3000+ Real Estate Deals Later, Going From Startup to Succession | Part II

Guest: $240,000. So those commissions just aren't that lucrative. Out here where you might pick up leads and be able to convert to listings on $7,800,000 properties, that might be the same as flipping a house. 3% on 800 grands, $24,000. That's more than the average wholesale rep.

Steve Trang: And you've also since sold your property management company. Yeah. So, I know that you, have always been a great operator in that department. So what was the mindset getting to that or do or doing that?

Guest: It is, it required a tremendous amount of energy for me, because I'm just generally not naturally wired to do the precise work that comes along with property management. So I hired a bunch of really good people, but the skill set and the behavioral profile of that person versus mine are so opposite. It required a ton there was a lot of healthy conflict in those conversations.

Steve: Mhmm.

Guest: And then generally in property management, like, the margins are just so low. And one of the things that I realized in property management is because the margins are so low, the the normal person that they hire is paid an underwhelming wage. And when you have really hard work for people to do, like evicting people, handling maintenance tickets, like, showing a house to 30 prospective tenants and only one of them qualifies. It's hard work. And you only pay $37,000 a year.

It's just hard to get quality people.

Steve: Yeah.

Guest: And then when you do, they're not gonna stay all low, not for $37,000. So the right way to, I think, to run a property management company is actually to raise your fee. Because the one thing I can tell you in property management, the management fee is not where people lose money. If they have an unsuccessful experience with a rental, it's not because they paid too much property management fee on a thousand dollar a month rental. At 10%, it costs you a $100.

Steve: Mhmm.

Guest: One bad tenant cost you six months worth of rent plus another probably six months worth of rent because they've trashed the place. Yeah. We have. So poor management costs way more than expensive management.

Steve: Right? Right.

Guest: So if I were to build a property management company today, I would charge 15%, hire the highest quality people that money can buy, and I think you could actually build a property management company, that charges 15%. You would get higher tenant retention. You could get people to pay more for rent because of the experience that the most people move not because they don't like the house, because they don't like the landlord, or they don't like the property management. Treatment. Correct.

So it's just it was one of those things that in order to do it right, I think I had to scrap a 100% of the model that had been built and start with a premium property management company that that charges 15%. And I just didn't like the, the odds of that taking off.

Steve: Right.

Guest: And we sell a ton of turnkey. So I had a bunch of, you know, 70% of our clients. We've sold, I don't know, 500 turnkeys in the last four years. For me to move them from seven or 8% to 15% would have probably just shocked them. So, yeah, it was just one of those things.

It's a it's a it's a it's close proximity to our core business, but it served for me to be more of a distraction than anything. Yeah.

Steve: But it takes a lot of discipline. Right? Because I've got massive shiny syndrome. I mean, I'm I'm always looking at new opportunities and so on. And you're actively closing some of these, not opportunities, but businesses that were bringing in revenue.

Guest: Yeah. So for me, though, to to be clear, I transitioned the lion's share of the ownership and and and leadership to someone else that necessarily closed them. I closed off the access to me.

Steve: Got it.

Guest: Does that make sense? Yeah. And I closed off the access to my most important people. So there's a a good saying that I heard that says, don't put your best people on your biggest problems. Put them on your biggest opportunities.

Steve: Yeah.

Guest: And the brokerage and property management were, like, our biggest problems. Like, man, we're not getting these listings, and we should be doing this. And every listing we have, we should be able to get another buyer. And property management, if you don't do it correctly, you're gonna upset the property owner. So it was a problem.

Like, no one's ever said, how did you make your millions? And they said property management. Right? Or brokerage, unless it's at the the the the the ownership level. Right?

Not the individual broker. It's always been the Gary Kellers of the world or the the top of the food chain. And, that was it for me. I was like, I I can't have my best people on my biggest problems. I need to have them on our biggest opportunities, and that did not include, the management of and and by the way, we have great partners for both of those.

So nothing has suffered and we've actually gotten better because we partnered with the property management company that was managing 5,000 units. And so we inherited all of their really good people, and they're actually able to pay people more money because they're managing 5,000 units. So 7% spread across 5,000 units is actually a lot of money. Right? So they have really, really good people.

I've been you know, we have a bunch of rentals of our own that are managed with them, and they've done a really good job for our turnkey clients. So I'm pretty happy with the decision.

Steve: And somewhere along the way, you started consulting.

Guest: I did.

Steve: Well, what's what's the thought process behind that?

Guest: So I think, the best way to learn something is to teach it. Right? Like, for me, you know, take for your example, like, the best way to become the a high performing salesperson is to teach sales.

Steve: Mhmm.

Guest: Right? Right. Like, so for me, it started with with actually social media where someone was doing it. I had FOMO and, like, someone in my market was doing Facebook lives, and I was like, man, why am I not doing that? So I took the leap of faith and I started doing it.

And, like, after forty days, I ran out of stuff to talk about. Right? Because I talked about appraisals. I talked about septic tanks. I talked about, you know, how to handle a change in terms, how to hire a real estate agent.

I was like, I gotta talk tomorrow, and I don't know what to talk about. So that's when I started reading books, three and a half, four years ago. And I was like, I'll just read a book, you know, if I learn one thing, I'll just teach that the next day. So I it now put all of this pressure on me to learn. So everything I've learned the last four years is because I felt compelled to teach it on my Facebook live.

So I start doing that, and then I start having people either through Collective Genius, or just through social media that had reached out to me for advice. And, I would help them. And I'm like, hey, man. I'll help you. Let's set up a call.

I'll do this. I'll do that. And, I helped him two or three times, and then eventually someone was like, would you just talk with me each week? I was like, dude, I don't know if I could do that. Like, I got a lot going on.

I was like, well, what if I paid you? Mhmm. And, you know, at some point, everything's always at least a little bit about the money, and coaching and consulting would be very lucrative. So for me, I just kind of ran it through this internal filter of, like, does this align with my greater purpose? And my greater purpose is to leverage my experience to build meaningful relationships, to positively impact the lives of people so that they can have belief in themselves that they can do anything and faith in others.

