Real Estate Disruptors Best of 2022.

Steve Trang: Hey, everybody. Welcome to today's episode of Real Estate Disruptors. It's the end of the year. We don't have a live guest today. What we do have is Aaron, one of our top team members.

He's the one that has to break down all our episodes, digest it at even deeper level, and break them out in the clips and snippets. So I think he understands our material better than anybody else. What we're gonna be talking about is some of our favorite episodes as well as some of our favorite moments. So, what are some of your favorites throughout the year?

Aaron: I think, honestly, I would have to start off with, Ramon. He his him and Rodrigo, when they came on here, they started the energy off. Probably the funniest podcast in my opinion. When you asked them, well, how was life before real estate? And, you know, he kinda gave you a very blatant answer, said terrible.

I feel like how a lot of real estate people feel.

Steve: Mhmm. So life before real estate was horrible. Mhmm.

Aaron: So that was probably one of my favorite moments. And then I would just I I think I learned a lot also from just

Steve: listening to these. Definitely.

Aaron: David Richard, I know the way he was talking about how he sets up his bank account. I remember immediately after learning that one is one that I took in. I was like, oh, let me let me try that out. So I put that into effect. And then TJ Dajani, he was very interesting, just talking about Airbnbs and automation.

I didn't know a lot of things like that. But I think those would probably be my some of my part of my top three. Of course, PACE. Pace came in twice. Actually, interrupting Tim Ross was funny.

Oh, yeah. That's right. Yeah. He went on live, which was a cool moment. So we had a lot of people that, like, I was actually interested in meeting that came on this year, and it was fun listening to him.

Steve: Yeah. I could say for sure, you know, having Ramon and Rodrigo come on were some of my top moments. It's funny you bring up the the life was real was horrible for real estate. That was funny. For me, it was the fact that someone in the, YouTube chat specifically asked for for them to sing their mariachi, and then they did.

Yeah. And I didn't realize at the time how loud they were. I mean, I recognize that mariachi is typically pretty loud, but people on the other side of the wall were asking after the show, like, what happened over there? What was going on? Oh, there you go.

Or something. During your podcast. I would also say, you know, there are a few other really favorable or memorable moments. You know, we had Shane Nynan. He was the first person we handed the plaque to.

Before we jump into questions, there's two different things I wanna do.

Shane Nynan: Okay.

Steve: Out of the out of the first is wanted to present this to you.

Shane: Oh my goodness.

Steve: So we got this right here, plaque for Shane and Lauren.

Shane: Oh my goodness. 100

Steve: goodness. Millionaires. So we didn't figure out the mic logistics. So Okay.

Speaker 3: We just

Steve: have to shake your hand from here. We'll take some better pictures later on. Okay. Cool. That's it.

Live during the show. So that's really, really cool. We had Matthew and Nicole Potter. So Matt came on, and then another time we recorded, handing them the plaques. But, you know, their journeys is we've been saying we wanna create a 100 millionaires.

It's not lip service. You know, we actually do it. Ryan Zolin, he came on as well to recap what's going on. He had a killer killer, first six, seven months of the year. I mean, the numbers he was sharing is like, man.

Like, how can someone I'm working with be kicking my butt this badly? And as far as favorite episodes, you know, it's really cool to have all our friends come on. You know, you mentioned, Pace Morp became a couple of times. Ryan Pineda, you know, just sharing whatever craziness he's he's up to lately. I would say as far as, like, you know, for me, the thing that attracts me the most are our leadership principles.

And so, you know, we're talking about leadership. We had, Tim Brods come on. Right? He talked a lot about his journey and how he went from, like, not being on paper gas to where he's at today with all these thousands of doors. Eric Brewer talking about the importance of how to effectively lead your team, and he's faced adversity, you know, multiple times.

He talks about the the journey, the lessons he learned, how he's able to lead organizations today. We had Larry Yatch. I mean, the guy's a freaking Navy Seal. Right? The guy Yeah.

Knows how to manage people. And he mentored my team. Right? Like, I don't think we would make it possibly make it through this crisis of a year in 2022. We didn't have Larry Yatch on.

I don't know. There was another person, Jimmy v. Jimmy Vreeland. Right? The crazy person on part of this Russian is actually a very sane and normal human being.

He talks about, you know, his journey from, former West Point and Navy, army ranger to, you know, how to trans how that experience translates to to real estate.

Aaron: Yeah. And I why you're saying this made me remember some, like, stories. This one is a little bit, newer ones. I might not get into the cut, but, Dean Rogers, when he came on talking about with Phil Roger Phil Rivers, pardon me, the $300,000, like, tossing of the water bottle. I was like like, sometimes I was just on podcast.

I listened to him. I have to tap my, coworker, Johnny. I'm like, Johnny, like, listen this. Like, listen this. It's crazy.

Steve: So Yeah. That is insane. Yeah. And then we also had, you know, men mention Dean. So, like, I don't have this podcast if I didn't go with Vic Heredia, who was another guest this year, to Dean Grazi Yossi's event.

And we've been trying to get Dean Grazi Yossi on the show for four years. And this was the year where we went to his office and recorded an episode inside his office. So that was pretty cool. That's like, you know, it's like a bucket list thing. So to be able to repay or pay homage to the person to help us at least start this journey, that was a really cool experience for us.

Those are our favorite moments for 2022. Hope you guys enjoy this episode.

Speaker 4: I have to tell you that this is my favorite podcast I ever come on. I get so excited. This is the only podcast I get butterflies for.

Steve: Well, I appreciate that.

Speaker: Bro, you're the best. So first time I came on here, I gave my cell phone number out. K? So that's not a tip for you guys to go look at that episode. But I put my phone number out there.

Not only did I get business partners from that, I got business relationships. I just bought a $3,000,000, multifamily deal, sub two and seller finance because somebody got my phone number from your podcast. Yeah. You have made me millions of not thousands, not hundreds of thousands, millions of dollars since my first episode.

Steve: Well, I appreciate that.

Speaker: And you've made a lot of people millions of dollars too, and people need to understand this. Like, my here's my strategy. Anybody that comes on your show, I'm like, oh, that's obviously somebody that's been vetted, somebody that Steve knows is legit. I'm gonna go become friends with that one person, and I'm gonna see how I can make money with that person.

Steve: Really good strategy.

Speaker: Simple strategy. Simple strategy.

Steve: And, I mean, I don't really need to get in, you know, too deep with this as far as the social media component. Right? Yeah. Obviously, you're doing really well on social media. But, you know, you're saying just you coming in on and just giving your phone number has made you millions of dollars.

I mean, how what would you say to someone right now that is, like, should I make content?

Speaker: Get over yourself. One step one, get over yourself. Like, there you have everybody has something inside of them to benefit somebody else. And I think the biggest reason why they feel like they don't is they think that everybody is looking for a full book and that you're just one step ahead of them. So I'm like, guys, if you're just one chapter ahead of somebody else, like, you've done one deal or you've cold called a hundred hours, you've never got a deal, then tell people that.

Just show people the genuine authenticity. You're one step ahead of them, and that's all they need to know is that one next step. So forget about the imposter syndrome, forget about all that kind of stuff, and post. I I look at it this way. If I'm driving from Arizona to California and I'm hungry, how do I know there's a place to eat in the middle of the desert?

Well, there's a sign Yep. Sticking up maybe two, three miles down the road. I'm like, oh, great. Meanwhile, if none of these hamburger joints or these sandwich shops had any signs, I would just drive right back by them not knowing that they actually had had a call.

Steve: Let us know they were in business.

Speaker: Right. So throw up the damn golden arches, guys. And the golden arches in this business is social media. It is your business card nowadays.

Steve: I saw a clip that you had posted. I'm assuming someone on your team posted. Right? But that was a great clip. It was you and Brandon Turner with some, video event.

Yeah. Right? Talking about dating versus marriage. Right. Can you elaborate on that?

Speaker: Yeah. Actually, so first episode I did with you was a little over three years ago. I give my cell phone out, and I said, if you guys need help closing deals, you guys need help with whatever, creative finance deals, going on appointments, just let me know. I'd be happy to help you. So Cody Barton, my business partner, shoots me a text.

Didn't know me at the time. He just saw me on the show, and he's like, oh my gosh. That's exactly what I need. K? So Cody and I go and sit down in a McDonald's.

Ironically, then I'm I'm bringing up the golden arches. We go and sit down in a McDonald's. Literally, he pulls open a laptop, and he goes, Pace, I've got warm leads. I go, prove it. Okay.

So he gives me these leads. I'm sitting there, again, guys, in a in a McDonald's. I fly the next day to a Mark Evans event. And as I'm stepping out and taking breaks from the Mark Evans event, I'm making calls to his leads. That weekend, in two days, Cody and I made $40,000 together because he's like, here's the leads.

I close the deals. Right? And immediately, we were like, woah. This is a great vibe. Mhmm.

We should partner. Yeah. But we didn't do that. We dated for six months because you wanna wait for people and their true nature to come out after about six months. Because when you first meet people, their guard is way up, and you don't know who the real person is until they get that late that laziness.

Steve: Mhmm.

Speaker: So it's why you also shouldn't propose to anybody until you're at least dating six months. So for me, Cody and I dated. We just JV'd on everything that we did. And then after about six months, we looked at each other and said, man, we this is great. Yeah.

This JV has made us both a lot of money. We like working together. We actually look forward to looking or working with each other, and we're constantly in competition to see who can outwork the other person. And here we are three years later, it's the same exact thing, constantly trying to outwork each other. He always loses, but he still tries.

Yeah. I love Cody. And I got my partner from you, actually, from the show. Again, Steve Trang has made me millions of dollars. So dating, always, I would say, six months of JVs before you go into a partnership.

Steve: We did an event.

Speaker 5: It's been a while. It's been a hot minute.

Steve: So let's kinda go real quick through the early parts, right, about your journey, and then we'll get into, like, where you at today. So first is what got you into real estate?

Speaker: The recession. So I jumped in when everybody else is jumping out. I had just gotten a degree from ASU in realty studies, and the market took a massive shift. And I learned how to do short sales extremely quickly and started doing those and realized within about three months that I was one of the few people on the planet that could actually get them approved at that time. Yeah.

So that was the quick and dirty jumping into real estate and just kinda took the ball and just ran with it

Steve: at that point. So what's a short sell?

Speaker: Short sell. Might see some more of those starting to starting to come to fruition. Might. What it is is it's where a homeowner owes more on the home than it is worth in its current condition. So example, you have a $300,000 mortgage.

Maybe the home's only worth $2.50 in its current condition. We submit a packet of paperwork and negotiate with the lienholder to approve the sale at the market value.

Steve: Yeah. And the more recent ones you've done, I think, when we've talked about it was buying someone buying a house with VA loan.

Speaker: VA loans, we're also doing a ton of reverse mortgages right now. Home equity conversions, yeah, we're doing a lot of those because the baby boomer population is, you know, they're at that age.

Steve: Mhmm.

