In today's episode, we are joined once again by Robert Chevez. He's the CEO of The Caza Group, one of the top real estate companies in the country, and the founder of the GRID Investor, a global community of over 25,000+ real estate investors. Along with him is Cory King, a realtor and the community lead for the GRID Investor in Knoxville.
We discuss Rob's businesses, strategies for growth, and how they leverage the real estate market by controlling inventory.
In today's episode, we are joined once again by Robert Chevez. He's the CEO of The Caza Group, one of the top real estate companies in the country, and the founder of the GRID Investor, a global community of over 25,000+ real estate investors. Along with him is Cory King, a realtor and the community lead for the GRID Investor in Knoxville.
We discuss Rob's businesses, strategies for growth, and how they leverage the real estate market by controlling inventory.
Anybody that plays the agent game at a high level knows that the money is not made on the buy side. It's made up by controlling inventory. So all of our teams control inventory. That's our number one goal. So it's like your brain should be obsessed every day on saying what inventory can I control? What listing could I get? What investor has a development project they need to unload? Which hard money lenders taking back projects that I can then put on the market Right Like that's been a big, big thing for us During the financial crisis. The people that made all the money were the REO agents and the short sale agents. I was just a little late to the REO game because I was a new agent so I didn't have those relationships to land on. But I played the short sale game at a really high level and I controlled a shitload of inventory playing that game and I realized every market. There's a way to make money. You just got to figure out where the energy is and then focus on that.
Speaker 2:Welcome to the Everyday Millionaire Show with Ryan Greenberg and Nick Calvis. All right, guys, welcome back to another episode of the Everyday Millionaire Show. We're here with Rob Chavez and Corey King. Rob is from our sort of our market up in Virginia, Corey from Knoxville Tennessee, Knoxville, Tennessee. How are you doing, guys? Doing awesome man.
Speaker 3:Awesome.
Speaker 4:Thanks for joining us.
Speaker 2:Yeah, thanks for coming. Rob's a repeat guest from Last BPCon. It's funny we only see each other when we're thousands of miles away from our home market. So Rob and Corey are part of. Well, Rob started the grid network. Can you guys talk a little bit about that? What is the grid network and what do you guys do for investors' realtors, Corey, what's grid Sure?
Speaker 3:So grid is a I would like to describe it as like a wealth building platform, right Built for investors, that operates on a national scale, in terms of like a network where there's nearly like 50,000 people, and we bring it to a hyper-local level at individual communities across the United States right?
Speaker 1:Yeah, each one is run by a passionate leader that loves real estate investing. They help gather real estate investors, and essentially the reason why they would do it is it's a big funnel for them, right? That funnel helps them generate business in their respective businesses. I've been kind of geeking out on Alex Hermozzi's $100 million leads book, and one of the things I realized was he said we don't need more leads, what we need are engaged leads, and I realized that everybody that comes to a grid meeting is an engaged lead, right? They get in the car, they drive to the location, they sit down, they participate, they listen, they engage. These are all people that end up becoming clients of ours, right? So it's been one of the best lead gen tools for us for a long time.
Speaker 4:So is the grid network geared around having an agent, a licensed realtor, run it and then bringing in outsiders who aren't agents but who are just investors, to educate them, essentially.
Speaker 1:It's interesting when we first started, it was anybody that was passionate about real estate investing could lead a grid community. So we had private lender like hard money lenders. We still do have a hard money lender run a community. It runs construction hardcore investor, agent investor.
Speaker 1:And then what happened was I started wanting to pour more into my agent investor community and really trying to help them understand how they could use this as a massive wealth building tool, and so I started gearing a lot of our conversation to help agents become that agent investor and the voice in their local market. But we've since pivoted and said, hey, anybody that loves real estate investing I think the power couple, the power team, is typically an agent investor. So an agent that gets the investment game like Coraine and myself, and a hardcore investor right that kind of like Mark Beckett, my business partner he's not an agent. So I give everybody the perspective of my world as an agent investor and he gives everybody perspective from his world, which is really like investment and construction, and that those different perspectives adds a lot of flavor to the room and makes it special right.
Speaker 2:How do you pick markets on where you're going to start your next grid group and how close do you put them together? Like is there a grid DC and a grid Baltimore? Or like how do you guys pick that?
Speaker 1:So we used to think that there would be really geographically focused right, like we didn't want like grid groups like on top of each other. We realized, after like doing homework around this, you realize that there's like a Starbucks on every corner right and or a CrossFit. Let's look at CrossFit. You might have like multiple CrossFits in one location and I used to like look down on that. I was like man, like why would they do that?
Speaker 1:Well, what we realized is that this is kind of like the best survive in this and one CrossFit personality might attract one type of group of people and another CrossFit leader might attract a different group of people. So we started kind of cutting out the geographic boundaries and said anybody that wants to own one or run one not own one but like run one in a local area can probably best if they're about 30 minutes away from each other, because people, like you know, don't want to drive more than 30 minutes to go to a community. But we, you know, like we run one in Rustin and there's one in Falls Church and Falls Church is only 15 minutes down the road and we pull a very different crowd than they do in Falls Church because they're very focused on condo development and like different types of projects, and we work a lot in kind of like that house hacking, airbnb, you know, midterm rental market. So you just find that people gravitate towards the different leaders.
Speaker 4:And that's a great way to think about it too, because, like originally, I'm sure, your thought was you can't have them close. But then you start to realize that two different personalities, like you said, are going to attract two different types of people.
Speaker 1:Yeah yeah, different energy right. Different leaders, different personalities. Some are better than others. Yeah, it was interesting.
Speaker 2:So what does it take to start one up and be a leader? Do you vet those people? How does that process look?
