In this interview you’ll learn how your business should look when you have it dialed in and working like a machine
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This is part 2 of an interview I did with JP. There’s a lot of great info for you in here – enjoy!
JP Moses: Hey it’s JP Moses the director of Awesome and I am back again with the Marketing Commando, David Corbaley. We are continuing our conversation. We were previously discussing the difference between having a real estate business and a real estate hobby. Or the difference between somebody who makes money in real estate versus somebody who builds a real estate investing business, and those are two different things. And our first conversation was a philosophical is there a difference and where are you in the spectrum of those two things. Where do you fit? We ended with a challenge.
If you haven’t had a chance to go through that I recommend you; actually there should be a link somewhere here on the page. I recommend you go check that out and start there first and then come back here and pick up from there. Here we are with David, former Army Green Beret, former professional Firefighter turned real estate investing ninja and he does have quite a business, a very impressive business. David your entire business runs remotely too, right? You’ve got your, I mean you don’t have a big office with personnel. Everybody on your team works from wherever they happen to be in the world. Am I right?
David: Absolutely. We had, I’ve probably gone through four or five different office locations off and on and a little over a year ago I told everybody to go home and I shut it down. Now I avoid all of those costs that come along with having an office and the other stuff that goes with it and it’s much better.
JP Moses: That’s a whole conversation we should have too. Maybe we’ll do another one on that in the not too distant future. I too run my business remotely. I work out of my home office and everybody on my team works from their homes, but it’s not for everybody. I know people who have tried the remote business and it just didn’t work for them. And they need an office space and they need to interact with people, and they need to have the people they work with there with them as much as possible. One is not necessarily better than the other. It depends on you and what you need and how you’re wired, but that’s a different conversation.
JP Moses: Let’s pick up where we left off. What I want to do now is have you help clarify the; I guess the differences in a tangible way of a real estate hobby and a real estate business. Or make money in real estate versus real estate business. What does one look like versus the other? Maybe what we could do, this is just coming to me in real time, I could maybe tell you here’s a real estate hobby in my opinion, and then you can respond with here’s what a business looks like or those same aspects on a business side.
David: Totally, yeah totally, that’s a good idea.
JP Moses: First of all, going back to the story you told in the first segment, a real estate hobbyist, or someone who just makes money in real estate; and this is going back to your words. They find a lead, they focus in on that lead, they exploit the opportunity that’s there, they make some money, and then they go look for the next lead. That was great, I’m going to go look for another deal. That’s the cycle; you go from deal to deal. Maybe you do more than one at a time, but you have this mentality that you are always on the hunt for your next deal.
In my view that’s the mindset of someone who is in the make money in real estate side of things. What’s the real estate investing business version of that?
David: The business version is more of you have a consistent; a consistent stream of leads and deals coming to you versus you chasing it whenever you have the need to go make some dollars or pay a bill. What that is you have consistent methods out there that are your marketing. Whether you’re doing them or you have a team member doing them or whatever that is, you have marketing methods out there in place that have the phone ringing and have leads coming into your inbox. Either you’re dealing with those or a member of your team is dealing with those. It depends on the level of your business.
Ideally you want to get to the point so as a business owner you want to get to the point where you’re not running your business, you’re overseeing your business and making sure that it’s running correctly and you’re having somebody else run that business. That’s what’s going to bring you the freedom of owning a business. As a real estate business you’re overseeing; I’m talking about high level, great, this is awesome kind of thing.
What it would look like is you’re overseeing these processes. The processes are you have this business manager that is making sure that the marketing is going out regularly, whether that’s direct mail and internet marketing and ads if you’re using those. Whatever method you’re using, those are currently in place. The ones that are working are being expanded and the ones that aren’t working are being tweaked or pulled.
