JF1951: Lessons Learned From A New Book Based On Napoleon Hill Writings with Jeffrey Gitomer

Jeffrey has a long background in selling, both as he was and is in the selling field, and he also trains people on the science of selling. He was given access to Napoleon Hill’s first writings and wrote a book about what he learned from the writings. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“The average person in business goes for sale tactics rather than value tactics” – Jeffrey Gitomer


Jeffrey Gitomer Real Estate Background:

  • Author of 15 books, renowned speaker for sales and personal development
  • Host of the Podcast Sell or Die, getting over 100k downloads per month
  • Based in Charlotte, NC
  • Say hi to him at https://www.gitomer.com/ or seegitomer.com


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Joe Fairless: Best Ever listeners, how are you doing? 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, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today we’ve got Jeffrey Gitomer. How are you doing, Jeffrey?

Jeffrey Gitomer: I’m doing fine. How are you, Joe?

Joe Fairless: I’m doing well–

Jeffrey Gitomer: I was gonna say “How are you doing, Frank?” but I didn’t wanna–

Joe Fairless: Yeah, that’s my business partner actually, so it would have made somewhat sense… A little bit about Jeffrey – he’s the author of 15 books, he’s the host of the podcast Sell or Die. It gets around 100,000 downloads a month. Based in Charlotte, North Carolina. His most recent book, called Truthful Living, The First Writings of Napoleon Hill is something we’re gonna talk about, and get some lessons from that.

With that being said, Jeffrey, do you wanna give the Best Ever listeners first just a little bit more about your background, and your current focus?

Jeffrey Gitomer: Sure. I grew up in Philadelphia, so that means automatically that people who live in New York, Washington or Dallas can hate me. It’s standard. Teams don’t care about pre-season games unless it’s Philly Dallas. Then we care.

Joe Fairless: [laughs]

Jeffrey Gitomer: So we kicked your butt just to show we could, and football season will commence September 8th; I’ll be Philadelphia, watching the Eagles play the Redskins and beat the shit out of them because we now have [unintelligible 00:02:28.05] and that’s my background.

No, actually I grew up selling in New York City. I owned a couple of manufacturing plants in New Jersey and in Florida, and I cold-called in Manhattan for years, and made a bunch of big sales. And I used all of those strategies and technologies to write the books that I’ve written. I wrote the Little Red Book of Selling, which is at the moment the largest-selling sales book of all time. That’s where I’m at, and I’m having a good time; I love going on podcasts, I love to talk to other listeners who may want to involve themselves a little bit more in the science of selling, not the art of selling… And I do as much online as I can; not just my podcast, but we have a live virtual series of trainings that’s going on right now. If you go to SeeGitomer.com, you can see what the next offering is. I don’t wanna make a pitch out of it, but it’s pretty darn cool.

Joe Fairless: You said the science of selling, not the art… Will you elaborate?

Jeffrey Gitomer: Sure. Selling is a repeatable, understandable, learnable science, just like any other science. People say “The art of sales…” There’s no art of sales, unless — there’s one small, subtle thing, and that is never let the other person feel like they’re being sold. You walk into a car dealership and the guy says “Are you looking for a car today?” I’m like “No, I’m looking for a f****n house… What do you think I’m doing?” And “Did you have a trade-in today, did you have a budget today?” If it wasn’t for the word today, they couldn’t say a word, and they feel put upon. When I walk into a place, I don’t wanna feel put upon. I go into a hotel and they say “Checking in?” I go “No, I’m here for my hair transplant.”

Joe Fairless: Right…

Jeffrey Gitomer: What do you think I’m doing?! I’m here. I’ve got a bag. Just help me. Like “Welcome, you’re gonna have a great stay here.” “Oh, cool.” But they choose to say the dumbest things on the planet. “Can I help you?” “No, I’m just looking.”

Joe Fairless: Right.

Jeffrey Gitomer: So there’s a science to that, and the science is “Can you create something using the science of creativity, that impacts me emotionally, and feels good about you as a person, and will I tell the story when I’m done? Hey, I went into this department store today, and they said “Can I help you?” Like, seriously? No one’s gonna talk about that.

And the department store people don’t realize it, trainers don’t realize it… There’s all kinds of things that — they don’t ask anything that’s emotionally engaging. All they do is do the easiest thing they can do, so they can get back to texting their boyfriend.

Joe Fairless: What should a department store salesperson say when you enter?

Jeffrey Gitomer: It depends on what department they’re in, but let’s say they go into the men’s clothing department. You look at the person and go “I have something perfect for you. It just came in. Let me show it to you.”

Joe Fairless: That would get me. I’d follow them.

Jeffrey Gitomer: Exactly. But they don’t. They go “Can I help you with something specific?” Go away from me. Go away. And I don’t understand what they do and how they do it, I just don’t understand.

Joe Fairless: What are components of this science? You mentioned something that creatively impacts me emotionally…

Jeffrey Gitomer: Right.

Joe Fairless: Is there more to the science than that?

Jeffrey Gitomer: Yeah, I wanna make a connection, I don’t wanna repel you. “Thanks for calling. Your call is really important; please select from among the following nine options.” Seriously? Is that to help me? Was my call important, or is that just to piss me off? So I’m asking the person to think in an emotional way, to say “How can I engage this person? What’s engaging about me, what’s different about me?” and you have to use creative science in order to be able to do it. It’s not that difficult. I promise you, it’s not that difficult.

Joe Fairless: What are some other tactical examples? That department store example was really good, and it helped me understand that. Do you have a couple other ones?

Jeffrey Gitomer: Let’s do a real estate one. How about that?

Joe Fairless: Cool.

Jeffrey Gitomer: Okay. I’m gonna go to a home, I’m gonna go to a real estate agent that sells homes, and they’re gonna greet me like I’m here. I walk in, “Hi, my name is Jeffrey.” “Oh, hi. My name is Bill.” “Yeah, I’m looking for a home here in Charlotte, North Carolina”, and the real estate guy says “Do you have a home for sale?” and I’m gonna walk out of that place… Because he’s trying to qualify me, and I don’t wanna be qualified. He’s gonna say “Do you have a mortgage right now? Have you been pre-qualified? Have you ever missed a payment?” Like, dude, back off. “No, I’m just trying to help you.” “No, you’re just trying to qualify me.”

Real estate agents, they’re one of the  few people in the world that already know everything. It’s unbelievable. And don’t take my word for it, just ask them. They’ve been doing this for 14 years and they’ve got it down. Meanwhile, they’re pissing people off.

So if it was me, and somebody walked into my model home, I would say “Would you like a cup of coffee?” and they’d go “No, we just wanna see…” I’d say “Look, before we go out, I just wanted to ask you one question, if you wouldn’t mind…” And I’d bring them over to the sofa and sit down, and I’d look at the guy and I would say “Tell me about the bedroom that you grew up in.” Can you think of yours?

Joe Fairless: I can. Yup.

Jeffrey Gitomer: If you have siblings, did you have fights with them, are your parents still alive? Maybe you’ve moved from home to home? Whatever it is, I just flashed your entire youth by your head. And then I’m gonna turn to the woman and I’m gonna say “Tell me about the bedroom that you grew up in?” And she’s gonna go “Tah-dahdah-dahdah…” And then I’m gonna say “Is that the kind of bedroom that you want for your children?” Because it’s gonna help me when I show a home. Got it?

Joe Fairless: Yup.

Jeffrey Gitomer: Now let’s talk about the home tour that everyone screws up completely… Because the real estate person is taking them on a three-home tour so they can sell their own listings. Any argument with that?

Joe Fairless: No.

Jeffrey Gitomer: Okay. So I go into a home, and the person says “This is the master bedroom. It’s 16×19”, and I’m gonna say “Well, I have a tape measure with me. Would you mind measuring this? Because if it’s not 16×19 I’m out of here.” Why wouldn’t that real estate person who already knows everything ask “Where do you think in a room like this you should put the television?” And then I’m gonna go to the walk-in closet; you know how they all have walk-in closets?

Joe Fairless: Mm-hm.

Jeffrey Gitomer: And the real estate guy is gonna go “This is the walk-in closet.” No shit! A walk-in closet. What do you do, you walk in? Is there a light switch? No, I’m gonna look at the woman and I’m gonna say “Will all of your clothing fit in here?” Because if it doesn’t, that house is out. Correct?

Joe Fairless: Right.

Jeffrey Gitomer: So why wouldn’t they ask that question? Answer, because they’re the smartest people in the world. Any other questions on real estate? [laughs] I could ask you a question – why do real estate agents go to closings?

Joe Fairless: Why do they closings?

Jeffrey Gitomer: Mm-hm.

Joe Fairless: I don’t know, it depends on the agent.

Jeffrey Gitomer: No, they all go for the same reason.

Joe Fairless: Everyone doesn’t act and think and do the same thing. They’re not robots.

Jeffrey Gitomer: They go to get their check.

Joe Fairless: You can get your check outside of the closing.

Jeffrey Gitomer: I know, but most of them need the money, so they get the check right away and they go to the bank.

Joe Fairless: Well, they could be going to build a relationship with their client…

Jeffrey Gitomer: They could be, but for what I’ve seen in my career in real estate – and I have been fortunate enough to talk to a hell of a lot of real estate agents; like in the thousands, not in the hundreds. And I’ll ask them, “How many of you go to real estate closings?” and  people raise their hand; I go “How many of you go to get your check?” and no hand goes down. Not one. And I explain to them that they’re missing the best opportunity on the planet if they go to the bank. Why would you not go to the person’s home with them and walk in when they walk in? Could there be a more emotional time in any human being’s life than walking into your new home?

Joe Fairless: Yeah, that’s a good approach, for sure.

Jeffrey Gitomer: Yeah, why wouldn’t they video it and then send that back to the customer? The kids running to their room and claiming their space.

Joe Fairless: Yup.

Jeffrey Gitomer: The reason is they don’t think beyond the close, they think “Oh, this person’s not gonna be good for me unless they get me a referral.” And they’re gonna send me a postcard saying “Thanks for your XYZ. I run my business on referrals, so please fill this card out or call me with anyone that you know that might be moving.” Tear it up, burn it, throw it away, never talk to that person again, ever. Because they don’t care about me, they just care about the referral.

Joe Fairless: Right.

Jeffrey Gitomer: Correct.

Joe Fairless: Well, I don’t know if that’s a correct statement, but the perception certainly could be correct.

Jeffrey Gitomer: Exactly. So why wouldn’t they, when I move in, go “Congratulations! Here are the 50 best places in the community. Restaurants, dentists, barbers, hairdressers, clothing stores, car rentals…”, anything. Why wouldn’t they send me that list of preferred merchants? They’re new to the community, and even if they’re not, they’re still moving across town… So I wanna know “These are the places that I go, these are the places that my team members go. These are the places that we personally recommend. We don’t make any money from them, we just want you to have the list.”

Joe Fairless: Cool. Yeah, that’s a good approach.

Jeffrey Gitomer: It’s a value tactic, not a sales tactic.

Joe Fairless: Right.

Jeffrey Gitomer: So the average person in business goes for sales tactics, rather than value tactics, and they lose the long-term business, even though they may gain a little short-term business.

Joe Fairless: I like the value tactics.

Jeffrey Gitomer: You buy insurance, don’t you?

Joe Fairless: I do.

Jeffrey Gitomer: Yeah. And you have a property and casualty guy? You probably have a big one for the business you’re in, right?

Joe Fairless: Yes.

Jeffrey Gitomer: And the guy calls you up on the phone and says “You know, we’ve been doing business for a couple of years now and I was wondering if you would mind sitting down with me and going through your friends and see if you have any referrals or people that really would wanna do business with me the same way I do business with you.” And you feel a little uncomfortable about it, because you’re not 100% crazy about this person… So you say “Let me get back to you in a week”, and the guy says “Okay.” And of course, you don’t get back to the guy. And he calls you up on the phone and says “Remember last week, we talked about referrals? I was wondering if you had a chance to go through your list?” And you say “No, I haven’t had a chance yet. Call me again next week.” And the guy goes “Okay.” You’ll never take that guy’s call again, ever.

Joe Fairless: Compared to which approach should he take?

Jeffrey Gitomer: Well, he’s a taker, isn’t he? But suppose that same guy calls up and says “Hey, I know of  a couple apartment buildings in town. I think these guys wanna sell. I think you can get a really good deal. Would you like me to introduce you?” “Sure. Let’s have coffee.” “Okay, fine.” Isn’t it better to give a referral than get one?

Joe Fairless: Mm-hm.

Jeffrey Gitomer: But see, that takes work. And most salespeople are not willing to do the hard work that it takes to make selling easy, because their boss said “Now as for a referral. As soon as you’re done, blah-blah-blah.” Really? Why are you asking me for a referral? You have earned nothing.

Joe Fairless: Yeah, I like the approach that you’re talking about, for sure… And it certainly makes a lot of sense.

Jeffrey Gitomer: Yeah, and it’s not that difficult. I haven’t said anything to you that’s like “Well, explain that nuclear physics theory again?” No, dude; it’s giving value.

Let’s go back to the original thought of this. I have a relationship with the Napoleon Hill Foundation, and they came across Napoleon Hill’s first writings, and called me to see if I wanted to edit and annotate them. Now, why did they call me? And the answer is 15 years ago I met the guy who runs the foundation, and told him my story of Napoleon Hill when I read Think and Grow Rich ten times in one year, yadda-yadda, and it literally launched my attitude. And I said “Listen, does Napoleon Hill’s Foundation have an email magazine?” and he said no. I said “Well, look, let me do one for you on one condition.” The guy said “What’s that?” I said “That you never pay me a dime.” And it was like a stunner. Because people always will ask someone successful “I can make you a lot of money, all you have to do is give me some of yours.”

So I’ve been doing their email magazine for free for more than a decade, built a list of almost 100,000 people, and everything that goes with it. So when they came across this stuff, they figured “Oh wow, here’s something we can help repay Gitomer. That’s pretty cool.” And they did. And that’s where Truthful Living comes from. It’s the first writings of Napoleon Hill.

Joe Fairless: Nice. Is that out?

Jeffrey Gitomer: Yeah, it’s out now in the bookstores, you can get it on Amazon… It’s actually published by Amazon. You may not be able to find it in Barnes & Noble, because I think they hate each other, or something; I don’t know, something stupid.

Joe Fairless: Cool!

Jeffrey Gitomer: But go online, go on Amazon and look up Truthful Living by Napoleon Hill and me, and you’ll get it. And I didn’t change any of his words, I just annotated things for the 21st century, because these are the first writings of Napoleon Hill from 1917.

Joe Fairless: Yeah, they spoke differently.

Jeffrey Gitomer: Oh, my gosh… It’s [unintelligible 00:14:58.02] but it’s accurate. Just look at the table of contents. The first chapter is “Success is up to you.” The second chapter is “Finish what you start.” The third chapter is “How to think”, and there’s 23 different chapters in the book, all about how you can become successful by the way you dedicate yourself to the way you think, and the way you dedicate yourself to the way you work. Just that simple.

Most people do not have a foundational, fundamental education about how to succeed. You didn’t get it in school, did you? Algebra, and geography, and bullshit like that, which – it’s great, but only in Trivial Pursuit or Jeopardy… And all the way through college, same Trivial Pursuit/Jeopardy. And now you’re in the real world and you need to have a great attitude, and you need to have enthusiasm for what you sell, and belief and love in what you sell… And that’s what this book is all about – helping people understand how they can become a better person, both in their family and in their business. But it uses old words.

Let me give you an example of the old words. Do you know the new word mindset?

Joe Fairless: I do.

Jeffrey Gitomer: Okay. It came from the word “focus”. That was the second iteration. The first iteration is “concentration”. Hill wrote about concentration. And what it meant was “distraction-free concentration”. And in today’s world, distractions play this amazing role in your life, and my life, and everybody else’s life… Because you get a text, or you get a phone call, or you get a notification of some kind… I have a 10-year-old daughter, her phone dings more than it rings, but she likes to get those notifications. I’m trying to wean her off of them, but when you’re ten, you wanna know what happened on TikTok. Do you do TikTok?

Joe Fairless: I don’t.

Jeffrey Gitomer: Oh. It’s a…

Joe Fairless: I know what it is…

Jeffrey Gitomer: It used to be called Musical.ly. But it’s huge, they have a billion users. Unbelievable. Where did they come from? So the world is changing, and you and I and everyone who’s in our genre has to change with it or die. That’s why we call our podcast Sell or Die.

Joe Fairless: Got it. And the best way for the listeners to purchase the book – you already mentioned. What about learn more about what you’ve got going on?

Jeffrey Gitomer: Just go to Gitomer.com. Or actually go to SeeGitomer.com. That’ll take you to my virtual events that are taking place, and people can learn more about me by watching me work.

Joe Fairless: Well, Jeffrey, thanks for being on the show, talking about the value tactics, and giving a lot of specific examples for how to do it, which were very valuable themselves. Thanks for being on the show.

Jeffrey Gitomer: Joe, it’s  a pleasure.

Joe Fairless: I appreciate it. I hope you have a best ever weekend, and we’ll talk to you again soon.

Jeffrey Gitomer: Thank you.

JF1834: From The Corporate World To Mobile Home Parks with Ryan Narus

Ryan had a job in the banking world, didn’t like it, looked for a way out, found his way out with real estate investing. We’ll hear how he was able to take the leap to being a full time investor, and how he closed his first deal. We’ll also hear how he has scaled his business to owning over 500 mobile home pads. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“We are obsessed with getting people on the phone” – Ryan Narus


Ryan Narus Real Estate Background:


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Joe Fairless: Best Ever listeners, how are you doing? 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, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Ryan Narus. How are you doing, Ryan?

Ryan Narus: Great, I’m honored to be here. Thanks for having me.

Joe Fairless: Well, I’m glad that you’re on the show, and looking forward to our conversation. A little bit about Ryan – he is a real estate investor and has been one for the past four years. He’s closed on 20 million dollars in mobile home parks. Currently owns eight parks and about 535 pads. Based in Charlotte, North Carolina. With that being said, Ryan, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Ryan Narus: Absolutely. So I woke up one day with a corporate job, and realized I hated it, and realized I needed to find an escape because I was stuck. And I refused to take what the world gave me, so I picked up books, I read everything I could, I picked up the phone, I called anyone I could… I looked at about 100 or more different possible business to buy, because I realized I needed to be an owner. And it was Rich Dad, Poor Dad and 4-Hour Workweek…

Joe Fairless: What was your job?

Ryan Narus: I started off as a car salesman, because I graduated in ’09, which was the worst year ever to graduate, other than the great depression, for jobs. I was sold this idea of “Hey, go to college. You’ll get a good job, you work at a good company for a long, long time…” That might have been true for my parents, but that’s definitely not true for us millennials today… So I just refused to take what the world gave me, and I went out and I just for years met people, learned, tried to figure out who I was and what I wanted to be, and eventually I buddied up with a childhood friend,  Ian Tudor, and he turned me on to mobile home parks, and I said “Hey man, if it’s anything like the show Trailer Park Boys on Netflix, sign me up, because that show is hilarious.” And I found that it matched my skillset extraordinarily well.

Flash-forward – no money, no experience, no network, four years later I found my way into over eight deals, because we’ve sold out of a few… I hope that your listener base  hears my story and goes “You know what – why am I making excuses? If this guy can do it, I can do it.”

Joe Fairless: Well, let’s dig in there… So I had asked “What was your corporate job?” and you said you started out as a car salesman, but what was that last job that you were hating? That’s what I was wondering.

Ryan Narus: Banking.

Joe Fairless: Banking. So what were you doing exactly?

Ryan Narus: I was in THE leadership program… [laughs] Which turned out to just be a lot of hype and not a lot of substance, and it was probably everything that you would guess. “Hey, come on in. You’ve got an MBA… This is  a big bank. We want you to be a future leader”, and then you get there and you’re ignored, and you find you’re doing copying and pasting more than actually providing a ton of value; and then you go and you do something no one else has done, and provide a bunch of value, and you get a pat on the back and that’s it. And then it’s “What have you done for me lately?”

I’ll put it to you this way – a friend of mine, my best friend just started a business, and he was a former banker as well. We were having lunch the other day and I told him “At your bank, in the next five or ten years, were you in any danger of basically having your job removed and being  able to walk away with a couple million bucks?” Because that’s his exit. He wants to in 5-10 years sell his company for a couple million bucks and ride off into the sunset, maybe start another business, maybe do something else…

And we both were laughing because we were like, there’s literally no way that a bank would ever be like “Oh, you’ve done such a great job scaling this, that and the other thing. Here’s a couple million bucks. Go retire, go do something else that you wanna do.” The United States of America is about the ability to go and start your own business and chase wealth, and I’m just so glad I did that.

