16 Jun Interview with Raphael Vargas
Raphael Vargas shares how he’s generated millions in fees already before the 2018’s halfway mark. He reveals how he’s wholesaling in multiple states, mistakes he’s made, and strategies for growing your business to the next level.
Video Replay of Interview with Raphael Vargas
Podcast Replay of Interview with Raphael Vargas
Show Notes:
You can reach Raphael by email at raphael
Download the iTunes podcast at https://itunes.apple.com/us/podcast/wholesaling-in-multiple-states/id1386400008?i=1000413929308&mt=2
Transcription:
Steve: Hey everybody, and thank you for joining us for today’s episode of Real Estate Disruptors. Today we have a very special guest from Tampa, Florida, with Raphael Vargas. He’s here to share how he’s made millions already so far this year in wholesale fees. If this is your first time tuning in, I’m Steve Trang, broker-owner of Stunning Homes Realty, the co-founder of the OfferFast app, the one place you need to do all your wholesaling, and I help people become real estate entrepreneurs.
Steve: If you’re excited for today’s show, please give me some thumbs up, give me some hearts, and before we get started … I started this show because I want to give back to our community. I definitely struggled when I got into this business. I’m sure you’ve faced some struggles, Raphael.
Raphael: Yeah, a lot.
Steve: So we want to shortcut that struggle for as many young leaders as possible. I don’t charge a dime for this show. I don’t make any money doing this, so here’s all I ask. Here’s your cost. If you get value out of this show, please tell a friend. Either share this episode right now, tag a friend below, or tell them your best takeaway from this show later on. That way, we can all grow together. And don’t forget, this is a live show, so please post your questions and Raphael will be happy to answer them. You ready?
Raphael: Yes, I am. It’s a pleasure being here, by the way. Thank you so much for inviting me.
Steve: Oh yeah, it’s our pleasure. So what got you into real estate?
Raphael: You know what? A really interesting story. I was working, you know, dead-end job. I was 20-years old, working at a dental firm and dead end job, you know, and didn’t graduate college. I got kicked out of high school. I went to an alternative school and didn’t really have any formal education. And when I was working at a dental firm, I saw this guy coming in, he was getting his teeth done and he was spending a lot of money. And I was like, wow, what do you do? You seem successful. You’re in a BMW. That was luxury, right? And I’m thinking, wow, “That’s amazing. What do you do?” And he said, “Real estate investing.”
Raphael: And I was at really desperate times in my life, and I said, “Hey man, how much would it cost for me to pay you?” I didn’t even know this guy, I said, “I will pay you to teach me this-
Steve: Mm-hmm (affirmative).
Raphael: … because I want to be like you.” And he said, “Give me $5,000.” I said, “I don’t have $5,000. I have $3,000.” He said, “Okay, give me $3,000.” I gave him $3,000 and he took it and he didn’t teach me anything. So it was a pretty bad experience.
Steve: That was the first lesson.
Raphael: That was the first lesson. Yes. I trust people very quickly. And I’ve learned how to kind of, leverage that and understand that, but, you know, that was the first lesson … that’s how I got into real estate. After that, I was dead broke. I was in a worse position than, obviously, than I started because now my net worth was zero.
Steve: Yeah.
Raphael: Probably negative, with debt. And it was just, getting started, in that regard. And so, yeah.
Steve: Okay, and what were some of your early struggles? I mean, obviously besides the guy just taking a few thousand and running with it.
Raphael: Man. Honestly that was one of the biggest struggles for me.
Steve: Uh huh.
Raphael: Was the fact that he took that money and I had no mentorship, I had no coaching, no people to actually teach me anything. So I had to look online, YouTube videos, you know, online on websites, whatever it is on free forms. That was a huge struggle for me. And the biggest thing was, I come from kind of a rougher background, so you know, I have tattoos, I’m like, rough around the edges, kinda ‘street,’ if you would say, from a certain standpoint.
Steve: Yeah.
Raphael: And so I really had to learn how to change my dynamic. I had to look at successful people and say, “I’m not acting in the right character. If I wanna be successful, I’m not acting in the right character.” So I had to reframe my entire mindset. It was my mother, myself, and my mentally disabled brother. I was 20 years old, now I’m 26.
Raphael: I was 20 years old at the time, and it was really difficult for me, because, one, I had no money, and two, watching my mother and brother kind of struggle on a daily basis, and watching my mentally disabled brother walk around in circles all day, and me being frustrated to the point where I’m like, you know, I have the opportunity to build a legacy and build a real estate investment company, become wealthy. My brother will never have that opportunity, because of his mental condition. And so, it really made me frustrated, so that was a really hard thing for me, but at the same time it fueled me, for my success of where I am today.
Steve: Okay.
Raphael: Yeah.
Steve: And then so, knowing what you know today, what would you do differently?
Raphael: Oh man, I would’ve hired a coach a lot earlier. And I think there’s a lot of really, really great coaches out there. I would’ve hired a coach a lot earlier. So that’s what I would’ve done differently. Hired a coach.
Steve: Are there any specific coaches you want to recommend right now? Or? If you don’t want to, it’s fine.
Raphael: There’s not. So, for example, so, Carlos and [Salig 00:04:35], they were on your podcast.
Steve: Yeah.
Raphael: Yeah, you mind, hold this for me real quick. So, Carlos and Sal were on your podcast, right?
Steve: Yeah.
Raphael: I would recommend Carlos and Sal, they just had an all-in event, absolutely amazing. They were actually my mentees. I taught them two and a half years ago, they were doing like, nothing in business.
Steve: Mm-hmm (affirmative).
Raphael: They went to my event. They exploded their business. Now, obviously I can’t take full credit for that, right?
Steve: Right.
Raphael: These guys are hustlers. Like, I gave them the foundation, I gave them a vision, and they just ran with it.
Steve: They executed it.
Raphael: I’m sorry?
Steve: They executed it.
Raphael: They executed it, right?
Steve: Yeah.
Raphael: And so, it’s amazing. And so they’re having an event, I’m also gonna be doing consulting, in the very near future as well.
Steve: Yeah.
Raphael: So I would say myself and you know, those guys. They’re my brothers.
Steve: Okay. Awesome. So, I saw a really cool story on your Instagram, where you took your family on vacation.
Raphael: Yes.
Steve: Tell me about that.
Raphael: Yeah, so it has always been my dream to retire my mother and I knew through real estate investing, my rental properties, you know, the wholesale business I have, the real estate agent business that we have, and I knew through that I would be able to, obviously, take care of my family. It’s always been a dream to take my family on a luxury vacation. And I was able to do that. I flew my family in from Bolivia. I rented a mansion on the water. We rented a-
Steve: Oh really.
Raphael: Yeah. Rented a hundred foot yacht. And I retired my mother fully, the beginning of this year.
Steve: Mm-hmm (affirmative).
Raphael: So she’s 100% retired. She ‘works on my rental properties.’ You know? She’s like, “Hey, I’m working.” Like, okay. No, not really, but she’s fully retired and it’s just a huge blessing, man. It’s a huge blessing to see where God’s taken the young and dumb, the stupid like me, right?
Steve: Mm-hmm (affirmative).
Raphael: I’m not special in any kind of regard, and that’s why I look at people and they’re like, “I could never be like you.” And I’m like, “Dude, you have no idea what I used to, who I used to be.”
Steve: Right.
Raphael: Like, I never used to think that I could be who I am today.
Steve: So at 15, 16, your old Raphael, would never imagine this.
Raphael: Never. Never.
Steve: Yeah.
Raphael: Yeah, man, 15, 16 year old … never. And so it’s a dream come true to see all these things happening. And it’s just really cool, man. I live a really fun life.
Steve: Mm-hmm (affirmative).
Raphael: I think God has been blessing me with just a ridiculously fun, and at the same time, ridiculous work ethic as well. We’re working ridiculously. So, I live by a principle of fun. I’m never stressed, no matter what happens, I’m at peace, I have spiritual mentors in my life. I have business mentors, I have physical mentors. So, you know, I live at peace and no matter what happens. And I know God’s always in control. So.
Steve: So what prompted or what compelled you to retire your mom? I mean, you were 20 when you started this-
Raphael: Yeah.
Steve: … at what point do you say, “Man, I wish I could just retire my mom.”
