EP 447 – Creating And Working Your Business Plan

NCS 447 | Business Plan

NCS 447 | Business Plan

 

Setting up a note business means that you have to create and work on an effective business plan. It can be a long and analytical process, but once it is properly executed, success can be endless. Scott talks about how to make a business plan that works. He says keeping your eye towards the goal and talking to the right people is necessary to ensure that you are in the right path, and identifying your ideal asset along with the right communication method will make any business plan materialize in a much more promising manner.

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Creating And Working Your Business Plan

Our topic, I made it a multiple choice between two topics and I throw it up on a Facebook poll. “Do you want to learn about either building your business plan or diving into what to do when something happens, what happens to your business if something happens to you?” It’s a close poll across the way. The next episode is what to do if something happens to you or what to do when everything hits the fan but it’s going to be about creating and working your business plan when it comes to your note business. Honestly, a lot of the things we’re going to discuss can also be on your real estate plan. We’re going to come from the point of view of we’re doing this as a side hustle because I know a lot of you are looking for things to do in your 7:00 PM to 2:00 AM or on the weekends. That’s the way we’re going to structure this because I, by no means want to tell you, “Go tell your job to take this job and shove a giant paycheck,” at all. That’s not at all what I teach. That’s not how I want.

Making Something Full-time

What you have to do first and foremost when you’re looking to do something, you want to make something full-time or you want to be successful at something, you need to come with a plan. I’ll give you an example, Tiger Woods from the Masters. He has struggled over the last couple of years with three back surgeries and a broken leg, divorced, DUI, losing sponsors, gaining them back and then he was by far not the longest hitter at the Masters at Augusta. Dustin Johnson and a few of those other guys are nailing the long ball. He had to work within his tools and his plan and he was the most accurate guy on and off the greens throughout the weekend to win the Masters. He had to play his game and not dive into other people’s games to do it. That’s the thing I want you all to realize here, you all have your own game that you’re playing. Just because somebody else is off running and doing fifteen notes in their first year or 50 properties, that doesn’t mean that has to be you.

Only you know what you need and what your goals are. If you go into some of our previous videos, some of my previous episodes, we talk about some different things like making $250,000 in your first twelve months and how that breaks down to twenty deals you’re doing, use the money yourself. It also includes whether you are obviously taking all the notes and getting them worked out, keep them for cashflow and then sell them off. That’s one way. We’ve got another one we did a while back called Your First Ten Deals. We broke it down. If you’ve got three to modify and reinstate, three that you got deed liens on and the other four, you had to foreclose on. I think that’s exactly how the numbers were.

Those are some great things to look at. They were great videos. I highly recommend you over to Note Night In America podcast and listen to those or go over to our YouTube channel at YouTube.com at We Close Notes. Subscribe to be able to listen and watch those episodes. If you’re a real estate entrepreneur or wantrepreneur, that’s where most would start off with. There are things you have to put in place. Otherwise, you’re going to be out there shooting from the hip trying to make some things happen and it’s making a little wild and crazy like the wild west out there. You obviously want to make some money which is important to each and everybody but you don’t want to end up having your dreams become your nightmare.

Here’s what I would recommend. Here’s the process I would recommend and we’ve taught this in the past. We dived into this quite a bit with our Mastermind students when they come in or our Fast Track students. Here’s the golden rule that I would recommend that you do. First and foremost, be honest with yourself. You can only chase one rabbit. If you are one of these people who have to go out and try to do everything, you’re going to struggle a lot longer. You’re going to be upset and your friends and your family are going to get annoyed with you. You’re probably going to end up being a Debbie Downer because you’re not having success. Try to focus on one thing. I’m a big believer that education is important. We were training classes and things like that like our Note Buying Blueprint but once you identify, once you get educated, once you start learning about what focus you want to go into, then I would give a lot of your energy to it.

I would spend most of your focus on that aspect. I would sit down with somebody in your local market or somebody you can get on the phone, drop an email to, jump on Facebook or send a message to. I believe that our amazing WCN Crew Facebook page is a wealth of information and great people. I would reach out and say, “What did you do in your first year? What’s realistic?” I like to set a goal. I don’t want it to be a realistic goal. I want something that’s going to stretch myself. Something that’s going to work to make me be focused and accountable. If you’ve got a full-time job, you’re working 60 hours a week or more, you may not have a lot of time so you’ve got to pick and choose what you are able to focus on. You’ve got young kids or you’re in the process of other things or moving, you’ve got some things that are going to kick you in the shins or kicking the teeth that you’re going to have to be focused on. Don’t get down on yourself if you haven’t closed your first deal in your first 30 days or your first 60 days. Sometimes it takes time in life as it’s a way of dealing with things.

Moving Forward Towards Your Goal and Talking To Significant People

Keep moving forward, keep working towards the goal and we’ll get to some of those things that can be working on. Let’s talk about your business plan for your real estate or your side hustle. Talk with somebody about what a realistic number is. I’ll give you an example here in Austin, Texas. I’m going to go out and buy and rehab twenty properties in my first year in business. That’s not going to happen. You’re not going to rehab twenty properties. You luckily will probably rehab a couple. Wholesaling, you’re only going to rehab 100 deals. Are you in a market like Columbus or are you in a market like Austin? Are you in Austin, Minnesota where it’s cold half the year versus Austin, Texas here you’ve got a tough market? You have to know what is feasible in your market. Talk to your local experts. This is one of the biggest things. I could recommend, the best way to do that is to go to your local real estate club. Talk with the people that are closing deals. If it’s a REIA club that’s focused on education and training, whereas you hit the guy that runs the group which is all about that, or the gal that runs her group is all buying and training from them, I will talk with somebody else. Find somebody else.

