Common Mistakes We ALL Make

Cole Ruud-Johnson (00:00): Today, we are talking about a bunch of different stuff. We don't really have a themed episode. Today is the first q and a episode that I'm releasing on the off market operator show, and I'm super excited for this one. Guys, we got into a bunch of common questions I get asked in this business that I'm sure are applicable to your business and you can implement right now. And that is my goal of this show is to give you tactics and skillsets and stuff you can implement right away. So without further ado, let's get right into it. People don't fail at real estate because they suck, they fail because there's too many ways to succeed. That's why I suggest you focus on the most important skill and all of real estate, which is finding deals. I'm Cole Ruud-Johnson and in this podcast I share the exact steps I've used to source 400 deals by age 24. This will allow you to do three things, control your deal flow, make unlimited income, and build your empire as an off-market operator. (00:54): Let's get right into it. The first question that I always get asked in a wholesale real estate perspective, specifically sourcing off market deals is what list do I buy? What magic list from magic software is out there that it's gonna allow me to make five phone calls and get a deal signed? Right? You guys, there is no such thing as a magic list or a magic software or a magic tool in this business. It's gonna make this easier, and I talk a lot about this across all my socials, but it really comes down to doing the work, which is spending 80% of your time talking to sellers and 20% of your time talking to buyers. That second part doesn't matter without that first part, that first part doesn't matter without that second part. You guys have to do both of those things the majority of your time in this business if you ever have hopes to scaling it and doing more deals, hiring more people on building a team. (01:43): So backtracking a little bit to the the actual question, right? Which is that I got in my DM the other day, which was specifically, you know, which list do I buy that's gonna give me the most lead flow? And there is some answers to this. There's a bunch of different types of lists that do give you a better chance to get a good cost per lead could cost per deal. But one thing I want to preface with is most of the data companies we use in this business and any businesses aren't that good. That's why we do list stacking. I talk so much about list stacking on my socials in our coaching group is because that gives you a better opportunity to actually find prospects that you know are motivated. But the biggest wholesale companies in the, in the country, which I think we we've had a very big company for a couple years, is most of the time we're buying data on the county level. (02:22): We are going and buying like a predictive list from mon you guys, which is expensive, about 20,000 a a quarter. So we'll go buy that list, right? And add it on top of our just base database. We'll go buy kinds of absentee lists and prevo closure lists and stuff like that. We will market to those separately in a more strategic advanced way. But at the end of the day, are our KPIs better on that? Yes. Are they astronomically better? Not really. The nuances of this business will make you more money. It might take you from a million to 1.2 or 1.3, which is awesome, but they aren't gonna take you from zero to 500 zero to seven 50 K a year. That is gonna become, come by doing the work. And normally when I get this question, what's the magical list? I can pull the next magical software that I can use for whatever the next guru is pushing. (03:03): I usually get a bit concerned because to me, all that's telling me is they don't really want to put in the, the labor. They want to find that secret list, which guys there isn't. Okay? Uh, we all have very similar amounts of information. There's ways to piece together differently, and there's guys that give really good systems and process around that, which I think, uh, I do great as well for people, but there's no secret sauce, so to speak, really at the end of the day, that's gonna change your life and make you so you don't have to do the work. So that's how I always answer that. One. Another question you guys that have written down here that I got last week, and I get this every week, every time I do a q and a or I have an in-person event. This is something I get too, is it revolves around who your first hire is in an off market business, right? (03:41): That could be wholesale specifically, that could be fix and flip. It is my belief that that depends on who you are as a person. And I put out an episode a couple weeks, a week or two ago about specifically, you know, buying back your time, delegating. I've also put out an episode of virtual assistance and hiring those. That was actually the last episode of listening to this. So go ahead and go back to that episode if you haven't listened to that one yet. But again, that depends on who you are, right? And what I mean by that is if we're working up a ladder of, you know, we start at admin, we go to fulfillment, we