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Crushing it in a Small Market with Jared Irby
Jared Irby is the president of IRBY Homebuyers and the IRBY group of companies. He is an experienced entrepreneur with a unique and diverse skill set. Jared has opened and sold multiple successful ventures in his career. Two startups were taken to over $10MM per year in revenue with significant cash flow and profits. He is highly skilled in marketing, sales, and business management as his diverse experience has required.
He started buying and redeveloping real estate 10 years ago and has never looked back. Over the last 10 years, Jared and his group have companies that have flipped hundreds of houses, acquired hundreds of apartment/rental units, and transacted tens of millions of dollars in real estate deals.
- Who Jared is
- Doing 150 deals in a small market
- What his business looks like
- The reason they are taking titles for most of their properties
- Staying in control
- What his team looks like
- Their average deals
- BRRRR method
- Where they get most of their deals
- What list stacking is
- Having a great team culture
- Having a good script
- Setting up their core values
- - Team first
- - Massive action
- - Positivity
- - Honesty
- - Integrity
- - Complete domination
- On hiring people
- Knowing your strengths and weaknesses
- Buying deep enough
- Advantages and disadvantages of being in a small market
- ""When there's people involved, a lot can go wrong."
- "It's more about massive action."
- "Right people on the right seat is important."
RESOURCES AND LINKS FROM THIS SHOW:
- Property List Manager
- Jared Irby on Facebook
- Irby Home Buyers
- EmpireForge Mastermind
Larry: Welcome to the Brain-Pick-A-Pro show live from Lake Wylie, South Carolina. I’m Larry Goins. Thanks again for watching. I really appreciate it. If it’s your first time, welcome. Each week, we interview a different person who is a mover and a shaker. They know what they’re doing. I’m bringing you guys the best of the best. It might be a speaker, an author, a trainer, it might be somebody just in the trenches, somebody flying under the radar, but today, we’ve got a great special guest and I am really excited to have him on. Jared Irby is the guy who is crushing it in a small market. He’s from L.A. That’s Lower Alabama. Please give a warm welcome to Jared. What’s going on, buddy?
Jared: Oh, not too much, Larry. I appreciate you having me on today.
Larry: Man, thanks a lot for coming on. I really appreciate it. Why don’t you start out and tell the viewers and listeners a little bit about yourself. Who is Jared?
Jared: Yes, so, I mean, personally, I have two little girls, great girlfriend, just kind of do what I want to do, live life the way I want to live, and it’s all been with real estate and so that’s pretty awesome. But, as far as our real estate company goes, our company is Irby Home Buyer. We’re based, like you said, in Lower Alabama which is kind of Mobile and Baldwin County on the gulf coast here. We do, you know, close to 150 deals a year, wholesale, fix and flips, own rental properties, and even kind of double and some commercial properties and multifamily stuff as well. You know, so that’s just kind of a little bit about our business.
Larry: That’s awesome, man. You do 150 deals a year in a small market.
Jared: Yes, it’s pretty small. It’s probably, you know, less than 600,000 people in the whole metro area between two counties.
Larry: That’s awesome. So you’re marketing in two different counties to do all your business.
Jared: Correct. It’s a little spread out but they’re basically one kind of metro area for the sake of argument. A lot of people live in one county and work in the other, that kind of thing.
Larry: Right, right. Like, a single MSA but you kind of go outside of that a little bit.
Jared: Exactly. Yes.
Larry: Alright, cool. Cool. so tell us what does your business look like. You do 150 deals a year. Is that wholesaling? Fix and flip? Landlording? primarily?
Jared: Sure, as far as Irby Home Buyers goes the residential side and actually have that’s called the Irby Group of Companies, so it kind of encompass the multifamily, and the commercial stuff as well; but on the residential side, kind of speaking to your listeners, you know, out of those 150 deals, it’s probably 70% to 75% we wholesale to other investors, but we actually do a title to them so it’s kind of on a double closings and things like that. On the fix and flip side, you know, it’s probably the balance of our transactions are kind of split between buying rentals for own portfolio and then fix and flips.
Larry: Okay. Alright. Good, good, good. So, you take title to most of your properties, why do you do that?
Jared: Well, in Alabama, at least in our counties, there is no transfer tax on the deed, so to do a double closing, is not significantly more expensive, maybe 100 bucks or so, and then we can stay in control of the whole process and we’re also on the chain of title, you know, which kind of is important in some aspects with wholesaling I think, as far as just not paying any kind of broker situations. So that’s mostly why we do it, but the biggest reason is we just like to stay in control on the buy side and sell side, because when you assign a contract, you know, it works out 99% of the time, but occasionally, it can go sideways with the buyer and the seller, so we just like to kind of stay in control of it ourselves.
Larry: That’s so true. I mean, there are certain times to use an assignment and there are certain times to use a buy-sell, two separate closings, right?
