Many real estate investors, even successful ones, end up creating a job for themselves, and their business suffers significantly for it. To truly be successful and build a scalable business, you need to leverage people and systems. In this FlipNerd.com Flip Show interview, veteran Miami based real estate investor, Alex Pardo, shares his views and experiences on this topic in more detail. Alex also shares where you should start your outsourcing, and how to become dramatically more productive. There are some great nuggets in this episode…don’t miss it!
Mike: Welcome to the FlipNerd.com Podcast. This is your host Mike Hambright. And on this show I will introduce you to VIP’s in the real estate investing industry, as well other interesting entrepreneurs whose stories and experience can help you take your business to the next level.
We have three new shows each week which are available in the iTunes store or by visiting FlipNerd.com. So without further ado, let’s get started.
Hey, it’s Mike Hambright with FlipNerd.com welcome back for another exciting VIP interview. Where I interview some of the most successful real estate investing experts and entrepreneurs in our industry to help you learn and grow.
Today I’m joined by Alex Pardo, he’s a veteran real estate investor out of Miami that left Corporate America to have a better life. He know there was a better way than working for someone else.
Over the years he’s realized the importance of building a team of A players is the best way to build a scalable business and to put some systems and thing in place too, to really truly create a business instead of a hobby.
So we really can’t talk about this stuff enough. Before we get started with Alex though let’s take a moment to recognize our featured sponsors.
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We’d also like to thank National Real Estate Insurance Group, the nation’s leading provider of insurance to the residential real estate investor market. From individual properties to large scale investors, National Real Estate Insurance Group is ready to serve you.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.
Hey Alex, welcome to the show.
Alex: Hey, Mike thank for having me on I appreciate it.
Mike: How you doing today?
Alex: Doing great man, doing great. I’m looking forward to contributing some content and providing value wherever I can, man.
Mike: That’s great. I think that’s one of the great things about this show is people, you know, a lot of people don’t believe this when I say it, but there are a lot of veteran real estate investor that are always happy to share their information and give back. I think a lot of people say, why would people share their story and, you know, part of its ego, part of it is, like we talked about before it’s a lonely business and you love to kind of share your lessons probably like a lot of us do. And so I’m glad you’re here.
Alex: Definitely man, I know when I got started this is one of the things I did is, you know back in 2004, 2005 we didn’t have programs like yours. I had to jump on Google and try to find articles. So I learned from people back then and I’m always happy to contribute and give back.
Mike: Awesome. Hey, before we get started, why don’t you share your… tell us a little bit about you. But start with when you were Corporate America and you decided to leave. Because I think I’m a corporate refugee as well. I think a lot of people, I don’t know if I need to trade mark that term corporate refugee, but I use it a lot.
But I think a lot of people are like you and me that they’re in a corporate job and they just feel like that’s not their calling. And so I think a lot of people will resonate with your story.
Alex: Yeah, so like you and I were speaking before we started the show here is, when I was graduating from FIU in 2002, I always had aspirations and dreams of being a CFO, being a CEO of a Fortune 500 company.
Little did I know that it was the exact opposite of what I wanted to do with my life. And I accepted a job with General Electric in the financial management program and three months into the program you know working 60, 70 sometimes 80 hours a week, behind a cubical looking at Excel and PowerPoint all day, I realized that this is the definition of rat race and I needed to do something to get out and get out fast.
But I felt a little bit obligated because I had made a commitment to them, I had moved from Miami to Atlanta. And I wanted to finish the two year program with them and leave on good terms. So I did that. And this was in January 2005 that I left General Electric.
Long story short, I decided to take some time off, I went backpacking around Europe with a couple of friends. Tried to basically find myself, you know, for lack of a better phrase.
And I had always been interested in real estate investing, I had bought the Kiyosaki books, I was constantly reading about buying and selling houses, renting. I just didn’t know what niche within real estate I wanted to get involved in.
So my last week, this was August of 2005, my last week in Europe I was partying in Ibiza. And I hopped into an Internet Cafe to check out some email and a buddy of mine Ray, here in Miami, sent me an email and he said, “Hey Dave Lindale is having a marketing for deals boot camp in Atlanta. This is October 2005, and it’s 997 bucks, do you want to join me?”
