How to Scale Your Real Estate Investing Business

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

This is episode number 320 and my guest today is Gabriel Garcia. In less than three years, Gabriel has gone from doing his very first deal to doing more than 100 deals this year alone, maybe as many as 120. Today’s show is a powerful lesson in how to build and scale your business up, where we discuss the importance of how to build your team with the right people, how to put the right structure in place for that team and how to install the right systems.

We talked a little bit about partnerships and a number of other things that will allow you to grow your business. And your business growth should be based on your personal and your financial goals, but if you’d aspire to do more than, let’s say, a deal a month, you’re going to get a ton out of today’s show. So let’s get started. Please help me welcome Gabriel Garcia to the show.

Gabriel, welcome to the show, my friend.

Gabriel: Thank you, Mike. Thanks for having me, man.

Mike: Yeah. I’m excited to talk about this topic today. Before I knew what we were going to talk about today, because we just decided that, is I was thinking about that this morning and I was seeing people post stuff on Facebook groups about hustling and driving for dollars and all those things. Hey, when you start, you need to hustle and you need to kind of get things going, but to grow your business, you can’t do it alone, right?

Gabriel: Right.

Mike: So I think it’s going to be great to talk about how to build your business through people and systems and maybe partners and all sorts of stuff like that because let’s face it, if you don’t do that, if you left corporate America or you left a job to be an entrepreneur or to be a business owner, if it’s you doing everything, then you’ve really just created another job for yourself, ultimately.

Gabriel: Yeah. I think most people don’t realize that. I think even myself, I think when most people think of themselves as a business owner, what they really think of is being self-employed. They’re not really thinking of really being a business owner because it’s a totally different mind shift.

Mike: Yeah. Explain that a little bit. What do you think the difference is? I think a lot of people get caught up in that. I’m self-employed but you’re still gainfully employed. You’re still working as hard as you ever were.

Gabriel: You’re not really a business owner. You’re probably working more than what you were working as an employee. That’s number one. Hey, you’re going to get paid a lot more for it if you’re doing it right. If you’re successful, you’re going to get paid a lot more than you would at your job. But ultimately, you have a job. If you stop working, the income stops coming in.

That’s the main difference as a business owner. If you stop working, the income comes in no matter what and pretty much you have what you call a sellable business. You can go ahead and pretty much call a broker and put your business up for sell and sell it. No one’s going to buy you. They’re going to buy a business, it works without you. You can not show up for a month and everything will be in order and everything will be working and your business will be doing great.

Mike: Yeah. That’s the trouble that a lot of real estate investors have, a lot of small businesses, actually, is if you’re the key person and you’re like . . . and don’t get me wrong. I’m stuck in this situation on some of my businesses too. But at least I’m aware of it.

But I will say this is my first day back. I just got back after being gone for five or six days. And my business didn’t stop. We still had things going on. I checked my email here and there. I’m not to the point yet where I have a business that I could leave for months at a time, but I left for a week or two at a time and checked some emails here and there for fires I needed to put out. But anyway, it’s great to talk about that.

But before we get in to talking about building your business, why don’t you kind of tell your background about how you got started and maybe a little bit about how your business has evolved.

Gabriel: Yeah. I got started back in the end of 2012 going to some Rich Dad seminars. I pretty much started reading the books, “Rich Dad, Poor Dad,” and “Cash Flow Quadrant.” That’s how I started. I just finished graduating from the music business in Orlando.

My dream at the time was to be a hip-hop artist. I wasn’t even thinking about real estate. But ultimately I was broke and I figured I needed to get money and didn’t have money. So the only thought that I had was, “Why don’t I go the library and read about money? Maybe that will help me understand why I don’t have money.”

So it worked. It was a good solution, right? So I read those books and it kind of opened up my eyes to all these new possibilities of ways to make money, knowing the difference between assets and liabilities. I didn’t even really know about that. Even though I got the award at my school for like the best in accounting. I didn’t really think about assets and liabilities on a personal basis. What is that? How do you acquire them and what do they mean for you and your financial future?

So those things got me thinking, I’m like, “Man, if I can buy all these properties and it brings me income regardless of whether I work or not, then that’s the key to financial freedom.” So that just pretty much just sparked me up completely. It elevated me to just another level of, I guess aliveness. It got me engaged in life and gave me something to actually work for and work towards.

So I started going to seminars back in 2012, implemented what I learned from the seminars, made a little deal there like in April of 2013, I think, was my first deal where I basically just daisy-chained a deal from somebody else and made like $1,000, probably one of the hardest $1,000 I ever made.

I kept stumbling and working so hard and learning. I’m sure you know being in this business that there are so many things to learn and there are so many different strategies to learn that when you’re first starting off, you learn a hundred strategies and you start implementing on, but you don’t get success because really what you need to figure out is one or two. You don’t need a hundred.

So you’re all over the place. And that’s how I was. I knew I needed help, but help costs money or knowing somebody who . . . I had some other people who wanted to bring me on as a partner at a company and stuff like that, but it just didn’t vibe with me. I’ve always been a very intuitive person. If it doesn’t feel right, I’m not going to do it.

So I finally ended up getting a mentor, a local mentor who has shown me the ropes. I basically had to pay him $5,000. I paid him $5,000 and the deal was that he would mentor me, show me the ropes and basically I had to split three deals with him or four deals with him. That’s how I pretty much got started. I did my first wholesale deal I think it was November of 2013. I think the next year I quick my job in March. I got a wholesale deal where I made like $40k and I just quit my job right away. There are some people who wait to have all this savings.

