Episode #175 – Building Your Ideal REI Business, With Mike Simmons, Part 2

What if you could understand the growth trajectory, health, and blind spots of your business in a single data point?

Well, good news:

You can.

And better news:

Nothing will free up your time, skyrocket your revenue, and give you more clarity than figuring out this data point.

In this episode, Mike Simmons joins me again to reveal how to find this data point which runs your entire business.

Listen now.

Show highlights include: 

  • The “unsexy” pitfall investors make with their business which causes it to implode on them (and how to avoid this in your business) ([1:37])
  • The only 6 KPIs you need to measure to build a behemoth real estate investing company ([7:01])
  • The “Moneyball Method” which reveals the health and growth trajectory of your business with one data point ([8:22])
  • How you can “retire” by the end of the year (without selling your business) ([19:29])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

Find out more about Mike’s business here: https://www.mikesimmons.com

Tune into Mike’s Just Start Real Estate Podcast here: https://podcasts.apple.com/us/podcast/just-start-real-estate-with-mike-simmons/id732855311

Read Full Transcript

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 AdWords 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.

(00:42): All right. Hello and welcome to this week's episode of the REI marketing nerds podcast as always. This is Daniel Barrett here from AdWords nerds.com. And look, if you need help, finding more motivated seller leads and deals online, you know where to go. It's AdWords nerds.com. All right, folks, you can tell my energy level is good today. I feel awesome because I just finished my second interview with Mike Simmons. Now, if you missed the episode, a couple episodes back, Mike is an incredibly successful real estate investor and coach and mentor. He works in his investing business two hours a week, and they do over a hundred deals a year. Not only that, but I, I gotta tell you that I, I talked to a lot of people in investing. Uh, I know a lot of real estate investors. They're great people, but Mike is one of the most grounded and happy and like comfortable in his own skin.

(01:44): People you are ever going to meet in this industry. He is one of my absolute favorites, and I knew after the first interview that I wanted to bring him on, like I knew immediately that I wanted to have him on for another interview because we barely touched the surface the first time around. And so in this interview, we talk about the ways that investors blow themselves up. We talk about the defining characteristics of investors that go on to be successful. We talk about how he started to implement systems in his business that removed him from the process and how that whole thing came to be. We talk about retirement. We talk about family. We talk about all sorts of stuff. Oh, and my single favorite takeaway, Mike talks about his Moneyball number, the KPI that was the sort of cornerstone of everything he did in his business. It personally had a big impact on me. I know it's gonna have a big impact on you. So without any further ado, let's jump into my interview with Mike Simmons from Mike simmons.com. All right, this is Daniel Barrett. And I'm here again with Mike Simmons from Mike simmons.com. Michael, thank you so much for coming back on, man. I really It, no, I'm, I'm glad you asked me to, I'm excited about it. I always have a lot of fun talking to you, so thank you.

(03:04): Yeah. And so we were, we were kind of crunched in the first episode where we were talking and there was like 1,000,001 different ways I wanted to go, but let's start with kind of systems and processes. We talked a little bit about systems and processes last episode, but I wanted to kind of stop there and stay there for a little bit, because one of the things that's really fascinating to me about you is that both that your investing business is really successful, but also that you don't spend a ton of time on it. Obviously you're very busy, you're doing a whole bunch of different things. You've got, you know, the, the kind of lending part of the business got the coaching part of the business, et cetera. So let's start with that because I know that a lot of investors, when they start investing the, the fantasy is , you know, like they have the fantasy air.

(03:50): It's like, I'm on the beach and it's nice and there's cash cash flow. And, uh, you know, it's like every time someone says like passive cash flow to me, my eyes kind of roll, cuz I'm like, I dunno, the more passive it, the more passive quote unquote, it is the harder it seems to be. But in any case, so take, take us back to the beginning. You were, you're doing the investing business. I assume it was not always I'm working two hours a week or whatever. So, no, I guess back the beginning, when you were, when you were getting started, what were the problems you were running into and then how did you get from there to kind of where you are now? And we can take that all different sorts of directions. Yeah. So my, my business had a couple of different arcs. And so when I first started, I was working full time in the automotive industry. My wife was my partner in my business with me and it was oh, 8 0 9. So getting deals, this is gonna sound weird to people who are just getting into the business now, or haven't been in it very long, but getting deals was easy. It was almost like, how many do I want? You know, I was like finding deals was the easiest thing in the world, but getting them sold and, and being profitable was my biggest challenge because I was in a declining market. And so if I didn't buy it low enough or didn't move fast enough, my ARV or my after repair value was going to change for the worst. If I, if I didn't do it quickly. Right?

(05:10): So it's different challenges than they're facing. Now the biggest problem that I was facing, two of them, and a lot, one of 'em is gonna be real familiar to people who are working a full-time job. My job was in my way, I couldn't respond to things the way I wanted to because I had a job that required me to be present and be in it. And I, I, I was in an office and it was a open air office. So what that means is I couldn't close a door and have discretion. I was like, everyone could hear every conversation I had. It was cubicle sort of situation or what was the, It wasn't even cubicles. I worked for a German comp, I guess it was, but the cubicle wall height was about waste level. So it wasn't even like when I'm sitting, I was looking directly at the face of the person across from me. Um, by the way, just to break in whoever thought this kind of thing was a good idea. I just do not understand it, but I don't know. I've never actually worked in this environment, but like having walked around, some of them, it seems like a nightmare. Was that like a nightmare to be in or

(06:04): Yeah, it, it was sort of a nightmare to be in if you really needed to have privacy, not because you, even in your, like, if you just wanted to have a conversation where you didn't hear anybody else talking and you didn't sound like you were in a call center. Yeah. You had to get up and like walk somewhere where no one was and it's, wasn't your desk. So you weren't at your computer. You know, it wasn't convenient. It's a terrible idea. Honestly, this company, I could go into great detail about the silliness of rules that they had starting with the open air and then ending with at the end of the day, your desk had to be completely clear of everything except your phone. And if it wasn't managers would come around and take a picture, you would be called by HR the next morning. And you would have to explain why you left a notebook on your desk or why you left a folder on your desk. They wanted it clean at the end of the night, that was priority to them. And it's like it Because they were gonna let you go there. Just like we have to be able to let anyone go to moment's notice, like, what was the

