Many get into real estate investing (or try to) to take control of their financial destiny and attempt to achieve freedom. But, many end up in a job they’ve created for themselves that would crumble without them involved in most aspects of the day to day. It comes down to a focused plan and having fine tuned systems in place to slowly eliminate yourself from many of the processes, and finding great people that are incentivized to do what you need them to do. Sean Terry of Flip2Freedom tells us how to truly scale your business during this episode of the FlipNerd.com Flip Show. Don’t miss it!
Mike Hambright: Welcome to the flipnerd.com podcast. This is your host, Mike Hambright, and on this show I will introduce you to V.I.P.s in the real estate investing industry as well as 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. Without further ado, let’s get started.
Hey, it’s Mike Hambright with flipnerd.com. Welcome back for another exciting V.I.P. interview where I interview some of the most successful real estate investing experts and entrepreneurs in the industry to help you learn and grow. Today, I’m joined by Sean Terry. Many of you know Sean. He’s a real estate investor, author, mentor, and coach via his Flip to Freedom program. He has a lot of stuff going on. He’s a fellow podcaster. We’re going to learn a lot more about Sean today. We’re also going to discuss how to scale your real estate business. For those of you that know Sean or listen to me at all, we talk often about how to turn your business from a hobby into a real business, yet all of us, Sean included, started with just one house. Taking your business from a hobby to a thriving business that gives us all those things that we want out of real estate investing is a whole different story. We’re going to talk about that today. Before we get started, though, let’s take a moment to recognize our featured sponsors.
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Mike Hambright: Hey, Sean, thanks for being on the show.
Sean Terry: How’s it going, buddy, what’s up?
Mike Hambright: Good, good. Glad you’re here. I’ve had a number of other leading podcasters in our space. I think you’re probably number one in the real estate space though, right?
Sean Terry: I don’t know if I’m number one, because I’m a big dork so why would people listen to me. I started in April of 2010 talking to a mic. My first podcast, because I didn’t have an office at the time, was in my car. That was the only quiet place, because I have two loud kids, two crazy dogs, and a wife at home. It was in my Range Rover at the time.
Mike Hambright: Yeah. That was cutting edge technology back then.
Sean Terry: Cutting edge, man.
Mike Hambright: Yeah.
Sean Terry: I listen back to those and I cringe on the audio quality. It was terrible.
Mike Hambright: Yeah. You know what’s funny now? We don’t talk about this a whole lot, but if people saw my setup here… I have an $80 Logitech cam. I have a Mac. I do have a fancy microphone and a free Skype account. There’s so much you can do with a few hundred bucks these days. It’s crazy.
Sean Terry: Yeah. Just have an idea. You start talking. I had a little condenser mic. It plugged into one of those audio recorders, and that was in my car. I was going off. My intent was to deliver a content that people could use that they could take back in their business and make money.
Mike Hambright: Yeah, and you’ve done a great job of teaching other people that. Before we get started about the topic of the day, for those that don’t know you or maybe don’t know you real well yet, tell us a little bit about your background and how you got started in real estate investing. Obviously, that led up to helping lots of other people, too. Take it from the top.
Sean Terry: I was 33 years old. I had a brand new baby daughter. I found myself in a position that I completely hated. I was in a job that I hated and a boss I didn’t like. There was this whole political game of uncertainty. I was in a situation where I was very dissatisfied. I was 33. It’s interesting, because there’s a point in your life when you know that you want to do more. You felt inspired to do something more, but then you don’t know what to do.
Mike Hambright: Right.
Sean Terry: You haven’t really found your purpose yet of what you want to accomplish and what you want to do. You want to do it and you’re striving to do it, but you don’t know what to do. I found myself in that state. I was working in a company. I had to go on a sales call on a Saturday afternoon. Prior to that, I was talking with my wife about what I could do with my life, and she said you should be a real estate agent. I was like, oh, okay, why not. I read this book on being a real estate agent. They said you have to go out and do listings and this, that, and the other. It just didn’t resonate with me about being a realtor. I happened to go on this appointment on a Saturday afternoon. Saturdays were typically days I spent with my family or doing honey to do lists. It was at a time where I was living month to month, and everything sucked financially. Obviously, I went on the appointment to provide for my family. I was driving down the freeway flipping through the radio stations and I heard this guy talk about how you could flip houses with no cash, no credit, have no experience, and you could make a bunch of money. I’m originally from New England. My skepticism came across me.