Jared: Yes, sure. If we’re on it, we’ll sign a contract for a thousand dollars or two thousand dollars or something like that. We don’t do that very often but when we do, we’ll just assign that and not worry about it, but on our biggest, nicer, normal deals, we want to be, kind of, in control of the whole process, which I think is important because our sales were up to the ones going out, talking to the customers initially and everything. Anyway, you know, and then you’re throwing another element into the equation when you have the investor come in, start yelling with the seller. We just like to stay in control of the whole process from start to finish.
Larry: Right. That makes sense. That really does, and it keeps your seller and buyer from knowing what you’re doing, right?
Jared: Yes, exactly. And to us, that’s probably not the biggest thing because we’re on a disclosure state so it’s pretty easy to see after the fact what happened, you know, and kind of figure out what our fee was. We have a lot of repeat buyers, so that’s not really been the biggest issue. The biggest issue is just, this is a people business, right? When there’s people involved, a lot can go wrong. So we have the relationship with the buyer, we have the relationship with the seller, so we kind of want to stay in control of that at all times. A buddy of mine that’s a broker that got me in my first couple of deals, you know, 10 or 12 years ago, was like, I am never going to let you meet a seller at the closing table. You know, I’m staying in the middle of it all. It’s kind of a valid point. You know, you kind of keep the buyer and the seller separate even at the closing table, in a lot of cases, just because you want to like get as much little friction as possible.
Larry: There you go, there you go. That’s good. So you’re doing about 10 to 15 deals a month, this sounds like, so what does your team look like? Do you mind sharing that?
Jared: Sure. We’re kind of going for 250 deals this year so we’ve been, you know, I think we’re on track to close, I think we have like 15 or 16 closings already set up for March, so we’re kind of on a good trajectory right now.
Jared: As far as our team goes, we have two lead managers, the kind of intake leads, follow up on leads, that kind of thing. We have two acquisition reps. They actually go out on appointments, meet the sellers, you know, determine renovation, and basically give them some options where we can purchase the house. Then we’ve got a disposition manager that handle selling all of our wholesale deals but he also handles kind of coordinating the closings, even the ones we buy inhouse. He has an assistant as well. I’ve got a great COO, Rhen Bartlett who basically runs the whole operation. He actually came from a marketing and advertising background. He was running a marketing company, you know, sold advertising and marketing products to local businesses.
Jared: So he’s really familiar with kind of the business that we do. On top of that, we’ve got a couple of, you know, maintenance guys and construction workers that handles some of our rentals and then we sold everything out to a property management company, and we’ve also got a couple of assistants that kind of help us with book keeping and things like that. So, yes, that’s pretty much our team. I think we got about 12 folks.
Larry: Good. That’s awesome. I like that.
Jared: Actually, I forgot to mention on person who is really important. We also have a director of sales that came on board about three months ago. He oversees basically all of the sales for the acquisition reps and also kind of, we have some expansion plans to go out in the surrounding markets around us as well. He’s kind of heading that part up.
Larry: Oh, that’s awesome. So you’re doing that many deals with two acquisitions managers and they actually go to the house and get the contracts signed in person in front of them, in front of the seller.
Jared: Yes. I mean, you know, we do occasionally buying them over the phone if it’s an out of town seller or something like that. We bought plenty over the phone but we like to go face to face. I mean, I think that there’s a lot to be said with that. It’s a really large transaction. I heard there’s a lot of people that do virtual wholesaling and stuff like that and it can certainly make a lot of money, but our business model is set up to kind of go more face to face and buy really really deep and get really amazing deals.
Larry: That’s awesome. I love it. I love it. I’m taking notes, man. What does your average deal look like?
Jared: We’re in a market where you can buy a 5,000 dollar house or 500,000 dollar house. So, it’s hard to say that there’s an average but, you know, our normal bread and butter deal is probably a house that an investor, if we’re looking at the wholesale side, it’s probably a house that an investor is going to want to be in, you know, 50 to 60 grand to rent out essentially. We sold a lot to investors that want to rent properties. It probably would need a 15,000 dollar renovations so we would try to be in that house for, you know, to make a 10,000 dollar profit or so. So we would probably, if they got to be in it for 60, they’re buying it from us for, you know, mid 40s. We’re locking it up, you know, in the low 30s range and that’s kind of a pretty typical wholesale deal for us.
The fix and flips, we like to kind of stay with the bread and butter brick and slab house. There’s not really any bassinets here so we’re looking for brick-slab, you know, cutting edges. You know, 1970s and above in a good neighborhood. We’ll do those ourselves. Anything else we kind of look and if it’s in a worse neighborhood with that type of house, I usually keep it as a rental myself. We try to buy one or two a month for my own personal rental portfolio and kind of use the BRRRR strategy to acquire those. And then, we wholesale to keep the lights on and keep the machine moving.
Larry: That’s good, man. That’s really good. I love it. What Jared is talking about with the BRRRR method is buy, rehab, rent, refinance, repeat, right?
Jared: Yes. Lots of times.
Larry: That’s it. Good. It sounds like most of your wholesale buyers are landlords. Is that good?
