July 15, 2019

JF1774: Better Marketing & Better Due Diligence #FollowAlongFriday with Danny and Theo


Danny Randazzo is joining Theo for Follow Along Friday again this week. He’ll be sharing some insights from his previous business week and what he learned. Theo will be sharing some advice from Best Ever Guests that he interviewed last week. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Theo Hicks: Hi, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m your host again today, Theo Hicks. Today is Friday, we’re doing Follow Along Friday again, and  we are back with our co-host for the last week and the co-host for this week, Danny Randazzo. Danny, how are you doing today?

Danny Randazzo: I’m doing great, Theo. Thank you again, to you and Joe, for having me on. I’m happy to help on this Follow Along Friday.

Theo Hicks: I appreciate it. It went really well last week, you fulfilling the role of Theo and me fulfilling the role of Joe. You did well, and I hope that I did well too, and we’re hoping to have a repeat this week.

This Follow Along Friday we are going to go over the lessons that we learned from the Best Ever interviews from the week before. I did interviews last week, as I mentioned on the previous Follow Along Friday, so because Joe’s not here, I get to go over the lessons that I learned. Let’s jump right into it.

One individual I interviewed was named Ben Bacal, who is a literal rockstar real estate agent. One of his transactions of a residential property was 70 million dollars. I guess that was the largest ever recorded sale in Beverly Hills, which is saying something, because that’s Beverly Hills… He has actually sold over two billion (with a B) in real estate, and he created an app called Rila. The reason why he created it was based on his experience of finding buyers for one of his first deals, and then all the subsequent deals.

The way he explained it to me was his first luxury home sale was a three million dollar property, and once he found that listing, he wanted to find a way to market it that was better than just putting it on the MLS. I don’t know when this was, so I don’t think the Zillows and the Trulias were a thing yet… Because it sounds like he’d been doing this for a while. But he was willing to do more than just put it on the MLS. He did door knocking, he did face-to-face meetings with people that he would meet, he sent out postcards, he did cold-calling, he created an e-blast to all the people he had in his email list, and he created a video of the deal as well. In that video he included a bunch of personal pictures that he took of that property.

This seems like it’s simple – you just go in there and you take pictures with your cell phone or a professional camera. That really can’t make that big of a difference, right? Well, for these deals apparently, the way he explained it to me was that the pictures that you’ll find of the property are very basic pictures – the kitchen, the living areas, the exteriors… And those are the same standard pictures across the MLS, across Homes.com, across Trulia. They’re all the exact same. So if someone’s looking for this deal and they go to any of those websites, they’re gonna find the same standard pictures, whereas he would go there and take a ton of pictures with his own phone, and take pictures of things that people won’t be able to see just based on the standard MLS pictures. So the agent goes in there and kind of getting creative about it. He’d create these videos, he’d post to Instagram, Facebook, things like that.

Apparently, this was a huge help for him in selling his homes, and ultimately he made an app that kind of does the same thing; it’s like the Instagram for real estate.

Danny Randazzo: Yeah, I think that’s very interesting, because when you’re trying to appeal to a buyer for any sort of residential property, I think having those professional, awesome-looking photos on the MLS, or on Zillow and Trulia – it’s an absolute must have… But it sounds like for the market that he’s in, and his clientele, his buyer is gonna be a little bit more sophisticated… And I think those initial photos, the marketing photos that always look good, are going to tell the story of how awesome this house is, and how great the seller has kept the house, and how much value they’ve added.

So I think as a sophisticated buyer thinks about it, specifically in his market, in the high-price, high-net worth area of California and Beverly Hills, going in and taking those photos that allow his client to walk through the property without actually having to spend their time to go there is something that appeals to them.

Sometimes you can take a photo of a kitchen and it looks like this massive, open concept kitchen, but then you get in there and the feel is a little bit tight between the island and the sink. So if he’s in there snapping photos of real angles, that people are going to use and be able to visualize themselves in that space, I think that’s where you get the buyer. And they have an appreciation for it because again, time is very important. If they’re not having to spend the time to go out and tour and look at it, and they can use his app and know that he walked it and they trust him, then he’s building that client relationship and that buyer’s buy-in to purchase the property.