Let’s say you’ve got jobs and you may only have ten hours a week to do it. Here is what I would focus on those ten weeks and look at it in a long-term timeframe. Give yourself 12 months or 24 months even if you get sidetracked with wealth or other life events. Be realistic with yourself and be focused. Whatever your one thing is, let’s say it’s note investing because that’s our flavor here. Let’s say you want to make $60,000 in a year. That’s what it’s going to take you to leave your job. Here’s what you want to do. I’m a big believer and I get people that are wholesalers come to me all the time and I talked with somebody the other day about, “We’re going to wholesale a lot of your assets.” You’re only going to make a little bit of money and you’ll have no wealth that’s built along with it. The best way to build wealth in the note business is to work on assets that can potentially turn into performing notes or cash that comes in to you on a monthly basis.

Wholesaling And Having A Good Database

That’s a great way to truly build cashflow. If you’re only making $1,000 or $2,000 in wholesale fees, that means you have to flip 30 deals to make $60,000 and you’ve got to do it all over again every year. Nobody wants to work that hard. The thing that separates wholesalers is having a good database, finding good deals and also breaking down the deals. If you’re going to do all that work to sell it to somebody else for a flat fee, you might as well do the same amount of work to break down the deal and talk with people, talk with your warm market, build relationships. Have them fund the dealer partner with on the deal where you’re split on whatever.

Ten hours a week, what are the things you’re going to do? We’ll go back to my $250,000 in 2019 webinars. If you need to make $60,000, that’s $5,000 a month. Let’s say you’re using other people’s money, you’re splitting cashflow and you’re going to see $250 on your split of the cashflow side. Let’s say you’re getting borrowers on mortgages where they’re paying $500 a month is what either the modified amount is or the existing amount, its $500 roughly. If it’s $400 year and a lower value there, that’s fine. No problem. I wouldn’t go below $200 coming to you. It’s hard to make money when you’re paying a servicing fee especially if it’s nonperforming right off the bat. Try to stay above that $200 to $250 a month phase for the month part to you.

Let’s say $500. $500 a month divided by $5,000 is ten deals. If you have to split that, then that’s twenty deals. You’re going to work to get twenty deals performing in twelve months. That comes out to one and a half deals roughly under that or one and two-thirds deals monthly or if you figure that that’s one deal every two and a half weeks roughly, 50 weeks, 40 deals. How many offers are you going to have to make to get that number? The reason I’m going through this on the frontend side so it has a bit of a foundation for where we’re going in the next aspect of things. This is the whole idea of putting a plan together. You have to know your numbers.

You can’t throw, “I want to make $100,000,” slapping it against the wall and hope that the Jack Canfield fairy shows up and writes you a six-figure check with your first deal because that’s not going to happen. What’s going to happen is if you don’t plan out what your actions are, don’t plan out what your goals are, you’re going to sit here floundering. You’re going to say, “I want to lose weight,” but if you never go to the gym, you don’t change your diet or you don’t sleep better or still eat. Nothing’s going to change if you don’t change your diet. You’ve got to change the activities but you have to know where you want to go. Like example, my buddy Adam Schaeuble, our PHD, Previous Heavy Dude at the Million Pound Mission podcast, talks about how you’ve got to know your numbers. To burn a pound, you’ve got to burn 3,500 calories. That means you have to have a deficit. If you’re going to constantly eat 5,000 plus calories a day, then you’re adding a little bit unless you’re expelling that calorie while you’re walking, working out, doing other things, riding the bike or whatever.

A lot of people are like, “I’m on a diet.” If you’re going to starve yourself, that’s not necessarily the best way to do that. I’m not going to talk about starving yourself when it comes to the business. Pick a number, what you’ve got to make. If you’re making $60,000 a year and you‘re living comfortably $60,000. Maybe it’s $100,000, maybe it’s $80,000. I don’t know. Adjust the numbers for whatever it is. Take that annual income. $60,000 divided by 12 is $5,000 a month. You get $5,000 a month in cashflow coming in. Divide that by $250, it comes to 40 deals. That’s feasible. That’s basically about one a week or working towards that one a week aspect. 40 times $250 is $10,000 coming in. That’s half to your funding partners and a half to you. That’s $5,000.

How many offers do you have to make if you’re going to do that? I am a big believer that as new real estate investors, new note investors, you’re not going to have a high closing rate and you’re not going to make twenty offers and get twenty offers accepted. Everybody will agree to this. This is why for years, traditional marketing suggested you mail out 1,000 postcards, mail out 1,000 yellow letters and go knock on 1,000 doors or mail it to foreclosure list. That process will result in deals or yield in responses but it’s not going to be a lot of great stuff. You might get 1% to 4% response rate.

NCS 447 | Business Plan

Business Plan: The best way to build wealth in a business is to work on assets that can potentially turn into performing notes or cash that comes in to you monthly.

 

I like the note side of the game because it does alleviate a lot of the marketing that we have to do and while we don’t spend drop 1,000 postcards, there are other ways to market out of that. You can have a 10% closing ratio. If you need to close on 40 deals, then what you have to look at is 40 deals times 10% close rates. That means you need to make 400 offers. That comes out to about one a day. The more you close the better you’re going to get to your closing ratio. You’re never going to get beyond the Major Leagues. You’re never going to get beyond 30% or 40%. If you do have a higher closing ratio, it’s either you’re not making a bunch of offers, you’re being very good in your due diligence or maybe you’re overbidding on assets, overpaying and you don’t want to do that. It’s somewhere in that 10% closing ratio. You make twenty offers, you get two offers, two offers you end up closing one. It doesn’t mean you won’t get them accepted.

