You're listening to the REI marketing nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.
(0:41) All right, hello, everybody, and welcome to this week's episode of the REI marketing nerds podcast. As always, this is Daniel Barrett here from AdWords nerds.com. And if you are looking to get more leads and deals online for your real estate investing business, you know where to go over 10 years in the game, it's AdWords nerds.com, you can jump on a free call with my team, they will help you put together a strategy for your market. Now, man. This week, we've got a heady and exciting and I think pretty surprising conversation with John commerce. Now John commerce is the Managing Principal at a company called visible city, you can find their website at visible dot city and visible city is working on bringing data and data analysis to cities across the country, whether that's in urban planning, or whether that's in figuring out how to help investors make smart investments. John has a background in economics. He is an academic, he's a professor, but he's also had years and years of experience bridging the gap between local government, city planners, investors, commercial interests, John is a fascinating person with a lot to say about the future role of cities, really in the trajectory of the entire country. And I think if you are a real estate investor, you're gonna get a ton out of understanding how John thinks about cities and city growth, you're gonna get a lot out of his thoughts on how to use data and how to use data analysis to make smarter decisions. I had an absolute blast talking with John and I know you're gonna have a blast listening to our interview. So without any further ado, let's get into my interview with John commerce from visible city. Alright, everybody, what's up? This is Daniel Barrett and I am here with Jason medley from collective genius and learn more about cg.com. Jason, welcome the show, man. So happy to have you.
(2:43) And thank you for having me, sir. I'm looking forward to chatting with you a little bit today. And hopefully we can cover up on some things. Bring some value to your listeners. Yeah. Well, there's a million things I want to ask you about. I was joke that this podcast is just a secret excuse for me to ask questions. Really smart people stuff that I want to know is I've got a bunch of questions. And you know, I was saying that there are very few people I know in real estate investing, who really have their finger on the pulse of the industry, what other investors are thinking more than you. So we have so many things to dive into. I want to start just with you, for people who don't know, collective genius. So you run this masterminds collective genius, it's, I think it's fairly safe to say that kind of preeminent mastermind in the real estate investing space. For people that don't know what CG is give them the kind of elevator pitch for what the group is all about.
(3:34) Sure. CG is effectively a community, if you will of pocket for real estate investors that are looking to become the visionary leaders that skill, their business skill, their wealth, and then give back, right? It's not just all about the accumulation of assets, but in the end helping other people. Right. And so we have two different groups, if you will, then the thing I will tell you to Dan, is that we are just to give everyone some framework, not necessarily to be a pat on the back with us. But we're kind of the original gangsters and gangsters in this space, right, like we started 12 years ago before anybody can even spell mastermind. So the industry has taken off. Needless to say, there's quite a few people in our space now. But I do think we are the preeminent organization out there. And the reason is, is because our members are typically the preeminent for eminent investors in their local markets, right. And so a lot of that has to do with the caliber of people that we bring together. But long and short. We're a community we come together four times a year at our premier level, and three times a year at our select level. And it's almost like having a board of advisors, right, everybody comes they give a gear a give a system share a resource, and then they ask for what they need help with, right, whatever goals are trying to accomplish, and then we match them strategically with other people in the group that have already been, where they're at where they're trying to go. And because we're a community and go get because one of our core values, those individuals help get to the next level and so you got the information component but then there's also the deal flow component. Our members are buying houses selling houses lending money, borrow money doing syndications together, starting businesses together, you name it, there's literally a billion dollars plus transactions that take place inside of collective genius, I just gentleman texting me a moment ago, Mark Delatour, he's probably sold 150 Plus houses to the members of our organization this year alone, right. And so we we have a Facebook group where members are on daily. But one of the things I think that really separates us is that we provide a mastermind and a community for every core member of the investors team, so acquisitions, dispositions, or construction managers, and other CEOs you name it, every member of their core team we provide community and a mastermind for so their team on a monthly basis virtually can come together and help each other improve and help each other implement the things that we're actually talking about physical meetings. And so kind of a recap to some folks might want to know what the differences are, our premier group is typically someone who is flipping 100 or more houses a year, or if you're in the multifamily space, you're, you're buying 1500 to 1000 plus dollars a year on an annual basis, most of our members have for for significant portfolios of $100 or more. And now our premier level, or our select level is, you know, probably a little bit less experienced investor with someone who's doing maybe 25 to 100 flips a year, and probably has been typically been in the game a little less, a little less longer, long, if you will, than our premier level organization. So our goal on the Select level has helped to turn them from simply flipping houses to running a house flipping business, if you will, more, they'd have a core values mission vision, they've got KPIs, you know, they're measuring their numbers, they can hold their team accountable, they get a team that's firing all cylinders. And when it gets to that point, then they're typically you know, running a multiple seven figure business, which graduates them into two.
