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Planning Your Numbers
This episode is all a little bit about the numbers. It’s a little bit about knowing numbers and how to backtrack those numbers in but also how to identify your time and how can you effectively hit those numbers. Nobody likes to set a goal and not accomplish them. Come January 1st, we’re setting numbers like, “I want to lose so much weight or I want to make so much money, I want to go to the gym.” We all do things but then we often end up failing in the first week. We end up failing in the first month. One of the big things that are important when working through goals, working through numbers, working through things that you want to accomplish is setting attainable goals.
Instead of throwing a number out there out of the blue, take some time to look at those numbers. What do those numbers mean? Do you have to make offers? How many emails does that make? How many bids do you have to look through? How many notes do you have to look through to find those numbers? What type of income are you making off those goals? That’s the big thing I wanted to discuss with you because literally, through the end of the month and then through the first part of October too as well. One of the big things that I’m working through a little bit at night, a little bit during the day outside of my main focus of work, crunching through everything every day, is starting to plan 2019. “What are you doing planning 2019?” It’s important to start planning 2019 so I’m prepared for when it arrives. I’m preparing the different places that we’re going. I’m preparing some of the things that we’re looking towards. I’m planning on what our focus is going to be and how are we going to accomplish it by starting to work the numbers back in. What do I have to set? What do I have to do? What dominoes do I have to put in place so that when I can hit it on January 1st, those dominoes start to fall to find success?
How Many Hours Do You Have To Put Into What You’re Focused On?
The biggest thing you’d have to look at is how many hours you have to put into what you’re focused on. If you get ten hours a week, ten hours a week, it’s great. Ten hours, twenty hours a week because we figure everybody has from 7 PM to 2 AM unless you work a night shift and you usually have some hours in the day. If you’ve got ten hours in a week, that’s 40 hours in a month. That’s a doable thing. You can squeeze out an extra week of the month and turn your four-week month into five weeks by doing little things on the side to help out with that. We’re not talking, working an eight-hour day once you get off of your job. That’s a burnout waiting to happen. If you’ve got family, you’ve got kids, you’re not going to have full eight hours when you get off of work, so focus on what you want to with a note or real estate business.
The big thing is to look at what you’re currently doing and be honest with yourself. Let’s not blow smoke to yourself. Let’s not lie to yourself. Focus on things. What are you doing during the day? If you’re a realtor and you’re busy out doing realtor transactions, you can’t count that towards your real estate investing business because that’s the business of being a realtor. It’s the same thing with them being a mortgage broker. If you’re not getting leads for your mortgage business and you’re doing constantly other things that may not give you a lot of time for your note or real estate investing business. Let’s be honest with ourselves.
Planning Your Numbers: Everybody goes through peaks and valleys. Everybody has times that drag on.
Let’s look at yourself. If you don’t have anything else to do, then you have no excuses not to be working at least 40 hours a week in what your business is. You’ve got to be honest with yourself. If you’ve spent a lot of time on Facebook or LinkedIn and you’re not doing effective things on there, that’s a problem. Look at what your time is. Are you putting twenty hours a weekend? Are you putting 40 hours a week? Are some of you putting 60? Let’s face what it is. If you’re working hard, you’re probably not going to work 60 hours a week every day or every week. That’s getting into burn out. You’re going to have some ups. You’re going to have some lows. You’re going through highs and lows. You’re going to have some peaks and some valleys. That is normal with what it is. You’re going to have some great times where you’re excited. Other times you’re like, “I’m dragging. I’m a little tired.” The thing I want you to realize is everybody goes through that. Everybody goes through peaks and valleys. Everybody has times that drag on.
Those are some of the biggest things I can tell you. Keep cranking out and keep focused on things. Keep pushing. Let’s go back here. Let’s look at the numbers. If you’ve got ten hours a week working on things versus twenty hours or 40 hours, you have to figure that out. What needs to get done? The number one thing that you have to be doing is reaching out for assets. We’re looking out for assets. That’s the minimum thing that you’ve got to do with marketing is be reaching out to get assets. That’s either through banks or through hedge funds. What are you doing? Are you reaching for the low-hanging fruit where everybody else is? If that’s the case, you’re looking to buy the premium assets. You’re going to pay a premium price for that.
