Podcast Summary
Creating value for customers in real estate: Successful real estate businesses provide solutions to consumers' problems and make the process more accessible and convenient.
Successful real estate businesses focus on solving problems and creating value for consumers. Paul Hersko and Willie Goldberg, the guests on this episode of the Bigger Pockets Podcast, have built a unique business by helping people buy raw land through a rent-to-own model. They've sold over 700 lots and have a large team and operation behind them. Another business, Rent to Retirement, offers no money down options for investing in turnkey rental properties. Both businesses have found success by catering to the needs and desires of their customers. NREIG, a company that provides insurance for real estate investors, also focuses on making the experience easier for investors by offering a one-stop solution for insuring multiple properties. The common thread among these businesses is their dedication to making the real estate process more accessible and convenient for their customers.
Bringing value to others: Focusing on others' needs can lead to improved quality of life and success in various areas, including business and relationships. Look for complementary skill sets and build partnerships based on mutual value.
Focusing on bringing value to others rather than taking from them can lead to improved quality of life and success in various areas, including business and relationships. This theme was emphasized during the discussion about Amazon being a company that prioritizes consumer experience over owner experience. The speakers, Paul and Willie, also shared their personal story of meeting and building a successful real estate business together, which started when they recognized the value each other could bring to the table. They met at a party and discovered their complementary skill sets, leading to a partnership that grew their business. This idea of putting others' needs first can apply to various aspects of life and business, and it's a challenge for listeners to try incorporating it into their own lives.
Seeking Fulfillment in Real Estate: Two individuals found real estate investing as a means to fulfill personal desires and career goals, driven by experiences and research.
Both individuals, during different periods in their lives, felt unfulfilled with their current career paths and were seeking something new. One was drawn to real estate due to personal experiences and a desire to provide value, while the other was attracted to it as a potential profitable alternative to a demanding career. Their backgrounds and experiences shaped their perspectives and motivated them to explore real estate investing. While one had been exposed to it earlier, the other discovered it through research and podcasts, but both found that the seed had been planted and real estate investing offered a sense of fulfillment beyond just financial gains.
Finding a successful real estate investing partnership through complementary skills: Successful real estate investing partnerships benefit from individuals bringing diverse expertise and complementary skill sets to the table.
Successful real estate investing partnerships thrive when individuals bring complementary skill sets to the table. This was evident in the story of Willie and Paul, who met at a party and bonded over their shared entrepreneurial spirit and love for high-risk activities. Willie, with his background in finance and analytical mindset, was drawn to the numbers and systems aspect of real estate investing. Paul, on the other hand, came from a sales, ecommerce, and marketing background, which proved invaluable in optimizing listings and marketing efforts for their real estate business. Their unique skill sets, combined with their shared passion and mutual respect, led to a successful partnership. This story underscores the importance of seeking out individuals with diverse expertise when building a business or investing in real estate.
Successful partnership through complementary skills: A successful business partnership thrives when individuals bring complementary skills, allowing for the identification of unique opportunities and increased potential for high returns on investment, especially in the raw land niche with its virtual analysis capabilities and lower barriers to entry.
The success of their business partnership was due to the complementary skill sets of the individuals involved. Willie had extensive experience in the raw land niche, while his partner brought expertise in ecommerce and brand building. The opportunity to combine these skills led them to identify the potential in raw land investing, which offered virtual analysis, lower barriers to entry, and favorable margins. Willie was initially drawn to raw land due to its virtual analysis capabilities and the potential for high returns on investment, even with lower capital commitments. The lower price points in the market, typically less than $50,000, provide better margins as banks are less willing to lend on vacant land in this price range. Overall, the partnership thrived due to the unique perspectives and experiences each individual brought to the table.
Overcoming challenges in raw land investing: Raw land investing comes with significant costs and financing challenges, but offering financing solutions can unlock a large buyer base and create a profitable business model.
The process of buying and selling raw land involves overcoming various challenges due to the industry being broken from multiple standpoints. New investors often underestimate the costs involved, including those from title companies and realtors. Additionally, financing is hard to come by for raw land at the price points most investors operate in. However, by offering financing solutions, companies like the one discussed can unlock a large buyer base and create a profitable business model. The process involves buying land through traditional marketing methods, closing deals, and then listing and selling the property on a website with financing options. The value added is primarily in the financing aspect, as the company doesn't engage in property development or improvements.
