The 5 Things You Need to Build a $1,000,000+ Rental Portfolio

Brandon:
This is the BiggerPockets Podcast show 483. You’re going to build a team. The cash flow hopefully pays the team and the fees that you do when you buy the stuff will pay the team. So, you’re not out of a lot of money or even any money and maybe make money along the way a little bit, but your real benefit is that down the road, you’re going to make millions of dollars off this portfolio.

Speaker 2:
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Brandon:
What’s going on, everyone? It’s Brandon Turner, host of the BiggerPockets Podcast. Here in my sea shed, once again, I am with David Greene. What’s up, David?

David:
You always hold up one finger when you say host. Should I hold up-

Brandon:
The host.

David:
… two fingers and say, “The co-host of the BiggerPockets Podcast”?

Brandon:
Host. I did that because Josh did that for years back when I was in your chair.

David:
He said it. That’s why we say it like this.

Brandon:
Host of the BiggerPockets Podcast. Yeah, this is the BiggerPockets Podcast.

David:
This is the BiggerPockets Podcast.

Brandon:
Yeah, that’s how he did it.

David:
But where does the one finger come from?

Brandon:
I don’t know. He always do that.

David:
He wanted to subliminally that everyone knows he’s number one. It’s been drilled into our heads now. You see Josh and you just think winner. You can’t think anything else. Well done.

Brandon:
Well done, Dorkin. Josh, well done, Dorkin. That’s a good nickname for him. All right. Well done, Dorkin. Today’s show is part two of our series on building a team. We talked about being a solo entrepreneur, a solopreneur. In other words, you’re a small time investor. You’re got your first property, second property, fifth property, and maybe single family, maybe some small multi. You’re doing most of the stuff yourself.

Brandon:
Maybe you’re hiring a property manager. Maybe it’s long distance, but it’s smaller deals, where most people are out right now. Where I was at for a long time and in some regards, I’m still there in some things. So, I’m a smaller investor when it comes to my Maui properties, but then I’m a larger one when it comes Open Door Capital. So, today is going to focus more on the scaling entrepreneur versus the solo entrepreneur, a little SS alliteration for you all there. So, what does a scaling entrepreneur mean, David?

David:
So basically, when you start with a core four, you are doing a job and then you are finding four additional people, making it a total of five. So, we covered the four people you need on the team, but we didn’t actually talk about what you’re doing. You’re the biggest piece in the whole thing, right? There are four people that support you. When you scale into something bigger, we’re going to take your job, we’re going to divide that into five pieces. So, there’s five when you’re solopreneur and then there’s five when you’re scaling.

Brandon:
So, we have the core four. So, we’re going to call this the divide five.

David:
Divided five it.

Brandon:
The divided five it.

David:
That’s what we’re going with.

Brandon:
The divided five it is what we’re going to go with here. If you got anything better than divided five it, please let us know. But it’s the five roles that you put or play when you’re doing small deals. You all know this stuff. We’re going to cover them today. I can just say what they are real quick. But then as we get into the larger deals, we’re going to divide you into five pieces. In the beginning, this might all be you. So, don’t get stuck today thinking, “Oh, they’re talking about hiring employees.” So, number one, you have to have somebody generating leads and bringing the lead flow in. So, we’ll call that the lead gen person.

Brandon:
Number two, you have to have an underwriter or an analyzer, somebody who’s making sure the numbers work right and that you know how much to offer on it. Then you have the money raiser, the guy or gal who’s raising all the capital for it. Again, in the beginning, that might be you. They’re working with the bank financing, raising money, all that. Then you have an asset manager or maybe a property manager. Asset manager is a bigger word. We’ll talk about the difference here in a little bit. And then you have a finance bookkeeper type role. So, those are the five roles that you play. Now, there is a sixth role here that basically just means the person who puts it all together, right?

Brandon:
I like to call it a COO or CEO. That’s probably you no matter what, but maybe you’re going to be a piece of this on another team. For example, at Open Door Capital, I’m not really any of these roles. I actually have a full-time person on every one of these, in fact, some multiple people on each one, but I’m this aggregator maybe, the person that makes sure that each part is working correctly. I’m mechanic, but the pieces are in the engine working. So, anyway. So, we’re going to talk about these five areas today. Again, lead gen, underwriter, money raiser or investor relations, asset manager, and the finance side of things. So, that’s what today’s show is all about.

David:
So, those five pieces are your five Avengers and the aggregator is being Nick Fury. You brought the team together.

Brandon:
That’s pretty good. I like that. I was going to go with Captain Planet, right? Earth, wind, fire, water. When our rings boys unite, they formed Captain Planet. He’s a hero, right? So, they come together. Yeah, but actually, I like your example better, Nick Fury because he brings them together. Yeah, it’s less egotistical than saying, “I’m Captain Planet. Their rings make me.”

David:
Although I will give you credit for bringing Captain Planet-

Brandon:
Thank you.

David:
… into the BiggerPockets Podcast. I didn’t think it could be done.

Brandon:
Actually, that’s a funny idea. Have you ever seen those TikTok videos or YouTube clips where celebrities have to try to put a certain word, whether it’s a radio DJ has to say a certain word in their thing? Anyway, it’s a thing that people do, right?

David:
We actually did that as police officers.

Brandon:
Did you?

David:
We come up with a word of the day.

Brandon:
Super Troopers did that with police officers.

David:
I don’t where we got it from.

Brandon:
Yeah, yeah.

David:
You have to say something ridiculous in a radio transmitter.

Brandon:
Exactly.

David:
We would come up with just seven syllable words that there’s no reason it would ever have to be done. Whoever said it would get a free dinner that day or something.

Brandon:
Yeah, I’m thinking we might have to put that into a future episode of the podcast, anyway. So, if you ever hear us say a completely unnatural-

David:
Divided five it and Captain Planet, we’re on a pretty good start.

Brandon:
We are. All right. Before we get into that though, we got a couple of housekeeping things to do. First one being today’s quick tip.

David:
Quick tip.

Brandon:
Now I mentioned this a few weeks ago, but I’ll say it again now. BiggerPockets now, if you are a Pro member, you have access to something very cool that David and I did together. We sat here in my sea shed recording for almost four hours a video series on no and low money down investing. So, if you are a BiggerPockets Pro member, you have access to that.

Brandon:
So, to get access to that, go to your profile and go to the upper right corner. It shows your little face up there in the upper right hand corner and drop down. I think it says Promotions. I should know this, but I don’t know exactly. I think it says Promotions. Go in there and you’re going to probably find it in there. If you have any trouble, you can email [email protected], but it should be there. Again, that is a no and low money down masterclass that David and I did together. It was awesome. So, check that out.

David:
Candidly, I think this is the best content you and I have ever did.

Brandon:
I think so too. I think so too.

David:
When we were making it, it was just that feeling you get when you’re in the zone that you can’t miss.

Brandon:
Yeah, yeah. Four hours felt like an hour. You break it apart. It’s broken up into the little videos, but yeah.

David:
If you’re a Pro member, you just scored. Go check that out.

Brandon:
I think it’s only Pro Annual actually. So, if you’re not a Pro Annual member, I don’t think you have access to it, but something to think about doing in the future. All right. I think that’s enough introduction. Let’s get to today’s show. Today’s show, the divided five it. Actually, why don’t we cover the core four first as a quick review in case you didn’t listen to last week’s show? So, David, give us a rundown of what are the core four and then we’ll move into the divided five it.

David:
I came up with the core four when investing in different markets from where I live, because I was forced to leverage things that you can be tempted to do yourself. So, the core four are the four people you need to invest anywhere. They’re a deal finder, a property manager, a contractor, and a lender.

Brandon:
All right. That works when you are a smaller investor, small time investor. I don’t say small in a derogatory way, guys. Don’t misunderstand that. You can stay small forever. I’m just saying when you’re a solo type person, where you’re doing almost everything yourself, that’s a certain level. In fact, in the book that I wrote with Brian Murray, The Multifamily Millionaire, we have volume one and volume two. Volume one is really all about that, which is the smaller deals, the stuff that you’re doing yourself. And then the volume two is all about the bigger deals.

Brandon:
So, it’s almost like these two podcast episodes are playing with that same framework. So, anyway, core four works really, really well. You still need those in your large deals. There’s some overlap today, but you covered all four, right? I didn’t know interrupt, did I?