(06:59): I get, no, because here here's the greatest, this is the stupidest thing they had technically what they considered shared workspaces. And so anybody should be able to go sit down at any desk anywhere that they're walking in the company, just sit down and start working if they wanted to makes no sense it's a stupid priority, right? Anyways. So going back to real estate. So my challenge was I didn't have a lot of time to work on my business and my wife and I were, she was working full time too. And so we just had so much limited time and we had, we had no pro to talk about processes. Like we had no processes. Every deal we got was like brand new adventure for us, like, wow, what are we, where are we gonna buy materials? What are we gonna, what color are we gonna paint the walls?

(07:40): Like we just reinvented the wheel every single time. And you know, it caused us to be completely inefficient. We didn't have a lot of time to begin with the time we had, we were using poorly. And in the beginning we were looking at the scope of work on a house and we were picking out the things that we could do and saying, well, we'll just paint the basement. We will just hang this, whatever, right. This door. And it's like, when you do that, yes, you can do it. Yes. You will save money cuz you won't have to pay somebody else to do it, but it'll almost inevitably take you way longer. And so we were slowing down our own projects. So we're paying more holding costs, we're paying more taxes, we're paying more insurance. And it was just like all these inefficiencies and illogical, um, kind of thoughts that we were having were manifesting itself into longer timelines, higher budgets in the end. And it was just sort of like, we were just making every mistake in the world.

(08:35): I mean, it strikes me as like, it's the kind of like stepping over dollars to pick up pennies kind of thing. Yeah. But you, because the, the costs that you're talking about right. Which are like the ARRB value going down, you right. Or, um, those costs are kind of invisible. It's easy to look at it at the moment and say, well, I'm saving, you know, a thousand dollars here and not think about the potential sort of encouraged costs. That's gonna be kind of down the road. Right. We were just talking about the off, off camera. We were talking about how people in general tend to discount the future for the present. So how did you, how are you able to get out of the moment in order to see the bigger picture and start working on it? Right. Because part of the problem I think people run into is they're so busy that they, it's hard to literally take the time and sit down and like, okay, let's really think about what we're trying to achieve, what the system is, where the constraint might be. So how did you get out of the moment in, in order to be able to start do that? Like what was it, did you read something? Did someone tell you to do it? Like, what was the, what was the

(09:40): Deal? I'll tell you. I had a unique experience and I'm, I'm gonna tell you this and it's gonna sound like I'm speaking behind my wife's BA my wife's back, but she's heard this story and she agrees a hundred percent. Okay. Okay. Here's what happened? My wife and I were flipping houses. Yeah. Even though we were inefficient and we were sort of not going about it a great way. We were still having success. We were getting some traction. We were making money. And in our local community of real estate investors, we were becoming mini celebrities. Like people were asking us as speaker RS and how are you doing it? And mm-hmm . And so in my own, like, um, very self critical nature. I was like, we're doing this all wrong, but out outwardly people were like celebrating us. Right. So I got to the point where I started to think I could do no wrong in real estate. That's that's when you know, you're about to hit a wall and so About to explode is when you're like,

(10:34): Yeah, yeah, yeah. I felt like this car could never crash. I'm just gonna take a quick nap. and so I got, I started working with a partner and, and in a, in, in a tangential kind of a way to real estate, it wasn't really real estate. What it was is, um, they call 'em AFC adult foster care facilities. And so I worked with this guy who had, uh, health industry, connections, like doctors and things. And he knew what I did. And he's like, Hey, why don't you find the facilities? You renovate them. You maintain them. I'll bring residents in the, the, the model, the business model's phenomenal. Right? You have up to six people in like a single family, residential home. Each of them paying two to $5,000 a month for full time care, right? Like, like, um, healthcare and, and the money is insane.

(11:26): Right? And so I saw this model. I'm like, this makes, this is a no brainer. This makes total sense. I don't, I'm not gonna flip houses. I'm gonna do this. Right. The problem is I don't have any healthcare industry contacts. I know nothing. Right. All I could do is find the house. The entire survival of the business was dependent on this partner of mine, his connections and his ability to, to pull his weight in this arrangement. Well, you can see where this is going. I, I found the house and I renovated it and it was great. He wasn't able to hold up his end of the bargain. And so what happens with an AFC if anyone's listening to this, cuz this is, this is a thing in real estate. People do go this route sometimes. Yes. When you have six residents, it's a cash cow.

(12:04): I mean, when I say cash cow, it's like insane how much money can be made, but you have to have full-time healthcare in that house at all times, whether you have six people in it or one person, right? The break even is three residents. That's where you break even right. 3, 4, 5, and six are profit. 1, 2, 1, and two are you're you're losing. And so I got to a situation where there was only one person in the house we had full-time care. It was hemorrhaging money. The way it makes money with six, it hemorrhages with one. And so I, I got out of that, right? Lost like $30,000 in a very short period of time. The reason I'm telling you all this is because prior to that, when I was flipping houses, we were being celebrated. We, we were doing a good job outwardly, but my wife is very conservative.

