Real Estate Game Changers Show
Hi! My name is Mike, and I am your host based in Jacksonville, Florida. Each Monday at 3:00 PM Eastern, we'll dive deep with guests all over the country who are changing the game in real estate.
Real Estate Game Changers Show
Mastering Real Estate with Systems and Processes
In this episode of the Real Estate Game Changers show, is Stephanie Betters from Charlotte, North Carolina. Stephanie shares her journey from buying her first foreclosed home in 2007 to building a multifaceted real estate business, including flipping, renting, and wholesaling properties.
All right, everyone. Welcome to the Real Estate Game Changers show. I'm your host, Mike McKay, based in Jacksonville, Florida. And each and every week we do this show with people who are changing the game of real estate all over the country. And it is a live show, everyone. So if you have any comments, please Or questions, please put them in the comments for our guests to answer. If anyone is in the Jacksonville market and you're in sales and you're thinking about getting into real estate, uh, we are looking for some more team members for our acquisitions team. Um, so if that sounds like you send me a DM on Instagram and let's talk this week on the show, we have Stephanie betters, Stephanie, welcome to the show.
Stephanie:Thank you for having me. Can I say the same for Charlotte, North Carolina? We got some good clothes here in Charlotte. I'm always looking.
Mike:I like it. So for the people who don't know you, could you tell us a little bit about how you got into the real estate business and how that's led you to where you are today?
Stephanie:So, uh, our journey, I'll try to be brief because I feel like I can get along with it. It's quite a winding road, an adventure. Um, but we, my husband and I, uh, graduated undergrad in 2007 and fresh, fresh, uh, professionals. I was a nurse. He was an x ray tech at the time. We had both gone to school. He was, uh, going to looking for a PA school, uh, application, applicant at that point. And we had no money and we had a ton of debt and in 07 It was a really good idea to buy a foreclosed house. Like that was the cool thing to do Uh, so he convinced me to do this I mean basically you see that you just buy a foreclosed house and you make money, right? So he's like we'll just buy one Uh, so we bought one in 07 and we did a live in renovation and Thank God, we sold it right before the crash, right before, and then we ended up going to grad school after that for a few years. But that was the first foray into it, it's like, okay, we, we, uh, we can do this, we can make money in real estate. And the idea for us was always to do this as an additional, um, way of making money, like, you know, some passive income and buy some rentals at one point. So very long story short, we went to grad school, we graduated. I'm a nurse practitioner. He's a physician assistant. We get our dream jobs. We're doing our thing. We've got great W2 jobs. We had a bunch of babies. We have three and, you know, it became clear, like, okay, like, are we going to do this? You know, we moved to Charlotte specifically for the real estate market and the job market was good. So in 2014, we were kind of rebooted, uh, after having some kids and getting settled and. Taking a home equity loan of credit out on our primary residence. We decided to go out and try to buy some rentals. And that went, that went well. It was hard. We probably made a hundred offers before we got our first, uh, offer accepted. Uh, but we, we started buying, um, buying rentals and then we found, Oh, we can't buy rentals with traditional financing because we run out too quickly. Like there goes up 20, 000 for the down payment plus renovation to get it, you know, tenant ready or what have you. So we decided, okay, maybe we need to start flipping again so we can grab some active income from that and reinvest it with rentals. So that started rolling and then we all of a sudden had three, four active flips and we, our teams were backed out, backed up, and we were working full time, had little children, like we can't keep up with this pace. We've got to hire people to help us. And, uh, what's this wholesaling thing that people are talking about? Maybe we should try that too. So, uh, we started wholesaling because our, our own crews were really busy. We didn't want to stop this. Marketing momentum. We finally got, so we were, we were buying rentals. We were fixing and flipping. We were wholesaling. And, uh, in, uh, 2018 we merged with a local friend of ours who was doing new build construction and then we added a fourth leg to the stool. Now we're there. So we've, we've kind of done the gamut, um, in real estate and had built a, built a pretty big team, but that's kind of a quick, uh, Story of how we got into it and all the different stages of, of real, of our real estate, uh, exit strategies.
Mike:Gotcha. So when you were doing your own flips, were you actually marketing for your own deals as well? Hmm.
Stephanie:So we made a bunch of offers on MLS and, uh, then we, we tried to get, we, we, we signed up for that HUD website where you can get HUD homes. Um, and that's how we actually got our first deal, uh, was from the HUD website and then one from MLS and we bought a rental off MLS. And then there was, we could never really find another deal on MLS ever again, to be honest. So our first true marketing channel was Every Door, Direct Mail, you know, where the post office would pick a route. So we knew neighborhoods really well in Charlotte and we said, okay, this is a good neighborhood. All these houses need about the same type of renovation. So let's buy in there. We want to hold in there eventually too. And so we would just mail that whole postal route. And, uh, then we got our next set of deals from that.
Mike:Gotcha. And at that point, you weren't yet wholesaling. You kind of put in wholesaling after when you kind of had too many deals to for your amount of construction.
Stephanie:Exactly.
Mike:Gotcha. And then, like, what are some challenges that as you were growing? These businesses you, you, you faced along the way as you started adding, let's talk about adding the wholesale line. Like what were some challenges fed in the wholesale line of business?
Stephanie:Um, well, we had to now build a, build a network of other investors and kind of get out there a little bit more. Um, so we started going to Ria's and, and meeting other people and deciding, you know, figuring out who else is transacting in our area. Uh, and this is in, you know, 14, 15. So long before we had online tools like investor lift, for example, to try to establish a network. So we would go to Ria's and then we had, we also would go to auctions and we still do that actually today. We go to auctions, was bidding on auction property and go make some friends there and say, Hey, I, you know, I've got a deal. Would you want this one? You know, there's better deals on what's happening here in the auction. Yeah. We made a lot of really great connections that way. Um, but I would say, so that was a big one. Transitioning into wholesaling is getting a good, uh, getting a good network. So that was a new piece. And then the transaction management all of a sudden made more transactions. We had to hire a transaction coordinator to help keep the homeowner on the line, keep the buyer on the line, uh, make sure everything's moving forward. Just that volume increase. Um, created a different challenge, you know,
Mike:Yeah.
