Episode #017 – Automating and Systemizing Real Estate with Dan Schwartz, Part 1

You're listening to the REI Marketing Nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: All right, hello everybody and welcome to this week’s episodes of the REI Marketing Nerds podcast! As always, Daniel Barrett here from Ad Words Nerds. This week we’ve got a really good one. This week is actually an interview. I know! Getting into the all interview space! We’ll definitely be back to our usual format of me talking a bunch of gibberish about marketing at you soon, but this week, I could not pass up the opportunity to interview Dan Schwartz. If you don’t know Dan Schwartz, he is the CEO and kind of mastermind behind InvestorFuse, which is a really incredible program that kind of manages the relationship between seller leads and you, and can do all kinds of really amazing things… automate lots of process, do all sorts of wild marketing things. It is a really, really cool tool. So I get into this whole process with Dan, how he started in investing, doing wholesaling. We talk about what brought InvestorFuse into the world, why he decided that was going to be the thing that he wanted to focus his time on. We talk about what’s new with InvestorFuse 2.0, what that is and what’s going on. We also talk about a lot of real universal things like Dan’s phrase here, we are in an age of systems in investing, and what that means and how you can use that in order to improve your own business. We talk about how you can make more money and get more deals from the exact same amount of leads just be automating a lot of your followup, and we talk about some of the followup tactics that the best investors in the world are using right now. This is a value-packed amazing interview, and by the way, just outside of that, Dan is a fascinating guy, a really, really interesting guy, one of these people that is incredible at analyzing his own life, figuring out where the highest points of impact are going to be, and then optimizing everything he does around that. He is one of my favorite people in the real estate investing community, and I can’t wait for you to hear this interview, so check it out, and I will be back at the end of the episode here.

So, without any further ado, here is my interview with Dan Schwartz from InvestorFuse:

Dan: All right everybody, Dan Barrett here as always, and I’m here with Daniel Schwartz from now… Okay, so when you introduce yourself, do you say, I am Dan Schwartz from InvestorFuse… How do you… when you meet people at parties [laughter] how do you introduce yourself at what you do?

Dan S: I introduce myself like a medieval lord! Daniel Schwartz of the Schwartz family of Baltimore, Maryland!

Dan: Daniel of Schwartz [laughter]…

Dan S: de Baltimore

Dan: [laughter] I like Dan Schwartz… Oh, of the New York Schwartz’. I see how it is! That’s cool! [laughter] For people who don’t know who you are because I know who you are, and we have a long history together…

Dan S: Um hmm…

Dan: … but I’m not sure how much of the audience knows who you are. Give me the elevator pitch version of who Dan Schwartz is.

Dan S: I’m the reason that everybody is here right now, listening to Dan talk! [laughter]

Dan: [laughter] That’s true! You were my first ever real estate investor client. I didn’t even know who real estate investors were before I met you, and so you are, in my head, the platonic, ideal real estate investor…

Dan S: Yep. All real estate investors are young… they all play in bands… they all travel around the world!

Dan: [laughter]

Dan S: [laughter] No.

Dan: [laughter] No, it didn’t end up being that way. None of that ended up being true.

Dan S: Yeah, so background was in wholesaling, and in 2011 or 2012, I was determined to figure out online, how can I actually use the internet to make more deals happen, and I found you on oDesk or something, isn’t that…?

Dan: It was Elance… It was still Elance because…

Dan S: Elance…

Dan: I was just testing doing PPC for clients, but I was already doing web design and SEO and stuff, and just like maybe I’ll try something that actually makes people money more quickly. That sounds like fun…

Dan S: Yup, yup. So I found you on Elance. We had one conversation. I’m like, this guy… This is a cool dude!

Dan: [laughter]

Dan S: Okay, he understands the business. He’s got 80/20 systems mindset. I think we’re going to get along. Basically, he and I just hacked away at PPC for our InvestorCarrot site because that’s what I was using. I might have been using some other site back then. Really, that was the impetus for Ad Words Nerds to branch out into the whole real estate investor. It is a formula, and it’s always changing, and we kind of dialed it in. I was like the first guinea pig, if you will, but we got deals from it. We made a bunch of money.