(12:49): And so we would be working on a house and I'd go, we gotta get another one and she'd go, whoa, whoa, whoa, slow down cowboy. We're gonna do this one. We're gonna finish it. We're gonna get paid. And then we'll go to the next one. And I was like this racehorse that was constantly trying to go faster. And she was reigning me back. Right. Probably good. Cuz I would've made tons of mistakes in the beginning by going too fast. But once this AFC thing happened and blew up in our face, she's like, all right, we have to take a six month break here. Just can we just clear our heads for six month and do nothing, no real estate, no nothing. And I said fair. We just lost 30 grand. I can't really argue that we screwed it up and you're stressed out. You're having trouble sleeping. Let's do that. And we did after six months, I was like six months. It has been six months. Let's go. And she said, you know what? I get it. You love it. I don't feel like I wanna get back into that. The, the rollercoaster of real estate even is just to my, I just, it's not, I'm not bill for this. She goes, I support you. I love you. I trust you. You go do what you have to do. I don't want to hear the details because it just stresses me out. And it was like, you just gave a 16 year old keys to a Ferrari and said, go as fast as you want. And, and I did. And so the reason I'm telling you all, this is your question was how did I ever get out of the moment and start being a little bit more like looking down the road and being a little more systematized because I went out and started buying two and three houses at a time.

(14:09): I, I went nuts. Right? And I, and, and when I did that, I knew I couldn't be involved in any one house. I could not be there, like swinging a hammer, painting walls, none of that. I had to start building a team and I had to start doing something that was repeatable. So when I got a new house, I could tell my contractor, same cabinets, same paint, same flooring in all these houses, like just it's the same. Right. Just put 'em in and let's go. And so I started creating a process and material list and a system that I knew I was gonna repeat because I was going too fast, not to. And so my own appetite for speed forced me to sort of not homogenize. That sounds wrong, but like, like get some consistency across the board with what I was doing, cuz I didn't have time to go to home Depot and pick new paint, pick new flooring. I just said, this is our paint. This is our flooring. I kind of created like an, a, B and C level house. Right? Real nice houses where this is an, a house. This is a B house. This is a C house and go. And so that's sort of was how I started the thought process of having some kind of a system that I'm following.

(15:12): I, I think it's, it's a cool story, right? Because you sort of have that enforced break and it sort of allows you when you know, it, it, you know, there's like this kind of principle, right. Where it's like, you don't really know what you really value until you're, you sort of lose it for a little while. It's like the fact that you went through these kind of really tough experiences, you lost a bunch of money. Right. Was really disheartening. I can imagine the fact that you were chopping in the bit six months later, right? It's like, oh, you, you went to go box and got your butt kicked. And now you wanna get back in the ring is probably good sign. That that's what we should be doing. Yeah. But you know, the thing that you were talking about, how is like a level house, B level house C level house, it reminds me of in the like sort of Toyota manufacturing sort when Toyota sort of becoming the manufacturing giant that ultimately became, and they're sort of developing the stuff that would later go on to become lean and all this kind of process improvement stuff.

(16:03): Right. It's like one of their principles was single minute change of die, which was, there was like a machine that had a certain, you know, part in it. And every single car would have, you know, a different die that would be needed to put into this machine and sort of before it can sort of continue down the runway and they would lose like 10 minutes on this process of just you've gotta change the thing. And so they instituted this, this, um, whole principle where it's like, all the parts had to be very quickly interchangeable. Like all the different dye would come from different manufacturers. They said they just made their own because they were like, we should be able to change the dye in a single minute. Right. Because it's the process of changing from, we gotta do this way to then we gotta figure out a whole different way to do it, to doing this different way.

(16:50): It's that? Yeah. Time loss to sort of switching tasks where so much efficiency goes away. So it sounds like a big part of your process. You correct me if I'm wrong, was you sort of reduced the amount of time, like if like a new investor might go to the house and be like, what do we wanna do here? And do we, does it need this? Does, does it need that? It sounds like you were sort of arranging your business. So before you even got there, you knew kind of what you wanted to do or where it sort of fit in the process. Was that part of it for you as sort of making it a template or, or like just easily repeatable like that?

(17:29): Yeah, it was. And I also realized that when I was trying to switch things up, it was very difficult for my contractor to keep track of what I wanted to do with what house, what colors, what cabinets. And so it was easy for me, but more importantly, it reduced the amount of communication needed with my contractor. Yeah. Which is huge. Right. So the contractor clarity with them and you know, when, so a lot of times, and I don't wanna like rail on contractors, but they're colossal pain, the ass. A lot of times when they have a question, some contractors will ask and some will make assumptions. And so a lot of 'em make assumptions. Yeah. Because they wanna just keep moving. And so they would make assumptions, especially before I was doing this full time, when I was working part-time they couldn't get ahold of me and they would make assumptions.

(18:14): So I would have to go into the property like the next day and I'd go, wait, why wait? These are not the cabinets I wanted. And they're like, well, I couldn't remember because you did this one last time. And it's like, I realized, wait a minute, I am causing confusion. That's costing me money. They have to know, we buy home Depot off the shelf cabinets. And there's like a, at the time there was like chocolate, natural and white. Right. That's it, that's all we used chocolate natural or white. And we used white and chocolate. We never used neutral. And then that's all they had to remember was this, is this white or dark? Like which one is it? And so I, I cut down on the amount of confusion I was causing with contractors. Even if I could keep track of it, contractors don't always.

(18:55): And, and I wasn't the only job he was working on. Right. He had other other clients. And so I just needed to streamline it and cut it down so that there was, it's like, I, I equated a little bit to like, I don't know who anybody cares about the NFL or football, but sometimes you bring a player, a quarterback onto a new team and they don't give him the whole playbook. They, they give him a very condensed version of it so that he doesn't have a lot to learn or think about. There's only a couple of plays and we're just gonna run these couple of plays until you figure things out. I was treating my contractors like that. Like, I don't want you to have a lot of variables. I'm gonna reduce the variables. So I'll reduce the guesswork, I'll reduce the mistakes and thereby reduce my extra cost.