Stephanie:receiving offers, how do we price? Do we take the first offer that we get that's asking price? Do we let it be bid up? I think we still have all those same questions, but, uh, we had them for the first time then, you know, and tried to have to try to figure out how, how to, how do we make margin on this and what's acceptable. And, you know,
Mike:I was going to ask when you said that, what is your, what is your strategy in this current market wholesaling? Is it, I take the first asking price off or is it, am I trying to bid it up? Gotcha.
Stephanie:If we get our asking price offer, that's what we take. Especially if that asking price offers with somebody we know and have transacted with before. That's definitely a lesson I've learned is establish good relationships with other people because that reputation goes a very long way. So when we have a known relationship with a buyer and they give us an asking price offer, for the most part, we accept that. If it's somebody we don't know, then we're going to do a little bit more vetting and consideration, right? Like, Hey, who are you and, uh, have you seen the property and things like that?
Mike:are you, are you using some of these newer tools now, like investor lift to, to find your buyers or have you guys just built up a list over the years?
Stephanie:No, we don't. Uh, we've built up a list. No, we always are adding new buyers and monitoring who's transacting in the area. So we'll probably a hundred new buyers a month just by scraping and meeting new people, et cetera. But we have a pretty large database now.
Mike:Gotcha. Okay. And then I know we're talking a little bit offline about how a big part of allowing you guys to be able to scale has been some systems that you guys have built out.
Stephanie:Yeah.
Mike:You want to talk about maybe some systems that you've built early on and even all the and then maybe pick a couple that you've built up to even today.
Stephanie:Yeah. So really creating process and having a repeatable system has been a really big part of our journey. Um, I am, I'm operations minded and, and I like systems. Um, and one of the, one of the problems we had is trying to figure out what works. You know, so that was one of the, the biggest problems besides maybe figuring out what to offer, but what, what works as far as marketing goes is the next big problem. Um, and so what we struggled with in the beginning was things like phone metrics, like how many phone calls do we need to make or how many conversations do we need to have? And how do we, how do we set appointments and confirm appointments and follow up with people that know show and things like that? So all that kind of broke, if you will, or didn't wasn't established in the very beginning. And I got, you know, I got a lot of momentum and trying to solve problems like that step by step and understand and understanding what, how, how systems affect the bottom line. Right. So we started becoming more and more efficient and, and, and knowing what the number game is. And for example, you know, like if I know I have to make a hundred calls to set an appointment when I'm, when I've gotten my 88th or my 90th, no, I know I just need to get to a hundred. So I'm okay. So it kind of helps with some consistency to understand your pipeline and the same through kind of downstream. Like how many appointments do I need to set so that I get the appropriate number of attended appointments? Because there's always, there's always cancellations or no shows, right? And then on appointment, what percentage of the time am I making an offer? That's not a hundred percent of the time. Maybe we may feel like it, but if we don't know those true numbers, then we, we don't truly know how effective we are. Um, just as an aside there. I think us as entrepreneurs, we were kind of emotional and instinctual type of people. And we can sometimes feel like we know what the answer is like, Oh, this, no, this works. This marketing channel works. You're like, no, I made more offers than that when you potentially didn't. So having, having a system where you can actually track these numbers and literally, I know that your title is game changers, but that was the game changer. Understand what I call our pipeline velocity from, from marketing channel all the way through to transactions. And there are these kinds of key, key handoff points along the way that once you understand it becomes, A system that you can then manipulate, you know, so just as an example, the, the number of leads that come in, what percentage of those are qualified of your qualified leads, what percentage of those have appointments and then have attended appointments and then have offers made and then have offers accepted and have Trent contract, you know, that contract actually closed. There's only a handful or so of those key touch points. Um, to, to really measure and understand, and then when you can measure and understand that if there is a conversion percentage, for example, that isn't good, for example, you're not getting enough deals, you can kind of go back and look at your pipeline and figure out, okay, it's not that our leads aren't qualified, it's that we didn't make an appropriate number of offers. So why aren't offers? Is it because of we're not attending the appointment? Is it because it's not a qualified lead? Really? You know, what is it? Right. And then, and then I think it's easier to solve. All the problems that happen in, in our, in our businesses, instead of we just need more deals, we just need to spend more money on marketing. You know, like it's almost like that's our, our natural instinct, more leads. But if you look at your whole system and your whole pipeline and how things progress through it, you can really understand where to focus. And then you don't have to spend that much money on marketing potentially. And, kind of spoiler alert, it's almost never marketing's fault. You know, like it's almost always our own operation and our own stewardship of the leads that we got in our system and our follow up and stuff like that. I've, I've been able to save a lot of money in marketing because I've understand, understood that. And then I can, we can manipulate those numbers and create a deal. Like it's kind of all math at that point, you know?
Mike:What are you trying to discover? Because you've got like the metric that's, you know, appointments attended versus booked, right? So you're going to try and see how many hold. But then you said you've got another metric after that. That's. Like offers made, because so you said sometimes you don't always make one. So what are you trying to figure out with that offers made metric? They're like, what would you adjust based on that?
Stephanie:So if. First of all, there is this, if you're on an appointment with a seller, there's a lot of focus on establishing rapport, right? So you're there and you're walking through the house or it's a phone call and like, you're trying to understand pain and uncover pain and connect with them so that they can tell you what's actually hurting. Right. And you can have an entire appointment there and then get to the point where you're about, like where you have to start talking numbers. And people and some people will say, okay, let me get back to you. I'm gonna go run my numbers and then i'll call you with an offer right or
Mike:salesperson would say that.