David:
Yeah. When you get into larger deals, the problem is you are not going to want to do every job that you were doing in the smaller deals the same way. There’s a lot more at stake. There’s usually more complexity in analyzing a 200-unit apartment complex versus a duplex type of thing. So, you can get by with maybe weak analytical skills when you’re buying a duplex. You can use the BiggerPockets calculator. Our members get to use that for free.

Brandon:
Correct.

David:
Once you move into something this big with all these moving pieces, it becomes to the point where your lack of skills will probably start to show up. They’re compounded in everything, whether it be the lead generation component, the organizational bookkeeping component, whatever it is. So, you and I have broken down the five roles that are needed that the investors typically playing themselves and they’re buying smaller deals.

Brandon:
Yeah, let me tell you all a quick little story. I’ve said it before in the podcast if you’ve ever heard it. So, my company is called Open Door Capital. We buy mobile home parks and apartments. In fact, we’re raising for a big apartment deal right now, odcfund.com. I think we have 13 people now on the team or something like that between employees and team members and independent contractors, but we have these 13 people, right? That whole entire business started because I was in Nashville, Tennessee and I saw my buddy Seth Mosley, shout out to Seth, who runs a company called Full Circle Music.

Brandon:
Full Circle Music is awesome. They produce a bunch of Grammy winning songs and stuff. I saw his team that seemed five people that were amazing, top of their game, Grammy winning people, amazing success. I was like, “I want that in my life. I want that top people that really get along well, have a great culture fit, doing impactful meaningful work.” I went home from that trip going, “How do I build that?” And then I went to a conference. I think it was Joe Fairless’s Best Ever conference three years ago or four years ago, three years ago. I saw these investors that were doing huge, like what we’re talking about today, these larger multifamily deals. I was like, “Dang, I got to build that.”

Brandon:
So, all that combined is why I built Open Door Capital. I started with the divided five it that we’re talking about today. I’m going to laugh every time I say divided five it, because it’s funny. I said, “Well, what would I need to build a team that could just buy big deals?” I’m like, “Well, I’m going to need somebody who can lead gen and get the leads coming. I’m going to need an underwriter. I’m going to need a money raiser, an asset manager, a finance person to do all this.” That’s where it started. What’s different about Open Door Capital than any other business I’ve started is I started it from, “Let’s build the team and then go after it.” I mean, I started with the asset.

Brandon:
I knew I wanted to buy mobile home parks to start with, but I still said, “Let’s build a team now. I’m not going to do every one of these roles and then one by one, outsource them to people. I’m just going to start from the beginning doing this.” So not that you have to do that way. I’m just giving you guys a little background story of these roles are important for anybody who wants to scale their business.

Brandon:
In the beginning, it might be all you or you might decide tomorrow to put together a team of five partners. Each of you take one of these roles, or maybe you hire five people and they’re all employees, or maybe there’s a mix of the two. But this is we’re going to need to go forward. Cool. Anything you want to cover before we jump in, maybe asset class pick in that? Do we start with asset classes? Is that before you build your team, you got to know what you’re doing to buy?

David:
Yeah, I think that’s a good way to go. So, basically, our theory here is that you start with the end in mind. So, the first question you have to ask yourself is, “What do I want to buy? Why do I want to buy it?” And then you’re going to work backwards putting pieces in place from there. So, when you decided you wanted to get into mobile home park, why did you pick that asset class? What was that really process like as you went over your options?

Brandon:
I interviewed a few people on the podcast here who did mobile home parks. Now, we just thought it was sounded intriguing. I mean, there are benefits to mobile home parks. I could brag about them all day long, why I love them, but somebody could also give me equal good reasons on why vacation rentals are the best thing ever. Somebody could give me equal good reasons on why building a single family house fund is a better idea, right? They all work. All of this work. So, really, I just had to pick something and go with it. So, I picked something that I felt some fire in my belly about.

Brandon:
I was like, “Oh, this is cool. I like this thing. Mobile home parks sound cool.” I just followed that fire. It’s a phrase we say a lot here on the show is follow the fire. So, I just followed the fire. I said, “Okay, I’m going to stop looking at a million different things and thinking about everything and not taking action, because too many options lead to inaction.” So instead, I just said, “I’m going to just pick this thing and go with it.” So that’s how I chose it.

David:
Now, there were probably a few components of it that allowed it to work for what you actually wanted to go do. So, one is you have to buy an actual product big enough to support all the people on your team, right? So that’s why you didn’t pick duplexes.

Brandon:
Correct.

David:
Mobile home parks are large, you can scale.

Brandon:
Now I could have said, “I’m going to go buy 50 duplexes over the next couple years,” and then we could have built a duplex fund. It’s a different way. This is such a mindset thing, right? I’m not thinking of it as an individual, “I’m buying investment properties.” I’m thinking about as I am building a company that happens to trade in the asset of mobile home parks for me or could have been any-

David:
That’s a great point. The way I would look at it is you are buying an income stream that happens to be a mobile home park. Out of that income stream, you are going to pay all the different people on your team. Because it’s a company, your goal is to have more money left over at the end than what it was that you spent. That would be your profit. Now, one of the benefits of building a company based on real estate is that it’s not just the cash flow. In fact, it’s probably the least important part in the whole picture. Can you share a little bit about what the goal is, the vision for 10, 20 years down the road?

Brandon:
Sure. In fact, I was talking to this group of people yesterday, doing a call with them. A lot of them are in ecommerce. I was like, “Yeah, ecommerce is great. I love it. I love it.” I started random ecommerce business over the years. They’ve almost all failed. The truth is because I wasn’t as passionate about it, but they do work. You can make a lot of money in ecommerce. You can make a lot of money selling courses or being a coach or a consultant. All those things work. But at the end of the day, a simple Google algorithm or an Amazon algorithm can completely change your business overnight and shut you down.

Brandon:
When you’re consultant, you have a car accident, your business shut down, because it’s dependent on you. There’s so many problems with most businesses that people run, because they’re so easily destroyed. So, even I wrote books, right? We make money off book selling. We sell books, right? It’s good money. I like making it, but that could shut off tomorrow. You all could stop listening to this podcast and then stop buying my book and not buy The Multifamily Millionaire and then I don’t make that money anymore.

Brandon:
So many businesses are like that. What I love about real estate and specifically, building a company that transacts in real estate, like we’re talking about the larger stuff, is that it’s so long term secure. I don’t worry about some small change in Google’s algorithm destroying my business, because real estate’s been around for thousands of years. It’s going to be around for thousands of years. Yes, we adapt to make changes, but anyway, that’s what I love about the real estate side of things. What was the original question?

David:
Yeah, the cash flow isn’t the most important.

Brandon:
Oh, yeah, yeah, yeah. The cash flow is great, but just like if I was going to go build a tech company, the profit you make is good, but it’s the fact that I can sell that tech company someday that I really want. With the larger deals we’re talking about today, what I like about is that over time, we’re going to improve the value of them. You’re going to do the same thing if you get into the larger deals. You’re going to build a team. The cash flow hopefully pays the team and the fees that you do when you buy the stuff will pay the team.

Brandon:
So, you’re not out of a lot of money or even any money and maybe make money along the way a little bit, but your real benefit is that down the road, you’re going to make millions of dollars off this portfolio. So, yeah, cash flow’s important, but it’s everything else. It’s the appreciation of the property, the loan getting paid down, the tax benefits, all of that, and then the resale eventually that’s going to benefit you. So, now, we’re not relying on appreciation, but what we’re doing is capitalizing on all of the wealth generators in real estate, which is really fun.

David:
When you do it with the deal that’s big enough, you can then leverage other people. So, you get the best part of businesses is when you only do the part that you enjoy. The part that feels light to you is the only part you have to do and other people do the heavy stuff.

Brandon:
Yeah, that’s true. Yeah. So, anyway. So, again, I’m not saying there’s anything wrong with starting an internet business or anything like that either. Just so people are clear, I’m not saying that. I’m just saying it’s short term income. It could be great income. You might make a lot of money for it, but it’s going to end at some point. The same is true for flipping or wholesalers, right? The market could change.

Brandon:
Also, you can’t find deals anymore. But the fact that I own 2,000 rental units, I own them, they’re mine and my investors who invested with me, but they’re there. So, yeah. Last thing I want to say before we jump into the divided five it is you might be wondering, “Well, do I even need to listen to this episode today? Because I’m not trying to build a big, gigantic company. I’m trying to buy my first duplex. I’m house hacking. I’m trying to do the BRRRR strategy on little deals.” David, what would you say to that? I’ll give my thoughts too.