Joe Fairless: When you were in banking, noted on being in the leadership program, but that isn’t what it was cracked up to be, or at least positioned to you… But what were you doing? You weren’t a teller, it doesn’t sound like. What was your role within banking?

Ryan Narus: I was in operations. Anytime something like a credit default swap trades, I was the guy behind the scenes, making sure the trade is made properly.

Joe Fairless: Got it. Sounds riveting.

Ryan Narus: [laughs] That’s why I’m gently trying to steer the conversation away from —

Joe Fairless: No, I get it, I get it, but it’s important to know where you came from and what types of skillsets you were using then, and what you’re using now. Okay, so that was four years ago… So I’m decent at math, I can subtract; that was around 2015, correct?

Ryan Narus: Correct.

Joe Fairless: Okay, around 2015 you had your corporate job in THE leadership program for a bank, and you were in operations… Then what?

Ryan Narus: I’ll unwind this… [unintelligible 00:07:03.13] wanted to be a salesman. Went and sold cars for four years, loved it, until I didn’t anymore… Because I realized — I sprained my ankle once playing basketball, showed up the next day in crutches, trying to sell cars, because I realized I wasn’t getting paid sitting at home with ice on it.

Joe Fairless: That’s gotta help you sell cars, when you’re out there in crutches…

Ryan Narus: Believe it or not, it got a lot of attention.

Joe Fairless: Of course.

Ryan Narus: I can’t remember… It’d be funny if I sold a car that day, but I don’t think I did. I don’t remember… But I just remember that day; I don’t wanna get a promotion to the finance office, because that sounds miserable. And then the sales desk sounds miserable, and then 20 years goes by, I’m a general manager, and the best advice my general manager had for me was “Go start your own business. You know why?  Because I never see my kids!”

So then I went and got my MBA, because I figured “Alright, maybe my MBA will show me what business I wanna start, and give me that toolkit to go start a business”, and it did, because in 2015 I met back up with Ian Tudor during my internship between my first year and second year of MBA, and then my second half of my MBA I spent starting the mobile home park business, and then I was a year in banking, working on my mobile home park business while working full-time, and then I quit to go full-time in mobile home parks in June of 2017. So as of today, we’re almost two years into it full-time.

Joe Fairless: What was the first deal you did, mobile home park, and what was your role in that deal?

Ryan Narus: Our first deal was an 89-lot park, 1.525 mil acquisition. We wanted to use that as a training wheels deal. So we grabbed that deal and we went out to try to get debt financing, and we reached out to 40 banks, and I am proud, Joe, to tell you that I got 40 no’s. Every single bank rejected me. And here’s the sad part about it – that deal has been an absolute home run in terms of debt  coverage ratios and anything a bank would be looking at… And we still just got nothing but rejections, which… I think it’s important for folks listening in that have never started a business before – you can’t let no stop you. Because eventually what we did is we brought in some investors who were outstanding, and we decided we wanted to be a fly on the wall, and learn.

So our first deal was more about “Okay, how can we monetize this and how can we educate ourselves?” And our second deal was really our first deal, because that was our first deal without training wheels, if that makes sense.

Joe Fairless: You mentioned the person’s name… Who is “we”?

Ryan Narus: Ian Tudor is my business partner, and I have not asked my investors if I have permission to talk about them, so I’d prefer to leave them out.

Joe Fairless: Yeah, I would have never asked for your investors’ names, but your business partner is Ian Tudor – okay. How did you meet Ian?

Ryan Narus: Believe it or not, we grew up in the same neighborhood, and if you asked him, he would say he absolutely hated me growing up. [laughs] But we kept in touch, and we bumped up when I was doing my MBA internship in Miami, and he was in Orlando. We hung out a bunch of times, discovered we’d be great business partners, and four years later talking almost every single day. We’ve grown a business, and were able to quit corporate America, and have done pretty cool things that we probably had no business doing, just because we refused to stop when we were told no.

Joe Fairless: On that first deal, what did he bring to the deal in terms of value, and what did you bring to the deal in terms of value?

Ryan Narus: Sure. Ian is an underwriter, so that’s what his background is in. And he found a new up-and-comer broker, who was weak in underwriting. So what she was doing was funneling him off market deals, so he could help her underwrite, and also teach her. So he provided value to this broker, and she provided value to us. Because what ended up happening there was we got a look at a great deal before it ever went to market. So that’s where he brought the value to that first deal.

Where I brought value to the first deal was my networking, because eventually we ended up finding the right bank, and we ended up finding the right investors… But I don’t think it’s fair to necessarily put that in those buckets, because we were both wearing many hats during that process… But if I was to just say “Boom, this is what Ian did. Boom, this is what I did”, that’s probably — with a little blurry in the lines, that’s probably how I’d put it.

Joe Fairless: Of course. Even after many deals, the lines are still blurred on, and responsibilities.

Ryan Narus: Yes.

Joe Fairless: But that’s helpful to categorize them, at least for this conversation’s purpose. The up-and-coming broker that Ian met – how did he meet her?

Ryan Narus: Straight networking. Ian and I are obsessed with getting people on the phone. It doesn’t matter if you’ve never bought real estate before, or if you own billions of dollars of real estate – we wanna get you on the phone. I’ve gotta say, Joe, that most of the times when I reach out to someone, especially when I started, they were not interested in taking my call… So I’ve gotta say, of the 100 people that both of us reached out to, probably less than half actually took our call, and she was one of them. Probably because she too was just starting out.

Joe Fairless: And do you remember how Ian found her, to initially reach out?

Ryan Narus: Man, that was four years ago… That’s tough. But I will put it to you this way – we hit any avenue we can. We ask people “Hey, do you think there’s anyone that would be cool for you to introduce us to, and vice-versa?” We do LinkedIn, we do Facebook, we look people up online… There’s so many avenues. Any stone that we can unturn, we try to unturn. So that would be a great question for Ian, but those two just hit it off. They’re still buds to this day, really close friends. You’ve just gotta turn up the rocks and see what’s under them.

Joe Fairless: And was there a particular focus on mobile home parks at the time, so that’s the type of people you were connecting with? Or is it just more general?

Ryan Narus: Absolutely. The primary goal at that time – and really still – is anyone who has any interest in mobile home parks, I wanna talk to you. Whether you bought them or not, you own them or you don’t, I would love to get on the phone with you. That was our focus at the time, and we really decided mobile home parks fit our skillsets extraordinarily well; this was going to be it.

We’ve looked at marinas, we’ve looked at RV’s, but we keep coming back to our skillsets are set for mobile home parks, so it’s almost exclusively been mobile home parks.

Joe Fairless: Okay. And how do your skillsets fit mobile home parks?

Ryan Narus: Straight car dealership. When I graduated in 2009, undergrad with a degree in psychology and a big dream of being a salesperson, business-to-business, and no one was hiring… And I went “Alright, well I guess I’ve gotta settle with car sales”, it taught me everything I needed. It was probably the best job I could have ever not realized that I needed to have… Because it was rejection every day you show up.

So it’s learning how to get basically punched in the face, and then when that next customer walks through the door, if you’re not smiling, you may cost yourself a sale, so you have to learn how to pick up your own emotions rather quickly… Because that next person walking through the door – it’s not fair to them that your boss just yelled at you, or you just blew a sale because X, Y or Z, or someone was calling you a scummy car salesman, even though they’ve never met you before. That plus persuasion, overcoming objections, negotiating, organization, learning how to use business analytics, statistics – all of that was perfect for mobile home parks, because it is a lot of learning how to deal with confrontational situations, be it [unintelligible 00:14:44.09]  yourself and your business… Because people don’t just flock to you. You have to put yourself out there to get them to come to you, and have to have word of mouth.

So it’s a lot of sales, it’s a lot of marketing, it’s a lot of organization, it’s a lot of things you would not expect you need if you just listen to the hype stories about mobile home parks, which are “Wow, it’s a great investment. They’re ten-caps everywhere. Buy it from mom and pops, and you set it and forget it.” It’s quite the opposite. And mom and pops in and of itself are a sale; you have to convince them that you are not like everyone else who’s calling them… So I’ve gotta say selling cars was probably one of the best things for me in terms of enjoyment, yet it fits this industry like a glove.

Joe Fairless: How do you differentiate yourself when you’re having those conversations, to position yourself not like everybody else who’s calling them?

Ryan Narus: With the mom and pops? Well, one big thing is I speak Spanish, I’m on my properties, I do not have a fund, I do not have pressure to acquire. I go for the long game. I like to show up at folks’ houses – obviously, if I’m invited – and shake their hand.

Joe Fairless: I have a feeling you’d show up even if you weren’t invited.

Ryan Narus: True story, I have done that before. I showed up at a woman’s house and we ended up watching Wheel of Fortune, and we had such a great conversation. It pulled over into The Price is Right, so we ended up spending a couple hours. And I’ve got a baby boy on the way, and she texts me every now and then and asks me how my wife is doing with the pregnancy, so… Look, you have to be different, and the way that I want to be different and I have been successful being different is I’m doing things no one else wants to do.

Who wants to go and knock on someone’s front door? Who wants to pick up the phone every morning and get yelled at and hung up on? Who wants to do anything other than call someone and say “Will you sell me a property right now? No? Okay.” Hang up.

I constantly am looking to put myself in situations that differentiate myself, and one big thing I’m not afraid of is being embarrassed. If you ask my wife, she hates it. She’s like “You’ll literally walk the dog in dress shoes, dress socks, athletic shorts and a tank, because you just don’t care what people think about you, but I care what people think about you… And it’s weird, dude.”

Joe Fairless: You’re doing mobile homes… Why are you knocking on front doors?

Ryan Narus: No one else is doing it.

Joe Fairless: Whose front door are you knocking on?

Ryan Narus: Sellers. Potential sellers.

Joe Fairless: Sellers. So their residence, where they live, you’re knocking on their front door, or…? Help me understand the situation.

Ryan Narus: Absolutely. I’ll give you a good for-example. There was an elderly woman who we called a bunch of times, had wonderful conversations with, but every now and then she’d just disappear for 30 days… And one time she kind of casually was like “Oh yeah, sure, come on over.” And long story short, she set up a time for us to go over, and we went over and she was in the hospital. We met her whole family, and long story short, we ended up knocking on her door several weeks later when we figured that she was probably back… And yeah, literally we showed up at her residence.

Now, it wasn’t completely cold, out of the blue, “Who are you? Go away. This is trespassing.” This was more of a warm knock on her front door… But we have done that several times. I’ve also done the cold knock on the front door as well. I’ve showed up to mobile home parks and just walked into the office… But all of the above because what’s happening in our industry now is you have wholesalers coming in with Boiler Room types of telemarketers, just trying to find the low hanging fruit. You have tons of brokers and you have tons of folks sending mailers, and the competition has just exploded.

I do anything in my power to be different, because otherwise I’m no different than anybody else who’s calling and sending mailers, and doing all that stuff.

Joe Fairless: Has walking into the office cold resulted in a completed transaction for you?

Ryan Narus: It has not. We are getting very close with one, but I will say that one that we did close here in Gastonia, North Carolina, right outside of Charlotte – it wasn’t knocking on her front door; we showed up at the property with an LOI, and a contract, after months of talking with them. And the reason why we showed up is because the seller said “You know what – we like you guys, we wanna do business with you guys, it sounds like the price is right, but we just wanna wait until January 2019 for tax reasons.” I remember Ian did this, and I’ve gotta give him all the praise in the world for doing this, because he walked me through the objections that the seller threw out, and I said “Show up at the property when we know she’s there and we’re at least somewhat warmly invited.”

Joe Fairless: Yup.

Ryan Narus: So in other words, “Hey, Ms. or Mr. Owner, are you around then?” “Yeah, we’re in our home right now.” “Great, do you mind if I stop by?” “Yeah, sure.” So he shows up with the contract and the LOI, and I told Ian, “This is what we did in car sales, this is what you’re gonna do when you get there. You show up, you give them the pitch…” You say “Hey look, it takes 60-90 days to close, period.” Because it was August. “Why don’t we go ahead and sign this contract, just in case the economy takes a dip. We know the price, the economy takes a dip, this price is locked in; we will do literally everything we have to do with the bank, and the appraisals, and the surveys, and everything, so that way on January 1st, 2019, all you have to do is sign it and it’s done.” And then just sit there and don’t leave. [laughter]

It took over an hour… This is a hysterical story, because he showed up, he walked them through it, same objection, and then he said “Well, why don’t we go through the contract?” and she said “We’ll just leave it here.” He said “Okay.” And he left it there, and he just sat there. Created an awkward silence. Didn’t say anything, which was by design… And that awkward silence unearthed another objection, and then–

Joe Fairless: What was that?

Ryan Narus: It was just that “Well, I’ve gotta go through the  contract.”

Joe Fairless: Which is legit.

Ryan Narus: Legit, right. But it’s also a dodge, too. Because “Oh yeah, leave it here”, and then you leave, and then they got you out of there. So then it was “Great, I’ll wait right here while you go through it.” Well, I’ve gotta finish this sub-floor job.” “Okay, I will wait in my car then.” Then he went out and waited in his car.

Joe Fairless: I’m surprised he didn’t offer to help with the sub-floor job.

Ryan Narus: I hate to say it, but neither of us are very good handy folks, so…

Joe Fairless: Still… He could do something. Move some materials around, or play some Spotify, play their favorite playlist, at least from your phone, while they work…

Ryan Narus: That’s actually a great idea. I might try to offer that. Like “Hey, you’re doing some tiling work. You definitely need an extra hand here. Let me help out.” But here’s my favorite part of the story – he went out and he sat in his 2006 Honda CRV, with very limited, questionable air conditioning, in the hot North Carolina sun, in the middle of August… And waited for her to walk back out, which she did. And then he sat in his car, with the window rolled down, for what he described to be forever, and they went through every single line of that contract, and he left with a signed contract that day.

So when I say my skillset — and our skillset really, Ian’s too, because he doesn’t have sales experience, but he is a natural salesperson… It fits like a glove, and that’s just the only way you can compete when it is a hot market right now. Because it is a seller’s market right now.

Joe Fairless: Thinking about one other mobile home park that you’ve closed on, what’s one other way that you found the deal?

Ryan Narus: Networking has been phenomenal. I’ll give you a good for-example. If an outfit is selling their way up; in other words, they maybe built a giant portfolio on two and three-star, and now they’re selling while the market is good up to four-star properties, a lot of times you can snag something off market, because someone knows you can perform… Eight mobile home parks, 20 million dollars, plus you’ve heard of me, and we’ve talked several times, and maybe we’ve had a beer, maybe we’ve had a lunch, maybe we joke about the NBA together… I’ve had several looks at several properties, a lot of which I’ve passed on, but several which we’ve closed, from bigger name folks, who were like “Look, I don’t wanna put this to market, because I don’t wanna see a bunch of knuckleheads who’ve never bought stuff before. I’d rather just sell it at a fair price, get it off my books. This is less than 10% of my company’s overall revenue, it’s a liability to me at this stage. You guys are growing, you’re comfortable with two and three-star assets – here’s a fair price.” Boom. That’s one way to do it.

Then another off market way — obviously, networking is huge, and then also I know a ton of folks through my podcast who anytime I see a deal, I pitch it off to them, and I’m happy to do that, so… Literally not even an hour ago a broker brought me a deal off market, that I had already looked at, and I immediately connected her with someone else. So there’s plenty of folks within my network  who have reached out to me, who I am happy to pitch something off to you. So networking is huge.

If you’re listening in right now, reach out to me, reach out to folks like Joe, because you never know. If you’re like “Hey, I’m looking for something in Greensboro, North Carolina, about this many units”, if you’re in the back of our minds and we have good deal flow, we see a lot of deals, we’ll think of you. And if you’re like me and you like helping other people out, you get something off market from a broker; you make a cold call and the deal doesn’t make sense for you – we’ll call you. And that comes right back to me, I’ve done several deals just like that.

Joe Fairless: Taking a giant step back, based on your experience, what’s your best real estate investing advice ever?

Ryan Narus: Bet big on yourself. I don’t know if you’ve ever watched the Austin Powers series – they’re totally silly movies, with Mike Myers in it, but there’s–

Joe Fairless: I’m not a fan, but I know it.

Ryan Narus: [laughs]

Joe Fairless: I hate those movies, but go ahead… [laughs]

Ryan Narus: I don’t blame you… There is one line which I was sitting down with a single-family home flipper, just as “Here, let me help you out, man” kind of thing, because I don’t do single-family home flips… But it was one of the best meetings I have ever had, with a newbie home flipper, not interested in mobile home parks, I’m not interested in his – we sat down and he hit me with a line from Austin Power, from the fat, bad guy who says “I’m unhappy because I eat, and I eat because I am unhappy.” And he hit me with the real estate equivalent of that line, which is “I can’t go full-time, because I don’t have deals, and I don’t have deals because I’m not full-time.”

And when I pressed him on that, I said “What’s stopping you from quitting your job, going and living in one of your flips to cut expenses…? What is the one thing holding you back right now from increasing your deal flow?” And he’s like “Man, if I could just go full-time…” and I was like “Can you get a job, in 12 months?” If you just said “In 12 months, if I can’t make my business happen by giving it full-time effort…” and he looked so uncomfortable, Joe; he was so uncomfortable, but he was like “You know what, you’re right.” And I’m proud to say that he’s not gonna just quit his job tomorrow; he’s gonna take the next 3-6 months to plan for it, but he is gonna do it. He’s gonna bet big on himself. Obviously, plan because he’s got kids etc, but it’s gonna take some prep, because it took me a lot of prep too, to go full-time; even without kids it took me a lot of time to prep.

So don’t just blindly jump into it. But here’s the thing – if the one thing stopping you is deal flow, and you are confident you can get that deal flow if you devoted your full-time to it, what are you gonna say when you’re 80 years old, looking back on this, when you’re in your early thirties or twenties, or even in your forties or fifties? What are you gonna say? Are you gonna say “Boy, I’m glad I stuck with the job that I hated?” or are you gonna say “When I was a young lad, I had the courage to bet big on myself. And if it fails, even though it failed, I learned so much and I’m glad I took a chance on myself.”

Because if that’s the worst you’re gonna say when you’re 80… The flip of that is “Boy, I quit corporate America, I literally work from my couch now, and I get to do what I want, when I want, and I live my career dream.” If that’s the upside there, why wouldn’t you bet big on yourself? So that’s probably bar none my best advice to anyone looking to break into the industry.

Joe Fairless: Amen to that. We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Ryan Narus: Let’s do it!

Joe Fairless: Alright. First, a quick word from our Best Ever partners.

Break: [00:27:25.14] to [00:28:14.22]

Joe Fairless: Okay, real quick – best ever book you’ve recently read?

Ryan Narus: Oh man, that is just so tough, because there’s so many I wanna talk about… Probably Chris Voss, and I’m gonna forget the name of–

Joe Fairless: Never Split the Difference.

Ryan Narus: Never Split the Difference, bar none best negotiation book I’ve ever read.

Joe Fairless: A mistake you’ve made on a transaction?

Ryan Narus: Not checking the water bills.

Joe Fairless: Best ever deal you’ve done? Which one?

Ryan Narus: Probably a countryside mobile home park, because it was a huge win for the residents, huge win for us, huge win for the investors. Everybody won.

Joe Fairless: Best ever way you like to give back?

Ryan Narus: My time. Call me, email me. It doesn’t matter what type of real estate you’re getting in, I want to help you and I want to talk to you.

Joe Fairless: And how can the Best Ever listeners learn more about what you’re doing?

Ryan Narus: Ryan Narus, just literally google me, shoot me a line. All my contact information is there, my podcast is there, all  my YouTube videos are there. I have nothing to sell, I have everything to give, give, give.

Joe Fairless: Ryan, I enjoyed our conversation thoroughly. I love your never-quit, very resourceful, gonna-make-things-happen approach, a do-whatever-it-takes type of attitude, and I loved hearing the story about Ian and the sale that took place in August, when perhaps it for most people would have taken place in January or not at all taken place without that perseverance.

Thank you for being on the show. I enjoyed our conversation. I hope you have a best ever day, and we’ll talk to you again soon.

Ryan Narus: I loved it, Joe. Thank you so much for having me.