Dan: It was so early, and I think it was an interesting time too, because there were not… One of the things that was exciting to me about it was when I went out to look at, for other people doing it, there wasn’t really anybody. There was like Sean Terry was talking about Ad Words, but very few people were really on that bandwagon even then, and it’s not that long ago. It seems weird now, but… So I was really excited about the opportunity to do something new, and I specifically remember us having a conversation, and I was like, okay, so tell me what a real estate investor does, and you’re like, well, you know, I buy homes, and then I can turn around and sell them for more than I bought them for, and I was like, wow, you must be loaded, you must have a ton of money on hand to buy multiple homes at once, and you’re like, oh, I don’t use of any my own money! And I was like… what the F is he talking about? [laughter]

Dan S: [laughter]

Dan: I think in the photos I’m like, um hmm, um hmm, and in my head I was like, what does that even mean? I don’t understand any part of what that means? It was a deep dive pretty early, which was…

Dan S: The unfortunate truth of it is 99% of people that say they’re real estate investors are just broke wholesalers! [laughter]

Dan: [laughter] Well, that’s very true. There’s a very sharp 80/20 or Perry Marshall would say it’s a 99/1 distribution of real estate investors, right, for sure?
When did you make the transition? Because you made the transition at some point away from trying to be a full time wholesaler. You were always the kind of person that had a ton of systems in place. You really worked out that process, but you transitioned out of that into the kind of backend world of it. What made that happen? What was the impetus behind that?

Dan S: Yeah, building systems for other people. I think the impetus was me developing a self-awareness that I actually resisted systems, and that I wasn’t alone in that. I’m more of a quick start and then figure it out later type of guy. Then I realized the better systems I have, the more that my quick start skill set actually has leverage. I basically just realized that putting in that front-end work to build automation and all processes and to recruit awesome people around you is the most important aspect of business. Nothing else matters other than building engines, not working in the engines, and I had that revelation back then because I was on the road touring. That’s one thing Dan and I have in common – both musicians. When I was wholesaling more full time, I was also on the road, so I was forced to figure out how to… The only thing that I could actually… the only value I could ride was to figure out how to build the backend so that my team back at home wasn’t on the road staying up to 4 a.m. every night, could actually get stuff done. It was circumstances, and none of the existing solutions could help me do that. The only thing that existing solutions could do was help me get more random, like public data or leads. Nothing actually helped me manage the leads once they came in. That was just a free-for-all of disparate systems, disorganization, and losing deals. I remember actually one day I was at the café right after a phone call with you. This lead I called back, said that he just sold it to the other wholesaler because I didn’t get back to him in time. That was in Canton, Baltimore. It was a beautiful neighborhood in Baltimore where I could have made 50K on that, which would have been a huge deal for me at that time, and that was the moment I was just like, okay, I’ve got to find something that actually works that I can trust the process to follow and hand it off to my team, and that’s when Podio came into my vision via Joe McCall…

Dan: Oh, okay, I didn’t realize that. That’s interesting. Let’s take a step back for a second… I think it still is mind blowing to people to think that, at this time, you are a successful wholesaler, you’re doing deals, right? But you’re also out… Like you said, you’re touring, you’re… My impression of you is, we are very similar in the sense that you’re not the guy who’s like I’m just going to grind it out 24 hours a day, like hustle, hustle, hustle, right? So, what was the process for you to even getting to that point? What helped you to develop that and figure that out in the beginning? Was it just you had to because you knew you wanted to play music at the same time? And you didn’t have any other choice? Was it that you had to learn that the hard way? What got you there?

Dan S: I was exposed to a couple books that sort of lit the fire in my brain. The basic ones, like The E Myth…

Dan: Which I have still never read, by the way…

Dan S: [laughter] Really?

