Leadership and Leverage in Real Estate Investing

Mike:This is the Flipnerd.com expert real estate investing show, the show for real estate investors whether you’re a veteran are brand new. I’m your host Mike Hambright and each week I bring you a new expert guest that will share their knowledge and lessons with you. If you’re excited about real estate investing, believe in personal responsibility and taking control of your life and financial destiny, you’re in the right place.
This is episode number 427 and my guest today is Richard Gonzalez out of San Antonio, Texas. Today we talk about leverage. Now, when I use that word, your first thought may have been around financial leverage, leveraging money, but that’s not what we talked about today. Today we discussed leveraging other people’s talents and time for your business, the use of systems and processes to leverage your capabilities and capacity and using marketing to leverage your message and to communicate with larger audiences than what you could ever do on your own.
Of course, without solid leadership none of the things I just mentioned would ever be possible and you’ll be out of business before you know it if you’re not an effective leader. Let’s face it, most of us didn’t get into this business with small dreams. But without a good team, you can’t reach your dream. Please help me welcome Richard Gonzalez to the show. Hey, Richard, welcome to the show.
Richard:Thanks for having me on, Mike.
Mike:Yeah, I’m glad to have you here. So, I know we’ve been talking quite a bit over the past few months in our Investor Fuel Mastermind, we’ve gotten to know you. And you’re doing some pretty amazing things down in San Antonio. I know you’ve got a pretty unique background that you’re going to share with us today. And we’re going to be talking a lot about leadership and about how to build your business through kind of leverage of resources and time. But before we kind of jump in, why don’t you tell everybody your background so they can learn a little bit more about where you’re coming from?
Richard:Yeah, definitely, Mike. I got started in business almost by accident. I dropped out of college at 18 to join a network marketing company, one of the ones that they call pyramids. And I did actually pretty well. I had a good mentor that I met in college and went full time, basically dropped out of high school . . . I’m sorry. I dropped out of college and went full-time not knowing much about business but the person that was mentoring me in my upline helped a lot.
So, for the first two years did a lot of personal development, we traveled all across the nation going to events, reading every book I can get my hands on, CDs, everything I can listen to at that moment. Unfortunately, I think my leadership at that time wasn’t up to speed or up to par and my whole organization just ended up collapsing. So, I ended up going back to square one and looking for another opportunity and started my first company at 23 in the credit card business doing merchant processing.
And I did very well. To this day, I still have that company and had a lot of success. In 2011, I moved to San Antonio, Texas to expand that company into the Hispanic community. So, 80% of my business in Los Angeles or originally where I’m from in California was Hispanic-based.
So, San Antonio was just a perfect fit, the glove fit the hand perfectly. And we did very well first two years until Square came out and just kind of shattered everybody’s pricing down to pennies. Well, during that time in 2011 one of my best friends from California moved out with me. He actually was a real estate investor during the crash and just lost it all, millions of dollars, went bankrupt and had to start over. So, he realized that I’m moving out to another area, he wanted to come along with me and he started from scratch.
So, I’m watching him for the first couple years in San Antonio living off my couch, driving a cab at night to make ends meet and within the first couple years picking up some vacant lots in the downtown area and did very well. And I’m watching this guy, I’m working 14, 16 hours a day expanding my credit card business which is now the industry has changed and this guy’s making money hand over fist on some vacant lots that he got in really early and that was just enough for me to watch with my own eyes to get into it.
And so that was my start to real estate, getting into vacant lots in the downtown area, picking them up for pennies on the dollar basically, and went into rentals, and fast-forward today I’ve been in business three years full-time. I have a pretty big book of rentals and now building it to a new level.
Mike:Yeah. And I know this isn’t the topic that we’re going to talk about today, but maybe we’ll have you back on another time to talk about your strategy for building rentals. I’ve never seen anybody do this. It’s really unique. It’s really cool though, when you explain it, is you’ve carved out a small piece of San Antonio near downtown that you know is going to blow up over the next couple of decades for sure, right? And you’re just really focused on building up rentals in that area and you got a pretty good size of the area now, but just knowing that it’s right in the path of growth, right? I mean, it’s going to happen. It’s just a timing issue.