Raphael: I mean, from the jump. That was the … when I was 20 years old, I used to watch her. She used to work two jobs and go to school. And she used to get straight A’s. And not sleep. I get my work ethic from my mother.
Steve: Mm-hmm (affirmative).
Raphael: She used to stay up all night, because my … she got married to my father, my father left when I was young, and she was single and with my brother and me. I was a frickin’ headache back then, when I was 18. But, she … I used to watch her work, man, and she used to get straight A’s in school, work, just to … two jobs just to keep, you know, take care of me and my brother. And it was just ridiculously amazing. And that point really frustrated me because I was like, “I’m a knucklehead, what am I doing? I need to take care of my mother.”
Steve: Yeah.
Raphael: And so real estate was what I knew, I was like, I know this is gonna take care of her.
Steve: Okay.
Raphael: So.
Steve: And you flew family in from Bolivia.
Raphael: Right. So actually, they flew themselves, but I flew a couple of them, yeah. But then they flew themselves and it was just, it was four of them, four or five of them, so they’re direct family. But you know, obviously, it was like a $30,000 vacation. It was just really amazing and fun.
Steve: So how was that? Like, you, this was your goal, your vision, this is what you wanted to do and you were able to do it, how was …
Raphael: It was surreal. It was an amazing experience. I brought some of my mentors for them to meet, my family to meet my mentors and my friends. A lot of people that have changed my life, we all had dinner. It was just surreal. And it was a lot of talk on spirituality, about God, about how, you know, my mother’s crying and how did my son become this, you know?
Steve: Yeah.
Raphael: She used to pray for me, every single day. You know what I mean?
Steve: Stay outta trouble.
Raphael: Stay outta trouble, man. She just didn’t want me to die. I mean, people were trying to kill me, at a certain point.
Steve: Right.
Raphael: It’s like, she was just praying for me to live. You know?
Steve: Yeah.
Raphael: And like, not thrive, you know, so thriving and living, is just …
Steve: Huge bonuses.
Raphael: Huge bonuses, man. And it’s amazing.
Steve: Okay. So you said that your 15, 16 year old Raphael, definitely cannot imagine this, so-
Raphael: Uh uh.
Steve: … you said it was easier than you thought it would be, but it was also extremely difficult. So what will you tell a young guy, trying to get into this wholesale business right now, fresh?
Raphael: Man, I think the young generation has it a lot better than us. And I’m young, obviously, I’m 26, but, I’m looking at the people that came to my event, and there’s some killers, man. Like this guy named Alex [Sanes 00:09:35], and this guy named Chris, they’re two … JayLynn White, they’re 19 years old. They come to my event, I’m like, “Dude, these guys, these are smart guys, man. I wasn’t this smart when I was 19.” I feel like the generation is just getting smarter and smarter and smarter, full of entrepreneurs. And so, yeah, I would tell them, they’re doing the right thing, right? Learning from other people, having the wisdom to learn from other people. And learn from others’ mistakes, man.
Steve: Yeah.
Raphael: And that’s what I wasn’t doing.
Steve: Well there’s crazy, how much information is out there, is available right now-
Raphael: Yeah.
Steve: Right?
Raphael: Yeah.
Steve: That information wasn’t available for me when I was like, ten years ago, right?
Raphael: Mm-hmm (affirmative).
Steve: I was definitely older than 26 when I started, so.
Raphael: Right.
Steve: But, this information wasn’t available and I just think, sometimes, man, what would’ve been possible, if I knew what I know now, just even ten years ago.
Raphael: Yeah. Exactly.
Steve: Okay, so, what are you passionate about?
Raphael: Man, I’m passionate about my relationship with God. I am extremely passionate about that. That’s my number one passion. I’m extremely passionate about my family and making sure that they’re good. And my third passion is I’m business. Like, I’m a super-businessman and I love business. I love going into rooms, controlling situations to benefit the people that work for me and putting ourselves in better situations consistently. I love leading. I love the pressure. I need pressure. I need pressure. I need my team, in my business, I need them to rely on me all the time, because that’s what fuels me. So I’m super passionate about leadership, about God, about my family, about business.
Steve: So, how do you develop your leadership?
Raphael: That’s a great question. The biggest way that I developed my leadership is learning from one, learning from a lot of leaders. I have big mentors in my life, guys that are worth billions of dollars, and huge real estate developers, just like my business partner, he’s a massive real estate developer. I can’t mention his name because he’s very institutionalized.
Steve: Mm-hmm (affirmative).
Raphael: But he owns over 50,000 multi-family units. He owns millions and millions of square feet of commercial assets and billions of dollars worth of assets. Brilliant, brilliant man. He just sold a multi-family building, here in Arizona, made 250 million net, on one deal. In Arizona, right? So I look up to people like that, and I watch him and I go to lunch with him, two, three times a week, and he teaches me a lot about leadership. But also, reading. You know?
Steve: Yeah.
Raphael: Leaders are readers, right? So reading one to two books on a weekly basis, always, you know, guides.
Steve: Okay.
Raphael: Yeah.
Steve: So, yeah. I was gonna get that question later on, but now that we’re talking about it, how would someone just, if they wanna have a mentor like that, right?
Raphael: Mm-hmm (affirmative).
Steve: [Killian’s 00:12:08], because a lot of people would be happy to meet a millionaire. Right?
Raphael: Right. Yeah.
Steve: To meet a billionaire, they’re like, “What has to happen? What are the things you need to do to put yourself in a position, to be able to meet someone like that?”
Raphael: Do you want me to be completely honest?
Steve: Yes.
Raphael: For me, I have no control over that. I just wanna be completely honest. I went straight to Tampa, the first thing that I started looking for, was a bible-study group. I was like, I need to go to a bible-study group, I need to link myself with people that believe in God.
Steve: How old were you?
Raphael: I was, no, when I went to Tampa, I moved there about eight, nine months ago.
Steve: Oh, okay.
Raphael: So, recently. I was 25.
Steve: Okay.
Raphael: And so I was looking for a bible-study group, a buddy of mine said, “Hey man, come to this bible-study group.” I’m like, “Sure.” He gave me the address, I’m like, “This is that corporation.” I’m like, “This is at a huge … these are some massive real estate developers.”
Steve: Mm-hmm (affirmative).
Raphael: And then I learned that the president of the company is gonna be the one hosting the bible-study. And I was just amazed. And, so walking-
Steve: It’s an incredible opportunity.
Raphael: Oh yes. I’m like, I come in early, in a suit, you know it’s 7:30 in the morning. Get there in the morning time and he’s there, messed up hair, T-shirt that’s ripped, and shorts. And I’m like, dude … I’m sitting in front of this guy, I’m like, “Ed,” his name’s Ed, I’ll just name his real name Ed. I’m like, “Ed, very nice to meet you, I’ve learned so much about you, heard so much about you. Whatever.” And he had pneumonia at the time, but we immediately, we connected and so, to be honest, I have no control over that.
Steve: Yeah.
Raphael: I can’t be like, you have to do this, and you have to network here, like, I don’t know, right?
Steve: Right.
Raphael: Some things are just anointed by God, and that’s how I see things.
Steve: Yeah.
Raphael: And sometimes God just says, “Hey man, you’re faithful to me, I’m gonna just put things in your lap.” And you’re just blessed like that.
Steve: Right.
Raphael: That’s what I would suggest.
Steve: I think there is something there though, right?
Raphael: Right.
Steve: You found out about this opportunity.
Raphael: I did.
Steve: You got there early.
Raphael: Yeah.
Steve: You put a suit on.
Raphael: Yeah.
Steve: And I’m sure you gave a darn good handshake.
Raphael: Yeah. I did.
Steve: Right. So-
Raphael: And you know what? He had, this is actually a good point, that would … on a just a regular level. He was having a Foundation, and I didn’t know anything about it, right? He was just … I saw a poster at the place and they owned the 49ers and they have like a … Super Bowl Rings and all this stuff, and they’re like, “Oh this … something for the football team,” and they were having a Foundation for raising money for feeding children. And I didn’t know anything about it, barely talked to the guy, and I wrote him a $5,000 check, I said, “I don’t know what this is for, but God told me that I needed to be giving you this money for your Foundation.”
Steve: Right.
