so what's starting to happen is they're just like, we have cash, we're sitting on the sidelines. We can't sit here forever. Rates don't seem to be going down anytime in the near future. We need to get this capital working again. And so they're starting to come back into the space and they still source 95, 98% of their inventory off of the MLS. They all want to crack the off market space though. The issue is it's so fragmented with so many different players, and there's no central location to source inventory. There's no really central players that own the contract to close, process, or have the actual direct to seller contract. Because there's a lot of daisy chain stuff out there. And that's what they've tasked us to do, is they would like us to go into the marketplace. We have a few of them on our platform already that have given us their nationwide data, or at least the markets that they're buying in. We can enter an address. It's a green light, red light. Here's a range on the low end, here's a range on the high end, minus repairs, where we'd like to be. If that hits, then we reach out to that wholesaler that has the, the agreement with the seller and then kind of discuss next steps and what the prelim offer is. You know, they're still paying more than most, but they're hedge funds, so they come with more red tape. Right. And so the biggest thing they're going to want is an inspection. But typically we can have an inspector, inspector out there in 24 hours. I'll have the report back 24 hours after that, and then I can have a final offer from them 24 hours after that. So there is like a three day to four day period that we have to work through that process with a lot of folks out there, but they're typically paying more. So a couple wholesalers have offered like, hey, I'll get you preliminary access. If it works, then what we've been able to line out is like, okay, get me in there before you go to marketing. If we don't buy it, we'll give you all the media, we'll give you the inspection, we'll give you the 3D walkthrough. We'll give you the photos to use on your marketing when you go go to push that out. Another option is give me a three day option period or four business day option period and then you can keep marketing and take backup offers. But go ahead and let me it so I get a right of first refusal at that higher price and if it doesn't work out, you're still accepting backup offers. So just trying to work through some of the clunkiness of that process. And honestly talking to some of these wholesalers, I think that there's ways they could improve their contracts to make them more friendly on their side. On the wholesaler's side with the seller. I see like very short due diligence periods. Our contract has a 45 business day due diligence period and we get zero pushback. I think sometimes, you know, especially when you're newer in the business, you don't know how much you can push really but with a seller or how much you can actually get out of the seller as far as terms go. And so I think there's a lot of things we could share in just our, with our process with a lot of these wholesalers that would help their businesses more so than the relationship of just buying stuff from them.

[Brent Daniels]

Got it. And is there a platform people could submit these deals to and work with you on that? Also aren't you coming out with something that'll actually. You could plug in an address and you'll see what these.

[Scott Pennebaker]

Absolutely. That's coming out into Q1. We'll have that launch where you can just yourself put in the address. It'll tell you green or red if it's going to going to hit or not. And if it doesn't then you can actually upload that right onto our marketplace and we'll send it out for you that way as well. So to kind of push it out to our network. And then right now the best thing is just reach me on email scottebuilt.com hit me up. I'm always accessible and I love to work with, you know, anyone in your audience that has stuff like that. I mean I can give them the buy boxes. It's they're not doing huge rehabs. They want under 30k rehabs. They want properties 1965 or newer. You know, all the general stuff, at least three bedrooms, that kind of thing.

[Brent Daniels]

Got it. So just send you an email guys. You got the information there? Rock and roll. What if people need money, Scott? What if they need some money? Are you Doing transactional funding, Are you just doing like, you know, 20% down? What, what kind of terms do you have?

[Scott Pennebaker]

So typically on lending that website is to apply for a loan is rebuilt.com lending. We have four different loan products. The most common is the fix and flip loan. Typically our best terms right now is like 10% down, you know, 11 to 12% interest and 1 to 3 points origination on a six month term. And then if you want to extend beyond six months, it's an extra point of origination. We will do transactional funding as long as we get the title work. So we keep that in house. So if you send us the title work, then we'll also fund your ABBC close.

[Brent Daniels]

100%.

[Scott Pennebaker]

100% what?

[Brent Daniels]

Yes, 100%. So they don't have.