(19:33): And so much of that time savings. Right. It's kind of invisible before you do it. Right. You don't really realize how much time is sort seeping out in the email back and forth. Right. Yeah. And, but you have these downstream effects of just making it a much simpler decision. That's really, really cool. So let's, let's think about it today. Right? So you work with investors, you have, you have coaching students that are, you know, your, your coaching programs are wildly successful. Like doing really well. You work with investors through your lending programs, right. Cause you have a, you have sort of a lending armor your business. And so you're working with investors for your money. When you, when you meet someone where you feel like they have it together, right? Like, like what are the indicators to you? You're like, okay, this person has their stuff down. Like they know what's going on. Is there something you look for in the business or even in the investor or their personality where you're like this, person's gonna be able to figure it out or they've gotta figure out already. Like, how do you tell, is there a way to tell? Yeah,

(20:33): That's a really good question. I've never been asked that before. There are, there are, there's definitely common denominators with Fe people that I find that have success, or I think they're going to have success. That's a really good question, man. I, so I think one of the things that I notice that's very common with people that I, I, I think, I feel like I really can tell if I, if you introduce me to someone and I, and you ask me, if, if I think they're gonna be good in the industry, I can probably tell you in 10 minutes, it's because there's an optimism with people who, who I find that are successful. There's a sense that they don't throw up. They don't. Yeah. I call 'em yeah. Butters. They don't say. Yeah. But to everything you say, they say like, yeah, they're more. Yes. And you know, they, yeah, yeah.
A yeah. Butter face. I got yeah. Butter.

(21:16): Yeah. Butter face. exactly. Yeah. He's a nice guy, but yeah. Butter. He's a yeah. Butter. Yeah. Butter face. So they don't, when you, when they ask you how to do something or ask your opinion or ask your advice, they don't go well, that, that won't work in my case. Right. They, they take it and they do it when I was, you know, there, if you look at a graph of my business, like from 2008 to 2015, there was a, a, a steady, but not dramatic incline. Right. It was going up, but it wasn't like nothing to write home about. Nobody was getting that excited. Right. But at 2015, it almost goes straight up. It's like hockey stick growth. They call it right. It was like skyrocket growth. And so when I have shown people that in, when I've given presentations or whatever, the obvious question is, well, what happened right here?

(22:04): Like, I don't really care what you did back here in the beginning. And I don't necessarily even care what you're doing right now. I wanna know what you did right here. Right. And what I did right there was I started seeking out the advice of people who were highly successful, way more successful than me, and had been successful for a while. And the key thing that I did or didn't do, depending on how you look at it was question them or be skeptical when they told me what they thought I should do. I just did it. Right. And so one of my superpowers is I take direction really well when I feel like it's someone I should be taking direction from. And it's probably because I was raised by a Marine. And you just don't question directions when you're raised by. And when I say Marine, I mean like what you picture when like stereotype the cartoon character of a Marine.

(22:54): Yeah, yeah, yeah. Totally. And so I, I met this guy named Andy McFarland. He's still a very close friend of mine. Yeah. Excellent. Really successful investor. Awesome guy. Yeah. You know, you know, I, so I know, uh, I think I met him once and I know okay. Of him just kind of like through seeing his work and stuff. He's, he's really, the way he crosses over with me is that he does really well online. Right. So a lot of times, like when I study a given market or other competition, like I'll come across either yeah. Stuff that he's done or, you know, whatever. He's, he's very, very smart. I forgot you guys do have crossover, but so a good friend of mine, good investor, good businessman. And I was lucky enough to be able to, to be on some calls with him and some, some one-on-one stuff. And, uh, at the time I said, Hey, Andy, you were where I am about four or five years ago. You were, you were me and now you're you. Right. How did you get there? What did you do? Right. And he told me, he told me exactly what he did. And, and I said, okay. So if you did that in four or five years time, and Andy's a conservative guy for people who don't know him, he's, he's not like this wild hair on fire risk, everything guy, he's a little bit conservative. But I said, if you do that in four or five years with hindsight, right. With the benefit of hindsight, you know what you did, right.

(24:09): And what you did wrong, is that something you think I could replicate in a shorter amount of time, like a year or two. And he's like, absolutely. You could, if you, if you follow, if you, if you take my advice and you avoid the pitfalls that I had to go through. And so I was able to, to do that, I was able to turn that switch and, and do it very, very fast. But I, I did it. I didn't question him. I didn't say, well, you're in Utah, I'm in Michigan. Right. It doesn't work that way in my, like all the stuff you hear, people say, I hear this all the time. It doesn't work that way in my market. Yes, it does. And so when he told me what to do, I was already doing it before he was finished talking because I just implemented.

(24:46): And that's what I see in people that are successful. They believe they can do it. They believe it when, when they seek advice from someone that they should be seeking advice from and they get the advice, they actually do it. They don't just go, Hey, uh, Dan, how do I this online, you know, paper, click thing. Like, how do I find, how do I get leads? How do I set that up? And you tell 'em I go, oh, Uhhuh, Uhhuh. Okay. And then they go, oh, Mr. X, how do I do? And they ask the same question, right? Yeah. Yeah. They just do it when you tell them, cuz you're an authority on that. So that's, I, I find successful. People are implementers. They're not always the smartest people. And I don't mean that as a joke, even it's not like, oh boy, you really have to be real sharp to, to get this right.

(25:26): No, you don't. You have to be an implementer. You have to execute on ideas and not just curate ideas constantly. You have to implement them. Yeah. And the people who do that and they believe it when someone tells 'em they can, they can do it. And not just rah or like a affirmation, but like, Hey, you can do it. And here's how you do it. This is what I think you should do. And they implement it. Those are the winners. Those are the people that succeed. When people, I, I talk to people all the time. Like you said, I give advice. I coach, I can almost tell you the people who are gonna be successful after I'm done talking to them. I can tell by the way they respond to me. And so, yeah, man, that's probably the biggest thing as indicator for me.

(26:05): Yeah. It's, it's fascinating. Right? Because I think people wanna know that the plan is gonna work a hundred percent before they get started. Yes. And the fact of the matter is even like in the case of like, so for example, Andy gives you really good advice. It is gonna be different from you. You are different, your market's different, it's a different time or whatever, but you still have to get started. So you can figure out where you need to deviate from the plan and where you don't need to. It's sort of like, you know, like the, the metaphor that I'll often use, I is like, you are crossing a stream, you know, you want to get to the other side, but the stream is deep enough where you can't really see where the rocks are and where there is a place to step in where there isn't.

