Drop the Fads and Learn Business

Dan Austin: [0:00] Hey there. Welcome back to another episode of the collecting keys real estate investing podcast. This is the podcast where we teach you how to make massive income, not just passive income. Because if you're like me, you desire a lifestyle that's somewhat costly, or it's just honest, even if it's average, it's really hard to make up for that with passive income, which is what most people get into real estate to do, create enough passive income to pay for your lifestyle, so you don't have to work, or so you can travel the world, or whatever your glorious dreams are. Instead, we will show you how to do that, but first, we're here to teach you how to make active, and massive active income at that. Many of you, as off market operators, are sitting on a gold mine, and you don't even know it, and that gold mine is your business. But the challenge that we all have, is we have to learn what got us in this business, is not what will keep us in this business. And what I mean by that is, we started out as off market real estate operators, to try and buy deals. Or we wanted to become real estate investors. And when I say buy deals, I mean long term investing, becoming buy and hold investors, whether that's Airbnb's, or long term rentals, or whatever kind of niche you have in the rental industry.

Dan Austin: [1:13] And the reason why that won't keep you here is because a, it gets boring after a while, and it takes a super long time. You won't stay an off market operator very long if all you do is look for deals to buy. You get burnt out or you run out of money. And that's why I say you're sitting on a gold mine. Because there is so much easily attained income if you focus on the right things in this business, in the off market real estate business. Literally, you can make tens of thousands of dollars just off of one deal, and it's just one deal a month, you can make $20,000 that can help most people live a pretty good lifestyle, plus have some extra money left over to invest in real estate. And that really is the premise of today's episode. What I wanna talk to you about today, or share at least my insights on really is focusing on your business as a business. Stop chasing the fads, and realize you are a business owner, you're an entrepreneur running a business. What I mean by stop chasing the fads is, I we see it all the time. Oh my god, it's really what what is Brandon Turner doing this this month? Oh, is he a trailer park guy? All of sudden, everybody becomes a trailer park guy. Oh, he's an apartment syndicator? Everybody becomes an apartment syndicator.

Dan Austin: [2:26] And you can name a dozen different little niches. Right now, a popular one with people is sober living. Nothing against it, all these are great business models, but people bounce from one business model to the next, and they're just chasing the fad, and what they're really doing, and the reason why I bring this up, what they're really doing, and if this is you, this is what you're really doing, is you're really just chasing ROI, and you're looking for the highest and best opportunity to increase ROI, and you're thinking about it from the standpoint of an investor. You're basically trying to be a day trader of thoughts, and ideas, and concepts in real estate, which is an asset that is not meant to be traded so frequently. And that's okay, because as off market operators, we basically become baseball card dealers. Right? We're trading houses like baseball cards. Right? But when you talk about investments, that's a totally different ballgame. And I wanna separate those two, and make a very definitive separation between real estate investing, which is a completely separate business from the off market real estate business. And then you have, on the front side of that, is truly your business that feeds excess income into your real estate portfolio, your real estate business. You have off market operator business, you have real estate holdings and portfolio business. Don't ever let the real estate holdings portfolio sink your off market business, because your off market business becomes the acquisitions pipeline for your holding business. Mike and I made these mistakes early on. We got into this, like I've mentioned many times, to become buy and hold investors, and we started out trying to buy everything.

Dan Austin: [3:56] And we were buying dumps that took a lot of money to get them fixed up, with long BRRRR cycles. And it really stunted our growth. Unfortunately, we're too stupid to give up, and we just kept pushing through, and we kept scaling our business, and kept growing it, and growing it, growing it. However, we would have much more money if we understood this concept when we started out. And the reason why I'm talking about the business side of things is because all too often, we overlook it. We are running a business that has a marketing department, it has a sales department, it has an operations department, and you have a finance department, which is essentially your accounting, your financial forecasting, all the things that you do for your business to ensure that you can go back around, and have money for marketing, and have money for operations and staff, and all that sort of stuff. Those are the four core parts of your business. And if you can think of it that way, you can really start focusing on the right areas. So instead of focusing and wasting your time on looking at investments, invest in yourself and in your business. Invest in your education, whether that's joining a a mastermind, joining a coaching community like the scale community, or taking a course that's gonna teach you something about business.

Dan Austin: [5:07] You know, Mike and I, we always share the different things that we are paying for. I paid this year to be in three separate masterminds that I'm learning things, whether that's commercial real estate, acquisitions, because I want to be able to market to that pipeline, whether that's other communities of other investors and business owners. All of that I'm learning, and I'm being part of the I'm being very intentional about being in those communities. And the cool thing is, is, you know, Mike does has done stuff with Hormozi, and we get to bring that stuff back as well, all and the different things him and I are doing, we bring back to our business, and accumulate that information into and distill into one place that is focused on our mission, which is growing a larger business. Real estate investing is very much, so at this point in our life, or our our business, a secondary byproduct of the business that we're growing. So as you think about this, think about what can you do to grow your business. Oftentimes, I talk to folks in the scale community, or other investors that hit me up on Instagram, at investor man dan, if you have questions, you're always free to hit me up there. They're always starting out where they're like, I don't have enough deal flow. Okay. Well, what are you doing for marketing?

