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Why So Long? with Guest Co-Host Robert Orfino
Distractions And Pivots Happen
It’s a three-shirt day here in Houston. Kathryn was explaining this to some of the folks. I didn’t understand what a two and three-shirt day was until I moved here to Houston. Here’s an old boy at the networking event. He’s sitting in the back of the room. He’s had one twelve-ounce adult beverage, get some chicken wings in him. Some of the vendors are a little boring. He’s sitting there in the back and he’s waiting for the main speaker to come up. Here’s the guy that runs the REIA club standing in front of the room, probably breathing too much into the mic.
“Everyone, I want you to enjoy the chicken wings. They’re a from the title company. Thank you. We’re out of chicken wings everyone, sorry. Have some coffee in the back. The coffee is provided by Martha from YourLocalRealEstateAgent.com. She’s great. She’d been in the business 30 years. She has seen it all except how to get wealthy from it. She’s still here on Tuesday night. I do want to say thank you, Martha. Thank you, title company. Who else is here? Kangen Water, come on up. This is the water that cures cancer. You come up and talk for 30 seconds.”
Where’s the CBD oil guy?
“This is not marijuana. We’re not promoting marijuana. Come on up, bring the oil guy up here.”
The vendors are literally at the back of the room at their tables. You’re sitting there like, “Bob with CBD oil,” and he’s shuffling. He’s moving the papers around, gets to the front of the room and is still breathing heavy. It’s a big room. There are twenty people in the room but it’s set up for 300.
“Lenny from LegalShield, come on up. Lenny, talk about LegalShield, that’s great. We definitely want the 1-800 number for your legal advice. It’s awesome. It’s only $25 a month, it’s fantastic. Everyone should sign up for LegalShield because they’re going to do the deep dive on real problems. They’re excellent. If you have a speeding ticket, they can help. Identity theft, they’ll help you with that. Bob the bug guy, come on up here.” Bob goes on for seven minutes, “Bob, that’s enough. Thank you, Bob.”
Bob has always got a jacket with a black shirt on and dark multicolored tie. This sounds so terrible but there have been so many of these meetings. I’m not even listening to what they’re saying. I’m like, “Where did you get that outfit? Don’t you have a wife?”
“Stan, hard money, come on up. Stan’s hard money but he does do every type of loan. That is true. He’ll get your credit cards too. That’s the vendors. It’s now 8:45. We’re going to get our guest speaker on. Don’t worry, he’s only going to take two hours and pitch you for an hour. It’s all good.”
Here’s this old boy, sitting in the back of the room just asleep, he’s sawing logs. That’s your typical real estate club on a Wednesday night. People showed up to the Small Apartment Mastery and we’re all sitting at a table at the bar. Everyone’s walking in, “What’s going on?”
They’re all protective too because they’re trying not to make eye contact. The worst thing to do is make eye contact with someone behind the vendor table. You can’t make eye contact with those people, “Do you have a property manager? We’re doing property managers.”
“We’re looking for a real estate agent. We’ve got both our agents right here. I’ve been sitting next to him.” This is what is so funny to me, when we do these informal events like this and I was thinking about this on the way to the office. I like the informal events because it immediately casts a light on how bad people are at networking, “Jason, I’m looking for an agent to help me make offers.” Do you realize you’ve been sitting next to one for the last 45 minutes? Were you not paying attention when she said, “I do this and I’m on the Mr. Texas Real Estate Team?” That’s what’s funny to me, “I’m looking for a lender.” The guy across the table from you, that’s your lender.
We’ll make fun of sponsors as we need eleven more.
Our sponsors are way better, 99% of the folks out there.
We work with our sponsors. One of the things we tell them is never get behind a table. Push that table to the back of the wall and stand in front.
The table is four walls of death, just stay in front of the table. I have had some of my vendors tell me, “I’m not feeling very social sometimes.” I find the table and I’m like, “Everybody has their bad nights.” It’s funny when we were doing events up in Dallas, we would sit on our table. Somebody would sit on the table and then I’d roam around chatting with people. In any case, that’s your REIA club. That’s the REIA club on a Wednesday night.