Speaker: And, a lot of them have taken out the reverse mortgages, which in turn leaves a substantial debt on the property. And then when they pass, their errors are kinda stuck with it, for lack of better words. So we're working out short sales on it, cleaning it up, property goes, you know, down the line, and then ultimately gets resold generally to, you know, an owner occupant.

Steve: Yeah. So this was 2007 or 2008.

Speaker: 2008.

Steve: 2008. So that's when we first connected. And so you're doing short sales then. And, actually, I talked to people here or there. They're like, hey.

You know, I got a situation where it's there. I was like, oh, talk to my short sale guys. Like, you have a short sale guy? Like, you're still a short sale guy out there. That is me.

Yes. How many short sells are you doing right now?

Speaker: Right now, I think we have in queue I wanna say it's over a 100 that we're Still. That we're working on right now. Yeah. So, I mean, we're still we're doing them still, just not at not at the o eight, o nine Of course. Twenty ten numbers, but we're still doing a lot.

And we are starting to see some trickles of certain areas where there's a little bit more of a concentration of them. Again, a lot of that goes to, like, the reverse mortgages that we're seeing right now. Okay.

Steve: So you have reverse mortgage or you just don't have enough equity. Master guy. I'm the guy. How many have you done total? Short sales?

Speaker: Yeah. Between, my wife, who's my business partner, and myself and our transaction manager, Marissa, one of the greatest in the game, we've done over 18,000 since 2008.

Steve: 18,000 for ourselves. Yes. Okay. So if someone has a deal where there's not equity, how do they send that to you?

Speaker: Usually, what I say is just go ahead and send me an email with property address, preferably the bank information and kinda numbers, what you think it's worth, what, what, what you think it's worth, and then ultimately, what's owed on it. From there, generally, we're gonna know within about five minutes whether or not it's gonna be something that we're gonna be able to work through as a short sell. Email address? Matthew@stunninghomes.com.

Steve: Yeah. So for those of you guys don't know, like, I got a chance to be the guy known for short sells. I go out there and promote. I was like, guys, if you're upside down, let me list your properties, and then I would just have Matt do all the work. So it was a great situation for me for many years.

Speaker: It was. Absolutely. And I'll never forget when we sat down, had lunch, and you were like, this is what I wanna do. And I'm like, yeah. I'm all in.

Let's go. Yeah. And, well, here we are.

Steve: And back then, you're getting paid 1% on my $60,000 transaction. So $600 More.

Shane: To go

Steve: to the banks for months.

Speaker: Four of us to split. Before you to split.

Steve: Yes. Okay. So what are we gonna do as far as our team? Our acquisition strategies are gonna change. So we've been doing cash first, really cash only, right, for our wholesaling team.

That's what we've been doing for the last, four years is cash options only. Right? So what are we gonna do? We're going to be offering novations more often. So we're gonna offer cash first and then novations.

But if novations doesn't work, whatever doesn't if they can't turn into a deal, they gotta turn it in. And once they turn it in, I'm gonna talk to them. I'm gonna talk to the homeowner, figure out why cash didn't work, why novation didn't work. And at that point, we're gonna start pitching creative offers. So that's option number three.

Right? So cash first, then novation, then a creative offer, and finally, a realtor referral. So that's how we're gonna modify our acquisition strategy, strategies. We basically need to come in with more than one option. We're gonna come in with multiple options.

Again, figure out what the situation the seller is in, what the ideal outcome looks for them, and then come in and offer cash, offer novations, creative offer, and finally, a realtor referral. Now that's probably not rocket or a a a revelation for you guys. Right? A lot of you guys may be doing that already. But what is definitely gonna be changing is our disposition strategies.

Here's the reality. Our flippers that we've been selling to, our wholesalers and flippers that we've been selling to for the last two years, I mean, it's been really easy to sell. Like, our disposition guys didn't really have to work that hard to sell the property. I mean, our best disposition strategy is posting on Instagram. Right?

So it hasn't been that hard to sell the deal. But right now, flippers' appetites have changed. When they were usually before, they were willing to pay 85%, sometimes as high as 90%. Now they're saying they need to be a 65 to 70%. That's not gonna work for us as a business.

Hard money lenders, they've changed their terms overnight. Again, totally understandable. I understand where the flippers are coming from. They gotta price their risk because they can't pay what they're paying before. Of course, I get that.

Hard money lenders, either their funding has dried up or you gotta put more down or you gotta pay more points. You gotta pay pay a higher interest rate. So hard money lenders are becoming, not as great of a partner as they were before. And, again, I totally understand where they're coming from. One of the things our disposition team needs to start doing is create relationships with different hard money lenders.

Right? You find other people that we can partner and buyers with. We're gonna start reaching out to realtors. I think that, right now, as flippers and we don't really deal as many as many buy and hold people in the Phoenix market, but, as our buyer pool or buyer appetite changes, we need to be more proactive. We're gonna start reaching out to realtors.

So, finding realtors that have sold homes nearby. Right? Finding the top realtors in the market, reaching out to them and offering them off market properties. Now here's the thing. A lot of realtors don't wanna hear from investors like us.

They really don't. And that's fine. Right? We move on. We're gonna find the realtors that want to work with us, that want to hustle, that want to, do more business, especially in a market that's slowing down.

So, that's one thing we're gonna be adding. The other thing is if a flipper needs to buy a property at 65% for it to make sense for them, they're not our buyer. So you guys have heard us talk about on our role plays, on our scripts, that if a seller says, I need you to pay this price, well, I'm not your seller. Right? Or I'm not your buyer.

Well, here's the same thing here. If you need to buy this house at 65% for it to make sense for you, you're not our buyer. And I'm gonna take those deals down myself. Why would I sell it to someone else at 65% and sit here while I'm really hustling really hard, Right? Spending the money on marketing and so on, I try to sell this deal at 65%.

For us to be able to sell a deal at 65% and make money, we need to be buying at 55, 60%. And I'm not saying it can't be done, but the deal volume, the number of deals we're gonna do per month is gonna change drastically, right, to the point where we might be out of business. So, for us, this is how we're gonna pivot. Now how do you pitch a innovation agreement?

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

Steve: seconds. Go for it.

Shane: 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?

Steve: If I

Shane: was in baseball, I'd get sent to the minor leagues. Mhmm. 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 novation 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. Right.

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 good 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.

Speaker: Yeah.

Shane: 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 four.

Steve: Right?

Shane: 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.

Shane: 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, 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 novations 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 an issue with it where or novation where the seller got kinda squirmy. So have you ever done sub tails where you're doing sub two and retail?

Shane: 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 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. Right.

Right? It's just so I would tell you to revisit novations. 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 squirrelly, 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 really, you know, stuck with me is desired end states. Right? Commander's intent. So we're gonna talk about it later on, but can you just share real quick how commander's intent or desired end state apply in that situation so we can let him talk about how it applies in real estate?

The

Speaker 6: that was a unique that wasn't one of our normal missions. Right? This this was a big mission, a really big mission. This mission so The US has battle plans. Like, if all of a sudden North Korea was gonna invade South Korea, there would be there's already a, you know, a book this thick with the plans for what we're gonna do.

This particular mission, securing the oil platforms, ever since the first Iraq war when Saddam had destroyed all the oil in Kuwait. Like, we knew he wasn't full of crap when he was talking about what he do. We had there's plans for this. Right? So those plans are very specific.

They fit into the overall battle plans. So that one is that was a very static mission for us, meaning there's an oral platform. Go take it. Most of our missions are not static. It's a very dynamic environment that we work in.

It's ever changing, highly dynamic, and lots of risk. With that type of environment, our commanders can't tell us go, like, go take that house.

Aaron: Mhmm.

Speaker: Like they said with this, like, go take the platform. Make sure it doesn't get damaged. From there, most of the time, if they were to tell us that, the world would change so much even just on the way to the target that we'd be in trouble. So most of the time, we are tasked with what they refer as commander's intent where he would tell us what it would look like the battle space would look like after we were done as opposed to what we were doing. And that commander's intent gave us the flexibility to adjust strategies and tactics in that ever changing environment while we're executing the mission.

So it's the best way I liken to it is it's the reason why we're going out, not what we're gonna do or how we're gonna do it.

Steve: Yeah. So the objective as to why this objective is important versus what the exact outcome looks like.

Speaker: It's literally most of the time, especially, like, in business, you're telling people what to do. And a lot of times, we're able to tell people how to do it, right, which is two layers, two deep.

Speaker: Mhmm.

Speaker: Our our commanding officer would tell us why we're doing something. It was our job to tell him what we were gonna do to produce that fulfill on his why. Yeah. And then he would give us an okay of did we get it right. So we he would never tell a strategy.

It was our job to identify strategy. Yeah.

Steve: But, it's always like, here's why it's important.

Speaker: Yep. Why it's important. That's it. Here's the why. We showed up with the what.

And then as a as an officer, my job was the what we were gonna do. My guys, my leaders, my my enlisted guys, they told us how we're gonna get done. And my job was to follow them, not actually lead them. One of the things that

Steve: and I know we're kind of we're kinda going a little bit differently than how I I would normally do this, but, you know, like I said, it's been instrumental for my business. The things that, it's always felt like top down management. Right? Like, hey, Larry. How many dials did you make today?

How many contracts did you have? Right? And it just feels like I'm pulling this out of you. Right? And it feels and it feels like micromanaging.

Mhmm.

Speaker: Right?

Steve: And the things that we've learned very recently with you guys is that it's not me requesting this of you. It's you're reporting it to me.

Speaker: My job to over report.

Steve: Right. Your job to over report. And then with when I have the intel, now I can make decisions on the business because I have all the intel on the front lines. It's a completely different way of looking at business.

Speaker: The it's the it's the concept again, one of if I was to say what was like, I talked about responsibility and feedback and planning, but the concept of leadership versus management was ultimately one of the biggest paradigm shifts that I had. When I go as a junior officer so I come straight out of training. I'm out of training. I go get assigned to a team. I get assigned to a platoon.

I walk into that platoon space. I would be the second at maybe the third highest ranked person in the whole on that platoon, which means I'm very high at the top out of sixteen, seventeen guys, yet I know the least. Right? So I show up absolutely brand new, but they have to call me sir, and I can tell them to do anything, and they have to do it as long as it's the legal order.

Speaker: Mhmm.

Speaker: If I go into that environment pretending like I can lead them to success, I'm gonna fail. It's gonna be dangerous. My job is to create a space for them to lead me to success because they have the knowledge, the experience. They have the confidence of of previous action to get stuff done. Yeah.

And so there's this real change that going into an organization and pretending like you know how to lead people to success is usually very wrong and ultimately very limiting. Whereas my job was to create the space for for my guys to lead each other and me to success. That is when my job is to create leaders around me, I'm infinite. When my job is to lead others, I'm very finite.

Steve: Right. And these conversations I have with Jaden. Right? He's my, Yep. Now he's my CAO.

Right? Coordination of action officer. Yep. And, like, we've had conversations, like, you know, who reports to who exactly? Like, look.

