Leads – they can make or break your business. Not so much the leads themselves, but how you follow up with those leads. Dan is an expert in that area, and that is what he does with his business. He now helps investors get leads, and follow up with them, in exchange for a 50/50 split of deals with his trusted partner. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“Cold calling is harder, the harder it is to scale, the better it will be and less people will be doing it” – Dan Schwartz
Dan Schwartz Real Estate Background:
- CEO of InvestorFuse, a lead management workspace for real estate investors
- Has helped hundreds of investors automate part of their business
- Based in Austin, TX
- Say hi to him at investorfuse
- Best Ever Book: Rocket Fuel
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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, Dan Schwartz. How are you doing, Dan?
Dan Schwartz: I am doing really well, thanks for having me.
Joe Fairless: Yeah, my pleasure. Nice to have you on the show. A little bit about Dan – he is the CEO of InvestorFuse, which is a lead management workspace for real estate investors. It’s helped hundreds of investors automate a part of their business. He’s based in Austin, Texas, and the website is investorfuse.com, which is also in the show notes page. You can click through there.
With that being said, Dan, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Dan Schwartz: Absolutely. It’s been a while since I’ve been on the show, but I was on very early on… Things have rapidly changed since then. My background is as a wholesaler; I started flipping houses right after I graduated from university, with a marketing degree, and realized that having an infinite income is much better than a salary… So I got into wholesaling, while simultaneously playing music on the road, which essentially forced me to get really good at building systems and figuring out how to fire myself from the local tasks that I couldn’t physically do, because I was on the road all the time.
That sort of led to the creation of InvestorFuse, which is essentially a CRM to help investors automate a lot of their lead management duties that plague most investors, who really aren’t that good at follow-up, which is like the essential thing that you need to have in place in order to consistently do deals. That has spawned a really nice community of investors who are systems-minded. Our whole goal is to help investors fire themselves from their business, so they can focus on the essential tasks in their business and in life. That’s where we’re at now. Over 600 companies on the platform.
Joe Fairless: Cool. Well, congrats on the growth. How long have you had the company?
Dan Schwartz: I started it in 2015.
Joe Fairless: 2015, and we are in the early stages of 2019, so about four or so years. You’ve got how many companies, you said? 650?
Dan Schwartz: 650 on the platform. There’s a legacy version which is on Podio, which a lot of your listeners might be aware of… And the new platform is rolling out as we speak, InvestorFuse 2.0. About half are on that now.
Joe Fairless: Cool. So what have been some lessons you’ve learned over the last four or so years as a CEO of a real estate software company?
Dan Schwartz: Well, I’ve learned that real estate investors require simplicity. Complexity, basically, is the killer of real estate businesses. People have analysis paralysis when there’s too many systems and tools. Most investors just wanna put deals together and not have to worry about technology, or processes, and systems. I think it’s important just to create as many simple processes in your business as possible, and remove yourself from a lot of the tedious stuff.
Joe Fairless: What are some examples you’re referencing when you say “Real estate investors require simplicity”?
Dan Schwartz: Well, a big thing that we believe is the 80/20 principle. 80% of your results are gonna come from 20% of your activities. If you really think about your day in terms of what actions are actually bringing in revenue, those are typically the actions that you should be architecting your business around, so that you’re only doing those actions.
For instance, negotiating major deals, hiring amazing team members, designing systems to remove yourself from a lot of the activities in your business, educating yourself, taking care of your body – those are the essential things that really people should be focusing on. Those are kind of — I wouldn’t say simple things, but those are the high dollar/hour activities. And then a lot of the tedious stuff that still needs to get done, like doing your marketing, analyzing the deals, pulling the comps, writing up the offers, managing the VAs – all that stuff needs to get done, but not necessarily by you. So it’s just creating an awareness around the actions in your business that actually bring you money, and trying to remove yourself from everything else… That’s kind of the long-winded answer to that.
The simple way to do your deals is just do the things that you’re good at.
Joe Fairless: And knowing that you have that insight as a lesson learned over the last four years with your company, how have you applied that to your business?
Dan Schwartz: I realized that I am not good at the details part of things. I’m sort of a more visionary type in my business… So I’ve surrounded myself with folks that are better at the details, that are better at handling the technical side of things, and the customers, with my software company.