Mike Hambright: Your bullshit monitor was going off. Was that it?
Sean Terry: It was like, you know, beep-beep-beep. No, it was this red flag all the way. It was like this guy’s kidding me. It’s amazing, because you tend to become skeptical, or your mind shuts down and says no if you don’t know something. I didn’t know what I didn’t know. This guy was talking about how you could flip houses. He had people on there that made $5000 to $20,000 flipping properties in a matter of days and weeks. They could do this with no cash and no credit. I was laughing to myself. I was like this guy’s a joke. You can’t do that in real estate. What a scam. That’s what I thought. I flipped the channel. I was looking for some sort of sports station I could listen to. I was driving down the freeway. I felt a nudge. Now I know it was God’s intervention. He basically slapped me upside the head and said turn the channel back, so I did. I continued to listen to what he said. He talked about the concept of wholesaling which all your listeners know, Mike. I’m sure they’re well versed in wholesaling, but I never knew wholesaling existed.
Mike Hambright: Yeah, I understand.
Sean Terry: I never knew you could contract a property for X, and turn around and sell that contract to an end buyer, and have the end buyer fund the whole thing, and be able to make a profit. I bought his course. I devoured it over a weekend. The course was antiquated. It taught to go knock on pre-foreclosure doors. I took the information and I started knocking on pre-foreclosure doors, which I don’t really recommend to anybody because you have to have thick skin like a rhinoceros to go knock on doors.
Mike Hambright: Yeah, for sure.
Sean Terry: That was my introduction. I started with get a list, knock on doors, and eventually after three weeks I got my first deal. I made $11,008. That check changed my life.
Mike Hambright: Yeah, absolutely.
Sean Terry: All the people that are listening, if you’re brand new and you’ve never made a check before, just do whatever you’ve got to do to make the first check. Because once you get that first check everyone that says you’re crazy, everyone that says you’re nuts, everyone that says it’s a scam or whatever, that check will shut them up.
Mike Hambright: Yeah, there’s no doubt about it. There were people when we started that said why would they buy houses from you, and why would they sell it for a discount, and all these things. We started to question ourselves. I think it’ll work. I don’t know. Then, of course, those people now are like how can I get involved in this, the same people that were the naysayers.
Sean Terry: Yeah. As soon as you prove it, yeah. I went to my father in law. He’s a very successful businessman and stuff like that and bought and sold tons of properties from his own personal residence. I was on our back patio. I said hey, I’m going to get these houses – they’re $100,000 – for $50,000. I’m going to tie them up on a contract. Then, I’m going to sell them before I have to buy them. That’s what I said. He was like you can’t do that, that sounds illegal, but don’t take my word for it, go talk to this realtor. I went and talked to the realtor that he recommended. He was like you’ll never be able to find those deals because all the professionals find those first.
Mike Hambright: Right.
Sean Terry: I used to be a Marine. I got out of high school and went into the Marine Corps. One thing I learned in the Marine Corps is tell me you can’t do it, tell me that I can’t do it, and I’ll do it ten times over to prove you wrong. Obstacles are just obstacles. They’re something in the way, but as Marine you learn to go over it, to go around the obstacle, go under it, or my favorite – just blow it up.
