Why a 95% Close Rate Means Your Prices Are Too Low — Transcript

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1. 0:004 years,
2. 0:012 months, and about 6 days, you told me
3. 0:04to stop running my real estate lead
4. 0:07generation agency
5. 0:09cuz I sucked at it.
6. 0:12I took your advice, I listened, and
7. 0:14>> feeling sassy.
8. 0:16>> It was It was good advice because since
9. 0:18that time I've sold about 125
10. 0:20million in real estate.
11. 0:23Now
12. 0:24>> Yeah.
13. 0:26>> You You told me to come back and then
14. 0:28figure out the small
15. 0:29uh you know, media agency again. Have no
16. 0:32interest in doing that. I actually found
17. 0:34that I'm a lot better at selling real
18. 0:36estate than running the agency.
19. 0:38>> Yeah.
20. 0:38>> [laughter]
21. 0:39>> So now what I've done, I've kind of
22. 0:41found a niche cuz it's a another piece
23. 0:44of advice that you told me to figure
24. 0:45out. And then the third thing is you
25. 0:47told me to go find rich people, figure
26. 0:49out their problems, and solve them cuz
27. 0:51they pay a whole lot better.
28. 0:52>> Yeah.
29. 0:53>> So I started specializing in figuring
30. 0:55out how I can leverage the tax code
31. 0:57while helping them acquire real estate.
32. 0:59>> Mhm.
33. 1:00>> Just figuring out all the different
34. 1:01loopholes by leveraging real estate to
35. 1:03offset their taxes. So I specialize with
36. 1:05high income W- uh
37. 1:07workers or you know, business owners.
38. 1:10Get them real estate. Now the business
39. 1:13has kind of evolved and has been
40. 1:14doubling every year. We're on pace to do
41. 1:16about 55, almost 60 million this year.
42. 1:19>> Kind of crazy.
43. 1:21To put things into perspective, 2 and
44. 1:231/2, 3%. That's what the revenue would
45. 1:24be.
46. 1:25>> Yeah.
47. 1:25>> So division one is the acquisition. It's
48. 1:27about a million, two million, three.
49. 1:31Then we have a set up business where we
50. 1:32set up the the investment properties for
51. 1:34them, Airbnbs.
52. 1:37Either I got to raise prices or do
53. 1:39something else cuz I have like a 90,
54. 1:40almost 95% closing rate. Um so we are
55. 1:43doing about another 2, 300K there.
56. 1:46And then we have the full done for you
57. 1:47management on the back end and that's
58. 1:49packaged on as an offer.
59. 1:50>> Mhm.
60. 1:52>> After speaking with Ed and a few other
61. 1:54things, I'm trying to figure out if I'm
62. 1:56killing off the baby here and keeping
63. 1:58the main thing the main thing like you
64. 2:00told me back 4 years ago we're trying to
65. 2:01figure out how to pivot because the
66. 2:03continuation I know some of my really
67. 2:06high income earners the people that have
68. 2:08the million 2 million dollars in taxes
69. 2:09to offload.
70. 2:10>> Yeah.
71. 2:11>> They don't want to set up the properties
72. 2:12they don't want to manage them they
73. 2:13don't want to do anything so they
74. 2:14definitely do buy because of that
75. 2:16turnkey method.
76. 2:17>> Uh-huh.
77. 2:19>> So I'm at this crossroads of do we
78. 2:21double down or I'm capped like how do I
79. 2:24go from 60 to 100 when I have other
80. 2:27people in my office working with Serhant
81. 2:29doing 300 400 million just selling a
82. 2:31higher ticket item right 5 10 million
83. 2:34dollar properties as opposed to million
84. 2:362 3 4 million dollar properties like I
85. 2:37am right now
86. 2:39so trying to figure out where to go
87. 2:40next.
88. 2:41>> So just to give context on this when
89. 2:43Alan was our our software company we
90. 2:45served white label for you know social
91. 2:48media marketing agencies so Peter was
92. 2:50helping realtors get leads to sell
93. 2:52houses and for like 6 months he would
94. 2:55hop on I'd do like a call every week or
95. 2:57whatever [snorts] and he would hop on
96. 2:59and he'd be like god these realtors suck
97. 3:00they don't work their leads you know all
98. 3:03of all of this stuff and 6 months he was
99. 3:04basically flat with revenue
100. 3:07um and I was like have you ever worked
101. 3:08your own leads?
