Close in on 9 figures – real estate startup strategies with Ross Hamilton – YouTube

Transcript:
(00:00) the good thing about real estate is you can always find properties below market value so you have to worry about what are the prices as long as you can buy below a market value you’re safeguarding yourself you can’t do that in the stock market um if you could I would do it but you go to jail for that type of thing in the stock market you get rich for that type of thing in real estate [Music] this is a good episode we have Ross Hamilton who sold the company not so long ago for we’ll call it hovering
(00:39) around the nine figure Mark officially an undisclosed number and we go all over the place the episode starts with General philosophy and Frameworks around approaching big goals business personal things whatever but then we get into some very tactical elements of accelerated growth how the business went from a couple million to a lot more than that strategies to do that and the tactics and then we launched into a whole bunch of nuanced places uh super fun super wide ranging I think you’re gonna like this one Ross Hamilton
(01:19) Ross Hamilton it is great to see you my friend I’m so excited to be here Brad so uh I you have lots of different uh fun things to talk about um I don’t know if you remember this but we met probably 12 years ago in Tampa through sort of a real estate group and it was after the event um and I can’t even remember the context of why this was happening but you were talking to a very attractive woman’s mother and spending time building rapport with the mother for probably like an hour and I I remember thinking this is an
(01:55) interesting move and a lot of commitment uh and I really appreciate that dynamic um I have no real recollection but a lot of those business meetings I get so tired of having the same conversation about business with everyone sometimes if there’s a non-business person regardless of what their kid looks like it might be just a good brain relaxation um just to stop talking business for uh first split second but yeah I mean I’m a networker I’m always always out there talking to people and trying to help
(02:30) them and looking for ways they can help me and it’s it’s been The Secret of My Success for sure well I don’t know if that was the driver 10 or 15 years ago but um I uh I can’t argue with you there and I’m very much the same way uh you know at those events the I think that look we’re there to talk business we’re there to do business but more than that it’s uh it’s the relationship and if you’re not if you have the same damn conversation over and over and over and over it bores me to tears I mean I just I
(03:02) want to get out of the the small talk right away and figure out how to talk about more fun things so I want to do that with you because you’ve got everything from endurance Athletics uh BMX biking um you know bootstrapping uh an awesome company and then selling it for a bunch of money uh so I want to talk about that story but why don’t we start at the beginning of your entrepreneurial Ventures yeah yeah absolutely and the the great thing is everything we’re going to talk about here um can tie into one quote that I just
(03:35) love how you do anything is how you do everything so the way I went about riding BMX the way I went about doing Iron Man’s the way I went about my business was all exactly the same and it translates to success it’s just my personal success formula now after selling you know and retiring you know myself my parents my kids kids I believe that an entrepreneur has a real responsibility to to help as many people as possible it’s kind of like the full circle so now um in the charity World um helping with affordable housing in a
(04:16) really exciting way and maybe my first million in real estate so now I want to give back and I’m going about that the same the same exact way so you know just high level we can dig into any of this stuff the way that I go about everything I do um is I always always I know this is this is the easy step right I always write down my three year goal and this is why people always think they can accomplish a lot in a year and you can accomplish a good amount in a year but you can come accomplish so much in three years and three years
(04:53) doesn’t seem that far out so I always have my three year plan that breaks down into my year plan that breaks down into my monthly weekly daily and I use that three-year plan I have it on one side of a piece of paper every time I’m writing my to-do list to make sure that everything I’m talking about kind of ties into that whether it’s a goal in BMX or wanting to complete an Ironman Triathlon so you have to write down your goals and you have to review them and when you review them you can’t just you
(05:23) have to review them with emotion okay so this is kind of a metaphysis metaphysical side of it I’ll get tactical in a second but I have just a a religion around the way I start and end each day the bookmarks of my day I just defend relentlessly and I’ve been I’ve been a person with two or three free hours every morning and two or three free minutes every morning so just realigning yourself constantly is um is important so that’s kind of the high level stuff that I know everyone already knows but it’s so easy to think
(05:57) it’s not important and when you think it’s not important is when it’s the most important um but that’s that’s a conversation for another day but really what I always what I always do is I align myself with people that are 10 or 15 steps ahead of me first thing I do is I figure out how do I bring value to when I was writing BMX I got to ride every day with Dave Mirra who is the was the Michael Jordan of BMX so every day I rode with this guy Brad and he would he’d be looking at a jump and say I’m gonna do a backflip and
(06:31) touch my tire to the ceiling now me I would think it would stop your rotation and you’d fall flat on your head but by the end of the day the ceiling was filled with tire marks and what that did is it brought the impossible into reality for me so that’s why it’s so important that to figure out a way to align yourself with people that are far far above you now how do I how did I provide value for Dave Mirra I worked at his skate shop for free I helped him build his skate park I just wanted to be around this guy
(07:04) and it brought with it a lot of other great people that came in so I got really good at BMX really quickly because of the people that I Associated myself with let me back out of this for a second so the I love the idea of um keeping the end goal in mind I love the idea of the three-year plan I also uh I think it’s it’s so worth reiterating revisiting that stuff because a lot of people feel like they put a plan in place and then revisiting it and realigning and tweaking seems like extra work but like that is the work that is
(07:39) the point of the whole thing is you have to keep looking at the map to see where you are um I love all that and you said I you use the word always which I sparingly use because it’s uh I feel like there are so frequently exceptions to rules uh but the question is for me when did you start that you know I started it when I was um when I read the book Think and Grow Rich um I think it might have been 2005 ish I have I have a date written in the book because every time I read it every year and every year I write down just a
(08:17) little something about it because it’s different to me every year but you know Napoleon Hill gave some pretty specific only a handful of things that you like had to do and one of them was writing down your goals in a certain way and revisiting them and revisiting it with emotion and you’re right the word always is definitely challenging but I get kind of obsessed with having like a track record like I write down the date every time I review it and if I if I have a lot of days in a row when I reviewed it
