It’s Mindset Monday! That means we are going to get our weekly dose of learning as an entrepreneur in this day and age. Host Jason Bible discusses the benefits of becoming an entrepreneur and getting into that mindset. He shares the two things entrepreneurs do – earn or learn. Centering on entrepreneurship as a real estate investor, Jason shares all the learning and earning you will have to go through in this path. Get out of the fear of learning, focus in on the things that generate revenue, and rock the market like a hurricane.
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Rock The Market Like A Hurricane
Being An Entrepreneur In This Day And Age
We’re talking about Mindset Monday. We are going to talk about earning and learning. Let’s start with the fact that most of you reading are entrepreneurs, real estate investors, which is a part of being an entrepreneur or you’re thinking about becoming an entrepreneur. The last statistics I saw by Forbes Magazine said that 14% of the workforce classify themselves as entrepreneurs, which means 86% of the workforce classifies themselves as workers. Hourly workers, salary workers, management executives or whatever, they’re workers. They work for a company, a business where 14% of the population classify themselves as entrepreneurs.
The last time I looked, it was 14%. Prior to the 2008, 2011 debacle, it was 9%. A lot of that extra 5% into the market may have come from the plumber who used to work for the hospital and get paid from the hospital to being told from the hospital, “We’re going to let you go, but we’ll hire you back as an independent contractor.” That happened everywhere. All of a sudden, a lot of contractors or technical workers is a better way to put it, who were W-2 became contract workers W-9. They classify themselves as entrepreneurs because they didn’t necessarily have to work at that hospital. They could go get work anywhere they want. There’s a portion of that.
I know for a fact that our readers are over 40 years old and I can tell you that your impressions of this generation coming through right now is wrong. There are massive amounts of creativity from college graduates. These little workforce co-op centers are full. It’s one of the largest growing businesses in the country. Basically, these little incubators for entrepreneurs. There are a lot of Millennials that are absolutely getting into, becoming and creating their own business. We’re reading Forbes and it says, “The gig economy is a huge boom to entrepreneurs. The rapid rise of freelancers and other on-demand workers has a huge impact on small businesses, 42% of whom employee contract workers. Freelancers already compromise 35% of the US workforce.” We’re creating an entrepreneurial society. We’re creating a society where we’re not relying on the big business to take care of us for all our lives.
I think the break is probably around 35 to 40. For those who are over 40 years old, a lot of you who are not entrepreneurs or trying to become entrepreneurs, it’s okay. You can be 75 and decide that you want to become an entrepreneur and start your business. Colonel Sanders is a great story. If you’re my generation or a little bit younger than me, you remember the deal. You were sucked into your parents’ deal and here was the deal. I’ll go get a good job, get a pension, get a 401(k) and start saving for retirement. Get two weeks off during the summer, get another week off during the year, have my sick days, have the contribution matching 401(k) contributions. That’s the deal you made. There is absolutely nothing wrong with it. 85% of the population chose that deal. That was the deal that they picked, whether it was subconsciously or consciously, that’s where they wound up and they took the deal.
What happened from my father’s generation to my generation is there was no long-term, 20, 25, 30-year employment. What happens is we shifted. When I remember the last statistics I looked at, my generation was going through between seven and nine jobs during the course of their life. Seth says, “If the only thing you’re looking to do is to get another job doing the same work that you’re doing now, but only paid higher, then that’s a misnomer. You’re in a downward spiral.” Unless you can add value to the economy, your job becomes outsourceable. Us as entrepreneurs, we create wealth. We create jobs.
I want to set the pace here, set the tone. We’re entrepreneurs, we’re real estate investors. We may still have a full-time job. It’s great to be an entrepreneur if you have a 40 to 50-hour a week job and you’re making $150,000 and you’re still able to create a business or an LLC that creates wealth and creates jobs, that’s awesome. Most people are doing that and trying to transition out full-time or most people say, “I have a side business.” We can spend time and maybe we will, on the tax benefits of being a business owner.We're creating an entrepreneurial society where we're not relying on the big business to take care of us for all our lives. Click To Tweet
There are two tax codes in this country, one for individuals and one for companies. Which one do you think is better? The one for companies. Why doesn’t everyone in this country have a company? Why aren’t we taking advantage of the Tax Code? Because 86% of the population took that deal, “I’m going to go work for Halliburton. I’m going to go work for Exxon, I’m going to go work for Chevron, I’m going to go work for these companies and they’re going to take care of me for the rest of my life.” Sometimes it happens and sometimes it doesn’t happen. Sometimes there’s a merger and 85% of your department gets wiped out and all of a sudden you become a contract worker.