Theo Hicks: Great advice. That’s kind of confusing at first, because it’s like “Well, every single luxury home I’ve ever seen listed has professional photos on the MLS”, but as you mentioned, it’s about taking the pictures that are more truthful and tell a story to the buyer. As you mentioned, not trying to take some crazy angle down low, and make it look like the kitchen is  a lot bigger than it is.

A lot of times — again, there’ll just be one picture of each room, and at maybe not the best angle. From my understanding, it seems like he’s taking a lot of pictures, so that literally they could do a video walkthrough without actually having to do the video. I’m not sure why he didn’t choose the video route, but I guess the pictures were working better.

I guess he’s got this app where residents can go into the properties, take a bunch of pictures, post it to this app, and then those pictures are the listing. So you get the listing by posting those pictures, and the idea is that it’s like a crowdfunded version of the Zillows, and you don’t have to pay 10k/month to be shown in the search results. That was interesting.

Danny Randazzo: Yeah. I think the lesson here from this one is that he found a need for his clients. His clients needed to see more photos than what was just available on the MLS or on the listing, so he created a solution to fill that need. Obviously, he’s closed two billion (you said) in real estate from a transaction side, and I think a huge component of that was finding that need for his clients to buy more properties, and it was giving them more photos. So… Heck yeah, go take a ton of photos and sell two billion in real estate, and help your clients by adding value to them – I think it’s an excellent win.

Theo Hicks: And obviously, this doesn’t just apply to selling homes. If you’re a rental investor, you kind of have the same thought process when you’re taking pictures for your rentals. Don’t just go in there and quickly rush with your iPhone to take pictures so you can get your listing up. You can go to Craigslist and spend like $50 on some college student who has a major in photography, and go in there and take hundreds of pictures. Then select the ones that tell the best story of the property. Some of them are just pictures of this bookshelf, or zooming on the fireplace, or the backyard… Again, it’s not just like “Here’s the office. Here’s the bedroom. Here’s the bathroom.” It’s showing the highlights of the property.

Danny Randazzo: Yeah. If anyone out there in the Best Ever community – if you wanna be the best ever and sell your property for the most or the best ever value, you need to spend money for professional photos, period. End of discussion on that. It’s the most appealing thing that is gonna draw traffic into the home. You need to get people out of their computer first, by giving them excellent quality photos, for them to show up and go and tour and look at your property, and then buy it for top-dollar. So spend the money on professional photos.

Theo Hicks: Totally. So that’s number two. I interviewed a couple – Jay and Samara Harvey. They are actually mobile home investors. Whenever I think of mobile home investors, I think of people buying actual mobile home communities, where they just go in the communities and buy individual mobile homes and sell those… But the form they got into mobile homes – they were trying your typical real estate rentals and things like that, and they trusted a mentor that they met at a conference (I think). This is not a paid mentorship, this is a free mentorship, where you find someone who’s experienced and shadowing them, and partnering up on a deal together… So they did this and they lost $30,000 on that deal with this mentor. So obviously, I asked them “What types of things do you look for in mentors to make sure that that doesn’t happen again?” and they provided me with a really solid list of things to look at that I hadn’t necessarily thought of before, when you are looking to find a mentor.

Again, these are free mentorships, but some of these can apply to paid mentorships as well. It was kind of broken into two categories… Kind of. The first one was, obviously, do your due diligence on the mentor. More specifically, what they meant was 1) when you’re initially talking with this person, they most likely are gonna tell you about all the things they’ve done, all the deals they’ve done, the volume of transactions they’ve done, who they’ve worked with, maybe what news sources they’ve been quoted in… So don’t necessarily take a list of what they’re doing, but make a mental note of the things they’re saying, and then afterwards go online and try to figure out if what they said is actually true. Essentially, just fact-checking everything that they’ve told you. Obviously, if they’re lying, then that’s not a good sign.

The other one was to not be afraid to ask around about this person as well. This person, again, claimed they’ve worked with Donald Trump – figure out if they’ve actually worked with Donald Trump. If this person claims they’ve worked in this particular market and they’re the number one broker in this market, well then talk to other brokers and owners in that market to see if that person is even known by these people. So that was the first category, which is do your due diligence. I’ll pause there before I go to the second one, to see if Danny has anything to add.