102. 3:10And like actually seen cuz you're not a
103. 3:11realtor so I was like have you ever
104. 3:12worked your own leads and seen if
105. 3:13they're actually any good at all um
106. 3:17and he ended up having a partner there
107. 3:18that you know fell off who was the
108. 3:19realtor who was going to be like the
109. 3:20expert in the space and he was just
110. 3:21going to run the ads and then it was
111. 3:23just him
112. 3:24and so we had a little bit of a heart to
113. 3:25heart moment where I was like
114. 3:27listen man it's been 6 months like
115. 3:29nothing has changed because something
116. 3:30has to change and so why don't you just
117. 3:32like actually get good at real estate
118. 3:34and then if you want to visit this back
119. 3:36once you go crush it in real estate this
120. 3:37door will always be open cuz you you
121. 3:39still have the skills right you can
122. 3:40always come back and so that is the the
123. 3:43full of the other side of
124. 3:46almost getting emotional about it but
125. 3:46like very cool man very cool.
126. 3:48Um
127. 3:49okay so let's let's scale this thing.
128. 3:52So, um big picture we have
129. 3:55you've this Airbnb thing, right? So, is
130. 3:57that like how many of the people that
131. 3:59you're selling right now need this
132. 4:00Airbnb as the as the way or as the
133. 4:02reason that they're they're buying from
134. 4:03you?
135. 4:04>> So, out of the 70-some deals that we'll
136. 4:07do cuz
137. 4:08nothing is set in stone cuz I'm still
138. 4:10closing deals literally as sitting at
139. 4:11this event.
140. 4:12>> Um I would say probably about 90% are
141. 4:15buying it for tax purposes. So, out of
142. 4:17the 55 million, probably like 35 almost
143. 4:2040 is quarter four numbers.
144. 4:21>> Yeah.
145. 4:22>> So, like my business is so heavily
146. 4:24stacked in the back end of the year,
147. 4:25it's kind of crazy.
148. 4:26>> Yeah.
149. 4:26>> So, if I can do that volume in one
150. 4:28quarter, like what can I do in four?
151. 4:31>> Yeah. So, but so you have this Okay, so
152. 4:34a couple considerations is like
153. 4:37I'm seeing path one is you could say I
154. 4:39want to build a compounding vehicle
155. 4:41around this Airbnb thing.
156. 4:43You could just straight raise money and
157. 4:45do it. That is that is a path. Be like,
158. 4:47I'm going to raise a fund, we're going
159. 4:47to do Airbnbs, and this is the arbitrage
160. 4:49we're playing with. That's an option.
161. 4:52Another option would be um
162. 4:54for these people like you could
163. 4:56obviously raise the prices cuz if you're
164. 4:57closing 95% then like the off like the
165. 4:59offer's great. So, like we need to go
166. 5:01like way up. And the price would
167. 5:03probably just be the percentage of, you
168. 5:04know, the the management fees and
169. 5:05whatnot.
170. 5:06>> Yeah, the the done-for-you is 10 grand,
171. 5:08but it should be really like 20. Where I
172. 5:09really make the money is the commission
173. 5:11on the actual deal.
174. 5:13>> Yeah.
175. 5:13>> And then the management is at 15%, which
176. 5:16is about 5 to 10% below where we should
177. 5:18be.
178. 5:18>> Yeah.
179. 5:18>> But they make more money, which then
180. 5:20gets them to transact with us again. And
181. 5:22I have people that bought three, four,
182. 5:23five, six properties. Like I just got a
183. 5:24guy who bought four back to back.
184. 5:25>> Yeah.
185. 5:26But is the is the limitation of the
186. 5:27business that you can't handle more ops
187. 5:29on the Airbnb?
188. 5:31>> So, I'm I'm getting to this point where
189. 5:33we have about 60 that are up and live,
190. 5:36and I'll keep expanding the team.
191. 5:38>> Yeah.
192. 5:38>> I hate that business. Like if somebody
193. 5:40were to willing
194. 5:41>> reason you can't just like work with
195. 5:43somebody who does this and just shh puts
196. 5:45Give it to them.
