BiggerPockets Podcast 389: He Changed His Strategy & Is Now Making $1M/Year! With Mike Simmons

BiggerPockets Podcast 389: He Changed His Strategy & Is Now Making $1M/Year! With Mike Simmons

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Are you tired of toiling in the trenches… and ready to run a business that cranks out profits without your constant involvement?

That’s what today’s guest has managed to do! In this episode, Michigan-based investor Mike Simmons shares exactly how he went from moderate success to $1 million in annual profit.

You’ll learn why Mike switched gears from flipping to wholesaling real estate, what he’s learned from spending hundreds of thousands of dollars on various marketing channels, and the four-point checklist you must use when considering any kind of partnership.

Ultimately, expert marketing tactics are fine and well. But to scale, you’ve got to master leadership and hiring—topics Mike covers in great detail here and in his new book, Level Jumping.

So pick up a copy (see link below), and share this episode with a friend, family member, or fellow investor who you think would enjoy it!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Brandon :
This is the BiggerPockets Podcast, show 389.

David:
You want to go forward, then you can steer. You just have that car sitting there, it’s not starting, you can’t change, you can’t get better, you can’t learn. Frankly, if you do your first deal and break even, the learning that took place on that deal is off the charts. I read books, I went to seminars. My first deal gave me 10 times more confidence and education to do the next deal than everything I had done prior to that.

Speaker 1:
You’re listening to BiggerPockets Radio, simplifying real estate for investors, large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online.

Brandon :
What’s going on everyone? It’s Brandon Turner, host of the BiggerPockets Podcast, here with my cohost, Mr. David Greene. David Greene, welcome back to the show, man. How you doing?

David:
I’m doing wonderful. We’re in peak real estate sales season. The market’s still hot. We have an amazing show today with a guest-

Brandon :
We do.

David:
… that was on once before and you saw him when he was at the ground floor, and now he’s scaled up seven years later. He’s got a big business and I’m really liking this rhythm we’re getting into where we are interviewing the same person at different stages, like pre and post-COVID. I guess we’re not quite post-COVID yet, but after the shutdown happened and getting to see how they’ve pivoted, because I really feel that helps a lot with the people who feel scared and they don’t know, “What am I going to do if X, Y, or Z happens?” And you get to hear how these people handled it.

Brandon :
Yeah, yeah. I mean, Mike’s been one of my … just favorite people for a long time. I’ve been him following online for years and, and we … Yeah, ever since he was on our show the first time. He’s just really good at expressing his points. So today, Mike Simmons, who’s our guest today. He wrote a book called Level Jumping, and it basically talks about how he grew his business to over a million dollars in profit. He’s going to talk about that today on the show, by utilizing what he calls level jumping, and he’ll explain what that actually does and what it means. So we’re going to get into all that today.
He talks a lot about wholesaling. So he does a thing called the wholesaling, which all talk about on the show. It’s when basically you find good deals for other investors, but why that’s not always a great strategy for newbies. So there’s a lot of confusion around what wholesaling is and what it isn’t and who it’s good for and who it’s not. So we go into that, then he gives a lot of detailed specifics on direct mail marketing. So if you’re somebody who wants to use direct mail marketing to find deals, off-market deals, Mike has spent, I think, hundreds of thousands of dollars over the years on direct mail. He’s a marketer, so he tests different ones and he actually goes through a bunch of really good tips on what works and what doesn’t and what seems to work really well in his business. Specifically font size and things like that, what type of mail he’s sending, he goes into, and some of the mistakes that people make on direct mail.
Finally, we spend the last, I don’t know, 20 minutes of the episode today, going through team building and how to bring in other rock stars to do work that you don’t like doing, or you don’t want to do forever. This is something that David and I talk a lot about just in our personal conversations and on the podcast. But it’s, if you bring in a bunch of really good superheroes, you could have an incredible superhero team and it means you don’t have to do everything. So Mike lays out exactly how to do that, how to get started with that and just all around a great show, whether you’re brand new, getting started today with your very first deal, this show’s going to be really handy for you. If maybe you haven’t done a deal … I mean, maybe you just are a single operator, you have one employee maybe, and you want to figure out how to make a million bucks a year in your business, this is going to help you as well.
So, just so good. But before we get into that though, before I actually bring you the interview with Mike, let’s get today’s quick tip.

David:
Quick tip.

Brandon :
All right, quick tip today is when you’re going to buy a rental property, you probably should know about what a rental property rents for. Makes sense, right? So we have a new tool at BiggerPockets that we designed for investors. Now there’s other tools out there that exist like this, but we built ours for real estate investors, not for tenants. So the idea is it’s the rent estimator, BiggerPockets Rent Estimator. So what it allows you to do is to log on, go to biggerpockets.com/bp-insights, BP-insights, or just go to the navigation bar, you’ll find it in there and look for rent estimator. You can type in an address and find out what all the comparable rents have been in the area. So you can look at a map and say, “Okay, this area here’s where the rents are really high. This is where they’re kind of low. Here’s what I estimate that we can get for our two bedroom, three bath house,” or whatever. Comes in super handy for running your numbers, for figuring out a good neighborhood.
It’s all part of the new BiggerPockets Insights program, which is … I don’t want to go into it right now because there’s a ton of cool stuff there. It’s all data to help you make better decisions so you can find a good market and a good neighborhood. So anyway, check that out. biggerpockets.com/bp-insights, or just go to the navigation bar and just look for it there and that is today’s quick tip.
Now I think we just need to jump into this show because Mike Simmons just brings the fire today, you guys are going to love this episode. Make sure you listen to all the way through, it is a longer episode. So if you have to listen to it in two parts on your commute, listen in two parts on your commute, because it is worth every single second today.
So with that, let’s get to the interview with Mr. Mike Simmons. All right, Mike, welcome back to the BiggerPockets Podcast, man. Good to have you here.

Mike:
I’m glad to be back. I’m calling it Return Of The Jedi in my head because that seems cool, but that might be a little presumptuous, but I’m calling it Return Of The Jedi.

Brandon :
I like it. Return Of The Jedi. Well, I’m excited because your episode … I’m not even kidding, your episode was actually one of my favorites that we did years and years ago in the first year of BiggerPockets Podcast being around. I really enjoyed our conversation and you, I hear have gotten into some really exciting things in the past, what? Seven years, since we last talked, or whatever it’s been.

Mike:
I know, it’s been forever. Yeah, a lot of stuff has changed in my business. A whole lot has changed, yeah. So it’s been a fun, exciting time.

Brandon :
Cool, cool. Let’s go through that then. So for those who don’t know who you are, haven’t listened to episode 50 of the BiggerPockets Podcast, who are you? What do you do?

Mike:
My name is Mike Simmons. I am a Midwest guy, born and raised in Michigan. I don’t know if the Detroit jokes are going to be flowing all the glass time, but we’ll see how that goes.

Brandon :
Maybe a few less.

Mike:
Yeah, exactly.

Brandon :
Because you guys had a nice rebound.

Mike:
Exactly. After working in corporate for a number of years, I got to the point in my life where everyone does at some point where they think what is going to happen for retirement? How am I going to retire? When am I going to retire? How does that look? Do I have enough money? Will I have enough money? I realized I wouldn’t have enough money if I kept on in my trajectory and what was happening, I just wouldn’t be able to do it. So started looking into ways that I could invest, vehicles that I could use. To me, intuitively back then it was like, “Well, stocks and the stock market and I’ll have to invest in mutual funds and all these things that I still don’t know much about.”
I realized when I started digging into that world, I just didn’t like it. I hated it, I had no interest in it. I would drift every time I tried to go down that road on the internet, it would be like I would end up on ESPN or something. So eventually, if you google investing and how to invest for retirement and all these things, you’ll find real estate investing. Even back then, this was like back in 2003 and I found real estate and I just fell in love with it. I loved it, those success stories and I fell into what most people do, it’s just like living vicariously through other people’s adventures and how they made money and how they were able to do it.
I did the right thing at first and that was, I immersed myself in it. I started reading books. At the time podcasting wasn’t a thing, but I started absorbing everything I could, going to meetups, going to seminars. I did that but then the right thing ended up being the wrong thing because I stayed in that analysis world. I stayed in the learning phase and I didn’t get out there and actually start doing the business until 2008.
So there was a five year period where at first I was learning and that was good and then I told myself I needed to learn more. Then I felt like I was in it because I was reading, I was going to seminars and I got comfortable being in the environment and I never had to take the plunge.
So 2008, I finally got my head straight and said, “Listen, you’re just learning. You’re just observing, it’s getting pathetic. It’s been five years. You have to do something or stop talking about it.” For me, I’m married, getting my wife kind of up to speed and on board with me was important because she’s half of the decision-making in the house and she works and she’s smart lady. She has a master’s degree and I know that she’s conservative and frankly. So real estate investing, it can be a little bit scary when you don’t know what you’re doing. I needed her to understand what I was trying to do.
So we went to a weekend, they called it a fly on the wall bootcamp kind of a thing, essentially just the local guru who was charging $2,500 to talk to you for two days about real estate, which happens, people do that. So I went. Long story short, the guy didn’t provide much in terms of materials that was worth the money that we spent but what he did do which was invaluable, was he gave us confidence. He gave us the confidence that we could do it, even if it was a little false, because we didn’t have enough information based off of what he told us, it gave us information. But maybe more importantly for my wife, we spent $2,500, we were not going to not use it. Whereas me, I’m not wasteful, but I could spend $2,500 potentially and not utilize what I learned if I’m not interested, but for her, it was like, “No, no, no, no, no, we’re never going to waste that money.”
So we went out there, we started making offers, bought my first house. Several months later, had a funny little incident where … This was 2008, so if anybody remembers that time, house prices were plummeting and everyone’s screaming, “Get out of real estate,” which is normally the best time, honestly, to get into real estate. So I was lucky that way, but the first house I went to purchase … Now we’re talking Michigan prices. So if you’re in a state where the median house price is in the several hundreds of thousands, this is going to seem strange, even in 2008, but we were going to buy a house. The first house we got accepted offer was an $80,000 brick ranch, basement, blue collar neighborhood, perfect carpet and paint, kind of a situation. The financing fell through because back then, smaller mortgage companies and banks were going out of business and it was just awful.
So we lost our funding, the bank went under and we couldn’t recover another funding source fast enough. So we lost that deal. $80,000 house, we lost it, we were crushed.

Brandon :
Did you lose a lot of money in earnest money or anything like that?

Mike:
We lost $2,000 in earnest money, which was devastating, right?

Brandon :
Yeah, because I got 2,500 bucks for the weekend boot camp [crosstalk 00:10:11], for the thing.

Mike:
Yeah, exactly, exactly.

Brandon :
Now you’re really in the hole, yeah.