JF1803: Selling $40 Million In Real Estate Before 25 Years Old with Chris Salerno

Chris got his real estate start as a real estate agent, he gained traction quickly and led his team to being the #1 team for residential sales in the Carolinas. Theo will ask about how he was able to do that, and then they’ll talk about his newest venture into multifamily real estate. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“For people trying to get into multifamily syndication, give people details on what you’re doing” – Chris Salerno


Chris Salerno Real Estate Background:

  • By 25 years he sold more than $40M in real estate volume and helped lead the #1 real estate team in the Carolinas
  • Named to Charlotte’s 30 under 30
  • Leads QC Capital as a well respected, high-return investment firm
  • Based in Charlotte, NC
  • Say hi to him at https://qccapitalgroup.com/
  • Best Ever Book: Best Ever Apartment Syndication Book


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Theo Hicks: Hi, Best Ever listeners. Welcome to the best real estate investing advice ever show. I am your host today, Theo Hicks, and today we are speaking with Chris Salerno. Chris, how are you doing today?

Chris Salerno: Hello! I am doing phenomenal. How are you, Theo?

Theo Hicks: I am doing fantastic, I’m looking forward to our conversation. I actually know Chris, so it’s our first time actually meeting virtually face-to-face. I’m looking forward to learning a little bit more about you and your business.

Chris’ background – by 25 years old he had sold more than 40 million dollars in real estate volume, and helped lead the #1 real estate team in the Carolinas. He was named to Charlotte’s 30 under 30. He leads QC Capital, which is a  well-respected, high-return investment firm. He’s based out of Charlotte, Carolina, and you can say hi to him at QCCapitalGroup.com.

Chris, do you mind telling us a little bit more about your background and what you’re focused on now?

Chris Salerno: Yeah, definitely. Thank you, Theo, for the introduction. Best Ever listeners, I’m excited to be on here… I started listening to the podcast about two years ago to gain my knowledge and education throughout the real estate industry.

I’ve been living in Charlotte, North Carolina for 13 years, and this is where my family is. Within those 13 years I focused heavily on real estate, and I got into the residential side of selling real estate here locally, and very quickly gained a success track record.

From that success track record in residential real estate I landed myself in the position of leading the number one team here in the Carolinas for residential real estate, and made  them 46% profitable in one year, compared to their three years of just being stagnant.

With the education of learning that, I just fell in love with multifamily, especially value-added, B and C class assets… Because I feel when acquiring those type of assets – they’re basically a failing business, or they’re not extremely profitable as they could be… So I find it very exciting to go in there and make them extremely profitable for our investors. So that’s how I got into the multifamily industry,  and I love it ever since.

Theo Hicks: That’s an interesting way to look at it, that you’re basically taking over failing businesses and turning them. [unintelligible 00:04:16.01] TV shows where they go into failing businesses and flipping them around. I can’t remember what it’s called, but I’ve got the picture of the guy’s face…

Chris Salerno: Yeah.

Theo Hicks: So before we dive into the multifamily, let’s talk about your time as an agent, leading a team. What were some challenges that you faced? Obviously, you were a young guy, you came into this industry… Obviously, you were very successful at it, but being a manager is tough.

Chris Salerno: Very much so.

Theo Hicks: Anyone who wants to grow a massive business at some point is gonna bring on team members. Maybe talk a little bit about some challenges, maybe talk a little bit about some tricks you learned, about hiring people, and anything surrounding being a manager and building a team.

Chris Salerno: Great question. My big thing was I enjoy studying businesses, and not just successful businesses, but failing businesses too, because you can learn a lot from studying a failing business.

Before I even got into that role, I just would study different types of businesses, like Sears for example. I studied Toys R Us. I just studied them and why they failed and why they didn’t succeed. So when I went into that role, I found a lot of holes… We call it the T-12, but I’m still used to calling it the P&L. I found a lot of holes in the P&L that needed to be filled to make sure we are tracking the leads better, to make sure that the money that is being spent on advertisement and marketing is being spent properly, and we’re not just dumping money anywhere.

So I really honed in on the P&L and the structure of that to get a good grasp of it, to make sure that we are cutting down our expenses and then making sure that the agents who are on the team, their sales role — every agent that joined the team I trained in selling; sell themselves, and how to sell a product.

So I’d made sure that they were selling themselves at a very high level, to make sure that the homes would sell. That was definitely a big difference, that I had a role into making sure each agent was trained properly and selling at a very high level, and then also overlooking to make sure expenses were lower.

Theo Hicks: When you did this deep-dive in the P&L, were you at this point already the manager, or is this something you did when you were just an agent, and then by doing this they’re were like “Geez, this guy is legit”, and then because of that you became a manager?

Chris Salerno: Yes, this was just me as an agent. I would go in there and all the other agents didn’t care about running a business or operating a business, but my long-term goal was owning a billion-dollar business and running it… So I would always walk into the boss’ office and ask him “Hey, can I see your P&L?” At first he was extremely hesitant, but then he just felt that I just wanted to gain the education that comes behind studying a P&L and understanding how money flows in a big business, that is an over 100 million dollar revenue business.

Theo Hicks: That’s what I thought. But that’s definitely a great way to get educated, but also to position yourself as a leader, and someone who’s serious about the business. A lot of people – your typical W-2 job; you kind of go in there, you do what you’re told, and that’s it… Whereas you went above and beyond, you looked at the business and you wanted to actually improve the overall business, for the business itself, but also for yourself, to learn and to grow as well. I think that’s awesome.

So because of that – you think that’s one of the reasons why you were eventually able to lead… Was it this same team, or was it a different team that you led?

Chris Salerno: No, that was the same team that I led. I was their top sales person leading that team and training each agent that joined the team. So that was the team that I led, and then going in, making that transition to multifamily – I then cut selling residential real estate off in full, so I do not sell residential real estate, and I’m full-time into multifamily syndication.

Theo Hicks: Was it your plan to start off by selling residential, and then transition into multifamily, the entire time?

Chris Salerno: It was my plan to make that slow transition, but a big thing that I preach to a lot is that when my back is against the wall, I end up doing things that I would normally not do, to gain business or to gain the knowledge. And I think that’s all of us as humans – when our back’s up against the wall, we would end up doing something that we’re normally not comfortable in doing. So when I figured that out, I spoke with my coach and I told my coach “Hey, in six months I’m done selling real estate.” Then I called him in a month and I said “I’m done selling real estate.”

I made that transition right away, and I took that risk. It is a big risk, jumping straight into it… But I will not fail, and that’s the only thing I have going – I will make sure I succeed in it.

Theo Hicks: What was — not necessarily the biggest challenge making that jump, but after you made that jump, what was the biggest challenge you faced to complete that first deal? What was the hardest part about completing that first deal?

Chris Salerno: Really gaining the knowledge. I think I’m always gaining knowledge, and I will always be gaining knowledge, and especially in this business. That’s one reason why I love it – it’s always different, it’s always transforming. It’s not the same thing over and over.

When I first made that transition into multifamily syndication, like I did when I first got into that company’s role by giving up my own time to gain the knowledge – I did that in the syndication world here; I met with Dan Hanford, who only lives an hour and a half away from me, and I told him “If you come to Charlotte, anything you do in Charlotte, let me know. I wanna shadow you, I wanna gain as much knowledge as possible.”

They acquired a property out in Greenville, South Carolina, and I drove out there 2-3 times a week when I first got into the multifamily syndication business – it’s about two hours from Charlotte, North Carolina – just to shadow Brandon Abbott, Danny Randazzo and Dan Hanford, to just soak up as much knowledge as possible to help myself close that first deal.

Theo Hicks: So that deal that Dan Hanford did – is that your first deal, or is this what you did before you did your first deal?

Chris Salerno: That’s what I did before I did my first deal. It actually closes tomorrow.

Theo Hicks: Oh, congratulations.

Chris Salerno: Thank you, I appreciate it.

Theo Hicks: You’re basically there. So how long were you doing this gaining knowledge period? How long were you shadowing other successful investors before you started the process of starting your own syndication business?

Chris Salerno: Great question. It was about two to two-and-a-half months. But I’ll never stop that. Any chance I get to just learn from someone where I want to be and where I want the company to be – I’ll always shadow them, I’ll always ask questions, just to gain the knowledge… Because to me, that better helps the investors that invest in our deals.

Theo Hicks: Let’s talk about this first deal… So you gained that knowledge from the other successful syndicators; what were the steps you took from “Okay, I’ve got the knowledge, I’m ready to go” to “Alright, I got this first deal under contract”? What is some of the upfront work that people who want to do what you are doing need to do before they actually sign on the dotted line and put their first deal under contract?

Chris Salerno: Great question. It’s very nerve-wracking, too. I started the same way Joe Fairless started; I actually started with no money down. I have a very strong client that I have with QC Capital, who trusts me very much, that actually lent me 220k to put down as hard money for this particular property.

So once I found that I had someone who trusted me and trusted my business and my real estate education here in the Charlotte area, once I had that, then I had that footstep to go ahead and put that down for a non-refundable deposit on this particular property.

Once I finished with the PSA and all the negotiations in regards to that – and I definitely feel from my residential background side it’s definitely helped me with the negotiation and understanding the contracts to a point here… That right there has definitely helped in making that transition to getting my first deal under contract.

Theo Hicks: Alright. How did you meet this person? Was it one of your clients you met through residential selling?

Chris Salerno: Great question. He’s one of my clients for residential selling. A very high net worth individual here in Charlotte, North Carolina, with a big public company, and it took me eight months — I was all about cold calling when I sold residential real estate, and scripting. I taught people around the United States and I coached people around the United States in selling real estate, so it took me eight months to get him on the phone. But I finally got him on the phone, and when I did get him on the phone, he bought four houses from me.

Then when I was making that transition into multifamily, he called me up and he said “Chris, I wanna buy some more single-family or condo rentals.” I said “Well, let’s sit down and talk a little bit.” He always does a business deal over brewery here in Charlotte, so we went to a brewery… And I spoke to him, I said “This is what I’m doing now in multifamily. Your returns are higher, you have higher tax benefits, and you don’t have to manage the property, you don’t have to worry about the tenants.”

Once I showed him the returns on some of these deals, he invested in myself, and I raised capital for another deal… Once he saw that, then he said “Okay, this is where I want to park my money, for the tax benefits and for the returns.” So that’s when he trusted me to move forward with this particular deal. It was a very risky point, but we are closing tomorrow, so everything turns out good for it.

Theo Hicks: Is he investing in the deal as a passive investor, too?

Chris Salerno: Yeah, so he’s investing as a passive investor as well, and he’s also investing in other deals throughout the Carolinas, passively-investing.

Theo Hicks: What about your other investors? You mentioned that when you were presenting this particular business to this client, you mentioned that “Here are the returns I’ve gotten on some of the other deals I raised capital for…” So obviously, you have experience raising capital. What are some tips you have on how you were able to raise all that money without having necessarily done a deal before?

Chris Salerno: Yeah, it’s very difficult. I think the biggest thing is really network. If you see me on social media – I’m very active on social media in all the real estate groups that are on social media that I’m in. I’m extremely active on social media, and I try to stay in front of everybody, especially my network that I have. I’m always reaching out to them.

And I think a big thing for people who are trying to get into the multifamily syndication is not necessarily sell yourself or sell the deal, just give them the education on what you’re doing. Once they figure that out… And because this was my first deal, some did not want to invest, and they just said “We wanna see how you do your first one”, which is totally understandable… And I’m still staying in contact with them and keeping them updated through this process, just like if they would passive invest, so they feel comfortable with me.

So I’d say the big thing is just making sure you’re staying in contact, staying in front of them, and just giving them the education of the returns on multifamily real estate, not necessarily selling them on a deal.

Theo Hicks: What percentage of the total capital you’ve raised so far has come from your residential real estate network?

Chris Salerno: The percentage of the total capital came from (I would say) right now around 15% to 20%, and it’s growing. I had a couple of phone calls yesterday with some high net worth individuals here in Charlotte who actually found me on social media and we’re having lunch next week, in regards to me just being out there in front of people. But from my network I’d say about 15%-20% for this particular deal.

Theo Hicks: And the rest – where is that coming from?

Chris Salerno: The rest is coming from me networking. And with my KP and my sponsors as well, who are on the deal. I feel that with your first syndication — or I would say all the syndications, it’s always good to have multiple people on the KP and on the sponsor, because you’re having multiple people see the issue. If an issue arises or if anything comes up, you have multiple people seeing it, so it’s very helpful to have multiple people in that position.

Theo Hicks: Alright, Chris, besides all of the fantastic advice you’ve provided thus far, what is your best real estate investing advice ever?

Chris Salerno: Best real estate investing advice ever… I would say find someone that is at your goal or where you want to be in the future, and find a way to get with them and just soak up as much knowledge as possible. I’m willing to fly on a plane to meet with my coach, and just sit in the same room with him and soak up as much knowledge as possible.

So I would say find someone who’s where you wanna be and has already hit your goal or has the same goals as you with business, and just soak up as much knowledge as possible.

Theo Hicks: Alright, Chris, are you ready for the Best Ever Lightning Round?

Chris Salerno: I am.

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:16:47.01] to [00:17:27.27]

Theo Hicks: Alright, Chris, what’s the best ever book you’ve recently read?

Chris Salerno: I would say Joe Fairless’ book. I’m actually currently reading that right now, and that is just phenomenal. I’m gaining the education from it.

Theo Hicks: That’s the Best Ever Apartment Syndication Book. You can find that on Amazon, or BestEverBook.com.

If your business collapsed today, what would you do next?

Chris Salerno: I’m a big believer in never giving up, and focusing on your one thing. I would rebuild the business. I would rebuild it.

Theo Hicks: Besides your first deal or your last deal – and this could be syndication-related, or any properties you sold through your residential selling career – what is the best ever deal you’ve done?

Chris Salerno: Best ever deal I’ve done was actually a single-family rental. I bought it off market for 55k; I found a tenant to pay $1,100. I had to put 20% down; I got a conventional loan, and in six months I refinanced that deal. I got my 20% back, plus an additional 5% back, and it’s still renting for $1,100 and it’s cash-flowing around $550.

Theo Hicks: What about the worst deal you’ve done?

Chris Salerno: Worst deal I’ve done – I would have to say going from a flip, dealing with contractors and finding good work, and trusting contractors to say they’re gonna get the job done. So I’ve learned not to trust contractors saying that they’re gonna get the job done, and oversee their work.

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Chris Salerno: Best ever place to reach me is at QCCapitalGroup.com, or Christ@QCCapitalGroup.com.

Theo Hicks: Alright, Chris, I really appreciate you coming on the show today. It was nice finally officially meeting you virtually. Lots of solid advice. Just to quickly summarize some of the main takeaways – I really like your perspective about looking at these B, C multifamily assets as failing businesses, that you go ahead and essentially turn around and make profitable, or more profitable again. I really like that.

You also talked about your experience as a residential agent, and how you’d go in there, go to your boss  and say “Let me see the P&L and the T-12”, and you’d take a look at that and you’d essentially figure out ways to increase the bottom line. And because of this, you were the leader of that team.

We talked about your transition to multifamily and how this was kind of your plan all along. You started off as an agent and eventually transitioned into multifamily, and how your plan was to quit after six months and you were able to do that after one month, which is always great to hear… And you mentioned what you did is you essentially found the people who were doing what you wanted to do and just met with them and shadowed them. It wasn’t just a virtual meeting or a back-and-forth; you literally went out there to a specific deal they were doing, multiple times a week, multiple hours’ worth of driving, and just watched and observed and asked questions to the syndicator. You mentioned Dan Hanford, Danny Randazzo, Brandon Abbott… You did this for about two and two-and-a-half months. Obviously, you’re continuing to do this, but once you did that, you made the transition into your own deal, which you’re closing on tomorrow; once this goes live, you’ll be well into that business plan.

You mentioned that, like all new things, it’s pretty nerve-wracking, and you were actually able to start with no money out of your own pocket. We talked about the client you had met through your residential agent career, and how because of your credibility and trust with that person, they actually lent you the non-refundable down payment for that property, which I’m sure was very helpful in securing that deal.

Chris Salerno: Very much so.

Theo Hicks: And then we talked about raising capital for your first deal, and it basically comes down to networking. Sometimes I really liked that you said is you’re not selling yourself, you’re not selling the deal, you’re just educating them on what you’ve got going on.

Something else that I think — I’d never heard this before, because most of the time when people raise money for deals, they send the deal out to their main database, and then whoever says they wanna invest, they make a new email and they’re only giving those people updates… Whereas you will also include people who said “Well, we wanna invest, but we wanna see how you do on your first deal.” So keeping them updated on what’s going on that deal I’m sure probably elicits that fear of missing out response.

Chris Salerno: Yeah, that too. It does tap into that. So then once we close, they’re like “Oh, I wish I got into it.”

Theo Hicks: Exactly. And then your best ever advice, which obviously you live, is find someone who is either at your goal, or is doing what you wanna do, and then find a way to meet with them and soak up as much knowledge as possible, even if that involves getting on a plane and meeting them in person.

Again, Chris, I really appreciate it. Great advice. Thanks for joining us today. Best Ever listeners, thanks for listening. Have a best ever day, and we’ll talk to you soon.

Chris Salerno: Thank you.

Best Real Estate Investing Advice Ever Show Podcast

JF1190: Protect Yourself By Not Piercing Your Corporate Veil with Patrick Camuso

Patrick specializes in real estate taxes and tax planning/advice. He’ll give us multiple strategies that we can use to grow our wealth as real estate investors, and pay minimal taxes LEGALLY. We’ll learn a good amount about what the corporate veil is, why it’s important, what it means to “pierce the corporate veil”, and how to avoid doing that. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

[spp-tweet tweet=”“All of the costs will be outweighed substantially by the tax benefits” – Patrick Camuso “]


Patrick Camuso Background:

  • Founder of Camuso CPA PLLC, a  real estate business advising company
  • World class experience in investment management and real estate space and consulting for the world’s premier asset managers, real estate companies and retailers
  • Leverages advanced knowledge and experience in tax and accounting to serve his top clients


Made Possible Because of Our Best Ever Sponsors:

Fund That Flip provides short-term fix and flip loans to experienced investors. If you’re looking for a reliable funding partner, their online platform makes the entire process super easy, and they can get you funded in as few as 7 days.

They’ve also partnered with best-selling author, J Scott to provide Bestever listeners a free chapter from his new book on negotiating real estate. If you’d like to improve your bestever negotiating skills, visit www.fundthatflip.com/bestever to download your free negotiating guide today.


Joe Fairless: Best Ever listeners, how are you doing? 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 of that fluff.

With us today, Patrick Camuso. How are you doing, Patrick?

Patrick Camuso: Hey, Joe. How are you doing? Thanks for having me on, I appreciate it.

Joe Fairless: My pleasure, nice to have you on the show. A little bit about Patrick – he is the founder of Camuso CPA PLLC, which is a real estate business advising company. He leverages advanced knowledge and experience in tax and accounting to serve his clients. He’s based in Charlotte, North Carolina, and you can check out his company’s website in the show notes, just by clicking that link. With that being said, Patrick, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Patrick Camuso: Absolutely, Joe, and I do appreciate that introduction, as well. As you mentioned, I’m the owner of Camuso CPA. We’re a multiple service CPA firm located in Charlotte, North Carolina. We’re serving clients right now in about 12-13 different states. We’re heavily focused on the real estate industry, as you mentioned; about 80% of our clients are involved in the real estate industry at various levels.

Our wheelhouse is helping clients setting up their portfolios, as well as working with them on a year-round basis with tax minimization strategies.

Joe Fairless: Alright, well let’s talk about some of those tax minimization strategies… Let’s pretend we’re an investor who’s just starting out. What are some questions we will likely have for you and what are those answers?

Patrick Camuso: The first question that I would be looking to get a handle on if I’m consulting with a new investor is what their strategy is for investing. Really, the big determining factor for me is finding out whether or not their business is gonna be active or passive. If you find someone that’s fix and flipping properties, that’s usually gonna be treated as an active business. Someone who’s holding rental properties, we treat their properties as a passive business.

Joe Fairless: Okay, so number one – identifying if they’re active or passive.

Patrick Camuso: From that, it’s really gonna determine what the optimal entity structure is for that investor. Obviously, this is a scenario where we’re looking at someone just starting out; they’re not creating a multi-entity structure.

So if you’re dealing with a passive investor, they’re either gonna form a single-member LLC, or they’re gonna form a partnership to get flow-through treatment on the passive income. That’s gonna give them the most advantageous tax rate from that perspective.