There’s a much better way to do interactions and making sure that folks know each other. We work with our sponsors. If they’re going to work in our rooms, they are going to work our lists then we’re like, “This is the best way to do it. We want to show you this and that and go through the stuff.” We’re going to bring out a guy, Casey Everhart. You should go ahead and tag him on Facebook and become friends with him or follow his page. We’re going to bring him in just for sponsors. He’s going to do one-on-one with the small businesses and the sponsors which will blow their minds.
Once you get to meet Casey, this is a small business. It’s great for real estate, building your personal brand. We could deviate here a little bit. I get this flak all the time, “Why is Jason on Facebook and YouTube? What do you guys do? Why are you building this personal brand? Shouldn’t you build another brand?” Mr. Texas Real Estate’s one thing but it’s always going to be associated with my name and some form or fashion, so is Rob. “Why would you build a personal brand?” I’m like, “It’s 2019. We don’t take a buggy or horse to work anymore. Although we get a lot of referrals, the newspaper for a lot of this print media and those things are dead, even billboards. Social media is building a personal brand. What’s a personal brand? It’s reputation. That’s what a personal brand is.
That’s worth bringing this up because I went through this. Here’s what we found out. I talked to Casey and here it was. I was like, “I’ve got a dilemma. We went through the thing with Merrill and I’m an action taker.” Within 24 hours after Merrill, the three takeaways I had to do immediately was get my brand going, the brand that’s going to be fundable. I started moving things around on Facebook. I talked to Taylor back in California. She was helpful and we went through all this stuff and we’re like, “This is how we’re going to do it.” I texted Casey, “Do I build it under me or do I do it under a business?” He said, “Do you plan on selling that business?” I said, “Maybe.” He said, “Do the business.” He’s like, “You will be you, but the problem with Tony Robbins is that Tony Robbins isn’t going to be able to sell himself except it’s going to take another generation. The myth will be Tony Robbins.” It’s like Dale Carnegie, that’s hard when you put your name in that. He said build it as a business and we’ve had this company for a couple of years now. It’s been behind the scenes and making money and all that other stuff but now it’s time to move that forward and push some other things aside.You have to endure the monotony of success. - Gary Keller Click To Tweet
It’s that full marketing and media consultancy. What are you branding? For those of you reading this, 99% of you are not going to sell your house buying and flipping company. I know of only one time that’s happened and that was the one I sold to my business partner. The only hard money one I ever saw got bought when Goldman bought Genesis. That’s the only hard money lender I ever heard that got bought.
The REIA club sells. All those three clubs have changed hands many times. That is a great example you’ve got this dynamic leader who is gregarious and connects with everyone at the level of their soul. We trust them and we buy all these $997 products. His profit and loss look fantastic. He’s got nothing on the balance sheet, but his profit and loss is great. Someone says, “I want that club because of look at how much money I can make.” They don’t understand that it’s Steve Love who’s been doing this for many years and everyone loves Steve Love. Anyone who thinks are going to buy that and keep that pro-forma that he has is mistaken because despite it being Prosperity Through Real Estate, Los Angeles REIA Club, it is Steve and Robyn Love. For them, you can’t buy his brand. That’s what it is. Someone went in and bought the other half of his partner out and is not doing as well. In fact, I don’t even know if they’re still around. It’s a bad deal. You’ve got to make sure that you’re always constantly building your own brand because that creates traction and awareness which leads to being able to help people. It leads to being able to get them in your group, and then they like you, they love you, and they might buy something from you.
Curtis Wharton posts this morning, he goes, “Do we need another networking event in Houston?” I said, “We’re about to open the PVC and the PLC in a very large way.” There was a whole bunch of comments and threads about, “We’d love to see smaller networking events.” I’m like, “We do those.” I got the picture in my mind of this older dude at the back of the room sleeping at the networking, exhausted from the long day, had him a pound-and-a-half of chicken wings. He’s just not feeling it. Members-only jacket. It’s chilly in that hotel room. He’s got his members-jacket over, sitting there taking a little nap.