Mike Hambright: Awesome. Somewhere along the way there you and I both said this is great, but it’s a hustle for me to do everything and to really scale this thing up,and how do I turn this from using all my own efforts into finding ways to truly build a business out of it. Let’s start talking about that a little bit. Talk about how…
Sean Terry: Interestingly enough, what happens… I never went to college. I joined the Marine Corps. I did my whole thing. I never went to college. I never took a business class on how to run a business. I didn’t have that experience or knowledge or know how to build or run a business. I went at it with what I know, and as a Type A personality and as an almost perfectionist I want to get it done. It was very difficult for me to even think about hiring people at any point. In the beginning and for the first handful of years I would do everything myself. Basically, I would be pretty much every seat. I would be the marketing person. I’d go send out the marketing whether it be yellow letters, postcards, whatever it might be. I’d take the phone calls. I’d sort through the leads. I didn’t have a C.R.M. at the time like we do now. I’d sort through the different leads, then I’d turn around and call and I’d go on appointments with the sellers. I’d go get the contracts. I’d pull all the comps.
If I got a contract I’d have to send the paperwork to go open up escrow. Then, I’d have to make sure I had to do transaction coordination to get the seller to get all the documents over to the title company. Then, I had to market the property. Then, I had to put out the signs. I had to put out the marketing and banded signs. I put it on Craigslist. I put all that information together. I had to take calls from all the buyers. I was taking all the calls from the buyers to try to find it, then I had to go show the property to the buyers. Then, I had to get it under contract. Then, I had to send it over to the title company. I was doing all this, and I got to the end and closed the deal and you go whew, I did it, I made $5000, $10,000, $13,000, and guess where you’re at now.
Mike Hambright: Start over.
Sean Terry: Back to the starting point. I’ve got to do marketing now. Then, you go through the whole process. A lot of wholesalers, what happens is they do that. They go through the check and they go through that process. They go okay, how do I go from doing… Maybe they do it once a month. Maybe they do it twice a month or maybe three times a month. How do you go from doing two or three or four deals a month to scaling it to an operation that’s doing 15, 20 deals a month in a single market, then scaling it to a national market and doing it across the country? I came to the…
Mike Hambright: Also, how do you get some of your life back, too?
Sean Terry: Yeah. Then, how do you enjoy it? Because when you’re doing that, guess what? You’re taking calls on Sunday if a buyer wants to go see a house. Real estate is a 24/7 deal. It’s not like 9:00 to 5:00 and I’m going to shut the phone off. Forget about it. First off, you have the mentality. I looked at real estate as a way to get out of the financial month to month. I wanted to get rich. I didn’t get in real estate to just make a living, to make 100 grand a year. I got into real estate to make a fortune. I took that mentality of making a fortune. It’s funny, I saw an Instagram thing. It said most billionaires work 80 hours a week. I’m far from being a billionaire. If they’re working 80 hours a week, I can sure work 60. Now, there are ways to systematize things to allow you to have the free time to be able to do that.
Mike Hambright: Let’s talk about some of the steps. We can talk about what you did, all those tasks you do from lead generation to taking buy calls, taking calls from buyers and sellers, going on appointments. You start to find those things, probably starting with the things that take up the most time you like the least, and start to find ways to systematize those. Let’s talk about some general steps where you went from there and what you recommend.
Sean Terry: It’s interesting. Change happens when a catastrophe happens or a mental breakdown happens. That’s typically when change happens. Hopefully, you can listen to this and not have to go through a mental breakdown or some crisis before you change. What happened to me was, interestingly enough, I was pretty much a one man show. I had a partner at the time that did more of the books and the financing. I basically built the thing, generated the leads, and stuff like that. In early 2003 I got started wholesaling. In my first year I think I made $134,000 solely on my own hustling. In 2004, that’s when I went into business with my partner. We went out and at the time built a rental portfolio of about 120 properties, $36 million worth of properties between 2004 and early 2005. In Phoenix, the market went bananas because the inventory levels shot down to, like, 5000 units. We got approached from a California group that wanted to buy all of our properties. We unloaded all of our properties from May to November of 2005, all 120 properties, all $36 million worth. It was insane.