For active investors, their income is going to be exposed to self-employment tax, so as opposed to going into a partnership or single-member LLC structure, what I recommend for investor in this regard is to form an S corporation, because when you form an S corporation, one of the biggest tax planning benefits to being in this structure is shielding a portion of the income that you make from self-employment tax.

Now, the caveat that I will give to investors in this regard is that if you do go into an S corporation structure, there are additional compliance costs to being in an S corporation, so these need to be considered in addition to the tax savings that would be associated with it.

Joe Fairless: Like what, for example?

Patrick Camuso: If you’re a single-member LLC, you’re basically only gonna have to file a personal tax return with a few additional schedules on it. If you go into an S corporation, you’re gonna have to file an additional tax return that’s more complex and more time-intensive than filing a personal tax return… Since you are determining a reasonable wage to pay yourself, it’s recommended to all my clients that you substantiate the ways that you’re paying yourself with a reasonable compensation study, which also will be an additional cost come tax time.

When you’re in an S corporation, there are additional tax planning benefits outside of minimizing the amount of income that’s exposed to self-employment tax… So you may wanna work with a CPA more closely in tax planning within the corporation. And finally, there is more of an administrative burden on having an S corporation as well, just because you have to be much more careful about not co-mingling funds when you’re moving money in and out of the corporation.

Joe Fairless: Okay. I imagine that might seem daunting to a beginning investor who is just getting set up, so what would be steps that they need to take in order to make this all happen, to get them set up properly?

Patrick Camuso: The thing with the S corporation structure with investors that are starting out in that regard – I did highlight that you wanna make sure that the tax planning benefits are gonna outweigh the costs of moving into this structure, so I usually recommend clients looking at electing S corporation once they’re at about 60k-70k gross revenue. At that point it makes sense for me to sit down and crunch their numbers and really determine it down to the penny if it is gonna make sense for them or not.

Any time you’re working with a CPA, they should be able to relay the actual benefits over the costs to you to moving into an S corporation structure. All too often I do see clients get moved into this structure too early, to where they can’t afford to administer it correctly, and that either leads to them getting burned financially, or just not handling the company correctly and then having further compliance issues down the road.

So firstly, I recommend electing S corporation status when it does make sense for a cost/benefit perspective, and then at that point I recommend working closely with a CPA, a firm like Camuso CPA, to handle all of your tax and accounting needs related to S corporations.

If you elect that within the threshold that I mentioned, all the costs will be outweighed substantially by the tax benefits that you would realize.

Joe Fairless: And if you have a single-member LLC, you can convert that into an S corp, right?

Patrick Camuso: Yes, and that’s a great point to touch on. When you form a single-member LLC, you have the first two-and-a-half months from when you formed the LLC to elect S corporation status. Additionally, you have the first 2.5 months of every calendar year to elect S corporation status, so within those timeframes you can file form 2553 and make the election.

Additionally, throughout the whole entire year you still can make the election. You have to make a retroactive election, which does potentially pose additional penalties and fees, but again, if your income throughout the year makes sense from a tax planning perspective, where the tax is gonna outweigh the cost, then we also recommend retroactive elections to clients.

So if I’m working with an investor who’s just starting out with fix and flips and they’re not gonna be able to readily anticipate where their income is gonna be at, I recommend that they start with a single member LLC, and check back with me in two months. Most likely, they’re not going still to be able to determine what their salary is gonna be for a year, which [unintelligible 00:07:56.17]

At that point, I recommend “Let’s do another check-in in six months, then ten months”, and we see where they’re at in terms of their income, and I’ll run projections on the benefits and the costs of doing a retroactive S corp election.

That to me is the best approach for setting clients up for tax minimization without moving them into an entity structure that’s gonna impose an additional compliance cost on them too early in the game.

Joe Fairless: I started out with an LLC, and then I converted it to an S corp, as I went further along, based on my accountant’s recommendation… So I’m listening to you and I’m shaking my head, “Yup, yup, that’s exactly what I’ve been told”, and that’s why I converted it from a single member LLC to an S-corp.

Patrick Camuso: Absolutely. The last thing that I would mention is that some investors are utilizing multiple strategies in the market. Maybe they’re doing fix and flip and they’re also doing buy and holds – then I do recommend holding those in two separate companies to minimize the liability and also not nix the various forms of income from a tax perspective as well.

Joe Fairless: Will you elaborate on buy and holds in a single-member LLC, and why we should do that?

Patrick Camuso: Sure. The reason that you want to structure them in a single-member LLC or partnership is just so you can get pass-through treatment, and it’ll just flow through onto your personal tax return, and you’ll only have to pay tax on the income, as opposed to self-employment tax. That’s the reason why if you are doing fix and flips and if you are doing buy and holds, I would recommend putting them in separate entities, so the income is co-mingled and all treated as active income, and it’s exposed to self-employment tax.

Joe Fairless: Okay. So if we’re a fix and flipper who is then taking some of the profits from every third or fourth fix and flip and buying a buy and hold, then we should have separate entities to own the property buy and hold, versus the fix and flip company.

Patrick Camuso: Absolutely. And to that point as well, whether you have one company or two companies and you do establish articles of incorporation, then you set up your different bank accounts onto your company’s EIN and you set up your operating agreements, what you’re doing is you’re establishing what’s called a corporate bail for your company, and you always wanna make sure that any income related to the specific that it’s coming from or any expenses that are coming out of that specific company stay in their specific bank accounts to maintain that corporate veil. Because when you are utilizing different strategies, it is imperative to maintain the separate companies, to maintain the separate companies, to maintain distinctions between the incomes.

Joe Fairless: You said corporate veil… Will you elaborate on what that is?

Patrick Camuso: It’s a legal term, and all that it really represents is a clear demarcation between you as a person and your company that you set up; it sets a clear line between the two. And you do that 1) by filing your articles of incorporation, 2) by drafting an operating agreement, and 3) by establishing separate bank accounts and credit cards and financial records for your company, and then making sure to not co-mingle funds, which means mixing personal and business accounts together.

Joe Fairless: Why is it important to not co-mingle the funds and mix personal and business together?

Patrick Camuso: If you’re owning a single-member LLC, it’s not gonna have as much of a negative impact as if you’re in an S corporation or if you’re operating multiple entities. When you’re owning a single-member LLC, the only purpose that being in an LLC is serving is liability protection. So if you do co-mingle funds and you do have an issue where you find yourself in court related to one of the properties that are in this company, you may face the potential of people being able to come after your personal assets, because you’ve eliminated the corporate veil of your company.

Now, once we get into an S corporation and setting a wage and distribution for yourself, we have to make sure that we maintain a corporate veil so your whole entire S corporation isn’t disqualified and then all of your income will be exposed to self-employment tax.

Joe Fairless: So it could be a double whammy.

Patrick Camuso: Yeah, when you’re in a single-member — it’s really just from the liability perspective, but once you get into an S corporation, then it does become an issue from a tax perspective as well.

Joe Fairless: Based on your experience, what is your best real estate investing advice ever?

Patrick Camuso: I’m sure that the best piece of advice is probably one of the most common, and that is to build a strong network around you and a team of advisors. At Camuso CPA we like to think of ourselves as the financial part of your real estate team, and that is an imperative piece. But in addition to that, building a strong team of both colleagues and peers, and just a network of real estate professionals is really what I see as the driving success factor for investors.

Joe Fairless: Are you ready for the Best Ever Lightning Round?

Patrick Camuso: Absolutely.

Joe Fairless: Alright, then let’s do it. First, a quick word from our Best Ever partners.

Break: [00:13:10.14] to [00:14:15.00]

Joe Fairless: Best ever tax planning book that you recommend?

Patrick Camuso: The Tax Planning Guide For Real Estate Investing is really one of the best that I recommend, and it’s a very general title. I would have to look up who the author is.

Joe Fairless: Okay, Tax Planning Guide For Real Estate Investors?

Patrick Camuso: Yes.

Joe Fairless: Okay. That’s not Tom Wheelwright, is it?

Patrick Camuso: That is the author. And the other one is The Logic Of Subchapter S. That would be for someone that’s more technically inclined and is really looking to learn the in and outs of subchapter S corporation taxation.

Joe Fairless: What the heck is a subchapter S?

Patrick Camuso: It’s like when you form an S corporation, that’s the tax code that you’re operating under… So reading that would give you more of an idea of the nuts and bolts of the company. But if you don’t wanna get into those types of details, you could always Camuso CPA as well.

Joe Fairless: Okay. And the book you were referencing, is it Tax-Free Wealth, by Tom Wheelwright?

Patrick Camuso: That’s it.

Joe Fairless: Okay, sweet. Yeah, that’s a great book. What’s the best ever story you have about helping a client lower their tax basis or lower the amount of taxes they pay?

Patrick Camuso: One interesting strategy that I’m able to employ on a  few different occasions with investors that people like is if you find a fat pattern of, say, a high W-2 earner that’s married to someone that doesn’t have a job, maybe they’re a stay-at-home parent, opening up some real estate investments in the stay-at-home parent’s name, and then qualifying them for the real estate profession status, which allows them to take in unlimited amount of losses against all of the income that they generate on their personal tax return. That’s something for investors that are looking to get the ball rolling and maybe are still working the job and supplementing an income for a family – that’s something that’s beneficial for them a lot of times.

Joe Fairless: Okay, I wanna make sure I understand this… If we’re making a high income and we have a spouse who is stay-at-home or just not making much or at all of an income, then buying an investment and putting it in the spouse’s name who’s not making much or any money, which will then qualify them as an active real estate investor, and then that helps with taxes?

Patrick Camuso: Yes. With the spouse, it’s better if they have no job, because you do have to qualify them as a real estate professional if your losses are going to exceed a certain threshold, which [unintelligible 00:16:46.10] $25,000. The scope of the real estate professional status is probably a whole other episode, which I’m always happy to do, but mainly there is an hours requirement, that you do have to meet a 750-hour requirement and it has to be your main activity, among a lot of other criteria.

Joe Fairless: Got it.

Patrick Camuso: But if you can qualify someone for that, they can count all of their losses against their income, so it’s a powerful strategy for someone that has a partner that can qualify for that and is filing [unintelligible 00:17:16.15]

Joe Fairless: Okay, great strategy. Thanks for sharing that. What’s the best ever way you like to give back?

Patrick Camuso: I like to white-water kayak, so I find myself helping to train some of the younger children that are at the center… More on an ad-hoc basis, but just being able to do something that I like and informally help out someone that is also inspired by the same things that I am.

Joe Fairless: Best ever way the Best Ever listeners can get in touch with you and learn more about your company?

Patrick Camuso: The best way to both learn more about my company and also to get in touch with me would be to go to CamusoCPA.com. If you go to the Contact page you’ll see all my contact information there, and if you go to the About Us page when you cruise our site, you’ll get a very good perspective on what our company is able to offer.

Joe Fairless: Patrick, we’ve been talking for about 25 minutes, you’re based in Charlotte, North Carolina, there’s no way you’re from Charlotte… You’re definitely from New York or somewhere in the North-East, correct?

Patrick Camuso: Yes, sir.

Joe Fairless: Where are you from? Jersey?

Patrick Camuso: I’m from the North-East, originally from North-Eastern Pennsylvania, up in the Poconos, which is a country setting. I went to school in Montclair State New Jersey, and before moving down to the Charlotte area I worked about five years in the New York City offices [unintelligible 00:18:41.03] accounting firms.

Joe Fairless: I know my accents… [laughs]

Patrick Camuso: I do stick out like a sore thumb with the accent…

Joe Fairless: Well, Patrick, I enjoyed our conversation… Thank you for talking through in detail multiple things. One, as a beginning investor, what entity should we choose; we talked about if we were doing buy and hold properties, then most likely LLC. If we’re doing fix and flip, most likely S corp, but we’ll need to look at the revenue that we’re generating – if it is 60k-70k gross revenue or above, then most likely it makes sense to do an S corp. Then the piercing the corporate veil and how not to do that, the things we need to keep in mind, as well as that last tip about a powerful strategy if you’re filing jointly and you have a spouse who does not have a job, so that he/she could become an active real estate person and get those benefits on properties that are purchased.

Thanks for being on the show, great stuff. I hope you have a best ever day, and we’ll talk to you soon.

Patrick Camuso: Thank you very much.

Best Real Estate Investing Advice Ever Show Podcast

JF1182: Answering Your Clients Questions Before They Ask Them with Nancy Braun

Nancy started a brokerage at a very strange time, in 2008 right before the market shifted. Luckily for her and her team, she had a great niche and system already in place, which made it easy to expand to a new niche when the shift occurred. Nancy says one of the most important things for her brokerage to stay successful is staying top of mind with her clients, even after their transaction is completed. When she is in the middle of a transaction with a client, Nancy and her team work to proactively answer any questions that might come up from the client. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

[spp-tweet tweet=”“Communication –  that is critical” – Nancy Braun “]


Nancy Braun Real Estate Background:

  • Charlotte Real Estate Broker / Owner Showcase Realty & Showcase Property Management
  • Creative force behind Charlotte’s Showcase Realty and its several divisions.
  • Showcase Realty specializes in many different areas of real estate
  • Focusing on technology and delivering a new kind of real estate experience
  • Nationally recognized consistently ranking in the Top 1% America’s Best Agents category for sales and volume, by RealTrends
  • Based in Charlotte, North Carolina
  • Say hi to her at http://showcaserealty.net/
  • Best Ever Book: 10x by Grant Cardone

Made Possible Because of Our Best Ever Sponsors:

Fund That Flip provides short-term fix and flip loans to experienced investors. If you’re looking for a reliable funding partner, their online platform makes the entire process super easy, and they can get you funded in as few as 7 days.

They’ve also partnered with best-selling author, J Scott to provide Bestever listeners a free chapter from his new book on negotiating real estate. If you’d like to improve your bestever negotiating skills, visit www.fundthatflip.com/bestever to download your free negotiating guide today.


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 of that fluffy stuff.

With us today, Nancy Braun. Nancy, how are you doing?

Nancy Braun: Great! Excited to be on the show.

Joe Fairless: Nice to have you on the show. A little bit about Nancy… She is the owner – and I love this title: Broker In Charge at Showcase Realty. They’re headquartered in Charlotte, North Carolina, and they are not only a brokerage, but they do property management as well. Nancy, in particular, has been recognized and has consistently ranked in the top 1% of America’s Best Agents category for sales and volume by Real Trends. With that being said, Nancy, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Nancy Braun: Sure. I started my career in retail management and then went off to law school, and then practiced corporate law. Then I lived my fantasy, which was being a chef-owner of a restaurant for five years. Then I got tired of cold – I was in upstate New York – and beelined for Charlotte, NC, 21 years ago, which was a great decision, great life, much easier on the body, nicer environment.

I moved down here and didn’t know what I wanted to do, and I was urged by my dad to take a real estate class. I took it, I didn’t really have much interest in real estate, didn’t know anything about it, but that career stuck; all my other careers kind of had a five-year turnaround, and this one I’ve been in 21 years.

I didn’t really know anything about real estate when I got here, but I joined a local brokerage and I became one of their top brokers, and 12 years later I opened Showcase Realty in 2008, right when the recession hit… And we’ve been growing ever since.

Joe Fairless: You opened it up at a very interesting time in 2008… Tell us about what that was like.

Nancy Braun: It was… I didn’t really see it coming, but we fortunately had a good niche with the REO foreclosure markets, so when I simultaneously opened the company, I really focused big time on growing the REO division. At that time, that’s how we grew, and we focused on marketing – that was my big thing, it was internet digital marketing, before a lot of the bigger brokerages even took a hold of that. We had a tremendous internet presence, and at the peak, I’ve closed 525 units one year, and the bulk of that was REO.

When the market shifted, we shifted before it shifted, knowing that the REO was gonna dwindle, and now we have — I think it’s reversed, it’s about 80% regular real estate transactions, and about 20% REO in that dynamic, where we kind of change with the times before the times change, so we’re not obsolete.

Joe Fairless: Do you anticipate another change coming, so you can change before the actual change occurs?

Nancy Braun: Yeah, I think it always happens. So we’re all just sort of [unintelligible 00:04:25.00] especially from an investor perspective, we’re all waiting for the market to shift, since the prices are so high and there’s so little on the market. So there is an expectation that there’s gonna be another challenging real estate market, and we’re positioned so we can grow that division back up again. Fortunately, my traditional real estate will stay strong, so with that I’m glad, because they kind of feed off of each other.

My REO listings and my shortsales and distressed listings drive a tremendous amount of leads and a lot of people are interested initially and trying to get a deal, so they contact us first. They may not buy a foreclosure or a shortsale, but we’ve got them hopefully as a client to buy the right house for them, or the right investment. So a lot of investors come to us because they know we have a strong foothold in the REO market. We have great relationships with all the banks and asset managers out there, so even when the market starts shifting, I think we’ll be in a good place.

Joe Fairless: From a management standpoint, how many units do you manage?

Nancy Braun: Well, we have a small showcase… I have a division that’s actually a company called Showcase Property Management, and we probably just manage at any one time about 50-70 properties. It’s not a large division, but it also makes it very personal, and we take a real personal approach to it

Joe Fairless: As the owner who’s overseeing all the different types of revenue streams coming in, how do you identify where to put your focus to help to increase the overall profitability of your company?

Nancy Braun: That’s great, I’ve been in the midst of that right now. I’ve been trying to recharge and re-energize the divisions that are bringing in better profit, rather than just more revenue. In our general brokerage, the average buyer and seller and investors really are the bulk of our profit drive, so I’m focusing a lot on just building up that segment of my company. The REO has become so that I can manage that pretty easily, but the profit is very low.

The banks have really shaved a commission split to us, and the tasking is very labor-intensive, so it’s not a profit segment of my division, it’s kind of like the loss leader in a grocery store; you need that cheap milk to pry them in there. So that’s what drives our investor focus – investors love us, because they see that we have a strong inventory of distressed assets… But I think that’s really good; you have to keep on looking at your business and your business model and seeing where you’re shoving a lot of money or time or energy in, and where that should be refocused into a side of your business that’s making you money.

Joe Fairless: I noticed you didn’t mention the property management, the 50-70 properties, and growing that or optimizing it.

Nancy Braun: Actually, that is one of my strategies. It’s an area that has been profitable to us, but it would certainly be a lot more profitable if we had more doors, so that’s an area that we need to build on as well.

Joe Fairless: Knowing that you’ve got the general brokerage, where you’re working with buyers and sellers and investors – that’s the main profit machine for you. Then you’ve got the loss leader of REOs, and then you’ve got kind of the wild card of property management. How do you choose to spend your time to focus on what’s making money now, versus what could be making you more money?

Nancy Braun: Yeah, I’m engrossed in that right now. I’m trying to build my retail division I have on my own little team. These are people that I worked with buyers and sellers I’ve worked with in the past, they trust me, they know me… They specifically asked to only work with myself or my team, so I can’t delegate those clients over to my independent contractor agents. That’s the division I’m kind of focusing on right now, because it’s doing very well. And I have control, because I have my employees focusing on that segment, so I can dictate to them what exactly they need to do to make sure that each of my personal clients gets the same quality experience from Showcase.

Now, if I delegated a client to one [unintelligible 00:08:54.07] agents, it doesn’t necessarily transcribe to the same experience that my specific team has. It’s kind of like a craft, because we follow a protocol and a system… It’s very systematized, so that especially our sellers get the exact same experience and same marketing, and obviously we wanna make them lifetime clients.

So that’s an element I’m focusing on – hiring people to be in that division that are really quality, A players, that will do things as I dictate that they need to be done, or as the team dictates how things have to be done, so each client has the same quality experience. So that’s one of the focuses – building that division, getting the right people in the right seats.

Joe Fairless: Okay. You’ve mentioned ensuring – or at least attempting to ensure – that the same quality of experience is experienced by clients, whether they’re working directly with you or with your immediate team, and then trying to scale that… And you said you’ve got a system in place and that’s really important to you… What aspects of this system have been improved upon the most since you’ve started creating a system?

Nancy Braun: Communication. That is critical, especially when you’re talking about sellers. They really wanna know what we’re doing behind the scenes; they wanna have a clue on where our marketing is. Our sellers are much more educated and internet-savvy today than they were ten years ago. They go online and they wanna see that their property is marketed everywhere and they can find it online very easily. They’re checking on it, and we have an incredible team of marketing specialists that make sure that the property is plasted everywhere on the internet and has very strong SEO. I have an SEO person specifically focused on that.