You have the marketing out there which makes the phone ring and the inbox get leads in it regularly. Weekly you might end up with conservatively, five to ten leads from your marketing efforts, but you can sift through those and pick the three or four good ones that you want to go after, talk to those people and you’re literally picking up a deal a week, maybe three or four deals per month. In doing that it depends on your business structure. You might be flipping every single one of them and that’s fine. As long as you keep that machine going you keep the revenue coming in.
You might be flipping some, and it depends on what you want to do, what model you want to do. You might be flipping some and holding some, so you can have the consistency of the tax write offs of holding and the revenue from the rentals and things like that. You might be rehabbing them and selling them for retail and making the fifty, sixty thousand dollar profits on every single one. You might have a margin that I’m only going to tackle this house if I can make forty thousand dollars.
But that business is consistent and you have the teams in place, you have the methods in place, and it’s all working on there is no more; oh gosh I need to go figure out how to get a deal. They’re coming consistently. That’s basically all; you get to the point where that’s all you know. And you’re asking yourself how many deals did we get this week? Instead of what can we do to get some marketing out there to get the phone to ring?
JP Moses: Excellent. Here’s another aspect of the real estate hobbyist; the person who makes money in real estate. I think that typically they are prone to trying lots of different things. Everybody kind of starts in this place right; it’s acknowledged. Everybody, before you ever have a legitimate business you are a real estate let’s try everything, let’s figure this out.
David: That’s okay, because you’re going to do it.
JP Moses: That’s simple; you’ve got to do some trial and error. You can’t just you fail forward and that’s part of building a business or building anything. I think if you stay in that place and you are like a metal ball bearing and you move to whatever smells like the best opportunity at the moment, you move towards whatever magnet pulls you at the moment the most versus having some kind of an actual plan. That’s what I think is a characteristic of a real estate hobbyist. What’s the business version of that?
David: That’s great, that’s a great point. I think the business version of that is you know where you settled. You know what you what your space is, like I said a minute ago whether it’s you’re wholesaling and flipping everything or a combination or all you do is rehabs. You have six teams out there working on fifteen different houses. It depends on the level that you’re at, but you know what it is. You consistently improve that space that you’re in.
Let’s just say for instance it’s rehabbing. You’re consistently; you have this rehab business, you only buy houses that you’re going to fix up and beautify. You’re going to put your businesses touches on this house. You have the systems in place to do that. You know what kind of materials you use. You have your teams that do the work. You have your project managers that manage the work, but it’s all in place and the systems are in place.
When you get the deal, you evaluate the deal using specific criteria that you do for every single deal. If it doesn’t fit that you don’t get it. If it does fit that you get the deal and then you go through the processes that you typically do for every single deal.
JP Moses: To add to that, so if your business is defined as I buy and rehab houses in these three neighborhoods with these minimum profit margins and only these types of houses for example, these three types of structures we’ll say. Further extrapolate that, but if that’s your business, if you said this is my business and then suddenly you get an opportunity to wholesale lease options let’s say. Then you’re going to take that opportunity and you’re going to filter it up against your business plan.
You’re going to say will this add to or take away from my business plan? Because not everything that’s good is great. When you have a business plan there are lots of good opportunities that can water down the greatness of the plan that you’ve created. I think a business person uses their plan as a litmus test of sorts, to filter any and every other opportunity. It doesn’t mean that you never veer from that plan.
If you decide that I think a better thing would be for me to shift my business in a different direction. Or I’m at a growth point now where I’m ready to add another revenue stream, maybe bring in a specialist to help with that. Or my team pretty much handles the rehab business with nominal input from me at this point, more than a couple hours of week so now I’m going to try something else and add that to the mix. That’s a strategic decision you make, but it all comes back to your core business plan that you put together versus that shiny ball bearing pulling towards whatever magnet happens to be there.
David: That’s an excellent point and it’s an excellent way to contrast it too, because you’re spot on. I’ll roll over to the hobbyist side. The hobbyist would maybe be working on a rehab, figuring how to work his way through a rehab and how to inexpensively get this door to fit in this doorjamb. Let me hammer this piece of wood in there just right; ask me how I know that.