go to sales, we go to marketing, we go to sales, we go to leadership. Where are you on that ladder? So if you're getting started and it's just you no partner and you're doing the sales, the transactions, the dispositions, everything, all of that, you wanna start down here with admin and fulfillment. (04:19): And what I mean by that is you wanna first go hire kind of a quote unquote operations slash transactions person, okay? I wouldn't go hire an acquisitions person right away. I wouldn't go hire a dispositions person right away, especially in this business, which is a pipeline business. You need your pipeline to keep rolling as you buy back more and more of your time. So the first time slot I would buy back, if I, if I was you and I was doing everything in the business, I would buy back some kind of operational role, okay? That can be a really good virtual system. You train on transactions that I, I recommend them being really good English speakers if they're gonna be running your transaction side. But this person at, at this scale, you guys, if you're between zero and a million dollars a year, your transactions person can also handle a lot of your marketing. (04:55): They can handle a lot of your payroll roll, they can handle your banking and your invoicing and stuff like that, as well as deploying en lists. Uh, skip tracing. They can do a lot of stuff. So you don't need to overhire. And that's a big mistake people make in this business is they overhire they want to be that fancy business owner that says, I employ X amount of people, but you guys, bigger is not better in this business. You wanna make sure your revenue per employee in this business is around $200,000. Meaning if you guys are doing 500 grand a year, you don't need more than two people on your team. Okay? If you're doing a million dollars a year, you can have five-ish people on your team. And I've seen that that's the equation that normally works both for us internally and for other people in this business. (05:27): You guys don't want to overhire or over leverage your side on the, um, personnel side, you know? So back to the question specifically is the admin fulfillment role in this business? Is transactions, marketing, stuff like that. You know, I'm not talking about like a cmmo kind of marketing person. I'm talking about someone that can deploy your list, make sure your call calling is coming in track, your marketing KPIs, that's someone you wanna stick on that like marketing side of your company. So then you have that the operations and admin role filled. And then from there, you know, after a couple months of that, you're still crushing deals and that person's solidified and their role, you have a good playbook for them. You have good SOPs for them. I talked about building SOPs in a playbook in the last podcast, but you have them fully quote unquote, let's say onboarded and they're crushing it. (06:04): Then you can move up the ladder and, and then we can explore hiring out for either acquisitions or dispositions depending on who you are and what your skillset is. For me, back in the day when I was doing everything in our company, I was on the phone with sellers, I was on the phone with buyers, I was doing transactions, I was running a lot of every department way back in the day, uh, it was probably five years ago, six years ago, the first thing we hired was operations fulfillment. Like I just said, I didn't know what I was doing, we just did it naturally. And then from there we started bringing in acquisition guys. I kept doing dispositions for a long time, but we started trying to hire acquisitions. I really enjoyed dispositions and to me it felt like a, a high leverage thing for our business. (06:35): Looking back, I could have gotten rid of that a lot sooner. And that's, I think a mistake a lot of business owners make is specifically in real estate, we want to let go of the vine. We think we can do better than everyone at everything, which most likely you guys, if you were focusing on just one thing in your business and you were crushing it, you would do that better than someone you hired. When you're wearing multiple hats, you know, someone doing 80% of, uh, your capacity and your skillset in a specific role is a hundred percent awesome. And that's the saying I took from Dan Martel, who I love, I spent a lot of time learning his stuff when it comes to team building. But you guys, 80%, someone doing 80% of the job you are and your specific role is a hundred percent awesome. (07:11): And take that to heart and implement that. But that fulfillment role, it's big. We try to hire acquisitions, acquisitions, we had a lot of turnover, guys, acquisition's a hard position to hire for. It's it's turnover. You're gonna have a hundred percent turnover every, I would say best case, 18, 24 months in this business of guys coming in and leaving on, on sales roles. And then from there, after acquisitions, and we went ahead and actually hired, we hired dispositions, eventually got that off the plate, and then we had pretty much everything hired out in this company in regards to like a day-to-day operational rule that the path I recommended to people. That