Raphael: And so he looked at me kinda crazy, because I never met the guy and I give him a $5,000 check, and he was like, “Here’s my cell phone number, let’s get lunch. Contact my assistant, let’s get lunch.” Contacted him, we had lunch, and it was just like … the guy’s old, but like, he’s like the coolest guy. Like, me and him, like I’m a cool guy, but he’s like, super cool, man.
Steve: Yeah.
Raphael: We just bonded and it was just an amazing bond. And yeah, now we’re business partners in our wholesale business and our rental properties. And, yeah.
Steve: Very cool.
Raphael: Yeah, man.
Steve: So, I watched your video, about Podio, a friend of mine sent it to me-
Raphael: Okay.
Steve: … and I’m seeing you go break down these numbers, tell me about the blue letters, the purple letters, yellow letters.
Raphael: Yeah, yeah.
Steve: It’s crazy. Talk to me about that. How did you even get to a level where you’re analyzing, not just using Podio-
Raphael: Right.
Steve: … using Podio on such a high level-
Raphael: Right.
Steve: … that you’re able to do A/B testing on colors.
Raphael: Yes.
Steve: What was that journey like?
Raphael: After I got some success and I hired some consultants, I realized that consultants were like, the key to my success.
Steve: Mm-hmm (affirmative).
Raphael: And never generalize consultants. I started hiring generalized consultants and they didn’t really help as much as very specific consultants. So I started hiring consultants like, you know cold calling consultants, direct mail consultants, things like that. And so-
Steve: True specialists.
Raphael: Yeah, true specialists. So I hired a direct mail consultant that’s gonna help us with our direct mailings, specifically. And yeah, that’s pretty much how he … he said, “This is how you have to see it, I don’t know how you’re gonna work it in the CRM, but that’s how you have to see it.”
Steve: All right.
Raphael: And so, we just figured it out, locked in, and got those processes down so that immediately, we can export all the campaigns from our CRM, input into an Excel sheet and then it links automatically together to see the response rate, the Campaign One, Two, Three, you know, D.C., Atlanta, the Baltimore, Tampa. You know, different colors, what’s more effective in specific zip codes?
Steve: Yeah.
Raphael: So it drastically decreased our cost, because direct mail is very expensive. And we’re sending about, close to about 200,000 postcards on a monthly basis. So, yeah, it’s expensive, dude.
Steve: That’s great.
Raphael: Yeah. And so we’re trying to obviously, reduce that cost.
Steve: Right.
Raphael: Yeah.
Steve: You had your direct mail consultant-
Raphael: Yes.
Steve: … say, “Raphael, this is what you need it to look like.”
Raphael: Correct.
Steve: You take that information-
Raphael: Right.
Steve: … and what did you do with that information?
Raphael: Took that information and just figured out a way, hired excel consultants and say, “I need to,” because our CRM is just like an Excel that’s complicated.
Steve: Yeah.
Raphael: So I just said, “I need to merge these fields specifically, so that our campaigns, per phone number, per area code, link and so I can export it and import into the Excel sheet and just view everything on a very simplified basis.”
Steve: So I’ve monkeyed around with Podio, that’s what we use, too. Right?
Raphael: Okay. Yeah.
Steve: But you’re not the one that’s making Podio work, or are you the guy making Podio work?
Raphael: No, we have a Podio consultant, or, CRM consultant, yeah.
Steve: So you take this direct mail guy, he says this is what I need-
Raphael: Right.
Steve: … and you take that to the Podio guy, and say make this happen.
Raphael: Right. Exactly.
Steve: Right.
Raphael: Yeah.
Steve: And there’s something very powerful there, right?
Raphael: Mm-hmm (affirmative).
Steve: Because a lot of people get lost in the details.
Raphael: Right.
Steve: And you’ve got amazing, amazing details.
Raphael: Mm-hmm (affirmative).
Steve: But you’re not the one that’s making the details happen.
Raphael: Right.
Steve: You’re saying, “Hey you, this is what it needs to look like? No problem” “Hey you, go make this happen.”
Raphael: Right.
Steve: And you’re paying these guys at a high level, but you’re making it work, and you’re getting the maximum performance.
Raphael: Exactly.
Steve: So it takes, I think you said earlier, you don’t have to be the smartest.
Raphael: Mm-hmm (affirmative).
Steve: But, you have to know what you want and you have to go after it.
Raphael: Exactly.
Steve: So I think there’s something, you know, a very powerful lesson that you kinda undersold.
Raphael: Yes.
Steve: Is that you’re maximizing the specialist?
Raphael: Right.
Steve: And that’s where you gotta be … I’m in strategic coach with Dan Sullivan, and he’s all about surrounding yourself with the right people to maximize your strengths.
Raphael: Yeah.
Steve: And clearly your strength, is talking to the experts.
Raphael: Right.
Steve: And surrounding yourself with the right people.
Raphael: Yeah because I’m a doofus. I’m smart because I know where smart people are-
Steve: Right.
Raphael: … and I’m a doofus, I just listen to them, right?
Steve: Yeah, well, they say, you don’t wanna be the smartest person in the room. So.
Raphael: Right. Yes.
Steve: If that makes sense.
Raphael: I agree.
Steve: So what does your organization look like today?
Raphael: Organization is pretty simple. I try to simplify everything. We have CEO, CEOO position or Visionary Integrator and then-
Steve: Mm-hmm (affirmative). And do traction also.
Raphael: Yeah, traction, we use a book called ‘Scaling Up,’ it’s phenomenal, as well. Scaling Up has been a great help for specifically for building our business. You know, CFO, we have Director of Acquisitions that manages the acquisitions team. We have an acquisitions team that obviously answers calls live from home owners, from all the direct mail cold call, you know, all the marketing that we do online, advertising, things like that.
Raphael: They take the calls live, they secure the contracts, they secure them via ‘DocuSign.’ Or they set appointments for our outside field reps, so the people that are in the D.C. market, in the Atlanta market, in the Baltimore market, Tampa market, set appointments for them to go secure investment properties. We also list a lot of properties as well.
Steve: Mm-hmm (affirmative).
Raphael: This year, we’re probably close to about 45 million in transactions, on the agent side, which is low. But, we’re trying to scale that up closer to 70 to 100 million.
Steve: Mm-hmm (affirmative).
Raphael: But in all these markets. So, we have the agent reps that are on the field, in those markets. We have the acquisitions specialists that set the appointments for them, and then obviously after the contract, we give it to our sales people, the sales people sell the property to investors, developer
Raphael: … give it to our salespeople. The salespeople sell the property to investors, developers, whoever, and then transaction coordinators that deal with the transaction side ensure that the property gets a closing, deal with showings, deal with the tenants, things of that nature. Then virtual assistants, cold callers, things like that.
Steve: So you said you were … You mentioned multiple markets.
Raphael: Right.
Steve: So how many markets are you in?
Raphael: Four.
Steve: Four?
Raphael: Correct.
Steve: Okay. Then you got acquisition, obviously, got in every market.
Raphael: Correct. Well, actually, some acquisition guys are in multiple markets.
Steve: Okay.
Raphael: So yeah.
Steve: So how many acquisition guys do you have in total?
Raphael: Three. Three guys. We’re hiring our fourth guy right now.
Steve: Oh really? You’re doing all that with only three guys?
Raphael: Yeah, man. These guys …
Steve: Is he a slave? What’s his-
Raphael: Dude, so the biggest thing for us is how can we refine our leads, right?
Steve: Yeah.
Raphael: So we’re always looking at ways that we can do more production from less work. So how can we maximize productivity from each individual person? That’s one of the big things that I’m learning from, for example, my business partner who, at his development company, everyone there’s millionaires, right? Everyone that works for him is a millionaire, almost everybody.
Raphael: So he’s like … He’s always telling me, “How can you get more production out of your people with less effort so that they make a lot more money?” So we’re consistently doing that. He said, “Hey, dude, our business is not successful if the people currently in your business right now don’t become millionaires.”
Steve: Yeah.
Raphael: We need to make sure they become millionaires in our company. So he’s been really helping me refine that. So, for example, I mean, each guy last week … One guy got six contracts last week. One guy got four. The other guy got two. Right? So that’s 12 contracts this week. It was 10 contracts.
Raphael: So we’re really trying to maximize that efficiency of the leads, so only giving them quality stuff. So, yeah.
