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Episode #26 – Goodbye 2020

Episode #26 – Goodbye 2020

Welcome to another episode of EarlToms podcast. On this episode, we’re gonna kind of look forward to the new year, reflect on this past year. I know a lot of people out there have had just some strange things that have happened this year. The strangest, as far as my business is concerned, is I will actually end this year with more money in my bank account than I’ve ever had before. If you would have told me that, back in April, when the economy shut down, and all these lockdowns were happening, I would have told you, you were crazy. Part of that is I did get a PPP loan. The way that I saw it was that the government was giving out free money basically, that you didn’t have to pay back. So I said, why not take it. But to be honest with you, because I live, so simply, I only pay myself $5,000 a month. So it wasn’t, you know, massive amount, but it did help. So by the time you did, I think it was two and a half months, that overall alone was $12,500. But like I said, it did help in a time with uncertainty. But one of the reasons that, that I can say that I’ll end on December 31, with more money in my bank account than I’ve ever had, is because I’ve actually stopped purchasing to hold property properties of I’ve just focused more own kind of flipping houses. So what normally would kind of hurt a bank account of, you know, purchasing houses to hold rent out, you know, that pretty well stopped that middle of the year. You know, we’ve still got a decent economy right now, stock market’s doing well, people are starting to get back to work. But my concern has been what I told you in the episode about the virus, you know, originally, that we still haven’t seen this play out. I mean, the government has given out checks, I think they $600, who knows what is actually going to be sent out, but you know, they sent out a check earlier in the year as well. So they’re trying to help people. But you know, when you look at that amount of money, I mean, that probably pays up a house payment, mortgage, rent, car payment, get some groceries, but it’s it’s not going to go far. So you’ve seen a lot of people refinance their houses, and whether whether they’re able to survive it or not, I think this coming up years is gonna determine that. But because of me appraising back there in the foreclosure crisis, I still see a lot of similarities. As far as what happened then to what’s happening now. You know, the string can only hold so much weight until it until it breaks. And I’m still have the impression that we’re getting there. So what I would expect, and I think if you’re if you’re a smart wholesaler that can kind of predict the future, then you need to start focusing more on these institutional buyers than you are on these smaller investors. Because what we’re seeing now is a shift accelerated to an even more big corporation, society. I mean, you look at the technology companies and what what they’ve been able to do during during the pandemic, while the main street businesses are, you know, having to stay closed. I think I saw something not too long ago where it said 20% of the workforce in the United States is the restaurant industry, the hospitality industry. So when you take a fifth of the jobs and basically shut them down, that if you look at it in terms of real estate, every single person out there, myself included would be very happy with a 20% return.

So if you correlate that over to jobs. If you lose 20% of your workforce, or put 20% of your workforce behind in their ability to pay bills, eventually that is going to take a very, very direct hit. And it’s gonna cause a lot of problems in the economy. And it’s nothing that the government can bail anybody out on. Because we’ve seen the chaos this past year, with what they’ve tried, no one can agree on anything, it’s, it’s just getting to the point to where it’s, it’s silly, to be honest with you, everyone is so worried about this, or who won the election or this run off, are we going to give you $600, or we’re going to give you $2,000, who’s gonna win who’s gonna, you know, go on the news and say, Look at what we did for you, instead of actually just sitting there going, you know, what, these people elected us, it’s time we started doing our job in Washington and a lot of, and a lot of ways have just really become a joke. And if we call it anything other than that, then we’re deceiving ourselves. But if you take what we’re seeing right now, and you move it forward, there’s there’s cause to be concerned. And it doesn’t have anything to do with a particular party, or anything like that. It’s just the simple fact that you have adults acting like they’re in elementary school, instead of being adults, being the parents that run the household, make sure everyone is taken care of. The only thing that they’re can, that they’re concerned of, is who looks the best. Today, it’s a popularity contest, and the people in this country are just sick of it, it doesn’t matter what side you’re on, people are just sick of it. So when you go and you look at at what that’s gonna do, for this coming up year, I’m still gonna go with my prediction that I made in the in the virus episode, we’re going down. And there’s there’s no way that you can sustain what we’ve been doing. You know, whether it be the the stimulus checks that have been coming out, the people of this country, fit have this have this feeling that their best interests are not being looked after by the people that we supposedly elect to look after us. So, like I said, it doesn’t matter what party you’re affiliated with, or who you vote for, both sides feel the same way, the other side laughs at one of them, instead of everyone just kind of getting back to the way things used to be. And being able to walk next door, borrow something from your neighbor, most of you out there, probably don’t even know your neighbors names. That that’s sad. So we’re becoming a more isolated country, this pandemic has just further accelerated that. If you look at the schools, kids falling behind it, it’s just gonna hurt, I’ve got a niece, she’s in New York, this is her senior year in high school, she hadn’t been through those school doors one time this year, that is going to hurt this next generation that’s coming through. Because it’s you’re not getting that in person, how to relate to everyone how to process information, how to build relationships, things like that, then you take that to the to the people that are working from home.

