JF2412 : Surviving The Recession With Stacy Bahrenfuss
Stacy started her real estate quest by applying for a job at a local real estate company when she was in high school. What started as a bet ended up becoming her profession. At 19, Stacy got her real estate license and started working hard at filling the gap the local market had at the time.
Stacy started her career in 2006, just a couple of years before the housing market crash. In 2020, her experience surviving the recession is as relevant as ever.
Stacy Bahrenfuss Real Estate Background:
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“What you do in a bad market is what protects you in the good market” – Stacy Bahrenfuss.
Theo Hicks: Hello Best Ever listeners and welcome to The Best Real Estate Investing Advice Ever Show. I’m Theo Hicks, and today we’ll be speaking with Stacy Bahrenfuss. Stacy, how are you doing today?
Stacy Bahrenfuss: Good, Theo. How are you today?
Theo Hicks: I am well. Thanks for asking and thanks for joining us today. Looking forward to our conversation. A little bit about Stacy. She is the founder and CEO of Catalyst Group. She started a real estate company at 19, and survived the 2007 to 2010 housing crisis. Since then, she has built her real estate company into a seven-figure operation. She is based in Eagle, Idaho, and her website is catalystidaho.com. So Stacy, do you mind telling us some more about your background and then what you’re focused on today?
Stacy Bahrenfuss: Absolutely. I was a senior in high school actually, and joking around with some friends, and they challenged me to apply at a local resort real estate office as a salesperson. Obviously, at that time, I was focused on high school and not able to go full-time into that field. But the resort real estate office ended up hiring me as an admin assistant to one of their coordinators, and that was the start of the real estate quest, as I say.
I worked there for a short period of time and quickly saw that there was a gap in the industry that I could fill, which is related to how I was seeing customer service being handled, and just the gap overall in the client experience. So I proceeded with getting my license at 19. I just really wanted to make a difference in the industry with how people experience the process, really inspiring them to see that whatever their goals are, they can be achieved, versus a real estate agent sort of being like a burden a lot of times more often than not, unfortunately, instead of a help.
So I started that then when I was 19 and built my business as a single agent, and then started building the team. Currently, that’s where I’m at today. I’ve done some development on my own, and built some properties, but the focus is existing residential and new construction today, with my real estate team.
Theo Hicks: Perfect. So when you were 19, was that before or after — had you started your business already on your own and then the crisis happened? Or you started during the housing crisis?
Stacy Bahrenfuss: It was 2006 that I got licensed. It was essentially right as it was happening. Yeah. So that’s when I started.
Theo Hicks: What a perfect timing.
Stacy Bahrenfuss: I timed that one right.
Theo Hicks: Well, it’s it seems like it worked out. Let’s talk about that a little bit, about what’s it like… Because as we’re recording this in December, and technically, according to the Fed, a recession started back in February… So what advice would you have for an agent who’s maybe got their license within the past six months to a year, and they see that there’s a lot of stuff going on with real estate in the current recession? What advice would you have for someone like that?
Stacy Bahrenfuss: I would definitely advise what I always say, is the recession is my favorite time in the market, because the strong survive, and all the market share that was taken from people getting into real estate because it was really good, or easy, as they say – you get that market share back. So all the random aunts and uncles of the people that were your clients before, they typically go and get another job, because they weren’t trying to make it into their career.
As far as the recession and what you can do to recession-proof your business – just be aware that if you work your business like a business and commit to the numbers and metrics of keeping in contact with your people, and religiously doing that day in and day out, you will truly survive any storm. That’s what I did then, and that’s what we do now. What you do in a bad market is really what protects you in a good market, because it’s easy to do a lot of business in a good market. But when you’re operating from that same blueprint, you exponentially grow your business in a good market, because you’re operating from that recession plan, if you will.
Theo Hicks: Can you go to a lot more detail about what you mean by religiously and constantly staying in contact with people? Who are these people and then what’s your strategy for staying in contact? What do you do and then how do you make sure you’re continuously doing that?
Stacy Bahrenfuss: Yeah. What I encourage realtors to do is to focus on an area of business that you want to pursue that you enjoy. If you don’t like cold calling, don’t do cold calling; do open houses and networking, if you like that in-person experience. The more that you can cater to your strengths, the more sustainable that your plan is going to be. So do that.
