Building a Real Estate Investing Business

Mike: This is the flipnerd.com Expert Real Estate Investing Show, the show for real estate investors, whether you’re a veteran or brand new. I’m your host, Mike Hambright, and each week I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility and taking control of your life and financial destiny, you’re in the right place.

This is episode number 314 and my guest is Sensei Gilliland. Sensei is not only a martial arts expert, he’s a real estate investing expert that’s been involved in thousands of transactions and teaches others how to build real estate investing businesses. The significance of the fact that he is a highly accomplished Black Belt is that he’s learned a lot of discipline in the martial arts space and has brought that into his real estate investing career over the past 20+ years.

Many investors fail because they never build a fundamental business that allows them to scale, allows them to operate a business that makes money month after month and year after year. Does that sound familiar? Have you fallen into this trap? Hopefully not. In today’s show, it’s packed with great information on how to build a real estate investing business that lasts.

We talk about the importance of defining your focus. We talk about getting the right amount of education, coaching and things like that, things that are actually very important, not to put them down but at some point, you have to take massive action as well. That’s an important part of the mix. How to establish your systems and processes, building your brand and how to do consistent marketing so that you have leads coming in so that you’re actually doing deals. You do not want to miss today’s show. Please help me welcome Sensei Gilliland. Sensei, welcome to the show, my friend.

Sensei: Hey, Mike. Good to see you. Pleasure.

Mike: Got to see you. So my first question before we get started here is what level Black Belt are you now? Have you advanced since you were on the show 230 episodes ago?

Sensei: Are we talking about in the ring or are we talking about in real estate?

Mike: Yeah. I guess real estate.

Sensei: No. Actually, in martial arts, I do hold a first degree in Kyokushin, which I earned in Japan. I hold a sixth degree in Shodokan, Gojo-ryu, Shito-ryu and Wado-ryu and then I also got a Black Belt in judo as well.

Mike: That’s awesome.

Sensei: Not to mention I’ve always done boxing and kickboxing my whole life, but they don’t hold belts.

Mike: Yeah. I’m excited to have you on. You have been on the show before. We were just talking about it right before we started recording. This is show number 314. The last time you were on was show number 79. I’m doing some math in my head. That’s a lot of episodes ago, over 200 episodes ago. And over two years ago, actually.

Sensei: What took so long to have me back?

Mike: I don’t know. I’ve missed you and I’m glad we’re together now. But yeah, I’ve always been impressed by . . . I told you I have a son that’s in taekwondo and probably the best . . . he’s nine years old and he’s kind of an entry level Black Belt, but the reason why my wife and I like him to attend there, and he acts very differently there than he does at home, unfortunately, we’re like, “How do we get that home?”

But there’s a lot of discipline, a lot about respect, a lot about courtesy that’s kind of taught there. He would never talk back to the person who teaches him there. He probably talks back a little bit at home. I think there’s a lot of discipline that can be learned there. And obviously, a big part of real estate investing is discipline to just do the same thing over and over again mostly, right?

Sensei: That’s our tagline, Black Belt Investors, “disciplined investing.”

Mike: Yeah. That’s awesome. Today, I know we’re going to talk about building the business and get into some detail about the right way to build a business for the long-term because you’ve been doing this over 20 years and have a lot to share with listeners today. Before we get started, why don’t you just take a couple minutes and for those that don’t know you, maybe share your background?

Sensei: Absolutely. I started just like most other people. You watch an infomercial, you go down to a hotel and you listen to the sales pitch and it makes you get all pumped up and the next thing you know, you’re signing up for this . . . back then they didn’t call them boot camps. They called them a seminar. So you’re signing up for multiple seminars. I did that back in late 1994, early 1995.

So my intention was really to buy, fix and flip real estate, understand the concept of buy something low, improve the property, build the sweat equity and then sell it and make a profit. It made sense to me because I was already in business and I was buying my materials low and selling them high. With that, I took that course and I spent $32,000 back in 1995 and with that, that’s a lot of money.

In fact, let me tell you something, Mike, this is crazy. In 1995, I was dating my wife. We got engaged. We got pregnant. We moved in with each other. We got married. We bought our first home. I rehabbed that home. I got a cash out refi. I bought my very first fix and flip in Fort Meyers, Florida while living here in California.

Mike: Wow.

Sensei: That’s a lot in one year.

Mike: Yeah. Absolutely.

Sensei: But it’s kind of how I roll.

Mike: And when you do that stuff early on, if you kind of immerse yourself in something, you learn so much faster, right?

Sensei: You do. And you know what? Technology obviously has changed a lot over the last 20 years, right? Back then, I was hoping and praying because I didn’t have any more money to go back and visit the property and see how the construction crews were working. I was hoping and praying is what I was doing. Every once in a while, they would send me a Polaroid showing me some progress.

Mike: Polaroid, that’s funny. And they would probably physically mail it to you?

Sensei: They would. They would physically mail it. We had Internet back in 1995, we had email, but we didn’t have digital cameras. So they would physically mail it to me. Here’s a cool thing. My wife was stressed out. Completely understand, we’ve got a lot going on. All the money that we had in our savings account is now into this property.