(08:49) I really don’t want to miss that day even if I’m on vacation you know I can read it on my phone it takes no time a reminder something just to realign myself because that that helps you look for those things that are going to help you get there you’re not staying busy you’re staying productive so um yeah that’s I’ve been doing this probably since 2005 and I love going back over those goal sheets now it’s like a gift to your future self uh yeah I do too that’s one of my favorite
(09:16) things is to look at uh look at the Historical track record of my progress and one of the things that I find interesting and frustrating at sometimes encouraging at others are the things that I sort of lost sight of but got done anyway and I credit that to the fact that they were on the list in the first place right had I not put them on the list and Revisited them and looked at them and at some point seemingly forgot about them but have I not if I had not put them on in the first place there’s no way I would have gotten them done yeah so you
(09:52) said revisiting with emotion what does that mean to you so when you’re reading it you can’t just say you know in four years I’ll be 40 you have to like read you have to like feel it like you’re in possession with it because that’s what actually gets you the that magnetic effect that that like good luck it’s just read it with emotion and the importance that it really holds in this this very short life that you have and it’s just there’s so many studies on the difference between reading something
(10:28) or reading something with with emotion and that’s that’s hard to do all the time but yeah the more you do that the faster you’ll start attracting the things that you the things that you need and the way that you write your goals is is very important as well um I have a giveaway that I’m going to give give everyone at the end it’s like basically my whole my whole plan on how I do that where you can just fill this out but the way that you write your goals is very important um to make sure that you can you can
(10:58) track them and you want to build momentum Brad like don’t you want to make sure you’re hitting your goals and you’re just building momentum on things um so you want to make sure when you write them down you are a hundred percent in control of the result right so it could be something like for a small daily goal it could be like I don’t know um self Brad you know a connected investor subscription right I am not in 100 control of that but I could spend 30 minutes talking with Brad explaining to him the benefits based on
(11:37) my research on what’s important to him like you have to write down goals that are a hundred percent in your wheelhouse because if you start if you write down too many goals and you miss them you’re going to throw your goal sheet away so give yourself a bunch of small easy things you know you can do there’s a test that’s hard my favorite hack for myself is there’s something I really don’t want to do in my goal sheet I’ll say spend 10 minutes um researching your accountants questions
(12:06) right I can spend 10 minutes and usually I’ll file back fine I’ll spend 10 minutes I’ll get it off the list I’ll open it up and then I’ll actually get it all the way done but if I say answer all accountants questions then that’s going to give me anxiety and I’m not going to do it right so it’s like just showing up is 90 of it so what’s that goal you can write that’s going to make you actually open something and start it um and that’s how I’ve kind of tricked myself to get around things that
(12:36) that give me anxiety um or just make me feel weird to start yeah there’s a reminds me of a quote uh which is people are not in control of their future but they are in control of their habits which dictate their future and I love that because it’s in in what you just said is also I’m also a huge fan of structure and Frameworks um and there’s so many so many people in our world that buck that so hard and feel like it’s uh restrictive and you know they need freedom and variety and I find Freedom in structure and Frameworks
(13:14) and it’s because that’s what creates The Habit that allows me to just do it on autopilot and one of the structures you just gave was to reframe the way that you speak to yourself right is to put goals in place that are in control that you have control of um that’s great man uh well let’s let’s jump back to uh connected investor so uh you know I don’t even know where you were in you know 2008 when I met you or whatever relative to connect an investor but when did it start how did you start
(13:44) it yes well ironically it started in 2005. um yeah it started in 2005 prior to that I was a real estate investor and actually I read thank you very much before 2005 because they can grow Rich got me into real estate um so maybe 2000 or earlier uh so yeah no I was doing very well in real estate at a very young age um I had a really bad injury in BMX and I was out for like a year and a half and I just I had to figure something else out after that and I found real estate investing because it was the number one way to become a millionaire in the
(14:24) United States so I’m like I’m gonna play the odds so I went from jumping ramps flipping ramps to flipping real estate and I did yeah I did very very well my friends were flipping burgers I was flipping houses it was exciting um yeah it there’s so many different aspects of real estate that you can you can really narrow in on if you’re kind of a network type person if you’re an analytical person so real estate is one of the core needs in life um and what type of real estate were you doing at that time like as you just
(14:57) pointed out and I think people that aren’t involved in real estate don’t really know how how many different little niches there are that you can absolutely build a fortune in um and how radically they different they are you know some people try to plan a bunch but a lot of people specialize and only do single-family homes or even within single family invest in a million different ways yeah yeah I’ll jump into that but I just want to say this like if you own a house you’re a real estate investor
(15:25) if you paid retail you’re just not a very good real estate investor right so you are a real your listeners are probably all Real Estate Investors and I truly believe that you have a responsibility to add a house or a property every few years to your portfolio because I promise you that’s what’s going to take care of you more than anything when you get older your business could fail your you know all these crazy things could happen but then if you have 15 20 properties paid off you’re all good so
(15:59) anyway that’s just my little why real estate’s so important and the good thing about real estate is you can always find properties below market value so you don’t have to worry about what are the prices as long as you can buy below market value you’re safeguarding yourself you can’t do that in the stock market um if you could I would do it but you go to jail for that type of thing in the stock market you get rich for that type of thing in real estate so real estate is just something everyone needs to take
(16:23) seriously so don’t you know don’t overlook it but you don’t also don’t have to over complicate it which is what a lot of people do because there’s so much information now available Brad I mean I was I was part of that and when I first started it was really hard to learn how to invest in real estate and just like with BMX I found a mentor someone who was great figured out a way to provide value to this person started to Shadow them a little bit met other people the same exact thing I did in BMX
