Build Your Real Estate Investing Team

Mike: Hey, it’s Mike Hambright with FlipNerd.com. Welcome back for another exciting Expert Interview, where I interview successful real estate investing experts and entrepreneurs in our industry to help you learn and grow and help you grow your business.

Today I’m joined by Tony Javier. He’s the owner and founder of Professional Home Buyers, an investor that buys and sells single family houses in a few different markets. Tony has expanded into three different markets now and plans to expand even more, and to pull that off successfully it’s been critical to build a great team. In fact, there is really no way to pull this off yourself if you’re looking to truly build a business.

If you’ve watched or listened to this show for a while, you’ve heard us talk before about the importance or the difference between using real estate investing as a hobby versus a business, and today that’s exactly what we’re going to talking about. Tony is going to tell us the importance of building a great team, and he’s going to include some advice on how you can do it yourself. Before we get started with Tony, 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.

Hi, Tony, welcome to the show.

Tony: Thanks, Mike, for having me. I appreciate it.

Mike: Yeah, yeah. Glad to have you here. So you and I are in a mastermind group together and actually just met a few months ago for the first time. I actually met your manager, or I guess he’s the president of your company who is very . . . I think a lot of people there were jealous that you had such a strong person to lead your team. It’s an area where a lot of real estate investors and small businesses, quite frankly, struggle to fill that role of somebody that they can just trust implicitly, but it looks like you’ve done a good job.

Tony: Yeah, yeah. Thanks, I appreciate it. It’s priceless having good people on your team.

Mike: Yeah, absolutely. It really is important. So before we get started talking about team building, why don’t you tell us your background, about how you got started in real estate investing, so we can learn a little bit more about you.

Tony: Yeah, that sounds good. So I started in 2001. I was waiting tables, going to school, and I bought a course on TV called Carleton Sheets. I think most people have probably have heard of the no-down-payment system. So I bought that course, spent a couple hundred bucks.

Mike: Cassette tapes?

Tony: No, they just converted the CDs at the time.

Mike: That must have been the year they converted, then. Yeah.

Tony: Yeah, I believe it was 2001, 2002 or so, and they converted it. So yeah, I just read up on it. I just got infatuated with it. Real estate, as everyone knows, is a great tool, and when I see opportunity, I act on it. I’d say within two to three months I had my first property under contract, found my dad, or found my investor at the time which was my dad, to sign on two or three of the first properties that I bought.

After that, I brought on partners, and still bring on partners to this day, or private lenders, to fund all the deals that I have. So it’s just been a progression along the last decade and a half of finding opportunities, building a team, putting it all together, having the systems, and that’s really what it’s all about. Right now, like you said, I operate in three different markets, Wichita, Kansas City, and now I’m in Tampa, Florida, starting a third market.

I couldn’t do this without putting together a great team that does a lot of the work for me. I’m the visionary. I’m the idea guy. I’m the guy that brings an idea to the table and then I hand it off to my team, and then they take it and they run with it.

Mike: Yeah. So talk about how you evolved to there, because if you’ve been doing this for 14 years, I’m sure that wasn’t always the case, right? You started off doing this, I mean, you were a one-man band for a little while, I assume?

Tony: Yeah. When I brought my sister on she said, “I don’t know how you did all this yourself.” I mean, I was doing the marketing, I was doing the craigslist ads, I was doing the acquisitions, I was doing the bookkeeping. You name it, I was doing it.

Mike: And how long was it like that for?

Tony: What I decided to do . . .

Mike: How long was it like that for, where you were doing everything yourself?

Tony: Oh, gosh. I hired my first assistant probably in 2006 or 2007, so probably six years I did it pretty much all myself. I had contractors, I had people that I’d sub things out to, but once I brought my first assistant on, that really changed things. It was just a small amount of things that I didn’t want to do that I kind of pushed on her, some bookkeeping, some property management and things like that.

I think that’s really the key when you hire people. Hire people that are good at what you’re weak at so that you can take those things that you don’t want to do or that you’re not good at, and let them run with it because they’re going to do it a lot better than you and they’re going to like it a lot better than you.

Mike: Right, absolutely. So in terms of team-building, where do you start? I think a lot of people . . . well, why don’t we start here. You said you brought on an assistant first. That’s a common question I think a lot of people ask is, what’s the first person that I should hire in this business. It’s usually an assistant or a salesperson, or somewhere in that regard. What are your thoughts on that?