Versus that same hobbyist is trying to figure this out and all of the sudden the phone rings and there’s this lease option deal. Yeah, yeah, let’s meet at the house and boom you’re going to jump all over the lease option deal even though it might not fit, be your best interest, because that’s what you do. You don’t have that consistent stream of deals coming in.
JP Moses: One of the things that this reminds me of is the E-Myth. We’re dancing around a lot of the topics that are in the book The E-Myth by Michael Gerber. Just as a quick aside I think it’s worth recommending everybody who is engaged in this conversation if you haven’t done so, go buy The E-Myth Revisited from Amazon and devour it; process through it from the perspective of where you are right now. The book talks about, a lot about a lot of these concepts.
Have you gone through The E-Myth David? Do you feel like, what do you feel like its relevance is to these types of conversations.
David: I think it’s a great book. I read so many, but I do remember The E-Myth. It’s been a few years since I’ve read it. I think you actually recommended that to me, gosh maybe three years ago. I think it’s a great book. I don’t remember the topics of it but I know it did have an impact. What I do is I’ll go through a book and then I’ll implement the components of it that make sense for me. Then I kind of forget about the book. I think it’s a great book.
JP Moses: I think the reason that it pops into my head, some of the things you’ve already talked about are a lot of the concepts discussed in the book. One of the; I guess the next point that I want to make in this contrast that we’re doing is this idea of working in your business versus working on your business. That’s an important distinction that is covered a lot in The E-Myth.
If we look at the hobbyist, the real estate hobbyist side of things; and this is by the way I was the real estate hobbyist for the first eight years of my real estate career, so I’ve really, truly I feel this. I know where this comes from. It’s been a long growth process for me to learn how to build a business and not just make money in real estate.
You do it all. You have this mentality that if it’s going to get done right, I probably have to do it myself. You wear all the hats; you’re a jack of all trades. That’s for lack of knowing anything better, that’s how you think a real estate business is supposed to run. You’re so busy working so long and so hard in your business that you don’t have time to pull up above and do some higher level thinking and operating from the seat of the business owner and the entrepreneur.
Looking at the big picture and doing things like creating a plan for your business and deciding of all the opportunities that are out there, which one fits my personality the best. Which one is the best for the market that I’m in right now? What is my market asking of me? And how can I find the sweet spot between what my market is asking of me and what I like to do and what resonates with me the most that keeps me from doing the things that I learned and I have avoidance behavior, like landlording for me, that’s talking about myself.
That’s’ higher level thinking. I think on the other side, the business owner has a commitment to a routine of higher level thinking and operating. Even if you’re still caught in the day-to-day of your business and maybe you can’t afford a team for whatever reason and you don’t have the ability to operate consistently from that level. You at least have an hour a week that you carve out that’s completely dedicated to you sitting at Starbucks thinking from a higher level and planning and making strategic decisions. Not just reactive decisions to whatever’s in your business at that moment. What are your thoughts on that?
David: I totally agree with that. I think as you grow into; because I was a hobbyist as well, not knowing the difference and not realizing that I really wanted to be the business owner. I did that for gosh 2002 to probably 2005, 2006; three or four years; same thing. I think what happens as you grow and become more of business owner and accept that role; accept that that’s who are becoming if that’s what you want to be. The more you learn to catch yourself when you’re starting to fall back into a gosh they can’t, they’re having trouble getting this done at this one house. Let me go over there and see if I can help.
You learn to check yourself and say, you know what; I have better things to do. Now if it’s certainly something that requires you, yes. But you learn to separate yourself from the work. If you’re embedded in your work, if you’re embedded in your business and you’re doing the business. We’ve all heard this before, you basically, you own your job. It’s like a Subway owner, the sandwich shop. They own a Subway; they buy a Subway with the thought that I’m going to buy this franchise and I’m going to be a business owner and I’m going to own my business.