[Scott Pennebaker]

We charge 1. 1% with a minimum of 1000 bucks.

[Brent Daniels]

Sure.

[Scott Pennebaker]

Guys.

[Brent Daniels]

That's incredible. Give that site out again. Scott.

[Scott Pennebaker]

That is rebuilt.com forward slash lending. And our title company is national-title. National-title.

[Brent Daniels]

And your title is in 28 states. Is your lending in all those 28 states?

[Scott Pennebaker]

The lending is in 46 states.

[Brent Daniels]

Yeah. Isn't that incredible? Oh yeah, that, that blew my mind when I found that out. Scott. When I, I remember I was talking to Chris Iman and he told me, yeah, I'll give you transactional funding. And I was like, what? Because I, as an agent, I was like, I can't go and be a buyer on a purchase agreement if I don't have the money in an account, at least the 20. And I can get hard money. I understood that, but I don't, I didn't have that money. And then we're at a meetup or whatever years ago, a decade more than that, 12, 15 years ago. And he's like, well if you find a good deal, you know, I'll just give you transactional funding. And I was like, what is that? He's like I'll give you 100% of the purchase price as long as it's a great deal. And I was like what? And I go can I get that in writing? And goes, yeah, that's. I'll give you a proof of funds or a, it was a letter of credit that they give. And I was like, so now I have money to be able to, if I get a good deal, 100%. I said, well, up to how much? He's like I don't know. I got like 20, 30 million dollars. I was like what? He goes, now you have 20 and 30 million dollars. And I was like, oh my gosh. This is how it works. The whole industry set up for us.

[Scott Pennebaker]

I mean the whole industry set up to make money using other people's money and we all lend to each other.

[Brent Daniels]

That's the clip, by the way. That's that, that's what we're going to open this thing up on YouTube with. It's, it's the absolute fact there is more money than there are deals.

[Scott Pennebaker]

Absolutely, for sure.

[Brent Daniels]

And so guys, just go out and start building the skills of finding really great opportunities and then someday you'll be on the other side of this podcast doing over 500 deals, talking about it. So when did you do your first deal, Scott?

[Scott Pennebaker]

So I started out right out of college. I got into the mortgage business. And so this is like 2003, right? And so the type of loans that I was writing were, you know, 125% loan to value one day out of a bankruptcy on a stated income. Right. And so these things are like fish in a barrel. And what really led to the crash of 08 were those type of loans and Dodd Frank and all the regulation that came after that. But that's where I really learned that I could use banks money to build a balance sheet. So I have new investors come to my meetups all the time. Like what's the number one thing you want to like for me getting started? Like what's the number thing I should do? I'm like get your credit up because you need credit to borrow banks money in this business. Now if you're doing hard money using hard money deals, that's different, that's more asset based lending. However, you still need good credit if you want to build a real estate portfolio and you don't want to be paying double digit interest rates for the rest of your life, right? And so yep, then I got into the college textbook business right out of that. So I was wholesaling textbooks actually before I was wholesaling houses. And Brandon, my business partner now, we had sold door to door during college. And so we reconnected about a decade later in 2012. He was leaving that company and I just started buying some real estate, but I'm still running the textbook business. And he's like, man, I'm looking for my next move. I'm like, come over and help me grow this textbook business. Right? We have a prescriptive industry. We, we know what books to buy, we know how much to pay, the professors assign them and the students have to go buy them and we put them on Amazon and ebay, effectively. Having a college textbook store all over the country, right through those marketplaces. And so that grew quickly. And then, you know, Brandon and I are both sales guys, so we're terrible operators, right? And so we have, like, 40 sales reps across the country. All these books coming into our warehouse in Lexington. Brandon's living in Nashville at the time, and he's like, man, we need to talk to my cousin Al. Al was working at BlackRock as a director, had been there for about a decade. He, like, he's the process guy, right? He can come in and kind of look at our technology and look at our systems. And so Al really consulted for about a year and a half, and then in 2015, they became equity partners in the textbook business. But we all loved real estate, and so Al had holdings in Philadelphia, Brandon had holdings in Nashville. I had my stuff here in Kentucky. But we started buying real estate together. We formed Al Bransco was the LLC. Al Brandon and Scott Albransco LLC. And between 2015 and 2018, we bought about 140 doors, primarily from wholesalers. That's how we were finding the inventory, right?

