Real estate investing is like a three-legged stool. One leg is tax planning, second leg is asset protection, and third leg is business planning. Always remember to grow the business side of your real estate investment.
Today, Clint Coons of Anderson Business Advisors talks to Andre Johnson of Deal Mastery about real estate investing from the business planning side. Look at real estate investing as a business to turn cash into something sustainable.
Highlights/Topics:
- Pathway to Financial Freedom: Live rent- and mortgage-free by having tenants
- Strategic Partners and Business Operations: Work on your business, not in it
- Unlock Scalability: Fire yourself from as many roles and responsibilities as possible
- Foundational Building Blocks: Mindset, marketing campaigns, and making money
- Basic Marketing Systems: Opportunities via cold calling, yellow letters, and door hangers
- Financing: Almost every business opportunity might need to get a small business loan
- F-ing Focus: Find, fund, fix, and flip by drawing, sticking to, and working that plan
- Virtual Assistants (VAs): Hiring virtual workers doesn’t mean the work stops
- Shiny Object Syndrome: Real estate investing is simple, not easy or overnight success
Resources
Deal Mastery (Download Best-Selling Book by Andre Johnson)
Deal VAs (Free Consultation with Andre Johnson)
Andre Johnson’s Deal Mastery Website
Anderson Advisors Tax and Asset Protection Event
Full Episode Transcript
Clint: Welcome, everyone. Hi, it’s Clint Coons here with Anderson Business Advisors and this is another episode of our podcast. In this episode, what I thought we would talk about is real estate investing, but from the business planning side.
Those of you that have heard me speak before, you’ve been out to one of the live events, you know that when I talk about real estate investing, I like to refer to it as a three-legged stool. That is you have the asset protection leg, you have the tax planning leg, but then more importantly you have the business planning leg.
When you’re focusing on your real estate, what you should be looking at (from a structure and standpoint), is you definitely need the first two legs—the tax and asset protection. But you need to make sure that you’re not going to do something with those two legs that will impair your ability to grow the business side of your investment because, in the end, that is really what real estate investors should be focusing on.
Looking at real estate as a business. Using it to turn their cash, their efforts, into something that is sustainable for them so you can do more. Put yourself in the place where an opportunity presents itself, you’re ready to take action. But so many people miss this. Their local professionals do not see it that way.
The individuals whom they worked to help them, their coaches with their real estate investing do not understand this concept that business is extremely important. That idea, that mindset, when you’re going to go out there and start real estate investing because as challenges come up if you haven’t planned for those challenges or anticipated them. Because you’re looking at it from a business perspective. It’s going to be difficult for you.
So many people miss this in all aspects of their lives. I remember when I first started practicing law. I graduated from law school. I was two years at a law school. My grandfather, he’s an attorney for 50 years. He sat down with me one night over a few bottles of wine, and he said, “Hey, Clint. You’re never going to find success as an attorney the way you practice.”
For a minute there, I didn’t know how to take it and then I spun it and I said, “You’re right. Based upon how you see the practice of the law, I’m never going to find success that way. But I’m not trying to find success the way you practice. I’m taking my practice (what I’m doing) and I’m building a business around it. I see it with a different set of eyes. I want to create something that I can scale, that I can expand, and go nationwide.”
From his perspective, where you sit behind a desk and you wait for clients to come into your office or you play hide the ball—that’s how you build your business. Ours was completely different. It was about education and bringing it to people to build trust.
This is what comes up in real estate. That’s what I thought with this episode, what we’ll focus on is the business side. There’s no one better to talk about that than a good friend of mine who is out there actually teaching people about business. His name is Andre Johnson. He actually wrote a book called Deal Mastery. He has a phenomenal program about understanding this concept and helping real estate investors move their investing to the next level so they don’t feel trapped. Andre, how are you doing today?
Andre: I’m great, Clint. Thanks for having me.
Clint: I’m so glad you’ve come on because this topic means a lot to me. In every event, I talk about the business planning side. I just look at people and their eyes start to widen and they lean into the conversation because no one’s ever spoken to them about this.