Then we update the clients with snapshots of everywhere they’re exposed on the internet, as well as the hits and the interest that they’re getting, and we make sure that they know when we’re boosting ads on Facebook and targeting ads… They’re getting copies of everything. So we have systems in place, and that certainly took us a long time to create, so that they’re all engaged in the same processes that we’re doing, so they don’t second-guess us and think “What’s my agent doing?” I think that’s the biggest problem – a lot of agents work really hard for their clients, but they don’t relate to their client what happened yesterday and what happens tomorrow and where you’re gonna be the next day.

Our placement and our focus is very strategic, so that way we don’t just plaster the internet with their property on day one of when it goes on the market, because Google hates that. They wanna see steady progress, so we have a calendar that’s a live calendar, that the client can click on any day and see “Oh, look where I’m gonna be on this day. Look what they’re doing on this day.” So it’s very strategic marketing.

Joe Fairless: That is… It’s so methodical; I hadn’t heard of a process that detailed. It holds their hand along the way…

How many updates — and perhaps I think you might have answered it with them just being able to log into the calendar, but when you were saying when you boost the Facebook ad, things like that, they get an update… How many updates are too many updates for the client?

Nancy Braun: They’re insatiable, they want [unintelligible 00:12:12.03] [laughter] There’s never too much. I think if they were notified every day, they’d be happy. But we definitely let them know professionally on a weekly basis, we give them an update. Then I’ve done live webinars with them, and I let them see my screen. They can see there’s ways that we can figure out how many showings are going on in their neighborhood or their zip code, outside of their listing, and I can say “Look, if you were priced in this price range in your neighborhood, you would have had eight showings this week. But because you’re priced at this other bracket, we’ve only had two showings this week. Should we shift to the other bracket? Because that’s what’s getting all the activity.”

The clients love it, because it’s so transparent. They really see what’s going on in the market and we’re not just feeding them a bunch of baloney; they can actually see it, and they go “Wow… I’m not strategically placed in the market, I need to reposition our listing.”

Joe Fairless: Let’s pretend that same client has gone through the process with you and gone through a successful closing, and now it is seven months from when you closed. What (if any) communication have you provided to that client on a regular basis to stay top of mind?

Nancy Braun: That’s critical, too… And we have a closing process. We obviously send a handwritten thank you note after the closing, we call that week to see if everything is good, do they need us for anything, water heater work, and “Do you need any of our vendors?” and we send a gift, and then we put them in a program that is called our Seller Suite. They get updates from their community. If they moved to a new neighborhood and have a new address, then they will get updates on all the properties that are going on the market or are under contract in their particular neighborhood. I think everyone wants to know what’s happening in their own neighborhood – are the prices shifting, are they changing, are they selling fast? So they’re just e-mailed listings in their neighborhood forever, so they can just see what’s the pattern in their neighborhood and how their investment is doing.

So we do that, and then obviously we put them on a drip, so they get updates on how the market is, what’s going on in the real estate market in their local market. Then it’s really my job to keep calling them and seeing how things are. There’s more things I can do when those things are in place; we’re trying to create a better mail campaign as well, so they’re getting more newsletters from us and more updates.

Joe Fairless: As far as the Seller Suite goes, where you give them updates on their community, is that a software program that you created, or is that just a name that you created for subscription to the MLS in their neighborhood?

Nancy Braun: We use [unintelligible 00:15:00.26] so we have to just place that client into the Seller Suite with their new address, and then they’ll get auto-emailed activity in their neighborhood.

Joe Fairless: Got it. What would you say is the number one way that you stay top of mind with your clients after the closing, if you had to pick one?

Nancy Braun: I think Facebook. We do a lot of focus of our marketing on Facebook. We obviously invite them to follow us on Facebook once we meet them, once they come on board with our company, and then they’re gonna see updates – they’re gonna see recent solds, recent new listings, but they also see personal things… About 20% of my posts are person. Then they’re gonna see what’s going on in the market. Video is one of our biggest drives. Everyone loves video, so we do a lot of video posts on Facebook. I think that’s probably our number one.

Joe Fairless: You work with investor, right?

Nancy Braun: Yes.

Joe Fairless: Can you tell us a story about working with an investor? And take that in whichever direction you wanna take it.

Nancy Braun: Well, we work with mom-and-pops, and we also work hedge funds. Totally different experiences, working with someone to buy one or two properties if they envision owning and maybe holding and renting out as a future investment for them. Those are always very personal, because it’s their life savings and it’s very important that what they pick is gonna be a profitable, strong investment for their future.

Recently – my babysitters are Brazilian and they had some inheritance that they could flip some money over from Brazil, but it was like their life savings, and we bought a couple homes for them. They’re easily rented, and they’re gonna be great investments for them down the road when they wanna sell them… But they’re probably gonna hold them a long time; they trusted me, because they’ve been with our family for so long.

Then on the other side, we work with hedge funds. We do acquisitions for them, and it’s on a computerized program where you plug in numbers, and they have to meet certain fields, and it’s just a machine, so it’s not as personal. It’s just “Do the numbers work?”

Joe Fairless: And I’m sure that a hedge fund buys, in general, more than a mom and pop person, correct?

Nancy Braun: Yeah… Ideally. If their numbers work… It’s tough right now. There’s so little on the market, and the hedge funds have really tight numbers. If they have a multiple offers scenario, it’s really hard to meet those numbers sometimes.

Joe Fairless: What are the typical numbers of a hedge fund that they’re looking to achieve?

Nancy Braun: Most, if they’re holding, they want at least a 5% or above [unintelligible 00:17:38.16] When you factor in their figures, that could be tough, because they have a lot of holdings costs, and carrying costs, and they have cushions built in, so that they are gonna see at least a 5% net. A lot of them have very similar criteria – they wanna be in great school districts, they wanna have no obstructions, no visual views of [unintelligible 00:18:02.29] or corner lots, they don’t like water around them, they have to have amenities in the neighborhood, they have to have a two-car garage, it can’t be older than 10-15 years old… They’re all after the same thing. [laughter] It’s tough.

Joe Fairless: How did you initially get connected with your first hedge fund that you worked with?

Nancy Braun: I think it’s usually someone mentions me to someone. “Oh, did you speak to Nancy?” I think I went after the first one I did initially — a large hedge fund I worked for, and I think I went after them. I saw them starting to acquire a lot of properties and I did some research and contacted them. But sometimes it’s just they find me, because we have such a strong internet presence, and they know we have such high inventory in distressed markets.

We’re kind of well-suited to assist for hedge funds, because we have the expertise and the experience working in this arena.

Joe Fairless: Based on your experience, what is your best advice ever for real estate investors?

Nancy Braun: Best advice ever for real estate investors… It’s all different. Some people want different things, but the best advice I guess is to get something — if you really wanna be safe, closer into the city you live in… The ones that are farther out are more susceptible to economic changes, whereas the city properties closer in are always gonna be highly desired.

Joe Fairless: Got it. As long as it’s not in a bad pocket. But eventually, perhaps that pocket will change.

Nancy Braun: Yeah. As long as it is close in… I’m not afraid of buying things further out either, because it’s cheaper, but it depends on what level of safety you want and how risk-adverse you are.

Joe Fairless: Are you ready for the Best Ever Lightning Round?

Nancy Braun: Okay…

Joe Fairless: Alright, let’s do it. Hey, you went to law school, you are ready for this, believe me… First though, a quick word from our Best Ever partners.

Break: [00:20:02.21] to [00:21:06.15]

Joe Fairless: Alright, best ever book you’ve read?

Nancy Braun: Best ever book I read… I’m reading 10X right now, which I love.

Joe Fairless: Okay, by Grant Cardone…

Nancy Braun: Yes.

Joe Fairless: Best ever transaction you’ve done, either buying your own or working with someone?

Nancy Braun: I bought my own recently in a transitional neighborhood close to the town. It like an old bungalow, and I just think it’s gonna be a terrific investment. It’s easy to rent, and it’s charming, it has a lot of character. I’ll either keep it for a long time and rent it out… I even thought of doing an Airbnb with it, because of the proximity with the city. A lot of choices.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Nancy Braun: I’ve bought a property once… My staff messed up and made some mistakes, and with the asset management was mad at me, so I said “I’ll just buy it. Don’t worry, I’ll fix it, I’ll fix it”, and I’ve done that before – I’ll just buy the property just to get the problem solved… And it’s been a headache ever since. Its condition was horrible, it’s out in the country, and it’s on a well and septic… You don’t wanna do that. [laughter] Gosh, I hate that property.

Joe Fairless: So note to self – if someone else has a problem, then don’t just buy the property from them.

Nancy Braun: Well, don’t buy something old, and a well and septic… Yeah.

Joe Fairless: Well and septic, noted. What’s the best ever way you like to give back?

Nancy Braun: We are very focused on that. I’m on the board of director and advisor counsel for the Boys and Girls Club of Greater Charlotte. I’m there almost every week. We are one of the top donors to the Boy and Girls Club in the Charlotte region. I love the organization, I love the people in it, I love their gratitude and the results. It’s very result-driven, and these kids are really different, not because of their membership in the Boys and Girls Club. 94.5% graduation rate in high school, and a lot of them go off to college because of their experience there, so that’s very fulfilling.

Joe Fairless: How can the Best Ever listeners get in touch with you or learn more about your company?

Nancy Braun: They can call my cell, 704 488 3109, go to my website, ShowcaseRealty.net. They can e-mail, Nancy@ShowcaseRealty.net.

Joe Fairless: Well, if they can’t get a hold of you after those three things, then there’s a big problem. Nancy, thanks for being on the show. Thanks for talking about your macro level business and your approach right now, focusing on profitability, where the majority of it is coming from the general brokerage, growing the property management and then REO as a loss leader. I loved that example of the grocery store milk.
Then the approach for how you stay top of mind with your clients after the close: handwritten Thank You notes, gifts, a call the following week, you’ve got monthly updates about their community, and then your drip campaign, as well as using Facebook.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Nancy Braun: Thank you very much, it was a pleasure.


Best Real Estate Investing Advice Ever Show Podcast

JF1146: How To Generate Referrals Without Asking #SkillsetSunday with Stacey Brown Randall

Word of mouth referrals are without a doubt the most effective lead you can get. Asking for a referral is different than when it happens organically. Stacey is here today to tell us how to make it happen organically. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

[spp-tweet tweet=”By the end of this, we’ll know how to generate referrals “]


Stacey Brown Randall Background:

  • Referral Marketing Strategist, Business Growth Accelerator, Productivity Coach, Adjunct Professor
  • Helps other in referral strategies, particularly focused in real estate
  • Her online programs, VIP days and live events provide a blueprint to follow to take control of your referrals
  • Based in Charlotte, North Carolina
  • Say hi to her at www.growthbyreferrals.com/joe  


Made Possible Because of Our Best Ever Sponsors:

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They’ve also partnered with best-selling author, J Scott to provide Bestever listeners a free chapter from his new book on negotiating real estate. If you’d like to improve your bestever negotiating skills, visit www.fundthatflip.com/bestever to download your free negotiating guide today.


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.

Well, I hope you’re having a best ever weekend. Because it is Sunday we’ve got a special segment, like we usually do, called Skillset Sunday. By the end of our conversation you’re gonna have a skill that you can go apply towards your real estate endeavors.

Today we’re going to help you learn how to generate referrals without asking, and I can tell you based on my experience in advertising prior to getting in real estate, full-time, and also in real estate now full-time, word of mouth referrals are the number one influencer of purchase intent. So listen up, Best Ever listeners, Stacey Brown Randall is going to share with us how to generate referrals without asking. Stacey, how are you doing?

Stacey Brown Randall:  I’m doing great today, thanks for having me.

Joe Fairless: My pleasure. This is a topic that is important for all real estate investors, as well as to any entrepreneur, really. A little bit about Stacey – she is a referral marketing strategist, she’s a business growth accelerator and a productivity coach, as well as an adjunct professor. She is based in Charlotte, North Carolina and she’s gonna help us generate referrals without asking. With that being said, Stacey, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Stacey Brown Randall:  Absolutely. The short story is this is actually my second business. I actually started a business a number years ago that failed, and when I looked back over that business and why it failed, I realized I didn’t touch business development every day in a way that was gonna work for me, so I needed to figure out a business development strategy that I would be willing to do… Because I wasn’t gonna cold call and I wasn’t gonna stalk people on LinkedIn, and I wasn’t gonna network every night.

So when I started my second business, that’s where I kind of came up with this whole strategy behind how do I generate referrals and how do I do that without asking, because asking for a referral to me feels a lot like a cold call; kind of like that red-headed stepchild, it feels like a cold call. So I needed to figure out a different way, and I did it out of necessity, because I didn’t want to have a second business that failed. From that perspective, for what I do with my clients now as I started having success with my referrals, they were like “What are you doing?” and “Teach it to me.” That’s really where my focus has become over the last couple of years – really helping service professionals and business professionals and business owners understand that you can generate referrals, you can do it in mass, you can do it with volume and you can do it without asking.

I would say, if you look at my history – my background is kind of a portfolio career; I did the corporate thing, of course, and then until I hit that business failure… The learnings from that is what’s changed everything with what I’m doing now.

Joe Fairless: So how should we structure our conversation so that by the end of this we’ll know how to generate referrals?

Stacey Brown Randall:  I think the best thing is we probably need to kind of set a foundation of understanding the definitions behind leads, word of mouth buzz, introductions and referrals, and then maybe dive into some of the points that I teach folks on the best way to go about generating referrals and what are those rules you should follow, or those no-no’s that you shouldn’t do.

Joe Fairless: Yes, I love that. Let’s do it.

Stacey Brown Randall:  Alright, so just to kind of give everybody an understanding, as I think it’s really important that we understand what we’re talking about, because word of mouth buzz is different from a referral, which is different from an introduction, which is different from a warm lead. So let me give you some quick high-level definitions and examples of those.

A warm lead is where someone says “Hey Joe, company ABC down the street needs your help. You should call them, and when you call them, use my name.” That’s not a referral, it’s not even an introduction, it’s not even really word of mouth buzz, it’s a warm lead. You just happen to have the person’s name to call, and you happen to have a person you can use, but it’s still like a cold call, just a little warmer.

Word of mouth buzz is what I think most people think is much like a referral. The reality of the word of mouth buzz is I would come up to you and be like “Hey Joe, were your ears burning last week? Because I was just talking to you; there’s someone who really definitely needs to call you, and I now they will.” Well, that’s great that they identified that there was a need with that person and why they needed to work with Joe, but they didn’t actually make the connection happen… So it doesn’t do anything for you. You don’t know who that person is, and if they’re not willing to connect you, it’s still just word of mouth buzz; it’s awesome and we’ll take it, but it is not a referral.

An introduction is where they say “Hey Joe, meet Stacey. Stacey, meet Joe. You guys probably should have some great synergy” or “You guys should get to know each other to grow your network.” So they make the connection for the introduction, but they don’t say why we should be meeting. So I don’t know, are you interested in what I do so you’ve been referred to me, or is this just one more person I get to meet that’s gonna grow my network? Nothing wrong with that, but a true referral has the connection that’s made to the person who has the need, by the referral source, so the prospective client is connected to you by someone (your referral source) and that referral source has already identified why they should be connected to you, why they should work with you, and states that. That is the definition of a true referral, and that’s why the close rates of referrals are higher, that’s why when you said with the introduction that it is the best way to bring in new business because people want referrals over anything else, and they’re the easiest to close because they’re less price-sensitive because they show up already valuing what you do. But you have to make sure it’s the right thing for all those pieces to fall into place.

Joe Fairless: Will  you give an example of what that sounds like, what that connection is made to the person who has a need? Just what that would sound like

Stacey Brown Randall:  Sure. Most of the time, I always prefer for them to come over e-mail, because I think that you are in control at that point. So when someone says “Hey Stacey, I’m having so-and-so call you”, I’m like “Yeah, why don’t you go ahead and send them an e-mail and copy me on it?” But typically, what that e-mail would say – I just got one yesterday… Literally, that e-mail comes in that says “Hey Stacey, meet Rob. Rob does this. Hey Rob, I was telling you about Stacey; Stacey does this. I think she can help you with your referrals. You guys should definitely set up time to connect, or go ahead and download some of her free resources.” So there’s already that opinion of that met need of “Hey, we’ve already talked about, Rob, why you need to be meeting with Stacey; she’s gonna help you with your referrals, and I’m connecting you with her so that she can kind of take over and facilitate the next conversation or the next meeting.”

Joe Fairless: Okay. So that’s what it is. Now, how do we do it?

Stacey Brown Randall:  Here’s the first thing I have to tell folks – you’ve gotta have the right mindset, and that is there’s a couple of things you can’t do. You can’t ask for referrals and you can’t be willing to pay for referrals. Now, I know, if any of your listeners is a realtor, in their industry actually a referral feedback to another licensed realtor is common practice and it’s identified and disclosed to the client, so that’s not a big deal. What I’m talking about is the things you don’t disclose to the client, whereas you’re gonna get a kickback, you’re gonna get paid for sending someone to somebody else… Because at that point we’ve commoditized the relationship. We do the same thing when we ask. When we ask somebody to send us a referral, we’re manufacturing the need for why they should actually reach out to us, why they should actually take time to meet with us.

When we manufacture or we commoditize any piece of the referral process, then we’ve cheapened it. If you think about commoditizing it, if I’m getting paid to send you referrals, actually what you’re asking me to do is just to work for you… And I have a full-time job. I don’t need to be doing work for anybody else, unless that’s a relationship I’m willing to enter into and there are guidelines and things in writing that needs to then be disclosed to the people I may be referring to you.

The other part of that is that when we pay or we ask, when you think about that ask, I’m asking you to do something you hadn’t thought of before. That’s why when we ask people “Hey, who do you know who needs what I do?”, if you’re in a face-to-face meeting with them, you literally see them shift in their seats; they literally pull back in their seats. You’ve probably been a part of that, right Joe?

Joe Fairless: Yeah…

Stacey Brown Randall:  You’ve probably been in a meeting like that. They either slide the blank sheet of paper across the table to you and you’re like “Can you write down ten people who are just like you, who need to do work with me?” Or they just come to you and say “Who’s like you that I need to be doing business with?” and you literally see them lean back in their chairs, or they start to shift uncomfortably. That is literally their physical reaction to what you just asked, and they are trying to distance themselves from what you just asked them to do. The truth is it’s because you’re asking them for something that they’re not maybe willing to do, or they don’t want to do, or you didn’t set it up correctly.

I always tell folks, I don’t teach anybody how to ask, but I do teach folks in my online program and in some of my live events, I do teach folks how to plant referral seeds so that I don’t have to ask, and I know I’ll come up top of mind when that situation presents itself.

I think the question most people always ask themselves is “Okay fine, but does that mean I’m gonna generate any level of volume?” I’m like, “If you know the language to plant the seeds and you have the right group of folks that are your referral sources and you follow a process to stay consistently in touch with them year in and year out, yes, you can definitely generate volume.” I know in my practice from the very first year that I started out as a business coach I generated over 100 referrals and I’ve done that every year consistently.

In my first year as a business coach — and my first business had nothing to do with business coaching – I generated 112 referrals following this process. It’s just a process, right? But you have to have the pieces that fit, so that you know what to do so you’re not having to ask, you’re not having to do anything else that would put you in a position to cheapen the relationships you have with people.
So we don’t ask and we don’t pay, but there’s a few other things we also have to make sure we have in place too, and that is that your client experience and the work you do – it can’t be choppy. You’ve gotta deliver a quality product or quality service… Because nobody refers crappy work, but even in this day and age nobody refers average work either. So you’ve gotta elevate that experience.

Joe Fairless: One quick follow-up question – the 112 referrals you got in your first year, looking back on it, what was the difference between the conversion rate for those 112 that were referred to you versus the leads that you got from other sources?

Stacey Brown Randall:  I would say in my first year, when you’re thinking about those 112 referrals, the other source that brought in a number of new clients for me was my speaking engagements. I would say in my first year, at the end of that first year, I was in the 60% range of closing on referrals, and the other 40% of my client base came through because they saw me speak. Maybe not a full 40%, because there were still some people who just knew me from my past life and just hired me because they knew me. So there’s definitely some percentages in there.

Now I’m at the point where a couple years later I’m more in the 90% rate of my clients coming through referrals, which means my close rates have gotten better because I learned different language. It’s really fascinating – when you go any type of sales training, there’s like a script they teach you when you’re in that first meeting with that person – identify their pain, figure out if you’re the fit… And what I realized is when someone was referred to me, the questions I asked and how I handled those conversations were entirely different. And when I figured that out, like “Oh, right, you actually already want to buy what I have; you already wanna buy me, I’ve just gotta figure out how to get you to that place by asking different types of questions.” When I figured that kind of language out, then my close rate definitely went up.