At that time I was only making 25% of what I earned because I had to split half with my now wife because she pretty much lent me the $5,000. So she’s like, “I’ll give you the money but you have to split it with me too.” So as soon as I got the money I quit because I knew, “I’m wasting time here at this job. I could be making so much more money using all this extra time that I have, but I can’t. I’m stuck in this job.” I quit my job in March of that year, which was 2014, went full-time.

That was my first time full time and now fast-forward. We’re here in 2016. This year we’ll probably do somewhere around . . . my goal was to hit the $3 million mark in gross profit. We’re not going to hit it. We still can, but it doesn’t look like we’re going to hit it. We’re going to be shy about $500,000 to $700,000. So we’ll probably be somewhere around $2.25 to $2.5 this year depending on how we finish off. Mike: That’s amazing. And not that units matter, but how many units will you guys do this year?

Gabriel: We’ll probably do somewhere around 100 to 120, give or take, somewhere around that ballpark range. We’re already at around 80 year to date. We’ve got a bunch of . . . that doesn’t include the properties we’ve already purchased that haven’t sold yet on the rehab side.

Mike: So those are sales. Yeah.

Gabriel: Those haven’t been counted yet that are going to close.

Mike: Yeah. So what’s fascinating about what I know of you is that you’re very thoughtful and insightful in terms of growing your business and it’s something you’re passionate about, which is why we’re talking about it today. So in a short period of time, two or three years, you’ve gone from doing your first deal to doing 100-plus deals a year. I know it’s been very methodical.

I think a lot of real estate investors get stuck at that one or two deal a month. Either they don’t get started at all, which is probably the majority, unfortunately, or they get stuck at that one or two deal a month level, which I say stuck. If that’s your goal, there’s nothing wrong with that. But you probably can’t afford overhead, some of the stuff we’re going to talk about today about putting in some systems and people in place.

It gets to a point to where to grow, you have to invest and you might have to do a deal or two a month to cover your non-advertising overhead and then your advertising on top of that. So just talk about how you grew so fast and how you . . . I know it was through putting systems in place and ultimately forming a partnership and other things like that. But at a high level, just talk about how to get from that entry point of doing a deal here and there or even a deal or two a month to taking it to a whole other level.

It’s time for a quick announcement. We’ll back to the show in less than 30 seconds.

Passiverental.com is your source for turnkey, done for you rental properties. If you’d like to be an investor and not a landlord, please visit passiverental.com to learn how to purchase cash flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today and get started by visiting passiverental.com.

At a high level, just talk about how to get from that entry point of doing a deal here and there or even a deal or two a month to taking it to a whole other level.

Gabriel: So I would say there are a couple of different aspects to it. The first aspect is maybe the spiritual or mental aspect if you want to talk about. For me, there is always the desire for growth. Obviously growing just because you think it’s cool, it’s not really a good reason, right?

You always hear these personal development people talk about ask why first, figure out your why then don’t worry about the how. The why is more important. So for me, my why was I just wanted to be great at something, man. As a kid, first my dream was to be a professional baseball player. I used to play baseball.

By the time I got to high school, I was messing around, doing drugs, smoking pot, doing all this stupid stuff high school kids do. All the kids who were working hard in baseball and the kids who I was better at, at one point as we were younger, once we got to high school, they were way better than me. That left me upset. I couldn’t grow and I stopped growing. So they overpassed me. So that hurt inside.

And then later I got into music. From a talent perspective on the music side, I was very, very good. But I didn’t have . . . I’m not built for that lifestyle of constantly being out on the road and being in nightclubs and bars and stuff like that. That’s when I realized that world wasn’t for me. That’s how you make a living.

Then with real estate, it was like this fits my lifestyle. I can do this. I can make a lot of money here without sacrificing how many hours I work a day. I can be home. I can do all this stuff. So I got really passionate about it. For me, my why has always been like, I want to be great at something and how can I be great if I’m just doing a couple deals a year? I need to blow this thing out the water. I need to make several million so I know that I’m one of the best at this at what I do.

So that’s one of my whys. So I would say that’s the first aspect. You’ve got to have a good reason to do it. It has to make sense to you, right? I don’t care if anyone thinks I’m great or not, it’s all about my own perspective of myself. So it’s got to be for you and you’ve got to have your own reason for it that gets your blood flowing and makes you wake up early, if that’s the case, and makes you stay up later, if that’s the case, and gets you going. It’s got to get you excited. It’s got to get you motivated. It’s got to get you pumped.

Mike: Yeah. I think not to compare a newbie real estate investor to a professional athlete or musician or any of those things, but it is similar in the sense that even like a heart surgeon, I have a friend that’s a surgeon, but if something happens to his hands or something happens to him, he’s out of business. Or if you want to take an extended vacation or extended leave, if you’re not working, you’re not making money generally, right? I think those things are tough.

There’s a reason there’s a lot of broke former professional athletes is because they made a lot of money, they didn’t know how to handle it and when they lost that contract or lost their job, then they don’t know what else to do. That’s one of the beauties of scaling your business up in real estate investing is you can start to remove yourself from some of the day to day to where you can still make money even if you’re kind of behind the scenes or even out of the scenes for a little while, right?

Gabriel: Right.

Mike: Well, let’s kind of dive into some of the specific things that allow you to scale. So I want to talk about, I guess, kind of structure in terms of how to structure your business and maybe we can just tie together people and structure, I guess. But what have you found that is the right fit?