So there’s a lot of stress that went on. However, putting faith in front of fear was a huge play point for me. Nine months later, I ended up receiving a FedEx envelope, ripped it open and found a check in there with a little over $9,000 in profits and I was basically scarred for life.

Mike: Yeah, hooked.

Sensei: Hooked. Well, I always say it’s like me and Pringles. Once I pop, I can’t stop so I bought more properties.

Mike: Well, the interesting thing about real estate investing is there are a lot of people that are new that want to get started. They don’t get started because they’re anticipating all the problems or troubles or whatever and you get to a point to where after you’ve done a certain number of deals, you have just complete confidence, like, “Hey, there are going to be problems, but I’ll figure it out.”

Even myself after doing hundreds and hundreds of houses, I have new problems all the time and I coach a bunch of people. So they come to me and say, “Has this ever happened to you?” like scared of something, and I’m like, “That’s never happened to me, but here’s exactly what I would do if it did.” So it’s not so much having the experience to fix something that’s happened before, that’s part of it, but part of it is just, “Hey, that’s a new problem to me, but here’s exactly how to handle it.”

Sensei: Right. Here’s the thing, Mike. As an entrepreneur, as a business owner, we can always expect that we’re going to lose money. I don’t care if you own a liquor store, someone is going to steal a beer. If you own a merchandise shop, someone’s going to knock a glass off the shop and break it. You’re going to lose money. It’s just part of it.

But when it comes to real estate, the beautiful thing about real estate and the beautiful thing about martial arts is I can never learn it all in a lifetime. I like the challenges. I don’t look at it as a problem. I look at as, “Wow, here’s a new challenge for me. Okay. This is different.” I can build onto my arsenal of education.

Mike: Yeah. A lot of it’s attitude, right? Knowing how to deal with stuff, knowing that there are going to be problems or issues and challenges and, “I’ll just deal with them along the way.”

Sensei: If I can’t fix the problem, then I’m just going to choke them out.

Mike: Yeah. That’s funny. So let’s get this show started today. We’re going to talk about building the business and I’m going to spell out what we’re going to talk about here. In the first part of the show, we’re going to talk about the importance of education and having the right level of education, but obviously, you’ve got to take action at some point.

We’re going to talk about having mentoring and coaching there for support and really defining your product. I think a lot of real estate investors get overwhelmed with the ways there are to make money. There are a lot of ways to make money. I think for most people, you’ve got to have some focus there so you don’t get spread so thin that you’re just flailing.

Then in the second part of the show, the taking action segment, I want to tell everybody you’re going to share some tips on business operations and systems and kind of setting that up and branding, how to brand yourself so that people know who you are, they get customers who come back around because you’re memorable.

And then talking about marketing, we were talking a little bit up front about how I wanted to put all this in the taking action segment because if you’re a real estate investor, a successful real estate investor and you have a business, you’re really a marketer. It’s marketing and operations and real estate just happens to be the widget that we have chosen. The doing deals stuff is just a subset of actually kind of having a business operation, right?

So let’s kind of jump into part one here, talking about education and then mentoring and coaching and why those things are important.

Sensei: Okay. Here’s the thing. I get a lot of people that come to me and they want to learn real estate investing. Their eyes kind of gloss over a little bit because they’re not sure if they should get into rehabbing or wholesaling or some kind of purchase options. Maybe it’s short sales, maybe it’s getting into mobile home parts. There’s so much out there, it becomes a distraction.

So with that, I think it’s very easy to figure out. So I ask them, “What is it that you need?” Not what you want. We all what want riches. We all want financial security. But what is it that you need? Do you need a paycheck or do you need a portfolio? If you need a portfolio, that tells me that you have cash machines up and running. You’ve got business and you need to shuffle that money over to build your wealth side.

But if you’re that person that really needs to have a consistent paycheck coming in, then we need to move over to the buy and sell side of real estate. Now you’ve got to dissect that. Do you have some money to work with? That means can we go out and buy properties, fix them up and sell them? Are you lacking funds? Maybe you have the money, but you don’t want to use your money and we can maybe default over to wholesaling where you can flip properties without the use of cash or credit.

So we really need to kind of tier it down and have a little bit of tunnel vision with regards to the niche that you can find some passion for because if you don’t have the passion, you’re not going to follow through and then the niche that can ultimately get you that payday or that financial security.

Mike: Yeah. I think a lot of people will probably . . . you’ve probably seen this too because I know you coach and mentor a lot of folks, they get so hung up early on without ever getting started on the tactics of what they’ll do instead of setting a strategy as to what is it that you want to accomplish.

I think it’s easier for us . . . I hear new people that are like, “I want to buy 100 houses a year. I want to do what you’ve done, what this person’s done.” It’s like, maybe you don’t. You don’t even necessarily know what they’ve done. On a high level, you see they do a lot of volume, but maybe you don’t have to do a lot of volume to achieve your goals or maybe there’s another way to do it, right?

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Maybe you don’t have to do a lot of volume to achieve your goals or maybe there’s another way to do it, right?