Stephanie:salesperson or The the homeowner may say something like well i'm shopping around. I don't you know When you ask them, what do you want for the property? And you're like, well, I don't know, make, make me an offer. And there's kind of this, like this, it's a little bit of controversial. I have, I have arguments with others about this all the time. We're like, oh, you're shopping around. You're not motivated. You don't have a number. I'm not going to make a number first. So you never like get into the point where you're talking numbers with the, with the cell, with the homeowner, you know what I mean? Uh, So in my opinion, if you don't get to that part of the appointment where you're starting to talk numbers and even, even if you're the first one to say something like you got to give somebody a range to get them talking about numbers or expectations or then it's not truly a completed appointment. Like it's, you haven't completed the sales process, you've attended the appointment and there's value, right? But if you didn't get to that part where you're like, I'm, I'm, I can offer 200, 000. I'm paraphrasing, never say it like that, but if you don't get to that point, then you obviously can't get a deal. So it may, it kind of forces you to examine your sales process. You may not make an offer a hundred percent of the time. That's okay. I expect our sales folks to make an offer at least 80 percent of the time. So sometimes you'll be like, I can't help you. Like, first of all, I, you know, you, you, you owe too much or whatever it is that you, that it's not the right, it's a retail house and it's ready to be listed on the market. And you're there like, This is not the right fit, right? So it's okay that you're not the right fit, but you should be making offer 80 percent of the time. And when looking at a metric like that, it makes you be really honest about if you've got to that point where you're talking numbers and when you're the salesperson and you're out there making it, like, you know that when you're managing a team of people, it's, it's misleading the number of appointments that you have, like you're just seeing a metric, like, Oh, we had 50 appointments. Why didn't we get any deals? Well, diving in a little deeper. Oh, we didn't make an offer. Right. I'm trying to explain that as succinctly as possible, but you'd be surprised at how big of a problem that is,
Mike:And, um, is it, when you say like, make an offer, is it that they've gotten down to like the exact dollar or is it even that they've talked like talk numbers with the seller? Like got given them talk numbers,
Stephanie:even if it's a rank, like if, if
Mike:okay,
Stephanie:if you get to a point, you're like, well, what can you, what, what, you know, what, what do you want for the property? Like, what are you, what are you trying to do? You know? And they say, well, I don't know. I'm like, well, I'm in the ballpark. I'm going to be in like the low two hundreds and they're like, get out of my house. That still counts as an offer. You know, because especially some of the more challenging homeowners. The quickest way to get them to start to give you their number is for you to say a number, right? Like you just anchor them and start the conversation, but you didn't really engage in a sales process until you got to that piece. And if I could argue even further, I don't think the sales process has even started until you've gotten a no until they've said, no, that's too low. That's truly where the sales process starts, you know, anyway, it's just kind of taking a harder look at that. And then you're judging. Your contract conversion ratio based on the number of offers that you make, not necessarily based on the number of appointments. So I made 20 offers and I closed three of them. Okay. Versus I, you know, I went on 30 appointments and got one deal. Well, maybe those appointments, you never talked to sales. Like we only, we only could count conversions from that offer being made. You know what I'm saying? Cause what if 20 percent of them weren't even qualified? Right.
Mike:sure. Yeah. I kind of can eliminate one of those ones too, that maybe it shouldn't have even been set. By who's ever setting them in the first place.
Stephanie:Exactly. Or if it's acceptable that only 80 percent of them, 80 percent of the appointments, Should get an offer, then you've kind of falsely blamed your acquisition rep for their conversion ratio when it was truly a normal one from based on the offers that you made, you know,
Mike:Yeah. And then in your market, what are you looking for as a conversion rate number from the offer made to a contract sign? Not necessarily closed, but signed.
Stephanie:goal is 20 percent from offer made to contract signed. Um, and that, I think that does have some ability to, to be variable. Like I think 25 percent is gold standard, gold, gold, gold standard. And it's hard to operate at that 25 percent consistently all the time. Um, and I've seen a range to still be very viable, like 15%. And not because you can, you can get a really great large margin, especially wholesaling, you know, uh, that it's great that you, that you, uh, are converting a 15 percent of every one of your deals, you're getting 40 K off of, you know, so I think everybody has a little bit of a, some flexibility on what. Viability looks like for offer percentage accepted. I have, I will say, you know, looking at lots of data from companies I work with across the U S it has never been viable if you are 11 percent or less, that seems to be like the death sentence. Like if you are
Mike:I can do that. Yeah.
Stephanie:offer accepted from, you know, offer, offer accepted percentage, everybody struggles with profitability. You know, if you're marketing, if you're not marketing, I guess, I guess it doesn't matter if you're not, if you don't have any skin in the game, but if you're spending money and you're paying people to go out and do stuff, you have to be above 11 percent for viability. All
Mike:Yeah. What other metrics besides that kind of like the funnel, right? The funnel, I call them the funnel metrics, which is from the top to the bottom. What other metrics are you looking at for your sales team specifically?
Stephanie:right. Let me see if I can get them all chopped my head. So from lead from a brand new opted in lead being qualified, that should be between 30 percent and 50 percent
Mike:Is that no matter what, what the lead source or
Stephanie:Yes, a blended rate. It should be 30 to 50 percent. If it's too low or too high, there's a problem, generally.
Mike:Mm hmm.
Stephanie:You're over qualifying or you're under qualifying, right? So you want 30 to 50 percent as that range. And then the number of those qualified leads that get an appointment scheduled should be, or attended, should be 90 percent.
Mike:The number of those leads that get an appointment scheduled is 90%. Okay.
Stephanie:Qualified now, 90 percent of those should get an appointment. And the reason why there's a little margin there is sometimes people no show or cancel and you're like in this loop of rescheduling and, and they're kind of hotter follow up, but there is a percentage of people that just like you set an appointment and then they ghost, right? So 90 percent is, is, is great. And then of the appointment, um, set to appointment attended, that should be at least 75%, okay? And then the number of offers should be at least 80 percent on appointments. And then 20 percent of offer accepted, and then you should be closing, if you're wholesaling, if you've got a contract signed, you should be closing that over 70 percent of the time. So everyone talks about how many deals do you get, how many deals you get, you know, and there's this kind of like omni, like what percentage of these deals actually close 70 percent of those deals that you sign should close. Which means that that's a significant margin of error, like it could be title issues, it could be buyer issues, it could be homeowner issues, right? Like 30 percent of those things not closing is totally reasonable and totally normal. Um, but you should, you should aim for, for 70 percent of those contracts you sign to close. And I, I see a lot of people hover between 50 and 70%.
Mike:Mm hmm.
Stephanie:On their exit strategies,
Mike:What's typically the problem that you see? The biggest problem when they're at 50.