David:
I would say the first thing you have to understand is if you get this concept, when you’re doing the smaller deals, you will recognize what role you’re performing. That’s important to you, because there will be parts you don’t like, that you don’t enjoy, that you feel heavy, that cause you fear, that you naturally recoil from. If you don’t understand, you don’t hate real estate investing, you just don’t like analyzing or you just don’t like investor relations.

David:
You’ll think, “I shouldn’t do this. This isn’t a worthy pursuit. I guess I should go watch Dancing with the Stars,” or “I should go back to working at Starbucks.” If you recognize every time this thing comes my way I can’t stand it, there’s actually incentive to scale. Because as you grow, you get enough meat on the bone that you can get other people doing that. The job becomes more fun, the more you do it.

Brandon:
Yeah, that’s very true. Let’s dive into it. Number one, let’s talk about the lead gen person. We talked a lot about at BiggerPockets and on the webinars and here at the podcast, we talk about the LAPS funnel, L-A-P-S. That stands for you have to get leads that come in, then you got to analyze those deals, and then you got to pursue them, go after and make offers, and then you got to get success once in a while. It’s just a giant funnel. So, the beginning of the funnel is going to be the lead gen person. So, trying to find somebody who can help you generate leads. It’s actually probably one of the hardest roles.

Brandon:
But for most people, that is you. You are the lead gen person, if you are the person putting together this team, unless you do what I did, which was I actually hired somebody to help with that upfront, because I didn’t even want to do it. But the cool thing about the larger deals is almost always they’re focused on brokers. You’re dealing with commercial brokers, which is very different than real estate agents. They’re similar in some regards, but also very different. Have you ever dealt with commercial brokers? I know you do most of the residential stuff.

David:
It’s more infrequent that I deal with commercial brokers.

Brandon:
Yeah. So, I think the big difference is the way that residential used to be done, let’s say, back in the day. You can correct me if I’m wrong on any of this. But back before we were born and before the internet, real estate agents would get a listing. The guy at the hardware store he meets says, “I want to sell my house.” He says great, “Come on down my office. We’ll sign some papers.” He goes to the office, signs of papers. Now, that agent has the listing. They then fax it or mail it or whatever to all the other brokers or agents in town that they want to. They don’t have to give it to everybody.

Brandon:
They call their other agent friend, John. He said, “Hey, John, the guy at the hardware store I just met wants to sell his property. Do you know anybody who wants to buy it?” John, the other agent, says, “Yeah, I think I’ve got a client that was looking for a house.” They come together. It’s very personal related. One broker knows another broker. Then the internet changed all that and made the MLS happen. Now, there’s a million agents and everyone can see everyone’s deals pretty much all the time.

Brandon:
Now, it’s just this free for all giant box, where all the properties are and all the agents are just playing in it. Commercial real estate, the big deals we’re talking about. Again, you don’t think in terms of unit number here. We’re just talking doing the larger deals though, but they typically operate the way that residential used to. Broker gets a listing from the guy he met at the hardware store. It just happens to be an 80-unit apartment complex. He calls up, first of all, his clients. Then he calls up his broker buddies. After all of that, if they can’t find anybody to buy it, then maybe they throw it on LoopNet.

David:
Which would function as an MLS, but it’s not the same as MLS.

Brandon:
It’s not the same. Most agents go on the MLS. It’s the first thing they do. They don’t call every one of their clients and all their agents. They don’t do a lot of pocket listings, but commercial real estate is all about pocket listing. So, all the point I’m trying to make here is that depending on what asset you’re going into and what size of properties you’re trying to buy, if you’re trying to scale your business, you may be the lead gen person yourself. You’re talking to the brokers.

Brandon:
We spent a long time on the last episode or the one two weeks ago or two episodes ago last week, where we talked about the small deals. We’ve done a long time talking about how to stand out to a broker or to an agent or to a lender. So, we don’t need to rehash that now. But basically, the idea is you need to be professional when you present and be serious.

David:
I’ll say it’s even more important that you do that with commercial brokers than residential agents, because you can find the deal on the MLS. And then if you’re a jerk to the agent or not very personable-

Brandon:
Find another agent.

David:
Yeah, or you can write an offer. If the listing agent doesn’t like you but your offer’s really good, they’re still going to accept your offer. With commercial brokers, you will never even know that there was a deal out there if they don’t like you.

Brandon:
Yeah, yeah, yeah, they’ll blacklist you. It’s a real thing that happens. So, reputation matters a lot more in the bigger deals. Now, let’s just say you do want to build. You want to scale your business, but you want to scale with single family houses. So, you’re dealing with the MLS, but you don’t want to do all that work yourself. You still might bring in person on your team, again, the divided five it, that’s just in charge of lead gen. That’s their job is to generate leads. In fact, I’ll give you an example. Ryan Panetta who’s a buddy of mine, been on the show a couple of times, out in Vegas, open houses. He has multiple people in his company. That’s all they do is lead gen.

Brandon:
So, they’re doing, “You know what? I think we’re going to do a TV commercial or we’re going to start a direct mail campaign or we’re going to go and talk with wholesalers.” Ryan doesn’t do that, right? Ryan doesn’t do that job at all. I don’t do that job. I hardly ever talk to brokers. Unless I need to add some weight, it’s Brandon from the podcast, I don’t talk to brokers. My team does that. Right now, we have Walker and Jay. They’re the ones in charge of that side of things of the lead gen. They’re talking to agents. They’re also generating off market leads. They’re sending direct mail marketing. So, finding that person, I’m curious, if you’re trying to find somebody on your team who’s going to be the lead gen guy, what skills do you think that that person needs to have?

David:
That’s a really good question, because I would say this is the most important component of any business and real estate is no exception.

Brandon:
Yeah, if you can’t get leads, you’re dead.

David:
Yes, it starts at the top of the funnel. So, the first thing you want to look for when you’re looking for person who generates leads is a person who has a strong motor first off. There’s no one who’s generating leads that just is afraid to talk to people that wants to sit in their basement. Your underwriter can be that person, who just wants to be away from everybody and sit in front of a screen. They act as a filter. You bring things to a filter. You run it through a filter. The filters have to go look for something to catch, right?

Brandon:
You need something go out and hunt.

David:
Yes, you need a hunter that’s going to push things through a pathway to go fill up that filter. So, a motor is the number one most important thing. That means they have to be motivated. It’s either they got to be motivated by money, they have to be motivated by talking to people, they have to be motivated by pleasing you. There has to be some high level of motivation, because otherwise, they’re not going to be running around, going to look for leads. Then the next thing is they have to have an understanding of human nature. This is when people miss a lot of the time. You can send a billion letters to people. And then when the phone rings, if they don’t understand what to say to that person, it was for nothing.

David:
You can send a bunch of letters and send it to the wrong place, right? You really want to be sending them to distressed properties, people that are likely to respond. If you just shotgun letters all over the place, you’re not going to be very successful. So, that’s another big part of it is understanding human nature and what makes people respond to being likable. The last thing I would say is a person of influence. They need to have a big circle of people. They either need to build a big circle or they already have a big circle.

David:
So, I always tell people, the best thing I could ever find for my real estate agent business, like a lead generator, would be the most popular person in high school, who’s still very popular, tons of Instagram and Facebook followers. Everyone listens to what they say. All they have to do is join my team and route the people that listen to them our way. That’s the best position ever to be in. Now, those people are hard to find, but that’s really what you’re looking for.

Brandon:
Yeah, that’s a good point. One thing I would add that I look for in that person and that works really well on my team is I need people who are very process driven. An underwriter has to be very high C on the DISC profile, right? They want to be in a spreadsheet all day. I’m not necessarily talking about that, but I need somebody who’s good with… Let me back into this explanation this way. Finding deals is actually pretty simple, right? You and I could right now go generate a bunch of leads here in Maui and find properties to flip. Let’s say we want to flip, right? What would we do? We’d probably go out and get a list from list source of people who are absentee owners that maybe have owned their property well.

Brandon:
Then we’re going to go order a bunch of letters. We’re going to mail those letters out to all those people. At the same time, we’re going to drive for dollars every Saturday for four hours. Then we’re going to answer the phone every time it rings. We’re going to put them into our CRM. Then we’re going to follow up those people every single month when they start calling until we buy their property. If you do that, I guarantee you will buy properties. It’s very simple how to buy properties in real estate. Why does nobody do it? Why do I not do it? Why do you not do it? Because you and I are not process driven people.