Richard:Absolutely. And I think that’s what makes us different than a lot of investors. We have literally selected a certain area of town actually near the downtown area where a lot of the gentrification is happening right now and just do not deviate. So, my list of . . . My marketing list at that point was just a couple of zip codes and mailing them every week or every couple weeks until people got 20 letters from me and hopefully they contacted me.
So, that was really our strategy. There were really no techniques or anything, just an absentee list and try to work the lead to that and follow up. And like I said, it’s worked out. I think we’re in a good position right now and in the area as prices have probably doubled since we started and there’s a lot of investors now investing in that area and development and building. A lot of stuff going on. So, I think we’re ahead of the curve at that point.
And that was something I got from my investor friend where he studied the developments in San Antonio where the city was going and he just went in early. So, I’ll call him a master speculator and I just followed right after him, but I knew that I had now experience and with systems and processes from my previous company and I was able to capitalize on the opportunity by putting some systems in place.
Mike:If you’re an active real estate investor already doing deals and looking to double or triple your business, you should consider joining the Investor Fuel Real Estate Investor Mastermind. We’re a small group of investors that share our best practices, tips and tricks with one another in an effort to all win. We limit our membership to only one to two members per market, so everyone shares their knowledge, tips and tricks openly and honestly.
Our members include some buying one to two houses a month up to some of the most respected investors and leaders in the real estate investing industry, some of which have personally done over 1,000 deals. If you’d like to be considered for our invitation only world class mastermind, please visit investorfuel.com to request your personal invitation. Our next meeting is coming up quickly. Go to investorfuel.com now to learn more.
Richard:A lot of stuff going on. So, I think we’re ahead of the curve at that point. And that was something I got from my investor friend where he studied the developments in San Antonio and where the city was going and he just went in early. So, I would call him a master speculator and I just followed right after him, but I knew that I had now experience with systems and processes from my previous company and I was able to capitalize on the opportunity by putting some systems in place.
Mike:Yeah, yeah. That’s awesome. That’s awesome. Well, so let’s kind of jump into what we’re going to talk about today, and that is, it’s largely using leverage, right? It’s using. . . And a lot of people think of leverage when we talk about leveraging money. I mean, that’s a part of it, but we’re really going to focus on leveraging other people, their skills and their resources and their time, leveraging systems and processes, using leveraging systems and processes to leverage your time and just the power of marketing, right?
But before we jump into those things, we know that none of that matters if you’re not a good leader. And I think there’s a lot of real estate investors, a lot of people that I know really well that are pretty open about it. Like, “I don’t like to manage people. I don’t like to do this or that.” And so that’s probably a big part of leadership is knowing what your own skill set is, right? But let’s kind of jump into the power of that leadership component because if you don’t have that, then nobody’s going to follow you, right?
Richard:Exactly. I think a lot of people focus on techniques and recruiting and marketing, but if I came to your business and your leadership was not up to par, then it’s going to be hard for you to lead me and really guide me in the right direction. So, I really hang my hat on that aspect of the business is really showing people lead by example. So, I think once people start working with me, they realize how much of a maniac workaholic I am where they probably haven’t worked with somebody like me in a while.
Like, I said I get very obsessive in regards to my work, so I do whatever it takes. I say I work two shifts every day, one ends at 6:00 p.m., my next shift starts at 10:00 at night, it goes all the way to 3:00, 4:00 in the morning every day just working on the business, working on systems, leveraging now as much processes that I can and then I’m up four or five hours from there, but like I said, we’re growing and I’m just grateful. I’m grateful at this moment.