Tony: I’d say an assistant. You know, just like I did in Tampa, when I hired my first person here, I didn’t have a title. I basically just said, “I’m looking for an assistant,” I guess is the way that I worded it, and I told them everything that I do on a daily basis, and I said, “I need you to take a lot of this stuff off my plate.” So I hired someone here in Tampa that’s similar to my sister in Wichita, where she’s very sharp. She’s someone that can take something and run with it and figure out how to do it. And if she doesn’t know how to do it, she’ll ask me a quick question, she’ll get back to it and get it knocked out.

So my advice would be someone that is very detailed, someone that is very driven. Not too driven or they’ll want to take over your business, but someone that has managed another company. My sister managed a company before she came on with me. My assistant here managed basically a real estate . . . or not a real estate but an attorney’s office, where she was doing the marketing, she was doing the books. They would just throw stuff to her and she was basically their office manager. So I think someone that can take a lot of the day-to-day things off your plate where you don’t have to babysit them. They take it and they run with it, and you don’t have to babysit them. I think that’s a big thing.

Mike: I’d say probably the most successful real estate investors that I know are generally not the types that enjoy the administrative side, the bookkeeping. In this business there’s a lot of paper pushing and a lot of organization that has to happen, and generally speaking, successful real estate investors are more of that . . . they’re out there trying to kill stuff and that administrative part is a necessary evil, but it’s probably not something that you enjoy and probably not even that good at, quite frankly. So that makes sense that that’s the first thing to go.

Tony: Yeah, absolutely.

Mike: Yeah. So where do you go from there? I mean, I think there are a couple lines of thought for real estate investors. Either they try to have this “stay small and keep it all” mentality, like, try to do more themselves and not really farm a lot out. And then there’s the “I’m going to blow this thing up and launch into multiple markets or do a ton of volume” type of thing. So I guess for people that are listening to this that are in one of those two camps, what are some of the typical ways they can take it to the next level?

Tony: Well, one of the things that really hindered my growth was I was flying in too many different directions. I guess my advice would be, with that first hire, is get them trained and get them trained very well before you start taking on other ventures. I’ve done multi-level marketing. I’ve tried to start a handyman business. I’ve tried starting a . . . there’s a mortgage business. I mean, there’s all kinds of businesses that I’ve tried to start, and what I realized was is that, I was doing many things but I was only doing one thing okay and the rest of them I was doing really crappy.

So your main focus needs to be on what you do well. Do it very, very, very well, and once you can hand that off to someone else, such as my president or general manager, Leon, and my sister Tina, before you start trying to get too wide, find those people, do it very well, and make sure that most of it runs without you before you start chasing other things. I’ve seen too many entrepreneurs do that and they have something that’s good and successful, but they don’t have it systemized correctly. They go and they venture off into something else and then their bread and butter, the thing that puts food on their table, ends up going away.

I’ve been wanting to do this for a long time, come to Tampa, Florida and do other markets and things. But until I could get that set up very well, there’s no way I could be here if I was worrying about what was going on back in Wichita.

Mike: Right. So I think there’s a couple people, a couple things that a lot of real estate investors, and really all small businesses, worry about in terms of building a team. Not worry about, but these are legitimate things. One is, and you made a comment on it a minute ago, is that somebody, they get to a point to where they say, “Well, I’m doing all the work here and the owner’s making all the money, so I’m just going to go do this myself,” just this fear of somebody leaving and becoming your competitor.

But it’s also a very real issue that you have to face, like is that person a threat, or do I worry if they really want to do that, and then just generally the fact that you can’t have a lot of redundancy. You really can’t. As a small business, you can’t afford redundancy. So you have these key people, and if one of them leaves, you probably have to step back in because there’s nobody to back-fill that immediately. So talk about those issues.

Tony: Yeah, so when I first hired my first assistant it was a very low-wage assistant. When I hired my sister I basically had to double wages to get her onboard, but I did that because I was sick of dealing with the fluff up, people not showing up. The assistant that was very good for me, was good for about a year, and then she ended up falling off.

So from a standpoint of keeping good people and making sure that they’re not going to go anywhere, I’d say it’s two or three different things. One is to pay them what they’re worth. The assistant that I had before, in her prime she was worth more. She had some personal issues that whether I paid her more or not, I don’t know if they would’ve been there or not. But she ended up doing some things that she shouldn’t have and kind of got in some trouble.

