Pros and Cons of Scaling Your Real Estate Business

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Direct to seller is very literal, meaning that it means exactly what I say. It means that I want to go find a house. So what do I do I go direct to the seller, I don’t go through an agent, I don’t go through a wholesaler, I don’t go through a referral. I’m literally cold calling texting billboards, TV, radio, direct mail, bandit signs, whatever it is, I’m directly marketing to a seller. Now the most successful, least expensive costs to get into that model is through cold calling, you know, you could do direct mail, but direct mail is going to cost you seven to $12,000.

Every time you get a contract in marketing costs, what we find is that with a virtual assistant, you’re usually going to be able to get one virtual assistant should average between one to four contracts a month, depending on how good of a job you do training, how good of a list you’re pulling, and the virtual assistants training, and where it comes from. Like, if you’re buying a $4 an hour, a virtual assistant, good luck with that you’re gonna hate your life in three months and wonder why did you ever hire a virtual assistant.

So for us, here’s why I like direct to seller, I never have to wonder whether I’m getting contracts this month or not, I never have to worry about it. And then also, I got a JV deal today. And it’s just like, I’m dealing with squirrels a lot of the time. So what you’re dealing with is you’re dealing with a whole seller who’s a squirrel, who’s also dealing with a seller who’s a squirrel, and I’m sitting here trying to then sell to a buyer. And I have no control whatsoever in that relationship. And we want me show you my perfect business model what my business looks like, this is me and my business.

Okay, my business is evolving over time. Okay, so don’t think that this is what’s going on all the time. Okay. All right. So when you’re brand new, there’s basically there’s a couple of categories. So there’s direct to seller, we already talked about that direct to seller means I’m calling and I’m spending money, this cost money for us. Our direct to seller model right now is that we are doing anywhere between like you heard us do, we got a $40,000 deal today, I’d say we do about $150,000 a month in average revenue.

Build a Cold Calling REI business from scratch:

And I’ll tell you right now that when you start going past this dollar amount per month in revenue, you will absolutely hate your life, because it stops becoming about deals and it starts becoming about managing acquisition people pass this dollar amount. It’s a babysitting job. Everybody in this industry all agrees with that exact sentiment. There’s a handful of my friends like Donovan Ruffin, Scott foods and a couple of other people that are doing like four or $500,000 per month in this revenue model direct to seller, but they have 40 employees and those employees are a constant revolving door.

This is why direct to seller has its downfalls that benefit, here’s the benefit, I’ll give you a benefit and we’ll type it in blue. It is control reliability, okay? I can rely on getting contracts myself because I can control the flow. Okay, the downfall to a direct to seller model is it’s hard to scale. Okay, so when you guys are sitting there like oh, we’re gonna have a direct to seller model and we can move on and hire and train people to like, take this over and scale it.

Scaling this business is very challenging, because you’re not scaling this business, what you’re doing is you’re scaling acquisition people, acquisition people are the worst employees you’ll ever hire. Because they’re all visionaries. And they all just want to own their own business. So for me, I would say let me stay at between 125 and 175. You try and go past the direct to seller model $150,000 a month now it’s no longer building a system and process like listen to what I’m saying here.

If you are direct to seller and you think you’re going to build that system and process around a human being and a personality type that is anti processed and anti system hiring more anti system and anti process people is not going to scale that business. So scaling is really challenging with this business. The other thing here with direct sellers that to start this business is it costs money typically. Now we also have wholesaler this is like my favorite model. Okay, but there’s benefits and downturns to this to wholesaler model. I primarily am doing creative because I’m I choose to do so doesn’t mean I can’t do cash.