Epic Real Estate Investing - Brian Ellwood - Fire Yourself | 408

Episode Date: June 14, 2018

Brian Ellwood, a real estate entrepreneur and author of Fire Yourself, virtually flips 70 Tennessee properties per year from Colorado and owns and manages dozens of rentals. On today's episode of Thought Leader Thursday, Brian shares tips on how to hire your own acquisition manager, how to manage and compensate them, how to avoid hiring mistakes, and much, much more! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. You hear so many people to just want to systemize and automate everything, but they've never done any of the things that they want to systemize and automate. When they plug someone to that role, they have no idea what doing a good job looks like. Hello, I am Matt Terrio of the Epic Real Estate Investing Show,

and this is Bot Leader Thursday. So today I'm joined by a real estate entrepreneur born in South Carolina. raised in Tennessee. And after a short stint in the corporate world, he started his own business flipping houses and buying rentals. And after systemizing the business to run without his physical presence, he tested the theory by moving to Colorado, where he currently lives. And his Tennessee business continues to thrive today doing over 60, excuse me, 70 fix and flips per year and owning and managing dozens of rentals, all from afar, doing this all virtually. So please help me welcome to

the epic real estate investing show, Mr. Brian Elway. Brian, welcome to the show. Joe. Thanks for having me, Matt. Excited to be here, man. Yeah, I'm excited to have you here as well. Again, you've been here before and we don't really need to go do the backstory again. I specifically invite you for a specific reason. And that is the idea of investing virtually. It's thrilling to people. And they find it so exciting. And, you know, and specifically when it comes down to investing virtually and doing it successfully. You know, one needs a team. One can't do it all by themselves. And, you know, and at the very least, one of those key team members is your acquisition manager. And I have a few of them around the country, but I've acquired all three of them,

four of them, in very different ways. So I don't have a system as how to go about it. And you do. You actually wrote a book about it, right? Fire yourself. Got it right here. And, uh, it's It's fire yourself, how to overcome your competition, reclaim your freedom, and triple your revenue in the next 12 months by hiring a rock star acquisition manager. That pretty much says it at all. So very niche book, though. Very small audience. Why did you write this book, Brian? I wrote this book because I felt like it's the biggest need in a lot of real estate investing businesses.

A lot of people want to get into real estate, but they don't want to answer. the phone all day, talk to sellers, sit around analyzing leads, drive to appointments, and sit at kitchen tables negotiating. Me personally, I was never too thrilled about doing any of that stuff as a real estate investor. I honestly just wanted to get to the passive income as fast as possible. And I did it on my own for years and never really learned to enjoy it. And once we hired our first acquisition manager, not only did our revenue triple, but we got back tons of our free time. And all the other investors are like, wow, how are you guys finding so many deals?

How are you getting so many contracts? And I saw that to be our little like secret weapon was the fact that we just had a guy who was grinding all day, making offers all week. Because I know like you as an educator, you teach your students, make more offers, make more offers. It's like the key to everything, right? Well, how about hiring a guy whose only job is to make offers? You know what I mean? So, yeah, I just, I saw it as a way to explode real estate businesses. Everyone talks about marketing all the time and it's really important.

But what you do with the leads is just as important. Otherwise, you're wasting your money. So, and no one had really a lot of, I learned this, you know, what's in this book from you and John Terry and Joe McCall and lots of other guys, I just sort of decided to put it all into a step-by-step format so that people could follow and really see what the power of it is. Super. So I'm glad you did because I've been debating on how I was going to put this part

into my academy for so long. And then you just came and did it. And I said, okay, great, I'm just going to have you on the show and share with people how to do it. So you kind of already said it. You know, what was life like before the, acquisition manager, you're doing a big part of the business that you didn't enjoy doing. After hiring that acquisition manager, kind of everything changed for you.