You have to also start looking at building some systems in place to help you with your marketing. If you’re constantly going and doing one-off different things, you’re not giving your marketing a lot of time to have success. You’re not giving your time to be able to measure your results and what’s going on and that takes time. I’m still a big believer, especially in the note business. It’s a lot less marketing time as far as the physical stuff. You’re not sending out postcards. You’re not posting bandit signs. If you’re working your marketing time in the note business, that’s consisting primarily of reaching out to asset managers. That’s pretty easy to do when it comes to your marketing aspect of things. Basically, you’re setting up your Infusionsoft, MailChimp or AWeber accounts. Whatever your email service provider is, that’s what you’re setting up to get out. I know a lot of people love the idea of pulling an asset manager list and sending an email.
What 90% of people fail at doing is setting it up once, making sure all their links are working and then replicating that. That’s literally a one-day activity, literally a few hours activity that can set you up for months out. What do you have in your books this month? That’s the important thing to look at. Those are some simple things to do, but a lot of people fail to do them. The fact is they get tired. They spend time on one email and then they forget about it and they don’t get to it. A lot of people send out emails every Sunday night or every Monday. For the most part, that’s great. They’re writing new marketing, but taking the time to go ahead and pre-write your email list is important to get done too. That’s a valuable thing. You can do that once and save you time later on going forward versus having to replicate or recreate the email every month.
What To Do During Your Off-Peak Hours
Go ahead and set it up and send out three or four months or even six months of emails. Schedule them so they go out the first Tuesday a month. That’s not hard to look at with a calendar. That’s a smart activity and you can do that off times. You can do that at night. You can do that on the weekends. You can do it during your lunch break if you need to. You start setting that stuff up if you’re working full-time. If you’re not working full-time but you’re a full-time real estate investor and note investor, I would do that something in the morning, something in the evening. I would not spend a lot of time on that during the middle of the day. Do it in your off-peak hour. For something brand new, go ahead and send it out, get it out.
The idea here is that your best activities for a note investor is marketing for deals and raising capital. Once you get your deals in, evaluating and going through the due diligence and working through those systems and then making offers. If you do buy it, then handing that off to your team because your team was working 9 to 5. That’s your attorneys, your servicing companies, your servicers or any other special service you have working for you. Your vendors, those are working during the day. Those are your 9 to 5 activities. Those are the phone calls you’re making. The phone calls in the 9 to 5 are to the banks and the hedge funds. You’re going to make some phone calls. We talked about the time to do that 10:00 to noon, Tuesday, Wednesday and Thursday or also 2:00 to 5:00 on the same time, Tuesday, Wednesday and Thursday. I would not make phone calls on Monday, I would not make calls on Friday. I would spend a couple of hours a week reaching out to people that open your email. Open up your asset manager emails and following up with them.
A big shout out to Melanie and Phil Jacobs. They shared with me that they’ve been sending emails out to the asset managers. They’ve opened up the last few emails. Their open rate is 41%, 42% which is a pretty good chunk. They’re getting lists sent to them. They’re being smart. They’ve sent some emails out here for the last three months and they’re starting to get tapes sent to them; one-off deals, some awkward deals. They’re not the traditional bread and butter but they’re still getting deals sent to them, which are from the consistency of putting the systems in place. They’re both busy people. Phil still works full-time for a major auto company and Melanie has her consulting practice as well. The fact that they’re doing this and it’s part-time, part-time is smart time. When you look at that, how long does it take you to write an email? Half an hour, an hour if you’re getting started the first time. The first thing you want to do is once you’ve got your email, if it’s good and all the links looking good. You have somebody review it for the first couple of times. Make sure your spelling is correct, then set it up then that’s when you replicate it. Let’s go back to, “How many emails do I need to send out, Scott? It sounds like a lot of work.” The hardest work is the phone calls more so than anything else. Emails are pretty relatively easy.
