← Success Story with Scott D. Clary
Success Story with Scott D. Clary
Lessons - How Specialization Built eXp Realty Into a Billion-Dollar Empire | Leo Pareja - eXp Realty CEO
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A
The HubSpot Podcast Network is a Success Story Partner now. If you like Success Story, you're going to love other podcasts in the HubSpot podcast network. One of my personal favorites is I Digress, hosted by my boy Troy Sandich. With shows under 30 minutes, I digress helps eliminate complexity, complications and confusion in your business with frameworks and strategies to achieve true, scalable and sustainable success. Success. If you are an entrepreneur building anything you need to listen to I Digress. This is one of the most useful business podcasts you're ever going to subscribe to. Listen to I Digress Wherever you get your podcasts. NetSuite is a success story partner now. What does the future hold for business? If you ask nine experts, you're going to get 10 answers. Bull market. Bear market. Rates will rise. Rates will fall. Honestly, I just wish somebody could invent a crystal ball. But until then, over 41,000 businesses have future proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory and HR into one fluid platform. With real time insights and forecasting, you're peering into the future with actionable data. And when you're closing the books in days, not weeks, you're spending less time looking backwards and more time on what's next. If I had needed this product, this is what I'd use. Whether your company is earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. And speaking of opportunity, download the CFO's Guide to AI and Machine Learning at netsuite.com Scott Clary the guide is free to you at netsuite.com ScottClary netsuite.com ScottClay in this lessons episode, discover how mastering creative financing and government programs early can set you apart in real estate. Explore how losing everything became a catalyst for smarter rebuilding. Understand why adaptability and choosing to stay in the game when the rules shift is the real marker of lasting success and why the American Dream still holds strong for those who persevere. When I look at sort of the the framework that you deploy for yourself and now for all your fraternity brothers, I mean that's, that is almost showing mastery of real estate and the different levers and mechanisms you can use at a very early stage. Because I've worked with a lot of different real estate agents and between government programs and I'm not a real estate investor. I don't pretend to be, I don't pretend to be knowledgeable, but I'm just, I always find that real Estate is the one category of investment opportunity where there's so many systems and opportunities that are actually built to support it. Like there's all these creative financing rules, there's all these government programs. Like it just seems like everything is built to help real estate investors succeed. But the, the real estate agent that I speak to is not knowledgeable about or they don't bring these things to light. Like if I have ever had, very few people have ever told me when I'm looking at a house, oh, these are other ways to finance it. Or have you thought about buying a fourplex and living in one of the units and then renting out the other three? So I think that, I mean part of your success just outside looking in is the fact you just had like you immersed yourself in not only the surface level of the industry, but like all of these again, not just selling, but investing. And that investment actually led you to become a better salesperson. But it's just interesting why I don't see that happen quite often in real estate even for like mature, tenured, experienced agents.
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B
So the, the one thing I figured out early on that I still preach is that the riches are in the niches, right? Like you know, blue ocean strategy. Like I much rather become masterful and maybe just a couple things that resonate and then I can actually be an expert at it. Right. So like do I want to compete with Walmart? No, thank you. Because like if everyone's going after the same product or service, then you're, you know, competing on price, consumer acquisitions, expensive versus like hey, let me become really, really good at a couple things. And demonstrating value to be picked is much easier at that point.
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A
Yeah, and that's what you did. So, so 11 homes, 60 grand in commission.
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B
So I blow it on a BMW because I'm 20 something. But by my senior of college I was, I think my senior, full senior that year. Right. Because I graduated and still had more time. I did about $300,000 in gross commission as a full time real estate agent.
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A
And that's like now like a year and a half, two years into this. It.
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B
Yeah, two, two years in.
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A
Right, so and, and like, I mean just tell the audience about statistics. I mean that seems like that is unusually high for two years into real estate.
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B
That is unusually high for today standards. Right. So I think the average agent in America makes about 42,000. So it's probably like 8 to 10x especially back then with the average agent full time professional mate.
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A
Now eventually this obviously ends up turning into like thousands of homes. And real estate transactions completed. So what was the, what was the sort of the playbook to sort of expand on those, whatever first 11, first $300,000 of commissions and then now you, at one point, you were number one agent at Keller Williams. Okay, so what's the journey to get there?
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B
That's the, like the highlight on the Internet, right? Of course, the journey is that, you know, or is it just hard work.
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And, and well, repeat.
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B
It's also a lot of this, right? So the journey is like, I'm not that special at all. $306,000 happened in 05. Right. I was a licensed real estate agent with a heartbeat in the greatest bubble in history in the world. And so what that translated to is I went and bought as many properties as I could with a ton of leverage because it was available. No income, no asset loans. I, um, you know, the, the, the real pivotal moment was I think in the summer of 05 or 06, my accountant told me I was worth $5 million at 14 rental properties. I had an X5. I thought I was God's gift to real estate. And then within like a six month period, that same accountant said I was worth negative a million dollars. And in the subsequent, like 24 months, I gave all that back to the banks after doing a lot of crying and boogers.
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A
And so that process was, you had achieved last quadrant. You, you had turned into a real estate investor very, very quickly actually.
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B
But with, without any of the fundamentals in place, right, like not real free cash flow and real sustainable fixed debt versus variable debt and all, all of the, the, the things that were skipped through in the, in the exuberance of the moment in the market. So, so the, the, you know, legislative safety measures and the lending system didn't exist that exist today. Right. You can't do that again today because we collectively as a country learned that was a bad idea.
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A
But did you hold on, did you hold on to any of that?
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B
No, no. It was all, it was all hit the reset button. But what the lesson was learned is like, hey, there's a whole lot of crying. And then you, it's, it's, it's one of those moments in life which is, is again a philosophy I prescribe to. It's like, hey, the rules of the game changed. You can be mad about it or you can just decide, do I still want to be a market participant? And I feel like this, this thought process applies to everything, right?