197. 5:46>> that's what initially happened last year
198. 5:47around November. The property manager
199. 5:49quit, said, "I'm done. I'm out. Here's
200. 5:5120 properties. Do whatever you want with
201. 5:53them." So, then I went and I actually
202. 5:55got one of my clients who bought an
203. 5:56Airbnb with me, who was doing Airbnb
204. 5:58arbitrage. Kind of brought them in.
205. 6:01I made a deal and I'm They they
206. 6:03take 2/3 of the revenue and I take a
207. 6:06third. So, like for me to make a hundred
208. 6:08grand on years worth of work when I can
209. 6:10literally close two deals, like it just
210. 6:12makes no sense. So, I was thinking about
211. 6:15figuring out if I can pawn it off and
212. 6:16partner. A lot of my clients, what I'm
213. 6:18noticing
214. 6:20the management is always the the wild
215. 6:22card, the weakest link. Cuz if the
216. 6:23management doesn't do well,
217. 6:25they don't come by again.
218. 6:27But if everything turns,
219. 6:30we see uptick on obviously the sales.
220. 6:33So,
221. 6:35I'm looking at trying to see if I can
222. 6:36partner out without letting go of the
223. 6:38control, but on the management side of
224. 6:40the business, there's also
225. 6:42we by accident built a cleaning company.
226. 6:45Really? Like Not directly, but we have
227. 6:47cleaners who went from like 10
228. 6:48properties to and scaled with us and
229. 6:50obviously I helped them build that. So,
230. 6:52it's Now it's all decided and it's
231. 6:55I'm
232. 6:55going into way too many directions. I'm
233. 6:57trying to keep the main thing, which is
234. 6:59what you told me, sell more real estate
235. 7:00or sell high price state real estate.
236. 7:05Just because you don't have legal
237. 7:07control doesn't mean you don't have
238. 7:09leverage.
239. 7:10Oh, yeah. I know. Right. And so,
240. 7:14I I do think that what you're probably
241. 7:16looking for is a partner, not like in
242. 7:19your business, but basically somebody
243. 7:20who can just manage this full time. And
244. 7:23then just say like, "I'll give you
245. 7:24100%." You know what I mean? Like your
246. 7:2630% or whatever, like yeah, I see that
247. 7:27as not a deal provided you don't
248. 7:29have to do anything.
249. 7:31So, I'm all for getting paid for not
250. 7:33working. I don't want to get paid a
251. 7:35small amount if I am working. Basically,
252. 7:37it's the CEO. Like everything has to run
253. 7:39through me. Even though if does like 80%
254. 7:41of the work. I'm still
255. 7:43The clients call me when goes
256. 7:44wrong.
257. 7:45>> Right.
258. 7:47Um right, you're the one who who passed
259. 7:49who passed on the relationship. Um I
260. 7:51think that if you just position it as
261. 7:52like well, would they buy? They would
262. 7:54still buy from you presumably, right? If
263. 7:56they if the management goes well and it
264. 7:58was a third party.
265. 7:59>> I tried the here's my partner Ken,
266. 8:01here's my partner whoever Todd, you
267. 8:03know.
268. 8:04>> Yeah, yeah.
269. 8:05>> And I
270. 8:06but they're like, oh, well, is this all
271. 8:07under you? So, it's kind of it's
272. 8:09definitely easier sell when I say it's
273. 8:11where it's all interconnected it's under
274. 8:12the same roof.
275. 8:18>> So, then I'm trying to figure out is how
276. 8:20much of my front end sale
277. 8:22>> Yeah.
278. 8:23>> is actually
279. 8:25attributed to us being able to set up
280. 8:27the property and then managing like our
281. 8:30property skill.
282. 8:31>> always just like sell properties without
283. 8:33it and see what happens.
284. 8:34>> So, I So, I did. The first year we did
285. 8:36about 10 12 million, then it went to 24,
286. 8:39then 36, now we're at 55.
287. 8:41>> So, last year but you have but you
288. 8:41included the Airbnb in the beginning or
289. 8:43just recently?