Sensei: No. I completely agree with you. I think a lot of people just look into the vanity of real estate investing because that’s what’s portrayed on infomercials and books and things like that. Hey, it’s work. Real estate investing is work.

Mike: Yeah. No doubt about it.

Sensei: It can be profitable, but it is work. So here’s the thing that I come across that’s a little bit frustrating not so much for me but it becomes frustrating for aspiring entrepreneurs in real estate investing and they just give up. It goes back to what I was just talking about earlier. Let’s say for instance martial arts. People come to me and say, “Sensei, I want to learn karate. I want to learn jiu-jitsu. I want to learn MMA. I want to learn boxing.” That sounds fantastic.

But you know what ends up happening if you learn a little bit of everything? You become a jack-of-all-trades and a master of none. That’s where I find a lot of real estate investors. They go out and buy these big packages and they’re taking that short sale class and foreclosure class, that REO class, that rehab class. Okay. So they get a little bit of knowledge about everything, but just not enough of where that rubber meets the road so they can take off. It’s kind of like who’s been to Vegas before? You’ve been to Vegas, Mike? I know you have.

So me, I’m not a gambler, right? But I love the buffets. So I’ll go hit the buffet. Do they give you a little tiny plate or a huge plate? They give you a huge plate, right? Your eyes are looking at all these different things, saying, “Holy smokes, everything looks so good.” It’s kind of like a buffet of real estate. You take a little of that, a little bit of this.

Next thing you know, you’re getting a bicep workout because your plate is so heavy with food you drop it on the table. You’re like, “Holy smokes, that’s a lot of food, but I can’t wait to dig in.” You sample a little bit of everything. While you’re sampling, those foods start to mesh together. They’re not as appealing anymore. What do you do with it? You take that plate of food or you take that plate of real estate courses and you throw it all away. Then you go back to where, “What is it that I need to be able to get it going?”

Mike: Yeah. That’s a great analogy. So let’s talk about having a coach and a mentor. I coach and mentor some folks. I know you do too. Some folks, you either kind of get gurued, you get sold something that doesn’t help you or you’re kind of anti-coaching and mentoring.

But we say this all the time on the show that the best athletes in the world have multiple coaches. I have mentors I look up to and people I seek out for advice and I’m sure you do too, even though a lot of people come to you for that, you have people you seek out advice from. So kind of set the record straight on what’s the right level of coaching and mentoring for folks?

Sensei: There is a difference between coaching and mentoring. The mentor is the one that’s going to take you under the wing and teach you the ropes. The coach is going to sit in the corner of the ring, massage your shoulders, tell you what you’re doing good and what you’re doing wrong and get you back out in the fight again.

With that, you’re absolutely right. You should have multiple coaches. You’ve got to start with one. But I always say if someone is going to learn about, let’s say, wholesaling, for example, make sure you’ve got a coach that is very versatile and experienced in wholesaling. I would also say especially in your own state.

I can tell you right now, California is one of the most difficult states to do real estate in. I don’t care if you’re buying rental properties or if you’re rehabbing or you’re wholesaling, it’s one of the difficult states. And then if we’ve got someone coming outside the state into California, there are California laws that go along with wholesaling that most don’t even know about. So you really need someone in your own backyard, I would say, so that way there may be a time when you can connect physically and not just over the phone.

The other thing is that when it comes to coaching, I believe that if you’re going to be a real estate coach, you need a real estate coach that’s going to specialize in the niche that you’re trying to accomplish. You need a business coach to learn business operations and that doesn’t necessarily have to be a real estate coach. One of my best friends and long-time . . . I don’t even want to say coach mentor. He is, but he’s not because we’re friends, but the guy makes $50,000 net per day.

So I learned business operations through him and in exchange, I handle all of his real estate for him. Then you’ve got a speaking coach because a lot of people think, “I don’t need a speaking coach.” I think you do. If you’re going to go out there and pitch your product and if you’re going to make sales or you’re there to help someone, you should know the words that are coming out of your mouth. So with that, it’s important you do connect on a regular basis. That may be weekly. That may be bi-weekly. It may be once a month, depending on where that person is in their business. But all in all, you never ever get rid of your coaches unless they’re not doing the job and then you fire and you hire another one.

Think about it. LeBron James, Tiger Woods, those guys all have multiple coaches. They’re the best. And if they’re best, a lot of people look at real estate and say, “You’re the best, why do you need a coach?” No. Because there’s an old saying in the Bible, of course, it’s old, it’s in the Bible, it says, “Iron sharpens iron.” Iron sharpens iron. It’s important that we surround ourselves with people that have a knowledge that’s much more grand than our knowledge. We don’t want to be that big fish in a small pond.

Mike: Yeah. In my experience too, even some of the best real estate investors, people that do really well with real estate investing, depending on what state you’re in and what your exit strategies are, they might be doing a deal or two a month. It’s not that you have to do 20 deals a month to be successful, right?

