If you’re an investor who is looking to build a sustainable real estate business, this episode is for you. Eric gives us some of his systems he’s created that have helped him get to where he is today. From hiring team members to how he spends his time everyday, great tips are in store for you in this episode. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Eric Jacobs Real Estate Background:
- Real estate lawyer with an MBA, coaches and consults with real estate investors
- Has been in real estate since 18 years old
- Owns some real estate but prefers lending
- Say hi to him at: https://www.ericjacobsconsulting.com/
- Based in Miami, FL
- Best Ever Book: Smarter, Faster, Better
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Eric Jacobs. How are you doing, Eric?
Eric Jacobs: Hey, Joe.
Joe Fairless: Welcome to the show. A little bit about Eric – Eric is a real estate lawyer, and he’s also got an MBA. He coaches and consults with real estate investors. He’s been in real estate since he was 18 years old, and he owns some real estate, but focuses now on hard money lending. Based in Miami, Florida. With that being said, Eric, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Eric Jacobs: Sure. Hey, Joe. Thanks again for having me on the show. Again, I’m Eric, I live in South Florida. I’m a bit of a serial entrepreneur. I used to be a real estate broker, owning a real estate brokerage. I sold that in 2006, thank God.
These days I’m currently running a title company that I built an ultimately sold to a Fortune 500 company about a year ago, and on the investing side, I do own some investments myself, but I’m really kind of keeping my powder dry… We get ready for some opportunity down here in South Florida, and I’m kind of hedging my bets with some hard money.
I do have one 20-unit broken condo under contract right now… We’ll see if I keep it or flip it.
Joe Fairless: Cool. So hard money lending is your primary real estate focus right now, it sounds like… What type of deals are you working on?
Eric Jacobs: Well, I guess my primary focus right now is being president of this division of this large company, but in addition to that I’m also a real estate attorney, and then I do the real estate lending.
On the lending side, generally what we like to see is an entity looking for bridge financing, usually a year or so. 60%-65% LTV, and just a good, solid transaction, a good, solid piece of property in [unintelligible [00:02:45].00]
Joe Fairless: Got it. So it doesn’t sound like that’s your primary focus. So you said president of a large company – what large company are you referring to?
Eric Jacobs: I’m the president of Clear Title Group. That’s a title company that we built from the ground up and almost a year ago now sold to a Fortune 500 company; they kept me on, I’ve continued to run it, and I’m working with the great folks there as well.
Joe Fairless: Got it. That’s the point I missed. When you said you sold it, I didn’t know you were still doing it. So you’re the president of Clear Title Group, you sold it to a Fortune 500 company, you built it from the ground up… What are some things you’ve learned along the way?
Eric Jacobs: Well, I think being a serial entrepreneur and being involved in a lot of things, I think my primary takeaway and the real value that I’ve tried to convey to people that I work with in consulting is that it’s really all about systems. I come across people every day that have businesses that are really very little more than their own job, where they’re their own employer… But if you really wanna build something, you need to build systems to go along with it. That’s really been my takeaway – it’s the systems that I sold, more than companies.
Joe Fairless: Can you elaborate on some specifics about some systems that you sold along the company, just to help us crystallize that?
Eric Jacobs: I think even if you look back at the real estate brokerage business that we had, we came in, we started from scratch… We were not one of the big brand name real estate companies, so we didn’t just kick the doors open; we had to find a way to be something different.
I myself did not go on listing appointments, I did not recruit agents; I built a platform that allowed me to bring people in that would recruit agents for me, and people that would go on listing appointments for me.
The title company is very much the same thing. I don’t often do a lot of closings on my own; I have a team that does that, I have marketing people that do that… And basically, what I do is I consider myself something of an air traffic controller, making sure that all the system’s right.
I’m sure, Joe, you obviously have a lot of systems yourself to be able to do the longest-running podcast ever, and have a business life on top of it… Something pretty incredible.
Joe Fairless: When you built a platform with your title company, what were some of the challenges when putting in the systems that perhaps others will come across and will just assume they’re also building a title company?
Eric Jacobs: Well, at least I can speak [unintelligible [00:05:02].19] I struggled with through a couple of companies was I often either tried to do too much on my own, or I hired people because I liked them, and I think both of those are not really necessarily recipes for success, and certainly not for scalability.
When it comes to trying to do everything yourself, when you start building a little company – and this is whether you’re in real estate investing, or brokerage, or anything – presumably, what it is that you do well gets you some degree of success, and then you hire people and it becomes so easy to try and hang on to all of it, instead of hiring great people and letting them go, and let them do their thing… And sometimes you find that they may do it better than you did it.
