Brant Phillips Show 24: Brant Interviews Judson Smith, Real Estate Investor

Brant Phillips Show 24: Brant Interviews Judson Smith, Real Estate Investor


Brant: All right everybody, welcome to The Brant Phillips Show. I’ve got a special guest on with you today. In a lot of these podcasts and shows people say, “Hey, I’d like to introduce my good friend.” Sometimes a little peep behind the curtains, a lot of these people in promotions, they’re promoting and they may have met at a conference or something like that at one point in time but this is a friend of mine, a true friend. His name is Judson Smith. We met years back. He came to one of my events, a Breakthrough at the Beach Event. Over the last few years, I have watched Judson become what, like Hall of Fame action taker and just going out and taking action and just doing the work and really starting from a small, very small business to really consistently taking his business to the next level, to the next level, to the next level. I’m very happy that all you guys are listening today because you’re going to be in for a treat with my good friend Judson. Judson, how are you doing brother?

Judson: I’m doing awesome man. I appreciate the generous intro.

Brant: Yeah dude, hello. I don’t think that’s even really doing justice to what you’ve been doing man because since I met you a few years ago, dude, you’ve just been crashing it. I’ll tell you what, one of the greatest compliments for someone who is a coach or a mentor or just helping people out is whenever they go out and do what you suggest or recommend and not you, you went out years ago and did everything that I taught you and you’ve taken things to the next level. Some of my students have gone out and created bigger businesses than myself and that is a compliment to me. You’re a dude who’s crashing it including closed I think a hundred unit deal that you did recently. Before we get into some of the nuts and bolts about real estate man, just introduce people, tell them a little bit about yourself so they can get to know you a little bit.

Judson: Yeah, absolutely man. I do my business in the Raleigh, Durham and surrounding areas of North Carolina. Family man, I’ve been married to my wife Lauren for five years. We’ve got three kids, we’ve got Parker who’s five and then we’ve got Ella-Kate and Emmeline who are twin girls, who are three. Funny story is when you were just talking about meeting at your Breakthrough at the Beach Event and I remember when I first saw the ad come up on Facebook and I was sitting on my couch and I was having a couple of beers and watching the game at that time and you know whatever football game was on and Lauren was pregnant. I was like, “Man, should I go? Should I not go?” I was up in the air, up in the air.

Long story short, I ended up signing my commitment and sending my wire while I was in the hospital room and having the twin girls. The next time you say, “You know, now is not the right time.” Think about that because there will never be a right time but yeah man. We do all kinds of real estate deals, we buy and hold, we flip, we wholesale at times and so our goal is really just always bringing value and solving whatever problem the property springs to us and helping people out whatever way we can through real estate. It’s been a journey, it’s been awesome and a lot of it started with our relationship there at Breakthrough at the Beach.

Brant: Yeah, I remember that, whenever you’re having the twins and then not only signing up and committing to that but then telling your wife that, “Hey, I’ve got to fly clear across the country next month and leave you with a couple of one month old babies.” Yeah, I remember that man. The timing for a lot of things in life aren’t … a lot of big things, most of the things, it’s never going to be ideal. That’s for sure, good or bad, whether it be something positive and a lot of times negative things that arise like this is not a good time for it but that’s usually the time it’s going to appear.

When I teach real estate, of course you know my program is built around what I call the seven fundamentals. The first fundamental is mindset. I say over and over and over again, the most important part of your business or at least out of these seven fundamentals really is mindset. We were talking before we started recording this a little bit about Navy SEAL training and guys just that we’ve met at the gym and some guys that are just like have this really strong mental fortitude. What have been some of your insights or things that you use to just help you stay focused and create results in business that revolve around this conversation about mindset? Why is that so important to business success?

Judson: Yeah, absolutely. I love that quote. I don’t know if Tyson was the first to do it but he definitely said it with, “Everybody’s got a plan until they get punched in the face.” With a lot of investors, even including myself, this looks great. You go out and you see 20, 30, $40,000 flip profits and you see it on TV and the way it’s going to look or should look and then you actually go out and do it and somewhere between a week and two weeks in, you just get punched right in the face with some sort of adversity and things don’t look like they did on TV, and problems come up out of nowhere and so mental fortitude becomes the biggest tool you have.

I use a couple of things man. After dealing with a bunch of problems and having a bunch of what I thought were world ending issues come up in my business that I had to deal with right then, one of the things I try to do is just weed away the noise and the BS to get to what the real issue is. A lot of times when we face adversity, it’s all this noise and it’s chaos coming at us or what appears to be chaos at first. If you can quiet your mind enough, whether that’s writing it down or taking a second to breath or getting out of the situation and ask yourself a couple of simple questions like, “What do I need? What needs to happen in order to fix this? What do I need to do or who do I need to be or who do I need to contact or employ or whatever the question may be to solve this?”

One thing I’ve seen over and over with myself especially in the beginning days was I’d get so wrapped up in the problem, “Oh, we opened up this wall and it’s completely eaten with termites. That’s an extra 10 grand that I don’t have in my bank account.” Or, “We’ve got five jobs open and they’re all late or the contracts fell through, it’s noise, noise, noise.” When you can take a second and separate yourself mentally from the noise and discover what the real issues are and how to solve them, things quiet down for you and you start to build systems that solve things.