You’re getting that isolation, you’re getting that depression, you know, is this is this one of those ways to where it’s it’s almost like what we experienced 20-30 years ago with with outsourcing, you know, all those call centers. I know most of you, whenever you call a company for customer support, you’ll get someone that doesn’t sound like you. So now we’re moving to the point of less work from home. So we can pay you less than what we would if you were actually working here. And you’ve got certain states now that are you know, because their employees kind of travel state lines. They’re trying to make these companies pay the taxes for those employees, even though the employee is not actually in the state working. They’re in a different state. It’s just gotten to be utter chaos. So until an adult actually puts their foot down and says let’s clean this up. Let’s look, you know, let’s take care of the people that elected us to get here. We’re still going to be in that chaos mode. And as soon as we can get by And I hope we can very soon. But as soon as we can get back to your my neighbor, I don’t care if you’re a republican or you’re a Democrat, you’re an independent, I don’t care, I don’t care who you voted for, I don’t care what your beliefs are, you’re my neighbor, if you need something, you let me know, if we get back to that, then we’ll be all right. Again, that’s why you never really saw very, very bad economies, between the Great Depression and the foreclosure crisis that happened some years ago, because that’s when everyone was was working together. And that’s why they got through the Great Depression all those years ago, is because they they shared they took over and help their, their neighbors treated them like family gave them food to eat, you know, things like that. Now, we, we couldn’t even tell you who our neighbor is, most times. So it’s it’s getting to a to a level that we need to as a as a society go back and look and say, how did we get here? What can we do to actually be friendly with each other again, regardless of opinions, and you know, beliefs and things like that every every human being is a person and deserves to be treated with respect. So we’ve got to get back to that point. And that, in itself is one reason why I think we’re still headed towards a negative and a downturn in the economy is because we can’t get along, we’re still stuck in the mud, so to speak, just based on what we’re doing, who we associate with, if we disagree with someone, you know, we banish them for life, losing friends losing family members, this, this pandemic has just on multiple levels, put us in stress mode, that if we don’t, if we don’t work together to get us out of it. There’s no telling what the next year, the next five years or 10 years is going to look like for us. So when I look forward to 2021, what I’m going to focus on is I’m still going to do my business the exact same way that I always have.

But I’m also going to focus more on what I expect to be coming. And that is more of more deals to actually show up. I think the profit margins, at some point in the year are going to expand, because when we go down, I think we’re going to hit there fast. And I think a lot of people are just going to kind of bail to get whatever money they can. But these institutional investors are going to be slow to catch up to the rate of decline that we’re going to see. So the first part of the year or first month, whatever it may be, we’re gonna think the profit margins are gonna stay somewhere where they are right now, to where they’re kind of tight on most deals, because you’ve got so much competition out there, too, when you get to, whenever that decline hits, the rate of it is going to actually increase those profit margins, because you’re going to have people that are just out throw it just to get some cash in my hand to prepare for what’s coming and exist potential investors out there are going to be in that in that vulture mode. Okay, I need to go by, I need to be the number one buyer in this market, I need all the deals to be sent to me things like that. So they’re going to wind up staying at their purchase price level longer than they should. And then when they finally catch up, because the demand forces them to catch up, your profit margins will shrink again. But everyone if I’m advising you, because it’s what I think just looking at things of the past with experience, current situations, you need to you need to be aware of that and continue to do your business as you normally would but the first time you see something in your market that shows you signs of concern people. Basically when you get that first deal, where it just shocks you because of the way you always go about wholesaling as if your first offer isn’t insulting or borderline insulting, then you offer too much. You have to do that negotiation but they’re always going to start high. You always start low. So if your first offer is not insulting or borderline insulting, you’ve offered too much. So that first deal that you get the just shocks you to your core and But how did I get this for that, when you get that deal, it’s common, something has triggered that seller to throw that house away, just get enough just to get money to be able to survive, it may take a month, two months, three months, but that’s going to be your triggers on that it’s here. Pay attention to that. Because you will get it this year, I have no doubt in my mind that that is going to happen. You saw bits and pieces of it, and in 2020, but you’re going to see more of it in this coming up year. But what you have to always do in this business, is you have to evolve in the business the same way that the market is trending. So years ago, we had the foreclosures that brought on you know that flip that house TV show, then it turned into, you know, Wall Street started buying houses. So now let’s sell everything to all these hedge funds and all these buyers to be able to rent houses out, it got it got kind of stressful to be able to flip a house because you couldn’t get the deals anymore to pass them along to another investor, and then still be able to make money on a regular basis that that became a little bit more difficult.