(16:52) I started doing in in real estate and um what I was doing was just figuring out ways to buy real estate without using much of my own money because I had none I literally had zero dollars um so I had to get good A Creative deal structuring and if you can find a deal money’s never really an issue um real estate’s hard if you want to buy retail but I was doing creative deal structuring and you know anyway that’s we can go down a lot of rabbit holes there but I found creative ways to buy real estate at a discount and it’s it
(17:28) really isn’t that hard compared to what you probably do at work you know it’s Buy Low sell high right um yeah so a good example is I would knock on the doors of people that were losing their house in foreclosure and I would figure out a win-win situation for them to either sell the house and move on or I would buy the house from them and figure out how to let them stay there for a while I would partner with different individuals I would do a lot of wholesaling a lot of lease options uh most real estate strategies are just one
(18:03) or two contracts you don’t have to be a contract specialist That’s What attorneys are for so I knew nothing I just started to talk to people that needed to sell their house and then I would figure it out I would think figure it out from there and I became a millionaire in just a few years and yeah and the financial side of that for you figuring it out to get to you know your first million in real estate um it sounds like and there’s probably a theme coming up here but it sounds like uh it was through a network of Real Estate
(18:37) Investors so you found a mentor and then presumably other people because you still had to figure out how to do the financial side of it so those creative deal structuring had to involve somebody with money somewhere right yes so what what did that look like did you find a group or yeah no absolutely but you know here’s the thing if someone comes to me and says hey Ross how do I invest in real estate I’m like ah okay uh where do we start right like do you have four do you have four days I can go over everything with you
(19:11) um but if someone comes to me and says hey Ross I have a deal this person wants to sell it for 250 it’s worth 300 they’re willing to sell or Finance what should I do then I’m like okay good let me roll up my sleeves and we can have some fun and I can give you a few different options so just being in the game starting to make offers and get creative with people when you have a real deal people can help you you know they can they can help you get to the next step and there’s really no loss sometimes you can help
(19:43) the people sometimes the deal might not go through um but yes that network of people was important which is why I developed my local network I used to go to my local rias um I wound up sitting on the board of my local Ria because I was always there and I was I was excited to be there I loved the the opportunity that real estate gave me and that’s what made me found connected investors because I realized the more people I was connected with the more opportunities I had the more money I could make so back then in 2005 when I
(20:17) founded connected investors which essentially became like the LinkedIn for real estate investing uh it was social media was simple the platform was simple and we launched it and it it started to grow not super fast like Facebook or anything but as people understood how commerce was done in a social media World our platform benefited from that and we uh we grew it and it wasn’t easy um there was a lot of times where I almost lost the company as well so you know those are just common threads you’ll hear in in everyone’s story and
(20:53) uh but yeah we made it through the other side um so let’s talk about that so in the beginning you know in 2005 first of all any sort of web development was horrifically challenging uh you did not have the resources tools uh to build things out in fact I don’t I don’t remember when the four-hour Work Week came out but I feel like that was like 2007.
(21:18) uh which is sort of the for a lot of entrepreneurs uh was the Advent of Outsourcing things it was when they figured out like oh there there are resources out there where I can Outsource my life where I can find developers where I can find you know va’s etc etc um so how did you how did you launch that company first because I want to talk about the later stages of it but uh how did you put it together gotcha gotcha yeah and the four hour work week I will say that reading that book is what made me hire my first
(21:53) employee I believe you said something in there like after you hire someone you’ll never not have employees again um and I was so nervous the person I hired you know they had a family I didn’t know if this was gonna work um but anyway it wound up working out uh fantastic um so as far as starting connected investors back in 2005 it was very challenging from a development standpoint there were no Frameworks um and I I didn’t know anything about tech either I just had an idea and my cousin knew a guy who could build websites and that
(22:33) was about that was about enough and now there are some huge traps that people fall into with web development that somehow I stayed out of trap number one is offering Equity to like web developers way too early because man if I’d give an equity to my first web developer I would have been dead this guy was people can’t run at the same Pace as a really motivated entrepreneur so giving away Equity too early is really really challenging you have to be very careful there um but I was able to and I didn’t have
(23:08) to raise money Brad because I was able to I would flip uh real estate I’d flip a house and I’d use the profits to develop out the website so I come up with 20 to 50 Grand at a time through house flipping and I would give it to my web developer who would send me these Scopes and I was like addicted to Scopes like all of my money was just going into you know into web development but I was flipping more real estate as a result and people are starting just to bring me deals so there was this crazy flywheel
(23:42) effect so I just put all of my real estate profits into into the tech company and I got the first version up the way I got it out was through again my network who was started to be real estate Educators right so I went from a pro-bmx rider to a pro real estate investor to some of the early gurus or influencers of the time I’d start going to those meetings and I got a crazy story about the one me and you probably met at but I would just start showing up at these meetings and I met someone that was doing a product
(24:18) launch and I convinced him to use my social platform as a bonus because it tied right in and we privately branded it for them and he launched it with his um with his platform we got our first you know 10 000 users and then we just kind of kept using that model over and over again until we built up a big base and were able to uh able to grow ourselves but yeah I launched it through early influencers um in the space because I didn’t have any and I didn’t even really have a product Brad right I could just it was a social
(24:52) network so it’s tough at first I you know I have like 80 accounts that were all me and I was having like conversations with myself to make it feel like people were using the platform so I was going I was going insane for a little while just talking to myself online uh well I think that you know the the Dynamics of a Marketplace are interesting in general even through the entire process of growing them but specifically in the beginning uh in oddly um I also launched easy pay to react with the proceeds of investing in real