Buying underpriced land for resale with flexible payment plans: Company specializes in buying underpriced land, offers flexible payment plans, and generates passive income through monthly collections
The company specializes in buying underpriced land directly from landowners, often due to personal reasons or market inefficiencies. The company then offers these properties for sale on their website with easy, flexible payment plans, similar to rent-to-own agreements. Buyers can use the land while making monthly payments, and once they've paid off the full price, they gain full ownership. This business model allows the company to generate passive income through the collection of monthly payments on vacant land. Additionally, the streamlined buying process and flexible payment options make it an attractive alternative to traditional real estate purchasing methods.
Creating a new business opportunity in leasing land for hunting and camping: Paul's team identified a unique business opportunity and scaled it by building infrastructure, hiring sales team, and implementing effective systems. However, it comes with risks and requires careful consideration before investing.
Paul and his team have identified a unique business opportunity in leasing hunting and camping land to individuals and businesses, and they have successfully scaled their business by focusing on building a strong infrastructure, hiring a sales team, and implementing effective systems and processes. This creative solution to the challenges of finding profitable real estate deals in today's market required thinking outside the box and designing a new system rather than just finding existing deals. However, this business model also comes with risks, such as the potential for buying land that doesn't generate the expected revenue, and it's important for potential investors to carefully consider these risks before getting involved. Paul and his team have learned from experience that the key to success is scaling intelligently and efficiently, with a focus on hiring the right people and implementing effective systems to manage the business and its growth.
Learning from experience and due diligence in real estate investing: Experience and due diligence are essential in real estate investing, avoiding costly mistakes and focusing on high-demand areas. Utilize technology like DealMachine for efficient lead generation.
Experience and due diligence are crucial in real estate investing. With thousands of deals under their belt, the speakers have learned that going to areas with high demand and avoiding costly mistakes, such as buying properties in unfavorable locations or misinterpreting environmental reports, are essential. The niche they focus on is forgiving due to the low cost of the properties, but even so, they've only lost a few thousand dollars on a handful of properties. A mistake they made was trusting an agent's assessment of a property's wetness level, which led to a significant loss. Technology, like DealMachine, has made lead generation more accessible and efficient, allowing investors to access high-quality data and contact information for potential deals. By focusing on experience, due diligence, and utilizing the right tools, investors can increase their chances of success.
Revolutionizing Real Estate Investing with Technology: Tools like RentApp, DealMachine, and PropStream streamline rent collection, lead generation, and deal making, saving time and potential losses through accurate data and filters. Be cautious investing out of state, and use resources like Google Earth Pro to avoid costly mistakes.
Technology is revolutionizing various aspects of real estate investing, making processes like rent collection, lead generation, and deal making more efficient and convenient. RentApp simplifies rent collection through ACH bank transfers, DealMachine provides unlimited access to reliable contact information, and PropStream helps find off-market deals with accurate data and filters. Meanwhile, it's essential to be cautious when investing out of state, as lessons like learning about property elevation and topography from Google Earth Pro can save potential losses. Overall, embracing these tools and best practices can lead to a more successful real estate investing journey. To learn more about these services, visit rent.app/landlord, dealmachine.com/bp, and www.propstream.com/bp.
Learning from setbacks in real estate: Accepting mistakes as part of the learning process, implementing strategies to mitigate risks, having a diverse portfolio, hands-on experience, giving employees freedom to learn, tracking KPIs for overall success
Running a successful real estate business involves making mistakes and learning from them. The speakers shared their experiences of encountering unexpected issues, such as hidden parking restrictions and homeowners association fees, which led to losses. However, they emphasized the importance of accepting these setbacks as part of the learning process and implementing strategies to mitigate risks, such as buying at certain prices and having a diverse portfolio. They also highlighted the value of hands-on experience and giving employees the freedom to make mistakes and learn from them. The speakers' business coaches encouraged their number-driven approach, and they stressed the importance of tracking key performance indicators (KPIs) to ensure the overall success of their enterprise.
Thinking like a business owner and taking calculated risks: Embrace entrepreneurial mindset, set KPIs, and regularly review progress for effective business oversight.
Having a mindset of thinking like a business owner and taking calculated risks can lead to faster learning and growth, rather than waiting for everything to be perfect. The speakers emphasized the importance of a culture that encourages entrepreneurial thinking and not being overly rigid. They also discussed the use of key performance indicators (KPIs) to manage and oversee a business at scale, focusing on the most important metrics to ensure accountability and progress towards goals. By managing the business from a high level and regularly reviewing KPIs, it allows for effective oversight and understanding of the various processes and teams within the organization.