But definitely, going back to your, the point that, Mike, definitely the leadership is critical if you want to have a successful organization. I think everybody focuses, like I said, on the technique part but I think if we just start focusing a little bit more on ourselves, you will attract the right people and giving them that vision about where you’re headed, people just kind of almost gravitated and they want to be part of it. So, that’s really what I offer when I meet somebody. I give them my future vision, my next three, four or five-year vision, where we want to be, and if they can actually be part of it and do one thing which I’m just asking them to do one or two things at a really high level, I’m literally going to throw softballs if . . . So, it puts a lot of pressure on my end to really offer that type of opportunity to anybody that comes to our business.
Mike:Yeah. What are some other tips on leadership? One is teaching people. And it’s hard to teach this, but I think you made a comment about your work ethic. That actually is one of our core values that we’ve defined is work ethic because my wife and I, we work very hard and we’ve had people on our team before that . . . We don’t say you have to work a lot of overtime, especially if they’re in an administrative type role, but it’s always kind of been like, “Hey, we just need you to do whatever needs to be done, the business needs.” But we’ve had people before that, their shift or whatever ends at 5:00 and you see them packing after 4:45 and just kind of watching the clock.
And then you’ve got other people that are like, just do whatever it takes to get it done. And so that’s an important thing. So, work ethic is one. But what are some other leadership skills that you can teach people? And also talk a little bit about if those are skills that you learned in the MLM industry because some people hate that industry, some people think it’s a bunch of scams, whatever. Let’s be honest, a lot of people think that real estate investing is a scam, right? So, we know that’s not true. There’s a lot of similarities, though, in terms of being able to inspire and motivate people, right? So, maybe you should kind of share some other leadership skills or things that are important to really kind of be a true leader in your business.
Richard:Definitely. I think leading by example is critical. And what I mean by that, it can be just the smallest thing from doing what you’re saying you’re going to do and supporting anybody that’s in your organization 100%. I have no problem somebody contacted me one of my key team members in my business 20 times a day if it’s something that maybe they still haven’t learned and I just want to download it from my head into theirs as soon as possible. So, I think one of my philosophies is if it’s going to take me to . . . How can I bridge the gap as quick as possible and that might be what the new team members that might just be working with us for a couple months.
So, I’m willing to support that person and invest in them. I mean, we’re investors in general, investing in properties and marketing. I want to invest in people and invest all the time that it requires. And there has to be, like I said, a happy medium, there has to be some progress, there has to be some effort, but it’s holding that person accountable and making sure that they’re actually progressing.
And that’s all it really takes in my opinion, but you have to make the commitment to support them. I think the biggest mistake a lot of people do is they hire, they bring somebody on board and then they expect them to just be successful. At the end of the day, I think that the difference between me and that person is that I’m actually going to work with that person and develop, find out what their strong suits are, use their highest and best use. And again, the only way I can figure that out is just by experience, trial and error. You might have to burn a couple people at the beginning just because you’re going to make mistakes.
So, instead of trying to figure out who’s the perfect person I would say hire somebody right off the get-go even if you don’t know anything and you’ll figure it out. You’ll know after you fire your first couple people, what you did wrong, and maybe their personality that now you need even if you don’t know anything about personality traits and Kolbe tests and any of that. Just knowing, okay, this person had a bad attitude, they were too strong over the phone, I need somebody that has the same energy but maybe needs to tone it down a little bit. So, we can just make it very common sense. And the only way to do that is just by going through the processes. So, instead of having that fear to try to make everything perfect. . .
Mike:Trial and error.
Richard:Trial and error. That would probably be the one thing that I probably done the most compared to anybody else, and I’m just willing to go through it as quick as possible. So, I’ll probably fail, like they say, more than a lot. A lot of people will be, but if I know that, I just want to go through it as quickly as I can.
Mike:Yeah, yeah. That’s awesome. So, let’s talk a little bit about leveraging people. And some people could say, “Well, you’re using people,” I was like, “Well, you’re paying them for it,” right? I mean you’re using them, you’re using their resources which is their time which you’re using their specialty, right? So, I think a lot of times for new business owners and new real estate investors they have this misconception that they have to be good at every part of the business. And you’re never going to . . . You’re always going to be better at some parts than others, right? And so you just have to . . . The parts that you’re not good at or that you hate doing or both, you have to fill that with people that are good at it. And a lot of times people have a hard time admitting that they’re not good at something, right?