Maybe you classify yourselves as entrepreneur, but maybe you don’t have the tax structure set up. Us as entrepreneurs, we’re different than those 86%. They’re driving us to work right now and you’re thinking, “I’m going to be an entrepreneur. I’m going to set up my businesses. I’m going to get my rental properties. I might do a flipper too. I’m going to do some other things. I am different.” That’s who I’m talking to, those of us in the minority, those of us that are out there trying to create something. The economy needs us. This country needs us. This country needs us desperately. We go out and we create these things. Whether it’s a fourplex with a healthy, clean, and safe house where people can live, that’s something. When you take a piece of junk house in a rough part of town and you renovate it, you raise the standard of that neighborhood. You have contributed to society and you should get paid for that.
We’re going to talk to the entrepreneurs and those that are tracking into becoming entrepreneurs. If you’re not an entrepreneur, “I like my day job,” that’s okay. There is nothing wrong with that. We need that. This is how the economy churns. We’re going to talk about the benefits of becoming an entrepreneur and getting into that mindset. The first thing that we’re talking about is earning and learning. What do I mean by that? When you do something as an entrepreneur, when you’re set out and you give a project and you say, “I’m going to go and create this widget and I’m going to sell it.” I’ve got a widget factory sell all set up and all that stuff.
For us it’s, “I’m going to go down to the hunting ground and I’m going to buy $1 million asset. I’ve got to spend money on appraisals, survey and inspection. I’ve got to put an earnest money deposit down. I’ve got to put some other money over here and I’m spending all this time and energy going back and forth to the hunting ground.” Lo and behold, when we add up the tally sheets about $30,000, $40,000 and then we lose that deal. We had a little mastermind meeting. I have the mastermind folks, the big game hunting folks over my house almost every month. We had brunch and one of the guys there just said, “I heard what Jason was saying. That sucks.” I’m like, “It does.” He’s like, “What did you learn?” I said, “We learned two very important things. We learned.” It was a $40,000 lesson. The joke for me is Jason is talking about $50,000 loss but I’m his partner, so I lost $25,000 of money I never had. I’m on the hook for it, but it’s a $25,000 lesson. We will not make that mistake again.
Very briefly, the mistake was we had a poorly executed contract from an agent who didn’t know how to write the contract and didn’t research how to write the contract. The contract needs to be much more robust and a lot more protection from us. We made the classification. If you’re an entrepreneur, you’re out there doing it. There’s no big company safety net. Some of you split the difference. Some of you are, “We’ll have a safety net morning day job,” and then you move into that entrepreneur stuff on the weekends at night. God bless you for that. I’m just curious if you are an entrepreneur, do you actually have an LLC or a corporation set up? I don’t want to take advantage of that stuff.
We had a big loss that we learned. As an entrepreneur, you do two things. You either earn or you learn. That’s the result of your project. We learned. We also had another little loss. It’s the same thing. It was a small commercial deal, which has to be written up like commercial deals. Even if it’s a five-unit and this is the problem that we’re having in real estate right now. We have a five-unit we’re buying right now and the contract is written up as if it’s a one through four and it is not. It’s a five-unit. You have agents that are writing these things up as if it’s a regular residential, one through four unit and it’s a commercial unit, which means the banking, the inspections, and the appraisals are all completely different.It's not about the deal, it's about representing the buyer. Click To Tweet
That’s why on Mr. Texas Real Estate Team, we have one person who focuses on commercial contracts, even a five-unit. Five little efficiency apartments are a commercial contract. That person has trained with some pretty heavyweights in this town. He has figured it out and takes a very long time to write that contract. Here’s the big thing. That contract has to be written to protect me. Too many agents want to protect the deal and not the buyer and it gets very gray very fast. We’re going to get this deal done. Agent, screw that. It’s not about getting the deal done. It’s about you representing me. There’s a big difference there. There’s a big ethical difference. There’s a big representation difference. It’s not about the deal, it’s about representing the buyer. That’s why we have an agent. We learned that lesson very expensively.
