Transcript for:
BiggerPockets Podcast Show #343: Steve Rosenberg on Systematizing Real Estate and Building a Scalable Business

this is the bigger pockets podcast show 343 you're listening to bigger pockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the hype you're in the right place stay tuned and be sure to join the millions of others who have benefited from bigger pockets calm your home for real estate investing online what's going on everyone this is Brandon Turner host of the BiggerPockets podcast here with my coasts David Green what's up buddy not much man it's another beautiful day I'm kind of wishing I was out there and Hawaii hanging out with you and all these cool real estate investors yeah you know you'll have to do that sometime yeah we just got done wrapped up a i'ma mastermind weekend with a bunch of really great investors including the gentleman that we're interviewing today so this interview that we're gonna get to hear in a moment actually we recorded it in person well me and me and our guests were in person Dave was over on the record I mean I don't know the computer screen which was actually kind of fun so if you want to see the actual like three camera angle like high quality video you can check that out on our YouTube page BiggerPockets comm slash youtube or youtube.com such a bigger pockets both should get you there and anyway Steve is Steve Rosenberg is our guest today a fantastic real estate investor an airline pilot who uses the methodology that an airline pilot would think through like checklist processes systems and he applies that to his real estate business so he's built up a really an amazing business both in real estate and property management that takes very little time out of his actual like life because he still has a you know an actual career besides real estate it's a really phenomenal interview and just one of the best people I've ever met I mean Steve is just a phenomenal guy so I'm excited for that but before we actually bring him in to the interview I think it's time to get to today's phase quick tip is short and simple we publish all of our podcasts over on YouTube like every one of our podcasts actually also on YouTube so be sure to subscribe to our YouTube channel as well and I sometimes YouTube videos are just a little bit different than a podcast not usually too much but a little bit and then there's like ten times more content besides the podcast over there on YouTube and Zak who's the video platformer BiggerPockets has been just doing a really good job of organizing more and more and more a great high quality content over there so make sure you're following us here subscribe to our youtube channel and check it out there oh one last thing I don't know if I mentioned this but we are transcribing every podcast as well on the show notes page so for example today if you wanted to read the transcription in today's show you can access by going to BiggerPockets comm slash show 343 alright Steve welcome to the show good to have you here man thanks for having me appreciate it guys yeah so alright so let's get into your story your journey how you got into real estate I know you still work you're a pilot now right I am so like what I find fascinating and we'll get into this is how are you able to do that while working a job and I know you've done some cool stuff so sure let's go very beginning well I real stuff I would say you know at first I never even wanted to be in real estate I didn't know anything about real estate you know my life growing up grew up in Southern California and my life was always I wanted to be a pilot you know little kid see the planes in the sky that's what I want to do and so I was one of those people that really worked really hard overachiever whatever you want to call it I got hired real young it with the airlines I got hired at 25 years old with the major airline and best job in the world right so I get shipped out I'm flying out of Guam and the South Pacific flying all over Australia Asia and then August of 2001 I'd moved to Houston obviously a month and half later 9/11 hits and basically what ended up happening was the the safe secure job that I thought I had being an airline pilot actually proved to be the most unsafe most unsecure because the illusion of me being basically untouchable because I had this airline job and I'm in the Union and you know you pension and contracts you know September 10th I had the best job in the world September 12th I had the worst job and September 13th I was given a furlough notice saying thanks for playing but basically we don't need you we're cutting contracts pensions good luck and so you realize that you know when you're when you're so specialized in a field there's not much other things that you can do you don't have any other talents because you've been focusing your whole life on this one skill and so it's it really is a point that you have to actually do a self check on yourself to go man you know did I make a big mistake of this everybody told me this is what you do you know this what our parents did this was you know you get a job with a big company and now it's gone and it wasn't like you know when you're dealing with situations like an industry turning let's say oil prices are turning and you know oh they're laying off this is coming I need to prepare for it this was in a matter of 72 hours from the best job to nothing and so it really made me realize like man I I need something else I don't know what that something else is and so it took me about you know probably about three months just to get my head around the fact that I did not have a safe secure job anymore and for people that remember that timeframe all of a sudden we had foot-and-mouth disease we had SARS Asian bird I mean it was like the locusts were coming next for the airlines I mean it was yeah and so you know you just it was more and more impactful for me to realize that I needed something else to do and so I started reading books just to kind of get an understanding and everything kind of gravitated towards real estate everyone that was wealthy at some level was tied to real estate I thought okay well I'll go down this path of real estate and I started just reading books I read a book a week on real estate just just devoured it and I think because at that time I'm 29 years old and I thought man I'm behind the curve like I've been going down this wrong path and I need to make a hard correction so I need to do as much as I can because if there was another attack another you know anything else that happened I would be out of a job and not only out of a job but I'd be out of a job with about a hundred thousand other people just like you so now where are you gonna go you know and at the time pilots that were losing their jobs were going over to Asia to fly they're going down to South America and I'm thinking I self I don't want to do that like I don't want to I don't want to run to save on to this dream if it's not there it's not there and so I just started learning more and more about real estate and I started getting in doing wholesaling back then I was flipping I'm not flipping wholesaling option contracts and stuff like that it's kind of that could you explain what that is for those that might not know what hole silliness yeah sure so basically I would find somebody that couldn't sell their property and I would go ahead and put an option contract on it which is basically a one-way contract that they have to sell it but I don't have to buy it until you and then I would go and I would find a buyer and I would basically marry them up I had equitable interest I had money in the deal maybe was ten bucks maybe was about 20 depending on the day but I would basically put those two together and then I would make the difference of what I got the option at and two what I assigned the new price app for the buyer yeah and so basically you're basically putting them together and you're making the difference between the two and it's a good way to make money I mean now it's obviously everybody does it back in 2002-2003 yeah it wasn't very known but it's a job I mean it you know you're constantly putting people together but I was using it as a means to learn more about real estate understand Burbidge understand terminologies and just get a lay of the land and also build up money and so I ended up building up enough money that I bought an apartment complex so I went into partnerships with another business partner mine at the time and we went in and we bought a 39 think it was a 39 unit apartment complex and it's fine so the grass is greener he wanted to learn what I was doing I wanted learn what he was doing yeah and so he's like hey if you teach me and I'm like hey if you teach me and and so we basically did that and we exited that deal of the apartment complex turns out a church bought it the church next door bought it from us cash well because it was a landlocked scenario and it was AC complex in an a area that was being regen turf ID and stuff and in Houston so I wanted have another little bit cuz I mean that that's I guess I don't know a courageous bold whatever the words like to go from like I'm I'm doing whole styling of his houses yeah I'm gonna go buy a 30 31 39 39 unit yeah apartment like that's a big jump first of all I mean let me back in before we get there do you recommend wholesale you know you said it's a good way table and if the job do you recommend that today still for newbies that are listening to this maybe Hague go learn wholesale Ian or would you actually recommend starting somewhere else you know the one thing that I've learned about all these different things is a lot of people they get into a these are strategies right so buy-and-hold as a strategy flipping is a strategy these are all strategies and if they don't have the end destination of where they want to go in life or as a result of that it's like saying should should this person get on the freeway and start driving north well where are they go yeah and so to me it it's a good way to make money it's a good it's a good strategy to get you to a goal as long as they can identify what that goal is and where they're going in their real estate life so if they can't tell me this is what I want out of flipping and wholesaling sir then I would say maybe they need to identify that a