I guess, tell me what was the process in finding that particular person and how is it different of how you'd go about it today? So when we first did it, I have to give credit to Joe McCall because he was our coach at the time, like a one-on-one coach, and he was looking at what we were doing. He's like, guys, you know, you're running around like crazy. you can't make any more money, you know, you have no more time. Why don't you hire an acquisition manager? You guys are going to dinner with your girlfriends and your phones bring it 40 times

because the direct mail just hit. You know, it was ridiculous. So we took his advice because we're paying him good money. And even though we didn't want to, we ran ads on Craigslist to hire an acquisition manager. We had never hired anyone before. We hadn't even hired an office manager. Actually, we had a VA, but that's a low risk, $5. an hour higher. This was a serious, we're going to give somebody control of the most important

part of our business. Right. And so we got a bunch of applicants in on Craigslist. We went to the nicest, we didn't have an office. So we went to the nicest hotel in Nashville and bummed their lobby, basically. That's a little trick right there. If you don't have an office, but you want to look cool, just go to the nicest hotel in your city and do the interview. You know, using the lobby on some nice leather couches in the corner. People think you're pretty cool and you're not even staying at the hotel. So that's what we did. And we lined up the candidates, you know, I was more nervous than they were because I had never even interviewed anybody before. And we picked a guy who just seemed to share our values right out of college, real hungry,

no sales experience, no real estate experience. And we just kind of threw them to the wolves. So even without a formalized process, it still worked, just replacing ourselves. And even though he was not as good as we were at sales, he outperformed us three to one just based upon the sheer amount of volume of activity that he was generating. Because we were just waiting on like the laydown deals, you know, like the easy ones. We'd go on the appointments. He was going on every appointment. So, you know, he outperformed us three to one, and that's why we tripled our business, because he was just essentially making three times as many offers, three times as many contracts,

et cetera. It was more of the volume than the skill up front at first. Yeah, absolutely. I think volume, you know, is an easy way to explode. You can, you can dial in the skill and negotiation tactics later, but in the beginning, it's really just about increasing the volume of offers and appointments. Right. So before we get too much too far into that, so you place this ad on Craigslist and, you know, give me the gist of what that ad said. Who are you looking for?

Well, in the book, I have a better version of the ad that you guys can use. Just put your own business in there. But it just said something like seeking rock star outside sales rep, local real estate investing company seeks and then the ad they might have said 40k a year plus plus plus you know signifying that they could make lots if they really blow up our business right and then in the description um you know the job duties and some of the values and things that they would need to share okay so how many applicants did you get for that a lot or was this just like the one guy we got um probably 70 to 100 applicants.

Just from Craigslist. You know, we might have put it on Monster or Indeed. I can't remember exactly where we put it, but I think we might have boosted it. And then we got, you know, a bunch of applicants. But we used the hiring technique that Sean Terry kind of came out. And I think he was the one who kind of taught everyone where you tell them, send your resume.

fill out the survey on survey monkey and send us a YouTube video. I'm sure you've heard of that. Okay. Yeah. So we still use it for everything. And so we only had to look at five to 10 videos out of those 70 to 100 resumes. Isn't amazing how it narrows them down so quickly? It's the best thing ever.

And you narrow people down even more when you watch the videos because you say, nope, not working with that guy. Yep. Yeah. It's like you take 80 people that are all looking for a job and then only 10 of them are willing to burn any calories whatsoever to get the job. And then they go ahead and they just kind of self-select them right out of it with their video. But go ahead. I tell people all the time that are looking for jobs in the normal workplace.

I'm like, make a video. Why are you just sending any of your resume everywhere? Right. You would totally stand out from the pack. You know, we just hired it. We just placed the ad for. the person that will be editing this video for us. We hired a video guy.

And we got in a week through Indeed.com, we got over 400 applications for this position. And we put the little 10 steps in there with a little, we had them go take the disc test and then record the video of what they thought about the disc test. And then they had to send us their video. And I think out of 400, we narrowed it down to like 15, just like that. It was amazing. Anyway, I'm sorry.

I'm interrupted. That's great. That's a good segue to the next thing I was going to say is that, you know, in this book, I've really formalized this process where I go through all the steps because really you shouldn't just hire the guy that feels right. There's a lot of different interview questions you need to ask and see how they handle pressure. Like, for example, no matter how much you like your favorite candidate, at the very end,

you have to tell them, you know what, I just don't think you're a good fit for this job. You have to say that at the interview and see if they hang their head and say, all right, well, that's what they would do with the customer when they tell them no and the negotiation. Right, right. So you have to do things like that. And then we do a Colby test, a disc test, you know, looking for a high D.I., looking for a high quick start, you know, things like that, guys who are going to be good

at sales. and then we do a really cool thing where, say you narrow it down to your top two candidates, give them a week and give them each 100, like, of your old leads that are kind of dead, and just see what they drum up. Hey, call all these people, set some appointments, make some offers, you know, just like, boom,

you can even pay them a couple hundred bucks for that week or whatever, so not working for free. So that's a little contest we add to the very end of this process that really, like we just hired a Facebook ads manager actually, we did a six-week contest between the two top candidates, gave me each $1,000 and said, bring us some leads. And we saw what kind of ads they ran.

