Welcome to the FlipNerd.com Expert Interview Show Top 10 series, where we share our top 10 shows from 2017. Perhaps one of the top phrases discussed amongst top real estate investors during the past year is the word “Systems”. Top real estate investors have been focused on systems and processes recently, and many of these systems have found their way down to even newer investors. We continue the FlipNerd top 10 award winning shows with this episode, where I interview my friend Gabriel Garcia – and we talk about how to build and scale your business. Let’s get started.
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 in 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 talk a little bit about partnerships and a number of other things that will allow you to grow your business. Now your business grow should be based on your personal and your financial goals. But if you 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, yeah. I’m excited to talk about this topic today, and before I knew what we were going to talk about today, because we just decided that, right, is I was thinking about that this morning and I’ve kind of told you it’s just seeing people post stuff on Facebook groups about hustling and driving for dollars and all those things, and 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?
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, you know, 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 but they really think of as being self-employed, they’re not really thinking of really being a business owner because it’s a totally different mind shift.
Mike: Yeah, well, explain that a little bit. What do you think the difference is? Because I think a lot of people get caught up in that. I’m self-employed but you’re still gainfully employed but you’re still working as hard as you ever were, right?
Gabriel: Not really a business owner, you’re probably working more than what you were working as an employee, that’s number one. I mean, 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 what 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 of the business owner.
If you stop working, the income comes in no matter what and pretty much you have a, what you call a sellable business. You can go ahead and pretty much, you know, call a broker or put your business up for sale and sell it. No one is going to buy you, they’re going to buy a business. It works without you. You can show [inaudible 00:03:15] for a month and everything will be in order and everything will be working and your business will be doing great, you know?
Mike: Yeah. I think that’s a 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, you know, 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, literally, 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 kind of check my email here and there. I’m not to the point where I have a business that I could leave for months at a time, but I’ve left for a week or two at a time and checked some emails here and there for fires I need to put out. But anyway, I think it’s great to talk about that.
But hey, before we kind of jump in to talking about building your business, why don’t you kind of tell your background a little bit and how you got started and maybe a little bit about how your business has evolved?
Gabriel: Yes. So I got started back in the end of 2012 going to some Rich Dad Seminars. I pretty much encountered the . . . started reading the books “Rich Dad Poor Dad” and “Cashflow Quadrant.” That’s how I started. I just finished graduating from music business in Orlando. My dream at the time was to be a hip-hop artist and I wasn’t even thinking about real estate. But ultimately, I was broke, I figured I needed to get money. I didn’t have money so the only thought that I had to me was why don’t go to a library and read about money, maybe that’ll help me understand why I don’t have money.
So, it worked, it was a good solution, right? So I read those books and they kind of opened up my eyes to all these new possibilities of ways to make money, knowing the difference between assets and my liabilities. I didn’t even really know about that even though I got the award in my school for . . . it was like one of the . . . I got, like, the award for the best in accounting. But I didn’t really think about assets and my liabilities on a personal basis, like, what is that and 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, you know, if I can buy all these properties and it brings me income regardless whether I work or not, then that’s the key to financial freedom.” So that, like, pretty much just sparks me up completely and elevated me into just another level of I guess a liveness. It got me engaged in life and gave me something to actually work for and work towards for.
So I started going to seminars back in 2012, implemented what I want . . . implemented what I learned from the seminars. Made a little deal there like on April of 2013, I think, was my first deal where I basically just, you know, daisy chained a deal from somebody else. I made like a thousand bucks. It’s probably one of the hardest thousand dollars I ever made.
I always kept stumbling and working so hard and learning and 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 just one or two. You don’t need a hundred.
And so you’re everywhere all over the place and that’s how I was and I knew I needed help but help cost money, or knowing somebody who . . . ask some other people who wanted to bring me on as a partner in a company or whatever and stuff like that but then just, I don’t know, it just didn’t vibe with me right and 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 showed me rope and basically had to pay him five grand, I paid him five grand 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. So, that’s how I pretty much got started. I did my first wholesale I think it was November 2013 that the next year, I think the next year . . . well, the next year, I quit 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 the savings up and at that time, I was only making 25% of what I earned because I had to split half with my mentor, and then I had to split half with my wife because she pretty much lent me the five grand. So she’s like, “I’ll give you the money but you have to split it with me, too.”