I guess one of the interesting things, you’ll probably agree with this if I say this, whatever we talk about here today, everybody kind of needs to do trial and error because a lot of it comes down to what you’re personally good at. You can talk about this a little bit, but if you’re not good at something or you hate something, that’s probably one of the things you should fill a gap for first that you don’t want to do, right?

Gabriel: Yeah. As long as it’s not like we were talking about earlier, one of those higher level things.

Mike: Right. “I’m not good at being a CEO. I’m just going to hire somebody off of Craigslist.” Yeah.

Gabriel: “I hate looking at my P&L, but I’m going hire somebody else to tell me how much money I’m making and losing.”

Mike: Right.

Gabriel: It’s not the best idea.

Mike: Yeah.

Gabriel: And you can hire people for those things as you grow, but when you’re starting off, the reality is you just can’t. But yeah, definitely, all the other stuff, on these wholesaling groups, you see all these people who are so excited that, not to knock them, but they’re so excited they just stuffed 1,000 envelopes or 5,000 envelopes. I’m like, “Really? Why is that something to be excited about? You should be paying someone $10 an hour on that stuff.” If you know how to do a deal, you’re wasting your time doing that. That’s just a waste of time.

Mike: Yeah. I don’t know if you follow Gary V. at all, Gary Vaynerchuk. I like Gary V. I like his general message. But I think people get lost in that, that the hustle is the destination. As a real estate investor, especially early on, you have to hustle and you have to work hard. But if you celebrate the hustle, that’s the achievement, I think the results are the achievement, right? People get hung up on that, I think.

Gabriel: Yeah. I’m results-driven, man. I don’t care if I’ve got . . . what’s that word? What’s the term? There’s a big difference between busy and being productive. You can be busy all day and say, “Look at all these things you got done,” but at the end of the day, if the numbers in the bank don’t add up.

Mike: What did you produce? Yeah. Absolutely. Well, the only way you can grow your business is through other people, right? It’s leveraging other people’s resources or time. So one of the things that I want to kind of point out, before we started recording here, Gabriel shared his organization chart with me.

I think one thing that’s really interesting to note inside of there, we kind of looked at it at a high level is that your name was on several roles, like it’s your intention to ultimately remove yourself from those roles. But I think some of those people think, “I have to do all these things,” so they don’t think of it in terms of an org chart, they don’t think of it in terms of seats. Those are some of your responsibilities, but you’ve got it still broken out to where eventually someday that would be somebody else’s responsibility, right?

Gabriel: Right.

Mike: Where did you learn that from? Is that an EOS thing?

Gabriel: That is an EOS thing. It’s also an E-Myth thing. If you’re on the E-Myth as well, they go over the organization chart. So we had one before EOS and then once we got into EOS, we refined it and got even better. But the organization chart is one of the basic fundamentals of really growing your business because the whole scope of the organization chart is you want to build out your business and say, “Okay, what’s the goal? Is the goal $1 million, $2 million, $3 million, $4 million, $5 million?”

Whatever that is, how does that look like? If you’re doing $10 million, you need to put on your thinking hat and brainstorm and figure out, “If I’m doing $10 million, how does that look? How many deals a month are we running through? How much are we spending in marketing? How many people in the marketing department need to fulfill those tasks? How many people do I need in acquisitions?”

And you departmentalize your business so you can see the whole picture and know, “Okay, this is how everything works. This is the whole entire structure of the business. This is how it flows. This is all the people that need to be in place, the seats that need to be in place.” Then you can start plugging in the seats. Now you can start hiring.

But it’s so easy. People ask me all the time, “Should I hire a VA to do this?” I’m like, “What is he going to do? What’s his role?” “Well, his role is to do this.” It’s just like they gave me tasks, like create the marketing plan, send an email blast, follow up with leads. I’m like, “Look, you have your person filling in four or five different seats and you’re not even aware of that.” You need to first figure out what the seats are and then hire based on those seats.

Now, you can have one person in multiple seats. That’s fine. But just be aware of that because you’re hiring for multiple seats so the person who’s filling those seats also needs to be aware of what seat they’re in at the time they’re doing the work so they know what their input is on the business, who they’re accountable to, when they’re doing that part and how it fits into the whole big picture of the business because if they don’t understand, you’re not going to be efficient. You’re going to have so much moving pieces. It’s hard to scale that.

Mike: And even looking at your org chart or thinking about how my company is setup, anybody that’s listening to this, how you should think about it is just presume you’re a major corporation. You’re going to need the same functions. You have to have a financial function and cash management. You can break that down into a bunch of different areas, bookkeeping, there’s a bunch of different seats inside of there potentially.

Now, it may be all the same person that is your bookkeeper and managing payments to vendors and also managing your cash maybe. Be careful letting somebody else manage your cash, by the way. But you need a marketing person, you need acquisition side, disposition side. You need all those things in our business. Your name may be on all of them when you start, but at least you’re kind of designing what it will look like when you grow, right?

Gabriel: Right. The EOS, it’s basically an entrepreneurial system to run your business based on a book called “Traction.” Basically on EOS, one of the things that really helps with EOS is the whole premise of the book is to gain traction. So one of the ways they use to gain traction is once you have your organizational chart, now you know who are the leaders who are accountable for that department.