And after a lot of kind of going back and forth and looking at my bank credit cards statement. I pretty much had to put it on credit, I didn’t have that money back then I had spent, blown all my money just traveling around Europe. But none the less I decided that I had to do something. I knew I didn’t want to jump back into a 9 to 5, or in my case a 7 to 7 type of job.
So I attended that boot camp, I plucked one of the letters out from Dave’s manual that he gave us. And I sent out my first direct mail campaign when I got home at the end of October. And a month later I went under contract with a home owner, who was actually in pre-foreclosure, and three months later we ended up netting $44,000 on that deal, which is just shy of what I was making on my corporate job. And once that happened man there was just no looking back. I’ve been doing this full-time since then.
Mike: Yeah, and, you know, what’s a little interesting I know several other people that have been through that same GE program that you were a part of. And that’s a highly coveted position. I mean it’s a great company, it’s a great training program.
I actually know somebody that was with GE Capital for a long time. And I mean, is a huge C-level executive now. It’s a breeding ground for what people historically think is kind of a dream job or dream jobs are. And it’s funny how more and more of us are realizing that working for somebody else is just not where we want to be.
Alex: It’s interesting you say that Mike because I remember, I’ll never forget the day I called my parent and I said, “Hey guys, I’m going to leave my job. I’m going to move back down to Miami and I’m going to start buying and selling real estate.” My parents have always had the best in mind for me obviously as most people’s parents do. But they thought I was absolutely insane, to leave a corporate job making at the time $55,000 a year right out of college. I mean they basically thought I had you know the world by… in the palm of my hands.
But I just knew that if I continued to stay with it I was going to get wrapped up, I was going to find someone get married, have a family. And then it becomes even more challenging to make that move. So for me it just felt like it was the right time to transition out of Corporate America and sink or swim basically.
Mike: Awesome so my guess is from our conversation before is, you know there’s a lot of people that get into real estate investing. If you think of it as kind of a funnel there’s a ton that are interested, and very few that kind of get out of the gate, if you will. And then even many that do make it through and even some that are wildly successful have essentially created another job for themselves. They haven’t really structured their business to where it can run without them.
And I’m not even a huge believer that you can have a real estate business that you can be just totally disconnected from and it just runs itself. I’m not sure that I’m quite there, even though I know some people that say they do that and seem to do well.
I feel like I still have to be involved in, primarily because I’m a rehabber so I still want to, I still look at each house. We’ve got some process in place where I don’t spend a lot of time doing you know any of those things but if I’m on the hook on it financially I still have to be involved in approving each deal.
But there’s a ton of people that are involved in everything. I mean every aspect of the job and if they stop doing that tomorrow then their business stops. They can’t leave for a week or two at a time and just check in periodically. And so and I know you’re in agreement with the fact that none of us should be that way. We should find ways to build systems and support and have a team in place that can help with at least some of the parts of our business.
So kind of talk about that. The importance of systemizing your business and building a team to help you, you know, one make your life better, but two, allow you to create something that’s truly scalable.
Alex: Yeah, Mike this is defiantly something I’m passionate about man. Because I would say people reach out to me from time to time and always ask me, what are some of the mistakes you’ve made in the past and you’ve learned from? And help me kind of navigate so I don’t make the same mistakes and one of the first things I always tell them is, find the right people to bring onto your business and or leverage technology and other tools and resources so that ultimately you can replace yourself.
And the mistake I made was from 2005 to 2008, 2009 the first four years of the business, so to speak I was a one man show. I did the marketing, I spoke to sellers, I visited properties, I was the home inspector I mean I did it all. I wore so many different hats.
And there was two books I read that really opened my eyes to be the possibilities of having an actual business that doesn’t necessarily depend on you 100%. And that was Tim Farriss, “4-Hour Work Week.” I have it behind me here. And Michael Gerber’s “E-Myth” which I’m sure a lot of your viewer and listens have heard about those two books. If they haven’t highly recommend you read them.