Danny Randazzo: Yeah, I think due diligence is so important, that you actually vet what they’re saying… Because ideally, you wanna have a mentor who’s kind of been there, done that, and is still doing what you wanna do. Due diligence is important, just like you’re gonna buy an investment property – you’re gonna always make sure that there’s real tenants in place, or that there’s actual cashflow coming in, and that the property is real, and that the quality of the construction and the systems, the roof, the plumbing, the electrical, the HVAC are in good working condition. So you just need to do that same thing with a  mentor, make sure that they’ve – like Theo said – done what they say they’ve done, and there’s easy ways on the internet to fact-check them.

If they’ve recently bought and sold a property, go to the county website, the RMC or where they have the public real estate transactions and verify that they bought it and sold it.

Theo Hicks: Absolutely. And then the second category, which still comes down to due diligence, but more it’s more specific, in that you wanna find a mentor that has good character. This seems obvious, of course, but in the moment it’s something that might be overlooked, and you focus on all the great things they say they’ve done, all the great things they say they can do for you, and you don’t necessarily think about how your initial feeling is about their character.

Jay and Samara went over a few red flags to look for when you’re speaking with someone which may indicate that they have poor character. Number one – again, this goes back to due diligence – is lying about their track record. If they say they’ve done this many deals and they haven’t, that’s not a good idea.

The other one was they’re the loudest person in the room, and are the ones that want all the attention. Everyone knows – if you go to a conference or some sort of seminar, there’s always that one guy who’s obviously trying to gain all of the attention. Their explanation was someone who’s really good at being a mentor is gonna be pretty selective with who they bring on. So they’re not gonna be crazily marketing their program every single place that they go. It’s most likely gonna be them finding people to work with on a one-on-one basis. They’ll go to the conference or the seminar and they’ll sit back and observe and pick out the people that they might wanna work with, and then approach them one-on-one, rather than grabbing the mic from the MC and saying “Hey, I’ve got a great deal. Do you wanna partner up with me on it?”

That takes us to number two, which is them being overly aggressive. So even if they are talking to you one-on-one, if they’re really aggressive and they’re trying to pressure you to join, they’re saying things like “Well, this is only a one-time opportunity. The second I walk away from you right now, this deal is gone.” That’s also a red flag, that something’s amiss.

Something else too which is also very interesting was value for value. Again, these are free mentorships… And typically, when a lot of people ask me how to find a mentor, I tell them that you wanna go out there and proactively add value to their business. Because at the end of the day, the person who is the mentor is going to be adding the most value, obviously, to your business, because they are way more experienced than you… So just you alone being with them will give you credibility that you won’t have otherwise. But they should ask for something in return from you. They’re not actually gonna give away their years of experience for free. If they are, then something’s most likely going on. So if they’re not asking for something in return, that’s also a red flag.

And then two more are no referrals – you ask them for referrals and they’re kind of weird and saying how “Well, my limited partner died, and my other ones are on vacation for the next three years, so you can’t really get in contact with them… But just trust me, I’ve got you.” Obviously, that’s not gonna happen, but if they don’t have referrals they can list right off the bat, it’s also a red flag.

And then lastly – this might be more along the lines of after you’ve started working with them, but they make you feel bad for asking questions. They make you feel stupid for asking questions. They don’t wanna answer your questions, or they just straight up don’t answer your questions is also another red flag.

Danny Randazzo: Yeah. I certainly agree with all of those, and I’ll add two more points to the list here for people to consider. Number one, trust your gut. Like you were saying, Theo, if something doesn’t feel right, or they can’t get references, or there’s a lot of excuses about why their references are out of town, and your little gut inside of you is saying “Something feels funny”, it is. Move on. There’s plenty of people out there that are trustworthy and likeable, that you will feel good about working with. Because not only is it you getting value from them, but you getting value from them – you’re giving value to the mentor as well by having that relationship… So it needs to be a two-way street, where you both feel comfortable of creating value and opportunity for the both of you to work on that.

So number one, trust your gut. If it feels off, it is. Just move on and find someone else. There’s plenty of people out there. We’ve got seven billion plus and growing in the world, so you’ll find one person that can be your mentor.