Let’s talk about some numbers. We all need financial numbers to drive where you wanted to go. If you look at what you want to make, do you want to make six figures? Do you want to make $50,000? What is it that you want? Do you want to make $10,000 a month as your ultimate goal? That’s $120,000 a year. You want to be making $10,000 a month. You’ve got to break your numbers down. If you’re using other people’s money, you’ve got to figure you’re going to be splitting the income coming in off your assets. Figure what’s your split, if it’s $400, $500 a month. If it’s $500 a month is what’s coming in on average on your mortgages that you’re buying, that you’re getting reforming, then let’s figure that out. $10,000 divided by your split of $250 a month equals a total of 40 notes that you need to do. If you want to get that in your first year, what’s it come down to? 40 divided by twelve months, which means you need to be closing on about three notes every month. That’s not bad. That’s totally attainable.
Planning Your Numbers: Don’t get frustrated. Realize that somebody outbids them.
The question is how many offers do I need to make to get to that three closed? 10% closed ratio, 3.3 notes times ten, it means you need to be making 33 offers every month. Divide it up by four weeks, it means you need to be making about eight offers a week. Those numbers are attainable. It’s knowing your numbers, keeping a track. How many offers did you make this week? How many offers did I make last week? Start to see the bids because that is ultimately what happens. When you’re making offers, you have offers that you’re putting out to the hedge funds and the banks. You need to keep track of how many offers. I always try to have twenty offers in the hamper. One offer could be 100 assets. It could be one asset. It depends on the tape size.
I like to spread my stuff across because sometimes when you’re buying portfolios, not all of them are going to get accepted. Sometimes somebody will outbid you for the whole thing. It’s the business. It’s what happens. Don’t get frustrated. Realize that somebody outbids you, especially when somebody bought the whole tape which will happen from time to time. I like to use this as an opportunity, “Mr. Seller, who bought the whole tape? Would you mind forwarding my bids to them to see if they be willing to talk to me about carving out some of their assets?” It’s not a bad thing. It’s a great way to build relationships.
If you’re looking back at your numbers and you’ve got to do eight offers a week, two a day, that’s not that hard to do. When you reach out to the hedge funds, when you reach out to banks, get in the process. Give yourself a 90-day window to get things ramped up. If you’ve been in the business for a while and you’re struggling, come back to the basics. A lot of people get sidetracked going to conferences, going to events or going to networking events. They think that they’re doing something. At the end of the day, look at what was the value of that event? Did I get contacts? Did I make a lot of great acquaintances? Did I collect a lot of business cards? Did I put my database for marketing? That’s the second phase of what you’re doing. Besides making offers, you’ve also got to talk to investors about raising capital. You’ve got to get out what you’re doing. One of the basic and best ways to do that is email.
I like posting stuff on social media. It’s definitely a great way to get the word out but depending on where you’re posting. If you’re posting into a real estate group or you’re posting into the WCN Crew private Facebook group, you’re probably not going to raise a lot of capital because we’ve got a lot of sharks in there. They’re looking for the same thing. You have to look at how you’re leveraging your list, your time outside to help. Is that going to the Propelio Meetup groups in Dallas or San Antonio? Is it sponsoring an event like the Quest Expo? You may have to drop some money on stuff like that. You’ve got to be a mad scientist about going out and meeting people, “Here’s my card. Can I get your card?” There are some things you’ve got to develop.
I don’t necessarily like running around and trying to collect 100 cards in an hour because you’re not building fruitful relationships that way. I like going where others aren’t going. I do like going to the Quest IRA events. I like going to self-directed IRA events. That’s a great thing to go to but you also got to be careful there are a lot of sharks there. I like harvesting things. You’ve heard me talk about pulling IRA investors off the county appraisal districts. It’s one of the most underutilized tools. If you are going to do some direct mail marketing, that is an effective use of time reaching out to investors. The whole idea is to look at and balance with what you’re doing. If you’ve got a full-time job, you have to stretch your numbers out a little bit. Instead of getting eight offers a week, maybe it’s four offers a week, maybe it’s going to take you a year to get to $5,000 in cashflow. Maybe it’s going to take you two years to get $10,000 in cashflow. The idea is that every asset you get, we all know that’s not ultimately going to be turned into a re-performing note. I wish that was the case. Some of them you have to foreclose on. Some of them you’re going to sell off. Some of them you’re going to wholesale.