In my real estate company, how I did that was – again, it’s just kind of hiring folks that are gonna compensate for your weaknesses. I have a good book recommendation that kind of dives into this, if you’d like me to share…
Joe Fairless: Sure.
Dan Schwartz: There’s a really good book called Rocket Fuel, which is essentially a book that talks about the dynamic between business partners – the visionary and the integrator. I think that is an essential piece to my success – having a business partner that compensates for my weaknesses. I sort of play offense as the visionary, and he plays defense as the integrator. You see that as a pattern across a lot of the most successful companies.
Joe Fairless: How did you meet your business partner?
Dan Schwartz: We did a lot of work together. We “dated” before we got “married”. We worked together, essentially helping investors build systems and automate their CRMs using Podio. I had a lot of clients that needed my help, and he had some skills that I didn’t have to actually build out systems for people. He was doing this by himself, as a consultant. I had a bit of a following at that time as a wholesaler and systems guy, and we started working together, just helping investors out. Eventually, it just made sense that “Man, we work really well together. Let’s turn this into an actual scalable company.” I would say that’s a good strategy for folks – do some deals with some people, just as partners or consultants or JVs before you actually partner up and split equity in your organization.
Joe Fairless: Are you still wholesaling deals?
Dan Schwartz: I am doing some marketing on the side, where I generate the leads and split the deals 50/50.
Joe Fairless: Okay. So you’re still involved in the transactions, you just focus on a particular area of the transaction, and you’re doing 50/50 profit splits.
Dan Schwartz: Right.
Joe Fairless: Does that go back to the 80/20 thing, and focusing on things you enjoy?
Dan Schwartz: Exactly. I enjoy setting up the mechanism for leads to come in, and I don’t wanna be involved with the process after that. Also, just from a time standpoint, I’m pretty busy running InvestorFuse, so I don’t have time to be actively talking to sellers and doing deals, and such… So with the systems and information I know, I’m just leveraging that… Doing the most modern forms of lead generation, sending those leads to a trusted partner in Baltimore, and then splitting the deals 50/50.
Joe Fairless: And what are the most modern forms of lead generation?
Dan Schwartz: Well, right now it’s cold calling. It’s pulling a very targeted list of direct sellers, getting their phone numbers via a skiptrace service, and then one by one cold-calling them, using systems like Mojo Dialer, just to get these potential sellers on the phone, and determine if they have a house to sell or not very quickly. And if they do have a house to sell, that lead gets piped over to my partner, and he converts that into hopefully a profitable deal.
Joe Fairless: Why do you think cold-calling — I feel like it’s come back; it’s the thing. Why do you think that is?
Dan Schwartz: It’s because it’s harder. I’m noticing a trend with real estate marketing, that the harder it is to scale, the better it is gonna be, and the less people are doing it. Two years ago there hardly was anyone doing cold-calling. Everyone was doing direct mail, and then they noticed that direct mail responses were going down, so… What’s the harder thing to do? Well, it’s to reach out to these people one by one, via the phone, and figuring out the systems to use for that.
Well, two years later, now the systems are much easier for cold-calling. You can use a tool like PropStream and within five minutes get a whole list of phone numbers for vacant houses in your target market. So now it’s basically whatever the harder form of marketing is, that’s where you wanna be looking. I think if I were to make a prediction, now that everybody is cold-calling, the next thing is gonna be door-knocking, because that’s gonna be the next progression of the hardest thing to do, right?
Joe Fairless: It all comes full circle.
Dan Schwartz: Yup, cycles.
Joe Fairless: Knowing that that’s your prediction, have you done anything to get ahead of the curve?
Dan Schwartz: No, but I’m thinking about it. I’m thinking about what tools and systems we can create to make that an even easier process. I guarantee you that those types of tools — there’s already a lot of bird-dog tracking tools…
Joe Fairless: Just buy some drones, and have a mechanical hand that will knock… [laughter] And just fly them around the neighborhoods.
Dan Schwartz: It knocks and then drops off a little flier.