Speaker 1:Yeah, they apply online like they'll find us through word of mouth or kind of like, here you know bigger, bigger pockets, convention, and then they'll apply online and then we're going to read their bio and we want to know that they're actually in the game, that they love real estate investing. We've learned it can't be somebody that has investments and wants to build kind of like a division of their business. They need the love it, kind of like what you guys do. You love it, you talk about it and you're like it's part of your DNA. We look for people that it's part of their DNA and if it's part of their DNA, then we're going to give them the framework for how to run an effective meeting at what we call a seventh level meeting. Right In our world, in the world of agenting, right, you can have an agent that does an open house and you know they might just put it on the MLS and they show up on the day of the open house and they don't properly market for that and that's called a level one or level two open house and you could run a grid meeting like that and it will just die.
Speaker 1:And, by the way, most meetups, most investment groups, are run like that, like typically, the leader is like doesn't know what they're going to talk about that night, right?
Speaker 3:They're like oh shit.
Speaker 1:We got a meeting, Like there's no structure to it. But when you do a seventh level, you've got food, you've got drink, you've got music, you've got sponsors, you've got video and like these guys in Knoxville have done an unbelievable job they're like raised to the bar. I told them listen, you got to like do a seventh level event. Right, think of this as like a seventh level event. What would that look like? Next thing, I know they're streaming live on Facebook like professional videography and like bad ass. It looked bad ass and we're like shit. We got to up our game and resting because we suck compared to what they just did. Right.
Speaker 4:Corey, are you? Are you a licensed agent? Yep, okay, so I see how it can be beneficial to licensed agents. How can it be beneficial to, let's say, it's just someone who was just investing and not actively selling?
Speaker 1:I can answer that and you can answer it right. So, from an investment standpoint, I just bought a house last month, sub two from the group, right. I made $150,000 on that house and every month I'll do one or two projects that come from members of the group and think of you know, if I have a hundred people in that room and I'm telling them what I'm looking for, both either as an agent or an investor, you have a hundred bird dogs. You have a hundred people that are like, they're thankful that you're pouring into them and they want to pour back into you, right, and so when you do it properly, it'll bring you whatever you're looking for. The core four that typically benefit the most property management, construction investors and, like agent investors and, I would say, title right, oh shit, god damn, I got to join this thing.
Speaker 1:Yeah, yeah, I covered like three of those three or four other things. That's right. Private lending, private money, is probably the biggest.
Speaker 2:Hard money is the biggest right, I feel like it's funny because in like the life cycle of real estate, investor money is always the first obstacle or problem. And then you do a couple and that's the last problem, like that's there's no problem with finding private money, raising private money. And it's funny how, like, you do a couple of deals and you're like now I have no deals and all these lenders that would lend to me, and people don't get that. They're like you know.
Speaker 1:you know, what's really interesting is everybody's always talking tactics, right? How do you wholesale and how do you estimate the renovation, and how do you do the Renault, and how do you do sub twos and all that stuff, when in reality this is a sales and marketing game and nobody goes hardcore on teaching you, like all the sales and marketing, of how to actually execute this at a high level, right? So how do you get that telephone to ring? And once it rings, how do you negotiate with a seller and what do you say and what don't you say? Right, like that is the art of real estate investing is how do you actually put those deals together? You need to understand the tools in the toolbox. That's why we need to learn them, but at the end of the day, this is a sales and marketing game.
Speaker 4:So if somebody's opening up a grid in a market center, for example, what resources or tools do you give them to properly set up meetings in that market center?
Speaker 3:Yeah, for sure. So Grid offers a great like platform in terms of there's already some content pieces like built out, so I don't have to like you know free, think you know what am I going to be talking about. There's already a good content strategy put on there that I can bring in, add my own flavor to it. On there it is. They do a good job of providing the some of the marketing materials, but then it's up to us ultimately right to go take that and execute on it, and so they give us a good background and a good framework to like work off of, and then it's up to each individual community leaders to really just amplify that message, to just attract people to their local community.
Speaker 1:Here's what I realized when I was a brand new, baby investor and I'd go to different investment groups, I found that they would always give me enough information that be dangerous. And then everybody was selling me books and tapes in the back of the room and I remember thinking I just want to go somewhere where people are just like more open and more collaborative, right. And once I understood the game and I understood the gaps of my knowledge, of what I needed to learn, I said okay, if I was a baby, brand new investor or any kind of investor, what would I need to know? First? I was like, well, I need to understand the game of wholesaling, like that, like we need to kind of understand what that game looks like and why that's actually an important piece, right.
Speaker 1:And then the next month I might need to understand well, because I understand what wholesaling is, I need to understand now how do you actually estimate those deals? And like what's the price that the wholesaler would buy it for and what's the price that the rehabber would pay for it? And like I need to conceptually kind of understand that piece. And then next month might be okay, once I understand that, like how do I make the telephone ring so that if a deal does come in I can quickly analyze it, just like online. And so I created a curriculum that started with the wholesaling in the beginning of the year and ended with being the bank at the end of the year and all of the knowledge throughout the given months. The one knowledge based stacks on another, stacks on another, so that you feel the full life cycle and learn the full cycle of a real estate investor's life, so kind of mid year towards the end of the year we're talking about subtos and lease options, right, so we teach like the creative stuff typically towards the end of the year.
Speaker 1:This year. We did it in the beginning because it's such a hot topic with subtos and everybody was like how do I buy like something subject to and time travel? Because I'm like buying subtos like time travel. Right, if you do it right, you're getting a house and a mortgage that I bought one at the end of last year at 2% right. Took one over sub two 2% that had been 15 years like into the amortization schedule. You're like how is it that they were at 2% for like it got modified, the loan got modified at some point and so every time I make a mortgage payment the majority goes to principal.