(25:28) estate so I was flipping houses uh back in 0678 which was a horrible time to be flipping houses if you were intending to uh hold any of them um but it’s what allowed me to build up what was a very slow residual stream through payments um so what I what I knew was that it was an opportunity to get large chunks of cash and real estate is a great vehicle for that um let’s so I want to fast forward through the marketplace Dynamics here because you said something that is a really interesting potentially pivotal point
(26:10) uh when you’re selling software and that is that which is only kind of what this is or was at the time but you said that you white labeled it for somebody to Brand it as their own did you continue down that path over time would you have done that differently today how do you think about the choice to White Label the software for somebody else versus push your own brand out yeah I don’t think it’s either or if you have a software that could be white labeled even later in my career we did that the issue there are issues with
(26:44) white labeling and um the reason we kind of hit a wall with that is because people didn’t want to White Label it right the people that did didn’t promote it they would keep it in there it would be like a bonus for something but then no one would go there and it wasn’t growing fast enough for me and then there’s all sorts of weird you know anyway it’s just challenging to keep it separate but the same there’s there’s development issues but if you’re not good at marketing direct to Consumers then white
(27:20) labeling is a fantastic route to go I developed a skill to be able to Market to direct to people and have them buy from me so I needed to break free from White labels and just go out on my own because I wanted to have a business that I can grow and scale and uh but yeah it’s not a bad idea later on we developed out our deal finding software we created a different version for people to White Label and uh it’s a slow grow with white labeling but if you get tied in with a few of the right people a lot of real
(27:55) estate software companies that have done the best have been behind the scenes white label it usually takes them like a decade to get anywhere that’s meaningful but then they they latch on to that Grant Cardone or that you know that person that just shoots up and then they’re riding off their success but it’s a bit of a it’s a bit of a gamble for a while even the most successful ones they’ve had ups they’ve had Downs so I don’t know if that answers your question but for me to initially launch
(28:22) there was no other way for me to to do it because I was you know I had no expertise in marketing yeah I hear you I would also think that as a Marketplace uh or a social network you know having a singular brand is critical to get sort of the masses on both sides where the marketplaces of value to both sides right it’s there’s no value in a Marketplace if it’s heavy on one side and not the other right and if nobody goes to it right then you just have Ross talking to himself in 80 different accounts yeah
(28:57) exactly exactly um I dig it so I you know I know so you moved away from the white label proposition did you move away from the affiliate promotion of it how did you continue to grow it what was the primary mechanism to grow it you know after you were at a million or two in Revenue what allowed you to get uh you know eight plus yeah that’s a great that’s a great question so we we were very active in the affiliate world for a long time and you can grow a business pretty well with the right influencers and
(29:33) Affiliates and I think it’s a an important part of any business model moving forward these the biggest brands in the world are doing it now right um but we had to be able to buy our own traffic and this is actually where my Iron Man story comes in uh Brad so I kind of reached this point to where I’d kind of plateaued had Affiliates I did create like a webinar and my own product within the platform of connected investors and we were doing okay there but I was kind of stuck and I remember I signed up to do the Iron Man because I
(30:07) just wanted to I wanted every day to change and when you’re training for an Iron Man every single day is now changed I just wanted to create like a wobble in my gravity and my habits that I was orbiting around so I couldn’t I couldn’t swim not like you’re supposed to I had never run ran a marathon before my only biking experience was a BMX bike and a little bit of road bike so you know I went about that the same way I always do you know I got a coach I found some mentors found some people to run with to
(30:37) train with to have that Co-op Edition with you know like in BMX the people you ride with you compete with in real estate the people that you’re doing business with you’re competing against deals you know so anyway that’s just I liked to hang out with those type of people and um through this I met the CEO of a company called Lending Tree and what they did is they had a Marketplace that matched borrowers with lenders and he was doing an Ironman Triathlon as well and I explained to him how Real Estate Investors were getting
(31:10) financing and he’s like man that sounds like 1992 in the consumer world and then we just became buddies and he mentored me and I created a another Marketplace for private non-bank lenders to connect with people that wanted to buy investment real estate so for the first time someone could click a few buttons and be talking with a hard or private money lender or just some rich person in the area that wants to put their money in real estate and it was very disruptive in the space we created a whole a whole industry and the business
(31:46) model there we just copied Lending Tree exactly exactly what they did we did we just had private lenders they had real lenders now Brad I did this a little premature so I built it I showed it to the CEO and he goes Ross you’re violating like every single one of my patents I’m like he’s like if anyone puts this you know on my desk we’re gonna have to like send you a cease and assist and probably sue you because he was defending his patent against Zillow because Zillow wanted to do it Landing trees what they were doing
(32:21) wasn’t crazy you know it was just matching People based off their locations and type of home they want so what happened is Zillow beat Lending Tree they lost their patents the day that happened I launched my platform and what that did for me is it allowed me to buy traffic at scale because lenders would pay me to connect with Real Estate Investors whether they closed the loan or not between 30 to 100 hours just to talk to someone so I could get on average 100 hours of form it might have cost me 30 to 100 to
(32:55) get the full get the the form with the traffic and I was able to make a lot of money on people that were interested in real estate and then they would apply for funding and then they would become part of our social network and see our other products so I was able to self-liquidate all of my ad cost and spend half a million plus a month buying traffic and having a lot of people to sell my software to so that was just we were you know putzing along and then we did that and we had a hockey stick a hockey stick a year because we were able
(33:27) to buy a lot of our own traffic Beyond a million is brought to you by Easy Pay Direct if you’re an entrepreneur and you are still using a product like stripe or PayPal to accept payments it is time to find out why the largest names in your industry would never consider doing that check out easypaydirect.