Mike:
Oh yeah, and it was devastating. That was a turning point. We could have said, “You know what? Let’s just lick our wounds. Let’s just call it quits and just stop, stop the bleeding.” But to my wife’s credit, I would have for sure gone out, but to my wife’s credit, she’s like, “No, we need to see this through.” So about six months later, I got the next house under contract. I got it under contract for $40,000. But the crazy thing was, is the house was only one street over in the same subdivision. So if you’re following along here and following my logic, had that first deal gone through with the way house prices were dropping, I would have probably lost money. It would have been a bad deal for me because I bought almost the exact same house in the same neighborhood for $40,000 less, six months later.

Brandon :
Wow.

Mike:
So we bought that house. As far as financing, we we did a mortgage. I didn’t know anything. I didn’t know what I was doing really, not that there’s anything wrong, we didn’t know any other really options. So we went to the bank, got a mortgage. For renovations, we used credit cards and cash, we just went that route and we spent $15,000 on the renovation. It was essentially a carpet and paint deal, new kitchen and things, new bathroom, but it wasn’t anything dramatic. We ended up making $15,000 on that. We sold it for like $75,000 and we had some problems there. I talked about this the first time I was on the show, but we didn’t get release of liens from the subcontractors.
So we had an electrician coming back saying, “I have to put a lien on your house.” I was like, “I don’t even know what you’re talking about. I paid for the electricity. I paid for that work.” They’re like, “Well, you probably did. You paid the general, he didn’t pay us.” So we learned about release of liens right off the bat. But even with all the mistakes we made and we tried to do some of the work ourself, kind of a thing that people do sometimes when they’re starting, like, “I know how to paint, I’ll save money.” But it took us three weeks and the painter could’ve got it done in an afternoon. So we lost some time, but after it’s all said and done, we made $15,000 and my wife was like, “Oh yeah, you need to do more of this. This is good, I like this.”
We’re off and running, as far as being house flippers. We’re house flippers for about five or six years before I switched my model and that was after … When I came on BiggerPockets last time, I was pure house flipper. I didn’t want to do anything else, I had no interest. But since then, I had some pivotal things happen in my business that I switched my model and I’m happy to talk about that if you want.

Brandon :
Yeah, I want to get into that for sure, because I’m super curious. Because again, I knew you as old Mike, and so I’m curious to hear about new Mike. I want to go back though real quick, because this is something that you brought up such an amazing point, that people get stuck in, that you got stuck in this analysis paralysis thing where you just you’re living in the zone. You’re maybe going to meet ups. You’re listening to the BiggerPockets podcast week after week, after week or whatever podcast-

Mike:
Constantly, yeah.

Brandon :
… your podcast, yeah. How does somebody get out of that? What tips do you have today? Looking back at your now long career, long, relatively newbies, how do people get out of that?

Mike:
For me, I was raised in a household … My dad was a marine. He went to Vietnam, he volunteered. I was in a pretty tough … My household was not short on pointing out shortcomings and being critical of people. So it was a lot of it. So when I was in that paralysis analysis thing, at first I was telling myself, “This is good. I need to learn. This is responsible. I need to be educated about what I’m going to do, this is a lot of money that we’re talking about.” But it got to a point where I couldn’t deny the fact anymore that it was fear that was keeping me from doing it. I can be a procrastinator by nature. It’s one of the worst aspects of my personality, is that I tend to procrastinate on things, especially when I don’t feel confident. I got to a point where I just started beating myself up, like, “Dude,” and I’m pretty blunt with myself like, “Dude, you’re a complete poser. You are a pretender and you’re afraid. That’s why you’re not doing it.”
When I start getting in that area where I feel like I’m afraid of something, I kind of hear my dad’s voice like, “Just do it. It’s fine.” He just always pushes and I couldn’t get past the point that I felt like I was a coward, honestly, just waiting. Now I’m not calling … When people get in that … I can empathize with that mode. I was in it for so long. I know what that feels like, where it’s like, “Oh, just one more meetup, one more seminar. I just … ” and then the problem with seminars is everyone has a different technique.
So it’s like then you get shiny object syndrome combined with paralysis analysis. I just spiraled, but I got so disgusted with myself and the fact that the only thing stopping me was fear. I could make all the excuses when I was at a local REIA or something. “Oh, how many have you done?” “Oh, I’m new.” You can only say you’re new for so long before it’s like, “Oh, five years, I’m still new.” No. People were seeing me time after time. I started getting really disgusted with the fact that I was holding myself back because I was afraid. I just don’t like that feeling.

David:
Well, the problem with paralysis is it’s literally a feeling of fear that makes you think, I can’t move. You have to understand, it’s part of how you’re wired to keep yourself safe, just physiologically. You’re walking through the woods, you hear a twig snap, it could be a tiger. The first thing you do is freeze because you don’t want to keep walking if you’re walking towards the tire, or the tiger. Which means that if you can acknowledge that this is how I’m designed to work, you’re not wrong to move on in spite of that. It’s trying to keep you safe, but it’s not helping you in that case.
In the case of analysis paralysis, the only way you overcome it is by doing something scary. Being okay with failing, if you could have gotten to the point earlier where you said, “I’ve lost $2,500 on a course, I lost two grand in earnest money. I’m okay with losing if I’m making progress to get out of this fear.” You would have been fine and looking back, that’s probably how you see it. Like, “Oh, that was so dumb. I worried about two grand. Now I’m making a hundred grand a month sometimes with this awesome business I have.”
I know you’ve mentioned that you can relate to those kinds of people. I know in 2008, it was the best time to buy, but nobody was. Let’s just be honest. Everyone talks about it now, “I can’t wait for the next ’08. I’m going to jump in. No, you’re not.” If you were scared of ’08 then, it’s going to be worse now because all of the things that make you feel confident about investing in real estate, the economy is really good, interest rates are really low, you have tons of excess capital. They’re not there in the next 2008. It’s tons of fear talk that you’re going to be hearing. Can you share how you eventually changed your thinking, how you think now, and maybe some advice for how guests can make that shift, that paradigm shift in their thinking process?

Mike:
Totally. I love that question too, because I’m super passionate about fighting that because it was so gripping for me. I mean, I can give you the short answer and then I can make it longer, for sure. But the short answer is taking action, and it’s really what it was, I wasn’t taking action, it’s a muscle like any other muscle. Taking action now is effortless for me. I take massive action, I take massive risks sometimes, or calculated risks, but it doesn’t hold me back anymore because once I did it and I realized that the world wasn’t going to fall down around me even if something didn’t go right, then you do it the next time, it’s even easier. It’s like any decision that you’re afraid to make, once you make it, it’s easier to make it the second time.
I think my life at this point is a crusade to get people going, to get them to start because that’s the hardest part. It took me five years to start, honestly. So my first five years of not starting and then if you just contrast that with the last five years of my life, it’s exponentially different in terms of what I was able to achieve financially, personally, all the things that I have, it’s insane what I’ve done in five years. So the risk when you do that is also, if you want to add another log to the fire is, is doing it gives you that muscle. But, I listened to a lot of not just motivational, but people I respect in various industries and various parts of business and things. One of the things I hear often from folks like that is the one thing that scares them the most is regret.
I think that nobody wants to get to an elderly age, or God forbid on their death bed and go, “What if I would have done that?” I think that a fear of regret can and should be greater than the fear of starting something or just taking action.

David:
Yeah, that’s exactly right.

Brandon :
That’s so good.

David:
But it doesn’t physiologically affect you the same way because it’s not a guarantee. That tiger’s real but you should be just as worried about the fact that if I don’t bring food home for my family, they’re all going to die. That should motivate you just as much.

Mike:
Totally but I think what you find out when you do try something that scares you a little bit, it wasn’t as risky as you gave it credit for. If you have a little bit of education, you take the time to read and to educate yourself and listen to BiggerPockets. You can know enough to keep yourself out of eminent, crazy risk and do this business. Nothing is risk-free but if you are diligent and you just use a little bit of common sense, you can steer clear of 90% of the problems that you’re going to face. Then once you do it, you realize it isn’t as scary as you gave it credit for.

David:
Yeah, it’s true.

Brandon :
One thing I teach BiggerPockets all the time that’s related to this, is with webinars and stuff, is this idea if you just get started, you might not get a home run. I like to classify deals as there’s bad deals and there’s base hits, doubles, triples and home runs. Then once in a while you get a grand slam. So guys like you or I will talk about our grand slams. Even today’s, what I consider a base hit, would be a lot of people’s grand slams, if you’re just getting started because you get better over time. But I talk about my … I got a fourplex makes me $1,400 a month in cash flow and I got no money into it. That’s a cool story and people are inspired by it. Then they go out and look at their fourplex they’re like, “Oh man, I’m going to have to put in $25,000, I’m only going to make a 12% or 10% or 9%, 8% return on it. That’s not like Brandon’s deal. That’s not like Mike’s deal or David’s deal.” And then they don’t start.
But what’s funny is the early deals, they just don’t matter. The only goal of the first deals is to start. If real estate is a train, you got to get it moving. In the beginning, it takes a ton of work to get the train moving, but you can never get to the later deals if you don’t get the first one. So I think people just, I would guess … Would you agree to that? They need to stop obsessing so much about getting home runs on their first deal and just get something that will make sense?

Mike:
Totally. Honestly, that first year I told you I made $15,000. For a lot of people, that’s very pedestrian. It felt like a home run because I had not done anything to that point. I use an analogy and I use it in my book that you can’t steer a parked car. You can’t make a tactical decision in your business, or make an improvement, or get better unless you get some momentum going. You want to go forward, then you can steer. You just have that car sitting there, it’s not starting. You can’t change, you can’t get better, you can’t learn. Frankly, if you do your first deal and break even, the learning that took place on that deal is off the charts. So it’s almost never a bad thing.
You can lose money, I’m not saying you can’t, it’s possible. But even if you meant to make $20,000 and you make $10,000, to me, I’d be pretty irritated with myself at this point. But honestly, $10,000 to learn what you’re going to learn on that first deal. I read books, I went to seminars. My first deal gave me 10 times more confidence and education to do the next deal than everything I had done prior to that. All that analysis paralysis.

David:
Listen to that everyone. That’s really good, you can’t steer a parked car. I tell the people that join my team, or that want to, you’re a car. If you go really fast, I can help keep you on the track. I can teach you how to drive. I can teach you how to take turns and what to be aware of, but I can’t push you. I don’t want people on my team that are not motivated, that don’t want to make it happen. That’s the one thing that I’m not going to fix. So for the people that are listening, if you’re having a problem with motivation, no one can help you with that. That’s something you have to address. But once you’ve got that figured out the rest of it, that everyone’s scared of, man it solves itself.
Brandon, your point reminded me of Gary Vaynerchuk as a young kid, selling baseball cards. He’ll tell you about how he learned entrepreneurship selling cards. How much money did he make selling baseball cards? A couple of hundred bucks, wasn’t worth anything.