Brant: Yup, yup. No, that’s definitely true man. I know one of the things I talk about at the Beach that’s so important is creating that space from the noise, because the noise and the stress and the pressure is, it’s overwhelming and it’s real. The struggle is real but there’s tools, like you have your structure, some of your habits, some of your resources and tools that you do to combat them. That’s why it’s so important and I tell people about not, I don’t like to use the word having a balanced lifestyle but creating some of the habits and the things that help overcome all the daily little darts that come at us because if you’re building a successful business and most listeners out there may be doing real estate on the side or full-time, may be working a full-time job and they have a career, they’ve got relationships, they have kids, you have to create some space where you can check out from all of the white noise and everything going on.

That’s why we teach and preach doing things like daily exercise and/or doing things like just meditating and just creating some space to get clear, get present with where you’re at, what’s most important so you can sift through the BS if you will to find like okay, where is the pressure coming from and where is the target? Where can I push the button or call someone to outsource this thing? Or just whatever it is to get it resolved as quickly as possible so you can get back to focusing on making money and enjoying your business and doing the things that matter the most man. It’s absolutely important.

Judson: Yeah 100% dude. I’m just going to jump in real quick right there if I may because here is what I’ve understood and part of what you’ve taught me as well is these clearing mechanisms, nothing can go constant for 100% of the time so we can’t run hard, we can’t run our business 100% of the time, we literally can’t focus on something for that long. These outlets that we’re talking about, healthy ones being working out, meditation, time with family, time with kids, those outlets are going to happen no matter what. Those outlets also look like booze, sports gambling, porn, like you’re going to have those outlets no matter what. I’ve learned to and I tell people, younger people too like pick your poison. One that’s actually not poison but pick your method because you have to create space and you’re going to create space. You’re either going to do it healthy or something that’s going to eventually tear down the whole house.

Brant: Yeah, you’re absolutely right man. That’s why if you look at my calendar, every day I’ve got time blocked out for my kids and I’ve got workout scheduled throughout every day of the week. It doesn’t mean that I’m bursting out some two or three hour workout but I’m getting at least 30 minutes to do something. Not that I want to, not that I always enjoy it although I do most of the time but I know that if I don’t do that that I’m going to likely be a big ball of stress and just not as productive. I’m not going to be as relaxed when I do go home with my kids, my family and things like that.

Yeah, it’s absolutely critical just to stay in this game because this game of real estate, this game of business man, it’s not always about the Xs and Os. It’s not always about the fundamentals of real estate and we’re going to talk about that in just a second but it’s all these little ancillary things that you may not see on the whiteboard like analyzing deals and by evaluations and raising money and financing, it’s the things that we don’t whiteboard about that are intertwined with all these little things that we are doing on a daily basis, how we’re operating in these relationships with employees and with contractors and with private lenders. If you’re operating your life where it’s just a big mess or chaos and uncertainty, then you’re going to step into your business that way. That’s throughout, how you do one thing is how you do all things. It’s going to trickledown effect or trickle into effect on how your business is run.

All right man. Let’s move into a couple of the other fundamentals just real quick and let’s talk about a little bit on … let’s talk about deal flow because one of the most critical things in business and real estate where, with our coaching students here and even just running our business, we spent most of our time talking about and working on generating deal flow. Second most is probably financing. We also spend a lot of time with construction and rehabbing booth. We’ve got that built up pretty well with our teams and systems. Let’s talk about deal flow man. What do you do in your market? I know you’re in North Carolina. It’s probably a little bit different here in Houston but it’s probably pretty similar. What are you doing to generate deal flow in your business?

Judson: Yeah. I’ll start by saying deal flow is the lifeblood. The interesting thing about deal flow is that you might think that money in the bank or in the operating account is what makes you feel good as a real estate business owner but for me it’s really more, as long as I’ve got few deals in the pipes, mentally, that’s always what makes me feel healthier even more so than cash because that’s what creates our cash, that’s what gives our investors and private lenders a place to put money and grow their money and so without it, you can build a big of a bank account or do as big of a deal as you wanted to do but what’s next? Where is that money moving and what’s coming down the pipe?

A few strategies we use and probably nothing new here if you’ve ever listened to anything about real estate or real estate investing but direct mail or direct marketing, creating relationships with wholesalers, creating relationships with investor-friendly real estate agents which is a … let me hone in on that one because hopefully I can save you a couple of years of your life. Do not mess with real estate agents who do not know investing or do not deal with investors because you will bang your head against the wall and wonder why a deal that is selling for 150 that you don’t want to pick it up for 140, so make sure you’re dealing with investor-friendly. Talk to other investors in the area, get in with the people who are selling deals.

Then the biggest way honestly to create deal flow would be to close a deal, prove to these people that you, whoever the key players may be in your market that you can close. I know we’ll get to that later on, how to close and how to raise capital but once you close a couple of properties, the deal flow gets more consistent because the people feeding you deals know you did what you said you were going to do.

