Show Summary
Most real estate investors start out small. Lone wolves. Chief bottle washers. Challenge is, your business ends up being limited by your own capacity, and your own expertise. You’ll no doubt be doing things you don’t like, and things that you’re simply not good at. Once you understand the power of surrounding yourself with a team, your real estate investing business can take off. Andy McFarland is the winner for the best FlipNerd show in 2015 on Scaling Your Business.
Highlights of this show
- Meet Andy McFarland, CEO of Treehouse Investments.
- Learn how Andy scaled his real estate investing business over time, and now invests in multiple markets.
- Join the conversation on the importance of building a great team, and the role of technology, systems, and consistent marketing in scaling your real estate investing business.
Resources and Links from this show:
Listen to the Audio Version of this Episode
FlipNerd Show Transcript:
Mike: Hey. It’s Mike Hambright with FlipNerd.com. Welcome back for another exciting Expert Interview where I have your successful real estate investing experts and entrepreneurs in our industry to help you learn and grow. Today I’m joined by my friend Andy McFarland. He’s actually back for a second interview here. He’s a CEO at Treehouse Investments. Round two baby.
He’s a successful real estate investor, coach, and speaker that invest in multiple markets. But he started as a one-man shop in one market where he did everything himself, chief bottle washer. He’s now scaled to multiple markets with multiple employees where he’s doing more than a hundred houses a year and still has time in his life to enjoy his life. Today we’re going to discuss how to scale your real estate investing business because many of us started as a one-man band and most of us aspire to do something greater than that. Before we get started with Andy though, 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 Andy, welcome to the show.
Andy: Hey. Thanks for having me back.
Mike: Welcome back, yeah.
Andy: I know.
Mike: You made the cut. We said, “Let’s have this guy back.”
Andy: People may or may not know this but after you do an interview with Mike, he sends you this really cool FlipNerd glasses and my kids love those glasses. I really wish I had them because I’d be putting them on right now in this styling because . . .
Mike: Like this?
Andy: Oh no. I wish I had mine too. I’m so jealous. The glasses envy right now.
Mike: I’ll send you some more my friend.
Andy: Awesome.
Mike: Yeah.
Andy: Yes. Mission accomplished.
Mike: So yeah. Hey, glad you’re back for round two. We have decided to go back to some of the folks we had on the show before and have some folks back here and there that we had great response from and people that I’ve become friends with that have great information and great stories to share. I’m excited to hear more about scaling your business because I think a lot of real estate investors get started and they’re so conservative that they just stay small, do everything themselves. The challenge is a lot of times people end up just creating a job for themselves instead of a business that they can truly scale and really have a life, right?
Andy: Absolutely. Real estate investors, we’re kind of cheap by nature, right? We want to keep everything in house. We don’t want to spend any money. We don’t want to, “I can do that. I can do that.” But really, there are a lot of things you shouldn’t be doing and really, it’s holding you back. It’s absolutely holding you back. So we’re going to talk about that.
Mike: Awesome. Hey, before we get started, why don’t you tell everybody your story again about how you got started? I know you got started by selling hand-drawn pictures of Mario and Luigi. You got to tell us that part again.
Andy: Yeah, I’ll give the quick background. I’m an army brat. I was born in Georgia and I’ve moved all across the United States. I’ve lived in Germany. I’ve lived in Virginia. I’ve lived in Kansas, New York. But we ended up landing in Utah a number of years ago. My parents, my dad was in the military and my mom was a physical therapist, both working professionals. I’ve always been a little bit entrepreneurial. Like you said, I sold pictures of Mario and Luigi on the school bus. I sold bulk candy to get a profit.
I’ve always had that little bug, but I never knew what it was until I read “Rich Dad, Poor Dad” which shifted my mentality. After reading that, I started looking for opportunities primarily in real estate. The first opportunity I found was a bank-owned, non-conforming, illegal triplex. Basically if you don’t know what that means, I didn’t know what that meant either, but it’s a big mess and a headache and I bought it thinking . . . because I didn’t know any better, right?
I bought that deal. I bought it, fixed it up with these two hands, rented it out, sold it on owner financing, and got the cash out a couple of years later. It’s pretty good money at that. But what I learned from that was just invaluable. It was my hardest deal to date. But I call that deal my treehouse because I never had a treehouse growing up. But when I was working with these two hands on that deal, it was like me hammering nails into my first treehouse. So now my company is of course called Treehouse Investments.
Mike: That’s a great story man. You said it was illegal. What was illegal about it?
Andy: Illegal. It was illegal for the zoning. It was a triplex that wasn’t in the zoning for triplex. Illegal in that zoning. Non-conformance to law . . .
Mike: Okay. I guess you got that result.
Andy: Yeah. It was just some they had to go get variances with the city and had a bunch of code of enforcement stuff. I had to pour concrete, showed plans for how you’re going to get five cars back in there. I literally, I did all those stuff. I thought every real estate investor did that. I’m looking at this thing going like, “Oh okay. I guess that’s what I got to do.” But most investors probably past an idea up because they’re like, “I don’t want to do all that stuff.”
But I did it and the most valuable thing I got of that . . . and I made 40 grand, which I wasn’t expecting it that much. That was a ton of money for me at that time. Made 40,000, but the most valuable thing I got out of it was this – I learned so much from doing that. Not only doing dry wall and painting and things like that, but I also learned how to fill out a lease and get tenants in there, and take cleaning deposits and deal with tenants junk, and I learned how to do seller financing. Just all this stuff from that one little deal, from my treehouse. That was the beginning of everything.
Mike: I’m suspecting you learned a whole bunch of stuff about what not to do too, right?
Andy: Oh man. I made so many mistakes. I made so many mistakes but they were stepping stones.
Mike: But now you’re perfect.
Andy: Yeah, I’m absolutely perfect. I’ve been perfect for a number of years now actually.
Mike: Yeah.
Andy: That’s why you have me on the show.
Mike: Yeah. Talk about your business really on after that first deal, because I think there’s definitely a great lesson here for people to realize. It took me a while too. I didn’t start as a one-man band. We had employees and staff from the beginning. But it took a while for me to really value those employees. If any of my former employees or current employees are listening to this, just know that I value you more than I would have in the past.
My point is this, I used to look at employees or things like that as unnecessary evil instead of a win-win for everybody involved like, “Let’s really create something here.” Some of that’s probably a maturity level maybe. But like you said, I think a lot of people get stuck in this “I got to stay small and keep it all tight” mentality that you hear. The problem is this, you are the bottleneck in everything you do and you can’t grow. So let’s talk about like, where you went after that deal and how you evolved.
Andy: Yeah, and I can absolutely relate with everybody here. I’d say 90% of the people listening to us are real estate investors that are that. They’re small. They started small. You’re probably the anomaly, you say started with employees and things. That means that you probably had a little bit of money. Like for me, I started with nothing, so I had to do everything myself. I had to be . . . and I recognize that I was the bottleneck, but I really needed it small and keep it all because I had nothing else. I just totally grew organically that way. I totally identify with people that are a one-man band, that want to keep it all because they don’t have any other options. It’s absolutely me.
