Episode #26-The three stages of a real estate business. Build, Grow, Wealth!

Introduction

• Host: Bob Mangold, the listing coach.
• Episode: #26
• Duration of the podcast: Six months
• Gratitude expressed to listeners for downloading and sharing.

Main Topic: Three Stages of a Real Estate Business

• Stage 1: Building Your Business
  • Create a business model that doesn’t rely solely on yourself.
  • Build a database of potential sellers, not buyers.
  • Develop a local, national, and global referral network.
  • Establish unique value propositions to differentiate yourself.
  • Create systems to generate income from multiple streams in each transaction.
• Stage 2: Growing Your Revenue
  • Focus on gaining market share through listings in specific areas.
  • Utilize social media and online systems to grow the business using your database.
  • Expand your Rolodex of referral partners (CPAs, insurance agents, etc.).
  • Increase the number of people who know you by conducting open houses.
  • Develop strategies to encourage potential clients to raise their hands and express interest.
• Stage 3: Building Your Wealth
  • Manage systems to ensure CRM and ads are running smoothly.
  • Use cash flow to accumulate assets.
  • Invest in real estate to grow assets and secure tax benefits.
  • Create strategies to protect wealth and minimize taxes.

Market Update:

• Mortgage market shows signs of improvement, but no drastic changes expected.
• Fed interest rates may increase due to inflation and job market slowdown.
• Government criticized for manipulating job numbers; actual data from ADP indicates job losses.

Additional Resources:

• Facebook group: Real Estate Asset Advisors for scripts, presentations, and free materials.
• Bi-weekly Elevate Business Briefings on Wednesdays at 1 pm Eastern Time.
• Book download at ifyoulistyoulast.com for detailed information on the Home Boss process.

Conclusion:

• Wrap up and encouragement to focus on building and adjusting the business.
• Sign-off reminder: "If you list, you last."

Join our Facebook Group at: https://www.facebook.com/groups/realestateassetadvisors

Visit our website to watch replays of our Wednesday "Elevate Business Briefings" at: www.RealEstateAssetAdvisors.org

Download a copy of my book, "If you list, you last!" at www.IfYouListYouLast.com

Transcript

  Hey, welcome fellow listing agents, Bob Mangold, the listing coach here with episode number 26 of the If You List, You Last podcast. Now, I can't believe we've been together on this podcast for six months. Can't believe how fast time has gone by. And as always, hey, listen, thanks for listening, sharing, and downloading.

to make this a popular podcast. Now this week, I actually have a pretty serious topic for you. We're going to discuss the three stages of a real estate business. And after we're done, you'll be able to determine where your business is at. And. Make some of the adjustments that you can achieve to make your long term goals come true.

Now, as always,  make sure you join our Real Estate Asset Advisors Facebook group so you can join the conversation, share your thoughts, comments, or questions on any of the topics I discuss. Right here on the podcast. Also, a lot of times I'm giving away free materials that I use or, scripts and presentations and things like that.

So make sure you join the Facebook group. You'll find it at Real Estate Asset Advisors. Now, if you have a topic or a conversation you want me to cover on the show. Facebook group and share your request. So let's get started.  Now let's get into this week's mortgage market update based on the mortgage backed security charts. There may be some light at the end of the mortgage rate tunnel for the summer. Not long term. Unfortunately, it's not gonna be a huge move and as inflation continues to rise and the job market continues to slow, don't be surprised to see the Fed raise their interest rates later in the year.

Now, the good news is, it's gonna be really hard for them to do it, whether they raise or lower the rates later in the year, because they'll be accused of election tampering, favoring one candidate over the other. So it doesn't matter if they try and raise it or lower it, They're going to be accused of that, right?

So their best course of action, at least for that.  is to stay stagnant and do nothing. The problem is, as jobless, the job market continues to soften  and inflation continues to go up, that's unfortunately going to have an impact on mortgage interest rates. Now, another important note from last week were the job numbers that were released by the BLS, the Bureau of Labor Statistics. 

Even analysts now are starting to call out the government for completely cooking their books. And when I say completely, Cooking their books. It's a hundred percent. If you compare their numbers to ADP, we actually lost jobs last month. Now, with all the creative adjustments available to them, they just make the numbers look better.

Last month, there was a massive increase in the birth death rate adjustment. That adjustment added over 300, 000 jobs out of thin air. No justification, nothing. Without that adjustment, we'd have lost around 87, 000 jobs, which actually would confirm the ADP numbers. Now, ADP, right? The people that are responsible for paying 25 million American paychecks every week.