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A
Like.
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B
You know, email marketing worked really well in 2001, right. They made a movie about it, you got mail and like people get excited versus like we just don't even open it anymore. And so whether it's a marketing tactic or hey, this, this rule changed by the federal government where you can't do that anymore, do you decide, okay, I could have big feelings about it for like a day. And then you have to make the decisions. Like, okay, do I still want to be a market participant and learn to play under new rules of engagement? Or I do, I just move on to do something else. And you also, like as a human being, you always have that free will to say, I want to participate, I don't want to participate. Right. So for me it was okay. The world ended as I knew it. What do I do now? Do I want to get out of real estate or stay in real estate? At that point it was like, hey, people have lived before me. Let me try to get in front of older, wiser folks who've seen this before. And as soon as I did they were like, hey, this movie's played before, right? Like 1992, the SNL crisis. There's going to be these things called foreclosures and on the bank ledger books they're going to called reos. So now you need to find out where they're at, right? And you know Ariana, my amazing wife, she was in the business and she had been to a settlement with an agent who had a bunch of reos. And she's like, hey, they told me a lot of these banks are in Dallas. You need to go to Dallas and go get some of these contracts for us. And I turned for one opportunity where again showing up and knocking on doors and cold calling say, hey, I want to do some of this stuff. And they asked me to do these things called broker price opinions, which paid like 40 bucks for an opinion of value. But we did like a hundred of them, 30 days and then they're like, hey, you want to sell some houses? And then it went from like at the worst year ever, I think we sold seven homes. And then within 12 months it was like 99 homes and then that turned into 280 homes. And within like a four year period, the best year we had, we did 603 homes in a 12 month period in 2010, which by today's standards there's teams that do much more than that. But back then, before the accelerant of high speed Internet and the technology that we have available today, I think our team was number five in the Wall Street Journal of all teams in the country.
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A
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A
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- [12:12]
A
Busy taxes and fees extra see mint mobile.com youm know most people that that I speak to that now look very successful from the outside in there's always. They've achieved a significant marker of success and then seemingly lost it all at some point in their career. And this is like, not. This is a story that plays out again and again and again. I could always see it's a rite of passage. It is a rite of passage. It's always like, oh, I made a business. And it's always, you know, a million dollars for most people is, especially people that are not entrepreneurial. If you're entrepreneurial, usually you have the foresight to say, okay, if this goes well, I'm going to be making well over a million dollars. My business will be making well over a million. But for the average like 9 to 5 W2, that's like a big amount of money, a big sum of money to get in one year. But most people that are entrepreneurial, I think what happens is they achieve this milestone, they achieve money that they've never thought possible, and then there's sort of two paths they can go on. Because there's going to be a point. Very rarely will that first success ever turn into the success that you're going to talk about in 20, 30 years from now. Usually there's some shit hitting the fan moment when it all goes to crap and all goes to hell. But I think that, that, that point, that moment when you. Again, like what you said, just to parrot it, you can choose to be a market participant. You can choose to opt in or opt out. You can choose to just complain and cry and, and, and you know, like, woe is me. Like, I can't, I can't continue. Like all, all these different, all these different negative feelings you can have at that point. You can choose to take those lessons, those learnings and just continue to build, or you can opt out. And I think that's actually the, the, the biggest indicator of success, what you choose to do in that moment.
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B
So I heard a quote once that said, in order to acquire a great fortune, you must first lose a small one. Right? Oh, I like that quote.
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You know, but you mentioned also, like, so this happens in every industry. So I mean, in podcasting, Apple podcasts, where majority of podcast downloads come from, they used to auto download. So when I used to upload, as well as every other podcast in the world, used to upload a new episode, all the people that subscribe to your podcast on automatically downloaded it onto their player. So Apple updated this feature about a year, year and a half ago where you don't auto download anymore. So if I subscribed to you five years ago and I haven't listened to you since. It doesn't make sense that I'm still auto downloading because downloads count towards advertiser. But yeah, well it counts towards advertiser downloads and cpm and it that, that fuels the whole commercial model of podcasting for every podcaster in the world. So when Apple did this, I mean that's on a, on a low end, about 20% of downloads and then revenue were cut overnight for every podcast in the world on the high end, like 30 to 40%. So again, this is something that you just have to deal with in every. And it doesn't matter what you're doing. It could be drop shipping, it could be, you could be selling on TikTok shops. If you're in this space now, it doesn't really matter. It's always going to happen to you where whatever you've been building, eventually the rules are going to change and you have to find a way to persevere in spite of it. So I hear a lot of people say that they think the American dream is dead. What is your perspective on the American dream after going through all these ups and downs and highs and lows?
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B
Yeah. My vantage point is someone who didn't grow up here. Right. I didn't get here until I was 12, so you know, my dad worked for an NGO so we moved around to six Latin American countries. So like I actually did kidnapping dress as a kid. Right. Like I fundamentally believe if my story was in a different country, someone would have kidnapped my family. Because that's what you can do when you get mad at your competitors, when there's no rules. Right. In foreign countries. So like just like simple things like our legal system works. If I get mad, I sue you. And for performance or non performance or you know, for payment. Right. If I fail horribly, I hit bankruptcy and no one puts me in jail. Like there's, there's debtors jail in other countries. Right. So to, to me, this is still the greatest system on the planet. Is it perfect? No. Is there a better one? Show me. Like, I just, I haven't seen a better system. So you know, cost of living, everything. Yes. It, maybe it's, it's a tough moment in history and I don't want to take anywhere anything away from that because I'm hyper aware that there is a lot of pain in the system post Covid with inflation. But I don't know of a better system on the planet than this one.
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A
Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.