little bit more before they just jump in because now as it is they bought a job right now they're busy they're working and don't get me wrong you can make a lot of money at it but it's very competitive now there's a lot of people doing it it's kind of a buzzword so I don't think it's wrong I think what's wrong is people get into it without the strategy to the end destination and I think that's the challenge people have so Steve I really like what you mentioned about meeting an end destination in fact that's where a lot of people they don't ever actually sit down and plan that in fact I think a lot of people are surprised that they're actually going to be successful they find themselves successful they're rapidly trying to keep up with their success they don't know where they're going do you feel like you got that mindset from being a pilot and part of a flight plans you always have to know where you're going and how you're gonna get there you know that's a good question I I wish I could say yes but the reality is is the answer is no because the second half of my story is after we sold the apartment complex we started buying a bunch of low-income properties and we got our butts kicked and we bought within about a year we bought about 20 20 in about a year and about and all of a sudden we had a lot of problems and I mean that that you know these people called tenants started calling us right they wanted things fixed they couldn't pay their rent and you know and we nobody ever asked me why are you buying those properties those do not align with what you want out of life meaning properties that cashflow appreciation these may appear to cash flow but the way you want to run them is a passive income role is not going to work because again we didn't do that so I learned by my mistakes and one of the things I talk about a lot is you know you can learn a lot by seeing how other people fail and what they make of the failure so I wish I could say that you know it was a strategy but the reality is is back then there was no bigger pockets right there was no one to talk to to say what should I do where am I going and if I would have had that if if somebody would have asked me that one question like what is this why is this strategy going to get you to where you want I would have said I don't know where I want and I think that would have cued something to go well maybe you need to think about that before you start putting your money on stuff because my thought was I've always been a hard worker I'm a grinder and I thought well if 20 didn't work let's buy more so then we buy 35 of these or 40 of these things and it was like gasoline on a fire I mean it was it was unbelievable the problems we had and it was I mean if I didn't have the airline job I probably would not be able to be financially able to sustain the losses I learned a lot of valuable lessons and that's why I'm such a huge proponent of telling people like look don't make the mistakes I made like do this the right way and sharpen the mental axe before you start swinging and so because I've touched that hot stove and I've been burned and so that I wish I could say I was smart enough to say I had this plan and this master strategy but I really didn't well I want to know more about this so like the apartment complex worked out okay right yes it did so that worked out good probably give you some confidence should I go I got this I know the smartest guys in the world man we just sold the apartment complex yeah we got this thing you jump from that and then you bought hope you said 30 or something like yeah so what was going on is is I was still flipping properties because I had a good system down for it and we'll talk about systems later I had some pretty good systems around it and we started seeing the market turning a little bit where this was 2007-2008 where all of a sudden people were not able to get as many loans yeah so we were noticing that it was slowing so we thought why don't we just hold some of these properties and so my business partner was still my business partner today and the management company he says hey man I found all these properties they're like they're huge cash flow on paper they're super cheap they're called low income high cash flow we can get as many as we want of these things and I'm like well we just were flushed with cash we're the smartest guys on the block man we just sold an apartment let's roll and and one of the lessons I would tell people is that is a different business strategy and and I never thought that there's I never thought that there was a business strategy to begin with but more importantly anything you go into you really got a map it out to make sure that you have the strategy for the end goal and we just went crazy like you know two kids with money we're just buying stuff buying stuff and again that that was a big problem that you think you're smarter than you are and that was that was a problem with us why why do you think those low-income housing cuz a lot of people they get really excited about the cheap really cheap rental houses you know like beckalus back in the day Josh dork and their host on the show would make fun of Detroit all the time was our governing joke forever did you buy a you know a house for a pack of smokes and that's right like yeah what's wrong with those and what went wrong well so the the the I could tell you what we did wrong and from managing them we were kind of the ghetto kings for a while because everybody said well we're just gonna hand them to you to manage in your management company so we got to really understand the dynamics first of all the the one challenges the tenant in general is a month-to-month mentality tenant so right out of the gate you have a tenant let's say the rent is $600 a month yeah if you you know when you start doing this on a large scale and I'll talk about the state of Texas I don't know about other states but in the state of Texas anything over four units you are basically in the same pool with fair housing discrimination so when you charge one tenant late fees you have to charge them all late fees you can't let them slide so all of a sudden now we can't let this tenant slide but these tenants are month-to-month and so now you have late fees the late fees are almost as much as half their month's rent so what do they do they skip so our average tenancy was eight months our make ready cost for three times the amount because when the tenants left they would take a lot of parting gifts with them yeah wiring air conditioning light bulbs I mean plants and so we realized that it's not that it's not that the model doesn't work it's that the model didn't work for the way we were trying to run it so Pat so low income properties are great and I tell people it's not that they're bad we were trying to be hands-off and run it systematically where they all paid on time every time without any you know without any variances and I think that is work it's as you want to scale that I think that gets harder and harder yeah because if you don't what a lot of people don't realize and you know one out of three landlords are in a lawsuit every year for some kind of fair how discrimination law they don't realize that they're breaking laws by by letting tents slide on late fees by not charging them and and you know what one thing that I had learned is that a lot of landlords and again I was I did it I'm sure you guys have all done it where you know you have a tenant that you let them slide on their rent well a lease contract and I'm not an attorney but at least contract it's a bilateral contract meaning if they don't perform meaning they don't pay the rent you have to perform and you have to enforce that contract meaning if it's in the contract that you're charging late fees you have to do it yeah and so again you don't realize that what you're doing is you're actually setting a precedent that you're discriminating against your other tenants possibly and you're putting yourself in a bad position and not only that but you're putting your business your family your finances because you're trying to let someone slide so if you don't let them slide what happens now now they leave yeah so it's this vicious cycle so again I'm not saying they don't work but that's what we we had the wrong model for what those properties represented and that was a mistake on our part yeah that's there's a lot of really good stuff in there I mean like we could pull out a ton of just probably a management lessons out yeah right like I mean just the fact that you're talking about you know if you if you let tenants slide all the time first of all like I find that whenever I the tenants slide those all always want that coffee problems later anyway once that pendulum swings exactly once they learn that they like what you give them out to cookie they're gonna ask for gloss and it looks like that just keeps going so we started and you probably the same thing as we started like because of the fair housing thing as well a lot of people don't realize that something really glad you brought that much remedy has it's huge yeah if you treat your tenants differently you can get sued for fair housing problems so don't treat your tenant differently instead rely on the lease so my wife has been huge she wrote that in the book on managing rental properties like make the lease the bad guy like that way cuz I'm an I'm a nice guy I don't like to do it doesn't matter I even would I would tell my tenants I have to do this or else I could get in child row of trouble with you know legal stuff because I it blames the government it blames the lease it blames the stamp it flames the courts it's not my fault I'm just doing my job yeah and everybody generally understands that well in what I've learned and not to go down this path of management conversation but what we've learned is when you set the proper expectations in the beginning with the tenant and we explained to them listen you know we we have a thousand properties that we manage that means we have a thousand tenants and we have about eight hundred owners and everybody has a different definition of happiness all's we can do is run it down the line of what the law says and the law is the agreement that everyone has signed our job is not to interpret the law you have to enforce the contract and you know