(7:00) Yeah, I, you know, having been in CG for a while now, one of the things that really impresses me about what you guys do is, there's a lot of masterminds. Like, there's a million masterminds now, it's like, like you said, it's a very popular model. Now, I know it wasn't when you started, but it's like even for me, like I'm in the agency space, right, and marketing space. So there's a million masterminds, and I've been to a bunch and I think collective genius is far and away any of them I've ever been to the best run and the most health and the thing that really makes it that way is one can you mentioned every member is giving at every single time they come together, right? So you are getting not just hey, there's like three speakers this week or whatever you are getting every single person each of whom is a successful entrepreneur, real estate investor bringing their A game so that's the music and then you guys have done this really amazing job of digging into what are all the pain points of real or real people doing this business model like where are they running into trouble? Let's provide assets let's provide resources let's provide training let's provide support it just everything that you could run into even for me like I don't invest in real estate, right? Like I work in real estate investing, but I go when I go to CGI come back to like 500 pages of notes on like operations of leadership and logistics of ministry. It's really an amazing
(8:23) yeah, it's not just practical tactical stuff. I mean, typically day three of our mastermind is we bring in, you know very high level keynote speakers, you know, to I mean, we've had anybody from Jocko willing, from a leadership perspective to Chris boss from a negotiation perspective to you know, Joe, just two weeks ago, in Scottsdale, we had Jeff Hoffman, who's one of the founders of Priceline, you know, talking about sales, marketing and branding in a in challenging economic times. I think one of the key things that you said Dan, which is critical is the real issues that investors are dealing with in round images. Right now investors are dealing with real issue. Everybody's kind of been on this gravy train, plenty of momentum before COVID And then COVID For the last two, two and a half years has just escalated. That train has been cooking on all cylinders and now it's effectively coming off the rails and we are about to separate the men from the boys or the women, the women from the girls with
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(10:00) Okay, so let me let me ask you about because this, this was one of the big reasons I wanted to ask you. So the last time I was I haven't, I haven't been able to go to CG in person for a while, mostly because COVID happened or whatever. So I think the last time or maybe a couple times ago, when I was at CG live, you guys did this whole, it was literally like three days of presentation. And the theme of the presentations were, things are going really well. Everybody get ready for when they are not going to go, well, any penny here we have an awkward the talk was like, hey, might be time to take some money off the table, or, Hey, make sure you're building up a war chest because you know, right now, everybody's happy. Sooner or later, things are gonna turn around. And I remember sitting in the audience and being like, that's really smart. And then literally, I think it was like the next year, we went into COVID, or whatever. And just everything has been crazy ever since. So I want to give you props, for like having the foresight to be thinking about that. And I think the people that were there took a ton away from it. So let me ask you, because again, you talk to investors, probably more investors than anybody I've ever met. Right? You are truly well connected and connected to really sophisticated people. So I'm curious, what is your narrative of what the last couple years have been about? And what the next few years are going to be about, like put, put this in context for people because I think, for the average investor on, you know, on the street, doing yellow letters or whatever, trying to get deals, things have been, it's, it's just been chaotic, almost nonstop for the last few years. So when you kind of back up, you take all that experience into account. What do you view that storyline as being about where we've been in where you think we're going to?