So then I did that, so as soon as I got the money, I just quit because I knew, like, “Man, I’m wasting time here at this job. I can be making so much more money using all this extra time that I have but I can’t. I’m stuck in this job.” So, 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 over here, 2016, this year, we’ll probably do somewhere around, I’m hoping to hit . . . my goal is to hit the $3 million mark in gross profit. We’re not going to hit it. Well, it’s not that, we still can but it doesn’t look like we’re going to hit it. We’re probably going to be shy for about $500,000 to $700,000. So we’ll probably be somewhere between two and a quarter, two-five this year depending on how we finish off.
Mike: That’s amazing. And not that you 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 got a bunch of . . . that doesn’t include the properties that we’ve already purchased that haven’t sold yet on the rehab side.
Mike: So those are sales, yeah.
Gabriel: So 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. And I know it’s been very methodical. So kind of talk about . . . because 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, then that’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 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 you’re not advertising overhead, then you’re advertising on top of that, right?
But just talk about how you kind of went . . . 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, you know, doing a deal here and there or even a deal or two a month to taking it to a whole other level.
Are you looking to change your life through real estate investing? If you’re investing in either getting started or taking your business to the next level, please check out FlipNerd’s private program at theinvestormachine.com. This is the most robust real estate investor coaching, networking, and mastermind on the planet and designed for your success.
If you’re ready to roll up your sleeves, ready to take personal responsibility for your own success, and ready to dive into a world-class instructional coaching program that provides you step-by-step instruction to help you achieve financial freedom, then you should apply today. Spaces are limited and candidates are only considered after an application and interview process. Our 12-month investor program is unparalleled. Think you might be a fit? Learn more today at theinvestormachine.com.
Gabriel: So I would say there’s a couple different aspects to it. The first aspect is maybe the spiritual or mental aspect if you want to talk about. And for me, you know, there is always a desire for growth. Obviously, growing just because you think it’s cool, it’s not really a good reason, right? You always hear, like, 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, like, my why was, I just wanted to be great at something. As a kid, 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 and in drugs, smoking pot, all the stupid stuff high school kids do, and all the kids 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 and I couldn’t grow. I stopped growing so they overpassed me. So that hurt inside.
And then later I got into music and from a talent perspective on the music side, I was very, very good. But I’m not built for that lifestyle of constantly being out on the road and being at nightclubs and bars and stuff like that. And that’s when I realized, you know, that that world wasn’t for me if that’s how you make a living.
Then with real estate, it was like, you know what, 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 the stuff. So I got really passionate about it. And for me my why was 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. Like, I need to blow this thing out of the water. I need to make several million for me. 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 is you’ve got to have some type of . . . you have to have a good reason to do it and it has to make sense to you. 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 got to have your own reason for it that that gets your blood flowing and makes you wake up early, if that’s the case, then it 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 your pumped.
Mike: Yeah. And I think like a lot of, you know, not to compare, a newbie real estate investor to a professional athlete or a musician or any of those things, but it is similar in the sense that even like a heart surgeon, okay, I have a couple of friends that are . . . 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?
So I think those things are tough because, I mean, that’s the 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, right? So, that’s one of the beauties of scaling your business up in real estate investing is that you can start to remove yourself from some of the day-to-day to where you could still make money even if you’re kind of behind the scenes or even out of the scenes for a little while, right?
Well, let’s kind of dive into some of the specific things that allow you to scale. So let’s talk . . . I want to talk about, I guess kind of structure in terms of how to structure your business, and maybe we just kind of tied together people in structure I guess. But have you found that is kind of the right fit?
And I guess one of the interesting things is you probably agree with this if I say this is, whatever we talk about here today, everybody kind of needs to do trial and error, because a lot of it comes onto what you’re personally good at, right? 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 the gap for first that you don’t want to do, right?
Gabriel: Yeah. I mean, as long as it’s not like a, what you’re talking about earlier, as long as it’s not one of those higher-level things that . . .
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, you know, I’m going to hire somebody else to tell me how much money I’m making and losing. It’s not the best idea, I mean, for all the . . . I mean, 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, like all these wholesaling groups, you know how you see all those people who are so excited that, not to knock them but they’re so excited because they just stuff the 1,000 envelopes or 5,000 envelopes, I’m like, “Really?” I’m like, “Why is that such like something to be excited about? You should be paying someone $10 an hour for that stuff. If you know how to do a deal, like, you’re wasting your time doing that. That’s just a waste of time.”