Brandon:
We might like processes for other people, but you and I are not one that every single week, [inaudible 00:25:21] for three hours and check it off and make sure that was done and done well and then try to improve. So, what I found when I hired Walker and now Jay is you should see their spreadsheet. It’s internal, but I would love to show you. They have a list of 30 activities they do every single week, every week or once a month, but it’s on a schedule.

Brandon:
They have a red light, green light they put in the spreadsheet on, “Did they do it or not?” Did they reach out to seven wholesalers this week of manufactured housing or whatever? Did they reach out to five brokers this week? Did we send this many letters? Did we send a gift to this person? All these actions that are lead measure that will generate the results you want, that’s what I want in a really high level lead gen person is somebody who does that in other areas of their life. So, that they’ll do it here as well. It’s hard to get people to do that, especially W2s, especially people who don’t have this thing. It’s harder for me to do it. It’s easier when it’s your job to do it, because they have to do it.

Brandon:
And then we’ll talk about this later, but I guess we’ll be talking about it now. We wrap our entire business in some business system. So, we use EOS from Traction. From Traction, we use EOS. That makes sure everyone has those defined. So, everyone’s following their process whether they want to or not. But anyway, bottom line is, I’ll get off my soapbox, process driven people, super important. Yeah, lead gen, you people are valuable. We want you. By the way, another piece of this whole conversation today, you might be thinking, “Well, I’m nowhere near being able to build a team.” Great. Could you be on somebody else’s team? Could you be a partner of another team? I mean, let’s say you and four other people came together like Captain Planet style, right?

Brandon:
Each of you took 20% of the general partnership. Could you do five times more deals if all you were doing was what you feel light and awesome about doing and everyone else was doing what they feel light and awesome of doing? Together, you just buy a bunch of big stuff. I bet you could do 100 times more than you could do on your own by only getting 20% of the company if you divided it up. Or if you worked for somebody else just for a year or two to learn and got no equity, who cares? Build that knowledge, get those systems down, and then maybe you’ll use it five years from now. So, that’s why this stuff is important, too, is not just you as the leader of the team, but maybe you as a member of the team.

David:
That’s really good. In fact, I would say there’s way more people out there that should be on a team than should start a team. It’s just common sense. The person who starts a team is called the entrepreneur. The person who joins a team is called the intrapreneur oftentimes. They build their world inside of someone else’s world. There’s only one Apple. How many employees does Apple have? Apple’s nothing without those employees. I mean, is there even a number we can throw out? Too many to even count.

Brandon:
Too many.

David:
So, don’t hear this and think, “I got to start my own Apple. I got to start my own Apple.” Even if you do want to start your own Apple, you’re probably going to work for somebody else’s IBM before you actually go do that. So, part of, I think, the barrier that stops people from getting into real estate investing seriously is they’re trying to do all of it. If you know where your strengths are, join somebody else’s team, work for them, learn, and then you can either start your own or you just build your own thing inside of theirs.

Brandon:
Yeah, that’s really good point. If you’re thinking right now, “Oh, I could be a lead gen person for somebody. I’m process driven,” great, start working your process. Even if you can’t call the deal, start working that process maybe on smaller deals, maybe you start wholesaling. That skill of what we’re talking about lead gen is really what a wholesaler needs to be amazing at if you want to do small time. The guys like Cole Ruud, we interviewed…

David:
Ruud.

Brandon:
Ruud. Sorry, I always think his name’s Ruud, Cole Ruud. He’s going to kill me for getting his name wrong. Cole is a 21-year-old kid, 20 years old. He’s young like 21. He does 100 deals a year. Why? When I think of what makes Cole amazing at wholesaling and flipping, he does both, is he is so process driven. He has a big network and he just shows up. He does the obvious simple things that you know you have to do to generate leads, but nobody does. We all know how to lose weight. We all know how to go to the gym and lift weights and run. It’s just we don’t do it. So, you need people who actually do it and can prove that.

David:
That’s exactly right.

Brandon:
Yeah, cool. All right. Well, let’s move on. That was the first one is you got to get that lead gen person again. It might be you in the beginning. Great, just think of it, “Okay, that’s one of your hats.” If in the beginning, you’re doing all five of these, great. How can you eventually divide yourself up so you have other people doing this? So, you don’t have to work as much, eventually, to the point where you can work a few hours a week and everyone else is working and building your empire for you.

Brandon:
Number two, you got to have somebody who can underwrite the deals, underwrites a fancy word for analyze. It just has one extra syllable, so it sounds better. But you’re basically running the numbers to find out exactly how much you can pay on a property. Again, it’s another difficult role to hire for, but what do you look for in an underwriter? What would you look for?

David:
Your underwriter is going to be your filter. So, the first thing you’re looking for is somebody who functions as a filter. What a filter does is it takes a stream of, say, a liquid in a car. It catches impurities and holds them back. Their first job that you’re hiring them to do is to eliminate all the properties that aren’t going to work. Of the properties that could work, the underwriter’s job is to now paint me a better picture of what it would look like if we bought it. Okay. A lot of people get in the habit of thinking the job of underwriter is to say, “Well, here’s what it would look like if you had it.” If you know right off the bat, you can disqualify this property before actually doing it, you should.

David:
It’s like the 1% guideline that we talked about. You don’t have to meet the 1% rule to buy a property. It just tells me, “Is it worth putting into a calculator to even go over if it’s close to 1%? than it is?” So, underwriters are very detail oriented. They care about the details. They know that those things matter. It feels light to them to look at all the little, tiny pieces and organize them. In fact, part of being a good underwriter is having…

David:
This is for everything, whether it’s a loan that you’re trying to originate, whether it’s a property that you’re trying to buy, whether it’s an insurance policy they’re trying to put together for your company. They take chaos and create order. Underwriters take all this stuff that’s flying around all over the place and they put it in an organized fashion, so that it can be quickly read and understood.

Brandon:
Yeah, that’s really good. That’s exactly what they do. Can you talk about the DISC profile for a minute?

David:
Yes.

Brandon:
I mentioned earlier, high C.

David:
That’s a great point.

Brandon:
So, let’s talk about what those are and why that matters.

David:
The DISC profile is a personality assessment. I wrote an article on BiggerPockets. If you Google D-I-S-C or search it on BiggerPockets, you should find it. That splits the human personality up into four components. Your D score is how decisive you are. It’s how quickly you make decisions when you’ve never been there before. Those tend to be drivers. Those are usually the person running the company. Your I score is how likable you are or how much you want to be liked and how personable you are. It’s how much you value human interaction. People that are high I’s value relationships. They’re the most fun. You like being around them. Those are the social butterflies, the people that everyone are like, “I just like that guy. Every time I talk to him, I feel good.”

David:
That is usually your investor relations type person. Your S score is how much stability you like in life. It measures how much predictability and pace you like. High S’s want the same thing all the time. And then your C score is your conscientious or your compliance score. That measures how much attention to detail you tend to value. So, that would be your architecture, your engineer, your doctor, your lawyer, your underwriter. They know every policy.

David:
If you’re a police officer, that’s a detective. That’s the person who knows every single crime, every single law, and can sit there for four hours looking at evidence and trying to piece it together. So, underwriters, I see we are going with, tend to be higher on the C score. They really like diving in. They’re compared to a beaver that wants to chew through a tree. They will chew on that same tree over and over and over until it finally falls.

Brandon:
That’s really good. Yeah. We run a DISC profile on everyone that works for Open Door Capital. For the underwriter role, when we do that, we want people who feel light and easy when it comes to spreadsheets. They’re usually a high C, usually, a higher S. They want that thing. When it comes to investor relations, we’ll talk about that in a minute, my guy Mike, Mike is definitely a high I. I’m a high I. I want to be liked. I want people to like me.

Brandon:
For that reason, I’m not a super high D, which D’s are a little bit more driven forward, the hard charging CEOs. They don’t mind difficult conversations. You are a much higher D, right? When they meet us in person, I’m much more like, “Give me a hug everyone.” You’re a little bit more of the… Everyone’s like, “Oh, is David mad at me?”

David:
Yes, I get that all the time.

Brandon:
Because you’re blunt. You say what you’re thinking and this is what it is. That’s why D’s tend to make better CEOs, where I’s tend to make better investor relations. Now, I don’t want to box everyone into a thing and you can’t get out of it.

David:
Of course, right.

Brandon:
But when you’re looking to build a team, look for people who just really love to analyze deals.