Number two is a very interesting tip that one of my mentors gave me… And Theo, I’m gonna use you as an example. If you were going to be my mentor, I would really love to set up a Zoom meeting with you, Theo, so I can get to know you better after I vet your references… And most likely, the person is gonna take the meeting, a Zoom meeting, using the camera, being able to see them, in their home. So Theo, I’m gonna pick on your for a minute here – what does Theo as my potential mentor look like in his environment, where he’s comfortable?

I’ve learned quite a bit from Theo just by seeing him in his office. The shelving in his background is very organized. I see a photo in the back of his screen; that shows me that he cares about the people in his life, because he wants to see them. I see several books up on his shelf, which leads me to believe he’s eager to learn, and I see that the shelves are very organized, which leads me to believe that he’s a responsible person; there’s no trash on the ground, which leads me to believe that Theo takes care of himself and is interested in being a successful person who wants to take care of his environment.

So I would trust Theo based on the environment that he lives in and is comfortable in. I would have a really hard time personally if I called the mentor and they had boxes of junk in their background, in that environment. To me, that’s very chaotic. I wouldn’t wanna be around that. So the tip from my mentor was “Have a conversation with the person inside of the environment where they live, and you’re gonna learn so much about them just by getting onto a call, even if it’s a minute long, to see where they live and what they sit in on a daily basis.” That to me was a huge tip, to know who you wanna surround yourself with. Again, if someone’s disorganized and chaotic, it doesn’t seem like they would be very diligent at business.

Theo Hicks: Exactly. That’s a great point. I’ve thought of that, but I’ve never articulated it that way before. It’s more of an unconscious thing, where you see someone who’s super-disorganized, and you’re kind of like, “Huh… That’s interesting.” You have that certain feeling towards them right away… As opposed to someone who’s got a very clean background.

You didn’t say anything about the [unintelligible [00:19:48].12] Maybe you just ignored that one. I guess it shows I like to relax at the end of the day, too. Or maybe you just can’t see it. But that’s a great point.

With the one paid mentor that I’ve had before – I never actually did that… And now, looking back, I wish I would have. And you can really apply that to anything – relationships, in general.

Danny Randazzo: A potential business partner, or investor, or whatever you can learn about someone in their natural environment tells a huge story about who they are.

Theo Hicks: I think I’m gonna write a blog post about that concept on Joe’s website next week, because that’s very powerful. I might just take a snapshot of my background and be like “Would I be a good mentor…?” and then go through the things you’ve just mentioned.

Something else I was thinking about, too – taking a step back and not thinking about it from a real estate perspective… If you’re looking for like an author you want as a mentor, then maybe you want someone who’s got a really chaotic-looking background, with books everywhere. When I write books, in my mind it’s just complete chaos; it’s not very organized. In order to write books, you can’t think very structurally, you can’t be organized in your mind. You’re kind of all over the place, and that’s where I think most authors thrive… But particularly for real estate, you don’t want someone who’s got a bunch of crap laying around their room, for sure.

And then obviously, you said “Trust your gut.” I know that’s a huge thing that Joe talks about. We think or we wish that we make all of our decisions based on logic and reason and statistics. And obviously, if we take the time to make decisions, then we do that; but in the moment, we’re not analyzing things like that, when we’re having conversations with people. It’s mostly based on our initial feeling.

If you just trust your gut when you first meet someone, you’re going to save yourself a lot of trouble in the end… Whereas if you try to over-analyze, like “Well, I don’t feel right about this, but he has done 10 million dollars worth of deals, and maybe I can make this work; I’m gonna force it to work”, you might end up in Jay and Samara’s situation, where you’re losing $30,000 or maybe more because you didn’t initially trust your gut.

Danny Randazzo: Yeah. Well, the other thing too – and the last thing I’ve got on the topic  here – is utilize the power of the network. Everybody should be in the Best Ever community group on Facebook, and if you’re thinking about vetting a partner, post it in the community page. See what kind of feedback people have, because chances are if they are a well-known investor or entrepreneur, someone in the community is gonna know them, or know their friend, and they’ll be able to give you honest feedback without expecting anything in return. I think that’s always valuable – tap into the network and say “Who has worked with this person? Tell me about your experience.” And just create your own references after, if you want more in addition to the references that that mentor provides to you.

