JF1034: 6 Steps to a 7 Figure Income with Pat Hiban
Want to know what the big boys did to get where they are? From goal setting to investing and everything in between. Learn the skills needed to be a millionaire!
Pat Hiban Real Estate Background:
-Owner of Pat Hiban Group with Keller Williams
-Founder at Rebus University Billionaire Dollar Agent
-Host of popular podcast “Real Estate Rockstars”
-New York Times Best-Selling Author of “6 Steps to 7 Figures”
-Based in Baltimore, Maryland
-Say hi to him at www.pathiban.com/
-Check out his book at www.sixstepsbook.com
Listen to his Best Ever Advice Here: https://joefairless.com/podcast/jf310-renting-to-section-8-and-college-students-and-all-you-need-to-know-about-it/
Click here for a summary of Pat’s Best Ever advice: The 6 Steps to a 7-Figure Income
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.
With us today – Pat Hiban. How are you doing, Pat?
Pat Hiban: Awesome, Joe. Thanks for having me back, brother.
Joe Fairless: Hey, nice to have you back, my friend. Best Ever listeners, you just heard it – Pat has been on the show before and he gave his best real estate investing advice ever in episode 310. I highly recommend going back to listen to that episode. And because we’ve heard his best ever advice, we’re going to do a special segment as we usually do on Sundays… And because it’s Sunday, we’re gonna do Skillset Sunday, where Pat is going to walk us through six steps to a seven-figure income.
A little bit about Pat before we get into it. He is the owner of Pat Hiban Group with Keller Williams. He is the founder of Rebus University; he is a billion dollar agent, host of the popular podcast “Real Estate Rockstars” and New York Times Best-Selling Author of “6 Steps to 7 Figures.” Based in Baltimore, Maryland.
Pat, before we get into it, do you wanna give the Best Ever listeners a little bit more about your background and your focus?
Pat Hiban: Sure, Joe. I’ve been in real estate pretty much my whole life. I’ve ventured into many things since I started accumulating a little bit of wealth. I think obviously what has paid me the best and most consistently has been real estate.
I was in the game of selling for a long time. In 2010 I sold my team business, which still runs and I still make a horizontal income from, and I wrote my book. Now I just kind of work three days a week, I do my own podcast, I have great courses for real estate agents on how to make more commissions, and I enjoy the fruits of the many investments I’ve made over the years.
Joe Fairless: I really enjoyed our initial conversation, because you talked in detail about your income streams. Again, Best Ever listeners, go listen to 310 after we get done with our conversation here. The topic of today and what we’re gonna be focused on is “6 Steps to 7 Figures.” Can you walk us through the steps? Because I’m curious, that’s for sure.
Pat Hiban: Sure, absolutely. The first step is set goals and affirm them. What I talk about in this chapter of my book is a lot of people just set really large goals. For instance, they set a goal “I wanna be a millionaire”, but they don’t set the small daily goals that it takes to be a millionaire, such as “I save $10/day.” Or, even the goal before that is “What are you gonna do to earn that extra $10 to save that extra $10?”
I talk about setting large goals and breaking them down into small goals, and then putting them in the affirmative, which would be “I am a millionaire, I save $10/day by doing X every day.” That’s what I’ve done my whole life… In the book I map out goals that I’ve set over the years and how I turn them into affirmations and then how I achieve them. So that’s the first step.
Joe Fairless: Makes sense.
Pat Hiban: The second step is Track. Just like you probably track how many investments you have, what they’re worth, how many downloads you get on this show, how it’s increased or decreased, I’m an avid tracker. I’ve tracked everything for years. Every successful person I talk to tracks like crazy. People that tend to not get very far don’t track at all. It’s like weight watchers, Joe. Do you know anything about weight watchers?
Joe Fairless: I am familiar with the concept.
Pat Hiban: Weight watchers – what you’ve gotta do is you’ve gotta write down every single thing you eat. If you eat a raisin or a peanut, an M&M or something like that, you have to write it down, and then you get points for that. Then in addition to that, they want you to track by stepping on a scale every week, or as much as possible. What it boils down to is if you’re on weight watchers for let’s say six weeks and you lose 30 pounds by tracking everything you eat, and then on the seventh week you stop tracking everything you eat, what do you think tends to happen?
Joe Fairless: You slip a little bit, you get chunky.
Pat Hiban: Exactly. And then if you don’t do it the next week and the next week and the next week, chances are the same – you just gain all the weight back.
The thought process behind it and the truism behind it is “If you track, you succeed. If you don’t track, you fail.” I talk about all the different things that anybody can track, but there’s always a million things to track.