It’s all always about you got to go out and fix and flip this property. Here’s a deal on how to wholesale. You got this different spin on it and I find that to be intriguing. But you just don’t wake up one day and realize hey, this has got to be a business. Where did all those come from? How did you get started figuring all this stuff out?
Andre: Just a quick background on me. When I started investing, I started like a lot of people looking at it as an opportunity, a pathway to financial freedom. A friend of mine had just bought a townhouse. I lived in a townhouse. The only difference was his townhouse was two units. He would always brag about how his tenant upstairs is paying for his rent and mortgage.
Essentially, he got me into the business by showing me how real estate could unlock the opportunity towards cash flow, towards the ability to create wealth, and that was my beginning. He wanted to buy more properties. He had credit challenges so he wanted me to be a credit partner. That was really the beginnings of me looking at real estate through the lens of not trying to do everything myself.
I think the listeners listening to this podcast, a lot of people struggle with trying to make real estate a business where they wear all the hats for all the responsibilities that we have as an investor. One of the keys, as you’re starting out your real estate business or trying to get unstuck and take your business to the next level, is to fire yourself as quickly as possible from as many roles that you have in your business.
Let me repeat that. Your goal should be to fire yourself from these many responsibilities that you have in your business as quickly as possible. That’s the way that you’re going to be able to scale. That’s the way you’re going to be able to be successful long term.
Let me give you an example. There are many of you that are looking to get started as an investor or you’re trying to grow your business and take it to the next level. Unfortunately, you are trying to do all the things in your business to make that happen. One of the things that helped unlock the scalability in my business very early on, Clint, was to be able to rely and leverage on others to do things like finding deals for me. To allow others to help to finance the projects that we were fixing and flipping in the early 2000s.
That way, you don’t get stuck with the limitations of your own time, limitations of your own capital, and the limitations (quite frankly) of your own knowledge. If you’re willing to and you look for the right strategic partners in your business.
Clint: That goes back to the age-old saying, “You should be working on your business, not in your business.” That trap, everyone falls into it. I know I still to this day. I’ve been practicing for 20 years building up Anderson and I have to check myself because I will fall into that trap of working in the business too much rather than on the business. That’s a great point, but I don’t think people necessarily get that right away, do they?
Andre: They don’t because most people (and quite frankly) in our industry, most instructors, coaches, and mentors put forth the result in front of the student or the new investor as the prize. An example would be the mindset of how quickly can I get that first deal done or a marketing campaign where we’ll help you to make $30,000 in 30 days.
Clint, I liken that to someone that just wants to chase a result. Someone that is playing the lottery. There’s no predictable outcomes, no predictable timeline with that mindset. Someone looking to get started. One of the most important things I can leave you with today is if you’re looking to make real estate as a serious career change, a serious business for you, and a path towards financial freedom, you have to invest in building the fundamental building blocks in your business.
Those building blocks are you have to invest in having ongoing sales and marketing. You can’t just rely on the MLS. You can’t just rely on agents and brokers. You can’t just rely on auctions and wholesalers to be the source of your deals. You have to invest in some type of scalable lead gen for yourselves.
What does that mean? Invest in some basic marketing systems where you can find and nurture opportunities with off-market sellers that might be interested in selling their property to you. There are many different ways to do that. You can do that with cold calling. You can do that by sending out yellow letters. You can do that with door hangers. There are many ways you can set up deal-finding systems in your business as sales and marketing.
Another component of building a business is, of course, operations. I would ask you if you’re in real estate, do you handle all the paperwork in your business? Are you doing the bookkeeping? Are you the one that’s answering the phone? Are you the one that’s actually following up on the leads? Are you the one going out in the field to actually take the photos of a property?
These are all tasks that we have as real estate business owners, but until you’re able to fire yourself, outsource these tasks, and delegate them to someone who’s experienced and been trained to actually execute, then you’re going to be constantly working in your business and you can’t work on your business to scale it to be something where you control your time.
Clint, the funny thing is when people get into this business, they have the dream of being financially free, being able to have their passive income to replace their expenses, and being able to work anywhere in the world. Unfortunately, the dream very rarely matches the work and the execution that people put into building their real estate business.