But the first thing I did was, I’ve always been I’d say financially responsible. So when I made that first $40,000 paycheck on my treehouse I didn’t go spend it all. I didn’t go buy a new car, didn’t upgrade my lifestyle. In fact, I took that money and I just reinvested it. I continued to go from deal to deal as a one-man band and just getting the money, getting a little bit more, reinvesting it, reinvesting it, until I could finally have a little bit of breathing room.
And Mike, I was extremely like . . . I’m risk averse. I was working on a loading dock, making more money in real estate than I was on the loading dock. But I was so afraid to quit because I wanted that security of, “Oh, I need this x dollars per hour so I can qualify for a loan, so I can do more stuff.” Yet it was sucking the life out of me and was totally taking all of my time that I couldn’t go do what was making me more money. So I understand everybody that’s risk averse.
But I finally got to a point where I got fired from my job on the loading dock. That pushed me out into the world of real estate, so just go do this thing. I remember to this day sitting on the front porch with my dad and I came home and he’s, “What’s going on?” and I’m like, “I got fired from my job there.” He said, “Andy,” he begged me, he said, “please. Please Andy. Go back to your boss there. Go back and just please ask them to give you your job back.” He says, “You do not want this on your resume. Just go get your job back there.” And I said, “Dad, I want to do real estate. I’ve been doing real estate successfully,” like, “I want to do this.” And he was just like, “Just go get your job back.”
But I realized now he was speaking from his paradigm of that security of what he wanted to do, was build his resume. But again I got pushed out of the nest there. I was forced to grow wings and I was a solo entrepreneur for a long time. But it’s just been in the last three or four years that I’ve allowed people to help me. I had a little bit more money. Then I just plain got sick of doing everything. I realized that was my own bottleneck. I don’t know if we want to start off with this, but the first thing I outsourced was, I hated taking the phone calls. Because this thing would ring when I was at dinner or nights and weekends and I’m like, “I don’t want to answer those anymore.” But you know Mike, when you pay the money to have that phone ring, you got to answer that phone.
Mike: You got to answer that.
Andy: You got to answer that phone, right? It was literally the money phone. I had my phone and I had the other phone which is the money phone.
Mike: I was the same way man.
Andy: Yeah.
Mike: It’s frustrating because there’s a point earlier in your life, like before you got to that point, where you would drop everything and answer that phone. It was the most important thing in your life probably. Then this weird thing happens where it’s the life blood of your business but it annoys you that you have to deal with that now. That’s just crazy that you get to that point.
Andy: You do.
Mike: But it happens. That could be a $10, $20, $30, $40, $50,000 phone call and you just don’t want to deal with it. You’re like . . .
Andy: You get content. You don’t want to deal with it. Yeah. But I can’t tell how many deals or how much information from a phone call I’ve written on the back of a napkin because I stepped out of the dinner table with my family at a restaurant and like, writing stuff down because I didn’t want to miss that deal. I got those deals, but at what expense, right?
Mike: Right.
Andy: So, yeah. That was the first thing I outsourced, is finding somebody to answer the phone for me, to gather that information so I didn’t miss that and tee up appointments. That was my number one.
Mike: Let’s talk a little about why you . . . this isn’t always the case but I think sometimes what you did . . . I know what I’ve done in the past to get some of my life back, I had to get bigger. Like, I had to build to justify. If you’re small and you’re doing a house here and there, one, you can’t keep somebody busy, two, you probably can’t afford to pay them so you’ve got to keep it in-house generally unless you have virtual assistance or call centers that are per minute and stuff like that. But on some level, in order to build your business, to get your life back, you have to grow, right?
Andy: Absolutely.
Mike: Yeah. So was that part of your decision making when you said . . . we’re also going to talk about how you scaled up and how people can scale their business, but that’s an important part of it, right? You need to be willing to maybe get bigger to get more of your own time back.
Andy: Yep. You have to absolutely create a bigger pie so that you could cut people in on that and still make it profitable for you. I remember my wife, “Nature abhors a vacuum,” we’ve probably heard this before. When you free up your time, you naturally fill it with something else. I’m an entrepreneur and I do that all the time. I still do that to this day.
When I told my wife, I remember before I brought in the first guy that was going to answer the phone, she was like, “Are you sure you want to do this?” Because she knew that when you bring somebody else in, it’s like you are committing to going a little bit bigger. I was like, “Yeah. I think want to do this.” And she’s had that conversation with me time and time again over the last three, four years. Every time I say, “I’m going to go into a new market,” or, “I’m going to start this new thing,” she’s like, “Are you sure you want to do this?” I’m like, “Yeah. Yeah. I think I want to do this.” But you have to absolutely do that.
When I brought that first guy in, I was no longer answering the phone anymore so of course I didn’t care how long and often that phone rang. But that forced me to be bigger, to make sure that that phone didn’t stop ringing. So I went from that number of phone calls to this because of somebody else is doing it. Yeah, it absolutely forced me to be bigger.
Mike: Sure. Sure. Let’s talk about, maybe share a little about how you scaled and what you’re doing now. Then we’re going to talk about some, for those that want to scale, some of the things they need to think about and some technology and the importance of hiring good people and some of those things. So talk about what you did. You were just initially in Salt Lake City, right?
Andy: Yep. Utah area. Salt Lake City but then also north and south of there. All around Salt Lake metro area.
Mike: Okay, and then what happened?
Andy: I started there. Got a person answer the phones for me. Then I found somebody to help me [inaudible 00:13:38] to keep the marketing out so the phones would ring more often. Did that. Then once that happened the guy that was answering the phone and teeing up appointments for me, he had just way too much stuff going on because he was comping all the properties and making sure . . . he was like almost my personal assistant setting up all those appointments and things. So I brought in an assistant for him.
The last piece that I was actually working inside that business was I was the outside salesman, outside sales rep here in Utah. When I outsourced that piece, when I actually found an outside sales rep, then I was able to go even bigger with that. I was no longer limited by, “Man, I don’t want to go all these sellers.” Because the phone rings 500 times, that’s okay. But when I got to go see 15 sellers in a week, I’m just like . . . you juggle all those balls. That really freed me when I freed myself up from that.
Mike: Yeah. One of the things that I know that you know, if you’ve been doing this for a few years, even in the last couple of years, technology has really changed the game for what you can do.
Andy: Absolutely.
Mike: How many markets do you invest in now?
Andy: Three. Three markets right now. Three states.
Mike: Three states. So they’re pretty spread out.
Andy: Yep.
Mike: And so, even things like the ability to sign contracts from an iPad, wire money from an app, stuff like that. You could wire money from a phone or you could certainly wire money in different ways three or four years ago. But there’s just so much you can . . . like see houses now, somebody can take pictures and give you real time access or maybe even video. There’s so much you can do now that you couldn’t do a few years ago. So, maybe, talk about how that’s changed things for you. Then if you can, maybe share some tips on what people, if they want to scale up and do things like that, some advice.
Andy: Yeah. As far as the technology goes, all of us are our own limiters, right. Like you said, we’re our own bottleneck. I think we’re still stuck in that. The information age is here. It’s been here for a few years but we’re still stuck in this, like, “I got to see it, touch it. I got to know what this is.” I’ve never been to two of the states that I buy houses in, never been there.