So it depends on what your goals are and it depends on a lot of things. But what happens is it’s not like you’re buying houses every single day. What happens is you kind of go through these ups and downs, peaks and valleys and in my experience, it’s easy for a lot of investors to pick up bad habits.

As the market shifts, you’re trying to do stuff the way you used to do it and you’re in denial or you say, “Well, it’s real competitive now so I just need to pay more for houses.” And then you’re doing stuff so thin that you have no margin for error and then when the market shifts back, you keep doing that. We just pick up bad habits that every once in a while you need to talk to somebody to say, “You need to stop doing that.

Sensei: You bring up a good point. Real estate investing has always been one of those highlighted careers that people can pull themselves from rock bottom to riches, right? With that, you’ve got a lot of real estate coaches and mentors out there that are fairly new. They sound great, but they’re fairly new. They really haven’t done the job. They’ve maybe done one or two deals and now they’re coaching and mentoring.

I’m going to tell you that anybody who’s looking to get a coach or mentor really needs to do their research, not just get all excited and swipe a credit card and get a coach. They really need to do their research to make sure and vet that coach so that they are able to provide the services that you can provide.

So for instance, myself, I’m just going to use myself as an example. I’ve gone through three recessions now in my real estate business. I got started in the early ’90s, 2000s and then our greatest recession. I made more money during our greatest recession than I did during the roaring ’20s. I thought I was doing extremely back in 2005. I’m like, “Wow, look at me, kind of a rock star.” And then everything falls apart. And 2008, it goes a little quiet.

But having the versatility in real estate, meaning that I’m a wholesaler at heart, that is my foundation is wholesaling, audience, please understand, wholesaling is not just about assigning contracts or double closings, it’s really about making your money on the purchase, not on the sale, getting properties at a deeply discounted profit margin.

So with that, you can be a wholesaler that’s assigning contracts, doing double-closings. You can be buying, fixing and flipping and you can be buying and holding as a wholesaler. But then, there’s another component that goes with wholesaling and it’s the complete opposite of wholesaling and that’s purchase options. I’m talking about lease options, contract per deeds, land installment contracts, subject to transactions.

There are quite a few different strategies within purchase options. They’ve actually become the yin and yang of real estate. They balance each other out. The wholesaling side is all about equity positions and the purchase options side means that we can now flip or buy and hold properties that lack equity, that maybe break even in equity and even upside down in equity and with that, as the market cycles shift and change, whether it’s the economy or real estate, knowing these two strategies will allow you to roll through the punches and all you to become profitable at any given time.

Mike: Yeah. If you have somebody that’s been through some of those cycles, you can kind of plan for . . . I was the same way, 2008, 2009, 2010, we were crushing it, right? But what you learn now is, “Hey, I’m not just waiting for that cycle.” You start to say, “I’m going to plan for that cycle,” because when that comes back around, it’s going to be heyday again.

Sensei: It’s the wholesalers at heart that are like, “Yes, a recession is coming.” We don’t want anybody to get hurt. We don’t want them to lose their home and stuff. But that is a time where your true investors go out and harvest the crops with real estate.

Mike: Yeah. I forgot to tell you this, we’re going to talk about defining your product in a second, but I forgot to tell you we’re going to do this part. I have a question we asked on social media. We asked people, “I’m interviewing Sensei today. What questions do you have?” I think you know who Brad Webber is because he kind of referenced you. I’m paraphrasing a little bit what he said, but this is his question. He basically said, “Do you feel like you could get dropped into any market and be successful there and if so, what’s the secret sauce?” So what do you think about that?

Sensei: Yeah. Absolutely. Hands down. In fact, when I teach real estate investors, I have a program that I’ve had for the last 16 years called The Master’s Program. That’s exactly what we do. We can drop into Any Town, USA and make it happen. So we kind of take a step back. Who is our most elite team out there? It’s the Navy SEALs, right?

So before they get into a certain field or location, you do a little bit of pre-planning, we set it up. We get into any market and I don’t care if it’s from low income to moderate income to working class to upper income, we can know exactly what to do because our strategy doesn’t change. The only thing that tends to change a little bit is the numbers. But if you know your target market, whether it’s for products, you know your target market in regards to your clientele of sellers and buyers and you can stick to your disciplines, hands down, you can take over a market.

Mike: Yeah. So talk a little bit about defining your product. We talked about this beforehand. I know people, I’m sure you do too, that say they’ll do anything, “I’ll buy a carwash. I’ll buy houses. I’ll buy whatever. I’ll buy land,” and they find some way to do it. They kind of are proud of that badge of like, “Well, I just buy anything.” And then there are some people that are like, “I only do single-family.”

Truthfully, I know a bunch of people that do commercial and I’ve bought hundreds of houses. I know I could figure commercial out if I wanted to over time, but I don’t know anything about commercial for the most part because I do single-family houses. A lot of people that tend to do the best tend to have some sort of specialty, but talk about what your thoughts are on defining that and the importance in terms of building your business, the importance of defining what products do you sell?

Sensei: Yeah. I think that’s really important to understand your products. Costco wouldn’t be in the top ten businesses out there if they didn’t understand their products, not only understand their products but at the price point they get it and they only mark it up 15% and they stay in that discipline. That’s how they’re able to dominate all the other wholesale and retail ones that are out there, right?