Brandon :
Yeah, nothing.

David:
But the value was in how his brain adapted to learning, how to make a sale, how to find profit margin, how to run a business, that made him a multi multimillionaire. It’s very similar to what you’re describing Mike.

Brandon :
What’s funny about that is that I just realized something, just now occurred to me. So Gary Vaynerchuk, for those not familiar with Gary, he’s an online … one of the biggest social media educators, teaches you how to use social media and he runs a big social media company. Anyway, he’s on our episode, I don’t remember, a while back. I’ll see if I can look it up but he was on the podcast a long time ago, but here’s the point. He teaches a lot, he really encourages people a lot on his Instagram and stuff to go out and do garage …

Brandon :
Like he really encourages people a lot on his Instagram to go out and do garage sale flipping, where you buy baseball cards or whatever and make some money. And I’ve been kind of negative on Gary for that advice for a long time. My thought was always like, “Gary, these people are going to make like $50 or a $100. And they get really excited about making $100 when they flip this thing.” And I was like, “Why can’t we teach them to do something more impactful?” But what you just said there, David now makes perfect sense because Gary’s not teaching people to…

David:
Make money.

Brandon :
Make a living off doing it. He’s trying to get them to take action. He’s basically saying, wax on, wax off. Like, garage sale on, garage sale off. Like his only goal here is to teach a skill to get you moving because that skill is what’s going to make you. I just never thought that. I just kind of judged him as bad advice.

David:
It’s the same thing Mike is telling us, is get into the game, figure it out. So Mike, you did that with rentals because I mean, don’t take this as the end all be all advice, but in general, rentals are safer. You have a larger target with a rental property. If you buy it and it goes terrible, you may not make money every month, but you may lose a couple of hundred bucks and you can survive that working in a coffee shop, right?
Whereas when you get into flipping houses, your margin of error becomes much smaller. You can lose tens of thousands of dollars very easily. And so Mike, you kind of got in with the low risk, low reward method, got your feet wet, learned how to swim in the shallow end, I would say, sold your baseball cards. Now your business has transitioned into a higher stakes game, which is typically what people hear and they get all excited.
But I really liked that you’re showing us that I didn’t start here, I moved my way through. There was this transition. Can you tell us where your business is at now and how it’s different?

Mike:
Yeah, totally. And I’ll tell you why, because I think it’s important. There was a fork in the road moment in my business that I had to address. A lot of it was based off of me making some bad decisions early on. I was a house flipper. We talked about that. I was flipping houses, things are going great. I’m guest hosting on Bigger Pockets. Like my life is awesome. Right? At the time, the one thing I was looking back, a mistake that I made was my team was sort of poorly put together ,in that I had a realtor that I relied on too heavily.
I gave him too much power in my company to tell me what a house could sell for at the end of the day, when I flip it, and I had a contractor that was doing all of my work, right. Since then I tell people, to use a baseball analogy, you need a farm team. You need a bench. You need people that you can call if your contractor flakes or your electrician just won’t show up. You need a bench of people that you can talk to that you have a familiarity with. So I had a general contractor and a realtor that I gave a ton of power to. So we had a deal, we were working on it, and I think I bought the house for like $75,000, and it was going to require $45,000 to fix. It had some wavy floors and needed some supports.
$45,000 is a decent sized renovation in my world. So I had my contractor working at it. We had our price agreed upon. My realtor, by the way, this was in his town, in his neighborhood, almost. His comps are going to be dead on. He knows his own town. So he tells me what it’ll sell for, and I think at the time he said it should sell for like $150,000. And I’m like, “Okay, it’ll be a base hit deal. Won’t be the greatest deal in the world, but it’ll be a base hit. It’ll be nice.” So we get working on it and my contractor stops showing up regularly. And then when he does show up, he’s got this handful of receipts of, “Oh, I noticed this, I went and bought this. I went and did this.”
The next thing you know, the cost of the renovation starts to balloon. And I’m like, “This doesn’t all feel right to me,” and he’s not showing up for the job. So we’re going through doing that, but I’m like, “Okay, we’re still going to be okay, I’m going to make enough, it’ll be fine.” Right. So we’re going through the renovation and the contractor gets increasingly… Belligerent is maybe the wrong word, increasingly combative with me. He starts arguing with me out of character. Like we had a pretty good relationship. I had done dozens of deals with this guy. So he starts giving me some feedback that it’s weird and he feels like he’s overcharging me. So as we get to the end of the project, he has this big list of add on stuff that he had to do.
He saw it, right? Safety issues and stuff that I… whether he did, I don’t know, but shame on me that I didn’t snip that in the bud sooner. But so I said, “Okay, I’ll pay this, but this is probably ending our relationship, cause I don’t feel like this went right. I don’t feel like you’re being honest with me. You weren’t at the job most of the time.” And he’s like, “Whatever,” kind of a thing. I’m like, “Okay, well I guess I need to find a new contractor.” So we get the thing on the market, it’s on the market for a month, nothing. Crickets at $150,000. So I go to my realtor, I’m like, “What’s happening?” And he goes, “Well, I think we might’ve missed this one. I think it’s probably closer to like $120,000.” And I’m like, “What are you talking about?”
“You live in this town dude, and it’s a small town. You’ve been doing this for 40 years. What are you talking about?” And his attitude was basic… And it’s weird because I tell you guys, I’m so forgiving and try to be cool with all my contractors, realtors. I’m not a yeller. I don’t do that. I typically go, “Okay, there was a problem. Fine. I don’t even need no apologies, no pointing fingers. Let’s just move past it. And let’s figure out what we did wrong and never do that again.” Right. And his attitude was kind of like, “Hey, you win some, you lose some.” That was kind of the way he came at me with it. And I’m like, “No.”

David:
It was not extreme ownership. That is for sure.

Mike:
No. Thank you. That’s a good… I love that book too. No, it was not that. And I’m like, “Okay, I need to find a new realtor and a new contractor at the very least.” Well, I had just started doing some direct mail, like my own marketing stuff to find deals. So I’m still getting opportunities coming across my plate, but I don’t have a contractor. I don’t have a realtor. I put too much power in their hands. So I’m like, “I don’t have the capacity to do another deal right now. I don’t have the people on my team.” So luckily, I’ve been doing this a while. I knew all the players in my market. I knew all the house flippers. And I had just been at a meetup recently where all of them were complaining they couldn’t find a deal. They’re dying on the vine. This was like 2014, and they’re like, “We can’t find anything. There’s just nothing on the [inaudible 00:29:18]” and none of them were using any sort of direct mail or any of their own marketing.
And we were all kind of commiserating, and so I called a guy when I got the next deal that came available to me. I went out and actually I got the deal under contract because I was going out and doing my own acquisitions. Went out and got it under contract. And I’m like, “I don’t know what I’m going to do with it.” So I call the guy and I’m like, “Hey, I’ve got this deal. I had [inaudible 00:29:39] a contract for $95,000.” I didn’t tell him that. But I said, “If you want this, here’s all the information, go do your due diligence. But for $110,000, you can have it.” And he goes, “Give me 10 minutes. I’ll get back to ya.” Gets back to me in 10 minutes.
Like, “I’ll take it.” I just made $15,000 and I didn’t do anything. I like that a lot. So like a week later, another deal comes across my desk. I haven’t even closed on that first one with that guy. And it was in an almost identical house and identical city. It was the carbon copy. And I call him and said, “You’re not going to believe this, but I got another one just like it, if you’re interested.” He goes, “Tell me the numbers.”
Told him the numbers. He goes, “I’ll take it.” Like no due diligence. He just said, “I’ll take it.” It was the same numbers too. I bought it for $95,0000. I sold it for $110,000, cause I didn’t have the guts to move the number. I didn’t want to ask for more. And he’s like, “I’ll take it.” So like $30,000 within a couple of weeks, and it closed, no problem. No big deal. And I’m like, you know what? I’m an impatient guy, and I really don’t necessarily want to deal with appraisers and contractors right away. I liked the way this felt. I liked the model. I liked the velocity of it. So I switched my model over to being primarily a wholesaler. I haven’t done tons of flips since then. That was back in the end of 2014, beginning of 2015. That’s when I started switching my model over and going that route.

Brandon :
Yeah, that’s fascinating.

David:
I like to describe the wholesaling model… Really, I like to look at real estate investing itself as a whole, as in like there’s steps A through Z, okay. You find a deal. You work all the due diligence you have to, you end up with a property. You keep it as a rental or you sell it. That’s basically everything we’re talking about in the podcast. Well, when we say there’s different strategies, it’s either a different disposition at the very end or a different chunk of that whole funnel that we just described. And a wholesaler is just the very first step in this whole funnel. They get a lead and then they figure out if you want to keep it to flip it, if you want to keep it as a rental, all kinds of stuff. You could put a mortgage on it.
Someone else was seller financing. But what you’re doing is you are assigning the contract to somebody else. And the reason I like wholesaling models for those who are very committed to real estate, is most of the headaches that come from real estate investing come from after you get the deal in contract. It’s something that went wrong in that whole process, that sours people to the entire asset class. And you figured out how to get in, get the most valuable piece taken care of, cause getting that lead into a deal under contract is the most important part. We say you make your money when you buy it. Essentially, that’s what you’re doing. And then you give it to someone else. Can you tell me, with the benefit of wholesaling, meaning I get to avoid all the headache, comes the downside of, I got to do the hardest part of the job. I got to go find a seller and get it under contract. What is your company doing to excel that space?

