Ben Rao – Community Buying Group for Real Estate Investors

Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright. And on this show, I will introduce you to VIPs in the real estate investing industry, as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week, which are available in the iTunes store or by visiting FlipNerd.com. So without further ado, let’s get started.
Hey, it’s Mike Hambright back for another FlipNerd VIP interview show. Today, I have with me Ben Rao, who’s the president and founder of Community Buying Group, which is a membership program to allow real estate investors’ associations, RIA clubs, and all sorts of groups of people to get purchasing power benefits for buying products and services that they tend to buy anyway.
So before we get started, it’s a great show. There’s going to be a lot of information in here that’s going to help you save money. Before we get started, let’s take a moment to recognize our featured sponsors.
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Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.
Hey, Ben. Welcome to the show.
Ben: Hey, Mike. Thanks for having me on.
Mike: Yeah, great, great. Glad you’re here. So you’ve got a really innovative business, which is nowhere close to a concept anymore. You have… I think you said you have over 30,000 members that are benefiting from your services one way or another. But talk a little bit about… give us an introduction of, you know, who you are and how you got started, and then we’ll talk a little bit more about what your company does and how you’re adding value to folks.
Ben: Sure. Sure. Absolutely. Thanks, Mike. I’ve been a real estate investor, landlord, flipper for over 10 years. So I’ve worked on hundreds of projects where I’ve been buying single-family houses and flipping them. Really have a passion, and fell in love with fixing them up. Sometimes too much, to a detriment. But, you know, love to go take something that was really wrecked, whether it was fire damaged, or water damaged, or something that was just neglected, bank-owned. Go buy that, you know, make it beautiful, and then put a family to it at retail, or turn it into a rental property for a long-term cash flow.
Mike: Okay. Okay. And that’s how you got started. And then somewhere along the line, you said, there’s got to be a better way for…
Ben: Yeah. So, you know, there’s a lot of things that happened. But as I was doing that, I was starting to meet a lot of people, I was starting to network with different groups of people that were in the same industry, and there was a lot of trends that I saw there that were the same. And one of them was people would come to me and say, “Hey, Ben, you’re doing this.”
You know, “Who do you have that’s a roofer? Who do you have that’s doing your gutters? Who’s, you know, how are you insuring your properties? How do I set up an LLC?”
And I just… it felt like there was just not a place to really get people connected. Because we all had the same issues all over the country.
Mike: Right.
Ben: You know, we all loved that local networking part of it, to be able to meet people that are right here in our backyard, and that can help us. But the national level had a lot of the same issues. So I wanted to try to create something where we could all exchange information, ideas, and who we were doing business with, and who was good, and who wasn’t so good. And that was really how Community Buying Group got started.
Mike: Okay. Okay. And that was primarily just in your market, the Kansas City area, initially, I assume, where you started out.
Ben: Well, the networking here locally… you know, there were a couple of RIA groups, and several landlord associations, and just more of that typically networking here. But when we went Community Buying Group three years ago, we went nationwide.
Mike: Okay.
Ben: We went out all over the country, and started to get the word out. And it took a while, just like any other start-up. It was a grind.
Mike: Yeah.
Ben: You know, we were working out of a garage in, you know, one of my rental properties.
Mike: Yeah.
Ben: And, you know, which is kind of cool, now you look back at it. But it’s… you know, that was fun, and we did that, and kind of grew it up from the ground up, bootstrapped it. And, you know, here we are now, three years later, with over 30,000 members.
Mike: That’s fantastic. And so kind of a high-level summary of what you do is you… well, why don’t you go ahead and explain, you know, what it is that you do. The service that you provide for others.
Ben: So, I mean, at a really basic level, what we’re doing is helping people that are touching properties, that need to buy materials, or want access, or we know that they need things to help their business do business better. So it could be something as simple as just needing the drywall and the materials for a project or paint, or it could be something as… like a portable alarm system that, while your property sits empty, and you’ve got tools or other things in it that you can set up there, and it’s portable, and you pick it up after you finish that project and move on to the next project. So there’s really a gamut of different suppliers that we have.