Moving forward, because we know that, we’re in much better positions. We have a twelve-unit coming online and we talked about the nine units coming online. We have another eight-unit and five-units. Those are all moving very well. On the other side of it, we have some good relationship with local banks. We went around, we asked people for local banks and people gave us a whole bunch of names. We talked to probably about seven actual banks that we know work in the real estate space. There’s one more we’re slapped to do. That’s probably the big daddy. Someone that has been hinted at that their LTV is 85%. We’re tracking that stuff down and then we bring all that information to our mastermind.
The first three hours of our mastermind is going through money. We learned. The other thing we learned from that disaster down there was money. We started talking to everyone. We talked about getting left at the altar by a hard money lender twice. We talked about getting left at the altar by a bank, talked about getting left at the altar or shifted to deal, shifted at the end and we just weren’t interested in it. What we learned about money and learned about commercial contracts on that is as good as any education we would have had to pay for because we learned.
That being said, nine of the thirteen units that we talked about, we’ve been talking about this deal we have over in the cash. Nine of those thirteen units are vacant. I will have crews run through there and do the demo, do all the electric, prep the plumbing and do drywall. I should have drywall workers in there shooting texture up there and then the following week is going to be cabinets. The floors are all staying. We’re not going to mess with the floors. It will be cabinets and trim work. What we’re going to do is a little bit different, but we will be earning lots on those deals. That’s what it comes down to is the ability to learn from your mistakes and earn. That’s what we do as entrepreneurs.
Now we’re going to be earning, now we’re taking these units that we’re making that the blended rent on those thirteen was like five and a quarter and we’re going to pump that, blend it up to about $900. Once that happens with nine units all around 900 and three others over 700, and that blended rate is maybe 878, 860. We’re going to go to a bank that we’ve established a relationship with and they’re going to give us a five or seven-year loan on it at 5.5% versus the 10% or 12% we’re paying now to the hard money lender. All of a sudden, it will become a very profitable project for us. We will earn. We’ve earned because we’ve established relationships with banks and we learned a little bit along the way. That’s what we do.
Most people look at failure as this big, hairy, scary thing and, “I won’t do it.” I listened to Tony Robbins. I had so much windshield time. I drove back and forth the Surfside four times because we’re going to be earning there. I was listening to Tony Robbins and I don’t listen to him very often anymore, but I listened to him. He said, “These are the six things that human beings are looking for.” I always ask, “What are your top two?” One of them is security, “I want security and stability.” He says, “If you pick this as one of your top two. If you’re out there and you’re an entrepreneur. Maybe you’re floundering a little bit and maybe you’re not getting that thing, one of the top things in your life is to have security. It becomes very difficult.” You have to look at the stuff that, “I might fail but it’s a learning experience.”If it's fear that's holding you back, it's not a fear of failure. It's a fear of learning. Click To Tweet
There’s a wholesaler that I’ve known now in this town and I’ve watched him come and go and talked to him. It’s hard. I talked to Charles who did the wholesaling networking hour. He says, “This person has got two deals.” I was like, “That’s great. They didn’t quit.” Every challenge became a learning experience and they moved on. The fear of failure is ridiculous. If you are afraid to fail, if you need that security in your life, if this is the thing that’s holding you up, that fear that I want you to understand what you’re afraid of is learning. You have a fear of learning. That’s the problem. It’s not failure but learning.
We talked about the learning we did, now it’s about the earning. When you’re earning as an entrepreneur in an LLC or a corporation, you have some tax benefits. When you’re out there and you’re doing this as an entrepreneur, it’s going to happen. It’s almost inevitable. You have to be a complete knucklehead in this business to actually get nothing out of it if you persevere. Keep moving forward. These deals are out there. We talk to folks all the time. We have a couple of people that came to us in a hole, two right off the bat I know, but they show up to these events. They look at the properties and they’re getting there. They’re working overtime. One of them is driving Uber. They’re doing what they have to do to succeed because they’re not part of that 86%. You are part of that 14%, are part of the 86%, are on the verge to go over to become an entrepreneur. You’re different. I’m not saying you’re better. You’re different and God bless you for that difference.