Speaker 4:That's really good.
Speaker 1:That's like time travel, right? I bought five that year that way this year.
Speaker 4:I never even looked at it that way either, but that's a really good point, because the farther you are along on the amortization schedule, the more benefit it is to you.
Speaker 1:Dude, it's like you bought a house five years ago. You know how we regret we didn't buy enough, like at least I do. I'm like I can right, and so we have strategies and we that's the stuff that we teach at the local level and we help people build their businesses.
Speaker 2:And does it cost something to join, for the people like that are joining Completely free, everything's free, yeah.
Speaker 1:It goes back to like how do you create a lead magnet that's so good that people would pay for it? Like people would pay to come to these meetings, right. But we don't. We make it free because we realize the relationship is where the value is. People get to know you, like you and trust you, and we want to get more people to know us, like us and trust us. No different than what you guys do on a podcast, right.
Speaker 2:Right.
Speaker 1:Like this is a hyper local neighborhood podcast where everybody think of it. And then that's the other thing these guys have done such a great job of then recording the content and then chopping that up into a thousand reels and then pushing it back out to the marketplace. So it's this flywheel of content. Right, I always say, listen, there's four like the way to really generate business at any level, super high level. It's like create content that starts a conversation, that leads to connection, that ultimately leads to the conversion. Right, it's like we call it the four C's model. It's like great, let's do more of that and that's what great does for the local leader.
Speaker 2:So can we talk a little bit about? Because I and if we can't talk about it yet, that's fine, but we were talking in the convention today about how you plan on monetizing it, because you as the owner. Still, you can't just do all this stuff for free all the time and grow it to be this massive thing without paying or playing. You know how are you planning on monetizing it If everything's free?
Speaker 1:So at the local level for the leaders it's really easy to monetize Like I'll do well, over a million dollars in revenue every year from my group through doing deals right. So Corey monetizes at the local level by doing deals Super easy and, by the way, they actually get sponsors at their local level. That generates a profit for them. But the real money is in doing deals right From the global HQ perspective. Think of it as no different than like a podcast right. Once you have a certain amount of listeners, once you have a certain amount of eyeballs, you're running YouTube channel. Once you have a certain amount of audience, then you monetize that through affiliate partnerships and marketing and co-branding partnerships right. So that's the stage that grid HQ is at, with 35,000 members across 45 different locations. My goal was to get us to 100 communities right. Get us to 60,000 members that are getting our content every single month between the podcast and all of the, and then you have some buying power right To go in and start creating these affiliate partnerships right. So that's how we will monetize it. You know what's interesting?
Speaker 1:I saw Alex Hermosi interview Dave Ramsey. You saw that right. So Dave makes 300 million a year in revenue. You saw that right 300 million a year in revenue Teaching.
Speaker 2:And he spends $25 a year. That's right, that's right, teaching.
Speaker 1:Well, remember, what was interesting was 45% of all the revenue came from referrals his referral network right. I was like, okay, we need to take a page out of that book. Right, part of the revenue comes from Financial Peace University. So our equivalent to Financial Peace University is a course that we created called the Income Flip. That helps people take their active income and convert it to passive income and there's a journey in that process and we developed a system and a model and a journey for that process. So that is our equivalent product to Financial Peace University. Right, eventually we'll probably do some kind of income flip coaching, right, but that's in the future. Right, I'll have another leader that's in hold another business and so you guys on, are you in Keller Williams?
Speaker 2:Yes, are you a Keller Williams guy too? And so what does that business right now look like for you guys? With the rate environment that we're in and you know things are a little bit tougher, buying power is a little bit less like. What are you guys doing to stand out, to be different, to keep that business running?
Speaker 3:I can jump to that For, like my team specifically right, we focus largely on the landlord and the investor markets and so certainly we take care of our you know, jones-siege's home buyer seller, like just people from our sphere of influence that would normally want to make a move and that's going to be driven just from lifestyle changes, right, death, divorce, job change, job growth that's what's going to be moving in this market. But where we focus on the investor, the landlord, these like one to many relationships, you know, as investors we're not as influenced by interest rates because we're really just looking at, you know, income potential. What's the equity play I've got in this, what's my long-term gains on it? And someone else ultimately is paying that note right, and so by serving that market, we're having a great year right now.
Speaker 1:Yeah and Corey put 15 properties under contract himself last month, right, and we are in the DMV area like we've put down 25% compared to this time last year, but last year was crazy and we're still moving a lot of product because we also focus on the investor market. So I remember thinking because I thought this in my head I was like maybe I should sell one or two things and stabilize my stuff, right, and I was like, if I'm thinking this, I guarantee you other landlords and other investors are also thinking this. So I was like guys, we're just going to call landlords and we're going to be like hey, are you interested in buying anymore? Are you thinking of stabilizing your asset base? Like so many other investors, people are like, yeah, I'm thinking about selling one or two of my things just to kind of shore up stuff, just put some dry powder, you know, to the side, and so we've just turned a lot of property that way.
Speaker 1:But the other thing that we do is we target pre-foreclosures, right. So as the market starts shifting, we started getting a lot of calls. Actually, like we're like on a lot of the different platforms. So we started getting a lot of calls off of some of those different platforms where people are like I'm not behind, but I'm going to be behind and I've got equity in my house, so I just got to like liquidate this thing and live the fight another day. And when I start picking up on things like that, we start creating messaging around those things and then we target.
Speaker 4:So are you seeing investors that are, buyers slowing down right now, or is it kind of consistent in comparison to last year, for example?