But they all come down to one thing, and it’s to help a real estate investor or a landlord to save some money, to be able to do business better, get access to programs and products that they may not know about because they may not be spending a half a million dollars with a supplier like a Lowes.
Mike: Right. Right. And so what you do is you… that you in turn go negotiate with those suppliers to get better pricing, so that folks that are interested in being a member, whether it’s through an association or some other way, not only can find out about products and services that they might need or might already be using, but can get better deals through… you’re kind of leveraging the purchasing power of your entire group to get those benefits. Is that right?
Ben: Yeah, we are. So, you know, somebody that was doing 10 flips a year, you know, can help to benefit from somebody that’s doing 100 flips a year, and the person that’s a newbie, that’s just getting into the business, gets the benefit of all that. And we go to suppliers with our network, and we go and cut contracts to where our members can get some kind of preferential pricing or program to help them to save that money. And then we deliver that program through associations.
So it’s very well that we sell very many individual memberships. It’s more about how do we help other people. You know, we talk about it in the office, of… we’re here to help other people. We don’t have anything to sell. We don’t have a product. What we have is that we can help these clubs and associations to market membership benefits better and more effectively, and we can brand all that for them, as well as, you know, touching our members after they register with a customer service call to make sure they understand how to take advantage of it, and know that that’s free because it’s part of that association membership.
You know, these associations are run by volunteers, or they’re run by somebody that’s a for-profit and they own it, and they’re overrun.
Mike: Right.
Ben: It’s very unlikely that they’ve called their members anytime in the last year, and gone through and called them all.
Mike: Yeah.
Ben: So, you know, we’re able to touch them, and brand that touch to that association, and really help provide that service. So we charge an association a one-time annual membership fee, and then we’ll set up all the rest of the things we just talked about for their members to be able to take advantage of that program, and all the mechanism in place to track it, and everything else.
Mike: Okay. Okay. And so when folks… let’s just say that you’re a member of a specific RIA club…
Ben: Mm-hmm.
Mike: …that has partnered with you. You create kind of a custom-
skinned store for that RIA club, so that it’s branded like the RIA club. And the members, do they ever… anything that they buy or sell, does it always have to go through that site, or do they have a membership-type card where they can use it otherwise, or…?
Ben: So we don’t have… they don’t buy anything from our site.
Mike: Right.
Ben: They’re still going to shop at the suppliers, the same way they always do.
Mike: Okay.
Ben: That’s the beauty of the program, is it’s… hey, there’s no scam, there’s nothing here.
Mike: Right.
Ben: You’re not buying something from us. You’re going to go to the store and shop the same way that you do today to go purchase your products. You’re going to go to either online or to a box store to go purchase what you need to purchase, and you’re going to have all the same convenience of having all the locations, and do it however you want to do it, at the pace that you want to do it. We’ve just got access, and we’re helping people understand there’s other programs that are now available to them.
Mike: Right.
Ben: They’ll both save money and, you know, for example, a lot of people don’t realize that Sherwin Williams will deliver paint for free.
Mike: Right.
Ben: So if you can… if you’ve got a… if you go set up a credit account with Sherwin Williams, you can call them, or put a credit card on file, you call them, they’ll deliver paint to your job site. You don’t have to go pick it up. You know, same thing with Lowes, as far as going to the pro services desk. You know, there’s some real benefits there when you’re purchasing more than $2,500, to be able to get, you know, additional discounts that far outweigh what you would normally get just on a day-to-
day basis.
Mike: Right.
Ben: So, you know, those kinds of things, that maybe they’re not getting a necessary discount, but they’re getting an added benefit. And, you know, to save time.
Mike: I see.
Ben: If you can get materials delivered for free, or for $20 or $25, you can’t pay someone to go pull an order and deliver it for that amount.
Mike: Absolutely. Yeah.
Ben: Your workers keep working, you have the stuff delivered there, and there’s not… you know, if we could just all plan a little bit better.
Mike: Right.
Ben: Which a lot of people in the real estate investment business aren’t necessarily the best planners for when it comes to projects and…
Mike: [laughs] Are you talking about me?