Theo Hicks: I think we’re gonna stop there for the lessons. So those are the two things we learned last week. The first one was about taking professional photos for your deals, whether you’re selling or renting deals… And then secondarily, we had a deep dive into what to look for when finding a mentor. I think what Danny said about having that video conversation with them – that’s very interesting. I think that’s very solid advice, that everyone should apply.

If you have a mentor right now and you haven’t seen them in person yet, should definitely call them up today and be like “Hey, I’m just curious – I wanna do a video with you and see what you look like.” Obviously, you don’t say “I wanna analyze your background to see if I wanna continue working with you”, but…

Alright, so let’s move on to the trivia questions. I’m trying to make these trivia questions each month themed. Last month was the whacky real estate laws… I think this month I’m gonna focus on some global real estate questions – questions that aren’t specific to the United States… Which I guess makes it a little bit harder.

Our last week’s question was “Name the country where it’s almost impossible to buy a pre-owned resale house, because most of the houses depreciate in value, and more than half of them are demolished after 30 years.” I think you say Bahrain… Is that what you said?

Danny Randazzo: I did.

Theo Hicks: Okay. So the answer was actually Japan. In Japan they have four times more architects and two times more construction workers per capita than in the U.S, obviously because they’re consistently building homes, and I guess demolishing homes as well. I’m not specifically sure what economical reasons are behind this depreciation in value, but I guess the demand is not there like it is in the U.S, and maybe there’s not as many real estate investors in Japan as there are in the U.S.

This week’s question might be a little simpler… This is globally now – what city has the highest monthly rent? This is gonna be based on a two-bedroom apartment. I’ll give you a hint – number two is San Francisco. So out of the entire planet Earth, San Francisco has the second-highest two-bedroom rent in the entire world. What is number one? Danny?

Danny Randazzo: Yes, I’m thinking… That pause of me kind of like looking out this way is I’m thinking through cities that are gonna have the highest two-bedroom rent in the world. I was running through a bunch of different cities here in my head. I think San Francisco is higher than New York, so I’m not gonna say New York, because it’s also a global question…

Theo Hicks: Well, I’ll give you a hint, maybe more specific. It’s not in the U.S, and it’s not in North America, it’s not in South America, and it’s not in Europe. Or Africa, obviously.

Danny Randazzo: Singapore.

Theo Hicks: Okay. So Singapore is the guess. If you are listening to this audio, you can submit your answer to info@JoeFairless.com. If you’re watching the video, comment in the YouTube section below. The first person to answer this correctly will receive a copy of our first Best Ever Book.

And then the last thing – make sure you guys check out the Apartment Syndication School; it’s at SyndicationSchool.com. We post two podcast episodes each week that focus on a specific aspect of the apartment syndication investment strategy – raising capital from passive investors to buy large apartment buildings.

Right now we’re through being a complete newb, to actually closing on your first deal… That entire process, and everything in between. We’ll start focusing on asset management starting next week. Or I guess it’ll be in two weeks, because we’re always a week behind from when I record those.

On Follow Along Friday we’re going to be giving away — or at least discussing one of the free documents that we have available at SyndicationSchool.com. This week’s free document is a free market evaluator spreadsheet. This is a spreadsheet that not only walks you through what data you should be looking at when you’re evaluating a target market, but also how to find that data, and then obviously you can log that data on the spreadsheet.

That is from series number five, which is “How to select a target apartment syndication market.” If you wanna listen to those episodes, it’s 1520 and 1521. You can find these free spreadsheets there, or you can find the free spreadsheets in the show notes of this episode.

That will wrap up this conversation. Danny, I really appreciate you coming on again. I’ve enjoyed the conversation, lots of solid advice. Before we head out, where can people find out more about you and what you have going on?

Danny Randazzo: You can check me out, I’m pretty much @DannyRandazzo everywhere. Also, if you’re interested in the apartment investing that we do, you can check us out at PassiveInvesting.com. I’m all over the internet, so reach out and get in touch.

Theo Hicks: Awesome. Well, Danny, thanks  again for coming on the show. Best Ever listeners, thanks for listening. Have a best ever day, and we’ll talk to you soon.

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