Initially, if you make ten offers but through your due diligence, you’re probably going to end up eliminating some stuff either taxes, foreclosures, it’s trashed out assets. It’s not occupied. There are a variety of things that can eliminate that stuff but knowing those numbers right there, I need to close on 40 deals that are bringing me $250 to get to $10,000, twenty deals to bring me $500. It’s either 20/40 whatever number you’re looking at. If you’re $5,000 a month or $10,000, take whatever that number is, the number of deals and divide it by $250 or $500. That’s the number of deals you need to get to where at the end of twelve months you have that many deals that are starting to perform. Some are going to perform faster. Sometimes you get the building up and they’re going to start cashing in, sometimes they’re going to start getting those borrowers on track with your vendors. That’s the first part knowing your numbers. The thing is, “How many hours a week do you have? What are the marketing activities you’re doing in your business plan?”

Knowing Your Team

Keep that in mind that’s a great thing. We’ll come back to that. Hang on to those activities. One of the most important things about your business plan is knowing your team. That means you need good realtors. You need to know the markets you’re investing in. You have foreclosure attorneys in those states. You have a servicing company. If I didn’t say this, you have realtors already or people in that neck of the woods that can drive by the assets for you. Those are all integral parts of your team. We did a Note Night in America episode on the Perfect Pitch Book. That’s a great way to look at to see what teammates you have, who’s dealing with it whether it’s Madison Management? Who’s your insurance company like Ross Diversified, whether you’re using Franco Barile or Singer Law Group as your attorneys.

There are a variety of different things. Who are you using for collateral storage whether it’s Orion or the company out of West Branson, Missouri or Richmond Monroe. There are a variety of different teammates you want to have. Maybe you’re only going to start off in two states. That’s another thing to look at too. I like these five states. These are the five things I like but I’m probably going to focus on most on two or three states to begin with. That’s the thing I’m talking about. You can’t try to buy everything in every state initially because you’re going to burn out. Texas, if I see something in Texas I’ll jump onto it but it’s not one of my top five. I’m here with my top five because my top five are the states I see in most of my inventory coming in.

Here are the states that we see most of my inventory: Ohio, Michigan, Indiana, Illinois, South Carolina, North Carolina, Missouri, Tennessee in some cases and Kansas but those are primarily the states that we see the most amount stuff coming. Pennsylvania and Maryland, Virginia, throw those in there as well too. If you’re in one of the states, great. If you’re in Ohio or Michigan, you’re in the land of milk and honey. You could probably buy enough in Ohio to loan satisfy your needs or in Michigan as well, Pennsylvania or Maryland but develop one state, develop one market and then go from there.

You’ve picked your states. What state is it? We’re going to focus on Ohio. What are the bigger markets in Ohio? This is the thing by breaking it down. These are things in your business plan you need to know. Columbus, should I go to Cleveland? It’s got some iffy issues. Let’s avoid Cleveland but Akron, Dayton, Canton or Cincinnati, if you’re a Bengals fan. There are some good markets in Ohio. I like that area but those are the areas you need to know. What’s the next phase though? In your business plan, you need to find a local real estate club either through Meetup.com and also find a realtor in that neck of the woods. Maybe you need to find a title company. Maybe you need to find somebody that can help you out with that stuff. That’s breaking it down. If you did that for one area and then if you’re going to do Michigan, do the same thing. What are the big areas in Michigan? A lot of this stuff can identify things. The more you dive in your business plan, the more focused and happier you’re going to be because you’re not going to be chasing so many freaking wild turkeys out there and chasing every little remote deal. “It’s in Ohio, it’s in a small town.” That’s what I’m trying to get at. The more focused you can be to pick your cities that have over 25,000, over 50,000 or the major universities in those areas.

Those are some great filters to help you focus on some things. Why education? Why college? The worst case you turn into a college rental within five miles of the university. You can rent out bedrooms but then that takes me into, “What are you going to do with these assets?” What’s your biggest focus? Is it going to be a wholesale? It’s not the cashflow thing. You have to look at how much you can make in a wholesale deal. Is it $1,000? Is it $2,000? Is it $5,000? If you’re buying $5,000, it means buying it at $0.50 on the dollar or below that to leave plenty of meat on the bone for the final investment. Know what your focus is, “I need to buy owner-occupied assets that I can modify where the borrowers hopefully had paid something in the last 12 to 24 months,” or “I’m buying assets between say $40,000 and $150,000 in these markets that I need a faster foreclosure, judicial or non-judicial. That’s all the things that go into your business plan.

Identifying Your Ideal Asset

The more you’re identifying exactly what your ideal avatar is or ideal asset and you’re looking, the easier it’s going to be. It’s easier for you to do your due diligence. It’s easier for you to run through and as you’re looking at assets, I don’t want to buy anything under 900 square foot. I don’t want to buy just a two-one. I want some of at least two bedrooms or two baths. It helps you filter those things down. The more specific you can be in what your target focus is, the better it is going to be. That’s all about getting focused. Let’s go back to how do you reach out to fund these deals? What’s your focus going to be? What are you going to spend your time on if you’ve only got ten hours a week to do it? Now that you’re focused, you know the states that you’re in that you’re looking to, then you want to build your list of asset managers or banks that are lending in those states. That’s where Lane Guide will come in handy. That way you can pull some easy lists off of there. It’s worth $160 to $170 year or whatever it is.