Ben: I’m not talking about you, but, you know… or maybe it’s the… maybe it’s the contractor that they’re using as far as, you know, it makes me want to cut my wrist, how many times I’ve heard people that I’ve used say, “Yeah, they’re at their third trip to go to Lowes to go get stuff for a project.”
Mike: Yeah.
Ben: It’s like, why didn’t you go one time in the morning? “Well, I didn’t know we were going to need it.” Well, then, you didn’t plan.
Mike: Right.
Ben: So if we could break that code, [laughs] we’d help everyone.
Mike: Yeah, good luck with that. And so how does it work? So through these different vendors, the ultimate, you know, member, I guess, or individual investor, has… for a lot of the different vendors, they have some sort of account number, or kind of a customer code of some sort, that allows them to get…
Ben: They do, they do. And it just kind of depends. You know, we’ve grown to, now, up to 25 suppliers. So it really just kind of depends. It could be an affiliate landing page. It could be a code that they need to use.
Mike: Okay.
Ben: It could be a credit account. It could be just a cash account, where they walk in and pay for it with their own credit card. However they want to do it. But through that registration process, we’re making sure that those people are connected, and those suppliers know that our members are members, and that they deserve that additional discount.
Mike: Okay. Okay. Well, you know, one of the things on this show is I like to learn and share… you know, folks like you that could benefit other investors, for sure. And we obviously… I think that real estate investor clubs are kind of the backbone of the real estate investor community across the country, and so I’m sure we’ll probably find some ways to get some folks that run RIA clubs or are heavily involved to learn more about you.
One of the other things I’d like to learn more about is just the entrepreneur side of you and your business, and how you got things started, and how you fought through, you know, getting out of a garage in one of your rental properties…
Ben: [laughs] Mike: …to build this thing up. So talk a little bit more about, you know, how you made that leap from being a corporate guy, which a lot of folks know my story, too, as a corporate guy, and went into real estate investing, which there’s a lot of us now. But we call them corporate refugees. So talk a little bit about how you made that leap from being a corporate guy to an entrepreneur and a real estate investor.
Ben: Yeah, Mike…
Mike: You probably were real estate investing while you were a corporate guy, I assume, right? You were buying some rentals and things?
Ben: Yeah. A lot of people think that I was a corporate guy, and I wasn’t…
Mike: Okay.
Ben: I wouldn’t say I really was a corporate guy.
Mike: Yeah.
Ben: I helped to build an IBM business partnership.
Mike: Okay.
Ben: So they have a channel where they have business partners, and so we did that for a long time. You know, it started… when we started that business, we were still wearing suits every day.
Mike: Yeah.
Ben: And by the time it was over, you know, the business casual had come around, and it was much more… less structured, and less of a concern, you know, to be wearing a suit and tie every day to go out to make, you know, sales calls, and calling on big customers.
Mike: Yeah.
Ben: But so I always had a little bit of an entrepreneur… even all the way back to as a kid, you know, whether it was selling lemonade…
Mike: Yeah.
Ben: …or doing yard work, or doing those kinds of things. You know, some of that, you just… some of that, you just have.
Mike: Yeah.
Ben: Either you enjoy doing stuff, and building, and working… but, you know, as I moved from having the properties, and building that portfolio of rental properties, and, you know, I made a lot of mistakes. And everybody’s going to. And I would just recommend to people, hey, get out and network with as many people as you can. Whether it’s a local association, whether it’s something that’s a… you know, a business, entrepreneurial group. Anything you can do to go out and rub shoulders. There’s all kinds of… there’s pitch fests, where people are out pitching, you know, for their business to go raise money.
Mike: Right.
Ben: So I did, you know, many of those to go raise private equity for the company, community buying group, so I could go add more people. You know, and the more you get out and do that stuff, and you see ideas, and you meet people, and people hear your story, and you refine it, it’s just… all of those things will help, and it doesn’t matter whether you’re in real estate or whether, you know, you’re doing something else.
Mike: Yeah.
Ben: Those are things… it’s how you can get experience faster without having to go through the expense of getting it yourself.
Mike: Right. Right.
Ben: To where… you know, I’ll give you a simple idea is, man, I wish I wouldn’t have bought so many single-family properties.
