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Why Bigger Isn’t Better — How to Scale Smarter, Convert More, and Keep More Profit
00:33:06
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Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn more@mycare.org.
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Still treating your real estate business as a side hustle?
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At Joe Homebuyer, we help real estate.
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Entrepreneurs scale to full time with right strategies, training and community. Join a winning community of go givers. Get access to weekly strategy calls, leadership training and industry expert masterclasses. Plus will help you get more deals across the finish line and increase your profits. If you want to stop grinding and start growing, Joe homebuyer is your competitive edge because that's where I think you need to start. I don't think any of us as entrepreneurs go into entrepreneurship to make less than 250 grand a year. But somewhere along the lines people want more, they want to get bigger, they want to have employees, they want to do more. But more doesn't mean net profit either. This is why I want to expose this kind of myth or people talking about how like grow bigger, you know, and all this other stuff. I have so many points to just basically point out that it's not always the case. What is up? What is up? Science of flipping fam. We are going with a solo dolo hardcore tactical real estate advice from yours truly, the Justin Colby. Now, if you're not following me on Instagram, you probably should. I am giving away incredible content right there on Instagram. Go follow me at the Justin Colby and go follow everything and and you'll see some great stuff there. Now I want to dive in to some tactical myths, the myths that I think need to be broken here in the real estate investing space as well as I want to talk to like can lead in conversions, right? And so there's a lot of myths that I think that are out there that fly around from people that probably have never really built a big business and probably are just solopreneurs and, you know, say things that they think to be true but that aren't true, right? And so starting out with this idea is bigger is better and more is better. Now you talk to Grant Cardone and he's going to tell you bigger is better. Right now he's done something pretty spectacular and many of you guys probably read books just like I do. And there's a great book out there by Dr. Hardy. You know, 10x is better than 2x. So I'm all in alignment with that. But I think from my own 18 years of experience, anytime I go way outside my realm, outside my expertise, without individuals around me in that expertise, I find that I always feel some pain, right. Sometimes it's just growing pain, sometimes it's some bigger pain. But I think there's a lot of people that want to get bigger and more and more deals and more money and more and more and more. And I don't fully subscribe to that now. I always want everyone here listening to me and watching me on YouTube and Instagram to push themselves. I always want to encourage, to grow. I think it just needs to be framed in the right way. Right. I want to talk specifically about like more deals, more leads, and I want to kind of frame it in a way that I think you guys are going to appreciate. Because whether it is a myth that bigger is better and more is more and better or not, I'm tired of people really kind of making that the narrative. What I do believe specific to the lead and deal flow side of what we do, mostly in the single family space, I'm talking mostly in the single family. And then I'll circle back to some commercial and apartments. But there are services that can help you actually do more deals with what you already have. So a lot of times we, as you know, wholesalers and fix and flippers and transactional investors, we need more leads, do more deals. We need more leads, do more deals. We always want to keep investing in marketing to do or to get more leads, to do more deals, to make more money. Right? But I think there's some efficiency. So the first thing I'll tell you to write down right now is I want you to look into Lead Detector IO. Lead Detector IO. If you are one of those investors that has a website and you push any amount of traffic to the website. And by pushing traffic, I mean if you do pay per click Google advertising or Bing advertising, if you do Facebook ad advertising, if you do TV commercials and or even if you do direct mail with your website on it, if you are driving traffic to your website, then Lead Detector IO is a great service that will help you capture roughly 20 to 30% more leads than if you don't use Lead Detector. I'll give you an explanation about this. There's roughly an industry standard that we see roughly 1 to 2% of those that visit our website, opt in to our form, give us information, want us to call roughly 1 to 2%. Well, so what happens with the rest of those people, where do they go? What do they do? What happens to them? You know, I have a website, literally, I run TV commercials to this web solid website. It's called Justin buys Bama. Okay? We spend a lot of money every month doing TV commercials for the greater Birmingham area and Tuscaloosa area. And so on that website I have lead detector for those that do not give me their information out of the gate. The only reason they're going to that website is because they saw my commercial and they want to do something with their home. Or maybe it's a rental home, maybe it's the home they live in, whatever. Why else would anyone go to Justin Baez Bama? I don't think there's a person ever on in the United States of America, let alone the world, who has googled Justin buys Bama without seeing that TV commercial or maybe even without someone telling him about it. So for me, I want to figure out if you've landed on my website, you have some level of interest to be there because it is your classic website saying we buy now, we buy fast. You know, we buy cash, no appraisals, no fees, no, you know, classic real estate investor website. So we are getting roughly 20 to 30% of those people that just visit our website. We are getting them dropped into our CRM with their contact information because of lead detector IO. Not only can I get their contact information, I can actually enrich the data and I can actually pay for their credit score. I can pay for the credit utilization, I can, I can pay for the credit availability. I have access to be able to understand who is this potential client, what is the scenario. And then from there I can keep my sales team focused on the people that we believe to likely have the most financial pain. And when you can harness who your salespeople should be focusing on, you ultimately are going to win the bigger war. Not maybe just the battle, but the war because your salespeople will convert more. So this goes back to the more is better, bigger is better. In this specific example, I do not always agree that you need to spend more on Google, spend more on Facebook, spend more money on tv. You need to have tools like lead detector IO sitting on your website so that when people visit your website they can actually be captured and not only that, spend a couple extra cents on enriching the data. So we know who would perceived to be the most financial, financially needing, if that's the right way of saying it, person, right? Who is in the most pain financially. If your sales team or you can focus on those people, you have a much higher chance of conversion. On top of which you're getting more leads anyways. So even if you're not the best salesperson, if you do not have to pay more for these leads, you are just simply going to convert more deals out of a law of averages. The more homeowners you talk to, the more chances you have to get a deal. And you're not spending another $250 per lead on Google.
