JF972: How to Flip Over 100 Homes a Year in OTHER MARKETS
From a Carleton Sheets infomercial to a high production flipping business our guest has mastered finding leads, negotiation, and the close. This is a real no fluff interview that will inspire you to set up your systems TODAY!
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Tony Javier Real Estate Background:
– CEO of Real Estate Prodigy, an educational platform for real estate investing professionals
– Founder and CEO of Professional Home Buyers
– Team does over 100 transactions a year while he lives in San Diego running Real Estate Prodigy
– Over 16 years in experience in real estate
– Based in Wichita, Kansas
– Say hi to him at http://prohomebuyer.com/
– Best Ever Book: 7 Habits of Highly Successful People
Click here for a summary of Tony’s Best Ever advice: http://bit.ly/2q44r2p
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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, Tony Javier. How are you doing, Tony?
Tony Javier: I’m doing great. How are you doing, Joe?
Joe Fairless: I’m doing great, as well. Nice to have you on the show! A little bit about Tony – he is the founder and CEO of Professional Home Buyers; he’s also the CEO of Real Estate Prodigy, which is an educational platform for real estate professionals. His team does over 100 transactions a year, while he lives in San Diego, running Real Estate Prodigy. With that being said, Tony, do you wanna give the Best Ever listeners a little bit more about your background and your focus?
Tony Javier: I’d love to. I started the business in 2001; I bought an infoproduct on TV, I’m sure you’ve heard of it – the No Down Payment system by Carleton Sheets. We started buying properties from there. We fix and flip all the properties we buy. We buy undervalued properties, we fix them up and then turn around and either sell them, or we have a rent/own program where we allow tenants to live in the property while we help them fix their credit, and eventually they become homeowners, usually within about a year or two. That’s kind of our business model.
The business has evolved over the last 16 years. I’m based in Wichita, Kansas. We expanded a little bit into Oklahoma City, as well as Kansas City. We’ve done some properties in Tampa, Florida and we’re actually now setting up some partnerships with other people in other locations, where we’ll do some of the backend operations for them and they manage the deals.
Joe Fairless: Is it like franchising what you’re doing, or something else?
Tony Javier: When we do Oklahoma City and Kansas City – those are close enough to us that we can manage those from an operations standpoint. Going outside of that, we’re gonna start partnering with other investors where we do the marketing — because what I found through coaching and through education is the biggest problem that people have other than mindset and some of those hurdles is actually finding properties. That’s one of the things we feel we’re really good at.
We’ve got many different marketing mediums that we use in our business to find properties, so what we decided to do is start marketing for other real estate investors, so we would either – depending on how it’s structured – split the marketing costs, or we pay for all the marketing and have our office actually manage the marketing part of it, as well as managing the leads coming in and qualifying them. The investor will actually meet with the seller, put the properties under contract, do the day-to-day operations of it, and then we split the profits depending on some of the experience, depending on if we’re gonna invest in the marketing, and some of the other different factors.
Joe Fairless: I love that. I’ve realized the more people I speak to and the more I am in this business, the importance of focusing on what I’m really good at, and then bringing on team members to do what they’re really good at. In your case you’ve done that, but you’ve done it to a higher degree with an actual business, versus you and your partners — perhaps you did that with your business partners too, but your actual business is focused on one aspect of the process, which is finding properties.
What makes your team so good at finding properties?
Tony Javier: When I started in 2001… Actually, in 2002 or 2003 I met a guy that just called me out of the blue – kind of a cold call – and wanted me to meet with him, wanted me to do marketing in a phonebook; at that time I had no money to my name. I was actually still in college, getting my business going, and I stood him up actually a couple times… Finally, he got me into his office and he sold me an ad. Just a great guy, great salesman, just showed me the value of it, and then that’s where I understood the power of marketing, because I put a little ad in the phonebook for $150/month, and I think that first it ended up making me like 20k or 30k (it might have been even more than that, it’s been a long time)… It made me a lot of money just on that small ad.
Over time, he just kept selling me bigger ads and bigger ads, and all of a sudden this ad that I had in the phonebook was bringing me multiple six figures a year back in business. Ironically, I kind of became friends with that guy, he ended up getting promoted, promoted, promoted… He’s the one that actually allowed me to move to San Diego, because now he works in my business. I hired him three years ago to take over the operations of my business. He’s a sharp guy, and his genius is marketing.
