JF2237: Interview With A Real Estate Investor & Coach Erik Hatch
Erik Hatch is an entrepreneur, public speaker, do-gooder, social media expert, and leader extraordinaire. He owns 18 companies including Hatch Realty (the #49 real estate team in the US), Hatch Coaching, and Abovo which does over 644 transactions a year.
Erik Hatch Real Estate Background:
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Best Ever Tweet:
“There is a sweet spot in this, & anything outside of that sweet spot is no longer a skill game, it’s a guessing game” – Erik Hatch
Theo Hicks: Hello best listeners and welcome to the Best Real Estate Investing Advice Ever show. I’m Theo Hicks and today, we will be speaking with Erik Hatch.
Erik, how are you doing today?
Erik Hatch: I am never better, Theo. Pumped to be on. Pretty excited to talk about real estate investing, one of my favorite things.
Theo Hicks: Oh, well, let’s get right into it. A little bit about Erik. He is the CEO and owner of Hatch Realty and Hatch Coaching. He started investing in real estate in 2012. Right now, he has a portfolio that consists of 60 doors and he also does 20 to 30 flips per year. He is based in Fargo, North Dakota and you can say hi to him at https://www.hatchrealty.com/.
Erik, do you mind telling us a little bit more about your background and then what you’re focused on today.?
Erik Hatch: Yeah, I didn’t start in real estate. Most people don’t start in real estate. It’s usually a second or third career for people. For me, my background was I grew up in Fargo, North Dakota, always lived here. When I graduated from college, I went to work in the ministry. I worked in my local church, hanging out with kids. It was like the best job in the world, except for the paycheck that came with it.
I started there in 2003, then 2005 came around and I was just massively in debt from school and bad decisions and everything else, and having a poor paying job. My buddies were like, “Hatch, dude, you should sell real estate, you’re good with people.” I said, “Okay, I’ll do it.” That was 15 years ago. I got my real estate license and I started off as a part-time realtor for about five years until I went into it full-time.
Then started to grow a team, started to really grow my net worth. In my first year in real estate full time, I made five times profit what I was making being a full-time employee somewhere else. I saw the financial gain that was there and the opportunities and soon thereafter I started investing in real estate. I was scared to death of buying my first rental property, so I did so with a couple of partners, and I put 10 grand towards a property. As I look at it, now we’ve owned it for eight years, and we’re carrying a mortgage of under $40,000 on it, and the property is worth 175k. It’s just amazing how fast wealth has accumulated for me.
Now, as of 2020, I lead one of the top real estate teams in the country, I’m a top 25 Real Estate coach, I have 25 different businesses that I own and operate. Half of them are investment groups, and the other half are tied to real estate, one way or the other, except for this random one-off speakeasy that I own in a building, which is pretty fun. As I’ve taken a look at it, the wild thing is in the last 10 years I’ve grown my net worth by 4,000% and I’ve done so through real estate.
Theo Hicks: So you sell houses, you have rentals and you flip houses.
Erik Hatch: Yep. And I own a mortgage company and some other things that are just different ways to build legs to the stool. But I think real estate in general, at least the residential real estate world that I live in, people are looking for servicing and marketing. There’s so many different avenues that we can get when we do that. One of the things I started doing a couple years ago is I started flipping houses. The iBuyer Movement was all the rage. I said, “Man, if ever was an opportunity to better service our clients, this iBuyer move would be one of them.” We created our own iBuyer movement. In fact, I kind of created a franchise-esque model, where I’ve sold it now to probably 30 different people from around the US that are doing the same thing that we’re doing. They stole our model, which we copied from somebody else, but I happen to put it in a nice, bundled package together. We’re teaching people now how to invest in real estate, but even more so, we’re teaching them how to flip, how to fix and flip and how to buy and hold. My favorite thing, Theo, is to wholesale. It’s never actually buy the property, and just profit all that in between gooey-gooey goodness.
Theo Hicks: If you get a deal, how do you know what to do with it?
Erik Hatch: With a house?
Theo Hicks: So like a wholesale – do you buy it yourself? Do you sell it to someone else? Do you flip it? How do you know what to do?
Erik Hatch: That’s a great question. Obviously, if I go back to what I had said earlier, is that real estate and the residential world that I live in, we’re in the marketing and servicing industry. Our job is to get in the door as much as possible. When we get in the door, we’re actually giving our sellers three options. We’ll tell them okay, you can list traditionally, that’s how most people sell real estate, it’s still the traditional route. I’m willing to give them a $10,000 interest-free loan to improve their property. I’ll just get paid back in closing. So we advertise that as well. And then we advertise you can sell directly to an investor. We call it a snap offer. I happen to be the investor, but they can sell directly to me. So avoid all the hassle of putting their house on the market and doing repairs and whatnot.