But going back and looking at it, there were some things that I probably would see now that I didn’t see then that probably would’ve been red flags. So when I hire people now, they have to fit into our culture. And that’s the second part of it. You have to create an environment where people like to go, people like to work. It’s a positive environment. People can be creative. You can give them jobs and you’re not looking over their shoulders. We have tracking measures that I have them send me every week just to kind of do checks and balances, but when you hire good people and you put them into a good culture and you pay them what they’re worth, that really goes a long way.

So if you can do those two or three things, I think you’re really, really heading in the right direction.

Mike: Yeah. I know personally for myself lately, I guess . . . so we own multiple businesses, all kind of in the real estate space, and I guess early, some of this is a business maturity issue, I guess, but for a long time I just looked at employees, not that I like . . . I guess subconsciously is more of the way I thought this is and that employees were a necessarily evil, and I just need people to do their job. I believe much more now in the importance of making people feel like they’re a part of something much bigger. Not making them feel that way, actually truly living that, like having them be part of something, let them have a lot more control over decisions that are made which has been hard as a control . . . a lot of us small business owners, we’re kind of control freaks, right? I’ve said this before, like, “Hey, if I ever bought a McDonalds franchise, nobody would be able to fry the fries as good as me.” Because I’ve got a business to run, right?

So I think lately I’ve kind of started to give that stuff away, and it’s allowed people to have ownership because I’m allowing them to make more decisions. And so I think, not to say that, “Hey, follow what I’ve done,” but it was a maturity thing. It took me a long time to get over that hump of just having an employee versus somebody that can really be a part of our team here.

Tony: Yeah, I really try and empower my employees. You know, I’ll give them small projects that they can handle. I try not to overwhelm them, but I let them make a lot of decisions. Like for instance, they send me a link to properties today that are comparable to one we’re getting ready to put on the market. And I still like to have my hands on that a little bit. I want to make sure they’re not too far off in their pricing. And they were going back and forth and asking my opinion. I said, “You know what, you guys deal with it. You’re $5000, $10,000 apart on where you want to price it. I trust your opinion. You guys get together and make the decision.” And when I do that, it really makes them feel like a part of the process.

And when you get to hiring your first people, speaking of buying in and processes, you really don’t have to have a lot of processes in place when you hire your first person. You want to, but if you hire the right person, really, they can put those processes in place. And by empowering them and making them part of the process, they’re really going to buy into those processes once they start implementing them.

So like you said, just giving them as much as you can of being a part of it, letting them know that you trust them, that was one of the big mistakes. In fact, I lost two employees one time because they were chatting back and forth on some kind of InstaChat. It was years ago and they had some kind of weird chat room, and I happened to pull up their computer and noticed they were talking about me. And at that time I’m like, you know, whatever. I’m not that way. But looking back, I was really on them. I was like, “What are you getting done? What’s going on?” instead of “How’s your day? How can I help you? How can I get you to grow,” and really caring about them, because once you care about them and you empower them, they’ll do about anything for you.

Mike: Yeah. I found that as well. I think it’s tough to get to that point because, especially if you’re used to for years doing a lot of the stuff yourself, you inherently believe that your way was always the right way and it’s probably the only way. But I think, again, it’s a maturity issue, it was for me, to realize that not only is my way not necessarily the right way, that some of the decisions that I held so close to my vest, it didn’t really matter if a different decision was made. It was like just a big part of this business is just making a decision, just being decisive. And so yeah, sometimes people make decisions and I’m thinking to myself, “That’s not what I would do,” but ultimately if it empowers them and makes them feel a part of it, and I don’t have to do that anymore, and it makes everybody happier and it doesn’t really impact the bottom line, then you need to give more of that stuff away.

Tony: Yeah. Actually, I heard a good analysis one time. I think it was a book I read, and they compared it to a rock star. I think they were talking about the Rolling Stones or someone, and they said they did like 100 shows in one year. And if they had to go to every city, do the marketing themselves, set up the stage themselves, worry about all the details and planning – I’m talking about the rock stars themselves – you would only be able to do, what, a handful of shows a year, doing all of that themselves.

But having a team, they can just automate that process and do it over and over and over. They can concentrate on what they do best, and they can make 10, 20, 30, 40 times as much money by having that team in place that just takes the system, puts it in place, and then just repeats it over and over and over.

Mike: Yeah, that’s a good analogy. Cool, man. So tell me about the . . . the other side of that is this fear that somebody’s going to learn how to do it, and then go out on their own and take your secret sauce. I mean, that’s a fear that a lot of real estate investors have. So talk about that.