Joe Fairless: Can you give a goal that you have accomplished and what you tracked on a daily basis leading up to accomplishing that goal?
Pat Hiban: Well, I’ll relate it to your audience here… For the longest time my goal was to be a hundred-percenter. What a hundred-percenter is – it’s a word we use in one of my companies that I’m involved with called GoBundance. What a hundred-percenter is — let’s say you map out your monthly bills; if my monthly bills are 20k/month that it takes for me to pay for my kids’ colleges and pay for my house and utilities, food, everything, a hundred-percenter would mean $20,000/month would come in from rental real estate or passive investments. That would be 100% of my bills are paid.
In order for me to get to a hundred-percenter, I needed to do a couple of things. I needed to first of all earn money, and then with that money save money, and then with that savings invest that money, and invest it wisely. So my ultimate goal is to become a hundred-percenter; my daily goal that I might track would be I needed to list a house a day, or a house every three days. My goal from that would be to save $10,000/month in commissions, and then from that it would be to invest, and then I would obviously track — which I still do; I can show you a sheet right now… I have 63 lines of income that come sideways to me that pay my bills. That in itself, that sheet is a tracking form.
Everything was tracked, from what I did to get the listing, what I did to save the money, what I did once I invested the money, and then how the money paid me sideways. Does that answer the question?
Joe Fairless: Yes, it does.
Pat Hiban: Step three is join masterminds and get mentors. A lot of people live life thinking that a mentor is some old guy that sits at the top of a hill under a tree, with a long beard, looks like Rip Van Winkle. This guy just kind of has advice on all aspects of life, whether it be health, relationships, money, investing – everything. I think people get it completely wrong by that… Most people are brilliant at one or two things, and then average and not so average at everything else.
I’ve had over 50 mentors that I can count that I have learned from and stepped upon, kind of used to climb up the ladder of success. Many of those mentors I was able to find at masterminds. A mastermind is just simply a collective genius, so to speak. It’s 5 to 100 people that are all thinking the same and are sharing best ideas and best practices where you could just learn in abundance from multiple people all at once… People that have gone through what you wanna go through. I talk about that in chapter three, Join Mentors and Masterminds.
Joe Fairless: Okay.
Pat Hiban: Then chapter four is Act. That is the forceful act of moving forward. There’s an old saying, “Nothing great comes without sacrifice.” I’ll give you an example – when I wrote my book I went to find some mentors, and I found Gary Keller, who’s written multiple best-selling books – The One Thing, The Millionaire Real Estate Agent, The Millionaire Real Estate Investor etc. and I asked him for advice. He gave me advice, and then I said to him “I have an idea. I wanna make my book a best-selling book, just like your books. What I’m gonna do is I’m gonna go on Facebook and I’m gonna friend anybody and everybody that I can in the real estate industry and then I’m gonna talk about my book every single day.” He said to me, “Pat, that will never ever, ever happen.” Not that I wouldn’t be able to friend people on Facebook, but that I’d be able to get on the best-seller list.
The best seller list at that point, Joe, was about 9,000 book purchases in the first week. So he said to me “None of my books have gotten anywhere without hard work. What you need to do is you need to quit what you’re doing and you need to go out on tour and start speaking to real estate agents at real estate agent offices throughout the country, talking about your book.” And I almost think it was a test… He was kind of testing me to see if I was serious or not, because he didn’t wanna waste time with me, because all people probably say, “Oh, I wanna write a book, I wanna write a book.”
So I took his advice and I actually sold my real estate team to my top agent, and then I went on a book tour and I started promoting my book. I spoke at 53 offices and 53 cities over a seven-month period and got them all to commit to buying a book on the first day that it came out.
When my book was released, we sold 10,600 copies in the first week. My point is that Gary told me that I needed to act. He said something I’ll never forget; he said, “You reap what you sow 100% of the time.” It’s so true. You would have never gotten to where you are, Joe, without doing a podcast every day, right? For three to four years. That’s a lot of work, that’s a ton of time. So there’s no free lunch is kind of what that’s about.
Joe Fairless: I’m getting into the weeds here, but I have to ask about the book tour – that’s a fascinating case study for how you were able to sell so many books on the first week that it released. Do you know how many it would take now to do that and become a New York Times Best-Selling author?
Pat Hiban: I think it’s still around 10,000, maybe 11,000. I don’t think it’s changed that much, but I don’t know for sure… You’d have to ask somebody…
Joe Fairless: Yeah… No, I’m just curious. For new books that come out that you write, what’s your approach?