David:
Well, the problem is if you’re not a high C and you’re playing the analyzer role, you’re going to hate it. It’s just going to feel heavy. It’s going to drive you nuts, right? For me to be in the high I role, I would burn out of patience very quick. I think people are surprised because we do the podcast. I’m a high I when I’m podcasting, but when we’re done, I’m done. That’s about all that I had to give.

David:
So, if I was nothing but just walking around, meeting people, having to do the thing that you do really well, I’d be in a bad mood all the time. My energy levels would be really, really low. So, this is why this is important. It’s the same principle. Breaking up the job of investing into the parts that you like, understanding where you fit on the DISC profile so that you can know why certain parts feel heavy, why certain parts feel light. It’s that self-awareness and investment awareness that makes a really big difference.

Brandon:
Yeah, totally, 100% agree. All right. So, you got the deal analyzer, the underwriter. They need to be comfortable analyzing a lot of deals. Again, this is framed within some organizational system, because how many deals are they going to analyze? What are they analyzing? What makes it a good deal? When Walker came in our team, the thing I loved about him was he took our spreadsheet, just completely tore it apart, and built a whole new one.

Brandon:
He’s like, “This is not how you underwrite. This is how you underwrite.” He just rebuilt the whole thing. And then he continually made tweaks on it for the first year as an intern until we brought him on as the full-time guy. Now, he’s COO, running everything. But again, that underwriter, very important role. Especially if you don’t want to do it, get somebody else to do it.

David:
The problem with underwriters, the ways that you can use them wrong is if you don’t pay enough attention to them, because they’re just going to chew through that tree. Underwriters will run things through spreadsheets, will look at all the details, and they will rarely ever ask, “Why am I doing this?” So, you have to be paying attention to what they’re doing. When you’re using them right, it’s like using a sniper in the military. Don’t ask them to do anything other than make that shot. That’s where they’re really good.

Brandon:
Absolutely, yeah.

David:
Find someone else to go line up the targets for him. Find somebody else to make sure that their weapon is loaded. Find somebody else to shield the sun from getting in their eyes and make sure that they’re hydrated. Those are positions other people can play. You want to use that underwriter to just take that shot, hit that target, and then you get the number that you can come back with and say, “Would this work or not?”

Brandon:
Yeah, very much so. Now, these two people we’re talking about here, we got the lead gen. We got the underwriter. They’re both on what we call the acquisitions team. Almost all these people are really part of acquisitions, except for one, we’ll talk about in a minute. But another piece that comes in, this is not a role, not a part of the divided five it, because for most people, this role is shared for a while. That is the due diligence person.

Brandon:
So, generally speaking, we put our underwriter in charge of due diligence, because due diligence, what I mean by that is they’re going to be checking all the leases to make sure that all the leases were assigned correctly. They’re going to be checking all the rent roll. They’re going to be checking all the tax from the county. So, why would we have an underwriter do that? Because it’s the same, it’s just checking boxes and documents and spreadsheets.

David:
It’s right in their wheelhouse.

Brandon:
It’s right in their wheelhouse. So, eventually, maybe you’ll add somebody on for that or you’ll outsource that, but for most people in the divided five it, that underwriter, analyzer/due diligence personnel. Due diligence will also be done slightly by some of the other people in the team, but our underwriters lead the entire process.

David:
That’s good.

Brandon:
All right. Number three, another piece of the acquisitions team would be the money raiser. We call it typically investor relations. That is who’s in charge of raising the money. Now, that’s a little different than the bank person. I’ll talk about that in a second. They could be the same person. They could be separate. But when I talk about investor relations, I mean, if you’re going to put together a syndication, you’re going to go raise money from multiple investors like we do at Open Door Capital. We raise money from partners. They put money in. We buy big deals. Somebody’s got to be good at talking on the phone.

Brandon:
Back when we raised for our fourth fund just a few weeks ago, I’m not exactly sure what day this episode comes out, when we’re recording this, we’re just closing it here this week. But that fund, we raised $20 million in seven days from hundreds of investors. Now, when we did that, almost everybody wanted to get on the phone. That just makes sense, right? You’re going to give my company a quarter million dollars. You’re going to get on the phone. You want to talk to somebody first just to make sure everything’s good, just to cross your T’s and dot your I’s. I would too.

Brandon:
I just want to feel good about it, especially if you don’t know me personally. So, who’s going to have hundreds of phone conversations? Or even if you’re raising money from 12 people, who’s going to have those 12 conversations or do the webinar that shows the power of your deal or any of that stuff? That’s investor relations. So, that’s why that investor relations, I mentioned earlier, the high I is so important. When people talk to Mike Williams, my guy, they’re like, “He is the greatest person I’ve ever met.” Everyone says that. Every single person who knows Mike says, “He’s the greatest person I’ve ever met.” I love that about him.

David:
Mike’s going to be talking to a lot of people in that room.

Brandon:
Yeah, a ton.

David:
If he doesn’t enjoy conversation with human beings, they’re going to get-

Brandon:
I talked to him last night. We went and watched outdoor movie under the stars with our kids, because we have young kids that are best friends. Mike and I are talking. He’s just giddy. He’s just like, “Dude, this is so much fun. I love this.” I’m like, “What do you mean?” He’s like, “I had 15 phone calls today.” Everyone’s like, “How do I get the money in right away before we close the fund?”, because it’s filling up fast. He’s like, “I just love this.”

Brandon:
I can just feel the energy coming off of him how pumped he was. When I think of that, I’m like, “Oh, gosh, that sounds horrible, 15 back-to-back phone calls all day.” That’s all you did is sat in a chair and talked to people. He comes off that so energized. Thank God for people like Mike, because even though I’m a high I, I don’t get energy that way. I want people to like me, but I don’t want-

David:
He’s afraid, “Oh, after this phone call, there’s no one to talk to. How do I find a person?” We’re like, “Oh, my God, another phone call? It’s coming.” So, if somebody wants to talk to Mike, how would they get ahold of him?

Brandon:
Generally, the way that most people do it is they go to our website, odcfund.com. They go to our website. they submit their information like give us your email address or whatever. And then they usually in an email goes back and forth. And then they’ll say, “Hey, I want to talk to you, Mike.” This is why he’s good for this role and that if you’re looking for an investor relations person, they also create systems as well. Everybody is system driven where we hire, because it’s so important. But he got a system for, “Okay, the email goes here. This is the link you click to book time on his calendar.

Brandon:
So, that he doesn’t have to go back and forth with that. then they book a time. Then he calls them, because their number’s right there in his calendar.” That whole thing is a system that works out. So, that’s how it typically works. They go to the website to contact him. It works really well. So, yeah, system driven people, investor relations.

Brandon:
Now, the other half of that is the bank person. The reason I say that sometimes it’s the same and sometimes it’s different, because everyone’s personality is different. This could be a whole topic of a show right here in itself, but you build a little bit of your team… How do I say this best? You start with a vision of what you want, right? We talked about your asset that you want, where you’re going. Then you find the roles that are going to fit there. But then you have to go back and tweak things based on the personality of who you get. For example, Mike gets a ton of energy being on the phone with people. He would not have a ton of energy being on a phone with a bank.

Brandon:
I just know Mike would just not want to sit for six hours on the phone with the bank, going back and forth with documents to the bank, and having to sign everyone. That side of things, he just thinks is crazy. So, that role is split between our underwriters who deal with a lot of stuff and our finance guy, which we’ll talk about here in a moment.

Brandon:
I’m just letting everyone know, there’s a little bit of flexibility in this role, the person who’s in charge of the lending. Again, that might be you. We just want you to start thinking these are the hats you wear if you want to scale so you can start putting people in the process. So, the bank person, very valuable person, also, probably should be a high C, because it’s all that information and spreadsheets, all the loan applications. All that stuff is just document, document, document.

David:
High C’s can handle a lot of that. Hey, I need another paper. Oh, you’re right, I have to complete the packet. If it’s 99% done, it’s not done. That’ll drive a high C net. So, they’re going to enjoy having to send more paperwork back. So, one thing I just started thinking is with your company, there may be times where you pair Mike and Walker. You pair your investor relations with the guy who likes talking to banks. They work together to handle the things that they’re better at doing.

Brandon:
Yeah. You have all these ingredients. Depending on the deals and on the food you’re making, you need to pull different things in. So, it might be a bank meeting between me and Walker and Mike or it might be a meeting between Walker and Jay and the bank or whatever. Depending on the situation, you bring in the right people. The great thing about that is every person… I don’t know if I made this clear earlier, but one of the benefits of thinking of your business this way is that each of these people then are not only personality driven to be awesome at this role, but now they’ve got experience and they’re gaining experience. Every day, they’re getting more experienced in this one role. So, everyone’s gets better and better.