Mike:
Yep. I can totally tell you that. And I didn’t finish answering the last question, where I am today, but I want to set that up properly. I’m glad you said that too, because I think sometimes there’s a really bad message that’s sent out, like wholesaling is what you do when you’re new and don’t know anything until you step up into the big leagues. I really don’t like that because honestly, lead flow, getting deals like you just mentioned, that’s like oxygen to the body, right? You can discount it all you want, but go ahead and stop breathing and see how long your company lasts. So getting those leads in is oxygen, and we provide the oxygen to people’s company. Now, it is hard because I had this conversation… And by the way, I flipped for six years.
I love flipping houses. I love the whole process. I love the model. I don’t have any problem with it. Wholesaling fits my personality better. That’s why I switched. I like it more. But I had this conversation with somebody recently. I won’t name them. Well, it’s a family member. That’s why I won’t name their name. It’s a family member of mine and he wants to flip houses and he’s like, “House flippers, take all the risk. All of it. You know, we have to get the money for the house. You’re a wholesaler. You just find the deal. You don’t have to invest anything. You have no money at stake.”
And I’m like, listen. As a flipper, if you’re doing it right, if you’re doing a good job, you do your due diligence. You run your numbers. You are borrowing money, or you are using money, your own or whatever. But when you do that, theoretically, the day you buy the house, it’s worth more than you spent, right? Or you did a bad job. So it’s worth more than you spend, usually, when you buy it.
And then as you renovate it, you’re increasing its value as you go. So at no point, theoretically, is the house under water in terms of what you owe and what it’s worth, right? So it’s relatively safe that way. Now, switch over to me, a guy who’s doing wholesaling at a high volume. So we average about a hundred deals a year, a hundred transactions a year. We’re spending at our peak last year, and it went down a little bit when COVID hit, cause we changed our model a little bit in terms of marketing, but at our peak last year, we were spending $30,000 on marketing a month.
$30,000 spent on marketing for direct mail, PPC, all these things that we do, there’s no asset that it’s tied to that’s protecting it, right? So in theory, we could spend money on marketing and then nothing happens that month, or the next month. We don’t get a deal. It doesn’t happen that way because you can make good predictions off of the model of what’s happened in the past, but still, we’re not investing in an asset at that point. It’s marketing. It goes out into the ether and you hope that it returns in a way that’s predictable based off of past performance, but there’s no guarantee. So it is hard. And what are we doing to be really good at that? Everything. Our business is all about marketing and sales. So direct mail has always been kind of a workhorse for us.
It’s not always the highest ROI, but it usually is the highest deal flow volume that we get, is through direct mail. And I have a lot of ideas and thoughts on direct mail, cause I’ve been doing it now for five years, like an obsessed scientist. I really have specific things that I think that people should be paying attention to, that I’d be happy to talk about.

Brandon :
Please.

Mike:
So direct mail, PPC is big for us. We don’t do bandit signs anymore, really. We’re doing texting and ringless voicemail. Those are probably the mainstays for us right now. But as far as direct mail goes, yeah I have a lot of thoughts about this. And I’ve spent a lot of time talking to folks about direct mail because I’ve tried a lot of things and there’ll probably be people who disagree, but here’s my thing on direct mail.
There is no silver bullet, right? There’s no message that converts like magic. I don’t care what anybody says. It’s more about what you shouldn’t do than what you should do, right? I think the mistakes outweigh and they trump the great ideas in direct mail. So here’s some of the mistakes that people make. Well, we’ll talk about postcards for a minute. Cause that’s what I primarily use. I don’t do as much letters as I used to, primarily postcards.
When it comes to postcards, first of all, my demographic, and I think most people’s demographic are a lot of times older folks. So if you’re catering to an older demographic and they’re probably standing over their garbage or near it, when they’re looking at their mail, if your call to action isn’t physically large enough, meaning your font size, so it’s readable, an older person is not going to see what you’re trying to tell them, and they’re going to throw it away. If it’s busy, in other words, you pack it with all of your thoughts about how great your company is and how you’re going to help them, and it’s just jam packed, the message gets lost.
It becomes confusing. And a confused mind says no. So I’m big on open space on your postcards. Don’t feel like you have to fill every empty space. Open space is a good thing. Larger font, and I keep the call to action very prominent, bold, it’s bigger than everything else. Call me here. And then throughout my card, it might say something like, “Hey Brandon, I’m reaching out about your property at 123 Any Street. I’m a local investor looking for another couple of properties to buy this month. I would love to talk to you about buying your property for cash. I can close quickly and you don’t need to do any repairs. If you’re interested in selling, give me a call today. No obligation.”
Whatever. Right? So I would bold your name. I would bold the word cash, not to be cheesy, but I want when someone glances, they go Brandon, cash, here’s the address, here’s the number. So at a glance, they can see everything I want them to see, and they can kind of gloss over all the other stuff that isn’t as important.

Brandon :
Because everyone skims. Everyone skims.

Mike:
Everybody skims.

Brandon :
We learned this in blog writing, right? Like blog post writing, or book writing, like everyone skims. So you have to make sure that things stand out, so that when you’re skimming, they’re going to get the most important information.

David:
Brandon, do you remember the first time I brought up your writing style when we were first becoming friends, and I wrote you a text message in the style of how you write blogs?

Brandon :
I remember you making fun of me for it.

David:
And I was like, “Look, does that sound like you?” And you’re like, “Yeah, but David, here’s what you don’t know. My blogs do better than yours because you just hammer people with this fire hydrant of information that they’re like… They’re drowning in it. And they just want to get away.” And I pull them in, making them want to hear more and only getting them to commit to small things at a time. And you’re a hundred percent right. When I get an email from someone, and Brandon would attest to it as well, that’s 12 paragraphs long, I’m probably not even going to read it. I might skim through to look for some keyword that would give me some justification for why I should commit to reading it.
When I get an email that’s like, “I want help with this thing. Here’s what I can do for you. Let me know what you want to do.” I am way more likely to respond because my brain doesn’t feel like it’s being overwhelmed. And that’s exactly what you’re doing with your direct mail. You’re creating curiosity that makes them want to read it as opposed to giving them a huge job they’re not going to get paid for by reading the whole thing.

Mike:
Simple is better, and what I tell people is that the most well crafted message on a postcard or a letter, like it’s just beautiful. Everything perfect, elegant. If they’re not ready to sell, it really doesn’t matter anyway. Right? A lot of it’s about timing. So I’m way more about consistency and frequency than I am, crafting the perfect message. And frankly, on my postcards, and I’ve done a lot of split testing, a lot of testing over the years; the simple two or three lines, like in a simple, easy to read font, always outperforms the graphic heavy, message heavy card. It always does. No matter how hard I try to get complicated, it’s always when I make it more simple is when it actually is more effective.

David:
What you are doing well is you are not trying to knock down the whole tree with one swing of the ax. You’re actually trying to own the mind share of the people. So when they think, when I need to sell my house, they go to you. Because you can’t control when they’re ready, and that’s the same thing I tell realtors all the time. Stop talking to people and saying, “Do you want to sell your house? No? Okay, then you’re no good to me,” and moving on.
They don’t like how that feels. Own their mind share in their head so that when they think about real estate, they think about you, and they will call you when they want to sell their house or their friend wants to sell their house. And that to me is what a good marketer does. They align themselves with a concept or a market. So you think of them like Gary Vaynerchuk has with social media marketing. That’s what Brandon, that’s exactly how he described it. And that’s what the listeners who are trying to replicate what you’re doing should understand, is you’re not looking for just, I can pick the ripe fruit right off the tree. You’re actually planting seeds and watering them over time.

Mike:
Totally.

Brandon :
Yeah. That’s really good. You know, the other day I had a headache, so I woke up with a headache, but I didn’t even really realize it was a headache. It just kind of was like there. And throughout the day, it just kept getting worse and worse to the point where it was just a pounding headache. I was laying on the couch, trying to close my eyes and thinking, this hurts so much. And my wife comes over, Heather, and sweetly asks that annoying question, “Well, did you take any medicine for it?” And I had not even thought about taking medicine all day, cause it came on so slowly throughout the day that it never occurred to me, just take a fricking Advil. Right. So I take a freakin Advil and within like a half hour, I’m perfectly fine.
I was so consumed by the problem that I wasn’t even thinking about the obvious solution. And that’s what I love about direct mail and the repetitive, you’re just asking people over and over, “Hey, did you need some Advil?” Because their headache may have started a long time ago and it’s getting more and more severe, and they’re not thinking, “I’m going to go sell it to a real estate agent. I’m going to list it.” But if you offer them Advil, when they’re laying on the couch with their eyes closed, yeah they’re going to be like, “You know what? Why didn’t I think of that?” Cause they were too busy thinking about the problem. And that’s what I love about the consistency of it.

Mike:
Totally, yeah. And you asked me, guys, where I am now and I feel like I still haven’t answered your question, but I want to real quick.

Brandon :
Yes, please.

Mike:
So I changed my model to wholesale. Okay. We talked about that. Wholesaling is a very active business, right? So is flipping, frankly, but it’s very active. So my goal was, how do I turn this very active model that requires me every single day, how do I turn that into a more passive business then than it is by nature? For me, and what I learned from having a one contractor, one realtor who owned most of the responsibility in my business was, I need to build a team of people, not just one or two where there’s failure points that can devastate me. I need to build a team of people and do it in a way that’s responsible that doesn’t overwhelm or drain my business of all of its cashflow.
So I started putting together a team and hiring people and bringing people on and thinking to myself, when I work in corporate or when I worked for somebody, what was it that made that job sticky for me? Or what was it that made me not hate going into work? Cause I’ve had both kind of jobs in my life, jobs that I dreaded and jobs that I actually kind of looked forward to Monday morning cause I really enjoyed the people I worked with. I enjoyed the company. What do they do? And I started becoming a student of that. So that’s something that I think is important to understand when people go, “Well, I don’t want to wholesale. I don’t want to be out there every day, beating the bushes and grinding.”
That’s how you start. You start off as a technician, you start off in the business. And then if you want to scale, if you want to build a team, some people like being a one man band, there’s nothing wrong with that. You want to do a handful of deals here and there. It’s great. But if you want to build a company that is consistent and has fairly predictable results, then you need to start building a team. And there’s a way to do that. I did it poorly when I first started hiring people. I just started throwing people in seats and I expected them to have my drive and have my dedication and have my passion for the company. And that’s not fair or realistic of someone who just joined a company. So I started becoming very, very conscious of, what do I need to do to get someone to the level where they have a passion for it? It may never be my passion, right?
They’re not incentivized the same. If my business becomes a $50 million business, it’s not going to affect them and their families the way it affects me and my family. That’s not a fair thing to put on them. And also, I was bringing people in, we were burning through people, basically. I was bringing them in, giving them way too much, giving them what I would do, and then trying to walk away. And I wasn’t a great leader back then. So I would stand on the goal line on one end of the football field, basically, and I hand out the ball and go, “See that goal line a hundred yards away? Get there, go there. Fast. I don’t care how you do it. Just go there.”
Right. And that’s horrible. That’s not how you train people. It’s not how you motivate people. It’s not how you inspire people. And I was burning through them. I had one person who I still regret to this day, she would have been a great employee if she was still with me, but I was just throwing stuff at her like crazy. And she was doing it, and then eventually it started falling through the cracks. Things weren’t getting done. And so I kind of confronted her in a boss way. “Hey, I see this isn’t getting done. I need some answers here.”
And she’s like, “I wake up in the morning and I start working, and every night, not some nights, every night I fall asleep on my keyboard. That’s how I’m trying to keep up. And I still can’t.” And she’s like, “I can’t. I just can’t do this.” And it made me realize, “Oh man,” like I was not being fair to her because if she did something, I would give her more. And if she did that, I’d give her more. I was basically building something that was going to fail. She did end up leaving, and looking back, in hindsight, she’s one of the best employees we ever had. Like she was doing a lot at a high level and I was not giving her a break. So lessons learned.