Pat Hiban: I haven’t written another book since. It’s a hell of a lot of work. It was four years in the making… it was my life’s work. It took four and a half years; they say you never really write a book, you just rewrite it…
Joe Fairless: Yeah.
Pat Hiban: It was a lot of focus time, going into the library and sitting there, spreading out on a table in a library and just going through five or six hours in a row, pages and resorting… It was a lot of work. If I did it again, I would just have someone else write it for me and do all the work and I would just take a small cut, rather than trying to be so highly involved in it.
Joe Fairless: That’s good info. Okay, so we have “Set goals and affirm them”, “Track”, “Get mentors, surround yourself with the right people”, “Act”… What’s number five?
Pat Hiban: Number five is Build. One of my mentors, Fred [unintelligible [00:14:27].24], used to always say “Build on a success up, not from the ground up.” What he meant by that was if you have a success with something, use it. A good example would be on your page it says “Hey Pat, would you like to come back on the show?” it shows six or eight people that you’ve had on the show… It shows Barbara Corcoran, it shows Robert Kiyosaki… One of those would be a success, and then you’re building on that success to try to get other good guests, if that makes sense.
For a real estate agent, if you have a house in a neighborhood that you just sold, don’t go to some other random neighborhood and try to prospect and farm it, go to the neighborhood where you had the success and build on that success up, because you’re much more apt to get a listing in a neighborhood where you could say “Oh, we just sold a house up the street. You may have seen my sign”, that you would with some neighborhood you’ve never a sold a house in before.
Find every little success you can and just build, build, build constantly. Keep building on the same blocks, if you can.
Then the last one is Invest, and I talk about kind of what I did when I went over the goals with you, which is “Bust your ass, save money.” Most people are terrible savers. Be a good saver, be an excellent saver. Take the down payments and invest in real estate – that’s how I did it – and then live off the horizontal income from those investments.
Joe Fairless: And “Invest” can be a week-long seminar, so I’m cognizant of that when we delve into this, but I would like to ask for real estate investors what should the approach be? I’m gonna leave that broad, to see where you take it.
Pat Hiban: Well yeah, it’s interesting you say that, because there’s more opportunity now for investors than ever. It’s like, not only has real estate become a respected asset class, but it’s become almost a preferred asset class for so many people. I don’t know if that’s good or bad yet. It’s good, it’s easy for anybody really, with syndication, and with a little bit of money it’s really easy for people to get into the market. That being said, I don’t know if the fact that cash is no longer kind, that money is so fluent and so much money is flowing into real estate, that I don’t know if that means it’s an inflated asset class.
We could say the stock market is inflated, which it is as well. I don’t know if both of them aren’t inflated right now; I’m not sure of that. I don’t know if that’s the answer you wanted me to give you. I have a lot of people on my show and I asked them a similar sort of questions and I think the ones that have a following that they’re sold to, meaning that they’re making money off of, will tell you “Oh, just buy and never sell.”
Robert Kiyosaki will tell you “Hey, I’ve never lost money on a real estate deal.” You say “What are you talking about?” and he says “Well, I’ve just never sold.” I’ve sold some stuff and I’ve made some good money, but I’ve also lost my ass on some stuff. Did I answer to your question directly enough?
Joe Fairless: Yes. I would like to know, since your brought it up, you made a lot of money and you lost your ass on stuff – can you give us an example, specifics on a deal that you made a lot of money on, and specifics on a deal that you lost a lot of money?
Pat Hiban: Sure. I invested in real estate in apartments, and I’ll just give you two examples so we’re comparing apples to apples. We bought a building called Stratham Place, it was in South Carolina. I think we paid like a million dollars for it. My portion of it was 100k. It was a [unintelligible [00:18:17].22] which means 100k I owned 10%. Let me think – there was a loan on that, too. But anyway, let’s just say I owned 10% and I invested 100k.
We sold it last year after having it about seven years and we 2,5x-ed our money, so I got 250k back from my initial investment, plus it paid me quarterly dividend. I don’t have it in front of me, but it probably paid me about 12% on the money for 7 years. That would be one.
I’ve had some houses that I’ve done… I had one house I paid 185k for and sold for 450k. I remember that one as a home run. That was back right when the market was peaking, like 2006. I think I bought it in 2004 and sold it in 2006. I’ve got a couple stories like that.