So if you have your marketing department, ultimately who’s responsible for everything that happens in marketing. Acquisitions, who’s responsible for that? So all your managers who are responsible for all these departments are having what’s called these level 10 meetings with everyone below them. They’re making sure that you’re going over your key metrics for everything in those roles and everything is getting done.

If it’s not getting done, you’re resolving the issue right away and figuring out why. This is done on a weekly basis so that way the business can gain traction. And vice versa, all the managers are meeting with each other to present all the lower things that are happening and make sure the business is meeting its goals ultimately.

It’s a lot of stuff when you’re first starting off. When you’re first starting off, you’re just busy running around. But ultimately you’re never going to get to the next step if you don’t become aware of these things that happen and start setting yourself goals to ultimately be at that seat to be there.

Mike: I see a lot of real estate investors that even something as simple as just tracking your advertising expense and leads, how many appointments you went on, how many offers you made, it’s a funnel, right?

If you ask the typical new real estate investor, and we’re talking about this stuff constructively, so if you guys are listening to this and saying we’re criticizing, it’s like no, here’s how to learn to take it to the next level. But if you make, I’ll just make some numbers up here, if you make 20 offers a week, then you’re going to buy a house a week. You probably have about a 5% conversion or you get 20 leads a week then you should buy a house a week, something like that.

So don’t be surprised if you get to the end of the month and you only had 8 leads that you didn’t buy four houses. It’s like you should have known that at the end of week one. Just tracking basic performance of your business. I think a lot of folks don’t do that. They just assume, “If I work hard and I hustle and I grind, then good things will happen.” That may be okay generally, but that’s not a recipe for growth.

Gabriel: Yeah. You have to have the numbers. This year, when you said that our growth was very methodical, this year was more methodical than any other year that’s ever been and that’s the reason why we’ve been able to pretty much double what we’ve done from last year to this year because we have our numbers and we know exactly on every department the numbers that are needed for us to achieve whatever the goal is.

If it’s to do 150 deals, I know what it costs me to generate one lead. I know how many leads convert to a deal. I know how many leads convert to an appointment. I know how many appointments convert to an actual contract and how much does it cost me to bring in a lead. How much does it cost me for that deal to come in? You have to have all this data so you can reverse-engineer the business and say, “If I want to do 300 deals this year, this is what it’s going to take. Is it even feasible?”

Mike: Right. That’s kind of how you do it too. You say, “If I’m going to do x-number of deals, I’m going to need administrative support. I’m going to need support in these areas. I can’t have a part-time bookkeeper anymore. I need a full-time bookkeeper.” You can start to figure out based on how much you . . . what your goals are, how much advertising you need to do and then you have to figure out, “Where am I going to need support at? Where are we going to need basically capacity to do the different things that have to happen in the business?” right?

Gabriel: Right.

Mike: What would you say . . . not necessarily what you did, but what you would do if you had it to do all over again in terms of what are some of the first positions. Let’s say it this way. What are some of the first positions you think a typical real estate investor needs to fill if they’re looking to grow?

Gabriel: First I would fill . . . you want to fill from an economic perspective, just fill the less paying roles. Marketing, if you have a marketing department, I’m sure you need to, A, gather leads and put leads into an Excel or into your CRM, however you’re tracking that, someone needs to do that. You can hire a VA for that. That’s a $5 or $6 an hour job. Don’t spend your time on that.

If you’re stuffing envelopes and stuff like that and dropping off stuff at the post office, that’s a $10 job, $12 an hour job, you shouldn’t be doing that. Spend the money. Now, if you don’t have a job and you don’t have income, that’s a different story.

But when we first started, I always budgeted from my income at least a certain amount of money that I knew I could consistently spend regardless if no money came in, I knew that I could spend $500 a month or $800 a month no matter what. And I would be committed to spending that regardless of where that came in so that way I could start getting stuff done without me doing everything.

So you’ve got to outsource basic stuff in the marketing. As you grow, I see all these real estate investors, there are a lot of real estate investors that are doing a pretty good amount of volume. There are real estate investors that are doing 30, 40, 50 deals a year. They’re answering the phones. That’s crazy.

You shouldn’t be answering the phones. You should have somebody answering the phones for you. That’s a $12-$15 an hour job. When you find somebody really, really good and they’re great, give them a raise. All the admin stuff on the back end, bookkeeping, you shouldn’t be doing that. That’s a cheap job, you shouldn’t being doing transaction coordination. That’s also someone you can find relatively cheap. The bigger hires come on dispositions and acquisitions as you go to.

I think you basically have to look at every market is going to be a little bit different. What I’ve found is you want to look at what are you going to pay that person? How much is it going to cost to get someone to do that? If you’re going to pay commission based, what’s your average profit per deal? If your average profit is $10,000, will somebody be comfortable . . . if you’re doing two deals a month, is that enough money to motivate someone to work for you full-time?

Mike: Yeah. Absolutely.

Gabriel: If it’s not, then you’ve probably got to scale up a little bit more. If it is, then you’re ready. Get someone on board. That person can do a lot more than two deals a month. Now you’re in better shape now to be able to scale. You’re not doing everything. You have people doing them.

Mike: I’ve had that exact conversation a lot of times. A lot of times I think folks look at, especially those that are thinking about bringing on an acquisitions person, their first thought is, “What do you pay your acquisitions person?” and that differs, people pay 10%, some people pay 15% if they’re at totally variable compensation.