I’ve also gotten better at training my referral sources on the right type of person to send to me, so I think that’s increased me from like a 60% to more of like a 90%-95% close rate from where my clients come from.

Joe Fairless: Okay. And you said language, right group of people that you’re speaking to, and training them on who you’d like to be referred to, and the process. Can you elaborate on those three?

Stacey Brown Randall:  Sure. So I always tell folks, I believe that this system works best – it can work with a lot of different folks, but I believe this system works best when you’ve been in business for at least a year or two, and you have clients already that you’re working with, and we have to identify where those clients came from, and how they arrived. If they were referred to you, that’s where we start with your referral sources.

My referral sources are from clients that have referred to me, and the centers of influence (COIs) that have referred to me, which basically means they’ve just never done business with me, but they know what I do. So it’s cultivating enough of those people to generate the type of volume you need.

Whereas I may have 20 or so folks in that category, that are sending me referrals – some of them only send me one or two a year, and some of them send me double digits, like 10, 11, 12 a year… That’s enough to give me what I need for my business. But relate that to an attorney that I work with that can only take 12 cases a year, and we got her referrals up from six or seven a year to averaging about 27 to 30 a year. Now, she gets to pick and choose the cases that she takes, because she’s only still gonna take on about 12 cases a year, she just wanted an easier way for those cases to fall into her lap, so to speak.

So it’s figuring out who already refers you, and if you don’t have enough of those people who should be referring you, and then building out a relationship with them; that’s really the process I teach in my online program and my live events – what are the steps we take, what’s the process we take so that we know we’re doing something consistently that matters, that’s memorable and meaningful, and is all about the referral source, nothing about us…? Because nobody actually refers to us because of us; they refer to us because they know somebody who has a need, and they wanna be the hero to help that person solve their problem, and I am the right solution.

Joe Fairless: That’s a money line right there, they refer to us because they know people who have the problem, and — what did you just say? I don’t wanna butcher what you just said… [laughs]

Stacey Brown Randall:  No, you’re doing great! So basically, we have to remember who’s the hero in the referral story, and the hero is the referral source, because they know the person with the problem, and they wanna be a hero to the person who has the problem, the prospective client. The fact that I happen to be the best solution is just bonus and benefit.

Joe Fairless: So it’s not saying in your e-mail “If you like this, please share with your friends”, it’s focusing on that person delivering the outstanding work, but then identifying the right people who can refer you to their friends, and then making them the star of the show by doing memorable things for them… Is that correct?

Stacey Brown Randall:  Correct, and then doing it on a year-long basis, because that way you know if you’re gonna have enough touch points, if you bill out what you’re going to do. You can manage your budget better that way, and you can manage your calendar better that way if you know what you’re gonna do for a full year.

But what I’m not talking about, and Joe, I think a lot of people get this wrong – I’m not talking about your newsletter; that does not count.

Joe Fairless: Right.

Stacey Brown Randall:  I’m not talking about the fact that you’ll send them out an e-newsletter or you’ll happen to see them at a couple of networking events and so you’ll strategize time to go to talk to them… I’m talking about people who make your life easier because they draw clients into your lap; what is that worth to you and how valuable is that to you? In some cases it depends on how much a client spends with you, but I had one client drop a client in my lap that was worth 20k. I will do a few things above and beyond just sending them a thank you note or a thank you e-mail.

Joe Fairless: What do you do?

Stacey Brown Randall:  There’s two secret sauces to what I teach – it’s the language that I teach; for most folks, there’s usually about nine different situations where there’s this particular strict or messaging I want you to know, so that’s one piece of the secret sauce.

The second piece of the secret sauce is what I call this “referral experience.” Any person who refers to you, they should feel like they’re important to you, and you put them through an experience. That experience is something that’s memorable and meaningful, and I tell folks, it follows three platinum principles… And then I’ll give you some examples.

So the platinum principles are – first, anything you do is all about them. If I send you a water bottle with my logo on it, Joe, who’s that about?

Joe Fairless: Yeah, who cares?

Stacey Brown Randall:  Right, that’s about me. “Woohoo, my logo!”, right? So for instance, this is an example I use a lot, because I think it makes the point the easiest – a lot of my referral sources are working parents, so I recognize Mother’s Day and Father’s Day. Of course, I have referral sources and client sources that are not parents, so obviously I do something different for them. But if they’re a working parent, if they own a business, they’re working, and they send me referrals, on Mother’s Day they get recognized. Last year I sent a Wonder Woman water bottle to each of my top referral sources, and a card on it just said “Never forget you are a hero! Happy Mother’s Day! Stacey.” And when they took the card off, there was nothing on that water bottle to say Stacey sent that. My logo wasn’t printed on the back, it wasn’t on the bottom, it wasn’t on the top, but they never forget that I am the one who gave them that water bottle, because it was memorable and meaningful, and I was acknowledging something about them that I know, because you should know your referral sources well. You should know if they’re a parent or not, you should know the type of business that they’re in, you should know the type of clients they’re interested in bring in to their business… Or whatever their needs are.

You should know things about them so that you can provide an experience for them, which is done, and that experience is done whether it’s face-to-face time that you spend with them grabbing coffee or lunch, helping them grow their business, or it’s events that you may invite them to so they can grow their network and meet other people, it could be gifts that you do, it could be something you mail, like a thank you card or a “I appreciate you” kind of card. It could also be something that you e-mail – “I saw this article, I thought of you”, but it’s all about them, through all those things that you do, and then we just build it out over a year so we know we’re not doing too much and we’re not doing too little… Because platinum principle number one says it has to be all about them.

The platinum principle number three says it’s gotta keep you top of mind. And then platinum principle number two is you have to be comfortable doing it.
An example I always give is I worked with a financial advisor and he said “You know what, Stacey, I will do just about anything you tell me to do, but if I have to take people to a bunch of dinners or a bunch of events that are after hours, in the evenings, I’m not doing it. Because at five o’clock, when it rolls around, I wanna go home and be a dad, and I wanna be a coach with my kids in their sports teams, or be in there with them after school”, and I said okay… So if we built something for him that was all these evening things — well, first of all he wouldn’t have done it, and second of all, he would have every right to fire me, because I wouldn’t have given him what he needed.

Joe Fairless: What’s an example of what you did with him?

Stacey Brown Randall:  I have to learn a little bit about folks when we’re crafting these things, whether they’re in the online course or not; I give them things to think about to help them figure out what this looks like. For him, he happened to have told me that he loves to eat at off the beaten path locations. He loves finding that new restaurant, or that ethnic restaurant that no one’s really tried, and taking people to them. So we put that in as a part of his process, but also he loves baseball, so doing at our minor league stadium that we happen to have here in town [unintelligible 00:19:53.27] where he brought all his referral sources and they got to bring a spouse or someone with them… So that was part of what we did. He had the budget for it.

I have some folks who come to me and they’re like “I have no money.” I’m like “Okay, we can do this on a shoestring, it’s not a problem. It looks different, but it’s not a problem.” So you just have to be willing to figure out what is it that you are willing to do, but more importantly, what is it that those referral sources want or need, and then how do we build that out so that you stay top of mind throughout the year in a memorable and meaningful way, so that it feels authentic and genuine, because it should be. Because if you’re trying to do this to buy referrals from someone by buttering them up, they can tell. It has to be real. And if you’re doing it and it feels okay to you, then it’s probably real.

That’s why those platinum principles are so key and everything we build is around those three principles.

Joe Fairless: What are some other examples that you or your clients have done throughout the year to stay top of mind in a memorable and meaningful way?

Stacey Brown Randall:  I have one client that is a fire and safety company, and they do this for their referral sources, but also for their clients, because they’re all in that fire and safety world… And apparently sometime in March – I don’t know the exact date – there is a national day known as Near Miss Day; I would not know anything about this. There’s lots of national calendars and whacky holidays calendars out there. When people go through my course they get a copy of one, because sometimes it’s those things that make you most memorable and meaningful… It’s like “What’s a whacky day that connects somehow to my business that I can do something for?” I have had people pick some crazy things. Ask me in a minute and I’ll tell you what someone did for National Pickle Day.

But for this particular client, because they’re in the fire and safety world, they’re all about safety and protection and that’s what they do with their clients… So there’s this thing called Near Miss Day, which is I guess when an asteroid almost hit the Earth, but it missed us. It’s back from the 1980’s I think, but it’s known as Near Miss Day. So for Near Miss Day they were gonna send Earth squeezy balls to everybody, with a story of Near Miss Day and why they’re celebrating it, and “Thanks for using us. We don’t want near misses”, but then also the referral source says “Thanks for sending us to other folks, that we can help them out with their safety, so they don’t have a Near Miss Day.” So they just tied it all in, and it worked for them to do it that way.

Joe Fairless: Okay. And the pickle thing? Obviously, I have to ask you about that now. [laughs]

Stacey Brown Randall:  We have a National Pickle Day sometime in October or November. The things I now know because my clients tell me… I’m like “Fascinating!” It’s funny, because this person is a coach that helps people figure out if they want to become entrepreneurs in a franchise model system. This client, she was thinking [unintelligible 00:22:24.06] whole referral process and she was like [unintelligible 00:22:26.08] and I was like “Cool!”, so she came up with National Pickle Day.

Basically, she had it much more clever than I’m about to say, but it was something to the effect of “I think pickles don’t get their due. National Pickle Day is overlooked, everybody only cares about November (because she mentioned Thanksgiving, or something). Other major holidays overshadow this very important day and I wanna bring it to the forefront, so I want you to celebrate National Pickle Day with me”, and she sent — there’s an herb that you have to put in with cucumbers to turn them into pickles, and she literally sent that as the gift with the recipe about how to do this to make your own pickles for pickle day. Again, I kind of butchered what her note said, because I don’t remember – it was a while back – but it was really funny.

And then I have a homebuilder that happens to know how to juggle. Well, in June it’s National Juggling Day, so he did a video of himself juggling hammers, because he can juggle… He know what he’s doing. He can juggle, so he’s juggling hammers, because hammers/homebuilding fits together, and he was saying something cute like “This is National Juggling Day. I bet you didn’t know that, as your builder, I could juggle. Thanks for your business” and then for his referral sources, “Thanks for always sending clients my way.”

Joe Fairless: And that’s part of the language? Even if they’ve never sent new clients, you’re just assuming that they have and you’re implying that they already have and then they might be compelled to do so?

Stacey Brown Randall:  It’s how we word it, yes. It’s something to that effect. If they have sent a referral, we never miss an opportunity to thank them for that, either by a person they referred to us, or just to say “Thanks for sending all the referrals over the years.” If they haven’t, we use just a little bit of a different language, and it’s more so the token of “We love helping the people that you know and care about.” So it’s not like we’re necessarily doing a presumptive close in that type of language, but we are planting the seed.

Joe Fairless: Great stuff. I love how you’ve torn down the typical paradigm for how to get referrals and you’ve built up from the center focus of the actual referrer, and not about us and our business, but it’s about them and making them the star of the show.

Where can the Best Ever listeners get in touch with you?

Stacey Brown Randall:  I put together a page just for your listeners to make it easy for them. They can go to GrowthByReferrals.com/joe and they’ll be able to download some of those no-no’s I was talking about in the beginning about not asking and not paying. I call them “The Seven Deadly Sins Of Generating Referrals.” They can download that on that page, and then if they’re interested and wanna join the Facebook group, it’s called Referrals Without Asking; it’s an awesome, active community. I answer every question that’s asked personally, but the community’s great about answering questions, too.

Then also I have challenges like “Five days to jumpstart your referrals.” That challenge is free and I do it throughout the year. So they can sign up for those different things, learn more about me before they decide to dig and decide “Hey, do I actually wanna work with Stacey or do I actually wanna go to one of her live events or join her online course?” That’s the best place to just kind of start to understand my philosophy, to decide if you wanna learn more.

Joe Fairless: Stacey, thank you for being on the show and, as I mentioned earlier, identifying the best way to grow our business through referrals, and tactically how to do that. First, we need to know the lifetime value of a customer, because that will help us determine what type of ongoing meaningful and memorable approach are we going to take, whether it is doing the [unintelligible 00:25:34.20] thing with the spouses, or maybe it’s just juggling some hammers, or anything in between.

Then also what things we should say or should not say, and how we should never end a water bottle with our logo on it, because it’s not about us, and I think that’s the main takeaway for me, but then also tactically how you approach it. I’ve got a page of notes and I’m gonna be looking back on this and listen to this interview again.

Thanks for being on the show. I hope you have a best ever weekend, Stacey, and we’ll talk to you soon.

Stacey Brown Randall:  Thanks again, Joe.

best ever real estate pro advice

JF1113: Protect Your Income With Rental Income Protection with Sky Mikesell

When a tenant stops paying, won’t leave, and trashes your property, RentSure can come to the rescue. For a low monthly fee, they deal with the eviction, and pay you your missing rent for 90 days – plenty of time to turn the unit over. They also offer malicious damage protection in case they cause excessive damage. Tune in to hear more details about how RentSure can help you protect your income and properties. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Sky Mikesell Real Estate Background:
-CEO of Nationwide RentSure, a rental income protection company
-Invested in 8 states over last 20 years For 10 years he ran a turn-key investment firm
-Grew portfolio to 19 single family homes before transitioning into turnkey property
-Bought first real estate property at 19 after saving money for 2 years and works as plumbers assistant $6/hr
-Based in Charlotte, North Carolina

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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 of that fluffy stuff.

With us today, Sky Mikesell. How are you doing, Sky?

Sky Mikesell:  Hey, Joe. How are you? Thank so much for having me.

Joe Fairless:  My pleasure, nice to have you on the show. I’m doing well, and looking forward to diving in. A little bit about Sky – he is the CEO of Nationwide RentSure, which is a rental income protection company. He has invested in eight states over the last 20 years. He has grown a portfolio to 19 single-family homes before transitioning into turnkey property. Based in Charlotte, North Carolina… With that being said, Sky, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Sky Mikesell:  Absolutely, thanks again. I’ll dive right in and give you my quick background. I actually started on the West Coast; I’m from Portland, Oregon, originally and I am now in based in Charlotte, North Carolina, but I started out investing as a 19 year old… That was a long 20 years ago. I was making six dollars an hour as a plumber’s laborer – not a real plumber, but just the helper… And I started buying real estate. I had saved enough to buy my first piece of real estate, a year later I bought my first rental property, and I’ve pretty much grown since then. About 2005 I liquidated my portfolio on the West Coast, knowing something bad was coming. The writing was on the wall, so we got out.

We searched the country over and researched where we were gonna go, and ultimately ended up settling on Charlotte, so here we are… I started a turnkey operation shortly after arriving, and we were one of the first few turnkey operations in the country back then. We were doing what turnkey operations do – we were buying, renovating, leasing, selling… We did quite a few transactions over that 10-year span that we ran that operation, and we decided to transition out of that as 40-50 turnkey providers came into the marketplace. We really shifted our focus in the last three years into rental income protection.

We  looked hard, and I said “All of my clients over the years have bought good properties from me. We renovated them well, but a few things always hurt them”, and it was never anything that we did, but it was the things that we could not prevent – it was the unexpected maintenance and the unexpected vacancy, or unexpected eviction, in most cases.

Unfortunately, with those cases, that’s what really is a cashflow killer. It’s a cashflow killer for me as an investor, most likely you as an investor, and most of our [unintelligible 00:03:34.19], so a few years ago we shifted our focus into the rental income protection business, and we launched a rental income protection company here in the US, the first one of its kind in the US, and as of now, as far as I know, the only one that’s up and running and doing it.

Joe Fairless:  I’ve heard about companies like this, but maybe I just dreamt it, or something, or maybe it isn’t exactly what you’re doing, so tell us about the company and the business model.

Sky Mikesell:  Sure. Basically, rental income protection — all these years that we’ve been in real estate, I think all of us are raised as these landlords to just accept this fact that “You know what? Evicting a tenant and losing that rent is just a cost of doing business.” That’s a mantra that all of us have said. Well, the fact is it does not have to be this accepted belief.

In Australia they’ve had rental income protection for well over 25 years. Over 80% of the landlords in Australia have rental income protection. In the UK, in Germany it’s well over 60%. In the US we just haven’t had it up to this point. What rental income protection really is in its simplest form is if the tenant defaults and stops paying rent, then rental income protection generally will step in, pay for the eviction, do the eviction for the landlord, they will go ahead and start paying the landlord the rent that they’re no longer getting from the tenant… And in our case, we actually cover malicious damage caused by the tenant, in addition to everything else. So all of those things kind of encompass rental income protection.

Overseas there’s different iterations of it, but for our program here in the states, that is exactly what we handle.

Joe Fairless:  How do you make money?

Sky Mikesell:  That’s a great question. There’s 48 million rental units in the United States, so there’s not a shortage of market for us to have. Our critical mass number is not a huge number for us to get there. The cost is relatively affordable compared to what it is covering. I’ll just cut to the chase – we’re hovering right around $500-$600 on the starting tier. We will run from $600 to $900 in rent for the starting tier, and it steps up from there. Obviously, the more the rent, the more the cost of the membership.

Joe Fairless:  And is that a monthly or annual?

Sky Mikesell:  We got it set up so landlords can pay each month.

Joe Fairless:  Got it. So the minimum to have that insurance – $500/month?

Sky Mikesell:  That’s the starting, yeah. $528 is the lowest threshold we’ve got, and that’s up to $900 in rent. So it covers the lower-priced [unintelligible 00:06:04.07] in most cities here in South, South-East, Midwest.

Joe Fairless:  Now, that $528 is what I pay as a landlord for this insurance?

Sky Mikesell:  Yeah, it’s a good question. The way we’re set up is we are set up as a membership-based organization. What that means is we are backed by an A+ insurer that’s actually owned by Lloyds. Our membership organization is backed by insurance; we have gone through the regulatory process in all 50 states, we’re 100% financially-backed and legally protected. The way the membership organization works is you sign up as a member, and part of your membership comes the benefits of rental income protection, comes eviction protection, the cost of the eviction and malicious damage protection. Those things are all part of the membership, so for that membership you’re buying, per unit, you’re looking at $528, depending on the price point, and that’s on an annual basis.

Joe Fairless:  That’s annual or monthly basis?

Sky Mikesell:  That’s the annual cost, and it can be broken down per month.

Joe Fairless:  Oh, that’s what I was missing. So the $528 is annual, not monthly.

Sky Mikesell:  Yeah.

Joe Fairless:  Okay, I misheard you. Now that makes sense. It’s a lot clearer now. So $528 is the minimum to get in, and that would cover you for one rental property. Does that depend on how much the rent is of that rental property?

Sky Mikesell:  Yeah, that’s exactly right. On that first tier, at $528, your rent can come in anywhere from $600 all the way up to $900 in rent. Then it’s the next step up from $901 to $1,200, and it continues to step up from there.

Joe Fairless:  Got it. Okay, cool. So for $44/month I am guaranteed income for 12 months, or for the lifetime of the lease? How does that work?

Sky Mikesell:  That’s exactly the way it works. If one of your tenants defaults, we step in, we pay for the eviction, we do the eviction, and then rent starts up. So within 60 days you get a personalized rent check, and that is for the previous two months – so from the time the tenant defaulted. So you’re covered all the way up to 11 months on the rental income protection. It’s one or the other.

This is the month of June right now, so let’s say in June the tenant defaults, and let’s say it takes RentSure until the month of September to get them out. So you will have received your income from June, July, August and September. Let’s say 15th September rolls around, the tenant has been removed, you’ve been granted possession of the property. At that point, our system will pay you an additional 90 days worth of rents. That’s October, November, December rent. So you get three additional months. That’s 90 days.

That’s kind of a headstart to say “Go get it cleaned up, get it ready, re-rent it…”, and I don’t know too many property managers in the U.S. that can’t rent out their properties in 90 days. In small towns, bad neighborhoods maybe, but everywhere else, 90 days or less is pretty reasonable for getting it rent-ready and back on the market and re-rent it, obviously. So that’s what happens during the rental income protection process.

Now, if the tenant was to maliciously damage the property, you can go on and file another demand on our website as part of your membership, saying “Look, it wasn’t just normal wear and tear, it was malicious. Fist holes in the wall… They beat up my property pretty good, and I’d like to file malicious damage demand.” At that point, we protect up to $10,000 in malicious damage caused by the tenant.