So what’s going to wind up, you’re going to have that shift, again, that is going to take the investors of renting away to basically putting it back to something similar to the foreclosure crisis, to where now the flipping part becomes more prevalent, instead of the rental buying whole, but you’re still going to have your institutional investors out there, just your your smaller investors are going to be more concerned with making money, they’re hedging their risk. So they’re going to make money instead of lose money, so to speak. Because when you put out $50,000 – $100,000, and you’re getting, you know, $1,000 a month in rent coming back, it takes a while to get that to get that to be profitable for you. So what they’re looking what I think is gonna happen in this coming year, is more of your smaller local investors are going to be looking for the flipping opportunities. I think your hedge funds are still going to be looking for your for basically your your rentals you’re buying holds. So you’re gonna have a choice to make, you know, do you stay local and help your local personnel? Or do you go with the with the institutional investor? That’s that’s doing the buy and hold? The answer to that is, is twofold. Number one, you go with whoever you can make the most money with long term, whoever is going to give you money today. That’s great and wonderful. But you need to still pay your bills next month also. So you have to look at it in a kind of a weighted decision of Yes, this is good for me today. But is this also good for me tomorrow, you’re gonna upset some people this coming up year, because people that you had good relationships with, they’re going to get strained coming up, because now you really do have to look out for number one, to be able to pay your bills. So when you go through like your local investor, you know, if they’re borrowing five houses a month, that’s great. So then one sale to hedge funds, three or five or 10, or ever how many you can sell them. And then that way, you’re still you’re supplying all of your all of your clients and keeping everyone happy. But don’t be surprised in this next year if some of the buying the traditional ways that you’ve been selling kind of constricts itself, because you’re gonna have something go on in this economy this coming up year. That is going to be a result of what we’ve been building to the reasons that we haven’t already experienced it still baffles me.

You know, you’ve got over things 30 million people that are expected to be evicted as soon as these moratoriums are lifted. The the government keeps propping them up with these moratoriums. I can’t blame them for doing that because you never want somebody to be homeless or you know, not not have a roof over their head. But eventually, they they are not going there. You can’t print enough money to save everyone. So you got to look at it in terms of Where is that coming at? You’re having more people that are getting in default with their loans. It as soon as that string breaks, the market is going to have utter chaos, because now you’re going to have banks start taking houses back People that have written get evicted, looking for places to rent, things like that. So you’re going to have more people on government assistance, whether it be unemployment, food stamps, section eight, whatever it may be. More government assistance is on the way, because people are hurting. So take a moment, right now look at what you did this past year, did it prepare you for the next year, because if you have to reflect, and I usually do it at the end of the year, some people do it at different times, and that’s fine. But if you break up your year, this year is odd because of the pandemic. But if you break it up into thirds, basically with seasons, then you can know what season was most profitable, what season you struggled in, what season was middle of the road? What you could have done different. When did you make money? When did you lose money? If you go back and you break those things down, and you and you break them out into, say, quarters or seasons, then you can go for this next year and say, Okay, well, the summer months, I was spending a lot of money on advertising. And I didn’t really get in any return. What calls that? Was it that the deals were not there? Was it your negotiation, what calls that go back and reflect on that. So that this summer, when you see the conditions of this summer, you know, what to repeat, and what not to repeat, so that you don’t make the same mistake. Because one thing about it is you may have to change how you do business, whether you’re sending postcards, Facebook ads, Google ads, whatever, you may have to change certain aspects of your business. But you don’t change the fundamentals of your business.