We’ve got to take the same approach in the real estate business. For me, I’m like you, Mike. I’m not the guy out there pushing commercial. We sell commercial. I have a really good understanding about commercial, but my product is one to four units, which I call my property platform, one to four units. Now, why did I choose one to four units would be the question.

Well, there are pros and cons that go with every product that’s out there and you should know at least your top 10 FAQs for all your products so that you can answer them properly when you’re making a sale or a purchase. But going from one to four units, I’m into paydays. I like knowing that I see COE on my email, which is close of escrow, or PayPal jumps up on my phone saying I’ve been paid because, as a wholesaler, I take a lot of payment by PayPal.

With that, one to four units, the reason why I’ve chosen that property platform is because, number one, they’re the most affordable. A house is more affordable than any other piece of property with the exception of possibly land. But affordability is not the only key factor. It’s affordable in regards to an investor or a homebuyer coming in and being able to get the financing. So financing is extremely flexible. You can still buy properties with financing with zero money down or you can go FHA at 3.5% down. So flexibility and financing are there.

You’ve got the desirability factor, the desirability of price point, the desirability of rental price point. You’ve got the desirability of people wanting to live in a home as a family or you’ve got the renter that wants to have that family in a home versus an apartment complex. So it’s really the lower-hanging fruit. That means that if it’s a lower hanging fruit and I’ve got the affordability factors and the desirability factors in there, that means I can push and sell more of that product than I can of a commercial building.

Think about it, Mike. If you were to buy a $100,000 and a lender comes along and says, “As an investor, you need to put down 20%. That’s $20,000, right?” Okay. That’s a little bit easier on the palate than going over to the commercial building that’s over $1 million and saying, “You’re going to be required to put down 30%,” and that’s $300,000.

So there’s the affordability factor. And with that property being so low as a house, for an example, it’s also the exit strategy. I’m able to liquidate houses much faster than I can liquidate that million-dollar apartment complex. It goes back to the affordability factor again.

Mike: Yeah. I think the importance in terms of building your business is just to know what you will or won’t do. So there are things in my business. Don’t get me wrong. I get shiny object syndrome often. But there are some things when I hear commercial, I’m interested because I hear some friends that do a lot of commercial investing or buy apartments and I’m like there are some bigger paydays there and there’s a lot of opportunity.

But usually when somebody is like, “Hey, are you interested in an apartment?” It would take me so long to even know how to evaluate this deal that I’m either just going to like say, “Here’s who to send this to because he’s interested, but you’ve just got to turn it off. It’s really important to have some focus, especially as you’re getting started. You can’t be willing to do any sort of investment because like you said, you’re going to be a master of nothing if you spread yourself too thin.

Sensei: Simplicity is key in my business. I own multiple businesses and I try to follow the same strategy of simplicity, knowing your product because eventually, you’re going to want to hire employees and such and it’s easier for them to learn and everybody knows, “Hey, I’m going to go Mike because he does one to four units. He’s after houses.”

Mike: Yeah. Awesome. Well, let’s jump into the second part of the show here, the taking action segment. Let’s kick it off with talking about the importance of business operations and systems. It’s not the sexy part of real estate investing, but it’s obviously a critical part if you want to actually have a business and not just be jumping from deal to deal, right?

Sensei: That’s absolutely right. In fact, I tell a lot of my students that are eager to go out there and start flipping. They always say, “If I can get my first deal, I can’t wait to get my first deal.” If you’re chasing deals, you’ll be out of business. But if you build the business, the deals will come.

Mike: Yeah. As a real estate investor, I don’t think anybody that’s listening to this is going to deny that they want to get into this so that they can build something that sustains itself and you can do deals over time.

But to do that, it’s kind of counterintuitive to the way most people think because they think they start looking at deals before the form a legal entity or before they think about having a CRM or any systems or automation. And you don’t want to be so focused on that that you’re not thinking about doing deals either. But unless you have those systems and operations and even marketing systems, obviously most important, then you’re just kind of going month to month without really having a business, right?

Sensei: So for instance, when I set people up to start building a business, I’ll give them an action plan. This action plan will have a series of events and tasks and items that must be completed within a certain time period. With that, at the end of the action plan is when I actually tell them to go out there and start looking for deals. It’s not in the beginning. Most people want to take some sort of a boot camp and on Monday, they’re out there looking for deals.

Okay. Do you even know what you’re looking for? Do you have a marketing that you can find deals? And what if you did find a deal? Can you sell it to someone? You don’t even have a database yet. You must take the time to build a business. If you build a business, the deals will come, but not only that, you’ll become long lasting. We don’t want to chase deals and say, “Oh my gosh, I just did a deal and now I can’t wait to get my next one, but I’m not sure when my next one is going to happen. We want to fill the funnel is what we want to do in business.

Mike: Yeah. And also, a lot of folks that don’t do this, if you never have systems in place, then you can never stop being the guy or the gal that does everything. It’s all in your head. You can’t plug somebody in to say, “This is how we do it.