Anyway, that started back in 2001; as the phonebook started working, I started doing some direct mail. As direct mail started working, I started doing TV. As TV started working, I started reinvesting that money into radio. Now radio is a little bit newer for us, but we started getting into Facebook ads, and then we started getting into Google pay-per-click advertising.
A lot of it was trial and error, to be honest with you. It was just putting information out there, letting people know who I am and what the benefits were to my company. As we started serving customers, money started coming back in and we could go back and reinvest that money into different marketing mediums, and just keep going from there. A lot of the mistakes that I see some investors make is that they put their money into one marketing medium, and then if that marketing medium dries up, their business kind of goes away or really suffers.
I’ve been very fortunate to start early in the business with the marketing part of it, and really just started scaling it up by adding different things that we could test and track, and now I’ve got someone that runs my operation that’s really versed in marketing, and has taken it to even a different level.
Joe Fairless: At what point do you recommend someone bring on a full-time marketing person?
Tony Javier: That’s a great question.
Joe Fairless: Maybe we just look in a mirror and just look at you… It’s a tough question, because everyone has a different business model. Let me be more specific – at what point did you know it makes financial sense to bring on a marketing person?
Tony Javier: Well, I’ll tell you how I progressed. So I did the marketing myself when I first started out, and then as I became busy enough, then I started with an administrative person. If you’re versed enough in marketing – which I think I had just enough information in marketing to not have to hire an outside marketing person – you can actually have your admin person do your paperwork, do your rent collections, whatever you have them do, and have them do the marketing at the same time. They’re gonna be the ones that are gonna be testing and tracking some of the things that you give them.
If you already have an admin person but they’re too busy to do that, and/or you don’t have enough knowledge in that, then what I would do first is outsource. I would go to someone that already is doing this for other real estate investors… Because they already know what works, and you’re not gonna have to reinvent the wheel. They’re gonna be able to test and track things in your market and have it done for you, to where if you have no experience and you don’t know much about marketing and you try and do it all yourself, you’re gonna spend a lot of money testing your own stuff when you could probably hire someone that already knows what they’re doing.
Then you’re gonna know when it’s a good time to have a full-time marketing person. It was probably five years ago before I started taking one of my administrative people and actually had them pretty much working on marketing full-time. So like you said, it’s hard to tell based on — everybody’s gonna be different, so my recommendation is if you already have an admin and you kind of have an idea of what strategies work out there, start implementing them and have that admin work on them. Then maybe reach out to a third-party marketing company – there’s a lot out there that deal with just real estate – and see if they can help you out. The worst-case scenario – you have a conversation with them and they give you some great advice, and maybe you just pay them hourly for consulting.
Joe Fairless: How do you manage the marketing person? Because if you are doing everything, from direct mail to Google pay-per-click to Facebook ads, radio, tv… How do you keep track of that and make sure that you’re reaching the business objectives and you’re spending the right cost per lead, things like that?
Tony Javier: It’s not really that much of a science, other than just putting together spreadsheets and putting together formulas. First of all, we track everything – that’s the first thing you need to do. When I was first in the business, I could track it without a tracking number just because I only had one marketing medium (the phonebook). If I got a lead, it was from the phonebook. Eventually, I realized that first of all, some of those weren’t coming to me; I’d either missed a call or it didn’t ring to my number or people were hanging up… So I got a tracking number, which not only would it track the call, it would also text me if someone left a message or if I had a missed call.
Twelve years ago when I put that in place, I invested $50/month for a tracking phone number… At one time I was in a mall and I didn’t get reception. I got out of the mall, it texted me and said, “You’ve got a missed call” but they didn’t leave a message, so I ended up calling them back. I scheduled an appointment for the next day, I ended up putting the property under contract and made over $20,000 on that house.
I can’t remember where I got that tip or trick, but since then I realized that’s something that a lot of investors do – they’ll spend money on marketing, but number 1) they don’t track it, and 2) there could be leads coming through their funnel that they’re missing if it’s just going to their cell phone. When people don’t get an answer, they’re just gonna call the next person.
Coming back around, now we have a tracking system, it’s CallRail.com. We have 15 or 20 different tracking numbers in that system. When we do a postcard, we can getva new number and put it on that postcard. When we start doing radio, we’ve got a different number on the radio commercial, so we know if it was a radio lead. All of those calls go into CallRail, where we can pull up a spreadsheet and say, “Okay, this week we’ve got 20 leads from TV. This week we got 15 calls from the radio”, and we’re able to track that.
