10 Powerful Lessons Brandon Learned Building a $50M+ Rental Portfolio

Brandon:
This is the BiggerPockets podcast Show 479. When you have that vision, when you finally make the decision, this is where I’m going, everyone else around you is like, “Hey, he’s going somewhere, let’s go with him.” That’s what leadership so much is about. It’s not about having the perfect answer. It’s not about knowing this is the perfect solution. It’s just making a decision and going with it. You weigh your options. You say, “These are my different options. I’m just going to make the decision. And if it’s the wrong decision, I can correct course later.”

Intro:
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Brandon:
What’s going on? Well, it’s Brandon Turner, host of the BiggerPockets podcast, here with my co host, at least for now, David Green. What I mean by that is today’s episode, you’re not in most of the episode, you’re hearing the introduction and the outro. But what’s up, David?

David:
Well, now, I don’t know. What’s up with you?

Brandon:
All right. Today’s show is a little bit different style. We’ll talk about it in just a moment. But I first wanted to ask, David, I don’t know, I feel like I have a clever question, and I had nothing. David, if you could relive any day in your real estate investing life, you get to relive any day, what would it be?

David:
In my investing life, this is really good.

Brandon:
Now relive it, not to do it differently, but to just to be there in the moment again.

David:
As odd as this sounds, I would relive the day that I refinanced four California properties out of 30-year mortgages into 15-year mortgages. Because the day that I did that, I ran it through an amortization calendar and I realized how quickly this was going to scale as far as equity was going to go. I was going to pay him off faster than 15 years. But I ran it through a calculator where I realized I can pay off these 15-year mortgages at nine years, and then refinance them, buy more properties, do the same thing again.

David:
And I was going to turn these properties over four times and grow it to $12 million, instead of a million and a half that it was worth and that feeling of compound interest working for me just had me jazzed up. I was like walking on the clouds. And I know it’s a weird story. But I remember being super excited when I saw that worked out. What about you?

Brandon:
I’m going to go with way back in the day back when I was 21 years old, I was reading a real estate book. And I remember getting really excited about this concept of buying properties, and then the equity growing. Similar to you, like the equity growing, and then I could take the money out and sell those properties or refinance them, and then put that into bigger ones. And I kind of like what I felt like the stack today.

Brandon:
And I remember writing down on a piece of paper, this big long piece of paper, this how much I’d have here and it gets paid down. And it just like, I realized that I was going to be a millionaire that day. And I was only 21. I had no money. I was broke. I had no credit, no anything. I owned my only one property I was living in that first house. And I realized right then, I’m going to be a millionaire. This is totally doable because I realized the power of real estate. So, that was a cool day.

David:
That’s what both of us are describing. When we saw how strong real estate was, it had nothing to do with us. It was just like, that’s been there this whole time.

Brandon:
Yeah, this feels like it should be illegal. You buy property, they go up in value. You buy bigger property, they go up in value.

David:
And it just and I got to say, from that point, it only got better. You mean I get to write off the depreciation even though it’s appreciating in value. I mean, I get to borrow most of the money when interest rates are going down. The rents went up this much just every single thing.

Brandon:
Yeah. It’s cool, man. Well, good for you. I wanted to make sure we got a little bit of content between you and I since today’s episode is a little different. It’s actually just me. So, here’s the backstory of what you’re hearing today. I did a class and we taught a class on the lessons I’ve learned in building a $50 million business, which actually, within a month, now we should be over $100 million, which is crazy. It’s called Open Door Capitals, my company.

Brandon:
And so, I did it for a group called the JDC Mindset Academy. We’ve had Jason Drees on the call, I mean, on the podcast before. Jason’s a good buddy of mine. He’s my performance coach. He has this mastermind group called JDC Mindset Academy. And Jason’s asked me to come and speak on this topic of how I did it. It was called like opening doors or something like that. It’s kind of play on words with Open Door Capital.

Brandon:
Anyway, at the end of it, people were like, “Brandon, this was amazing, they really liked it a lot.” And I was there so, I don’t actually know. Because you know when you’re speaking, you never know actually how it went. But people seem to like it. So, I show it to a few other people. And they’re like, yeah, you should definitely put that on a podcast.

Brandon:
So, here we are today. I’m playing it for you on this podcast. So, you can hear a bit of what I talked about, some of the lessons I learned in bringing in partners, in scaling and how to know you’re working with the right person and not the wrong person, how to do all of that stuff, how to keep your role intact, how to keep excited moving forward, all that stuff. A lot is covered in here with a lot of specific examples. I hope we’re going to help you guys.

Brandon:
Whether you’re trying to buy your first property or your 100th property, that’s what today’s show is all about. So, that said, we’ll get to that in just a minute. First, let’s get to today’s quick tip.

Brandon:
All right, so today’s quick tip. Here we are, if you’re watching this anyway, when it comes out, here we are in June of 2021. And at the end of July, I think it’s the 31st of July, we are launching a book called the Multifamily Millionaire. It’s a book that myself and Brian Murray. It’s actually two books, it’s two volumes, almost 700 and some pages combined. It’s a ton of information all about multifamily. Here’s why I bring it up today. Because in the month of July, before the book even comes out, because a lot of people are excited about the book coming out, I’m going to be teaching every week a class on multifamily investing for those people who preorder it from BiggerPockets.

Brandon:
So, if you want, if you already have preordered or if you preorder it by the end of June, then what I want you to do is I want you to go over to iwantmultifamily.com, make sure that’s correct, iwantmultifamily.com. I bought that domain and just so you remember on the podcast, I want multi, M-U-L-T-I family dot com. You’re going to put your name, your email. You’re going to upload a picture of your, a screenshot of a receipt showing that you have preordered the Multifamily Millionaire.

Brandon:
And then you get to come to, I’m going to do four classes, one each week for the whole month of July, where I’m teaching a lot of the concepts of the Multifamily Millionaire plus a little bit more that maybe isn’t even included in the book. I think you’re going to like it a lot. I’m going to put a ton of work in this thing because the goal here is I want everyone to preorder this book.