What I mean by reaching out to these people is – let’s say you really enjoy open houses. Then make sure that three weekends out of a month, you have an open house going, since you’re probably not doing that during the week. You have an open house going three weekends out of four, and that is your lead generation, the metrics that you need to be working on. So you would need to make sure that, as an example, 10 people come through your open house; if they don’t, you need to have a strategy of what else you’re going to do. So that could look like door knocking to the neighborhood while you’re at the house, or before or after the open house, introducing yourself, asking who they know that needs to buy or sell real estate, and connecting with those people and making those contacts, and then putting those contacts into your database, and creating a nurture campaign so that you can stay in touch with them, and create them into clients ultimately.
Theo Hicks: What’s the nurture campaign? Is that capturing their information, making a list, and sending content to that list? Is that what that means?
Stacy Bahrenfuss: Yeah, and more so just looking at it like how can you provide value; updating them each quarter on what the value of their home is, as an example, and keeping them up to date each month on the market. I always like to provide an educational and inspirational piece to whatever contact I’m making. So making sure that you’re not only calling them to say “Are you ready yet?”, but you’re also calling to educate them on something, like interest rates. Maybe you know that they were also considering refinancing. If you always go to that “I’ll provide and you decide” kind of mentality, that’s what we say on our team, the more impact that you can make and the bigger your business will get, because you’re worried about the impact versus the transaction.
Theo Hicks: Let’s zoom out a little bit and try to talk about something that applies to anyone who’s in real estate, or I guess in business in general… And that’s scaling. You said you started off doing this by yourself, then you eventually brought on team members, and now you’ve got your seven-figure operation. Walk us through, to start, how that initial scaling works. So I’m an investor, I’m working on everything by myself, I have no one working under me, I’ve got no employees in my business – how do I know when it’s time to hire employees? How do I know who to even hire first?
Stacy Bahrenfuss: I definitely think that sitting down and making a plan of what is that ultimate vision for your investing company. What does that look like and how big do you want it to be? Do you want to mess with employees and a team? Really be honest with yourself, because some people don’t want to mess with it and that’s fine. But in the case where you know you’re really looking to scale, is you can succeed and do things at a completely different level through people, and cover a lot more ground.
So looking at the first question, when is the right time to hire or scale? For me — it’s funny, my husband is very logical and more of that engineer kind of mind, and I’m visionary. So for me, I actually started sooner than I think you should. My thought process was, if I can get someone to do these postcards and these mailers that is taking time and it’s super annoying to me, frankly, then I could go out and deal with more people. So I took that leap really in the first year, because there’s that element of “Do I have a year’s worth of savings on covering expenses and everything like that?” That all is, of course, runway, and that runway is so important. But also trusting in your vision that you create upfront and what you’re trying to do – that is equally as important. Because you could wait, and wait, and wait, and really miss your opportunity to scale.
I definitely think looking at the tasks that you’re doing that are less than $250 an hour – if there are a lot of those, it’s time to hire and bring those people in. There are ways that you can make your team a part of the profit-producing activities, so everyone has skin in the game, so that it’s not an employee that’s just an expense, but they’re all in on the vision too. I think that that’s the first thing. Then looking at the vision and what tasks only you can do, and trying to delegate and outsource everything else makes it so that the business grows exponentially.
Theo Hicks: What’s the hardest step in the scaling process? Is it going from you to one other person? Or is it a little farther down the line where it gets a little bit harder? Is that the easy part? Like “Oh, I got my first hire. This is super easy” and all of a sudden you’ve got five employees and you’re like, “Oh, this is the hard part.” What’s the most challenging part that you’ve come across in scaling your business?
Stacy Bahrenfuss: The most challenging part is setting the expectations piece and clearly writing out the job description and the metrics, and all of that. Because I didn’t do that upfront. I hired first and I expected them to read my mind, and I was surprised when they didn’t. So really diving into those expectations, I think, is there whether you have one person or 10. That, for me, has been the recurring theme as I’ve grown, because I didn’t take that time. As soon as I did, it just made a world of difference, obviously.
I think that really looking at those job descriptions and expectations, and having someone you could bounce them off of, that has maybe a different personality type or perspective than you see the world, is super helpful… Because there are a lot of holes that maybe you don’t fill, that an employee or someone else would need answered.