Buying the right product or property at the right price and location is crucial for business success.: Identifying the right product or property and making the right purchase at the right price and location is essential for business success. A clear vision and effective team roles help ensure this.
The foundation of a successful business lies in making the right decisions during the initial stages, specifically in buying the right product or property at the right price and location. This sets the stage for the business to overcome potential mistakes and challenges that may arise later on. Each team member has a unique role to play in ensuring this success. The visionary identifies the direction and goals of the business, while the integrator focuses on implementing the operations and ensuring they align with the vision. By prioritizing the right purchases and having a clear vision, a business can thrive and weather any potential storms.
Managing and Organizing a Real Estate Business: Effective management and organization are vital for real estate success. Familiar areas, systematic approaches, and financing terms can lead to profitable deals, but inflation's impact should be considered.
Effective management and organization are crucial for a real estate business to grow and succeed. The speaker in this discussion manages various aspects of their business, including finance, CRM, and overseeing deals. They find properties in areas they're familiar with and use a systematic approach to negotiate and fund deals. In this specific deal, they bought a 2.5-acre property in California for $64,100 and sold it on owner financing terms for $303,200 over 120 months with 0% interest. While this deal was successful, the team didn't learn any specific lessons from it. However, they acknowledged the potential impact of inflation on their business, as most of their sales are on terms.
Company's model mitigates inflation risk through land ownership and quick cost recovery: Company minimizes inflation impact by retaining land title, owning debt, and focusing on high volume sales
The company mitigates the risk of inflation by quickly recouping their costs and owning the land while customers make payments. The value of their debt and notes decreases with inflation, but the value of their inventory, or land, increases. They retain the title to the property during the payment process, making it easy to take it back if necessary. Inflation hurts them on the upside with borrowed money, but protects them on the downside with cheaper dollars for repayment. The company's model is tied together, keeping risk low, and they focus on high volume to minimize the impact of inflation.
Prioritizing Customers for Business Success: Focusing on customers and simplifying processes leads to business success, positive customer experiences, and scalability.
Focusing on making things easier for customers rather than just making the most profit leads to business success and customer satisfaction. This was emphasized in a discussion about buying and selling land properties, where having a large number of properties minimizes the impact of inflation. The importance of a user-friendly website and excellent customer service were also highlighted as key factors in their business success. The speaker, who has an Amazon background, emphasized the importance of putting the customer first and making things easier for them, rather than just focusing on profits. This approach not only leads to a better customer experience but also results in more business and scalability. The speaker also shared their mission of helping people realize their dreams of owning land and providing a simple and affordable way for them to do so. Overall, the takeaway is that prioritizing the customer and making things easier for them is essential for business success and positive impact.
Favorite Books and Hobbies of Real Estate Investors Willie and Paul: Willie recommends 'Am I Being Too Subtle' for real estate and 'Made in America' for business, while Paul enjoys tennis, water sports, and learning from opponents in investing.
Real estate investment provides an opportunity for individuals to own something and fulfill their version of the American dream, even if they may not have the financial means to buy a house. During the last segment of the show, the hosts asked each guest their favorite real estate and business books, as well as their hobbies. Willie's favorite real estate book is "Am I Being Too Subtle" by Sam Zell, while Paul admitted to never having read a real estate book. For business books, Willie favors "Made in America" by Sam Walton, and Paul prefers "The Hard Thing About Hard Things" by Ben Horowitz. In their free time, Willie enjoys playing chess and poker, while Paul is an avid tennis player and water sports enthusiast. When it comes to successful investing, Paul believes that determination and gathering intelligence on opponents are key factors that set apart successful investors from those who give up or fail.
The Importance of Execution, Persistence, and Long-Term Perspective in Real Estate Investing: Successful real estate investors have a willingness to try new opportunities, persist through challenges, make decisions despite setbacks, educate themselves, and take action on ideas, while maintaining a long-term perspective.
Having a willingness to try new opportunities, being persistent, and having the courage to make decisions, even when things go wrong, sets successful people apart. Both Paul and Willie emphasized the importance of execution without overthinking and treating every experience as a learning opportunity. They also encouraged educating oneself and taking action on ideas, while knowing that things won't always go as planned. To connect with Paul, visit paulhirsco.com, and for Willie, go to williegoldberg.com. Remember, the key to success in real estate investing is not about timing the market but rather having a long-term perspective and being consistent. To find an investor-friendly agent to help you navigate the market, visit biggerpockets.com/deals. Always consult with qualified advisors before making any investment decisions.