Brandon:
So, the key again, you got to buy both books. You got to preorder both books directly on BiggerPockets, not on Amazon. You got to buy them through BiggerPockets, and you’ll get all that stuff. So, do that before the end of June. And then upload your stuff, and then we’ll have July, it’s going to be awesome. So, there’s you’re not so quick tip. Good?

David:
Very good.

Brandon:
All right, maybe you’ll join me for one of those. I don’t know, we’ll see. I might draft you in. All right guys, thank you so much for being a part of this community, the BiggerPockets community. It’s amazing. I hope you enjoyed today’s episode. So, with that said, I think we’re ready to get into this thing.

David:
Yeah, I want to hear what you have to say.

Brandon:
Okay, yeah, you haven’t heard this yet. So, we’re going to play it for you now. So, here we go. Thank you, everyone and have a fantastic time.

Brandon:
I don’t have slides today, but I have notes. And so, if I’m looking over here and not at the cameras, because I’m reading my notes here. But I wanted to basically tell the story today of Open Door Capital and kind of what I did to grow my business over the last few years. But I don’t want this to be about me, I want it to be about everybody watching this and what you can take from.

Brandon:
This is kind of the last year and a half of my life. And so, some of this may be new to you, some may be old and you’ve heard it before. But I’ve basically pulled out nine or 10 lessons that allowed me to step into where I’m at today in my life. And so, I just kind of run through that from beginning to end. Sound good?

Brandon:
My story begins, the Open Door story anyway begins, well, technically it begins a long time ago. I had company called Open Door Properties. We bought small real estate deals in Grays Harbor, Washington. And I bought a duplex, triplex, four-plex, five-plex houses, did some flipping over the course of about a decade. So, from when I was 21 to about 31, 32.

Brandon:
And at some point in there, I started slowing down a lot because BiggerPockets got more and more consuming on my time. And so, I was buying a couple things a year, maybe really try not to do much. We’re making three or four grand a month in passive income from owning it. And when I say passive, I mean passive-ish. My wife was still managing the properties, I was living there. So, I would go and take care of problems when they came up. I wasn’t the full-time maintenance guy, but I did a lot of the maintenance. And that was just how it was. I was just what I call a small multifamily real estate investor.

Brandon:
You know I actually got a book coming out here shortly. It’s called the Multifamily Millionaire. And it’s two volumes. So, volume one is small multi, volume two is large multi. And the difference is not a unit number actually, it wasn’t that weird. The difference between the small and large is the way you approach your business. Small is like I do things myself, I usually manage myself or it’s a local property manager. I’m very much involved. I know all my tenants names. That’s a small investor. Nothing wrong with that, but it’s just a different game.

Brandon:
Then there’s large investing, which is like I don’t know who my tenants are. There’s big gigantic billion-dollar companies that manage the properties. I’m raising money syndication, it’s that world. So, two different approaches. So, I was in camp A, small multi for a number of years and just small real estate.

Brandon:
And then that led me to, I don’t think complacent maybe is the wrong word. But definitely to a point where I wasn’t doing a lot. And this is actually around the time where I got connected with Jason for the first time. And so, I was frustrated. I was trying to put out a million fires every week. And in a lot of times, my three or four grand a month in passive income was dried up just from a big rehab or something like that. So, I didn’t feel like I was making a lot of traction, which is what got me thinking I need a performance coach kind of get me to the next level, such why connect with Jason at.

Brandon:
And around then also, I went to Nashville. You probably heard the story before, but I’ll say it again. I went to Nashville, Tennessee, a buddy of mine lives there, and he’s a music producer, Grammy-winning company. All his team members are Grammy winners. He’s a Grammy winner. They’re really good at what they do. And it’s a small team. They only five or six people in the entire company.

Brandon:
And I flew there, hung out with them for a day. And he let me record a song in his studio because I do a little bit of music. And it was like the best day of my life. But it wasn’t the best day of my life because of the music and that was cool. I’ve been in a national studio. But what made it so amazing is because I saw a vision that I had never realized existed. And that was a small team of people who loved each other. They were good friends. They work together. They showed up when they wanted. Nobody was telling them what to do. They did their job. They were top of their game. They’re, again, Grammy winners. They were just amazing people in a team and they had such a camaraderie doing impactful work.

Brandon:
And I just remember thinking, this is what I want. Because at the time, like I said, I was kind of feeling just kind of like, I’m not really doing much, but I got this feeling of this is what I want. So, point number one, so lesson number one to pull out of that I wrote is start with the life you want to lead. And not so much like I want this much money in the bank account. But what does that feel like? What is the life you want to lead feel like?

Brandon:
For me, it felt like that. Working on impactful things with high achievers, top performers, who were also my friends. I felt like Michael Scott here, right? I’m world’s best boss. They’re all my friends. But that idea of being like, I wanted to love work. Because I think work is so vital for the soul. Nobody who can get financial freedom takes financial freedom. People who retire die. It’s a fact. And so, I love work, the idea of work, but I just never experienced work like that. So, lesson number one is to, again, start with the life you want to lead. But start with what does that feel like.

Brandon:
So, I went home from there, super inspired of like, I want to have that someday. And I don’t know what business that’s going to be. I don’t know if it’s real estate, if it’s something else, but I know that’s what I want in my core. It felt so right to me.

Brandon:
And so, then around that time, we started interviewing, I’m having people on the BiggerPockets podcast for eight, nine years now. But I interviewed a guest named Jefferson Lilly. Jefferson Lilly was a mobile home park investor. And then a few months later, I interviewed another guy named Kevin Bupp. Kevin Bupp was also a mobile home park investor. And in both those interviews, I walked away going, “Oh, that’s so cool. I love that idea. I love the mobile home park niche.”