(33:46) com forward slash bam to find out more amazing uh amazing that’s such a good lesson for everybody and I think the lesson for me out of that is twofold one is look for a better lead magnet and the lead magnet doesn’t have to be your core business it just needs to run in parallel with it right so this was a totally different offer totally it’s a totally different business model but you used it as a lead magnet to get people in and uh lead generation is a very powerful lead magnet because people will buy leads and you can sell leads whether or
(34:27) not they convert right so you had a whole bunch of people and let’s say for example you sold the same lead to four people and they each paid 25 bucks a piece and then they compete for that lead so you get 100 bucks out of it and you can go acquire the lead for you could overpay for them you could pay 70 bucks to acquire the lead and you’re still crushing uh that’s awesome that was actually the 70 70-ish dollars was the magic number that’s our that’s that’s what we needed we needed to get 70 per we needed our
(34:58) Revenue per lead to be about that to have the margin we needed but our back-end sales were so strong in the product we already had that even if we lost money we still we still made money so just there is the ability to kind of get spread yourself too thin but I already had half of the marketplace I had a million people using my platform they all needed money so I had to go out and sign up a bunch of lenders so uh that was a B2B I’d never done that before um but it was simple enough we decided it took us about a hundred lenders to
(35:31) sign up to have a really good robust um Marketplace of of matches how did you approach uh building out that side of it and finding the lenders because you mentioned that you know sort of like the Lending Tree model except you what you the language you used I think was it wasn’t real lenders it was Private individuals or otherwise it was it wasn’t Banks yeah it wasn’t yeah so how did you find the list and how did you approach that and how did you think about it well for that I definitely brought on
(36:08) someone to be head of that department because in your business someone had you have to Outsource the anxiety you have to Outsource the obsession if someone is not worried about something then I’m worried like I need my people to be actually physically worried that’s the only thing that calms me down I need to make sure someone else is worried about it so you know I call it Obsession like what are you thinking about when you wake up what are you thinking about midday are you always trying to solve that problem
(36:37) in your head so we brought on um a really good leader in that spot and all he did was you know talk to lenders I would jump on the line with them as well we’d go on little road trips and stop by all the the different lenders there were events that we could go to where there were lenders and we were the only people in the space doing it at the time which was good and bad because they lenders all wanted to pay me for a closed transaction but I couldn’t do that because then I’d have to be an accountant
(37:06) oh you closed that lead oh oh we already had them in our database no you didn’t prove it like it would have been monumentally hard and then honestly Lending Tree helped me a lot because Brad you would think the more leads people want to buy the cheaper that’s what I thought but my mentor is like no the more they want the more every lead is and I’m like it was just a mind like having him help me figure out what the scripting was what they needed but then you had to have a good conversation with the lenders and make sure they were
(37:36) making their money on the investment right and as long as they were at break even or close to break even we could raise we could raise prices I mean we made mistakes there for sure uh just in our contracts we didn’t have enough flexibility to raise prices and AD costs went up so you know it got it got challenging but but anyway yeah no we just I hired someone specifically to go do that and go find uh go find the lenders and they’re they’re not hard to find through public data and just through events and it wasn’t it
(38:07) wasn’t that challenging now I needed 100 100 people so you know you get a few a week you’ll get there so at some point uh you sold this thing and I think it was what a year and a half ago at this point something like that um I know that people go through all sorts of different Journeys when they are selling and afterwards and uh preempting the sale um how did you come upon the exit did you did you seek it out did somebody offer you money what was that process like yeah well um great question and if you’re building a business
(38:51) in your in your plan you need to make sure you are going to either sell it or step out right like either someone else needs to come in and worry about it all and you can be a strategic advisor or you need to make sure you’re building a sellable business that is the light at the end of the tunnel it will help motivate you it allows you to motivate people in your company because there’s an end goal to where you can give different types of equity it doesn’t really mean anything unless you sell um like Phantom stock and stuff like
(39:25) that we had for some of our some of our people um you can get more investors if you need them if you have a plan to sell so if you take your business more seriously if you have a plan to sell so what happened to me Brad is LendingTree try to acquire us right we were a great fit um and I went through the whole process I had to get my books audited I got I had to sit down with the c-level executives and they loved one side of our business but hated the other side they just didn’t they just didn’t get it
(39:58) they didn’t want anything to do with it um so I almost sold to them and uh that year they were gonna give me like four payments no three payments of four million dollars for the company at the time and that year the company profited four million dollars I’m like man I made isma I’ll just keep this thing for a little while right and then we wound up getting almost 10x that you know two years later or yeah a few years later um but I got to the closing table then I’m like I need to sell this thing so I
(40:31) didn’t I wasn’t being as proactive as I’m telling you to be um but after that I’m like yeah I really want to sell this thing uh and everything I did was to get to an exit just the type of Revenue I was doing I didn’t do coaching because I didn’t want to that doesn’t sell well in the niche that I was in so we stayed more software anyway so uh I had hired a company to help us get professional looking on paper create like pitch books and stuff and I was able to help with that a lot and we took it out on the open market
(41:09) and no one was interested so first sale fell through second sale no one was interested and then you know I’d honestly reached a point Brad to where I was like man you know I’m kind of over this it had been like 20 years right started in 2005 I’m like uh I’m ready for a change change in my life um and then I just it was crazy I got a phone call from the company that we were buying data from that said hey do you want to sell two weeks before that I had another call from someone that was trying to buy me but they were going to
(41:44) buy me in a weird way like they wanted to buy my whole company but only give me half the money now and then start another company and I was going to get a percentage it was like this comp it was almost like a pyramid scheme I explained it to my wife and she’s like wait you have to get three of your friends to sell and then she didn’t like that she drew it on a board for me and I’m like yeah I guess that is kind of anyway um but they made a serious offer right at the time that another offer came in