But technology-wise, you can go Google Earth and put 123 Easy Street and you can get there and literally sit in the front of their house, spin around, look at all the neighbors, and you could feel what that looks like across the world. The comparables you can get on their MLS locally or there’s even lots of things like Zillow and Redfin that in some areas are accurate. You can get accurate values and stuff and you don’t even have to go there. Really, because I’ve never been. That’s the type of technology you were talking about, right?
Mike: And I guess if you’re wholesaling, you’re primarily wholesaling in those markets, right? So that makes it a little bit easier that you’re not fully committed to taking them down yourself. Your margin might get squeezed or something like that, but yeah.
Andy: No, that’s true. The final eyes that are going to look at it will be on the ground. We do have people on the ground in the different states but we didn’t always have them on the ground at those states. But your buyer, absolutely. They are the people that are last eyes. They’re going to look at these and they’re going to be the ones spending their money, so they’re definitely going to be checking it out. So you’re right.
Mike: Yeah. Any advice on technology? Not necessarily specific apps or anything like that, but just how people should start thinking about it if that’s something they wanted to do.
Andy: Yeah. Here’s some key things. They’re not specific apps necessarily. Like a CRM program and specifically we use Podio like a lot of real estate investors do. The importance of CRM is so you could stay organized. Because most real estate investors start out with, if they’re organized, they’ll start with an Excel spreadsheet. List the names and numbers of people they’ll call, when they’re going to follow up with them. But having some sort of CRM that has a follow-up system and that can trigger you to follow up on somebody or just to keep track of the addresses and the numbers, all that stuff is extremely important. So I would say, absolutely get a CRM.
Another thing that’s important is being able to track your marketing which is phone numbers. We’ve got a [inaudible 00:17:22] system that we use, but every marketing piece has a different phone number on it. So we can track . . . we know exactly where are leads are coming from. We know who’s calling from where, how effective stuff is. You got to know that stuff. If you’re spending money on marketing, you need to know what’s being effective and what’s not. That’s absolutely something. There’s lots of different providers for that stuff. There’s like RingCentral. I think [PacLive], I think they’ve got something like that too. We use a different one and it’s local.
Mike: Yeah. Let’s talk a little about people. I think part of this is being able to find people that can help your business be successful. Of course that’s a challenge especially if you’re in multiple markets. It’s a challenge if you have them in your own office, I found.
Andy: Yeah.
Mike: But talk a little about the importance of people and being able to rely on people, train people, and keep them motivated especially if they’re in a different market.
Andy: Yeah. That’s been my biggest takeaway honestly from the last ten years of investing, is the power of people, the power of your network, and the power of people that can help you. It makes a difference, if you find that one good person, it just changes everything. If you could find these key people in different parts of your organization, whether it be, taking the phone call or closing a seller or working with transaction coordination or disposition, it just makes life so much easier. Absolutely, technology is great. Google Earth’s great. Podio is great. Voiceover IP, like phone stuff, is great. But people make the business. I think people will always be the business.
Mike: Yeah.
Andy: So finding good people and aligning your incentives with them. That’s what I’ve done. I don’t treat them . . . and here is the biggest tip I can give to you with that like, “How do I find them? Do you do like a personality profile or do you put something up online?” The biggest thing for me is, you treat them like you want to be treated. I don’t treat them like employees. I even cringe saying like, “He’s got employees.” I don’t feel like I’ve got employees. I feel like everybody that works with me on my team wants to be there, and they’re incentivized to do the stuff for themselves and they want to do a good job.
I’m sitting here right now in this interview and I know that they are in their various spots doing their thing. I don’t worry about them. I don’t micromanage them, I don’t babysit them. But that all starts with you as the person that’s hiring them or bringing them in. If you’re feeling about them is they’re an employee and you’re going to treat them as such, they will feel that and you’ll get that from them. But if you treat them like they’re not that way, as a team member, or not just rhetoric, but truly treat them that way and feel that way about them, they’ll feel that and you’ll get better performance out of them. That’s what I found out.
Mike: Right. Maybe you could add some thoughts on . . . I think one challenge that probably a lot of real estate investors face when they’re, especially like sales people, is that a lot of those folks want to be you ultimately. They want to be an investor themselves. You could go at it from two different angles. One, you could say, “No. I just need you to do what I need. You have to do this for me.” Then there’s other ways like, “Well, if you commit to doing this for me for a couple years then I’ll help you go out on your own,” or whatever it might be. Talk about that aspect because I think most people that are sales type guys, buyers, whatever you might want to call them, they ultimately have a bug to be the owner. And sometimes maybe they start to feel like, “Well, I’m the one doing all the work. I’m only getting a minority share of the pie,” stuff like that. Just talk through that part.
Andy: Yeah, that’s interesting. I would say, first of all is to show them how to win within your sphere. Because they can be self-employed business owners within your organization if you will, right? Everybody is the president of their own corporation, right? You can quit whenever you want at whatever it is you’re doing. So I would show them how to win within that arena. I think most people that have that attitude, that . . . some people, you can’t reign them in.
But when people have that attitude and they come in just to learn or whatever, what I found is they come in to the organization, and maybe you found this too Mike, but they recognize what they didn’t know. They get in there and they think, “Oh, I can do everything,” or, “I want to do it all for myself.” Then they come in and they’re like, “I had no idea that I needed all of that.” And they’re like, “Why don’t I just do what I’m good at right here and let the rest of the people do what they’re good at and then we’ll just be this big team, family, pushing towards the same goal?”
Mike: Right.
Andy: Because there’s a lot to it. And you know Mike, all the things that look easy on the surface, there’s a lot of moving parts.
Mike: Yeah. And there’s a lot of risk. Presumably, you’re paying for the advertising and may or may not get anything out of it and all those things.
Andy: Yes. Absolutely. All that stuff. All the systems and other people that you’re bringing together there. You brought a lot together. They’re free to go do that on their own if they’d like to. But most of them come in, they’re like, “That sounds like a nightmare.” And you keep them incentivized by paying them well. That’s what I think.
Mike: Yeah. Awesome. We mentioned marketing, but the importance of marketing, and I know you said that’s one of the first things you outsourced. Why was that?
Andy: The first thing I outsourced was answering the phones. But then after that, I wanted the phone to ring long and hard, like I just want it to keep ringing it. So I recognized that I was a bottleneck there too. And anybody that has ever put together marketing, you got to keep it going out. Like a direct mail, if you’re sending mail every 30 days, you’ve got to get the list. You’ve got to send it to the mailing house. What piece are you mailing and what phone number you put on there. The proofs are coming back. There’s just a lot of moving parts with that and I recognized that that’s a full time job. Just keeping up the marketing, and that’s just direct mail.
You could have absentees, owner occupants, probates, inherited, [inaudible 00:23:07] tax lates. You can do all these different lists. You got to build the list. But what message you’re going to give them? You coordinate with the mailing house, and you’re trying to save money, and when is it dripping out and all that stuff. That’s just one channel. Then you’ve got like, “Are you going to go on the internet? Are you going to put bandit signs up?” There’s just lots of different channels, so it’s almost like you absolutely have to have somebody that’s full-time dedicated to be like, “This is what I’m doing. I’m going to make sure the phone keeps ringing.”
Mike: And the most important thing with marketing, as you know, is consistency.