Then, I got big for my britches at the time. You think holy cow, I made millions of dollars selling real estate, this is incredible. Then, I started getting into other different projects. I got into land projects. I got into huge apartment complex projects and stuff like that which was bad timing, because the market was in the process of crashing. I found myself back in 2009 where I was like listen, all my money, I had millions and millions of dollars tied up in land projects. I was completely illiquid and I was at a point where I had to generate cash flow. At the time my partner and I decided to part ways, and I started back in 2009 from scratch. I had to start building a wholesaling business. Again, I did everything myself. In 2009 I was writing handwritten yellow letters from my kitchen table at home to generate leads coming in. I took it from that standpoint. I did everything myself, because I wanted to be cheaper, cost effective, and try to do everything. I worked from when I’d wake up at 5:30 or 6:00. I worked during the day. My family would go to bed. From 9:00 and 10:00 when they’d go to bed until 2:00 in the morning I would be hustling, working, doing stuff.
I found myself at a Collective Genius meeting. I had an opportunity to meet Jason Medley over at the Collective Genius there. At this time I was doing well. I had pulled myself. I was cranking it. I was doing deals. I was doing everything myself. I stood at the meeting. At the Collective Genius you stand up and tell your story, who you are and what your situation is. In that meeting I stood up and said listen, I’m at wits end. I’m working 24/7. I was at the breaking point, the tipping point. What the heck should I do? Jason said why don’t you hire somebody? I’m like, what? It never crossed my mind. Hire somebody? What, are you nuts? He taught me the process [Inaudible 0:17:38]. I was like okay. I had my first hire. That was the crisis, the breaking point, because I was disconnecting with my family. I was constantly going. My brain was always future thinking. That’s when I hired my first person.
Then, things started to shift, and I kind of understood the process of what that can do for your business when it comes to leverage. Leverage is incredibly important, because you can only do so much. If you’re working, you make money. If you’re marketing, you’re talking to sellers, you’re making money. If you’re selling properties, you’re making money. But, if you’re not selling properties, if you’re not talking to sellers, if you’re not doing that, guess what? There’s no income generated if you’re not doing anything. You have this massive guilty feeling. I’d be at the park with my daughter, and I’d be guilty checking my phone or doing whatever to see if I’m missing anything, because I’d have this guilty feeling because I’m not working to produce income.
Mike Hambright: Right.
Sean Terry: When I started strategically hiring I was like wow, I can be at the park with my daughter and I can still generate revenue. Once I understood that concept, that was a tipping point for me. Everything completely changed.
Mike Hambright: Yeah, yeah. I understand that feeling for sure. What’s been interesting for me specifically is my wife works in our business, too. We never leave work. We’re talking about work laying in bed at night. Did you remember to do that? There have been those moments not necessarily hitting a breaking point, but I think everybody gets to a point where they know this works but this is not sustainable and what do I have to do to take it to the next level and make my life easier.
Sean Terry: Right. I think that was the component of hiring somebody. It goes to hiring, and then there’s running a business, then strategically scaling it from one person to many but being able to manage that growth process to be able to make it happen.
Mike Hambright: Yeah. For folks that are listening to this that have…
Sean Terry: In that state.
Mike Hambright: What’s that?
Sean Terry: That are in that state right now.
Mike Hambright: Yeah, that maybe haven’t hit that breaking point yet. They’re afraid to hire people. A lot of people are naturally conservative, which is good and bad. It depends on the market. There are a lot of people their overhead got way too heavy. They’re in trouble when there’s a downturn, because you can’t cut your costs fast enough. For folks that are getting into this with the intention of scaling it and maybe haven’t hit that wall yet, how do you advise them on where to start layering in? Where’s your first hire, and what are some of the things…
Sean Terry: If you back up from the hiring perspective, it all goes to mentality. It’s amazing how your vision will determine hires. It will determine where you want to go. First off, the question that needs to be asked for someone is where do you see yourself in ten years? It’s not saying where do you see yourself in ten years? It’s like, where do you see your revenue, where do you see your business, where do you see how much time you’re going to have off to spend time with your family doing things? What is your marketing, what’s your story going to be? It’s almost creating your vision of where you want to be in ten years and reverse engineering that thing. What I did in my business at the time is I said where do I want to be in ten years?