What happens is if they say yes to wanting to sell directly to an investor, I can wholesale it. I can whole tail it, I can buy and hold, I can fix and flip. I have all those options right there if somebody does choose to take my snap offering to go the investor route.
Theo Hicks: What’s iBuyer? You mentioned iBuyer, what is that?
Erik Hatch: IBuyer, it’s a common term for residential realtors and the groups that are doing it on the largest scale are groups like Zillow and Opendoor. There’s some national brokerages as well that are getting into it, like Keller Williams’ of the world they’re getting into it. It’s an investment buyer, it’s an instant offer that they’re giving. It essentially is the wholesale play, but they’re not selling to somebody else. They’re just buying at a discount and then doing the lipstick on the pig method, pretty-ing it up as best they can and then going to resell it.
This iBuyer Movement started really on the west coast of Seattle, Portland type of area. Most of the time, these groups would come in and they’d pay 80 to 90 cents on the dollar, they pay actually a pretty premium property. It’s a loss leader for a group like Zillow, who bought last year thousands and thousands of homes throughout the United States in this iBuyer movement; they bought so many houses.
The reason why it’s a loss leader is because what they’re doing is they’re buying the data of that person, and they’re of course proving the model too. With the data, they’re taking that information and they are now selling that person a mortgage, and title work and all these other things, the different legs of the stool.
Zillow will eventually make money on it even though, they lost literally billions of dollars last year doing it. Now, we’re saying, we don’t need a Zillow or an Opendoor to come in and to provide these offers, and we don’t need to fly a sign on the corner like a lot of wholesalers will have to do. We can use our reputation and our local expertise to be that iBuyer for people, where they don’t have to work with a big box company and they can work with somebody they know, like and trust.
Theo Hicks: Do you have a software that they input their information in and it spits out numbers? Is that how it works?
Erik Hatch: Yes. It can be done a couple of different ways. I have a buddy out of Cleveland, Ohio. He’s a realtor and runs a real estate team like I do. He built his own software and spent a couple hundred thousand dollars, so the algorithm will tell you, “Hey, this is what your house is worth.”
For us, I live in Fargo, North Dakota. Obviously a lot smaller than Cleveland, Ohio. So we take all these and we do an on site evaluation of the property before we actually give them the offer. Because we don’t want to go in and offer them 130k, to find out that their house is a lemon and we have to go back and tell them, it’s actually 110k. We think that’s damaging to our reputation.
Theo Hicks: Okay. How are you finding your leads? You mentioned what you do once you do want to get them; what’s your number one way to get leads that end up in some sort of back end close?
Erik Hatch: It’s really two things that are our leaders. One is radio. I’ve had my own radio program for the last nine years or so, and then I also pay for a lot of ads on our local radio station. That is probably 30% of our business. The other 40% is five different categories, so I won’t go into those. The other one is direct mail. Direct mail is huge.
We spend about four grand a month on direct mail. Every time I send out a postcard, I buy two houses. It’s like clockwork at this point. So every time I spend four grand, I know I’m purchasing two places. My goal is to make 15% per property from my total cash in, and I am averaging about 12%, and my goal is to make 15%.
Theo Hicks: You’re on a radio program… Do you have a show?
Erik Hatch: I started a real estate radio show, and this is such a big opportunity for anybody that’s listening or watching right now, Theo. The reason why is because there’s so many top radio stations that are looking for content. What happens is they have to go and purchase a program outside of their market, they have to pay for that. But I pay $1,000 a month for my own radio show. In fact, I recorded it this morning. It’s a 30-minute show that airs at 8:00 am on Sunday mornings. I bring in guests, I talk about wholesaling, and I talk about flipping, and I talk about listing your home traditionally, but I’m a storyteller and I’m a real estate radio host.
We then take that and we will blog about it. It helps our SEO on our website. We’re going to take that and we’ll make video clips that we’ll put on YouTube, we’ll make video clips that we put on social media, tagging our guests and delivering all this extra content. It cost me $1,000 a month and my return on that investment is probably 10X. In your market, wherever you are in anywhere USA, my guess is there’s some talk radio stations that are looking for more content and you can approach them. Most of the time it’s between $1,000 and $2,000 a month for two to four hours of content that you’ll provide. And then you can go and you can sell ads to the vendors that you’re working with that certain effect. But immediately it can be a profit piece for you. On top of that, you’ve now become the local expert, because nobody that’s listening believes that you are paying to be there, they think the radio station is paying you as the local expert.
Theo Hicks: How do you what radio station to go on?
Erik Hatch: I’m in a community of 250,000 people and there’s three talk radio stations. I went to the most popular one first. It was just that simple, and I said, “Hey, would you be interested in having a real estate radio show on? And here’s what I’ll cover, here’s what I’ll do, and what is it going to cost?” I was blown away because I thought I’d have to pay 10 grand or so to have that kind of airtime and that kind of ability to market what I’m doing. Because we put it on all these other markets, too – we put it on YouTube and social media and we podcasts and we blog and all these other things – we get so much juice out of that squeeze deal.