we tell them listen this is our systems this is what is expected of you and in I think the biggest challenge landlords have especially new landlords is they're afraid to to basically have that bad conversation of if things go wrong and we're a business and we explain listen this is what you can expect of us this is when we will make payment this is when we will fix your property this is what is cosmetic this is what's inhabitable these are the things that you're responsible we're responsible and then this is what we expect of you and if you don't do it here's what will happen and it's it's kind of like when the when the aircraft pushes at 12:01 off the gate it doesn't matter if you're stuck in traffic or security line it's gone yeah and that's just in so you have to realize it you have to take the human factor out and you got to run it like a business so what you just described right there Steve is exactly why I don't want to manage my own properties we all know about fair housing laws discriminatory practices but I think the majority of people who want to own real estate or do just think well I would never discriminate so I don't need to worry about that having zero idea of how discrimination is even defined because as you just said not charging somebody a late fee could be defined as discrimination what we would consider helping somebody could actually get you in trouble if you're not offering it to everyone else and if you're not offering it to everyone else then you can't have it in the lease at all I think that for the vast majority of investors who think I want to get into this and I want to manage my own properties they need to start with the end in mind like you said do you want to be a property manager do you want to have a business of property manager if so manage your own properties learn on your own dime that is a great model but if you know you don't like me for instance I never ever bothered learning property management after the first house that went so bad and I realize this is just a terrible waste of my time I don't want to get involved in this stuff I let someone else do it and I never look back I think that's a very good point that you just made as far as your experience what do you think makes a good property manager what should people be looking for or when they're wanting to make a property manager that that's a great question which actually answer a lot on bigger pockets for people but I think that one of the things is are they running a business meaning art you know to me you know and I'll use my airline background you know everything is about systems policies procedures and structure you know I think the one of the challenges with landlords is they don't get into it thinking they're running a business and I one of the things I explain to people is when you are running a business whether it's one property or 50 you own a business when you own that rental property and if you are not going in there with the mindset of having a business plan and having what is your income what is your loss what is your profit who is on your team I've never and I don't know if you guys I've never read a book that talks about how to become wealthy and saying this is the part that you're gonna do yourself yeah everything is about leverage everything is about getting smarter people in certain realms to do what they do best there's never anywhere that says this is where you should spend all your time and David to your point I don't even manage my own properties I hand it over to a company it happens to be my company but the point is is it's all about systems so if you're talking to a company in my opinion and you're asking them questions like what are your average days on market what is your eviction rate what is the average rental property price range that you manage if your property is $3,000 a month and they manage $500 they may have a different way that they handle things in certain situations to me it's not so much their answers but do they have the data to back it up because if they don't have the data that tells me they do not running a business and look we know a lot of property management companies that don't run like any business in general they don't run it correctly because they don't have policies structure and they're not running like a business and and again we know a lot of landlords that do the same thing because they get into this thinking well I live in a house I'm renting a house it's kind of the same thing and I have explained them you're buying four walls and a roof it's the business running inside the four walls in the roof that it's actually going to get you that return because look we all know a lot of people that bought great deals and ran them right into the ground because they didn't know what they were doing yeah and so I tell people it's not the house it's the business running inside of the and that's what a property management company should bring to the table is their business model and I tell people I said if you know if we talk about self landlords I said if you owned let's say you own 10 properties and there were two hundred thousand dollars each so you let's just say you had a million dollars in assets and some guy comes off the street and he says hey Brandon I got I've never done this before I don't know anything about the law I don't know how to deal with tenants but I feel pretty good that I can run this for you would you hire that person the answer is no ya know the problem is is we are that person and we hire ourselves and now we're running a business that we have no idea what we're doing you know the odds of being successful you know of not hearing these horror stories when you hear these horror stories and again we get a lot of the landlords after the fact when they're going man I got my I don't know what to do I'm in a lawsuit and I'll start asking them questions well what is your policy for this what is your you know I learned that if you put the right tenant in a lot of these problems go away so we have a very strict tenant acceptant policy and we have a 1% eviction rate because we know that if you put the right person in a lot more things go right after that but if you don't have a policy on that and again now you're getting into fair housing and and all that stuff but it's just a way to systematize your business so that you can I tell people you should systematize 80% humanised 20% if you can do that on a scheduled basis with anything you know whether it's using a virtual assistant or a software or CRM whatever it is you're gonna make things a lot easier because you're able to focus on the important 20% and not the white-noise 80% that really it's got to be done but it's not important yeah and so that a long way to answer your question David I think that just seeing how are they running their business because that's how they're going to run your business in the rental property that is such a good point yeah and when I think of the property managers that I've had in the past who have been horrible and I think of the ones that I have right now I have one that's really really good right now I can clearly see the one that's good has a very good business model it's actually a franchise and like they have a way of running their business they know what they're doing and it's a proven model it's a proven model yeah and the other ones were like I own some rentals I can manage properties and like I got nothing better to do yeah so all managers yeah exactly and so that was rough so walk is do the rest your story so you bought these properties what happened after these 30-some properties that was rough yeah so it was it was it was bad and basically my wife ended up coming to me and said basically you you suck at buying houses you are not good at this like you need to stop and I in my thoughts were I can fix this like I kept thinking I can if I buy enough properties I can tell you if I push through the hill and she was like no you can't like this I need to stop so what we ended up doing my business partner and I we sat down and said okay we have three options one option is is we hand these over to a management company the other option is is we sell them or the last option is as we self manage them the first option we he says I know some management companies let me make some calls so a week later he calls me back and he's like we got a problem I'm like did we buy another one and we don't know or like what what happened he goes nobody wants him I'm like what do you mean he goes they said they'll never make money they're always gonna be a problem yeah and he said we're never you know it's not gonna work so they didn't want I'm like okay well that sucks but now it's 2010 no one's getting loans can't sell yeah the last option was okay we need to figure this out on our own so he and I sit down for about six months as investors and we plummet the foundation of how we would want our company to run for self preservation took us about six months we kicked out about 70% of our deadbeat tenants they weren't paying anyways but they're taking but so we basically said if we're gonna do this we're gonna stick to it yeah and so we did that and what happened was is we actually had other people start approaching us other investors saying hey man do you guys seem like you're fixing your problems what are you doing we told them could you manage our houses and our first answer was no freakin way we do not want your problems we barely fixed ours and then we started thinking well we could get you know we can keep buying we can keep marching on and so we started taking on properties and and I mean literally within about six months we had about 80 we're managing and because they wanted to give us their problems basically we were looking at it as investors going okay well this is how I would fix it that's what I would do so it's almost like we were given up consulting the first thing we did the smartest thing we ever did is we went to a business coach hmm and we said do we have a business and he looked at it and said well you have scalability you've got opportunity of marketability by definition yes you have a business you guys are not very smart based on what you've done I don't know if you guys can run it so we hired our business coach that day yeah good pitch right good closer so so for the last six