(11:48) Yeah, I mean, I think the long and short of it is, is we've been from a narrative perspective, we've been emphasizing, what you stated is that the wind is at your back, you have been in the way of momentum. And that momentum has been fueled by uncanny one time incidences, such as COVID, or the lowest interest rates in history, or kind of one in the same one cause the other if you will, but so you know, but so much of that was not necessarily because you were a great business owner. And so you're living in kind of this artificial environment. And regardless of the environment, we always share with our members, our job is not to predict the future, our job is to preparing for the future, right? Let that sit in for a minute. Our job is not to predict the future, our job is only to preparing me for the future. And so our narrative has been, hey, the winds at your back Run like the wind, right? But be intelligent, right? We start on every single meeting and express to people we show this, Dan, you've probably seen it 10 times, we show our house. And this is not mentioned any way to sound insensitive given we're cutting this right after a hurricane. But we show a house that's on the beach from a hurricane a few years ago up to the Florida Panhandle. And it's standing by itself and everything else around it is is vapor. Yeah, you're we show that for a reason to explain to our our community that the reason that house stands now is because of how it was built before the storm. And so the sun is shining, we're on the beach, things marvelous. But when the storm comes for you to be ready, you've got to take chips off the table, got to understand that profit is not just a number that shows up on the bottom right hand corner of your p&l, it must be extracted from the business, right? If you worry a little bit during good times, you won't have to worry a lot during bad times. Right? Let that let that let that sit on your for a minute. If you worry a little bit during good times, you won't have to worry a lot during bad times. So what is what is worrying a little bit worrying? We always say making money is a skill set keeping it as a discipline. If you don't have both, it doesn't always turn out very right. And so a lot of entrepreneurs are good at making but the disciplines that you've got to put in place are you got to have retained earnings for your business. So when things get when things slow down like this, you make it you've got to have retained earnings for your family. So when things slow down like this, you can make it the law than you know. So there are our disciplines that have to be put in place when times are good. So you don't have to worry when times are bad. So that's really the narrative that we've been driving for the last several years, right. Hey, thanks. Great. Don't take all the credit for it. The wind is at your back. Make sure that you've got your plan out your buckets out while it's raining. And make sure you say Ah, some water shifts, you know, from from the rain. And so here we are, that those mantras are in full effect right now. And so the new narrative, quite honestly is, you know, we're telling our folks in CG get to a place of stability, right? A place of stability sometimes might mean doesn't necessarily mean you don't believe, right. And so an example might be, you know, you're out mountain bike riding, you get flipped over the front end, you break your leg, or an hour from a hospital, your job is not to perform the surgery, your job is to stop the bleeding. Right? You don't you don't get to do surgery right there on the trail, wherever we're gonna do that later, we're just going to stop the bleeding. So especially those who are heavy, heavy, heavy into construction, or even if you're in the wholesale side of the business and got a big staff for many of our members do both right, they generate their own leads, and they decide to wholesale to rehab the turnkey, keep it in their portfolio, whatever it may be. But our our message up to this point has been to number one, you've got to stabilize even if that means you don't use names, or we have a gentleman in Salt Lake, I mean, the guy's a rockstar, he's very consciously said, I've got a ton of projects that I priced three months ago, are coming onto the market and launch the price, the way I priced them or underwrote them three months ago was irrelevant. Today, if I want to get to stability, I'm gonna dump these properties, I'm gonna take some losses, I'm probably going to lose a million and a half dollars. Now, he probably made 12 to $15 million over the last four or five years. And so if he's instituted those disciplines, you know what, I've got cash reserves, I can make smart decisions. I've got to stop the bleeding. I'm going to dump these properties. I'm going to take a haircut, I'm going to reassess the market when I'm on stable ground. Right. Now. That's on the rehab side. On the wholesale side. You know, there's a couple of things there. From the perspective of number one, you've had an order takers on your staff for the last couple of years, right? You get a deal. It what didn't even really have to be a deal, right? You