Stephanie:if they're wholesaling their disposal strategy, you know, like their buyers list, having a good buyer's list that's diverse, that can pay enough, that everybody can make money. Um, or people only having one exit strategy, like maybe they're only flipping and something comes up in inspection and how it's a deal killer for them, um, title issues are also a huge part of this where we deal with messy deals, so there's, there's generally surprises that happen like, Oh, you have an IRS lien for a hundred thousand dollars. Well, that kind of blew up the deal because I'm not paying that 1, 000 plus your mortgage or whatever. So, so I think there's a significant portion of them too, that just have really hairy title issues that take either time to, to, to cure or they kill the deal.
Mike:Yeah. If like when you're running your sales team outside of those conversion metrics along the way, are you looking at any other like key numbers daily or weekly?
Stephanie:So when analyzing the sales team, I think that the most relevant metric is to establish is to measure how well they do on the appointment. Like, did they prepare for the appointment? Did they arrive at that appointment either in person or on the phone with an understanding of the value of the property and potential repairs? Like, I don't care if it's ballpark, like, Oh, it's a 1970s house. It's probably gonna need 20, 30, 000 worth of repairs or understanding the comps, right? Like we gotta be prepared for the appointment when you show up. So we owe that based on people, their notes. Did you update your notes before you went? Do you have, or if you don't catch it before they go on appointment, did you have any of those numbers documented? Like at all, do you have comps and offer? And what's your maximum allowable offer on this property? If you don't know that going out to the property, and at least enough that you can do some quick math, like, oh, it's not 20, 000, it's, you know, 10, 000 or it's 50, 000. You're never going to be able to like be snappy enough on that appointment to, to lock it up at the time. So preparation is a big thing that we, that we measure. The next one is rapport. And you can tell by I've been able to establish rapport if they have pain points. uncovered. Like, why are we here today? Why are you selling, you know, and we can either review those appointments one on one with, with acquisitions or they're, we're reading their notes and seeing that they were able to establish rapport. Um, other things are like, were you able to negotiate on the property? Like, did you give a number? Did you make an offer and then what were the steps for this transaction or for this opportunity? You know, if you know those things, generally that was a successful appointment. And I think looking at sales appointments like that has been really helpful because otherwise you're judging the sales team based on the number of contracts that they got signed instead of the skill or tactic that they're doing. And the idea is if you get good at the skill and the tactic, you get the contracts. But when you're hiring a team, it's very difficult to teach that if you're not aware of it. Like, how do I set myself up for success? What is considered a successful appointment? It's not just that you get the contract signed. Obviously that's ideal, but you can still have an extremely successful appointment. If you did all those things and you're more likely to get the contract and follow up or next week or whatever it is, right? Like depending on the situation, you can still have a successful appointment. So if you train your sales team to do those. Things on the appointment the contracts will come because you've done it properly been prepared You've established rapport. You've been able to negotiate on that call get to numbers. You know what next steps are So if this homeowner is like, I don't know. I don't know you talked to my sister. Okay, let's do this Let's call your sister. Oh, I can't call her. Okay, let's do this. I'm gonna call you tomorrow Or I'll come back tomorrow or let's call you, whatever, like you've established, like, you know, and you've tried to set up the next steps for that appointment. Now you've trained that salesperson appropriately. They're going to be more successful.
Mike:How are you handling the issue of sometimes salespeople not updating systems because that's sometimes
Stephanie:classic problem.
Mike:problem. Yeah.
Stephanie:Yeah. It's like the aid salespeople complaining about leads and not updating notes is I think we'll be talking about that till the dawn of time. Uh, I think, I think the only real way to get compliance is like, if you didn't document it, it didn't happen and you can't get paid unless stuff happens. Right. So you got to put that stuff in, like, or, or we can't hand it off. So you get a deal signed, but we, you don't have any of your handoff stuff documented. Like we're not even gonna try to dispose of this deal until you have your stuff done. We can't do the next thing well, if you didn't do this thing. So, and then I think also allowing them to buy into the why, right? Like take the three seconds and do it because it helps our automation or it helps us help you. You're like, now someone can pick up from behind you when you're on another appointment. Our, our lead manager can call Sally and follow up and say, Hey Sally, did you talk to your sister? You know, Joe said so many nice things about you and it sounded like your sister was, you know, concerned that now you can pick up the relationship and the fact that you can actually have a higher chance of getting a deal done. So it's a little bit of, a little bit of carrot, a little bit of stick. I don't know.
Mike:Yeah.
Stephanie:you need to buy in that. It's important. I think, right. I'd take every anywhere.
Mike:Yeah. Absolutely. What were some other kind of inflection points as you were building your business that you decided? Okay, like I'm going to systemize this thing next.
Stephanie:Um, I think a big inflection point was having more marketing channels and trying to manage multiple marketing channels. Um, so at any given time we have five to 10, you know, there's always one ebbing and flowing. But, um, if you're wanting to scale your business, you truly need to have many different marketing channels and you have to do them really well. So you've got to start with one, master it, get to that 30 to 50 percent conversion, right? Like control that swim lanes, controllables, um, and then move on to the next one, one by one, you know, making sure that when you're adding marketing channels that you accounted for the runway of each one, there is no magic pill. Like you're not going to buy a lead source. And then all of a sudden a million dollars gets deposited in your bank. And you know, you're going to buy a lead source and you're going to figure out that what that lead is like. Like for example, Facebook leads behave differently than website leads behave differently than an inbound phone call from a direct mail piece. So your team has to kind of understand that and understand the conversion and all that. And then it's going to take probably a whole quarter for you to realize consistent revenue. Like after, or after a quarter revenue is starting to be consistent. I think that, you know, the business being emotional and all in and like kind of scary if we don't know those things, then we're like, we tend to make like jerk reactions. It's not working. Turn it off. Oh my gosh, we just spent 10, 000. Like it's not working. So understanding some of those numbers and that having the expectation of how long it's going to take for that cash conversion cycle, I think can also help us stay cool and like stay in the game. Don't move. Just let the. Let it work, let it cook, you know, uh, before shifting gears again or, or, or turning something off. So I think normalizing how long it takes and adding multiple channels over time is what helps scale. Because even if you have a great marketing channel, for whatever reason, it's ebbing and flowing, right? Like you can be consistent and you just have a month where it's slower. Like this month, Facebook was amazing. And then last month direct mail was, and we didn't do anything different. So it's kind of what it is, you know, so you just have to be able to stay consistent and like master each channel and roll it out in a way that you can keep your, keep saying,
Mike:Sure. Yeah. How are you, because I know you said that 30 to 50% you want 30, I think you said 30 to 50% of your, I guess you call'em, I dunno what you call'em, we call'em raw leads, and then you think qualified is the next step for you guys, at least. How do you make that work for a channel that's like an outbound marketing channel? Something like cold calling?