depends on where you are in the ladder. Do you have partners or is it just you? But you wanna slowly move up that ladder from admin to fulfillment to uh, marketing, to sales, to leadership, and slowly buy yourself out of your business and buy your time back. (07:51): That's your job as a c e o, your guys' job as a quote unquote c e o if that's how you wanna market yourself. You can't be marketing yourself as a C E O if you're spending time day-to day in an operational role. CEOs do a couple things, right? They bring in resources to a company. They're out there meeting new lenders, meeting new people with money, meeting new people that can get their costs down on certain things. Idealizing systems and processes that can be created and handing those off to their team. They're recruiting people if that's part, if you guys don't have an HR person or that's you don't have a c and you're doing all the recruiting as a CEO e and you're strategizing like you're not in the wes. And so a lot of people put, you know, CEO in their Instagram bio and stuff when they're talking about a wholesale company, but most of us aren't. (08:28): And I'm not even a CEO e o in all my company. It's like my call center. I talked about this before, but Tucker is a CEO E I'm very much on the ownership team. Like I do own, I'm a part owner of the company, but I'm in more like a c o slash CTO role on the backend, making sure our our teams, our team is actually doing what they need to do. So that is the hiring ladder when it comes to this business specifically. So moving on to another question I get all the time, which is surrounding marketing. Okay? So we talked about data, we talked about hiring the right people. Now marketing is a question I get a lot, you know, what's marketing channel? Should I, should I do pvc? Should I do seo? Should I do Facebook adsd, should I do Craigslist ads? (09:03): Should I do blah, blah blah blah, blah. And I'll, I'll tell you guys, much like the list, if you guys are below a million dollars a year, especially, you guys need to master one marketing channel, okay? You don't need to be doing pay per click and SEO and Facebook ads and TV ads and blah, blah, blah, blah, blah. Again, all we're doing is trying to avoid the work and we're trying to find a magic secret pill that doesn't exist. You guys, the work is the work and the work has to get done, okay? There's no magic marketing pill that's going to allow you to scale your company. The way I look at this, you know, homo talks about this a lot and most business people do, is you just need one avatar, one marketing channel, and one product. Okay? And I put this out on my Twitter the other day, is for us, the reason we've scaled so quickly in wholesales, cause all we do is wholesale you guys, like, we haven't even played around that much in subject two in innovations and we've done a good amount of flips, but we've, we've done very easy flips. (09:49): Like we've focus our brain on building our wholesaling operational machine. That is what has allowed us to scale in 2, 3, 4 years. And you know, so you guys listen to this choose one marketing channel, okay? If that's gonna be cold calling, awesome. Either build that out internally or hire that out. I put out an episode on that a while ago, which we can link in the show notes that was all about either building out your own internal cold calling or hiring that out. If that's texting, cool. If that's mail, awesome. I don't care what your marketing channel is, I just want you guys, if you listen to this and you follow me and you think I know what I'm talking about, if you're listening to the show and you truly believe that I am, you know, quote unquote an off-market operator and I know what I'm doing, then listen to me telling you, focus on one marketing channel, focus on one avatar. (10:29): Okay? Your avatar is a single family seller, okay? If you guys, there's, there's all kinds of noise out there about doing multi-family and commercial and blah blah, blah, blah, blah, blah, blah, blah, blah. I think all of those are awesome, but if you want to truly build a pipeline business like this at scale, you need to do one at a time. So if you don't have your single family side built and you're not, you haven't hired that out and scale that and systemize that, then go in and starting to target multi-family and commercial isn't going to help you cause you're not solving the issue and the first avatar that you need to solve for in the second avatar anyways to continue to scale a company. Otherwise, you're just gonna have a high paying job forever. Which isn't bad if what you, if that's what you want, but that's how it ends up playing out tangent. (11:05): But again, one avatar, one market channel, cold calling s m s, whatever that is going to be for you and one product, right? And our business, our product is we're wholesaling houses, right? That's, that's what we do. More flipping houses or we're developing houses, you know, I focus on off-market leads and deals. So whatever your guys' product or extra strategy is, you know, hone in on that and master that, okay? If you're gonna fix and flip, then be the best fixer and flipper