I got my head kicked in on one apartment building that we bought in Fort Worth, Texas. We thought it was a C neighborhood, and it ended up being a D neighborhood. We paid a lot of money for it, and we had — I’m trying to make a long story short for you… We had a murder on the premises; Fort Worth police sent us a notice… “Hey, [unintelligible [00:19:32].12]” A couple months later we had a second murder on the premises. They were like “Now you’re on super secret probation.” Then they started scouting the place; there were some other arrests, but no other murders. Then they sent us a notice that said, “Hey guys, we’re gonna fine you up to a million dollars if you have another murder, and it’s gonna affect your rental license.” There was a lot of bureaucracy involved with the city. We kind of panicked and we sold it.
I invested $430,000 cash into that one. I think I was a 30% owner in it. I think we paid like 5 million and we put down like a million and a half, me and three other guys. I got back a check for 106k. I lost $333,000 over a period of about two and a half years. The only way we could save ourselves — we sold it on Auction.com. This was actually last year that we just did this, we sold it last year on Auction.com; we kind of got screwed on that a little bit too… We didn’t get as much money as we thought we would.
We just didn’t have deep enough pockets. If we had deep pockets we would have put a million dollars into security and try to beef it up, and then took the risk of getting fined by the government and all that and rode it out. But one of my partners on the deal had signed personally for it – I didn’t sign personally for it… That was almost worse, because he signed personally for it so he was kind of freaking out. It was like, “I’m the one that guaranteed the loan on this”, and he was freaking out, and he had even more money — I think he put 600k into it. So he panicked, and I’m just one of four people in it, so I only had a 25% vote… It was just a bad situation that happened.
At least I got 106k back, at least I didn’t lose every cent, but it hurt. That was the biggest lost. I was like, “Damn, I’ve just lost $300,000+. That’s no joke.” And it was pure cash, too. It wasn’t borrowed money, it was money I could have invested in something else.
Joe Fairless: Yeah. Looking back on that, what are some things you would do differently on a future deal?
Pat Hiban: Well, I think if there’s a question on whether the neighborhood is a C or a D, which makes a big difference…
Joe Fairless: It does, big difference…
Pat Hiban: …we should go look ourselves. We should spend time there at night. You’ve gotta go at night. During the day people are sleeping or whatever, and they’re gonna put on a good show especially if they know you’re coming. I would say go there when no one knows you’re coming. Go there at night and spend more than one night there, and talk to people around. Find out how bad of a neighborhood is this, how bad of an area is this. Look at crime reports.
For whatever reason, we were convinced that it wasn’t that bad of an area. We just misjudged it. That’s 100% what happened, we misjudged it. We could have dealt with it if it weren’t for these murders. We could have shut down 20% of the units and just fixed them up, and that’s what we did on probably eight other apartment complexes we bought. We did great on that in areas like Macon, Georgia… I think four of the eight that we bought were in Macon, Georgia.
Most of them are C neighborhoods, but it’s a different type of poor, it’s a different type of tenant. This was crime-ridden. So you’re taking a big step, if this makes any sense, going from C to D. You’ve really gotta know what you’re doing, and we didn’t know what we were doing in that class D, so we freaked out.
Joe Fairless: Thank you for sharing those stories, along with the six-step process. Is there anything else as it relates to “6 Steps to 7 Figures” that you want to share that we haven’t talked about?
Pat Hiban: No, I think we’ve pretty much covered it all. The only thing I didn’t mention I obviously cover in the book. It’s available anywhere online books are sold, audio version and also the print version and the eBook version. It’s all there.
Joe Fairless: Where can the Best Ever listeners get in touch with you?
Pat Hiban: I’m real easy, I’m public, so you can just google me. An easy one-stop shop would be to just go to PatHiban.com and there’s links there to Rebus University, which is my company that trains real estate agents, and links to the book and my podcast, Real Estate Rockstars. Everything’s right there.
Joe Fairless: Excellent. Well, the step-by-step process certainly is beneficial, and the link to your book, Pat, will also be in the show notes of this episode. Best Ever listeners, you can just click the link and go straight to Amazon and get the book.
So step 1 – set your goals and affirm them; make sure we’re using the right language. Step two is to track, and I loved the hundred-percenter term that you and your GoBundance pals have. Step three – get mentors, speaking of that… Number four – act, and it’s much deeper than just acting you gave the example of how you became a New York Times Best-Selling author by doing the book tour and being strategic about it.
Five is build on the success and be smart about how you position your success, because there’s ways to leverage your success that perhaps others won’t recognize if they’re not as skilled at looking at how to leverage and what you’re building on, and step six in Invest, and you gave the phenomenal examples of losing a bunch of money and making a bunch of money.
Pat, thanks so much for being on the show. I hope you have a best ever weekend, and we’ll talk to you soon.
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