But yeah, you’re right, just hypothetical numbers here. If your average gross margin on a deal was $10,000 and you’re doing two deals a month, your acquisitions person is making $3,000 a month, $36,000 a year. So are you going to find a great, dedicated sales person to work for you for $36,000 a year? Probably not. I think sometimes you have to look at, one thing is if you could help that person make $80,000 a year, you’ve got to find someone that is happy with that.

When you find someone that’s like, “I’m used to making a quarter of a million dollars a year,” that’s probably not going to be a great acquisitions person for you because they’re probably going to be disappointed. They won’t have the capacity to buy at that level. I think it’s important to think about, one is, if I had a full-time person and they had the capacity to buy five or six deals a year, what would that do for me? Can I afford the advertising to feed that monster now.

Gabriel: Right.

Mike: So let’s talk a little bit about . . . real fast before we go any further, I want to ask you kind of a question of the week here that I want to ask you. I know you’re a student of the game. So why don’t you kind of share with us what your favorite book is, let’s say your favorite book that most people haven’t heard of that you think would help them in terms of growing their business.

Gabriel: In just overall business growth stuff?

Mike: Sure.

Gabriel: That’s a tough one, man.

Mike: Stumped you.

Gabriel: Yeah. I think I don’t know if it’s necessarily my favorite, but it’s been one of the most useful ones as far as being able to take everything that the book advises to do and doing it and seeing results, I’d say “Traction” has been that. There are other great books that I’ve read. I’ve got hundreds of books in here, man. But that one’s been . . . all the other books always take something small and add to it, but traction, I took like everything in “Traction” and put it in and it’s worked. It’s not necessarily my favorite read. It’s not a book that I’m like, “Oh, I’m pumped. I read this book.” But it’s useful.

Mike: Yeah. It’s a great book. It’s obviously very fitting for what we’re talking about today because it talks a lot about how to take your business to the next level and how to put some structure around it. Okay. Well, hey let’s talk a little bit about systems. So the importance of systems . . . when a lot of folks start off, they have no systems or they have a legal pad and some manila folders and maybe that evolves to Excel spreadsheet.

But let’s just talk about maybe you could share just for a minute where you started and then where you kind of move dup to. We don’t need to get specific on what system. Well, you could share what system you use, if you want to, but just the importance of that and how a busy aspiring real estate investor should think about it in terms of what it can do for them.

Gabriel: Yeah. The systems are really important, especially when you’re hiring because that’s your pretty much training menu. It’s easy to just say you’re going to hire . . . for instance, let’s just give an example. Let’s say you’re going to hire a transaction coordinator to manage your transactions. You say you don’t have any systems in place. How is she going to come in and know exactly what you want? She can’t read your mind.

You can go ahead and tell her what it is you want, but I guarantee you’re going to miss a lot of stuff when you tell her she’s going to miss a lot of stuff. You’re not going to be able to hold her accountable and you’re going to create a mess and then she’s going to be driving you crazy because she’s going to have tow personalities.

She’s either going to not do anything without asking for approval from you, so she’s going to be calling you every two seconds or if she’s going to be a type that’s going to do everything without your approval and you’re going to be like, “Holy shit, what is she doing?” So the systems pretty much is your guide and your employees’ guide for knowing each step of the way what to do.

Let’s give an example of transaction coordinating. What’s the first step? For us it’s reviewing the contract as step one, reviewing the contract, making sure the name and public records match, we have a binding contract. We use Podio as a CRM. So she makes sure that she marks the new file just came in. She puts all the fields in Podio for our CRM, the purchase price, the escrow deposit, when the closing date is, when the inspection period expires and all those workflows within Podio.

She opens title. She sends it to the title company. She’ll send the escrow letter to the seller if you’ve got to put up escrow. She’ll call a seller, let her know that, “We’ve got a closing happening. I’m the closing coordinator. If you need anything, I’m here to help you. Let me know.” That’s pretty much the first step.

She’s got a whole bunch of other steps to the funnel she’s got to go through, but we’re very clear between her and I and now my business I manage operations, she knows exactly what steps she has to do. So if she misses one of those steps, I can clearly determine what steps she missed and say, “You didn’t do this step. Go back to your manual. You need to read it again. Do you understand why you missed it?” It’s pretty much the structure for your business. You need if you want to have a business.

Mike: I think the other important thing is to kind of document how to do certain things, right? That’s a system in and of itself because if that person leaves or quits or gets fired or whatever, you don’t have to go through and explain all that to the very next person again. Everybody’s going to have questions and that’s fine. You kind of learn from their questions, like, “I guess I should create a little training video on this because I don’t have that.”

But I think that’s really important, that in order to scale your business, if you have to keep explaining over and over and over again how to do something, it’s not that hard to just open up Camtasia or Screencast-O-Matic or some sort of screen capture tool and just talk into a microphone and say this is how you do it. Then when you hire somebody, to be able to say, “Go watch these videos and let me know what questions you have,” and if you get stuck somewhere, go back and watch the video again.

Gabriel: Yeah. The thing is in our business, we’re not like in the startup venture side where all of a sudden you go from 5 employees to 100. In those businesses, systems are even more critical because you’re just bringing out so much people in place. In our business, you can pretty much have, for the most part, one or two people in a role and you can scale a pretty big business in our business in terms of profiting and revenue with one or two people.

So I mean they’re still necessary because like you said, if the person leaves, you don’t go. You need some type of outline to hold people accountable so that everyone is on the same page of what needs to be done and there are no misconceptions, “Oh, because I thought you said this,” “I didn’t say that. This is what it is.” And you can have the videos and you can have diagrams. That’s one of the things we’re working on now is everything for us has been typed and documented, but realizing that we want to get it to the phase where we want to have all three one format.