Clint: I see that a lot. There’s that reality that finally starts to sink in. People are wondering why they’re not having success. I refer to it as building the foundation or having a blueprint instead of plans. Everything begins with a script or plan. You want to build a house, you need a plan. You want to make a movie, you need a script. People put a lot of time into that so that whatever they’re going to do, hopefully, they’re going to find success. You have to nail all that down.
So many real estate investors, (as you stated) they want to go out there for the prize right away. They don’t think about investing in the process to obtain the prize.
Andre: Absolutely. What happens is occasionally, let’s say you had this big training outfit, maybe it’s a national outfit and they train tens and thousands of investors. Yes, you may wind up with 5%-10% of them that wind up doing a wholesale deal in the first 30 days. That becomes an “atypical case study”. Results are a typical type of disclaimer with someone that has that type of pop-up result in 40 days. But they can’t reproduce it.
What I’m saying is, if you want real estate to be the pathway to financial freedom, if you want it to be something that gives you the lifestyle and the happiness that you want, be willing to invest in the process knowing that you may not have that deal that pops in 30 days. But you’ll have a business that continues to generate cash flow, it continues to generate multiple series of income for the long haul over the life of your business.
I mentioned the fundamentals of having a sales and marketing foundation—building blocks—in your business. I mentioned having operations building blocks where you might have virtual assistance, virtual workers, and strategic partners that help you to execute the grunt work that needs to happen in your business. But you also need to make sure you invest in having those professional service providers in your business.
Starting with a mentor, someone that can help shorten the learning curve to help you get started. Or (quite frankly) a mentor to help you get unstuck if you’ve been in the business for a while to take your business to the next level. Then all the other strategic partners you need like your asset protection person, like Clint and Anderson Advisors. Making sure you have the right financial partners around you that can keep the money in your business as opposed to going out of your business.
Lastly, of course, this one baffles me, Clint. When people come into this industry and they want to get started, or they have some experience with investing and they want to go full time, it always baffles me why people do not think that they need to […] up their finances in their business before they get started.
If you look at any business opportunity, a franchise, a mom-and-pop business starting, or a deli shop, everyone understands I might have to get a small business loan. I might have to take 6 months of capital for my operations in my 6-12 month plan and put that in the bank to make sure I can cover my payroll. To make sure I can cover my marketing. To make sure I have enough expenses to go to my system, my website, and all these different things.
People come into real estate and they just think I can turn a dollar into a million without any type of financing foundation. We make sure that not only people that we work with but people that are in the earshot of our voices understand. If you’re going to get into real estate full time or if you want it to be a pathway to financial freedom, make sure to invest in financing your business.
Have 6-12 months of your operations, your marketing budgets in a bank account. That’s going to allow you to hire virtual workers, hire assistants, and bring on the right partners, legal protection advisors, financial advisors, and mentors. That’s what’s going to allow you to scale your business. Have the right plans to allow you to achieve your goal and to scale your business long term.
Clint: When you’re talking to that first person, they’re getting started in real estate and you’re telling them all of these that you need to do. (1) I can see what’s going to happen. You’re going to feel overwhelmed by it. (2) They’re going to push back and say why should I spend money? Or maybe they’ve already gone and taken educational courses and they haven’t found any success and learning how to flip property, buy and hold, or buying wholesale. Why should I spend more money and I haven’t made money yet?
Because I see that as the typical objection that people have to invest in the core aspects of building their business as you described. How do you address that?
Andre: My retort to that is you shouldn’t spend the first dollar if you’re not planning to invest for the long term into building the foundation and the growth of your business. In other words, if your mindset is I’m going to invest (let’s call it) $100 for some course, that’s no different than spending $100 on playing Powerball or The Big Game.
It’s not sustainable. It’s not a fertile plan or pathway to success. You really have to look at real estate investing as a business. The business is only going to be successful when you have your real estate investment activities as a core part of the multiple streams of income in your business.
I turned it around and told people this. When you get started in real estate, you’re going to have to find what area you want to specialize in. I call it finding your F-ing focus. It’s not the F you think about. You have finding deals, funding deals, fixing properties, and flipping deals. Finding, funding, fixing, and flipping. Those four F’s really break down the areas of real estate no matter what type of strategy.