Your business has inputs, then you have the processes. And then you have the outputs. So when you’re looking at the inputs, the inputs is basically how are you You’re the inputs are your leads, how are you getting your leads? is in the process? Part of it is how are you negotiating with that seller? Then how are you negotiating with your buyer? How are you getting it to the closing table, and the output is when you sell the house to your buyer, and you put the money in your bank account. So you have to go back and you analyze your inputs, what you did and your processing. And then how did your outputs turn out. So if you’re going through when you’re getting 10 contracts a month, but you’re only selling three of them, you need to change something because you’re wasting money, seven out of 10 times that marketing, whatever you’re doing, whether it be to a seller or to a buyer is not giving you the return, you’re living on 30% profit on 100% spend. That’s not long term success. So you need to increase your batting average, so to speak. So now every if you’re spending 100% you need to be having an output a bank account deposit of 60, 70, 80, 90% of what you’re putting on the contract. If not, that’s not long term success. Because if you’re going out every month, and you’re spending $5,000, you’re making $5,000. That’s even money. You’re not going to survive, because one month, you’re going to spend $5,000, but you’re not going to make $5,000 Where do you go? So you go back and you have to quarter up your year, figure out what you did in the process all the way through them when you’re looking at your inputs, that your direct mail gives you the most leads, could you cut off your Facebook or your Google ads and still survive? How many leads came from Facebook? How many leads came from direct mail? How many leads came from cold calling? Then you go when you you look at Okay, cold calling gave me a $5,000 profit. Facebook ad gave me a $10,000 profit direct mail gave me a $20,000 profit. If you can make a $20,000 profit consistently on direct mail.

But every three months, you’re getting a lead or a deal closed from Facebook. You’re spending let’s say $1,000 a month on Facebook for every three months to get that three $5,000. So you’re making $2,000 Is that enough of a return for you to keep doing it. Maximize where you’re where your spend is so that you can maximize your return is coming into your bank account. So your input, maximize your input how you get those leads what you’re spending to get those leads, work on your sales negotiation part of it buyer and seller, so that you can maximize those dollars. Remember when you’re you make money when you buy, not when you sale.

So if you’re going through and you’re making, you’re offering too much on these on these houses, because there’s a guru out there now, I see it all the time, says put the house under contract for whatever they’re asking, when you find a buyer go back and renegotiate, that is terrible advice. Know what you’re doing up front. Don’t go back and renegotiate, you’re going to lose more deals than you can imagine by doing that, that guru was an idiot. And you heard it here first. These people that tell you to do stuff, that you’re basically conning somebody, even more than you already are as a wholesaler. Because you sit there and say that we buy, when you’re actually selling it to somebody, you’re actually not buying it. So keep it as as ethical as you possibly can get it under contract for the right amount, or don’t put it under contract. And then work. That’s where you’re working on your negotiation, because your input, whatever marketing Avenue you were using, gave you that, that deal. So you work on your negotiation. If you can’t get it for something that you know, you can send out and make money on the first shot. Don’t put it on a contract. It’s that simple. Put the right houses under contract, so that you can get them sold. You’re stressing yourself out when you’re listening all these gurus that say go out there and put this house on the contract and go renegotiate it. That’s, that’s undue stress, that’s unnecessary. There’s no reason in the world for you to do that. You’ve got the livelihood of someone in your hands, that expects you to follow through with what you told him. And now you go back and renegotiate because you you didn’t do what you told him that you were going to do in the very beginning, it’s important to keep your word so work on your import inputs, while you’re getting your leads, go back and work on your negotiation, to where you can get it under contract for the right price. And then when you turn around and try to get an output out of it with a buyer so you can put a deposit in your bank account. It’s easy. It’s not hard. You can pick up the phone, you can send an email, hey, I’ve got this house. Are you interested in it? And it’s this price? Oh, wow, that’s a great deal. I don’t even have to think about it. So super simple. Move on to new money. But when you go through when you have to go back and renegotiate, you’re still working on old money. You’re not at new money. So you’re costing yourself money in that process. That is the wrong process to do. In order you if you ever think about business in general, you’ve heard it before, get in and get out. This simple get in and get out. If you follow that you’ll be successful. When you get in, you stay there for a while. Then you get out. You didn’t make as much money as you could you cost yourself money. You personally cost yourself money. No one else did. You did. So these gurus that are out there telling you to go back and renegotiate go slap him tell him they’re idiots because it’s it’s not good for your business. Get in, get out. It’s that simple. put something under contract. If you do it the right way, two weeks later, deposited into your bank account. Everyone’s happy, you didn’t have to keep worrying about going back and renegotiating. So now you can start yourself another deal. You don’t have to worry about what’s going on with anybody that’s out there. All of a sudden, everybody’s happy you got more money in your bank account. And less worry less gray hair coming on your head. And you’re just a happy your happy person in general.

