The Science of Flipping - Episode 71: How To Hire Your Acquisition Manager

Episode Date: July 8, 2016

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Alright, what is up? What is up everybody? Welcome to the Science of Flipping Podcast. I am your host as always. Justin Colby is here. It is episode 71 and I am excited to be here with you every single week. My co-host is still traveling with his family, but he promises he will be back on the show. It just is important to him, as it should be to everybody, to spend quality time with his family. My co-host Kent Clothier is out with the family enjoying daddy hour and husband hour and enjoying the last couple of weeks of his life. I am here again. And if this is the first time you have been to the podcast, I really encourage you to get to thescienceofflipping.com.

We have our 15 most costly mistakes a real estate investor can make in today's economy, in today's market. It is absolutely free for you. I always want to make sure that you are able to avoid mistakes. And so that is absolutely free. Make sure to download it. It's the most costly mistakes you can make today. It is gathered from myself making mistakes and many other friends and investors that you probably know of that are here on iTunes or have coaching models. So go over to thescienceofflipping.com. Download the free e-book because we don't want you making mistakes. That's the whole point here, right? The whole point of this podcast is to give you the systems, the tools, organization to live the life that you want to live, right? And so many of us entrepreneurs tend to jump all in, commit all in, figure it out as we go.

But what that really ends up doing is taking away time from our families, time from our friends, time from traveling. And it's simply because we don't have the organization. We don't have the systems and tools to implement so that we can actually live the lives we want to live. It's one thing to make a bunch of money and that's great. And I think the majority of us get into being an entrepreneur because we get to see the light at the end of the tunnel in terms of we get to create our own income, right? That's a big portion here. But another portion that people forget about is we want to be able to also live the lives we want, right? And not to have to be dictated by a boss about when you have to show up to the office,

when you can leave the office, what you have to wear. As you guys see on these videos, I tend to be somewhat casual, whether it's a t-shirt or a button-down short-sleeve polo or something of that nature. I get to come in when I want, and I get to leave when I want, and I get to wear what I want, and I get to say whatever I want. It's my company, right? And that's the idea here. and so with that being said this podcast is here to help you guys whether you are wholesaling whether you're fixing flipping whether you are developing or possibly at the point of buying a portfolio or maybe even you're at the point of raising a bunch of money for a ppm or something of that nature so you can lend money. Not only do I have a ton of experience been doing this for the last eight years, but I will be bringing on guests

that have ton of experience in multiple different arenas, as well as my co-host, who is what arguably is the largest wholesaler in the country doing over 650 deals a year right now. So that's what this is about. And so today I actually wanted to review, I got an email from one of my students. It was a great email, but it kind of got me thinking that I think it's actually something that everyone should hear the answers to the questions that this student asked. And so I'm going to take some time and I'm going to ask the question and I'm going to answer the question. That is simply on an email. So the first question that she actually came up with is, can you give me more detailed process and best practices for selecting and hiring a property acquisition manager? And assistance with that helps with property

acquisition. Example, submit offers, do property analysis and follow up in doing transactions to close and market. So what I want to focus on here simply is this question about how to find and hire a property acquisition manager. And I have done a very good job doing that in our own business. And what most people don't recognize is very likely it's someone you already know or is very close to your inner circle. I pride myself on being a great networker. I've for years gone to a lot of different networking events. Now meetup.com has basically a bunch of different meetups that you can go to in your market. I know here in Phoenix, my friend Sean Terry runs a

meetup. I run a meetup. There's several other friends I know that run real estate investing meetups. And the reality is you don't have to look very far to find an acquisition manager. Whether it's simply talking to your friends in their arena to say, hey, look, this is what I'm looking for. This is the role I'm looking to provide. I need someone to take in the leads, call the seller back, possibly go meet with the seller, negotiate on my behalf, right? Or whatever that role may be, right? So my acquisition manager defined, simply is meeting the seller, negotiating with the seller, and getting it under contract. That is his only purpose, right? And before he meets, he obviously has to do some analysis and make sure he understands the value of the home and provide the three lowest comps and find the three highest comps.