Next thing you know you have the Subway owner trying to save money. Trying to save whatever minimum wage is nowadays where they are; trying to save that by working in their business. A month goes by and they’re just going to do it until it gets more business in their business, more customers. A month goes by and then three and then six and then they’ve basically been working in their own business. They’ve been working a ten dollar an hour job as a business owner and not realizing that they’ve done it.
We do the same thing. We’re in there with the potential to make six figures or seven figures a year in our business and we’re doing a fifteen dollar an hour labor job, because we need to fix a doorjamb. That’s something that you learn, or need to learn to start pushing away. Say okay, can I get this done for a reasonable cost that is going to bring more value to me by hiring somebody for fifteen bucks an hour or whatever you’re going to pay for that specific job and taking that time myself to go think about making my business better. Or implement some things to make my business better.
I think as you grow you learn to implement that more and more. The better you get at it, the better your business becomes.
JP Moses: What made the huge difference for me in beginning that shift was the busting up of my own limiting belief that it was possible. I, early on in my career for those first few years I just didn’t know anybody else who was able to run a legitimate business, a real estate business, not just to make money in a real estate hobby, and able to do that without some big operation in the big office. Kind of like, I don’t know, I don’t want to make necessarily a direct comparison, but I definitely didn’t have a desire to have this big operation. I want to keep myself small and lean and free in that.
But at the same time, I thought that’s not congruent with building a business. I thought there’s only one way and that’s me out there slinging offers and doing deals. Not until I came across some people who had a legitimate and very, very successful business that ran on systems, that had a specific plan, that everything else, every other opportunity got compared against. That had a culture and a routine of higher level thinking and operating. Not until I was able to encounter people doing that and still having the kind of life that I wanted to have, did I even think it was possible.
I’m so grateful. I’m talking about the guys that taught me, and you. All as I’ve encountered more people like this I began to go wow, this is actually can happen. I don’t have to have some big office and big company in order for me to have a legitimate business that’s very, very profitable. I just have to bust out that limiting belief and shift the way I’m thinking and then frankly following the footsteps of guys like you who were successful at it and cracked the code before I did.
David: I remember the same thing. I remember going to events and stuff like that and sitting in the audience and looking at the guy on stage as he would talk about his business. And just thinking gosh, knowing I want to be like that. I want to have that kind of business. Not knowing, assuming that everybody in the audience was thinking that same way that I was. Not knowing that there was a percentage of that audience that probably had two or three times the business that that guy on stage had. I didn’t realize that. I didn’t realize that could be me. I could be just like that; I just wanted to be like that.
I didn’t realize until I looked back and it’s just putting the processes together and keep putting one foot in front of the other trying to grow your hobby or your business into that business that you want. You just keep moving forward and you look back one day and you realize, wow I do have that business I wanted. This is cool. It’s just a process of getting there.
JP Moses: All right, well let’s press pause again on the conversation. This wraps up part two. We need to have a part three for sure to follow this. First we talked about the real estate hobby versus business and which are you? Getting honest with where are you right now on that spectrum and then where do you want to be? We in this conversation discussed the differences. Tried to crystallize so that you can even better answer that question for yourself and know where you are and understand the possibilities of what could exist if you’re interested in building a legitimate business.
Or maybe you have a business, but there are some real rough areas in some of the things that we discussed that you need to be working on. Hopefully we’ve opened your mind there to the possibilities. In our next conversation David, I want to go tactical for those who want to transition. They know they want to build a business and not just have the hobby. In terms of what does that look like; how do you make that shift? That’s where I want to go next. Does that sound good?
David: Yeah absolutely.
PJ Moses: All right guys. Check out David at the MarketingCommando.com and say hi to him over there. Any comments, questions, anything that this stirs up, please leave us comments and questions below here in the Mobile Lesson. I love interacting with you guys down there. We have a different section for comments and for questions. Thanks a bunch. We’ll catch you on the next one.
David: Thanks a lot.