Stephanie:sure. So
Mike:you, yeah.
Stephanie:what we would call a lead in a cold call scenario is that somebody said, yes, they would want an offer.
Mike:Okay.
Stephanie:So it was an opt in to some degree. So it's not a prospect, like you bought a list. Um, of people who might have a property to sell, but somebody who opted in to learning more, either by saying yes to a cold caller or filling out a form or calling you off direct mail, whatever it is that opt in is what we qualify as a lead. What we call a lead and then it becomes.
Mike:I guess the part that I'm trying to figure out is how would you get set up your cold calling so that 30 to 50 percent of those end up making it over? Because we found at least, and maybe there's something that we can improve is that, you know, our outbound lead sources are way less qualified leads than our inbound lead sources.
Stephanie:Yeah. And that's why I think that blended rate kind of covers that 30 to 50%. Outbound is going to be around 30%. Like that's going to be where inbound is going to be closer to that 50%. I will say a little exception to that has I've seen as to be TV. TV creates a lot of phone calls, not necessarily all qualified. Think that, uh, TV would be closer to 50%, but it's closer to the 30%. But I think, you know, if you aren't getting 30 percent for your cold call leads, I would, you know, examine your list for sure. Um, but also don't underestimate, uh, that, that they are actually motivated. I think it's really easy for a homeowner to say like, well, you called me, I don't know, maybe I'll sell and like act tough on the phone. But once you get out there in person, like they're a hoarder and their wife is a mess, you know? So generally, if a, if even if it's an outbound lead, if they're willing to go on an appointment and have us go out there, we go ahead, we qualify it and we go out on the appointment. Like if we're looking to sell like in the next six months, six to 12 months, we're going We'll still go out on an appointment or set a call with a acquisition rep. And I, I will tell you, there are so many times where we're surprised. We're like, thank God we came to this appointment because they play it so cool. You know,
Mike:So. Is that kind of your, uh, qualification criteria if they want to sell in the next six months
Stephanie:so they have, they have to be in an area that we buy. Obviously, um, they, uh, they have to have some motivation to sell. Besides I want an offer, like give me a million bucks. Like that's not a motivation. Like I want to sell because I'm downsizing. I want to sell because I need repairs. I want to sell because I'm, you know, I need the finance. What, like they need to have a reason to sell, like not, I want to save money on commission. Like they have to have a reason to sell within the next 12, six to 12 months. Then we'll go out and we call that qualified.
Mike:out there? Wow. Okay. That's interesting. Cause yeah, some people have a way stricter and some people have a way looser and it's interesting to kind of see the different ways it's set up.
Stephanie:I find people to be the most strict when it's them going on the appointment.
Mike:Well, sure. Yeah.
Stephanie:Right. Really? Well, I'm busy. But if you, if you just, if you're imagining it from the team perspective and like, you just need at bats, then you're going to want to go on anybody who is reasonable to go out on, you know, regardless on how cool they sound on the phone,
Mike:Are you, is your team split? I know you mentioned lead managers. Is your team split where you've got lead manager setting appointments for acquisitions or is acquisitions setting their appointments and lead managers are just following up? If acquisitions is overwhelmed.
Stephanie:lead manager, set appointments
Mike:I said,
Stephanie:from start to finish. It's the best way to control the lead management is. Okay, go ahead.
Mike:I was just curious, I think you're about to say, well, I was curious why, why that's your stance on it. Curious to hear.
Stephanie:Lead managers are operations type of people. They're detailed people that they follow rules. Right. Like I'm going to call the new lead right away. I'm going to, like, I'm going to do these things to qualify the lead. Acquisitions is they're rule benders. No, does not mean no. Right. Like they don't follow process naturalist. And that's a beautiful thing. Like, thank God for them because that's how deals get done. Right. So if you primarily keep an acquisition person in a lead management seat, the process will suffer. It's, it's, it's. Essentially a guarantee. Now there are always unicorns out there for sure. And especially if you're the business owner doing it, there's some difference there, but if you have a team, you're going to want the, the process is what wins like 99 percent of the time, follow up process and doing, doing the same things the same way. Is what actually wins in the long run. Now, if you have a super motivated person, is it the most ideal scenario for them to immediately talk to a person who can help walk them through that deal? Yes, absolutely. But that only happens at best half of the time, right? So other half of the time, half to 70 percent of the time, right? If we use that qualification metric, they're not somebody who's motivated right now. So now you've inundated your acquisition rep with stuff that's not hot right now and they're busy doing that instead of busy having conversations with people who are qualified or, or on appointment and talking deals. So you've like bogged them down with that. And another thing, another step there is like that gets in your head, right? Then you're like, it messes with your mojo to talk to people like that while you're not motivated. Okay. Like you need to be like, you need to say like on the hot street, you know what I mean? You know how it gets in your head when you talk to five, 10 people and they all tell you, no, and it's like, you're like, damn, I'm wasting my time. Right? Like, as soon as you get into that mindset, you're not going to close as many deals. So I, I feel obviously very strongly about this, but my, my best advice to people starting off is, is get lead management, especially if you're a one or two man shop or a woman shop, like you need help with that process and just like help people set you up for people who are actually qualified because when you feel like you're winning, you win more.
Mike:Yeah. Are you doing, does your lead management, is that US based or you do that overseas?