Mike: Mm-hmm.
Ben: You know, I wish I’d bought duplexes. I wish I’d bough multi-family.
Mike: Okay.
Ben: You know, just… you start to get to having so many properties that they’re… you know, why not have one roof, instead of, you know… why not have one roof over eight units, instead of eight roofs?
Mike: Right. Right.
Ben: You know, other things that are simple is, you know, master keying your properties. Do them all.
Mike: Right.
Ben: I started about my 10th property, is when I kind of figured it out that I needed to start master keying them. But, you know, a lot of people get going, and they just don’t think through some of these things that are so simple and easy…
Mike: Right.
Ben: That can make your life, long-term…
Mike: Yeah.
Ben: …so much easier. So you’re going to learn that kind of stuff when you’re out networking with people.
Mike: Yeah. Yeah. And so you’ve been in business for about three years now? A little over three years?
Ben: Yeah. For Community Buying Group, a little over three years, yeah.
Mike: Okay. Okay. And your journey is just to kind of network with RIA clubs and associations, and continue to build up your… the number of vendors that you work with, that give discounts to real estate investors and clubs, and kind of basically improve your value proposition as you go along?
Ben: Yeah.
Mike: And try to network with more and more folks to kind of take advantage of that proposition, right?
Ben: Yeah. That’s exactly what we’re doing. You know, the more people that we can help, you know, our phone is… you know, is starting to ring a lot more now than it… you know, three years ago.
Mike: Yeah.
Ben: You know, we’re getting people calling in that said, “Somebody told me about your program.”
Mike: Yeah.
Ben: You know, that’s exciting. You get somebody that finds you organically, through, you know, Google or somewhere. You know, that stuff’s exciting. So, yeah, we’re going to continue to add, you know, suppliers. And I hope that by the end of the year, we’ve added about another 14, you know, or so quality suppliers that can help people. There’s no magic number. You know, about a couple a month. And we just… there’s some stuff that we have, and we’re in conversations, and have four or five things going now for contracts that we hope will close in the next 30 days, and…
Mike: Great.
Ben: So that we continue to do that. You know, our biggest thing is that we’re living and breathing customer service. Somebody calls, we’re going to call them back. We’re going to answer our calls. You know, our entire mission is how do we make your business better. So as long as you keep helping everybody else, you know, everything else’ll take care of itself.
Mike: Yeah. That’s great. That’s great. So for RIA club, for real estate investing clubs, or it could be other associations that partner with you, you provide a customer service support level for their members. So if their members have problems buying something through a site, or questions, they contact you and you guys help service them?
Ben: We do. We do.
Mike: Okay. Wow, that’s great.
Ben: And we brand all of that to the association’s… to the association’s name. So, you know, anytime we’re talking to somebody, we’re going to make sure they understand, hey, you’re getting this because you’re a member of ABC landlord association, or, you know, ABC RIA. That they really understand there’s another value that they’re getting from that RIA outside of the typical networking and education and those type of things.
Mike: Right. Right. And the types of vendors that you bring in, how do you cultivate those? Are you limited? Again, I’m interested in the business side of it. Are you limited by national vendors, or are you primarily focused on national vendors so that they can serve folks across the country, or…?
Ben: Yeah, we’ve been focusing heavily on national vendors, just because we’re in, you know, 40 states now.
Mike: Yeah.
Ben: And so it’s just… we need people that have the coverage. And not everybody’s going to have coverage. You can’t do anything about that.
Mike: Right.
Ben: But the real passion, and the original idea behind the community buying group, was building these communities, similar to Craigslist…
Mike: Mm-hmm.
Ben: …to where people could join a community as they join Community Buying Group to have a business listing. Many people in this business have other businesses. They’re out there… whether they’re doing something, like, I’m a contractor, or I’ve got a painting company on the side because I’m painting all my units, or…
Mike: Right.
Ben: You know, somebody writing insurance, or an attorney. So we’ve created a community and a business listing system where people can go in and add those, and they can add themselves to as many communities as they want.
Mike: Hmm.