Tony: Well, you know, I’m not really afraid of that in my business right now because we have a really good culture and everyone really buys into it. When we bring someone into the business, we have multiple people interview, make sure that they’re a part of the culture, and if we hire them and they ended up not fitting, they’re gone like that. You can really tell very easily if they fit in.

Now, if you’re a new business and you’re just now hiring your first person, how they interact with you is probably how you can tell whether they’re the right person. Do you have to tell them all the time to do something? Do you have to be on top of them? Is it hard holding a conversation with them? Does it flow? I’ve had people in the past that have been in my business where I needed them to come up with the answers. It wasn’t come to me for the answers. I’m hiring you for that. So you can really tell in a short amount of time whether someone really is working well with you.

Now, is that person going to take and run and do what you do? Chances are pretty slim. There are not very many people like you and I, Mike, and some of the callers on here, or listeners, rather, that really have the drive to do their own thing. A lot of people are 9:00 to 5:00 people. They want to go and they want to get a steady paycheck. They want to make their steady salary, which is fine, there’s nothing wrong with that. But there’s not a lot of people out there percentage-wise that really want to go out there and do what you do, and if they do, then they’re probably going to go out and do it rather than work for you.

I haven’t seen that very many times. I know it does happen, but usually you can tell those personalities pretty quickly. If they’re asking for a raise really quickly, if they’re asking for bonuses really quickly, if they’re wanting to take, take, take in the beginning rather than . . . Leon, for instance. He has, for the last year and a half, been give, give, give, and now he’s finally earning extra bonuses and incentives on top of that that we put in place for him. If I would’ve started that in the beginning, then he would have said, “Hey, I want this and I want that,” in the beginning, that’s the kind of guy that’s going to take your business and run with it. So those are good signs that someone is in for it for themselves rather than for the whole team.

Mike: Right, right. So talk a little bit about the importance of systems. You’ve been doing this long enough, I mean, you’ve been doing this longer than me, and I see just an amazing difference at the quality of systems and tools and things that are out there today versus even three or four years ago. Just talk about how that has changed the ability to build a team, and it helps you manage things without being there easier today than it did in years past. So just maybe talk about the role of systems in your business.

Tony: You know, I think that’s probably . . . obviously there’s money and some other things, but I would say processes and systems are probably 90% – I’m just throwing that number out there – 90% of failures of businesses, because you can go to places and they have really good food. They have a really good product. Whatever it is that they offer is really good, but sometimes it’s the people that are working in the business [inaudible 00:21:23]. But really, it’s like, you said McDonalds earlier, if you have a really good process in place, and whether you put it in place or whether your assistant puts it in place, it doesn’t matter. If you have a good process in place you can take most decent people off the street, put them in your business, and they can run a decent part of your business without having much of an education or much experience.

If you don’t have those processes and systems in place, not only can you not hire very efficiently, but you’re going to have a lot of leakage. We’ll do over 60 houses this year, and there are a lot of little details that go into that. There’s weekly marketing that we do that we have a process for. There are acquisitions. When my acquisitions manager goes out and looks at properties, he has a spreadsheet that he punches his numbers into, and a contract that he uses that we formatted for him, he’s got negotiating scripts that he uses. When he puts it under contract, another process is he sends the contracts, as well as the numbers and pictures, to Leon and I for approval. And then after it’s approved, then it goes to our transaction coordinator. She has a checklist, which is another process, another system. Then it goes through the renovation, getting bids, budgets, we have a whole system for that.

If you look at a transaction, there are probably 100 things that you can look at and say, “I could put some kind of a system or checklist in place for this process.” If you were to just do that on a whim every time you bought a house, which I did and you probably did when you first started, it takes a lot of time, a lot of energy and a lot of effort. But if you can systemize that . . . without processes and systems, I would be spending 30, 40, 50, 60 hours on a project. Now I spend probably 30 minutes on a project. So that just kind of gives you an idea of what processes and systems can do.

Mike: Yeah, and I think as a small business owner, too, it gets rid of some of that fear of, “Well, I’m just going to train somebody, and then if they leave then I’m going to have to train them again,” and it kind of gives you a lot more comfort that, “Hey, I don’t want this person to leave. But in the event that they do we can plug somebody in and they can watch our training videos or whatever it is, they can learn how to do what it is we do.” And it’s kind of systematized now. You don’t have this fear of . . . I will tell you personally in the past, I’ve had a fear of losing somebody because nobody knew how to do things other than that person, and if they left, it would be a pain for me.