Brant: Yeah, absolutely man. I see a lot of newbies come in to the business and the marketing piece, creating deal flow is really, it’s about your commitment level when it comes to spending money. Or if you’re taking more of a I guess a grassroots approach and the way I started really was just through a lot of networking and meeting people and trying to find out who the real players were. That was also a commitment level of just my time and my energy but a lot of times, it’s just a matter of being committed to a marketing plan and doing it over and over and over and over again. To me, I found that that is the most critical piece.

I read a book one time and it was like, 101 ways or however many it was, 101 Ways to Market Real Estate Deals. This guy went through all these different ways to do marketing for a real estate business. Then basically he asked a question. He was like, “This is probably what a lot of you are asking towards the end of the book, what is the best way? Out of all this, you know 100 ways or whatever it is, what is the best way to market my business?” He said, “Whichever one you’re going to commit to do over and over and over again.”

With postcard marketing for example, I’ve seen people who will create a campaign and they’ll spend 1,000 or $5,000 or whatever it is and they’ll mail out maybe once or maybe twice and they don’t get a deal and then they just stop. I did that in the very, very beginning. That is myself, that’s what I did in the very beginning. The first time we did a campaign, we had spent like 10 or 15 grand almost and like we didn’t land a deal from them. I’m like, “Oh, we got to stop this.”

For postcards, postcards and letters for example, when you look at your return rate, a first time mailer that you send to somebody, you’re going to get like maybe a 2% response, maybe, maybe. Then you send out again, it goes to like 3% or 4%. You send out again, it goes to like 5% or 6%. After you send out like the fifth or sixth exposure to somebody that little bit of the trust goes up, a little bit of familiarity then it jumps up to like 30% or 40% or 50% response rate or something like that. That rule of direct mail marketing applies really across the board with all marketing. It’s just a matter of being consistent over and over and over again.

I’ve seen that to be true, especially we do a lot of SEO marketing but it’s taken us two years to get really, really, it took us about a year and a half to say, “We’re pretty good at this.” To where we’re like, “We’re really good at it.” It’s not that we’re really good, it’s just we’ve been really consistent for multiple years now so it’s just starting to pay dividends really. Like with a lot of things, it just takes time.

Judson: Some key things just for the listeners, like a couple of things you said there, so it can take years to build this type of response rate and the 2% you’re talking about, that’s responses, that’s not deals. There is this second …

Brant: That’s responses. That’s just-

Judson: There’s this second layer to it and it’s like, “Yeah, I’ve sent out a thousand postcards and 20 people didn’t tell me to go die in a hole somewhere and I was able to convert one of those into a deal.” That was honestly with marketing was my first … actually Chris, one of our mutual friends, he sent me a screenshot one day he’s like, “Dude, you’re famous. You’re on the interwebs.”

It was an article I had done with PostcardMania which is a good postcard company that they’ve always had really good customer service and done a really good job. They had done an interview with like a good month that had been created through one of their campaigns. Just one of those things where yeah, that looks great and I’ve got the picture up there, cheesing and this is what happened with this postcard but you don’t see is all these, I used to drive for dollars and which is basically just driving around looking for vacant houses and all these other things that went in with no response or people saying, sellers saying like, “You know guys are ripping people off or you’re scamming people.”

This is the side of marketing that if you are new to the game, be prepared that if it isn’t taught at a school or a university or something like that like people won’t understand it. You do have to stay consistent in what you know regardless of what the … don’t commit to the, or don’t be waivered by the outcome, commit to the process like you were saying.

Brant: Yeah, it’s there. When we worked with new students, the science is, the results are in the math, it’s all there. It’s like this is what happens consistently over and over in time. This has been proven that you’re going to get these results with this effort and this consistency. Until you experience it, like being a newbie, I get it, it’s scary because there is essentially two types of truths that we have. We have like knowledge that we identify and we’ll say, “Hey, yeah, I accept that as truth.” Even though it may be something that we’ve never experienced before. This is like raising our kids, we’re trying to teach them through our experiences or training employees or for me training students like, “Hey, this is true.” Like, “This is really what happens when you do these things or when you do this thing or whatever it may be.” Like, “This is true.” Them going, “Oh yeah, I can see how that happens.” They believe I don’t lie very much so people, I tell them something like, “Yeah, I believe Brant, like it’s true.”

If they haven’t experienced it themselves, like for themselves, like it’s harder for them to truly accept as truth through experience. I taught one of my kids to ride a bike recently without training wheels. I kept telling them like, “Son, when you get this, like whenever you take these training wheels off, you’re going to love this.” I’m like, “I know you’re scared of it right now because you can fall but I promise you even if you fall a few times and you fall down and even if you scrape your knees and your elbows and you bleed. Even if you do that, when you learn how to do this, you’re going to say, “Dad, it was well worth it because this is so much fun.” Finally, we got the training wheels off and he experienced it. He was terrified before and he experienced it and he’s like, “Oh dad, it’s so much fun, I love it.” I’m like, “Yeah,” because he had experiential truth, the experience that felt like it’s so true.