And so, anyway, let’s talk a little bit about kind of using people to help build your business and obviously they benefit in exchange, but let’s talk about that.
Richard:Yeah. So, I think I personally look for people that are better than me in certain areas and the areas that I think that I’m pretty good at. When I see somebody else that’s gifted, that’s like, there’s no different than . . . We do a lot of rehabbing, hiring a contractor or a subcontractor directly to do tip implode. And when you find somebody that that’s their gift and you can . . . the opportunity meets the person, I mean, unbelievable things could happen and you get to witness that and I think that’s really where I get the joy is where I can find people. . .
And again, that’s really up to me to identify, as a good manager, as a good leader, going back to the highest and best use where you might just be having the person in the wrong seat and just put them in a different seat and testing those abilities. But it’s amazing. It’s amazing when you see somebody’s gift right in front of your eyes and you realize that they excel at it and all you had to do was just plug them in. I mean, that’s really what it comes down to.
Mike:Yeah, it’s funny. I mean, there was a time when I thought that if I gave somebody my crap, like, it was crap to them too, but when you find the right person, I mean, there’s people that are like, that’s what they love. Like, there’s people that love to be on the phone talking to people and there’s people that want a checklist of things to do and they want to be able to close their door and not talk to anybody and just get it done, right? And so, it’s a little bit of a misnomer, but there’s like somebody for that job no matter what job you have in your business, somebody that can excel at that even if it’s something that you hate doing. I think that was an early lesson for me was that, “Hey, it’s okay to admit that I’m not good at something. Why wouldn’t I? I want to get it out. Why would I want to do it just because I feel like I have to be good at it if I hate it? And two, there’s people that love to do what I hate to do.”
Richard:Right.
Mike:Yeah. So, let’s talk a little about the next one which is using systems and processes. I know you and I spent a fair bit of time talking about that over the past couple months actually, some things that you’re doing in your business. But let’s talk about, not just the value of it. It’s critical, right? Like, there’s so much software and tools and it doesn’t even have to be some high tech software, it could just be a process that you follow to help us really kind of magnify results in our business. Let’s share your thoughts on that.
Richard:A lot of the systems that I develop, obviously now we use software, we use robust systems, but the way I like to start a process or a new system even with an Excel sheet or . . . I think about it how maybe business was maybe 10 years ago where you didn’t have a calendar, you didn’t have a computer, you’re just answering phones, making appointments. Really basic fundamentals that I really focus on. I’m not really result-driven. I really just expect people to do the basics, which is answering the phone, making appointments, making offers, how many people did we talk to.
It doesn’t matter what system we’re using. I’m very, like I said, very principle-driven. And if we can manage activities versus results, then I think the results will be there, but it’s just figuring out what those sequences are and what are those key performance indicators that you want to focus on when you bring in somebody. I don’t really like to focus on we use this software, this has changed our lives. At the end of the day, I talk to people that get new software and I’m like, “How is the new software going?” and it’s like, “Well, if everybody used it, it probably worked beautifully.” But that’s the problem. Not everybody is using it at the same level, so it doesn’t matter how good the software is. It really comes down to training and implementation and just keeping people practicing.
Mike:Yeah, yeah. And I think sometimes it’s a misnomer. When we say words like systems or processes that sometimes people assume software or something fancy or it’s complicated. Sometimes a system is just, it could be a paper checklist, right? It’s like, “Do this, then do this, then do this,” or a series of actions, and I think that’s what’s more important is that kind of a standard operating procedure of what has to happen almost regardless of what the software tool is to actually manage it or track it, right?