Ben: And then there’s a rating and review system that lays over top of that, to where you can rate and review other members. And the whole thought was it goes back to what I talked about earlier. People would call me and say, “Hey, do you know somebody that can do this? Do you know somebody that can do that?” And is there a way that we could create a self-service type of environment that was really from a trusted network, which would be a local group of people that were property managers, landlords, and real estate investors?
Mike: Right. Right.
Ben: Because, you know, I have the people I trust, and I give those names out to everybody that asks me, because I appreciate that they’re good and they do business. And those guys remember it.
Mike: Right.
Ben: If I have… you know, somebody gets to go do five more roofs this year because of referrals from me, you think they’re going to come fix one of my properties as quickly as possible when I call them?
Mike: Yeah.
Ben: Absolutely.
Mike: Yeah.
Ben: Absolutely.
Mike: What comes around goes around, for sure.
Ben: That’s right. That’s right.
Mike: So tell me a little bit about… explain that a little bit more. So you have… inside a community buying group, you have some functionality where folks can find individual vendors? And is that inside a community buying group?
Ben: It is. It is. So once somebody registers, you have the ability to create a… either a public or a private business profile. So you can go out and go do that. And you can also place it in any community that you’d like. So just like when you go to Craigslist, you pick a state, and then you pick a city.
Mike: Yeah.
Ben: Same methodology. When you go to Community Buying Group, you create a profile. You can say, “I would like to place it in,” you know, pick a state. I’m in… if you’re in Texas and, you know, the list might be that I’m doing business in Dallas, Houston, and San Antonio.
Mike: Okay.
Ben: So your profile would show up in those three communities.
Mike: Okay.
Ben: And that anybody else that was a member of those communities could see your profile, and you could see theirs.
Mike: Okay. Okay.
Ben: And so then, really… and then there’s 30, 40 different categories that you can say, these are my areas of expertise. So I’m a real estate investor, I’m a landlord, I’ve got a painting business, and I’ve got an insurance… and then my… those would show up under any of those different categories. So people could search by community or city, and then people could also search by category for what they’re looking for.
Mike: Okay. Okay. And that… and is there a charge for vendors to use that?
Ben: There’s not.
Mike: Okay.
Ben: There’s not at all. That’s just a membership benefit. And so we’ve looked at some ideas that we’ve got on the whiteboard, as far as doing some other things, whether it be regionally or more localized. But if you charge somebody to have a listing… I don’t know. That’s really what we’re struggling with. If anybody can be in there that just pays… which, you know, certainly they could today.
Mike: Yeah.
Ben: It really is going to need to be vetted by the membership themselves.
Mike: Hmm.
Ben: To say, oh, yeah, I’ve done business with Mike before. He’s done, you know, 15 roofs for me in the last two years on my properties. I would certainly give him a four-star rating.
Mike: Yeah. Yeah.
Ben: Or Mike installed windows. He did a horrible job, and they’re leaking, and I keep calling Mike.
Mike: Yeah.
Ben: And it says the number’s no longer available, and I can’t find him. And so then I want to at least let people know that, to say, hey, maybe he’s not going to follow through as much as he should.
Mike: Right. Right. Yeah. And for everybody’s information, do not ever call me to do anything [laughs] related to putting in windows or anything else.
Ben: If you want leaky windows, call Mike.
Mike: Yeah. That’s… no. Awesome. Awesome. So where do you think… where do you grow your business from here? You’re just trying to, again, add more associations? And I guess that’s probably some of the challenges. There’s so many different clubs and organizations, and maybe, you know, just touching them off, for them to kind of understand the value that’s there. Sounds like it’s a great benefit that they can share with their members.
Ben: It is. And that’s been… you know, that’s been some of the challenge, as far as people say, you know, what’s the catch, too good to be true. They don’t understand what our business model is. They think… you know, but once people start to get it, and they understand it, it’s a no-
brainer.
Mike: Yeah.
Ben: And then it becomes when somebody’s on with us for a year or so, and it becomes… you know, these guys are great. They did it, and they’ve done… followed through on every single thing that they said they would.
Mike: Yeah.