Think about it, folks. Who do you have more faith in? Politicians? Or ADP that's producing 25 million paychecks a week. I'm going with ADP. Now, I wish there was some good news to report. Unfortunately, there's not much happening in the mortgage backed securities market that's positive. The good news is it's not horrible either.

But I don't see rates dropping. Maybe they go down into the 7. 5, 7. 25 range. But one of the bright spots of that conversation with your buyers, folks,  if interest rates drop, let's say that they drop down to 5. 5 or even 6%, that's going to spur a lot more people to come back into the market to buy a property And when that happens, what do you think is going to happen to the price of the home? 

So I don't like saying, buy the house, date the rate, because none of us know when that's actually going to happen. But we might want to be looking at different alternatives like adjustable rate mortgages or interest only loans for a few years to help people be able to afford the payment so that they could buy the house.

But I promise you folks, if rates would drop down into that five and a half percent range, You're going to see buyers coming out of the woodwork and you're going to see the house, the housing market go nuts. And talk about 2020 and 2021 with all the buyers fighting over offering properties. You're going to see that again.

So it's really pick your poison. You can have a higher monthly payment because of your interest rate, or you could do it because of the cost of the house. So let's get creative out there and look at some different alternatives  to lowering people's monthly payment.  And so I have a podcast. I don't remember.

It's probably three or four where I talked about how somebody who was wanted to buy a more expensive house had a 3 percent interest rate, got a loan at 7 percent actually lowered their, or, lowered their payment, but in actually increased their monthly cashflow by more than 1, 500 a month. So there's strategies out there.

You just gotta be more creative. and you've got to take a little bit more time and your mortgage person has to do the same thing. Okay. So it's not all bleak and there's lots of things that you can do for that. And the good news is it'll demonstrate your expertise in the marketplace, which is important to us right now.

So let's talk about something you can control, your actions, strategies, and business plans.  So I want to talk about today  is really the three stages of a real estate business.  And at the end of the day, the three stages are very simple. You're either building,  you're growing your revenue, or you're building your wealth.

I suppose the fourth stage could be you're exiting the business. So technically there could be four. I just don't choose to talk about exiting the business. Okay, so the question that I would have for you is, are you currently building your business? Or are you focused on growing your revenue? And there's a difference. 

And then maybe you've done all that and you've been doing this for 20 years and you've got a business set up. What are you doing to build your personal wealth?  So I want to break down a little bit, each one of those categories to give you an idea of things that you could focus on. So if I was to take a brand new agent and say, here, you need to take and build a foundation.

We're going to take and put together a business plan for you that's going to allow you to take and live the life that you wanted  and have the money that you want. So what would that business look like?  So I'm going to give you like five bullet points in each one of those categories. In each one of those bullet points, quite honestly, I could break down even further, but for the purpose of a podcast, I'll keep it relatively simple.

So let's talk about building your business. What does that look like? The very first thing that I personally would want is a business model.  that doesn't rely on me to do all the work to generate cash flow.  If I have to do all the work then I have a J O B. Now, I started out as an individual agent, then I started a team, and then I bought a couple of exit realty franchises.

And I thought being the broker was a good way for me to be able to do that. The problem on the broker side was I forgot about all the expenses. Now I was fortunate. I didn't, didn't make money. It was profitable, but not much, but I was profitable. But  the reality of it is the broker I'm getting paid every time an agent closes a transaction. 

If you're an agent, you only get paid when you close a transaction. So how do you build a business model that doesn't rely on you to do everything to generate your cash flow? Now, I can give you all the subsets of how you can do that. Maybe it's a time for a different topic. And I'll be creating more content online.

And quite honestly, I'm going to actually take this on the road and start teaching classes for agents. They might, might be a. five to six hour class, but actually building a business the way you want it to work. Now, that's the first step. Number two, you've got to build a database of likely sellers, not buyers, sellers.

And the reason is pretty simple, folks. Sellers build market share. You can build a brand. You can build brand identity.  If you focus on listings, but you can't build market share as a buyer's agent, right? I may want to buy in the southwest portion of the city and you may want to buy in the northeast portion.

I don't have an area that I can focus on. Now, if you're in a big city like a Phoenix you can't travel all over that Valley, right? There are some parts that are two hours apart. You can't go and show homes three or four times a week and have to drive two hours to get there and two hours to get back.