It’s like that with a lot of my students. It’s like they’re walking through, it’s like that valley, that dark valley. They start spending money on direct mail and things like that and like I’m on the other side of the valley, the tunnel like where the light is. I’m like, “I promise you, keep going. There’s going to be a deal.” Then it’s like, “It’s dark, it’s really dark in here. I think I can see you at the end of the tunnel Brant but I’m not sure.” When they get that deal it’s like, “Aah.” Then they’re going out and telling other people about it. It’s definitely been that way. Hey, I’m just curious. I’m just curious. Was the deal that you did, the big deal with the multiple homes a part of that like a direct mail marketing thing?

Judson: Yeah. It started as a direct mail marketing campaign on the one house. Then I always have a follow-up question or whoever is working with me or around me or I’m partnered with or whatever the scenario may be, I always make it a point to say ask a seller if they have anything else. Like, “Is there anything else that you have that you’d be interested in selling?” Once you have a deal locked in and this happened to be a deal where it was a single family house in a different area and then the guy had like 97 other units clogged into a small city nearby. He’s like, “I’m also interested in moving those.” It’s like, “When were you going to bring that up in the conversation if I didn’t ask?”

Yeah, that essentially resulted from direct mail. That direct mail was actually sent to a tenant who relayed it up the way I understand it. It was like, “Hey, you got this postcard that came,” or something to that degree. The guy lived on the same street as the house and the subject house that the mailer went to. Yeah, you never know and that’s why you just got to stay consistent with it.

I wanted to hop back real quick on that gap that you were talking about because I think as much as people might want to hear mechanical things as they usually do, that’s a huge thing you said about that valley or that risk gap that exists there because I really feel like it’s what separates people like who will sit in the gap and who will sit in the pain of risk or risk tolerance for long enough to see the results and whether it’s marketing or trying something new in your business or growing your business, you’ve got to be willing to sit in that gap long enough if you trust in your heart that you’re going after works.

You made the reference to marketing but before we hopped online, we were talking about business growth for us, for me and you. Guys that are already doing certain types of numbers, you experience that same type of fear, that same type of gap, that same type of darkness, some days of what in the hell am I doing? Even at the next level, even at this level and so it’s always like how have you built yourself to sit in that gap, in that valley, in that darkness until things pan out?

Brant: Yeah man. It is so important and we’re really going back to mindset which is fine with me because that like I said is the most important fundamental of business. Just recently I mentioned before our call, a friend of mine’s bought like 1,400 houses. He talked about some of his … he came out to one of our events and just spoke about very similar things, just about having the mindset, being committed and do whatever it takes. A lot of friends and people I’ve had in this business, we share war stories, Masterminds and things that I’m a part of. It’s really your commitment is so much more important than really anything else because if you’re committed no matter what, no matter what, you’re committed you’re going to make this happen then whether or not you spend 10 or 15 or $20,000 on marketing without getting a deal if you’re committed to it, you’re going to keep doing it.

That’s why it’s important to have a business and have a structure that’s built on fundamentals which I think we’re really fortunate in the real estate investing industry because there’s been so many people that’s gone before us that have already created the map. We just have to go out and execute it. When it comes to being a successful real estate investor, you don’t have to go out and reinvent the wheel. We just have to do what’s already been done. We’re not creating Tesla electric automobiles or Bitcoin or whatever. It’s like I’m not that smart. Give me the map and let me just go out and do it over and over and over again. I talked about this Navy SEAL Joost, J-O-O-S-T, I think he’s from Holland. He’s coming to speak at our event here in a few weeks, Flipping Houston live event. Some people may say, “Why do you have a Navy SEAL coming to speak at your real estate investing event?” I’m like, “Why not?” I love-

Hey, this is Brant. I hope you’re enjoying today’s show. If you’re in a place in your life or your business or your real estate investing where you just feel stuck, maybe you don’t know what actions to take next to get you unstuck or just on that path of creating the results that you really desire, please take a few minutes and go to my website at brantphillips.com. There are some really valuable resources and information that may be able to help you out. If you’re interested in really speeding up results with the help of a coach or mentor and adding true accountability and guidance to your life and business, please reach out to me from my website, you’ll see a link at the top or by going to brantphillips.com/coaching. Now, let’s get back to the show.

I love the SEALs and the Mark Divine is another one who a lot of his guys have really, there’s been this crossover a little bit with just the mindset, the Navy SEAL mentality and applying that to business. He shared the story about when he was going through BUD/S which is the five-day Hell Week essentially with no sleep and just brutal, brutal physical challenges and workouts and all these things that they have to go through. He tore tendons and muscles on his neck, I heard it on a podcast so I’ve got to, me and him are having a call tomorrow so I got to get some more details on that because this really surprised me but he tore tendons and muscles and ligaments and all kinds of stuff on his neck.

How it happened was, I don’t know if you’ve ever seen in any of these Navy SEAL shows or whatever, they’ve got this boat exercises where they get in that boat out past the breaking waves and it takes them time after time like half a day to do it, but it’s dependent on them. The only way to do it is if they, a little bit of luck probably but them operating as a team because if even one of them is off or not pulling their weight or not positioned correctly, the boat’s going to topple over. It’s all about teamwork and also how they either continue to help each other and push each other or if they give up. That’s the part of the psychology about it. Literally the boat came over, a decent sized boat and hit the back of his head and that’s how it tore his tendons and his ligaments.