So depending on your learning type, you can just come in and say, “I don’t want to read. I’d rather watch,” or, “I don’t want to watch video. I’d rather just see the visual diagram.” Whatever your learning type is, you can just get it and run with it.

Mike: The great thing I’d say is unlike . . . So we’ve been using Podio for several years, actually before I knew anybody else that was using it. Now everybody is using it. I’ll say ours is not nearly as tricked out as some of the folks we know.

But it’s a great system. I’m not here to promote anything in particular. There are a whole bunch of systems out there that are great tools. I think the important thing for a new real estate investor is don’t let it overwhelm you but don’t recreate the wheel either. Just plug in to a system that there’s a handful of systems that almost all real estate investors use that have a system they subscribe to and you don’t have to recreate the wheel.

The great thing about it is they all have associated Facebook groups or support desks or whatever that can answer questions for you or have probably a bunch of videos on how to do certain things. There used to be a time when you had anything like this, you had to create it yourself and figure it out, right? But that’s not the case anymore.

Gabriel: Yeah. I always say if you’re a real estate investor, if you’re a one-man shop or you’ve got one or two people on your team, I would say the most important thing you can do as an entrepreneur is to learn how to stop and look at your data. If you don’t have data, figure out how to get it because you need to realize the difference of when you’re working in the business and when you’re working on the business. You’ve got to dedicate at least a certain amount of time of your time to work on the business on a weekly basis.

That’s the only way you’re going to be able to go from . . . I like the way the “E-Myth” classifies it the most, from the technician, which is you’re the guy actually doing the job, from the manager, being the one that oversees the technician and then being the actual entrepreneur, the one that actually owns the business. You’ve got to set time once a week to go through that or maybe once a month if you can’t even do once a week and then look at it every quarter. You just constantly want to be doing that stuff.

Like for us on a quarterly basis, we take a day off just to work on the business the whole entire day. On a weekly basis, it’s about a 90-minute . . . I mean now we’re always working on the business now. I don’t particularly work in the business. It’s mostly on it because now we’re on the managerial part. But you’ve got to do it.

You’ve got to be able to look at, like you said, you’ve got to know what the numbers are, see what the deals are, see where you’re at today, how you get from here to there. You’ve got to think big picture and you’ve got to stop. If you’re always hustling and you’re always grinding, you’re not thinking. You’re just doing. You have to know how to turn on the other side of your brain.

Mike: Pull back. Yeah. For me, it’s like I need a change of scenery. So if I come to my office, I know that I’m going to get stuck doing something I didn’t know I was going to do. I actually have a few different businesses now. I have employees here and people who want to chit-chat. That’s all fine. That stuff is great. If I need to get focused on something, then I literally just, truthfully almost every morning I go to Starbucks for a couple hours and just stay at a high level of what do I need to accomplish here. Where are we at with this project we’re working on or whatever?

It’s so easy to get in the weeds if you allow yourself to go there. I think for some people, if that makes sense for you, you’ve got to find a way to . . . when I was in corporate America, I worked with a lot of C-level people. We had corporate retreats. We would go somewhere and do that. Do the same thing for yourselves. It can be Starbucks. It can be under a tree in a park. It can be anywhere, right?

Gabriel: It’s like the same thing. I’m sure real estate investors can relate to this. If you’re a rehabber, would you ever rehab a house without making a plan first? Would you just go in there and do whatever you need? You probably won’t. You have a plan. You see when you actually build a house, you have an actual set of drawings of what it is you’re going to build, how exactly it’s going to be laid out so someone can read it and know exactly what it is they’re doing.

That’s their system to know, “Okay, I’ve got to build this exactly here, here, here.” So that’s in essence what you’re doing. You’re stepping away from the work to build your plan. You need to build your plan of where the business is going to go, how it’s going to look like and that stuff.

Mike: Absolutely. So without spending a whole lot more time on it, any kind of thoughts on just systems? I think one thing I want to clarify and I think people get hung up on sometimes is a system doesn’t necessarily mean software. It might just mean a process that you document on a checklist. Systems can mean a lot of things. That’s kind of how you do things, right?

Gabriel: Yeah. Ours is all just on documents. We basically have a Google Drive. I have a folder on Google Drive that’s called Working Procedures. We have it based off every department. So everyone that works in our business knows what their department is in and they know which pertains to them. So each department has each role.

Our operations department, we have our disposition manager, our rehab manager, our short sale processor and our transaction coordinator. They know their stuff is located in there and they know their processes are documented there. If they ever have a question and they forget how to do something, they should only be calling me if it’s something that’s not documented in the system or just stuff that’s not documented in the system, it’s like, “This happened and I don’t know how to handle this. Okay.”

Mike: Yeah. Well, let’s take, so we don’t run too long here, just take a couple minutes and talk about partnerships. I know you have a partnership now that you didn’t have initially. My wife has always been my partner. We’ve kind of split the business in different ways. But there are a lot of partnerships in real estate investing.

I think a lot of people like you said, early on you’re very apprehensive to it. A lot of people are like, “No, I’m going to be my own boss. I’m not going to have anybody that’s going to be involved in making decisions other than me.” But that can limit your growth too. There are a lot of opportunities with partners. Maybe just share a few thoughts that might be helpful to people listening on partnerships.