Dan: It’s like where people are “Citizen Kane is the best movie of all time,” and you’re like sure, and you just haven’t seen it, and now you’re like, now I’m never going to see this. It’s just my personality… I don’t know why…

Dan S: Yeah, it’s like business systems for newbs, and he paints a very lovely picture of this bakery, this lady that runs a bakery, and how she is about to lose her business, and she started hiring people, and making checklists and it changed her life. Then I read a book called Work the System. I started getting obsessed with this, and then I realized that no matter how complicated you think your business, you can create systems around it. It can be broken down into its smallest parts so other people can do stuff without you, and you don’t have to worry about them messing up too much.
And also a big reason for that is my innate laziness. I am so lazy that I will go through hours and months of turmoil, struggle, and trial and error just to figure out how not to do something anymore…

Dan: Um hmm… [laughter]

Dan S: [laughter]

Dan: Yes!

Dan S: And that is a good skill set for an entrepreneur to have.

Dan: Um hmm.

Dan S: My laziness is my biggest strength.

Dan: Yeah, I am the same way, dude. I would say I’m a low energy entrepreneur where I barely get out of bed every single day, like it’s a struggle, so I better have something in place, you know what I mean? [laughter] And ironically, you end up getting sucked into it and spending more time… For me, I’ll spend 3 hours automating something that would have taken me 5 minutes, but I’m just like I don’t want to deal with it anymore…
Okay, so you’re getting into systems. You build out systems for your own business. You realize there is nothing there for investors, right? So you jump into Podio. Was the plan always to make something for other investors to use? Were just like, I need a better thing for my own use?

Dan S: Yeah, it was for my own use. With Podio, it’s a customizable interface where you can create different apps for different areas of your business, and an app is just a set of fields with little buttons that you can program in to do stuff. It’s like a customizable database. That’s why investors liked it because you can change the words around and you can add buttons, and you can add statuses and you’re not confined to whatever the software company gives you. That was kind of a new paradigm shift for the whole real estate business. People flocked to it, and then they realized they can actually automate stuff that happens inside of it by connecting it to this other system, and that is what I really geeked out on because I realized that you can some powerful high-leverage activities just with a couple little workflow hacks. Simple stuff I figured out for my own business. I had no one else in mind for this, but I ended up creating simple stuff like how to generate a contract by clicking on Generate Contract inside of Podio. You program the button, and then you do the If/Then workflow in GlobioFlow, which is the tool that automates Podio. If you click on this button, then it pulls all this data from other areas of Podio, and then it generates a nice clean PDF, and then you can program it to email that to the seller using the email address in the seller field. I just got nerdy and dug in to creating these systems so that I didn’t have to do stuff like generating contracts and sending emails and stuff like that. I remember being so proud of myself that I shared it online, and no one else was doing that, so that’s the reality of it. I was just like, wow, I just figured this stuff out! In 3 seconds, I shared it, for contracts… It’s just one example of the stuff you can do, and then I kind of got addicted to this validation I was getting from people so I kept sharing stuff…

Dan: [laughter]

Dan S: And then it started a viral loop. People were watching these videos, and I put my email in the info of the videos and then other people emailed me and said, just do this for me, I don’t want to do any of this, it seems like you figured this out, just do this for me. At one point, someone just sent me a PayPal of $1000 without even talking to me…

Dan: [laughter]

Dan S: There were like, hey, just set this up for me, okay, thanks, bye...

Dan: [laughter]

Dan S: And that’s when I knew that I was onto something.

Dan: Yeah, well, that’s the perfect example, right? You really validated your business idea when it wasn’t even a business idea. It was just people were like, I need to pay you to do the thing, right? Um, and that’s so cool, man. We’ve talked about this before, but there’s a very special feeling when you’re like, I’ve set up a system to do something really cool, and you start to see it work, and those pieces flick into place, and it’s like, that’s so fun.

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Dan: So that system that you were building, that became InvestorFuse, right? So when did this become an actual business? Because you guys are… From now, inside at least, it seems like you guys have been growing a ton. More and more people on our side, people that we work with, use you guys or know who you are, and you kind of made a real brand in that space from this idea of automating the backend, and I want to dig in to a lot of the specifics of that, like when did that finally crystallize and become a real business?