Brandon:
It’s like the Avengers to go back to the analogy, right? The Hulk gets stronger and better. Tony Stark gets better and he’s got better equipment. As a team, everybody just tends to improve, which is super cool to see. So, if you’re trying to scale, you got to find these people. And then your job as the leader, if you are the leader of this team, is to develop them, to be a multiplier, like we talked about that book, Multipliers.

David:
Great point there.

Brandon:
Right, your job is to multiply their skill set and to help them and to build the systems maybe as a whole. I put in EOS. That was my job, because I’m the group leader. I’m Nick Fury. So, I’m saying, “Hey, this is our framework we operate within.” And then now they operate within it. They’re all Excel in some. Yeah.

David:
Great point.

Brandon:
Thank you. So, that’s investor relations. Quick note on that, I mean, we’ve talked about this on numerous other episodes lately, because we’re talking a lot about multifamily this month and next because of The Multifamily Millionaire, but just understand raising money, there are a lot of legal things to do and don’t do. So, just be careful. There’s 506(b), 506(c). There’s crowdfunding. There’s all these things. If you do it wrong, you can end up in jail. So, just do it right and make sure your investor relations guy knows the laws and they’re studying that stuff. It’s part of being an expert.

Brandon:
All right, moving on, number four. Let’s actually go this one next. Let’s go finance next. Again, in the beginning, it might be you. It might be hired out. So, my team, we hired a guy named Mike. So, Mike is our finance guy. I put finance, bookkeeping, the paperwork, the tax stuff, the notary signings, all of that is this role on the team. Typically, there’s a lot of high C roles in this business, but it’s that type of role again, because I hate doing that stuff. I can’t think through a spreadsheet and try to bookkeep and check where every dollar went. If we’re raising money to fund, who’s the fund administrator? Who’s taking care of all that?

David:
Well, the reason there’s a lot of high C roles, if you break down in business, the D’s and the I’s tend to be in the front of the funnel and the S’s and the C’s tend to be in the bottom of the funnel, okay? So, D’s and I’s tend to be more self-driven. They’re more initiative. Your top salespeople in real estate are combination of D and I or I and D. The S and the C are more comfortable with being handed something. You set up the target, I’m going to shoot it, right? They’re a fish cleaner versus a fish catcher would be another way to put it. That’s how I look at it.

David:
So, in this business that you’re building, you’re going to have more S’s and C’s, because typically, you are going to be functioning in the front end, the D, I roles, right? You’re going to go out there and you’re going to load up the funnel for people to analyze. You’re going to help raise the money. Once you’ve got those pieces in place, you’re like, “Hey, I need someone that can talk to the guy who I’m raising the money from. Hey, I need someone who can analyze the deal that I went and found.” So, there’s a rhythm between fish catching and fish cleaning is what I always call it. Really, business can be simplified and understanding it in those two roles.

David:
Now, most people that ever had a job in their life, they were a fish cleaner. You’re rarely ever hired to be a fish catcher. If you just think about every job from your first job to now, it was almost guaranteed to be you were cleaning a fish somebody else caught. So, what makes it tough when we’re talking about this is your mind is trained to think, “It is my job to do what somebody puts in front of me.” When the customer walks in the door, I talk to them. When they walk up to me and say, “Here’s the sparkplug I want to buy,” I run it through the cash register. That’s all the business we ever know. We think that’s what work is. That’s not.

David:
There was so much work that was done before that person ever got there. When you step into what we’re talking about here, you’re responsible for all of it. So, you’re typically going to be looking for people that are more S’s and C’s to play those support roles or those fish cleaning roles, but that’s okay, because that’s what they like. That’s what most people are comfortable with. In fact, if we said, “What makes most investors give up fail or never get started?”, I would bet you that that mindset of I’m a fish cleaner. Now, Brando and I are saying, “You got to go catch fish.” We’re talking about how to catch fish. We’re talking about CRMs and cold calling and direct to seller and all this type of stuff. They’re not comfortable with that. That’s not a thing that most people have ever had to do.

Brandon:
Yeah, that’s a really good point, really good point. So, yeah. So, find that person who can keep track of all the books and paperwork and all that. Now, I will say this. One thing that David talks a lot about in the Long-Distance Real Estate Investing book, when you type out the core four, I don’t remember if you use the analogy in the book or if we’ve just talked about it since, but it’s like checks and balances of the government, right? One government entity checks the other. Judicial branch checks executive, which checks the legislative. They all work together to make sure nobody takes over too much power. That’s an important thing to keep in mind here as well, when it comes to raising money, especially trying to scale your business.

Brandon:
You can scale your business and then get everything’s stolen from you and then lose everything, right? So, to make sure you have those checks and balances, that finance guy is going to have a lot of power to be able to write checks and pay bills and all that stuff. Just make sure you have other checks where maybe the underwriter then checks that work or maybe there’s two phone calls every time there’s a wire done. Your job is to protect the money of the people you’re raising money from. First job, don’t lose money. Second job, grow money.

Brandon:
So, having that checks and balances in place is super important. That might also play into our fifth role of the divided five it, which is the asset manager, because that asset manager is going to also check a lot what goes on, but they also need to be checked to make sure that they don’t have the opportunity to steal as well or just be bad with the money and have no way looking after what they’re doing. So, let’s talk about asset manager. We’ll talk about how that differs from property management as well. So, asset manager.

David:
So, the asset manager’s job is basically once the deal is completed, it’s been purchased, you own it at that point, they’re going to be the ones that run it, right? This doesn’t get brought up very often. When we go on the podcast, we typically talk about how to get a deal, how to get a deal. Everyone starts at the front of the LAPS funnel. They’re always like, “How do I get something to go look at?” Well, once you get it, your job’s not done, right? Now, you’re in the process of managing it, keeping it alive. I think when you’re trying to have a kid, all you think about is, “How do we get pregnant?”

Brandon:
Yeah, I got 18 years of this.

David:
Yes, that’s exactly right. So, part of what Brandon and I are talking about is when you’re choosing your asset class, understand that you’re going to own this thing. You’re having a kid. You’re going to have them for the rest of your life or as long as you own that property. You’re going to want a person that’s going to actually manage it for you. They’re going to have their own unique set of skills and their own responsibilities, but I think in my opinion, the most important part of all the properties I’ve bought between the ones I liked and the ones I didn’t, the properties that I enjoy are ones that make the asset manager’s job easier.

Brandon:
Yeah. Asset manager’s job is to not just manage. I mean, the asset manager is not out there fixing the toilet. Typically, they’re not out there, even collecting rent or knocking on doors, property management, right? That’s a property manager. Asset manager is thinking more big picture. How do we make sure that the returns are what I expect, that the growth is there, that the wealth is being built? It’s thinking much bigger picture. So, the property you buy is going to play a significant role in that, because the asset manager can’t change a whole lot. They can’t change the location, where you buy. They can’t change the condition of the property. They can’t change much of that.

Brandon:
So, they need to be involved actively in everything up to that point, which is why this whole thing is a team based focus. You have to have that role. A lot of these roles are like, “Well, they can be maybe fudged a little bit,” but you can’t leave out asset management. Now, you could do that role yourself, but it still has to be done, because again, property manager would never take care of your property the way you will. So, your asset manager is one that’s calling your property manager and saying, “Hey, our numbers are down 3% last month. What’s going on?”, and then thinking of big picture solutions. Okay, let’s run a new advertising campaign if that’s what’s going to work here or they’re going to fire the property manager and find a new property manager.

Brandon:
That’s asset management, very important role. That’s what I hired or not hired. We partnered on it, because he’s a partner of mine, but Brian Murray. That’s why I brought Brian Murray in, because he had owned thousands of units before. I’m like, “He’d be a really good asset manager. That’s his strength is to be able to do that.” So, yeah, the same Brian Murray that co-wrote The Multifamily Millionaire book with me, because that’s just his thing. So, we have the asset manager. Yeah, just make sure that everything’s done correctly.

Brandon:
Now, they’re going to work with the finance team, because they’re going to get issue reports, let’s say, to your investors if you have them or they’re going to look over together, every month, the financials. How did we do this month? What happened? The asset managers are going to work with the underwriter, because they understand boots on the ground. This is what it actually takes to manage a property. So, Brian is constantly talking with Walker and Jay, my underwriters, and lead gen guys about, “How do we tweak our underwriting to more match what we’re seeing in the market today?”, because that’s where the asset manager comes in really handy.