For the last day and a half to 48 hours, he literally could not hold up his head through his own neck muscles and ligaments or tendons or what have you. When he needed his head raised, which is probably a majority of the time, he would have to physically hold his head up with his hand.

Judson: Unbelievable.

Brant: That’s how committed he was to completing Hell Week and becoming a Navy SEAL. I would say if a lot of people had, I don’t know, maybe a tenth level, 10% of that commitment level in real estate that they’d probably be really successful but a lot of people get in and they dab with it or they’re somewhat committed and their goals are somewhat vague or their why isn’t big enough and they don’t make it. It’s not that they weren’t good enough, it was just they weren’t really committed to it and stuff.

Judson: Everybody, it’s my belief anyway that everybody is good enough and like you said that the business plans are on Google. Just go Google real estate, the mechanics are there. One thing, it doesn’t annoy me, that’s the wrong word but I hope better for people when they ask about mechanics because the mechanics are always going to be the mechanics. It’s everything that surrounds those mechanics that make or break your business or make or break how successful you’re going to be. Let’s go back to your buddy you were just talking about which that’s incredible that he had the drive to do that and finish. How do you stand on a boat? How do you paddle up? There’s 100,000 ways to do that but the point of the exercise is just to finish. I think new investors especially get so wrapped up in mechanics.

My advice would be, take it for what it is, but once you have your head wrapped around a certain mechanic that you understand, just go hammer it, go hammer it and see how committed you are to it. If you’re really all in … I’ll back up for a second. I took flying lessons all the way up to student pilot, soloed airplane, soloed my first airplane at night, flew a cross country trip which literally doesn’t mean cross country but flew down to South Carolina from North Carolina, Myrtle Beach at night, flew over to my hometown Edenton, did all these things. I wanted to be a pilot. I wanted to learn how to operate a single prop airplane. I realized, I mean this is something that took a lot of time, a lot of commitment and it was all mechanics. It’s all checklist, it’s all proper equipment, proper procedure. It has a bit of coordination in it but for the most part, it’s mechanics.

What I found out at the end and even as recently as within the last year and a half, I completed the written exam for the FAA but still haven’t got my pilot’s license. There’s some type of gap there in terms of how committed I am to actually having that pilot’s license in my wallet and being able to fly people around from place to place in a single prop airplane and just looking at the facts. I’m not committed to it. It’s not something that I truly want to do right now in my life because if it was, there’s no mechanics issues, there’s no physical deficiency, there’s no mental deficiency, that’s debatable I guess. I’ve got a few mental deficiencies but we won’t talk about those.

Brant: Most serial entrepreneurs do.

Judson: Yeah. The point being if you really, mechanics matter. You can’t just go do business another way or any way. Once you have your head wrapped around your idea, then you got to go execute and you’ll know your commitment level by your level of execution.

Brant: Our commitment level will show in our results and what we either do or we don’t do. Absolutely yeah. That’s a great point. The information, we live and we’re very blessed, we live in the information age. Like 100 years ago, if you had a book about real estate investing, you were head and shoulders above everybody else. You could have been the next real estate mogul 100 years ago with just a book about real estate investing because 100 years ago, a lot of people could not even read, a lot of potential competitors or whatever. They weren’t really teaching it. There weren’t a lot of maps about it.

You fast forward to today’s day and age and we can in a matter of seconds we can download a book that will give us probably everything that we really need to know to become really successful in the real estate through just a book. We can get into … it’s important how you organization the information that you receive, how it’s organized by whosever is teaching it and how you organize it in your own and implement it in your own business. All that’s important of course but things have just changed. It’s just a matter of being committed to executing it and being okay with things failing, things going sideways.

One of my mentors who I wrote the book Conversations with a Millionaire Real Estate Investor with, he said this and this is how it stuck out to me. He’s in his late 60s, he’s amassed a fortune of I don’t know how many tens of millions of dollars but he’s credibly successful. He said this one time that stuck out to me. He said, “Brant, you know what, it takes 10 years just to learn how to really make money.” I was like, “Whoa, whoa, whoa, what?” He was like, “It takes at least 10 years.” He was like, “From what I’ve seen,” He was like, “In my experience from other people, yeah you may make money on deals and you may be able to stay in business,” but he was like, “I’m talking about making real money.” Like, “It takes 10 years to learn how to really make money.”

Then we got into the whole 10,000 hour rule and that kind of stuff where what you’re doing, it becomes more instinctive than anything else. I’ve got my acquisitions guy who I think I’m working him too terribly long, super smart, super sharp guy. He’ll bring a deal and maybe there’ll be pictures, a video or CME and like pretty quick most of the time I’m like, “Yup, like it, don’t like it.” He’s like, “What are you seeing?” I’m like, “Well, there’s this and that.” He’s like, “I didn’t even think about that.” I’m like, “Well, you shouldn’t have thought about that. There’s no way that you would even know to think about that just because it’s kind of the 10,000 hour thing.” Yeah man, there’s [crosstalk 00:40:09].

Judson: Let me hop in for a second. Is that the guy you’re talking about that said it takes 10 years to make money? Is that the same guy that won’t lend to people unless they’ve failed on a deal?