290. 8:43>> No, so last year basically last November
291. 8:46I had people asking me, can you just
292. 8:48help us set it up and they would just
293. 8:49waste my time. Well,
294. 8:50>> So, this is recent. So, you did 24
295. 8:52million before like per annum before
296. 8:55adding this in.
297. 8:56>> Yeah.
298. 8:57>> Yeah, I think you should probably just
299. 8:58go sell more houses.
300. 9:00Being real.
301. 9:02No, for real. I think you should just
302. 9:03sell more houses and then just have an
303. 9:04intro. Like it's like, I can make some
304. 9:06introductions to some management
305. 9:07companies, but the core thing is they
306. 9:08need to buy the real estate to get the
307. 9:09depreciation or whatever, right?
308. 9:10Whatever you know, the thing you you you
309. 9:12figured out.
310. 9:13Um
311. 9:14so, that's the like the core thing is
312. 9:15they want to get the money off the
313. 9:16books, which is why Q4 is such a big,
314. 9:18you know, thing they right.
315. 9:19Right, and so having the management to
316. 9:21me feels like it's gravy rather than
317. 9:24like the core thing is like I have to
318. 9:26spend this money or I will pay taxes on
319. 9:27it and I will own an asset that
320. 9:31I cuz I'd be like, I've got a suite of
321. 9:32five different guys that are management
322. 9:33companies. Like they can do this. I'm
323. 9:35the one who gets you good properties.
324. 9:37And I will find you a good deal on the
325. 9:38property cuz if you buy right, it makes
326. 9:40it gives you a lot more padding on the
327. 9:41back.
328. 9:42>> Yeah, so like when we had the
329. 9:43partnerships, the issue that I ran into
330. 9:45>> is that the guys would do a job and
331. 9:47then I would get the phone call "Can you
332. 9:49manage this?"
333. 9:49>> I think but again it's like I think all
334. 9:51of that comes down to expectation
335. 9:52setting.
336. 9:53So, if you're having the conversation
337. 9:55with them and you're like, "Listen, if
338. 9:57we buy right, you're going to save like
339. 9:58you will you get an instant 58% increase
340. 10:00on the money that you don't pay taxes
341. 10:02on."
342. 10:02>> Yeah.
343. 10:03>> Right? So, like no matter what, we get a
344. 10:0458% increase on free money.
345. 10:06>> Yeah.
346. 10:07>> That's what I can deliver. I can
347. 10:09introduce you to some people.
348. 10:10Everything's hit or miss and like the
349. 10:12management's up to them. Now, that's
350. 10:13part of the like that's part of what
351. 10:14you're getting to but if you're good to
352. 10:15lock in the 58, let me go get you a
353. 10:17house and I'll make sure I buy below
354. 10:18market, blah blah blah blah blah. I
355. 10:19think you could still do the pitch. I
356. 10:20think it's all about just how you set
357. 10:22the
358. 10:23the expectation up front.
359. 10:24>> So, a lot of the leads that are coming
360. 10:26in is through my strategic partners.
361. 10:28Like I go, I speak around the country, I
362. 10:30get on stages, right? And room full of
363. 10:32people, typically CPAs, accountants,
364. 10:34stock brokers.
365. 10:36>> I've been thinking about going direct to
366. 10:39consumers. So, instead of finding the
367. 10:40CPAs and speaking, going directly to
368. 10:43"Hey, are you a high income earner, W-2,
369. 10:46whatever?"
370. 10:47>> Yeah.
371. 10:47>> Is that the wrong tree to bark at?
372. 10:50Because I don't want to be dependent on
373. 10:51those strategic partners. Like we we I
374. 10:53definitely identify with
375. 10:54>> have?
376. 10:55>> I have like three or four.
377. 10:56>> Okay, that is a little dependent. Well,
378. 10:58I mean I think I think it was the right
379. 10:59strategy. I think you just need to
380. 11:01get more.
381. 11:03I think it's more like how do I get like
382. 11:0430 or 40? And so, I think part of the
383. 11:06reason that you've been bending over
384. 11:07backwards is because you need the deals
385. 11:10that they give you.