Brandon:
Again, if you want to scale, it’s just really hard to do all five of these roles yourself. You can do it. It’s just incredibly difficult. But this is the great part about real estate, this is one thing that gets me super pumped up is that imagine that you wanted to get in shape. Let’s use an analogy of trying to get in shape. We use that a lot here on the podcast, the most overused analogy on Earth. You can do arm workouts. You can do leg workouts. You can do running cardio, it’s good for your heart, and all that. But you have to do all of that. You’re the body. You have to do everything here. So, it’s hard, right? You have to do everything. But in real estate, it’s not that way.

Brandon:
You do not have to do everything. You can hire someone to be your arm guy. You can outsource your lead guy. You can outsource your head, your heart, your everything. You can outsource everything. Now, you, if you’re the leader, still make sure it’s all getting done, but you don’t have to be sitting there pumping weights all the time, which is super exciting about scaling.

Brandon:
When we talk about scaling, that’s why these five roles are important. Because when you put them together, you can grow your business to hundreds or even thousands of units over time. Is it easy? Of course, not. But the better your systems are, the better you can lead this team or manage a team or be a part of the team, the more you’re going to do. So, that’s the secret to scaling is to build this divided five it and crush it.

David:
It’s also the secret to enjoying what you do.

Brandon:
Yes, I’m glad you said that. I love what I do, because I don’t do much.

David:
The stuff you do is the part you like.

Brandon:
Yes, it feels light to me. I love coming on podcasts and talking about things. I love my Instagram and posting about what I’m doing. I love meeting with my team and helping Mike come up with a new idea to take investor… Good example, last night, Mike and I are sitting and talking. Mike is amazing at having these phone calls, but Mike knows and I know, we both know if we’re going to go buy a billion dollars of real estate, we can’t just rely on my Instagram audience to come and give me money. We got to get to that next level. So, me and Mike had this long talk while our kids are watching this movie last night. It was like, “How do I help him get to that next level?”

Brandon:
You can hear my voice. It fires me up to think, “How do I make him better?” I get to work with him to elevate him to a whole new level. He wants to. But if he didn’t want to, he’d be like, “Hey, man, I like this. I like being the guy just on the phone all day with investors. I don’t want to be on that level.” Great, then it’s my job to be as visionary, “What do I want that role to look like?” So, I get fired up about that. I know a lot of you listening gets fired about that, too, because it’s fun to be able to build a machine and then watch the machine work.

David:
It’s fun for you.

Brandon:
It’s fun for me. Yeah.

David:
For someone else, it might be terrible, horrible. I don’t want to be responsible for that. I don’t know what’s going to happen. I don’t have vision. What they want is I want to play this role in the machine. All I have to do is that. They’re going to be happy as a June bug, right?

Brandon:
So, when you find those people and put them together, it’s amazing. Yeah, it’s amazing.

David:
One of the mistakes I made and probably still make in my life is assuming people think like I do. So, I’m like, “Oh, why would anyone ever want to cold call? I would hate that.” And then there’s literally human beings out there who like to do cold call. They love to talk to people all the time to solve their problem. I would love to be able to do something like that. So, getting out of my own head and recognizing that there’s things that are heavy to me that are light to other people. I don’t know why it’s so hard to embrace it. It makes sense that everything else in life, right?

David:
Typically, the person with a strong upper body isn’t going to have a strong lower body as much, right? Ask a woman, “Would you rather bench press or would you rather squat?” The majority of them are going to say, “I would rather squat.” I hate squatting. You just did a leg workout with Jerry. You’re probably hitting every single day every time we sit down and stand up. There’s just parts of a workout if you’re lifting weights where you like lifting chest or you like doing shoulders or you like doing arms or you like core stuff. You can work your core out all the time or you like cardio.

David:
Nobody is the same. Well, personalities are like bodies. There’s people that enjoy certain parts of this job and are pumped up to go to the gym on arm day. But when it’s like ab day or something, they’re looking for every excuse that they can to not go. What ends up happening is you don’t go to the gym. What makes business awesome is I can leverage ab day. Someone else could go work my abs out for me.

Brandon:
Yeah, I love it. Yeah, it’s really fun. It makes scaling fun. I work less now than I did at any point in my real estate, maybe not at any point. I know there’s time where I took a year and just did nothing, but generally, I work less than I ever did when I was actively trying to grow my business, yet I’m growing faster than I ever had before. It’s more fun than ever before, because I’ve got these people in the right places.

David:
You got Avengers.

Brandon:
Yeah, I got Avengers. That’s fine. That’s what you can do as well, if you’re trying to listen to the show, every one, and you’re like, “Hey, I want to scale my real estate business.” Just start thinking. This is very much a mindset related episode, even though it’s a real estate show. If you start thinking this way, that there are people, there are roles, there are hats that you wear and you can shift between the hats and then eventually give the hat to somebody else. Pretty soon, you’ve got a whole team or you’re part of a team. You’re just killing alongside other people.

Brandon:
You’re learning how all these roles work. So, that you can go out maybe someday, if you wanted to do it on your own or you don’t have to. You can get wealthy and get a piece of what somebody else is doing on their team. That’s amazing as well. There’s nothing wrong with that. I mean, think about it, I wear a hat at BiggerPockets. I don’t own all the BiggerPockets, right? I own a little bit of the company, but that’s not my wealth. But it sure is fun playing a role. I love having that hat that says podcast guy. That’s fun. I get to use that.

Brandon:
I built up so many skills that I now apply to other areas of my life. That’s why I built Over Door Capital. That’s mine, not entirely mine. I have two partners for that, too, but that’s my baby. So, the point I’m trying to make here is don’t feel bad about being on somebody else’s team. That’s when you grow, because like we talked about last week, it’s a lot harder to get up and do those tasks when there’s no accountability.

David:
You’re actually making a good point that I didn’t think about. I’m on more people’s teams than I am the owner of the team.

Brandon:
Interesting. Yeah, I probably am too. Actually, yeah. No, I am.

David:
So, you can’t look at that and say, “I’m too good for that,” or “I don’t want to be on someone else’s team.” I’m on a lot of people’s teams. We’re on a podcast because we’re on BiggerPockets team. Within BiggerPockets, I’m on the publishing team. I don’t run publishing, right? I’m on the webinar team.

David:
We can keep going for a lot of ways, where really when you and I talk about going into a deal together, going into business together, what you really boil our conversations down to is, “What roles would I have to play on this team?” When neither one of us owns the team and what we’re doing is we’re looking at, “Would I enjoy that role? Am I good at that? Would I mesh well with the other people, or am I going to end up wearing every single hat on this entire team and wearing myself down?”

Brandon:
Yup. Well, everyone, hope you like this show today. We’re going to wrap things up here in just a moment, but first, we’ll get to our last segment. Since we didn’t do it last week, we’ll do it now. That is today’s…

Speaker 4:
Famous Four.

Brandon:
Famous Four is a part of the show we do every week, pretty much, we didn’t do it last week, where we go through the same four questions we ask every guest every week. But we’re going to alter it slightly right now and I’m going to ask you the question. First question, what habit or trait are you currently trying to improve in your life? What are you working on right now?

David:
I am paying a lot of attention as of the last five days to what drains me and what energizes me, which is probably not a coincidence why we’re having this podcast today. So, I am working on putting up walls so that other people can’t bring their problems to me and I’m going to solve it, because I like doing that. I like solving problems. But when you’re doing it for 40 people at a time, it can become very draining. So, I’m learning to say no to things, but not just like, “No, I don’t want to do it at all.” No, I will do it, but it has to be under these circumstances.

Brandon:
Yeah, that’s really good. All right. So, what am I working on? Posture, which I’m terrible at. I got a book on posture called Becoming a Supple Leopard. It’s on stretching and posture and all that stuff. Yeah.

David:
A supple leopard.

Brandon:
Yeah, Tara gave it to me. I totally get it, yeah. Becoming a Supple Leopard, I’m working on that on my physical standpoint. I am working on focusing more. I talk about it a lot, but I’m still not that good at it, which is saying no to things that aren’t as important and saying yes to the things that are really important and then having the wisdom to know the difference, right? So, I’m trying to work on that right now.