Brandon :
Yeah. This whole concept is so important. This is David and I… Most of our conversations we have these days are about this concept of how do you build a team? How do you motivate a team? How do you get a team excited? How do you not just give him the ball and tell him to go a hundred yards? And so I mean, again, we talk a lot about this. I want to actually spend some time, cause I know you wrote a book and a lot of the book is on this topic, of getting to that next level by building teams and by learning stuff.
I want to get into that, but first, let’s just say… You said a minute ago, I think you said you’re doing a hundred deals a year. Is that right? That’s a crazy amount of wholesale deals. I did like a few wholesale deals and a few flips in my life and it did take a lot of work. So doing a hundred just sounds insane. So obviously you have a machine now that’s just running stuff, that we’ll get into, but I mean a hundred deals a year. What’s your average profit on a deal, if you don’t mind me asking?

Mike:
No, I do know it because I track my numbers. So our average profit in 2019 was $15,000.

Brandon :
Whew. $15,000 and 100 is, what, $1.5 million? And then you probably have some expenses in there for [crosstalk 00:46:01]

Mike:
Yeah, there’s some expenses in there for sure. Yeah.

Brandon :
For sure.

Mike:
You probably have some expenses in there for team members.

Brandon :
Yeah, there’s some expenses in there for sure. Yeah, team members in marketing. I told you my marketing, it peaked at 30. It wasn’t that all year, but we’re between 20 and 30 for the year for the most part.
Yeah. Wow. Yeah, that’s awesome. A million bucks a year or a million dollars about what you profit, is that right?

Mike:
Yep.

Brandon :
Yeah, that’s insane. Okay so how do we get there? How do you build a team that gets you there? Because people are listening to this going, shoot I want to make a million dollars a year. I don’t want to work a 100 hours a week. I don’t want to fall asleep on my keyboard. What do I do?

Mike:
Yeah. Well, I’ll tell you this, in the first few years it was reinvesting a lot of money, obviously. There’s people in my market that tell me, they’ll make $10,000 on a wholesale deal and they’ll go out and spend $10,000 on something personal. And they don’t know why they can’t get any momentum. It’s well, you’re taking all your profits and you’re investing it in fun, this is great, it’s your prerogative. But so for the first couple years, I was reinvesting majority of my money back into marketing so that we could exponentially jump. But that’s only one part. That’s just one aspect of it.
Really, what I did was I started surrounding myself with people who were doing what I wanted to do at the level I wanted to do it. And whenever you surround yourself with those kinds of people and you’re able to use their hindsight as your foresight, good things happen. And that’s part of what I did. And so my circular defeating logic before I changed my model and started growing was, I can’t really hire a team because I’m not big enough to hire a team. And then the problem was.

Brandon :
That’s what a lot of people listening are thinking.

Mike:
Totally.

Brandon :
They’re saying, “I don’t even need to listen to the rest of this podcast because I’m a one man person.”

Mike:
Totally.

Brandon :
I don’t make enough money to hire. I don’t make a million a year, I can’t hire a team.

Mike:
Yeah. I would go, “I’m not big enough to hire, but I won’t get big enough unless I bring people in to help me.” It’s like this defeating circular logic. The first person I hired was part time. And because I got really interested in trying to understand what makes people tick. I started putting a little bit more time and energy into personality assessments, the DiSC or the Kolbe. There’s one called the Culture Index, it’s a little bit more advanced. But I started putting people through those before I hired them so that I could at least know what their predisposition was. They’re not end all be alls. They don’t tell you everything about a person, but they do give you some predisposition, some foundational stuff. I took all these tests and I was amazed at what it said my weakness was because I had to agree.
I know one of my weaknesses, I’m not detail oriented. I’m not the guy you want checking the document one last time. That’s not me. I’ll always do a bad job. The first person I brought in, we called her and this is the person I burned out actually. First person I hired, it’s the greatest luck in the world to find somebody great right off the bat. I called her a transaction coordinator. What she did was when we got the contract from a seller and the contract from the buyer, I would give it to her she’d go to the title company, here are our contracts. And she would all of the work it took to get us to the closing table. Getting all the LLCs and the EINs and all the different things, and people’s wiring instructions and making sure all the cats were kind of herded to that closing table and made it happen. I was bad at that. Once I got that off my plate, that freed me up.
The next thing that I had to really come to grips was is despite the fact that I do podcasts, I’m on this podcast, I speak in front of crowds, I’m not by nature a super outgoing person. I was competent at sales. I was sort of getting the job done so to speak, but I wasn’t great. I knew I needed to hire someone to help me with a sales part of it. Now, where people maybe your a listener right now going, “Oh, that’s all great. You hired this part time person. Now you’re hiring a salesperson. I don’t have the money for this, guys. I can’t do this.” Well, check this out. And this is something you can replicate. It’s not unique to my situation, but I sort of stumbled upon it and realized this is repeatable really.
The first person that I hired for a sales position, he was working in my market as a pharmaceutical salesperson and on the road, local, pharmaceutical salesperson. And he was crushing it. He was doing great at his job. They loved them. They were giving him awards. As a matter of fact, they sent him to Hawaii as the regional top regional salesperson in their company. But the fact of matter is he was crushing it, he had a lot of free time during the day. He came to me, actually, found me. And he’s like, “I want to learn real estate. I want to work with you. I’m great at sales. I think I can really help. I don’t know anything about real estate, but I think I can really help you in sales.”
The first guy I hired had a full time job. He went on a couple of appointments for me a day and I paid him straight commission. He didn’t need a base because he already had it day job where he had free time. He was on the road. He worked for me. And then when I saw him what he did in the seller’s home, he went with me. He shadowed me a few times just to learn some of the wording and he didn’t know anything about real estate. But he learned a couple things, went in there, started crushing it. And when he had questions or when someone came at him with a question real estate related that he didn’t know anything about, he would just have to step out and, “Call my boss, I’m not sure how to answer that.” He’d come out and talk to me. I would talk them through it and go back in.
But the rate of success in the home getting contracts skyrocketed because this guy was a legit salesperson and I wasn’t. Spending no more money on marketing, doing nothing different inside of my company, hiring the right person to do sales, doubled my volume because I could have never gotten the deals he got. I’m just not good enough. And I didn’t know that until I saw somebody who knows what they’re doing in that position and just destroyed it, just crushed. That was huge for us. And then, so I had a sales guy, I had a transaction manager, the next thing was I didn’t want to answer phones. For me in the short term, I said, “Hey, sales guy, who I hired who’s awesome, can you take calls during the day too? Do you have time to do that?” And he’s like, “Yeah, actually if I could take the call and I could warm them up and create rapport on the phone and then I show up at the door, that’s so much better. It gives me a little bit of an advantage walking in. It’s not cold.”
He started taking calls. Now I don’t care how much marketing I do because I don’t have to answer the phone, which I hated beyond anything. Now I upped my marketing. I ramped that up a little bit. He’s taking calls, doing a better job anyway, going into the home, doing a better job. My ROI is going up as I’m spending more money on marketing because I have a part of my machine actually working properly. That was sort of just functioning adequately before that. Now more revenue, better salesperson working straight commission, gives me the freedom and the capital, the cashflow to bring in other people to support that. And that’s sort of how it went.

Brandon :
That’s what I love about real estate is that real estate you can do that in a way that a lot of businesses maybe can’t. You can’t do that as a teacher, necessarily, or delivering pizzas. But real estate, there’s so much money to be made when you do it right.

David:
You can cut off chunks of it to pay other people. And you could leverage components of what you’re doing much easier than other jobs like being a truck driver. You can’t as a truck driver, have somebody else do a big chunk of that. But when you’re an agent, you’re like, you go run the comps and you go do this stuff. And as long as they all compile everything and they give it to you, you’re kind of teeing up the sales guy. He’s like the hinge that swings this door to go crush it. This is what you’re describing right now for everybody who’s trying to work themselves out of a job and into a passive business, I feel like the struggle most of them have is they hire people who don’t know what they’re doing. They come to you and they say, “Teach me your ways.” And it’s similar to, this is the strategy I wanted to talk to you guys about to see if you agree with it and if you think it works in your own business.
Brandon wants to go learn jujitsu so he shows up and they say, “Okay, you just roll around with people for six months and get your butt kicked. And if you can last that six months and you show me heart, now I will actually train you in a couple of techniques to make this fun.” That puts a huge onus on Brandon to stick it out and tough it out to get to the point where he’s going to have fun, like eat vegetables for six months and maybe I’ll give you some dessert. Now Brandon can do that. But a lot of people can’t. They’re going to quit way before they get there. They’re going to have a sour taste in their mouth. It’s the same way with the agents on my team, call 20 people a day, tell him you’re an agent, ask how you can help them. Eventually they’re going to come back.
Well the problem is, when that person comes back and says, “I want to buy a house,” the agent doesn’t know what to do with them so they fumble the ball. They got 20 yards down the road to the goal line and they said, “I don’t know what to do now.” And they lose that deal and all that. And then they’re discouraged. I’ve worked so hard and I fumbled it. What I’ve realized is you have to make them do that work. Brandon has to show up and he has to earn the right to get that training by putting in the time and eating the vegetables. But you can also take them with you, like you said, Mike. I let this sales guy shadow me. I took him on the appointment and I showed him how I close a deal.
Now that’s like when your instructor says, “Hey, I’ve seen you. You’re working really hard for a couple weeks now. Let me show you how to put someone in an arm bar.” And you’re never going to actually do that in a real sparring match but it’s fun that you learned. You feel encouraged. You’re excited. You’re like, oh, that’s how that goes. It makes it showing up every day and making those phone calls easier. I do that on my team where I say, “Okay, I’ve got this buyer client. You can listen to me on the phone negotiating with the listing agent and I’ll show you how I wrote the offer.” Or, “Hey, go with me to show homes. I’ll show you how I show homes to people and get them excited.” And he gets this, oh, I love it. This is what I missed. And then his confidence is higher so he’s more likely to make those calls.
And the system I’m putting together has, they start at the beginning of the funnel and they work their way forward with hard work. And then I take them to the end and I work backwards with them to teach them what I’m doing. And at a certain point, we meet in the middle and they know the whole thing. And boom, now they’re in your business actually generating revenue with confidence and they’re a good employee. Is that similar to what you sort of did with your own funnel?

Mike:
Yeah. You know what? Yes. Yes I did. And one thing that I want to mention that I did that I learned and it was revolutionary for me when it comes to bringing people onto your team and hiring them and training them, I hire people to do what they’re good at. The first person I talked about is I brought her in for something she was good at. And she did a really good job. And so, because she did good at that, I was giving her a lot of ancillary stuff, stuff that wasn’t her super power. But when I brought the sales guy on, he’s good at it. And when you’re good at something, you intuitively you naturally liked doing it. All I had to do was bring him along on a couple of things to give him some confidence that he understood how those appointments go.
And then because he was good at it and he fit that, he was almost like I got it. Now you’re going to be in my way in a minute so get out of here. He started doing really, really well. Now there’s somebody else that works for me, who applied to be an acquisition. We call them acquisition, the people go into the home and talk to the homeowner. He applied for that and we actually didn’t hire him to do that. We hired him to do what we call dispositions, which in our company, you get the contract from the seller. You need to find a buyer.