years we've had a business coach every week we're coached nice and so I think the difference and so our business our company flash board now we're managing about a thousand properties in three different cities Houston Texas for Dallas and Fort Worth and and we're very big and scaling and we're very well known in the industry because I think we look at things as business owners not as property managers everything to us is sales marketing acquisition everything everything we do is KP ID and tracked with spreadsheets and we're very very detailed because it's the Devils in the details and so that's how we've been growing and scaling it's funny that you say that because what I found is that no matter where you start whether your real estate agent you're a loan officer your real estate investor you're a house flipper when you talk to people the very beginning of starting something they don't even know what a KPI is but a lot of our listeners don't know what that means when you talk to anyone that's been doing it well kpi's our key performance indicators is like the first thing they talk about in fact they might tell you like Jay Scott he runs the BiggerPockets business podcast he's a big-time house flipper he probably doesn't even care about flipping houses anymore he's running the business podcast because he learned it was business skills that he needed to run that well and bran and I have had the stock before that and if I was Brandon that told me it doesn't really matter what you do you just got to pick something and do it because if you're good at business if you understand these principles and these fundamentals you can make anything work and I know that I'm bringing this up because a lot of people that are listening they're in love with real estate that's great we're in love with real estate too but to be good at real estate you have to rent it like a business you have to understand business principles and one of those that you mentioned is scalability and that happens through systems so when it comes to systems can you explain what that means when you use that word what you're actually describing then give us an example of how you have systemized a piece of the business that allowed you to scale sure so when it when it comes to system that's a great question and I'll let me start by saying you know systems and checklist are are vital and they're used in every business we just don't really notice them or see them they're very prevalent in the airline industry and so as an example everything that we do has a checklist and behind that checklist is an expanded version of what that means the way checklists are run which is opposite of what a lot of people think is it's the things that will kill you that you check it's not the hey sit in your pilot's seat and put your seatbelt on it's hey put the landing gear down when you're gonna land so it's those kind of things and people will inundate the small details of a checklist to where it's a lot of white noise which is not the way you want to do it now because things can be so systematized the company I work for there's 12,000 pilots I can get in the cockpit with any other pilot that I've never met we can sit down he has his systems and flows that he does I have mine we run the checklist and it's like we've been flying together for 30 years even though we've never met because everything is so systemized and that's why planes don't crash yeah because they like we don't even move a flip a switch unless we're pushing a checklist so with that being said when we are trying to scale our company the one thing we learned especially when you're scaling a company rapidly 50% of the systems and 50% of the people will break they are B they are just going to break because what worked when we were in a hundred properties doesn't work at 400 doesn't work at 600 and you know we learned our job as leaders of the company is to always be looking ahead for the bottlenecks and to figure out where the choke points were going to be coming that we could fix and see them coming and again it could be call volume we're getting a thousand calls a month on our vacant properties didn't have that problem at 100 properties but at 600 properties that was now a problem yeah so in any event so what we realized is you basically first thing you have to do when when you have a system that you're trying to figure out that's automated you you have to first flow it out and what I mean by flowing it out is you take a basic flow chart and say okay Brandon what do you do on day one when rent is due tell me what happens okay now tell me what happens what is the next step and responsibility you may say well rent is due on the first and then it's late on the third okay now what happens then well on the fourth now something happens okay and when something happens who does that who is that person and again when you're when when people have a business and they're scaling this out whether it's flipping or anything it doesn't matter you always attach the roll not the person you never you never attach anything to a person because it this goes into disc profiling and having the right person in the right seat but what you need to do is you need to make this so that anybody could walk in look at this flow which the flow chart ends up going let's say let's say for example you said on the fourth of the month notice to vacate sir sent out that's all it is right and that could be a check item yeah but what does that really mean well what happens is as you are as you're doing that you're creating a manual a systems manual that actually says in detail what does that mean when you send out a notice to vacate you're gonna go in the software you're gonna check to see who's delinquent and you're gonna do this so that's the detailed version yeah you checking off saying sent that means that you know what that expanded version is so then you're going through all these systems and and again we've been able to do this where every you know the property management company that's we don't sell gadgets we don't sell product we sell services and those services are backed up by a lot of processes and procedures all of those are a lot of them are tied into one another so one we have checklists that are cloud-based and a lot of things now are cloud-based that basically one ties into the other and so much so that we actually have people in other countries and virtual assistants that actually do the tasks really and yeah because the reality is is if something scalable right and if you you've been able to sit down and and basically I don't want to say dumb it down it's that's not the right term but if you can make it towards simplified to exact that person knowing exactly what they're responsible for on a daily basis per the checklist and what that Duty is and if they don't know that they can look it up somewhere else so now it's a scalable model without that the reason a lot of people don't put systems in place or they don't put checklists in place and they don't put outsourcing of virtual assistants is it shines a light of a weakness in their own company and they don't want to do that so as an owner you're going you know what don't look over here look here I'll just do it myself because nobody can do it as good as me and the reality is is everybody could do it better than you be if that's their only task their focus on it and when it comes to property management there's so many things going on and whether it's flipping it doesn't matter there's things that you're good at inherently and there's things that you're not good at like me we all have skill sets and the way that we know if somebody is good or bad and if they're doing their job or not is through key performance indicators which are the metrics and those are those are what we call KPIs and so the way we run our company is everything is based on KPIs and you can even take a step further as an upper-level CEO role of the company we have them color-coded the red or green if it's green it's good I don't care if it's red maybe we have a problem it's red two weeks in a row we definitely have a problem we need to look at it is the parameters off is it a person problem or is it a system problem and again now what you're doing is is you're pulling yourself out to work on the business instead of working in it and again all of everything that we're talking about is owning a rental property yeah it's just doing it on a scalable model because the one thing I think we all can agree nobody gets into real estate to own one property yeah they know it look they want to be you they want to own hundreds of properties they just don't understand how to do it because they don't understand scale and they don't understand leverage and they they're afraid to go out there and get in that uncomfortable zone of saying I don't know how to do it or I don't know how to do the systems because they think it's a matter of owning the rental and and I disagree I think a rental property in my opinion is a mathematical equation it's an inanimate object it either hits the mark or doesn't if it doesn't hit the mark it's like buying a stock yep and that's where I think people have a mistake with owning rental properties is they don't they just they don't look at it as business owners they look at it as living in a rental and owning a rental can you give an example of what a KPI is that you like a couple KPIs in your business that you look at a regular basis lutely so one one of the biggest challenges in owning a rental property and having a management company is maintenance no Maness is a big problem one of the things that we have are work orders that are over seven days we want a certain percentage that are under set that are over seven days we want it to be a certain percentile right we want a certain percentile of month-to-month tenant so their lease is up have renewed what's our percentile we in and again what normally you what you want to do is you want to have maybe three to five you don't want too many but if you see a problem then you got a dig deeper and you got to put more kpi's on that so all of a sudden you see that's bleeding a little bit we need to go a little bit deeper to see where is it bleeding because what we'll use it was a sales process for example if you have a sales person and the sales persons not closing and we