So when you think about, like, if I can spend an hour each week with someone, you know, that need help with business or leadership or real estate, and can I leave an impact on that person? And the answer was yes. And I was like, alright. I'll do it.

Steve: Yeah.

Guest: And, I've had great response to it. I mean, some of the the more meaningful relationships that I have outside of my family is some of the folks that I coach. Brought one of those young men with me today. You had a chance to meet him. You know?

And and it was great for me because I've watched people in Phoenix. Right? You guys were at the hub of the market changing. Like, it was literally, the leader. Like, it it it rose the fastest and fell the fastest.

Mhmm. And those guys are, like, 25 years old. And I'm coaching them. They're like, dude, we had $300 in our pipeline, and it vanished overnight. Like, literally, everything that we thought was a $40,000 deal went to zero.

Steve: Alright.

Guest: They had 15 deals in their pipeline that were scheduled to go to dispo that easily would have sold. They're smart. Right? Didn't lock up bad deals, but each of those deals dropped in value by 50 to $80,000. It was vanished.

Within forty five days, they were able to pivot with my help to now going back within thirty days to a $140,000 in net profit on the books for the following month. They went from heroes to zeros and back to heroes again in a sixty day cycle. That's amazing. Yeah. And so the one thing, about coaching that I think you gotta be or at least me had to be aware of.

And I put up a post last week, and I was like, I'm gonna take on one client. And, so I ended up taking on four, which is just classic Eric style. Right? It's like I just kind of over committed myself, but I'll figure it out. But, when they asked me why, I said, I don't know that that I can sustain all of the wins and losses that come along with that.

So for me as a coach, when you win, the great thing is I get the benefit of winning. Mhmm. Right? It's like Steve did that $40,000 deal or he hired this important person or, you know, he's been able to create more work life balance because he's become a better leader. That's awesome.

The downside is when I work with someone or I coach someone or I'm friends with someone when they lose, I also carry that

Steve: Yeah.

Guest: Sort of baggage with me too. So it it's inevitable that in business, people are gonna have issues. And as their coach, what I've realized is their problems become my problems, and I haven't become great at disconnecting from that. And my own business and businesses require enough of my energy and have enough of their ups and downs. If I vote on five more wins, that's awesome.

If I vote on five more tough conversations with my partner, breakups with my partner, months where we didn't hit our goals, tough personnel decisions where I gotta hire or fire someone and I'm not sure to do, I I I absorb all of that. So I wanted to be pretty protective over that, but I made the decision to bring on three or four more people than I said I was gonna do and I'll figure it out. And it'll just be the next thing for me where I have to learn how to still care deeply about the the results, that I get for them, but be able to maybe disconnect a little bit better and and and not, you know, live and die by their results. But I don't think that's such a bad thing.

Steve: It's not a bad thing at all. I mean, that's that's I think that's a great thing. It's a great quality. So when you were here last, we were talking about Novations. Yeah.

And, I just

Guest: know what's crazy? Back then, nobody needed them. Right? And so I was asking somebody today. I I'd literally had, I swear I can show you, eight Novations sales calls today about people that reached out to me.

There's still people that reach out to me from this show a year and a half ago

Steve: Mhmm.

Guest: And they'll say, I heard you on Steve's podcast. Tell me about this Novation deal. So I had, like, seven of those. Five people signed up for our course. And I was like, this that show was a year and a half ago.

Where have you been? And one guy's like, I didn't need novations for the last two years. I could literally set a house on fire and put a sign in the yard, and it would still sell. And I was like, okay. Touche.

Good point. You know, so a lot of people ask me, is this a good market to do novations? The the answer is absolutely yes. I've been doing them since 2009 was when I first did it, but didn't need to. 2011, it really became an important part of my business.

So if you remember what the business was like in 2011, it was tough. Really hard to sell a house. Pretty easy to find a deal. Mhmm. Right?

So we started doing it in 2011, which is a lot like what we might be experiencing right now. Right? It's just there's there's a lot of speculation. Nobody knows we've hit the bottom, if we hit the top, or what's gonna happen. So there's uncertainty with buyers, which just extends the sales cycle.

But it's funny that, I did that show back then, and one or two people would reach out to me a month. And, now it's literally five or six a day Yeah. Because it's, I think we're gonna look back on this. It might be this show, and you'll see, like, when did Novations become popular? Mhmm.

Steve: And I

Guest: think you'll look back, and they'll say it was July 20 what's today? Twenty seventh?

Steve: I would say it was June because, I mean, I I look at our analytics, and brewer method is continue consistently trending on my analytics.

Guest: Oh, really? Yeah. Oh, like the search and what people are are watching.

Steve: Yeah. They're already been consistently watching Leon Johnson. It was creative finance. Yeah. And Eric Brewer.

Guest: Pace was just here and did I mean, I I've watched that six times now. I mean, you talk about sub two, like, you can start taking over some houses that don't have a lot of equity with 2.75% interest. Yeah. So there's an awful lot of people talking about it. Innovations right now is a great way to to try and, you know, close the gap between what you were doing maybe six months ago where the market was crazy and you could sell anything for $30 over list.

And, yeah. So what was your question? I'm sorry. I just No.

Steve: That was it. Just we're talking about it. And I'm I'm gonna open up the q and a in just a minute. But before we do that, like, you know, that we got Dan Bro involved now. Yeah.

I'm really excited to have him kinda run the, the the business of the Novations part where we're trying to help people, where we are helping people across the country

Guest: Yeah.

Steve: Execute innovation. So I think I'm really excited about that. So, before we open up to questions, so, like, is there anything you guys are doing right now to pivot for this, you know, this shift?

Guest: Yeah. It's kinda crazy. It's it's a little, nuts if you ask me, but, I'm I'm super duper. That's pretty corny, but I'm super duper excited about what we're working on right now. And it's funny, like, you know, who who always makes the money in a recession?

The rich get richer. Right?