Steve: So there’s something very powerful there as well. So I love Think and Grow Rich.
Raphael: Right.
Steve: Right? One of the things he says in there, Andrew Carnegie, is … A reporter asks him, he’s like, “You have 18 millionaires working for you. How is that even possible?”
Raphael: Right.
Steve: “Why would they work for you?”
Steve: What he says is, “Well, they weren’t millionaires when they started.”
Raphael: Yeah.
Steve: “I made them the millionaires.”
Raphael: Exactly.
Steve: So if you can make them millionaires, they’re gonna stay loyal to you. Right?
Raphael: I agree.
Steve: So we started, this whole podcast actually all started was I made a proclamation, like, “I wanna create 100 millionaires around me.” Right?
Raphael: Yeah.
Steve: That’s how … You see I tagged this 100 millionaires and real estate disruptors. So that’s how this whole movement started.
Raphael: Yeah. I love it.
Steve: So that’s awesome.
Raphael: Yeah.
Steve: Okay. So you’ve got three acquisitions guys. How many disposition guys?
Raphael: Only one, actually. So we only need one, because we’ve systemized the place where it’s just you send an email, deal sells, easy-peasy.
Steve: Oh, nice.
Raphael: So he manages just that sale, and then we have two transaction coordinators that just manage the transactions. We’re working on about 35 … 35, 36 active deals right now.
Steve: Oh, nice.
Raphael: So, yeah, it’s pretty efficient, man. We try and keep it super lean. I read a lot about lean, lean, how to keep your business lean and lean. Obviously, Ed thinks the exact same way, so …
Steve: Cool, cool.
Raphael: Yeah.
Steve: How many cold callers do you have?
Raphael: We have five cold callers right now. Yep, yep. So we wanna scale that up, obviously, to get 10, so …
Steve: Okay. Then I watched your live video. I think you got everyone in the building.
Raphael: Correct, yeah. Everyone’s in Tampa.
Steve: Okay. So you don’t have any overseas? You don’t have any …
Raphael: Cold callers?
Steve: Yeah.
Raphael: No. All cold callers are overseas. Yeah, everything’s outsourced.
Steve: Cold callers are overseas?
Raphael: Correct, yeah.
Steve: Okay. So where are they? Are they Mexico, South America, Philippines?
Raphael: So, yeah, yeah, so Philippines, mostly. Most of the people … Yeah, Philippines, and I think we just hired one person from Mexico. So, yeah, mostly Philippines, though.
Steve: Okay.
Raphael: Yeah.
Steve: So then the people that I saw calling on your video …
Raphael: Acquisitions people.
Steve: … was the acquisition guys?
Raphael: Acquisitions, correct.
Steve: Okay.
Raphael: Yep.
Steve: So these guys are talking to sellers directly?
Raphael: Yes, directly. Correct.
Steve: All right. Then they’re doing DocuSign, sometimes site unseen?
Raphael: Most of the time, site unseen.
Steve: Most of the time site unseen?
Raphael: Most of the time, yeah. Most of the time.
Steve: That’s nuts.
Raphael: Yeah.
Steve: So how does that work?
Raphael: It works. It works.
Steve: It works great.
Raphael: Yeah, it works great. We beat out a lot of the competition by not having to actually meet with homeowners. Typically, a lot of times, because we’re already under contract, if the property does need significant renovation, we’re pretty conservative with our offers over the phone.
Raphael: But if the property for some reason has foundational issues, whatever, then at that point, it gives us a stronger hold to renegotiate, which we do really effectively as well, after we already have the contract.
Steve: Yeah.
Raphael: So it works pretty well.
Steve: So then what are you offering over the phone, like 60%?
Raphael: Typically what we do is just look at what investors are buying for. So we completely assume that the property needs a full-gut renovation. So we look at, really … We make wholesaling as simplified as possible. What are investors paying? That’s the price point that they want it at.
Steve: Yep.
Raphael: That’s what they need it at. So we use the MLS to see exactly what the investors are paying for to then resell it to them at … around that price.
Steve: Okay.
Raphael: Yeah.
Steve: All right.
Raphael: So the investors are buying for around 120, we’re offering around 110, 90 to 110, on a range that way.
Steve: Okay.
Raphael: Yep.
Steve: That makes sense. That’s funny. I’ve never heard of anyone do it that way, so that’s awesome.
Raphael: Yeah, man.
Steve: Okay. Then, obviously, we’re talking about Podio. That’s your CRM.
Raphael: Correct. Yep.
Steve: Do you do anything on top of that Podio or just …
Raphael: Oh, man. We were … I spent like 20 grand in Salesforce, and then it was just too much.
Steve: Just pissed away.
Raphael: Yeah, yeah. So we just refined a lot of … dialing systems within Podio, things like that …
Steve: Yeah.
Raphael: … to really refine the system.
Steve: I’ve seen a lot of different CRMs. I messed around with Infusionsoft.
Raphael: Yep.
Steve: I’ve seen Salesforce, and then we’re using Podio for the wholesale flip side. Podio’s amazing.
Raphael: I love it.
Steve: It’s totally undersold.
Raphael: Yeah. Yeah, it is. It is.
Steve: I mean, it’s way better than Infusionsoft.
Raphael: Yeah, it’s super duplicatable. It’s super manipulatable.
Steve: Yeah.
Raphael: It’s phenomenal. I love it.
Steve: Okay. So [Max the menace 00:25:34] has a question. “What was the biggest step you took when you decided to scale up?”
Raphael: Biggest step I took?
Steve: Mm-hmm (affirmative).
Raphael: Hmm. That’s a good question. I think the biggest step I took was ramping up marketing. I think that was the biggest step we took, is just ramping up marketing, doing more direct mail, doing more online advertisement, of risking more investment, essentially.
Steve: Yeah.
Raphael: Yeah, I think that was the biggest risk.
Steve: Yeah.
Raphael: And also letting go, letting more go and finding, really, the right people, putting them in the right seats with the right processes. So …
Steve: So how do you determine that? How do you determine that they’re the right people for the right seats? ‘Cause that’s Jim Collins, right?
Raphael: Yeah.
Steve: Good to great. You gotta make sure you’re putting the right people the right place. But how do you make sure you’re putting the right people in the right place?
Raphael: You know, that’s a really hard thing to really lock in, because every single position is different.
Steve: Yeah.
Raphael: So you really have to have a full … In my understanding, people try to scale up way too quickly. I was doing my entire business for two years before I started hiring anybody. So I really mastered all aspects of the business.
Steve: So you were the guy, beginning to end.
Raphael: I was … Beginning to end. Marketing, acquisitions, sales, transaction coordination, closing.
Steve: Right.
Raphael: So I was dealing with everything. And I feel like I really mastered that position myself to understand exactly the key, what kind of key people are for each individual roles, and then finding the people that fit that specifically.
Steve: Yeah.
Raphael: But, also, cultural fit is one of the biggest things. You need to make sure that people, when they walk in, they’re just an easy cultural fit, they fit your culture. I think we have a really awesome culture …
Steve: Yeah.
Raphael: … at our Tampa headquarters. We have a 5,000 square foot office with cool colors and pool tables and TVs on the wall like this.
Steve: Right.
Raphael: It’s standing desk. So it’s really … Nerf guns. It’s really cool, man. So the culture’s really important.
Steve: So definitely a young vibe.
Raphael: Young vibe, but we do have older individuals that work with us …
Steve: Yeah.
Raphael: … people that are almost, not twice my age, but close.
Steve: Right.
Raphael: Yeah.
Steve: Okay. And then some of these people are asking, “What is your top lead source?”
Raphael: Of course.
Steve: Yeah.
Raphael: Top lead source for us, our biggest investment is direct mail. But I understand that direct mail isn’t effective in every single market that you go into. For example, I know Phoenix, direct mail is not that effective.
Steve: It’s tough.
Raphael: Right. It’s tough. It’s very tough. So I understand that.
Steve: Yeah.
Raphael: But direct mail, for us, is the most effective form of marketing.
Steve: Okay. Yeah, I’ve heard the same things. I had a guy I was talking to in Vegas. I said, “What do you mean no direct mail?” I was like, “It doesn’t work here.”
Steve: He was like, “No, that’s impossible. You’re just doing it wrong.”
Raphael: Right. Yeah, yeah.