Andy: Absolutely.
Mike: There’s people that I coach and mentor that, they know the importance of it too, but they’ll be like, “Oh man. I was supposed to send that out last week. I totally forgot.” This is already a, I call it a lumpy business, right? You have lots of ups and downs and peaks and valleys in this business, and that’s when you are consistent. If you’re not consistent with advertising, good luck.
Andy: I think that’s the difference between the person that scaled and growing and the solo entrepreneur. Especially the way the real estate world is, they send out something. They do the right things. They get a deal or two. They get so overwhelmed with what they’re doing with those deals and they just turn off their marketing machine. They don’t have any consistencies and are like, “Oh, I need another deal.” So it goes from deals to no deals, deals to no deals. But if you can keep that marketing consistent, you’ll consistently get deals. That’s the big secret, right?
Mike: Yeah.
Andy: Keep doing it consistently.
Mike: Yeah. Maybe you could share a little bit of insight in terms of scaling. Not just scaling to be bigger in your own market but for why you went in to other markets. It’s seems like there’s probably plenty of opportunity for you right in your backyard, why would you go into different markets?
Andy: Yeah, there is opportunity here and you start to see . . . you couldn’t go any bigger. In order to scale this real estate business, you need to have things that are scalable. Like, direct mail is scalable and internet stuff can be scalable. But there’s only so much we could do in our market and I thought to myself, I needed a bigger a list. Literally, with direct mail, I want a bigger list. I want to send more mail.
So the answer was I had to grow in to another market because Salt Lake’s not that big. We’re like two million [inaudible 00:25:11] across the Wasatch Front. That’s what it was. I wanted to feed the machine and keep people busy so it’s like, “Let’s go hit another market.” So we go in there. We make a mess in that other market and then we clean it up. Then we’d go in another market and make another mess and just keep going with it.
Mike: Yeah. I guess, based on how far apart your markets are, because your markets, it’s not like you’re in an adjoining market. You’re in Salt Lake and then Indianapolis and then . . .
Andy: New Mexico.
Mike: . . . New Mexico.
Andy: [inaudible 00:25:37].
Mike: When you look at a market like that, is it just to diversify risk or you’re looking for markets that are less competitive, or . . .?
Andy: Yeah. California wasn’t, but we did go into California. It was random, honestly, when we went into New Mexico. That was a little bit random. But Indiana, actually, there was I choice because I actually want to pick up some cash flowing rentals. I have rentals in Utah, but Indiana in particular just made sense to me so I thought, “Why don’t I just turn on the marketing machine there and do some wholesale retail stuff and then also keep some stuff as rental properties?” So that’s what it was. And there was a little bit of method into the madness but mostly just like, “Why not?” right?
Mike: Yeah. But back to the scaling part. I don’t know all the details but you still talk about what you’re able to handle centrally and then what happens with boots on the ground in those markets.
Andy: Yeah, absolutely. What I’ve learned and what I think is, for a wholesale business and maybe even a retail business too, is you need to have one person on the ground. It’s not absolutely necessary because we’ve done it without one person on the ground, but I think it works a lot better with one person on the ground, and that’s an acquisition manager. That’s somebody who’s actually going to go meet with the sellers, look at the properties, analyze that stuff. I think that’s key. Everything else we do from the office in Utah is answering the phone, sending out the marketing, dispositions, meaning getting rid of the properties, transaction coordination, comping all the properties. All that can be done in central location and frankly, you probably could do a lot of it with VAs if you have a good system that you could train them really well. I think a lot of that could be done with VAs. We do it with people that are actually live people in our office, on the ground. But you probably could. We keep all that stuff local.
Mike: Yeah. Great man. That’s good information. We got a couple more minutes left here, maybe you could just share this . . . summarize everything together and for folks that are listening, which I know there’s a lot of people listening to this that are a one-man band, one-woman band and stuck in this hamster wheel of doing everything, maybe just what they should start thinking about first. Because I know it just starts with just find one thing that you don’t like and figure out how to outsource that so you can . . . at the end of the day, what folks listening to this need to know is, and when I say this it’s completely obvious but, you have an opportunity cost, right?
You could be doing something else with your time. And if you’re doing things that are below your pay grade where you could be out finding more leads or enjoying your life, God forbid, anything other than the things you hate doing, you got to start somewhere. But what kind of advice would you give to folks that are looking to . . . this is hitting home and they need to do something about it?
Andy: First bit of advice would probably be not what you’re looking for. But the first bit of advice would be, step back, think about that and think why. Like my wife puts me in check every time and says, “Why? Why do you want to be bigger? Why do you want to do those things?” Because truly, it’s not cool or necessary to do more deals. Just to say you do 150 deals a year, who cares? Right? Quality of life is absolutely important.
So if you’re a guy that doesn’t like real estate, you don’t want to scale it up, you don’t want to manage people but you’re doing fine, find something you love doing and even if it’s not real estate. I tell people all the time. I know this is real estate centric, but go find something you love because time is your most precious asset and don’t waste your time doing things that you hate.
Now that said, don’t be lazy. Don’t be the person like, “Well, Andy said I have to do something I love. I want to sit on a hammock all day.” Don’t be lazy because I think in life, our growth comes from tackling things, from encountering obstacles and getting through those. That’s where real growth is in life. So if you do want to grow, find out what it is you like and find a way to add value to people that way using your unique abilities. And go out there in the world and add value and do what it is you love. That’s probably not the answer you wanted Mike . . .
Mike: No, that’s a good one. The reality is, I think a lot of people, this is what I’d say, a lot of people get in to real estate investing I believe, not necessarily for the real estate. It’s for what that . . . that’s like a vehicle to something else. But if you hate doing it, you shouldn’t do it. There’s no doubt about it. I agree with you 100%.
Andy: Absolutely. It can be a highly paid job but that’s really what it is. When you’re flipping real estate, whether it be wholesale or you’re flipping it like fixing it and reselling it, retail, it’s a job. It’s absolutely a job. The real key to financial wealth is live on less than you make. Invest the difference until your passive income is better than your . . . there’s more than you need to live, right? You’re financially free at that point. Once you get there, it doesn’t take that much to be financially free really, but in the meantime you do need to have a job for growth, one, and two, for money so that you can invest. So find something you like doing and just find growth within that arena. You don’t have to do 150 deals a year, right?
Mike: Yeah.
Andy: That’s not success. That’s not necessarily success but it can be.
Mike: Yeah. Well Andy, before we go, why don’t you tell us about how to go check out some of your I Love Real Estate Stories videos?
Andy: Yeah. Nature abhors a vacuum like we said earlier. I had a bunch of people on my team, that are helping me buy houses so I don’t have to go see them all anymore. I don’t have to go see sellers anymore, but fortunate enough to have great people work with me there. So I had some free time and my brother’s a talented documentary filmmaker, so I said, “Hey. Come film the life of a real estate entrepreneur, which is me,” and I said, “We’ll talk about interesting flip stories I’m doing, wholesale stories. Also just tips and tricks about little things that come along the way.”
So he’s been recording me. It’s been about a year and a half now. It’s called I Love Real Estate Stories, so iloverealestatestories.com. We do a bunch of documentary style videos that are not fake, not TV fake stuff, but it’ll entertain you. It’ll educate you and hopefully it’ll inspire you to do whatever it is that you want to do in your life.