Gabriel: Yeah. For me the partnership didn’t limit our growth at all. It actually helped us grow faster. Now you can . . . ideally me and my partner didn’t really do this, but ideally you want to have a partner who complements what you’re not good at, like you said. So you can focus on what you’re best at and your partner can focus on what they’re best and hopefully they shouldn’t be the same thing. So that way you can divvy up the work and you guys can do what it is that you do best.

There’s a magic that happens when you have two people working because now when you’re by yourself, who holds you accountable? Now you have a partner, you say, “Hey, dude, you said you were going to get this done, man.” You can address each other. You don’t want to be in that situation with your partner. You have mutual respect for each other. So it keeps you on your A-game more. That’s been my experience.

Me and my partner, when we partnered, we didn’t really go over our strengths and weaknesses. But luckily it still ended up fine. He had a better . . . one of the things I saw was I knew he was very deep into the marketing aspect of the business and really liked that aspect more. And I wasn’t. I was more of just the big picture guy, likes creating the systems and I liked making sure all the pieces of the puzzle were plugged in and I could see where everything goes.

I didn’t like the minutiae of the marketing. I just wanted to know, “Is it working? Is it generating ROI?” That’s all I care about. I don’t care about split testing and all that stuff. But I know it’s important. I just don’t like it. He was into that stuff. I liked the finance side and I liked reviewing P&L and I liked looking at numbers. I was more the analytical guy. So it worked out fine.

For us, we basically had a few meetings, we used the “E-Myth” at first. That was like really our guiding business bible before “Traction.” In the “E-Myth” he talks about expressing what your vision is, putting it on paper and really being clear what it is and something that excites you. Me and my partner would go to Starbucks and we would have full day meetings without working, just shutting off our phones and just talking on a human level what is it that we want out of life personally, financially spiritually, family-wise, all that stuff, and just seeing if we were on the same wavelength and seeing if this even made sense.

So we had those really deep intimate moments with each other where we would see that stuff and just see if it really made sense. So for us, we were pretty much on the same wavelength. We had the same values as people. We had very similar belief systems. We just kind of see eye to eye together on many things. So for us, we thought it would be a good fit and it would work.

But we must have had about three or four full-day meetings before we actually formed a marriage. We were just making sure that everything was good, that we were both okay with what our visions were and we were both in sync with that and there was no disharmony anywhere within that so that way things wouldn’t blow up after you go into partnerships.

Mike: That’s great. I will say that’s a lot more than most people do, right? I think a lot of people that start a partnership, it’s kind of more based on, “Do I like this person in terms of like do I want to have a beer with this person.” So what ends up happening for a lot of people is they’re too similar. You kind of hired a carbon copy of yourself and the things that you’re not good at, they’re probably not good at either.

So it’s harder to divvy up tasks because you both have the same strengths and weaknesses or similar. But not that those can’t work. I think it sounds like you did a lot of great things to make sure that . . . truthfully I think a lot of people forget that we should be building businesses here to support the life that we want to live, right?

A lot of times it ends up happening the other way around. So you might end up resenting that person because you’re not living the life you want to live, but by design, you both are not good at some of the same things and maybe don’t even have similarities in terms of outside of the business.

Gabriel: That’s what it’s ultimately about, right? That’s what we looked at was, “How much money did we want to have in our bankroll?” If I want to net $1 million a year and my partner is like, “That’s great. I respect that. But honestly, I’m happy with $200,000 a year. That would satisfy me.” That’s an issue because now if you’re being partners, you’re going to want to do what it takes to get to the $1 million and he’s not.

So for us, it was all about knowing . . . it was all about discussing what we want out of life first and seeing if we were there together. We would go down that ride with each other. It wasn’t business at all for us doing the things. It was more life and seeing if we were in the same life path versus business path. The business worked. We were friends before business. For both of us, it was like, “Dude, at the end of the day, partnerships go bad but I see you as a friend first and then a business partner and I want to make sure that stays the same way. I want to keep it friends first always.”

Mike: Yeah. We don’t have time to talk about scorecards and stuff like that, but kind of like a marriage, it’s important to have checkups, just every once in a while. I’ve seen some partnerships, you probably have too, end really bad, seen some marriages end really bad. When you kind of know the people, you’re like, they probably never sat down and talked about what am I upset about or what’s not working or what can we do differently?”

I think it ultimately ends up somebody ends up resenting somebody for something they did or didn’t do, yet they probably don’t bring it to their attention. It just kind of festers and it gets to a point to where there’s just a blow up and it’s over.

Gabriel: For sure. That’s what the weekly meetings are for. In those weekly meetings you want to bring up issues and those issues are if you’re feeling a certain way, you want to bring it up because it’s going to come up sooner or later, so bring it up now before it becomes a huge issue.”

Mike: Yeah.

Gabriel: For us too, I was showing you my organizational chart earlier, we were mapped out totally different a quarter ago and we’ve changed the way we’re mapped out in our charts now. One of the things is my partner has moved to Israel. He’s not living here in South Florida anymore. He’s not 100% sure, but he’s there for two months right now. He’s working from there. So we realized one, from there, he won’t be effective here. He’ll be more effective here because you need to be here for this.

Two, if you’re looking at our chart, when we saw our chart, we’re like, “Are you naturally inclined to do this stuff because I’m naturally inclined to do that and I’m not there and vice versa.” And we’re like, “Yeah, you’re right. Why are we here?” So seeing that gives you a better understanding of where you need to be in the business and being like, “Okay, I should be held accountable for this, not this,” and vice versa.