You could jump on to different state licensing websites and see if they’ve got servicers or licensed mortgage bankers in a specific area and then you have to decide, what are you going to do with your ten hours a day? If you’re working full-time, you’re probably not going to have a lot of time for making asset phone calls or calling asset manager banks. It’s not going to happen. That’s a two-hour or three-hour a day thing you’ve got to focus on. You can’t make ten phone calls in 30 minutes and say, “I called banks.” That’s not an effective time and to say that you’re going to do it during your lunch break, no offense but it’s probably not going to happen. You might do it for a couple of days but you’re probably not going to do that. This comes back to, how do you market effectively? This is what you have to look at in your ten hours. You’ve only got ten hours to do some stuff. You need to build a list. Also, you’re going to have to buy a good investor’s list and you want to buy a bank list.

This is something you can do at different times at night. Do not do it during the day. You can do this at home or after dinner. When the kids are in bed, you knock a couple of hours out. That’s what I would say to do too. You have to look at your schedule with your plan. How many hours do you realistically have? You’re not going to probably spend all 7:00 PM to 2:00 AM after you get off of work. You’re probably going to spend 8:00 PM to 10:00 PM, two hours. Do that four nights a week. Friday nights is the ladies’ night or the guy’s night. Spend some time with your family and friends and you’re not going to spend all weekend. You might spend two to four hours on a Saturday or three hours on a Saturday and then maybe an hour or two on Sunday. You could do two hours a day or two hours Monday through Thursday. There are some things that you have to keep in mind that you’re probably going to get to. If you go to your local real estate club, if you’re in an area there, that’s an important thing to do. Go network and build relationships. That’s a part of your marketing.

Look at your calendar. “I’m going to go on the first Wednesday and the first Thursday.” Those are the two nights a month that my local real estate clubs meet. Mark that down on your calendar and that’s your two to three hours you’re going to networking. That’s a good thing, but you have to be effective. Get business cards. Take their information and put them in your database. If they give you a business card, take the email, the phone number, the address, who they are and put it in your databases. Potential buyers, funders or whatever and that comes down to where do you put them? If you’re getting started with a business plan, you need to have some email service provider or CRM of some sort. MailChimp is an easy one to use. Infusionsoft, AWeber there’s a variety of different ones out there. We like MailChimp and Infusionsoft, which is the best.

MailChimp is the easiest to use, and they have a lot of newer and cooler features to it. When you’re starting off, it’s a great place to start off if you’ve got a small database. It’s easy and inexpensive, just go and use it. What does that mean? It means you’re building a database of either investor you’re meeting or building lots of asset managers off of like Lane Guide, the Scotsman Guide or the Texas Department of Savings and Mortgage Lending those are lists. You’ve got to put those lists in something. You’re not going to send an email out via Gmail or Yahoo or AOL like some of you are using. They are Dark Ages.

You have to realize that it becomes your next thing. Your 7:00 PM to 2:00 AM activity is writing an email or sending an email up on Sunday so that your emails go out throughout the week. I will be sending an email out to your database at least once a week. Databases are like investors or people you meet at real estate clubs once a week. It’s not a bad thing to do at least once every two weeks. Send an email out to your database and then follow-up with the same email through MailChimp of those who didn’t open the first round at a different time. Sunday nights at 7:00 is a great time to send emails out. The next thing you’re going to look at besides emails out is then I will also spend time on LinkedIn.

LinkedIn is a great way to find asset managers. Find secondary marketing professionals. Go out and spend some time and send messages. Connect with different people on LinkedIn. If you have a brand-new LinkedIn account, it will be a little harder to do initially if you don’t have a lot of connections. LinkedIn only allows adding so much percentage compared to how many connections you have. You may need to spend some time on your LinkedIn app on your smartphone, adding new connections that way versus your computer, but it’s easy to do it while you’re sitting there and doing it. I wouldn’t do it at the table. Don’t do that. Your husband or your wife will get mad that you’re not paying attention. Put the phone away so you spend some time with them. Send emails, asset managers to your contacts and then also spend some time on LinkedIn reaching out to asset managers that way.

NCS 447 | Business Plan

Business Plan: Go network and build relationships. That’s a part of your marketing.

 

Those are three great ways to do it. The next thing you can do is reach out and type in real estate hedge funds and start tracking some announcements or sources they have. If you’re working during the day, you’re not going to have time eventually as you start getting lists. You have to do a lot of due diligence during the day so you’ve got to do that at night. This is why you want to set up your systems initially at first with your marketing. That stuff can get off cranking for you on a regular basis instead of doing one thing and saying, “What do I do now?” If you start doing this, you’re going to start seeing some lists coming whether it’s from fellow note investors that you see and meet, or maybe some brokers, or you’re getting some direct list direct from banks and asset managers.

I’ll give you an example. I made phone calls to banks for about an hour and a half tracking down some asset managers for short sell agents here in Texas that we’re working on a couple of smaller submissions. We had some good luck coming. I’m stoked about that. If you’re working full-time, you don’t have time to maximize this. That’s why you want to reach out via LinkedIn or you want to send an email blast out to asset managers during the day and use MailChimp to be able to do that so you can pre-schedule it and send it out at 11:00 AM while you’re in the middle of typing on the phone or doing your job.