Speaker 1:In my market. Buyers are definitely more hesitant. Investor buyers are definitely more hesitant, right? It's like how are we going to make these numbers work at 9%, right?
Speaker 2:Especially when rents have gone down in a lot of markets too. Rents haven't gone down in our market, so I just saw the luxury apartments in Canton, which is like a really nice part of Baltimore. They went. The two bedrooms were like I think it was 2800 for a two bedroom luxury apartment and they're down to like 24, 23. And that's a significant drop in rent.
Speaker 1:Here's what I tell you. Anybody that plays the agent game at a high level knows that the money is not made on the buy side. It's made by controlling inventory. So all of our teams control inventory. That's our number one goal. So it's like your brain should be obsessed every day on saying what inventory can I control? What listing can I get? What investor has a development project that I need to unload? Which hard money lender has taken back projects that I can then put on the market? That's been a big thing for us, and so it's like during the financial crisis, the people that made all the money were the RAO agents and the short sale agents. I was just a little late to the RAO game because I was a new agent, so I didn't have those relationships to land that. But I played the short sale game at a really high level and I controlled a shitload of inventory playing that game and I realized every market. There's a way to make money. Just got to figure out where the energy is and then focus on that.
Speaker 2:Absolutely so, corey, what did you do before real estate? Because you mentioned before that you kind of like leveled up, leveled down at your job. Yeah, you did a ceiling or something.
Speaker 3:So I lived here in Florida, right, and I was a restaurant manager, owner operator through pretty much all of my twenties, so it was kind of really just what I was all in on, and real estate was a side hobby to a degree.
Speaker 3:Right, I bought my first house, house hack, found a cool little niche in going to auctions here in Florida that would sell cars, boats, tools, collectibles, stuff like that Like, and real estate would pop in there. And I found a cool little side hustle of picking up vacant lots in subdivisions that tanked in the crash. This is like 2010 through 2013. And I could pick up those lots for like 3000 bucks. It was like right between two people's houses and then I could turn around and go sell them to either person on either side, because that was my ideal buyer and, being like a little Zillow printout, go like, knock on their door, send them a letter or something and be like you know Zillow says this is worth 10. I thought I was going to build here Economy sucks whatever Sell it to you for eight and could close it almost instantly like right at the front door, right.
Speaker 2:So, that was a cool little like take that money, go back to the next auction, go do that again. We've talked to a lot of people and I've never heard that before. That's really cool.
Speaker 3:So, like that was something fun, I just kind of stumbled upon and did that for a couple of years just making some cash. And so, yeah, I had the restaurant business and really just hit kind of a ceiling of achievement as we just grew and expanded, got to six restaurants and we're big on from promoting within and so that that next level would have been that district or like area manager position. But there was two guys ahead of me for that spot and I just kind of hit a spot where I didn't want to keep doing this for another like seven years to maybe get that job and the grind of restaurants.
Speaker 1:Yeah, it was just I was.
Speaker 3:I was like approaching 30. At that point met my my now wife while she was in grad school down here and just kind of saw the writing on the wall. Like you know, I know we're going to end up having a family Like this. Just lifestyle isn't conducive for that. So I started looking for just other things to get into. And she's from North Carolina originally and I lived in Tennessee for high school, so I had some familiarity with it. She wanted to move closer and so that's kind of what just brought us back up that way. I was just like, well, let's just get out of here. I sold a house here in Florida and that gave me basically the cash just start anew and go a different direction, because I liked real estate and had worked with a few other agents before and like to say it was like one of those things were like, well, if they could do it, like surely I can pull this off too. So yeah, which, once we moved to Knoxville, was just all in on on that for me.
Speaker 4:Can you tell us a little bit about the first deal that you bought as an investment property?
Speaker 3:Yeah, for sure. Well, outside of our I guess my first house here in Florida that I house hacked Can you talk about.
Speaker 4:that also Cause a lot of people.
Speaker 3:Yeah, so that was that that home, particular here in Florida, was 2009 that I bought, that it was on a short sale and heard about it. It was in the same neighborhood Actually, interesting, my dad lived in at the time and so heard about it and it was a good deal. Just bought it then and I was 22,. You know, it was a little bit of like FOMO I guess I was going through at the time, right, cause a lot of my peers were graduating college or like having that direction and I didn't go down that path, and so it was a little bit of a I don't know like an ego trip for me, to a degree of like well, they're coming out of school and like what do I have to show for myself at this same age? And like I'll just buy a house. Right, that was at least like something. If I'm being a hundred grand in debt one way or the other, like let's just go that way.
Speaker 3:So bought a house, had two of my buddies moved in with me shortly after that, worked at my restaurant and so that was nice, cause that just offset the note that I had, and I did that for like a couple of years. Just like save the cash and just use that to, and I got into the the lot flipping kind of deal and, yeah, eventually I ended up selling that place and that's kind of what ended up letting us move up to Tennessee. So in Tennessee we bought a home there and turned that into after I guess we lived there probably two years and then turned that into our first rental in Tennessee and then just started, you know, picking things up here there, right.
Speaker 1:Yeah, I really just did.
Speaker 3:Yeah, yeah for sure, and so pick up a lot of stuff honestly on the MLS. I mean, if anybody says that there's not deals on the MLS, they are crazy, because almost everything I've bought has been right off the MLS.
Speaker 2:I'm sure that might be market specific to maybe yeah, but I also think a lot of people too. Just they. When people say, oh, there's no deals out there, I'm like, well, how many offers that's a big have you made?