Dan S: Well, first it started with a partnership with Joe McCall, where I basically did that service of installing all these automations and apps for people, done for you, and then I just marketed that to his list pretty much. I was in charge of filling everything, and we had this partnership that put me on the map as a guy that knew how to systemize and outsource for real estate investing specifically for that acquisitions part of the business. Not the lead gen because I was talking to people like you for that but more of the running of the acquisitions team. With that attention backed onto myself and to Podio and the fact that there are actually other solutions other than existing solutions to do this one thing that everybody hates, we’re just following up with leads. I basically said, listen, in order for me to do this right and scale it beyond Joe McCall’s constituents, I had to do it on my own. I had to set up my own system, and I basically figured it out so my goal all along was to create a recurring income business that could fund my ideal lifestyle. I tried it with wholesaling, but with wholesaling, it’s deal-to-deal. It’s very reliant on your negotiating prowess and your consistency with marketing. I would still be doing that if didn’t stumble upon this automation thing. I figured out how to turn Podio into a monthly recurring income business. No one else had done it before, so I had to structure a deal with Podio, hire some developers that essentially when someone signs up for our service, they can be added to this pre-populated, done-for-your workspace with everything already plugged into to API to automate stuff. When I say automate stuff, the goal of the solutions I create is for investors to only just talk to motivated sellers and everything else is taken care of, and I’m talking about the data entry, the scheduling of the appointments, the follow up communications, the notifications for when someone responds, the sending of the offers, everything that happens between when a lead comes in from your website or your phone call, to getting it under contract. It’s the same no matter what real estate you’re doing, whether you’re flipping or you’re wholesaling lease options or you’re buying rentals. It’s the same thing. We figured out how to just productize it so it’s the same on Podio, and then that’s when we launched InvestorFuse version 1, and 2-1/2 years later, 500+ companies and now we’re launching our own system off of Podio. I never would have thought in a million years that that was the path I was going to take, but you never, as the old Steve Jobs said, you can’t connect the dots looking forward, but looking back, it makes total sense because I’m passionate about freedom. I’m passionate about figuring out how to craft the business around your ideal lifestyle that can give you time freedom to do the stuff that you actually want to do, like make music and be with your family and be a human being that isn’t just always talking the phone with motivated sellers.
That was the underlying… This whole journey has been a learning experience and finding out what people actually want.

Dan: Yeah.

Dan S: And to deliver that in the form of a real estate system.

Dan: I definitely want to come back to jumping off Podio because I know this happened really recently for you guys, and that’s a huge… I mean, for people that are non-technical, they might be like, oh, that’s cool, but this is a huge thing. It blew my mind that you guys did this because there is a whole world of stuff in software development and all that stuff, so I definitely want to come back to that. But the thing that you said that I really love, is it’s all about figuring out what people really want, right? So for you, when you look at investors, and you look at the way that people use InvestorFuse now, right? What are the things that InvestorFuse does that, those things that are highest leverage, highest impact, those things that really make a difference? The things that really kind of, really, really improve those investor’s businesses?

Dan S: Can I share my 80/20 cheat sheet chart?

Dan: Yes! Please, anytime someone wants to share either a cheat sheet or a chart all at once…

Dan S: [laughter]

Dan: [laughter] … I’m into it! That’s right up my alley.

Dan S: This is the most popular free download of all time. So, can you see it?

Dan: Yes, yeah. If you guys are listening to the podcast, here he is showing us on the screen, we’ve got the InvestorFuse 80/20 task cheat sheet. If they Google this, can they find it?

Dan S: No, but I’ll give you the link so that you can download it.

Dan: Okay, beautiful. All right, so if everybody, if you’re listening to the podcast, you want to see what Dan is talking about, this is really pretty awesome. You can go to www.oldsite.adwordsnerds.com/podcast and find this episode. I’ll put the link up for it.
So explain to us where it says Real Estate Investor 80/20 Task Cheat Sheet.