Brandon:
But I say that for a lot of things. I mean, I love self-storage. I love assisted living. I love a lot of these things. But really just something stood out about the mobile home park business and what they were saying about it. And I thought that’s really cool. So, this is another piece of the puzzle as I was listening to this.

Brandon:
And then I went and got invited to speak at a real estate conference. It was called the Best Ever Conference put on by Joe Fairless. And I was the keynote speaker there. So, I go there, I speak at this event. And I realized very quickly, I was the dumbest person in the room. I had the least amount of properties. I did not deserve to be on that stage. I was surrounded by people who were doing millions of millions of dollars of transactions, and were very, very successful people. And here was me, because I’ve got a podcast, I got a spot on the roster to be able to speak.

Brandon:
And it really encouraged me in a big way to think bigger, to think, well, if they can do that, why can’t I do that? And so, lesson number two, I wrote down here is get into a room where you’re the smallest, and make sure that every so often, you’re in a room where you’re the smallest player in that room, you’re the dumbest person in that room.

Brandon:
And we hear that advice before. It’s not like I made that advice up. But we hear it, but we still don’t do it very often. So, the question I would fire at all of you is like what can you do in the next month where you feel you’re in a situation where everyone is kind of where you want to be? Whether that’s a conference you go to, whether it’s the type of podcast maybe even listen to, where’s that next level where you can go and start getting in there?

Brandon:
And maybe it’s this Mindset Academy, maybe just being here, maybe you’re looking around going, “Wow, these people that are really, really good because there are, that are just killing it right now. I want to be more active here because this is where I’m not the smartest person in the room.” It’s easy to trick yourself into feeling really good about yourself when you compare yourself to your high school buddies who just want to sit around drink and watch Family Guy all day. It’s another thing when you go into a room where you’re the dumbest.

Brandon:
So, that was the Joe event, definitely was not the brightest in that room. On the flight home from that, I had a layover in Salt Lake City from Denver to Salt Lake, Salt Lake to Maui. I’d actually moved to Maui right around that time. And I read the book, Vivid Vision by Cameron Herold. I’ve talked about that before here in this group.

Brandon:
But Vivid Vision by Cameron Herold took me one hour to read the whole book. It’s a very short book. So, from the flight from Denver to Salt Lake, I read the book. And then from Salt Lake to Maui, I put the book into practice. And the whole idea was paint a picture, a vivid picture of where you want to be three, four or five years down the road. And I’m not saying this is right for everybody. I think there’s some people need that vision and some people need more of just like to feel things out. And we’ll talk about that here in a little bit.

Brandon:
But for me at the time, I’d already decided that what I wanted was that small team of people who are rock stars that were working together and living life together, I wanted that. Also I knew that I liked mobile home parks. And so, the Vivid Vision for me came at a perfect time. I decided that I needed to just pick something and go with it. And this leads still lesson number three, it’s more important that you decide than what you decide.

Brandon:
You see, one of the reasons I wasn’t going bigger for a long time from the time I was in Nashville and knew I wanted to do something bigger, and then even the people I’ve interviewed in the podcast for seven, eight, nine years that were doing bigger stuff, the reason I wasn’t doing bigger, it was because I just didn’t know what to do.

Brandon:
One week I’d go from like, oh, self-storage, and then mobile home parks, maybe I should flip houses and I could buy an apartment complex. There was so much. And in the real estate investing space, there’s so much you can do. And I needed to just say, “You know what? It all works. I could be a successful multimillionaire in any of these niches. But I need is to pick something and go with it.”

Brandon:
So, what fires me up? Mobile home parks, okay, I wrote that down, mobile home parks. How am I going to get a team of five people around me to hang out and do life together and just have a great time like I saw in Nashville? Well, I’d have to buy a certain number of mobile home parks to justify that. How can I make money? Well, when you do syndication, which means you pool a bunch of money and you buy big properties, there’s fees involved.

Brandon:
So, the company that puts together syndication, like my company, Open Door Capital, we would get a fee. So, I did work backwards. I said, “Okay, well, what would I need to be able to pay the salaries, roughly a half million dollars a year for five people.” I guess I would need about $50 million in real estate. So, I wrote that down, $50 million in real estate.

Brandon:
And then I just worked backwards on that. And I wrote my entire vision. It’s up there on my wall right now. I’ve talked about it again many times. But it’s called the $50 million surfers, how a small team of adventure seekers built a real estate empire, helped millions achieve financial independence and kept their humanity intact.

Brandon:
And on this like 2000-Word document, I walked through everything my company has three years in the future. So, it’s a newspaper article written three years in the future. I wanted 1000 rental units. I wanted $50 million in real estate. I wanted to have mastermind meetups in Maui, where I meet people and connect with people and grow my friendships and my networking.

Brandon:
And I landed that flight in Maui. I landed in Maui with a document completed and it was done. I spent seven hours working on the document and it was done. And I got home and I read it to my partner. We had bought one real estate deal together. His name’s Ryan Murdock. I read it to him and I said, “This is my vision for where I’m headed.” And his first words were, “I want to be a part of that. Let me be a part of it. I want to be with you on that.”

Brandon:
And I realized that moment when you have that vision, when you finally make the decision, this is where I’m going, everyone else around you is like, “Hey, he’s going somewhere. Let’s go with him.” That’s what leadership so much is about. It’s not about having the perfect answer. It’s not about knowing this is the perfect solution. It’s just making a decision and going with it. You weigh your options. You say, “These are my different options. I’m just going to make the decision and if it’s the wrong decision, I can create course later.” But I needed to be more decisive.

Brandon:
So, I made the call. This is what I’m doing, mobile home parks. I’m going to go into this one. Ryan was the first one to say, “I’m on board. Let’s do this thing.” Then, that next week, a friend came out to visit in Maui. And we’re sitting on my lanai, which is like a front porch. In Hawaii, we call them lanais. We’re sitting on the lanai. And I’m having a conversation with Ryan and this other mutual friend of ours.