It’s like, “Let me just do that myself because I don’t have a system there Rather than tell you how to do it, I’ll just do it myself.” The problem is most people don’t want to get into real estate investing to create another job for themselves, but that’s what most do because they have no basis for their actual business.

Sensei: Yeah. You’re right. Let me highlight a little bit of importance on systems. Systems are necessary. I’m a business coach. I don’t just coach with people that are into real estate. I coach with doctors, contractors. It’s funny because they’ll be in business for quite some time and I’ll ask about certain systems within their business and they kind of cock their head to the left like a dog would do and say, “Systems, what are you talking about?” They do have systems in place, they just don’t recognize the system. How can you optimize the business if you don’t recognize your own systems, right? We’ve got to constantly tweak and fine tune.

Just before we jumped on the air here, you were tweaking and fine tuning FlipNerd and how you’re able to grow because you’re able to place these systems to where you’re not just doing everything yourself. You’ve got some things that are automated and some things that are manual.

Think about it, Mike. If I were to give you a McDonalds, just the business, not the real estate, I put it on a busy street corner, you think you pull in about $1 million a year? Heck yeah, you do a lot more than $1 million a year. But then how are you going to pull in $1 million by hiring minimum wage employees?

It’s all systems. Everything has got a system to it. Everything is in its place. So just like a fine watch, you have every cog and sprocket in place to make it work. That way, it will be durable. It will last. It will pull in the business and keep that funnel filled so you are getting paid every Friday.

Mike: Yeah. And in systems, just to not scare people away too much, systems doesn’t necessarily mean technology systems, right? You need some of that, but it’s just processes. “I do this and I do this.” We have checklists that whenever we buy a house. We start a new checklist in an online tool that we have a template for and it’s like, “These are the 70 things we need to do,” starting with getting the contract signed to putting a lockbox on the door to everything in between to selling it and making sure we’ve got the wire and taking the lock box off the door and everything in between, right?

Sensei: Yeah. Let me give you a little tip, everybody, what we do here at Black Belt Investors because you just mentioned that you kind of had a punch list for your rehabs, right? We have a punch list for everything we do. It’s a step by step. It’s not wordy. It is just bullet pointed out. So what ends up happening is when there’s a new task that’s involved, maybe we’re taking on a new software program or maybe we’re analyzing a deal a different way, then we will have a bullet point list written out and what we’re doing now at this point is building office manuals.

So you won’t hear me listening to rap music or country music in my car because a lot of times, I’m on Dragon dictation building business manuals. I’ve got it all up in here. So I’ll go point by point so when we hire someone new like I did yesterday, I can say, “Here, here’s what I want you to learn first. I need you to update my database and here’s the bullet point list. I will walk you through it.” Next thing, I can walk away and they can do it by themselves.

Mike: And then you’re on to your rap music and country music, right?

Sensei: Absolutely.

Mike: So which do you prefer? Are you like the white guy that loves rap like me or are you a country music guy?

Sensei: Absolutely not. I cannot stand rap, but my wife knows every rap song out there.

Mike: That’s funny. So let’s talk about branding. I know a lot of real estate investors are just the, “I buy houses,” type and you get those letters in the mail and they all look the same and you can’t really tell who one person is from the next. But if you start to develop a brand and you have a reputation . . . and your brand isn’t your logo, it’s also what you stand for and things as well. But talk about the importance of that and maybe share some examples of how a lot of real estate investors fail here.

Sensei: Yeah. I think branding is extremely important. Branding is not going to happen overnight. It’s an evolved process. It’s not like what Mike said. It’s not just a logo, although you need a real strong, simple, cool logo, kind of like FlipNerd. You’re not going to forget FlipNerd. It’s a really cool name. You know what he’s doing because if you take away the logo and you just look at the word FlipNerd, you’re thinking, “flip what?”

But then you can see a house with some nerdy glasses on. You know exactly what he’s doing. That is awesome branding. Not only that, he’s only using one color. So you’ve got a color scheme. Typically most branding experts will tell you not to use more than two colors. They’ve got to be a color that relates to people. But a branding is really a reflection of you.

So if you go to my website, for example, blackbeltinvestors.com, my website will sound just like me in this interview. I’ve seen a lot of mixed branding, where I will meet with someone and before I meet them, I’ll go through their website and I’ll read it and it’s very elegant, it’s worded perfectly. It’s everything that you want, but then I got to meet them and they’re like, “F this,” and, “F that,” and it’s a complete contrast compared to their website. That’s mixed branding and it just doesn’t work.

So branding is important because remember, branding comes from that iron brand where they brand cattle. We want to brand it into their mind so you’ll never forget that company in a positive or even in a negative way sometimes, right? But that positive way. You’re not going to forget FlipNerd. You’re not going to forget Black Belt Investors. But you will forget, “We buy houses. ABC buys houses. Joanie buys houses, everybodybuyshousesindallas.com.” You’re going to forget those guys.