Brant: That is not the same guy.

Judson: Okay. Okay. That’s something that always stuck out in my head. I love that quote, the fact that he did that.

Brant: I did a speaking event with him last week and that came up that he will not loan, he’s a lender and they loan millions of dollars a year. He will not lend to a real estate investor if they say that they’ve never lost money on a deal because he believes one, they’re too wet behind the ears, that they haven’t been experienced enough or two, that they’re flat out lying. That they’re an established-

Judson: Yeah. They can get [crosstalk 00:40:59].

Brant: -real estate investor, and yup, which is absolutely true. Real quick, when I was talking about that, about getting the 10,000 hour thing is something that I was talking about recently in a presentation because there’s the long, each year, each deal you do you learn something. I can say that. I have learned something new on every deal every house I go to, whether it be about rehab, about financing or the title issue or the insurance or whatever it may be I’ve learned something new on every deal.

For those of you who are out there listening, thinking about getting into this business, I just encourage you like don’t do it if it’s not something that you really think you’re going to be passionate about long-term because what I’ve seen as one of the key factors to success is sustainability. To really create success in this business, I think you should look at the long-term and if it’s something that you think that you really, really love, then you have a good chance of making this a sustainable business.

When I say sustainable, it’s sustainable in the business model, like financially, this is going to be sustainable to create a profit and a revenue and a solid business structure for you for years and decades to come. That’s great. If you can build a business and a life that not only is profitable but you enjoy it, you love getting up in the morning, you love doing whatever it is that you do and building your business where you can focus on those things that you love doing, then you’ve not only have a profitable business, you’ve got something that’s very sustainable for years and years and years and decades. I’m not there yet but I’m getting to where I’m like, “Are my kids going to come work for me?” That’s one of my milestones is to keep moving to where I can sit, if they so choose, they can come and work with me and maybe they take it over someday, I don’t know but I want it to be like that where it’s sustainable and enjoyable at the same time and profitable.

Judson: One thing Brant I have had talks with younger, not like I’m an old investor but guys that are just getting into the game are the ones I call “Younger” One of the things is if you start, you’re talking about sustainability, an example would be in building the correct habits. You might not have deals yet, so your habit might be okay, I’m going to read about real estate for 10 minutes a day or 20 minutes a day or an hour a day until I know enough to climb the next rung on the ladder or maybe you have a business system and you say, “Okay, I’m going to look for deals every day. I’m going to network with agents and other investors every day until I’m at the action point,” or whatever your action point, your threshold for knowledge needs to be in order to take action, hopefully the sooner the better.

The point is build the habits. You hear more established guys talking and their habits may be … I’ve been sharing a lot of my habits on Facebook lately, not to put it out there as much as just to keep myself committed but it says things like, “Check-in with PMs, PM spreadsheet, business spreadsheets.” That’s after eight years of my daily habits being drop to job one, drop to job two, drop to job three. That shit. The word sustainability to me when I hear you say that really just means what habits, no matter what, no matter what you did the day before or the night before or how you feel, what habits are you committed to in your business on a daily basis to move it forward?

Brant: Yeah, the single biggest factor is the habits, the little things that we do each and every day. We talk about swing in singles, just hitting nice little singles every day and doing the little things that add up to really big things over time. All right, last thing I want to talk about is something that you mentioned also before we started the call. We’ve talked about habits, we’ve talked about mindset, we’ve talked about commitment, we’ve talked about marketing and we’ve talked about this, we’ve talked about losing money on a deal. My lender said he won’t loan to somebody unless they’ve done that because when you go through that and when you lose money on a deal, that’s absolutely one of the times where we get to learn, that’s where we get to learn the most about ourselves and really what our commitment level is.

We talked about the beach, we talked about … there’s really nothing negative. We talked, people say, “Oh, it’s positive, it’s negative, it’s so bad.” Okay, you could see it as being bad and there’s very unfortunate things that happen but we also have the ability to classify them as useful or non-useful. I’ll tell you what, I’ve learned a lot on our homerun deals, done multiple deals and make $100,000 on the deal, pretty awesome, it’s pretty cool.

Guess what? I’ve learned so much more, I learned so much more on the deal, the first deal that I lost money on where I lost like $4,000. I learned so much more on that deal that helped me make $100,000 on a deal really but it was because I lost money on that deal. Thankfully, just the handful of times I’ve lost money on deals after doing several hundred deals, those have by far been my greatest learning the lessons. It’s just something, it’s once again when you experience a loss, it’s so painful but there are so many like valuable lessons that we get to pull out from it. I think it’s something that’s important that needs to be discussed with people venturing into this and letting them know, one is it’s probably going to happen if you’re doing any decent volume of deals but two, it’s okay. It’s okay.

Now, we want to minimize those where I can … I’m very, very thankful to say that the biggest loss I’ve ever had was just a little over $10,000. Now I’ve had several that have been losses like that but I’ve learned a lot from them. I’ve learned a lot by myself, my commitment level. What’s your feedback on that? Because I don’t like some of these viewers that talk like it’s never going to happen because it is going to happen and it’s okay and it’s actually useful.