Brandon:
And he is a wholesaler, a wholesaler, who’s really good at finding off-market properties, things that aren’t for sale, negotiating and locking them up and then they’ll sell them for a fee to me. For example, if I was going to go buy a house, a wholesaler might lock it up. I’ll get it under contract for $100,000. And then, they’d go to me and be like, “Hey, you want to buy this property for 110?” And then they would make the $10,000 fee. That’s what a wholesaler does.

Brandon:
So, me and this wholesaler, we’ll call him Ed, me and Ed and Ryan are sitting on this lanai and we realized like, “Wow, Ryan’s really good at doing stuff. I’m pretty good at raising money, I think I will be. Could Ed find us all the properties?” I mean, he’s amazing at wholesaling. He’s done millions of dollars of he’s earned from wholesaling houses. If he has the skill to do houses, he’ll probably also have the skill to do mobile home parks.

Brandon:
So, we said right then in there, let’s do a third, third, third partnership. Open Door Capital would be 1/3, 1/3, 1/3. The three of us are going to dominate the industry. You’re going to find deals, Ryan’s going to run the day to day, and I’m going to raise the money.

Brandon:
Now, what happened next is that nothing happened. Nothing really happened. We didn’t buy any properties, nothing changed. We couldn’t find anything. And my buddy, Ed, we’re still friends to this day, we found is he was too busy in his own business to shift everything to what needed to be done in mobile home parks. So, my theory was wrong. I thought, if you’re good at the one thing like wholesaling houses, you’ll also be good at mobile home parks. And maybe he would have been, but it just he was busy and he had another business.

Brandon:
And so, the lesson that I learned there, and I wrote this down as well, you can write this down is, you never know how someone’s going to be until you work with them. You never know how an employee is going to be or a partner is going to be until you actually work with them. Resumes and speeches and all that stuff, I mean, even past experience is only a possibility of what they might be like for you.

Brandon:
But even in this case with Ed, he had the experience all day long. And his past performance was solid, but it just didn’t fit. And again, I don’t want to make it sound like he was a bad person. He’s a great person and a great investor. It just didn’t fit with what we needed at the speed we wanted to go and all that.

Brandon:
But now I had an awkward situation because now he owns a third of my company and we’re not doing anything, nothing’s happening. Which is why the other lesson, that I wrote down here, but you can write this down as well is I no longer … I should say this, give equity slowly, partner on big pictures slowly.

Brandon:
So, today if I’m starting another business and I have a lot of random business, I’m starting a coffee company right now. I just sell coffee because it’s fun. It’s like a side project. And I got a partner on that one. But we’re not laying out this grand partnership for the next 10 years anymore. Instead, let’s just sell some coffee. Let’s go sell 1000 bags of coffee. Let’s go buy a real estate deal. Let’s go JV on a new build. Let’s go do some consulting together.

Brandon:
So, in other words, find ways to work with people without having to get married. I mean, we do it in dating. We date people for a time, then we get engaged. We have a lot of conversations, maybe we get some counseling, premarital counseling, and then we tie the knot. But if so many times in business, it’s like, “Hey, you’re my friend, you have a pulse. Let’s go into business together.” And then you split some equity and it gets really big. And then it gets complicated later.

Brandon:
Again, I’m such a big believer now of find ways to work with someone before you get married to them in business right now. So, yeah, start small, which is exactly what it was with Ryan. Let’s go back to the Ryan Murdock. Ryan and I started with one single property we bought together and he was incredible at it. And I saw how well he worked at it. I saw how hard he worked at it. And that’s why I brought him in as a third partner on the mobile home park business, Open Door Capital.

Brandon:
So, what we ended up doing is the guy, Ed, that we worked with, he started slowly putting together a team of interns. Now, he was still involved at this point. Today, he’s not. And he did this right. I’m not saying he didn’t do anything. But it was just, he built this team of interns. And this was my idea going into it, I’d say, I have a really good idea. Let’s bring in 10 interns who do nothing but cold call and direct mail and basically hunt for deals.

Brandon:
And my buddy, Ed, is going to manage these people. Then I’m also going to bring in a team of 10 underwriters, which means analyzers, people who run the numbers and figure out what we can pay and make an offer and do that. I’ll have 10 underwriters, 10 lead specialists and I’ve had the super team of people getting deals coming in. Well, that failed, for lack of a better term, that failed because I didn’t have the time to manage these people. There were too many cooks in the kitchen. They started overlapping each other and one person would buy a deal. We didn’t have great systems. So, I would say that entire system failed.

Brandon:
However, however, in that group, in the intern group of 10 people who were the sales people, who were in charge of the sales and stuff, one of those guys in that group ended up leading the conversations, meeting with people without me, gathering them together going, “Okay guys, let’s meet together and come up with a plan to get some sales so we’re not stepping on each other’s feet and let’s do this.”

Brandon:
And he was holding them accountable and he became a leader of that group. That guy is Mike Williams, my investor relations guy, who I moved out to Maui here, one of my best friends in the world. I was just hanging out with him two hours ago as he was feeding Ryan’s bird, Ryan Murdock’s bird, who Ryan lives in my backyard in my other house back here.

Brandon:
And so, that internship led to Mike Williams now being one of my executives in my company. Now, at the same time, the underwriting team, the analyzing team, one of the guys in there took our spreadsheet and said, “Yeah, this is crap. Let me redo it for you.” Rebuilt our entire spreadsheet into the most comprehensive spreadsheet ever created for mobile home parks. I mean, it is unreal how good this thing is, all for free while working his full-time job.

Brandon:
Then he was organizing the other analyzers and getting them to do different things and helping them do things. He became a leader of that group. That guy is Walker Meadows. Walker right now as my COO, runs my entire company. He’s the day-to-day operations of my company today.