Again, if you only have one or two marketing mediums, you may not need that sophisticated a system, but it’s not that expensive and it’ll help you to make sure you don’t miss leads. So we take that information, we put it into our spreadsheet and it says, “Okay, we spent $10,000 this month on TV. We got, let’s say, from EasyMap, a hundred leads, so it cost us $100/lead for TV.” Then we’ll see how much money did we make on that, and we’ll be able to calculate our return on investment.
We can go through all of our marketing mediums to see what our cost/lead is, what our cost/deal is, and what our return on investment is. It’s a simple Google spreadsheet that we use to make sure that we’re doing the right type of marketing and that we’re getting the return that we need.
If one marketing medium that we started isn’t doing very well and we’re spending on money on that, then we may get rid of that, and then just put that money towards something we know is working and just turn up the volume in that marketing area.
Joe Fairless: What is a good cost/lead?
Tony Javier: I don’t manage that part as much… I kind of glance at it a little bit, but…
Joe Fairless: That’s fine…
Tony Javier: If I remember right, when I was looking at it and tracking it a little bit – I think it’s changed a little bit – it’s anywhere from about $50-$250/lead, and that’s just to get the deal. Then the cost/acquisition for our marketing mediums I believe is right around $2,500-$3,500. But if you look at it, most of those properties make between $20,000-$30,000, so those are pretty good numbers.
If you can get leads between $50-$250 and they’re good leads, and then you can have your cost/lead around that $2,500-$3,500 mark, that’s usually pretty good.
Joe Fairless: Do you know which marketing tactic or medium is most effective?
Tony Javier: It’s gonna vary based on the market. I can tell you what works for us… TV I think is our number one lead source. Now granted, because it’s kind of a shotgun method, we get a lot of different leads. We have to filter through maybe 40-50 leads before we get one property under contract.
Joe Fairless: About TV – where do you advertise? How do you get the advertising space? However detailed you can get knowing that you don’t handle this directly; I know you’ve got a team member that does this, but what can you tell us about that process?
Tony Javier: I can tell you that TV is expensive. Now, I’m in a smaller market, so it’s not as expensive as some markets… For example, I looked in Tampa, Florida and it’s just outrageous to market to that area, because you have so many suburbs and a huge reach. So first of all it’s expensive, so you can check in your area if you wanna do TV, if gonna be reasonable for you.
The second thing is you have to have it in place for a certain amount of time to decide if it’s working or not. Now, fortunately enough for me, the first month we got a really good deal off of it, and we made some good money off our first deal, but then it was another five or six months before we got our next deal. Had I not gotten that first deal, there was a possibility I may have turned it off after a few months, but after talking to other people that have been successful on TV… For radio or some other shotgun approaches, you really need to give it probably a good six months to be able to tell if it’s working or not.
Then as far as our message, it’s pretty simple – it’s “We pay cash, close quickly.” That’s really what we do in any of our marketing methods: we look at the pain points that they have and make sure we hit those. A lot of people don’t wanna do work to their houses, a lot of people need cash quickly, a lot of people don’t like the hassle of having to hire a realtor and go through that whole process; we say “No hassle” in our commercial as well… We just hit the pain points. I don’t know if that answered your question on the commercial…
Joe Fairless: You did, yeah. And how much of a production and — “headache” is not the right word, but… Preparation – that’s a better word. How much preparation is involved for a TV commercial and getting that all set up, versus — well, you don’t even have to do versus. I’m just thinking with Google AdWords, Facebooks Ads – boy, we can do that sitting in our pajamas at home, with a credit card, whereas a TV commercial, there’s more preparation. How much more is involved? I assume you’ve determined that’s worth the extra preparation, because you’re still doing that.
Tony Javier: Totally. I live in San Diego, so every time I go to Wichita – every three months or so – I usually film another commercial.
Joe Fairless: Are you the face?
Tony Javier: I’m the face of it, yeah. We started commercial 4-5 years ago, and I was pretty well known in the area for being a real estate agent and flipping houses and that type of deal, so I just kind of wanted to ride that wave and put my face on the commercials so that people could correlate it. It’s really paid off, because people that I haven’t talked to in years – or maybe went to high school with – are sending me leads because they’ve seen my face on the TV.