Now, I knew that those people were not necessarily the right people long-term for my business. But I was more fearful of the short-term headaches that would cause by them having all the knowledge in their head, of losing them that I just kept them around, which never ends well, either. So yeah, it’s a critical piece for sure.

Tony: Yeah, I’ve actually almost lost my business for that reason of not having as many systems in place as well as hiring the wrong people. Back in, it’s probably been 10 years ago, I hired three different people and I made a bunch of mistakes at that time. So I had an assistant working for me and two brothers that were doing some website work as well as project management, and what happened was all three of them just fell off the wagon, and all three of them happened to be living in my properties. So I had to not only evict all of them, but they threatened to take me to court, because they weren’t making payments and they weren’t doing good at their jobs.

So they were the wrong people, and then I just had mental overload of having to take on all three of their positions. I didn’t have any checklists in place, I didn’t have any kind of systems in place. And like you said, if I had those in place I would’ve been much more likely and it would have been so much easier to put an ad out on craigslist or whatever it was at the time, found that person and had those checklists and said, “Hey, here’s what I need taken care of. Here’s the checklist. Just go take these and run with it.” But because of that, I had it all in my head and I thought, “Man, I have to do all this myself until I can get caught up, and then I can start maybe bringing people in.”

So hiring the right people that time and having the checklists and processes in place would’ve kept me from almost losing my business. And I didn’t necessarily lose it because of financial, it was because I just couldn’t keep up mentally and physically with the work that I was taking back on.

Mike: Yeah, and there’s so many, if there was a checklist-oriented business, this is it. Right? There’s a lot of repetitive stuff that we do over and over again, turning utilities on, putting lockboxes on doors, taking them off, putting in signs or moving signs, there’s just this list that’s the same thing over and over and over again depending on what you’re doing with a house.

So this is actually a fairly easy business to automate or systematize because we’re kind of doing the same thing over and over again.

Tony: Yeah, no doubt. No doubt. Lots of moving pieces.

Mike: Yeah, and easy things to forget, too, even if it’s easy to . . . we used to have questions like, “Did somebody turn the utilities on at this house?” It’s like, “I don’t know. Check the folder somewhere, wherever that is,” but now there’s tools to just manage all that stuff very easily.

Tony: Yeah, and that costs you a lot of money. If you have contractors that are waiting for you to turn utilities on, that’s a few days of work lost. And then at the end of a job if you don’t get utilities turned off and you go three to six months paying someone else’s utilities, there it goes out the door on both sides.

Mike: Yeah, absolutely. Awesome. Well, Tony, we’ve got just a couple more minutes here. Tell us any final words of wisdom for people that maybe have been apprehensive to build their team and maybe have the mentality that, “Well, I’m just going to . . .” I mean, it limits you, right? Some people want to be limited. They don’t really want to grow. But for somebody that has some fears over building a team, maybe share your thoughts on how that might be limiting them.

Tony: Well, the thing that I did wrong for the first ten years, eight to ten years, is I tried to do it all myself. Not only physically doing the work myself, but also not looking for outside help. One of the big things that I would have done back when I got started was find a mentor, someone that I could talk to that could walk me through the process and would really cut down on a lot of headaches.

A real quick example. About five or six years ago I took on a mentor, a multi-million dollar guy, worth lots of money, and I started running deals by him, and one deal that I ran by him, he said, “Hey, why don’t you do this, this and this,” and it saved me $50,000 just on that one deal. And it’s those types of things where people have done it before and people have the knowledge. So trying to figure it out yourself is not the way to do it. You’re going to burn yourself out very quickly.

So get other people’s processes and systems, put them in place, and then find a coach, a mentor, someone that you can talk to on a regular basis to run ideas by them, because you may think you have the right idea, but you run something [inaudible 00:29:05] like the mastermind that we’re in Mike, we run ideas by those guys all the time, and those ideas they give us saves us tens of thousands of dollars. So those are the things that I would definitely say for a new person starting out. They definitely need it.

Mike: Awesome. Well, Tony, if folks want to learn more about you, your company, where should they go to check you out?

Tony: Yeah, my company’s educational business is Real Estate Prodigy. So if you go to GetMyProdigy.com you can sign up for a free account, get a lot of great free information, and kind of learn a little bit more about my business and the processes and systems that we’ve put in place. We offer a lot of those on our site and in the new educational business. So check us out there and get plugged in.

Mike: Awesome. Hey, good to see you, my friend. Thanks for joining us today.

Tony: Yeah, thanks, Mike. I appreciate it.

Mike: All right. We’ll see you around.

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