It was like an audacious goal. I have multiple different companies. It was like where do I want to be with this particular business in ten years? Then, what I did was say now I want to back it out to a three year goal. Where do I see myself, the revenue, the type of marketing we’re doing, the type of leads we’re generating, the type of monthly deals we’re doing, the deal size we’re doing, what does all that look like in three years? Then I backed it up to one year. Then, I backed it up to quarterly, and then I backed it up to monthly. If you have a ten year goal and you know exactly where you’re going to go and a ten year vision, you can say who do I have to have in place ten years from now to accomplish this goal, and who do I have to have in place three years from now.
In my organization I have me and I’m more the visionary. I’m more the implementer. I have a C.O.O., chief operating officer. Under the C.O.O. I have an outside sales rep. I have more of an inside sales rep. She manages all the C.R.M., the phones, and stuff like that. I have a chief financial officer that manages all the costs and the marketing. I have a marketing rep and a transaction coordinator in dispositions. If this is what you’re building then you can start defining each seat. Once you define the seats you can start backfilling those seats. You might have some people that are multiple different seats. My C.O.O. is in a marketing seat and a dispositions seat, but eventually we’re going to be hiring a new marketing person to come on to take that role over as his cup flows over with activities.
If you have this vision of the finished house, I guess you could say, what you can do is start backfilling these different positions of the people. Just starting, it’s going to be your name in every single seat. As you grow, you’re going to say I can send… It’s difficult to say I’m now going to take someone on. I’m going to take their livelihood on. I’m going to hire someone. But, I’m going to have them fill a specific seat. They’re going to have a specific role. They’re going to have a specific job. Most importantly, they’re going to report on a specific number. I do a meeting every single Monday. I actually do an annual meeting. It’s basically a two day meeting. We figure out exactly where we want to be in a 12 month period, exactly what our quarterly goals are, then we can break it down on a monthly goal down to a weekly.
Every single Monday morning at 9:30 we do a weekly meeting. It’s for 90 minutes. Basically, everybody reports on specific numbers that they… I don’t have it right here, but they report on specific numbers. My C.O.O. reports on the pipeline revenue that we have, what our closed revenue was for the previous week, what our future close revenue is for the upcoming week, so I know exactly how much revenue is going to close for the week and what our pipeline looks like. Then, each person reports on specific numbers that all equate to our bottom line goals. If you hold people accountable based upon goals and numbers and stuff like that then it’s amazing. What you track exponentially grows.
Mike Hambright: Sure, yeah. Would you take a second, Sean, and talk about how you find the right people, because I think a lot of real estate investors tend to be afraid that other people that are on their team, if they really find out how much money you’re making, they’re going to feel bad or whatever. I mean there’s a right and a wrong way to do that. Of course, the people that are worried about that have the people working for them that don’t see the downtimes and all the expense side of it. They just see hey, he just made 20 grand on a wholesale deal or whatever. It’s like yeah, but we lost 30 grand last month. Just generally talk about how to find people that you can open up and share those numbers with that aren’t always wondering well, I’m the one who’s doing all the work here, why is he making all the money, for example.
Sean Terry: Specifically, we have a hiring system that works really well. The hiring system is we do an ad. We put it on ZipRecruiter and put it on Craigslist. It’s very detailed of exactly what we expect, who we’re looking for, the job requirements, what the type of person will look like. Part of it is a three step interview where they’re directed to go through a seven step survey. That seven step survey will ask them specific questions. One question is how many books do you read, what were the last five books you read? If you have ones like ‘Fifty Shades of Gray,’ well, then, do I really want to hire this person? If it’s like Brian Tracy on closing techniques, well there you go. It could be different, there’s different questions about them. At the end of that it prompts them that they have to record a three to five minute video telling us why they believe they’re the absolute best candidate for the position.
They go through this process. When they do go through that process the amazing thing that happens is on the last hire we got 250 people that filled out surveys, and we basically have ten videos. My wife’s a really good judge of character, so I had her look at all ten videos. We selected three that we thought were the best, and out of those three one person lived way on the other side of town and didn’t want to commute. That left us two. I interviewed two. The biggest problem was trying to pick which one, because they were both outstanding. If you have a clear defined role of what you want with a person, then you’ll have someone be able to fill that. Your question specifically was about how do you find someone about revenue and this, that, and the other.