Sort of related to that, hiring people that I like, my interview process used to be 10 or 15 minutes; I’d get in a conversation, we’d chuckle a couple of times, and if I had a good vibe about them, I’d hire them… And I think it was Peter Drucker that said “Culture beats strategy every time”, and I believe that culture is incredibly important to a successful organization.
Having good chemistry and good fit isn’t all there is.
Joe Fairless: So what are some specific things that you ask or look for during the interview process, that you didn’t before?
Eric Jacobs: Well, the first thing that I do is I give them something of a personality test, I give them a basic skills test, and then I have some very specific questions about mistakes that they’ve made. I try to discipline myself to spend a lot of time talking about how they deal with adversity, mistakes that they’ve made, how they’ve overcome it, so that really it puts them in a position of having to talk about something that is naturally uncomfortable.
I think when you get people talking about what’s uncomfortable, you kind of learn a lot about them. That really can help you to understand if that’s somebody that you can set free and really benefit your business.
And then of course, there’s the natural questions about where I want them to get me… So if I’m hiring somebody for digital marketing, for example, I really wanna give them an opportunity to talk about what they could do for me, not just sit there and tell them what it is that I want them to do,
Joe Fairless: How do you get below the surface of a typical canned response of a challenge that they had? …where – okay, they saw it coming, they answer the question about a challenge or mistake they made, and you didn’t feel like you really dug in deep enough, but they did answer the question.
Eric Jacobs: I think you have to be really comfortable with the word Why, and I think moments of silence are really powerful in an interview. I think sometimes when you ask somebody Why and you just sit there – that’s hard to prepare for. I think people have difficulty anticipating you asking them why they did something… They canned that answer (I think we’ve all done it at one time), but when you force them to really think about and examine why, I think your BS meter will go off pretty quick if they’re just trying to work their way through it.
Joe Fairless: Switching gears, you mentioned you’ve got a 20-unit under contract – not sure if those were condos… And there was something else about the condos – you’re not sure if you’re gonna flip it or close on it… Can you elaborate?
Eric Jacobs: Sure. We have 20 units in a 35-unit condo building currently under contract. I refer to it as a busted condo. I saw an opportunity almost by accident. It was one little unit that was lifted… In the context of doing kind of my pre-offer due diligence, I noticed that a lot of the units in the building were owned by the same entity.
A busted condo is a condo that’s not really financeable, because one person/entity owns a substantial portion of the condo… So I saw an opportunity there. When I spoke to the broker about the one unit that was under, I asked him if his client would be interested in selling the entire portfolio. They said that they would.
We’ve gone under contract, and I think if we take it, the idea will be to try and acquire the other 15 units and privatize the building altogether. The reason why I said I might flip it candidly is it’s such a good deal that I think there’s a possibility that somebody may just take it off my hands, and I’m really more in an opportunistic sort of mindset right now, rather than the long-term decent return kind of play.
Joe Fairless: If you closed on it and then the next step was to acquire the remaining 15 units, have you looked at how many unique owners there are of those 15?
Eric Jacobs: Yeah, and I don’t remember the exact number, but let’s say it’s probably 10-12 unique owners. I think most of them have been owners for a long time, so they’re from a value standpoint reachable… Whether they’re willing to sell right this minute or other time, I don’t know.
One of them is a potential problem, because they so incredibly overpaid for it right in the height of the market, and then yet they’ve apparently kept their mortgage current… But I don’t know how we would extricate them from that. Maybe we just have to overpay a little, I don’t know.
Joe Fairless: When you look at the time that you spend in business on a weekly basis, how is it divided up in terms of the types of tasks that you’re doing?
Eric Jacobs: That’s a great question. Right now, after having been acquired, I feel like I owe the people that acquired us the majority of my time… So I really would say that I devote most of my workday to continuing to grow and expand the title company and make sure that they feel happy about what they bought. That means a lot to me.
The rest of my time is spent largely to some degree directly running a law firm, and certainly vetting investments and hard money opportunities. Then I have a handful of consulting/coaching clients; it’s really something of a new thing for me, but I’m really enjoying it, and I’d like to think I’m bringing a lot of value to the handful of people that I’ve chosen to work with.
Joe Fairless: You said most of your workday is growing and expanding the title company. How do you do that?