Like, right now, you're there to support them so they can be successful. Yep. That's your responsibility. Right? You're not leading.

You're not directing. Right? You're just giving them the space

Speaker: Creating the space.

Steve: To be successful.

Speaker: Right? Create, enable, support leaders. That's it.

Steve: And then the other thing too And,

Speaker: ultimately, what's crazy is you as the CEO, right, as the most senior person will often report to him.

Steve: Feels that way. Yeah. You should.

Speaker: Right? Like, because at a certain point, he's gonna need to direct your action

Steve: Yes.

Speaker: To get stuff done. And, therefore, he's leading you even though you're the most senior person.

Steve: Right.

Speaker: That's how a SEAL team operates.

Steve: Yeah. So it's we got, Gav Bear, and he is newly married. So he wants to know, should he rent, or should he try to buy a house and rent out the basement?

Speaker 7: Well, I'm a huge fan of the house hacking strategy, which is if you don't know what it is, simply put, you buy a duplex, you live in one, you rent out the other, and you there's a whole bunch of versions of that. So I'm more a fan of that if you if you can qualify for a low down payment loan. If I were to go back, I see this very often. I would buy the biggest, most beautiful fourplex that I could afford on a low money down, loan

Steve: FHA financing.

Speaker: In, you know, primary of Southern California. That's what I would do first.

Steve: Yeah. Yeah. I I read about that in Robert Green's book, multiple streams of income. Right? Long, long time ago.

Never executed it, but it was, like, before it was, you know, house hacking. You know? These these gurus talking about it many, many, many years ago. You have the same opinion? Yeah.

Speaker 8: I would agree. I mean, I I'm personally buying a house hack. I'm not, you know, recently married, but I've been dating for, you know, eight or nine years now. And so I could see myself being in that shoes, you know, in a couple years down the line. And the main thing for me was before I got married, I wanted to make sure that I had a house.

I had that stability. And so, you know, I I would agree that if you get a house hack, then you can have somebody else helping you pay down that mortgage. And if you're a newly married couple, if you're, you know, newly expecting a child and you have those other expenses coming down the line, having that other person help you out with your your mortgage expense goes a long way.

Speaker: And and a quick quick story on that, I actually house hacked my apartment, and I didn't own a little bit. Right? I did Airbnb on the other bedroom. It was a two bedroom, one bath apartment, and it helped me become an investor because I was not paying that additional 1,200 rent. It was being paid by the Airbnb, and so I would be able to save more money and all that.

So there's so many ways you can do that. Yeah. Yeah.

Steve: And it's it it sounds more complicated than it really is. Right? Because, like, when I was living in La Jolla, I was renting a three bedroom apartment, and I got the master and I my two buddies run the other two rooms. Right? That's for more all intents purposes.

What house hacking is is you're getting a mortgage versus you're splitting the lease, a few different ways.

Speaker 9: Yeah. Yeah.

Speaker: And, essentially, you guys were paying that guy's mortgage, but he just didn't even need to live in the house because you guys were paying it. So

Steve: Yeah. No. Pretty much. Right? So, now the the challenge then is he's got newly married, and if his wife's okay with it, cool with it.

That's that's great. Challenge is if, you know, we try to buy it today, a fourplex, and getting the wife to agree to living in a fourplex might be a challenge.

Speaker: And that's why I said the biggest because the there's a fourplex where there's tiny units and there's fourplex where it's almost like four houses on one lot. Yeah. Right? Or, like, a 4,000 square foot fourplex that, you

Steve: know That's a good point. Right? Because I I remember

Speaker: people didn't think, like, of multifamily, and I'm next to my neighbor. No. There's some there, like, you buy a duplex where it's a whole different lot. You know, they're over on that side. It's, like, two different houses.

Yeah.

Steve: I remember now thinking back in the Orange County, my wife's family. Yeah. They live in a duplex. I was like, this is a duplex? This is not

Speaker: These are two separate units.

Steve: Yeah. This is not a duplex. But, yeah. That's a really good point.

Speaker: Duplex sometimes has a connotation of, like, the shared wall. And like Alex said, you could have a fourplex with four buildings or own four garages just on the same parcel.

Steve: Yeah.

Speaker: You

Speaker: know, it's it's then that would work.

Steve: Good point. Mubarak?

Speaker: Head's right. This is not easy.

Steve: Mhmm.

Speaker: Going back to me jumping back on the phones and putting a headset on, especially for acquisitions. Like, I I hate to say very few are cut out for this, but very few are cut out for this for an for an extended period of time and doing it consistently. Yeah. So I would say you need to work on what's up here Mhmm. Because, ultimately, you where you're at in your head space is gonna be the results that you get.

Steve: Are you a bit of a sadomasochist in that you enjoy cold calling?

Speaker: I hate cold calling.

Steve: So you hate cold calling? And I wanna bring this up because, like, you're in a way looking forward to cold calling

Speaker: Yeah.

Steve: But you hate it.

Speaker: Yeah. So I like I still get a rush today.

Steve: Mhmm.

Speaker: When I get to the close, I get butterflies. I get the the bubble guts. Like, I still get it today. Yeah. When that feeling goes away, I will ultimately have to put the phone down.

Steve: Yeah.

Speaker: But So I love it.

Steve: So you don't look forward to picking up with the phone calling, but you really enjoy the feeling of the the close, the victory.

Speaker: I I like the whole I like so I I I preach the one, five step my five step sales process. It's intro, fact find, pitch, quote, close.

Shane: Mhmm.

Speaker: I love all of it.

Steve: Alright. So for everyone that's listening, let's dive a little deeper into each of the five steps.

Speaker: Yeah.

Steve: For the intro. Yep. Let's talk about the intro.

Speaker: Quick and simple. Mhmm. You wanna know who they are, who you are, the point of the phone call, and you wanna set expectations.

Steve: Mhmm.

Speaker: Right? And what I, on the intro, am trying to get people to do, because as we all know, these are not one call closes.

Steve: Right.

Speaker: So we put Less time on it. And less time is on it. Right? So in the beginning, what I like to do every single time is I like to get the seller to grab a pen and a paper and start jotting information down.

Steve: Mhmm.

Speaker: Because nobody else in the industry, from what I'm seeing, is even doing that. Right. Where I want them to know the name of my company. I want them to know my name. I want them to have my phone number.

So I, in our intro, and everyone in our office that's that's that's, pitching a lead, good lead or badly because we don't know until we qualify it. The very beginning of the phone call, they're getting them engaged saying, can you grab a pen and paper real quick and jot all my information down? The one, that's the intro.

Shane: Mhmm.

Speaker: That can

Steve: Can you role play or or say it?

Speaker: Yeah. Hey, Steve. Yeah. Hey, Steve. This is Eric with TLC Home Buyers.

How are you doing today?

Steve: Doing alright.

Speaker: Awesome. Ray, I catch you at a good time?

Steve: I got a minute.

Speaker: Awesome. So, again, my name is Eric with TLC Homebuyers. Looks like your property was referred to us by one of our referral companies. They thought we'd be a good fit for one another. So what I'm gonna do today, it's just real simple.

Gonna ask you a few questions about the property, see whether or not it qualifies to be put into our portfolio.

Steve: Okay.

Speaker: Sound good? Sure. By the end of this phone call, Steve, I promise you one or two things. We're either gonna say, yes. It's approved, and I'll have an offer.

Mhmm. Or I'm gonna say it was, disqualified, and I'm gonna have a reason.

Steve: Okay.

Speaker: Okay? We can't buy every property, Steve. We come across a lot of them. So we are a little picky and we pick and choose what we're gonna bring into our portfolio. Do you, do you grab a pen and paper real quick?

I'm just gonna have you jot jot some information down.

Steve: Yeah. I can grab one.

Speaker: Cool. I go ahead, give them my first name, last name, name of the company. And then when we give them the our phone number, we say at the end of the phone number, we say, just so I know you have that. Right? Can you repeat the phone number?

Why do we do that? It's because you can remember my name. You can remember the name of the company. But when I give you the phone number, I know you didn't memorize that. Mhmm.

So what I'm the reason I'm asking them to repeat that is to see if they're actually doing what I'm saying Yeah. Or asking them to do. Are they really engaged with the conversation?

Steve: Right. Yeah. Now you can test to see if they're really serious. Yep. Yep.

Got it. Okay. So that's the intro.

Speaker: Intro?

Steve: What's step two?

Speaker: Fact fine.

Steve: Alright.

Speaker: Reason they're on the phone. So we I we have a a rule in our office. It's the ten minute rule. You can't terminate a lead unless you've been on the phone with them for ten minutes. We get a lot of leads, but we don't get enough to where we can't spend ten minutes with somebody.

Steve: Right.

Speaker: So the the fact find is I see that you were looking to sell because you're done being a landlord, Steve.

Steve: How did you come across that information?

Speaker: According to the referral company that you chatted with, that's what you told them. All of our leads come from their, a cold call company. Mhmm. So we have, I'd say, 60% of the time, a motivation for it.

Steve: Got it.

Speaker: So that's the reason I'm saying this. Yeah. So the the reason I even bring up, looks like you're not wanting to be a landlord. So what we do is we bring up the fact, looks like you don't wanna be a landlord anymore because it was in the reason. Right?

Speaker 10: Mhmm.

Speaker: So we bring that up. We parlay that into a third party story. Like, listen, the last two people that I helped out of their time share, very similar story. They had a granddaughter that had been living in the property. It's just showing that, hey.

We've dealt with this. We've dealt with this before, and then we we come back to them to hopefully they'll open up of it's not just I don't wanna be a landlord. What's behind that?

Steve: Mhmm.

Speaker: So what's what's the real pain? Why don't you wanna be a landlord?

Steve: And I like the fact that you paused and you just waited. Yeah. Yeah. Okay. So that's fact finding.

Speaker: Fact finding.

Steve: And then?

Speaker: And then from fact find, once they know who we are, we know who they are. We've gotten on common ground. Right? We understand their situation a little bit more. Then from, fact find to pitch, which pitch is where we talk about the house.

Aaron: Mhmm.

Speaker: I will ask, if there's not a, asking if there's an asking price on our lead, I try not to bring it up. I wanna hear what they say. And the reason I say that is, I'm a firm believer that the hardest part about our job is the phone calls they got prior to them picking the phone up for me.

Steve: Oh, yeah.

Speaker: And I know if I can put them through an experience they have not went through yet, a structured phone call, I I already got a leg up on most of my competition. So we go from, intro fact find, and then before we go into pitch, we try to get a price out of them. By this time, we've been on the phone with them for, like, ten minutes or so. And and say, hey, mister Seller, in the event we can get to a number that makes sense for both of us, where do you think you would have to be? And then, nah.

It's none of your business. Completely understand. Usually, I like to see where you're at for a price point. Ultimately, I'm gonna go back and they're gonna give me a number. This isn't like a traditional real estate transaction.

I'm actually working with you.

Steve: Mhmm.