Mike: Awesome. They are great, which we actually talk about it. We’ve talked about it several times. There’s a lot of production that goes into them. So they’re very, very good. We’ll have a link for iloverealestatestories.com. We’ll add a link down below the video here. Andy, great to see you again. Thanks so much for being with us today.
Andy: Yeah. I appreciate it Mike.
Mike: Yep. I look forward to seeing you again soon my friend.
Andy: Absolutely.
Mike: Take care.
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He’s a successful real estate investor, coach, and speaker that invest in multiple markets. But he started as a one-man shop in one market where he did everything himself, chief bottle washer. He’s now scaled to multiple markets with multiple employees where he’s doing more than a hundred houses a year and still has time in his life to enjoy his life. Today we’re going to discuss how to scale your real estate investing business because many of us started as a one-man band and most of us aspire to do something greater than that. Before we get started with Andy though, let’s take a moment to recognize our featured sponsors.
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Hey Andy, welcome to the show.
Andy: Hey. Thanks for having me back.
Mike: Welcome back, yeah.
Andy: I know.
Mike: You made the cut. We said, “Let’s have this guy back.”
Andy: People may or may not know this but after you do an interview with Mike, he sends you this really cool FlipNerd glasses and my kids love those glasses. I really wish I had them because I’d be putting them on right now in this styling because . . .
Mike: Like this?
Andy: Oh no. I wish I had mine too. I’m so jealous. The glasses envy right now.
Mike: I’ll send you some more my friend.
Andy: Awesome.
Mike: Yeah.
Andy: Yes. Mission accomplished.
Mike: So yeah. Hey, glad you’re back for round two. We have decided to go back to some of the folks we had on the show before and have some folks back here and there that we had great response from and people that I’ve become friends with that have great information and great stories to share. I’m excited to hear more about scaling your business because I think a lot of real estate investors get started and they’re so conservative that they just stay small, do everything themselves. The challenge is a lot of times people end up just creating a job for themselves instead of a business that they can truly scale and really have a life, right?
Andy: Absolutely. Real estate investors, we’re kind of cheap by nature, right? We want to keep everything in house. We don’t want to spend any money. We don’t want to, “I can do that. I can do that.” But really, there are a lot of things you shouldn’t be doing and really, it’s holding you back. It’s absolutely holding you back. So we’re going to talk about that.
Mike: Awesome. Hey, before we get started, why don’t you tell everybody your story again about how you got started? I know you got started by selling hand-drawn pictures of Mario and Luigi. You got to tell us that part again.
Andy: Yeah, I’ll give the quick background. I’m an army brat. I was born in Georgia and I’ve moved all across the United States. I’ve lived in Germany. I’ve lived in Virginia. I’ve lived in Kansas, New York. But we ended up landing in Utah a number of years ago. My parents, my dad was in the military and my mom was a physical therapist, both working professionals. I’ve always been a little bit entrepreneurial. Like you said, I sold pictures of Mario and Luigi on the school bus. I sold bulk candy to get a profit.
I’ve always had that little bug, but I never knew what it was until I read “Rich Dad, Poor Dad” which shifted my mentality. After reading that, I started looking for opportunities primarily in real estate. The first opportunity I found was a bank-owned, non-conforming, illegal triplex. Basically if you don’t know what that means, I didn’t know what that meant either, but it’s a big mess and a headache and I bought it thinking . . . because I didn’t know any better, right?
I bought that deal. I bought it, fixed it up with these two hands, rented it out, sold it on owner financing, and got the cash out a couple of years later. It’s pretty good money at that. But what I learned from that was just invaluable. It was my hardest deal to date. But I call that deal my treehouse because I never had a treehouse growing up. But when I was working with these two hands on that deal, it was like me hammering nails into my first treehouse. So now my company is of course called Treehouse Investments.
Mike: That’s a great story man. You said it was illegal. What was illegal about it?
Andy: Illegal. It was illegal for the zoning. It was a triplex that wasn’t in the zoning for triplex. Illegal in that zoning. Non-conformance to law . . .
Mike: Okay. I guess you got that result.
Andy: Yeah. It was just some they had to go get variances with the city and had a bunch of code of enforcement stuff. I had to pour concrete, showed plans for how you’re going to get five cars back in there. I literally, I did all those stuff. I thought every real estate investor did that. I’m looking at this thing going like, “Oh okay. I guess that’s what I got to do.” But most investors probably past an idea up because they’re like, “I don’t want to do all that stuff.”
But I did it and the most valuable thing I got of that . . . and I made 40 grand, which I wasn’t expecting it that much. That was a ton of money for me at that time. Made 40,000, but the most valuable thing I got out of it was this – I learned so much from doing that. Not only doing dry wall and painting and things like that, but I also learned how to fill out a lease and get tenants in there, and take cleaning deposits and deal with tenants junk, and I learned how to do seller financing. Just all this stuff from that one little deal, from my treehouse. That was the beginning of everything.
Mike: I’m suspecting you learned a whole bunch of stuff about what not to do too, right?
Andy: Oh man. I made so many mistakes. I made so many mistakes but they were stepping stones.
Mike: But now you’re perfect.
Andy: Yeah, I’m absolutely perfect. I’ve been perfect for a number of years now actually.
Mike: Yeah.
Andy: That’s why you have me on the show.
Mike: Yeah. Talk about your business really on after that first deal, because I think there’s definitely a great lesson here for people to realize. It took me a while too. I didn’t start as a one-man band. We had employees and staff from the beginning. But it took a while for me to really value those employees. If any of my former employees or current employees are listening to this, just know that I value you more than I would have in the past.
My point is this, I used to look at employees or things like that as unnecessary evil instead of a win-win for everybody involved like, “Let’s really create something here.” Some of that’s probably a maturity level maybe. But like you said, I think a lot of people get stuck in this “I got to stay small and keep it all tight” mentality that you hear. The problem is this, you are the bottleneck in everything you do and you can’t grow. So let’s talk about like, where you went after that deal and how you evolved.
Andy: Yeah, and I can absolutely relate with everybody here. I’d say 90% of the people listening to us are real estate investors that are that. They’re small. They started small. You’re probably the anomaly, you say started with employees and things. That means that you probably had a little bit of money. Like for me, I started with nothing, so I had to do everything myself. I had to be . . . and I recognize that I was the bottleneck, but I really needed it small and keep it all because I had nothing else. I just totally grew organically that way. I totally identify with people that are a one-man band, that want to keep it all because they don’t have any other options. It’s absolutely me.
But the first thing I did was, I’ve always been I’d say financially responsible. So when I made that first $40,000 paycheck on my treehouse I didn’t go spend it all. I didn’t go buy a new car, didn’t upgrade my lifestyle. In fact, I took that money and I just reinvested it. I continued to go from deal to deal as a one-man band and just getting the money, getting a little bit more, reinvesting it, reinvesting it, until I could finally have a little bit of breathing room.
And Mike, I was extremely like . . . I’m risk averse. I was working on a loading dock, making more money in real estate than I was on the loading dock. But I was so afraid to quit because I wanted that security of, “Oh, I need this x dollars per hour so I can qualify for a loan, so I can do more stuff.” Yet it was sucking the life out of me and was totally taking all of my time that I couldn’t go do what was making me more money. So I understand everybody that’s risk averse.