It’s the one thing I think everybody should look to do right now. I don’t care if you’re an investor buying one house a year or 100 homes a year, get on the radio and start talking about investing. You want to find your other wholesale buyers, if you’re going to wholesale properties. If you want to find people who are going to invest with you, just start talking about investing and watch the phone start to ring.
Theo Hicks: And then you mentioned about ads, that you can make money through ads. Do you mind repeating that again? I don’t think I fully understood what you meant.
Erik Hatch: Yes. My real estate radio show – my home inspector is somebody that pays for ads. He pays us $500 a month for me to promo him. His company is called Nordic Home Inspections. I read a little commercial, it’s like a live read. In the radio world there’s recorded things and then live reads. And a live read is like right after your segment or right as the segment begins, you continue talking, so the listener doesn’t believe that it’s a commercial, that it’s just a part of the show. Weekly, I do a live read and I make $500 a month from him just on that one live read. That’s just one of the examples for you.
Theo Hicks: Okay. Yeah, that makes sense. I thought you were saying that you could bring people in and have them be the actual commercial, but live reads makes a lot more sense.
Erik Hatch: Yeah, yeah.
Theo Hicks: Okay. What is your best real estate investing advice ever?
Erik Hatch: Boy! My best real estate investing advice ever was you should have started yesterday. I got into real estate investing, frankly, because I had an extra 10 grand, no more. I had $10,000 and I didn’t know what to do.
The best advice I got from somebody was put it into real estate. I saw something recently that said if you have 10 grand and you put it in the stock market or 10 grand and you put it into real estate, what kind of return are you going to get? Real estate provided a three and a half times return over the stock market, even with the best stocks. So invest early, invest often. Don’t tie up all your money, but invest really wisely in real estate and you’ll reap some really long term benefits.
Theo Hicks: Before we go into the lightning round, I should’ve asked this question earlier. So you do a lot of different things… What are some tips you have for your ability to manage your time and make sure you’re spending enough time in each of these businesses, in each of these areas?
Erik Hatch: Well, when a real estate investment opportunity comes along, it kind of takes precedence, because timing is of the essence and I have to jump to it. I’ll put some other things on hold for me to jump in, and to focus on it at a really great length. So I am consistently on the hunt, consistently looking for that next deal or that next opportunity, but I’ve set a lot of systems in place.
To your question, Theo, I think if I’m going to manage my time wisely, I need to know what’s most important. Where am I going to schedule my time; because if I just wait for my calendar to fill up, it’s going to get filled up with what is urgent for other people and not what’s urgent for me. I’m really cautious and conscious of making sure that I put on my calendar the things that matter most. For me, my family matters most and then my team members matter most. After that, it’s investing and clients and that sort of thing. But I make sure that I give my best to those things that matter most to me.
Theo Hicks: Do you do this in the beginning of each week? Is it a monthly thing where you put the thing on our calendar, or it is always on there? Like, this is family time, this is team time, and then everything else kind of just fills in.
Erik Hatch: Yeah, I have my things that are non-negotiables. My family is my non-negotiable. My self-care is my non-negotiable; whether it’s working out or golfing or time with friends, that’s all self-care for me. Those are the things that are on my calendar always, and everything else fills in around that.
Theo Hicks: Alright, Erik, are ready for the best ever lightning round?
Erik Hatch: I’m ready, bring it.
Theo Hicks: Okay.
Theo Hicks: Okay, Erik, what is the best ever book you’ve recently read?
Erik Hatch: I just read The Pumpkin Plan by Mike Michalowicz. He’s the author of Profit First that I think is probably his most popular book. I just read it. He has seven steps of how people build these world-class award-winning 1500-pound pumpkins. It’s all about how to manage your client list and manage your team. It’s a powerful read and super easy too.
Theo Hicks: If your businesses—usually it’s business, but if your businesses, all of them were to somehow collapse today, what would you do next?
Erik Hatch: I want to say male modeling, but I’m more the before picture than the after picture, so it’s probably not male modeling. My passion is service. I love making money. I love being a coach. I love investing. And I’d find a way to do that, just in another realm. I came from the church and working for a non-profit, and that was a really, really great career. I’d find a way to just infuse that in a different arena.
Theo Hicks: What is the best ever deal you’ve done?
Erik Hatch: I bought my in-laws’ house. It was so scary and treacherous. They had this beautiful home but they didn’t keep it up very well, and they needed to sell in order to buy, and so I got to come in and be the hero. I gave them a wholesale offer that they took from me, and then I had to go and flip it. And this was like a historic character home and my mother-in-law hated me, because we painted all the woodwork and we made the changes on things that she loved. But I bought the house, because I did my family a solid — I didn’t think I’d make a dime on it. I ended up making 40 grand and sold it in multiple offers the first day we hit market. That was super fun for me, because I didn’t expect to make a dime, I pissed off my family in the process, but I ended up making the surprising 40 k.