Once I read that there’s the entrepreneur that is a manager and there’s the technician, I realized that I was operating as a technician in my business. I was wearing so many different hats and yeah I was making a lot more then I was making in corporate job. I was also working a lot.
And when I read the “4-Hour Work Week,” actually I went to the Website that Tim Farriss recommends and I hired my first virtual assistant in India, you know paying seven, eight bucks an hour, whatever it was. And once I got a taste of being able to focus on revenue generating activities. You know that’s one of the things my mentor Than Merrill always told me when I got started is, “Focus on revenue generating activities and where is your time better spent.”
So when I started offloading some of the thing that I hated doing, to my virtual assistant, it really opened my eyes to a business that can function, not necessarily like you said I’m still involved in my business. But I can disconnect and things will still run without me.
So again, that was a huge mistake I made. And I think to the extent that people can go out there and leverage human resources systems. In other words other people that they can bring on to their team and or technology, I think that they’re going to get the most out of their business and create something that is an asset. As opposed to a job that, you know it might be high paying, but it still requires you to work.
Mike: Yeah, and even technology I mean as you know you’ve been doing this for a few years long them me. But man how much that’s changed, just in the last few years alone.
Alex: Awesome changes.
Mike: Yeah, to allow you to be somewhere without being there. But I think the key is you have to have… somebody has to be there, it doesn’t necessarily have to be you. So for example now we use some different apps, where people can be at a house and then can just call me in whether it’s FaceTime or something else. And I can see what’s going on, my contractor wants to know, I used to be he wants to know what we need to do with these kitchen cabinets if we’re going to refinish them. And I want to see how rough they are, or whatever that might be.
It used to be that I’d have to drive across town, you know maybe an hour one way to have a five minute conversation. And now it’s like, well let’s just jump on a call, video call, and show me what you see. And save that time, you know I’m signing contracts from other countries on a vacation now and things like that. But the key is you have to have the… you still have to have other people that are helping your facility that I think.
Alex: Correct. And I think something to piggy back on what we’re talking about Mike is, you know the second mistake is. People sometimes they don’t want to bring on a coach or a mentor and someone that’s been there done that to kind of help guide them through the process, you can certainly do it yourself, don’t get me wrong. But to the extent that you have someone that has already paved the way so to speak.
I think it’s going to help you, and save you a lot of time and money. And in my case you know if I would have got a mentor like right off the bat in 2005, I could have saved myself a lot of heartache. And that’s if you find someone that you see their business and it works without them, invite that person out to lunch, take them out to coffee, you know to have a cup of coffee whatever it might be and pick their brain. And then it’s not just about picking their brain obviously you got to take what they share with you and then implement it because if you don’t do anything in five, ten years you’re going to find yourself continuing to work as Gerber says, “You know doing and doing and doing it.” And God forbid something happens to you, you know, you’re business shuts down. That’s not a sustainable model.
Mike: It’s funny that you say that we talk a few times about coaching, and mentoring, and I’m a mentor to a very large group of people that buy houses, you know hundreds of houses all across the country. And you know I used to… there’s some people that think that’s ridiculous, like why would you pay somebody to teach you anything. You can just learn for free, just do a Google search and you can do those things, that’s fine.
But even I found, I pay mentors and coaches now, in fact ridiculous amounts of money, people would kind of assume that… I think I guess what I’m trying to say as a coach and a mentor myself, I understand the value of having a coach or a mentor and other things, to the point where I pay thousands or tens of thousands of dollars, certainly tens of thousands of dollar a year to get access to certain people whether they’re in social media or other things because I know that there’s one little nugget they’re going to give me that’s going to way cover the cost of that. And so I think people don’t necessarily think to look at mentors as somebody to hold my hand every single day. You’re not hiring an assistant, but somebody that can get you over those road blocks when they come. Because whatever you’re paying them is probably worth the price, you know many times over.
Alex: I couldn’t agree with you more. I mean at the end of the day you don’t know what you want to know, right? There’s that saying, there’s people that have been there done that. And if you can just model what they do, I think that you’re setting yourself up for success.
I mean you can certainly try to bang your head against the wall and figure it yourself. But it’s going to take you a lot more time and probably a lot more money.