Eric Jacobs: Well, we look at very specific markets, and then we determine whether we think we can bring something unique to the table. I’ll give an example – we have a location in a different part of the state of Florida that I think we’re gonna move into next, and basically, we identified where we saw title companies that were not operated by a lawyer, where there were high dollar transactions, and how many transactions we would need to break even… And we see a real opportunity. So we’ll probably gonna put another office there in the next couple of months, and then I think we’ll continue to do that in the high dollar markets of Florida for at least the next year or so.
Joe Fairless: And then on the consulting front, what do your clients hire you to do?
Eric Jacobs: To this point, most of my coaching clients have hired me to take them from being however successful a one-man operation or a one-man dominated show, to really beginning to scale and think about their business in a different way… And instead of working — it’s become kind of cliche, I guess… Instead of working IN the business, really helping them to learn how to work ON the business, and allow them to scale.
Joe Fairless: And you’ve mentioned the importance of systems with the couple companies that we’ve talked about… What are some concrete steps that you would walk someone through in order to go from being a one-person show to having a scalable company?
Eric Jacobs: Well, I think the first thing that people often don’t bother to do is to figure out what it is that they want. I think very often people start a company to start a company, and then the company begins to take a life of its own, and it begins to run them.
So I spend a fair amount of time really getting a handle on what’s important, what priorities matter to the particular person that I’m working for. You may not want to acquire 500 million dollars in real estate and building an investing empire. Maybe you just want 8-10 duplexes for your retirement, but right now you wanna keep your existing job.
So not every formula is gonna work to get them where they wanna go, so I try to help them figure out what they want, and then we just kind of reverse-engineer it. If what they want is to acquire a substantial multifamily asset, then we begin to take apart the whatever number of tasks there are to doing that, and then it’s about holding them accountable and getting them to do those steps, even if it’s one at a time.
Joe Fairless: Based on your experience as an entrepreneur and real estate investor, what is your best real estate investing advice ever?
Eric Jacobs: Do it. You can walk into a medical library, read every book in there, and it doesn’t make you a doctor. At some point you need to stop talking and thinking and listening, and you need to get out of your own way and just do it. I think resources like this are very helpful, and are necessary. I think coaches are very helpful and could be necessary, but if you’re one of those people that are gonna find a reason not to do something, then you might as well stop reading and stop listening, because you can always find a reason not to do something.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Eric Jacobs: Let’s give it a shot.
Joe Fairless: Alright, great. First though, let’s hear from our Best Ever partners.
Break: [00:14:23].27] to [00:15:24].25]
Joe Fairless: Alright, best ever book you’ve read recently?
Eric Jacobs: Recently… Smarter, Faster, Better by Charles Duhigg.
Joe Fairless: Best ever deal you’ve done that we haven’t talked about?
Eric Jacobs: That we haven’t talked about… I did a fairly substantial hard money loan a couple years ago with a decent pre-pay, and I had another investor come in for leverage, and we ended up with a 20+ return in a very short period of time.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Eric Jacobs: Oh, boy… This could be a long podcast. I tried really hard to convince somebody not to buy some property in the Bahamas. They bought it anyway. I went over there to visit, fell in love and I bought it, too. Then we both lost money together. [laughter]
Joe Fairless: What’s the best ever way you like to give back?
Eric Jacobs: I like to find people that are being given really bad advice or that have been exploited and I like to help set them on the right path.
Joe Fairless: What’s a piece of bad advice you’ve heard?
Eric Jacobs: Pay somebody a ton of money and in a weekend they’re gonna teach you how to become a multi-millionaire, first with wholesaling, then multifamily, then with BRRRR… And just over-promising and under-delivering in general.
Joe Fairless: And how can the Best Ever listeners learn more about what you’ve got going on and get in touch with you?
Eric Jacobs: The easiest way to reach me is e-mail. It’s Eric@EricJacobsConsulting.com. I’d love to hear from them, and I sure appreciate your time.
Joe Fairless: Well, thank you for being on the show, talking about the systems that you’ve implemented in the companies we discussed, and how someone can implement the approach that you talked about, from being a one-person show to having a scalable company – three steps. First, you’ve gotta know what you want; two, reverse-engineer, and three, being held accountable every step of the way. I know that there are many sub-bullets underneath those, I’m sure, but from a high-level, that’s the three-step process.
Then also talking about how to select the right employees as you scale the company, getting comfortable with silence, asking the question Why multiple times, as you dig deeper and deeper when discussing a mistake they made or adversity they came across.
Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Eric Jacobs: Thanks, Joe. You too.