as homes before you try to build a wholesale side. If you're wholesaling and be the best wholesaler for you, you try to add onto that cause you don't need to add onto that right now. You can do 1, 2, 3, 4, 5 million a year in wholesale fees, build a team in an infrastructure and build a leadership. So when you do have that turnover that happens in this business, you have people under you that can hire, train, manage, and delegate instead of you having to step back in every time someone leaves your company. (11:50): But to get there, you have to be at a certain revenue point, which takes a long time. A question off of that that I get a lot is what, what does this business and look like at scale, right? Profit margins, employees, things of that nature. I'm gonna keep it pretty simple on this one and you know, let you guys know that there's, it depends on your goals, okay? So if you guys wanna run a 10 million wholesale company, you're gonna need a huge team. You're gonna need to be in office. And I guess what the question really is if people ask me is do I need to be in office or can I be virtual? And I think you can run a virtual wholesale company to one, two, maybe 3 million a year. Anything beyond that, I think you have to be in an office and create a culture and create a real company and a real just vibe. (12:26): And I, I don't think that you can really do that virtually. That's how we came back in our office. We were virtual for a long time. Um, we started in an office and went virtual and then our back in an office and I think you guys have to be in an office of some sort if you're going to be running a three, five, 10 million shop. So that would my 2 cents on that. Next question is best way to build a buyer's list. Okay? We talk, I talk about this a lot, uh, I'll do disposition specific episodes. The best way to build a buyer's list is building relationships. None of this like blast out to everyone in the universe stuff. I don't believe that works. I believe in building vetted buyer relationships and selling on a relationship base. And people called me crazy for a long time on this because when the market was hot, you know, we might have been missing out on three grand here, five grand there, or 10 grand there. (13:06): But when the market turned, everyone else couldn't sell a deal. While I was getting calls from guys and the industry, you know, that they were struggling not just business wise, but personally, financially, when the market turned and we were closing on over 90% of our escrows and we had a 90% success rate on our escrows when the market turned. And the reason is cuz we guys, we've built relationships over the years and that's why I'm a big proponent of two. Don't, you don't need to go nationwide, okay? You don't need to go run a nationwide wholesale company. Pick one market, learn all the nuances of that market, learn the zoning, learn the buyers, learn the best title companies, learn the best lenders, and build a business in that market that'll last a long time. You can, you can take it nationwide, you can absolutely take a wholesale business nationwide if you do the boring, hard stuff for long enough. But I recommend starting in one market so you can build your team to a couple million dollars a year in revenue before you try to, you know, blow this thing up, quote unquote. So that's my 2 cents on that and that is actually gonna be the end of, uh, of this q and a guys. I'm gonna do q and a episodes quite a bit as I get more and more questions that rolling across my socials and ev everywhere else that people reach out to me. So until next time. (14:10): All right guys, well that was the first q and a episode on the off market operator. I'll be dropping a few of these here in the near future as as my normal show drops happen on Mondays and Thursdays. Some longer, some shorter. As always, please, please, please side to my DM on Instagram, Twitter, wherever we go back and forth. Cause I talked to a lot of you guys on a regular basis and letting you know your feedback on these kind of q and a style shows as well as just the format I'm doing. I'm trying to run 12 to 15 minute shows and really give people tactical items without taking up a ton of their day. I will have interviews with guests and those will be broken up into part one and part two like Mr. James ARDS was a few weeks ago, and I will be doing more of that here. (14:43): But I just wanted to give you guys the first q and a show and as always, you guys please share on your Instagram or your Twitter or your Facebook, wherever you communicate with your audience and the people in your life, that would mean the world to me. Please DM me, let me know what your thoughts are. Then I was always, uh, you know, a like a subscribe, a share, a review on Apple Podcast or Spotify means the world. We are everywhere. You guys like to stream podcasts. We're on every podcast platform. And if you guys like the visual format of these shows, please check me out on YouTube. Um, I drop a lot of stuff on my YouTube as well and that's, that's consistently growing here in the, in the new year. So as always, you guys, till next time and you are one deal away.