Making Offers
The idea that I can tell you this more so than anything else is the more offers you make, the more you’ll work through. That’s the case and I know it’s stupid. If A is equal to B and B is equal to C, then A is equal C. It’s the whole Pythagorean Theorem when it comes to note investing. If you’re making more offers, hopefully, you end up closing more deals and in that case, you’ll be making more money. Making more offers equals making more money. Some of it you’ll get re-performing and this is that cashflow, money coming in perpetuity. Others when you’re foreclosing or selling off, those are bigger checks which are great too. I’m not going to turn down a check with a comma in it with sizable numbers to the left hand of the comma. What I’m trying to get at is set your numbers up for the cashflow basis because that’s the least coming in per month. Obviously, with bigger checks, bigger assets, you’re going to get some bigger checks in. You’re going to hit that $60,000 or that $50,000 a year, $100,000 a year a little bit faster by focusing on it.
The thing I can tell you most importantly, and this goes out to the wholesalers out there, is don’t be looking to flip at notes to other people. Look to buy for your own portfolio first. Look at that asset as an opportunity for you. Why do you like that asset? Your conviction, the reason you love that asset when you’ve done through the due diligence you like that asset, that will come out in the market. It will come up when you’re talking to investors. It will come out as a much better way versus shoveling stuff or taking orders. None of you want to be a note waitress or a note waiter. You don’t take other people’s orders. You want to order for yourself. You want to order from the menu, not taking somebody else’s and trying to find it. Don’t get me wrong, when you start off wholesaling, it’s a great way to make some cash but don’t be doing it for $200 or $500. That’s not worth your time. Your time is worth so much more than that.
Knowing your numbers and what you have to make offers on. Knowing how many you have to do in a week or how much you have to do in a month, those are the big things. Do yourself a favor, don’t spazz out if you’re not hitting that in the first month or first two months. There are some people, they buy a couple of notes and then they go dark for a month or two because they spend a lot of time on trying to find those assets and then they get back to work. “There’s a constant dance between the paper and the property of different things.” Once you buy something and then you’ve got to spend some time working on it. You’ve got to work out that stuff. You’ve got to get your vendors. You’ve got to get your collateral files scanned in and sent out. Those are some of the big things you have to do to help yourself be able to capture and be able to make that money on assets.
Planning Your Numbers: It’s going to be okay. Just go out and talk to people who know the deal.
How Many Do You Need To Be Closed On A Month?
If you look at how many do you need to be closing in on a month? If you need to be doing eight a month, here’s another way to take that number and figure out how much in private capital you need to raise. If you’ve got to do eight assets a month to hit that number roughly, if you figure the average purchase price is probably around $25,000 or $50,000, whatever your asset class is. If you’re looking at least $50,000 assets, then take $25,000 as your mid-price, as your funding amount. You can probably buy them at $20,000 and put a little bit extra in there for service workouts for a little bit at the National Bank. That’s $25,000 times eight. That’s $200,000 a month you need to be raising capital for. At the end of the year, that’s $2.4 million raised to hit your number. If you’re doing stuff on a regular basis like that, it becomes second nature that you’re raising stuff, especially your marketing, you’re out networking. You pick your numbers. You pick your spots that would be the biggest bang for your buck. I’ve had several students that were heavily on networking. Going out once a week to investment clubs and meeting with people. They figured that out and after a while, they’re like, “It was effective but I’ve lost my focus.”
The thing I’m trying to get at is putting $1 million together in private capital isn’t that difficult. When I was first starting off, I was like, “It seems impossible.” It seems impossible if you’re especially starting from zero. Moving that big rock up the hill or moving that big rock down the hill is difficult. It seems impossible until you get a little momentum going. If you get a little momentum going, then you can put some things in place, a little push and a little steady effort, you’ll become the little engine that did. I’m a big believer. I can go out and raise capital. Go out and raise it.