Mike: Yeah, I think . . . 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 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, like, that’s the achievement, I think the results are the achievement, right? So, people get hung up on that I think.
Gabriel: Yeah. I’m results-driven, man. I mean, I don’t care if I got all . . . what’s that word? What’s that term you can be . . . there’s a big difference between busy and being productive. You can be busy all day and say, “Look at all these things you’ve got done. But at the end of the day, man, the numbers in the bank don’t add up. It’s all [inaudible 00:17:48].”
Mike: What you produce, yeah, absolutely. Well, let’s talk about . . . the only way you can grow your business is through other people, is leveraging other people’s resources or time or . . . so talk a little bit about one of the things that I want to kind of point out, before we start the recording here, Gabriel shared his organization chart with me. And I think one thing that’s really interesting to note inside of there, I just . . . we kind of looked at it 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 these people don’t . . . they think, “Well, I have to do all these things,” so they don’t think of it in terms of 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 will be somebody else’s responsibility, right?
Mike: Where did you learn that from? Is that a EOS thing?
Gabriel: That is an EOS thing. It’s also an “E-Myth” thing. If you’re onto 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 yeah, the organization chart is, it’s 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 a million, two million, three million, four million, five 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 like? How many deals a month are we running through? How much are we spending in marketing? How many people in the marketing department needs to fulfill those tasks? How many people do I need an acquisition and you departmentalize your business so you can see the whole picture and know, okay. This is how everything works. This is the whole structure of the business. This is how it flows. This is all the people I need to be in place, the seats that need to be in place, and then you can start plugging in the seats.
Now you can start hiring, but it’s so easy, like people ask me all the time, like, “Oh, should I hire a VA to do this?” I’m like, “Well, what is he going to do? What’s his role?” “Well, his role is to do this.” It’s just that they give me tasks like, you know, create the marketing plan and send an email blast, follow-up with leads and this. I’m like, “Look, I mean, you have your person filling in . . . it sounds to me like you have the person filling in four or five different seats and you’re not even aware of that. Like, 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 that because you’re hiring from multiple seats, so the person that’s filling in 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 that, it means you’re not going to be efficient. You’re going to have so much moving pieces. It’s hard to scale that.
Mike: Yeah. And you can look at your org chart or thinking about how my company is set up or 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. Okay. There’s a bunch of different seats inside of there potentially.
Now, it maybe 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 an acquisition side. You need a disposition side. You need all those things in our business. Now, your name may be on all of them when you start, but at least you’re kind of designing what it’ll look like when you grow, right?
Gabriel: Right. And then the EOS, if you don’t know EOS, it’s basically an entrepreneurial system to run your business based on a book called “Traction,” and basically, on EOS, one of the things that really helps with EOS is the whole premise of that book is to gain traction. So one of the ways that 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 is responsible for everything that happens in marketing, acquisitions, who’s responsible for that.
So then all your managers who are responsible for all the departments are having what’s called these level 10 meetings with everyone in those, below them, and they’re making sure that you’re going over your key metrics for everything in those roles and everything is getting done. And if it’s not getting done, you’re figuring out . . . you’re resolving the issue right away and figuring out why. And this is done on a weekly basis so that way you have a business to 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 where you can be [inaudible 00:23:21].
Mike: Yeah, even something as simple, 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? What starts that? 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 or criticizing, it’s like, “No, here’s how to learn how to take it to the next level.”
But if you’re not making . . . 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. I mean, there’s some probably 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 eight leads that you didn’t buy four houses. It’s like, “Well, you kind of knew that, right?” You should’ve known that at the end of the week one, right, just tracking kind of basic performance of your business and 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. I mean, this year, when you said that our growth was very methodical, I mean, 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 over-double what we’ve done from last year to this year because we have our numbers at this point. And we know exactly on every department, the numbers that are needed for us to achieve whatever that goal is.
If it’s to do 150 deals, I know what it costs 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? So you have to have all this data so you can reverse engineer the business and say, “Okay. If I want to do 300 deals this year, this is what it’s going to take. Is it even feasible?”