Speaker: Right? It's me and you against them in the back. So if you have a number, we can at least jot it down. I can kinda see where they're at. Nah.

It's none of your business. I want you to give me an offer. Cool. I just let it go. Then we go into the house.

What what we do again, we're trying to do what our competition isn't willing to do. And what do I mean by that? The questions they have answered a 100 times over is what's the age of your roof, what's the age of the AC, and what upgrades have you done?

Steve: Yeah.

Speaker: They've answered it a 100 times. So we what we do is we start outside. Tell us a little bit about the neighborhood. Kid friendly, house to the, left of you, to the right of you, across the street. Are these rentals?

Are they owner occupied? How do you feel about your neighbors? You got the electrical lines hanging up in the, you on a double yellow line. So we're trying to get them to talk about the neighborhood. Is it kid friendly?

Any vacant homes. Obviously, we slide in the roof AC, but we try to, like, do that at the end. Mhmm. Because for us, it's if they say it's heavy rental, let me put that into my system. I'm not sure that we're taking any more properties that are heavy rental markets.

Aaron: Mhmm.

Speaker: This is for a fix and flip. Because at the beginning, I said we're gonna qualify your property. So we go into the whole pitch, and then we go inside the house. We use the line if you get a $20.30, $40,000 check, what would you spend it on? And then at the end of the pit or at the end of the the the pitch for the house, we always put every seller on two holds.

So it's, hey. Appreciate giving me all the information. What I'm gonna do real quick is I'm just gonna run back to the underwriters and see if where they're at. You know? They're gonna tell me one or two things.

Yes. We'll take it, or no. We won't take it. Mhmm. So I'm either gonna have a number for you or a reason.

Mhmm. And so we put them on hold. Why do we put them on hold? We mute our phone, and they're gonna have a conversation they wouldn't have with you on the phone. Yeah.

Was your wife there? No. She's at work. Soon as you put them on hold. Honey, get out here.

They're getting ready to quote us. The wife's there. How much do you want for your house? I wanna hear you first. You put them on hold.

If they can give us a 150, are we gonna do the deal? Yeah. You got a number out of them.

Steve: Right.

Speaker: So we go back. We start running our numbers. Right? Do whatever you gotta do for that. We do, two, three minute holds.

So we're on they're on hold for a total of six minutes. Someone's sitting on hold for six minutes, they're interested.

Steve: They're committed.

Speaker: They're committed. Yeah. If they've grabbed a pen and paper, they wrote all your information down, they can repeat a phone number, They sit on hold for six minutes. I have a motivated seller on the phone.

Steve: Right.

Speaker: So we put them on hold. We come back. They're enter the we don't say they're interstate. I don't have good news or bad news. They actually have more questions about the property.

Mhmm. So we always ask the same three questions. You save what save three questions in your in your pocket. Right? So you can pull them out.

What are they? Foundation, AC, windows. S3. They say, let's say the house is 1985 and you ask about the windows. Are they original?

And you come up this is on your, coming back from your first hole and they say, windows are original. I don't know. Let me put that in the system. Mhmm. So you start typing.

Right? They can hear your fingers type. I'm just letting them know in the back office. So then, we say, is there anything else that you think they should know? No.

Alright. Boom. Put them on another hold. You sit there for three minutes and listen. And the the holds are because you're gonna be a fly on the wall they don't know is there.

Mhmm. The holds have been so powerful for us where and and this is just one one instance, right? Where I had them on hold. What I was going to offer them on the second hold, the wife and husband were praying for a number that was $30,000 less than I was gonna quote.

Steve: Yeah.

Speaker: So the second hole, I made $30.30 additional thousand dollars. So we get back on. Congratulations. It's the first property they've approved for me all week or all month or whatever. You know, we I've we sell the sizzle, not the steak.

Steve: Alright.

Speaker: So it's, it's Hollywood every time. It's action. So and then what we do, and I'm giving a lot of free game out here right now, so I usually charge for this stuff, is every property that we get approved, we say, hey. I want you to grab your pen and paper real quick because they have they've given me a virtual withdrawal number. Mhmm.

Eric, what's the virtual withdrawal number? They've already moved the funds to another account for you. So it's attached to this number. What we do is we we can use that for urgency in the end of, hey. If they say no, let me think about it, whatever, it because then now we we're into the close.

Mhmm. It's, well, listen. I'm one of 15 acquisition managers on the phone. When they approve an offer, these funds are sitting here and it is attached to this this virtual withdrawal number. So if you gotta think about it, should I just tell the the underwriters to push that money back?

That way the company can have access to it again. And it it you get to gauge their level of interest. Yeah. So, and then listen. It's either yes or no and then follow-up and all that.

So and I will tell you, Steve, that is the script that I came up with.

Steve: Yeah. No. That's fantastic. It's it's an amazing script. So

Speaker 11: If you think about I mean, I love this, and I've said this before. So if you've heard it, I'm sorry, but I think it's really important. I'll ask you Steve, if you had the chance to go back and spend a day with your 20 year old self and you got a you got a week to prepare, like Mhmm. There's three topics. You get three topics, you have three hours with your 20 year old self, what are you gonna share?

How much would that be worth to you at this phase in your life?

Steve: I mean, you can't even Right.

Speaker: Put a

Steve: price on it.

Speaker: You can't put a price on it. Right? And and not just a financial price, like your heart, like about your relationship maybe with your wife or children or the business or when to start it or don't let these beliefs come in. Oh my god, when you get this age, you're gonna forget that childhood innocence and it's gonna go like all these things. And when I say that, and I've done it in front of hundreds of thousands of people over the years and there's only two answers.

People are thinking money say millions.

Steve: Mhmm.

Speaker: And people are thinking of other things say millions or it's worth everything. And you have to realize that there's people out there right now, kind of starting off where you once were in one of the areas of your life. Yeah. You know, people say, I've only done three real estate deals. I don't know if I could teach other people.

But what about the person dying to do one? Mhmm.

Speaker: Could

Speaker: you teach them the mistakes that you made and how you got in your first one and how you inspected it and where you got the money and how you cash flowed even if the first one didn't cash flow and you thought it would. That's one chapter ahead, But that's with every area in life, what we're sharing with people. I mean, Tony and I have helped people in 4,500 different niches in a 156 countries. You know, we had we had a woman who was in business but realized she went through and as men, we would have no idea, but she went through such hell in menopause. And she was taking medicine and going to a doctor and then she went to natural paths.

She researched like crazy and she cured herself. She didn't have night sweats. She wasn't gaining weight anymore. Her her mind wasn't going crazy. And all of a sudden she realized, she's like, oh my god.

How many women are probably going through this? They don't know where to go. I'm not a doctor. I don't have a following. I don't have an Instagram account, but I know how to get through menopause naturally.

Now she's selling courses on how women can get through menopause naturally. She's crushing it. It's amazing to watch her, but that's one of thousands of people that are finding, you know, I learned how to sail. I learned how to play the piano. I learned how to do hair better.

I learned made marketing better. Everything you could possibly imagine when you just realize if you're a chapter ahead, you have the opportunity to allow someone to go faster, and there's no way this industry is going to a trillion dollars a year unless people are realizing, I don't wanna go back to college. That's general knowledge. That's not working. I don't wanna learn on my own.

That takes too long. Let me look around and find somebody who's already been there. And that's what's fueling this industry.

Steve: Of running a construction company. Because, like, we have you know, it's very therapeutic. Right? We kinda share. We commiserate.

Yep. You're not managing salespeople and so on. But I don't think anyone knows how hard it is to flip. You know, the one thing I I hear from time to time is that contractors are crooks. Right?

They are. And but I kinda wonder, is it because they're immoral, or is it because they thought that since they are good contractors that they should be good at having a construction business, and they don't understand sales, marketing, finances, books, and so on.

Speaker 12: Well, I was always really a businessman, not a contractor.

Steve: Yeah.

Speaker: And I treated it as more of a business than what most contractors do. And, know, there's a place for everybody. And when I say this, I don't I'm not saying this because of anything, but a lot of contractors actually own the companies, not the actual workers. It's an easy place for them to go say, hey. I own a business and get cash flow, right, and be able to have cash in their hand, but they just don't know how to manage a business.

They're great at construction, but don't understand the business part. And that's really the biggest failure in contractors. It isn't that they're bad people or crooks. They just don't know how to estimate. They don't know numbers.

They don't know how to schedule, you know, and and run balance sheets and look at profit losses.

Steve: Cash flow management?

Speaker: Yeah. All of it.

Steve: Managing subs?

Speaker: All of it. You know? And Yeah. One of the biggest things in my business is I, or I have employees and I have vans. I refuse to hardly use any subcontractors, And then I can really control my destiny because when you're when you're, you know, having subcontractors, it gets hard, to rely on them because somebody else might pay them more money or do this or they might not show up.

Or my guys, they've been with me a long time. I know they're gonna be there and they're gonna show up.

Steve: Yeah. So then going back to my theory Mhmm. They're not necessarily crooks that really they just don't know how to run a business. So you say that's more accurate?

Speaker: I I would say that's real accurate. Yeah. I a lot of contractors are really good people.

Steve: Yeah.

Speaker: You know? They just they don't have a lot of education. Their skill set is really with their hands, not with experience, you know, using, you know, using their head for would be a best way to say it because a lot of them just don't think. You know? They they just don't wanna educate themselves.

It's construction is always known as an easy way to make a buck. Right? Mhmm. It's everybody's fallback for an easy way to make buck. That's what a lot of the construction people are.

Steve: So you've been in the wholesaling side. You've been in the flipping side. You've been doing this luxury development now. Mhmm. What are some of the parallels, or what is you know?

Or maybe let me ask this another way. For someone who's watching that hates contracting, because doesn't appreciate the work it has involved in being a contractor, can you, shed some light for them to know, like, why things are the way they are?

Speaker: Well, the the first thing is is if you get a good person, what you have to do is you have to put a little bit of trust in them. Right? Typical thing as investors is they're scared of that somebody's gonna run off their money, and they're not gonna get their job completed. If you don't take a little bit of risk and you don't, like, actually help somebody, a lot of these contractors don't have money. So working with them financially and rewarding them that way, really changes the the way that they work for you.

You know? And being a contractor, my my biggest thing is is whoever pays the best is who I gave you know, pays the best, has loyalty, and always keep kept me busy with the people that I never had problems with.

Steve: Right.

Speaker: So when you're vetting a contractor and you're looking for a contractor, you need to look for the qualities in that person. Don't don't look at all of their flaws. And if they do have flaws, identify the flaws and see if you can, you know, take the flaws away from them, and you you actually help them manage that right in the process of working with them. And, usually, you can gap that, and that's a great place to start with somebody.

Steve: Gotcha. Okay. So, what are some other things? Like, I'm I'm sure you get complaints from here here and there. Yep.

Right? What are some of your top complaints, that either for your business or someone else in the contracting space?

Speaker: From the contractors or from the investor side? Sorry.

Steve: From the investors that are hiring you.