Mike: So in terms of… maybe you could share some insights as to for people that want to start implementing systems or maybe whether it’s virtual assistants, or you know people that are in their office or in their town to help them with their business. And it’s going to be different for everybody. But where do they start? What is the first thing I kind of should look at offloading?
Alex: That’s a great question. So I think and the exercise for me, what I recommend break your day down into half hour chunks, and literally write down what it is you do on a daily basis every half hour.
So on simple Excel spreadsheet or just take out a piece of paper and a pen and write down, okay from the moment I wake up to the moment I lay my head down on my pillow, what is it I do every half hour, or every 15 minutes whatever works for you.
And then look at that list at the end of the day, and figure out okay what is I love, what is that I enjoy doing and where is that this is bringing in revenue and profits into my business. Is spending time with, I’m Google checking email, or on Facebook, or taking calls from motivated sellers which is personally one of the things I didn’t like doing.
You know, figure out what it is you like doing and what it is you don’t like doing. And then focus on the things you don’t like doing. What I like to do is create a video showing someone exactly step by step how it is I do that process.
So say for example hosting an ad on Craigslist, I’ll literally create a video that shows people like from A to Z like how to log into Craigslist, where to go, what ads to post. And I know what I’ll do is I’ll send that to my virtual assistant and I’ll have her transcribe that video and literally create a bulleted standard operating procedure for how you do that specific task.
So I would go down the line and create a video and have someone create an SOP on how to do the things that you currently do and have to do, but don’t like to do. And then find the right person to go ahead and transition that out to. And then just continue to go down the line, that’s where I would recommend someone start, leveraging other people and other resources.
Mike: And from someone I have virtual assistants that work for me as well. I’m a huge believer I love virtual assistants. Without getting into a lot of details there about my love for virtual assistants.
Tell me a little bit about what you think can be outsourced, maybe some of the things that can’t be outsourced to virtual assistant. That you don’t feel comfortable outsourcing to someone overseas that you would feel more comfortable thing you don’t feel comfortable outsourcing at all. And then some things that you feel need to be a little closer to home in terms of somebody that works in your office or near you.
Alex: So there’s different schools of thought on this Mike. And I think if you talk to you know if you interview ten different people you know you might get some conflicting opinions.
First I was of the opinion that I always wanted to speak to motivated sellers and that’s something that I was not comfortable outsourcing to a virtual assistant. Over the course of the last year, year and half, I’ve realized that as long as you pre-screen people and you bring on the right person into your business, it doesn’t matter if that persons a virtual assistant if you’ve coached and trained them enough, at that point I felt comfortable transitioning.
That was one of the things you know I’d send out a campaign of 5000 post cards, you know I’d get a couple hundred calls. And then I was the one that, you know I’d be having dinner and my cell phone was ringing and I had… by the time I finished having dinner, I had six voice mails and like four text messages. And then I had to jump into the office call all these people, take all their information.
So for me that was one of the first things that it really wanted to offload. So it was about putting out information about how is it I speak to a motivated seller. And it took me a while until I found the virtual assistant that I felt comfortable with. And now I have someone in Columbia that’s bi-lingual that takes all of our motivated seller calls.
Marketing I think is another aspect that, you know depending on who you talk to, they’ll say I’d rather do that, because marketing is the life blood of the business or that’s something that I can outsource. I use Cliptomail.com and I just created a simple video on how to upload the postcard. How to use the mail merge. How to upload the list. So our virtual assistant in the Philippines handles all of our direct mail campaign when it comes to anything and everything that can be done on line.
So going back to just figuring out what is you like doing, what brings in the most money to your business. I would keep that on your plate especially to start. But the things that you hate doing that have to get done, I would definitely take those off your plate and try to find a virtual assistant or someone to do those for you.
Mike: One of the things and I don’t know if you do these things. We use… there’s a number of different task management tools out there, I mean there’s a million of them. But a popular one and one that we use is Asana, and we just create these lists of tasks A-S-A-N-A, Asana.com in fact it’s free. We use it for everything in our business.