(42:09) so I was able to use that as leverage and to be completely honest with you I was kind of at my I was kind of done with the company okay perfect timing uh got it sold uh in six months during covid um the company didn’t even log into our software it was crazy they just had to be in this space they wanted to buy it and they called me up and they bought it but I was ready to sell and uh being ready being like I had all the documents and there’s a lot of accounting that goes on with selling um yeah that’s actually exactly what I want to
(42:46) talk about there um and real quickly uh we’ll cut this part but you’re banging your table a little bit and we’re getting like uh yeah we’re redlining a little but um so that’s exactly what I want to talk about is when you when you said you know you got this initial offer from Lending Tree and it fell through because it wasn’t quite the right fit uh then you started thinking about how to position things exactly for sale so you know what exactly were you doing between that point what did you shift
(43:19) from that point of hey you know we are producing right now we’re spitting off cash I’m content you know with uh you know taking 4 million a year out of this uh but it’s not the salable asset that it can be so what was lacking and what did you do specifically that allowed you to have all your books in order the paperwork ready have the model right so that when the next time came you were teed up and it was a easier sale yeah great question you know we really focused on retention rate you know and just how we did our
(43:56) accounting you know if we took an annual payment it’s one thing how do you book that Revenue right how do you tie that into your subscription rate ever people want to buy predictability so we tried to make the company we reframed the accounting to look predictable it just it’s not like we did anything nefarious it was just we were running like a cash style business and we had to move to more of an accrual mindset which made retention rates look better we changed our upfront licensing fee into prepaid subscription Revenue
(44:36) and kind of broke that out over 12 months and you know so we just did some accounting um you know gymnastics there to show what we were really doing because we were a direct response marketing company and we were we knew we had to be more of a software company to um to sell now I say all that um and we even like got an office we were virtual and people want you to look like a real business we got an office right before covid that was it a quarter million dollar mistake um it was fun to build it anyway so all that actually got thrown out the window
(45:15) kind of even if I didn’t do that when the company that bought me bought me because they just had to have me they didn’t they didn’t care it was they were it was it made the conversations better we were able to have better conversations but all they cared about was ebitda you know so they didn’t really care how Hakeem where it came from um so maybe all the stuff I did wasn’t necessarily uh necessary but that’s what you need that’s the way to put your company in the best light to show
(45:49) predictability um and long term long-term stability yeah you know I what I heard was and what I think what you said was we were a direct response company and we needed to position ourselves as a software company and when you there are very well established metrics and multiples across different Industries so sought people that are looking to buy software companies know the metrics and know the multiples and that’s the math that they’re doing so when they assess books they’re saying hey this is the
(46:26) multiple we’re willing to pay based on this because you fit in our little frame of a software company right so restructuring things as a subscription and you know prepaid subscription Revenue they can make sense of instead of looking at your books and being like yeah I don’t know what this is um why did they want you they wanted me because their competitor was buying my biggest competitor that’s it you know they yeah they were in a bidding war in one spot that didn’t go their way so they just called me up and said hey you want
(47:09) to sell it’s just crazy to think that my biggest competitor and the biggest pain in my rear end became 99 of the reason that I was able to get such a big sale to a publicly traded company that actually had the cash to sell because our industry Brad I mean you know it like there’s no one’s sitting around with 100 million in cash that they can just shovel out a few times a year right um that would be a top top line in our in our industry so we had to have someone from outside um come in and yeah it was it was
(47:47) exciting which you know is why I feel a huge responsibility to do as much good as I can with the blessings and the money that have come my way because I got really uh you know I got really lucky I mean I was added tenacity to stay out for you know to be in the game for 20 years but um yeah yeah so that’s why I’m rededicated to you know making a difference in a lot of more charitable ways I dig it well I want to dig into that too uh but before we get there um a little bit more on the exit so you know you alluded some numbers and I know
(48:24) that there’s an NDA on that stuff so I’m not going to poke too much but I also know the terms around it um are helpful for other people what can you share about you know percentage paid now earn out um time that you had to stay on the role Etc yeah it’s on the go it’s it’s all negotiable right there’s no um you know I mean there are some areas that I definitely messed up on in the negotiation um but basically once you sell your company the money you get up front you better be okay with that
(49:02) because once the books are in someone else’s hands just like I can move things around they can kind of decide they can ethically decide how much to uh to pay you afterwards so the big takeaway is whatever you’re going to get up front could be all that you get you know I pushed for 70 up front um and I was able to you know to get there and then the if there is any earn outs you want that Cliff to be as low as possible which was a huge negotiating point for me to where if you hit 10 of your gold you get 10 of the money or do you get
(49:41) zero percent some people say if you don’t hit 50 then you get zero so I was able to negotiate that down and then you can actually renegotiate after you’ve negotiated um so there’s no end to the things that you can ask for uh all they can do is all they can do is say no so again it’s like one of those things with real like how do you invest in real estate how do you sell your company like I can have some really fun intelligent conversations with people um that are in the process of it but try to get as much money as you can up front
(50:11) obviously and uh once you let go of the control I mean there’s culture clashes right there is ways they say everything’s going to stay the same but they have it they have different laws of gravity than you have so they don’t think they’re doing anything different but we can only pay salespeople once every two months hold on a second that doesn’t work for my sales people I like being paid every week now they’re selling way less because they’re sandbagging to wait until the next pay you know so there’s so many
(50:45) small intricate things and even with the best intent um you’re gonna fall into their model you’re not going to have the leverage you need it was the first time I’d ever been employed Brad like I never had a boss so it was so interesting I have so much more empathy and understanding for people that are working corporate jobs like people people work there just to not get fired like they’re not working there to like do anything big and even the people in my company after they started working for that company it’s like all right