Theo Hicks: So upfront, when you’re hiring people, it’s making sure you’ve got the expectations set, you are writing the right job descriptions so you’re attracting the right people… So is that kind of how you screen people, just based off of the job description, or there’s something else you do when you screen them?
And then a second part of the question – you can either answer together or separately, but… Once you’ve hired someone, what does that look like? Because you mentioned that you want to tie them to a profit-producing activity so that they have skin in the game. So is it they bring in a certain sales number, or is it, as you mentioned earlier, a certain amount of people need to come to the open houses? How are you actually measuring their success once they’re hired? And then how often are you looking at this? Are you doing quarterly reviews, yearly reviews, things like that? Lots of questions.
Stacy Bahrenfuss: I love it. I so appreciate it, because this is an area that I’ve just been so heavily focused on this year, so it’s all fresh, these answers. So it’s good timing. The first thing that I actually changed at the beginning of this year that has been so powerful in the hiring process is when I post the job description, I also require that they send a video with the resume. Just as an example, I was hiring for my executive assistant and I had 84 applicants. Out of the 84, only four read the directions and provided the video. It was just awesome [unintelligible [00:13:27].07] people are a lot more upfront, and then also get a feel for the person, so I don’t have to reach out and do that first interview and all of that.
The second thing just with that hiring piece is really checking references, and checking five references and asking those references for more references when you call. That just gives another level of perspective to the person. So that’s the other thing.
Also taking time to court this person in a sense, even going out to getting dinner or drinks, or something like that; so you can lead the dynamic in that way too, is looking at it more of like when you would start dating someone, what are those things that you would look at; we don’t take that fully over to hiring. We more have this annoying task we no longer want to do, and it’s super urgent, and we get the wrong person in. That whole “hire slow, fire fast.” So just take the time upfront to go through who they are as a person.
The piece that has been really exciting with regards to everyone contributing to the bottom line and production is incorporating that into each role. What that looks like for an admin staff is we have created focus points within the real estate business that they’re assigned to. For example, one of our admin, we have created a silo, if you will, that she is in charge of our out-of-state agent referrals. So she lead generates — she reaches out to them to create that relationship so that when they’re referring the clients here, we can be their point of contact, and vice versa. But that is her only focus. So when those clients get referred to our team, that [unintelligible [00:15:17].10] 25% referral. She gets 10% of that 25% that comes in. So she’s focused on that. Another admin is focused on her sphere of influence, because she’s lived here a really long time. So we’ve assigned these roles and then they build that into their daily schedule for at least an hour that they are doing outreach, making calls, and all of that. I feel like there was one more question than those questions…
Theo Hicks: Yeah, the last part was the ongoing reviews. So how often are you doing that and what does that look like?
Stacy Bahrenfuss: Yes. Doing weekly reviews with each person and going through metrics, but also tying it more to the silos, those assignments that they’re in charge of, from a higher level “How can we move this project forward?” versus being about what they’re doing day in and day out.
So yeah, as far as that’s concerned, I found it’s made such a difference keeping in contact and in touch with the employee in a structured way, versus you could go months and months and not really check in, and then they leave and you wonder why. So it’s really helpful to run that way.
Theo Hicks: Are you a believer more in the way of doing these meetings audio, or you do videos, too?
Stacy Bahrenfuss: We have an office, but we do video. It would be on Zoom, or in-person at the office.
Theo Hicks: Okay. Nice. One thing I wanted to ask you about that I didn’t get to, so I’ll incorporate this into the Best Ever advice… This could be your best advice that you have, as I was going through some of your social media, and you have a pretty big presence on there; you’re constantly doing stuff on social media. So what’s your Best Ever advice? This could be specific to real estate investing in general, or a real estate agent who’s trying to grow their brand. So what’s your Best Ever branding advice?
Stacy Bahrenfuss: It seems so simple, but to realize that every single thing you do affects your brand. It either takes away from it or contributes to it. The way you leave the house, the way you speak, what you say, the words that you used, how you show up in every way. And as far as the investment side of things go, you can’t know your numbers enough. I look at multifamily and apartment complexes and all of that, and it’s just crazy how many people have the proformas to get that higher asking price, and if someone is going to ask you have to do the work to get the rents up, they should compensate by lowering that total price.