Brandon:
So, I said a minute ago that that internship failed, but did it? Or did I just find a roundabout way to get there, which is kind of fun is, I mean, the people that are in the group that they tried for a while. I feel bad that they didn’t get into the team. But in a way, it was a giant contest, which funny enough is what Jason you actually told me, I don’t remember this, you told me this five years ago.

Brandon:
When I was talking about needing an assistant, you said, “Well, what if you made some kind of like contest, kind of a Hunger Games style thing and make you go fight to the death for it.” And I didn’t even go into it with that intention, but that’s exactly what happened. And it goes to that, just to reinforce that idea, you don’t know how someone’s going to be until you work with them.

Brandon:
So, my advice to anybody here building any kind of business right now is how can you find a way to make it a little Hunger Games style. And maybe you can attract 10 interns. I know I’ve got a benefit there being on the podcast. But there are people young and hungry in your world right now that you could bring in to see how they work and how they go and how they do.

Brandon:
There’s JVs you could work with people. I’m JV right now on a big self-storage deal with a friend of mine named AJ Osborn. We may work some big stuff in the future. We’ve got some kind of cool plans. But both of us are going wait, let’s just do one deal together. Let’s find out how it goes. So, again, find out how that’s going to be. All right, moving on with the story.

Brandon:
So, at that point, we started paring down the team. And then, remember earlier I said in my vision in the Vivid Vision, I had a plan to do masterminds in Maui, like live events in Maui where people come out and we mastermind together and we talk we build each other up. So, I did the first one. We called it the Maui Mastermind, which apparently is a trademarked name that we can’t use. So, it’s the Maui Real Estate Mastermind.

Brandon:
And one of those members that came was a man named Brian Murray. Brian Murray, I invited him because he was author of a book called Crushing it in Commercial Real Estate. He had been in our podcast a couple times. And I could just tell he was a good guy. Brian came to this event, along with 20 other people, and it was a great time. We went to a yacht, and we went snorkeling, and we went surfing and we did all this cool stuff. And we had these real in-depth conversations about what are people dealing with? What’s their challenges? What’s their problem?

Brandon:
And at that meeting, Brian said, “Look,” he had 2000 units of his own, he said, “I’m here because I need friends.” He’s like, “I’ve been doing this alone forever. I just wanted to be with other people that were doing awesome stuff.” And that’s why he came to the mastermind. And then he said, “I’m going to take my business to a new level.” He’s like, “It’s time for me to shift from the small multi to large, to go make that transition into the syndication world.” And he’s like, “That’s what I’m going to do.”

Brandon:
And at that same mastermind, I said, “Well, that’s what I’m going to do, too.” And so, Brian came to me, and he said, “Well, if you’re going to do that and I’m going to do that, why don’t we just do it together?” And I was first of all flabbergasted because this is Brian effing Murray. I mean, this is a big deal. This is Brian Murray, owns thousands of units. He’s a big deal. And he wanted to partner with me.

Brandon:
And it just shows, I’m sure it is a limiting belief. But I didn’t even think like he’d ever be interested in that. And now, Brian is my partner on Open Door Capital. He came in as a large minority owner, but a large owner of Open Door Capital. We brought him in on that meeting.

Brandon:
And at the time, I had some anxiety about it, about like, I wanted to give all my team members equity. Brian, of course, needed equity. Ryan was going to get equity. But that’s taking money out of my pocket. That’s taking money out of my kids’ pocket. That’s the fear. We start getting greedy and we’re like, “Oh, man, if I give equity, if I share with other people, if I partner with people, that’s money I don’t get.”

Brandon:
But then I just had this simple question. I remember somebody asked me, maybe Jason asked me or maybe somebody else did. I don’t know. They said, if you brought in all these people, these rock stars into your life, and they were the best at what they do, for example, I’ll just give Brian as an example. If you brought in Brian, could you do twice as many deals as you could do without him? And the obvious answer was, yeah, of course I can. Okay, well, then it’s, it’s a win-win. Why not do it then?

Brandon:
And the truth is having Brian, having Ryan, having Walker, having Mike, having all my guys that are in the team now, having them, I can do 10 times, 100 times more than I could do on my own. So, the mindset shift there, whatever it was, just really like not thinking what is this costing me by giving up equity and by JVing, it’s what could I get from this? And could I do a lot more.

Brandon:
So, if anybody here is feeling like that kind of constraint that I don’t want to share, just remember with the right people, it’s got to be the right people, with the right people, that synergy can produce far more than what you guys can do independently. So, don’t be afraid to share. All right, moving on.

Brandon:
First deal we tried to buy together. The first one actually worked out okay. It was one that came from the actual internship team. It was the only one that came from that group team. And that came with my buddy, Ed. And so, again, it wasn’t that he was bad. It’s just that he was too busy to be able to fully dedicate to this.

Brandon:
But we got to deal, we locked it up. Then we realized very quickly, we didn’t know what we were doing. I know we kind of did, but there was a lot of lessons. We don’t know what we don’t know. And that’s just a scary part of jumping into real estate sometimes. You don’t know what you don’t know. And so, luckily, it was a smaller deal, it was a couple million dollars.

Brandon:
Ironically, that today is our best deal. And this is just maybe a fluke, maybe an accident. But this deal we built so much wealth from the sale, it’s probably our best deal to date. I know it was the first one and we made so many mistakes in our underwriting and not knowing what we’re doing. But we took action and we moved forward.

Brandon:
The second deal that we locked up, we put $100,000 earnest money down, that means money that we pledged saying, “Hey, we will buy this property.” We went looked at in person. I flew over there to Tennessee. I looked at it. And we were like, “We can’t do this. This is not a good property.” And the seller refused to give back the earnest money. And we ended up having to go to court over it and had to settle somewhere in the middle. I think we lost $50,000 on that second deal.

Brandon:
And it was such a blow because I didn’t have that much. I mean, we had just started. I didn’t have money. I was trying to fund all these salaries out of my own pocket and hoping that we could buy the property so you get the fees to be able to support the team. And here I get dealt with this blow where the seller was not relinquishing the earnest money. It was a mess. And I wanted to give up then. I really did. I was like, this is just too hard. This is too complicated.