Communicating Your Success Through Email

When you start getting deals in, it’s important to start breaking down the due diligence. That’s when you want to jump in and spend some time on your due diligence. Another important thing to do is to communicate what you’re having success with. Maybe share your journey in your email blast out to your regular database. People love to follow along. People love to comment. People love to see people doing something and failing. One of the most valuable videos I ever did initially was calling banks for two hours and getting hung up on. People love that. They love seeing people fail. That’s great. You learn more about failure than you did by success. Take a look back and looking at your schedule, how much of your ten hours a week, 30 minutes should be set up once you got your email template and stuff done, 30 to 45 minutes is about long as you can take to setup your emails and go out once a week. 30 to 45-minutes going out to asset managers. You’re going to spend a lot of time connecting with people and sending out LinkedIn messages, I think that’s a great way to do it.

You might want to use LeadFuze. LeadFuze is a cool service that you can use to export context directly from LinkedIn. That’s a cool thing that we’ve stumbled upon and I’m excited about for some things. You’re going to want to spend some time building your social media profiles. Maybe join a few real estate groups. Maybe joining a couple of your meetup groups on Facebook or join something like the DFW Real Estate Investor or Columbus Real Estate Investor, especially in the markets where you’re buying at. You may want to join those groups on there to network with people. Find other people there that way when you come across something, especially if it’s not in your backyard, you may be able to reach out. If you don’t have realtor already, you can reach out, “I’ve got a deal I’m working through here. Can I have somebody who can help me drive by and see it?” These are free resources. The only thing that we’ve talked about costs anything so far is Lane Guide, MailChimp, which is going to cost you once you go beyond 2,000 times access. That would be pretty easy for you to do. You’ve got to use those things.

Make them a good use of your time, use your cellphone if you’re doing internet. I’m not telling you to go out and spend money on an expensive LinkedIn profile. Use the free version, it works fine. Start getting beyond 2,000 to 3,000 contacts in there, it’s going to get easier to add and share what’s going on. You may go, “I made offers this week. I contacted banks.” One of the most important things about an effective business plan, as we talked about going back with the numbers is for you to start tracking your numbers. When I was a banker at JPMorgan Chase, one of the things that they gave us was a scorecard every day. You probably want to have a scorecard somewhere where you’re tracking how many asset managers you contacted. Did you send an email blast out? When did you reach out on LinkedIn? What did your LinkedIn connections increase to? What emails did you send? What were your open rates? Start tracking that stuff. How many assets did you have come in? How many offers do you make?

Start tracking those things so that you’re effective in your day and in day out activities and that way you can track. Some of you have enjoyed the 30/30 matrix that we put together. You may want to check out that from a previous Note Night in America podcast or YouTube video, the 30/30 matrix where it’s 30 days and 30 marketing activities you can do across the top of the spreadsheet and you check off a couple a day and you’re rocking and rolling. One of the things you might want to do as well is you may want to find an accountability partner. I think it’s important. Maybe you find one of your local real estate club or maybe you meet somebody at Note CAMP or maybe you meet somebody at the Paper Source Note Symposium. Find someone to be accountable with. They are probably in the same neck of the woods you are. You guys can hold each other accountable because there are times that will flake on that person appearing back at us in the mirror but we’ve got something to hold us accountable too. We’ll do it. It’s the whole reason I have a trainer come by.

I’ll keep working but I have that accountability because I’m paying him daily. I’m not going to blow that money. I’m going to get my money’s worth that day and get my workout. Do yourself a favor. If you flake off, you started seeing things, you’re spending a little time excited because Game of Thrones is on. You’re going to binge watching Game of Thrones. Get it done. Check it off and go back to work. The beautiful thing I think is that in this day and age as entrepreneurs, there’s no excuse not to get started. There is a great book I would recommend written by my buddy, Dan Fleyshman. It talks about How to Set-Up Your Business for Under $1000. It gives all sorts of right resources of marketing and success. I would highly recommend you to download that. It’s a phenomenal book on how to start a business for under $1,000. The thing is a lot of people get into, “Do I need a website? Do I need social handles? Do I need an LLC?” Those are important things that are not killers. You can start doing this other stuff we’ve talked about.

You need an LLC to do this and before you go pick some fancy name that you think is cool to you, go to Namechk.com. See if the .com is available, see if the social media handles for that business are available. The last thing you want is some cool name and then the LLC is not available or the website is not available, the social handles are not available. Be smart. Check that out and then I’d reach out. You need an LLC. You should start looking at some of your initial expenses along the way. You have to pay for an LLC. You probably need to have a website. Necessarily, you don’t have to have anything too fancy. A lot of times people since this is your side gig, a lot of people will utilize their LinkedIn profile as their website initially. That’s great but make sure it’s completely filled out. Some people start it and never finish it, never put a profile photo and that’s difficult. Initially, get your LinkedIn profile and get a Facebook profile up there.

Start one for your business. Start doing those things and then go to a website. We’ve got some friends that do pretty inexpensive website creation. If you need one, reach out to me, Scott@WeCloseNotes.com, “I need some help with website development.” I will forward you over to my buddy who helps out in a lot of things. I would recommend you not do a Wix website. Do a WordPress website. Use something like that because it’s all got so many different plug-ins that you can make it look a lot fancier whereas Wix is not the easiest thing. When you start it, they build something that’s initially okay but you’re better off doing something else. You might want to check out Leadpages. You might want to check out ClickFunnels. There are a variety of different things that you can do for your website, depending on what you’re planning on doing long-term.