Steve: Okay. So Michael [Mariat 00:28:05] wants to know, “What is your marketing budget per month?”
Raphael: Close to around, right now, about $65,000 on a monthly basis.
Steve: Okay.
Raphael: Yeah.
Steve: So that’s not actually too crazy, for the kind of volume you guys are doing.
Raphael: Yeah.
Steve: That’s not too bad. Then Brandon [Ose 00:28:19] wants to know, “How much do you spend” … We’re talking about how you spend on marketing. “How do you pay your acquisitions and disposition guys?”
Raphael: That’s a good question. Salary and commission-based.
Steve: Okay.
Raphael: So salary-based, between 30 to $40,000. Commission, between 5 to 10%.
Steve: Okay.
Raphael: Yeah.
Steve: Of the fee.
Raphael: Of the fee, correct. Yep.
Steve: That’s on, for both sides?
Raphael: That is for acquisitions. Dispositions gets between a 30 to $40,000 salary, similar, and then between 3 to 5% of the wholesale fee.
Steve: Okay.
Raphael: Yeah.
Steve: Okay. Then [Maxico 00:28:49] asks again, “Do you like postcards, yellow letter, or both?”
Raphael: We do postcards, a lot of postcards.
Steve: A lot of postcards?
Raphael: Yeah, a lot of postcards.
Steve: So if I end up on your radar, you’re like, “I’m gonna mail Steve”-
Raphael: Yeah.
Steve: How many postcards am I getting from you?
Raphael: You’re getting one every single month, most likely.
Steve: Yeah?
Raphael: Yeah, at least.
Steve: For how long?
Raphael: For a long time. Yeah. Until you call and say, “Take me off your postcard.”
Steve: Yeah.
Raphael: “Take me off your list.”
Steve: Okay.
Raphael: So, yeah, we stay in your mind consistently. And we’ve seen a lot of success from that.
Steve: Okay.
Raphael: Yeah.
Steve: And then, do you alternate? Do you say, “This month, we’re sending this piece. This month, we’re sending this piece”?
Raphael: Yes.
Steve: Right now, we’ve got this one will say “We’re cash buyers.” This month, is “We have buyers in your area.”
Raphael: Correct. Yes, we do. We do separate, yeah.
Steve: Different messages.
Raphael: Exactly. Yep.
Steve: Okay.
Raphael: Exactly.
Steve: Then Vic wants to know, “Which list do you guys focus on?”
Raphael: Man, you know, we are not specialized in this. So my buddies Carlos and Sal, they really specialize. The fact is that we do a lot of listing. So we tried to not specialize just in the motivated sellers realm. We also try to target everybody, because we can, we can list properties, which we have a very profitable real estate agent side. And obviously, the wholesale side’s very profitable as well.
Steve: Yeah.
Raphael: So we don’t do that. What we do, actually, is market by generalized zip codes. So the way that we … We’ve hired a data scientist to help us. Well, one, I made a lot of mistakes with expansion, because I went into the wrong markets and just completely failed and lost money.
Steve: Well, I thought I heard you were in eight markets-
Raphael: No.
Steve: … for a little bit.
Raphael: No, no, dude. I went into the wrong markets-
Steve: Yeah.
Raphael: … and just completely failed, right? So I said, “How do I get this right?”
Raphael: And my business partner, Ed, he’s like, “It’s the same way that I analyze my multifamily development project, whether I’m gonna spend 300 million to develop a project in Arizona. Look at the population. Look at the data. Look at the age. Look at the median income. Look at all these things. And find markets that we’re in successfully and duplicate them. Find other markets that are like that.”
Steve: Yeah.
Raphael: So this guy’s brilliant, right?
Steve: Right.
Raphael: So we found a data scientist that we paid a good amount of money to, to find duplicatable markets similar to our markets. And we said, “Okay, now we have a framework. Now we have this market, that market, this market, that market. Now we know that these marketing techniques are going to work.”
Steve: Right.
Raphael: So we market by geographic area. That was where the question was.
Steve: Okay.
Raphael: Geographic area. So not necessarily list, like absentee this. We market equity, non-equity, absentee, owner-occupied, everybody. You know what I mean?
Steve: So it’s just a turnover area. This area has a lot of turnover. We’re marketing there.
Raphael: Exactly.
Steve: Okay.
Raphael: Yeah, because you’re gonna get deals regardless.
Steve: Yeah.
Raphael: That’s how we see it, at least. We really target … The biggest thing, I think, for us, is that we target by year built of properties. A lot of times, you can market an entire zip code, but you’re marketing to 2009-built homes. So we try to target between 1970 and before and 1975 and before.
Steve: Okay.
Raphael: So, yeah.
Steve: Cool. Let’s see. Elevate wants to know if you’re the only one cold calling your business, when do you start hiring cold caller to remove yourself from that?
Raphael: If you’re the only one cold calling?
Steve: Yeah.
Raphael: Immediately, because they’re very inexpensive.
Steve: Yeah.
Raphael: And you can outsource that immediately. But if you don’t have a lot of funds, what I would do is go call five of your buddies and be like, “Dude, let’s make a bunch of money together, and let’s crush it. And let’s all cold call together.”
Raphael: That’s what I did. I was cold calling with this guy right here, and me and him were in my mother’s basement when I was 20 years old. I’m like, “Dude, this real estate thing’s gonna be awesome.”
Steve: Right.
Raphael: Like, “Come to my mom’s basement.” He’s seen me in my mom’s basement.
Steve: This is Javier behind the camera right here.
Raphael: Yeah.
Steve: Then we got … I think Alex [Sines 00:32:17] was telling me the same thing.
Raphael: Yeah.
Steve: He just got his little brother in.
Raphael: Yeah, dude.
Steve: Alex is already young.
Raphael: Yeah.
Steve: His brother’s in a better position than Alex is in.
Raphael: He is, dude. Like man. Geez.
Steve: Alright. And then Jerry wants to know, “Are there any specialists or consultants you would recommend for cold calling, direct mail, and online leads?” I don’t know if you can answer that question specifically, but-
Raphael: For what specifically? I’m sorry.
Steve: Are there any specialists or consultants you would personally recommend?
Raphael: Ah, man. For what?
Steve: Cold calling, direct mail, or online lead gen.
Raphael: Direct mail, we used a guy named Craig Simpson. He was pretty good. With Simpson Direct. I tried to call him recently. That was a while ago. I think he’s, I don’t know if he’s, I think he might’ve retired, ’cause his number wasn’t working. But that’s who we used. We used him about two years ago, which helped us with the direct mail.
Steve: Okay. Awesome.
Raphael: But yeah.
Steve: And then one of the things you said I thought was interesting is that you list also, right?
Raphael: Correct.
Steve: And that’s kinda what I do. So I list, I buy, I wholesale, I flip. Whatever you need, I’ve got the solution.
Raphael: Yeah.
Steve: So you’ve got your acquisition guys. If they’re, if you’re also listing, then are all your acquisition guys licensed?
Raphael: No. They’re not listing properties.
Steve: Okay.
Raphael: The people on the markets, the people in the markets, they’re the ones that are licensed, listing the properties. They’re alleyooping.
Steve: Oh, ’cause the acquisition guys are on the phone.
Raphael: They’re alleyooping them.
Steve: Yeah.
Raphael: Exactly.
Steve: So they’re talking to you. They say, “Hey Raphael, we’ll offer you 150.” He’s like, “Well Steve, I need 200.” It’s like, “Hey, no problem. I got a guy. He’s gonna follow up with you.”
Raphael: Exactly. Hey, no worries. We have a sister real estate team. We’re crushing it. We do the whole nine, the drones, the this. We got a transaction coordination team. We do the best photography. Let’s do this. Let me set up an appointment, just show you the comps. It’s gonna take 10 minutes of your day.
Steve: Right.
Raphael: Let me just meet with you. Meet with our guy. Her name is this. His name is that. In this market, in that market. He’s the best. I guarantee you. You know, it’s 10 minutes of your time. What’s it gonna waste?
Steve: Yeah.
Raphael: And so we meet with them, and we list a lot of properties. Actually, Javier leads the D.C. market. And I think just last month, you closed like 3.5 million, something like that, around three million in listings. So yeah, listings is a great opportunity that I think a lot of people don’t capitalize on.