When you get started, you’re going to need to have a foundation in place to find where your expertise lies, where you want to hone that expertise. What you wind up doing is having partners, you wind up hiring specialists. You want to bring other people into your business so that you’re able to work on your business and other people working in your business.
I found, over the years, the best way to go about doing that is to approach real estate with a long term vision and focus in mind. Do not look at this business as something where you get rich quick. I’m going to make $30,000 in 30 days. If you play it correctly with the right budget, the right plan, then it’s something that I’ve seen be sustainable for investors across the country.
We’ve helped a lot of investors go from part-time to full-time. A lot of investors come to me with the right mindset to now be thanking the community, bringing in partners, and scale and grow their business like we scaled and grown ours.
Clint: What would be the average budget? Let’s say I wanted to go out and buy and hold properties. I want to start finding properties off-book, how much should I budget then to create these systems? How long does that take before I should even focus on the price?
Andre: Good question. Everyone is going to come with a different financial background, different financial resources, and access to resources. But if you come in and you have the ability to plan for 6-12 months, you have resources to bring in, (I would say) on average, budget somewhere around at least $2500 a month for your operations and your marketing budget.
That’s $2500 a month. Of course, if you look at that over a year, it’s going to be around $30,000. $30,000 for a year is not—if anyone is listening to this, you say hey, I’m going to start a new business. My goal is to be financially free in five years.
You say if I make an investment over a year—$30,000. Does that seem unreasonable? I think the average person listening will say no, that’s not really unreasonable. If you take a $2500 budget, you can now plan. You can have a portion of the budget (let’s say) $500-$700 a month be allocated towards your sales and marketing. Then find hot off-market deals.
Other $2500 a month, Clint, you may be able to take $500-$1000 to have a virtual assistant working for you about 20-30 hours a week. Now we’re off to about $1000-$1200. You’re about halfway to where that budget will take you on a monthly basis.
We’ve already covered our sales and marketing. We’ve covered our operations, our VA to do some of the grunt work for us in our business. The rest would be allocation towards some professional service providers. Maybe a mentor, maybe making the right alignments with those white-collar professionals that are expert in the area of real estate investing. Then you have a little bit left over to pay for courses and systems. Maybe a website, maybe some little things like that.
But that’s the mindset that you should have if you want this to be a career changer, a lifestyle changer, a pathway to financial freedom, and whatever pursuit of happiness you’re looking for. My recommendations to people that come to me, look at the $2500 a month number, $30,000 for a year, and make it be a 6-12 financing of that. If you can get $15,000, dump that into your business bank account. Now you know you’re set for six months of your marketing operations for the first six months of the year.
Clint: I heard you talk about the marketing and the VA, but what I’ve seen a lot is when you go on the internet or other individuals who talk about real estate investing. Let’s say you got to drop yellow letters. You know you don’t want to do yellow letters, you want to do these door hangers. Or you need to advertise on Facebook. There’s so many different ways you can go.
Personally, if I were in that position, I would just get lost in all the different messaging and I wouldn’t know how to spend that. How do you focus and narrow that down and say all right, this is what works in my market? Do you split test it? What do you recommend there?
Andre: Good question. Yes, there are so many different ways you can get to the same destination. I’m not here to say one is right versus wrong. What I am here to say is you draw out your plan, then you stick to your plan, and you work that plan.
When people come to us, in whatever parts of the country they’re in, they come to us with different goals, strategies, and interests. We just want to make sure that they allocate those resources to the best of their ability to achieve those goals.
I’ll give you an example. A lot of times, people come in, Clint, and they say the strategic why. The reason why they’re doing this, either starting a real estate business or trying to scale, is to have more time to spend with their loved ones. Then the first thing they say they want to do is they want to wholesale a property in the next 30 days. I’ll say okay, you realize wholesaling is actually work. You’re going to have to put work into this activity to actually wholesale a property. But their goals are to spend more time with their family.
A lot of times, that goal connects to something that they don’t make an intuitive connection with. Spending more time with your family, you’re going to need passive income. Passive income is going to be associated with things like rentals and other types of passive income-generating activities.