Mike: And that’s kind of how you do it too, is you say, “Hey, 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’m going to have to have . . . 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. You’re back into how much advertising you needed to do, and then you have to kind of layer out, well, where am I going to need support at or where are we going to need basically capacity to do the different things that have to happen in the business, right?
Mike: Yeah. What would you say . . . not necessarily what you did but what you would do if you had to do it 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 that you think a typical real estate investor needs to fill if they’re looking to grow?
Gabriel: First, I would fill . . . I mean, you want to fill from an economic perspective, just fill the less-paying roles. I mean, like, 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 or however you’re tracking that. Someone needs to do that. You can hire a VA for that. That’s a $5 to $6 an hour job. Don’t spend your time on that.
If you’re stuffing envelopes on stuff like that and dropping off the 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 any 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 over time, regardless if no money came in, I knew that I can spend 500 bucks a month or 800 bucks a month no matter what. And I would be committed to spending that regardless of whatever came in so that way I can 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 that are . . . there’s a lot of real estate investors are doing pretty good amount of volume. There are real estate investors who are doing 30, 40, 50 deals a year and they’re answering the phones. Like, that’s crazy. You shouldn’t be answering the phones. You should have somebody answering the phones for you. That’s a $12, $15 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 be doing transaction coordination, that’s also someone you can find relatively cheap. And then the bigger hires come on dispositions and acquisitions as you go to and I think you basically have to look at every mark is going to be a little bit different. And what I found is you want to look at, “Okay. What are you going to pay that person? How much is it going to cost to actually get someone to do that?”
If you’re going to pay commission base, what’s your average profit per deal? Your average profit is 10 grand, 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? If it’s not, then you probably got to scale up a little bit more. If it is, then you’re ready. Get someone onboard. And that person can do a lot more than two deals a month, so now you’re in better shape now to be able to scale because now you’re not doing everything. You have people doing them.
Mike: Yeah. 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, “Well, what do you pay your acquisitions person?” And that differs. People pay 10%, people pay 15%. If they’re totally variable compensation. But yeah, you’re right, just hypothetical numbers here. If your average gross margin on the deal was 10 grand, and you’re doing 2 deals a month, your buyer, your acquisitions person is making 3,000 a month, 36,000 a year. So are you going to find a great, dedicated salesperson to work for you for $36,000 a year? Probably not, right?
So, 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 somebody that is happy with that. When you find somebody that’s like, “Well, I’m used to making a quarter 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, because they won’t have the capacity probably to buy at that level. But I think it’s important to think about, one is, if I had a full-time person and they have the capacity to buy five or six deals a year, what would that do for me? And then can I afford the advertising to feed that monster now, right?
Mike: Yeah, yeah. So, let’s talk a little bit about . . . hey, real fast before we go any further, I want to ask you a kind of a question of the week here that I want to ask you. So, 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 probably haven’t heard of that you think would help them in terms of growing their business.
Gabriel: In just overall business growth stuff?
Gabriel: That’s tough, man.
Mike: I stumped you.
Gabriel: Yeah. I mean, I don’t know if this is 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 want to say “Traction” has been that. There’s other great books that I’ve read. I don’t know, I got hundreds of books in here. But that one’s been . . . like all the other books, I always take something small and add it to it. But “Traction” is like, I took 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, that’s a great book, yeah, and 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. So, okay. Well, hey, so let’s talk a little bit about systems. So the importance of systems, I know 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 kind of where you started and then where you kind of moved up to.
We don’t need to get specific on what system. Well, you could share what systems you use if you want to, but just the importance of that and how a busy real estate . . . a busy aspiring real estate investor should think about it in terms of what it can do for them.
Gabriel: Yeah, I mean, the systems are really important especially when you’re hiring because that’s your pretty much training manual. 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. And you say, you don’t have any systems in place, how is she going to come in and know exactly what you want? Like, she can’t read your mind and 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 able to hold her accountable and you’re going to create a mess, and she’s going to be driving you crazy because she’s either going to have two 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 system is pretty much your guide and your employees’ guide for knowing each step of the way what to do. So let’s give an example a transaction coordinating. What’s the first step? For us, it’s reviewing the contract is your step one, reviewing the contract making sure that the name in public records match or if we have a binding contract. We just pull it as a CRM so she makes sure that she marks the new file that 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 this workflow, just pipe it into Podio. She opens the titles. She sends it to the title company. She’ll send the escrow letter to the seller. If you got to put an escrow, she’ll call a seller, let her know that, “Hey, we 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 she’s got to go through, but we’re very clear between her and I because now in 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, “Hey, you didn’t do this step. Go back to your manual, you need to read it again. Do you understand why you missed it?” Okay. It’s pretty much the structure for your business. You need it if you want to have a business.