Joe Fairless:  How do you qualify a landlord and the tenant in order for them to be in this program? Because there’s a lot of ways to scam this.

Sky Mikesell:  Of course there is. Anything that has any sort of protection benefits like this I think there’s always gonna be the people that are smarter and more conniving than we are, and they’re gonna figure out a way. We’ve got some pretty good checks and balances in place.

Look, what we didn’t wanna do is we didn’t want to be the failing bottleneck for the landlords and the property managers, meaning we did not want the landlords and property managers to have to come to us and say “Hey, I’ve got this tenant and we’d like to know what you think of her. Will you approve her?” No, we put all the power and the control into the property managers, in the landlords’ hands as to how they wanna do it.

Our criteria is so simple – we are expecting the tenant to make two and a half times the gross rent. Most property managers, as you know, are screening for three times gross rent. We’re looking for no evictions and no judgments in the last three years. We’re looking for a simple rental agreement that’s approved by the state for wherever they’re at, and then we’re looking for the fact that the tenant actually paid first month’s rent when they moved in, and they weren’t in default the second they arrived. This is a pretty low barrier to entry.

Credit score – I don’t care what the credit score is, it makes no difference to us. Data supports that tenants’ credit scores has nothing to do with their follow-through or their ability to pay rent. This may come as a shock to some of your Best Ever listeners, but the fact is that tenants’ credit score has nothing to do with whether they’re gonna pay rent.

You know what else doesn’t matter? Whether a tenant pays a true deposit on not has no bearing on whether or not they’re gonna continue to pay the rent. Sounds crazy, but we wouldn’t be in business if we didn’t have the data to support that, so that’s where we’re at.

Joe Fairless:  How large units do you do? I imagine you don’t get into apartment communities, but that might be an incorrect assumption.

Sky Mikesell:  We do get into apartment communities. There’s very minor variations with apartment communities. Actually, there’s only one, and I’ll tell you exactly what it is. With a single-family home we will cover a maximum of $100,000 in lost rent, and as you know – we can do the math on that together – it’s pretty unlikely for us to hit that. Possibly California, possibly New York, but to date we’ve never hit that number.

For apartment communities, one address, it’s capped at $500,000 per domicile address. If you have ten units in an art building, you would have to have a membership on each one of them, but we cap you at $500,000 in rental income protection.

Joe Fairless:  How long has Nationwide RentSure been around?

Sky Mikesell:  We have been in North America for going on two years now. We’ve had a Canadian operation just right on the other side of the border, right in Toronto, for over two years, and the US operation has been in full effect for about a year now. We’ve got a combination of multifamily owners, turnkey operators, do-it-yourself landlords, we’ve got property managers utilizing us… We don’t know too many investors that are not in need of some sort of rental income protection.

Most of your Best Ever listeners, ranging from the private do-it-yourself landlords to property managers — the property managers are basically looking to reduce their workload and increase their income. That’s what rental income protection does for them. They no longer have to go to Court for the property manager, and they get to stabilize the property management income that they no longer would have if the tenants had stopped paying. So now the income continues to come in, they continue to get their management fee, and everybody keeps moving forward; the owner is happy.

Even guys like you, Joe, who are trying to get the highest return possible for your syndications — obviously, you’re trying to predict what that return is going to be, and the only thing that really throws that proforma off would be maintenance and vacancy, would you agree?

Joe Fairless:  Pretty much, yeah.

Sky Mikesell:  Pretty much. I mean, we’ve always got some variables. We probably don’t have time in this 30-minute podcast to go in all the variables, but we’ll call those the two big ones. So this solves at least the eviction fees. Of course, we do cover abandonment, as well. The protection for abandonment has a few different variations, but [unintelligible 00:13:46.25] the same way.

I really do feel like this is a fit for everyone. We don’t see anyone in the real estate sector — I’ve talked to one landlord so far (do-it-yourself landlord) who managed about 20 unit and he said “I haven’t had an eviction for 12 years.” That’s okay, well you probably —

Joe Fairless:  Raise your rent.

Sky Mikesell:  Yeah. [laughs] Raise your rent, and you probably don’t need Nationwide RentSure, because clearly you’re better at this business than the rest of us are.

Joe Fairless:  Why Canada? You’re not Canadian, are you?

Sky Mikesell:  No, I’m an Oregonian by blood. So it started in Canada; this project originated in Toronto. They wanted to beta-test it in Toronto, just because it’s a much smaller market than the US. The US is a very complex market, which is why no one has come here up to this point. We refer to the US as 50 different countries; there are 50 states, 2,200 jurisdictions, all with different rules for Court, different eviction — landlord/tenant law has a lot of similarities…

For example, in Texas if a judge does not like where your signature is on the eviction form, he can move your signature to the other side of the page and does not need to notify anybody of such change. So when you start thinking about having to file eviction in quantity electronically and over a large scale such as we’re doing, judges moving signatures really creates a problem. Having to solve that has been the biggest reason why rental income protection has not been in the States up until now.

Joe Fairless:  What’s been the biggest challenge that you’ve had growing the company?

Sky Mikesell:  I hate to put this so bluntly, but I personally believe that the biggest challenge that we’ve had is the gotcha factor, the “too good to be true” factor. I hear it on the phone, and I heard it when I used to sell turnkey property… “This seems too good to be true.” I’m like, “Well, what’s wrong with that? Do you not expect that things could happen to you? You sound like a good person, why can’t good things not happen to you?” So it’s not a too good to be true scenario, it’s not a gotcha scenario, and I think because it’s not familiar here in the US, that’s the first obstacle to overcome.

I will tell you, the folks that have probably most widely accepted it are the turnkey providers and multifamily folks, because they already allocate money for this type of expense in their proforma; they’re calling it vacancy or eviction. But a lot of do-it-yourself landlords and smaller investors that are using professional property management that own ten or less properties – they’re rarely making this allocation, despite — you’re a good counsel on this podcast, and this probably could counsel numerous other resources saying to allocate for these expenses… They’re not. So it was a lot easier to convince the turnkey providers, the multifamily folks, because it made sense to them because they already had this number in the proforma anyway.

Joe Fairless:  What is your best real estate investing advice ever?

Sky Mikesell:  My best advice would be to protect your rental income. I’ve owned a lot of property in the last 20 years, and as you know, lost rent never gets found. Once you lose that rental income, it’s gone. You’re unlikely to ever recover it. You can’t immediately raise the rent high enough to recover one month worth of rent, no less the average of five months worth of rent losses that it takes to get somebody out and get the unit re-rented. So it’s just a distant prospect that you’ll ever get that rent loss recovered, unless you maybe sell the property at some near point down the road. So my best advice is protect your rental income.

Joe Fairless:  Are you ready for the Best Ever Lightning Round?

Sky Mikesell:  Let’s give it a shot.

Joe Fairless:  Alright. First, a quick word from our Best Ever partners.

Break: [00:17:21.29] to [00:18:24.01]

Joe Fairless:  Sky, what’s the best ever book you’ve read?

Sky Mikesell:  Best ever book I’ve read is a book called “It’s Not About The Money” by Bob Proctor.

Joe Fairless:  Best ever deal you’ve done as an investor?

Sky Mikesell:  Okay, this is not gonna be a lightning response…

Joe Fairless:  That’s fine.

Sky Mikesell:  Best ever deal I’ve done… Okay, I’ll give you a very strange response on this one. And honestly, I’ve had hundreds of real estate deals that I’ve made a lot of money on over the years. Many of them were structured in a very cool and creative fashion that allowed me to earn that money, but honestly, the deal that I’m probably the most proud of – and this might sound really strange and probably not the response you’re looking for, but in 2012 I sold one of my companies, and in that transaction I made some blaring mistakes… Joe, within six months of that transaction I went from 30 employees and a massive real estate portfolio to pretty much losing almost everything. I went into debt… So you’re saying “This is great, Sky, but where’s the best part of this deal? Is this the best that you’ve ever done?” Here’s the best deal I’ve ever done – I found myself in this crazy place… Not a lot of money left, no income, not a lot of assets left, and I just picked up the phone and I started working out a plan with every single one of my lenders.

I made a choice. I had people encouraging me to give up, to file bankruptcy. Some of them were investors and clients, some of them were family and friends, but I made a choice not to give up, but to work harder, to rebuild and to honor all of my debt… But I had to start by picking up the phone and working through it with every single person, and it was honestly some of the toughest negotiations I’ve ever faced in my entire real estate career… And I got through it. I’m here, I’ve rebuilt — I started rebuilding the portfolio and we’re quite strong, and three and a half short years. So that’s been my best deal so far.

Joe Fairless:  On that note, what’s a mistake on a transaction that you can pinpoint maybe specifically?

Sky Mikesell:  Any mistakes made on transactions are always due diligence and your gut instinct. One of them is verifiable, and the other one is deep down… And you know, even when sometimes the due diligence makes sense, the gut instinct is telling you something different. So those are two big checkpoints on every deal – I always do my homework.

Joe Fairless:  And can you give a specific example?

Sky Mikesell:  Well, in that specific example the numbers looked great, but the gut was telling me that the partner on the other side had other plans for that transaction, so… They had already made plans to move around me on that particular deal, and they were quite successful in doing that. Of course, Joe, my wife warned me that it was gonna happen; she didn’t trust him… Gosh, I hate it when she’s right!

Joe Fairless:  What si the best ever way you like to give back?

Sky Mikesell:  I support various Christian Ministries and I support Special Olympics, because of their courage. My brother has Down Syndrome so I support Special Olympics for almost twenty years now.

Joe Fairless:  How can the Best Ever listeners get in touch with you?

Sky Mikesell:  Probably the easiest way is my website – it has everything I’m involved in. SkyMikesell.com.

Joe Fairless:  Cool. And then also NationwideRentSure.com would be another place?

Sky Mikesell:  Nationwide RentSure has everything about the rental income protection that you ever need to know. I’m happy to talk on the phone, or you can call direct.

Joe Fairless:  Sweet. Well, normally I don’t spend a lot of time talking about someone’s business, just because I wanna make sure we’re adding value and not like a promotional thing, but in your case it was unique because it’s a different business model, so it’s important for us to dig in there and talk about it, and I’m grateful that we did, and I’m grateful that we talked through the cost implications, from what it would cost as a member to participate, as well as the benefits of participating, which seem really good

Sky, thank you for being on the show, thanks for talking through the business plan, thanks for talking through the lessons learned along the way. I hope you have a best ever day, and we’ll talk to you soon.

Sky Mikesell:  Thanks, Joe. Keep up the good work!

Best Real Estate Investing Advice Ever Show Podcast

JF1035: Managing $100,000,000 and Raising Money in a BIG Way!

From wealth management to real estate development, John has seen A LOT in the real estate world.  His insight is invaluable as he tells us how to raise and manage a HUGE private fund.  Get your pen and paper ready, this is a good one!

Best Ever Tweet:

[spp-tweet tweet=”Just be in the market somehow.”]

John Azar Real Estate Background:
-EVP and Managing Member of MACC Venture Partners, private equity commercial real estate firm
-Co-manages the company’s newly launched $100M private equity fund
-Oversees alternative financing and investor/portfolio development
-Prior to MACC he co-founded and served as
-Managing Partner of Boston Venture Partners
-Based in Charlotte, North Carolina
-Say hi to him at http://maccvp.com/
-Best Ever Book: Freakonomics

Made Possible Because of Our Best Ever Sponsors:
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raising investment capital


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 – John Azar. How are you doing, my friend?

John Azar: Good, man. How are you?

Joe Fairless: I’m doing well, nice to have you on the show. A little bit about John – he co-manages the company’s newly-launched $100M private equity fund, so we’ve got a lot to talk about. He’s the executive vice-president and managing member of MACC Venture Partners, which is a private equity commercial real estate firm. Based in Charlotte, North Carolina. With that being said, John, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

John Azar: Sure. My background is mostly investments, financer-heavy [unintelligible 00:03:08.26] wealth management, commercial banking as well as institutional investment products. I had a real estate startup company, a real estate development consulting company that started back in 2003-2004, right after I left Morgan Stanley and did some consulting for large-scale mixed-case developments in New York, Philadelphia, Miami area.

Then obviously when the market took a dive in 2007-2008 my projects dried up and I had to look for a day job again. At the same time my brother was launching a new company here in Charlotte, which is the commercial firm that we have today. We grew it to a certain extent in the next few years and then in 2012-2013 he got more involved in the [unintelligible 00:03:51.05] and by 2015-2016 we launched a new private equity pursuit, and we just launched a new 100-million-dollar fund.

Joe Fairless: You’ve been busy.

John Azar: We have. That company was for the most part a multifamily owner operator. We buy and upgrade apartment complexes essentially across the South-East.

Joe Fairless: I want to focus our conversation on that, but just to tie up some questions on your background… You were consulting for large mixed-case development projects in the North-East – what were they paying you to talk to them about?

John Azar: Our role with the company that I was with was essentially investment bankers for these large scale developments. We would essentially package the deal in a nice little package with a ribbon on it and get paid a fee, and kind of walk away from it. We didn’t really necessarily take equity in any of the deals; we just made sure the buyers and the sellers are in the same place, the financing is there, the alternate financing if it was there, we would arrange the feasibility studies and any kind of introductions to local municipality, maybe if the Federal Government was involved… If there’s any [unintelligible 00:05:01.19] or contamination issues that needed federal involvement we’d kind of look into that as well.

Most projects typically took about a year, a year and a half to come to fruition, just because it’s a long cycle. We’re talking about large-scale projects. Most of them are projects that are ranging between 50-250 million dollars.

Joe Fairless: So you would work with the operators and they identified the opportunity, you then go find them the money and help take it to the finish line?

John Azar: No, sometimes we would identify the opportunities for them as well. They would just tell us “We’re interested in this city.”

Joe Fairless: “They” meaning the money people?

John Azar: “They” meaning the developers or the money people.

Joe Fairless: Okay.

John Azar: We would work with developers, we would work with money people, we would work with pretty much anybody that had an interest in getting a large-scale real estate project off the ground. Most of the time it was usually developers who would come to us and say “We’re interested in possibly doing a residential project in Boston. What do you think is out there that could be worth pursuing?” From there, we would sort of go and look for something.

We had a hotel conversion project in New York City that went from a condo project to a hotel project… That was an example.

Joe Fairless: What hotel?

John Azar: It was an old hotel and it had shut down; it was no longer operational, but I turned it into a mixed-case residential, higher-end residential. That would be one sample of a project.

Other projects could be just raw land… The two or three projects that kind of died out in 2007 were on the waterfront in East Boston, in Charlestown. They were large, old Navy Yard projects that had a lot of contamination issues, that were gonna be set to be converted to large-scale mixed-case or residential developments. Then 2007 hit and any money for decontamination or stuff like that dried up completely.

Joe Fairless: And how long — just on that waterfront project, how long had you been working on it before you no longer were working on it and had to shut down?

John Azar: We worked on it for over a year, a year-and-a-half.

Joe Fairless: For a Best Ever listener who perhaps has a taste of that – maybe not the full spectrum, but maybe they’ve been working on a project for 6-8 months and then it disappears, what would you say to them for how to deal with that?

John Azar: Look, you’re gonna have failures… That’s just part of the game. You’re gonna work on projects that you’re gonna put your heart and soul into and it’s not gonna come through. That doesn’t mean it wasn’t a good project, it doesn’t mean that you were a failure, it just means that the project and the timing just wasn’t right, for some reason, and the stars didn’t align. The project could maybe work in five years later, or three years later, or maybe three years earlier… But for whatever reason it just didn’t work.

Just dust yourself off and just keep moving, that’s the only choice that you have.

Joe Fairless: Now let’s talk about the 100 million dollar fund that you all have recently launched. What is your specific role with the fund?

John Azar: Most of what I do is I work with our investors and equity participants, equity partners. I help structure the capital — the capital structure, the capital fundraising portion of it… Anything that involves the capital and the financing end of it, that’s typically sort of my domain. My brother, who is the principal and CEO of the firm as well, he handles a lot of the acquisitions and asset sourcing and the underwriting when it comes to some of the assets that we do. So he’s out shopping for stuff to buy and I’m out shopping for money.

Joe Fairless: Yeah, it makes sense. That is a very similar structure for how my business partner and I have it set up. I am sure, just like with us, your responsibilities overlap, but those are your primary focuses, right?

John Azar: Exactly.

Joe Fairless: I get it.

John Azar: I’m responsible for the money, he’s responsible for the assets.

Joe Fairless: Right, I get it. So 100 million bucks – how long did it take to raise that amount of money? We’re still raising, and it’s gonna be an institutional-grade fund, which means that we will mostly be after institutional investors, that are mostly gonna be the pension funds, the endowments of the world, as opposed to the accredited investors – which we still have.

How historically we’ve operated and bought our properties is through individual syndication, which is sort of the model that most people in our industry have, and we still have that. We did not get away from the individual syndication model, so we’re gonna have a fund that will buy assets [unintelligible 00:09:30.27] maintain an individual syndication model, which is gonna be open for our normal investors, our regular sort of day-to-day accredited investors, high-net-worth investors that have been with us for the past ten years plus.

These are investors that are usually typically investing anywhere between 100k and up to 500k on a project with us. And they’re usually good for two or three projects per year. They’re not necessarily our target for the 100 million dollar fund. They can certainly participate in the 100 million dollar fund, but the minimums are much higher for our fund; there’s typically a one million dollar minimum for individual investors and 15 million dollars for institutional investors.

Joe Fairless: So your experience with how your career started is really gonna play a big role in this; you started in wealth management, and you’re in the North-East where a lot of the money is… Are you working on those connections to get the 100 million dollars closed out?

John Azar: You work all of your connections all the time.

Joe Fairless: [laughs]

John Azar: You have your connections that you worked with in the past, you create new connections… I love meeting people. To me, this is a people business. I love meeting new people; I’ve made a lot of great friends and a lot of new connections here in North Carolina, and I continue to expand my network on a day-to-day basis. Every now and then I’m lucky enough to make a few new friends along the way, which is fantastic.

Joe Fairless: The goal is 100 million – what have you got right now committed?

John Azar: Right now we have about five million because we just got started.

Joe Fairless: You just launched it.

John Azar: Yeah, we literally just launched it a couple weeks ago. The ink is still drying on some of the docs that just got finished.

Joe Fairless: So how does that work with a fund? With the five million that’s committed, do they transfer the money into an account, since it’s a fund?

John Azar: We don’t have to take all the money; we do capital commitments, and what that means is that you sign a capital commitment letter or capital commitment documents and essentially put a portion of the money down, and the rest of it is due upon capital calls. That’s how you sort of use the money – you use the money via a capital calls structure.

As soon as we hit certain milestones or certain hurdle rates, then we do a capital call. Let’s say our first milestone for this month is 20 million dollars. As soon as we hit 20 million dollars, then we do a capital call and start buying assets. We don’t have to wait until the whole 100 million is in.

Joe Fairless: Okay.

John Azar: It might take us a year, a year and a half to raise the hundred million, or even two years. We have up to two years to raise 100 million. It might take us the full two years, or we might be lucky enough to finish it in the next 10-12 months.

Joe Fairless: You might finish it after this interview goes live. [laughs]

John Azar: That would be fantastic. That would be music to my ears. [laughter]

Joe Fairless: With the initial portion of the money down, what percentage is that of their overall commitment?

John Azar: It’s 5 million, so that 5%.

Joe Fairless: No, you said you do capital commitment letters, and a portion of their money is down. What percent does someone have to put down?

John Azar: Typically 20%.

Joe Fairless: And that doesn’t generate an interest until you actually buy something, so you reach the 20 million dollar threshold?

John Azar: That’s right, it generates an interest. We put it in an interest-bearing segregated account, so it’s almost like an escrow account. It’s the same interest as that of any escrow account. You’re talking about market rates of next to nothing on escrow accounts these days… But once you actually pull the trigger and start buying projects, no, they’re not earning anything.

Joe Fairless: Why 100 million? Why not 105, or 85 million, or 125 million? How did you come up with that number? Besides that it sounds good.

John Azar: [laughs] Yeah, it does sound good. Funds are sort of an interesting creature… You’ve gotta do certain numbers, and it’s almost psychological. If you’re not gonna do 100 million, you should do 50 million. If you’re not gonna do 50 million, you should probably do 25 or 20 million, or something like that. Once you hit certain thresholds, you should just move on to the next thresholds, because otherwise you’re putting just as much money and effort into raising 15 million as you are raising 100 million. Once you start getting into that range between 50 and 100 million, you might as well go for the 100 million… To raise 75 or 80 or 85 million is gonna take you just as much effort, just as much being on the road, just as many meetings as raising 100 million, so why would you cut yourself short and raise 85 million, as opposed to 100 million?