Steve: Oh, 100%.

Guest: So who who would everybody say they talk about? Man, you gotta stack cash, wait for things to go on deal. Like, okay. That sounds great, dude. But, like, what do you mean stack cash?

Like, in order for me to save a million bucks, I gotta make 4.

Steve: Mhmm.

Guest: Right? So, like, let's stop saying that for a second and stack cash. Like, I get it. Right? We wanna have a rainy day fund, but, like, you gotta produce enough money to actually save a bunch.

So my idea was, like, dude, if all these people that are worth a gazillion dollars, right, capitalize on a down market, I don't have a gazillion dollars. I got a couple bucks, but I don't it's not a gazillion. Mhmm. So I can't make the type of acquisitions in the next two years if there's this opportunity that people think is gonna happen to change the trajectory of my wealth and my family for the rest of my life. I can find the deals.

I can rehab them. I can hire people. I can build a culture, but I don't have a gazillion dollars. I wonder if the people that have a gazillion dollars need someone to do those other four things.

Steve: Yeah.

Guest: So I've started strategic partnerships, knock on wood. Two of them will actually be consummated relationships with funds that manage north of $250,000,000, and the other one's north of 2,000,000,000. And then what we'll do is we will find these markets or assets that when they go on sale can be purchased. And then these by the way, these people don't buy them to resell them. Mhmm.

They purchase them, and then they stay in the family for a hundred years. So our pivot is we're gonna leverage our marketing, acquisitions, construction, property management, relationships to buy large assets or large pool of single family assets in markets that our strategic partners wanna be in because of the economics. Right? It's either a rapidly appreciating market or it's a affordability is a big issue right now. Right?

Like, you can't buy a house for less than $300,000 in 50% of the markets in The US, but you can in Pennsylvania, you can in Delaware, you can in Arkansas, you can in Mississippi. So there's still houses in Mississippi that are nice places you can buy for a $100,000. So some people would say that home buyers will move away from where they want to live to where they need to live because of affordability.

Steve: Yeah.

Guest: And we've seen that, right, with Bruce, Norris who who spoke at CG who was mind blowing. You're able to predict what's really gonna happen in the market to a certain amount of accuracy just based on the economics. He's like, everybody would ask him a question because, guys, it's just a math equation. If this lever goes up, this one has to go down.

Steve: Alright.

Guest: Right? So our pivot is, one of the things I'm gonna do is I'm gonna lean into more coaching and consulting because I think right now as things change, people are gonna need more guidance. They're gonna need to tighten up systems. They're gonna need more of a support system. So I would love to be that for a select group of people.

So I'm personally doing more coaching and mentoring, and I also have the ability that our people are able to do that in small increments as well. So I'm able to pull in some of my folks, you know, for a call here and there to help people support in that particular department if they need the help, and then aligning ourselves with folks that have a gazillion dollars that wanna capitalize on this fire sale that may or may not happen. Right. If anything, it might not be the fire sale, but it will be a small reduction. Mhmm.

Right? And then what we saw was, like, every twenty years, like, Jimmy Vreeland told us, real estate doubles in value. Yeah. So we just need to to to watch it drop back to probably where it was, like, in 2019, and then that's where I think you pull the trigger and you buy stuff in volume. And then when you look at 2039, that stuff should double in value if it repeats the cycle that it has for the last hundred years.

Steve: Exactly. Right?

Guest: So that's how we're gonna pivot, and then just getting better at everything that we feel that we're okay at, just ratcheting up what we believe is acceptable. Buy a little bit deeper, get a little bit better at dispositions, make sure that our people are happy, make sure that we're keeping them incentivized both emotionally and financially. We just we've always been pretty good. I I I want us to just probably be great.

Steve: Yeah. So we're gonna jump into the questions. Before we do that, we got a quick promo video. So check that out. And then, guys, ask your questions.

We're gonna answer all of them.

Speaker 2: His sales training is unbelievable. Right? There is other sales training in theory. Going through this stuff with how he breaks down his business is this is, like, invaluable. Because there's no other way to get this type of, like, this type of access with someone who's such an open book about every little thing that is completely applicable to my business.

Steve: Anyone who wants to bring that business to the next level, anyone who wants to close thirty, forty, 50% more of the deals, I mean, there's no one who wouldn't benefit from being better at sales.

Guest: I

Steve: mean, anyone in real estate, anyone I mean, anyone that has any entrepreneur that has a business. Not all the information may be presented to you, but time management, knowing how to work with people, having sales skills, because I think we're all in sales and marketing. And it could pertain to anybody, honestly.

Speaker 3: I would have to say it's asking questions. That's the biggest thing. You don't wanna give an answer right away. And if you're able to, answer their question with another question. And also that along the process, it's gonna be very uncomfortable talking to the sellers, asking the questions that you need to and digging for paying, but that's gonna come with experience.

So

Steve: if you're struggling, I think this is David that you need to come to to make sure that you take your business to the next level. Alright. So going to the questions here, we got a bunch of great questions. So on YouTube, we got Camilo Tatis. I'm in the Long Island market.

How can innovations work in the New York market?

Guest: So everything in New York is harder. Right? Actually, I actually have met Dan Breaux, and it it is difficult,

Steve: when

Guest: you're an attorney estate an attorney state. However, one of our best students that we taught the brewer method to is Tommy Cafarella, who does business close by, also in an attorney state. And what we found is, it's kinda like I always reference the movie eight mile. Right? You remember at the end where Eminem opened up with the wrap where he dissed himself, and he said, here, tell me everything.

Tell them something they don't know about me. Right? So that's what we do in New York. What happens is is when you pitch a novation, the seller's like, yeah, man. This sounds great.

Like, this is a great deal. I'm all on board. The attorney just absolutely lasers the thing. Right?

Steve: Like, with a red Sharpie.

Guest: No. No. No. No. No.

So Tommy calls me. It's actually on my Instagram. He posted or sent me a voice message with his Boston accent and was like, bro, I just locked up this weekend 200,000 in novation deals. He called me the next week and was like, dude, $200 of my deals fell apart. What do I do?