Speaker: So the the biggest the biggest complaints I get is is there's never nobody's on the job, and they're they're never on time. Mhmm. So if you say you're gonna be on time, I always, used to give, like, hey. I think I'm gonna be done around here. And if I'd run into a snag, I'd be like, hey.

I'm gonna be two more weeks, but it's gonna be right. And I and the communication always kept me, you know, in the safe zone because at least if I could call, they know I'm working on it. You're good

Speaker: to go.

Speaker: So it the delays is really the biggest thing and no no people on the job. That's a constant problem for investors. Because when when you pull up to your property and there's never nobody there working, you may not understand as the investor that, oh, well, you know, maybe the tile guy is busy on another job, and he'll be here in two days. But their first instinct is, why don't you have anybody on my job? It's not how it works.

Right? The the scheduling things and when things run over, then everything else gets delayed if you don't have another crew available.

Steve: Sure. So I guess the big thing to look at is if we're looking at the order of things

Shane: Mhmm.

Steve: And if one thing's being delayed, then it says everything else back.

Speaker: Yes. It it sets everything back. And, you know, in my own properties right now, I had a few delays, with different things going on. A couple of projects went, you know, went sideways on me on my own projects. And I'm the contractor.

K? I have, you know, 28 assets worth $50,000,000, and, you know, she's doing all the design. And I literally just told her, I'm like, look. Nobody's gonna like this, including our money partners and everything, but I have to stop the machine for two weeks. And I gotta get house one, house two, and house 3100% complete because they're just sitting there, and I just have to do this two week delay in our entire thing.

So I just had to push back my entire schedule on all these houses two weeks. That's a lot of money when I'm paying $300 a month in interest. Right? Yeah. But doing that, we just reset the machine and we move forward.

And it still happens to me. So it's gonna happen to other people, for

Steve: sure. So, what was it? So there's nobody on my at my at my house was the other one?

Speaker: Nope. Nobody's at my house. Mhmm. Right? And and, not being on time, meaning if you say you're gonna be done, you're not done.

Steve: Got it. And then what about communicating with the contractor? What what recommendations do we give our listeners that are working with contractors?

Speaker: What I recommend is, when you're working with your contractors is is build a solid relationship with them. K? Take them to one or two of your projects that you currently have going and set the expectation upfront. K? Make sure that when they walk in, you should see that guy, like, checking things.

I when I go in a house, and I actually have other contractors working for me now, I'll be like, what do you what do you see in this house that is not up to your standard? There's gotta be something. Right? So ask what their standard is and and say, it's okay. Go ahead and tell me whatever.

But make sure that their standard is what you want your standard at. Alright? And they know that. That's number one. And then they know upfront what your expectation is.

Next thing is is make sure that you, get them paid no matter what it takes. And if you can do those two things and build that relationship and get them paid, you can do about anything with contractors.

Steve: Yeah.

Speaker: Because remember, contractors quit showing up because they're out of money or somebody's gonna pay them more. That's the 99% of the rules of why they don't show up. So let me ask.

Steve: Do you have did you come here in a jet?

Speaker: No. I'm I'm spoiled since I got the jet. I actually had to bring my Mercedes Sprinter today.

Speaker: Oh, okay.

Speaker: The jet's getting service. It's in the hangar. I'm hope I'm hoping down hoping to fly down on Friday in it

Steve: when you

Speaker: come down to freedom.

Steve: Gotcha. Oh, so you're gonna drive back, and you're gonna fly back for freedom.

Speaker: Yeah. I gotta fly back for freedom. I told her, I'm like, my god. I so we left this morning out of Vegas at, like, 04:45, and we had to go to Sedona to a flip we have.

Speaker 13: Sedona. I'll check out on one of our projects there. Yeah.

Speaker: So you're there, and then we drove here, and then I could drive home. So I left home at 04:45, and I'm gonna probably get home at seven. Right? I coulda left at noon, come here, had lunch, did this, stopped at Sedona, and been home by five. Yeah.

So it takes me fourteen hours, I can do for five.

Steve: So a jet.

Speaker: Mhmm. That's an interesting business.

Steve: Yeah. So why do you have a jet?

Speaker: Well, number one, I do things that people tell me I can't have or I can't do. So I actually did it.

Steve: I have that similar problem, but continue.

Speaker: Okay. I actually did the jet just because peep I've been wanting one for, like, four years, and I I told her I'm gonna buy a jet. She's like, oh my gosh.

Speaker: I didn't say, oh my gosh. You always say that. I did not.

Speaker: Okay. So well, she about killed me through it because it was taking me

Speaker: Because and then it was about twenty hours a week going into him going through this process. It's not an easy process to acquire a plane and to get the financing and everything. And he figured out how to make it into a business model, actually. Yeah.

Steve: So So

Speaker: anything I do, it's like I think it's anything like an Airbnb. If I do it, I want it if I'm not using it, I want it to make me money.

Aaron: Mhmm.

Speaker: And, last August, I said I'm gonna go do it. I got turned down by six banks. They're like, you've never owned a jet. You you don't know the cost of them. It wasn't really a qualifying part as it was a banks are really goofy with jets because, like, you don't even have a business that really needs a jet.

Mhmm. And, my biggest thing was I knew if I got the jet, it gets attention. K. Attention's good.

Steve: Right.

Speaker: It drove it grew my social media brand, like, tripled it, if not quadrupled it in the last six months just because of the jet. And then I knew that if I got that, that I could then advertise on my social media for opportunity.

Steve: Yeah.

Speaker: And some of the biggest opportunities are now. Right? So I wanted to have a jet available that if the opportunity was there, I could get there. And it was also a mindset shift. I said if I have a jet, I have to do big things because they're very expensive.

Steve: Yes. They are.

Speaker: So those were the two major things. And then I looked at it, and, we're actually building a fleet of 12 of them now. And in the next eighteen, months, we're hoping to have 12 of them in the air. And we're gonna have, you know, midsize, long range, you know, and then we'll have our smaller jets like we have now. We have a Dassault Falcon 50.

Steve: So what is what can one expect to pay to get one of those jets?

Speaker: To get one of those jets like mine, it's a 3,600 nautical mile, three engine, nine passenger, two, pilots. You can look it up as Falcon 50. For that, right out of a sea inspection, which a sea inspection means, it just went through all the inspections. It does have another major inspection or overhaul for six years Mhmm. You can expect to pay about 2.5 to 3,000,000 for that jet today.

I got mine for 1.7, and it was at that stage.

Steve: The stress sell?

Speaker: No. Off market. But once again, my social media found that. Right?

Steve: Got it.

Speaker: And then you can

Steve: expect paying for itself.

Speaker: Yeah. It it's very well paying for itself, and I actually made mine. We have, four pilots. It runs nonstop

Steve: Yeah.

Speaker: And two Sturdes'. And we originally projected to get about 3,800 an hour out of that, and we're getting, like, 5,500 an hour right now. So we're making really good money. And the jet fuel is only about $300 difference from October to now, and it's basically stabilized. And once I seen it, I was like, I can make almost more money with jets and do no work because I'm not in the aviation business.

I'm just the investor now. Yeah. So I'm actually more excited about the aviation business than I am real estate now. I think it's got a bit I think it's got a bigger upside because with COVID changed everything with aviation. Right?

And since it changed it, more people are doing it. And there's more people, like, going well like, Carlos, there are days like, bro, if you have one, we're just talking Saturday night till, like, one in the morning, me and him. And we're on the phone for three hours. He's like, bro, if you have one, he's like, alright. I gotta look at this quicker.

Right? And then he it was funny because two days prior, he he made that post about it. And when I started looking at it, and now people see me have it, I actually have people wanting to invest in my

Speaker: airline business.

Speaker: Mhmm. And it really doesn't take that much money. About $7.50 liquid, and you can get a jet. That's not that much money. And you'll have that money back in about eighteen months, and then it pays for itself, and it's making you 50 to $100,000 a month.

Steve: Yeah. I, not in investing a jet. You know, I've just kind of played around, see what it's gonna cost. Right? Mhmm.

I was actually shocked. For just a few $100, I can fly each way between here and Vegas. Right? It's crazy how much more prevalent they are today. Yep.

Right? It's not as crazy as it was, you know, years ago. And the cool thing is you can actually take a picture in front of your jet. It's not a picture of you walking up in someone else's jet.

Speaker: It's a pretty good flex point.

Steve: Yeah. Massive flex. So Right. You're not talking about looking for ugly houses. No.

You're talking about basically clicking on the images. Yeah. Okay. And only reason I bring this up there was, Carlos Bill Vogel, right? He's another peer, a friend of mine.

He's in Carolina. And he calls it like, was it walking Polaris? And Polaris is just their GIS in that market. And they just, they find areas they like, and just click around and just look for odd shaped pieces of land.

Speaker: Right.

Steve: And they make offers.

Speaker: Right.

Steve: So, so predominantly, you're you're, you built a $1,200,000 business. And this is not to belittle this in any way. It's not an overly complicated system.

Speaker: No. That's what I love about it.

Steve: It's Yeah.

Speaker: It's very simple. And the reason we were able to get to the revenue that we did was I created a little system, realized I could then teach somebody else that system, taught it to them, then we taught it to, you know, the next guy. I went Steven, Paul, Dylan, and now Carlos is with us Yeah. And just keep scaling through that way.

Steve: Gotcha. So then in building this model, who would you consider to be the key roles within your organization to make this model to make this model work?

Speaker: So I do a lot of so all five of us are still in acquisitions. We still all make calls. I handle a lot of the transactional coordination and majority of dispo. Steven will help me with

Speaker: a lot of

Speaker: dispo and some of the TC stuff. Then the rest of the guys are just straight acquisitions. And we do cold call all all the way through closing the deal. So we don't currently have any outbound callers other than the team.

Steve: So you guys are pulling a list, throwing a triple line dialer or whatever?

Speaker: Oh, no. No. We use cell phones. So we are having terrible response rates. So I went to T Mobile and just bought everybody a phone and said, alright.

Here we go. Here. Everybody's got an iPhone.

Speaker: Mhmm.

Speaker: So now when sellers text back, they get the blue bubble.

Speaker: Mhmm.

Speaker: They

Speaker: know it's a real person. It's a real phone, and our contact ratios went through the roof.

Steve: Okay. So everyone has a phone.

Speaker: Mhmm.

Steve: Yeah. We went this model, a couple years ago. And it was great. Right. And what we learned, because we were we bought the phone Mhmm.

And we attached it to a Mac. What we learned was we never burned the phone number with iPhone. Right. We burned the Apple ID. Yep.

Because we were trying to text from the from the MacBook. Right. Didn't know you could burn an Apple ID.

Speaker: Yeah. So they will change it too. If you call in really angry and say, why is mine showing up as spam? Mhmm. They're, oh, we're so sorry, sir.

We'll fix it.

Steve: Yeah. Yeah.

Speaker: We don't do a lot of text blasting, though, so that might be the

Steve: Yeah. We were we were text blasting very particular lists.