Wholesaling is quite the opposite. It’s a very active strategy on real estate. That’s how we help our students. That’s how we help advise investors is to make sure whatever your strategic why is, I just gave you an example—spend more time with family. You’re going to have to generate more passive income. Let’s make sure we have your marketing. Let’s make sure we have all of your budget geared towards achieving that goal. We would have (in that case) our clients focused on their marketing, on things that are going to generate cash flowing assets with those dollars.
Clint: From start to going out and actually putting these processes, implementing them, and starting investing, how many months would you say someone should take building this up before they actually start getting serious about the investing side of it? I imagine, you’re not talking about a week here? You can put it in perspective.
Andre: No. In perspective, from ground zero, you come in and you build your 12-month business plan. You say yes, I understand. I believe this makes sense. You take your finance, we get you working up. You’re working an operating capital. You throw that in your bank account. From that point, you should be able to, after 30 days or so, have the systems in place.
In that second month or so, start your marketing activities. Have your virtual assistant, your virtual worker, trained to be following up on some of the leads and opportunities that emanate from your campaigns. It’s not unheard of within that first quarter to have an actual deal that you’re able to execute on, to close the partner on, and things of that nature.
The point of this is don’t make the deal the number one focus of your affections. Make the investment and the process of building your business the number one focus of your affections and the results will follow. I think we’ve all heard very successful people in various different industries make that comment. If you focus on the process and not the results, the results follow.
Clint: Let’s just talk about the virtual assistant then because that’s part of the process. How do you find one? If I’m going to bring in a virtual assistant, I want them to follow up on deals or go out there and actually find some of the deals for me. How do you train someone or identify a virtual assistant that’s going to have the aptitude to do that and are not just going to be more my time having to clean after that VA?
Andre: Here’s the actual secret in this process that is often misunderstood. Just because you hire a virtual worker doesn’t mean the work stops. You have the interviewing of the virtual worker. You have the training of the VA. You have the management of VA. Essentially, you do take on work when you hire a virtual assistant from this site or that site. There’s plenty of sites out there if you were to google virtual worker, virtual assistant.
What we have done, Clint, over the years of being in the business for two decades, we have seen the need for all of these systems—the deal-finding systems, the virtual workers, the financing of business, and of course the mentoring. We’ve seen all the building blocks required to help new investors get started and to help experienced investors to unlock themselves and their business to go to the next level.
We have found the best VAs in various countries. We train them up to use our deal-finding systems. Now we actually have investors to hire trained virtual workers and VAs from us. Those VAs are ready to hit the ground running with all of the training that you need to run comps on properties, to follow up on market sellers, and experience with some prescreening so that by the time you talk to the seller, the seller is ready to negotiate with you.
These are the types of VA that you want to work with, not someone that you have to spend your time and sweat equity interviewing them, training them, and managing them from scratch. You really want to have someone that’s already been handpicked to be the cream of the crop (if you will) to work for and work with real estate business owners.
You can get more information on these VAs, we call them Deal VAs, because they help you do deals. If you go to www.dealvas.com and then you can see some of the VAs we have there on the site. We have some audio samples, some resumes, and you can request for consultation and we’ll talk to you about your real estate virtual assistant needs.
Clint: That’s important because I’ve heard so many speakers talk about using VAs, but then the student is left to figure this out on their own. If you don’t know what you don’t know, that just becomes another burden or impediment. Leveraging what you have already done is definitely something that if somebody is looking for it, they should take advantage of that. Talking about knowledge, you have a number one Amazon bestseller, don’t you?
Andre: Yes. Thank you for bringing that up. The book Deal Mastery: Real Estate Investing Guide to Finding Deals, Joint Venturing, Taking Massive Action, and Leaving A Legacy! really was a culmination of being in the business for 20 years. I always thought it was a little pretentious to write a book, that’s why I hadn’t written one for 20 years. But a couple of people got into my ears and said no, you have a story to tell.
I really want folks to go to Amazon. Go to dealmastery.net, we’ll give you an overview of my book. I’m offering free bonuses that I want you to take advantage of the special offer to get the book. It’s close to $8000 of bonuses, $7804 of bonuses to be exact. We’ll give you copies of our joint venture agreements. The joint venture agreements we use to not only fix and flip properties, but fix and hold properties. We’ll give you a copy of our note agreements. We’ll give you 30 days of access to our Deal Mastery Coaching and a whole host of other bonuses there. Again, dealmastery.net.