So we actually created in the spirit of eight Mile, which is one of the best movies of all time, a cover sheet for people in the brewer method. When they take it to the attorney, we say, here's all of the things that your attorney's probably gonna have a question about. Mhmm. Why don't we create a sheet so that you can answer when you guys meet why this program made sense to you? He went from 50% fallout rate to literally, like, 20% fallout rate.

So in New York, what you have to do because of being such a litigious attorney state is you really have to arm your seller with the ammunition to be able to explain to the attorney why I'm choosing this option versus listing it or selling it myself or, you know, going the conventional means of selling it. 100% can be done in New York. I just met with the, oh, the two brothers, Austin and Jake.

Steve: Yeah. The Darragh brothers.

Guest: The Darragh brothers. Right? And they're in, they're like twenty five minutes north of Manhattan, and they do business in Connecticut and and Upstate New York. And, they're killing it with Novations. They have one of the best things I've ever seen them do, some young killers.

Right? They have in house counsel.

Steve: Mhmm.

Guest: Like, they hired an attorney that works in their office. He's a w two employee. Completely changed their business. Yeah. Because the crazy thing is New York because it takes, like, six weeks to get a title search back.

It's the craziest thing The attorneys

Steve: are awful up there.

Guest: It's horrible. Right? Like, you you really have no say about when you're gonna close. They'll let you know.

Steve: Mhmm.

Guest: So to answer his question, there is a way that you can condition, provide basically a cover sheet that goes with the deal. So when they take it to their attorney, you basically are are are nullifying, a lot of the the the the holes that are gonna shoot in your deal and then educating the seller on, hey. The attorney's gonna ask you this. If he asked why you're choosing to do this, what would you say? That's because I wanna go this route.

I don't wanna list it. I don't wanna make any repairs. No problem. We'll write that in here so that we provide a cover sheet that goes to the attorney that cut his fallout rate in half.

Steve: Yeah. That's awesome. So follow-up question or continuation of that question. How can I protect how can I be protected in the event a homeowner decides to renege on the renovation after the renovations are done?

Guest: So here's the the thing. When you when you learn about what we teach Innovations is it's revenue without Reno. We do not, so the the the renovation fix and flip, Novation is like so 2005. Right? The way that we apply Novations is really quick.

When you look at a 100 net leads, good operators are gonna convert about 10% of them. That leaves 90 people. 50 of those people not likely to make a decision to sell their home in the in the near future. Right? Unrealistic pricing, unrealistic timelines, multiple executors, wife and husband not on the same page, 50 of them go into a long term nurture campaign.

They're not gonna be converted. 40 out of a 100 have decent properties with decent expectations that would likely sell to you if you could just put the right plan in front of them. So the Novation deals that we're doing and by the way, 40 out out of those 40 deals, if you suck at sales and you don't present it to every customer the way you should and you're not real good at follow-up, you'll convert 5% of those. Yeah. Out of so that's two deals.

Out of every 100 net leads, you should find two new deals. If you still stink at sales and you haven't paid someone like Steve to teach you sales, but you present it to every single customer, you should convert 10%. If you're good at sales, you present it to every customer, and you have decent follow-up systems in place, you should convert 15%. These are nice houses. You're you're you are not doing renovations.

What you wanna use as as sort of your barometer is, will it pass an FHA appraisal? That's that's like the the the Mendoza line, sort of speak, right, from baseball terminology of where a novation start and stops. And these are people that are saying things like, Steve, that sounds really good, but I'm not in any hurry. And that's great that you can close in seven days, but I don't care if we close in seven months. I'm not going on a dollar below a 100, and your offer is 70.

Right? So our our form of novations appeals to almost 50% of the leads that you get, and they're people that generally have a little bit of motivation, but not the stress, and the property condition and their life circumstances condition are not weighing them down to the point to where they're willing to let it go at 50¢ on the dollar. So our style of novations does not include renovation, and it's a far more lucrative option than what I've seen with getting the property, renovating it, and then hoping that after you do a $50 rental that you're protected. I'm no moss on that.

Steve: Yeah. That's always a scary scary idea. Another question is what payment structure or salary would you pay your acquisition slash sales person?

Guest: So one of the things I think we do a lot of times when when we start this business is we want everybody to be $10.99 commission only.

Steve: Mhmm.

Guest: I think it sends a a a dangerous signal. It's like, I don't what I don't have the confidence in your ability to perform, so you're only able to make money if I make money. I think it's broken. I think you should hire acquisitions people, pay them 3 to $6,000 training salary. Right?

Because a lot of these people that you're hiring, probably already have a decent job. Mhmm. Right? So in order to get them to make the move to come over and work for you, if you hire them, say, 3 to $5,000 training salary for ninety days where they don't have to pay it back, they can actually focus on learning the job and not be stressed out about making a couple bucks to cover their bills. Then what we do is we have a blended salary and commission percentage, and they can choose that.

So if it's salary and commission, the commission percentage is a little bit less. For some of our more spirited entrepreneurs, they can go a 100% commission. And then what we have is a ten, twelve, and 15% payment plan for acquisitions. I don't mean to talk too fast, but I know we don't have a ton of time, and I think this is an important question. So they if they generate a 100 to a $150,000 in monthly revenue, they get 10%.

Once they go over the 150 mark, they go to 12% all the way up to 200. So they get 12% on the full $199,000. Wow. Right? So it's a $4,000 bump.

It's retro. The then then once they go from $2.00 1 to $2.50, if they hit two fifty one, they go to 15%. So if someone does $250,000 in a month, that 5% difference on $250,000 is $12,000, but they only get it if the team hits their goal. So the team has to hit a half $1,000,000 for the individual to get their individual bonus.

Steve: Interesting.

Guest: Yeah. Right? So, that's how I pay. But generally, I I think across the industry, 10% is like the average for acquisitions agent. I would encourage you to have an incentive plan, so where if they push for and hit revenue numbers that are well above or not well above, but reasonably above their expectation, that they should get some type of incentive.