Dan Austin: [6:18] Think about that. What are okay. So you're spending a few thousand dollars a month. Do you know your KPIs around marketing? Do you know your cost per deal? Do you know your cost per lead? Do you know your profit per deal? Those are some pretty basic KPIs you should start tracking. Because then, you can figure out how much money you need to spend on marketing to grow your sales pipeline. And then you can look at, okay, hey, I am I am averaging what other people are averaging in cost per deal. What can I do to get better? Is there micro changes you can do on your marketing process? Maybe. One thing I'll tell you, don't chase the fads, just going back to the investments out there, don't go and chase the next marketing fad. I hear all all these people who haven't figured out literally how to maximize the spend that they're doing, and they're already going out and they're doing PPC, they're doing SEO, they're doing Facebook leads, they're doing this pay per lead company, they're doing direct mail, but they're only doing part of it, all of it partly, and all of it half assed. So if you but if you approach it from the standpoint of an investor, or as as not an investor, and you do it from the point of a business owner, you're gonna look at things, you're gonna measure KPIs, and you're gonna say, hey, I need to get better at this, why am I spreading myself thin? And it's because you're so used to chasing opportunity in this business, which is that next fad, that next sober living project, that next group housing, or pad split, or whatever you're trying to do to get that little bit more cash flow, stop it. Get back to the basics. When it comes to the basics of the business, and the off market marketing, and the sales process, Mike and I literally have micro tuned all of our stuff from the basics. Like, we still do the basic things when it comes to marketing, we still hit our basic niche lists.

Dan Austin: [7:59] We still do direct mail, and we understand that when we go into a new market, we have this ramp up phase with direct mail, and we know for us, and our systems, there's a knee curve where that marketing stops returning what it was before, and that's where we stop spending more and more on direct mail. And for every market, it's a little bit different, but most markets are gonna be around the same, you hit that knee curve, and you say, you're saying, okay, well, I could spend more on direct mail, or I could utilize that same spend, and go to another lead source. I say that, knowing most people out there never hit that knee curve. They're spending 2 to $3,000 a month in a market, and they're doing a deal every other month. And they wonder why, and the reality is, is because their cost per deal is $4,000, if you only spend $2,000 a month, you can only reasonably guess that you're gonna get a deal every couple months. And that there is just a a focus that I'm trying to share with you, so that you understand, like it's a business, right? And you need to look at it that way instead of chasing these little opportunities. As you step in and you lean into your sales processes, do the exact same thing. You're trying to scale a business. How do you scale your sales organization within your business?

Dan Austin: [9:09] Well, you look at what are you doing in your business to get better at sales, or to convert more people? What are your conversion rates? Okay, how do you set goals around those conversion rates? That's another question you should be asking yourself. And a lot of this goes back to benchmarking across industry standards, and how do you get those industry standards? You try and Google them, or you get around industry people. Go to meetups, join masterminds, do all that sort of stuff, because then you can have a baseline, and that's how people, and why people that are involved in communities, or involved in their industry, scale so much faster. It's not because they're any better, it's because they know what good looks like, and what bad looks like, and they can now set the targets for those things. And I'm hoping what you're getting out of this is, all of this is, is breaking your business down into sections, and truly treating it that way, as opposed to fad opportunities, or just saying, oh, I saw this on Facebook, I'm gonna try that methodology, or a friend of mine in this market's doing this, and he's doing really good. Stop it. Go back to the basics, build out a marketing funnel, focus on your sales and operations around your sales. Are you hitting all of the follow-up you should be doing? I can guarantee you right now, if you're raising your hand saying you are, you're probably lying to yourself, because there's always more follow-up you can do. There's also more prospecting you can do. There's some systems that you can put in place to scale your sales part of your business, and then once you get to the back end, that's when you start getting to operate on the disposition side of your business, or the monetization side of your business, which is where you can choose to flip it, and you can choose to wholesale it, and you can choose to be an investor and buy and hold it.

Dan Austin: [10:46] Or you can do listings, referrals, whatever way, other ways you wanna monetize it. And that's where that fourth portion of your business, which is the finance comes in, because you need to do a cash flow analysis. A lot of questions people have are, hey, are the margins on this flip good enough, should I take it down, or should I try to wholesale for a much smaller fee? And or hey, if I have to leave money in this deal, should I still buy it? And a lot of that stuff is an investment criteria when it comes to buy and hold, but the rest of it is a cash flow analysis. So you need that fourth department that we talk about to do that, and that is honestly gonna be you. You're the CFO of your business, until you're big enough to have a CFO or somebody helping you do that. But in reality, it's all about velocity of money, and it's all about the cash conversion cycle. I have learned this term here recently, and I love using it, but these are things that you really need to start understanding as a business owner, because then the decisions become less emotional, and they become less challenging, because you've blocked out, and you've discovered all of the gray areas, and and it becomes much more black and white. If you set limits, hey, I don't ever I don't ever drop below $50,000 liquidity in across all my assets, then the decision is, no, I don't do this, because it's gonna drop me below $50,000 liquidity.

Dan Austin: [12:02] If you have a set criteria for cash on cash return for your flips, then that becomes a much easier decision. If you're like, hey, I have too much in the pipeline, and I cannot comfortably operate my marketing funnel, my business, for the next sixty days, if I take on this project, or if I don't get a cash infusion of the business, then you don't do it. These are all business methodologies. People that run businesses, and successful businesses aren't any smarter than you. They're just truly focused on the business operations of what they're doing, and they're not chasing the next big fad from an investment standpoint, because that's not even in their mindset, right? But we all lean into off market real estate as real estate investors first, and we get confused on what we're here to do. So I love to hear your questions on business management. I can talk about gross margins, net margins, profit and losses all day long on how to use that data to inform your next decisions. If you wanna hear more of that, hit me up on Instagram investormandan, just shoot me a DM, let me know. If you think it's stupid and boring, also let me know. But the concept I want you to take away from today is, stop chasing the fads, you're not a trailer park investor, you're a off market real estate operator who owns a business. You are an entrepreneur, and start looking at your business through the lens of what a business owner would do, whether you're selling widgets or making widgets, something other than be being a real estate investor, right? That's really what you're doing. Have a great weekend, I hope you enjoyed this, I will see you all next week.