One of the great stories I love sharing is our buddy, Wayne Snell. Wayne’s one of our best students. He’s done a great job, a couple of hundred assets. When he originally started off, he was funding things with his own capital. There’s nothing wrong with that. If you’ve got the ability to do that, great but he was scared to raise capital from other people. Why was he there? He’d had some bad things happen to him earlier on. The thing I kept telling Wayne is, “It’s going to be okay. Go out and talk to people who know the deal.” We had our Note Mastermind event in San Antonio. He came to the event. We used to have our Mastermind be five days, like Monday through Friday. They were fully intense. He went out. It was a Tuesday night or Wednesday night of the event. Instead of going out drinking with a lot of us in Masterminds, you get in trouble that way, he went out to local investment club Meetup. He had a meeting with a private investor through an introduction from somebody else in the Mastermind.
They got him talking about some of the deals he’s done, the type of deals they did, basic stuff that we regurgitate over and over again. He got out there talked about the type of deals he was doing and the investor was willing to write him a check right there. The investor was willing to invest with him. Wayne came back the next day and we could not get him to shut up about it. He was so excited about it like a kid at Christmas. It was so great to see him because it was a total mind shift. He went from not believing in his duties to have a lot of faith in making things happen. I see a lot of that happening with students out there. I see a lot of that happening with our rock stars out there. Something happened and it’s a total mind shift to what they can accomplish. The thing that’s great about seeing those mind shifts is it’s life-changing. That is what I want to have happening for all of you guys and gals out there. That’s what we do this for.
There’s no greater joy in seeing success happening and seeing you grow as investors, as individuals and seeing this mind shift take place. I didn’t get into this note business to be myself, to be just one man on a mission to help save thousands of Americans. I knew I could never accomplish my goals by myself. I knew that I needed help to get things done. I had a big mind shift when the capital rising from one project that I didn’t end up doing, but it was a mind shift of reaching out and making phone calls for a day, getting people to get excited about the project that I was working on. They knew the numbers because I was looking at buying the asset for myself. I wasn’t looking to wholesale. I was looking to buy the asset for myself. I was excited about it and the excitement came along.
That mind shift that day, I still remember it to this day. I still remember when people said, “Yes, we’d do it.” I also remember what I thought was a failure turned into something successful. When the asset didn’t turn out to be exactly what I thought it was, I had to go back and explain to the people that said they were interested why it wasn’t a good deal. They in turn said, “We’ll be glad to work with you. We’d be glad to get some things rock and rolling with you. Just give us some of the next deal.” What you have to realize that is important is you have to have a little bit thicker skin in the note business. You’re not going to hit 1,000. You’re not going to go 100% efficiency. You’re not going to be perfect at your pitches. You’re not to be perfect at the bids you place. You’re going to strike out. You’re going to swing and miss a lot. It’s okay to swing and miss. It’s okay to make some offers and come back and they’re like, “What the are they smoking over there?”
The thing I want you all to get at is you’re in the game. As long as you’re putting your ten hours a week, twenty hours a week or whatever you’re putting in, make sure you’re getting maximum effort. You’re getting the whole Deadpool, “Maximum effort,” out of your time that you have, whether it is 7 PM to 2 AM. If you’re a full-time, look at what you’re doing. If you’re failing, you’re spending a lot of time like we all end up spending time throughout the week on wasted stuff. Do yourself a favor and do a little bit better now. Do a little bit better tomorrow. Do a little bit better next week. Hold yourself accountable. Maybe you need to put a sticky note up somewhere, “I’ve got to hold myself accountable,” or put your numbers up there and as you close deals, celebrate.
One of my favorite things to do as a little celebration, especially when I finish my workshop or we completed a big trade, is to sit outside with a good cigar, good Rocky Patel Decade, Crown and Sprite and sip on it. Sit there and enjoy it. Relax a little bit. Figure out where we’re going next and going from there. We also love to travel. We close on a big trade. We love to book events. We like to book travel stuff. It’s our way of rewarding ourselves to go out there and recharge our batteries. If you do the same things over and over again, it can get boring. Every day’s a little bit different from what’s going on. You don’t know the country western song of the asset that you’re buying. You don’t know what your investors are going to say. You may have one conversation that leads you down a path. You meet people that you never thought about. Sometimes when you’re swinging into an asset, you think it’s a base hit. It turns into homerun. It keeps going and going with good stuff.
Planning Your Numbers: When you’re out networking, you never know who you’re going to meet. You never know what kind of influence they’ll have on your business and vice versa.