Keep it simple, keep it clean. You need a logo. You could jump on Fiverr.com find a couple of examples or go to 99designs and have a lot more samples to choose from. You could jump on Canva.com once you find out the entity names available and create your own logo if you needed to. That’s inexpensive. Those are things that you can figure out. You should not say, “I’m going to spend five days on creating something.” If you spend five hours, you’re in the wrong line of work but spending a little bit of time there, working through that stuff is a great tool or better yet, learn to start delegating some of that stuff out. I want you to start delegating some of your marketing out. You can find somebody on Fiverr or Upwork.com to help you to delegate some of the things that you shouldn’t be doing, especially you’re working full-time.

Outsourcing Tasks For More Social Media Presence

One of the biggest things that I see a lot of note investors struggle with is they try to do everything themselves for the first 20 or 30 episodes because they’re like, “I can’t afford an assistant.” You can’t afford not to. That’s not saying, you hire somebody at 40 hours a week to start off with hiring somebody up to ten hours a week, a virtual assistant to help you with your due diligence. Hire somebody to help you with your marketing, hire somebody to help you with your social media presence. There are a lot of people out there that will actually write free articles for you. I get bombarded once or twice a week with somebody wanting to write articles for our website. You have to realize that you have to treat this like a business.

If you want to treat this as a hobby like, “I have a Facebook account. I don’t need that. I don’t want to have that.” That’s fine. You can treat it as a hobby. You may close a fraction of what you would do but if you get serious about this, you have to treat it as a business. You have a logo, you’ve got business cards that are not printing home. Break it off. It means you’re one person doing one thing and not twenty million Jack of all trade jackasses. Be focused on where you’re going and start doing it. Here’s the thing of going back to your planning. We’ve talked about the numbers like the first twelve months. Do this. If you figure what your number was for twelve months that you wanted to hit, say twenty notes, increase that by 150% the second year. The second year, I’m going to do 30 notes or if I’ve only got ten notes in the first year, I’m going to try to go to twenty or am I going to fifteen in the second year?

Saying you’re going to close on 100 deals is not feasible to start off with. That’s the truth of it. Unless you were independently wealthy. Be smart and give yourself permission to do some different things. Give yourself permission that it’s okay for you if you didn’t hit your goals. One of my few archnemeses, when I was growing up unfortunately, was my sophomore geometry teacher, Mrs. Crawford. Mrs. Crawford did not like athletes at all and I was an athlete. I was the captain of my football team. I got along fine with everybody but she didn’t like athletes. It’s unfortunate. I had a lot of friends in my geometry class. I’m the kind of guy that if I give you the right answer, great, let’s get the right answer. If you’re going to sit here and make me jump back and forth, jump through hoops and try to close one way, your way, we’re probably not going to see eye-to-eye and that’s what happened. We didn’t get along. We didn’t see eye-to-eye. It was one of the classes I struggled with the most. I made decent grades on this stuff but I didn’t do so well the second semester of my sophomore year because we just didn’t go along.

There are other things we had to do and I didn’t take it that seriously. One of the things I did not like is that Mrs. Crawford, what she said about goals was that a goal should be something that you’re never able to accomplish and I dislike that. I don’t believe that. I think a goal is something that you should be able to accomplish. You want to stretch yourself but to never be able to accomplish your biggest goal, why would you do it anyway then? A lot of us have big goals out there, big dreams of what we want to accomplish. You may not get there in the first twelve months but it just takes time to get there and we have things along the way to distract the sickness, family issues or work issues. It’s okay to put down your goal for a little bit, rest, but then go back to it and pick it back up. You’re the only person whose goals and opinions you need to worry about. Please, for the love of your business, if you’re serious about it then be serious about it.

NCS 447 | Business Plan

Business Plan: Keep it simple, keep it clean.

 

We have some investors who write, “Scott, I love my job. I do this on the side.” That’s totally fine. That’s okay. We’re fine with that. It’s a great thing. “I’ve only got ten hours a week or five hours a week to do this.” Stretch it out. “I’m happy with my job. I only want to do this with my IRAs.” That’s great. There’s no wrong answer to that. “I just had a baby. I don’t have the time.” We understand that. Maybe you need to figure out how to do due diligence while you’re rocking the kid at 3:00 AM, but it’s okay to do that. This is why I love the community, especially in the note business. It’s different than your fix and flipside or your wholesale side. Most people cut your throat in other sides. A lot of times if you’re so busy, it’s good to find accountability partners. If you’ve got the money and you can partner with other people who’ll go do the deals or vice versa. If you have the time but don’t have the money, go out and find some deals and partner up with some of the other people out there that don’t have the time but have the money to do that, that’s a feasible thing to do and how you structure it.

Well get to that at a different episode. Coming back to your business plan, focus on what your numbers need to be. Realize you only have about 10% closing ratios and then work your numbers that way. Take whatever monthly you want coming in. “I need $5,000 myself. You’re going to see probably $250 to $500.” What’s that come down to? Twenty deals times 10% closing ratio means you need to make 200 offers. That’s one every two days or that’s eight a month on a rough basis to get to your deal’s done, to make your offers and to get the deals close to get that done. That also means we need to close in twenty deals and they’re roughly going to be $50,000 to $75,000. That gives you a number to raise capital for. Twenty deals at $50,000, that’s a $1 million portfolio. That’s what you need to look at and that’s also some of the things to look at that’s why it’s important to network. That’s also why it’s important to know your deals, having it structured. This is also why you need to have an LLC. It’s also why you need to probably put a little bit of timing and budget into your business plan to seek counsel for your attorneys, to have them set up entities, and to make sure your LLC is compliant with the corporate veil protection that Laughlin Associates have. We had Aaron Young on a few episodes ago.