We have task lists for every house we buy. If it’s going to be a rehab these are the 70 tasks, that’s already pre-assigned to who that person in our company does it, you know based on the template. But as a manager as an owner and there are a number of things we do. We have a weekly task list that hey my virtual assistant on Wednesday at 10:00 a.m. has to do this. On Thursday once a month they do this.
And I can always go look at where their tasks are and see are they on track do they say they’re done. That just provided me some additional comfort, to know that they have these responsibilities yet there are some checks and balances in place that I can have some level of certainty that they’re actually getting done.
Alex: 100% I’m actually leveraging a CRM called Podio.com.
Mike: We use Podio, too for our business.
Alex: Absolutely love Podio and I have to thank a good friend of mine I know it’s a mutual friend Chris Chico, last year he introduced me to Podio. So we have our entire business running through Podio, our virtual assistance, my acquisition managers, everyone on my team is on Podio and exactly that, they have certain tasks and they have daily checklists of things that they have to go through. And I can always log into Podio online and on my phone and kind of see where everyone is at in their tasks.
So whether it’s Podio or Infusion or anything else highly recommend that or Asana, that people use something that keeps the entire team on track. And even if you don’t have a team and it’s just you, it’s probably a good idea to start getting in the habit of leveraging a tool like that, so when you bring people on board it’s easy to kind of have your finger on the pulse of your business.
Mike: Plus this business is very task oriented, whether it’s marketing, whether it is what you do when you get a lead. There’s always these are the ten things you do, these are the three things you do. Whatever it is, it’s the same thing over, and over and over again. And I think it’s this industry or kind of what we do was basically you know checklist where made for what we do.
Alex: Exactly. And again that goes back to the whole Michael Gerber thing is creating systems around every part of your business. And a system can be nothing more than a simple check point or checklist that says, first do this, second do this.
And it’s like McDonalds and you go in there you got 15, 16-year-old working. And the food even though I haven’t had McDonalds in years it taste the same no matter where you go. You know, and it’s all based on systems.
Mike: Yeah. So talk a little bit about for folks that… I want to talk a little bit about A players. I know that that’s something that [inaudible 00:23:16] bring in A players. You’re also talking about virtual assistants which personally I the virtual assistants that I have that work for me now, I would put them on par of anybody I’ve had physically in my office. Physically or maybe better, just amazing work ethic and stuff like that.
So I don’t know if you’re necessarily referring just to virtual assistants but talk about the importance and maybe give some advice on finding the right people, not just warm bodies.
Alex: Yeah, and actually I’ve been through quite a few virtual assistants and when I say A players, I mean anyone that you would bring onto your team from virtual assistant all the way up to, a transaction coordinator, an acquisitions manager which I have a few of. And when I say A players, I’m talking about super stars I’m talking about someone they’re a rock star, in the way that they go about their business and the way that they take on a task and their particular role.
So I think for me one of the things that I’ve learned throughout the last year is, slow to hire and quick to fire. And what I mean by that is, you know when I place an ad on Craigslist or Indeed.com, or ZipRecruiter. I’ll have these people go through a series of things just to get on the phone with me for interview.
You know one of the things I’m testing now, and I forget who did this, I didn’t make this up. I got this from someone. I’ll have that person create a two or three minute video as to why they’re interested in the position with the company, and what they feel they can bring to the table.
Second I’ll have them go to TonyRobbins.com and take like a 10 to 15 minute it’s like a DISC personality test and they email the results along with their resume. So if they don’t do those things like to the T, I don’t even waste my time. I just don’t bother with them.
So what I mean by a rock star, and A player is the people that actually read the ad and do the steps. That’s a good indication that you’re on the right track. And this is a person that, you know you can give simple instructions to and they’re going to take it and run with it.
And then when I talk to them I always like to find out, where they see themselves in three, four, five years, what some of their goals are and their aspirations. And what are some of the accomplishments that they’ve had over the course of that time or over the course of the last few months and few years.
Because, you know successful people they have a track record and at the very lease if they haven’t achieved a level of success yet, as long as they’re hungry, as long as they’re motivated, and they’re a go getter those are the people that I want to bring on my team because I know they’re going to give it their all. And it’s just a matter of coaching them and guiding them along the right path.