David:
You go find a buyer for it.

Mike:
Which is usually a house flipper landlord. And that’s who you’re going to sell to. That’s a lot more of a negotiation really than the first one is like, it’s empathy. It’s finding out what their problem is, trying to solve problems for them and listening and all that. Dispositions, you’re dropped into a firefight. You’re negotiating the minute you pick up the phone. They don’t want to talk to you about, you don’t have to warm them up to the idea of real estate investing. They’re calling you for the numbers. They want to know what the hell, what’s happening. He was better suited for that. He doesn’t have the bedside manner for sellers, but he’s a really good negotiator, really good. Once I brought him on, he shadowed me for a while. He’s now, this is what you want. You want to bring people on who eventually, if you replaced him, you could not add more value than what they’re adding. You couldn’t do better. And ideally if you had to replace them or take them out, you would do a worse job because they’re better than you at it.
That’s awesome when you get to that point. And I’m a big fan now, I said, bring people in for their superpower and I totally believe that. You want to bring people in who are good at what you want. But if you have a choice between someone who’s a absolute rockstar in what you want them to do, but they’re maybe not the best team player and someone who’s pretty good and they’re just a phenomenal fit culturally, I’m bringing in the culture fit and I’m raising them up to the superstar. I have hired people that knew more about parts of my business than I’ll ever know and they wrecked the team.
And I talk about it in my book, like cancer. Every one of my team came up to me individually at some point said, “I can’t work with her. She lies to me. She’s manipulative. She’s horrible.” And I like, because she was so good at and she was really good at what she was doing. And it was transactions. When the first great girl left that I had hired, we’re like, well, I’m bringing in a superstar. I don’t want to retrain this position. Because I don’t even like that position personally in my company so I’m not going, I don’t want to train it. And I brought this lady in, she was a killer. She was just closing stuff like this. Title companies were just shaking in their boots when they heard her call. And I’m like, oh, I love this. She was great to me. Because I wrote the check to pay her. But the team, she was just dumping all over and they were miserable. And I almost lost my team because of this person before I finally realized what was going on and said, “You got to go.”

Brandon :
Yeah. I really battled with this because you and I kind of went through similar journeys of building this team that kind of gets you to the next level. And I asked a question, I think I’ve even asked it publicly here on the podcast of other people, how do you balance between skill and culture fit? And for years I felt like I kind of had to choose one or the other and what I kind of discovered and I’m sure you’re seeing it as well as, you can find people who are not necessarily skilled in that thing, but they have the potential to be skilled in it, but then fit in culture. That was the answer that I came with over years was like, because I’d hired people who are amazing culture fit, but no matter what, they just could never do the job. We don’t want those people. And we also want people who are amazing the job but no matter what you can’t teach culture. It is or it isn’t.

Mike:
No, you cannot change how people are wired like that. And that’s why we use personality assessments too. The DiSC and the Kolbe, because I want to know if they’re predisposed to being good at sales. If they have those basic building blocks, even if they don’t have tons of experience, I want to find a diamond in the rough, but I want to find someone who’s a culture fit. Who’s an ethic fit. They have the same because your company, whether you’re a one person company or you have two, three, five, 10 people, your company has a culture. It does. And if you’re not aware of it and if you say, “Oh no, it doesn’t. My company doesn’t.” Well, it’s a bad one then probably because you’re not paying attention to it. It’s like a personality. It’s like, hey, that person has a great personality. I never noticed.
Everyone has a personality so does your company. And if you nurture it, if you foster it, if you encourage a certain culture, that’s what it’ll be. But a lot of people just let it go. And our culture was bad in the beginning because we were bringing people in just turning and burning and it was all about show me your numbers. I like you, as good as your numbers are kind of an attitude. And it was just not, it was not good. It wasn’t conducive to people being passionate about working there.

David:
You also see this play out in a sports franchise, say a brand new expansion team that doesn’t have culture. Their coaching staff is new. The ownership has never done this before. Those are usually the teams that have the players that are doing dumb stuff. Getting themselves in trouble, making the franchise look bad because there’s not an established culture. It’s kind of the Wild West. And that’s how a new business is. There’s you and if you don’t have a very strong thumb on the pulse of what’s going on, you’re probably going to let it get out of hand. And that’s just, you’re learning that skill as the business owner yourself.
And then you get to where you have so many people on your team that are in that culture, that someone comes into it and they’re not a perfect fit, but the gravity of everything else pulls them into it. And you become like the New England Patriots. The Patriots can get players that you’re like on every other team they’re a headache, but they get in there, they learn the Patriot way, they fall in line and they rejuvenate their careers. Don’t be discouraged in the beginning when it is so hard. You think this person’s great and they become a cancer and you’ve got to get rid of them.
At a certain point, when you’ve got 20 people strong that are on the same page and that one person comes in that stands out like a sore thumb, it’s easier for them to fall in line themselves when everybody else is there. And if they don’t, you’ll notice it right away and you can make that move.

Mike:
Positive peer pressure. Positive peer pressure is a thing. If you have a team that’s just, well oiled, clicking, get along great, motivated, passionate, you bring somebody in who’s not that fit, they’re going to either wash out or they’re going to get on board because positive peer pressure. It’s just like the reason why you don’t want your kids to hang out with the bad kids in school. It’s just peer pressure will suck them into a bad thing. Positive peer pressure can do the same thing.

Brandon :
Does the same thing. That kid that was a problem in this school comes into a new one where every other kid acts differently and they’re like, “Oh, I don’t like being the only one talking without raising my hand, everybody else is.” And then it makes it easier to do things the right way.

Mike:
Yeah, the Patriot way is exactly right. It’s a great example. You can bring problem players in there and they just work because they conform to the positive peer pressure.

Brandon :
Yeah. And they can get a discount on super talented people because of that. And that’s what I’m kind of looking at. When you get a business that’s big enough with a great culture and enough opportunity, you can take the person who’s great at one thing and they kind of struggle with others and there’s a space for them in that business. When you’re small, you can’t really use that person. And that’s why we keep banging this drum of don’t quit. Don’t quit. Keep pushing. Work through these problems because when you get to the other side, oh my gosh, the rewards and the perks are so big.

Mike:
Totally.

David:
Yeah. That’s really good, man. You started building this team now. They’re doing it like, you got these team of rockstars that are all doing the right, they’re to use a Jim Collins analogy, you have the right people on the right seat on the bus right now. And so everyone’s on the right seat. Obviously we make changes. People come and go in organizations all the time. But when you have that well tuned machine, that’s what enables you to really scale your business without having to work as many hours. Is that good sum up?

Mike:
100%. Yeah, that’s that passive model that we talked about. It doesn’t have to be you out there doing it. Now here’s the interesting thing. Here’s the real hidden hurdle that sometimes people stumble over because they’re not aware, they’re not ready for it. Okay so you’re out there, you’re hustling, you’re building your business, you’re doing everything, you’re the technician. You’re talking to sellers, you’re talking to buyers, you’re putting out the marketing, you’re doing the title company, you’re going to close it. You’re doing all of it, you’re a technician. You’re good at what you do.
I worked in the automotive industry for a number of years before I started doing real estate. And the biggest mistake I saw when it came to hiring and promoting was they would take the best engineer in the engineering department and they would make him or her the engineering manager. Now they’re not engineering anymore.

Brandon :
They’re managing.

Mike:
They’re managing, they’re hiring, they’re leading.

Brandon :
Different skillset.

Mike:
And they would fail. It’s a different skillset. Us as entrepreneurs, we are the engineer. We’re out there, we’re doing the work. And then we’ll go to build a team, Brandon, I’m sure you’ve seen this. When you go to build a team, you bring these people in and now you’re not doing the work. You’re trying to train them. You’re trying to motivate them. You’re trying to inspire them and lead them. That is a different skillset. You have to be prepared for that.
If you want to do all the work yourself and kind of stay small and keep it all kind of a thing that I’ve said, then that’s fine. But if you want to grow, realize you have to get good at hiring, motivating, leading. And by the way, we talked about just bring people in and paying them. People are not just motivated by money. We have somebody that works for us, she has a father that needs physical therapy and she needs to be gone between 2:00 and 3:00 PM every single day. That’s so inconvenient, it’s not the right time to be gone at any business, but we give her that time because by giving her that hour that almost no company is going to sign off on because it’s just right in the middle of the workday, rabidly dedicated, passionate, loves us. Would do anything for us.
Hey, can you come in early? Of course. Hey, can you stay a little bit late to work? Of course. Awesome. We find and I try to find and not in a manipulative way, in a legitimately trying to discover what’s important to people, you find out what’s important to something and you give them that, they’ll be loving you forever. That’s how you get people that’ll run through brick walls for you. I’ve got people on my team that they would do just about anything. And they never complain because we make sure that they’re real, what’s really important to them is always observed. And if it’s their kids and if it’s school, being at their school functions or whatever it is, we make sure that those needs are met. Just like you would with a seller. You’re in the home, yeah you want to buy their house, but find out what their problem is. If you find out what their problem is and you solve that problem, you’ll likely buy the house.

David:
Yeah. That’s awesome, man. Well, one more topic related to the hiring of a team member and that you talk about in your book as well, is this idea of partnerships. Of bringing in a partner. I’ve gone the entire gamut on this, I’ve had done this on my own. I’ve had full 50/50 partnerships on stuff and I’ve had kind of where I’m at today, which is a, I do syndication now so I have general partners where I own 50% roughly of the GP and everyone else owns the other, the remaining 50%. I’ve kind of done everything. How do you view partnerships? When should somebody have a partner? When shouldn’t they have a partner? What mistakes do you see people make when they’re getting a partner?