And 12% is a is a is a reasonable amount to share with them. And

Steve: the same question for lead manager.

Guest: So lead managers, we pay I I think today, in order to get anybody, of reasonable value, you you gotta pay $20 an hour. Right? So and remember, these are sales positions. So I think for lead managers, you're gonna be somewhere between 17 and $20 an hour depending on the market that you're in. And then we pay a appointment bonus, attended appointment bonus, because that's their sale.

So that's like that's like an acquisitions guy getting a closing, getting an appointment for a lead manager or an inside sales agent is their sale. So we pay them for attended appointments. I think it's $25 per appointment. So if they schedule 15 appointments a week, that's a lot of money, and then they get a $100 per closing. So if they if their attended appointment ends up in a closing, they get paid.

Yeah. So our lead managers can make $7,075,000 dollars a year, work nine to five, and not have the pressure of an acquisitions or a full blown, outside salesperson.

Steve: Yeah. That's awesome. And you're you're talking about, you know, they're selling appointments. That's one of the things that, you know, we have our lead manager training program, something I do I'm doing with Jason Lewis. And the first thing we talk about as far as mindset goes is, like, you guys are not setting appointments.

You guys not book appointments. You guys are selling appointments. Right. So I love that you're using that same language. On IG, we got, Vicance.

How do you hire a sales rep on commission basis?

Guest: How do you hire a sales rep on a commission basis?

Steve: Mhmm.

Guest: I'm not a 100% sure how to answer

Speaker: that question.

Steve: Probably the question is how are you sourcing them?

Guest: So it it comes from social media for me. Yeah. One of the other things too, one of the more brilliant people I've ever met in real estate who's in Collective Genius, Phil Green and Eric Guidesen, they get what they call forced referrals from their people. Like, they literally sit down their best salespeople and go, I need 50 of your Facebook friends by 05:00 or you're out of here. Right?

It's like an old an old old showdown. But literally, what we really do is we wanna create employees that create employees.

Steve: Mhmm.

Guest: So I I would tell you that probably seven or eight out of our last 10 hires at any sales position in the company has come from a direct referral. Yeah. So I I would tell you to, network heavily, which you should be doing anyway as a wholesaler or a real estate investor out there. There's a lot of wholesalers that work for themselves that will love the opportunity to come work somewhere where they would have someone take on the lion's share of the ownership responsibility and stress. So one thing you can do is try and hire other wholesalers as employees.

We generally shy away from that because we feel like they're gonna leave us, but it goes back to what we talked about earlier. If you hire the right person and you lead and train them and manage them in a way that they don't wanna leave, you gotta eliminate the risk of them going out on their own.

Steve: And, on IG, Metro Phoenix wants or says leadership is easy if you're a natural leader. If you're not you're not all the books in the world will not make people follow you. What are your thoughts on that? I

Guest: think it's BS.

Steve: I don't think there's no

Guest: such thing as a natural leader. I think there's naturally more assertive people.

Steve: Mhmm.

Guest: There's bossy people. Right?

Steve: Yeah.

Guest: And a lot of times, we identify them as a leader because of status or their position or title. But I I I don't know anybody that was naturally born with what we now know to be the humility that's required for leadership and the rare blend of that humility and confidence that you can conquer the world. Yeah. I just I don't know. We talk to a lot of people, a lot of successful real estate people.

How many of those just said, man, I'm just a natural leader.

Steve: Mhmm.

Guest: It's the hardest thing. When you look at hot seats and what people presented and what they need help with, it's always leadership. I think it's hard. I think I'm a darn good leader Mhmm. Right now, And I I was definitely not a natural born leader.

Steve: Yeah. I think I think I was a natural leader. But even though I was a natural leader, I was still horrendous at it. I needed a lot. Like, I think I had the foundation.

Yeah. But, you know, through sports and everything else. Right? And then just people naturally wanted to kinda follow along where I was going. Yeah.

But that only got me so far.

Guest: I think you have to develop it.

Steve: That's the thing.

Guest: It could be inherit, like, it's in you, but it needs to be it needs to be uncovered. It's like,

Steve: I mean, talent doesn't matter if you don't do the work. Yeah. Right? So, like, I think maybe I had 10 to 15% of it. Yeah.

But the books and the training and everything else being surrounded by the right people helps you become that leader.

Guest: That's that's kinda like if you go back to, like, the old sports adage. Right? It's like, preparation beats talent when talent fails to prepare. Yeah. Right?

So I think leadership would be the same thing as as you can have the the best naturally gifted athlete in the world. And when you typically look at the people that succeed and win world championships and go to the hall of fame and leave a lasting legacy, on the sport when they're gone or the business when they're gone, it's because they've been able to develop as a great teammate or they've been able to develop as a leader that that that holds people accountable, but also, you know, champions and congratulates them when they do even the most you know, one of the things I think we we fail to do as leaders that I wanna make sure I share because I I remind myself of as often is a lot of times as leaders, we only celebrate or congratulate the great. And if I were to go into any organization, a lot of times I ask this business, what if everybody here just did 90% or 75% of what they're expected to do? Like, oh my god. Like, things would be great.

I was like, so when someone does 75% of what they're expected to do, how big of a deal do you make of it? Well, we don't. They hit 75. But hold on for a second. You told me if everybody so we we we we don't celebrate because often to hit 75% of goal, you had to give a 100% effort.

Mhmm. So I'm more gonna congratulate the effort it took to get you to 75% than I am gonna exaggerate the fact that you fell short of your goal. That's a slippery slope. Right? Like, you gotta be careful that you're not encouraging mediocrity.

But, again, the one thing that I can say is when you bring the right people in and you've been very disciplined about that, that it that's off the table. Mhmm. Right? I'm incentivizing a person that I know is the right person that did all of the right things but came up a little bit short. Yeah.

Does that make sense?