So from my standpoint, it’s a little more because I have to go in and film, and honestly, it takes like 15 minutes for me to go in and shoot a commercial. I script it, I practice it a couple times, I go in there, I take a few cuts of whatever it is I’m gonna say, they cut up the commercial to make it look good and then they produce the backend of it.
Now we have the template of our commercial… So the message changes, but our jingle’s the same, our phone number’s the same, some of the graphics are the same… it’s really just the message per commercial changes, and really, a message doesn’t change that much. Now, if you don’t wanna go in front of a camera and you want someone else to produce it, you can do that, too. You can give them your ideas, they can put graphics in, they can put someone else’s audio in there and produce it for you. It’s gonna cost a little bit more, but as long as you’re hiring the right person, you should have a pretty good product at the end.
Joe Fairless: Are you able to repurpose that commercial for online use?
Tony Javier: We do. We don’t even pay that much for the commercial. They only charge us a few hundred bucks to produce that commercial.
Joe Fairless: To produce it, a few hundred?
Tony Javier: Yeah, a few hundred bucks… Every time we do a commercial, they shoot it, and really they just charge us the time to shoot it and then they produce it for us, because we’re buying ad space from them.
So yeah, we just change the phone number on the commercial. Every time I shoot the commercial I change the phone number for Facebook Ads, change the number for the Google pay-per-click page that we use… And I think there’s one other commercial [unintelligible [00:19:38].23] change the number on those and repurpose them for the two different marketing mediums.
Joe Fairless: And that’s in Wichita?
Tony Javier: That’s just Wichita.
Joe Fairless: That’s where it’s airing… Okay. And last question on this – what type of programs and times in the day or night does it air?
Tony Javier: That’s a great question… That’s something for my president who handles all that. He has been a genius and has been able to figure out what works and doesn’t. When I was first involved in it, we started buying (I think they call them) filler spaces. We would buy some semi-primetime spots like the news at 5 PM and then some of the morning news stations as well. Then we’d buy some filler spots, meaning that they didn’t have certain spots, so they would give us those spots for a dollar or five dollars/commercial for that airtime.
Joe Fairless: Did you just say “a dollar or five dollars”?
Tony Javier: Yeah, the first spot that we would fill in, because they didn’t have that spot sold. If someone doesn’t buy that spot, then they don’t get any money anyway. Usually it’s like late night, or some spot where there’s not nearly as many viewers… But yeah, we would get spots for between a dollar and five dollars for those really cheap spots. [unintelligible [00:20:54].11] And then the prime spots, I wanna say we pay probably $15-$150 for those prime spots, if I remember correctly…
So yeah, you can get some really inexpensive spots, you can get some really cheap spots… It’s like any marketing, you just have to test and track it. If you’re a little bit newer and you’re just starting with a smaller budget, you might start with some of those filler spots, maybe just buy a couple of primetime spots… But you’re gonna have to meet with the person that handles that in your area.
We have a media buyer that we go through, and they know the trends and they know where the traffic is, they know the demographics… You really need to lean on them if you’re gonna do something like that, because they’re gonna be able to tell you better what spots they think you should buy and the demographics for those TV stations.
Joe Fairless: Where did you find the media buyer?
Tony Javier: It’s kind of funny how some of the things in my business have played out. I was actually playing poker one night with a friend, and he invited another friend who happened to do a lot of TV. I recognized him, so we started talking business; we were talking about the commercial and I said, “Hey, how does your commercial do? I see it all the time.” He’s like “Man, we KILL it with TV”, and I’m like “Wow, really?” He’s like, “Yeah, get a hold of my media buyer, he’ll hook you up.”
So I called him, we did the commercial, and like I said, we started to have a little bit of success right away, and now it’s just been a gamechanger for us because now we have our name out there more, we get a lot more referrals from people that I know that see the commercial… So it was just one night playing poker, and I got a contact, and we just went from there.
Joe Fairless: Tony, what’s your best real estate investing advice ever?
Tony Javier: Best advice ever… I think going back, the thing that I would have done differently starting out would be to leverage people more. When I started my business in 2001, I was a lone ranger… Which is fine, but I didn’t really reach out to other people. I would just get on my computer, I’d do some research, I’d throw some marketing stuff out there, see if it worked… There was a lot of trial and error.
So I would say if you’re going to really wanna get to that next level, you need to surround yourself with people that are doing things that you wanna do. You need to reach out to those people, and whether it’s paying them for coaching or just seeing if they’ll mentor you for free, and lean on people that have done what you wanna do.