Joe Fairless: And why do a fund versus do individual investments like I image you all have been doing?

John Azar: Well, like I said, we still have the individual investments. The fund really is going to allow us to have ready-to-deploy capital for projects that we can pull the trigger on pretty quickly and deploy capital quickly. It really gives us sort of a competitive advantage on some of the smaller deals, rather than the larger deals.

On the larger deals we have a lot of institutional partners that we deal with that we feel pretty confident that we can pull the trigger on and we can always participate in. Larger deals meaning [unintelligible 00:14:17.11] deals that will require anywhere between 10-20 million dollars in equity raises. Smaller deals are below that 8 million, 7 million threshold.

There’s a tricky sort of delta which is between the 2 million, 1 million and 6 million, where it’s a really tough place to do between 2 million and 6, 7, 8 million, because it’s not quite big enough for institutional guys to participate in, a little bit sometimes too big for the smaller guys to participate in… Because you can easily raise 3 million dollars from regular individual investors, but when you hit that 8 million or 3-7 million, it gets to be that no man’s land kind of parameter where you have to either do a combination of smaller investors and an institutional investor, or you have to find a specialty institutional investor where they’re willing to do a 5 to 6-7 million dollar investment with us.

So it’s a little bit more tricky and it takes a little bit more time, so having the fund will really give us a lot more flexibility and will allows us to be more nimble executing on deals.

Joe Fairless: From an advantage standpoint for you all, what are the ways that you make money on the fund versus a typical syndication?

John Azar: On the fund we make a little less money, that’s for sure. We make more money on syndications that we do on the fund, but the fund allows us to expand our bandwidth a lot quicker, obviously… 100 million dollars in an equity fund will buy us close to – if we’re doing 75% leverage, 25% equity, you’re talking about close to 400 million dollars worth of assets to add to our portfolio. You can scale pretty quickly with those parameters, as opposed to individual syndication, which is onesie-twosie, you have to go out there and…

And the other thing that the fund will allow us to do is we can go out and buy a portfolio of assets, as opposed to just one asset at a time and syndicate it one at a time. If we see a portfolio of two or three different assets — four different assets that have maybe an aggregated number of 1,100-1,200 units, we can utilize the fund to pull the trigger on something like that much easier than we can if we have to syndicate that.

Joe Fairless: I know you’ve been asked this before – what’s your answer to someone saying, “John, this is the hottest time right now to sell. It’s a seller’s market, why are you doing a 100 million dollar fund to buy?”

John Azar: Because we are in the top of the market. We’re gonna start seeing a contraction soon. We have already started seeing a contraction in the marketplace in some larger cities. Rents and class A products have already started taking a hit in some larger cities like New York, Boston, L.A. We’ve already started hearing whispers on the street that the contraction already started in the A class in certain metropolitan areas… So it’s really only a matter of time before this hits the rest of the street.

Right now there’s still a glut of buyers and a glut of sellers because of that exact reason. They know the rollercoaster’s at the top and it’s getting ready to get down a little bit. I’m not saying we’re looking at a cliff scenario per se, but even a small contraction is gonna leave plenty of room for more buyers than sellers, which is a great place for us. That’s what we want.

We feel that this is the right time to be in the market. We’re not quite at the back of the truck scenario with buying, but we feel like in the next 6-12 months there’s gonna be some really great deals coming out in the market.

Joe Fairless: And there will be really great deals coming on the market because they will be forced to sell because of the contraction, or because they’re trying to sell to get out ahead of it?

John Azar: The ones that are trying to sell ahead of it are selling now. These are the people that are in the market now, trying to sell. If you have a project that you’re trying to sell, any broker that you talk to, any commercial broker that you talk to will tell you “This is the time right now to put it on the market.”

Joe Fairless: Of course they’ll tell you that.

John Azar: Of course they [unintelligible 00:18:02.22] [laughter] But in all honesty, this is the time to put it on the market, because we’ve already started seeing interest rates rise and we’ve already started seeing — cap rates and interest rates are not quite matched up to each other yet; cap rates are still pretty low, and interest rates are just starting to creep up after the election. We’ve already seen 70, 80, 90 basis points upsurge in interest rates since the election until now.

I think once you start seeing an equalization of interest rates and cap rates, meaning the growth in cap rates or the expansion in the cap rates is gonna match what the expansion in the interest rates are, that’s when you’re gonna start seeing more buyers and less sellers in the marketplace — or actually, maybe the opposite: more sellers and less buyers.

Joe Fairless: John, what’s your best real estate investing advice ever?

John Azar: [laughs] My best real estate advice is, like I say with anything as far as investing is concerned – don’t worry about timing the market per se; it’s your time in the markets. You’ve gotta put your time in, you’ve gotta always be on the lookout to buy or sell. Don’t worry so much about whether you’re gonna hit it exactly right, because you’re never gonna hit it exactly right. Nobody has a crystal ball.

If you’re in the market, if you’re playing the game, if you’re doing deals on a regular basis, you’re gonna hit it right when the time comes for you to hit it right. So don’t worry so much about timing the market. A lot of people I talk to in [unintelligible 00:19:22.20] all worry about how they’re gonna time the market… I’m like, “Just be in the market! Be playing an active role somehow.” You don’t have to buy… I’m not saying “Buy all the time.”

We took a backseat on buying, in all honesty, back in November, and we just started buying now. We stopped buying from November, December, January, February and we just pulled the trigger on some projects just in the past month. For a firm like us, which we’re about 5,000 units size, for us to stop buying for four months was not an easy decision. Four months is a long time to stop buying, [unintelligible 00:19:54.03] to get out of the market, but it’s okay because we had a lot of other projects going on, we had some refi projects… So you’re always doing things and always looking in the market, your eyes, your hands are in the market some way or another, and that’s really what the key and what my advice is: just be in the market somehow – doing deals, looking at deals, looking at the projects… And don’t worry so much about timing the market.

Joe Fairless: I like it. That makes things really simple. If and when I repeat that quote, I will attribute it to you, I promise.

John Azar: [laughs] Well, thank you.

Joe Fairless: Are you ready for the Best Ever Lightning Round?

John Azar: Sure, I love it!

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:20:36.11] to [00:21:27.13]

Joe Fairless: What’s the best ever book you’ve read?

John Azar: Freakonomics.

Joe Fairless: Did you say “Freakonomics”?

John Azar: Freakonomics, yeah.

Joe Fairless: Cool. I was just reading Tim Ferriss’ Tools Of Titans, and one of the authors of Freakonomics was profiled in that book, and I was just reading some quotes that he said on the podcast.

John Azar: Yeah, it’s a very entertaining book and it just kind of sticks to you.

Joe Fairless: Best ever deal you’ve done?

John Azar: Best ever deal I’ve done is pulling the trigger on joining my brother and expanding this company.

Joe Fairless: What’s a mistake you’ve made on a deal?

John Azar: I expected less of myself and settling for less than what I’m owed.

Joe Fairless: Can you elaborate?

John Azar: I was involved in a deal and we were doing mixed-case development consulting; we kind of got pushed around a little bit on what we were going to be paid. At the time I was younger and probably a lot more green than I am today… And even though we brought tremendous value to the deal, I thought that — it was one of those things where you think you’re just kind of lucky to be at the table and you’ll kind of take what they’ll give you, and that’s the wrong attitude, because don’t ever underestimate what value you bring and don’t undercut your own value. [unintelligible 00:22:32.07] with that deal and we got paid a lot less than what we should have done.

Joe Fairless: What’s the best ever way you like to give back.

John Azar: I give back in a lot of different ways. I love mentoring, I love working with younger folks — and “younger” I mean sometimes a lot younger. I’m involved in a couple of different mentoring organizations for high schoolers and young adults. When I was in Massachusetts I was involved in an organization called [unintelligible 00:22:54.19] which mentored young adults that are between 18 and 24, and kind of helping them on a career track.

I was involved in an organization called NFTE (Network For Teaching Entrepreneurship). It’s more targeted for high school kids. I love working with Habitat For Humanity; we have teams here every now and then. A couple times a year here in the company we line  up a couple of habitat projects that we work on… Various other community projects I’m involved in, but mostly mentoring and coaching jazzes me up a lot.

Joe Fairless: Where can the Best Ever listeners get in touch with you or your firm?

John Azar: They can e-mail me, they can find me on Twitter, they can find me via our website… My e-mail is John@maccvp.com. They can go our website, maccvp.com. I’m on LinkedIn as well under Jalal John Azar. I’m in plain sight.

Joe Fairless: You’re everywhere. [laughs]

John Azar: I’m everywhere.

Joe Fairless: Well John, thank you for being on the show… Thanks for talking about the 100 million dollar fund. I enjoyed learning about the advantages of doing a fund, compared to an individual syndication. You mentioned a couple things – one is the fund allows you to buy faster so you can scale more quickly, and two is you have the flexibility to buy a portfolio of assets.

Then also just your overall thoughts on why you’re doing a fund now, because as I said earlier, I imagine you get that question a lot… And the best ever advice, where you said you want to make sure that you don’t worry about timing the market, but rather it’s about your time in the market. That doesn’t necessarily mean you’re always buying, but you’re actively involved in the market in some capacity, and you gave the perfect example of your group that has about 5,000 units and had a hiatus for five or six months, and is now back at it.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Subscribe in iTunes and Stitcher so you don’t miss an episode!   https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Best Ever Show Real Estate Advice from experts

JF820: How to Own America, or at Least Portfolios of Properties that Render Big Returns Nationwide

Would you like to begin earning a massive yet passive income on large portfolios? Today’s guest sets up a somewhat turnkey operation that you are able to analyze and purchase all at once. His business model is fascinating with a ton of upside for the buyer, hear how you can buy your next portfolio.

Best Ever Tweet:

[spp-tweet tweet=”The value of real estate is tied to where people live, work, and spend most of their time.”]

Adam Stern Real Estate Background:

– President at OwnAmerica; A National Real Estate Investment Brokerage
– OwnAmerica is the leading broker in the single family residential space
– Adam is currently the number 1 portfolio salesperson in the US
– 14 years in senior leadership positions within companies in the residential and investment real estate space
– Based in Charlotte, North Carolina
– Say hi to him at http://ownamerica.com
– Best Ever Book: Think Bigger by Mark Van Rijmenam

Sponsored by:

Door Devil – visit http://www.doordevil.com and enter “bestever” to get an exclusive 20% discount on your purchase. Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:


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Best Ever Show Real Estate Advice from experts

JF811: How to Be Rich and Generous and B.R.A.G. About It

Would you like to give back? Our guest helps other people complete real estate transactions as a coach and allows others to give back to the community. He is the host of a radio show and has completed just about every type of deal in the residential real estate investment realm. Here why he believes there is no excuse to not buy real estate if you’re making offers and some interesting deal scenarios.

Best Ever Tweet:

[spp-tweet tweet=”If You Don’t Make Any Offers, Then You Don’t have Any Chance of Buying Properties.”]

Larry Goins Real Estate Background:

– Active real estate investor & Host of the BRAG Radio Show
– Founder of Real Estate Day Trading, the art of buying and selling homes from your home office
– Real estate for over 30 years
– Travels to speak and train audiences on his strategies for buying and selling houses
– Author of “HUD Homes Half Off!” and “How to Get Started in Real Estate Day Trading
– Based in Charlotte, North Carolina
– Say hi to him at http://www.larrygoins.com/besteverlisteners
– Best Ever Book: Lessons from the Richest Man Who Ever Lived by Steven Scott

Want an inbox full of online leads? Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Click here: http://www.adwordsnerds.com to schedule the appointment.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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Best Ever Show Real Estate Advice

JF648: How to Host a Rockstar MEETUP Where all Deals Find You

He and his partner host four meetings A week, no mistake, four meetings a week! It makes sense as the majority of all his deals came from these meetings of adding value to other investors and has been diligent in doing so. He has raised a following in Charlotte and is quickly establishing himself as an authority in his local market. Hear how he sets it all up and what success he has seen.

Best Ever Tweet:

[spp-tweet tweet=”Don’t take “no” from someone who hasn’t done it before.”]

Taylor Peugh Real Estate Background:

– Holds 4 meeting a week for real estate investing (over 15 hours)
– Acquired properties via meetings
– Based in Charlotte, North Carolina
– You can reach him at taylor.peugh@gmail.com

Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Best Ever Real Estate Investing Advice banner

JF582: Why Hearing “No!” is MONEY and What this Property Manager can Teach You about Lead Generation

This highly proactive property manager is our guest today and he is on the attack! He take massive action by calculating how many “No’s” it takes to get to the yes. He calculates all his metrics and spend three hours daily prospecting, he has also purchased several buy-and-hold’s in the last 12 months, this is a powerful show and you should hear it!

Best Ever Tweet:

[spp-tweet tweet=”There’s two ways to build your business, passive or active and I chose the active way.”]

David Kerner real estate background:

  • In real estate for 20 years as a realtor-broker in residential sales
  • Been doing property management for 8 years and has 50 clients
  • Started investing 1 year ago and has 7 buy-and-holds with a focus now of growing his property management company and investing business for passive cash flow
  • Say hi to him at: davidkerner.com
  • Based in Charlotte, North Carolina
  • His Best Ever book: E-Myth by Michael Gerber

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Need financing?

Are you a buy-and-hold investor or doing fix and flips?

I recommend talking to Lima One Capital. A Best Ever Guest told me about them after I asked how he financed 10 properties in one year. They are an asset-based lender with unique programs for long-term hold and fix and flippers.

Click to learn more or, better yet, reach out to Cortney Newmans at Lima One Capital. His cell is 404.824.6121.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Best Ever Show Real Estate Advice

JF 409: 32 Unit Deal Closed by Wholesaler Only 3 Years In!

He does it all! Wholesale, seller finance, lease option, you name it! He not only invests in single family homes, but multifamily buildings as well. Our Best Ever guest is hungry for deals, and he’s well connected socially via social media, seminars, and meetups. Hear about his investing experience in his hot market in Charlotte and be inspired to repeat! Oh yeah…he’s only been at it for 3 years, so what are you doing?

Best Ever Tweet:

[spp-tweet “Put all your chips in the MIDDLE of the table.”]

Kevin Angle’s real estate background:

  • Based in Charlotte, North Carolina
  • CEO of Right Angle Properties
  • Buys and sells single family and apartment communities all over the southeast
  • Been doing real estate investing for 3 years
  • He controls 5 single family properties and wholesaled 35 properties; he is also doing owner financing
  • Played semi-professional golf for 7 years
  • Say hi to him at https://www.facebook.com/RightAngleProperties

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Best Ever Show Real Estate Advice

JF 358: How to Put the WOW Factor Into Houses You’re Flipping

Today’s Best Ever guests share with us how to put the WOW factor into the houses you’re flipping, and how to determine land value. Listen up, because they both have tremendous value to share.

Best Ever Tweet:

It’s a matter of rolling your sleeves up and doing some of that data mining.

Josh Collins and John Sears’ real estate background:

–           Business partners for 9 years

–           Based in Charlotte, North Carolina

–           Real estate companies, home renovations and new construction

–           Buy and hold, flip, multifamily

–           Say hi to them at http://www.Moosemojo.com, a branding and marketing agency

–           http://www.prespro.com

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Made Possible Because of Our Best Ever Sponsor:

Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

Best Ever Show Real Estate Advice

JF321: Anything and Everything You Need to Know About Direct Mail

Today’s Best Ever guest shares with us EVERYTHING you need to know about conducting a direct mail campaign and the logistics behind it. Ya wanna reach a lot more people to get a lot more deals? Well, here’s how!

Best Ever Tweet:

[spp-tweet “You are in the business of marketing”].

Shaun Caldwell’s real estate background:

–          Based in Charlotte, North Carolina and you can visit him at http://www.charlotteprint.com

–          Visit and put in promo code at Best Ever

–          Founder of Charlotte Print and works with real estate investors and lenders nationwide

–          His company is sending out 50,000 direct mail pieces a month for his clients

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Made Possible Because of Our Best Ever Sponsors:

Patch of LandWant to learn more about crowdfunding? Let the leading expert in the crowdfunding space, Patch of Land, give you all the info you need to get started. Grab your FREE copy of Top Ten Answers to the Top Ten Crowdfunding Questions athttp://www.PatchOfLand.com/bestever

Hiban Digital  – Go to http://www.hibandigital.com/6stepaudio  to get a copy of 6 steps to 7 figures by Pat Hiban. Here’s your COMPLETE guide to having financial freedom through real estate investing.

Best Ever Show Real Estate Advice

JF300: Why Every Market You Invest in Is Essentially the SAME

Today’s Best Ever Yankee/Southerner may not be able to decide what state he wants to be in, but he sure as heck knows a little something about real estate! Start paying attention, because we discuss the new tool you need to begin using to analyze deals, and why the market you invest in just doesn’t matter if you can find a good deal.

Best Ever Tweet:

[spp-tweet “Pick markets like you’re picking winners.”]

Gregory Rand’s real estate background:

–          CEO of Own America and incoming president of Investability.com, the world’s first national investment search portal  and is based in Charlotte, North Carolina

–          Been advising investors for 30 years from institutional investment funds to individual investors

–          Real estate contributor on FOX Business Network and author of the best-selling book Crash Boom: Make a Fortune in Today’s Volatile Real Estate Market

–          Moved from NY because he realized he was a southerner

–          Here is the link to download the document we discussed on the show

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Made Possible Because of Our Best Ever Sponsor:

Patch of Land – Want to learn more about crowdfunding? Let the leading expert in the crowdfunding space, Patch of Land, give you all the info you need to get started. Grab your FREE copy of Top Ten Answers to the Top Ten Crowdfunding Questions athttp://www.PatchOfLand.com/bestever

Local Lead Generator – Need more leads? Read the “Small Business Owners Guide to Local Lead Generation” in order to generate more leads. Visit localleadgenbook.com for more info.

Best Ever Show Real Estate Advice

JF255: How to Make FEWER Calls and Get MORE Leads. Wait…What?!?

Today’s Best Ever guest shares with us a unique strategy to get more leads while others are making your calls for you. We discuss how virtual assistants can take your business to the next level, and a great strategy to make money off houses you buy at market price. Listen up, because she shares some incredible advice that can make you MORE money in LESS time.

Best Ever Tweet:

[spp-tweet “Communication is the key in any business success.”]

Elsa Palmer-Oden’s real estate background:

–          CEO of Virtual Office VA & Innovative Real Estate Investor Strategies  based in Concord, North Carolina

–          Started working with investors as a virtual assistant seven years ago and created a system to keep them organized

–          Passionate NASCAR and Jeff Gordon fan

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!

Made Possible Because of Our Best Ever Sponsors:

Norada Real Estate Investments – Having a hard time finding great investment properties?  Unfortunately, the best deals are rarely found locally. Norada Real Estate’s simple proven system provides you with the best deals across the U.S. to create wealth and cash-flow.  Get your FREE copy of The Ultimate Guide to Out-of-State Real Estate Investing

Patch of LandWant to learn more about crowdfunding? Let the leading expert in the crowdfunding space, Patch of Land, give you all the info you need to get started. Grab your FREE copy of Top Ten Answers to the Top Ten Crowdfunding Questions athttp://www.PatchOfLand.com/bestever

The Art of Commercial Real Estate Leasing– You’ve heard him here before, and now he’s back with a book you must read. Buy Craig Coppola’s book, The Art of Commercial Real Estate Leasing and learn the 19 things to look for in a lease.

Best Ever Show Real Estate Advice

JF113: So, Wait a Minute, Real Estate ISN’T Like They Show on TV??!!

After watching house flipping shows on TV and losing money on his first deal, today’s Best Ever guest talks about the lessons he learned and how he applied them to his business. Now, fast forward 4 years, he’s done over 100 deals. He tells you how to do the same thing. Let’s go!

Tweetable quote:

[spp-tweet “Follow one course until successful.”]

Nasar El-arabi’s real estate background:

–        Founder of Real Estate Busters based in Charlotte, North Carolina

–        Fired from his job and decided to go full time at wholesaling, rehabs and buying investment properties

–        Started wholesaling in 2011 and has done close to 100 wholesale deals

–        Say hi to him at http://www.Realestatedoru.com 

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Sponsored by: Twenty Four Sound – visit http://www.twentyfoursound.com and mention “bestever” for an exclusive 20% discount on your purchase.