Investor Cheat Code Podcast with Mike Simmons

Today I'm excited to bring you the second half of my interview with Tom Krol. If you haven't listened to Part 1 yet, I highly suggest that you do before listening to this episode.

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In this half of the interview, Tom talks us through who he likes to wholesale properties to and why.

He also discusses how he valuates properties--you might be surprised to hear that he doesn't calculate the ARV. Tom thinks that valuating a property should be very easy and fast, and his method is based on recent sales in the area. That allows him to send out more offers every day. He also gives this useful tip: let the systems that you put in place after you get the purchase agreement allow you to adjust your number.

Tom has gotten to a point in his business where he doesn't need to actively look for buyers anymore. In his opinion, the best way to find a house buyer is with a house, not with a promise. He also recommends using bandit signs, and text messaging instead of email.

I asked Tom how he would get started in this business if he had to do it all over again. I love asking successful investors this question, and Tom gives a fascinating answer, which really highlights what should be most important for a beginning investor. He also goes over the best ways to find lists for direct mail campaigns.

Tom is really focused on having a completely hands-off operation. He wants to be a visionary, not a leader.  Listen to the full interview to hear Tom go into more detail about his goals for 2015 and beyond--I can guarantee that they will inspire you!

Tom has a great free webinar on the phone script coming up. How do you actually handle a seller? The webinar will be on Hot Seat Wholesaling in March, so check that website for more information. Tom loves coaching and teaching people what he knows about real estate. The contact page on Hot Seat Wholesaling is also the best way to get in touch with Tom.

He has a great book recommendation for the listeners of Just Start Real Estate: The Four Spiritual Laws of Prosperity by Edwene Gaines. He says that for him the results were instant and absolutely game-changing. He also recommends Yellow Letters Complete for direct mailing (mention Tom Krol and they should give you a great deal)!

I hope to get Tom back on the show next year and I think you'll agree that he's a phenomenal, generous guest! I'm excited to hear from him again.

Today I want to talk about a subject that came up a lot in my interview with Tom Krol. Automation is a huge part of the way he runs his very successful business. I spent the majority of my real estate investing career without much automation. But once you create systems that work, automation can really allow you to utilize people's skills and grow your business to a whole new level.

Most importantly, you need to be honest with yourself about what you're good at and what you're not. So much that you're not good at or just dislike doing can eventually be passed on to someone else so that you can make better use of your time. These days, it's so easy to find someone to hire, whether it's in person or online. I recommend oDesk or even Craigslist.

And if you're thinking that you're new to the business and don't have money to spend on hiring someone, you will be surprised at how inexpensive it can be to hire people for certain functions. Especially for clerical, repetitive work, hiring someone can really free up a lot of your time for very little money.

Once you have systems in place in your business, you should look for tasks that are redundant or that you don't need to be doing yourself and download those to someone who can do them for you. You will be amazed at how much more you can get done by automating things. It will free you up to grow and expand.

Today I want to talk to you about failure and what it takes to be successful in any business endeavor that is outside of your comfort zone. If you stay in your comfort zone all the time, you can expect to continue getting exactly what you're getting right now out of life. If you're ecstatic with that, great! But I suspect you're listening to this podcast because you want to find something better for you and your family. And if you get out of your comfort zone and try something new, you will experience failure.

Don't let failure be a negative. Every failure that you encounter, everything you do that doesn't work out is getting you one step closer to success. The secret is:

If you don't fail, then you're probably not really trying.

I think that's true about everything, and it's true in real estate. Now you of course don't want to lose huge amounts of money in this industry, but the little failures along the way will help you learn. The bumps on the road will teach you more than a completely smooth deal. Mistakes along the way are critical for long-term success.

Today I'm excited to bring you an interview with Tom Krol, an incredible wholesaler from Florida. Tom shared so much about his story and his business with the listeners of Just Start Real Estate that I decided to split his interview into two parts. Trust me, if you're even a little interested in wholesaling, you're going to want to look out for part two next Monday! I've been pursuing Tom for the past couple of weeks and I'm so glad I was able to bring him on the show.

Today is Tom's two year anniversary in the  real estate business, and he's just killing it! He describes wholesaling as the cornerstone of all real estate investing and says he often can't believe it's legal because it's such a great, honest way to make a fortune in a short amount of time.

Before Tom got his start in real estate, he lost his job selling long care service, and he says that was the fifth time he had been fired from a sales job. But you don't have to be a salesman to be a wholesaler! He says you want to be a deal-finder, not a deal-creator. After he lost that job, his brother Todd Toback urged him to consider real estate. Tom was initially very skeptical, but Todd convinced him to try it and showed him the ropes.

Tom started his career by educating himself as much as possible and soaking in information from podcasts, but it took him a while to realize that it was time to actually start! He describes that first phase as "too much education and not enough action", which I know a lot of the listeners of this show are familiar with. Tom and I discuss analysis paralysis and how to cross the hurdle of education to get started.