had this example I had this exact example where the sales person was not closing doors bringing in new clients they were answering the phone they were contacting the person they were setting up the appointment but they weren't getting the contract if you didn't have KPIs that actually broke down each one of those steps I would say that sales persons no good but when I was able to break it down and look at individual kpi's I could say there's a problem at the appointment with that sales person not able to close there's a scripting problem let me go with this person and let me see what are they saying winter fix the problem and it was that simple if I didn't have kpi's I could have gotten rid of a good team member because I didn't know and to me that's not being a good leader right cuz you got it you got to investigate it so sales step processes are huge for for kpi's because you've got to break down if if someone's in realty or something in sales and they cannot break down their sales step process to tell me everything that happens and what those percentages should be then they're just winging it and they don't know and then they don't know how you know what's your conversion rate what's your what's your lead rate what you know so I think to me maintenance vacancy yep eviction yeah you know why would you get pissed if you had a rental property what are the things that would piss you off if my property's costing me money yeah if it's making me no money or there's a maintenance on the property that's not being done yeah because ultimately the tents gonna leave and it's gonna cost you money what what's great about this too is it translates this idea of kpi's move I've been talking a lot about this last six months on the posture you know I'm obsessed with it yeah like I feel like I'm I've grown more in the last six months and have the last six years because of this idea of like leadership and this what leaders do with it look at Casey eyes and they they figure that out so if you're brand new to real say let's say you're brand new trying buy your first deal like your key yeah he's gonna be evictions gonna be whatever you have something maybe how many deals did you analyze this week absolutely offers did you make this month absolutely like once you start having the data good data leads to good decisions absent agree yeah it's huge and so like I mean perfect another example you listed a vacancy or occupancy right same two sides of the same coin was it four months ago five months ago I mentioned on the podcast year before but Ryan and I who worked together I said well my pen so Ryan and I who work together I we looked at our numbers I got fine I got good data after the move to Hawaii everything got crazy and I like lost track of a lot of like KPIs my visitor sat down looked at it and I realized I was at 15% vacancy and I was always at like five six four yeah I didn't really track of that closely sir I know it was better than I was and I saw my revenue my cash flow is down dramatically right so once I knew that I dove into it and me and Ryan investigate and figure out oh our vacancy is really high okay now let's set some now let's set a weekly meeting we know what the number is every week we set a goal hey we went 95 percent 95 percent we're at we're at 85 right now how do we get there and then absolutely just by tracking it it took like a month and we were like I'll Pat 95 like yeah because that we knew there was a problem there and that we have we have a dozen KPIs now that we monitor on a regular basis yeah and what we've learned and look what's a KPI right now may not be a key pair in the future you fix that problem and you go ok we don't need to we may want to put one KPI but we don't need five on there now we just need one and what we've learned is every time we have a problem it's because we don't have focus on it yeah and it's like a rock on your shoe when you're running it doesn't go away it just gets worse yeah and whenever we have something and we dig deeper and we put our focus on it we fix it you ignore it it doesn't get that like it doesn't fix itself right it's like a bad tenant they're not gonna all of a sudden make themselves right they're just gonna keep getting worse and again it's it goes to show it and to David's point business is business is business and and I've been fortunate that I get to talk in Australia I talk all over the US and I talk when I'm done talking there like that really wasn't real estate-related I'm like no Mike it's just it's it's business 101 that's what I've learned is we're all running businesses yeah they just don't realize they're running a business and if you can if they can start to learn first to run the business and think of it that way a lot more things become less emotional because look we all know that we you're making I've never heard one person tell me man I was so emotionally fired up and I made the best decision because of it right I've never I've never once I've never done it I've never heard it yeah so I tell people I go if you think of it that way that just goes to show that if you can run your business without emotions and remove yourself with kpi's because if you looked at it you said okay here's the problem here's how we fix it let's fix it it's very simple yeah and then it's not emotional getting upset it's just fact yeah and that's that's one of the things I've learned you know what I like to tell people is that emotions are terrible when it comes to making a decision should I do this or do that if you if you rely purely on emotions we have to make stupid decisions you want to make decisions on what direction to go in based on on facts and logic but emotions are wonderful when it comes to powering or fueling the journey so if you sit down and you say you know what this is where I want to go we need to have a 95 percent vacancy or occupancy rate we need to add this many units to our portfolio by the end of the year we have to make this many offers that's a logical decision now let the emotion of how bad you want that fuel the effort you put into making it happen it's better than when you switch the two roles yeah I agree um and to your point you know if you go back to the the rocket fuel and AOS system there's always a visionary and there's an integrator yep and you know there's the leader and people want to follow a leader and what people don't realize is when you're a when you're running a one one-person rental property you still have to put yourself in different roles and you know you when me and my business partner started we had an org chart right our business our business coach said make an org chart so we make this org chart and our names are in every single thing yeah but we realized that when we were doing that task that was our job and we had to take the hat off and put the other hat on yes and that's we're doing yes but to your point David is that people want to be led and they want to follow a leader and and that's the visionary that you know we were told a long time ago if you get bad employees it's because you're a bad leader you get the people you deserve so if you're getting bad tenants and you're getting bad vendors and you're getting this you're probably a bad business person yeah and it's probably something that you got to look within you and if you don't have that that vision that drive it's you know people don't go work for a dollar right they don't come work for money they work because they want to make a difference and they want to be a part of something right bigger pockets is a great example people want to be a part of what bigger Parks is doing it's not because they want to make money in bigger pockets they believe in the mission the vision of what you guys are doing that's a great example it's not that you're going hey I'm gonna make money you guys are not so you guys should all join me they're gonna go I don't see that vision I'm not following you so that I completely agree with you yeah that's great can you tell us about I mean just few minutes ago we did a facebook live taro and I up on my lanai yeah did the face wave and then we we brought you into it cuz taro knew a story for those of you unaware Tarly Arbor was on our show mid to hundreds super cool investor yeah a good friend of ours out here in Hawaii with us right now anyway so he he had you tell a story on that Facebook live about about your son can you tell us a story sure was fantastic yeah and there's a great lesson that I learned from this that I really try to pass on to people now and again it was never planned I'll say that from beginning but so I have a fourteen-year-old son he's 15 now and he basically came to me one day and said dad I want to buy a rental property and it kind of took me by surprise now understand that you know I'm on a lot of radio shows podcast shows I'm always listening to anytime I'm in the car I'm listening to an audio book or podcast so he's immersed in it without me even realizing it he's getting it you know you think your kids just sitting there staring out the window but he's actually listening to this and so I said okay I said well you don't have any money I said how you gonna buy your own and he says well I do have some money and I said well how much money do you have and he said I've got $10,000 and my first thing was like how did you get $10,000 without even knowing you know but he said I've been saving my money and I got this money and that money and and you know can I buy a rental and I said well that's not enough and he said what do you mean I said well you need more money for if you're gonna buy it conventionally a standard deal you need more money and he said well how much do I need I said well you probably need you know super decent you probably need about twenty twenty-five thousand and he said and this was the this was the thing that I thought was very interesting is he says well how do I do it I said well I said you've got two options you can either save the rest of it or you can try to get some creative deals and maybe partner with someone and he said okay so he comes back to me a couple days later and he says so if I save the money I'm gonna be 28 by then because it's taking me 14 years to get this and I said yeah you're right I said so what's your other option he goes well you mentioned that you can partner with someone I said