So he does an analysis. He meets with the seller. He negotiates with the seller, and he gets three highest comps. So he does an analysis. He meets with the seller. He negotiates with the seller and he gets the deal under contract. That is his responsibilities. And we have two acquisition managers actually. Now we also have a lead manager. Our lead manager takes the lead in. So we have a call center that the call comes into a call center. They ask five very basic questions. The name of the person, the address that they're looking to sell, what is their phone number, their email, and why are they looking to sell? That is all. That email gets emailed to my lead manager. My lead manager immediately calls the seller back and starts to talk about the property. Can you give me further detail about the property? Can I tell you a little bit more about myself? That is my lead manager.

The intention of that call is for the lead manager to set an appointment for my acquisition manager, right? So this email is specifically about an acquisition manager and assistants. That's how my business is set up. So my acquisition manager then gets an appointment set for him because my lead manager has access to the calendar and then can set an appointment for my acquisition manager. My acquisition manager is in the field. He sees an appointment that's been set for 2 o'clock on Thursday, and he goes on the appointment. real estate investing association groups around town. You can also truly, if you have a buyer's list, send an email to your buyers saying,

hey, I'm looking to hire. Is anyone looking to work with me? Or are there any struggling agents, or not struggling agents, but struggling investors looking to work with me? And then on top of which, realtors, agents, a lot of times are struggling. They struggle as much as anyone else. And they could be great resources to find an acquisition manager, primarily because honestly, they've already gone through it.

They know what they're doing. They're in the real estate world. They get it. Right. So, um, you know, I think for me, it has been most advantageous to hire within my own network, knowing, you know, who needs what, what, you know, where they can be. You know, I run a meetup group. I've obviously been coaching now for, for years. Um, I have this podcast, you know, for me, I could send an email to this podcast. I probably could find an acquisition manager. For everyone else, specifically my student, I would really encourage, and she knows this, but go to your meetup groups. Find meetup groups in your area with real estate investors. Network. Go to your meetings and network. Call realtors and network with realtors, send an email out to your buyers

list and say, hey, is anyone out there looking to partner up or work with someone? Those type of ways are the best way to find these people. Now, you can go down the path of traditional hiring. It is just not the way I have done it. Not that it is wrong. I just have always been able to build a team simply by the people I know. Now, as far as assistants, as that was another point of that question, assistants I tend to hire traditionally. Hourly wage, coming to the office every single day. I hire them usually through, well, referrals as well, people I know, but typically through typical, whether it be Zip Recruiter, Craigslist, that's where I find my assistants. But the acquisition manager, the team, the lead manager, more often than not,

they're going to be in your small circle, right? The people that you're not really thinking about it, but they're there. How do you screen and select them? It kind of goes along with the networking, right? If you base this off on networking, then you're screening and selecting them through meeting with them, going to coffee with them, meeting them at a meetup group or whatnot, understanding what they're looking for, where they're falling down, where they're not getting what they need done. So that's where I'd be screening them. How do you train them? Great question. So acquisition managers, if it's just you, I'm going to act as if you are a solopreneur like my student is, then you got to just do it and they got to shadow you, right?

That's the best way to train. If it's something that you can train them how to do it over a computer, like run comps, analyze a deal, the best way to train, in my opinion, if it's something you can do over a computer, record yourself doing it and send them the video. And then they'll never have to ask you a question because if they ask you a question, you simply say, hey, go check out the video. I sent you'll never have to ask you a question because if they ask you a question,

you simply say, hey, go check out the video. I sent you that video a little while ago, right? You don't need to be retraining. That's how you should be training, right? That's the best way to train. In fact, my sales guys, when we hire them, they watch the videos. That's what we make them watch.

I don't spend a ton of time. Now, will I audit their work as they're going? Yes. I will shadow them from time to time, but training them is no more difficult than simply having them shadow you and or if it's on the computer, such as comping properties, you can record yourself comping a property so now they understand how to do that. The next question that she has on here, what do you put on your contract for the acquisition manager to protect your business? Do you have a non-compete? If so, what does it look like? Well, I have an employment agreement, right?