One of the great stage craftsmanship stuff that I’ve learned is never saying goodbye. I’m the guy who disappears. I’ve been putting up for it because I was hosting them. We’re now getting to the point where we’ve got a lot of Mr. Texas folks in or going to get some other PA in. I’m like, “This is great,” because you come in, you work the room, give everyone a hug, shake their hand, “Let’s do business. Call me, we’ll do lunch.” When no one’s looking, Rob is gone.You need to stay in focus, but that doesn't mean you don't pivot. Click To Tweet
I’m trying to be better about parties. The people that I’m usually hanging out with, “Check it out. See you later.” What I’m finding is and this happened to the crawfish boil, I’m sitting there and looking around. I think I was looking for Curtis because we had the next thing coming up and I’m trying to check out with all my people. I started looking around, “Where did they go?” There was a group of them and now I’m like, “I’m going to go back to ghosting.”
I tried to leave twice but Ashley caught me once. I don’t want to feel like, “I just ate all your crawfish. Forty-five minutes into your event, I’m out of here.” I had to walk back in with them, walk around, do another round of the room, shake everyone’s hands, “How are we going?” and then walk out and there’s Lisa. I’m like, “I can’t get out.” I finally was able to go. I had great crawfish and the corn was great. I was able to sneak out of there before 7:00. I don’t want to feel bad about this but this is how I operate.
The trick is all the networking and business gets done before 8:30. It’s 8:36, that’s your time limit. Even at our event, I looked at my watch. I’m like, “It’s 8:36. We’re all done here. Pay the bar tab because it just goes downhill from here.” The questions get worse and my ability to interpret what they really want goes right down the chute, “We’re going to end it right here before 9:00.”
Let’s talk about why so long. I don’t have the hot tub but I have the pool. I definitely enjoyed the pool. It’s pretty awesome. I swore to myself I wasn’t getting out of that pool until I did twenty laps. I’m a little sore. My buddy, Ray, the guy who was flipping on lean margins out there, for one reason or another he’s shifting his business now into these granny flats. This is a California thing. It’s all over Houston. Everyone’s got a garage apartment or another house on their lot. It’s everywhere.
Explain the regulatory burden in California and why they do the granny flat because that’s where it gets really interesting.
Prior to this law by Governor Brown, I don’t know the exact law, but there was a large portion of your lot that could not be developed. The maximum was 55% or 60% development. You could have the front lawn. You’d have to have something in the backyard. As soon as you put concrete down, it became a problem, especially in these tighter metropolitan areas because of stormwater runoff. It was a big issue. On top of that, there are too many cars in LA. We’re not going to allow you to put a whole bunch of people on this property if there’s not enough parking for them which puts a burden on the street, which puts a burden on the community, the neighborhood. Sent back was an issue and a whole bunch of other things. There’s a whole bunch of real issues. It was hard for you to build an extra building on your lot.
If you’ve traveled internationally, you know what this looks like. You walk, you drive it and you’re like, “What is going on?” There are cars everywhere. All the lots are completely developed. There’s stuff on top of stuff. It’s crazy. They didn’t want it to get that overpopulated.
California’s so expensive, the nursing homes are equally as expensive. What they decided to do was say, “You can now put an AUD.” I don’t know what it stands for. It’s probably initialization, not an acronym. We call it a granny flat. Grandma can live in and have some privacy in her little house back there, 400, 500 square feet. You could bring in some people to help her three times a week or once a day or whatever. Someone would check in on her. If there’s ever an emergency, she could hit the button. You’re right there, you could help. It’s in lieu of sending people to an assisted living facility because there’s not enough and the ones that are there are obviously supply and demand are expensive. He’s going to shift his model now and that’s great. He says, “I’ve been doing it for a year.” I’m like, “That’s great. You’re heading into year two. This is all about systems.” He’s like, “I’m trying to figure this stuff out, trying to figure the best deal out.”
The numbers work like this. It’s $400 a square foot, so I can buy a 1,500 square foot house with a big lot for $600,000. If I get it for $550, $540 I’m good. I got another 10% there. If I add another 500 square feet at $400 a square foot, that’s $200,000 in value. Because these things are taking off, the market is recognizing it. The appraisers are saying, “I’m counting that 500 square foot as equal to this 1,500 square foot.” There’s not a step down on that second, which happens to us all the time. It’s a pure one-to-one and he’s like, “I’m going to be popping in 500 square foot houses all over the place. I want to do these tiny houses, this one-bedroom or studios for grandma or grandpa or Uncle Joe or whatever. I’m thinking either turn them out is rentals or I’m going to turn them out as for resale.”