But I finally got to a point where I got fired from my job on the loading dock. That pushed me out into the world of real estate, so just go do this thing. I remember to this day sitting on the front porch with my dad and I came home and he’s, “What’s going on?” and I’m like, “I got fired from my job there.” He said, “Andy,” he begged me, he said, “please. Please Andy. Go back to your boss there. Go back and just please ask them to give you your job back.” He says, “You do not want this on your resume. Just go get your job back there.” And I said, “Dad, I want to do real estate. I’ve been doing real estate successfully,” like, “I want to do this.” And he was just like, “Just go get your job back.”
But I realized now he was speaking from his paradigm of that security of what he wanted to do, was build his resume. But again I got pushed out of the nest there. I was forced to grow wings and I was a solo entrepreneur for a long time. But it’s just been in the last three or four years that I’ve allowed people to help me. I had a little bit more money. Then I just plain got sick of doing everything. I realized that was my own bottleneck. I don’t know if we want to start off with this, but the first thing I outsourced was, I hated taking the phone calls. Because this thing would ring when I was at dinner or nights and weekends and I’m like, “I don’t want to answer those anymore.” But you know Mike, when you pay the money to have that phone ring, you got to answer that phone.
Mike: You got to answer that.
Andy: You got to answer that phone, right? It was literally the money phone. I had my phone and I had the other phone which is the money phone.
Mike: I was the same way man.
Andy: Yeah.
Mike: It’s frustrating because there’s a point earlier in your life, like before you got to that point, where you would drop everything and answer that phone. It was the most important thing in your life probably. Then this weird thing happens where it’s the life blood of your business but it annoys you that you have to deal with that now. That’s just crazy that you get to that point.
Andy: You do.
Mike: But it happens. That could be a $10, $20, $30, $40, $50,000 phone call and you just don’t want to deal with it. You’re like . . .
Andy: You get content. You don’t want to deal with it. Yeah. But I can’t tell how many deals or how much information from a phone call I’ve written on the back of a napkin because I stepped out of the dinner table with my family at a restaurant and like, writing stuff down because I didn’t want to miss that deal. I got those deals, but at what expense, right?
Mike: Right.
Andy: So, yeah. That was the first thing I outsourced, is finding somebody to answer the phone for me, to gather that information so I didn’t miss that and tee up appointments. That was my number one.
Mike: Let’s talk a little about why you . . . this isn’t always the case but I think sometimes what you did . . . I know what I’ve done in the past to get some of my life back, I had to get bigger. Like, I had to build to justify. If you’re small and you’re doing a house here and there, one, you can’t keep somebody busy, two, you probably can’t afford to pay them so you’ve got to keep it in-house generally unless you have virtual assistance or call centers that are per minute and stuff like that. But on some level, in order to build your business, to get your life back, you have to grow, right?
Andy: Absolutely.
Mike: Yeah. So was that part of your decision making when you said . . . we’re also going to talk about how you scaled up and how people can scale their business, but that’s an important part of it, right? You need to be willing to maybe get bigger to get more of your own time back.
Andy: Yep. You have to absolutely create a bigger pie so that you could cut people in on that and still make it profitable for you. I remember my wife, “Nature abhors a vacuum,” we’ve probably heard this before. When you free up your time, you naturally fill it with something else. I’m an entrepreneur and I do that all the time. I still do that to this day.
When I told my wife, I remember before I brought in the first guy that was going to answer the phone, she was like, “Are you sure you want to do this?” Because she knew that when you bring somebody else in, it’s like you are committing to going a little bit bigger. I was like, “Yeah. I think want to do this.” And she’s had that conversation with me time and time again over the last three, four years. Every time I say, “I’m going to go into a new market,” or, “I’m going to start this new thing,” she’s like, “Are you sure you want to do this?” I’m like, “Yeah. Yeah. I think I want to do this.” But you have to absolutely do that.
When I brought that first guy in, I was no longer answering the phone anymore so of course I didn’t care how long and often that phone rang. But that forced me to be bigger, to make sure that that phone didn’t stop ringing. So I went from that number of phone calls to this because of somebody else is doing it. Yeah, it absolutely forced me to be bigger.
Mike: Sure. Sure. Let’s talk about, maybe share a little about how you scaled and what you’re doing now. Then we’re going to talk about some, for those that want to scale, some of the things they need to think about and some technology and the importance of hiring good people and some of those things. So talk about what you did. You were just initially in Salt Lake City, right?
Andy: Yep. Utah area. Salt Lake City but then also north and south of there. All around Salt Lake metro area.
Mike: Okay, and then what happened?
Andy: I started there. Got a person answer the phones for me. Then I found somebody to help me [inaudible 00:13:38] to keep the marketing out so the phones would ring more often. Did that. Then once that happened the guy that was answering the phone and teeing up appointments for me, he had just way too much stuff going on because he was comping all the properties and making sure . . . he was like almost my personal assistant setting up all those appointments and things. So I brought in an assistant for him.
The last piece that I was actually working inside that business was I was the outside salesman, outside sales rep here in Utah. When I outsourced that piece, when I actually found an outside sales rep, then I was able to go even bigger with that. I was no longer limited by, “Man, I don’t want to go all these sellers.” Because the phone rings 500 times, that’s okay. But when I got to go see 15 sellers in a week, I’m just like . . . you juggle all those balls. That really freed me when I freed myself up from that.
Mike: Yeah. One of the things that I know that you know, if you’ve been doing this for a few years, even in the last couple of years, technology has really changed the game for what you can do.
Andy: Absolutely.
Mike: How many markets do you invest in now?
Andy: Three. Three markets right now. Three states.
Mike: Three states. So they’re pretty spread out.
Andy: Yep.
Mike: And so, even things like the ability to sign contracts from an iPad, wire money from an app, stuff like that. You could wire money from a phone or you could certainly wire money in different ways three or four years ago. But there’s just so much you can . . . like see houses now, somebody can take pictures and give you real time access or maybe even video. There’s so much you can do now that you couldn’t do a few years ago. So, maybe, talk about how that’s changed things for you. Then if you can, maybe share some tips on what people, if they want to scale up and do things like that, some advice.
Andy: Yeah. As far as the technology goes, all of us are our own limiters, right. Like you said, we’re our own bottleneck. I think we’re still stuck in that. The information age is here. It’s been here for a few years but we’re still stuck in this, like, “I got to see it, touch it. I got to know what this is.” I’ve never been to two of the states that I buy houses in, never been there.
But technology-wise, you can go Google Earth and put 123 Easy Street and you can get there and literally sit in the front of their house, spin around, look at all the neighbors, and you could feel what that looks like across the world. The comparables you can get on their MLS locally or there’s even lots of things like Zillow and Redfin that in some areas are accurate. You can get accurate values and stuff and you don’t even have to go there. Really, because I’ve never been. That’s the type of technology you were talking about, right?
Mike: And I guess if you’re wholesaling, you’re primarily wholesaling in those markets, right? So that makes it a little bit easier that you’re not fully committed to taking them down yourself. Your margin might get squeezed or something like that, but yeah.