Stephanie:I've done both and I have never found somebody U. S. based to outperform our offshore people. But I think that might be a little unique to us. We, we have, um, a lead manager that's been with us for eight years. He's amazing. He's amazing. Um, and no one has been able to outperform him. So we, uh, we've hired a couple of his friends now. And like now we have a whole little team in the Philippines that I've got to visit one of these days. But, uh, they do a great job and they establish great rapport and they have great handoff between our lead managers and our acquisition reps and our acquisition reps are all stateside. But I think what helps them be successful there is obviously the process, but also the handoff. So, for example, if I'm the lead manager, I take the call, I'm like, Okay, Sally, you, alright, you know who you need to talk to? You need to talk to Mike. Mike, Mike has lived in this town his whole life. He's super nice. He's got such a sweet family. I'm going to set him up with you next. He's going to really be able to help you. Right. And like you hand that off to you and then you put it on there. Like, Stephanie had such nice things to say about you. It sounds like, you know, you're going, you're downsizing and you know, she got some notes here about about your house being three bed, two bath, 1500 square feet. I see what she wrote. It sounds like a good fit. Tell me what's going on. You know, like when you have this handoff like that, it doesn't matter where they are. They feel like it's a team. And that handoff doesn't become negative. It becomes like, Oh great. She's putting me in touch with a person I really need to talk to. I'm like, I'm being heard. I'm being taken care of. Right. And like, my guy sounds real nice. Like, you know, and you make you just like you were when you're in the house walking through and like, you see a picture or you have a grandma, Oh my grandma, you know, like you, you do the same thing when you're talking to somebody on the phone, right? Like, Oh, your name is Sally. That's my mom's name. Like, Oh, that's Mike's mom's name, or that's his daughter's name. Like whatever, like little teeny little personal things can really help make that connection and that handoff a very positive, a very positive interaction instead of like a, I'm on Verizon and Verizon transferred me to another department. You know what I mean?
Mike:Yeah.
Stephanie:where, you know, so that was a long winded answer for your question of the, of, you know, VAs and offshore folks, but they can truly be just as, just as good. It depends a little bit on, on your process and your team and your philosophy. I think that people feel very strongly about having us based folks too. We've been really successful with our offshore people and they've stayed with us for so long that we truly do all know each other and have a very longstanding relationship. And then when they go and follow up, like you'll go on the appointment. And then a year later, you know, my, my, uh, lead manager will call you, like, Hey, my Stephanie came out. I. How'd it go? It was, can you believe it was a year ago? It's me again. I'm calling you, you know, like they, they, uh, you know, they, it keeps that relationship.
Mike:Yeah.
Stephanie:You can say that when you're done the appointment, maybe you don't get a deal. I was like, okay, well, Stephanie's going to, Stephanie's going to call and follow up with you too. I'm going to tell her all about this. And they, you know, they feel that it's a team.
Mike:Yeah. What are the characteristics that you're looking for when you're hiring a lead manager versus hiring an acquisitions person? Obviously someone's going to follow the process, which you already said, but besides that
Stephanie:The manager is definitely a default process. Do you know the predictive index? Have you heard of that? Okay.
Mike:well. Yeah.
Stephanie:I love XPI is the best. Um, so promoters I think are the best in that lead management seat. Matt is like a chatty Kathy, you know, like who will can talk to a wall, uh, but follow process and truly care and feel, you know, and feel like they can, can, can elude that over, over the phone. There are certain people who can do that. When you interview, you know, because they get you talking about yourself and you're like, what are we, what are we doing? Why am I talking about myself in this interview? You know, they can kind of get that out of you. Naturally. And then acquisition reps, um, also a little bit of a controversial feeling, but Mavericks, I have found not do well long term, um, in sales. I prefer captains. I think captain is probably my favorite profile, uh, for acquisitions, but somebody who can follow process and be consistent and not, you know, cut bait when things are hard and follow a process and like do things consistently still they have to like, no can't mean no. So that's why I still want that high a. And somebody who can connect quickly and make decisions. And it quite frankly, for acquisitions, I'm looking more for a high cog score than necessarily a perfect fit, uh, for profile. Although I captain is my favorite. Um, if they have a really high cause for they're generally quick learners and can adapt quickly and, and, uh, and be quick starts, but if I had to pick my perfect one, it would be a captain with a high cog score.
Mike:you who don't know what the cog score is on PI, could you just share what that is?
Stephanie:So it's essentially, it's like a, kind of like an IQ test in a way. They give you a bunch of patterns and it's a measurement of how quickly you learn. It's not truly a measurement of how smart you are, what your IQ is, but it's how quickly can you identify patterns during this test. And, uh, that's what this, what this business is. Right. Like you gotta, you gotta learn quick,
Mike:What, what's the number that you're looking for, for acquisitions for a cog score
Stephanie:no lower than two 40, 300,
Mike:for sure. Um, So, I mean, I, I like talking about the system stuff. It's obviously your passion. What, like, as you've been developing, you know, obviously left, how long has left name been around for at this point,
Stephanie:almost four, four and a half years, almost five years.
Mike:what are the more recent things that you've decided to tackle as like, okay, this is the next problem we're going to tackle and turn into a process and a system.