Mike: Yeah. 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. I mean, everybody’s going to have questions and that’s fine. And you kind of learn from their questions. Like, “Oh yeah, I guess I should create a little training video on this because I don’t have that.”
But I think that’s really important is 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. And 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, then go back and watch the video again.”
Gabriel: And 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 it on 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.
But, I mean, they are still necessary because like you said, if the person leaves, they don’t go and you have . . . you need some type of outline to hold people accountable and that everyone is on the page of what needs to be done and there’s no misconceptions, “Oh, because I thought you said this.” “Oh, 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. It’s like everything for us is all typed and documented. But realizing that we want to get it to the phase or we want to have it all three, you know, one format. So depending on your learning type, you could just come in and say, “Okay. Well, I don’t want to read, I’d rather watch.” “I don’t want to watch a video. I’d rather just see the visual diagram,” whatever learning type is you can just get it and run with it.
Mike: Yeah. The great thing I would say is unlike . . . so we’ve been using Podio for several years. Actually, before I knew anybody else that was using it, now, everybody’s using it and I’ll say ours is not nearly as tricked out as some of the folks that we know. But it’s a great system, but I’m not here to promote anything in particular. There’s a whole bunch of systems out there that are great tools, and I think the important thing is for a new real estate investor is, don’t let it overwhelm you, but just don’t recreate the wheel either. Just plug into a system that, you know, there’s a handful of systems that almost all real estate investors use, that have a system that they subscribe to.
You don’t have to recreate the wheel. And the great thing about it is then 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. And so there used to be a time where you had anything like this, you had to create it yourself and figure it out. But that’s not the case anymore.
Gabriel: Yeah. I mean, now, I’ll say, like, if you’re a new real estate investor, if you’re a one-man shop where you 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. And if you don’t have the 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.
And you got to dedicate at least a certain amount of time of your time to work on the business on a weekly basis because that’s the only way you’re going to be able to go from . . . I like the way that [inaudible 00:38:55] classifies it the most, you know, 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 got to ask that time once a week to go through that and . . . or maybe once a month if you can’t even do once a week and then look at it every quarter and you want to . . . you just constantly want to be doing that stuff. 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 mean, I don’t particularly work in the business. It’s mostly on it because now we’re on the managerial part but you got to do it.
You got to be able to look at, like you said, you’ve got to know what the numbers are I guess, see what deals are I guess, see, “Okay. Where are you at today? How did you get from here to there?” You got to think big picture and you got to stop. If you’re always hustling and you’re always grinding, you’re not thinking, you’re just doing, doing, doing. And you have to know how to turn on the other side of your brain.
Mike: Pull back, yeah. My thing 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 have actually a few different businesses now. So I have employees here and people that want to chitchat and all those things. And it’s all fun, that stuff is great. But if I need to get focused on something, then I literally just . . . truthfully almost every morning, I go to Starbucks for, like, a couple hours and just stay at a high level of like, “What do I need to accomplish here? Where are we at with this project we’re working on?” or whatever because it’s so easy to get in the weeds if you allow yourself to go there.
So yeah, I think for some people, if that makes sense for you, it’s like you got to find a way to . . . when I was in Corporate America, I worked with a lot of C-level people. So, we had corporate retreats, like we would just go somewhere and kind of like do that. Just do the same thing for yourself. It could be Starbucks, it could be under a tree in a park, I mean, it could be anywhere, right?
Gabriel: And 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 and you’ve seen like when you actually build, if you actually build a house, you have an actual set of drawings of what it is you’re going to build, how exactly is going to be laid out so that someone can read it and know exactly what it is that you’re doing, that’s there to some to know, “Okay. I got to build this exactly here or here.”
So that’s in essence what you’re doing, you’re stepping away from the work, you just build your plan. You need to build your plan of where your business is going to go and how it’s going to look like and that stuff.