Then as partners you know, “Okay, if you’re accountable for this, I’m holding you accountable for this and if you’re accountable for that, I’m holding you accountable for that.” You have to be very clear of what your roles are in the business and who’s responsible for what.

Mike: Yeah. That’s great. Well, Gabriel, thanks for spending so much time with us today. I definitely appreciate it. Some great lessons in here. Hopefully everybody that’s listening got something out of it. I’m sure they did. If folks want to learn more about you, where should they go?

Gabriel: They can just check me out on Facebook, I guess. It’s Gabriel Garcia. Or they can check out our company site, SouthFloridaCashHomeBuyers.com. We’re always hiring, so if you’re interested in employment opportunities, it’s there.

Mike: Yeah. Truthfully maybe you can . . . it’s funny you say that. Why don’t you think back, maybe just share one last comment for folks, you said you paid somebody to mentor you, help do some deals, help get you out of the gate. You and I both know, those first five or ten deals you do give you all the confidence in the world that you didn’t have before. You’re able to ramp up a lot faster. But in terms of watching somebody or the ability to have somebody show you the ropes, maybe share your thoughts on how important that is.

Gabriel: It’s of the absolute importance, man. For me, I always talk about it. You can be the guy that’s . . . there was a guy I was having a conversation with on Facebook the other day. He was bashing anyone who spent any money on education. He was like praising these two big companies, which we both know who the owners are very well. And I’m like, “Dude, if only you knew how much the two companies, the owners of those companies have spent on their education, you don’t know what the hell you’re talking about.”

Education doesn’t have to be buying this big mentorship. It can be in books. It can be in seminars. It can be in trainings. It can be in one on one coaching, whatever it is, but you’ve got to invest in yourself. So for me, having the coach . . . if I would have not had a coach, I would have never been as successful as fast as I would have. The coach shortens your learning curve. If you can spend $10,000 or $20,000 to make $100,000 in five or six months versus two years, it just doesn’t make any sense why you wouldn’t do it. Vice versa, we still spend money on masterminds. I spend money to be around the best because it makes me better. It keeps me sharp, makes our business grow and it’s of the most vital importance.

Mike: Yeah. It’s important. I’ve bought hundreds of houses. Some people say, “You’re an expert in this or that.” What I’ve found through the show, actually, is I’m an expert in very few things. That’s a very narrow niche. But I spend tens of thousands of dollars a year on training or masterminds or different events even outside of real estate because it helps sharpen me in certain areas. I think it’s a small price to pay ultimately.

The challenge with real estate investing is even if you are good, it’s constantly changing. If you’re not surrounded by people or learning what’s coming around the corner, preparing yourself for that, then you might get left high and dry.

Gabriel: If you’ve never built a million-dollar business in your life and you can be in a room full of people who have done it, that would catapult . . . you would just fly to that million-dollar path right away versus if you’re around people who have never done it, you’ve never done it, you don’t have personal contact with people who are living, breathing, sleeping that stuff, it’s going to take you so long to get there.

It’s never going to happen unless you actually have millionaires in your circle of influence that you’re talking to very often because you only know so much as the people around you, you only make as much as the people around you and you don’t feel as good as the people around you. You need to look at that.

Mike: Yeah. You and I both know that whether it’s a mastermind or training programs, going to listen to other speakers that motivate you, whatever it might be, the value isn’t in the entire thing. The value is in this ten-minute conversation or this five minute little nugget you hear that changes everything. I think a lot of people think, “I can’t do all that. I can’t absorb all that. I don’t have time for that.” It’s like you just need a couple little nuggets in there and that’s what the value is in.

Gabriel: I see it is also spiritual, right? It’s like think about if you were best friends, if you were constantly talking with Gary V., you were constantly talking with Donald Trump or Mark Cuban, these big billionaires and you were constantly talking with them, hanging out with them, your level of play would step up so much, you would have to either stop being their friends or step up to their game because that’s just the way vibration works.

You’ve got to resonate with the people around you to be with them. If not, then you’ve got to get out of that group. So it’s just like I see the spiritual, your vibration has to match with where you’re at. If it doesn’t match, it’s going to get there. Everything in your life is going to change as your vibration changes.

Mike: Yeah. Awesome, Gabriel. Great to see you. We’re going to add links down below. I’ll dig up your Facebook profile and we’ll put a link there for people to check you out and maybe ask you some questions and your house buying business as well. So thanks for spending time with us today. Everybody thanks for joining us for another episode, episode number 320 is in the bag. We’re going to keep them coming. So keep on listening. Everybody thanks so much for joining us. Have a great day.

Gabriel: All right, Mike, thanks for having me, man.

Mike: Thanks buddy.

Thanks for joining us for this episode of the FlipNerd.com Investing Show. If you’re not yet an elite member of FlipNerd, you’re missing out. We have tons of great training including a new detailed master class published each month and live training webinars with experts twice a month. Plus you’ll get access to all of our archives where we already have a growing library of master classes and other training videos.

Elite members also get membership in our incredible online mastermind group, where many of the top real estate investors from across the country, including many of the hundreds of guests I’ve had on the show in the past, are already members. Whether you’re brand new looking to get started or a veteran, you simply must join today. I promise you won’t be disappointed. To learn more or join today, please visit FlipNerd.com/Lab. That’s FlipNerd.com/Lab. See you on the next show.