I would be so much further along… It took me six years to get a mentor. From 2001 when I started, my first mentor was 2007. That’s when things started to change. My mentor was a multi-millionaire, he had a really successful business, and I would just ask him questions every once in a while, and he’d give me advice every once in a while that would just save me a tremendous amount of time and money in my business.
So if you’re just starting out — even if you have a business; it doesn’t matter if you have 20 employees, reaching out to people that are at a higher level that are doing what you wanna do I think is the biggest game-changer for me in my business.
Joe Fairless: I can tell you it’s been the biggest game-changer for me in my business as well, so I embrace that advice, that’s for sure. Are you ready for the Best Ever Lightning Round?
Tony Javier: Let’s do it.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.’
Joe Fairless: Tony, what’s the best ever book you’ve read?
Tony Javier: Seven Habits of Highly Successful People by Stephen Covey.
Joe Fairless: Best ever deal you’ve done?
Tony Javier: There’s two of them. One of them was a deal we made over 100k last year; it was a really quick flip. And actually, the best one we ever did was a wholesale deal – we bought it for 25k, cleaned it up, put it back on the market and sold it for 65k. We made 40k on a wholesale deal. There was only a $65,000 sale price.
Joe Fairless: And you would place that over the quick flip because you did less work in shorter amount of time?
Tony Javier: The return on time investment was even greater, yeah.
Joe Fairless: What’s the best ever way you like to give back?
Tony Javier: You know, I have a lot of people reach out to me that see my Facebook and my TV and stuff and say, “Hey, how do I get started?” I used to blow those people off, and now, as long as I have the time and I can fit them in my schedule, I give people advice… Because the one thing — like I said, when I first got into it I was doing things on my own, so if I can have a quick conversation with someone and either help them avoid a mistake or help them to get started that much quicker, I don’t mind lending that little bit of advice based on my 16 years of experience.
Joe Fairless: What’s a mistake you can think of on a deal that you’ve done?
Tony Javier: I’ve made multiple mistakes in Tampa, Florida when I started doing deals out there. I didn’t do enough research on the market, I didn’t do enough research to know that the contractors out there are really tough to deal with…
Joe Fairless: Everywhere!
Tony Javier: Well yeah, but especially Florida. Anywhere in Florida, it’s like a breeding ground for really bad contractors. It’s crazy. It’s a long story on those deals, but… I’m sorry, what was the question again? Worst deal I’ve ever done?
Joe Fairless: Well, you can say that… Yeah, let’s do that – what’s the worst deal you’ve done?
Tony Javier: Okay, so one of those was in Florida… I bought a property; I could have wholesaled it quickly and made 20k. Instead, I let my ego get a hold of me and said, “You know what? I can make 50k on this deal.” Again, in Tampa, Florida. I had three bad contractors, ended up spending twice as much money on the project, ended up selling for $40,000 less than we anticipated, and ended up losing $65,000 on that deal.
Joe Fairless: Ouch! Well, lesson learned.
Tony Javier: Yeah, it’s only one of four or five properties I’ve ever lost money on, and it was a huge learning lesson. I basically wrote a $65,000 check for a big learning lesson.
Joe Fairless: Where can the Best Ever listeners get in touch with you?
Tony Javier: I’ve got a couple different ways… I hold a real estate mastermind, so if anybody is in the real estate space right now, you can go to REMEvent.com (Real Estate Masters) or go to RealEstateProdigy.com and get a lot of good free stuff from me.
Joe Fairless: Outstanding. Well, talking with you about marketing and how you positioned your company to be the expert in finding properties for investors and then partnering with them or getting a fee – really interesting stuff with your business model… Then we spent some time on the TV angle, how that is an effective medium for you, and the price that is being paid and the type of cost per leads and cost per acquisitions that you’re looking at or looked at before… But really, most important is the type of measurements that you’re using; I think that’s the main takeaway… As well as lessons learned, like wholesaling – you got an opportunity for quicker cash, but instead, in a market you weren’t as familiar with, you went for the flip. It didn’t work out, so you gave yourself a good learning lesson… An expensive lesson learned, but we’ve all been there and we really appreciate you sharing that, as well as all the other insights.
I hope you have a best ever day, Tony, and we’ll talk to you soon!
Tony Javier: Thanks, Joe, I appreciate you having me!