Steve: That’s just an alleyoop dunk.
Raphael: Alleyoop dunk. Exactly.
Steve: Yeah.
Raphael: Man, he’s been getting a lot of alleyoops, man. He’s getting those.
Steve: Very nice.
Raphael: Yeah.
Steve: Got Blake Griffin over there.
Raphael: Yeah, man. Yeah.
Steve: Alright. So what skip tracing program are you using, or do you outsource that to a VA?
Raphael: I outsource that. Carlos and Sal. Reach out to them.
Steve: Yeah.
Raphael: I use them.
Steve: Need To Skip?
Raphael: Yeah. Yeah. They-
Steve: Needtoskip.com
Raphael: … better give me better pricing for that shout out too.
Steve: Yeah. That was a big shout out.
Raphael: Yeah. Big should out.
Steve: Alright. Okay. So what would you consider to be some of the critical components to your success?
Raphael: My relationship with God. I keep bringing it up, but honestly, I feel like I’m a fool and I don’t have any real knowledge of … You know, I have no ridiculous knowledge of … I don’t really have a formalized education. And formalized education is obviously, you know, it’s not as important as specialized education.
Steve: Mm-hmm (affirmative).
Raphael: I have a lot of specialized education, but not formalized education. And you know, I just feel like my relationship with God was, He was the one directing everything in my life to just kinda put me in the right paths consistently.
Steve: Mm-hmm (affirmative).
Raphael: And yeah man, it’s just been, I think that’s been the reason for my success, honestly. I really think there’s nothing else that would benefit me more than that.
Steve: Okay.
Raphael: But also, obviously, my hustle and drive, you know. But it was the situation that I saw my mother and my brother in consistently that drove me to take them out of that situation.
Steve: Yeah.
Raphael: And so, for anybody that’s out there struggling and dealing with all that stuff, either their parents, their situation financial, I would say keep the faith. I had a lot of faith. I had a lot of faith. And I never always believed in God. But you know, it was when I was like down, lost, and out, that I was like, “Man, I need to … Maybe this God guy is like … Maybe He can help me.”
Steve: Yeah.
Raphael: “‘Cause I can’t get out of this myself.” And so, you know, to anybody out there that’s thinking that, faith goes a long way.
Steve: Yeah.
Raphael: You know? So-
Steve: Okay.
Raphael: Yeah.
Steve: So another question that I have that’s kind of related to this. So tell us about some of your habits. You know-
Raphael: Habits.
Steve: Morning habits-
Raphael: Yeah.
Steve: … or general habits. [crosstalk 00:36:22].
Raphael: Man, I’ll be honest. I switch them up. I switch them up a lot. But there is a habit that I stay consistent with, which is every morning, I do something, what’s called abiding. And that’s actually what my business partner taught me, right? He predicted the 2007 market crash because he does something called abiding, right? He, you know, pretty much what happened, in 2007, he owned close to 100 billion dollars worth of real estate. And then, he’s like, “The market’s gonna crash.” And he told his entire board, “Hey, the market’s gonna crash. We need to sell all our assets.” And they’re like, “You’re crazy. The market’s doing great. We’re making a bunch of money.”
Steve: Mm-hmm (affirmative).
Raphael: And he’s like, “Nope. We’re gonna sell all our assets.” Sold all their assets.
Steve: He cashed out.
Raphael: Cashed out. Market crashed.
Steve: Smart man. Smart man.
Raphael: Oh brilliant. The most brilliant man I know in my life, I swear. But market crashed. Cashed out. And they’re like, “What do we do now?” And he’s like, “We buy.”
Steve: Right.
Raphael: And so he bought land, land, land. He went from a billion dollars worth of assets to over five billion dollars worth of assets.
Steve: Yeah.
Raphael: And guess what he’s doing right now? Cashing out.
Steve: Yeah.
Raphael: You know what I mean? He came back on his private jet, when I met with … I met with him like a couple weeks ago, and he came back on his private jet. He owns two private jets. And the guy’s like, “Oh yeah, I just sold an asset in Arizona, $250 million. And then this asset over here in Texas.” Just getting rid of everything to prepare again.
Raphael: And so one key … I don’t know how we got on this. But one key thing during the market recession is what he taught me, was we’re putting together a large fund right now, is banks give away land. Right?
Steve: Oh yeah.
Raphael: They give it away. When the market is in recession. Assets, properties, different story. But banks give away land.
Steve: Oh, it’s true. I experienced it. I was an agent during that horrible recession.
Raphael: And guess who’s not buying land? Nobody.
Steve: Right.
Raphael: Except people like Ed. Right?
Steve: Right. Yeah.
Raphael: Ed’s like, “Oh yeah. I just cashed out on a billion dollars. Let me just buy a couple parcels of land. And so, it was one of the most brilliant decisions that he made. And the only reason, this is the reason I said abide, what are some of my habits that I do every single morning. Abiding is listening to God. Because for him, that’s how he got it, right, his intuition, God, whatever you guys wanna call it, that’s fine. But he got that intuition, you know? And he got that intuition to sell his assets, right? And so consistently, I’m looking to get that same intuition, from God, honestly.
Raphael: And so every morning, I pray, I meditate, I read my bible, I journal. And I do that every morning. But I used to wake up 4:30 in the morning. I switch my routine up, right? I like switching my things up. I used to wake up at 4:30 in the morning, go to sleep 11 o’clock, 10:30, around there.
Steve: Yeah.
Raphael: Wake up every morning 4:30, hit the gym. But now I switched it up. Now I’m going to sleep super late, and waking up a little bit later in the day, and then working on the evening time. So I’ve been switching it up. But regardless, every single morning, I’m doing what my business partner and me do, which is abide.
Steve: Okay. It’s fascinating. I’ve never heard it put in that way, so it’s very interesting.
Raphael: Yeah. That was the class that actually I went to and met him in. So it was about learning how to abide.
Steve: Okay.
Raphael: Yeah.
Steve: And then, going back to your partner.
Raphael: Mm-hmm (affirmative).
Steve: So you were talking about some wholesalers-
Raphael: Mm-hmm (affirmative).
Steve: … when we were texting before-
Raphael: Right.
Steve: … aren’t thinking big enough.
Raphael: They’re not.
Steve: So let’s talk about that.
Raphael: Yeah.
Steve: How can they think bigger. What should they be thinking about?
Raphael: They should be thinking that we have a very, our businesses are not that sellable, right?
Steve: No.
Raphael: And I know that because my business partner owns 350 businesses. He’s a private equity guy, right? And so private equity companies. And he’s like, “Hey man, these businesses aren’t that sellable.”
Steve: No.
Raphael: But they’re valuable at the same time, right? They’re valuable why? Because we’re getting distressed assets at a ridiculously reduced price.
Steve: Mm-hmm (affirmative)
Raphael: And so what wholesalers aren’t doing is they’re not thinking big enough. A lot of them are staying really tight in their market, which is great, right?
Steve: Mm-hmm (affirmative).
Raphael: And they’re just-
Raphael: … really tight in their market, which is great.
Steve: Mm-hmm (affirmative).
Raphael: And they’re just staying to their market. There’s so many markets out there, and there’s so many markets that we can literally duplicate our business in, nationwide in, and we can be buying and purchasing assets nationwide in. The biggest thing is that J.P. Morgan just opened up a hard money lending division.
Steve: I didn’t hear that.
Raphael: Yeah, they just did.
Steve: Interesting.
Raphael: Actually, they’re funding a project that we’re … We’re doing a luxury Miami development in Miami. We’re buying it for like $1.9 million. We’re going to develop it, sell it for 4 million. They’re lending on it with ridiculously low rates. J.P. Morgan just bought this company. Now they’re hard money. These institutional guys, they’re trying to get into our realm, you know what I mean?
Steve: Yeah.
Raphael: I was sitting next to the ex-CEO of Blackstone. They owned 50 thousand properties when I was at Mar-a-Lago because my mentor invited me. I’m just sitting next to the ex-CEO of Blackstone. The guys are single family assets, but I was telling him about my business. He was like, “I’ve never heard … This is fascinating. You don’t own the asset, but you make cash on these assets. Brilliant!”
Raphael: These guys think it’s absolutely brilliant because there’s no risk. Marketing is our only risk, so it’s not a risky business. I think our guys, honestly, aren’t thinking big enough. People like OfferPad, Opendoor, who are with these institutions are like, “We need to get in this business.”