You'll never make the kind of money that you want doing that. You have to focus on market building market share with listings. It's pretty simple. You have to build a database of likely sellers. Think of it this way. Imagine what a database of homeowners would look like. where 68 percent of them are guaranteed to sell their home in the next 24 months. 

I'm going to bet you'd like to have a database like that and join us for the Elevate Business Briefings because I have a class I teach on that.  But at the end of the day, if you had, let's say, I don't know, depending on your market size, five to 10, 000 people in a database that are likely to sell sometime between now  and three years from now.

Let's say 70 percent of them were going to sell within three to five years. Folks, if you can build a database like that, I promise you've got a business that will generate cashflow for you for decades,  but you can't do that with buyers. You're constantly generating buyer leads  and what everybody's hoping for the way that leads really work that you do online folks Only about 3 percent of those people are actually looking to take and do a transaction right now. 

17 percent of them are I'd like to maybe buy a house, so I'm interested in it.  And then 20 percent of the people are like yeah, it'd be cool if I could buy a house.  And then the remaining 60 percent are like, yeah, I have no interest. What happens is when you're running all these ads, all agents are trying to do is target that 3%.

Let's say you've got a thousand agents in your market doing Facebook ads, targeting that 3%.  There's not really that much for you to do. You've got to be able to build funnels of business where they're thinking about it now to, Hey, I'd like to do it too. I'm ready to do it. If you had that 40 percent of your funnel full, that'd be great.

Now you can do that with sellers much easier and less expensive than buyers. And again, folks, you just cannot make a lot as much money as a buyer's agent. As you can as a listing agent.  So at the end of the day, you've got to have a database like that. Now I could build a database of five to 10, 000 people like that in about two hours or so,  because they know a lot of you're going, Oh my gosh, that's so hard.

For my team, I'm actually able to help them take an accumulate that kind of database. and do it in a couple of hours. If you had a business like that, it'd be a lot better, right? That's how you build a business. Number three, you got to build a local, national, and global network of referral partners. 

To give you an example, this, the last 10 days,  my son has taken four transactions from referrals from agents in other states.  So we want to have a local  database or a local referral network, we need to have a national referral network and a global referral network. Last year we got a couple of referrals  from, one from Spain, one from Mexico. 

If you have a referral network built like that of hundreds and hundreds of agents,  You're going to get a certain number of transactions from that every year. Now, if you're really smart, you're going to take and go and do a little bit of research on  the,  uh, where are people coming from in, moving into your area and then where are they going to.

One of the things you might be able to find in that kind of instance, like in Virginia, Washington, DC Maryland, you'll find people that work for big defense contractors, the Raytheons of the world. And guess what? They move people out to Tucson and Phoenix, Arizona. Or they move them from Tucson to Virginia.

So the more data and the more research you can do now guess what? I'd be targeting agents in Virginia, Maryland, and Washington, DC. Our referral network of agents actually encompasses that.  And so we have an 1100 agent referral network that we get business from every year.  And so it's important to do that.

And then you can also build a local network, obviously not other realtors. Very few realtors will send you a referral in your own market. But what about things like divorce attorneys and estate planning attorneys and local business owners and insurance agents and financial planners and CPAs, if I didn't say that? 

You need to go out and start to have that network that you can rely on that will generate X number of transactions for you each year. Now, based on the number of referral partners you have, you'll be able to determine within the next couple of three years. How many transactions on an annual basis you're going to be able to take and do.

Make sense? Next, number four, build your value propositions. It's never been more critical than right now, folks. You have to be able to answer why they hire you. All this stuff going on with the buyer's agency and however it all shakes out. The number one thing you have to take away from that is you better be able to answer why they hire you when it comes to the listing.

Why do they hire you instead of all the other options they have? So if you don't have those figured out, You're going to have a hard time taking and generating business and being able to tell people why they should work with you. So for us on the listing side, hey, we can sell your house at the highest market value guaranteed in only 14 days paying half the fees of an old fashioned listing. 

On the buyer side, when you work with us, when you buy, sell and finance through us, we're able to take and help you pay your home off in somewhere, seven to 10 years.  Using a 30 year fixed rate payment to keep your payment low. And then with the money that you would have paid to the bank and payments and interest that we saved you, we help you accumulate a million dollar retirement fund.