Andy: No, that’s true. The final eyes that are going to look at it will be on the ground. We do have people on the ground in the different states but we didn’t always have them on the ground at those states. But your buyer, absolutely. They are the people that are last eyes. They’re going to look at these and they’re going to be the ones spending their money, so they’re definitely going to be checking it out. So you’re right.
Mike: Yeah. Any advice on technology? Not necessarily specific apps or anything like that, but just how people should start thinking about it if that’s something they wanted to do.
Andy: Yeah. Here’s some key things. They’re not specific apps necessarily. Like a CRM program and specifically we use Podio like a lot of real estate investors do. The importance of CRM is so you could stay organized. Because most real estate investors start out with, if they’re organized, they’ll start with an Excel spreadsheet. List the names and numbers of people they’ll call, when they’re going to follow up with them. But having some sort of CRM that has a follow-up system and that can trigger you to follow up on somebody or just to keep track of the addresses and the numbers, all that stuff is extremely important. So I would say, absolutely get a CRM.
Another thing that’s important is being able to track your marketing which is phone numbers. We’ve got a [inaudible 00:17:22] system that we use, but every marketing piece has a different phone number on it. So we can track . . . we know exactly where are leads are coming from. We know who’s calling from where, how effective stuff is. You got to know that stuff. If you’re spending money on marketing, you need to know what’s being effective and what’s not. That’s absolutely something. There’s lots of different providers for that stuff. There’s like RingCentral. I think [PacLive], I think they’ve got something like that too. We use a different one and it’s local.
Mike: Yeah. Let’s talk a little about people. I think part of this is being able to find people that can help your business be successful. Of course that’s a challenge especially if you’re in multiple markets. It’s a challenge if you have them in your own office, I found.
Andy: Yeah.
Mike: But talk a little about the importance of people and being able to rely on people, train people, and keep them motivated especially if they’re in a different market.
Andy: Yeah. That’s been my biggest takeaway honestly from the last ten years of investing, is the power of people, the power of your network, and the power of people that can help you. It makes a difference, if you find that one good person, it just changes everything. If you could find these key people in different parts of your organization, whether it be, taking the phone call or closing a seller or working with transaction coordination or disposition, it just makes life so much easier. Absolutely, technology is great. Google Earth’s great. Podio is great. Voiceover IP, like phone stuff, is great. But people make the business. I think people will always be the business.
Mike: Yeah.
Andy: So finding good people and aligning your incentives with them. That’s what I’ve done. I don’t treat them . . . and here is the biggest tip I can give to you with that like, “How do I find them? Do you do like a personality profile or do you put something up online?” The biggest thing for me is, you treat them like you want to be treated. I don’t treat them like employees. I even cringe saying like, “He’s got employees.” I don’t feel like I’ve got employees. I feel like everybody that works with me on my team wants to be there, and they’re incentivized to do the stuff for themselves and they want to do a good job.
I’m sitting here right now in this interview and I know that they are in their various spots doing their thing. I don’t worry about them. I don’t micromanage them, I don’t babysit them. But that all starts with you as the person that’s hiring them or bringing them in. If you’re feeling about them is they’re an employee and you’re going to treat them as such, they will feel that and you’ll get that from them. But if you treat them like they’re not that way, as a team member, or not just rhetoric, but truly treat them that way and feel that way about them, they’ll feel that and you’ll get better performance out of them. That’s what I found out.
Mike: Right. Maybe you could add some thoughts on . . . I think one challenge that probably a lot of real estate investors face when they’re, especially like sales people, is that a lot of those folks want to be you ultimately. They want to be an investor themselves. You could go at it from two different angles. One, you could say, “No. I just need you to do what I need. You have to do this for me.” Then there’s other ways like, “Well, if you commit to doing this for me for a couple years then I’ll help you go out on your own,” or whatever it might be. Talk about that aspect because I think most people that are sales type guys, buyers, whatever you might want to call them, they ultimately have a bug to be the owner. And sometimes maybe they start to feel like, “Well, I’m the one doing all the work. I’m only getting a minority share of the pie,” stuff like that. Just talk through that part.
Andy: Yeah, that’s interesting. I would say, first of all is to show them how to win within your sphere. Because they can be self-employed business owners within your organization if you will, right? Everybody is the president of their own corporation, right? You can quit whenever you want at whatever it is you’re doing. So I would show them how to win within that arena. I think most people that have that attitude, that . . . some people, you can’t reign them in.
But when people have that attitude and they come in just to learn or whatever, what I found is they come in to the organization, and maybe you found this too Mike, but they recognize what they didn’t know. They get in there and they think, “Oh, I can do everything,” or, “I want to do it all for myself.” Then they come in and they’re like, “I had no idea that I needed all of that.” And they’re like, “Why don’t I just do what I’m good at right here and let the rest of the people do what they’re good at and then we’ll just be this big team, family, pushing towards the same goal?”
Mike: Right.
Andy: Because there’s a lot to it. And you know Mike, all the things that look easy on the surface, there’s a lot of moving parts.
Mike: Yeah. And there’s a lot of risk. Presumably, you’re paying for the advertising and may or may not get anything out of it and all those things.
Andy: Yes. Absolutely. All that stuff. All the systems and other people that you’re bringing together there. You brought a lot together. They’re free to go do that on their own if they’d like to. But most of them come in, they’re like, “That sounds like a nightmare.” And you keep them incentivized by paying them well. That’s what I think.
Mike: Yeah. Awesome. We mentioned marketing, but the importance of marketing, and I know you said that’s one of the first things you outsourced. Why was that?
Andy: The first thing I outsourced was answering the phones. But then after that, I wanted the phone to ring long and hard, like I just want it to keep ringing it. So I recognized that I was a bottleneck there too. And anybody that has ever put together marketing, you got to keep it going out. Like a direct mail, if you’re sending mail every 30 days, you’ve got to get the list. You’ve got to send it to the mailing house. What piece are you mailing and what phone number you put on there. The proofs are coming back. There’s just a lot of moving parts with that and I recognized that that’s a full time job. Just keeping up the marketing, and that’s just direct mail.
You could have absentees, owner occupants, probates, inherited, [inaudible 00:23:07] tax lates. You can do all these different lists. You got to build the list. But what message you’re going to give them? You coordinate with the mailing house, and you’re trying to save money, and when is it dripping out and all that stuff. That’s just one channel. Then you’ve got like, “Are you going to go on the internet? Are you going to put bandit signs up?” There’s just lots of different channels, so it’s almost like you absolutely have to have somebody that’s full-time dedicated to be like, “This is what I’m doing. I’m going to make sure the phone keeps ringing.”
Mike: And the most important thing with marketing, as you know, is consistency.
Andy: Absolutely.
Mike: There’s people that I coach and mentor that, they know the importance of it too, but they’ll be like, “Oh man. I was supposed to send that out last week. I totally forgot.” This is already a, I call it a lumpy business, right? You have lots of ups and downs and peaks and valleys in this business, and that’s when you are consistent. If you’re not consistent with advertising, good luck.