buy something at 90 cents on the dollar, you turn around, sell it for 98 cents on the dollar to a hedge fund, whatever, you didn't really have to have Goshi ation training, sales training, it was almost like he needed a bot. Right? That's all changed right now, over the next 12 months, he or she who has the best trained sales team who can negotiate is going to win, right? The second thing that I would tell you there is you people are adjusting their buy boxes, what they're willing to pay relative to ARV, or market value has had to take a big, big change. And then on the other side is all of the efforts that were it was primarily all efforts on acquisitions with little to none on dispo. Because it's like if you if you've got a stake, you hang the stake out the wolves are going to come right. Well now. People are seeing things differently, you know, their knee jerk reacting to interest rates, they're pulling back, and right now that steak looks like oh, oh, hamburger at McDonalds been under the heat lamp for been under the heat lamp for like six hours. Right? And to sell that thing's gonna take a little extra work. Yeah. And so on the Dispose side, you know, you're probably moving, you're probably moving a lot of property to power players. And now you got to gotta go out. And you've got to find you're more so looking for HDTV buyers or folks who are in it for the long term to play. Hey, um, I know that long term, as long as I buy a property to cash flows, it's, you know, in 10 years or 20 years, if I've got 20 of those or 30, those doesn't matter. Right? Right. Doesn't matter, whatever. So, but that's a, it's a different ballgame. Now, when you identify those buyers, which you may not have been targeting. Now you're having to educate those buyers. Yeah. When you provide a package to the right. It's not just like, hey, I got a house had 52 grand or 122 grand or no, here, I've got a house for you, you're three people that can bid on it, give you an estimate for how to fix it. Right? Here's the best agent in that, in that particular zip code that when you get it done, has the best track record for selling it right. And then here, like, you know, here's the record, who's to hard money lenders here locally that could provide you the capital like you are, you're almost having been on selling a property where it's not pack. Yeah. And so all this stuff now, quite, quite honestly. And it'll be done more efficiently. And there are new tools. But all of this is this is 2012 stuff that we're talking about, right? It's just cyclical it all. It all goes around in a circle. And we're back to a point in the circle that we looked at, you know, 10 years ago. Yeah. And so a lot of people in again today, even though it's come full circle, they weren't necessarily in it when they had to drive their business this way. So, you know, the thing that I would I would tell you is as this market changes, I know a lot of people out there probably look at investing in a community or a mastermind as you know, a potential expense. The reality of it is, it's an investment to be around people who are what we do in every every rationalize, we take the people in our groups have already figured it all out and put them in front of the, the rest of our organization, doing it step by step, and actually, not just what to do. But here are the SOPs, here are the mindmaps, with how it's done, here are the scripts here. So everybody sharing everything. It's almost like an insurance policy to protect themselves from the bounce, right? And so when the river runs, shallow, and smooth, you can walk across it yourself, when it runs deep, and swell with white caps. You lock up the lock arms with the pulling, you should let let you walk across together with me. Right? Yeah. And so the narrative, that's that's kind of the narrative right now, you know, but there is, you know, right now, if you can, you can hold through what we call a gap, right? And the gap is, doesn't matter what prices are in real estate, as long as there's a tradable bottom in place, it's irrelevant. Your job was to create a delta between what you can buy for what you could sell for doesn't matter what pricing is, but until the disparity between what sellers think a home was worth and what an investor is willing to pay until that until that gap closes, and both sides come together, right? It's chopping. Yeah. If you can make it through the chop right now, you stand to be fiercely rewarded. On the other side.
(21:45) Yeah, I really like what you were just saying about, it really is about negotiating the gap between public perception and what the market thinks right? Are the sort of savvier investors in that market, right? That strikes me is really true and insightful, right? You still have people in the market today go to sell their house who expect someone to walk in and give them a cash offer the day they put it on the MLS, right? Because they heard that their friends did that six months ago, and that's not quite waking up to that reality. So yeah, how many things are there that were really insightful that I really love?
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