Joe Fairless: Exactly. What were you gonna say? I interrupted you…
Dan Schwartz: I was gonna say, you’re gonna see a lot of door-knocking gurus over the next year or so… So a good thing to get ahead of the curve is just to get a really targeted list of sellers; high equity, vacant, or even owner-occupied, which is frequently ignored… And maybe try doing some door-knocking campaigns. You’re gonna reach that person and connect with them in a way that your competitors aren’t by just sending mail or cold-calling.
Joe Fairless: And you mentioned a couple systems when you were talking about cold-calling… I wanna make sure I heard you correctly; to get a list, a service you recommend or at least mentioned was something called PropStream? Is that correct?
Dan Schwartz: Yes, PropStream.
Joe Fairless: And then to call people, I think you said Mojo Dialer.
Dan Schwartz: Correct, Mojo Dialer.
Joe Fairless: What about the skip-trace service?
Dan Schwartz: That is built into PropStream, actually.
Joe Fairless: Okay, cool. Any other vendors that you’d recommend be incorporated into this?
Dan Schwartz: Yeah, you can check out Call Porter. They can actually make your outbound calls. CallPorter.com can make your outbound calls, and there are real estate trained lead specialists.
Joe Fairless: Cool.
Dan Schwartz: Between those three tools right there you can set up a cold-calling campaign within a day, which is kind of crazy.
Joe Fairless: Yeah, that is. Leave me off the list, please… [laughs]
Dan Schwartz: Yeah, yeah.
Joe Fairless: With the three services that you’ve mentioned, which one takes the longest to acclimate to if you’re starting out and you’ve never done this before?
Dan Schwartz: Let’s say they’re all pretty basic tools, but PropStream has a lot going on inside in terms of list creation. You sort of have to know what all the terms mean – tax delinquent, absentee owners… There’s a lot of different filters, and stuff. There isn’t like a “Click this button and get a list.” You have to go in and determine what kind of list you wanna pull based on your market. Maybe you have a lot of vacant houses in your market, maybe you have a lot of tax delinquencies, but it helps to have a little bit of experience in your market, or to ask other investors what the motivated seller’s situation looks like in your market, and then using that information to create a really filtered list.
I think in this market, since everyone has access to the same leads, that the more targeted your initial data list is, the better you’re gonna be. That’s just part of it. The other way you’re gonna compete is just by having the best possible follow-up system to actually monetize those leads once they come in. That’s sort of what I’m all about.
Joe Fairless: So you’ve got a couple ways to rise above the pack. One is a targeted list, two is having a great follow-up system… So ideally you’ll do both, but if you were to look at your business, you’re more towards the follow-up system, because you’ve got InvestorFuse, is that correct?
Dan Schwartz: Yeah, exactly. And I believe that even if your marketing isn’t as good as your competitor, but you’re able to follow up and stay on top of your leads in an organized, systematic way, more than your competitor, then in the long run you’re gonna win… Just because the majority of your deals are not gonna be from that initial phone call. By definition, your deals are all gonna be follow-up, right? They’re all gonna be that post first contact negotiation…
Joe Fairless: Are you able to track that, to see how many leads are completed after a certain number of follow-ups, across your whole system?
Dan Schwartz: Yes, you can track that.
Joe Fairless: But are you able to see it from a big-picture…? I’m just looking for some data points, how many leads are converted into sales after the first, second, third, fourth, fifth etc. follow-up.
Dan Schwartz: It’s funny you mention that… There’s only one study right now, the Harvard Business Review that says you’ll have a 90% higher close rate after the sixth or seventh touch point… But that hasn’t really been checked yet. Part of my vision with InvestorFuse is to actually get more accurate data for that, for the investor community… And I think we have to scale to actually get that type of data. But the Harvard Business Review says 6 to 7 touch points gives you a 90% higher chance.
I have a bunch of more of these stats on one of our eBooks, if you don’t mind me sharing the resource…
Joe Fairless: Yeah, what is it?
Dan Schwartz: It’s called The Ten Commandments… You can download it on our main website, InvestorFuse.com. The Ten Commandments of Lead Management. It gives you the essential stats and rules that you should follow in order to maximize the most out of your marketing.
Joe Fairless: Harvard Business Review is just talking about business in general though, right? They’re not talking about real estate specific…
Dan Schwartz: Yeah, it’s sales stats, generally speaking…
Joe Fairless: Yeah. Okay, cool.