So just really the advice is to really dig into all the expenses on investments and always shoot high. If you’re building, shoot for longer. It’s going to take longer, and they’re not going to sell right away.
Theo Hicks: Alright, Stacy, are you ready for the Best Ever lightning round?
Stacy Bahrenfuss: Yes.
Theo Hicks: Okay. First, a quick word from our sponsor.
Theo Hicks: Okay, Stacy, what is the Best Ever book you’ve recently read?
Stacy Bahrenfuss: The 5AM Club.
Theo Hicks: The 5 AM Club. So you get up at 5 am?
Stacy Bahrenfuss: I don’t. It was four this morning, but it’s not a regular…
Theo Hicks: Okay. Is that what the book is about? Getting up earlier?
Stacy Bahrenfuss: It’s about that, but it’s about so much more. It’s just about it is 5 AM and there are all these studies about working out and learning your daily routine. But the way that it’s written is so helpful for every area of life.
Theo Hicks: Okay, cool. I want to check that out, because I need to start waking up earlier. If your business were to collapse today, what would you do next?
Stacy Bahrenfuss: I would continue forward with consulting and helping people with everything that I’ve learned over the past 15 years.
Theo Hicks: You do invest, so this could be either from one of your investments or a deal you’ve done with a client… But what is the best transaction or best deal you’ve done?
Stacy Bahrenfuss: I look at the best deal from a client’s perspective of the money that they’ve made from the investment and other factors that were important to them… But I think the best deal is a client that had purchased a house — it was 2011. We purchased it for $78 a square foot and today it’s almost $300 per square foot. So I love that kind of stuff, just being — you know, succeeding in that way.
Theo Hicks: Sure. On the flip side – and again, this could be an investment, it could be something that’s not even related to money, like a major problem that happened on a deal you did… But what’s the worst deal that you’ve done and what lessons were learned from that deal?
Stacy Bahrenfuss: I recently developed and built 11 custom luxury homes. It took way longer than was expected for everything. There was a portion of financing that I had used that was higher interest, and I will never do that again, because it goes way faster and eats up all of the profit. It’s obvious, but just when you’re in it, you’re putting the deal together and there’s aspects that it makes sense to do that, but if it goes too long, which is what happened to me, it eats all the profit and it’s not worth it. So just being really mindful of that.
Theo Hicks: What is the Best Ever way you like to give back?
Stacy Bahrenfuss: Teaching young people all of the things that I wish I would have learned starting the company when I did. I was just failing forward, so I actually am in the process of starting the BIM Foundation, which is the Believe In Me Foundation. It helps young entrepreneurs with business acumen, and goal setting, and just really designing their life, because that made all the difference for me.
Theo Hicks: Awesome. Then the last question, what is the Best Ever place to reach you?
Stacy Bahrenfuss: That would be on my website. Because my last name is super long, I’ve made it simple, which is limitlesswithstacyb.com. That has all of my contact information and things like that.
Theo Hicks: Perfect, Stacy. Thank you so much for joining us today and giving us your Best Ever advice. Some of the top things we talked about was advice you have for agents, or really anyone who’s getting started during a recession, or is going through a recession. You have a very positive attitude about it and you’re actually excited that there’s a recession, because that’s business that you can get from people who might not necessarily be cut out for this, or maybe got into it and just rode the previous economic expansion and didn’t have the proper business plan in place to thrive or maintain during a recession.
We talked about other customer service things you do with clients, like your nurture campaign that you send out. We talked about scaling, the beginning phases of scaling, hiring your first team member and how to know when to do that. The most challenging part of scaling would be setting expectations, and not just hiring people and expecting them to read your mind (wouldn’t it be great?) We went into more specifics on working with employees. You said that was a big focus of yours this past year. We went into a lot of detail on things you’ve done during the hiring process, as well as once you’re actually hired, making sure you’re tying what they do to profit-producing things. You talked about the focus points that each team member is assigned to, how their compensation is based off of that, and then the weekly reviews that you do.
Lastly, the Best Ever advice was for number one, the brand. Realize that everything you do either adds or takes away from your credibility and your brand, so keep that in mind. And then for investing, making sure you dig into the numbers, making sure you’re doing your underwriting and due diligence properly and to a high standard.
So Stacy, thank you so much again for joining us. 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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