Speaker: Yeah. I can see. I like to go bad.

Steve: Yeah. They were not happy. Okay. So everyone in your company gets a T Mobile phone

Speaker: Mhmm.

Steve: IPhone. Right. And they're manually typing in those numbers Correct. And calling them. Yeah.

Okay. So just for reference, how many dials can these guys make an hour with an iPhone?

Speaker: I'm not sure the KPI per hour, but on average a day, we're doing 75 to a 100.

Steve: Okay. So that's pretty good. So they're doing 75 to a 100 dials a day. Okay. So you said there's four or five guys in acquisitions.

Speaker: Mhmm.

Steve: One of the acquisition guys is also doing part time TC.

Speaker: Right. A little dispo.

Steve: A little dispo. Yep. What else does the organization look like? Who else is in the organization?

Speaker: That's it. We're still very bootstrapped, ground floor, you know, get figuring it out as we go. Yeah.

Steve: Alright. So then

Speaker 14: Reflective on life. And

Speaker: I

Speaker: was sitting out, grabbing coffee, overlooking the lake. It's a beautiful morning. Steam's coming off of it. And, I'm doing my net worth statement. And I realize 90% of my net worth was from my apartments which was about 10% of my time.

Steve: Mhmm.

Speaker: And I'm like, what if I dedicated all of my resources, all of my team to just investing in apartments? And that following Monday when I got in the office, I said, guys, shut down the single family site. We're not doing it anymore. Whatever's in the pipeline, we'll see it through. But we're just gonna focus on multifamily moving forward.

And so, acquisitions guy, you're not underwriting or reviewing houses and running comps on houses, you're underwriting apartments now. Project manager, you're not flipping houses, you're renovating apartments. And dispo guy, you're not selling houses, you're only asset managing apartments, our own portfolio. Here's the beauty of it. It was our own portfolio.

So we were the buyer, you know? And we didn't have to worry about dispositions. But we did have to worry about operations and stuff. But Yeah. You can control the deal when it's your own portfolio instead of just doing the transactional thing.

And, over the next, you know, whatever it was, into 2018, about eight six, eight months, picked up another 300 doors

Steve: and just Like doubled your account?

Speaker: Doubled my portfolio just because I focused. And then and then another deal came across my desk. This is the one that kinda put me on the map, I would say. A 700 unit portfolio came across my desk and, it was a bunch of guys or two investment bankers from New York owned it, but didn't have any experience in real estate, didn't have a partner who knew anything about real estate, and didn't interview a management company. Right?

So they buy all these doors because they're making millions of dollars on Wall Street. And, they buy all these apartments or 700 units down in Georgia and just get clobbered. And they realize this ship's sinking. This ship, if if their other job, their their Wall Street job, is gonna sink also if they don't just burn this one. Right?

And then focus back on this opportunity or their main their main, source of income. So they just let this go. And and we came in. We made an offer about 700 doors for $10,000,000. So $15,000 a door, but it needed another $20,000 a door in renovation across every unit.

So it was a disaster, dude. Yeah. I mean, we put $20,000,000 into or 15 to $20,000,000 into renovations alone. It's a big rental project. So, and there's there's more of a story.

The the private money lender who's gonna write the whole down payment check, which is about $4,000,000, backed out the Friday before the Monday closing. So we can get into all that stuff if you guys want to, but, I had raised $4,000,000 essentially in forty eight hours. And I'd never raised that much money before, but I got it done. And I talked about it on social media and then I did, like, some post about it and it went, like, viral. And I got like all these people started reaching out and they're like dude, didn't even know that you raised money that way.

Didn't know that you syndicated real estate. Didn't know that you took on investors and you paid them in a fixed return plus equity and this other stuff and like let me know about the next one. And then all of a sudden people started reaching out saying, hey, I wanna invest with you. I wanna sell you a deal. I wanna buy a deal from you or I wanna pay you to coach me.

And like I didn't intend to get into coaching. It was like, just this tidal wave of people saying dude, you need to coach people. You need to teach people this. And I was like, alright. And then I started putting together something called Commercial Empire which is how to scale into apartments.

Yeah. And, so I've been doing that for the past, three and a half years. And, and that's cool. We partner up with a bunch of students and stuff. But, and it's helped me grow my portfolio.

Right? Helps me get into deals that I couldn't get into. Helps me raise money that maybe, that I couldn't have raised before. Helps other people joint venture and get involved in deals. And so it's like, it's worked out pretty well until you realize some joint venture partners don't do what they said they're gonna do and all this other stuff so.

Speaker: One night in

Speaker: the middle

Speaker: of the night, I watched Tony Robbins on an infomercial and I buy his I felt like he was talking to me.

Speaker: Yeah.

Speaker: And I bought his course devoured it, Steve. Like, I felt like he was talking to me and and he gave me some fundamental shifts. Like, life happens for us not to us. Instead of me being like, oh, why did I get dealt this hand? It was more like, oh God, universe, thank you for this.

Because of that, I get to be me. Like Right. If my parents spoiled me, maybe I'd be miserable doing drugs. But because of that life, it gave me it gave me the desire for more. So, oh my God, this all happened for me.

And in a moment, my mind shifted and I focused on solutions more and surrounding myself with the right people. And I realized, oh my god, that's why I'm doing better because I have these older friends. Let me get more of them. Yeah. And it just really compounded me.

But it did two things to me. One, it really helped me be less hosed up. That really technical term. But number two, it made me realize, wow, Tony took my money

Speaker: Mhmm.

Speaker: And he gave me information and it shifted my life I wanted in. Yeah. I think we'll talk later. You had that epiphany at a point in your life or else you wouldn't be in front

Steve: of me right

Speaker: now interviewing. A 100%. Right? So there's this epiphany, like, my life experience could

Steve: help someone else. Right.

Speaker: So I said, I'm gonna go in the information business. Right? I had no freaking clue. I had no following. This is before the Internet.

Speaker: Yeah.

Speaker: This got This is 1997. There wasn't even Myspace. There wasn't even dial up on AOL. Like, you know, it was You didn't You couldn't watch a video on AOL.

Speaker: Mhmm.

Speaker: Right?

Steve: Right.

Speaker: It was a modem that Right. So I decided to go in and I created a course and I was gonna do real estate but I had only done a, you know, I did a bunch of real estate but I I was either gonna do real estate or cars. And I was going back and forth and I end up picking cars first because that's how I made my first big chunk of money or consistent money to invest I made from flipping cars.

Steve: Right.

Speaker: And I created a course called Motor Millions. I taught people how to flip cars through the classified ads. I I in fact, it's in the other room. Scott, if you get it, it's so funny. I got it, it was in a box that we found about a month ago from literally 1997.

Like, this is literally the course I created in 1997.

Steve: Oh, man. Amazing VHS.

Speaker: VHS and all that. Right? It's funny. I'm gonna show this, during the challenge Tony and I are doing. But, I created this course and then like all of us, and maybe you felt this way when you launched your podcast and do what you're doing.

Like, I was so fired up by what I learned from Tony. Right? Right? So excited about what he shared. I kind of put everything else on hold.

I went back to that 17 year old naive, I can just do it. Mhmm.

Shane: But I

Speaker: was a little older then. So by the time I got done and realized I had to create books and put product in the warehouse and hire a company, hire a call center, I had to put $50,000 in prepaid media. It cost a $100,000 to produce produce the infomercial. I'm 200, $250 in pretty much every dollar I had into something where I'm not Tony Robinson. I remember my sister sat me down and she's like, we're so proud of you.

You're the most successful person in our family. But you went too far, you're going broke, you're gonna lose everything. Stop this obsession. You're not an educator. You're not a teacher.

You are great at cars. You are great at real estate. You're not Tony. You're not six foot seven dynamic. You don't have millions of dollars.

And I just remember this gutted feeling of like, again, that same two voices I told you at 17, the the one was like, you're a freaking idiot. You just blew every dime that you saved up your entire life. You were broke as a kid, then you weren't. Now you're broke again. You'll never do this.

You're gonna lose everything. And then there was the other voice that said, you're meant for more. You could help people. You could share your story. You could teach what you did in real estate.

Teach what you If you can come from nothing and make this, imagine what you could do for other people. And those two voices again were a millimeter apart, Steve. Yeah. And I remember literally in the little town where I grew up, the place I took a walk. I took a walk and these two voices and me had had it out.

And

Speaker: I I

Speaker: would love to say no way I was quitting. I was a I was a hairline away from just going, hey, I should be lucky with the life I have. Yeah. I have real estate, I have a tow truck company, I have Dean Collision Center for God's sakes, right?

Speaker: I

Steve: should just be grateful.

Speaker: I should I should be grateful. Yeah. Why am I so greedy?

Steve: Yeah.

Speaker: Right? But something that they just wouldn't let me settle. That probably the day you decided to do a podcast

Speaker 15: or Right.

Speaker: All the things that you've accomplished in your life, man. You wouldn't be here if you didn't do great things in your life. And I just decided to go for it. And I was gonna do it, and there was nobody gonna talk me out of it. And I launched Motor Millions and, ups and downs, and I figured out this digital world or this product world, and it was different cause I had to do an infomercial.

There was no other way to sell. People like, why'd you do an infomercial? It's like, what else was there? Like direct mail and infomercials in yellow pages.

Speaker: Like

Steve: That was it.

Speaker: That was it. And I figured it out and when I got momentum, by then I had done a lot more real estate deals, not thousands, maybe maybe 30 deals my whole life. And I launched a real estate course probably twenty years ago now or

Steve: Mhmm.

Speaker: You know, nineteen years ago, called think a little different. And I just laid out all the deals that I had done.

Steve: Think a little different.

Speaker: Yeah. I I laid out Pretty

Steve: close to that whole apple.

Speaker: Yeah. Yeah. And I I laid out, I laid out how I did the deals I had done Mhmm. Up until that point, and I and it became a monster hit. I went the car infomercial and car digital product did okay.

That took me to a whole new level and I think we went on to surely be the number one real estate educator for a decade. Yeah. We changed a lot of lives and it was amazing. And during that journey, I became friends with Tony Robbins, the guy that changed my life. And all we ever talked about was self education and selling courses and products to change people's lives.

And over the last few years, I've merged into showing people what I've done in that space. Right? Yeah. I learned cars then taught it. Real estate then taught it.

Now how to sell what you know.

Steve: Yeah. And I think that's so powerful. And, you know, we were kinda talking about this offline, but, you know, for a lot of you guys that are watching the show, you guys, have heard me talk about, you know, I I launched this podcast because I was at The Edge by Dean Graziosi. And there was this guy on stage, Brandon Bouchard, saying, people wanna hear your story, people wanna hear your story. And I he's like, you know, you gotta do one of three things.

You either gotta start a blog, you need to write a book, or you need to start a podcast. And in my head, it's like, I already have a blog. It sucks. Right? I already wrote a book.