Brandon:
And again, this is where Jason’s been a part of all of this, by the way. So, he knows all this, but over a five-year period or whatever.

David:
Yeah, [inaudible 00:32:38].

Brandon:
Yeah, yeah, it was a tough time, just like, oh, I can’t believe we lost. Anyway, but really what this did, yes, we lost $50,000 on it, but we made that up. We’ve made that up many times since then. But this is the kind of the revelation, the lesson we learned here is that mistakes lead to clarity.

Brandon:
You see that deal, that mistake, the reason that we lost that money is because I’ll give you a specific, I mean, specifically what happened was, we found out that it had a whole lot of septic tanks, 30 of them septic tanks. And the septic tanks were not in great condition. And so, what we decided in that moment was we don’t want to do septic tanks. We don’t want to deal with it. Maybe somebody out there wants to be good at septic tanks and that’s their niche and that’s what they want to be good at with septic tanks with mobile home parks.

Brandon:
But we decided at that moment, we will not do septic tanks. And that was a $50,000 lesson. But that $50,000 lesson helped us clarify what it is we do want. So, today, we’ve got very clear goals. I mean, we want 100 plus pads. We have 100,000 people within a 20-mile radius. We’ve got no septic tanks, no lagoons, only city sewer and water. We want a certain percentage of them owned by tenants, not owned by the park. We’ve got all these criteria points. The criteria was built off mistakes, off of trying things and realizing, oh, we don’t like that idea.

Brandon:
So, again, the lesson there is, yeah, mistakes suck. Sometimes they’re painful, sometimes it costs money, but they’re learning experiences that help you create your criteria. And criteria is so important in real estate. And it’s so important in everything, but getting good at something and getting very specific on what you are good at will help you be able to hone in that skill and become the best.

Brandon:
So, I would say, I’m not bragging, but okay, I’m bragging, we are the best in the country at mobile home parks that have over 100 lots that are city sewer and water that have primarily tenant-owned properties with populations of 100,000 people within 20 miles. We are the best in the entire world at that thing. And so, now we’re able to land a lot of those deals. We’re closing those deals all the time now because that’s what we do. We’re so good at that specific thing.

Brandon:
And so, again, lesson learned there is get specific. Don’t feel like just because you niche down, that’s going to limit your options. In fact, I think it opens up a lot of options. So, mistakes lead to greater clarity. All right, moving on.

Brandon:
The next thing we realized we went through a dry spell. We had this thing going, we’re struggling, we’re going through a dry spell, we’re not getting any deals. And so, I went back to the basics of what I teach on BiggerPockets webinars. I do a webinar every week for BiggerPockets, and I teach the same concept over and over and over and over. Real estate is all about getting leads, analyzing those leads, pursuing those leads and then success comes.

Brandon:
So, let’s say I get 100 leads that come across my desk. A lead is like somebody who may want to sell their property. So, maybe 100 phone calls I get from sellers. Out of them, I’m going to analyze them to decide how much I can pay. Out of that, I’m going to make an offer. I’m going to pursue some of them. And if I’m consistent with that, I’m going to land the deals that I want. It’s just math. It’s just a funnel. It’s very simple.

Brandon:
And so, when people tell me they can’t find any real estate deals, all I have to do is walk them through that funnel. “Oh, you can’t find any deals. Okay, well, tell me how many offers you made last week?” “I didn’t make any offers.” “Oh, okay, well, how many deals did you analyze? Show me your underwriting on all the deals you analyzed?” “Oh, well, I didn’t analyze any or I analyzed one or two.” “Oh, okay, well, how many leads came across your desk? How many leads came across your desk, and what were the leads from? Were they direct mail? Did you talk to brokers? Do you have a real estate agent? Were you driving for dollars? What’s your lead source?” “No, I don’t really have one.”

Brandon:
Oh, okay. It’s like somebody saying, oh, I’ve been trying to lose weight for the last three months and I just keep gaining weight. And you’re like, “Well, what are you doing?” “Well, I mean, I’m not doing anything.” “Well, what’s your diet look like?” “Twinkies and nachos.” “What’s your workout look like?” “Well, I don’t get out of bed.” It’s like, we would be shocked if somebody said that. Yet, in real estate, we oftentimes just like, yeah, I guess there’s no good deals in my area.

Brandon:
So, we went back to the basics and said, “How many offers do we need to make in order to land a deal?” At the time, it was what 10, today, it’s about 20 because the markets got a little bit tougher. But we said, “Okay, we got to make 10 offers get one deal. How many deals do we have to analyze in order to make 10 offers?” “It is about 30.” So, about two thirds of the deals that come across our desk that we analyze, we don’t even offer on because they’re not right for us. Okay, so we need to make 30 offers.

Brandon:
“How many leads do we have to get across our desk to be able to analyze about 30 of them?” “Probably about 100.” Because again, 70% of them are just kind of wasted leads. They’re not good leads. Okay. “So, in other words, if we wanted to close a property every single month, we would need to get 100 leads every month.” “Yup.” So, I said, “Okay, let’s do that.”

Brandon:
So, we started tracking that meticulously. And to this day, we are meticulous. We meet every single week and we say how many deals we analyze, how many did came across our desk, we call it a hard look, how many did we offer on. And we set goals. Right now we’re offering on basically 70 properties a quarter. That’s our goal right now. Last quarter was 50, this quarter is 70. We’re going to make 70 offers this quarter.

Brandon:
And that should come down to three-ish, four-ish, maybe deals that we’ll buy. And in fact, yesterday, I got a text from my partner, Brian. He said, “Hey, good news. We just got two deals accepted today for almost $50 million combined.” In one day, we got almost $50 million of deals accepted. Do you guys remember my goal? What was my goal originally? for my three-year vivid vision was $50 million in real estate in the course of three years. And we just got that much accepted in one day, because we follow a process.