Again, a mistake I’ve made I’ve just hired warm bodies because I didn’t want to personally do the task. You know, I just out of site out of mind. Well that’s the wrong approach because you’re going to spend so much time following up with that person And having to redo the work that they do and at the end of the day you were just probably better off doing it yourself if you’re not going to focus on finding the right people to bring on your business.
Mike: Why don’t you elaborate a little bit on something you just said, in all honesty it’s something that I struggle with. I think… so kind of virtual assistants aside, maybe not aside, but anybody you would hire, you know probably more physically in your office or closer to your business that you want people that are high achievers that want to progress in their carrier over the next three to five years let’s say.
At the same time most of what you need them to do is repetitive and it will almost be like that forever. So how do you balance between finding people that want to achieve more and grow in a position that is difficult to grow, you know what I’m saying? Like a lot of times if it’s a transaction coordinator or just someone that takes calls. It’s like that’s going to kind of be that way in ten years. So how do you kind of balance that?
Alex: Yeah, no it’s a great question Mike. And I think the key is to… and that’s part of the reason I have people take that Tony Robbins DISC personality test is, if I’m dealing with someone that’s a high achiever and someone that they have high aspirations and the want to make a lot of money, that person is probably better suited in my opinion for some sort of sales role. So whether it’s an acquisitions manager or a sales manager, that’s the kind of person that I would want to fill that role.
But like for example a year ago I brought on board a former student of mine that has, you know, he was making six figures in his corporate job and he has a lot of you know high aspirations. The guys a rock star, it would have been a mistake to put someone like that in a virtual assistant or in a transaction coordinator role, because like you said there’s only so much they can do.
But in a sales role I think sky’s the limit right. You know to the degree that they’re willing to work and bust their butt, they can make a lot of money in that role. So I think it’ s a matter of finding the right person based on their personality and what their goals are for the right position on our team, because it does you no good, if I interview someone and they tell me I want to make six figures, I’m not going to put that person in a transaction coordinator role because it just doesn’t make sense. There’s only so much that persons going to be able to make, like a virtual assistants not going to make six figures. That person like I said is probably better suited for a sales role. And it’s, you know the revenue that the company generates is tied to their efforts to a certain degree.
Mike: Yeah, I think in my experience even the same thing with sales people. If they are telling you that they need or want… you want sales people that say, the sky’s the limit, you want to be able to present them with that opportunity. But you know as a business owner there’s some limits usually based on their personal band width.
If you have an opportunity for someone to make a $100,000 a year and they’re saying I’m not going to be happy unless I’m making a quarter million dollars a year…
Alex: That might not be a fitted… I think you’re setting yourself up for failure and, one of the things I do when I interview people is I’m realistic like I’ll tell them look this is what we’ve done this year to date. And this is where we project and going based on X, Y, and Z. So realistically you’re going to be somewhere in this range.
So you know I have someone that comes to me and say I want to make half a million dollars a year I’m going to tell them look this is probably not the opportunity for you, because I don’t see that as being feasible at this moment. You know what I mean? So I think it’s about knowing, you know being honest with yourself and knowing what someone can reasonably make working with you. And then just being honest with them, communicating that to them.
Mike: Well Alex hey thanks for sharing your insights today. We’re basically reading from the same book I think my friend.
Alex: Awesome man, glad to hear that.
Mike: Well if folks want to learn more about you or get in contact some way where should they go?
Alex: So my blog AlexPardo.com is somewhere they can go, admittedly I haven’t been as active as I was in the past and every once and awhile I share some insight, I put some video, some blog posts on there. If they want to reach out to me personally, one of the things I do is, every year I’ll hand pick a few people that I’ll work with one on one. They can go to AlexPardo.com/mentor.
Mike: Okay, awesome. Well Alex thanks so much for your time today. I appreciate you sharing some of your insights and your lessons.
Alex: Hey, man anytime. I’m happy to contribute and hopefully people find this valuable.
Mike: Absolutely, okay my friend stay in touch.
Alex: All right, have a good one.
Mike: You too. Bye-bye.
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