Speaker 2:because you know deals that are sitting on the MLS for three months like Maybe that agent just sucks and they didn't tell their client that they should drop the price or they should change the marketing strategy or whatever, and most agents unfortunately suck. So you know, you don't deny that you get the. You know you get that that person that doesn't have your best interests in mind or maybe they're just not good at their job and the house is just sitting and sitting and sitting and you just, you just make offers. The house I had that I bought down in Tampa was originally listed for over it was like almost eight hundred thousand dollars or originally was over eight hundred thousand dollars when the rates were really low. Then it sat.
Speaker 2:I made an offer for I think like six, fifty or six, six thirty In December. Didn't get it. They basically told me like kick rocks. They, the agent, called my agent down here in March and was like hey, like this house is still sitting, it fell on a contract twice. There was this, that, the other thing, whatever. We ended up buying it for 645, seller financed. I only put 75 K down. Seller finance the thing 15 year note, 30 year M. And that was just because we made an offer and just waited and didn't. You know, and I think the people that are really trying to buy Need to start making offers or find an agent that's willing to write a bunch of offers, and that's, that's what you got to do.
Speaker 3:Yeah, they are on the MLS. Yeah, they are. You just got to swing. Yeah, you just got to take the swing. There's plenty of people out there that are, you know, sitting waiting hoping that they're gonna get this right offer, they're gonna move this or get this person moving out from California. That's gonna pay, you know, over asking cash suddenly and don't realize that their homes been sitting. We're like, just take the swing. Worst they say is no, and at least they know you've made an offer, that you're there, and there's plenty people that will say yes, if you're making enough offers, you will get some wins out of that, for sure.
Speaker 4:Yeah, and I want to add to that like, another big thing is like, don't be afraid to Make a low offer. You know I've done that multiple times on the MLS, even when the markets were hot, and it's like, if you're able to get to that fast and get in touch with the agent, I still hold my license for that reason to be able to reach out to the agent quickly, get a contract over as quickly as possible and then, like Ryan said, like you know, search for houses that have been on the market for three months plus, and those are opportunities there. You know, if the seller needs to sell and they're sitting, maybe they'll accept that lower offer that you're thinking.
Speaker 2:So I have an interesting thing that we started talking about because Wesley and Dan over there they have a wholesaling business and we were talking the other day about sales versus marketing and the idea of Are both equally important. Does one is like the chicken or the egg scenario, like does one come first? Can you do one without the other? What are your guys's thoughts on that?
Speaker 1:It's funny I heard Gary V say sales is just bad marketing.
Speaker 3:Do you guys hear that like.
Speaker 1:He's like Sales is just like you're not good at more, like you get to the point where it's like you have to, then verbally, you know influence. And he's like good marketing just takes care of that's yeah, that's what I said.
Speaker 4:We were having this discussion yesterday and that's what I said.
Speaker 1:I said, if I had to choose between marketing and sales, marketing will outlive sales, because if you have good marketing, it'll just, you know, keep, keep going and when you're really when you're really good at telling the story and putting people through a funnel Right where they get to know you, like you and trust you in that funnel, it Closes this sale. But so many of us, like I, know that this is something that I'm still working on Getting really good at. You know we rely on kind of the, the, the influence of sales side right, because that's how we learned it's like sell, sell, sell, sell, sell, right? This conversation reminds you of, like you guys probably saw the interview between Grant Cardone and and and what's his name? The Wolf of Wall Street.
Speaker 2:Oh yeah, right yeah.
Speaker 1:And it was like Grant was all about marketing and Jordan was all about selling right, and the truth is it's combo those two right, it's like great marketing puts them through the funnel and then making sure that you know what to say, saying the right thing helps with the conversion of all of that right. But if I was to choose Right, if I was to choose, let's say I'm like Become a great marketer and it makes everything else easier. Right, become a great storyteller and makes everything easier. But you guys know this, like the power of Having these discussions if people listen to you long enough and then they want to do business with you. Like there is no selling. That's there. They're already pre sold because they your values have lined up with their values and it removes all the friction. That's there. It's like trust transference happens. By the way, his business partner, justin, our business partner that he runs grid with, and and our in our agent location, kaz and Knoxville, says great is a, a trust transfer vehicle, and I was like that's totally true right like.
Speaker 1:A Podcast is a trust transference vehicle. A book is that right. So I default to marketing. And yet I grew up in an environment where it was all about, like a BC baby right, always be closing. That was the, the glingary Glen Ross. Like you know, golden leads I'm a little bit older, yeah.
Speaker 2:Yeah, yeah, it's okay. So do you core? You work on Rob's team? Yeah, run his expansion team in Knoxville, nice, okay, that's cool. So how many agents do you have now, rob?
Speaker 1:30, some on, okay, and so what we? So really, I want to clarify he doesn't work on my team. He is my business partner in the Knoxville location. He owns 50% of that location with us, right, so we build business partners. So think of it as like a holding comp, like we, you know, oh, and a holding company and one of the assets that that holding company owns is grid Knoxville and we own 50% of that right. So we're business partners and we, we have five Teams like that that are under that structure and then we have four additional businesses that are also under that holding company Right construction, you know, my business partner, mark private lending, whole sailing business. Right Property management right.
Speaker 4:Do you have an agent count goal I?
Speaker 1:Want every one of our expansion teams to have no less than five agents and probably no more than 10. It's kind of like a sweet spot for profitability. Right Five is easy to manage. A team of five. 10 starts getting more complex. After 10 people start getting lost, you start losing a little bit of the culture. There's the whole military concept of span and control rights. Like I'm a leader and I pour into the culture, I am a leader and I pour into my five and those five each have their five and those five have that. That's how spanna control operates right. So what we found when we started analyzing profitability a bit of these like teams In complexity of running them. It's like team between five and ten very profitable and not difficult to run.
Speaker 2:Okay, yeah, it was interesting. We were talking before. I don't know were you involved in the conversation. We're talking about the numbers with property management companies and the sweet spot.