(26:44): So you could spend all your time trying to figure it out and like plot the perfect course across. Or you could just get started and feel around where the next rock is and move to that one. Right. So I mean, it, you have clearly, so this, this it's, uh, high on my mind because I just took, I retook the Colby, a, the sort of personality test that we've ever taking this, but you know, the Colby has like different ways of classifying you, you strike me as a very much like a fast start type of person. Right. Mm-hmm , it's like, you know, just start, right. So it's like, you just get started. Right. And that's, it's such a critical element because while fact finding research, all that stuff is really important. If you do so much of that, that you never actually get moving, you never start to gain momentum. You can't apply your, what you learned to that process. So here's the flip side of that question, right? Because we were talking about how do you know who's successful? Mm-hmm you also coach, you know, it's like you coach, you work with, you have a podcast as well. The, the name of the podcast is just start or what's the podcast. Just start real estate. Yeah.

(27:39): Just start, just start real estate. Right. So really good. Want to find motivated seller leads online, but don't know where to start download our free motivated seller keyword report today Edward's nerds have spent over $5 million this year researching the most profitable keywords for finding motivated seller leads. And you can grab these exact keywords when you download our report at www dot AdWords, nerds.com/keywords. So like you talk to so many people and you've been around for a while. Right? How do investors blow themselves up? Because it strikes me, it strikes me as like, you know, you have a martial arts background. It was just saying right in jujitsu where it's like every black, belt's a white belt that didn't quit. Right. And so how the, the biggest danger, I think to investors, there's not so much failure. It's failure to the extent they are blown up, they loo they are outta the game. Right. There's no more getting back to it. Yep. And you've gone through moments of, of failure. Right. But you didn't blow yourself up. So when investors blow themselves up, how do they do that and how can people avoid it?

(28:52): Um, another great question, Dan. You're really good at this Look, uh, dude, I don't know what to say. I'm just, oh look, I'm just an honest man. Trying to make an honest living. Podcasted fair. Uh, yeah. The things that I see that blow people up, I I'll tell you, I'll start with the number one thing. This is what I feel like is the biggest far and away, the biggest pitfall. And then we can talk about some supporting things that don't happen or, or happen poorly that cause it, but what I find is they try to grow too fast and they do it again at the expense of the future. They're, they're only thinking about today and they try to grow too fast and it implodes on them. And the reason it implodes on them, the deeper reason is they're growing too fast, which is not inherently bad. But when they grow fast and you start with this business, that where you're kind of doing everything and it's real small, and then you have hyper growth. The thing that people don't incorporate soon enough are KPIs.

(29:52): And it's not sexy. It's not fun to talk about necessarily, but they don't know their numbers. And so they're running this business that everything they're keeping track of it in their head, because they're only doing one deal at a time, for example. And then they get some advice. They see people who are doing it faster and better and they start throwing fuel on it. And it starts growing. And while it's growing, they lose track of profitability, of losses, of expenses. They, they start losing track of all that stuff and they get this rocket out of the atmosphere and realize, holy shit, this thing isn't holding air. Like we're losing air. Like it. This is a disaster. And we're in the atmosphere right now. And in, by in the atmosphere, I mean, we owe a lot of people. Money we've borrowed a ton of money. We didn't do a lot of due diligence when we were buying these properties.

(30:40): So they're not really gonna cash flow. Like we thought, or we can't sell 'em for what we thought we were gonna sell 'em for. Cause we're in a declining market, whatever it is, they start getting ahead of themself. And they find themselves in a really bad situation where they don't have the cash flow to pay their investors. They're trying to sell the properties, but there's something inherently wrong with that market or their, with their initial analysis or there's too much work for their team to do. So things start falling through the cracks. And so their rocket starts to split apart under the pressure and they ultimately end up failing or just crashing and burning. So I love that. So the first of all, if you think KPIs are boring to me, you don't know me very well because that's, They're not boring to you. They can be boring to invest. Investors tend to be great at finding deals and negotiating deals and renovating and all this stuff. But when it comes to like keeping track of the spreadsheets, it, it tends to be a, a real like yawn Yon Fest for them. And they don't like it. You like it. But a lot of investors,

(31:34): Don't people you need to listen. If you haven't found the joy of the spreadsheet, I didn't know it either. And now I'm way into it. Yeah. But I lit, literally went through this process recently where for ad or for the, so for the agency. Right. So different business than an investor. But obviously we work with investors and really sitting down and saying, what is the KPI we need to measure? Because in many ways too, which KPI you measure ends up impacting your behavior, right? Like bear Stearns were killing it on in terms of their KPI. It's just that their KPI didn't include like, Hey, are we gonna explode soon? Right. Yeah. And so, you know, similarly for me, for a while at, at Edwards nurse, we were tracking lead volume per client. And we were saying, average client volume is, is, you know, wants to be above 20.

(32:22): Or, you know, what percentage of our client base is above 20 leads a month or a week or whatever the number was. Right. And I was moving that number up, moving it up, moving it up, moving it up. And then at some point we were like, oh wait, we don't actually care about lead volume. We just care about deals generated. Right. Yeah. And I can get a ton of leads if I just say like, I don't care who they are. Yeah. Right. So then, then we had to kind of change our behavior again. So I love the fact that you're mentioning it. So it, when you look at an investing business, what are the KPI that you, for example, you tell your students to really focus on because early, just like you said, they're, they're in the business, they're, you know, they're laying the carpet or whatever it's they don't wanna do the spreadsheet. Right? Yeah. So it's hard if people don't wanna do it, you're, it's kind of the equivalent of the, you know, eat your vegetables kind of thing. Yep. What do you tell people to focus on? Like what's the 80 20 there of like, here's really where you want to keep your eye on, especially early.