Mike: Yeah. I think it really is important, like you said, to stay true to who you are. If you try to misrepresent yourself as something you’re not, aside from the logo and stuff like that, I think a lot of real estate investors, unfortunately, there are a lot of good people in this business and some bad ones. And unfortunately, some of the bad ones give us all a bad name. But I think it’s really important that your brand is part of your integrity and who you stand for. You screw one person in this business and it will drive you out of business.

Sensei: It will. It comes down to vetting. If you guys are searching for reputable mentors or coaches, you need to do that online research. Of course, you’re always going to have someone that’s not happy, but if it’s a long laundry list of negative stuff, then stay clear. Don’t swipe your credit card with them. Don’t give them that dollar. Branding, I’m looking at your logo and I’m looking at you and you look like your logo, man.

Mike: Let me help you. I’m going to throw these on here. I’m going to stand up here. We kind of look the same, right?

Sensei: That’s what we’re talking about good branding. If you’re going to do branding, everybody, just take your time. Here’s the thing, you’ve got to find out if that name is available with the Secretary of State when you get your corporation, LLC, whatever you’re going to acquire. You’ve got to make sure it’s available on a .com and a .net. You’ve got to make sure you’re not infringing on any trademarks, just like you can see a trademark for FlipNerd right there. You don’t want to make something similar to that.

Then you want to take your time and get the right color scheme. You can take that logo and color scheme in and ask their opinions, but are they branding experts? You probably want to take it to a marketing company, a branding expert and let them throw in their two cents, get that proper consultation.

Mike: And one thing I’ll say that I’ve seen some other people do too and I’m kind of guilty of this sometimes too is it’s important to have a brand, create a logo and all that, but don’t let that get in the way of you getting your business started. Some people are really hung up on what my logo looks like and never get to actually starting their business.

Sensei: That’s right. You’re 1000% correct. You still need to move forward with your action plan to build your business, but while you’re building your business, you’re actually going to discover things about yourself and you’re going to discover things about the business that will now take a role play in your branding. So don’t rush to brand yourself. It’s okay to make up some temporary business cards and do some temporary things, but once it’s evolving, you can start fine-tuning it and really making it how you want it to be.

Mike: Absolutely. So let’s talk about marketing, which is the 800-pound gorilla in the room. Let’s just say in terms of the importance of consistent marketing, which is where a lot of real estate investors fail, especially early on. But why don’t you share in terms of building a business, the importance of marketing and some mistakes people make.

Sensei: Yeah. I think the importance . . . most people are always on a budget. I don’t care who you are and how much money you have, you have a budget. So we’ve got to work within our means of a budget. We need to plan this out. I would easily start off by making sure that you secure all the URLs out there for your social media or your website because these things don’t cost you money and you can automatically start building a brand and marketing and building a list of buyers and sellers through these online marketing sources.

You can also market on like free classified ads such as Craigslist or Recycler or ThriftyNickel and different items like that. But when you start marketing and putting these free things together, of course, you’re going to get to a point where you must spend money because in any business, most of the money spent is typically on marketing and marketing is so important.

It’s so important that it actually showed back in 2010, a statistic came out. I don’t remember the exact numbers, but there were as many people marketing through the 2000s, but when the recession hit, the first thing they pulled was their marketing money. When they did that, then they fell off the face of the earth, their business basically crashed and the ones that survived and/or the ones that thrived during the recession were the ones that kept their marketing together. So the competition went away and the stronghold moved forward.

So it’s going to be important that your budget for marketing and the thing is, “Okay. Where do I market? How do I market? What do I do for marketing?” That’s’ where your coach is going to come into play and start pinpointing what and where you should be doing it and how often you should be doing it and with that, you’re going to be doing a lot of split testing.

For example, if you’re not familiar with a split test, let’s just say maybe you have two squeeze pages. One has certain content, the other has a different content. One has a white background with black font. The other one is all colorful and beautiful. And you can run ads for the squeeze pages where people can land on it and see who gives you the better results. So you’re going to be constantly split testing throughout your business.

Mike: Yeah. I know you agree with this. One of the things I want to make sure we cover is the most important thing is to be consistent here, right? If you’ve got a budget, don’t do everything in the first month and if you don’t get anything you’re out of business and also, if you get a deal, don’t say, “Well, I’m going to stop advertising until I sell this and then I’m going to start advertising again,” because that’s just destined to kind of kill your business.

Sensei: Right. I’m glad you brought that up. Get this. We all like “Shark Tank,” right? I love the show “Shark Tank.” My daughter that was nine years old at the time loves “Shark Tank.” She still watches it with me. It’s daddy and daughter time when we watch “Shark Tank” together. Her favorite shark is Robert. And he was kind of being really firm with the person that was up on the platform and he says, “Do you know what the most important thing in business is?” And my daughter, at nine years old, says, “Consistent marketing.” He goes, “Consistent marketing.”

Mike: That’s funny.

Sensei: I’m like, “Right on.” But yes, consistent marketing is key. What I find that most people in business do is they’re like, “Oh my gosh. I’m scared. I’m fearful to spend $500 on letters,” because you just mentioned letters earlier, right? “I’m fearful to spend on postage and letters. That’s a lot of money.”