Steve: Absolutely. Rewarding the effort. So I

Guest: think leadership is the same. You you can have naturally embedded leadership instincts, but it is something that really needs to be developed and practiced and and and constantly pursued.

Steve: I think, I go back to, you know, my example I always go to is, Darius Miles versus Kobe Bryant. Right? Because they're both on the cover of Slam Magazine talking about, like, this is the future. Yeah. You know?

And

Guest: Nobody even knows who Darius Miles is anymore. It's like

Steve: Darius Miles, like, dunked on Charles Oakley, you know, Michael Joring camp. And well Yeah. That was all talent.

Guest: Yes.

Steve: So another thing too I wanna say earlier, you know, you're talking about how you hired all these people, through referral. Gary Harper, you know, he says, like, you know, the best indication of the health of a company is how many people are referring within the company.

Guest: Yeah. He he told me that the that actually they started that staffing company as a lead generator for their leadership business. And I said, what do you mean? He goes, when people call us because they're struggling hiring, it means they have a leadership problem. Yeah.

And, I don't know what was a couple of CG meetings ago. Right? There was a keynote that said, you can't hire the right people until you become the right leader.

Steve: Mhmm.

Guest: So anytime someone says, man, I just can't find good people, chances are it's because you're not a good leader or you're not the right person. So

Steve: Which is and goes full circle to what you said in the very beginning. Right? Like, as far as scaling was that you learned that you weren't the right leader at that time. Yeah. Kimil, another question on YouTube.

In process of onboarding with Bateman, Audantic, and Lamasue, and I'm a one man show. Are you about to spend some money? Yes. He's a one man show.

Guest: I mean, that's a $30,000 a month commitment we just talked about.

Steve: Who would you recommend be my first hire?

Guest: It depends on what you're good at. If you stink at sales and you don't like it, you may wanna get some support there. I'm gonna assume for a second, if you've just invested that kind of money into those resources, that you're probably pretty good at sales. My first hire would be probably one of two people, an administrative person that could take some admin duties off of my plate and or a inside sales agent because you're gonna get a bunch of leads from those lead sources. Only 50% of them qualify realistically for you to make an offer and to pursue making a deal.

So if you hire a lead manager, they can talk to the 100 people you get to month and whittle that list of a 100 people down to the 40 most qualified people where you, as the sales leader of the organization, should be able to close 15% of those. So either a executive assistant to help me with admin if you don't have that support now or an inside sales agent to take all of those leads. Because with Bateman and Audanek, you're gonna get a bunch of leads. Right? Mhmm.

But the reality is you're only gonna convert 10% of those, but you have to talk to all 100 as if they are all a deal. You can't treat you don't know where the 10 deals are in those 100. So you have to treat all 100 as if they're a deal until you know otherwise.

Steve: Right.

Guest: So I would say an inside sales agent slash lead manager, when you're gonna turn on that type of because you you could have leads coming in. And if you don't answer it live, call them back in sixty seconds and follow-up five times every day for seven days, you're gonna waste all those leads.

Steve: So, great by choice. You you read that recently. Yeah. And, you made me reread it. So I I'm close to finishing it.

And, you're right. There were things that, you know, I forgotten. And one of those principles was, you know, fire bullets Yeah. Before cannonballs. Yeah.

I think, Camilo, you might be firing a cannonball here.

Guest: Sounds like it.

Steve: I've been trying to do too many things.

Guest: Yeah. To to make that type of commitment without knowing who or maybe they're just talking about their next logical hire. I mean, obviously, if you're able to make that substantial of a commitment, you've you've you've made some money. But, and I and I think it's okay to fire cannonballs though after you fired bullets. So there's a place for cannonballs.

Right? And for those of you that haven't read the book, bottom line is, he talks about great by choice and companies that that that that were great. One distinct difference between them and the companies that failed is they make empirical innovation. Empirical innovation for them means If they think that they should go do some data or some PPC, they spend $3,000, get a couple leads and see how they convert, and then they go all in and spend $30 Mhmm. Because they have empirical data that says, hey.

Listen. We're getting a five x return off of that. We're now gonna go all in and spend $50 a month on those same lead sources. So Great by Choice talks about bullets, how they're what is it? Low distraction, low cost, low risk.

And low risk doesn't mean that it has a high probability to succeed. It means if it fails,

Steve: it's not

Guest: gonna make you out of business. Yeah. Yeah. It's a great book, by the way.

Steve: Jalabi on YouTube. How do I contact mister Brewer if I have a turnkey rental under contract for him to acquire an renovation?

Guest: Best way to get a hold of me is, Instagram. We can post that in there. I think it's brewer underscore invest, or you can find me on Facebook. I may be getting close to 5,000 people, but, you can follow me on Facebook, or you can email me, eric@integrityfirsthomebuyers.com.

Steve: Alexis Adams wants to know, how do you pitch a innovation agreement?

Guest: Do we have time for that? I can probably knock it out in a couple seconds.

Steve: Go for it.

Guest: Less than a minute. So here's the bottom line. If you know anything about negotiation, Steve will tell you that you had to lead with a price anchor. When you lead with a price anchor, behavioral science will tell you if someone was thinking a 100 and you price anchor them at 30, you've modified their expectations about where they're gonna end up. So you need to lead all of your wholesale appointments with a price anchor.

If that person has made the decision that they've exhausted negotiations and your max allowable offer, let's say, is 70 and your clients is a 100, what you're gonna say to that person is, hey, Steve. If it's okay with you, I'd like to share, a really cool program that we started not so long ago, to help clients get more equity out of their home. I'm not a 100% sure that this property in your situation would qualify. You might not even be interested, but it's called our equity protection program. And, really, myself and the owner of the company realized that and you might not know this, but eight out of 10 people that I meet with, say, yes.

They'd like to do a deal with me, but they say no to my price. And, as a salesperson, that's just that's hard. Eight out of 10 times, I'm striking out. Right? If I was in baseball, I'd get sent to the minor leagues.

Steve: Mhmm.