(51:18) showing up you guys can’t fire me anyway take you a year to fire me it really did it would take like a year to fire someone at the company where we used to you know hire three keep one when it came to sales people no no no anyway so just a lot of different um things to kind of work through but I love the perspective that I gained I have a lot of respect for the the people that were above me and it’s just it’s just it’s a different world it’s a really interesting one I’m glad I got to experience it when it didn’t matter
(51:51) you know I love that frame yeah what would you have uh what would you have done differently in the negotiation of terms on sale um they I don’t now that everything has flushed out it all fell very far in my favor um I think I could have had a better attorney to be honest explain things a little bit better there were just a few little things I didn’t understand as far as how like just I didn’t know all the earnings were after tax dollars right so if I had to have three million dollars in ebitda that was three million
(52:39) after tax dollars that didn’t stop me from getting any my payouts but you know cut my check short a million bucks right um which whatever it’s my kids kids money but it’s still like damn I didn’t realize that that was the biggest thing that really annoyed me whenever the first payout came and uh it was it was 20 less than I thought hmm yeah I think that’s incredibly helpful takeaway for anybody that’s going into that uh that phase of business or life right it was just so much money like up
(53:16) it was so much money that you’re kind of in this Euphoria like you’re starting to spend the money in your head and you don’t give a crap if it’s this if it’s 10 million dollars less it’s just like so much cash um I feel so lucky the way that everything everything worked out that’s awesome uh well I wanna I wanna talk about uh the charity but a couple timely things I want to hit on too because you’ve been so involved in this uh both in real estate and software development and the
(53:48) intersection you know we are it’s August 29th 2023 um and we’re sort of in the first wave of significant AI in its impact on society right at large you know we’re seeing the first tools that have really wide reaching ramifications um how do you see the impact on AI in real estate software right now and like let’s say in the next uh year or two what do you see as the immediate use cases and how is it being used currently with that platform yeah no it’s I mean I would not start a business today that didn’t have you know
(54:28) AI tied into it or was a big part of the of the plan and I’ve been able to lift up the hood of some big companies that are building out you know the real estate AI of the future so with AI it needs good data and AI is doing really good now because it has years and years of social data and the internet to go back on but a lot of real estate data um is kind of held back for a lot of different um a lot of different reasons but some of those big data companies are building out AI um and the bigger companies they’re slow
(55:08) they uh it’s gonna be interesting but I’m not allowed to say too much but there’s a lot of huge impacts on being able to do everything in real estate um from an AI perspective you know evaluating deals figuring out which deals to uh to go after um moving the process along uh contract reviews are just awesome with AI right now you can just drop a contract in and ask it a question and it gives you better answers than oh I wish I had AI when I sold the company it probably would have found the things I need to pull out so I
(55:50) like to use AI for contracts I use it and then I go to the attorneys uh I haven’t seen anything super significant that’s really changing changing things yet but I’m seeing what’s what’s coming a lot of the big hedge funds will use AI just to make offers on properties that’s been happening for a long time to evaluate repair costs on a property I have a great video that I’ll include with my gift package that shows drones buying houses it was kind of like my big prediction back in the day
(56:27) um but I mean at the end of the day real estate will every property will be its own stock and you’ll be able to sell and buy pieces of the equity and the debt in any property it’ll be open to everyone that’s what I’m seeing a lot of Investments on that side of it buying a percentage of the house uh to live in and that’s kind of the direction that that real estate is going so you’ll be able to trade equity in your house and buy equity in your friend’s house um trade Equity with you and your
(57:00) friends so anyway that’s it’s going to be really exciting but the the world the financial world needs real estate to be more more fluid financially so they need to be able to move stuff quickly the financial world’s holding that back but people are figuring out how to get around how to get around it properly I like that concept uh yep we’ve got an interesting road map ahead of us here uh well tell me about so tell me about the shift into uh shift into the next phase here because hey I think it’s interesting anyway but
(57:40) B when people sell a lot of different things happen some people get completely depressed and complacent and don’t know what to do with themselves sometimes that manifests as a drunken disorderly person sometimes they immediately get back into another business um and apparently sometimes they do this where did it lead you yeah yeah so you know the question is kind of like now what when money doesn’t matter what would you do when your whole life was focused around money and that is gone um when money doesn’t matter but when
(58:20) money doesn’t matter and you no longer have the focal point being this huge initiative that you’ve been spending your whole life on yeah now um I look it’s not retirement I look at it as requirement and because you’re rewiring all your priorities that’s really that’s really what it is and when I sold the first thing I did is I got a coach because I’m like man I’m about to get into some crazy areas here I mean imagine if someone won the lottery and they went out and they got like a coach
(58:50) to help them through it so um I got a coach to help me re-prioritize everything a lot of my operating systems you know the entrepreneur’s operating system is like the stoicism the stoic philosophy which I love and have been obsessed with because it teaches you how to just push through some of the hardest things in life that’s not necessarily what I want my internal operating system to be moving forward I want to have more like emotional intelligence and just replace some of those some of those stoic uh
(59:23) philosophies with with some new ones so I made sure um I already have you know I have a real estate investing business so you want to make sure I have a Lifeboat a Lifeboat is a smaller company you can step out onto when you’re done so you have something to do I want to stay sharp I want to give back which is why I’m doing these podcasts so I’m just maintaining my real estate business I mean I brought up almost 200 properties in the last 12 months um but I’m only spending maybe like four hours a month on that right if I’m
(59:53) doing it in a different way I have a team and then I went I decided uh I almost feel like I mean that’s like this hot air balloon Brad and I’m looking down at everyone in traffic and I’m like I feel like fighting through that again I’m like yeah not really not not in the same way so then I just decided that um I wanted to to give back and I’m building out savinghomes.