Brandon:
So, by the way, we did pass that 50 million now. We’re over that. We’re over 1000 units, I think we’re at 1600 units, 1700 units now. And it’s literally just numbers. And so, anytime we have a dry spell, where we go a few weeks or a month without a deal, I just say we have to just stick to the process. The process works. Now, we can refine our process. We can try to get better at our process. But the process is what delivers the results.

Brandon:
So, as long as we’re consistent with that, we don’t have to freak out about a week or two or a month of a dry spell. And if it gets too long, fine, then maybe we need to adapt our process, maybe we need to shift then. But I’m not going to shift anything until we’ve tried our process for months at a time. And I think that just applies to almost every business in the world. If your process works and we know that it does, stick with it. If you need to expand it, expand it, but stick with it.

Brandon:
So, the lesson here to kind of summarize up in a nice cute little phrase here is that success is not an accident, success is a process. So, what is your process look like for success? Follow it.

Brandon:
All right in there. Moving on to the next kind of stage of Open Door Capital is now we’ve got six-ish full-time employees. Ryan comes to me, Ryan Murdock, who was at the time running everything. Ryan was the COO. Ryan was running the operation. At the time, Walker, who’s now COO, Walker was just an underwriter. He was our lead underwriter, deal finder.

Brandon:
Ryan comes to me and says, “I’m done. I can’t do it anymore.” He says, “I love you. I love Open Door Capital. I can’t work 80-hour weeks anymore. It’s just too stressful.” And he’s like, “I’m financially free. I’ve been financially free. I’ve got 100 of my own units. I make enough money. I live in Hawaii. I want to dive. I want to surf. I want to boogie board. I want to travel. And I can’t do it working 80-hour work weeks at Open Door Capital.”

Brandon:
And it rocked my world for a little bit. I mean, it was like, “Oh, my gosh, everything’s changing. Everything’s up in the air.” And again, Jason’s been here for this, what am I going to do? Everything’s falling around me.

Brandon:
And then, it didn’t. I said, “Okay, well, what do you want to do?” And Ryan’s like, “Well, I mean, I still want to be here. I just don’t want to work 80 hours a week.” I’m like, “Oh, well, what do you like doing?” He’s like, “Well, I like doing this and this. I love traveling to go look at properties. I love helping with each team member. I don’t want to be pushing papers 80 hours a week.” I said, “Okay, let’s build a job for you that you love.”

Brandon:
And so, I worked there. And I worked to make sure that Ryan had something that he loves to do. And it’s a constant up and down. We’re still working. Every couple months me and Ryan will sit down like, are you happy right now? Do you like this? And this leads to another lesson learned here is that, and I heard this from Gary Vaynerchuk once. He said, “Your employees don’t work for you, you work for your employees.”

Brandon:
And I very much in my life apply that to Open Door Capital. They don’t work for me, I work for them. My job is to make sure that they are successful, that they’re happy, that they’re producing. Because if they’re producing and happy and successful, they love their job, and they’re doing what’s perfect for them, and they’re taking care of their families, and they got the time off they needed, they’re going to be loyal to me. And they’re going to deliver on what they need to me.

Brandon:
And so, again, the lesson learned there is that they don’t work for me, I work for them. And so, today, Ryan stepped back from his full-time work. He’s still super vital. He still owns part of the company. He’s still there and he still makes money. But he does what he loves. And what really happened there, when Ryan got out of the way, I mean Ryan’s amazing. But Walker stepped up to lead and Walker was born for this. Walker is born for it. Walker loves an 80-hour work week, knocking this stuff out.

Brandon:
And so, in fact, had Ryan not stepped aside, Walker would not have got an opportunity to do what he was born to do. And maybe he would have left me at some point because he was so good at that thing. And so, again, just lessons learned there. It’s hard, but it works.

Brandon:
Now, in the next phase, now, we got lots of employees, we got movement, we got things happen, we got HR, we’ve got deals coming down, we’ve got all this stuff. And for a while, it was just all up here in my head, in Ryan’s head, in Walker’s head, it was just a mess. We said we need to get more organized. And I was doing probably 20 hours a week of one-on-one meetings with each person on the team.

Brandon:
And I was like, “I don’t want to work 20 hours a week in Open Door Capital. I want to work four hours a week at Open Door Capital, because I got a lot of other things going on too.” So, how do I work less? How do the team do better? How do we grow? How do we expand? And the answer was we needed more systems in place. We needed a management system.

Brandon:
Now, I am the most anti-corporate guy you probably have ever met. One of my favorite movies of all time is Office Space. I love it. I’m so anti-corporate that I kind of resisted it at first. So, did Brian. Brian Murray hates the corporate stuff, too. That’s why we’re in real estate. I’m guessing a lot of you do, too.

Brandon:
But I read a book called Four Disciplines of Execution. Four Disciplines of Execution by Chris McChesney and we had him on our podcast and it’s a system for achieving big goals. And so, we play with that for about a year, this 40x system. And I still love it to this day. It’s still amazing. I still use it to a degree. But then we expand it to an even bigger system called EOS. EOS is called the Entrepreneurs Operating System. It comes from the book Traction by Gino Wickman, Wickham, Wickman. Gino Wickman has the EOS system.

Brandon:
It’s basically a way of aligning everyone’s goals on the same page, a way of making sure that everyone knows where the company’s headed, what the quarterly goals are, what the weekly deliverables are, what the annual goal is, basically puts everything your business has, employees and vacation hours and this and this and this and it puts it all into a system that’s on paper or we use Asana, which is a project management tool and we meet once a week.

Brandon:
My hours went from 20 hours a week of working on Open Door Capitals to two almost overnight by implementing a system. And our park size increased, our business increased, our leads increased. Everything got better. Everything I got more systemized because it’s no longer in here. It’s now on paper. It’s now on Asana. It’s all tracked. And it doesn’t feel corporate. It’s a good time. It’s a one-hour meeting. It’s two one-hour meetings that I have. I have the executive kind of meeting and we have just the team meeting once a week.