Judson: Yeah, you’re going to lose money. Last year alone and I’m okay with being honest because this is just the real game but we lost over $100,000 in money doing deals for one reason or another. Whether it was due diligences that fell through or non-refundable money on deals that were lost or couldn’t be funded, whether it was flips that we had to sell undervalue or under where we thought we were going to be. Like you said, if you do enough deals you’re going to lose money. You’re going to lose on some and that’s just how it is.

When I write those checks out and obviously I don’t write my checks but when I send them out, I always take that moment to say like, “You know what, the money is there to cover it.” That’s my number one gratitude point. It would be different if it wasn’t there to cover it but something’s going right, we’re making enough money that we can cover this loss and keep our lenders paid or whatever the deal may be on the money.

The second part is it’s nothing has created more of a trustworthy, heartstring like bonding to my private lenders than them knowing that I’ll pay them back no matter what. That if you loan money to my company to do a deal, that I will and you know what, I just had this idea of top up. You told me down at the beach the first time that we met, you were like, “I told my wife day one, I will refinance my house to pay somebody back if I have to to keep this business going because that is how committed I am.” That’s a line that stuck with me.

I have another, a real estate group I’m in now we say, “We’d work at Wendy’s.” Whatever, I would work at Wendy’s to pay these notes back. It isn’t that it’s ever really a scary moment, it’s that you tend to get used to winning and you get used to closing deals and things moving at such a fast pace that you’re exactly right, you’re not learning anything, it’s just numb.

If you’re listening and you think, “Dude said he made $100,000 multiple times like that’s awesome.” Yeah it is but guess how long that feeling last? About five minutes, when you’re like, “Dude, we closed, yes.” It’s like, “I just made six figures.” Then five minutes later you’re like, “Did someone let the dog out?” Like, “Who cares?” When you lose you learn. I just think whenever I lose I try to express some, find some type of gratitude, usually it’s something like, “Malinda is going to love me, we’re going to get stronger and damn it the money was in the account, the check cleared, let’s move on to the next deal.”

Brant: You’re right man. I had a side, I’ll call it a side business. We had another business that we started up about two years ago and it failed. It failed. It was just really … what we talked about, it was a lack of commitment, a lack of time and energy spent on this business because we weren’t really committed to it.

After 18, 19 months of like, really visually or metaphorically it was like this weight being on my waist. It’s like so have you done workouts with like the 20 pound vest on? That’s what I was going through on my SEALFIT training. I would do these workouts and mass workouts with a 20 pound vest on. That business was like having this 20 pound vest on me. It was weighing me down each and every day. I’ve had these deals that go sideways. I’ve had some partnerships like that. It comes to a point where we can continue to cry, moan, reflect on the past, should have, would have, could have, things could have gone differently. I didn’t have to lose money. Me, I’m thinking about this business and what I’m going to do with it.

About three months ago, I’m like, “I’m just going to cut bait. I’m going to cut the cord. I’m going to cut the line, I’m going to take the vest off, I’m going to throw it off and be done with it.” Yeah, is it costing the 20, 25 grand, something like that? I don’t even exactly know what it’s going to be, it’s not a huge loss but it’s like you said, I’ve got the money to pay for it and lo and behold, I’m probably going to make a lot more money in a short period of time just by letting that go. Whenever you do a bad deal, if I’m going to get, for those of you who may be going through a deal right now, don’t beat yourself up. It’s so important not to just beat yourself up. Actually if you can find a way to give yourself a boost of encouragement, pat yourself on the back. Judson and I right now will welcome you, officially welcome you to the club.

Judson: Yeah, you’re in.

Brant: Welcome to the club of being … you’re being a real entrepreneur. This is one of the buy-ins. You have to do deals and you’ve got to lose some money on occasion. If you can do it in such a manner where the loss isn’t devastating, you want to minimize losses for sure, for sure. I’m not saying, “Just go do a deal.” No, you apply the seven fundamentals if you’ve read my book or whatever training program or mentoring you get, you apply those lessons and you do what you’re taught to do and you execute like that you should. You minimize losses. That is really important that you don’t foolishly lose money.

There’s two types of mistakes. With my employees, I don’t mind mistakes from effort, from trying really hard but I hate lazy mistakes. I hate lazy mistakes. Just being lazy like, “Oh, I didn’t do this or do that,” but you knew you should have, let’s not make those mistakes, but be okay with making some of these mistakes and taking losses. Now, always honor your work financially to your lenders. Any deal I’ve ever lost money on, my lenders have been paid 100% of whatever my note laid out, period. Most of my lenders never even knew that I took a loss. Some of them that do and like Judson said, they appreciate me and trust me so much more. Take a little bit of time if you need to. I think I got this from, whoever the publisher of Success Magazine is, or the editor whatever his name is.

Judson: Darren Hardy, yeah.

Brant: Yeah, Darren Hardy with the 20 minute rule. It’s like okay, you lost money, whatever happened, this bad thing, whatever it is, literally people will go, at the Breakthrough we call it the drift, where whatever happens and you go on this drift of like, “Woe is me, blah, blah, blah,” pity party. Literally, this can go on for days, weeks, months, years and even decades. I’ve spoke to people and I hear them talking about things that happened tens of years ago, “Should have, would have, could have, if only it had been blah, blah, blah.”