(33:11): Yeah. It, so it's, it's a question that would answer differently. Depend on the stage of the investor. If it's a highly sophisticated investor, it's gonna be different, but I'm not gonna, I mean, we can talk about that, but I'm gonna focus more on like the 80, 20, like you said, 80% of the people probably listening to this, they should be tracking marketing dollars spent. Okay. Whatever that means you tracking marketing dollars, spent the leads that generates. Okay. So I, I usually tell people, people that I coach that a call, for example, like, let's just say, for example, we're gonna talk about direct mail or even like paper click. If it's driving 'em to a website with a phone number or something where they're getting calls a call or a contact, a response from marketing, whatever that is, is different than a lead. And I think, I don't know if you like in your business, Dan, if you kind of slice it up like this, but what I've learned is it's important to differentiate between a response to marketing and a lead.

(34:03): A response to marketing is, Hey, I got your postcard. I'm never selling. I hate you for sending this and never call me again or never, never, never reach out to me again. Right. That's that's a response to marketing. Exactly. I'm calling the FBI. It's not a lead, a lead works, the FBI marketing. I saw you online or whatever it is. And I do have a house and I'm, I think I might wanna sell and I need to sell. And like, here's my situation. Now you're into a lead. Okay. So marketing dollars spent marketing responses generated. Cause I wanna know that number leads generated. They have a house that they could sell appointments generated from those leads, contracts generated from those appointments and then revenue. Like those are like the super basic KPIs that you have to know to be successful. And then, you know, then there's like some nuances like, uh, leads, I'm sorry, appointments that cancel like your cancel rate for your appointments.

(34:58): And that is an indicator of how good your appointments set is or how good of a job they're doing of determining marketing response versus lead. And then how many contracts are falling out before you're able to close on 'em I, I feel for you Danny in your business, because you can generate leads like you said, but people are, people are measuring what you do for them by deals, but there's so much that happens after your involvement that you can't control mm-hmm . And, and, and I think we, we touched on this last time we talked, but I had a, a student of mine say my marketing's not working. And it turns out their marketing was working phenomenally. It was their sales people that were terrible. And they had to fix that and they were blaming it on marketing. Yeah. And it was sales. And so that happens, I'm sure with you, but I, there, you know, you didn't ask me this, but I think it's something that people should hear.

(35:44): And it sort of, it sort of goes along with what we're talking about. There was a guy that I listened to in a workshop once his name went was Jeb blunt. He's a sales coach. And, and he talked about in his workshop, something called your Moneyball number in your business. And if you're familiar with the movie Moneyball with Brad pit and, um, I can't remember who else was in it. But anyways, it was about this guy, Billy Bean. He was the manager of the Oakland a and anyways, what he did in baseball was he used data to build a team instead of using like, oh, this guy has this. Guy's like a great pitcher. This guy's a great fielder. He figured out on the Oakland a back when he was our manager, he took all the conventional wisdom that people used to, um, recruit and to, to sign players.

(36:30): And he said, I don't care about any of that. I want to figure out what is the number one indicator of success of a, of a baseball team. And what he came up with was on base percentage. That was the one statistic that was the biggest indicator of success and failure. And so common wisdom was, I want someone who can hit what he said was, I don't care if they hit the ball, or if they get hit by the ball, I want them to get on base. That's all I care about. They can bunt, they can get hit with the ball. They can walk, they can get a hit, I don't care. And so he figured that out and he built his team and tons of success and movies are made about him. So Jeb blunt in this workshop said, you and your business need to find out the one thing, the one data point that is a Keystone, that if you know this one data point, it will point to all of everything that ails you and you can solve most of your problems by this one data point.

(37:21): And in my business, what I figured out at, at, after spending this whole workshop and, and really going deep was my Moneyball statistic or my Moneyball date point was new appointments attended in my business. And there's a very specific wording there because we played with new appointments, how many new appointments are scheduled, right? And then how many appointments did they go on? And we had all these things, but what we realized was, for example, new appointments scheduled wasn't necessarily a great indicator because anyone can schedule an appointment for anybody. It doesn't mean they're a good prospect. It doesn't mean it all makes sense. And then we thought, okay, well then let's think about this. We're gonna say appointments attended. We want our sales guys to go on a bunch of appointments. And we know that we'll have success if they're going on appointments. But what we found out was, and this is like the nuance, right?

(38:13): For the maybe more sophisticated investor, uh, team is our, our sales guy would maybe go on an appointment. He wouldn't get a contract, he would schedule up a follow up appointment. And he was counting that appointment as a new, as another appointment. Right. So how many appointments did you go on? I went on 10 but eight of 'em were a third appointment. Or were you you chasing this lead? Oh, gotcha. That wasn't really getting you anywhere. So I wanna know from my sales team, how many new appointments are they attending? Not new appointments scheduled because sometimes they get rescheduled. Sometimes they get canceled. New appointments attended is, is by far the number one indicator of my team success. And based off that number, I know if we have a problem upstream or downstream, so if we're not going on enough new appointments, then we have a problem with our lead intake.

(39:01): Our phone person is probably not setting enough appointments. There. There's something they're not doing well on the phone. If we're going on a, the, the amount of new appointments for attending the amount of new appointments that we have determined is our number. And we're still not getting the revenue. There's something happening after we're attending appointments. We're not doing good enough. Follow up our dispo. Guy's not doing a good job. Something's not happening downstream. Right. And so that new appointments attended was a very highly thought about very important number for us that we have found is the best indicator of success in our

(39:32): Business. Wow. I love that. I really love that. And this is good timing for me. So you, you were talking about how, the challenge of like, when you, when you do marketing for someone, how do you sort of parse out this actually like, you know, sorry, I'll, I'll sort of open the, the, the sort of curtain a little bit and sort of like one of the, we recently lost, one of our managers had let him go right. And great person, you know, really good person. Right. Not nothing to do with that, but there was, there was a real mismatch of values. Right? Yeah. And one of the things that really bothered me was every time a client didn't have success, this manager would say, well, they're not very good at their business then. Right. That was always the reason always mm-hmm

(40:20): Okay. And I'm open to, sometimes people aren't good at their business. Sometimes I'm not good at my business. Okay. Right. It happens but I was like, but I dunno, this person was successful before you, you know what I mean? Like it just, didn't always, and they were never really willing to take responsibility and look at what they could improve. Right. So that, that whole process opened up this whole thing where we really started diving into, well, how do we know we're generating quality leads? Like we could say it, but how do we know it? Right. And so we've gone through this sort of iterative process where we're kind of doing a similar, a similar thing to what you did, where we're going through. And we're saying, what are the things that seem to correlate with deals generated or sort of revenue generated? How do we get that number?