Speaker 2:I guess I was talking to what was his name. Again, you're the construction guy that we were to mark Mark. So, as I'm, you know, analyzing the, this property management company, the owners, like really really smart guy, accountant type math, you know really good with math and numbers, and he basically said, you know, in his Property management company had 250 units, it was relatively the most profitable it's been. Now it has over 750 units and the percentage you know. Obviously it's making more money globally but the percentage is a lot smaller in profit. And he's saying that now he's based at a point where he's got to get to like 1100 units to be that profitable again and it's. It's an interesting thing that I kept kind of never. I was not trained in business or anything like that. So hearing somebody talk about that, you know like how, like how does that make sense? But it, you know it does like he had 250 units and he's saying he's making more than when he has 750 units. Yeah, it's kind of the same thing, the economies of scale.
Speaker 1:I'll actually I'll in our speak. I'll Meeting on the agent side. I'll kind of clean that up a little bit or like, let me just kind of put a period on that, because you're 100% right. We analyze the property management business. My, my business partner said listen, the best profit we're gonna make, just looking at the spreadsheet, is gonna be between like 200 and 250 units. And then after that, then we have to decide do we actually want to make it bigger, because your level of complexity goes up, your profit margin is gonna come down and you're gonna have to push through a different level. It's gonna be painful, right? So Do we want to build little team, little property management teams that all do like 200, 250 and keeps the like, keep the level of complexity Down right, or do you want to kind of like scale that up in one location, right?
Speaker 1:The interesting thing that I learned as we started building multiple teams was that while the individual team is Like really profitable between five and ten agents right for the global company you need to have a lot of those to make money, right?
Speaker 1:And that's where I was like shit, like for us to really Make the money that I want to make, I've got a just like your, your friend, I've got to push through and get the 20 offices. And then I'm like, okay, but that's a whole different level of complexity and then and then. But what happens is when you start getting into those numbers you start becoming really valuable to you. Financial institutions, right, they now will value your business at a higher multiple because they realize that you've you kind of crack the ceiling in the small business and you're now you've got some economies of scale that are there. So it would be who have your friend to push through to the next level if he's like looking for one of, like a bigger buyer, or you know well, that's what we're talking about me potentially, you know, we're merging, potentially merging our companies together, and that will kind of bring us closer To that number, because together, you might be more valuable right.
Speaker 2:Well, basically like when he was. I don't know that, I don't want to say the exact numbers, but when you take the combined business now and you sell it, and then you or we add another 100 units or 200 units, which is like 10% growth, the value goes up so incredibly, like yeah.
Speaker 2:Like the value can go up 10% in in doors or you know assets under management but the profitability could double or or more, which is like Kind of I'm you know it's hard to kind of fathom that but it's I guess you know multiples of profit.
Speaker 1:And, but not only that, like the, the value of that overall business might go from like a three-tile, like three X multiple, and it might now sell out of six X multiple. Right, because the larger that there's institutions out there that want to buy businesses like these, but they just don't want to buy a bunch of small ones, right, what they want is to be able to go in and take a bite of a Larger one, because they need to deploy capital and get a yield on that capital, right, and so there is an argument to try to go for and build the bigger thing. But you have to ask yourself do you want to? You really want to do that? Right, I had to. I had to look at myself and be like I was, like I'm fucking pock mid it like I've got it Build the bigger thing right.
Speaker 1:So I mean I guess I didn't have to right, I'm like we're, we're like.
Speaker 1:One of the things was I'm like we're already because of our investments, like we're good, right, but from a like wanting to build something that I know is is buildable, like you guys were in the, you guys are in the keynote this morning with Dave oh, I mean David Osborne, like he was speaking to me directly because he literally is like he's like you get to a point where you're like, okay, how big can I build this? And it's like well as big of a vision that you could actually create in your mind. And I have a pretty big vision of what's possible, especially leveraging our great platform. And then you have to decide okay, am I, am I willing to pay the price or am I willing to do the work to do that, when I already know I Can go to Costa Rica and hang out right. And I had to like Kind of come to terms with that and said, fuck it, we're gonna build it. You know we're gonna build it and make it, make it big, because I'm too young to yeah, you know that's going like so.
Speaker 2:So how many units do you own right now, rob?
Speaker 1:so it's 22 properties and then I'd probably say like 36 total units, because we've got some multis in there right.
Speaker 2:Okay, for some reason I had. I thought you had like a bunch more, but you were buying in like Western Maryland and Cumberland and stuff, so had you mixed up.
Speaker 1:Well, I think what happened was we used to own more and we realized that more isn't better Right, and then probably we had 300 properties under management in that Western Maryland area.
Speaker 2:That's probably what you're.
Speaker 1:And that was like hell, man. Yeah, two hours away from where we lived it's. My wife ran that side of the business and we owned a bunch of duplexes and triplexes and we would sell those properties to investors. Chernkey, that's how we kind of cut our teeth. And then I realized, kind of like the conversation right before we jumped on, here we're. You're like Investors sometimes don't know what their actual true cash flow is, especially in some of those older building ones. On paper they look one way, but like over, you know, over a year or two, you start realizing shit. You know this. Five, six hundred dollars, I think I'm making a month, I'm not, because the building's older. It need a lot of work. Bob, blah, blah, blah. A tenant pull is great and it's simple math too.
Speaker 2:But I think investors have like their blinders on because you think about okay, if I make a net of 500 a month Over 12 months, $6,000 and I have to replace that old HVAC system, then I made zero dollars my zero dollars.