Mike:
Great question. Great question. I actually plan on doing a presentation on this later in the year in an event. I’m very passionate about the partnership side of it. I have a partner. We’ll start there. I have a 50/50 partner in my business. He’s the sales guy that I hired that crushed it several years ago. I ended up partnering with him. Now partnerships are not always the answer. Matter of fact, I think most often they’re gone into with good intentions, but they’re not really looking at whether or not you need a partner. I think there’s a couple of things. There’s four things that I always tell people, having a partner, by the way, I’ve had partnerships that didn’t work too for the record. I’ve gone both ways. There’s four things that you need to look at whenever you’re deciding if you need a partner.
Number one, and people think, the first deal that I ever did, I told you that contractor didn’t pay the electrician. I hired that contractor because I liked him. He seemed like someone I could hang with. And I got along with him personally and so I brought him in. We were a lot of like. That is not a good reason to hire anybody necessarily. And it’s certainly not a good reason to partner. Your partner should be different than you. If they’re exactly like you, it’s probably a bad thing. Number one, I look for or risk tolerance. If I have a high risk tolerance, meaning I’ll do anything. You show me some opportunity and I’ll do it because I don’t, I don’t care what the risk is. And your partner is extremely conservative, there’ll be clashes all the time. You’ll never ever see eye to eye on how to steer the ship and where to go because their risk tolerance is lower than yours. My partner, super high risk tolerance, it’s probably slightly dangerous, but it also allowed us to escalate our business very fast because we took calculated risks all the time. Risk tolerance is huge.
Alignment of goals. The analogy I like to use is if you’re in New York and you’re like, hey, let’s head west. And you hop in a car with somebody and you start driving and you don’t know it but to them west means Indiana. That’s where they want to go. West to you means California. And that’s where you want to go. And you get close to Indiana and they’re like, all right, we’re going to start looking for a place to stop. This is our destination. Whoa, whoa, whoa, I wanted to go to California. Well, it seemed like we were going in the same direction in the beginning but my goal was much bigger than your goal or your goal was much bigger than mine, if that’s the person who wanted California. I think knowing what your partner wants, you get into a partnership because you.

Mike:
Versus one in California. So I think knowing what your partner wants, you get into a partnership because you guys are like, you get along, and all these things are great, but they want a $1 million business, and that’s all they want. And they want it to be kind of lifestyle and just enough to get by, and we just want to be comfortable. And you want a $50 million business, there will come a time where that’s going to be a problem that you’re going to have to untangle, and somebody’s going to not get their way. I’ve seen it happen more than once.
Common hunger I call it, number three, common hunger. Common hunger is, Brandon, you and I go into business together. We’re 50/50 partners. We have the same risk tolerance. We’re both crazy risk takers. We both want a $10 million company, so we know what we want there. And we start working, and pretty soon, you’re working 10:00 at night, 11:00 at night. You’re texting me, “Hey, man. I got this idea. We should do this.” And you notice I don’t answer your texts after 5:00. And on the weekends, I take my family and I go up North and I hang out at the beach or whatever. And pretty soon you realize, wait a minute, I’m working 80 hours a week. My partner’s working about 25 on a good week. He takes a lot of time off, wants to go on vacation a lot.
How long will that partnership last? Right? We have different worth ethic. And neither one is wrong. It’s fine if somebody works for 25 hours, but not if you’re working 80, and you’re 50/50 partners. Right? So that common hunger, do you both want it the same? Do you both have the same idea of the kind of hours and the commitment? One person has three kids and a wife and a house, and the other person’s a 22 year old single guy who lives at home. It’s going to be tough. One person doesn’t have the same drive necessarily as the other guy because he has to make the money, so that common hunger is a huge one.
And then number four is complementary skillset. Like I said, if I’m a great, world class salesperson, I don’t need to bring a world class salesperson in with me. I have that skillset. I can handle that part of the business. So bringing in people who complement your skills is really huge. Now this is the one mistake I made with my partnership. A lot of these, I hit them incidentally. I hit them because I got lucky a little bit because I wasn’t thinking about all this before I did it. But the one area where we are both weak, me and my partner, neither one of us are good at details, so that’s why we have to have people on our team that are meticulous and really, really, really watch things and dot the i’s and cross the Ts because we know were not great at it.
So because we know that and because we’ve assessed ourself, we’ve taken the personality assessments, we’ve gone through this a million times, and we’re honest with ourselves, we know this, so we always make sure that our team has enough detailed people to kind of compensate for that fact. So identical risk tolerance, alignment of goals, common hunger, and complementary skillset is critical. You don’t need a carbon copy of yourself. You need someone who complements you. And by the way, try hiring before you try partnering. Try partnering on a deal with someone as individual companies. Partner that way. I talk about in the book kind of going on those dates before you get married. Try partnering with them in a non legally binding LLC, where you have all these inter-tangled things. You can do that for a while to make sure that the person that you’re thinking about partnering with. Try everything before you partner. Make that the last resort.
It can be great. But people sometimes partner because they’re just lonely. It’s just a lonely thing to be an entrepreneur, and they don’t have anyone to talk to who understands. And so they partner so they have someone to share with. That’s not the right reason to partner.

Brandon :
That’s so, so important. Again, this is one of those that people need to go back and listen to that last couple minutes again because, yeah, you never … I’ve said this before on the show, and I’ll say it again now. You never know how somebody’s going to be until you work with them. Resumes are lies, interviews are lies. Everything’s a lie, even recommendations and referrals are weighted and emotional and not legit. The only way to really, truly know, you can’t always do that. Sometimes you just have to hire a person and maybe fire them if they don’t work out. I mean, there’s been times in my past, I was going to start this big syndication business, and I brought in three partners. We were going to split it three ways. And we quickly just found out that we just didn’t work well together.
But then it was really awkward because they’re probably listening to this show. One of the guys, amazing guy, super good guy in every way, a super legit skilled. We just didn’t work well. It was just a mismatch in terms of, I don’t know if it was, it was one of those four, maybe a couple of those four. But probably the common hunger and the alignment of goals was really just a different thing. What I wanted was a $50 million business, and this person wanted a lifestyle business I think. And so one of the partners, it just didn’t work. But then it was really awkward because we had already had these big plans of making this big business. And then it was like, “Well, now we have to renegotiate.” It got really, really just obnoxious. I would have rather just …
But on the other hand, I’ll give you an example where it worked really well is Ryan Murdoch and I, I talk about Ryan a lot, Ryan lives in Maui here with me. That came up because we did one deal together. We saw that we worked well together. Then we did another deal together. Then he came out to Hawaii and he hung out with me for a while. And then we did another deal. So we built it slowly, so I could see how he was going to work, and that just made all the difference.

Mike:
Totally. And if you do partner with someone, then you need to define the roles very clearly and keep a very clear line between what you’re responsible and what they’re responsible for so that you don’t get into this, well, I thought that was your part of the business. No, no, I thought it was your part. That, and then review those roles quarterly. We look at what we’re doing. And obviously, his superpower is going to remain a superpower. But what are we doing in the business? And quarterly, if you review that kind of stuff and communicate, that’ll keep things going a little more smoothly. And if it’s like, “Hey, we partnered, it’s great. And we’ll never talk about what we do in this company again.” It’s like the resentment starts creeping in, so you have to be open. At least quarterly, review the roles and make sure that you guys are doing the right things for the company.

Brandon :
Yeah. Really, really good stuff, Mike. Man, I feel like we could talk about this stuff forever, and we probably just need to do a whole show just on this topic someday.

Mike:
It’s huge.

Brandon :
I would obviously recommend everyone pick up a copy of Level Jumping: How I Grew My Business to over $1 million in Profit in 12 Months, from our guest today, Mike Simmons. It’s awesome.

Mike:
Thank you.

Brandon :
And a lot of really just good stuff in there, just about how to get to that next level, how to build a team, how to partner correctly, how to get your business to grow, really, really fantastic stuff.

Mike:
Thank you.

Brandon :
Now before we get out of here, we do want to go to the next segment of the show. It’s time for our deal deep dive. This is the part of the show where we just want to dive into one particular deal that you’ve done, something that we could kind of get the dirty details on. So do you have a property in mind we could ask you a bunch of questions on?

Mike:
I do. I do. And this was a wholesale deal, so keep that in mind. But it was a great learner for me, and it was an eye opener, changed my business, actually a little bit.

Brandon :
All right. Perfect. Well, let’s start with number one. What kind of property is it?

Mike:
Single family, single family home in a very nice town in my market, very good town.

David:
And how did you find this deal?

Mike:
It was direct mail piece, actually. We do very light marketing in this particular town because it’s affluent and we don’t get as many deals. But we do it because when we do, they’re usually pretty good. Right? So we still do direct mail in that town. So it was a direct mail piece that came. They had it for months before they called us, which is not all that unusual. And that’s where we got it, so it was in a nice area of town.

Brandon :
All right. How much were they asking? And what’d you end up buying it for?

Mike:
So we ended up buying it for 125. They wanted 150. We got it down to 125. The house needed work. It was a definite one that needed to be flipped. It was not ready to be rented. It wasn’t rent ready, wasn’t suitable to live in, so it needed some work. They wanted 150. We get them down to 125. And like I said, our sales guy’s great. That’s a whole world of knowledge as far as: How do you navigate those waters? And how do you … The guy, my partner, the guy that works for me, or worked for me, now he’s my partner, he’s big on silence. He always says, “Silence is one of the best things I have in my toolbox because just people like to fill silence, and they’ll start negotiating with themselves.” So we got that down to 125. Again, I want to stress, in a nice town because it’s going to make a big difference to the rest of the story.

David:
Awesome. That’s how you negotiated it. How did you fund it?

Mike:
So this was a wholesale deal, so we didn’t have to find, we didn’t have to get money for the house, obviously. We were going to put this out to our buyers’ list, which we did, and we put it out to our buyers’ list. Like I said, we got it for 125, and I told my dispo guy at the time … I ran the numbers, so this is one thing we didn’t talk about in the beginning. As a wholesaler who’s flipped for several years and is comfortable with that world, I have an advantage. I know what the house flippers’ numbers look like. I know how to evaluate a deal from a flipper standpoint, as opposed to someone who maybe just did wholesaling. It’s the first thing they ever did, they don’t know anything about the real estate.
I flipped for a long time. So I ran the numbers on this and I said, “Dude, we got this for 125. I ran the numbers. I don’t see how we sell it for more than 135 because there’s too much work to be done here.” It’s a nice area of town, I get it. But there’s just too much work. And then for what it’s going to sell for, it’s probably, we got this for 125. I thought we could sell it for 135. And I thought after the work was done, they might sell it for 200. ARB might be two, 210, something like that. There just wasn’t a lot of money in this, so we’re going to have to squeeze a little bit, 10 grand maybe, and we’ll get in and out. It’ll be easy because it’s a great area of town. People want it.
So I said, “Put it out to our list for 135. Let’s just see what happens.” Right? Puts it out for 135, we get an offer, full price offer, five minutes after the email lands. And they’re like, “We don’t need to see it. We have cash. We want to close immediately.” And I said, “Do not accept that offer. Hold please. Hold.” And he’s like, “Yeah. Of course.” So over the next two hours, we got into some bidding wars with some buyers. So it went from 135, to 140, to 150. And I’m running the numbers like, “What did I miss? Did I miss something? Is this worth more than I think?” And I’m looking, I’m looking. We kept going. We ended up selling the house to the highest bidder for 175.

Brandon :
Whoa.