Give yourself 20 minutes. I think psychologically we need to let it out. Give yourself 20 minutes to punch a wall maybe or maybe just a pillow, cry, suck on your thumb, yell, scream, mope, whine, whatever, just emotionally let it out and then take out a piece of paper and a pen and just spend some time. Write down the lessons that you learned and I can pretty much guarantee you that those lessons that you learned in that deal are going to help you make so much more money than you’ve lost if you apply them, for sure, for sure, for sure.

Whenever I lost money on my first deal, I went through about a three-month pity party. I’m like, “I’m not flipping houses, this is not for me. I’m not smart enough, I’m not good enough, it’s too risky, blah, blah, blah.” I did it for about three months. I went on that pity party. Then took a little bit of time I’m like, “Okay, let’s look at what went wrong here.” I’m just going to consider doing it again because it really excited me. I was fearful of the pain of losing money but I took the time to write down my notes. When I took that time I also realized that no wonder I lost money. I did almost everything wrong like literally.

Judson: And you’re still alive.

Brant: Yeah. Then the next deal, my second … that was my first flip. Then the second deal lo and behold, I netted over $60,000 in 60 days exactly but it was just because I took a little bit of time to consider learning from what didn’t go right.

Judson: That’s incredible. That’s exactly how it works. If you can be calm enough to sit in your stink, sit there, you suck and you got to sit in that for a little while. That’s the first conversation we rarely have is we want to, listen especially as men like you want to excuse it out. You’re like, “Whoa. Well, I lost money because my contractor sucked,” or whatever the case may be. It’s like, “No, you lost money because you’re driving the ship and you suck today.”

Brant: Yup, you suck.

Judson: Once you sit in that, one of the things I realized like the first deal I lost money on, I had so many other options other than just forking up the cash and I freaked out because I wanted to honor my word and I wanted to close the deal. One of the first deals I ever did was with LendingHome or one of those types of companies, I think it was LendingHome. I just wanted to pay them for it to be done but not realizing I had like a refile on the table, I had a owner finance deal that I could have done on the table and then sold the note. I had like six ways to get out of that deal but I was like, “Oh crap, oh crap, this is … Okay, the plane is going to crash.” Then I just cash out.

That’s what I took from and it’s probably another topic for another day but there’s always, if you buy correctly, if you buy at a discount and a certain type of discount which is all laid out and I know it’s in your book and all over the internet, buy at the right type of discount and you’ve usually got four or five, six ways to exit a deal that may not be the most sexy or favorable but they’ll get you out of the deal, keep you, your lender, your private money, whatever it is, happy.

Brant: Absolutely man, absolutely yeah, there’s a lot to what you just said. We could create a few more podcasts out of renegotiating commitments, creating space and time and having multiple exit strategies, those are all interweaved in the fundamentals. Sometimes, we can say, it’s funny you mentioned that about like, “No, you suck,” because just the other day I was reminded of an old story from a friend of mine who was in one of my Masterminds and we were working out together, and a friend who was one of the trainers that day who was an ex-New England Patriot, Super Bowl winner and we’re going through this workout and it’s a doozy, it is not an easy workout. This guy was next to me, he’s like, “Oh God, this sucks, this sucks.” He’s bitching about the workout during the workout.

My friend who was probably about 315 at the time, 315 pounds about 6’4” D lineman for the New England Patriots gets in his grill up in his face, “It doesn’t suck, you suck, you suck.” Dude, that’s the truth man, when deals go sideways, well, if you had bought it cheaper, if you had maybe estimated repairs properly, if you had managed your contractors properly or better or if you had been able to raise money cheaper or put together a partnership deal or whatever, or had bought a deal where you had multiple exit strategies, maybe the deal didn’t suck, maybe you sucked from where you’re at.

Judson: Yeah, you sucked. One time real quick, I got into this conversation and it was a yelling match. The person I was yelling with was like, “You know, these contractors did this, the management was doing this and you had no idea.” I’m like, “Yeah. Well, I’m not pissed off because they did that. I’m pissed off because I let it happen and I need to be yelling right now.” It’s like I just need to let it out because I know it’s … the truth is once you decide to take responsibility for everything, then there’s only one place to look and that’s right there in the mirror and then you can deal with it, but yeah, don’t send it off. If you’re new in the game, don’t send any of these off, just take it on yourself and then you’ll grow 10X on that.

Brant: Yeah, for sure man. Let’s close it on that. We may have to break this into a two-parter too, it’s so long but that’s a good thing man. My friend, it was good talking to you man. I really appreciate you coming on and sharing some of your experiences and your insight and your wisdom with everybody.

Judson: Yeah absolutely. Thanks for having me and I appreciate our friendship and your mentorship and that really it’s hard to believe dude how short ago in terms of the big picture we met and how much has just really moved since that day.

Brant: That’s crazy man. I’m incredibly proud of you man, honored to have you as a friend and I appreciate you man coming on.

Judson: I appreciate you too Brant. Talk to you soon.

Brant: Take care, bye.

Judson: Okay, bye.

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