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So when it comes down to the idea of a bigger marketing budget, depending upon your specific scenario, who you are, how much experience, how big is your team, you know, whatever, I highly encourage individuals who are doing any type of online marketing not to necessarily spend more money, but to take a service like Lead Detector IO and put it on their website. Now for some of you, you might not have a website. So there's a great website would be rocket sites. Rocket sites, they're affordable, they are very specific to what we do as real estate investors. They're there for you, they have the right message pre built, you don't have to do anything. You put Lead Detector on that rocket site and you have a killer combination. Now let's go back to talking about conversion. The conversion of these leads is typically what people underestimate the value of and some don't. But a lot of people just want to keep spending more, right? They want to get up to 40 or $50,000 a month marketing spend. But if I were to audit their CRM, I would almost guarantee you I'd find leakage in conversion ratio. And this is why I would tell you more is not always better. Because any good sales rep right in our space, they're really converting one out of every 20 leads. At worst, some really good one out of 10. But they can't hold more than I would say 70 to 80 leads at any time. So if you look at your operation and you might be out there listening and watching this, that you are the only part of your operation, you are the operation. You might realize I have too many leads, right? I, I'm not even being efficient in what I'm doing here and I need to focus on conversion. So then you say, well, how am I going to follow up with. I'm going to make up a number here. How am I going to follow up with 500 leads in my CRM knowing that you are the only person working those leads? Well, that's where the cool technologies of today have come in, right? So like Rocketly, CRM has automation within it that nurtures the sequencing of communication with those individuals. Now typically that nurture can come through email, texting or you could physically call. Now we don't do any outbound within rocketly CRM that's, you know, obviously all those laws have hit pretty hard. But if you need some sort of nurture sequence, leveraging AI is the way to go. Again, this is why I'm not totally in belief of more is always needed. If you use AI for the use case and it's there and built in a way that's communicating with the seller to rehash the conversation or bring them back to the table, then you don't need more leads. You need the AI to work so you don't have to. Now this also goes to this idea and myth I want to break of bigger is better with your operation given the state of technology these days. I just, I don't believe that much anymore. And I'm not saying some operations shouldn't be large, but if you want to be making a hundred thousand dollars a month, you don't need more than five people in your business. Five people right? Now again, I'm talking to the transactional real estate investor here. I am not talking to the apartment owner, I'm talking to the transactional real estate investor. If you have one or two acquisition people, you have one or two disposition people and yourself, you should be able to run a full fledged hundred thousand dollar a month transactional business. Between wholesaling and fix and flipping for sure. I would even make the argument if you do it the right way, you could take those acquisition people and turn them, not turn them in, but they part of their job is transactional coordinating. They got to make sure all the paperwork is done right. All the paperwork is submitted to the title companies or closing lawyers. And then I'd also make the disposition people be transaction coordinates as well. Make sure all the job's done right, the earnest money is in, the assignment is in, the loan is done, whatever the case is done for the back end of it. But you wouldn't need more than five to get this done. I have a client, I do from time to time I do one on one consulting, right? I take on one real estate investor, one business and I help them build out their business, right? And I have a guy still to this day in Phoenix. It is just him and is just an executive assistant. That is it to this very day. And he does well into the six figures a month, well into it with two people. And I'll tell you, he does not work very hard. He is choosing to do the bigger better deals. If it makes a small dollar amount, he doesn't care. He's only looking for the big winners, okay? And because of that he doesn't need a lot of people because he doesn't need to do a lot of deals. He doesn't need to brag about, oh, I did, you know, 30 deals this month. He doesn't need to do that. He'd rather do one or two deals a month and make, you know, 50 grand per deal than do 20. And I can't blame him. As someone who's built out an operation myself, having construction management, having operational management, having TC management, having listings in property management. I mean, God, we have investor relationship management. I mean I'm, I have a full fledged business running. And some of you guys wonder why I'm bald. Constant deals, higher profits, a road map to financial freedom. That's exactly what we help entrepreneurs achieve. At Joe Homebuyer we provide the sales, negotiation and marketing training that separates top investors from the rest. But it's more than just education, it's execution. You'll get weekly strategy calls, expert lead masterclass deal reviews and real time business coaching so you can scale with confidence. Plus you'll be surrounded by a community of self driven, winning entrepreneurs who push each other to new heights. And for those of you who take this production to the next level, you'll qualify for our exclusive president's club where you'll be rewarded by luxurious vacations, recognition.