Mike: Absolutely. So any kind of, without spending a lot more time, any kind of other thoughts on just systems? And I think one thing that I want to clarify, but I think people get hang up on sometimes is that system doesn’t necessarily mean software. It might just mean a process that you document on a checklist or something, right? I mean, systems could be a lot of things. So it’s just kind of how you do things, right?
Gabriel: Yeah. I mean, ours is just on documents so we basically have a Google Drive, and I have a folder in Google Drive that’s called working procedures. And then we have it based off every department. So everyone who works in our business knows what their department is in and they know which pertains to them. So each department has each role. So, like, for operations departments, we have our disposition manager, our rehab manager, short sales processor and our transaction coordinator.
And they know their stuff is located in there and they know that their processes are documented there. So if they ever have questions, they forget how to do something, it’s all there. They should only be calling me if it’s something that’s either not documented in the system or just something that’s, yeah, stuff that’s just not documented in the system that’s like, “Hey, this happened and I don’t know how to handle this.”
Mike: So we don’t run too long here, just take a couple of minutes and talk about partnerships. So I know you have a partnership now that you didn’t have initially and my wife has always been my partner. We’ve kind of split the business in different ways, but there’s a lot of partnerships in real estate investing and I think a lot of people, like you said early on, you’re very apprehensive to, because a lot of people are like, “No, I’m going to be my own boss now. I’m not going to have anybody that’s going to be involved in making decisions other than me.”
But that could limit your growth, too, as there’s lots of opportunities with partners. So then maybe just share a few thoughts that might be helpful to people listening on partnerships.
Gabriel: Yeah. I mean, for me, the partnership didn’t limit our growth at all. It actually helped us grow faster. Because 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 at 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.
And two, there’s a magic that happens when you have two people working because now, when you’re by yourself, who will hold you accountable? You know what I mean? Now you have a partner, it’s easy to say, “Hey, you said you were going to get this done,” and you could address each other and you don’t want to be in that situation with your partner, and 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 that 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 who likes creating the systems and I like making sure all the pieces in the puzzle are plugged in. I could see where everything goes, but I didn’t like the minutia of the marketing. I just want 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.
So he was into that stuff, and I like the finance side and I like reviewing P&L and I like looking at numbers and I was kind of more the analytical guy. So it worked out fine. I mean, for us, we basically . . . we had a few meetings. We used the “E-Myth” at first. That was, like, really our guiding business bible before “Traction.” And on the “E-Myth,” he talks about expressing what your vision is, like, putting it on paper and really being clear of 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, like, you know, what is it that we want out of life personally, financially, spiritually, family-wise, all that stuff. And just seeing if we were in 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 and we just kind of see that eye together on many things. So for us, you know, we thought it would be a good fit and it would work. We must have had about three or four, like, full-day meetings before we like actually formed the marriage. And we were just making sure that everything was good that, you know, we’re 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: Yeah, that’s great. I will say that’s a lot more than most people do, right? I think a lot of people, they 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, right? And so, what ends up happening for a lot of people is they’re too similar, like you kind of hired a carbon copy of yourself and like you said, you probably . . . 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 are similar. But not that those can’t work.
It sounds like you did a lot of great things to make sure that . . . because 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. And 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? Because like, that’s what we looked at. I was like, “Well, how much money do we want to have in our bank?” If I wanted in a million dollars a year and my partner is like, “Well, that’s great. I respect that but honestly, I’m happy with 200 grand a year, and 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 million and he’s not.
So, for us, it was all about discussing what we want in our life first and seeing if we were there together and if we would go down that ride with each other versus just seeing, 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, because we were friends before business, you know what I mean? And like for both of us, it was like, at the end of the day, partnerships go bad but I see he’s a friend first than a business partner and I want to make sure that that stays the same way. I want to keep it friends first always . . .
Mike: Yeah. And I think we don’t have time to talk about kind of scorecards and stuff like that, but I think, kind of like a marriage, it’s important to have checkups, just every once in a while because I’ve seen some partnerships, you probably have two end really bad, seen some marriages end really bad. But 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. And 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 the blowup and it’s over, you know.
Gabriel: For sure. And 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, well, 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. So for us like 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 on our charts now. And one of the things too is my partner moved to Israel, he’s not living here in South Florida anymore. Well, he’s not 100% sure but he’s there for two months right now and he’s working from there.