Richard:Yeah, absolutely. And your pain will give you the feedback. You’ll know where you’re missing a step in the process because the same challenge keeps popping up over and over, so then you realize, okay, how can . . . Next time this happens, it actually progresses, it goes to the next base. And that’s really how you develop it, by trial and error, really, getting feedback and knowing where your pain is. So, if you can figure that out, then you know where you’re missing a step and at that point, it might be another point on your checklist, it might be a software, it might be a calendar. It might be anything that you can figure out what to plug in there.
Mike:Yeah. Any kind of tips you want to share on just thinking about your business in terms of processes, standard operating procedures if you will, and just the importance of that to truly grow your business, right? Because I think you’ve seen some of those issues yourself lately, some growing pains over not having some of those things in place.
Richard:Absolutely. And I think even now we’re at the . . . We’re still working on more advanced processes and systems, obviously we’re growing. And is never ending. It’s just, again, really upgrading the systems and processes so that going back to the basics, I think working on that muscle on implementation, putting . . . And I think that’s a lot of people they don’t . . . It’s like working out. You’re not going to be able to now launch new systems and processes if you’re not constantly working on them.
So, I would recommend hiring virtual assistants, even the ones that you pay per task or just for small jobs because what it does, it really forces you to put some type of sequence or process together so you can see if they can replicate the same result that you’re trying to create. So, the faster you can create those or get in an environment like that, and again, going back to my second shift, that’s kind of what I do, and I really practice that. So, I practice that daily, implementing, and then just seeing where the communication falls and where I need to make it better on my sequence.
Mike:Yeah. That’s awesome. That’s awesome. Let’s talk about marketing a little bit. I mean, obviously, on this show, this is episode number 427, we’ve talked about almost every topic you could talk about in one way or another. We talk a lot about marketing and the importance of lead generation. But maybe just share your thoughts on, from a leverage perspective, the importance of lead generation on magnifying and basically what you’re doing there is magnifying and how you communicate with people, right? I mean, if it’s just you and you’re door knocking, there’s not enough hours in a day for you to do that in a huge way to really grow a business, so then we rely on advertising and marketing for lead generation. But share your thoughts on that.
Richard:So, I think my personal goal is to get our message across to as many people as possible, especially when you have a solution or you have products and services that make a difference in people’s lives, you can go, like you said, door knocking one at a time, but by the time that . . . How long is it going to take you to cover enough bandwidth? So, that’s where marketing comes into place in my opinion, be able to put the same message in different platforms or format and put it out there in the world. And law of attraction. If you’re really providing value and people are connecting they will respond.
When I get a good marketing piece because we have a ton of rentals, so we got other investors marketing us all day. And once in a while, we’ll get a good piece that I actually want to respond back and I’ll just take that and run with it. I want to get that to everybody in San Antonio as quick as possible because I know just by numbers game or law of averages, we’re going to be able to get some results. So, that’s really where I see marketing being critical is being able to just reach more people quicker and be able to get those results that you’re looking for. But again, it goes back to the basics, figuring out what works and once you have something that works, then leverage it out.
Mike:Yeah.
Richard:But don’t just buy a postcard and let it out 10,000 times and say, “Hey, it didn’t work.” Really dial it in almost like having a franchise. Once you have the prototype built and it’s working and you can replicat it, now it’s taking it to the next level.
Mike:Yeah, yeah. So, we talked a lot about leverage here. And then I just want to come full circle on the leadership piece. Like, if you don’t have the right vision, you don’t know how to lead people or how to motivate people and there’s a number of things, it’s not just motivated, it’s compensation alignment, like a lot of things. But if you don’t have the right leadership in place, then all these things that we just talked about don’t matter ultimately. You’re going to spend more time trying to make those things work and they never will if you can’t inspire people on your team to do the right thing. So, am I . . . You agree with that, Richard?
Richard:Definitely, definitely. I don’t think I would be where I’m at today if it wasn’t for my early years in getting my personal development in place and getting forced into an environment that forces you to work on your leadership and your personal development and being around people like that. So, that would be . . . That’s why I have a positive view on companies like that even though I was not a huge success in one of them, but it really helped me on my next company.