Now it's important to understand that's not  including the equity in the house. That's on top of the equity. So we literally can take and help people become millionaires using the house. that they live in.  That's when you know you got powerful value proposition. So you got to figure that out. Number five, build systems to get paid more than once from every transaction. 

So give you an example. When I was in production, I was a real estate agent. I was a mortgage broker. I was an insurance agent.  I was both a life insurance and PNC. I would do your auto and homeowners. I would do your mortgage insurance policy, your loan and your real estate.  I got paid four times from every transaction.

If you're not getting paid three to four times from every transaction, you gotta re examine your business. Okay, so that's what you need to look at in building your business. Now, your revenue growth.  Number one, grow your market share through listings. You just have to say. I can't work with buyers  because it's not lucrative enough for you to do that. 

So you've got to focus on listings and then you want to focus it in specific areas. That's what market share is. Whether that's a subdivision, a zip code, a city, depending on the size of your market,  you've got to figure out how you're going to build market share where you want  Now, one caveat for that, a lot of times people say, Hey, I want to work in my subdivision.

And then I show them how to go and do the research.  And they find out that, wow, only three homes a year sell in their subdivision.  Do you really want to try and get market share in a subdivision where there's only three transactions a year? So you got to do a little bit of research, right? podcasts on that. 

So grow your market share through listings. Number two, grow the business from your database. Thanks. Using social and online systems. What does that mean?  Instead of going out and trying to find the 3%, you're running Facebook ads, Facebook lead ads and paying whatever you pay for that. You already have a database of people that you know are pretty likely to sell. 

You need to figure out how to be in front of that database and your referral partners, three to ti, three to five times every day. So let me give you an example. Let's say you've got a database of 10,000 people you've identified. That will be highly likely to sell.  You can take and run Facebook custom audience ads and you could spend a buck or two a day  and those people will probably see you one to two times a day. 

Now you could take and do a YouTube ads,  same thing. They're ridiculously cheap and you can target that  and spend another buck or two a day, right? So you're talking 75 to 150 maybe 200  a month. to be in front of your database.  The next thing that becomes important now that you're in front of them how do you get them to raise your hand? 

So we have things like a  seller's guide, like how to take and get the absolute most amount of money for your home in 14 days,  or how to turn, the mortgage hack that'll save you 100, 000 or more, and then we'll run ads for them to download the book. Guess what folks, that means they raise their hand. 

Those people we're going to take and get a newsletter in their hand every week. It'll be via email or text, make no mistake. And we're going to mail directly to them  once a month  so that we don't want those people forgetting about us when it becomes time to buy or sell or invest.  So grow that database that you have using social and online systems. 

Number three, grow your Rolodex of referral partners. Don't simply say, Hey, I've got a good CPA.  Why not three CPAs? I have a good insurance agent. Why not five insurance agents? Why not 10 insurance agents? Why not three or four estate planning attorneys? And three or four financial planners? And three or four divorce attorneys? 

Constantly be growing that Rolodex of referral partners. Now, there's a methodology to that, and again, I don't have time on a podcast to go through that, but you'll see more of the things that come out in my social media and classes and some of the live things that I do. Thank you. That'll do it or the elevate business briefings.

I do. We'll cover that kind of stuff. So constantly be growing your Rolodex of referral partners. Your goal ought to be at least two a month.  That'd be 24 a year, two years. You got 48 referral partners, folks. If they all refer one transaction a year to you, one transaction per year to you, that's 48 transactions.

And guess how much it costs you? Nothing.  Now this one, a little bit more interesting. Number four, grow your data database of people that know you. What do you mean? Know me at a minimum of a hundred people per month. So when we do a open house, we take a listing and we do an open house. We can get  anywhere from, we just did one on a condo in Phoenix.

My son did, he had 78 people come through, not a big one for us, but condos don't work as well as a house. Other ones will get two, three, 400 people to come through. Those people don't know me.  Now, what do I have to do to get them into the database? And that's a whole series of strategies to be able to do that.

But you should be adding a hundred people a month that now at least know who you are, have seen your name  and you want to have some followup systems in place. So they don't forget who you are. Now, number five, grow the  number of people raising their hands  by five to ten every day.  How many people raising their hands going, hey, I'd like more information, or hey, I'm a little bit further down the pipeline, or hey, I'm ready to get going? 

There's strategies and systems around that.  And the good news is they don't have to cost a fortune.  And so we want to have them raise their hand. So one of the things that we do is they're called Google network ads. And so there's over 30 million publications.  In the world that insert your ads, they could be national, newspapers and there's your ad.