yeah he goes what does that mean I said well you can somebody else can put in the money and you can be 5050 partners and basically you take on half the debt and he takes on half the debt and you buy it together I said or you can you know do things where they run the property and you put up the cash or vice versa there's many ways to do it and he said well would you go in half with me and I said well what are the terms he looked at me like come on dad I said hey I said this is business I said this is how you're gonna learn I said because if you don't know the answers of this this is how you get burned and this is how people take advantage of you I said so this is a lesson that don't let me take advantage of you tell me the terms so he went back and he did some more homework and you know what was funny is about three months prior to that he was asking me about real estate and I talked about appreciation and debt pay down and equity captured he asked me to explain it to him which I did I explained it to him and I drew a map of the US and what properties appreciate where and why people buy and one day I went into his room and it was up on his wall like he was looking at it and studying it and he just was always up there on the wall and I and I never I said anything and then couple months later when he asked me this question so he says well how about if we did 5050 I said okay I said what are you gonna do he said well I'll put in 50% I said okay so I said who's gonna who's gonna manage the property he goes well your company can manage it I said okay well is that a good deal he said a lot of nice and well first you got it work this backwards I said you have to explain to me what is a good deal what kind of property would make sense with all everything taken out all the expenses what kind of property makes a good deal like what is your exit strategy on this deal because again no one ever talks about the exit strategy which is one of the things that I've learned that even if you don't know what it is you at least have to think about it is it a 1031 is it you know what what are you doing with it and so we went through the gymnastics of it he got a couple sample deals and I told him I said listen we're not gonna go we're not gonna go looking for a deal until you can tell me what is a good deal because if you cannot identify a good deal there's no way no one else is gonna tell you if that's a good bad deal and they're gonna rip you off so I said you have to know what a good deal is to you before you can go outside this realm so we went through the the cash flow the cash on cash return and I forgot what what exactly the numbers were but we both decided okay this is the deal so I said okay this is what we're looking for now now we know so when this deal comes across our plate we know it's a good deal there's no question it's not hey is this a good deal is it not it either fits our parameters or doesn't yes so the deal that we got was I didn't want him to have to learn make readies there are big rehab jobs I want him to get a cookie cutter type property I mean I had some buddies that you know flipping and all that stuff so I told what I was looking for pretty much something done knowing that I said listen we're gonna pay more money for this but it's done either pay now and do the rehab or you or you just get it this house literally we got the property we closed on it four days later we put a tenant in it's been rented ever since never hear about it my son gets the cash flow heat my wife makes him put 40% back in to reinvest to buy another property and he gets to keep sixty himself so now he's understanding I said and I told him I said listen his name's jet I said jet I said if you had ten of these think of the cash flow coming in yeah he's like I wouldn't have to work I said or you could work and exponentially speed this up so he's like that's a good point I said but you're you're getting in position so his goal now is to own five before he gets out of high school that's cool and I'm thinking man I mean I didn't own a property I didn't owe my first house I was thirty you know and so I just think the one thing I've learned and you and I were talking about this in Seattle is that we all work so hard to get wealthy we all work so hard and we never want to see our kids suffer but giving our kids a portfolio of properties is not actually helping ya know teaching them the legacy of how to keep building that I think and again I I can't take credit that I want to do this but now I'm realizing how many people out there are out there trying to be successful but they never teach it to their kids and they're not building a legacy for their family because giving them that money it's like giving someone a good deal they can lose it just as easy if they don't understand the fundamentals so it's something that you know I think is very important to take this education that we're all working so hard grinding trying to get better and actually sit down with the with our kids or whoever just show them how they can carry that legacy on because I don't think many people do that and I think it's something that we should be doing you know because it's gonna stop right it's not gonna keep passing through generations if we don't keep doing that they're gonna say oh my dad made a lot of money and I got the inheritance and I spent it yeah that's not really doing them any favors in my in my opinion at least yeah you know people often ask me if I'm gonna homeschool Rosie or if I'm gonna go public school with her and I'm like well I'm in a homeschooler but she might go to public school too but either way like school doesn't end like I will be like she will know more about cash flow and financial freedom and wealth and all that when she's seven having little people know when they're third just think of what they're learning I mean they're learning a skill that they can you know they're learning that the things that people fear are really not real yeah you know they're learning these things on my you know my son's been on radio shows with me I've got him speaking at events with me so he kind of sees that so the things that other people fear he's like it's no fear yeah and and again I just think you're teaching them a skill that that I don't think they're gonna learn in school I really don't yeah you know no not at all yeah some very very cool story man just the fact that you're able to yeah I get more people needed I agree and I think that you know I think even creating a course or doing say I mean I just think it's I think it's something that's such a void out there that all of us are working so hard I mean how many people on bigger pockets are out there grinding trying to make a living but they never really show how to pass it down and again I think it's I think we're busy being busy yeah and I and I I don't fault anyone for that but at some point you got to step back and go okay what am I doing this for why am I doing this and how do I help other people meaning my family yeah carry this on for me because you know look we've all worked hard look you're in the middle of the night in Atlanta David I mean we're right here I mean you know we're working hard to be better we don't do this because we're getting paid to do this right here we're doing this to all beat we're all trying to be better at what we're doing in life right but how do we pass that to our kids to be better yeah you know in the real estate sales bit side I see a lot of 25 26 year old kids that are selling like twice as many houses as me and it blows me away how did you do this every single time it's that their mom or dad was a nature they grew up seeing it the stuff they were trying to teach people at 30 35 40 when they get a new career that takes a long time to adjust the personality you got to have the way you have to think they've been seeing this since they were 13 14 15 years old it's no thing for them and they walk in with this supreme confidence and just start dominating right away and it's because they had parents that cared and their parents were often not top producers they were just standard run-of-the-mill agents maybe a little better than average but the kid who saw that for 10 years before they even got in the industry flies right through and I think that's such a good point to make is we're all when you're the first generation of someone learning this when you're listening a bigger pocket and you're trying to figure this out and you're reading the books and you're you're hammering away knowing how to analyze a property you're treading through this sludge but you can lay a path behind you that's like a nice smooth concrete trail that someone else can come walk and get much further than you were and I think we forget it doesn't have to be this hard it's not very hard in the beginning and then for a Brandon and I man we can we can buy deals or we can analyze deals and what takes like maybe seven minutes it just doesn't take very long once you know to look for Steve you can I can say hey Steve should I buy this house and you can say what's the address and you can probably come back to me in 14 seconds and give me a yes right now you're so experienced right that did not happen when you were brand new whatsoever once you've got that if you're not passing it on to the next person like you just went through all the sludge for nothing yeah and the one thing I learned from our business coach in business he always says business doesn't get easier you get better mmm and that it get to your point right the houses don't get easier to buy we just get better at what we're doing you know and it just goes to show that the more and more you work on your craft and the more you try to refine it to be better you're getting better it's not getting better it's still the same house there that we that we could have burned we got one could have overpaid for right we just know it bore and we're faster at it that's such a good we need to tweet that Brandon trade market huh yeah you know weights don't get lighter you get stronger there you go I like it that's awesome they'll be the new t-shirt by the way speaking of t-shirts bigger pockets now sells t-shirts primer pockets calm sighs shirt Shi RT I finally after five years of people asking me I went and put up the ber shirt on the website so anyway go check