And again, going back to leverage, leveraging that, I started my first company at 23 and me hiring some of the top sales reps in that industry, people say I have have a baby face but back then I looked like a little kid. So, it was challenging even interviewing people, but I knew by the end the interview, something would click in their mind and once they came into my business, now it was time for me to prove myself. And once I once I was able to show them some results, then the respect came and then they allowed me to lead them. And so, it’s a process, but that’s exactly what it takes. It takes that being those people’s respect and be able to show them success.
Mike:So, a lot of people when they’re just getting started as you know are kind of a one-man or a one-woman band, right? They’re doing everything themselves and they’re the leader and the follower and they’re doing all this in any sort of systems or anything that’s getting done is them. But the goal is not to always be that way, right? And so can you maybe talk about how to develop some of those leadership skills as you’re building your business so that you can start to add other people to the team effectively? Because a lot of people it’s like a speed bump, right? They just got to get over that hump. So, maybe share your thoughts on that.
Richard:Yeah. I mean, I would recommend plugging into some type of organization where you actually have to support somebody if you don’t want to bring them, start hiring people and then figuring, “Oh shoot, I still don’t have it together. How am I going to lead this person if I don’t have the right systems or processes?” But, like I said, my strategy is just learn as you go.
One will say it in MLM, “Fake it until you make it.” And I think that’s what it is. It’s just giving that perception at the beginning. And by having somebody new in your organization that is now looking up to you and putting their well-being in your hands, it will force you to grow, it will force you to look for those resources that you need in order to lead them. So, whether that’s reading leadership books, John Maxwell or Tony Robbins and all that stuff, it will force you, but put yourself in that situation. If not, you’re not going to do it.
I’ll be the first person to say if I don’t put myself where I’m more motivated to what I got to lose than what I got to gain, that’s really just how my personality works and that’s why people say I’m always motivated. I say I’ve got more to lose than anybody. I’ve invested every single dollar I’ve earned in the last 10 years, so I’m definitely going to be motivated. So, it’s just putting yourself in that type of place.
Mike:Yeah. Yeah. That’s awesome. Hey, Richard, thanks for sharing some of your lessons and your knowledge with us today.
Richard:Yeah, you’re welcome. I’m glad to be on the show.
Mike:Yeah, yeah. Hey, if folks wanted to learn more about you or some of the things you’re working on, where can they learn more? Where should they go?
Richard:Yeah. Come on down to San Antonio. Stop by our office, we’re open door. But I’ll share my email. I’m always on my email. I support a lot of my teammates that way. So, send me an email at [email protected]. So, [email protected]. I’d be more than happy to answer any questions or if you guys want to come down to San Antonio and look out what we got going, we’re an open book. We really want to get back. That’s another one of my developments that I want to grow into, that type of person. So, any way, I can give. Find me on Facebook too, Richard Gonzales. Again, there’s probably a billion of them on Facebook, but I’m on there.
Mike:We’ll track down the right link and we’ll put it down below the show notes here for anybody that’s listening to this and you’re looking at on Flipnerd we’ll have these things down in the show notes. So, awesome, Richard. Hey, thanks again for spending time with us today.
Richard:No problem. I appreciate it.
Mike:Thank you. Thank you. Everybody, hey, this is episode number 427 with my buddy Richard Gonzales. He’s doing some great things down in San Antonio. We appreciate you guys listening to us today. We’re going to keep these shows coming your way, especially if you show us a little love on iTunes, Stitcher Radio, Google Play, YouTube, wherever you might listen to us or watch us at. If you could give us a positive rating out there, make sure you subscribe, tell your friends, all that good stuff, we’d appreciate it.
Of course, every show that we’ve ever recorded and a few different podcasts over the years, we have over 1,500 different podcast episodes, video podcast episodes and audio that you can see on Flipnerd.com of course. So, I appreciate it everybody. Hope you have a great rest of the week. We’ll see you on the next one.
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