What's going to happen when these people in your database see you in these big name newspapers,  you become that go to agent.  And guess what? As you use that Google network, you could utilize that to get people to raise their hands. Hey, learn how to sell your house for more money. Learn how to save a hundred thousand dollars, raise your hand. 

And then finally wealth building. What does that mean? So if I've built a business where it doesn't rely on me to do all the work to make money, and I have a database, it's always generating business for me. And I have a local, referral network or a whole referral network that's generating business for me. 

Do I have to work as hard? I don't have to spend a lot of time searching for business, do I? And then you have great value proposition. So people refer you  and you're getting paid more than once from every transaction. You've got a pretty good business, right? And then you're focused on listings, you're doing the marketing to stay in front of those people, you're constantly growing your database, your Rolodex and referral partners.

What that means folks is you have some time and you have cash flow,  which means what do you do now to start  building wealth?  And so really when you get to this stage, all it's about then is controlling and providing oversight of your systems. Is your CRM running properly? Are your ads running properly?

Are your custom audience ads in place? All those kinds of things.  That's a lot less time consuming than running buyers around, right?  Now, what's important to understand, when you have extra cash flow,  you need to use that cash flow to accumulate assets. Now, the number one source for wealth in the world Is real estate  that happens to be the business that we're in  yet?

I find most agents don't even invest in their own product real estate Why is that? Usually it's a function of cash flow. But if we did the building and the growing the right way, we don't have an issue with cash flow anymore, do we? And we can have assets out there that are growing, right? A lot of my agents have Airbnbs and that are crushing it.

Some of them don't do as well with it. But guess what? They use their cash flow to accumulate assets.  And then what they did is they use the assets to generate additional cash flow and personal wealth.  And then when you can utilize assets to continue to generate cash flow and wealth for you, isn't that the ideal place for you to be?

That's where you want to go out  and be able to live the life that you wanted because you're not tied to being at work all the time because you've got systems that don't rely on you to do all the work to get paid and you have assets creating additional cashflow for you. And then the truth is, once you start accumulating those things, you really do need to start looking at the taxes that you pay and how you build those systems. 

In place to protect your assets. Number one, because one of the things I can promise you folks, when you build wealth, there are plenty of people that want to take it from you.  So you have to protect those assets.  And then the number one place you have to protect it from is Uncle Sam. from taxes.  And if any of you are listening to this and you make serious money, you'll understand what I'm talking about. 

And so wealth building becomes spending time on looking at how do I accumulate assets that create cash flow that will continue to appreciate. And another benefit of real estate is it allows me tax deductions. And  so at the end of the day, if I have that kind of business and I'm in the wealth building phase of my real estate career. 

You got a pretty good life. Can we agree?  And so that's really the main basis for where you need to start. As I said, I could break each one of these down each one of those five that I gave you, I could break them down and tell you, build a business model that doesn't rely on you to do all the work.

And then here's the things that you should do for that. Et cetera, which I'll do in further training classes. But at the end of the day, I want you to understand those are the three phases of a successful real estate business. The problem for most  is that you're always in the perpetual building stage.

You're looking for different systems. You're looking for the golden ticket. You're on a webinar, you're buying stuff. You're doing everything you can to sit there and think of how can I generate more business.  What that means is you're trying to generate revenue growth without putting a system in place. 

And quite honestly folks, I can tell you from 33 years of experience of doing this, it doesn't work this way. You have to build the model first.  You have to build the database that will produce revenue for you. You have to build the referral network that will generate business for you. You have to have the value proposition so your database and your clients will refer you. 

And you've got to build systems where you're getting paid more than once from every transaction. Unfortunately, most agents are always in the building phase and they don't get to focus on the things that they need to grow their revenue, which ultimately gets them to build their wealth. I hope that makes sense.

I hope it allows you to take and go out and maybe do a little bit of analysis and figure out exactly where your business is at and maybe make some adjustments to it. Makes sense? Now, don't forget, jump on our bi weekly Elevate Business Briefings every other Wednesday at 1pm Eastern Time. You can register at www.

elevatebusinessbriefings. com and If you want more detailed information on the Home Boss process and how we use it and some of the systems that we employ, download a version of my book at ifyoulistyoulast.  com. So that's it for this show. We'll talk to you next week and remember, if you list, you last.

Have a great week. Go out and make a ton of money, folks. Talk to you soon.