So make sure you check your inputs, work on your processes, your processes of what produces the output. So if you’re if your model, and I’m not talking about a CRM, but if your business model does not have synergy, that means everything is working together, then you’re not going to be as profitable or successful as you could be. So you look at it to where you almost get it to the point of not having to think about it. Okay, Miss Mr. Mrs. seller. I’ll give you $100,000 for this house. Works. Okay, great. Mr. buyer. I’ll show you this house for $150,000 great that works. I mean, I’m out I’m done. Phone rings. You got a house to sale. Great. I’ll give you $75,000. Mr. seller, I’ll sell you this house for $100,000. Great, I’ll buy it done. You’re just you’re pumping them through like a big manufacturing plant. That’s all you’re doing. When you have to sit there and say, Mr. seller, I’ll give you $150,000 for your house. Mr. buyer, I’ll sell you this house for $175,000 Hang on, I can only pay $150,000 for hold on Miss seller, I can only give you $130,000 for your house. Well, what changed? Well, my contractor said this, this, this, and this is you just missed the phone call with $20,000 sitting on top of it, because you couldn’t work it because you were having to go back and work the previous deal. That’s kind of what happened in 2020. Instead of us moving forward, we all got bogged down, we all got shut down. And we weren’t able to move forward, like we should have. So the synergy of 2020 was not there, make it be there in 2021. And you’ll be you’ll be we’ll get back to the way things should be. But it all comes down to the inputs, the processes and outputs of your business. If they don’t work together in that synergy. It’s not it’s not as successful as it could be. And it’s not as profitable as it should be. Make sure it all works together. Stop complicating it, you’ve got this CRM that does this, you’re working with this, you’re doing this focus, focus. Because every time you’re doing things and you wake up in the morning, and you have a to do list, and you only get half of them done was not a productive day, be able to go through your day, have time left over. To do what you want to do to live your life have freedom, relaxation, that’ll that’ll make you more productive, because you’re you’re actually being productive, having time left because you got everything off of your to do list. And you were able to manage all the new items that showed up that you needed to address whether it be new sellers are a buyer having a question or a contract or wanting to go look at the house or an inspector or closing or whatever it may be. That whole process, that whole business model has to work with each other has to have that synergy. So go back to quarter the year 2020, even though it’s going to be probably the most weird time that you’ve ever gone through in your life, go back, cut it in, cut it in quarters seasons, if it makes you feel better, and look and see when did it What did I do here? Wasn’t productive. What did I do in this quarter? What did I do in this quarter, go back and look at the market trends. What happened in that quarter versus what your performance was in that quarter? Did it match if it didn’t figure out what it did. Then you go through this next year in that quarter, and you make sure it matches. Every time it matches, you’re going to be successful, and you’re going to be profitable. So make sure 2021 is synergy.

Your business model, your personal life, everything involved in it, that synergy it all works together, make 2021 be that year that you look back and say, I’m glad I cut out all of the distractions, the things that were costing me money, I stopped listening to all the people telling me to do things that weren’t good for my business. And I just buckled down and I got focused, and it changed my life. I’m gonna draw this to an end, I’ve kind of gone on a little rant on this, but I hope everyone in 2020 has been has enjoyed the podcast. You know, every episode, I’ve given you little tidbits of information here and there about how you can grow your business. There’s the website, that’s got certain things on there that will help you as far as the foundation of your business, to put a to put a good foundation down that you can grow off of that stable. It’s not a it’s not a guru scenario. I do this podcast because gurus frustrate me. Because they’re not truthful. The way that I’ve always looked at a guru is if you were actually good at real estate, you wouldn’t have time to be to be a guru or mentor, whatever you want to call it. But amazingly, all of these gurus and all these mentors, they have more time to coach and mentor and give you this coaching program and all this other stuff than they do to actually do real estate. So you kind of have to ask yourself, why are they are they good at real estate? Are they good at talking? Because it’s not both? You’re if you’re good at real estate, you’re making more money real estate than you ever would with coaching. So why would you coach instead of the real estate if you’re good at coaching but not good at real estate? Then you’re you go coach because you’re actually not good at real estate. So take that with a grain of salt if you will, you know you’ve got you’ve got to be concerned about your business.

But like I said, the website you can look at it and see if anything will fit your business as far as you know those building blocks that’ll that’ll give you a solid foundation. And then you know you’ve got ever how many episodes of the podcast that you can go and listen to. But we started this podcast to kind of cut the cut the noise out of the real estate, wholesaling industry, because it had just gotten to the point to where there was so much information that was being put out there that was not helping anyone that that’s that’s the reason that we started it and in 2020 So, you know, like I said, I hope you’ve enjoyed the listening to it this past year. We’ll be back for more in the in the coming year.

So with that, I’m going to sign off and wish everyone a profitable, successful 2021 take your business to the next level.

Episode #26 - Goodbye 2020

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