Stephanie:I get really excited about this. So nerd alert, just, uh, so the next big thing that we're rolling out is AI, uh, and, and predictions. And this is very, very, you know, hot topic, but we've been building it for a couple of years and now it's very fancy to talk about. So look at us, we're right on trend. Um, but basically, uh, we have this. It's this tool that integrates into your CRM and tells you all of your market insights and also auto updates your CRM when properties sell. So let's say you've been in business a while, you have 10, 000 leads in your system or maybe 3000 leads, whatever, you have a bunch of leads in the system and a certain percent of them sell and you don't necessarily know that they sell until you've talked to them and they tell you, I sold my house. So we have an auto updating the properties that sold and logging how much it sold for and who bought it. So that's kind of like this first piece of our tool and the kind of thesis there is Like I'm a I'm a human being who can make a hundred phone calls a day like that and that's my max, right? Maybe it's more if you have a dialer or whatever. I can make a hundred phone calls a day And that's my eight hour day. Like, I don't want to call people who already sold their house. Like that seems to be low, low hanging fruit. So like clean up the system, deal with that. And, but then that also produce a lot of really interesting insights. And then you can measure, Oh, I offered 200 for this house. It's sold out from under me. It was in my system and followup and they sold for two 10. I could have just offered two 10, right. For this property. And then you see who bought it like, Oh, you know, Joe Schmo LLC paid more. Is that a buyer? I need to know who that buyer is because I'm going to go look for properties just like that. And then the next time this one comes along, I'm going to offer a little more, cause I know he's going to pay more or that company's going to pay more. Right. So that even just that one piece creates some insights. And then the second phase, which is in development right now, won't be live until January. And that's your database enrichment. So you have all these leads in your system, but there's all these events happening to your homeowner. So just as an aside, there's three kind of buckets. There's property information, that's public data about property. There's public data about mortgage, like what the mortgage is on this property, how much equity you have and who's on, who's on the mortgage, like homeowner wise. And then you have event data. So foreclosures, evictions, probate, divorce, bad credit, all that stuff, right? There's a, there's events that happen to our homeowners. So our system is going to enrich the database with those events that you may not otherwise know of. And the idea with this is now this can give us better lead scoring and better prioritization of the people we should talk to. Let's take a quick step back. We all believe the most valuable lead in our system is the one that just came in. Drop everything! The lead came in! Call him! Call him! Like, we gotta call him in five minutes! Right? That's the most, that's the most valuable lead, but is it more valuable? First of all, we don't know who they are, right. Or like what, why they're opting in. Is that one more valuable than the person that just, that is 30 days, 60 days late on a mortgage, and they just filed eviction for the tenant in that property, but maybe I know that, right. It's like the system will update it and show you that that is probably a more valuable lead. Then the abyss of leads that you don't know more about, right? Is that person like you've ever filed eviction on a tenant? Like you've had enough, especially if you're late on the morning. Right. So all that event data is we are aggregating. Some of it is public information. Some of it is fragmented, like. Maybe there's a, maybe there is a probate, but we don't know if they've owned a property or not. So we have all these, um, scrapers out there gathering and re and like reconstituting all the information into one data stream. So I can tell you, you know, something valuable and then it's just going to automatically feed into your CRM and update stuff every day you get a hot list. Like these are the top 50 people to call. So yes, for sure. Call your brand new leads. Don't not call your brand new lead. I, that's still super important. All the PC providers out there. I still believe we have speed to lead is very important. Um, but I want my, who are the 50 people I need to talk to today? I don't want to just talk to somebody because I have a follow up task and I. Talk to them 30 days ago. And like, I've got to call them to follow up. Like I want to talk to the people who've been enriched. Right. And so it's cool to have this live data stream come in and do that for the entire database. So let's say often on your website or they call off a direct mail piece and you don't know any, any better, but now all of a sudden, you know, that. You know, they're getting a divorce or what have you, or they got their water turned off. Now you have these insights about homeowners and it's more likely that you can transact with them. So that's that second piece. And then the third piece, which will be available in March, hopefully, I'm not going to jinx it, is, uh, the buyer prediction. So we have all this public data. Now we have all the buyers out there that are, you know, from the sale data that we have, and we have all our own internal documentation left. Maybe we call them interested buyers. So we have, you know, for every property that you try a dispo, we probably get somewhere between five and 10 offers. That's all proprietary to me. I know what you're offering because you told me, but what's going to record for public data is one person who, and for what they bought it for. So basically it's taking the public record and then all of your internal information and predicting who's going to buy it and for how much. So that when you go to an appointment, you're not like just pulling comps, you're pulling actual data of people who are buying. So like, guess what? These are 300 people who will buy this property between two, two 20 and two 40. Now I feel real confident going out there and understanding what I can offer that homeowner. So that's this big, big, it's called left main genius and it's, The, the first releases and on September 16th, so it's super close and uh, it's a, it's a, I think it's going to be a game changer. I think it's going to be the standard from this point forward is how we operationalize data. I think that's what it's going to take to be
Mike:How do you, um, factor in, because, you know, let's say, you know, you sell a property, you wholesale a property to someone. You know, typically you're only seeing on the closing, the public records, what the purchase price was and not the assignment fee. Like I could buy a property for 140, wholesale it for 180, but public records show that whoever I wholesaled it to bought it for 180. How do you kind of get around that when you're looking at that kind of data?
Stephanie:You're not going to know it unless it's your own data, you know, that's a, that's a wholesaling. There's no chain of title, you know, so there is no way for people to know that unless you did it. You know, and that's why it's important to have like this data set being collected by your own business, because fast forward a year, two years, 10 years, you have an org, you have a system that has invaluable information that no one else can have, and it makes your company valuable. You know, we all want to build businesses that make money, but we also want to build businesses that are valuable. And the only real way to do that is to have a data set that can be leveraged. Otherwise, we're just this transactional business. We're only as good as our next deal. And like, you know, we don't have like the business itself, especially if all you're doing is, is wholesaling, like the business itself doesn't real ha doesn't have real value. But if you have a data set, that's completely your IP. And it's enriched with all the public stuff. That's really just a commodity at this point. Like everybody has it, but it's enriched. Now you have something extremely unique and extremely valuable. You know what I mean?
Mike:Yeah, absolutely. So you're taking, yeah. So you're making sure your team's putting in all the offers they're getting so that you can kind of, can look back on that as well. And at least the ones you sold, you know what they really sold for.
Stephanie:exactly. And what's more valuable too, is not necessarily how much I made, but how much, what the offer range is, because now I take that information. I can go make more, right? Like, cause I know what, what I can predict what it will sell for. So now I know make my margin. So over time you should make more per deal. Because you have a better understanding of what things can sell for instead of like, well, we'll mark it up 20 K and send it out and see what we get, you know, like some of it is a little bit like, you know what I mean? If you had that piece of the equation, you can go and just do the math, you know, for your, for your data set. So it's, obviously it's important how much you're making per transaction, but that data point, I don't think is as important as what offers you're receiving from buyers. You know what I'm saying?
Mike:What have you changed in your business? Over the course of the last, let's call it 18 to 20 months, is at least in Florida, as things have greatly shifted in the market. Mm-Hmm.