I’m refinancing two properties. I need to have a conversation with that private lender because then I think we can pop them over to the office and then we can refi the office and all that other stuff so we can go ahead and move there. We are probably going to end up with a new office in the Heights, which I am super excited about. I wasn’t a Heights guy until a couple of my bros there moved in and they’re like, “You’re going to love it down here. It’s so great.” They got the bike trail finished and all. I’ve been down there too often in the last couple of months. I’m like, “This is nice.”
We’re talking about why it takes so long. You put the quote up from Gary Keller about staying focused. You’re talking about focus. I agree with you, but that doesn’t mean you don’t pivot. What has happened for our buddy, Ray, out there is he’s seen a new opportunity. While he’s still doing his thing, he’s doing a little distraction by testing the water. Testing the water, it turned out to be, “My margins are much better than this. It’s roughly the same skillset, so why don’t I move forward on this?” He still got a tough two years ahead of him. Because as I like to say, year one you’re learning all this stuff. Year two, you put systems in place. Year three, you throw away everything you learned in year one and year two and you start over again. This time it’s much faster.
Here’s the real challenge. Year four, year five you start getting fancy and you think you’re that smart. I’ve seen that in all the businesses I’ve ever run. Everybody starts getting fancy and cute year four and five, you’re like, “Do what you did when beginning. It works well.”
It’s hard when you have that disperse down, even I where you’re always looking at the flowers in the sky and all that other stuff. It’s discipline.
That’s that Gary Keller quote, “You have to endure the monotony of success.” You do this and you do that. We used to joke about it, it’s making sausage. There’s nothing sexy about making sausage. Put it in the grinder. You grind stuff and you got to stuff that in the casing and there it is. There’s nothing like, “I’m going to bring my friends over and brag to them that I’m making that.” Nobody cares. Here’s our Airbnbs. You walk in Rob’s house and it looks like a Bed, Bath & Beyond. We were chatting with our friends of ours who want to go in and start decorating our beach houses. They’re like, “Jason, this is going to be so great. The girls and I are going to go down there and buy a bunch of beach stuff.” I’m like, “Bad news, ladies. The four beach houses, we’re keeping the short-term rentals and the other one will be done in soon.” It’s making $8,000 a week. I don’t have time. The one in Corpus Christi, you’ve got time there. The one on Crane, that bad boy should be on the market.Informal events immediately cast a light on how bad people are networking. Click To Tweet
You can pivot and then you’re going to have to stay focused on that. That’s what Jason and I have done. We’ve come from single-family and we’ve pivoted. Airbnb, I’m a couple of years in. I’m in year three. I’m truly learning the business. I don’t want to disregard any of the experience of the money that I’ve made in the first couple of years because it was good. It bailed me out of a couple of things and I’m living rent-free now because I’m making money off my Airbnbs. I’m at that point in my life, but now we’ve got to pivot. We’re not doing three or four, now we’re doing fifteen. It’s a totally different system. We’re going to be moving forward on that, but it’s been a couple of years of me in that field and that couple of years of I’m not interested in single-families anymore because I’m doing Airbnbs. There are plenty of people in single families and they should get some single-families. In fact, we have a deal. I remembered, if you’re interested, we have a deal. I don’t know the neighborhood. It’s off of 610 and I-10, somewhere in that little area there to the east side of town. It’s probably worth $140,000 to $150,000.
I’m pretty confident because if I remember the comps, they were $145,000 at 1,500 square feet, this one’s 1,700.
We’re at $150,000 on it. We have a contractor says, “I can get this rent ready for $6,000.” We’re at $108,000 so you beat it $114,000 out of $150,000 deal and it rents for $1,300 to $1,400.
I saw a rental comp at $1,450. There’s no inventory in that market.
It’ll go fast.
It will go insanely fast. In fact, we thought about just buying it, clean it up and flip it.
We’ll see what happens. Stay with the private lenders because that might be an easy one.
If you are interested, send Rob a text to (281) 401-9008.
We got it $108,000. We have contractor says $6,000 rent ready, $10,000 I’ll make it even a prettier house. We feel confident at $150,000 and the rent is around $1,400. You have to do your own diligence. Give us a shout at (281) 401-9008 if you’re interested in that. We have a wholesale liaison, Mr. Texas Real Estate, and now we did our own little wholesale deal there.