I know it’s lonely sometimes. This is why those coops are so powerful. You go in there like, “I’m going to meet my buddy. We’re going to build an app or we’re going to do this warm cookie delivery system and we’re going to start all these businesses.” Trust me, the economy is moving. It’s going in the right direction. It’s looking good. You’ll see more and more of these small businesses with a little capital behind them doing some advertising. They pop up all the time and then they can’t quite make it through the recession, but that’s okay because people learn. The next time they’re around, they learn to make their business recession-proof. We’re in a good economy. We’re in a four-out-of-five-star market for buy and hold. We have a lot of good individuals in this town who are willing to help.
If you’re part of that 14% now, you’ve got to forget the fear part because remember, if it’s fear that’s holding you back, it’s not a fear of failure. It’s a fear of learning. I want you to get that in your head. It’s not failure that you’re afraid of. You are afraid of growing. When I put it to you that way, most of you realize, “I’m not afraid of growing. That’s not a bad thing to be afraid of. I’m not afraid of growing.” It’s how we learn that lesson. It’s the growth from that. When I heard the quote, I didn’t understand it. It took me time to understand it. Most people are afraid of success more than failure because they’re going to have to change. They’re going to have to grow. The groundwork has been laid for you. Strong economy, good real estate market, lots of good people in this market to help you. We got agents and we know the right bankers to work with. It’s all there for you. It’s time to take action.
Let’s not talk about that failure or those fears anymore, because I know you’re going to get over it. It takes a little time. I know you’re going to take some leaps of faith. You’re going to do it. It’s going to be awesome. It will truly be awesome when you learn or when you earn. Now we’re focused on earning. Trust me, the big thing is all our LLC straightened out, figuring out which has debt, which is cashflowing, setting them all up. We met with this guy, Merrill Chandler. We’ve identified three LLCs that we think will be cashflowing that will hold no big rental portfolio. There will be management. Now we’ve got to spend time on making sure that we’re earning the proper way. I talked to a lot of folks. I talked to successful real estate agents like, “Do you have an LLC?” It’s like, “Just real estate.” It’s like, “You’re going to get killed on some of this stuff.” We’ve got to make sure that we set it up correctly. What happens is once you start earning and growing, sometimes we forget, we take our eye off the ball there.
We’re doing this whole thing to create an organization, create a business to get financial freedom, to help to grow ourselves, to help the neighborhoods. Do all these great things but that takes fuel and the fuel is capital. We always have to watch the fuel tank. One of the things we talk about and we do every Monday is I spend about an hour every Monday morning going through every single bank account, looking at every single withdrawal, every single deposit and looking at all of them. There are many, because we have about seven different businesses. We go through every single one. “That’s okay. Here we have a little tab, these bills get paid. Make sure everyone is going to get taken care of. We have jobs that we’re going to be taking in. Here’s what the income is coming from.” I’m going to watch that money, the fuel in and the fuel out.Most people are afraid of success more than failure because they're going to have to change. Click To Tweet
This has to be a big part of what you do. I heard a saying that someone said, “The worst thing an entrepreneur can have is capital because we have a tendency to spend it.” Some of us will spend it on fancy iPads, computers, cool vehicles and things like that. Other people will put it into rev gen and that’s where I want you to be. I want you to only focus in on things that generate revenue. I watch the money and then typically what I do is I’ll spend the next few hours on rev gen. We talked about this, we talked about goals, time blocking and all that stuff. We should be spending, as an entrepreneur, about three hours a day, very focused three hours, shut your cell phone off, close your email and focus on rev gen, revenue-generating activities.
If that is finding deals, then you’re going to spend three hours looking for deals every single day. Spend those three hours every day focused on things that will make you money and will bring more fuel into your corporation, into your LLC. You’re going to do three hours of that. You’re going to do at least one hour every week of watching the honeypot, making sure that you know there’s not a Pooh bear trying to steal your honey and then focus on rev gen. For us, if you’re in a real estate world, we’re looking for quads right now. We’re focusing about fifteen hours a week on finding fourplexes. “How do you guys find all these great deals?” We spent fifteen hours a week focused on finding four units. We’re looking for another Airbnb, “How do you find all that Airbnb?” We spend about fifteen hours a week focusing on getting Airbnbs.