[Brent Daniels]

Yeah, sure.

[Scott Pennebaker]

And then in 2018, we're like, man, we paid these wholesalers a fortune. Maybe we ought to, like, market direct to sellers ourselves. And so that's when we started spinning up our own mail campaigns. Also in 2018, textbooks started to go flat because so much of that content started pushing to digital. And so we didn't have a physical textbook. We didn't have anything to sell. Right. And so we're like, well, we need to replace the income in the textbooks. Let's start wholesaling more. It's a quicker time to cash. Our first deal, I think, was like, $5,000 here in Lexington. And we're like, yes, it works. And we realized quickly it was much more scalable than doing a bunch of fix and flip projects. And again, we had all these rental properties, but we burned out of them. So essentially, there's not a lot of cash flow in them until the banks are paid. I always say rental properties that get rich slow kind of business, right? And so that didn't make enough money, so we needed to do wholesaling, and we knew we could scale it and really ran rebuild as a side project until about 2020 when Covid hit. And then at that time, we were locked out of college campuses. We're like, we don't know when we're going to be able to get back in. We're spending 80% of our time on this dying business where we're seeing rebuilt really grow. We should put all our time and focus into that. And the name Rebuilt came about because we were going to buy properties and rebuild communities. But then it just happened to be that we needed to wholesale more of the deals than we needed to keep buying and building a rental portfolio for, really, the necessity of having an income and a living. Right.

[Brent Daniels]

Nashville.

[Scott Pennebaker]

Nashville, yeah.

[Brent Daniels]

Cash flow.

[Scott Pennebaker]

Cash flow, Absolutely. Yeah, yeah, yeah, absolutely. 100%. And so I wish we would have kept all those looking back long term, but it didn't make sense at the time and so needed the cash flow. We shut down the textbook company in 2020. We were able to get PPP money to really help all our warehouse workers land on their feet. At that time, we had about 110 national sales reps, so we knew we could scale a company nationwide. And really, we went to our best sales reps and said, hey, unfortunately, your job's being eliminated by a global pandemic. However, would you like to hear about what we've been doing as a rebuild? So that's really how we ended up in, like, Austin, Texas, Huntsville, Alabama, Chattanooga, Tennessee. It wasn't that we had some formulaic data that said this is where all the people are moving and this and that. It was just we went where we had the people that boots on the ground, because that was our model was boots on the ground. So first wholesale deal. That was a long way to answer that, kind of give you the whole story, but was 2018 for five grand in Lexington, Kentucky.

[Brent Daniels]

Well, I'll tell you what, you know, the. I think five grand is probably 90% of people's first deal amount, you know what I mean? And then it just grows. I don't care if it's a dollar or five thousand or five hundred or a hundred thousand dollars. Once you have proven that you can make income in this business, you go from faith, you cross that bridge from faith to fact, then, then it, then it's real, then it's tangible, then it's just do it again and again and again and again. And. And that's really the. The whole point of these shows and these conversations is just get people the confidence to go out and get your first deal. You know, it's real, you know that you can do it, build your confidence up to go and build an incredible company that now gets paid, you know, 73 different ways on every single deal that you run across. So absolutely incredible.

[Scott Pennebaker]

Scott.

[Brent Daniels]

Well, any final thoughts for people that are just starting out in this business? Any encouragement that you would give them?