You’re going to learn something new from every asset that you make an offer on. You’re going to learn something new about yourself. You’re going to develop skills with every asset you close on. Every deal you make, every email you send, every conversation you have, it builds upon itself. You are failing forward every day to get to where you want to be, “Am I the man I thought I’d be ten years ago?” I look back at the last ten years. It has been a crazy ride. I also know that the next ten years are going to be even crazier. What I want you to do is I want you to think about this. Take the time, write your goals down. You’ve got a lot of opportunities. Think back to what you were thinking about the first year. Think back to what goals you want to accomplish this year. If you’re working full-time, you’ve had a few setbacks, everybody has had setbacks. Everybody gets them. It happens. Welcome to the club. I don’t bat a thousand. I strike out on a lot of things. I goof up on things just like you all.
People ask me all the time, “Scott, how do you accomplish so much?” I accomplish so much because of the things that I do, I’m able to repurpose. I’ve got a tremendous amount of people that support me. I’ve got a tremendous network. That’s the beautiful thing when you’re building a business, whether it’s a note business, real estate, whatever you keep working towards, every person you meet can help you and vice versa. You can help every person you meet. You’ve never been able to find somebody that you need to meet easier. If you’re doing one of the things with networking, if you’re doing the right things with marketing, you’re leveraging LinkedIn contacts. You’re out networking. You never know who you’re going to meet. You never know what influence they’ll have on your business or vice versa.
That’s the biggest thing I can tell you. Write down your numbers. Take a second. Put it on a sticky note. Tape it to your keyboard. Put it somewhere you can see some things. Those are the most important things I can tell you that is going to help guide you on success is knowing your numbers, posting them and then sharing. That’s the third thing, sharing them. Working through your numbers, working through your marketing but then also talking about what you’re trying to accomplish, especially if you’ve got spouses or family members that may not be the most supportive. Share what you’re doing. As you’re making strides, that belief will turn from unbelieving to, “Maybe they can do this. They can do this. You are proving me wrong.” We all deal with that. We all deal with people that aren’t supportive.
The best thing I can tell you to do is try to block those people out for a little bit or take a break. Do not block them, but take a break from them. Take a break from their negative energy. Take a break from that mental blockage that comes when you’re dealing with negative people. Walk away from them. Put it on the side and focus on your path. I talk about staying in your lane a lot, focusing on what you’re doing. Focus on what your focus is, what your numbers are. Your numbers are your numbers, not somebody else’s numbers. The sooner you understand that, the sooner that you realize that it’s your journey you’re on and you’re not on somebody else’s journey and vice versa, it makes life a whole lot easier to get things. It also makes your numbers a whole lot more attainable because you’re not spending time on looking at what other people are doing or wasting your time on things that have no influence on your businesses or taking your time away from you.
That’s what I wanted to leave you with. Thank you for all the kind words. We’ve gotten quite a few emails in from people. I want to thank you for reading. Thank you for sharing. Thank you for subscribing to the show. One of the big things we’re trying to do with the podcast is getting the reviews up a little bit. Love to hit the 100-review mark here. If you love what we do, take the time to go into iTunes or Stitcher and leave a review. We’d appreciate it more so than anything else. Know your numbers. Work through your numbers and give yourself some credit. If you’re one of these people, “I’m going to do it in 30 days,” you’re probably not going to do it in 30 days. Put a plan, 30, 60 90-day, six-month and then one-year planning and work those numbers back from where you want to be. More than likely you’ll have a plan that works better for you. At the end of the time, you’ll look back and say, “Okay, good.” You’ll probably get closer to hitting your numbers versus somebody that does not have their numbers planned out.
If you don’t have your numbers planned out, you have no real guide. You’re a ship at sea without a rudder. Your rudder in the note business is knowing what your goals are, know what your numbers need to be, how many offers you need to make and how many people you’ve got to reach out to and talk to raise capital. With that, our extended note family and Note Nation, I want to say thank you for reading. Thank you for sharing. Go out and make something happen and we look forward to seeing you all at the top.
Important Links
- Infusionsoft
- MailChimp
- AWeber
- WCN Crew on Facebook
- Wayne Snell
- Note Closers Show on iTunes
- Note Closers Show on Stitcher