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And high level networking.
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If you're serious about turning your side.
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But I would tell you guys, you got to make a decision what you want because just to do the social media flex doesn't make a lot of sense just to be able to Say you have this big business or this office or this amount of people, it's really, no one really cares. You know, I tell a lot of people, people always ask me, when should I hire, when should I start hiring? And my first question, and I want you guys to hear this question. Are you putting 250 grand a year in your pocket? Not in a company, in your pocket. Are you actually doing that level of business? Because that's where I think you need to start. I don't think any of us as entrepreneurs go into entrepreneurship to make less than 250 grand a year. Right? But somewhere along the lines, people want more, they want to get bigger, they want to have employees, they want to do more. But more doesn't mean net profit either. This is why I want to expose this kind of myth or, or people talking about how like grow bigger, you know, and all this other stuff. I have so many points to just basically point out that it's not always the case. And you know, one things, one of the things that people aren't always thinking about is their bottom line. You know, there's, there's definitely been years, especially you know, eight, nine, ten years ago. We made a whole lot of money, top line. We didn't make a whole lot of money, bottom line, right? I mean, it was very cool to talk about the millions we were making all over social media. It wasn't very cool to know that I probably could have made more being a manager at a Starbucks. Right? And so we, we start a business, we start being an entrepreneur so we can buy our time back. Well, the only way you can buy your time back is if you're making money, right? And that's the point. So if you're listening to this and this is maybe triggering you a little bit, then you got to really look at that. Because I talked to an individual just yesterday. He, he actually applied to work with me one on one. And this guy is doing really, really well, but he has a really small functional team, right? He's doing, he's spending 100 grand a month and doing roughly 3 to 400 grand a month, give or take on the month. And that's very high functioning team. Now I'm not suggesting all of you guys go spend 100 grand a month, but what I'm saying to that is he doesn't have Some, you know, 18 person office is very functional, very. The best word I almost want to use is like, they're like snipers, right? Bigger is not better. The shotgun approach in this case isn't better. The rifle is they know what they're looking for. They know the areas, they know the deals, they know the profit margin spreads. And he's transactional and he fix and flips and he wholesales. And so I, I encourage you from this episode to audit what you're really wanting, right? I mean, you guys have heard me say this time and time again, right? The first law of success is you got to decide what you want and then who you need to be to get it. You know that to be the first law. And then you got to commit to that. And I guarantee all of you say, I want an office with a hundred people and I'm making a hundred grand a year. No one's saying that that's not what you want. You want to be rich, you don't want to be working as much. But the interim to get there is you do need to work a lot, right? But then you need to work smarter. So I'm going to take a step back. I'm going to bring this conversation back to leads and conversion. You don't always need more leads, you need to convert more. And you're not even capturing the ones that are going to your website because you're not using a company like Lead Detector IO. And so this is the whole cycle of this, bigger and more, all of it. Like everything I'm saying at this point would tell you in I know this to be true in most cases. I mean, most, it is not better. It is actually worse. You will be worse off. You will make less money because you will hire more people, you will have more cost, you'll have operational bloat, and you won't have the conversion of the leads at the pace you want. And you're not going to make as much money growing and going big. And by the way, this isn't even to mention about, you know, being able.
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To increase profit per deal.