[Scott Pennebaker]

Yeah, I would just, you know, stick with it. Use me as a resource in our company and people, people like Brent. I mean, I'm. I love doing these shows. I love talking to people. I host a meetup that I started in 2012 here in Lexington and I have like last one, I think we had three kids that said they were skipping class over at University of Kentucky that came to our meetup. But I love, like helping people and try to navigate different things or deals or working with. With other wholesalers and trying to. Like I said, I think there's ways you could adjust your contract to give you more leverage, to give you a longer diligence. And the biggest thing that our company is different from other wholesale entities, and this isn't a knock on anybody, it's probably a knock more on the industry, is that we're really trying to legitimize wholesaling because there's too many people out there that act like they're the end buyer. This is another thing I'll tell you. If you're new, your seller doesn't care if you're the end buyer or if it's one of your investment partners or another investor. So quit lying to people and telling them that you're the end buyer when you're not. And then when you can't find a deal, you ghost them because it just makes it harder for everyone else in this industry. We are very transparent. We have actually, you know, a sales sales slide presentation that we present at every sales appointment, virtual and in person, that says we are not the buyer. You know, we do buy like we have a rental portfolio. We have a fix and flip. We will do fix and flips. But 99% I'm not your end buyer and they don't care. So like, that's the big fear that I think a lot of people have is like, if you may lose one out of a hundred because they don't want to go through your process. But if you're personable and really dig into why they're selling and help them talk about why they're selling and what they're going to do with the money and the emotion behind it, if you're. Then they. They just don't care. I mean, that's just the biggest thing. That's probably the biggest advice I would give people is quit misleading people that you're the end buyer because it doesn't matter.

[Brent Daniels]

That's right. Be a truth teller, truth seeker. It works out every time.

[Scott Pennebaker]

100.

[Brent Daniels]

And listen, if they don't want to do business with you or they do want you to close. And it sometimes happens because they've been burned by other buyers or wholesalers in the past. Figure out a way to get the deal closed. There is more money than there are deals. So our skill is all centered around finding great opportunities. The only way you do that is have a lot of conversations and make a lot of offers. Scott.

[Scott Pennebaker]

Absolutely. Yeah. You're 100%. Hey, thank you, Brian. I appreciate the opportunity to come on.

[Brent Daniels]

See, guys, check it out. Rebuild.com yes, sir. Rebuild.com Guys, you've got go check out all the different areas, all the different states that they do business in. If you need money, if you need title, if you're maybe you're looking for an opportunity, maybe they have some job postings on there. I'm sure that there we do.

[Scott Pennebaker]

Can I run through that real quick? We have, we're hiring constantly right now. Our head counts 120. We have 45 acquisition reps. That's 26 in the field, 19 in inside sales. We have 19 disposition reps. We have five title processors, two TCs. We have 11 in our contact center. So there's a lot for whatever. If you're in any aspect of real estate or you want to learn more, please, it's Lifeebuilt.com all the job postings are on there. [e-mail] and then check out our marketplace. That's just marketplace.rebuilt.com marketplace.rebuilt.com I'd love to connect with anybody again. Scott. Rebuilt.com awesome.

[Brent Daniels]

There you go, guys. Thank you, Scott.

[Scott Pennebaker]

Thanks, Brent. See you, buddy.

[Brent Daniels]

See ya. That is it for our show today. We hope that you got so much out of that conversation. If you are ready to take your real estate business to the next level, I encourage you to go to richdad pro.com richdadpro.com it is time for you to join the number one real estate investing community of all time, the Rich Dad Pro community. Go to richdadpro.com and check it out. See you soon. Thanks for listening to Rich Dad Radio. The good news and bad news about flipping real estate, hosted by Brent Daniels. To learn more, go to richdad.com don't forget to like and subscribe. Wherever you get your podcasts.

[Scott Pennebaker]

Step into the world of power, loyalty and luck. I'm gonna make him an offer he can't refuse. With family. Cannolis and spins mean everything. Now you want to get mixed up in the family business. Introducing the [e-mail] test your luck in the shadowy world of the Godfather slots.

[Brent Daniels]

Someday I will call upon you to.

[Scott Pennebaker]

Do a service for me. Play the Godfather [e-mail] Welcome to the family. No purchase necessary. VGW Group void. We're prohibited by law. 21 + terms and conditions apply.