Ben: You know, it’s getting fun now, because we do offer the real estate investment associations and the landlords a little bit of a revenue share. It’s not a lot, but it’s a little bit.
Mike: Mm-hmm.
Ben: And so if your members spend, and there’s certain suppliers that we track, and some that just doesn’t make any sense, because they’re just too small. But, you know, some of those we track. There’s an opportunity for a real estate investment association or landlord association to see this as a revenue stream.
Mike: Right.
Ben: You know, if they join Community Buying Group annually, then they may be able to get a revenue stream back in based on their member spending, and provide this great value add to their members for the benefits. You know, that’s exciting. I just had to do some traveling, and stopped in to see a couple of the associations, you know, even able to deliver a check. You know, here’s a check for $1,200. We appreciated it. It’s great to have you. And they’re just like, this is awesome. This is great. This is… you said this is the way it was going to go, and here we are, a year later, and this is the way it went.
Mike: Yup. Yup. Awesome. Awesome. Well, so if folks want to learn more… I guess if you have… like you said, you don’t take on a lot of individual trade members, so most folks are joining through an association. But do you have a directory for individuals to find out what associations you work with?
Ben: We don’t. What I would encourage them is a couple different things. You could go to CommunityBuyingGroup.com.
Mike: Okay.
Ben: So if you go out to our website, there’s a couple of different tabs there. You can go out and put an inquiry in there if you know about an association. I could encourage anybody that comes to our website not to join as an individual, and to, you know, call us, or send us an email saying, hey, there’s an association here in my town. And we’ll follow up back with them, just to see if they’re a member, and let them know if they’re not. We could bring that association on. And we’ll give that person a $50 gift card for the referral if they join, and their membership’s going to be free, because they’re already a member of that association.
Mike: Yeah.
Ben: So, you know, it’s all been very organic. Very grassroots.
Mike: Yeah.
Ben: You know, so that’s from a perspective of somebody joining. But I would certainly encourage them, you know, don’t join as an individual. You know, get your association to join, so your membership is free. You know, if you’re not part of an association, we certainly can tell you about associations that we have in your area. And, you know, it certainly makes a lot of sense, if somebody’s not… there’s a lot of people out there… there’s millions of people out there that aren’t in associations.
Mike: Right.
Ben: That, you know, could join, and it helps them to save a ton of dough.
Mike: Yup. Yup. Awesome. And so for associations, clubs, things like that that are interested in learning more, they would just contact you through CommunityBuyingGroup.com.
Ben: They can, absolutely. And they click on the “Associations” tab, and there’s a place there that you can click and just send us a message to say, hey, I’m interested. We’ll ask, you know, just your contact information, and we’ll follow back up with you. Or you could always just call our phone number, and our contact information and phone number are right there on our website.
Mike: Okay.
Ben: And we’re here Monday through Friday, usually from about 7:30 until 6:00 at night. And, you know, you’re very likely to get through to somebody, and if you don’t, you’re very likely to get a phone call back within typically an hour.
Mike: Yeah. Awesome. Awesome. Well, we’ll add links to everything below the site here, and I think… I always love the stories of somebody that was a real estate investor themselves, or really any business. I mean, I can… even though I’m in real estate, I usually consider myself an entrepreneur, and real estate happens to be what I do. But… don’t get me wrong, I love real estate. But for folks like you that saw something and said, there’s got to be a better way, and let me find a way to do something that adds value to lots of folks, doesn’t cost anything, they don’t have to… you know, there’s no winners and losers. There’s nothing but winners involved. And so I think you’ve got a great program here, and definitely folks should check out your website to learn more.
Ben: Yeah, Mike. I couldn’t thank you more for inviting me to be on the show. I wish you the best of luck. And, you know, we certainly would love to help get you connected to some other people that would be, you know, guests for your show, if you need it.
Mike: That’s fantastic.
Ben: Since we know a lot of people.
Mike: Fantastic. Fantastic. Well, thanks again for joining us on the show. And again, we’ll have links below for anybody that wants to find out more and take advantage of some of these great purchasing opportunities. So thanks, Ben, for being on.
Ben: Thanks, Mike.
Mike: All right. Take care.
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