We saw how they communicated with us through emails. We saw the actual KPIs that they ended up with because, you know, Facebook shows us everything. So you've got to create a little contest to anyone you hire to see how they work before you hire them. And that's true with this. So really this book is just like the, what I would do if I did it all over again kind of book and the process we use now.

Sweet. So once you've got your winner, how should you or how do you compensate? That's a big question. Like what's the agreement arrangement? What's the paperwork look like? And then how is the compensation look? Okay. I want to say one thing because I get this question a lot ever since I wrote this book is

people want to hire, they read the book. They're like, oh, I want to hire an acquisition manager. It sounds awesome. I'm like, I wouldn't have to do any of that stuff anymore. But, Brian, I don't have enough leads yet. My business isn't big enough to hire an acquisition manager. So as far as compensation, the first thing I'll say is that you can be creative. You could hire a part-time acquisition manager who has another part-time job while your business is still small.

You could hire an acquisition manager who also functions as your, I don't know, office manager or your project manager. It's not ideal, but if that's what you have to do to be able to afford this position, you can do it. You can get as creative as you want. You'd be surprised what other people will agree to if you propose it. So to answer your question more generally, though, it's like 8 to 15% of the gross profit on a deal. That's, you know, and people ask questions like, you know, well, what if the deal is small or what if I'm going to keep it as a rental or rehab?

If we're going to do a like just keep a house as a rental, I usually just give the acquisition guy $500. And they're happy with that. Because a lot of times maybe a house you're going to keep as a rental, you wouldn't have otherwise put under contract in the first place. It only works, you know, longer term, cash flow. It's not like a flip. So it's $500 they wouldn't have gotten.

So you can go the flat fee route like $500 or $1,000 or $1,500, depending on the deal size or you can go a percentage. I would say, you know, don't let that part of it like hang you up. Just create a pay structure that you feel good about as a business owner and put it out there. Okay. That's pretty much the answer I give as well. You can go. You get what you negotiate, right?

Yeah, exactly. Okay. Cool. So, you know, the idea of this is so you don't have to work so much, right? You can delegate a lot of this time intensive sweat equity type work. So how in what does your management of that person look like? And specifically where I'm going with this, because this is the frequent question that we get over here is how do you protect yourself

from your acquisition manager like doing deals behind your back or or just slacken on the job? Like how do you monitor and manage them? That's a good question. I haven't gotten that one before. but I do in the book talk about how you should have your acquisition manager sign a non-compete that says once they quit working for you for the next two years, they can't do similar, you know, real estate activities in your immediate market. That discourages them from secretly learning all of your systems and going and doing it.

Another thing I would say is that if you follow the high market, hiring process and you hire the right type of person, they're really going to be like a sales type person, not more of a visionary entrepreneur type person. There is a difference between the two. Not everybody has the compulsion to go out and start a business. They just want to be right in like a certain, they want to be pigeonholed like in a certain position. That's a bad word, but you know what I mean, so that they can just focus and drive it to the top. You do need to manage this person, one of the other part of the question you asked, you need a sales manager. It doesn't have to be you as the owner if you can, you know, someone else, but you don't just hire the

acquisition manager and just kick back. Like every person in any company, they need a regular once a week call for at least an hour. You look at their KPIs, they're held accountable, how many appointments did you go on, how many offers did you make? What kind of things are you struggling with that we need to do some sales training or whatever? You need, add a, a minimum that maybe you can listen to recordings of their appointments. You can have them wear a little USB flash drive thing around their neck and records the whole time they're with the seller and you can listen to those. That puts them on the spot because it's like, hey, you didn't follow the sales process. You jumped right to price. You were supposed to ask them about their pain,

you know. So yeah, you have to do that. You become the sales manager when you leave behind the acquisition manager role. Got it. So you've been doing this for a long time. How many acquisition managers have you hired, do you think? Probably only about four. Four. Okay.

Yeah. Any big mistake that you've made that you make sure I'll never do that again? Hmm. You know, we did hire one guy who didn't last very long at all, but I can't honestly tell you why we screwed up. I think it was, you know what? we didn't follow the process. That's what it was.