Those are such important things that you need to put in place now and not wait later on. A lot of us, I always say this with the voice of experience, we get started with a Band-Aid budget. We get started putting things together. I’ll look at that later on. We never get to that later on. If you’ve got the time, put more time into your systems, put more time into your asset protection in the frontend side and it will pay volumes in the long run for you. Start putting a system in place. Start networking. You don’t have to attend to everything in the notes space. I’m against attending everything because I think a lot of it’s overkill. Pick out a couple of events. Maybe add an event to you that you go to in the New Year. You go to one event this year. Maybe you want to get to it next year and maybe you swap it out and go to a different event. Maybe as you’re growing deals, maybe you’re looking for more area focused events.

Maybe you’re looking for more marketing help or the thing you want to put into it because you’re never going to go wrong with two things. Put money into your marketing because it’s going to work volumes across everything, marketing whether you’re wholesaling, note investing, fixing and flipping, selling tiddlywinks your old Nissan or Honda Acuras or whatever to Jason Bible of Right Path Real Estate. Whatever it is, your marketing is always going to pay off for you. When you see a lot of businesses or companies that are struggling, they pull back in their marketing budget and that’s usually the sign of death. Don’t do that. If you’ve been ahead a busy week and you need to make some offers, don’t get down on yourself. Talk about what went on. Market about what you’re going on in your life.

Let people start building that rapport where you’re giving them the chance to know you that’s the biggest thing and the thing is, I would tell you this too. Take a little bit of time, pay a little bit of money, $200. Invest in a good microphone and a good Logitech webcam. Maybe use Zoom. It doesn’t hurt to start talking about you doing a webinar on the weekend or something like that. Something to market yourself, market the deals that you’re working through. Do a little lunch and learn, or a little weekend and learn. Record a PowerPoint talking about what you’re doing. We did the perfect pitch as I talked about in that webinar. Take 20 to 30 minutes and create a little perfect pitch video and you can upload that to YouTube or Vimeo and then go out and spend some time.

Maybe it’s either on BiggerPockets or Connected Investors and connecting with other investors locally. We’ve had some great connections happen across both of those platforms and it’s a great way to say, “Here’s what I do as a note or a real estate investor,” and that’s one great solid piece of advice I would give you. Spend more time on that in the frontend. Create some good four, five, six assets and by assets, I mean videos, your stories or case studies that you’re talking about. That’s one of the big things I would focus on. If you’re struggling, you don’t have any deals then reach out, “Do you have any deals that you’ve closed that you’d like to be interviewed on and talk about case studies or any sample numbers that we go through?”

Focusing On The First Year

It’s one of the great highlights of what we do at our Note Mastermind. We spend a lot of time going through different case studies, what deals would be closed lately? If you focus on your business plan, don’t get so bogged down that, “I’ve got to plan out ten years.” Focus on the first year. Write down some realistic goals for your first 90 days, your first six months, your first twelve months and then double that number or increase it by 150%. Make it a reachable goal but nothing crazy. If you haven’t closed on five, you haven’t closed on a note deal in your first twelve months, make that your goal for the first 90 days or your first six months and if you get delayed, okay.

I want to give a big shout out to Catherine Brennan in Chicago, the Note Exchange, you may recognize her name. She’s closing on our first note deal which is great. It’s been six months she’s been around but I also know that Catherine is a very busy and a very successful realtor in Chicago. Kudos to her because she’s closed on her first deal. It took a little bit longer than expected but that’s okay. She’s going to be off and running and doing some great things out there. Start spending time. Start networking. Don’t be a lone wolf. As investors, we have our own companies but don’t be afraid to reach out and ask for help. It’s one of the most important things that you can do because those that are most successful are successful because they have overcome the most amount of obstacles.

Those that are successful because they’ve decided success after success. What you don’t see is a lot of mistakes they’ve made alone. A lot of good deals, also a lot of bad deals or a lot of deals that didn’t go the right way that they were able to overcome because that’s half of what real estate is investing. We all love to think that the best thing is going to happen and that’s not always the case. You always have to have a plan B or plan C. Make that number and put that into your case study. Your case study is like, “I’m going to buy ten assets a year. Five of them are looking to get re-performing at $500 a month. I’m hoping to make $5,000 to $10,000 in fees when we sell the assets either through their deed in lieu or foreclosure.” That’s great. Not every deal is going to be a homerun. You’re hitting some singles and doubles, $5,000, $10,000 to your pocket? It’s not bad, especially if you don’t have to go out and do some heavy lifting to rehab it and things like that. A lot of people like our buddy Chad Urbshott north of the border, we were talking about a deal he’s glad to get rid of. It was a nightmare. He’s making some money on it but he was glad to be done with it. It’s the last big rehab.

The biggest thing that we see people struggle with is they try to be everything. “I’m going to do all of that,” and they build all these little half-finished bridges and they never end up completing everything. The more focused your business plan can be, the more focused you’re going to be, the happier you’re going to be and really happier your family is going to be because you’re not running all over like a chicken with their head cut off acting all crazy. You could be more focused and have more time for your family. The last thing you want to do is replace one job with something that’s shackled to you. You want to be smart, be efficient and be able to have some wins.

You’re going to have some hiccups, you’re going to have some investors walk and you’re going to have some deals get pulled from you that you’re all excited about. It’s not quite what you expected there but take a look at your servicing company. Look at the states they’re licensed in. Look at lenders in those states, mortgage company and bankers. We made a few phone calls to asset managers that are lending in Texas and some other states getting some listings. It’s all about the activity and if something isn’t paying off, there are a variety of things you’re going to do to market your business. Go back and do something else. Change it up a little bit.