It's gone absolutely nowhere. Let's just start a podcast, see what happens. Right? And I remember it was Saturday, when Dean when when Brandon was on stage saying it.

Speaker: Yep.

Steve: I made a commitment on Facebook that following Wednesday that, guys, tune in next week. I'm gonna do my first

Shane: Wow.

Steve: Podcast. And so week after that, I got my podcast. Right? So I launched it, and it was one of those things, like, you know, let me just do 10 episodes.

Speaker: See how it goes.

Steve: See how it goes. And if it sucks, nobody will know.

Speaker: Nobody will know.

Aaron: No one

Speaker: will know. You don't even tell anybody. Right.

Steve: But if it goes great, then, you know, this would be life changing. And so, not only has it been life changing for myself, but you just had you know, Pace was just in here. And, you know, I like to say I'm a small part of his story. Right? Because, and a few of others of our friends was that this podcast that started has helped a lot of people, but it would never have existed if it wasn't you on stage talking about personal development.

So, like, the the impacts Wow. The waves that you create, it's just it's just crazy.

Speaker: Ripple effect that you

Steve: don't know where it stops.

Speaker: It does

Steve: To do a million in a month, that is an incredible accomplishment. Right? But what gets you from one to one a month might be different than what gets you to two a month. What gets you to two a month, it gets 4,000,000 a month or different. So we have a lot of different people on the show that I think a lot of those key takeaways will help someone get to potentially a million dollars a month.

Right? What would you say are, like, the three to five or more biggest levers to get from 1,000,000 a month to having your best month ever at 4,000,000?

Speaker: I think the single most important thing is you can't do it yourself.

Speaker: Mhmm.

Speaker: So it's the people around you. You know? That's the most valuable thing. If If you find great people

Steve: Mhmm.

Speaker: And you help them grow and level up with you, it's a natural byproduct of success. Right?

Steve: Right.

Speaker: We have quite a few strong leaders in our company, and I have to help them elevate. I have to help them grow. Some of them need to grow in their own companies. So if we don't figure out a way to make that happen

Shane: Mhmm.

Speaker: We're gonna lose them.

Steve: Right.

Speaker: And with that, we're naturally just elevating, which is cool. Yeah. I think number two, it's not necessarily any sort of channel, in sales or anything like that. It's just getting really good at what you do. Mhmm.

You can succeed in any channel.

Speaker: Yeah.

Speaker: Whether you're calling, which is still, you know, probably our greatest skill set. That's what I initially learned. Right? That's what I became an expert in. To whatever channel you wanna do.

Mhmm. I know guys that are doing it every single one at that level. It's just getting really, really good at that one thing to where you're better than everyone else, and then you focus on the next

Steve: and

Speaker: the next

Speaker: and

Speaker: the next. And then you just get good at multiple things, and that helps you get there. But if you let the gas off any one of them, like we have in one of our channels, and our second top competitor has taken all that business from us. Yeah. And he's really, really good when he does, but that's happened because we let off that gas.

Steve: Right.

Speaker: So we're gonna now shift and go back. But it's just staying at that highest level in whatever you're doing. And I think it comes down to the quality of people you have.

Steve: Any other major levers?

Speaker: I think the single most important thing, second, I guess, behind that is just having a really, really good coach

Steve: Mhmm.

Speaker: Or a consultant team that helps you identify what you're not doing right or wrong. And then, you know, putting gas on what you're doing right, stepping back, changing what you're doing wrong, and adjusting it. And that objective outside view is sometimes what you need. Yeah. Because you have this subjective lens and many times you don't actually see

Aaron: Mhmm.

Speaker: You

Speaker: have blind spots.

Steve: Right.

Speaker: And if somebody else can sit there and you for you it'd be obvious. Like, oh, man, dude. You're missing this. Oh, really? Yeah.

It's like that just changed their whole year. Yeah. So having that objective outside perspective is just invaluable.

Steve: So I wanna dive deeper into each of these three because it's easy to say hire great people. Right? Mhmm. As you say that. And right now, we are experiencing what was it?

The great resignation. We hire. Right? So not only is it difficult to hire quality people, it's harder today than it's ever been, as far as my experience, to hire great people.

Speaker: Mhmm.

Steve: So how are you hiring great people? And just, again, for perspective, everybody else, like, I've got to interact with Phil's people. When he has great people, he's not talking like, hey. These are, like, high quality people. Like, these are professionals that had high success in different careers.

You're not taking this other guy that just graduated college or whatever. Like, these have have a successful track record. Yeah. So how do you, a well, I guess the first one, how you how are you attracting these people?

Speaker: Yeah. I guess it first starts with leveling up yourself.

Shane: Mhmm.

Speaker: I grew up with a very strict, subjective view of the world. I probably read a 150 self help books

Speaker: Mhmm.

Speaker: From, like, '18 to '23, which completely changed my perspective of life. Yeah. I mean, the amount of growth I went through is just was humbling. Mhmm. I realized I knew nothing about life.

Steve: You're doing that while going through college Yeah. Which is very unusual behavior. College just opened my mind. Yeah.

Speaker: Reading books that taught me the opposite of what I believed was reality just really expanded my mind to the idea of perhaps I could be wrong. Perhaps I'm off, you know? Mhmm. I need to always look at all perspectives and understand that I may be completely missing something.

Steve: Yeah.

Speaker: And that I can never be perfect. Right. So I just know that if I don't keep an open mind, I'll usually be humbled very quickly. And even if I do, I still get humbled. So when you change your mindset

Steve: Mhmm.

Speaker: And you try to grow and level up, it then allows you to attract those same kind of people.

Steve: Right.

Speaker: I think you first have to work on yourself.

Steve: Yeah. You know,

Speaker: if you're someone that's got a big ego, it's difficult for you to take any kind of constructive criticism. You know, how are you gonna attract those kind of people to work for you?

Steve: Right.

Speaker: I think it starts with working on yourself.

Steve: Yeah.

Speaker: Number one, grow. When you grow, it'll allow you to attract those same kind of people.

Steve: Mhmm.

Speaker: Because I

Speaker: mean, I wouldn't wanna work for someone who's got a big ego, who's not gonna try to help me grow and elevate and become better and and ride along with them.

Steve: Right.

Speaker: And then once you do that and you start to level up and grow, I think you then look at it from their perspective. You know, if I was working with you, what would I want? Well, the first thing we started off was we don't have a PTO policy. You can take as much time as you off as you want. You don't have to show up to work if you don't want to.

Work from home. You know? If you wanna sleep in because you had a rough night sleeping for whatever reason, well, then sleep in.

Steve: Yeah.

Speaker: Show up to work at noon or don't. All we really care about in the end is getting the job done. Right. So I think having that kind of mindset, you know, like, what would I want? Mhmm.

You know, I'd want freedom to do what I wanna do, work when I feel like I wanna work. And all that really matters in the end is that you get the results. Right?

Steve: Right.

Speaker: Why does it matter if you work eight to five or ten to seven

Steve: Mhmm.

Speaker: Or

Speaker: at midnight, you know. If you can just get your work done, it doesn't matter. You don't have to correspond with anyone else. It shouldn't matter.

Steve: Right? Right.

Speaker: Corporate America is the opposite. When I was in corporate America, I mean, they're very strict. These are the rules, punch in this, that. It was just horrible. Like, I was like, why would I ever wanna exist in this, you know, industrial revolution style Yeah.

Existence. It's just miserable. You're like a drone. Right? So I I just thought, well, what would I want?

Mhmm. And what would make me happy? And then next is set your goals to align with your people's goals. We win together or we lose together. And we elevate and we gain property and we build assets and we change our lives together.

Steve: Yeah.

Speaker: And I think when you do that, people are excited because it doesn't really I think a small amount of companies say do that.

Steve: Is there something you're doing as far as, you know, channels can be our next thing, but I look at recruiting. It still sells and KPIs and everything else, channels and marketing, whatever. Mhmm. What is there any, like, particular methodologies in in finding these people, identifying these people? Because, you know, what we found in the past is the best people have jobs.

Speaker: Mhmm.

Steve: The best people aren't looking for jobs. So is there anything particular you're doing to find the best qualified applicants that might not even be looking for a job right now?

Speaker: Yeah. We're always proactively reaching out. There's many candidates we talk to every couple months.

Steve: Yeah.

Speaker: And they're happy at this point, but it doesn't hurt knowing you have a second option if you ever do unhappy and and be a good culture and it'd be a good fit. Mhmm. And we just queue up that relationship. Sometimes it's a year later. You give us a call and they go, yeah.

I can't believe it. We just got a new CEO and they changed this and it's gonna be miserable now. We don't wanna work in this environment anymore. This isn't who we are. Mhmm.

You know? Do you guys still hire for that role? We are now. So if someone's awesome,

Steve: we we'll make a job for

Speaker: him always. Is this LinkedIn, Facebook?

Steve: Every

Speaker: channel. Everything. Everything. Yeah.

Steve: Everything works. Got it. Rhythm. So, so, like, what kind of revenue are we really talking about if someone's, like, doing maybe their first one?

Speaker: Yeah. Okay. So I wanna give a low end and then a high end if that's okay. Yeah. So average rates in America today is $4,500 a month to live in an assisted living home.

Steve: Per resident? Per

Speaker: resident. Yep. 4,500. So depending on where you live in the country that totally varies, but that's average rates. You're allowed to have anywhere between six and sixteen residents in the home.

Mhmm. So when I say single family, a lot of people think a three bed two bath.

Steve: Right.

Speaker: Yes. That's a single family, but also a seven bed five bath is also a single family. So we have to think differently when I'm saying that word. Right?

Steve: Right.

Speaker: So in Arizona, we're allowed to have 10 residents in a home. So our homes, other than the one we purchased, but the other two, they didn't start that way. We had to convert them to become 10 bedroom, 10 bath homes. But in that case, 4,500 times 10 seniors, 45,000 coming in gross.

Steve: So 10 bedrooms and baths, so they all have their own bathrooms?

Speaker: One of the homes has nine bathrooms and one has 10. So

Aaron: yes. Okay.

Speaker: The more private private you can do, the more you can get for

Shane: the rest

Speaker: of them.

Speaker: Yep. Got it.

Speaker: So, so yeah. So 45 coming in. Your expenses are pretty high because this is $24.07 for these senior. Medication management, three meals a day, $24.07 caregivers on staff, you know. Activities, food, cable, Internet, everything.

So let's call it because

Steve: each one has like their own TV and their own cable.

Speaker: Yeah. Yeah. Oh, yeah. The word like, we're giving them everything and anything that they want. They're paying a heavy fee to live in the home.

They should really be living out their golden years in the best way possible.

Shane: Mhmm.

Speaker: So let's say $30 in expenses, and then your debt service or mortgage maybe 5,000. Right? In most parts of the country, you can still get a pretty nice home for $5 a month. That's giving you $10,000 on that home every single month take home as the owner. Mhmm.

That's after you paid all your expenses, everything.

Steve: Including the caregivers? Correct. The utilities? Yep. So we're talking net.