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We haven't even talked about that. Now, this doesn't have anything about being bigger, but if you focused your time, energy and attention not on hiring and training and all that stuff, but actually increasing your margin of dealing, right, Instead of averaging 10 grand average, 25 grand, you don't have to get bigger. You don't need more deals, you're making more money per deal. And that is just creating efficiencies. And so, you know, I want you guys to realize there's a lot of technology, not that that's unknown, but there's a lot of great technology like Lead Detector IO, like Rocket Lease, CRM, like Rocket Skip. There's a lot of AI, you know, and you, you combine that with an opportunity out there to have like AI data which can get you, you know, the most highly motivated sellers out there. You know, REI lead machine is another great resource. They have lists that have AI data working behind it and scrubbing 400 billion data points. 400 billion and like almost half a trillion data points. Finding out who's the most highest likelihood homeowner to sell. You start to combine all this technology and creating efficiencies bigger, just ultimately will always point to not necessarily better in our space. There are a few examples that you can say bigger is better for sure. But my experience has been stay small and you can keep it all. The grant cardones of the world, they weren't inherent, you know, big real estate moguls, but they surrounded themselves with people who are. So my point to those that do want to scale a business. There's difference between growing a business and scaling a business. Most of you should focus on just starting and growing a business. But if you do want to be the next grant cardone or whatever and scale, then you need to make sure you have someone by your side. You need to have experts in the field. Grant is not the financial expert. He is not the real estate expert. He does a very good job surrounding himself with people who are. And he doesn't even have to train those people so he will pay them handsomely. So if you're going to do that, then you have to pay the people handsomely. Again, going back to operational bloat, if you are at that place financially, fine. My argument being is most of you probably aren't okay? And so I'm not trying to be negative. I'm just trying to say be smarter, right? Why don't you just go get rich, like real rich and then you can go buy your own apartments, right? And so I, I want you guys to focus on that first. And it comes down to operational efficiencies. Heavily leveraging technology and AI in today's world. I still believe you guys need to have a human component of the sales. You need to be negotiating, you need to be underwriting. I don't suggest to leave up analysis to technology. I know there are people and companies that are trying to make that work. I don't like it. I do believe you as the owner operator should be operating the business a whole lot longer than you think. I think there's a lot of opera. I know there's a lot of operators out there that just get a little worn out. They're Tired of being a solopreneur and they start hiring out the acquisitions role or they start hiring out the role of dispositions or whatever. Those are the two roles that make you the most money. Specifically in the wholesaling space. Why are you going to use those two roles as the first place to hire? It doesn't make any sense. So you want to really think through some of these. Now I have a great group if you guys are newer. I'm not sure if you guys are newer yet. Reilive Co. My joke is I couldn't afford the M reilive Co and we have calls every day, two, three hours a day, Monday through Friday and Sunday, Saturdays. For the premium side. If you are new and you're trying to figure out how to get a deal, you don't need a coach to sell you on 5, 10, 15, 20, 25, $30,000 of coaching. You need someone who's willing to do the deals with you and get in the trenches with you. That is what REI Live Co is. That is what it is about. Great community of like minded aspiring investors trying to break in and grow a real estate investing business. And I am right there by your side holding your hand, shoulder to shoulder, doing it with you and sharing in the deal. 50 50. So if that's something that you're on the newer side of this and that appeals to you, go check out reilive Co. If this was helpful and you think you know people that need to utilize some of these technologies, some of these services. The things I've mentioned as a, as kind of a rewind or reminder I guess is the best way of saying it. I talked about Lead Detector IO which is a great software that sits on a website and captures non opt in leads. Lead Detector IO Rocket Lee CRM that comes with AI nurture sequences. So if you're bringing in leads, you don't have to be the one responsible for nurturing all the relationships the AI can so your conversion rate can go higher. You have. What else did we talk about? REI Lead Machine. REI Lead Machine. Great list pulling and comping software that you can use to pull data that is the highest likelihood of a homeowner looking or interested in selling. REI Lead Machine has AI data built into it. And what else did we talk about? There's just incredible software out there right now. Rocket Sites. If you don't have a website, go to Rocket Sites. It's already pre built for US investors. Make sure you go to Rocket Sites. And then lastly, if you're a newer, you're struggling. You've been out there, you've been trying. You just need someone to do it with you. And you want to do a 5050 deal split, go to Reilive co. Reilive co. All right y'all if that helps and you think someone needs to hear some of this stuff, make sure you share this with at least two of your friends. We will see you on another episode of the Science of Flipping and make sure all people know about the podcast. Also as a reminder, there is a book I wrote. It has become a best selling book Flipping to Wealth. Flipping to wealth is found on Amazon. It is out there for you guys. Please check it out. It will help greatly. It goes over my entire life story of the last 18 years in building this real estate business. So glad this helped. Share it with two of your friends. We'll see you on the next episode. Peace.