Stephanie:The way we, so we buy a lot of vacant land. So personally, the way we look at land has changed. So for example, we classically, you know, since 18 have bought infill lots. And try to make the math work with our spec homes that we built. So we, we bought, we build like entry level homes, first time home buyer type price point. So way less than the median median sales price in Charlotte and Jacksonville is a super similar market. Uh, so we probably have similar price points and like homeowner activity. Um, but because first time home buyers have gotten squeezed, probably the hardest with interest rates going up and like the affordability of the, of the house. They're, they're renting a little bit more. So we've had to go, go after larger development lots and had to build it a little bit bigger scale than our infill lots to make the numbers work. Um, there's a little bit more influence you can make in a neighborhood when you have multiple properties and things like that. So that's a big shift that's happened really since. Since last summer, you know what I mean? Um, personally, and, uh, the other thing I'll say is just continued obsession with data. Like that doesn't lie. Like if I know what the numbers are, I can figure stuff out. You know, um, I can, I can understand if I understand my pipeline and what changed my pipeline, I can pivot. So it's such a nerdy answer, but I really believe that data is going to be this, one of the single most important factors that we have in our business. It's either it's our own data and understanding that or external data and what does that mean for my business? Like you've got to know what's happening in your business and around you to make good decisions. And it's just, it's such a difficult game. It's so hard to keep your minds right. And like, we all have bad weeks, get punched in the face a million times and we're like, how do we do this? You know, I get a lot of comfort in, in having information and having numbers that I can Numbers that I can understand. So I can make good decisions under pressure when things are hard and when the market changes, like obviously we don't have control, but we feel a little bit more in control when we at least under, so I think as the market continues to be volatile and we don't know what's going to happen with interest rates and things, the only real way to stay competitive is by continuing to make wise decisions and not lose our shirt, right. Not over leveraging or, you know, blowing up our pipelines. We locked everything up too high. Right. You gotta understand these things in order to stay in the game and stay sane.
Mike:Yeah. What have you changed on the acquisition side for like single family home in your business?
Stephanie:Just the price. I mean, in the glory days of 22, early 22 and part of 23, we were, we were locking up at 90 percent ARV and selling for 105. We could, we would, we would sell basically above, above retail price to some of our buyers. It was amazing. And now we're, we're back down that like. 75 ish range, 80 percent Navy, uh, of, uh, offered, you know, value therapy.
Mike:Is what you're selling to your buyers at or what you have to offer at
Stephanie:We're buying, yeah. And then we're selling it like 85 ish, maybe 90, if it's a hedge fund deal, you know, um, but, oh yeah, there's so much, but so much less. I mean, we went from, you know, 1500 transactions a month in a single county, Mecklenburg County in Charlotte to a little over 1100. Like that's a huge, that's a huge change from then to now. It was probably higher, uh, early 22, but the volume in general is down and institutional buyers are still a big part of the percentage of deals being done. Uh, I actually just pulled numbers on the percentage of deals. Happening right now that our home, like traditional homeowner deals or institutional and institutional houses, like you and me, like, you know, investment companies and rates 30%. Of transactions are done by like one in three are done. Not that long ago, it was one in eight, like that curve has gone up. So what that means is like volume changes. If those folks are like, well, we're going to hold for a minute, you know? Uh, so it's been, it's been interesting, but they'll buy higher. It's just a matter of. How much volume they'll take or what their current performer will let them do and things like that.
Mike:Yeah.
Stephanie:it's
Mike:about.
Stephanie:why many of them are out there now, you
Mike:have you changed there? I mean, obviously the numbers of what you're selling at, but the strategy I'm sure has changed.
Stephanie:know, kind of the core tenants of always have, have stayed the same, like building relationships and finding new folks and going to Ria's and going to auctions and paying attention to who's transacting and understanding what's happening in your business, like having true relationships with our buyers. You know, like understanding truly what it is that they're looking for and how much they can pay. We've been doing that forever and that's always been important, you know? So I don't think a huge change in Dispo, um, I've seen, I've seen our buyers less doing less short term rentals. Um, there was a boom in a lot more short term rentals, so that one seems to be on the not as, not as hot anymore. A lot more buy and hold, um, people transaction, transacting right now. But, you know, personally, we've always had, you know, kind of a diverse list of people doing lots of different things. So that's helped, but now I know that, you know, because we've had relationships with people. So we can kind of gauge that when we're acquiring property, like who's going to be our buyer and have a little bit of a head start on Dispo, but
Mike:Yeah, it makes sense. We're, uh, getting close to the end here and there's always two questions.
Stephanie:I realized,
Mike:Uh, first question I always ask is kind of fun is what is the craziest or most uncomfortable situation that you have ever experienced in a real estate deal?
Stephanie:uh, I think what people have in their house is always interesting. Uh, I've seen some very awkward bedrooms. And you're like, why am I in this, in this house? This is awful. Like from mirrors to like toys. And you're like trying to walk around with this homeowner. And you're like, Oh my God. To, uh, I don't know people like hoarder hoarder houses always are wild to me, like floor to ceiling and you can't walk the house. Those are always. And like the smell. Oh my gosh. I think those are the type of things that are like the wildest Thing that ever happened to me like being in these people's homes and seeing the craziness
Mike:Sure, yeah, we've had a few of those. Silence. So last question I always like to ask is, um, the newer people listening to the show is, uh, if you could go back in time, give yourself one piece of advice when you were looking for that first deal, knowing what, you know, now, what would you tell yourself? Hmm.
Stephanie:and start raising earlier I was real kind of bashful to share with My friends and family like well, I guess not my family, but maybe some friends and like what I was doing and My work connections, cause I worked full time in the hospital until only a few years ago. Uh, and I didn't want to like tell my colleagues, right. You're like, I don't want anyone to crush my dreams. But what I found was the more I talked about it, really how interested people are. And I'm like, I want to do that too. You know, I feel like the American dream is, is buying real estate and buying a restaurant. So it is interesting what you're doing. So talk about it more and you'd be really surprised how many people come out of the woodwork and want to, and want to be involved with you. And also there's a segment of people who just want to watch for a while. They wanna see you for a year, do something or two years do something. So if you talk to them earlier about it, then they can actually watch you and then they'll participate later. Be like, you know what? I've been watching you on Facebook for two years. I wanna be in, you know, like, how do I get involved? Um, so don't underestimate your personal network and, and, and talking about it.
Mike:Yeah, I think that's a great piece of advice. Um, if people wanted to reach out to you after the show, if they had questions, maybe they're interested in learning more about left main. How can they go about getting in touch with you?
Stephanie:You can DM me on Instagram at Steph Betters is always good. Or email me Stephanie at left maini com or go to the website left main rei com.
Mike:Okay. Well, awesome. Thanks for being on the show. Stephanie.
Stephanie:Thank you for having me. That was fun.