It’s an insanely easy rehab. There’s not much to it. In any case, if you’re interested in that deal, give us a shout. Why does it take so long? We had a very similar conversation when we were talking about in the mastermind session of the mastermind table. We were talking about CreditSense and some of the things Merrill’s doing. I said, “We’re teaching graduate-level real estate and it’s two to three years. When you go through that two to three-year process, then you’re like, “Now I understand. Now I know how this works.”
Ray’s off into this world. He’s out there and he’s hitting it because he’s a doer. He’s known as an action taker. He’s a guy I met a few years ago at the DANG Sizzler.
That’s a fun meetup. Are we going to that one?
No, we’re not going to that one. We won’t make it. Here’s my question because it came upon a couple of other folks. He’s hitting it hard. He’s an action taker. Everyone knows he’s flipped houses and he’s been successful. If he turned to everyone and said, “I don’t have a lot of time, but I’m happy to start building a mastermind around what I’m doing and I’m going to bring some other people in,” like this guy Tom who’s also been doing that. “I’m going to put Tom in the room and I’m going to put some people from the state in the room and I’m going to do all this stuff. It’s not coaching, it’s a mastermind. We’re going to sit and talk about it. We’re going to do walkthroughs, we’re going to show all this stuff off.” If you’re in California and you say, “Here’s this other option now. I’m still doing this, but I might want to investigate and look into this.” Would you want to pay $7,500 to tag along with Ray, to meet Ray once a quarter, to jump on a webinar with Ray to learn that side of the business as you’re doing your other things? Even though he’s only in his second year, do you want to learn as he’s learning? Do you want to wait until he’s completely done a few years from now, has all the money in the world and decides he’s going to teach this stuff at a $10,000 to $50,000 level?
Here’s the problem with that model. That marketplace may be gone by then. There’s a guy that runs around the countryside that teaches HUD foreclosures. They’re coming back. For the last few years, there’s been nothing. That’s why we like the mastermind model a lot more than the coaching model. Truth be told, I don’t want people that need to be coached. If you are not self-motivated, I’m not interested in working with you. I’m not your cheerleader. The mastermind, the peer group is like, “I don’t know where I get the motivation to get started.” I don’t either. Go watch YouTube videos, maybe Gary Vee will get you pumped up. There is no shortage of motivation in our groups, in fact, Walter told me this and somebody else did too. I’ve been posting going to work out and doing that thing and I’m like, “This is so cheesy. I shouldn’t be doing this.” A couple of people told me like, “If you got time to figure out how to do that in your schedule, it’s putting a big spotlight on me to go out and do it too.” I was like, “I’ll keep sharing that stuff we’re doing.” That should be your motivation because your peer group is out doing it and you’re not. You feel guilty. I guarantee you when people are sitting there watching like, “He’s in the pool, what do I need to be doing?” That should be your motivation not, “Let’s sit down and figure out where your roadblock is. Is it this or that?”
I guess if you’re the person that needs the DVD package, the manual, the checklist and the worksheets, then the mastermind is probably not for you.
I told that to our table. I’m like, “This is not the four-inch-thick, three-ring binder, you fill out this form and that form.” It’s literally like, “What are you trying to accomplish? Where are you at now? Let’s talk about where those roadblocks are. Here’s your list.” I open up my phone or somebody else in the group opens up their phone and says, “You need to call these six people.” They go, “Really?” “Yes, in this order. Call them tomorrow.” They go, “Okay.”
That’s the power of the peer-to-peer sharing. If it’s me, because I have a propensity for action versus wanting to learn all the details before I do anything first, I want to jump in Ray’s truck. I’ll pay you $7,500. I will take off on Wednesdays to just shadow you. That’s the model I would want to be a part of. That’s the model we offer for Airbnb. Some folks don’t like it in this market because it doesn’t come with all the books and it does have the DVD set and it’s not what they’re used to. We get it. It’s not for you, but for sure I would rather be the fifth employee at Facebook than the 5,000th employee. Even though it’s all messy and we’re in our dorm rooms and nothing’s working, we’re not going to get paid for a while. We’re just trying to figure it all out. I’d rather be that and that’s what we surrounded ourselves within this Airbnb. My partners, we haven’t made a lot of money. They’re putting in a lot of time and we have things come up that we had to figure out that costs us money, take money out of our pockets. We’re like, “We’re much more interested in being here now than joining when you have 50 properties.” Now we have a list of things to buy and it makes it easy. You can go online, click a button, everything gets ordered on Amazon.