The story that I tell, Clint, is that you can’t be successful in this business on an island. I said it before, but you need the right people around you. You need the right asset protection people, right tax advisers, you need the right bookkeepers, and you need the right mentor to help you take that first step or to help you unlock you from your business.
We really break down in the book my journey of getting started. It took me 18 months to do my first deal because I didn’t have the right why, connect it with why I wanted to be in the business. Once I found that, then I have no choice but to be successful in the business. I covered that part in the book as well—how to find your right strategic why. That’s what’s going to make you get up at 4:30 AM in the morning or go to bed at 12:30 PM at night to get work done while you’re balancing the 9-5.
I cover all these things in the book. I cover how to focus on the right things in your business, how not to just continue to be distracted by shiny objects here and there on the internet that you find. How you make money here in this industry and that industry.
Real estate is great and it is the perfect industry for anyone listening to get started or to take your business to the next level and be successful because there’s just so much opportunity. You don’t need any special type of degree. You don’t need any special experience to get started. If you just surround yourself with the right people, you have the right focus, and you approach real estate with the right mindset that it is a business. And it’s not just a series of lottery winning opportunities here and there.
If you approach it with the right mindset, then you can have the speed of pathway to financial freedom and the lifestyle of happiness that you want and deserve. If you go to dealmastery.net, you can take advantage of the offer to get the book and also get close to $8000 worth of bonuses for anyone listening to this podcast with Clint.
Clint: I hope the listeners take advantage of that because what you shared right there, 18 months until you were finally able to get everything in place and you got your first deal. To leverage that experience, I think is huge. That’s why you want to talk to someone who’s been through it and you won’t make mistakes along the way. But more importantly, you kept bringing something up. The shiny object syndrome.
I can’t tell you how many people I’ve seen at different events over the last 20 years. They’ve gone from stock investing to flipping real estate to wholesaling. Now they’re into multifamily and none of them ever stick because they’re always looking for something else.
I think it’s because (as you stated) they don’t have the systems in place, they’re not staying in focus, and they want it to be easy. Would you agree it’s not easy?
Andre: It’s not easy, but it is simple. Let me say that again, it’s not easy but simple. If you make the business simple about the fundamental things, then you will have a long term success. I want to just reiterate this one more time, real estate investing is one stream of income of your real estate business. If you built it out of the real estate business, you’ll have income and cash flow that will come from buying whole properties. You’ll have income and cash flow that will come from the occasional wholesale or flip.
But if you approach real estate as a business, you’ll create other streams of income that are tangential to the investment itself. If you put the right sales and marketing in place. If you have the right operations with your virtual workers in place. If you have the right mentor and the right professional partners or strategic partners in place. If you have professionally capitalized your business.
Those things in place will help you to have a sustainable real estate business and it will be much more than just the cash flow from your apartments, your mobile homes, or your rentals. You will see a pathway to create multiple streams of income once you have your business in place. I assure you that.
Clint: That is such an important concept. Again, as I stated, it ties back to what we teach at Anderson. You gave them some information on how to get a hold of you. That’s also going to be in the notes below the podcast. If people want to click on that link, it will take you right there to get you those bonuses. Be sure to take advantage of that. Anything in passing you want to say?
Andre: I just appreciate working with you. You’ve been a great resource to our community. Looking forward to seeing you here shortly in the future. Again, if you want to take advantage of the offers that we give here. If you go to dealvas.com, we’ll do a free consultation with you to discuss your real estate business needs and also talk to you about how our virtual workers can help you in your business at dealvas.com.
Again, the number one bestseller in the real estate investment category, Deal Mastery book. We’ll give you close to $8000 worth of bonuses for taking advantage of our offer on getting the book today. Go to dealmastery.net. Again, Clint, thank you for giving us this opportunity to share our experience with your listeners. I look forward to continuing to work with you as a strategic partner.
Clint: Likewise, Andre. Thanks for coming on.
Andre: Thanks, Clint.
Clint: Take care.
Andre: Bye-bye.