it out and David you look a you're gonna say something I gonna say did you give that cheesy we got merch line that everybody says whenever they get merchandise have you said yeah I don't know that I mean I don't know that is that's so cool that you don't even know what I'm talking about best friend you're such a geek merch line how do I know this everyone just screams we got merged it's their way of letting the world know like I'm important because now there's a t-shirt with my name on it that's funny no we everyone listening knows what I'm talking about that I I don't know we talked about all right so we're gonna move on now to the next segment of our show which we lovingly call our deal deep dive all right this is that part of the show where we dive deep into one particular deal that you've done the dhih dhih dhih dhih dhih and let's jump right into you got some in mind yeah I'm gonna fire a bunch of questions that you will go back and forth David and I kind of fire an answer number one what kind of property is it and where was it located single family property in Houston Texas all right how did you find this property I found it from an expired listings when I was doing wholesaling and the guy couldn't sell it and so I was going to do an option contract on it and then I was gonna sell it through wholesaling okay so you tried a wholesale it you found it that way how much did you get under contract probably what and what we're gonna hopefully I'll forward remember I got it under contract for I'm gonna have to guess it was about 72,000 and I had a buyer for 95,000 okay and how did you negotiate the 72,000 the way that I would go in negotiating is that I would come in with a cash price of maybe 60% and then I'd come up to about 70% with the option idea with a 30-day give me a 30-day window and I can get this done and you'll get a bigger deal so I'm working on the greed okay how did you then okay so I'm gonna ask how did you fund it you weren't really gonna find you were in a wholesale at though you but I was going to host you're gonna hold that you said yeah so what was going to wholesale it the guy there was an older gentleman nice guy and you know I just I I felt bad for him mistake number one is I got a little bit emotional in the deal and the buyer backed out at the last minute and I was pissed and I felt bad all it was going to be a slim deal even though I got it at 72 mmm it needed some work done to it at 95 it was it was an okay deal for someone at 95 but for me for my parameters I didn't like the deal even at 72 because of what I was gonna put into it and I made the ultimate mistake and I just bought it because I felt bad for the guy and it was not in a good area it was not there was a lot of indicators that were saying it was not a good deal but I made an emotional decision which is never the right one and I and I bought the deal and I just I I got a I think I use an a line of credit and I bought it with line of credit okay gotcha you know that's actually the richest man in Babylon one of the rules they talk about is never do something to help someone else if it's gonna hurt you never those three that's what that made me think of okay so once you bought it what did you end up doing with it did you keep it did you flip it how did you I earned it into a rental after my third tenant moved out three days after somebody came in and borrowed some stuff from inside the house and is about thirty thousand dollars in air conditioning copper wiring frigerator magnets I mean you name it they made our engines they took everything from it within within you know three days of the tenant moving it was gone oh so now I'm into it much more and at this point I was done I was just done with this so at the time was that your question what I do what did I do with it was that your question I kept it as a rental yeah yes what happened long-term that I mean like so long-term I we had a lot of people from Canada coming down buying properties and if you're a Canadian citizen you can't get a loan in the US but we were already managing the property I had put the money back into the property to fix it I had to deal with it and so because the a lot of Canadians can't get a loan but they wanted to own real estate I did a finance I did a rap oh and I own a finance it to them with a 20-year amortization with a three-year balloon okay and so I basically sold to them they bought it owner financed they put it in an LLC and then they they bought it refined it out all right so it's no longer you shared a pig with us and not a huge winner yeah yeah this this probably this is one of those properties that every my wife would say I told you this I told you deal and I knew it from day one that's our last question what lesson did you learn from this well the obvious one to me was never ever let emotions dictate a deal never that was a biggest one yeah and no matter how many times I tell myself that I still do it we all do it yeah hopefully less exact yeah well you better over time you get better exactly and that's another reason why it's so good to like you know like Steve's here in Maui right now because we're doing a like a mastermind get-together with twenty really high-level investors because we need that we need other people to look at a business and be like hey what what what are you doing stupid right now like that's what I want you to tell me this week like what am i doing stupid what am i not thinking about where am i where am i letting motion cloud my judgment so if you don't have it in your area people like fine people in your area you can get together with and vitam out go somewhere cool like Maui and and get people that can get around you and tell you what are you doing what can you absolutely the your your if you're the smartest person of your friends you're with the wrong friends yeah you've got to elevate yourself to smarter people to tell you and you got to be ok with people telling you hey you're doing this wrong yeah it's all wrong and you have to be ok and not let your ego come into play because that's a lot of times we all know yeah people's egos you know they don't want to be told they're doing something wrong yeah and that's the challenge you know yeah become friends with Brandon Turner you will not have an ego for very long I don't know that means you are not shy to tell people when they're doing something doing it hey David you should find out where pajamas everywhere you go baby you should probably not wear pajamas everywhere you go you know you should probably get dressed a little nicer David come on that was the first thing apparently I told David when we hung out the very first time I don't remember saying that but if you had better clothes I think we've been talking for a while and you were talking about how you want people to think more seriously and I was like well no that's why I decided I wanted to be your friend okay cared about me enough to say that without worrying about how that would make you feel and I mean but that's when people need to look for in their friendships like like Steve you said that your wife told you you weren't good at this yes like she was it was not hard for her to say I love you and you suck this is the knob yeah so that was probably why you said you know what then I need to systemize this and get other people that can do it and in order to do that I need to have crystal clear systems and boom you're on the bigger podcast podcast teaching about it so yeah tell me the truth that's how you love them absolutely absolutely I agree all right well we got to begin wrapping this up normally we would go through a fire around set of questions here with your questions on the forums but to be completely honest with everybody the Sun is getting closer and closer to our paces yeah we are we are sitting here in the afternoon Sun of Maui and like the Sun has been has been going like just down over like the edge of where we are right now and we're about five minutes from getting blinded yeah getting close and our face getting bright red sunburn so we're gonna skip right ahead and get to the world-famous all right and make sure you guys are listening to the other BiggerPockets shows you know there's a money podcast and of course the business podcast both excellent shows make sure you guys are listened to that it's really really good all right Steve let's get to the same four questions we ask every guest every week number one favorite either current or past a favorite real estate-related book other than the one you wrote favorite real estate book I would say my favorite book of all time would be Rich Dad Poor Dad all right it's a mindset shift it is so good yeah that's what I answer to back on episode 92 that was my answer yep so good all right what about your favorite business book favorite business book the e-myth yeah I just got finished reading that the other day I was gonna say this earlier and I didn't get a chance to say now you mentioned this idea where you had the org chart and your names are on everything yeah so I just reread that nemeth and I don't remember that from last time when I read it last time I all I remembered was don't work on your business work and don't work in your business work on your business and and you know franchise model which I love but this time I really got that is like org chart every single person like every role because not all the person's what the role so now I like Ryan and I sat down they didn't talked a lot about this like like this is Ryan's role this is my role this is what Lance Wakefield is doing like this is and like I'm doing like 3 roles Ryan's doing like 400 roles and Lance is doing a couple roles and that's okay like sure like I am like one of my roles is CEO like that is one of my roles but I'm also other little things like I'm building the slide deck for my real estate fund like that's one of my roles I have to do I'm the money raiser right now eventually we'll hire somebody to help raise money but right now that's me time both and so we can take that hat off I knew that's a totally myth I'm yep 100% on that and real quick for people that do the org chart thing you know what I would what I would suggest is never ever again never ever put a name by the org chart role and also I would say put a I use disc profiling put a personality profile to what type of