(1:00:18) org um you know a charity for single parents that are losing their house to foreclosure and uh it ties into the affordable housing world and it’s been I’ve kind of reset what the reward is because the dopamine reward right was like looking at the Easy Pay Direct settlement statement every day right it’s like oh cool then you get mad you’re like oh only 30 grand came in today that sucks like I don’t I’m not grading myself on that so I just kind of replaced the money with how many people how many homes can I save and that’s
(1:00:53) kind of what like what drives me and uh so it filled a void but it helped me kind of empty out the competitive side of me that I didn’t realize was so strong until I stepped um stepped away from it you know the entrepreneurial spirit is a possessive Spirit it can be evil right you could lose friends and family because you’re this is it right um so just recognizing um recognizing those roles you know I don’t I like to do a lot of healthy things you know I did 40 miles on my bike yesterday in the mountains in Asheville which is
(1:01:34) just gorgeous so just time in nature helping people um and then making sure my business is going is is good I’m just trying to trying to do a big exhale for a while and um yeah I mean I keep my eyes open but right now it’s a snow globe um in the financial world so I’m just patiently sitting on the sidelines making Investments where they work and that my mentor was like Russ just don’t rush your money into anything right now and that’s that’s kind of what I’ve been doing real estate I know
(1:02:09) um but the other stuff I mean it’s no one knows what’s going to go on um in the world um so I don’t know if I answered your question but just uh just just stepping back for a little while and re-prioritizing um the good thing is you know I was well it wasn’t I was very wealthy before this through real estate but not at this level I always had a monster I had a monster to feed that’s when a business becomes once overhead reaches a certain level like you got to make the money every month or or else
(1:02:39) yeah rewirement yeah I like that construct I want to hear the story about how you started using easy pay to react because it’s got to scratch my own selfish itch and you told me that you remember the day that you did it yeah yeah all right so before I forget before we started recording uh you started telling me a story about how you first started using easy pay to react for connected investor um and I don’t remember that day but people tend to remember when there’s a pain Point like this can you take can
(1:03:08) you tell me what happened uh yeah to say the least I remember that when I first started selling my software I only sold annual subscriptions right so I did this big launch got thousands of people to do this annual subscription and then a year goes by and I’m like sweet this is gonna be the best day ever well it wasn’t all of those payments went through my payment processor got shut down which means the other payments weren’t going through and the people we were working with they were not responsive they I had no
(1:03:45) relationship with them it was I just my business just shut off during like the most important time and I called you up man and Easy Pay Direct just came in and you understood our business you understood what was going on and we got set up really fast we were able to turn the bank account back on and start collecting uh you know tens of thousands of dollars that we were that we were losing so it was a big big uh it was a big big deal it almost shut down my whole business when uh when the money stopped because then all the
(1:04:22) subscriptions just kept bouncing back then you got to call people up they’re not yeah anyway so I remember that you came through and saved the day and I I’ve been telling everyone ever since even if you don’t even if you have a processor that you’re happy with you need just get a backup one set up so you can just flip a switch in case a weird decision is made oh and it gives you leverage when you’re negotiating price you know so it’s like hey I’m gonna like this other everything out there is really expensive
(1:04:51) and uh anyway so you save you save the day for me for sure I appreciate that I always like hearing those stories uh it never gets old uh well before I let you go I know you’ve got a time crunch here um where do you want to point people if people want to find out more about you more about savinghomes.
(1:05:11) org or anything else where do they go so cool little loophole my non-competes I’m not allowed to sell real estate information anymore but I can give it away so all the stuff that I used to sell the courses in in real estate I can now give it away and this is also my personal financial this is the bookmarks of my day this is how I write out my goals this is how I keep track of my goals I want to get this in your hands um so if you just I don’t even have a business anymore really so you can just email me and I’ll put the email address maybe it
(1:05:45) can be on the screen or in the notes it’s just my name Ross successcap.com shoot me an email and just like send me the gifts and if you’re you’re interested in getting involved in my charity in any way shape or form by spreading the word or making a small donation um I’ll make sure to include a link there as well and yeah so just Ross at successcap.
(1:06:12) com and that’s where you’re going to find everything all my courses I’m just I’m just giving it all away um Brad saved saved me so hopefully this will save this will save some of you guys and girls as well I love that man well hopefully you have somebody managing that inbox Ross Hamilton thank you so much for the time man it’s great being here bye-bye love it I hope you enjoyed the episode as much as I enjoyed doing it I need your help there are three places you can find Beyond a million the podcast itself beyondthemillion.com which has some cool
(1:06:41) free resources including a free course and we finally launched the Beyond a million YouTube channel I would love it if you would go there and subscribe and if you don’t want to you still would probably enjoy seeing the visual content check it out youtube.com forward slash at Beyond a million [Music]