Guest: But, so I sat down with the owner, and I said, you know what? We gotta figure out a way to pay these nice people more money for their homes. But I do understand that we need to maintain the integrity of the investment. I mean, we're investors. Right?

And, first, the owner laughed at me and threw me out of his office and took away my preferred parking spot at the office. And then I just put my my my fist down, and I I'll I'll go like this, and I'll go, listen. This we have to do this for two reasons. One, we have to help more people. And in our company, that's part of our core values.

Right? It's part of our purpose. So it's easy for us to to say that and and know that we mean it. And number two is as a salesperson, like, I just can't strike out nine times out of 10. It's it's just killing my my mindset.

It's just it's hard for me to scrape myself up every day and say, alright. I'm gonna come back in tomorrow, and nine times out of 10, I'm gonna strike out. So we came up with this equity protection program, and it only requires two things from you. A little bit of flexibility on providing me reasonable access. We don't say showings.

We say reasonable access because showings is a listing, reasonable access is an investor relationship. And then we need access to put the property on the open market. We say open market, not MLS, because MLS sounds like, why wouldn't I just list it? Which is what 95% of investors, when I explain novations to them, they go, why wouldn't they just list it? It's because we position and we pitch it, and and and and then there's the other part.

If you've done a good job over the course of your sales appointment, which is thirty to sixty to maybe ninety minutes long if you're in person, they actually should wanna do business with you.

Steve: Right.

Guest: By not presenting them with an option that allows you to make a reasonable profit as an investor and get the money out of the deal that they need to have it make sense, you're actually doing that client a disservice. Matt Andrews, who works with us very closely, says the only reason you wouldn't do novations is because you don't know how. Right. Right? So that's how you pitch novations.

And then Steve's heard me before, but I don't wanna get too deep. Is then I tell him that I'm basically gonna bring the property to the market with four different options as is, but because I understand construction, if someone comes to me with a problem, I can fix it. I've heard you say loud and clear, Steve, that you wanna sell it as is no inspections. The second option would be someone might wanna come and buy this house for me. Right?

And they'll buy it the way it sits, but they wanna do a kitchen. Now that kitchen, they're gonna know cost $15,000 retail. But because of my relationships with contractors and my understanding of construction, I can probably get that kitchen done for $10,000. Now I've made a little profit on the upgrade that the buyer selected, not on the purchase of the property because you've done such a good job squeaking all of that equity out of the deal. Third option would be is maybe they want a kitchen and they'd like that roof done.

You and I talked about that it might last for two years, but it might last for twenty. A lot of people in this price range are just gonna want the security of knowing that that roof's gonna last for twenty years. Same deal. Yep. They might think the roof cost $15,000, which it does, but because of my relationship with contractors and my experience in real estate, I'm able to get it done for twelve.

Now I've made another very small but reasonable profit on those upgrades, not the purchase of the property because you've done such a good job squeaking all the equity out of the deal. The fourth option is, and, boy, I hope this doesn't happen because it's a it's a really big pain in the butt, is they might come to me and say, Steve, I'll buy this house from you, and I want it fully renovated, and you name your price. Problem is is the we're probably gonna make good money on that, but it's gonna take six months. They're gonna show up at the job site every day. They're gonna wanna pick out literally every light fixture.

And then 50% of the time, something happens with the deal, they get upset, and the deal's off. So we only do it if we get a really big deposit, and we're doing it well after you and I have settled up.

Steve: Yeah.

Guest: So if we do that and you allow me those two things I talked about, I can bring the property to the market with those four options. It gives me a distinct advantage over every other the house that's on the market. Because if you go look at the neighbor's house, I'm sure it says here's the price, here's the condition, take it or leave it. Where I'm saying, hey, pick your options, one of these filler. Right?

And then we put right in the the public remarks, ask agent about possible renovations. And then here's the the the the the reality of it, 99% of the time we don't do any of those four.

Steve: Right.

Guest: But we're open to it. And then when buyers come to us and they ask about renovations and we tell them we need a big deposit and we tell them we're only gonna do the renovations after, they go, okay, we'll take it as is. Yeah. Right? So 99% of the innovations we do, we only do punch list style appraisal repairs.

Steve: Ingrid Hernandez, she, mentioned that she prefers sub two and retail sub tail versus novations. She had issue with where or innovation where the seller got kinda squirmy. So have you ever done subtales? Were you doing sub two in retail?

Guest: I have not, but I in my experience, it's much easier to get someone to work with me. And, again, I think one of the things that we gotta clarify is up until we've really been teaching and preaching this version of novation Mhmm. What everybody else has done before is is is not the same.

Steve: Right.

Guest: Right? It's just so I would tell you to revisit novation. Your experience previously might have been negative because of that form of novations, which included rehab and all that stuff. But, like, if I'm looking at it from a consumer perspective, I'm much more likely to be squirrely when I'm trusting you to make my mortgage payment for twelve years than I am saying, hey. We're gonna settle up in ninety days, and I need reasonable access to be able to bring this property to the open market in the next ninety days.

You shouldn't have too much trouble with sellers getting squirrely, particularly if you're being very transparent. And that's one of the things I love about Novations is I'm saying, I already told them I'm gonna list it. I'm gonna try and work one of these four deals, and I'm gonna do my best to make profit on someone that comes along and makes me an offer to buy your home. There's zero confusion about what my plan is when that property goes on the market versus the normal wholesale where it's like, I'm bringing my partner or my contractor, and it's this sort of gray area song and dance about whether you're actually buying the home. Do you really have the cash?

Are you gonna settle on time? So one of the things I love about Novations is it's very transparent, and sellers generally just don't get squirrelly.

Steve: Right. So, that's all the questions I see here. I want you to think about a message I'm gonna leave all the listeners with.

Guest: Okay.

Steve: And then, we have just a couple of quick announcements. So, guys, you guys already heard earlier. We got sales disruptors day and a half in my office talking about sales, our sales process, and you're gonna get to meet everyone in my office, see them work, see them work real time. So, you know, we're not just talking about it. Tomorrow, Eric and I were doing Pardon the Disruption.