Theo Hicks: Did you share that money?
Erik Hatch: No, come on now. Hey, come on. I take very good care of their daughter, so we’re going to call that good.
Theo Hicks: There you go. That’s your payment. Okay, let’s talk about on the flip side – tell us what a deal that you lost the most money on or lost money on and then what lesson did you learn from that?
Erik Hatch: I’m just finalizing that deal right now. I bought a house about 16 months ago and I paid 73 cents on the dollar. This house was just a money pit. I ended up having foundation issues twice. We had huge storms. We had these other things. We had a tree fall on the property. We had the worst general contractor ever. We had all these things that were just treacherous.
If I sold for full price, I would have lost 30 grand. Well, it’s out on the market and twice it fell apart the week it was supposed to close. Now, I just got it under contract and a contract for deed. I’m losing $60,000 on this house, and it could have been much worse. I’ve held it for 15 or 16 months and it has been a money pit.
The lesson that I’ve learned is that there is a sweet spot in this, and anything outside of that sweet spot, it’s no longer a skill game. It’s a guessing game. It’s the difference between playing poker and blackjack. Poker is a skill game. Yes, there’s things that can bust you and there’s going to be bad beats that you’re going to get. But ultimately, you know the skill. Blackjack is just dumb luck. I was playing blackjack and I lost my butt, and I won’t do that again.
Theo Hicks: What is the best ever way you like to give back?
Erik Hatch: I started a movement with my buddy Nick Shivers. He in fact is the guy that taught me how to do this iBuyer stuff. He’s out of Portland, Oregon. He and I have a passion to help kids. I went to Haiti back in 2010. He’s done mission work for years and years. Once you’ve held an orphan without parents living in a third world country, your whole world perspective changes. He and I started a movement called Sell a Home, Save a Child. If you go to https://www.sellahomesaveachild.org/. You can see all the details of what we’re doing… But we’re empowering people in the real estate world, whether it’s investors or mortgage officers or realtors or anything else, that they can give part of their proceeds and commissions to help save kids. During the last five or six years, we’ve raised about 2 million bucks and we’re just getting started.
Theo Hicks: Wow. Lastly, what is the best ever place to reach you?
Erik Hatch: Hopefully, on the golf course. If it’s a good day, I’m a mediocre golfer, but the golf course is great. Otherwise, I put my name on everything by the way, Theo. It’s pretty easy to remember; if you go to https://www.hatchcoaching.com/, https://www.hatchrealty.com/, https://www.hatchingleaders.com/, you’ll find me in any of those places.
Theo Hicks: Hatching Leaders, that’s a good one.
Erik Hatch: I wrote a book last year. It’s a leadership book. It’s called Play for the Person Next to You. We do all my speaking gigs and my writing and everything else…. There’s all on that https://www.hatchingleaders.com/.
Theo Hicks: Where can they find your radio show?
Erik Hatch: Just go to our website and we link to it. So go to https://www.hatchingleaders.com/ and we link to it right there.
Theo Hicks: Alright, Erik. I really enjoyed this conversation, this call. I think the biggest takeaway for me and I’m sure other people would be the radio idea. One thing we stress a lot on this show and in our blog is the thought leadership platform. So podcasts, YouTube channels, blogs, things like that. But I never thought of using the radio as an actual thought leadership platform.
Erik Hatch: The difference is, if you do a podcast, you still have to go and try to find your own audience. You’re out there with a million other things, and there are so many diehard radio AM listeners that are listening to talk radio over and over and over again, with a built-in audience of 1,000 to 100,000 people at any given time. You get a built-in audience with that. I have my own podcast too, Theo. I’m all in for being a thought leader. But it makes more sense, I think, to try to get on a local radio station and then turn that into a podcast, too. So you have at least that base amount of viewers that are already digesting your content.
Theo Hicks: Exactly. If you’re already doing a podcast, then you kind of already got the setup to then record your shows for the radio and then continue to do what you mentioned, which is to blog about it, video clips on YouTube and social media. We kind of went through specifically, the tactics for starting a radio show. Probably the biggest takeaway that I got, among other things as well. But how you’re finding your deals through direct mail… We talked about time management, that you need to figure out basically, what’s your number one priority, what’s the top priority things to you, and then putting those as a recurring thing on your calendar and then let everything else fill in. I like what you said that make sure you focus on what’s urgent to you, so that people are scheduling things that are just urgent for them.
Erik, I really appreciate you coming on the show.
Erik Hatch: It’s an honor. Thanks for having me.
Theo Hicks: Absolutely. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.
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