Andy: I think that’s the difference between the person that scaled and growing and the solo entrepreneur. Especially the way the real estate world is, they send out something. They do the right things. They get a deal or two. They get so overwhelmed with what they’re doing with those deals and they just turn off their marketing machine. They don’t have any consistencies and are like, “Oh, I need another deal.” So it goes from deals to no deals, deals to no deals. But if you can keep that marketing consistent, you’ll consistently get deals. That’s the big secret, right?
Mike: Yeah.
Andy: Keep doing it consistently.
Mike: Yeah. Maybe you could share a little bit of insight in terms of scaling. Not just scaling to be bigger in your own market but for why you went in to other markets. It’s seems like there’s probably plenty of opportunity for you right in your backyard, why would you go into different markets?
Andy: Yeah, there is opportunity here and you start to see . . . you couldn’t go any bigger. In order to scale this real estate business, you need to have things that are scalable. Like, direct mail is scalable and internet stuff can be scalable. But there’s only so much we could do in our market and I thought to myself, I needed a bigger a list. Literally, with direct mail, I want a bigger list. I want to send more mail.
So the answer was I had to grow in to another market because Salt Lake’s not that big. We’re like two million [inaudible 00:25:11] across the Wasatch Front. That’s what it was. I wanted to feed the machine and keep people busy so it’s like, “Let’s go hit another market.” So we go in there. We make a mess in that other market and then we clean it up. Then we’d go in another market and make another mess and just keep going with it.
Mike: Yeah. I guess, based on how far apart your markets are, because your markets, it’s not like you’re in an adjoining market. You’re in Salt Lake and then Indianapolis and then . . .
Andy: New Mexico.
Mike: . . . New Mexico.
Andy: [inaudible 00:25:37].
Mike: When you look at a market like that, is it just to diversify risk or you’re looking for markets that are less competitive, or . . .?
Andy: Yeah. California wasn’t, but we did go into California. It was random, honestly, when we went into New Mexico. That was a little bit random. But Indiana, actually, there was I choice because I actually want to pick up some cash flowing rentals. I have rentals in Utah, but Indiana in particular just made sense to me so I thought, “Why don’t I just turn on the marketing machine there and do some wholesale retail stuff and then also keep some stuff as rental properties?” So that’s what it was. And there was a little bit of method into the madness but mostly just like, “Why not?” right?
Mike: Yeah. But back to the scaling part. I don’t know all the details but you still talk about what you’re able to handle centrally and then what happens with boots on the ground in those markets.
Andy: Yeah, absolutely. What I’ve learned and what I think is, for a wholesale business and maybe even a retail business too, is you need to have one person on the ground. It’s not absolutely necessary because we’ve done it without one person on the ground, but I think it works a lot better with one person on the ground, and that’s an acquisition manager. That’s somebody who’s actually going to go meet with the sellers, look at the properties, analyze that stuff. I think that’s key. Everything else we do from the office in Utah is answering the phone, sending out the marketing, dispositions, meaning getting rid of the properties, transaction coordination, comping all the properties. All that can be done in central location and frankly, you probably could do a lot of it with VAs if you have a good system that you could train them really well. I think a lot of that could be done with VAs. We do it with people that are actually live people in our office, on the ground. But you probably could. We keep all that stuff local.
Mike: Yeah. Great man. That’s good information. We got a couple more minutes left here, maybe you could just share this . . . summarize everything together and for folks that are listening, which I know there’s a lot of people listening to this that are a one-man band, one-woman band and stuck in this hamster wheel of doing everything, maybe just what they should start thinking about first. Because I know it just starts with just find one thing that you don’t like and figure out how to outsource that so you can . . . at the end of the day, what folks listening to this need to know is, and when I say this it’s completely obvious but, you have an opportunity cost, right?
You could be doing something else with your time. And if you’re doing things that are below your pay grade where you could be out finding more leads or enjoying your life, God forbid, anything other than the things you hate doing, you got to start somewhere. But what kind of advice would you give to folks that are looking to . . . this is hitting home and they need to do something about it?
Andy: First bit of advice would probably be not what you’re looking for. But the first bit of advice would be, step back, think about that and think why. Like my wife puts me in check every time and says, “Why? Why do you want to be bigger? Why do you want to do those things?” Because truly, it’s not cool or necessary to do more deals. Just to say you do 150 deals a year, who cares? Right? Quality of life is absolutely important.
So if you’re a guy that doesn’t like real estate, you don’t want to scale it up, you don’t want to manage people but you’re doing fine, find something you love doing and even if it’s not real estate. I tell people all the time. I know this is real estate centric, but go find something you love because time is your most precious asset and don’t waste your time doing things that you hate.
Now that said, don’t be lazy. Don’t be the person like, “Well, Andy said I have to do something I love. I want to sit on a hammock all day.” Don’t be lazy because I think in life, our growth comes from tackling things, from encountering obstacles and getting through those. That’s where real growth is in life. So if you do want to grow, find out what it is you like and find a way to add value to people that way using your unique abilities. And go out there in the world and add value and do what it is you love. That’s probably not the answer you wanted Mike . . .
Mike: No, that’s a good one. The reality is, I think a lot of people, this is what I’d say, a lot of people get in to real estate investing I believe, not necessarily for the real estate. It’s for what that . . . that’s like a vehicle to something else. But if you hate doing it, you shouldn’t do it. There’s no doubt about it. I agree with you 100%.
Andy: Absolutely. It can be a highly paid job but that’s really what it is. When you’re flipping real estate, whether it be wholesale or you’re flipping it like fixing it and reselling it, retail, it’s a job. It’s absolutely a job. The real key to financial wealth is live on less than you make. Invest the difference until your passive income is better than your . . . there’s more than you need to live, right? You’re financially free at that point. Once you get there, it doesn’t take that much to be financially free really, but in the meantime you do need to have a job for growth, one, and two, for money so that you can invest. So find something you like doing and just find growth within that arena. You don’t have to do 150 deals a year, right?
Mike: Yeah.
Andy: That’s not success. That’s not necessarily success but it can be.
Mike: Yeah. Well Andy, before we go, why don’t you tell us about how to go check out some of your I Love Real Estate Stories videos?
Andy: Yeah. Nature abhors a vacuum like we said earlier. I had a bunch of people on my team, that are helping me buy houses so I don’t have to go see them all anymore. I don’t have to go see sellers anymore, but fortunate enough to have great people work with me there. So I had some free time and my brother’s a talented documentary filmmaker, so I said, “Hey. Come film the life of a real estate entrepreneur, which is me,” and I said, “We’ll talk about interesting flip stories I’m doing, wholesale stories. Also just tips and tricks about little things that come along the way.”
So he’s been recording me. It’s been about a year and a half now. It’s called I Love Real Estate Stories, so iloverealestatestories.com. We do a bunch of documentary style videos that are not fake, not TV fake stuff, but it’ll entertain you. It’ll educate you and hopefully it’ll inspire you to do whatever it is that you want to do in your life.
Mike: Awesome. They are great, which we actually talk about it. We’ve talked about it several times. There’s a lot of production that goes into them. So they’re very, very good. We’ll have a link for iloverealestatestories.com. We’ll add a link down below the video here. Andy, great to see you again. Thanks so much for being with us today.
Andy: Yeah. I appreciate it Mike.
Mike: Yep. I look forward to seeing you again soon my friend.
Andy: Absolutely.
Mike: Take care.
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