Dan Schwartz: Like, if you don’t respond to your lead within five minutes, that type of stuff. I would guess that that is actually less than five minutes now, because the study was five years ago. People’s attention spans are lower.
Joe Fairless: Right. I think it also depends on what type of lead it is too, because… I don’t do this type of business, but my target audience is accredited investors, and when they submit a form on my website to get to know us and they fill out the information, I imagine if we were to reply literally within five minutes – which we don’t do, but it’s that same day – it would be a little weird if we replied immediately… Because then it’d seem like a robot was replying to them, not an actual person.
Dan Schwartz: Yes.
Joe Fairless: But with single-family homes, and buying the properties – I totally get that. If someone’s calling with an issue, or they’re looking to sell, you’d better capture that lead immediately, otherwise they’re gonna go to someone else.
Dan Schwartz: Right. So you need to have some sort of mechanism in place to notify you as soon as those leads come in, so you can actually capitalize on that… Because they’re still in that “buying” state when they’re entering their information, and you can talk to them when they’re still in that state, thinking about selling their house.
Joe Fairless: What’s your best real estate investing advice ever?
Dan Schwartz: Get a team. My best real estate investing advice is you can’t do this alone. If you are overwhelmed and feel like you’re the jack of all trades right now, you’re never gonna be able to scale and truly own a business. So hiring a team not only is a forcing function for you to grow as a person and a leader, but it’s a way that you can enjoy your business more, because you’re gonna be focusing on the things that you’re good at, instead of struggling with the minutiae that you might not like.
There are people out there that are good and enjoy the minutiae that you don’t like, and it’s important to understand that. So I think hiring that first employee, or virtual assistant, or even a business partner, is the best move you could possibly make. That’ll help you scale much quicker.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Dan Schwartz: Let’s do it!
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:18:00].10] to [00:19:01].25]
Joe Fairless: Best ever deal you’ve done personally?
Dan Schwartz: I would say it’s one of the JV deals that came in. I just received a $25,000 wire and I didn’t have to do anything.
Joe Fairless: And by nothing – you did the marketing to get that.
Dan Schwartz: Yeah, and I set up the initial systems, and then that was it. The systems didn’t even require me to manage it, or anything. It was a $50,000 deal and we split it 50/50.
Joe Fairless: Nice. What’s a mistake you’ve made on a transaction?
Dan Schwartz: My biggest mistake I’ve made was not getting back to the seller in time, believe it or not. When I was more actively wholesaling in Baltimore, we were just using spreadsheets to manage our leads, and I called this guy back – he said he just talked to someone right before I called him, and he put it under contract… And it was in a really hot neighborhood in Baltimore, that I could have made about a 30k-40k wholesale fee on… And he told me, “Hey, if you got to me sooner, I would have probably given it to you.” And that was the impetus I needed to take systems a little more seriously.
Joe Fairless: Best ever way you like to give back?
Dan Schwartz: I like to share what I’ve learned. If you got the InvestorFuse Blog, there’s a ton of epic how-to guides about how to structure deals, how to generate leads, lead management, all that stuff, just for free.
Joe Fairless: How can the best ever listeners learn more about what you’ve got going on?
Dan Schwartz: You can check us out on Facebook, if you search for InvestorFuse; you’ll find me on there. I’m happy to answer people’s questions personally. If you shoot me a message on Facebook through the InvestorFuse page, or from my personal page, I’m more than happy to help people.
Joe Fairless: Well, Dan, thank you for being on the show. I enjoyed learning how your business has evolved, from when you started InvestorFuse to today. I really liked hearing about some specific vendors that you recommend using for cold-calling, and also you think door-knocking is the next thing… Because — I love the insight that you gave, and that is “the harder it is to scale, the less people doing it, so that tends to be an area of opportunity.” So if you can find a way to scale something that’s hard to scale, and refine that system, then you could have a competitive advantage… And on that competitive advantage you mentioned a couple things to rise above the pack. One is to have a highly targeted list, and two is to have a follow-up system.
I enjoyed our conversation. I hope you have a best ever day, and we’ll talk to you soon.
Dan Schwartz: Thank you!