Dan S: The question is what is your time worth? And what activities are you doing to bring value to your business? I separated this out into 4 columns, and I’ve actually since added words on top of each column so essentially you’ve got to think of your day-to-day tasks and the dollar per hour value. So I have 4 columns, $5 per hour, $100 per hour, $1000 per hour, and then $10,000 per hour, and the different activities that go under each of these columns. On the left 2 columns, these are more of your administrative and like tedious level work, and you can hire a BA to most of this stuff. On the left, I would say it’s admin, and then $100 an hour is more like just work, general work stuff that requires you to be on your computer all day, stuff like qualifying your leads, answering all incoming phones, posting your properties through Craig’s List, cold calling prospects, editing and printing out contracts, managing the database, itself, browsing Craig’s List, stuffing envelopes, opting leads out from your database, like all that stuff. It’s necessary, but it’s low level work that the owner of businesses shouldn’t be doing…

Dan: You don’t need any special knowledge to do any of that stuff. You can…

Dan S: Exactly.

Dan: … ten minutes and just get it done.

Dan S: Correct. That’s a good way to look at it as well. The higher dollar per hour, the more specialized that your knowledge is. $100 per hour is more of your worker, so they’re going to do your analyzing the deals, writing the offer in the MLS, sending out letters of intent, ordering your direct mail. It requires a little bit more knowledge and skill and process behind that. Still, I encourage people to try to figure out how to remove themselves from these last 2 columns. They can focus on the $1000 and $10,000 per hour things. Our software helps people really hone in on these right 2 columns. My vision is that if we really hone in our software to the point that it truly does give people the confidence to only focus on this stuff, I wonder what type of trickle effects that will have? I’m confident that it will actually dramatically increase the value of people’s businesses and how much money they make in less time.

Dan: Because not only are you able to get those tasks done more consistently, right? Because someone, that’s their job, that’s what they’re doing to get it done or the system gets it done every time, right?

Dan S: Yeah.

Dan: But then you have mental bandwidth leftover so that if you are doing $1000 per hour task or a $10,000 per hour task, you’re much more present, you’re much more conscious, you’re better at actually getting it done.

Dan S: Yeah, the best part of it is you don’t need to spend as much time on that, so it’s the 80/20 principle. That’s why I call this the 80/20 Task Sheet. It’s 20% of the activities you’re doing generate 80% of the results that you desire, or to put it another way, a small vital few things create the most impact, and you need to develop an awareness around your day-to-day actions that are giving you the most impact, and leveraging technology and team to free up more time for you. That’s what it comes down to. What’s left is the high dollar per hour stuff like negotiating major deals, thinking strategically. Maybe you want to launch into new markets. Maybe you want to incorporate a new monetization strategy or investing strategy. Designing the systems themselves. That’s a very high dollar per hour thing. Hiring rock star team members and establishing the vision and the values of your organization. That is essential because without vision or without a culture, your team has nothing really to work for. There is no meaning behind your business, and, therefore, there is going to be very low output from your team, so I always like to stress the financial implications of making sure you have values in your company. It is super important, and it’s just more fun. [laughter]
And then like education, like educating yourself, exercising. These are things that you might not consider it high value stuff that actually make you money, but they do! They actually do make you money, and it helps you develop an awareness around the things that actually, as a human being, give you the capacity to create businesses that run without you, coaching people, meditating and thinking, evaluating your KPIs, and determining ways to improve your metrics, and just really being an owner of the system versus a cog in the machine. That’s what it’s all about, and every tool that we design and build, we create with this framework in mind.

Dan: All right, REI Marketing nerds, I hope you got a ton of value out of that interview with Dan Schwartz. Man, I had such a good time talking to that dude, and I learn so much every time we chat. As always guys, thank you so much for listening to this episode. I would love it if you got some value out of this episode, if you go on ITunes or Stitcher or wherever you get your podcast, just give us a Like, give us a Subscribe, leave us a review. That helps other people find the podcast, and I really appreciate. As always, you can find me at the REI Marketing Nerds Facebook Group. You can go to www.oldsite.adwordsnerds.com/group, and it will take you right there, www.oldsite.adwordsnerds.com/group. There is a whole bunch of people on Facebook talking about marketing, real estate investing, a really, really good group of people, and you can find Show Notes for this episode, links to everything that we talked about, all that good stuff, plus all our past episodes at www.oldsite.adwordsnerds.com/podcast. I hope you are having an awesome week, and I will be talking to you again soon, and thank you… Cheers!