We have a real estate team now and we will sign some of that, outsource some of that to the team, but this is what we have to do. You’ve got to work the rev gen. We’re in the Airbnb space and so we’re focused. What’s going to create the revenue here? We’ve got fourteen units that are going up on Airbnb, all of which it’s fourteen units, I believe it’s seven properties. Each property should make us $2,000 minimum. That’s $14,000 every single month. That’s net, not gross. It takes care of all the expenses, pays all the employees, pays the insurance, pays the taxes, pays the utilities, pays the lawn guy, pays the bug guy, pays the pool guy and pays the maids. It pays for the Splenda and the coffee. We’re paying for all that stuff. On top of that, there should be $2,000 for each of the properties that we’re working on average.
We’ve got to focus in on that. I say it all the time, nobody cares about your money more than you. It’s not a real outsourcing thing. You can hire someone to help you manage that, which hopefully you’ll get to. I have a friend in a mastermind, they own ten properties and they’re managing it themselves. I was like, “Stop.” This isn’t to say you can totally turn those loose, but you can call a guy like Jerry Ta and he’ll come out there and he’ll set you up. You have to manage Jerry Ta. You have to manage the managers. Your job, once you grow out this business is to manage the managers and that’s where we’re at. We’re transitioning over.
Jason and I are humping around stuff. I don’t like putting things together. I’ll hump it from the truck to the upstairs bedroom. I’ll do all that stuff. I’ll open boxes, but at the end of the day, I’m not interested in putting it together. I will if I have to, but I’m not interested. We have people that come and help us put all this stuff together. That is part of the earning. We are doing revenue-generating activities. Putting the couch together is a revenue-generating activity because it will produce rentals. I will bring in guests. Talking about the couch, talking about the colors of the couch and what pillows go on the couch, “Maybe we should hire a designer. Maybe we should do design.” No, putting this couch in the room so that someone can come and sit on this couch or open it up and sleep on it will produce capital for us and will produce income. I want you to spend three hours a week a day on rev gen activities. If you’re a husband and wife, two hours for him, one hour for her, two hours for her, an hour and a half each. That’s the benefit of working as a partnership. You can split those.
If you have a partner, whether you sleep with them or you share a K-1, that’s the definition of partner. You can double down on that. Maybe you can do three hours, but only one person does one hour, the other person does two. You’ve got to focus every single day, three hours on rev gen. That’s the earning part of it. For us at real estate, it’s finding deals or finding cheaper capital. Three hours every day of your buy and hold career is going to be finding real estate and finding cheaper capital. It’s not going to be spending time on the new paint colors on the furniture or any of that stuff. You’ve got to focus on earning.Doing all these great things takes fuel, and the fuel is capital. Click To Tweet
We talked about learning from growing from mistakes. Don’t be afraid of that. We talked about earning, making sure you rev gen stuff. You’re like, “Rob, what does that mean three hours? I want to be a landlord, but what does that mean I’ve got to spend three hours?” Here’s the backhand. Here’s the actual thing. It means you sit down at 7:00 at night and you open up Zillow and you start dragging the map around. You set your little search criteria to find whatever you’re looking for. You’re looking for single-family? Good. If you’re looking for a duplex, a fourplex, you put in apartments and you drag it around.
As soon as you find three or four, you put them in an email, you email them to Linda or Cindy from Mr. Texas Real Estate and they’ll start negotiating on your behalf. They will represent you and not the deal. The next night you’re going to go through and you’re going to send your emails out to Jet Lending or Donny and all these guys. You’re going to say, “I need to get some capital because this is how I’m going to work it,” and wait for those things to come back. On Wednesday, you’re going to jump on an hour-long phone call during lunch to talk to one of the buyers reps. You can talk to Cindy or Linda and you’re going to say, “I want to go through this. I want little more details. I want to get this property because that’s going to earn me money. That’s going to create wealth.” On Thursday, maybe before you’re driving into work, you’re calling Michael over at Jet Lending. You’re going to have a conversation with him and tell him what you want to do. On Friday, you’re right back at it. Back on Zillow, dragging the map around and finding three or four properties. You can go a little bit deeper and you can do a little marketing campaign.
We’re going to do something about marketing. You can do that. You can send out 500 postcards and target market what you’re looking for. That’s what we’re talking about. That’s the thing. If you’re finding properties on Zillow that you want to make offers on, (281) 401-9008 and I’ll hook you up with Linda or Cindy. If you’re looking for commercial deals, we’ll hook you up with our commercial rep who can write the contracts the way they’re supposed to be written from the lessons that we learned. You’re going to be good to go. That’s what it looks like. Thank you very much for reading. I appreciate it.