Brandon:
And that’s pretty much all I do anymore at Open Door Capital. I mean, yes, I raise money. I’ll make a video here and there. I answer questions for my team when they have them. But the system is what runs Open Door Capital. I don’t run it. Walker doesn’t run it. Brian doesn’t run it. Ryan doesn’t run it. The system runs the team. And so, that’s just a lesson that I learned is that systems, management systems actually lead to freedom and growth. They don’t constrain you.

Brandon:
Yes, if we’re talking TPS reports and just worthless stuff, that’s not what I’m talking about here. I’m talking about a good … And there’s lots of other management systems out there. I just happened to like EOS. BiggerPockets runs on EOS. I mean, a lot of people I talked to run on EOS today. So, it’s a good one. But there’s a lot of them out there.

Brandon:
But the point being, it’s helpful. And you don’t have to have a big team to do it. You could do an EOS system with one person. If you’re a solopreneur, you could do it. But having that system just clarified everything and made it a lot better. And so, again, I don’t like the rigidity sometimes of things, but I’ve just seen how well it works.

Brandon:
Our new goal, we decided 50 million was too small. So, we’re like, what if we went to 250 million? We’re like, yeah, it seems too small also. What if we went to 500 million? That seems pretty good. That seems comfortable. I don’t want to be comfortable. What about a billion? What if you bet a billion dollars in real estate? And that scares me, not scares me like terrifies me like I’m going to cry. But that’s like, oh, jeez, that’s a big number. And so, that’s how I knew it was right.

Brandon:
And so, our seven-year vision right now, we have a seven-year plan is to buy a billion dollars of real estate. Now, let me tell you why this is so exciting to me and to our investors. So, we have 400 investors that are working with us right now. We’re going to keep continuing raising money. I need to raise probably $400 million in the next few years, in order to buy a billion dollars of real estate.

Brandon:
We’re going to deliver these consistent, awesome returns to investors. They get to passively invest in real estate with me and my team, which is great for them. They don’t have to work at it, we work at it. My team, the fees that come in on the parks, like when we buy stuff, that pays for the staff. So, I don’t have to pay out of pocket for the staff, as long as we hit our goals every quarter, and every year, which we will.

Brandon:
I continue working just a few hours a week at this making sure everything’s working correctly. But we’re going to turn a billion dollars of real estate into 1.4 or $1.5 billion of real estate. That’s 4 to $500 million of value we’re going to create. I have the feeling today of what I wanted when I was in Nashville, what, three years ago. And I built it working backwards from that feeling.

Brandon:
And so, at every stage of this, it was never easy. There’s always problems and questions, and concerns. But the last lesson I want to leave everybody with today is that mindset coaching. And it’s not just a plug for Jason, but literally mindset coaching at every single stage of this was a vital. I don’t know if I would have gotten through any of those problems and difficulties had it not been for meeting with somebody every couple of weeks going, this is what I’m dealing with. I’m not sure how to get through this. And then Jason asking the right questions.

Brandon:
And so, over the course of the last few years, I attribute so much to this coaching thing. And I’ve heard people say, “Well, I coached for a few months and I got out of the rut I was in and so I stopped coaching.” And I’m like, I don’t know. I mean, maybe those people are just really smart. And they’re way better business than I am. But for me, it’s like I can’t imagine not for the rest of my life, not having somebody that I’m regularly meeting with, like Jason, to talk about these issues. Because when you’re growing, there’s always another level, there’s always another thing that you’re working through. And if you’re not growing, there’s still probably levels of like I need to treat my wife better, I need to treat my kids better, I need to lose some weight. So, no matter what it is in my life, I can’t imagine not doing it.

Brandon:
So, that’s just the final like kind of reframing and lesson that I’ve learned is, performance coaching is not about just solving a quick problem and getting on with your life. It is the life. It is the ongoing maintenance that I will do. It’s the oil change in my life that I’ll have to do forever. And anyway, it changed my life. So, if you do not have a performance coach, I know you’re in this academy, but if you don’t have a performance coach, I would highly recommend it.

Brandon:
Get somebody you can meet regularly with. I mean, at this level, if you’re in this group, you’re at a level where like, if you had somebody setting goals with you, working towards your issues, answering these problems, just helping you decompress every couple of weeks, could you not achieve an extra 5, 10, 20, 50, $100,000 a year in revenue. It’s a no brainer for almost anybody.

Brandon:
So, again, I don’t want this to be a plug. Jason never asked me to say this. I just want to say, this is legit, how it changed my life. So, that is how we have Open Doors over the past three years at Open Door Capital. And hopefully those lessons can apply to you all as well.

Brandon:
All right, everyone, hope you enjoyed that episode where I talk about how I built up my $50 million plus business. And of course, it was not just me. And when I say that, we say I own $50 million of real estate, it’s I own a piece of a company that invest in $50 million in real estate. And you can do the same thing. In fact, in a couple weeks from now, David and I are doing a couple of solo episodes, just him and I talking about how to first build your team to build a real estate empire on a solo, alone, and then how to build a team that you can scale. So, look for those episodes coming up. I had a lot of fun recording them, and they come out in the next few weeks.

David:
So, it’s not every day you get to hear from somebody that built up a $50 million portfolio. Very cool.

Brandon:
Well, thank you, man. Appreciate it. And all you all, don’t forget to leave a ratings and reviews on the show if you like it and follow us over on Instagram, BiggerPockets, it’s @biggerpockets. You can find me at BeardyBrandon and David at DavidGreen24.

David:
Yes, sir.

Brandon:
All right. Let me get this out of here.

David:
Great job today.

Brandon:
Thank you.

David:
This is David Green for Brandon the multifamily man Turner signing off.

Outro:
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