(41:09): Right? And the, the biggest constraint that we actually run into is not so much, you know, what number do we look at? The problem that we primarily deal with is how do we get accurate data from our clients? Cause our clients are like, I'm busy. I don't have time to fill out your spreadsheet. You know what I mean? And they're, they have their own things. So I've been working on this whole system to automate that as much as possible. Anyway, I, I love this idea because like you said, if someone is willing to sit down in their home with a representative from your company, they're interest, like there're no offense, Mike, I love you. And I'm sure everyone that works in your business is amazing. You couldn't pay me enough money, sit down with someone from your company, cuz like I don't wanna sell my house and I'm in limited time and it's like, it's never gonna happen. But if I needed that or I was truly motivated, right. I'm gonna take that step. That is, that is a hoop. People are only going to jump through if there's some level of motivation. So it strikes me as it's kind of a knife that cuts through everything, cuz it's like, look, if you're sitting down with people, you know the process to get 'em on the phone was there. If you're not closing at all, that does kind of indicate that maybe you have an issue kind of down funnel. So that that's really

(42:18): Totally cool. If in your business, if your clients have an appointment that they actually hold, the seller holds the appointment and they let 'em come to their house, you have done everything you can do at that point. I, I would say, because anything that happens from that point on is out of your hands, it's very hard to find people who, like you said, I would never meet with someone from my company to sell my house either. I would never do it cause I don't wanna sell my house. So if they're willing to do that, you have, you have like gone a long way to finding the right person. If it doesn't happen from that point, it's usually on the sales process somewhere after that. Right. So, or

(42:58): You might, you might even say like, you know, maybe the market shifting or something's happening. Right. But it, it does kind of indicate at least the direction that you can look in, which is, and look, I'll say this too, because you know, KPI are very, are very forefront in my mind. There's a lot of work that I do around KPI. Obviously, even within Google ads, I talk a lot about KPI and what you look at and what you don't. And one of the things that I think is I, I just hired these new managers, actually. They're both awesome. Uh, one's newer sort of less experienced than the other one. And so I'm doing a lot of mentorship, right? Lot of work with him and we, we hired him actually very deliberately, cuz I was like, I don't want someone who has a ton of set and stone ideas and I don't want a carbon copy of me.

(43:40): I want someone who's going to expand the repertoire, what we can do. Right. So there's a lot of time mentoring him. And one of the things that he was talking about was like, well, I don't know, it's not an exact measure, right? It's not exact like I'm not, we, we there's some confusion. There's some fuzziness here. But this number we were talking about and I was saying like the purpose of measuring something is to decrease the degree of uncertainty you have about a decision you wanna make. That's the only reason you measure it. Right? So all we need to do is get a little less uncertain to have value in the measurement. So even if you don't get a hundred percent there, if you're not look, maybe, you know, new appointments attended, it's not the end all be all number. It's gonna tell you a hundred percent of everything.

(44:23): But it does seem like if you're an investor and you're listening to this, it's gonna get you way closer to where you wanna be, which is successful. Happy. Let me, um, let me change tax a little bit. I'm very curious how you think about this because you're a very successful investor. You've been a very successful coach for people listening to this. Mike is one of the people who, every time I meet his coaching students, they're all like very happy, well adjusted, successful people, which is probably good sign. So let me ask you this sort of a left, left turn, but we'll take it there cuz I'm curious what you're gonna say. Okay. How do you think about retiring? But do you have any desire to retire? Are you like, I got a date I'm retiring on this day or you're gonna work forever. Like what is your, what does that look like to you? Or how do you think about,

(45:06): That's why I love talking to you, Dan. Honestly, you asked me questions that are fun for me to answer. I love this kind of stuff. And you, if you asked my kids and said, what happens when your dad says, or when you say to your dad, Hey, I've got a question. I wanna know your opinion. I perk up because I love giving my opinion. and I have a lot of opinions about this particular question, retirement. All right. If you would've asked me 10 years ago, I would've said retirement is, um, leaving this company and never having to go to work again. Right? Like I don't wanna do anything that's retirement for me. Listen, the, the automotive company you were working. Yeah. Yeah. The automotive company with the, with the, with the waste height walls. And you could hear one Talking a German, a lot of Germans everywhere.

(45:42): A lot of Germans, listen, Germans are lovely. Not really. Yeah, they're lovely. But you know, they, their companies are a bit, uh, stilted anyways. Um, how do I think about it now? It's funny. I just seriously, uh, one of my kids has asked me this recently. I like what I'm doing so much and I'm having so much fun that I don't know if I could retire because I always have thoughts of things that I want to try that are fun and exciting for me. So I doubt that I'll ever fully retire, but it's completely out of choice. I think I would be sadder if I had to stop running a business or being involved in business than if you let me keep doing it. So it's by choice, but I'll tell you something that I am I do do well. Is I compartmentalize really, really well.

(46:27): Something can be going catastrophically bad in my business. But if my wife and I go out to dinner or we're like, Hey, we're gonna watch this movie. I can fully enjoy the movie or the dinner. Even though things are falling apart in a different area for me, I I'm just really good at compartmentalizing. And so for me, retirement, I'm pretty close to it. My kids jokingly tell me I'm retired already and I work a lot, but I can go upstairs and I'm in my, you know, my office right now. I can go upstairs and just hang out for an hour. And it feels like I'm not really working, but I really am. For me, retirement is not doing anything that when I think about it, I go, Ugh. And I'm still, I still do those things sometimes, but I don't wake up to an alarm ever.