Mike:
Now I fancy myself at least of average intelligence. And I know how to run the numbers for a flip, so I’m telling my dispo guy, “There’s no way they’re making money on this. There’s no money to be made. They’re not going to make money.” And he’s like, “I don’t know, man. They buy from us all the time. They’re a big buyer.” So I’m like, “Okay. Cool.” So when the time came to close, I don’t go to closings anymore, but I went to this closing because I was so curious. So the closing’s over with. Everyone’s getting up, and I shake the guy’s hand. And I’m like, “Dude, thank you, first of all, for being a client. I appreciate you buying houses from us. It’s awesome. But I’ve got to ask you, man. I’ve flipped houses for a long time. And I ran the numbers on this. I know you bought it for 175. I don’t think there’s any money here. I don’t understand how you’re going to make money. You’ve got to tell me how you’re doing this. I don’t care if you have your own money. I don’t care if you have your own crew. It doesn’t matter. There’s no money. You’ve stripped every possibility.”
And he said, “You’re right. I won’t make money on this. But I’ve got a bunch of crews that are not busy enough right now, and I need to keep them busy, or I will lose people. I will lose crews and members from my crew. This job will get me to the next one that will be profitable. And I’m just using this as like a bridge to get me from here to there. So I plan on breaking even. I understand that, but I need to keep my guys busy.” So after that, I stopped trying to predict, and try to understand what people will pay and why they’ll pay it, and try to have that … I don’t know what everyone’s model is. I don’t know their situation. I just don’t.
So us selling it for 175 was mind blowing because I used to try to predict and manipulate. What are they going to buy it for? And you just can’t do that. So now we put houses out to our list, to our buyers’ list. And sometimes we’re surprised for the better, and sometimes we’re surprised in the other direction. It doesn’t go for as much. But I stopped trying to predict all that stuff because if someone would’ve offered me 135 a couple years before that, I would’ve taken it because I didn’t know that you should not take it right away, especially when someone calls five minutes after you put it out, and they’re dying to buy it immediately. You’ve got to tap the brakes a little bit.

Brandon :
The tendency, and I know I do this as well, is we put ourselves in the other person’s shoes. Right? So well, they wouldn’t want this because I want to make $50,000 on a flip, so I’m not … That’s what we assume. They do too. But maybe somebody’s fine making $10,000 on a flip, or a 12% return on their rental, or 20%, or 5%. Who knows? Maybe they’re making 2% in the stock market right now, and they’d be happy to make 3% on a rental property, whatever. We’ve just got to take ourselves out of it. And that’s where just conversations with whoever, clients, salespeople, whatever, that’s where that matters so much, is to know what their actual motivation is.

Mike:
People do the same thing when they’re flipping, right? When they start off a lot of times, they’ll go, “Wow. I would like this color. I would like this accent wall if it was my house.” It’s like, bad idea, don’t try to make it for you. It’s not for you. It’s for somebody else, so let them decide what they want.

David:
I use a similar strategy when we’re writing an offer on a listing that I think is going to get multiple offers, and they counter back. And I know if we just take it right away, they’re going to be thinking, “Ooh, that was too easy. What went wrong?” So I will often counter them with something stupid just to make it feel like it was a little bit harder to go into contract with us so that they don’t realize what they have. It was the very same. If that buyer had not said, “Yep. Take it right now, no questions asked. Throw it under contract,” it wouldn’t have set off all those red flags in your head to where you would’ve been like, “Hold on. Let’s look into this a little bit more,” and you got 40, well, no, 60 grand more than what you thought. So you move quickly, you move efficiently, but you have to be thinking about what the other side’s thinking, and just enough that they don’t have … It doesn’t trigger that same response.

Mike:
Totally.

Brandon :
So good. All right, man. Well, let’s move on to the next segment of the show. It’s time for our (singing). All right. Let’s get to the famous four. Number one. Mike, current favorite real estate book, besides your own, of course.

Mike:
Besides my own, man, I am just raving about How to Invest in Real Estate by this surfer guy from Hawaii.

Brandon :
Nice guy.

Mike:
I don’t know. He surfs in questionable beaches. We talked about it before we logged on here. So yeah, that one, I love.

Brandon :
Yes. We did have a conversation about questionable beaches and surfing. All right. Well, thank you. That might be one of the first times people have mentioned me and Josh’s How to Invest in Real Estate.

Mike:
That’s a good book.

Brandon :
Thanks.

David:
How about your favorite business book?

Mike:
Yeah. I wish I could cram a bunch into here because I read way more business books nowadays than I do hardcore real estate. I’d say the one that’s probably impacted me the most is Traction by Gino Wickman. It’s how we run our business. We run it off that EOS system.

Brandon :
I was going to ask you earlier if you ran it off EOS because it sounds like it because we do as well.

Mike:
Yeah, we totally do. And I think it’s just a clean, very effective way to run your business. But you mentioned Extreme Ownership earlier in the podcast. I’m a huge fan of that too. That changed a lot for me too when I kind of embraced that in everything. You’re responsible for everything. It’s all you, so it’s huge.

Brandon :
Very cool, man.

David:
What are some of your favorite hobbies?

Mike:
That’s a great question. You know what, I’m actually sitting currently in a theater room that I built in my house, stadium seating and a huge screen. I like watching movies. It’s how I … I’m sort of on all the time. I’ve got a business and things that I’m doing. My brain is always going. The only way that I have found that I can shut my brain down and not have it running like a hamster wheel is to watch movies. It takes me out of my head space and lets me think about something else, so I watch movies a lot. Started running again, I used to be an avid runner when I was much, much younger. I just started running again, so that’s sort of a new hobby for me, getting out there and running and trying to get my cardio where it needs to be.

Brandon :
Are people chasing you?

Mike:
If they were, they would catch me, Brandon. I’m not going that fast. Nobody’s chasing me.

Brandon :
No bears in the woods or anything.

Mike:
No, no. I might not be the slowest person to use that bear analogy. You just have to be faster than the slowest person. I don’t think I’d be the slowest person. But if the bear ate the first person, he might catch me.

Brandon :
All right. Something to keep working on. Number four. Mike, what do you think separates successful people, successful real estate investors, from those who give up, or they fail, or they just never get started?

Mike:
It’s pretty easy for me. I think it’s pretty clear. It’s not the sexy answer, maybe, but it is the people who take action. I’ve been around probably thousands and thousands of real estate investors at this point at various times in the last 12 years. And the people who are successful are not necessarily the people who are the smartest, or the most academic. They’re not dumb people, but smarts has nothing to do with it. It’s the people who are willing to actually go out and do something. We talked about hiring. Right? And you’re thinking, “I’m not detail oriented. I need someone to help me.” Go hire a VA. Go on Upwork and hire a VA. Go do it. It’s $3 or $4 an hour. Yeah, you may have to go through a few to get the right person. But if you need help with details, if you need help with parts of your business that can be downloaded, and they’re clerical or admin kind of things for sure, go on Upwork, hire a VA, and take that off your plate. And just see how much that changes things for you.
So it’s the people who can hear advice and then act on it. Right? Because information, education, it’s all potential energy. It’s not doing anything. It’s that parked car analogy we talked about before. Education’s a parked car. Knowledge, listening to all this that we talked about today, it’s a parked car. Going out and hiring that first person, going out and taking control of your company’s culture if you already have people on your team, that’s the momentum. It’s the taking action part that makes all the difference in the world. I’m truly convinced. People who were … And by the way, sometimes the people who over analyze have the hardest time because it’s like the more you make …
If you go ask a lawyer if you should do something, they’ll almost invariably scare you out of it. Right? So you don’t want to educate yourself to the point that you’re deathly afraid to do anything. You need to be a little bit more build the wings on the way down kind of an attitude than figure it all out.

David:
I love that advice. If you ask a lawyer, the answer’s always going to be no because all these things could happen.

Mike:
Yep.

David:
If you ask a person who has no skin in the game and just wants to see what you do, like you go ask the joker, he’s going to say, “Yes, go do it. Who cares?” The advice you get is going to be tailored to the person you ask. And I’ve found that often, my subconscious will dictate who I go ask because I already know what answer that I want.

Mike:
Totally.

David:
Be aware of that.

Mike:
When you give someone advice, or someone gives you advice, if the first thing out of your mouth is, “Yeah, but,” I know that person isn’t going to do it. Right? If you ask for advice from someone who’s qualified to give it to you, then it’s on you at that point. They’ve transferred all that ownership to you. And if you don’t do it, you’re not going to succeed.

David:
Awesome.

Brandon :
Solid, Mike, solid. All right, well, that’s all I’ve got, David.

David:
My last question of the day. Mike, where can people find out more about you?

Mike:
They can find out more about me, so I have a podcast called Just Start Real Estate. And if you would like to check it out, it’s great. My email is [email protected], so if you want to reach out to me, feel free. I will love to hear from you. And then Brandon, you mentioned the book, Level Jumping, early on. It’s on Amazon now. You can go check that out too.

David:
Very cool. All right, man.

Brandon :
Yeah. Did you have … Earlier, you said something about a number people could text or something. Do you want to give that a shout out?

Mike:
Yeah. Let’s do that, actually. Okay. So you can get a free digital download of my book if you text the words just start, that’s two words, just start, to 55444, I will send you that free digital download. So if you like to consume on a Kindle or something, there you go. So just start to 55444. You can get a free digital download of the book.

Brandon :
Very cool. Well, thank you, man. This has been a fantastic, awesome, just I would say better than the first time. We shouldn’t have waited seven years to get you back. Awesome to have you.

Mike:
I know it. It’s a travesty. I know. We can’t do it again. We’ll keep in touch better. We actually did for a while. We were back and forth a lot, but we’ll get back on it, man. I’m going to get out to Maui. That’s my next move. Got to get out there.

Brandon :
There you go. Come hang out with me on the beach with the electric guitar player who was playing while I surfed.

Mike:
Exactly.

Brandon :
True story.

Mike:
Exactly.

Brandon :
And he was not clothed. Anyway, moving on. David, you want to take us out?

David:
Yeah. This is a good time to get out of here. I have that image in my head for the rest of the day. This is David Green for Brandon, faster than a bear, Turner, signing off.

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In This Episode We Cover:

  • Mike’s remedy to cure a bad case of “analysis paralysis
  • Why he switched gears from flipping to wholesaling
  • Why wholesaling is NOT always a great thing for newbies
  • The marketing channels Mike uses to do 100 deals per year
  • Ultra-specific direct mail tips (from a guy who’s sent hundreds of thousands of dollars of direct mail!)
  • What most do wrong with direct mail marketing
  • How he made a $50K assignment fee and the key lesson he learned
  • Hiring and managing transaction coordinators
  • Hiring his first salesperson on a “straight commission” pay structure
  • Using personality assessments like DISC and Kolbe when hiring
  • Why intelligence is not the most important predictor of success in real estate investing
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

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