And that employment agreement covers everything from what I expect of them, what their duties are, the fact that they can't represent anyone except for me. There can be no conflict of interest. What their compensation will be. Terms in termination, meaning if we no longer want to work together, what does that look like? So I have that. Now, the reality is more often than not, they can sign this. And what that really is trying to do is to make sure that I know that they're all in, right? For the most part, everyone in my business is on commission only. Now, I know some of you guys might follow other

people. My good friend, Sean Terry, is a good friend of mine. We actually do a bunch of business together. And he has a little different model than I do because he puts people on salary. Well, I tend to like to make sure that everyone, including myself, gets paid out of the deal. So this is really something that more than anything, they understand what their expectations are and what they aren't, right? What my expectations are of them and what they can or cannot do. And that's really what I put this together for and then have them sign. So at the end of the day, that's my thing. Now, is there always some case that someone could make, yeah, well, you're going to have to trust them for X, Y, and Z reason. Well, yes, you do. There's always that level that they can grow up and be

18 years old and be on their own and go do it themselves. Well, that's why you put this in kind of case of, you know, putting the fear of God in. Hey, if you go off and do this, and very clearly per this agreement, I state you cannot go off and do this because you are an employee of mine if you so choose to pay them salary. Now, if you pay them as a 1099, it's very difficult to enforce an employment agreement as they are not an employee. They are a contractor, right? So it really depends. Now, for me, I have contractors for everybody. And if they so choose leave, so be it.

But if you are going to hire an employee, pay them hourly, pay them salary, you'd want to have something in place to say, if you go against my wishes, then I will sue you. If you go against this agreement, I will sue you. I also have a non-disclosure agreement, a confidentiality and non-compete agreement would be even better for people who run my type of business, basically saying, what's my business is my business. You cannot infringe on my business. If it is my deal, it should be my deal, not yours. Do not steal a deal out from under me. I do have a confidentiality and non-compete agreement, which suits my business model, which is a lot more, you know, uh, uh, what am I? I'm blanking on the word, uh, non-employee based, right? So, uh, contractors,

right? 1099. That's what I'm trying to say. Holy hell, that was difficult, right? So for me, that's how I would really structure that. So you have a confidentiality and non-compete agreement. And I also have an employee agreement. And then you can also have a, well, those are the only two that I would use, obviously, depending upon what you have. So that's the paperwork I would have. What do you have them do for you?

Well, as far as an acquisition manager, I've explained that. The only thing that they are required to do is show up to the appointment that was set for them, negotiate with the seller, and get it under contract. And then simply, how much do you pay them? My acquisition manager makes 20% of the gross deal period. If I make $10,000 on a wholesale deal, my acquisition manager, excuse me, will make a two grand and everything else comes out of that into my pocket. Okay. They make 20% off top and that is it.

Actually, that's my acquisition team. And so that's how we have everything come off top is the actual lead manager and acquisition manager are splitting the 20%. So that is all they get and then everything goes back into house to repay marketing and profits and so on and so forth. So that is how we hire acquisition manager.

They're typically in review. They are typically in your circle of influence. Meetup groups. Imperative you go. Social media. I didn't even mention that. But get on social media. Go to real estate investing groups.

Just simply post it on Facebook or on your LinkedIn and you would likely find somebody. Real estate investing groups, just simply post it on Facebook or on your LinkedIn and you would likely find somebody. Real estate investing, REIA groups, go out and network. Realtors, there are a lot of hungry realtors that would love to be a part of deals. And then you can hire in a traditional way if you really want to, whether it's a zip recruiter or whatever that may be. We pay them 20% off top, and we do have them either sign a non-compete agreement and or an employment agreement, depending upon how you pay them.

We have our guys on as a contractor, right? They 1099, so it makes it a lot easier for us. We have a lot less liability. And their, their main goal here is their salespeople, right? They need to be in the field. They need to be going on appointments. They need to be negotiating. So I train them a lot of times on sales. I'll have them come into the office and we'll talk about negotiating strategies and what to say with this objection and, and them better. It works. It works really well. Guys, I wanted to give you that content simply because, listen,

this is a great email from one of our great students. She's already doing plenty of deals, and so she's looking at scaling and growing her business. That is all I got for you guys today at The Science of Flipping. I look forward to be today at the science of flipping. I look forward to be back. Hopefully the next episode, my hope will be is my cohost Kent Clothier will be back and we'll be back in better than ever. So that's all for today, guys. I am signing out, wishing you guys a great week and I will talk to you soon. Peace.