(47:09): So to me, that's like, semi-retired right there. I never wake up to an alarm. I start every day with, uh, spending time with my wife, having coffee. We have coffee for like literally an hour or two every single day and talk with music on and no distractions. I end the night or end the day with my wife. We usually have a TV show or something we're watching for an hour or whatever at the end of the night. And I take breaks whenever I want during the day. And I work on 80% of the stuff I work on, I want to be doing. So I'm pretty close to what I consider retirement. Now I'm putting in enough hours a week where I, I couldn't really say I'm retired, but I, I would say working no more on anything. All things combined, you know, five to 10 hours a week.

(47:51): That that's probably what we retirement will look like for me, whittling down my obligations to five to 10 hours total a week. Yeah. Is probably where I'll be when I'm retirement. And now I'm, I'm probably at like 30 hours a week. I don't know. And probably 20 of those hours, I'm doing exactly what I wanna be doing. Yeah. And, and I'm happy to be doing it. It's not a, it's not painful for me. And there's about 10 hours of, of work that I would rather not be doing and I need to delegate or eliminate or something. Right. But I don't get up to an alarm. I start the day, every day with coffee, with my wife and I go on vacation whenever I want. And I don't worry about money. So I'm pretty, I'm pretty close. I mean, I'm, if you told me 15 years ago, this would be your life.

(48:31): I would freak out. I'd be doing back flips, like going. That is the greatest thing I've ever heard. Right. And so now you get to a point where you're like, this is great. I am happy. I'm lucky as can be, but I see how I want to just tweak it to make it a hundred percent perfect for me. But you know, this Moneyball thing we were talking about or this like one number, the way I look at it is you're at a peak and you can see behind you and you can see forward. So it's not the end all be all, but it gives you clarity. You can see, you can see the whole game to understand what needs to be addressed. And for me, I'm so close to, to where I wanna be, that I can now see what I'm, where I'm lacking or where my life is great, but not exactly where I want it to be ultimately. And so I, I've got a lot of clarity right now in my life about what I want. What's important. What's working, what's not working what I like and what I don't like. And it's just a matter of just tweaking those little things and, and it'll be good,

(49:25): Dude. I, I love that so much. And it's, it's interesting, right? Like, I feel like you are like mentally, you're sort of where I want to be. Right. You're maybe you're like, you're ways ahead of me. Right. But I can see it. I, I think, you know, when you, when you talk, you can very much get the clarity of vision piece, even though that's not what you're talking about. You can get that from kind of the way that you talk about your business or your personal life or whatever. And I just think it's so awesome. So for, I'm gonna wrap this up because we can I'm, I'm probably gonna have you on a third time, I Don don't know it's gonna happen. It'll probably happen. But, uh, this has been so awesome for people that want to know more about you that wanna learn about your coaching programs, the investing that you're doing, what's the best way for them to get in touch

(50:10): With the best way is to go to Mike simmons.com that you can find my coaching stuff there. You can find how to contact me there. I also have a podcast. You guys are, you know, listening to a podcast right now. So if you're a podcast listener, it's just easier to go search iTunes or something, um, or apple podcast, you can look for just start real estate. We mentioned that, right? So I know that's an easy, you know, thing for people. If they're already listening to a podcast, Spotify, wherever you're listening to it, look for just our real estate. And, uh, you can find me there, but if you want to go to Mike simmons.com, you can find the podcast and everything there. So that's a kind of a one stop shop.

(50:41): Yeah. I will link to the podcast and to Mike simmons.com from Edwards nerd.com, but whatever you could just Google it. I always say like, we'll put it in the show notes. I'm like, I don't know if people go to find the show. I'm not just Google the, I know you could just Google the name. It's Mike Simmons and not the hardest name to spell, but I dunno knows. Look, maybe you got the Edwards or.com bookmark. I, I don't wanna, I don't wanna, uh, degrade you too much, but, uh, Mike, I just wanna say, thank you so much for doing this. I am like probably at some point, just gonna sign up for your coaching, even though I'm not a real estate investor, cuz I already got a ton out of these talks and I just, I really wanna see how your brain works. Thank you so much for coming out, man. This is, this is awesome as always.

(51:24): I appreciate it. And uh, I super value your friendship. I really do. Uh, we've gone for stretches without really communicating too much, just doing our own thing. But every time we get back together and have a conversation, it's like, I, I missed to talking to this dude and uh, I just think you're a ton of fun for me to talk to you. So, and I like, I just like talking to people that I enjoy and you are definitely one of 'em. So thanks for having me twice. I appreciate It. Yeah, man. It was absolutely my pleasure. And uh, we'll do it. We'll do it sooner this time. It won't be like five years in between. Yeah, yeah, yeah, yeah. okay. Perfect. I I'm on whenever you want me I'm here.

(51:59): All right. Thanks Ben. All right, that's gonna do it for this week's episode. Look, if you can do us a favor and leave us a review or subscribe or whatever you gotta do, wherever you listen to podcasts, it really means a big di means a lot to me because it helps other people find the show. As always, you can find more episodes of the show over@edwardsnerds.com. And look, I would love for you to talk to our team, right? It's free. We do strategy sessions with folks. We tell you what we would do in your market. We can talk about what we are seeing online right now based on millions of dollars of ad spend. I mean, if you wanna learn what's happening online for real estate investors, the best way to do that is to jump on the phone with the team@edwardsnerds.com. So go there, check it out, check out the other episodes, subscribe like us, whatever you gotta do. Smash the like button, whatever the kids say. But I just wanna say right at the end here, I really do appreciate you listening. It means a lot to, I will be seeing you next week. Have a good one. Cheers.

(53:06): This is the podcast factory.

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