person should be doing that rhizobia you may go well Ryan does that but he kind of sucks at talking to vendors so he's not gonna talk to vendors so we're gonna dye ride we're gonna change the roll around and that's what you don't do yeah old this is a disc profile this is the duties this is the KPIs and it's its unemotional yep and so that that that's the one thing I would say never change it around a person I had a call this morning with my business coach I gotta have one as well had him a couple years now been phenomenal and he he encouraged me to do the same thing he said look at he's like Tony Robbins and Michael Gerber have the same thing there's three types of people there are entrepreneurs there are in what Tony Robbins calls them artists but Michael Gerber says technician people who do the work and then there's managers people who control the systems right and he said like every one of those roles in your org chart is either a technician a manager or an entrepreneur yeah make sure that you have identified what those are so like your CEO Oh better be like focused on operations which is a manager role but your money raiser is gonna be more focused on a technician or a artist so anyway and what is the disc you know what we're very big we hire and fire we hire people on disc profile yeah and so we don't care what the resume says I want to know what is their disc and I want to know I'm not gonna hire a a C person that should be a sales person because I know they can't do that that's just not their role it's like me I couldn't be an accountant it's not my role yeah so yeah always hire I always say hire on disk and hire for the role not the person yeah and if people don't know what disc profile is David won't tell us real quick what that is cuz you're my favorite things in fact this was the rosetta stone that helped me understand how to communicate with other people it's a way of measuring for different aspects of your personality each disk is an acronym that stands for DS decisiveness I would be interactive or influential s is this ability rating and CEA's conscientious or compliance and and Heidi people make decisions very quickly in environments that they're not used to these are typically like your CEOs they're usually leaders are you Heidi nah man I owe me two eyes are you influential people they're typically the best salespeople these were like the the homecoming king or queen the most popular people in school everybody likes them they like to make people happy they do really good in sales roles or concierge type roles you're s is your stability score high asses are systems people they like the same thing all the time they really do not like change if you give them a task they've already done they do it very quickly and very well they don't like to let people down but they they're kind of opposite of Adi they don't like to be put in unfamiliar situations and have to make decisions there and your C scores your compliance people these are your engineers your architects your lawyers the people who really love policy two people who love spreadsheets if you take everything that comes your way and try to put it into a spreadsheet and turn it into a formula you're a high C type person these are your really good analyzers but they tend to not be as good with the personality side the networking type of stuff so just understanding that alone where you fit in will help you figure out what role you should play in your own business and then when you're hiring like Steve said you don't want to put a sales person like a heii in charge of analyzing stuff or in charge of running operations and you don't want to put a highly analytical person in charge of sales or raising money because they're not very charismatic they speak very monotone and they're kind of dry that's what you meant by getting the right people it's high-seas out there like wait a second now here's a do you know what sadistically what the investors are no what would you guess investors real estate would be heidi's but what do you think David you probably know I would say it would be a decencies a combination of those two see that yeah because it's large numbers yeah it's just numbers so it's just there's no emotions the reason they're not DS is they're very impatient and they're more stock brokers stock traders because they wanted to now they want to control the situation C's are logical they want to spreadsheets and data so we tweak this profile our customers yeah so we know statistically it's their C's which when you're salesperson you got to know how to talk you have to see language to a see yeah you can't be an I talking to a see you're not gonna get along value in knowing the dish just for yourself it's when I'm talking to Steve or I'm talking to Brandon or I'm talking to Ryan I have to do it differently based on how they like to address the rule which is why I just fell in love with it because it finally helped me understand why a lot of people thought I was just a jerk and I would run over people that's how high B's are and I assumed everybody else wanted to be talk to you that way - that's funny okay let's move on here next question Steve what are some of your hobbies ah hobbies well I work a lot because I've got multiple jobs and businesses I go to the gym but they you clearly work out I go to the gym yeah you know I don't look at it as a hobby though it's funny I've been doing it since I was 11 years old it's just what I do I just I get up in the morning I do my thing it's like breathing to me just it's just what I do um are you seven seven days a week Jim I go about five probably I mean the older I get the less I could dream you know but yeah I just I it's just what I do I don't I I could not function if I don't go to the gym in the morning and I would say probably ride motorcycles I love ride motorcycles cool yeah those green things and apparently diving just got out of the water did you yeah no I didn't go diving with the hell you know no but I do dive yeah yeah yeah alright last question for me what do you think sets apart successful real estate investors from those who give up fail or never get started I would say very simple it would be consistency and taking action not being right not being perfect I think the ones that fail they failed to start and I think if you're consistent and you just get out there and you're okay making mistakes and you're okay failing you're gonna you're gonna be more successful than anyone else out there which i think is attributed to my success and everything that we've done because we failed so hard and we're very open about it and we have no ego about it and we share it and so I think consistency and and basically getting out there not waiting for the stars dual-line before you pull the trigger on something alright last question of the day tell us Steve where can people find out more about you sure I am on social media they can find me on Facebook Steve Rosenberg our oze and be ERG property management company Empire industries @ww empire industries LLC comm Rosenberg Steve one on Instagram I'm pretty much my name I wrote a book they can think and pretty much find me I'm all over the place on my book called it's called building an empire failing our ways to millions there you go and on my website I probably have about 300 video blogs that I've done of educating people on mistakes that landlords make of finding the perfect tenant and all the stuff that again it's just our way of giving back so I do I do a lot of blogs a lot of video blogs just to help people so if you want to learn some stuff it's like BiggerPockets a not not like BiggerPockets but it's an educational thing for people that want to figure out what they're doing and you'll be doing more speaking and stuff too lately i do a lot of speaking i speak around the around the country i do a lot for either property management companies for investors as well as just for businesses as well very cool very cool all right dude well this has been fantastic you guys so much appreciate it yeah thank you yeah awesome big thank you very much Steve this is David green for Brandon wounds from a friend are better than kisses from an enemy turner signing off alright guys that was anything with Steve Rosenberg hope you enjoyed today's the episode again if you want to watch the video version just go over to our YouTube page youtube.com such BiggerPockets check it out there and if you like this video make sure to share with somebody go throw it on your Instagram or on your Facebook or whatever send it in an email somebody or write down the URL put in an envelope send it in the mail and tell them to go check it out no one's gonna do that anyway Steve is a phenomenal guy great investor what do you think David I know you guys really hit it off as well well you know we you do you could never really understand I could I couldn't understand that now and yes Steve is very similar to me in the sense we both have had full-time jobs I was a cop he was a pilot while building our Empire and we both focus on systems we're both very very big into system everything that I learned I want to systemize it right away and I and I think like as Steve mentioned any business it real estates like any other business you have to learn systems if you want to do it well and any business can be systemising that's really the secret to scaling is yeah very pretty and you know one thing that we didn't really talk about interview because Steve's like a super humble guy and doesn't like self-promote but he actually has a like outsourcing company like he helps real estate investors find an outsourcing person typically in Mexico for like a lot less than you pay in the u.s. for people to answer phone calls and whatever so I'm actually working with Steve right now and setting that up in my business so anyway be sure to check out links in the show notes BiggerPockets icon says show 343 for more on that and that's all I got so david green you want to know should we get out of here absolutely this is David Green for Brandon the Megamind of masterminds Turner signing you're listening to BiggerPockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the hype you're in the right place stay tuned and be sure to join the millions of others who have benefited from BiggerPockets calm your home for real estate investing online