David:
You know what I was just thinking, saying no to things is hard for us? There’s this point in life where you have to say yes to everything, because you don’t have opportunity. It’s very similar to being poor and I don’t know if I have enough money to eat. So, you never say no to food. You need it. You’re going to die if you say no to food. You do this long enough to where you become successful. Now, you have more food than you need, but your habits are ingrained to be afraid of being hungry all the time.

David:
So, now, the problem becomes I have to say no to food, which is a muscle I’ve never used, because that would have gotten me killed, right? I have to completely switch gears from saying yes to everything to no to everything. We are really fat when it comes to some decisions that we’ve made where we have too much stuff going on. We have too many things we need to say no to food more often. So, don’t feel bad if you’re in that same position. It’s just confusing. You’re like, “Am I supposed to say no? Am I supposed to say yes?” It depends on what position you’re in and how much food is around.

Brandon:
Yeah, that’s good. I feel like you’d write a book on that called The Flip.

David:
The Food Flip?

Brandon:
Yeah, that point in your life where you get to flip from saying no to yes.

David:
I see those angles all the time. Like we said one earlier, where there’s all this work to get a property, the minute you get it, it changes. Now, it’s all about maintaining it or catching fish. The minute that fish is in the boat, the mindset changes and it becomes cleaning fish. It was different skills that got you here than what it would be to get there. People mess up a lot in the business world by just doing what got you here, thinking it’s going to get you there. There’s usually a hinge on that door that you have to recognize, so long as far as you can in that direction, it has to go the other way around.

Brandon:
Instead of business books, because we mentioned that last week, what about business YouTube, Instagram accounts, influencers that you’re following? Anybody right now that stands out as, “Hey, I’ve been following a lot of what that guy says or that lady says”?

David:
Why is it that whenever you get this question asked, all of a sudden, you blank.

Brandon:
You’re blanking.

David:
I do it all the time. I listen to a woman named Allison Armstrong that’s really good, talking about understanding the differences between how men and women tend to process information. One of the things that she talks about is we assume everyone else thinks like we do. So, when they do something the way we wouldn’t have done it, we think that their intentions were bad. Oh, you know that you’re not supposed to do that and you just did it anyways.

David:
I found that I’m 100% culpable of that, where I will get irritated with people assuming that they knew and they just didn’t care, but really in their brain, it just didn’t occur to them at all that something was going on. She’s not so much business, I would say. In the business realm, I listened to a lot of Patrick Bet-David. We had him on the show. Man, I’m blanking right now. Who are you listening to? I need some time here.

Brandon:
Yeah, sure. There’s an influencer online. His name’s Sean Whalen, I think, is his name, right? He’s the Lions Not Sheep guy. He has a brand called Lions Not Sheep. He’s one of those mental toughness, Jocko, David Goggins type, all these pictures of him working out or whatever, but I just like that mindset right now, the mental toughness and stop giving up your authority, stop being a whiny little baby. I don’t know. Maybe I’m at that point in my life where I’m trying to become a better leader. I’ve been following a lot of his stuff. His Instagram Stories are just solid. So, that’s probably the influencer I like the most.

David:
Does he know Ryan Michler who he had on the podcast?

Brandon:
Yeah, they’re connected. Yup, I think Ryan is part of his mastermind or something like that, because I see him comment on each other’s stuff a lot.

David:
So, I hate to say this. I’m looking through my YouTube right now. It is mostly comedians, UFC fighters, or commentators on MMA or sermons. Not a whole lot going on in the business.

Brandon:
That’s all right. Maybe that’s where you’re at right now. All right, man. Well, third question, hobbies. What have you been working on lately? You’ve been in Hawaii here for a little while now.

David:
Yeah, I have been exercising more. I’ve been spending more time asking questions, instead of giving people direction. I have a tendency to, if you say, “Hey, what should I do?”, I go tell you and then you go do it. You come back to me. You say, “Now, what should I do?” Whereas if you’re trying to develop leaders, you have to ask them questions like, “Well, what are your options? Why would you go that way versus this? What will happen if you did that?” So, I’m trying to do that with everything in life. I’m literally trying to just practice on the waiter at the restaurant that I’m at by asking questions to get where I’m trying to go. I know that’s not really technically a hobby. The only other one would be the jujitsu lessons that we’re doing. That takes quite a bit.

Brandon:
It does take quite a bit, yeah. I’ll go with the cop out jujitsu answer too, because that’s probably my only a hobby. I feel like you’re only allowed one hobby when you have a kid or when you have multiple businesses.

David:
Well, the problem is as you get older, you start to realize if you want to be good at something, you got to say no to a bunch of stuff. You cannot have a bunch of hobbies if you want to be good at all.

Brandon:
Yeah, that’s a really good point. All right. Last question, what do you think separates successful investors and those who give up, fail, or never get started? You answered it earlier.

David:
Yeah, I mean, it would be the mindset I would encourage everyone to think about. Am I a fish catcher or am I a fish cleaner? Am I open to considering that I need to think like a fish catcher? Here’s one of the litmus tests to know if you think that way. If you’ve ever worked at a job and you thought, “I’m the only one that does all the work,” you’re automatically in fish cleaner headspace. You walk into a restaurant, fast food place, wherever. The employees are all talking and they’re too busy to come talk to you, right?

David:
I went to McDonald’s last week. I was in there for probably four to five minutes before. There was nine of them behind the counter, didn’t even look up. Okay. In their heads, they’re probably all thinking, “I just got the fries out last time. Why do I have to get the fries out this time?” or “I got to sweep the dining room again. I’m the only one that does anything,” right? The employees at McDonald’s are such a small piece of that entire thing, that whole system that’s created.

David:
They’ve got advertisers. They’ve got people that price this stuff. They’ve got people that looked over the books. They’ve got people that made sure that they were in compliance. They’ve got HR people. They’ve got hiring. They’re building manuals to be able to bring people in and train them. They’ve got partnerships with other companies that they’re doing. It’s a ridiculous amount of work that that entire corporation is doing. We just played that little tip of the iceberg and we think that that’s all that’s going on. So, that is a huge, huge, huge limiting belief for a lot of people that are out there in the world that work at a company and think that they do all the work.

David:
Work yourself backwards from where you are. When someone says, “Hey, can you do this for me? Can you give me these spreadsheets together?” Oh, [inaudible 01:04:57] when they get spreadsheets together. Why do I have to do this? Ask yourself, “What do they want that spreadsheet for?” That’s a whole new job that you know nothing about why they even need a spreadsheet. Okay.

David:
When you learn, “Why does that person need a spreadsheet?”, ask yourself, “Who are they going to report to?” That’s a whole another job that you don’t even know that exists. You can literally start at the end and work yourself backwards to seeing how an entire company runs if you ask those questions. That’s what real estate investing is, is you are the company. You’re not a businessman. You’re a business, man.

Brandon:
Good stuff. I’m going to give a much shorter answer. I think people who are successful are process driven. In other words, they don’t just rely on, “Oh, it just happened.” They rely on, “Oh, yeah, of course it happened.”

David:
Like you say, success shouldn’t be a surprise.

Brandon:
Yeah, success should not be a surprise, trademarked.

David:
That’s the Jocko discipline equals freedom thing. That’s why we hate process, because it’s discipline. We like the freedom to just do it whenever we feel. But when you live that way, you end up with no freedom. You’re a slave to, “Oh, this thing just went wrong. Now, it’s a disaster. I got to go fix because I had nothing in place to prevent it.”

Brandon:
Another way to phrase that would be success should be inevitable. This is a question I would ask. What would make success in whatever you’re doing right now inevitable? If you can answer that question, “What would make success in your scaling of your real estate business inevitable?”, well, if I had this person, this person, this person, this person, and we all did this, and we had this system, it’d be inevitable. Of course, we’d be successful. So, yeah, that’s a powerful question.

David:
Much like Thanos, I am inevitable.

Brandon:
What would make you Thanos? All right, everyone. Thank you for joining us today. If you liked this video, don’t forget to give the ratings, reviews, and all that on the BiggerPockets Podcast. If you have not yet followed us over on social media, you can follow David personally, @davidgreene24. You can follow me, @beardybrandon. You follow BiggerPockets, @biggerpockets, big shock there. Subscribe to our YouTube channel, youtube.com/biggerpockets. You’d find content from me and David over there quite often. I think that’s all we got today. So, David Greene, why don’t you get us out of here?

David:
Good job today, man.

Brandon:
Thanks. You, too.

David:
This is David Greene for Brandon, the subtle, supple leopard, signing off.

Speaker 2:
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