How to Outsource Your Real Estate Business and Explore Other Passions
In my conversation with Scott Bower, who is a wholesaler that is transitioning into multifamily syndication, he explained how he was able to create the extra time to explore his multifamily passion by outsourcing some of his wholesaling duties to an eager, young investor.
Scott has recently made the decision that he is going to pursue his entrepreneurial passion and dip his toes into the multifamily syndication pond. However, there was initially an issue that was holding him back. His wholesale operation was what paid the bills, so he needed to find a way to keep that machine running while he explored another real estate niche. The solution presented itself when he came across an individual, George, that wanted to become a wholesaler, but didn’t know where to start. George was hungry, willing to learn, and wanted to get out there to put in the time and effort that it takes to become a successful wholesaler.
Talk about perfect timing. Scott explained to George about what his plans were, in regards to the need to outsource labor so that he could explore multifamily investing, and they discussed how George could fit in. All the stars seemed to align, so Scott put the wholesaling ball in George’s court, and George picked up the ball and ran.
The first responsibilities that Scott provided George was answering the phone. Since Scott already had a successful wholesaling business that was consistently generating leads, the company received phone calls every day. Therefore, whenever a lead comes in, George’s responsibilities are to answer the phone and obtain the following information:
- Seller’s information (Name, address, phone number, etc.)
- Get an idea of what their situation is (i.e. why are the selling?)
- How can Scott’s business help them?
- Why did they pick up the phone and call Scott?
- Set up an appointment to view property
After the phone call is completed and an appointment is set, Scott accompanies George to the property, and teaches him what to look for, how to talk to the sellers, how to stay involved in conversation, and how to negotiate deals. The goal is to provide George with all the experience and knowledge that he needs, so that eventually, he can go out to these appointments and negotiate the deals on his own.
In return for his services, George gets a piece of the deal. In a way, he is like a sales guy. Scott has structured George’s compensation plan as follows:
- 14% of the deal on the first $40,000 of revenue to the company per month
- An additional 1% for every $10,000
- Capped out at 20%
For example, if the company brings in $60,000 in revenue during the month of August, then George receives the following:
- 14% of $40,000 = $5,600
- 15% of $10,000 = $1,500
- 16% of $10,000 = $1,600
- Total = $5,600 + $1,500 + $1,600 = $8,700
This is the preliminary compensation structure, and Scott plans on giving him more as time goes on and he becomes more experienced.
Now that Scott has been able to outsource most of the wholesaling process, he plans on focusing on:
- How to generate more leads for George or more people (if they are able to grow and bring on more Georges)
- How to become more profitable
- How to generate more income for everybody involved in the business
And of course, Scott will now have the time to pursue his true passion, which is multifamily syndication.
His parting advice for those that reach similar points in their businesses is that if you really want to do something, whether it is multifamily syndication, fix and flipping, etc., you will find a way to make whatever else it is that you need to do work (like in Scott’s situation, his existing wholesaling business). Think outside the box and don’t let any obstacle stop you from achieve what it is that you want to do.