The secret is:

You are never going to know everything about wholesaling. You have to be comfortable not knowing. You have to be comfortable being uncomfortable.

Tom has a very impressive business right now. He does a phenomenal job of utilizing other people's time and energy, and he gave great advice on hiring people for your business, and specifically on hiring virtual assistants. Listen to the full interview to hear Tom explain the difference between a visionary and a leader, and how he finds and utilizes his employees' talents. He currently has great systems in place and everyone who works for him has very specific tasks to complete every day. His business is really a well-oiled machine, and I strongly suggest you listen to the interview for the details of his day-to-day.

Check out Tom's website at hotseatwholesaling.com for more information about Tom and his business!

 

Tune in next Monday for the second half of this awesome interview!

Today, I'm going to cover a topic that's really dear to my heart. It's the thing that got me on track when I first made up my mind and decided to invest in real estate. My mentor told me at that time that I should focus on one aspect of real estate at a time.

For a long time, I let myself be distracted by every bright shiny object. I read about every different method of investing in real estate and I ended up not starting a single thing. My mentor told to to figure out which method appealed to me the most, put on blinders, and not think about any other aspect of the business.

The best way to learn about real estate is to actually do a deal. You need to put your head down and get good at something. Then you can expand your business model. But until you get successful at your chosen path, you should stay focused. If you spread yourself too thin, you will eventually get overwhelmed and burn out. The problem these days is information overload. The way to fight it is to restrict the amount of information that you're taking in; it's an important form of self-discipline. Focus on something and block everything else out. And you really would be smart to find someone in your local area or online who is focused on the same goal. Once you do that, there's really no stopping you in this business.

Today I want to talk about something that can really bring you down in real estate or in anything you're trying to do that's off the beaten path. If everyone isn't doing it, there will be a lot of naysayers, a lot of people telling you it can't be done. This happens to a lot of people in real estate.

Friends and family are only trying to look out for you, but their negativity can really get to you. I want to remind you of the power of spending time with like-minded people. That's really the most effective way to tune out the noise--fill your life with people who understand what you're trying to do, share your goals, and support you in your efforts.

Unfortunately, it's human nature sometimes to pull down anyone trying to claw their way out of a routine. Don't listen to the noise. Don't keep putting it off because you'll get stuck on a hamster wheel of excuses. You're probably not starting because you're afraid of something. Be honest with yourself, figure out what you're afraid of, and bust through it. 

If you know that you can do it, don't let anyone tell you you can't!

I want to give a shoutout today to out new sponsor: Landlord Station. Landlord Station is a one-stop shop for the buy-and-hold investor.  They offer tenant screening (which is essential for the small landlord), online rent payment services, legal forms, document storage and much more. Don't miss today's episode to take advantage of an exclusive offer for the listeners of Just Start Real Estate!

Today I'm really excited to talk to guest Andy McFarland. Andy has been an active real estate investor since 2002 when he purchased his first property, which he calls "the treehouse." He's purchased hundreds of properties since then, mostly from private sellers. He owns a renovation company, Quality Property Renovations, that flips ten to twelve houses a year, and a wholesaling company, Treehouse Investments, which wholesales over 100 properties per year in three different states.

When Andy was in high school and college, he had no idea what he wanted to be, but he always read a lot. In his early 20s, he read Rich Dad Poor Dad, which he describes as a great paradigm-shifting book. It made him realize that he could have passive income by working in real estate. At the time, he was working two jobs while going to college part-time. After reading the book, he decided to purchase his first property, the "treehouse": it was a bank-owned, illegal, non-conforming triplex. Andy admits that he just didn't know any better, and did this without a mentor or any kind of guidance, but he just dove in with determination. He worked on it himself, rented it out for a while, and sold it on owner financing. From that one deal, Andy learned how to be a landlord, a flipper, how to do seller financing, and so much more. I find this story incredible because Andy really got paid to get an education in real estate.

With the $40,000 net profit from this first deal, Andy put down a payment for a rental property that he stills owns and loaned the rest to someone to do a flip. He didn't consume any of the money, but instead drove it forward. He describes that as his winning mentality.

For the first few years, Andy didn't really have a strategy in his business. He was just looking for any kind of deal to grow his business. That often is a problem for new investors who lack focus and end up doing everything not well. But Andy was able to make something out of everything that came his way.

Andy was afraid to quit his job at a loading dock for a long time after starting his real estate business, until he was fired for skateboarding. He describes this as the biggest blessing in his life. His father, who was following a different paradigm, urged him to go get his job back, but Andy insisted he was going to work in real estate instead. I think a lot of people can relate to family doubts about investing in real estate. I know I can.

Fast forward to what Andy is doing now: he is primarily a wholesaler. He says he's always been a fast nickel guy versus a slow dime.  He also is a people person and enjoys talking to private investors. Andy describes himself as a "real estate social worker".