Mike Hambright: Well, let’s tweak it a little bit. I think guys like you and I tend to be attracted to people that are kind of entrepreneurial, but you don’t want them to be so entrepreneurial that they’re constantly thinking about how they’re going to take the best of your business and go do it themselves.
Sean Terry: It’s almost like you look at someone’s history of the jobs they’ve had before on their resume. Have they tried to start four or five companies and now they’ve only had two jobs in the past? Well, they have an entrepreneurial spirit but failed, so they might see this and go this is the one. If they have a history where they’ve been working for the past ten, 15 years, and it’s all been in employment situation, the chances of them breaking against that current is slim to none. What I try to do is find someone with a history that has a good standing history as an employee but maybe just hasn’t found the right company, instead of someone that has multiple startups that they tried to do and failed and now they’re looking for a job.
Mike Hambright: Right.
Sean Terry: Also, understand that most people aren’t like us. They’re not. Most people don’t have the ability to write a check for $40,000 or $50,000 for marketing for a month and then hope that you’re going to go out and get deals. Whether it be $50,000, or whether it be $2000, or $3000, or $4000, or $5000, a lot of people don’t have the wherewithal to do that consistently on a monthly basis. There’s that fear of doing it. It could happen. They could say I’m going to try to take the business and go do it elsewhere, but the track record shows in a lot of people that they won’t. They’re better employees, and they’d rather have a secure income and benefits and all that type of stuff than take risks.
Mike Hambright: Yeah. You usually find out, too. I asked somebody recently that was asking for more money. I said do you want more variable compensation, do you want me to incentivize you to help us make more money, or do you want something in your base. They were like in my base. I was like okay.
Sean Terry: Yeah. See, for guys like us, I’d say forget the base, give me a bigger commission and I’m going to make more money than you do. That would be my response to a question like that, where someone else would be I want more base because I’m not confident in myself to go out and produce more results.
Mike Hambright: Right, right. Awesome. This has been great advice. Any final words of wisdom for folks that are looking to scale their business up from a hobby or from doing a deal here and there to taking it to the next level?
Sean Terry: Absolutely. Here’s the biggest thing. If you’re doing two or three deals a month, you’re doing all the work, and you’re doing everything, understand that to go from two deals a month to 20 deals a month, to go from maybe $200,000 or $300,000 a year to millions and millions of dollars a year, there’s a gap between the two different points. That gap is the amount of marketing you do. We do Google AdWords like crazy. We’re in the Yellow Pages. We do Valpaks. We’re on TV. We’re on radio. We’re on the local papers and stuff like that. We’re all over the place. Those are just like lines in the ocean. We’re putting a line out and we’re hoping to catch fish. What do we control in this business? We control direct mail. The direct mail is the cornerstone for your business, and the more targeted direct mail you do, the more direct mail you do period, is what is going to increase that lead number on a per weekly basis. If you increase your leads on a weekly basis, and you can handle those leads, you can talk to those leads and you can monetize those leads to the absolute best ability, then you can go out and generate the revenue.
What’s going to happen is you can start small and you can scale it, but understand that… Guess what? My ten year goal is to drop 25 million mailers annually in my business, 25 million mailers. Right now, I’m sending 120,000. Between now and then I’ve got to scale my business up where I’m sending 25 million mailers a year to generate X amount of leads to produce X amount of revenue. That’s where I’m going for my gap. If you’re sending 3000 mailers a month and you want to go start sending 30,000, start sending 50,000, start sending 100,000, then, being able to scale and monetize those leads correctly is the key component.
Mike Hambright: Yeah. Awesome. Thanks so much for joining us today. I appreciate your time.
Sean Terry: Awesome. I had a great time, Mike. It’s been an absolute pleasure.
Mike Hambright: Yeah, absolutely. Thanks so much, and we’ll be talking again soon, okay?
Sean Terry: Sounds good.
Mike Hambright: All right, I’ll see you buddy.
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