Speaker: Even vacancies, everything baked into that. Yeah, net. So that's kind of your average home. In certain states, Texas, Ohio, Illinois, you're allowed to have 16 residents at a home. And what we teach in our training is to never do average, do above average.

So if 4,500 is the average, we have plenty of students all across the country who are getting $6.07, $8,000 a month per resident because their homes are very luxurious.

Steve: Is that covered by the family or by the, medical, by the government? Like, it's a significant sum.

Speaker: It is. Typically private pay. It's almost always their the seniors using their cash, their IRAs. They sold their home and are using those funds or their adult children are paying

Speaker: for it,

Speaker: which is also something to consider because a lot of people are not prepared for this. The silver tsunami is coming.

Speaker: Mhmm.

Speaker: The baby boomers are coming, and if you don't have a plan for your loved one, that's pretty scary. Like you've got to figure this out. So let's say there it's a 16 or or a 15 bedroom home for easy math, 7 thousand times 15, that's a 105,000 coming in gross, but our expenses are gonna go up. Maybe they're not 30, maybe they're 50.

Steve: It's not proportionally going up. It's

Speaker: It's going it's

Steve: going up, but not by this same ratios.

Speaker: Correct. Because this is a luxury home. Also, there's five more residents.

Steve: So we

Speaker: need to think of more food, more care, more everything really. So a 105 minus 50, and let's say the debt service this is a 15 bedroom home. Let's say it's $15 a month. That's still leaving you with $40,000 take home. So when we say one of these beats a 50 unit apartment, that's what I mean because each apartment, you're maybe getting, you know, a couple $100, maybe a thousand bucks, but that's not always the take home.

Right?

Steve: That's gross.

Speaker: Exactly.

Steve: Yeah.

Speaker: So it definitely beats it. We have a guy in Jersey who those are exactly his numbers. He's got 15 residents, $7 a month. He brings in $40 a month.

Steve: Pretty cool. So this is a different model than, for example, maybe going to buy a franchise. Yeah. I was, I heard I saw Cantona, my agent yesterday, one of the clients, you know, they have a a Mexican fast food chain. Yeah.

And they make $40.50 grand a month. I was like, wow. That's a lot of money for just, like, you know, burritos and stuff. But, you know

Speaker: It must

Speaker: be good burrito.

Steve: I wouldn't go that far. It's a high volume business. But this is just a different direction if you wanted to, like I mean, you can't do a Starbucks, but you were do I think, like, maybe a coffee bean, you can franchise. Right? This would be like a French buying a franchise.

Is there a lot of owner involvement in these, or is this like like, if you buy, like, a seven eleven franchise

Speaker: Yeah.

Steve: You're pretty involved.

Speaker: Yeah.

Steve: Right? Is this a situation where you're buying, like, a convenience store franchise, or is this a situation where you're buying and you're an owner but not an operator?

Speaker: Okay. So we set it up that you own and operate the real estate and the business Mhmm. But you're still hiring a licensed administrator, which in real estate world we'll call that the property manager. It's a medical license that they have through the states, so they can care for the residents. They can do intake with the residents.

But typically, they're doing like, you know, touring with the families. They might be in charge of filling the beds, the marketing, hiring and firing caregivers, payroll, all sorts of different stuff. They're your hands on go to person. So how we teach and train and how we run this is one phone call a week with that person. Of course, they can call in emergencies.

Steve: Oh, yeah.

Speaker: But one set phone call a week, and then I try to only visit the homes, like, every other month.

Aaron: Mhmm.

Steve: I

Speaker: don't wanna be hands on. I don't wanna be working there. There are plenty of people who do this hands on, and you absolutely can, but you also don't have to. And that's how I like to teach to set it up as more of a pactive. Right?

Passive and active.

Speaker: But a little bit

Speaker: I don't wanna say it's completely passive because it's not. You know?

Steve: Well, it's just like having a rental. Yeah. It's passive, but is it

Speaker: But is it exactly.

Steve: Got it. Okay. So then, let's So you guys both feel not know, but feel like interest rates are gonna go down in the next year or two. You don't think it's

Speaker 16: Yeah. So, like, in in all fairness, I think that what is happening right now to interest rates is that there is nobody wanting to purchase mortgage backed securities as an investment long term because there is a high likelihood that they'll be bringing rates down. And that's a very, very strong indication for people that are watching the market that says, like, like, when you're deciding on making a an educated guess, because this is, like, what we do when we're investing. Right? We're making the best hedged guesses.

But, like, if you know that investors don't wanna buy, the only customer is the US government at this moment. Rates are gonna be super volatile like we've seen. So and,

Steve: But you think that there are people that are wanting to buy mortgage backed securities or waiting because they think the interest rates are gonna be lower?

Speaker: Yeah. Like, once the market is more stable, you have more investors that wanna enter into the market. The problem is that a return on a on a mortgage is, like, three years of payments. Mhmm. Like, it sucks right now for most mortgage companies.

Right? A lot of mortgage companies, like, are in a really unique position. It's very expensive right now to get the lowest rate possible. If they sell the lowest rate possible at that peak of the market, there's a high likelihood in eighteen months, those people are gonna refinance, which means all of those mortgage companies are anticipating huge losses. Mhmm.

And, like and the same thing with, like, Fannie Mae, Freddie Mac, Ginnie Mae. They aren't real like, so what happens in mortgages too is that they release only so many interest rates, so many products. And they give you so much yield for those products. And right now, they're being very stingy with those things because all of the agencies also know that there is a high likelihood of them bringing interest rates down. And so mortgages right now are probably the most expensive I've seen in my career.

Steve: Yeah.

Speaker: Not the highest interest rates I've seen in my career, but the most expensive.

Steve: Can you elaborate the difference between expensive and rate?

Speaker: Yeah. So, like, I've I've worked in the industry since 2002. So interest rates at that time were anywhere between, like, 79%. And so I got to see them come down from there to, like, five and a quarter was, like, historically low rates. And then I've seen it trail all the way down.

And a mortgage back then, I mean, wasn't close to $300,000. Like, it just wasn't. And you didn't have to pay as expensive of a cost. Like, I mean, it's not unheard of to see, loan estimates with one to two and a half points, like, discount points right now to get a competitive rate.

Steve: Got it.

Speaker: And so that's what I meant by, like like, the loan amounts are greater, the cost to get that interest rate is higher, and in general, interest rates at 6% are not historically low anymore.

Steve: Got it. So, you made the comment that it seems like the industry is freaking out more than buyers and sellers.

Aaron: Yes.

Steve: So, I think, I mean, you're talking to buyers every day. What are, you know, your buyers telling you when they're when they're house shopping?

Speaker: We've seen a very large increase in cancellations because people are very uncomfortable with the monthly payments. It's a sticker shock. We deal with lots of buyers. And and but I will definitely say that, you know, like, there's a lot of misinformation from real estate agents.

Speaker: I

Steve: I think a lot of misinformation is probably an understatement, but continue.

Speaker: I know. And it's hard because, like, consumers get informed by what they see online, like, via the news. Like, there was this headline that was so annoying. It circulated, like, 20 times. Interest rates plummet to 5.3%.

Lowest drop in, like, twenty years or whatever it said. And I'm like, you guys, yeah, because two weeks ago, in two days, interest rates were, like, 6.625%. And so, yes, that is a steep decline. But guess what? That 5.3% interest rate that the news reported is already one week old based on the Freddie Mac interest rate survey, and it's no longer plummeted.

And then you just can't base your facts on that. And, like, most real estate agents don't know what's going on. Like, I talked to someone today, and they're like, Lizzie, we're headed for a crash. Values are going down. And I'm like, woah.

Woah. Woah. I'm like, values are not going down. Well, how can you tell me? I I this house is selling for under appraised value.

And just so you know, guys, seasonally, there are times of the year when homes will not, like, appraise, and there's homes times, like so for instance, I know March and May are the most difficult times for a home to appraise because the preceding six months are the slowest times in real estate. Right? It's like you get Christmas, January, February, and that's what they base home values on. But then you have people who are willing to pay higher prices then because there's more competition, and that's market price. Right?

So market price is what somebody's willing to pay today. Now a home might be worth 390,000, which is, in this case, is what happened, but that home sold for $3.60. It was listed for $3.70. Obviously, that real estate agent didn't list the house for $3.90. Again, like I said, there's that huge variance between opinions of value.

It's like the appraiser and the real estate agent looked at the same information, and they didn't sell it for $3.90. Right? Now that buyer didn't lose $30,000 in equity. Do you know what I mean? Neither did that seller.

They didn't even know they had that equity.

Speaker: Well, I think what the sellers are experiencing and what the realtors are experiencing is that we have seen a shift. So again, since last year, we have seen the traditional home buyers pull out or be pushed out essentially by these investors, by a lot of institutions. You've got the institutional flip investor as well, the Open Doors, Offer Pads, and, of course, Zillow before they pulled out as well. So you had these corporations that were willing to pay significantly more than the than the consumer. So they started driving the bus, Okay.

In a sense of this price appreciation, that's where the risk came in. So the market, as of today, you know, flash forward to the last, technically four months, but really becoming extremely noticeable in the last four weeks. Because institutions, as the interest rates pushed out more and more traditional home buyers, the institutions and the cash investors were the ones in control. And when they realized it, they pulled out waiting for prices to come down. And some of these institutions even pulled out of their escrows, just relinquished their earnest money, and said we're gonna sit on the sidelines for a while and see how this all plays out.

Steve: So the the the funds that were buying these properties, you're saying even as Yeah. Four months ago, they were starting to see, oh, crap. We're the ones Yeah. Buying all the houses. We need to pull back.

Speaker: They were the ones well, we've been telling them this for a year that they are the ones pushing the prices up. I mean, who would have thought that in Greater Phoenix, in the latter half, in the slowest period of time, the the last half of the year is typically a decline in demand. From the peak, which usually hits us right around March, April, May, and what's under contract all the way to December, it's a gradual decline. Well, right after June, all of a sudden, Zillow and Opendoor decided to have a clash of the titans in Greater Phoenix, pushing prices up. They were gonna take over the market, and then they then they got to win.

Whoever won got to take the trophy of most losses in 2021 Yeah. Which I believe Opendoor won that for the year of 2021, and Zillow won for the year their entire career of flipping from 2018. But, anyhow, aside from that, the thing is that that that created a a perception that demand was just going crazy. But what happened is those companies had to sell to, guess who? Somebody on the other side because they're not holding properties.

Steve: Right.

Speaker: And when the the general population is pushed out, guess who they were selling to? Institutions. And so when institutions pulled out, they are now having to turn their attention. Them and the builders are now having to turn back to the same people that they pushed out and kicked to the curb for the last year or so. Saying, hey.

We'd really like you to come back now. And then what if we pay down your interest rate? What if we pay your closing costs? I mean, this is actually the time where you got that 3% down FHA buyer that needs a little bit help. Mhmm.

You can walk them down a runway right now and auction them off because they are they're golden. So