So they’ll send out 1,000 letters, for an example, and they’ll only get one or two responses out of it and they feel like a failure and they won’t do it again. It takes time. It’s the branding that must go along in your letters. You cannot sound like everybody else. You must take a unique position, have your logo, your color scheme on your envelope in your letter and ground and pound that client or prospect, I should say, ground and pound that prospect until they become a client.

People always ask me, “Sensei, when you’re doing wholesale deals how often do you market?” “I market every two weeks to the same person over and over again.” They say, “When do you stop?” “Never.” Unless the property has been foreclosed upon or has been resold or they sell it to me. I have got them in the octagon and I am going to choke them out and tap them out until they give me the property. That’s the way I work marketing.

Mike: Yeah. The reality is, in terms of direct mail and things like that, the majority of people you send your letters to are never going to sell at a distressed level. They don’t need that, right? But the people that do, the likelihood of them getting your first letter, your first postcard and saying, “I’ve needed this for 10 years. Today is the day,” are pretty slim, right?

That’s kind of like tires. You get ads all the time for tires or mattresses all the time. But how often do you need tires or mattresses? Not very often. They know if I can apply consistent pressure to you, someday you’re going to need new tires and they want to be there on that day, right?

Sensei: Right. You bring up something that just recently happened to us. I had sent out a letter of intent to purchase back in 2001 out to this property out in the desert. So with that, I had my logo, my contact information on my letter of intent, which most people don’t do. If they receive something physical and they place it on their desk, they’ll always have that information versus having an email they can quickly click and disappear. This guy gives me a call just last spring. Remember, this is 2001. He says, “I’m ready to sell.”

Mike: That was literally 15 years?

Sensei: Fifteen years ago. That’s due to a little bit of consistency and then also the branding part of it. But then I have a gal, Silvia, in my office that has been sending postcards and letters once a month to a gal up in Northern California, and we’re in Southern California, she gets back to me 12 months later and says, “I would like to sell,” but her numbers were unrealistic.

Then Silvia comes back and says, “Well, she doesn’t want to sell because their numbers are way out there,” and I said, “I understand.” She goes, “What do I do?” I said, “You go back to your marketing campaign again and you start marketing.” So she’s received postcards and letters from other people, but the consistency through Silvia was able to score the deal two years later. The lady came back and said, “Now I’ve got code violations going on. Let’s just liquidate this property.”

Mike: Right. Awesome. Sensei, we talked about a lot of stuff here and I think the underlying thing is that all these things are important, but you’ve got to really create a business and some structure and processes and systems and be consistent in everything you do.

Truthfully, I’ve talked to some other friends about this often, when you watch HGTV and you see all these house flipping shows, they don’t show you any side of that at all. They have a deal and they make it from nasty to pretty again. But they never talk about the business operation, usually. The reality is the best performing businesses are pretty boring, right? You’re doing the same thing every day. It’s not that sexy, ultimately.

Sensei: No. It’s not. Even on the reality shows, those guys aren’t going out to the properties when they’re really doing their properties . I flip houses. I’ve got a property in the pipeline every single day. We average about 15 at any given time. So with that, I never see any of these properties. So going back to the reality show, yeah, the reality show is fun, it’s sexy, but they don’t show the business operations, they don’t show the true numbers and remember, they found a house, they rehabbed the house and sold the house within an hour’s time. That doesn’t happen.

Mike: While wearing makeup.

Sensei: What’s that?

Mike: While wearing makeup.

Sensei: Yes, while wearing makeup, exactly. It does take three D’s, right? It takes desire, the devotion and the diligence to be able to ground and pound whatever business you’re going to be doing. Yes, there’s a lot of maintenance that goes along. We all love the growth spurts in business. We love that. I personally love assembling a new business, putting all the components together, the branding, I love that and watching it grow.

But then it gets to a point where it plateaus off and you’ve got to maintain it, but it dips and sometimes it grows, but there’s a lot of maintenance involved. That’s not as much fun, but it’s more fun than working for someone else. It’s more fun to where I can say, “I’ve taken three vacations this summer. Thank God for real estate investing.”

Mike: Yeah. Awesome. Well, Sensei, if folks want to learn more about you and what you have going on, where should they go?

Sensei: Well, you can go to just type in Sensei Gilliland or Black Belt Investors in Google and it will pop up everywhere. You can go to blackbeltinvestors.com and that will be my home site. I also have remoterehabs.com, where we do properties in select markets across the states and hook up on Facebook, hookup on Twitter and LinkedIn or you can simply give us a call at 951-280-1900, again, 951-280-1900.

Mike: Awesome. We’ll add links to all the stuff and the number right down below the video here.

Sensei: Thank you.

Mike: Great to see you, my friend. Thanks for sharing your insights and your time with us today.

Sensei: I appreciate it and it’s my pleasure.

Mike: Awesome. Everybody listening, thanks for joining us today. This was show number 314. So you’ve got a whole bunch of other shows to go watch and we’ve got more coming. So thanks for joining us today. Everybody have a wonderful day.

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