386. 11:11Rather than like if you had 30 or 40 of
387. 11:13these CPAs, they'll send you customers
388. 11:15and you'll be like, "Listen, this guy
389. 11:17wants
390. 11:18a a shitload of stuff. I can I will get
391. 11:20these guys the houses they need and
392. 11:21we'll you know, to to to get the the the
393. 11:24the tax treatment that they are looking
394. 11:25for."
395. 11:26And you'll be able to turn down some
396. 11:28business that doesn't require this back
397. 11:30end thing in order to close the deal.
398. 11:32So, it's like maybe you lose 25% of your
399. 11:33business um by not having to deal with
400. 11:36all this headache and just saying like I
401. 11:37can make intros, but like I'm not
402. 11:39associated, but I can do the core
403. 11:40economic arbitrage, which is the first
404. 11:42sale.
405. 11:44>> Which inadvertently will help us make
406. 11:45more money cuz I can go sell more.
407. 11:47>> Yeah, you can focus. And I think that if
408. 11:48you if you had all the time back from
409. 11:50all this management and then
410. 11:52just said "I'm going to go from having
411. 11:54four CPAs to 40 by the end of the year
412. 11:56and we're going to run the same way."
413. 11:58Like you'll have 10x the lead flow and
414. 12:00assuming you close three out of four
415. 12:02instead of 100% because instead of a a
416. 12:04grand slam offer, it's a home run offer.
417. 12:06Right?
418. 12:07Um
419. 12:08then you'll still have tripled the
420. 12:09business.
421. 12:12>> And then would you change all the
422. 12:13marketing and all the
423. 12:15>> Sorry, 8x the business. Excuse me. 7 and
424. 12:161/2.
425. 12:16>> all the outbound to just target the CPAs
426. 12:19or would you still have some for the
427. 12:21direct consumer?
428. 12:22>> Well,
429. 12:23what percentage right now is coming from
430. 12:25the CPAs?
431. 12:26>> I would say probably like 60 70%.
432. 12:28>> And the other third is
433. 12:30>> from what? It's either word of mouth
434. 12:32coming, you know, recurring or literally
435. 12:34people finding me on Instagram after I
436. 12:35haven't posted a month, right?
437. 12:36>> I think um
438. 12:38I think the CPA is the is the primary
439. 12:40channel. Like you've gotten 60% of your
440. 12:42revenue from four people.
441. 12:43I just think great, how do we have 40 or
442. 12:45400? To me, that's the entire game.
443. 12:47>> Yeah, and then the the the customers
444. 12:49that are coming back
445. 12:51>> They'll come back.
446. 12:52>> They're they're they're they're coming
447. 12:53back or they're referring us now at this
448. 12:54point cuz they know
449. 12:56>> But the like I see that as the repeat
450. 12:57business, which we'll just carve out for
451. 12:58sake of like where does new business
452. 13:00come from? 100% of new business comes
453. 13:02from the CPAs almost besides the one or
454. 13:04two that come from Instagram.
455. 13:06So, if that's the case,
456. 13:07the big point of leverage in this thing
457. 13:09is that
458. 13:10each CPA firm, let's say is roughly
459. 13:13worth 500 to 700,000 a year in
460. 13:15commissions to you.
461. 13:17So, that's a lot of money per CPA firm,
462. 13:18which means you can get really
463. 13:19aggressive in attracting them
464. 13:21um to send you business.
465. 13:24>> And my margins on that business are like
466. 13:2590%. Right. Technically 88 cuz I got to
467. 13:28pay my broker.
468. 13:28>> Right.
469. 13:29But, I think that's the I think that's
470. 13:30the that's that's the way that I would I
471. 13:32would do it. Like, if I were to attack
472. 13:33the business today, I'd lop this part
473. 13:35off. If I confident, which I am, that
474. 13:37you can sell houses without saying I
475. 13:38also do the management, I think you've
476. 13:40got the sales chops to do that. Um
477. 13:42you'll sell way more houses cuz you'll
478. 13:44get half your time back or more. And you
479. 13:46can take that time to go get from four
480. 13:48CPAs to 40 CPAs. That to me is the game
481. 13:51plan.
482. 13:52>> Awesome. Thank you. As always.
483. 13:54>> Appreciate you, man. Congrats.
484. 13:55>> 4 years ago, you changed my life.
485. 13:57>> You changed your life.
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