What’s interesting about that is you were sending out some messages to our different groups to say, “All this stuff is on sale because we’re buying. What did you say, 80 sets of sheets or something ridiculous?” Here’s the place where buying them all. When we have all of our 50 to 100 properties, we’re not going to be doing that anymore. The onus is going to be on that person to go find and figure it out. I would much rather grow with someone who is growing than a company that’s already matured or not.
We’re okay with it. We don’t have 1,000 spots. We’re not trying to sell 1,000 coaching packages. It’s not our business.What social media really is, is building a personal brand. Click To Tweet
That was another thing that was a real shocker to everybody. I’m like, “We’re looking for 250 people,” and they’re like, “That’s it?” I’m like, “That’s it nation-wide. That is all we’re looking for is 250 folks in our mastermind.” Our quarterly conferences are going to be pretty awesome. That’s the group.
We’re looking to make 250 millionaires through real estate buying and holding, whether it’s single-family, small apartments, multifamily, Airbnb or granny flats.
We’re going to take those folks in those markets that want to share their best practices and be open about their business and contacts and help them build that. There is a reason the 1% are the 1% because the 99% can’t do it for the most part. They’re not willing to sacrifice it. We’re looking for the top 1%.
The avatar is as an individual you make $100,000 a year, as a family you’re making $150,000 or more. You got $40,000 to $50,000 or $25,000 to $50,000 ready to deploy. You have a FICO score that’s fairly decent. The FICO score we can fix relatively quickly. Let’s not start without a 700 FICO.
You’ve got to have some money, got some decent credit, otherwise you’re fighting a pretty big uphill battle.
It’s not to say that if you don’t have any money, you have bad credit, we’re not interested in having you around. That’s fine, but that’s the membership. We have that price point. We know it’s hard. We’ve designed this and we spent time. We didn’t just throw it against the wall. We said, “If you’re new, we’ve got these classes that are $97. Those should be able to get your feet wet, get you to understand that a little more in-depth.” We understand if folks don’t have a lot of disposable income. We created a membership for $1,000 and you can join a membership. We’ve done these in-depth eight-week classes for $1,000. They’re not $10,000, $20,000, $15,000 stuff. You can get into it at that lower level. If you’re going to be in the mastermind, we’re going to ask you how much you make. I’ve got two people to come to the office and the conversation is, “How much do you make?” “I make $40,000.” “This isn’t for you. I’m not going to let you in. It’s one-fifth of your annual income.”
You have a $10,000 mistake and a property. What are you going to do? If you’ve only got $30,000, $40,000, you’re making $3,000 a month, “Let’s work on this on this income side. Let’s work on that a little bit. Figure that piece out.”
If you don’t understand it and you can’t respect it, I’ve got nothing to say to you. We’ve set it up to make it as easy and as affordable as possible, but the reality is if you’re going to get into the small apartments, you’re going to need $100,000. 7.5% of that to join our mastermind is nothing.
When I joined my first single-family rental program, let’s call it $20,000. I told my wife, I was like, “This is $20,000 in insurance because I can make a $20,000 mistake.” For me, it was a risk management strategy. If they could keep me out of the gutter, then I knew I’d be like, “I got my $20,000 worth.” That’s different when your household income is $200,000 and you’ve got $100,000 in cash to put into real estate. If you’re making $100,000 a year and your credit is not great, you’ve got $10,000 in your checking account, you don’t have six months of reserves, that math doesn’t work out. You could pull yourself up from the bootstraps and you could go out and crush it. I’m like, “The world is littered with bodies of people who thought that.” One of the biggest failure points in all of the business is under capitalization. It’s an absolute 100% fact. You’ve got to have a little decent credit, have a little money, got a decent job. Give it some time.
If you want to connect with us or if you’re interested in a house we have or any of the memberships, the masterminds, (281) 401-9008. Have a great day. Let’s go do something good.