And so we realized, one, from there, you won’t be effective here. You’ll be more effective here because you need to be here for this. Two, was our thing, if you’re looking at our chart, when we saw our chart, we’re like, “Man, are you naturally inclined to do this stuff? Because I’m naturally inclined to do it and I’m not there and vice versa.” I was like, “Yeah, you know what, you’re right, like, 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 and that and vice versa.” 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 this.” And 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, that’s great. Well, Gabriel, thanks for spending so much time with us. I definitely appreciated some great lessons in here. Hopefully, everybody who is listening got something out of it. I’m sure they did. If folks want to learn more about you, where should they go?
Gabriel: I mean, they can just check me on Facebook I guess. It’s Gabriel Garcia or they can check out our company’s site, it’s floridacashhomebuyers.com. We’re always hiring, so if you’re interested in employment opportunities, it’s there.
Mike: Yeah, if you want to . . . I mean, truthfully, maybe you could . . . it’s funny that you say that but if folks . . . why don’t you think back maybe just share one last comment on for folks that you said you paid somebody to mentor you to help you with some deals, help kind of get you out of the gate. And you and I both know, those first 5 or 10 deals you do give you all the confidence in the world that you didn’t have before, and you’re able to ramp up a lot faster. But in terms of, like, watching somebody or the ability to kind of have somebody show you the ropes, maybe just share your thoughts on how important that is.
Gabriel: It’s of the absolute importance, man. Like, for me, I always talk about it. You can be the guy that’s . . . there’s a guy that I was having a conversation with on Facebook the other day. He was bashing anyone who spent any money on education, and 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 those two companies, the owners of those companies have spent on their education, like, you don’t know what the hell you’re talking about.” I’m like, and education doesn’t have to be buying this big mentorship. It could be in books. It could be in seminars. It could be in trainings. It could be a one-on-one coach, whatever it is, but you’ve got to invest in yourself.
So, like, for me, having a coach, if I wouldn’t have had a coach, I would’ve never been as successful as fast as I would have. The coach shortens your learning curve. If you can spend $10,000, $20,000 to make $100,000 in five or six months versus two years, it doesn’t make any sense why you wouldn’t do it. And vice versa, we still spend money on masterminds. I mean, I spend money to be around the best because it makes me better. It keeps me sharp at least, makes our business grow. It’s of the most vital importance.
Mike: Yeah, it’s important. I mean, you know, I bought hundreds of houses and some people say, “Well, you’re an expert in this or that,” and what I found through the show actually is I’m an expert in very few things. That’s a very narrow niche, right? 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.
So I think that there’s a small price to pay ultimately, because the challenge with real estate investing is even if you are good, it’s constantly changing. So 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: Yeah. I mean, it’s like if you’ve never build a million dollar business in your life and you can be in a room full of people who have done it, yeah, it 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 actually unless you actually have a million years 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. You’re as good as the people around you, so, you need to look at that, the people around you.
Mike: Yeah. You and I both know that whether it’s a mastermind or training programs or, I mean, I was going to listen to other speakers that motivates you, whatever it might be is the value isn’t in the entire thing. The value isn’t this 10-minute conversation or this 5-minute little nugget you hear that just changes everything. I think a lot of people think, well, I can’t do all that or I can’t absorb all that or I don’t have time for that. It’s like, “Yeah, but you just need a couple little nuggets in there and that’s what the value is in.”
Gabriel: Yeah, man. And it’s just that I see it’s also spiritual, right? It’s like, think about if you were best friends. I mean, you were constantly talking with Gary V. You were constantly talking with Donald Trump or Mark Cuban, these big billionaires and you’re constantly talking with them, hanging out with them, like, your level of play would step up so much, like, you would have to either stop being their friends or step up to their game because it’s just the way like vibration works. You 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 . . . yeah, I just see the spiritual. Your vibration has to match with where you’re at. And if it doesn’t match, it’s going to get there, and everything in your life is going to change as your vibration changes, you know?
Mike: Awesome, Gabriel. Hey, 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 looking to check you out or maybe asking some questions and for your house buying business as well. So, thanks for spending the time with us today. Everybody, thanks for joining us for another episode. Episode number 320 is in the bag, and we’re going to keep them coming so keep on listening. So everybody, thanks so much for joining us, have a great day.
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 masterclass 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 guest 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.