Right? We got that with RJ and CJ. I don't even know why we have them. It should just be you and me.

Guest: I mean, flumpers.

Steve: And then we got, this Friday, I'm doing my very first show with Paul Sparks. We're gonna be doing Certainty Talks. So that's gonna be our first, show this coming Friday. So what are some last thoughts you want to leave all the listeners with?

Guest: Man, that's tough. I feel like I've, given you all I had in the last hour and twenty minutes. I don't know. I mean, I wanna try and come up with something, like, cool and trendy to say, right, that, maybe shocks people. But I I think it's just, to keep going.

You know? I I can remember a time in my business. I can remember a time in in my parenting journey. I can remember a time in my fitness and health journey where I just wanted to quit. And, I would just encourage people to keep going.

Seek counsel. Sometimes that shows up in in different ways for different people that may be, spiritually where they're they're they're finding some some peace and some guidance through, you know, the church. Sometimes it's you know, you and I have become great friends, and there's been times where you've given me some sage advice that might not at that particular moment, had the impact that it was intended or or or designed to have. But six months later, it resonated with me because I was more receptive to what was going on. You told me a year and a half ago or so or maybe a year ago, we sat down, and I was thinking about all this stuff.

And you actually challenged me to do what I'm doing now. You're like, why wouldn't you do it yourself? Like, you can do whatever you want. People like you. You know what you're talking about.

Why would you, like, go this route? That seems small. You basically called me the p word. And, at the time, I I fought back. I was like, no, dude.

You don't understand. And then, once I got through that phase of what I was going through, that was actually right when I lost my COO, and I was distraught. Right? So when you challenged me to think big, it was like, dude, I'm in preservation mode. So just being part of of a community, being part of a group of people, a lot of times as real estate entrepreneurs, we force ourselves to walk that path alone, and we feel like we can't talk about our problems or our emotions.

And, I would just encourage you to keep going. And, this may surprise you to hear from me because you met me a couple years ago, but, just love on people, man. Like, if you love on people, it's amazing the results that you can get out of, those relationships. And, I've really started to to just give people the benefit of the doubt. I don't ask people to earn my trust anymore.

I extend them that trust and then just keep a close eye on whether or not they're a good steward of that. And, so that would be it. I would just say keep going. Love on people. And, you can find the answers that you're looking for.

You're almost always just one relationship away from everything you've ever dreamed of. Yeah. And, that sounds pretty profound. Right?

Steve: Yeah. Well, it is. Okay. It's absolutely true. Right?

And we found each other through, you know, being in a community together. Yeah. And, I appreciate your kind words. And it's it goes both ways. Right?

Like, I've called you.

Guest: I was hoping you would point that out because it's probably a little skewed. I think think I've given more to you than I've received. But, no. It's it's you're right. I mean and and you know what?

And Larry will tell you this. Right? He says, when you're vulnerable

Steve: Mhmm.

Guest: It means that you can acknowledge your weaknesses and admit them. Mhmm. And that creates the opportunity for people to help. And then here's the deep part. Helping people is like crack Yeah.

To people. Right?

Steve: It is.

Guest: So when you become vulnerable, right, you give people the chance to help you. And when that's the and and so that's the that's the paradox. Right? Let's end on that note. As as a leader, we never give ourselves permission typically to admit that we're wrong or we need help.

I gotta be big and strong, and no one can ever see me be vulnerable. When the reality turns out, it's the exact opposite. The more vulnerable you are as a leader, the more people will help you, which means now you have 10 people working on something versus one. Right?

Steve: Mhmm.

Guest: And it builds that trust, which if you read Five Dysfunctions of a Team, it's one of the best books ever written that'll help you build a business. The foundation of results is trust, and that's where we get things like commitment and healthy conflict and accountability. So, yeah, man. One of the this is one of the more meaningful relationships in my life. I consider you to be a friend.

I'm so thankful that you had me here. I had a lot I wanted to uncover and and get out about what's changed in my life since the last time that we spoke because I'm pretty proud of it. Yeah. And, I also just wanna encourage people. I'm glad you asked that question.

I wasn't prepared for it. You put me on the spot a little bit, but, I just wanna encourage people to keep going. And, that's part of why I'm coaching and mentoring and why I'm so excited about my role at CG because it gives me the ability to give them sometimes that little nudge that they need to to not give up. And for me, if I'm able to to help enough people by the time I leave, not here by the time I leave this Earth, that's how I'll measure, whether or not, you know, I did a good job.

Steve: I think we should include that one particular slide of my picture with Eric Brewer.

Guest: What? Which one?

Steve: The picture of Eric Brewer.

Guest: Yeah.

Steve: The the chemist the chemical? No.

Guest: That's I need to sign something as part of this. Like, you can't distribute this content unless that picture never resurfaces again. I think it's only fair as a two time how How many two time guest have you had?

Steve: You don't want the answer to that question.

Guest: A lot. Yes. Okay. I feel like crap now. So I'll be back in three months, and then I wanna know how many three time, perfect that you have.

But, no, man. I really appreciate you having me here. You got a great platform. I've met some some extraordinary people just through folks that went back and or or listened to this from a year and a half ago and have reached out to me because something about that conversation resonated with them. And, again, helping people is, like, crack the human.

So every time someone reaches out to me, it was like, man, I heard you on Steve's show. And what you said about coming from the car business or doing this or doing that really helped me, and I just reached out to you to tell you thanks. It's it's almost as good as money. It's not quite as good. I mean, I always like to get a paycheck, but it's a close

Steve: I do think it's better than money.

Guest: It's you gotta have both, though.

Steve: You gotta have both. Yeah. You can't have both, but you only need 75,000 a year.

Guest: To be happy, everything above that's a waste. Yeah. You're right.

Steve: So perfect. Alright. So thank you so much. Pleasure as always, and we'll see you guys tomorrow. And Eric will be back again towards zero points.

See you guys next week.