Steve: Right.
Raphael: They’re trying to get into our business, and they’re doing it. They’re already getting in our business, and guess what? They’re trying to go nationwide, as well, in the specific markets that they know to be fruitful.
Steve: Well, what do you mean they’re getting into it? Obviously, I’m aware of Opendoor and OfferPad, but when you say they’re trying to get into the wholesale business, so what does that mean exactly?
Raphael: Well, obviously not in the assignments, right? They’re taking down properties, they’re doing whole tailing, essentially, so fix and flipping. But still, getting into our niche, which is like the fixing and flipping, the beauty of that. But I think that maybe they don’t know as much about wholesaling than we do because they’re taking down these assets. When the market corrects, what’s going to happen to them? They’re holding the bag.
Steve: Yeah.
Raphael: They’re holding the bag.
Steve: Well, I know that they’re slowing down a little bit of what they’re buying.
Raphael: Yeah, good. I know. That’s a smart move.
Steve: No, it’s good for us, too.
Raphael: Yeah.
Steve: We can compete now.
Raphael: Yeah, exactly. Exactly right.
Steve: So Jared wants to know, what is your 10-year vision?
Raphael: Is that Jared Vidales?
Steve: No, no, no
Raphael: Okay.
Steve: It’s Jared Morris.
Raphael: Good. Jared’s not allowed to ask me any questions. I’m just kidding. Jared’s a good friend of mine. What’s my 10-year vision?
Steve: Yeah.
Raphael: A three-year vision for the wholesale company, grow and scale into a hundred million dollar company, and then obviously outsource and move onto the next thing. We wanna buy … Our five year vision with my business partner, we wanna own over 5,000 units in the next five years, so he’s got a bunch of money, and we’re buying a lot of assets right now.
Steve: So he’s cashing out the multifamily only, and then buying? He’s buying single family? What’s –
Raphael: He’s cashing out a lot of his commercial assets, a lot of the commercial assets, but some of his multifamily projects as well.
Steve: Well, and multifamily makes a lot of sense because man what these guys are asking for and getting is unbelievable.
Raphael: Especially in Arizona.
Steve: Yeah, I mean we’re talking [crosstalk 00:43:11] fore caps out here. It doesn’t make any sense.
Raphael: Yeah.
Steve: Okay. So, Ben wants to know how do you decide which market to target?
Raphael: That’s a great question so we hired the data scientist to help us determine that. One of the biggest things that we determine is average ARP, right? We want to be between 260 to 300. So, those are hot markets but also the amounts of flips and the amount of population. So, per zip code. So, we look at that on a metropolitan scale, we look at that then on a county scale and then on a specific zip code scale to understand this is the area and zip code that we’re going to start targeting. So, we’re looking for a lot of flips, gross ROI’s; because, this is all public information, you can see how much people buy it for, sell it for within a 12 year period. So, that’s what we hired this company to pull all this information, population, and stuff like that together for.
Raphael: So, that’s how we determine it. We’re looking for ROI’s, gross ROI’s of 80 and plus and flips per population of pretty much, if there’s 40 flips, we want to see a 40,000 population for that zip code. So, I don’t know what the math on that is.
Steve: Okay.
Raphael: We have a formula for that.
Steve: Then, what percentage of your business is from cold calling versus direct mail?
Raphael: Direct mail is the biggest percentage but cold calling is probably about 25%.
Steve: 25% okay. Marcus wants to know when do you expect the market to correct?
Raphael: My business partner thinks the market is going to correct within the next year. I don’t know, I just listen to him. I don’t know, right. But I listen to him.
Steve: That’s a smart move. He’s proven himself.
Raphael: Dude, he has, so I listen to him and he’s like friends with Ray Dalio who’s a phenomenal financial you know-
Steve: Yeah.
Raphael: Evaluator guy. So, he’s good friends with him and so yeah. Within the next year to two years.
Steve: Okay. What would you consider to be your superpower?
Raphael: That’s a great question. I think I’m a millennial leader, I think I’m really good at leadership. I think my leadership with millennials specifically is very strong. That a lot of millennials specifically, and even just millennials, but people specifically, want to work with me and stay loyal with me, because I am that person. I’m somebody that takes loyalty so strong;y, you know what I mean. So, I think that’s my superpower. And, also, being able to find people and experts to guide me because I’m not the smartest guy. So, I have a superpower of that as well.
Steve: That’s what I was going to say, given our conversation so far, that’s definitely the superpower.
Raphael: Yeah.
Steve: Leveraging the experts.
Raphael: Leveraging.
Steve: That’s beautiful.
Raphael: I love it.
Steve: So, going back to being the leader for the millennials, what would you say, how did that come to pass, why do you feel that’s the case?
Raphael: Why do I feel like I’m a leader for millennials?
Steve: Yeah.
Raphael: Just because, the kind of person I am. I think that God just put that in my heart, right. To lead the millennial generation to obviously, not only success in real estate, success in their personal life. Success most importantly for me, in their spiritual life. So, I think that’s just what God built me for. Some things I just know, I was born with this and I’m just like, this is what God blessed me with. This is one of my gifts and my biggest thing is figuring out, what is your gift, what is your gift and understanding and trying to develop and plant seeds in people to develop their own gifts that God built for them.
Steve: Yeah, that’s cool. I’m in multiple masterminds, because I’m a real estate broker and I’m totally not talking about a wholesale flip but I’m a real estate broker, that’s where most of my business is. I’m in these masterminds with all of these other top agents and they’re always complaining about millennials, constantly bad mouthing millennials.
Raphael: Yeah.
Steve: And, I tell them, I’m the old man in my office. Everyone in my office is a millennial and I’m telling you, all your complaints about millennials are wrong.
Raphael: Yeah.
Steve: They’ve got crazy work ethic.
Raphael: Yeah.
Steve: They listen, they learn, they grow so if you feel like they’re not great at whatever, it might not be them.
Raphael: Yeah, I agree. Yeah, they might not just know how to lead them properly. I agree 100%.
Steve: Okay, so what lesson would you want to teach today’s young real estate entrepreneurs?
Raphael: Leadership principles. Because, a lot of people can make money but they are not going to use it for the right reasons. So, leadership principles, absolutely.
Steve: Okay.
Raphael: The last thing I want to see, is a young guy make a bunch of money and blow it, lose it all and also not use it for influence of bettering other peoples lives.
Steve: Yeah.
Raphael: That’s my biggest thing, I wish more people learn about leadership.
Steve: John Maxwell says that the most valuable skill you can have.
Raphael: I agree.
Steve: I believe it, I follow it as best I can. Do you have anything you would recommend as far as books, training courses for leadership.
Raphael: Yeah, John Maxwell’s phenomenal. So, every Wednesday, we have a book club in our company. I got them the 21 Irrefutable Laws of Leadership book, it’s a workbook. So-
Steve: A workbook version
Raphael: Exactly.
Steve: Nice.
Raphael: So, we sit down 45 minutes every single Wednesday and I give everybody an opportunity to present that day; so I want to see what their leadership capacity is for leading the entire group, teaching them about that chapter. Man, it’s transformed our business culture, our relationship, just amazing. I love that workbook.
Steve: And, you’re leading by example.
Raphael: Yes, I think so.
Steve: Right, and what is the greatest lesson that you’ve learned?
Raphael: That’s so broad, man. I don’t know.
Steve: It doesn’t have to be just business.
Raphael: Yeah, the greatest lesson I’ve learned, man. You know what it is, honestly, it’s a good thing but not to trust people so quickly. You do what you are, so I’m a super, honest, trustworthy, loyal guy and I would never wrong people because I’ve been wronged so much of my life. I still haven’t even fully learned it, like I still trust people blindly sometimes. I always look at the best in people, right.
Steve: Right,
Raphael: Always look at the best in people and yeah man, I think that’s a flaw of mine because I always think that people always have the best intentions with our relationship and I truly believe that people have the best intentions but a lot of people are just unhealthy and sick and they don’t fully realize that some of the decisions that they just made completely either destroyed a relationship, destroyed a business partnership, destroyed whatever it is. So, I think my biggest lesson is learning how to evaluate people properly and then putting them in the right places in your life.