He wore many hats as he scaled his business and he rose up through doing everything that needed to be done in his business. Today he has a chief operating officer working for him and he stays above the whole process, managing the managers. I like to think of this as running a business instead of having a job. In the interview, Andy talked me through how and when he started hiring people for his business in order to scale, and which tasks he decided to delegate first. He now has a whole team working for him!

I asked Andy how he would build his business if he were starting somewhere new without any contacts. He gave a great answer:

First, he would get access to the MLS and county records and start driving around to get familiar with houses and values in th...

Today we're going to talk about accountability. It's not a real estate thing; it's a business thing and even a life thing. Whenever you're stepping out of your comfort zone or trying to do something bigger than you've ever done before, having people in your life keeping you accountable is critical.

That's a big part of why we make resolutions. When you tell people what your goals and ambitions are, it helps you stay accountable. A lot of people feel like there's power behind resolving to do something publicly, because it makes it very hard to just quietly not do it. So if you resolve to start investing in real estate and you tell your friends and family about it, it becomes really uncomfortable to tell people that you haven't even started. Telling people about your goals keeps you accountable.

In real estate, there are a couple of ways to stay accountable:

Tell your friends and family about your business goals.

Find accountability partners who share your goals. Tell your goals to someone who's in a similar situation or even a step or two ahead of you. You can really keep each other accountable and push each other to meet your goals.

If nobody's checking in with you and reminding you of what you wanted to accomplish, it's very easy to procrastinate or let fear take over.

Today I want to talk about a mistake I see new investors make all the time. It boils down to letting emotions get in your way and cloud your judgement in this business.

For example, you find a deal and you run the numbers and maybe they're not that great, but you really want to do a great deal so you convince yourself it will be fine. You talk yourself into it and come up with reasons why it might be better than it actually is, because you really want it to be a deal. Unfortunately, when you're really desperate for a deal, that's when you really need to be careful because you're most likely to talk yourself into a bad deal.

When you decide what you would pay for a house or when you're calculating rehab, it should be a completely emotionless process. In fact, you should be conservative no matter how optimistic or desperate you're feeling. The numbers will never lie to you.

Believe me, I want you to start your business. But you have to look at the numbers. I've talked many times about how to run numbers and know whether a deal is good. If you're not sure, ask an experienced investor. Them shooting down your hopes and dreams can save you a lot of trouble and even money.

I'm excited to have Justin Williams on the show again. He's a great house flipper, an inspirational person, and  a good friend of mine in the business. He has some exciting things set up for this year. Justin has been investing in real estate full-time for about eight years, and he currently flips about 100 houses a year.

(Justin has been on the show before. If you missed those episodes, catch up here: episode 27, episode 176, episode 181, episode 186, episode 191.)

In handling this enormous number of flips, Justin emphasizes the importance of systems. He only works on his business a few hours a week, but he has the right systems in place and the business keeps running without him. To get to this point, he eventually hired people to work for him. Obviously a beginner can't hire a bunch of people right away, but knowing when and what to delegate is crucial. Justin says that it takes one really good person on your team to set you free. Justin recommends that when you've gotten started, learned a few important things, and you  decide you're ready to hire someone, you should just do it. Decide on your criteria (for Justin, finding someone very familiar with the MLS was important) and put an ad out there.

Justin recommends that you give your employee tasks that are easy to teach but take a long time; the things that you do over and over and they just waste your time. Next, you want to give them a constructive task that they can do when there is nothing for them to do. You may not hire someone full-time in the beginning. Start them off with a few hours a week.

A lot of investors resist the idea of hiring someone to do work they could be doing themselves. But that's the only way to scale your business. When you hire people, it frees you up to grow your business. Justin puts it in a great way: you have to decide if you are just an investor or a business owner. If you are a business owner, you have to act like one.

2014 was a successful year for Justin; I highly recommend that you listen to the full episode for his recap. He's definitely building for the future of his business, and learned a lot about the importance of setting the right goals.

2015 is going very well for Justin so far, and he explains the systems he's setting in place to grow his business even further this year.

Justin started a great program called Fail Fast Flipping last year. If you've been listening to the podcast for a while, you've definitely heard me talk about it and it's been a great success. It's been amazing to watch beginning investors learn about the business. In today's episode, Justin gives us some more information about the program and how it's worked so far. Most importantly, Justin realized how deeply fear affects beginning investors. The Fail Fast Flipping community really embraces failure and celebrates taking action. This year, the program has been rebranded as House Flipping Formula. Justin has put together a great free video course, which you can find here.

Listen to the full episode to hear Justin explain his Three Cs of House Flipping:

 

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The program is for those of you looking to build a legitimate business. We don't want anyone who's not serious about the business in the program. We expect you to collaborate, share your success, and give back to the community. I'm proud to be a part of this program and I'm proud to be talking about it on the show.