Speaker 4:That's right I feel like a lot of them don't even think about the maintenance. The upkeep Vacancy, vacancies, turn over is a huge expense, just going in there and repainting and putting new carpet in, like they don't factor that in. They look at my mortgage is a thousand, I'm renting it out for 1500, I'm cash flowing 500 and that's not the truth.
Speaker 1:Yeah, simple math, you know. Um, yeah, we saw a lot. If you're in a cash flow market like that that doesn't grow, it's painful because you're like you said you think you're making $6,000 a year, you're making zero and then 10 years later that property's still worth the same because it hasn't benefited from the appreciation of the rest of the United States because it's a dying market. We saw that, so we pulled out of that market. Luckily, we bought when in 2008, we bought in our area, nova when prices were 50% off. So that portfolio is paid off and what we do is we then took an equity line against that paid off portfolio and we turn that money right. We either lend that money or we use that to fund flips that we have, and so that became our base. We're like, okay, we're good, we've got these properties that are paid for, free and clear, and every month they're going to bring in $15,000 a month. But we could leverage all of this equity and just turn it with an equity line right, yeah.
Speaker 1:And that's been good for us.
Speaker 2:Nice and then so you talked about lending. Are you also doing some lending arbitrage, borrowing from others and re-lending it out to investors?
Speaker 1:So we have our line that we took against and we lend that money out and then we arbitrage other people's money right. We'll find investors at 8% to 9% and we'll put that money on the street at 12% and 13% and honestly, we're learning that game. That's our mutual friend helped me get in and understand that business. So that's a little baby business for us that I think has a lot of potential.
Speaker 2:Nice. So a question for both of you guys is in business and real estate especially, consistency is crucial, Doing it over and over the repetition getting up every day. How do you guys keep yourselves accountable for being consistent in your business and doing it every day?
Speaker 1:I'll let you go, Corrine.
Speaker 3:For me it's beginning with the end in mind. It's like always just knowing where I want to go and knowing that it's going to take just showing up. And I've just I guess I've seen it too in times that I have fallen off man, I'm not like perfect with anything, but like in times that I fall off and then get back on and just get like a little bit of momentum going and then you start seeing the rewards. That gets addicting. You just want to start doing it more and more and more and start showing up again and again. It just takes time and like practice because you just know that you see plenty of other people doing it and that's just the message you hear is just like consistently showing up. And once you finally actually go put in that time to do it and you start seeing the fruits of your labor, it just gets to be too addicting to not do it.
Speaker 2:Did you have a hard time going from a place where you were working for like another company your regular job, where you had to get up and go to the restaurant every day to where, a job where you don't really need to get up if you could just lay around? Have you found that to be difficult at all, transitioning from that W2 life into business full?
Speaker 1:time. I doubt that. Yeah, not really. Corey wakes up every day and is like I'm getting shit done today.
Speaker 3:Yeah, I think in that too, because of, like where I was, I was the dude. I wrote my schedule, I wrote everybody's schedule, I wrote ordering. It was my place to operate and I was fortunate to have some business partners there that largely weren't breathing down my neck to make sure I was reporting here at this day. This time they knew that as long as the number shake out, staffs could cool, we don't have a lot of like attrition going on or anything like that. I was free to do my own thing. So I could have those days where I could go in early in the morning, help set some things up a little bit. Leave it at eight, nine o'clock, go run an errand, come back before like lunch service starts, work for a little while, leave again, go hit a bucket of golf balls or something like that. Right, I go to the circle home, shower, shave, go back to the restaurant and work. So I liked always working for myself anyway at that point, even though I had like business partners and had that kind of W2 job.
Speaker 3:Yeah, I still just really immensely enjoyed the work and the process, and so when I then went and transferred to the agent side of it, it wasn't too much of a change to a degree, because, like I knew I had to just wake up to make it all happen. Right, because it's two degree dependent on me at the last job and here this was just me, like I'm dependent on me now to make this happen. And moving to, you know essentially a new market and not knowing anybody, and you have to just grind and go for it and just out, I'd say like out producers, out communicate, right, compared to the rest of my peers, because I'm competing with people that grew up in that market and had a decade's worth of relationships like built and right and all this thing, and like I had to find a way to like how do I have a decade's worth of conversations inside of a year? Because I've got to really close that gap in order to actually survive.
Speaker 1:Yeah, I'm going to you know I'll say it a little bit different way, but it was like freedom was one of my biggest motivators and like what price am I willing to pay for freedom? And I'm like, any price. The one thing I don't want to be as a slave to a wage slave to something I don't want to do and I'm willing to frigging grind to make that happen. And so I got up every day and I make that hat. Like I made it happen. I wrestled in college and like I had that D1, kind of like you're the best in the world. The best in the world, get up, they train when other people are sleeping, they are obsessing about it constantly, they're using visualization to win. And I was like it's no different, like in business, and honestly I think Corey and I are kind of cut from the same cloth.
Speaker 1:The problem with that sometimes is, like Dan Sullivan wrote the book the Gap and the Gain right. Like sometimes, when you have that kind of mentality like it's never good enough, right, you're always like, yeah, but there's another thing and there's another hill to conquer and so we have to, as we grow and build our businesses, and realize that we also have to build our lives right and we can't break the people around us that we love, because, as entrepreneurs like, sometimes we break the people around us because we're like obsessed maniacs. So we've got to learn how to like. We've got to learn how to throttle it back and be present with the fam, like David Osborne talked about that earlier this morning.
Speaker 1:I experienced that in my life right, like most entrepreneurs that I know like have experienced something like that. Because we are that rare breed that's willing the bet on ourselves and because we're willing the bet on ourselves, we're just going to work right and what you learn as a business owner is in the beginning it takes grind, but eventually it takes your brain right and that's the transition. And a lot of people don't make that transition super well. They don't know how to become a leader in the business, and so that's one of the things that we work on all the time is like Corey, how do we take your self-employed job and convert it into a business right when the business works to fund your life, instead of you working in the business right? And most small business owners are the business right, and so now freedom was kind of what helped motivate me.