Raphael: My friends are less than five, you know. But putting the right people in the right places in life. I think that’s where I’ve been very successful and I think that’s where Ed, for example, my business partner, has been extremely successful. He sees people and it’s just like immediately he just knows, oh this person has this and that, this persons good for this person in my life, this part of my life, or this part. Yeah.
Steve: That is an incredible skill, because we talk about when you grow and you scale, your greatest challenge will always be people.
Raphael: Yeah.
Steve: Right, it’s not technology.
Raphael: Yeah.
Steve: It’s not this outside threat.
Raphael: Yeah.
Steve: It’s not time.
Raphael: Yeah.
Steve: It’s the people and if you have the right people the time takes care of itself, the technology takes care of itself all those other problems … if you have better people, you have a better army than they do, you’re going to win every time.
Raphael: I agree.
Steve: So, I mean, I think that’s a great point that you said, you know, your partner, if he can spot the right people and you can spot the right people, you have an incredibly unfair advantage. You’re like Lebron.
Raphael: I wish, he’s Lebron but man, it’s just, yeah, he’s been teaching me a lot about just like, man I don’t know what it is. He sees people, he just like instantly knows, this person has this and it’s just amazing. Honestly, I work for him, he just puts me in the right direction, you know what I mean. I love our relationship, me and my business partner, it’s very cool.
Steve: Yeah. Max has another question, at this stage of your business wheat percent of your business is wholesaling, what percent is flipping, and what percent if rental or development?
Raphael: I don’t do a lot of flipping, for example, this deal, we’re buying it from a baseball player who just go a divorce from his wife. It fell in my lap, for the grace of God, this deal fell in my lap. We hopefully, will net between, 700 to one million dollars on this deal. That’s like one of the only developments that I’m really doing. I’m renovating a lot of properties for rental purposes not ridiculous development, right now.
Raphael: I told Ed, we were looking at a 200 unit to build in Georgia and just right now is not the right time for that. Not the right time to build, you know land will be cheap in the next two years and we’re preparing a fund right now to buy a lot of land. So, percentage of business wholesale, I would say probably 65%, dude I don’t even know, maybe 50%; 20% on the agent side and 30% on the rentals.
Steve: Cool. How has failure shaped your life?
Raphael: I mean, failing forward, man, it’s obviously, that’s such a … you know. It’s the most important thing, failing forward. I’ve failed so many times, I used to go on appointments with sellers, it took me nine months to get my first deal. I used to go on appointments with sellers, straight out of the hood, right and I’m like, let me buy your house. You know, just looking stupid; looking stupid and they’re like get the hell out of my house. I just didn’t know what I was doing so I failed a lot. To refine myself consistently, every failure is just like a chip away at refining yourself to that masterpiece. Obviously, I failed ridiculously. So, failure is super important.
Steve: And you know what’s funny, I think you’re the eighth guest for this show and every single one has embraced failure.
Raphael: Absolutely, right.
Steve: If you’re not embracing failure, if you’re not failing, you’re not moving forward, you’re stuck.
Raphael: Yeah.
Steve: So, that’s very cool.
Raphael: Yeah.
Steve: What book have you read that everybody should read?
Raphael: I’m assuming business book? I’m going to say the Bible is the book that everyone should read. That’s for me. Business book, I think Traction and Scaling Up, were some of the most implementable business books that I really learned how to scale my business. It’s very, very practical for really scaling a business and it talks about organizational charts and how to build process maps. I hired a gentleman named Gary Harper, he’s a great consultant by the way, he’s a great consultant, Gary Harper, Sharper Business Solutions, great, amazing guy. He was a Six Sigma coach and he taught me how to do Six Sigma processing. How to process map to a tee and that helped ridiculously. Scaling Up, Traction has been huge.
Steve: You know it’s funny, I’ve never heard of this guy before and this week that’s the second time his names come up.
Raphael: Really.
Steve: So, I guess I gotta reach out to him.
Raphael: Got to. I love that man, he’s a great, great man, awesome.
Steve: Then, I heard a statistic, I don’t know how long ago it was but they surveyed a whole bunch of CEO’s, all the top CEO’s and every CEO had two books in common, their top two books. You know what they are?
Raphael: No.
Steve: The Bible and Think and Grow Rich.
Raphael: Really.
Steve: Yeah.
Raphael: Oh wow. Yeah, Think and Grow Rich, it’s a great book, I’ve obviously read it but it’s just, yeah.
Steve: Well, but you started with the Bible and I was like, man, that’s every staple. Every top CEO.
Raphael: Bro, I mean, there’s the most wisdom, I’ve missed a lot of … I’ve dodged a lot of bullets because the Bible’s been telling … you know, God in me saying, hey this is some wisdom, you better start doing this. I’ve dodged a lot bullets by listening to the Bible. Most importantly, listening to God and just directing my life, yeah man.
Steve: What have you done that everybody should do?
Raphael: Workout.
Steve: Yeah.
Raphael: Yeah, pray, workout, eat well because your body is so important, health is super important. You know, what good is it to make a bunch of money and then not have a healthy body. Another thing everyone should do is drive a Lamborghini, like go have fun. You know, I don’t mean drive a Lamborghini but go have fun. That’s really what I mean. Go do the thing that you always wanted to do. It might not be driving a Lamborghini, it might be climbing the Rocky Mountains, it might … you have one life and you’ve got to have fun. The biggest thing, my business partner is the most serious guy but the most unserious guy I’ve met. It’s the weirdest dynamic.
Steve: Yeah.
Raphael: He’s so serious but then he’s so fun. Every meeting we have, he’s like, make sure you’re having fun, make sure you’re having fun because there’s a corelation with fun and business that when you’re having fun, you’re more creative, you’re more energetic, you’re more charismatic. So, everywhere in your life, you’ve got to have fun. You gotta have fun.
Steve: So, we have a lot of core values in our office, they’re really important.
Raphael: Yeah.
Steve: And, I would say two of the characteristics that we don’t really qualify, or we don’t state but definitely see it when you come to our office is that we’re a bunch of young guys and we’re all having a lot of fun. We’re making a lot of money but we’re definitely having fun. Because if you’re making the money and you’re not having fun, what’s the point? If you’re having fun and you’re not making the money, what’s the point?
Raphael: Exactly, so you might as well have fun making money, it’s the best of both worlds.
Steve: Then, why do you think … wholesaling’s a hot topic right now, super hot topic, everyone’s talking about it, why do you think there are a lot of people who can’t make it the business? What do you think their failing?
Raphael: Because they don’t have the drive, honestly. Because it’s really not that difficult of a business. I understand if someones trying to build a billion dollar development company and they can’t do that, that’s a lot harder. There’s a lot of things, like relationships and institutional funding that you need to build a development company like that but wholesaling you just honestly, and I don’t mean to be disrespectful, you’re just not working hard enough.
Steve: Yeah.
Raphael: Honestly, plain and simple. The only reason you’re not being successful in your real estate wholesaling company is because you’re not working hard enough. Work harder and work smarter. That’s really. This is a really simple business, like it really is. It’s not that impressive to be that successful in this business. It’s a simple business and maybe this is the mindset I have but I used to think it was complicated so I understand their perspective. It was so complicated back then but now there’s so many more resources to just give you to make this business way simpler.
Steve: Well, there’s the podcasts, there’s the YouTubes, there’s the Facebook forums.
Raphael: There’s guru’s.
Steve: There’s so much information out there, it’s just unbelievable.
Raphael: Ridiculous and a lot of it’s free.
Steve: Yeah. Very cool. That’s all my questions and all the audience’s questions so thank you very much.
Raphael: Absolutely.
Steve: And then if someone wants to get a hold of you, what is the best way for them do to that?
Raphael: Email me at raphael@aceequitypros.com.
Steve: Awesome and guys thank you, if you guys like this show, please share this episode right now. There was amazing amounts of knowledge dropped here, it was unbelievable.
Raphael: Thank you.
Steve: We’ve got this all in for an hour and don’t forget to join us on Wednesday at 2:00 and also don’t forget to visit the website, realestatedisruptors.com; that’s where you’re going to find out about the … you’re going to get the videos, the podcast links and information about our upcoming events. So, again thank you, I appreciate it. That was awesome.
Raphael: Thank you sir, thank you great being here.
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