We didn't give him any of the personality test. We didn't make him do the little contest I just described. It was more of like a knee-jerk decision. It was just like, oh, crap, you know, we need a new acquisition manager. This guy's going to be out of town for a month. Just what about that guy? Let's hire him. It was very sudden, but it wasn't, you know, intentional.

Got it. So stick to the process. Stick to your standards. and then hope for the best. Yeah, absolutely. You have to be disciplined when you hire. Everyone wants to hire quick because usually when someone's in hiring mode, there's some kind of pain they're trying to relieve themselves of.

Totally. So they just, oh, let's just do it. Just this guy. He'll be better than nothing. That's bad. You need to budget 30 to 60 days to make a good hire. Right. Really, if you want to go through a full process and if you bring someone into your company

that's not a good fit for your company, it disrupts everyone else in the company. It pisses everyone else off because they don't work well with the culture that you've already built. It's, yeah, it's disruptive. So you really have to be careful when you make hires. You know, one thing I've noticed recently, and I know you educate people and train people as well, that there's always a big, I mean, the reason you're on their show is because everyone wants to do this virtually.

And what we found, we found two really interesting things. just probably in the last six months because we started doing some intense interviews and trying to really create solutions and create good fits for people so they could work virtually. And most of the time, everyone says they don't want or they want to work virtually because they don't think they live in a good market is really what the big inspiration is most of the time. And then after talking to them and getting down to the actual point, it really came down more to kind of how we started this conversation is that they really don't want to do the work. right? They don't want to get on the ground and sit across the dinner table and negotiate contracts and stuff like that.

So with that said, knowing that that's kind of the consensus I have found and not over just one or two people over several, how important is it that they actually get out there and knock a few of these down themselves first before hiring the acquisition manager? That's a good question. or can you just go in with no experience hire an acquisition manager and make it work? I think you can. I think it's probably better to experience the job at least for a short period of time. I, you know, you hear so many people to just want to systemize and automate everything, but they've never done any of the things that they want to systemize and automate.

So when they plug someone to that role, they have no idea what doing a good job looks like. So I have found as an entrepreneur, as the owner of businesses, that it's healthy for me to like be in the weeds for a short period of time. I get a glimpse of the day in the life of a blank acquisition manager, whatever. And then I can relate to them a lot better when I manage them and stuff like that. So I think you can do it without it, but you are going to be missing some depth to like of understanding of the role. Yeah.

I think missing as far as training. helping them succeed unless you find someone that's already been successful doing it. And then in that scenario, you kind of lose out on your leverage as well at your own business, right? That's true. That's true. It doesn't take long to talk to somebody to know who the real people are, right? And, you know, if you're hiring the person that's good at what they do and they'll be able

to tell whether you know what you're doing or not right away. So I think leverage is also key. That's true. it's kind of playing devil's advocate a little bit. I like to discourage a little bit. I'd like to see people get the actual skill under their belt before they start training and delegating. I think it's just going to make them for a better outcome long term.

But love that you wrote this, dude. If someone wanted to get in contact with you, what would be the best way for them to do that? So if they want the book, I give it away for just the cost of shipping at fireyourself.net. Okay. I have a podcast called the virtual real estate investing podcast.

My website is just my name.net, Brian Elwood.net. Two else. Two else. Yeah. So yeah, you can find me any of those places. Super. All right, cool. So you can go to fire yourself.net to grab a copy of Brian's book.

He's just asking you to pick up the shipping, you know, send that to you. And then what I have done actually, Brian, is I bought 10 of your books. And I'm going to give them away. to the audience. And this is how you win. I want you to go to Instagram. I want you to tag brian. Dot Elwood and tag Epic Real Estate.

And I want you to create a post stating what you liked best about today's interview. And the first 10 people to do that, I'll go ahead and I'll send you a free copy of Brian's book, Fire Yourself. And that's how you win. Or you can just go and do it the easy way and go to fireyself.net and pay for the shipping. Either way is 100% okay with me. I'm sure it's 100% okay with Brian. Brian, it's been a pleasure.

Let's stay in touch. Thank you very much, Matt. I appreciate you having me on and giving those books away, and let's do it again. You bet. And I actually bought those dudes, so that was like money that went into your pocket just so you know. Oh, crap, dude. Dinner's on me. That's good.

I got a book coming out at the end of the year. You can buy 10 of those. I will. All righty. I'm Matt Terrio. God bless to your success. I'll see you next week on another episode of Thought Leader Thursday. Take care.

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