Speaker 4:Yeah, I think a brave heart. What about you, Ryan? You haven't. You've asked a lot of guests that question, but you haven't answered that one.
Speaker 2:The reason one of the reasons I guess I'm interested in that question is because when I so, I was a teacher for nine years and started my business while teaching and then I started slowly, I took I was doing four days a week of teaching and then I was three days a week of teaching and then stopped, you know, ultimately stopped teaching and had to. I was so used to that schedule I wake up, go to the gym, go to school, you know, coach or do whatever else I was doing. Then I went to having no schedule and like I was used to my business kind of operating, not not all that well. I found out while I was at school every day and when I came, you know, to be full time in the business, I found a lot of the inefficiencies and issues and stuff like that. But I had to figure out my schedule.
Speaker 2:That was the thing that screwed me up, I think, in the beginning is that I didn't have that, that schedule, and it's not like I wasn't doing like lazy things, but I just didn't have the like, the structure, right away. So now I've kind of like fell into a routine, not like even purposely but I wake up, I go to the gym. I answer my emails. First I go to the gym and after the gym I, you know, I head to the office, or I check in my projects and I head to the office, and that has that's helped me a lot with just staying consistent. But in the beginning I was. I just find myself like I want to do something, I want to work but, I don't know what.
Speaker 2:The next thing? That I should be doing, because normally I would just be at school and somebody would call me and say that there's the basement that's flooded, and I would just like walk out in the hallway and call the plumber. And you know, like I was just so used to being there and doing that, and now it's like, well, what do I do now?
Speaker 1:You know, I had a gift handed to me like pretty early, like I was. I like I had a W2 job when I was in college, but I never like like I was self-employed pretty much like right out of college, right, and I'd started this recruiting business. And my friend was a natural recruiter. He was badass, he'd worked at a recruiting company before. He was like I think I'm going to start a recruiting business. I'm like if you start that, I'll come join you, right. But we didn't know what. We were 23, we didn't know what we were doing, right.
Speaker 1:And that year I put together enough you know deals to kind of like pay my bills and like we didn't make a whole lot of money. And we went to this training called Morgan methodology, training, methodology of training, and that Like we talked about sales and marketing. That was a this is how the sales game is played. And what that did was it gave me a system and what I realized was I played a game of math and the game was in that business 20 interviews a month, seven new job orders, 14 sendouts, like he's like if you stick to this math every month and all your goal, your goal is just to hit this math, kind of like you might say, hey, how many offers you're gonna make this month, right, if you just stick to the math, it's like I promise you your production will go through the roof. So I was like I'm young and dumb and I'm like I'm just gonna stick to the math, right. So every day I would just kind of be like, okay, how many interviews did I get, what's my gap for the month, and how many sendouts and how many new job orders? And that next year I produced like billings, which is similar to like commissions of $310,000, right. And so I made a good six figure income that next year, like at 24.
Speaker 1:And I was like, oh, okay, I get this game. It's just a game of math activity, right, input gives you output. So I was like, the more input, the more output. And I was like, well, you know, my wrestler mentality is more pushups, right. So more calls more activity. So I learned the activity game and was super focused on just hitting the activity, and the activity produced everything.
Speaker 1:And, by the way, that is how you fire up the engine in any business, right? Whether you're a wholesaler or you're an agent or you're a hard money lender, it's the same frigging game. It's like what's the math? But once you understand that what I call level two like in this framework that I teach then you get so good at production that you start losing your life a little bit because you're like in the wheat, like doing all the deals, you're like your phone's, blowing up your dinner, like your negotiating contracts. So you're a good producer but you're a bad business person. So the next level you've got to learn is how do I become a business person right, and that becomes part of the journey. The reason why most investors fail or most agents fail is that nobody educated them on the math in the beginning.
Speaker 1:To fire up the machine Once the machine is going. Here's the thing. Once the machine is going, you just got to keep that steady coal going into it, right, you don't have to burn too hot, you don't like, you just keep, just get the coal in there, right, and your brand right. Over time, doing the right thing, being consistent, always showing up, is like a leverage lever for you. Everything becomes easier over time because of all the good seeds that you sow right, and so people look at you and say, dude, it's so easy for you and you're like yeah, cause I've done it for 20 fricking years. Right, I've paid a lot of dues in the beginning to make that happen, and then I just did the right thing over time and so. But consistency is a superpower.
Speaker 2:Yeah, it is Nick. You got anything else for our guests here?
Speaker 4:No, but I appreciate you guys coming and I appreciate you being on again for the second time.
Speaker 1:Well, guys, thank you, this is great.
Speaker 2:The second time we just kind of bombarded you and like, hey, can you come do a?
Speaker 4:podcast. It was literally like, I think, we ran down and who was?
Speaker 2:it Russell. I think Russell he was like you got to get Rob on.
Speaker 4:We went over to you. You're like let's do it.
Speaker 1:Let's do it, man. I don't know we're gonna you know.
Speaker 4:In some random conference room at the event.
Speaker 1:I love that. You know what? Here's what I love. I love the hustle, right Like one of my. What I love about what we do, what entrepreneurs do, is that it reveals like ingenuity, hustle, like all the things that make this country great. Right, here we are, right Doing a podcast in Orlando. You guys are just loving man, like everything I bought. I love about it.
Speaker 2:Well, appreciate you guys. We'll be seeing you around this week.
Speaker 4:And yeah, next time, thanks, no-transcript.