Shaking Up Your Business

Shake up your business. Tweak it up. If you’re not getting anything out of your local meetup group because it’s pitch fest all the time, go to another one. If you need some coaching, get some coaching. Reach out to people that are doing some things. You never know because we’re all really one contact away from our business changing. Maybe it’s one contact in an asset manager. Maybe it’s one in a bank. Maybe it’s a servicing company. Maybe it’s a vendor. You never know who’s going to reach out to you for the source that you want to go to. If you’re looking, one of the great things you could do if you’re looking for case studies or things like that is to jump on some of the exchanges. We’ll get some deals that they have and work through some of the numbers. If I offered this, would this make sense? If I offered this, what’s the route? Work through those numbers. Those are great learning things and then talk about that. “Here’s a deal that we’re working through.” Numbers don’t make sense because of this. Here’s why. Show that you’re educated because it will build rapport not only with you. It will build confidence with you but it also will build rapport to those that are watching or listening and honestly, sometimes it’s the family too. They’ll start believing and seeing all change taking place.

Know your numbers, work your numbers, know the time that you really have to put into it, be effective in those ten hours. Don’t do little things. If you can delegate little things off, do it. If you want to make six figures, hire an assistant. If you’re not making six figures in your business, hire an assistant to go do that. Hire somebody that can run and do all this stuff that you don’t need to do. Look at what your hourly rate is. You have to think about that. That’s another important number for you. If you want to make $60,000 a year, here’s the number. Say you want to make $60,000 in a year. That’s what you’ve got to do and you’re working divide that by 50 weeks, 1,200 a week. If you’re only putting in ten hours a week initially to build this extra $60,000 that means your hour, you should be worth $120 an hour.

Anything that is less than $120 an hour, you should be delegating it off to somebody. A $15 an hour job should be delegated out to somebody to go do that. It means you’re washing your clothes, you’re doing your oil changes, you’re mowing your yard. I get it. Some of you guys enjoy that and if you’ve got your other stuff done, do that. Otherwise, give it to somebody else. Have something else go and make a bank deposit. Have somebody else go check your mail if you can. You’re focused on the $120-hour job, raising capital, finding deals and marketing.

NCS 447 | Business Plan

Business Plan: Those that are most successful have overcome the most amount of obstacles.

 

Those are the three biggest things that are going to help you grow your business and help you accomplish things in your business plan whether it’s notes, whether it’s wholesaling, fix and flips, whatever it might be. It’s being dedicated and focused on getting things done. That’s what it comes down to. Know your business. Don’t try to be a jack of all trades. Please stop trying to be everything. You probably need to take a little time, get a little education along the way. Education will be reading books. It can be going to workshops. It could be going to a mastermind. It could be hiring a coach. There’s a whole main different everything you can do to help that but you need to put that into your plan as well too. My marketing plan is I’m going to go to meetup groups in these areas in my hometown.

If you’re bigger like a DFW, there’s something every night. If you’re in a smaller town, I’ve got one meeting once a week and maybe I need to jump on something else. Maybe I need to drive one night a month, an hour to a bigger city and go to that event. If you can get your spouse included, that’s helpful. If you have an accountability partner that will help you with the ups and downs of this business because every business has ups and downs. Every business has hurdles. Everything has potholes out there. The idea is the more accountability, the more understanding you can get, the better you are at avoiding those potholes and hurdles that you’re going to fall in front of us all because they all do. Share what’s going on, share what you’re struggling with and don’t be afraid to say, “I need some help.”

The worst mistakes I’ve ever made often is when I didn’t reach out and said, “I need some help.” I sat there and thought I knew it all, I goofed up and messed up things. Those are some of the biggest things. Those that at least have goals written down are 50% more likely to achieve those goals. Many people start a business but they never put a plan in action of how they want to accomplish things, how they want to get to where they want to go or what they need to be doing. You need to be marketing to a regular basis to get things done and that’s a shame. The downright dirty shame that you don’t take the hour or two hours or a couple of hours to go through a business plan and have somebody review it, have somebody look it over for you. Look at online. Every town usually has a small business administration you can go to where they’ve got retired executives. SCORE is the name of the department. Take them out to lunch or take them out for dinner or happy hour. Try to expand your network.

My buddy, Gregory, likes to say, “Several years from now, we’ll be this and except for the people we meet and the books that we read.” Maybe you need to read some books or listen to some podcasts. Thank you for reading this blog or sharing it. I would appreciate that. If you’re reading out there guys and you don’t know where you’re going, or you’re in real estate and struggling, take some time and spend time putting a business plan together. You don’t need anything that is like 40 million pages. Some of those things are overkill. Some of my best business plans have been one page. “Here is where I’m focused on, here’s what I need to do and here’s where I want to go.” Those are the things that I post to keep and share. “Here’s my business plan, and here’s what I’m going for and hopefully, I’ll get there and see you at the top.”

That’s all I’ve got for this episode. Hopefully, it was helpful for many of you out there. The thing you’ve got to realize, you’re not in this alone. Take some time, pick up the phone, drop me an email, shoot me a text message and go from there. If you’d like to get some more information on note investing, you can always go to and download my free book at NoteBlueprint.com/Freebook. It’s $9.99 on Amazon. We’re giving it away for free if you’re reading this. You can download a PDF for the 73-page book and show how we were able to do what we did. Go out and make something happen. Have a great day and we’ll see you at the top.

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