Jared: Yes. I mean, don’t get me wrong. We do sell to quite a few flippers and our marketing strategy is pretty aggressive on the wholesale side too, so we actually do sell to quite a few, I will call them retail investors or even retail buyers, maybe somebody who is going to do a live and flip or something like that. The numbers were, you know, better for them on a flip than they do for us.
Jared: So, we do sell a lot of ones and twos, you know, to onesie or twosie kind of investors, and then we got a couple of buyers that are, you know, are doing flips on a pretty large scale. You know, the fix and flip isn’t something that is my forte. I have a sales and marketing background so I really like to focus on trying to build things bigger as opposed to actually doing the fix and flips myself. But then, other folks, you know, love that and so, you know, that’s kind of who our buyer is. That’s probably a third is fix and flip and the rest is the investors looking to actually purchase it and use it as a rental.
Larry: That’s cool. Good, good. Where do you get most of your deals? I mean, I know you got two lead managers that are in taking leads when the calls come in, call them back, I’m assuming they’re setting appointments for your acquisition guys. What makes your phone ring?
Jared: Well, so that’s kind of one of the hard things about being in a small market. You know, if I was in a large market, you figure out PPC, boom, you’ve got one lead channel, you know, that can produce you another deals to sustain, you know, there’s cold calling or whatever. We’re in a market where we kind of have to take pretty massive action to be able to get deals. I mean, when we’re talking marketing, we’re doing tons of direct mail, we’re doing cold calling, we’re doing knocking on doors, doing a lot of list stacking-type stuff where we’re really going in and see who is on multiple lists and we’re, you know, directly contacting those people. We’re also doing pay per clicks, we’re doing social media advertising, bandit signs. We get a ton of referrals from local agents as well which has been a great source of business when they have a customer that they’re trying to list a house, that house either couldn’t sell or it’s in really rough shape or they don’t really have the heart to tell them that 100,000 dollar house is only worth 20. We kind of break the heart ourselves and let the agent off the hook on that and give them a referral fee when we end up on the house. So it’s a pretty large funnel and leads are coming from a lot of different directions all at once.
Larry: That’s really good. It sounds like you’re doing a lot of direct mail.
Jared: We do. We do probably, you know, 40 to 50 thousand pieces a month at the moment.
Larry: Wow. That’s huge. I thought I did a lot of direct mail. I’ve been doing 25,000 and we’re getting ready to pump that up to 35,500 next month.
Jared: Yes, we’re actually cutting back on the direct mail. We’ve seen our response where it’s over the last year drops significantly and so we’re trying to dial in some more, weed out some of the folks that would never sell to us off of that list. So we’re trying to, like, do some data analytics to figure out, you know, who do we have no chance of buying from ever. Let’s go ahead and get them off the list and not mail to them so we’re kind of doing a little bit of research like that right now and really preparing our list down. We were up to 60 to 70 thousand pieces a month at one point, but we’ve kind of downed it back for sure.
Larry: Yes, that’s a lot. That’s a lot. You mentioned list stacking a minute ago. Can you explain to the viewers and listeners what list stacking is and maybe how you go about doing that?
Jared: Sure, so basically, we want to see if somebody on a vacant property list that’s also on a senior citizen list or did they also not pay their taxes, right? If that person checks all three of those boxes, boom! You know, they need us, right? So what we want to do is focus more, instead of just sending a postcard to 50,000 people, we want to send a postcard to the, you know, 40,000 people but dial in to the 10,000 people and go and touch them in a much deeper way with like handwritten letters and things like that, you know, to really get to those people directly that need our assistance. So it’s basically using, and looking at who’s on different lists to identify who has the most motivation. So, all of those things I consider motivation factors and really, frankly, that’s the only reason somebody would ever sell a house that you or me or any investor that kind of does what we do is because they’re motivated to for some reason. It might not be about the money but there are some situations that’s motivating them, whether it’s the county, you know, sending them notice of violations for their grass being too high or they’ve got a bad tenant or whatever it is. There has got to be some motivation factor them to sell at a discount so we’re trying to identify people that have multiple motivation indicators essentially and then target those people more directly. So if they show up on all of their list, we’re just going and knocking on their door, you know.
Larry: That’s awesome. I love it. I love it. Now, do you have a specialty list you’d buy or you just look them up by yourself and list somewhere like list source or something?
Jared: Yes, so we use List source probably like everybody else to get data and all that kind of stuff. So we pull different criteria and things like that, but then we’re getting a lot of records ourselves like divorce cases and you know, probates and stuff like that. We’re actually having to like go to the county courthouse, you know, and get this information. It’s pretty tedious and kind of a program that we’ve just started in the last few months rolling out, and we’re starting to see some good results off of it, and being able to reduce some of our spins a little bit. But, for us, I think it’s important because we’re trying to get go really really deep and we’re definitely the biggest player as far as the residential, you know, investor in our market goes. But, we think that there’s still a lot of love hanging fruit there to get up and this is one of those things. If I was just getting started, one thing that I am seeing really work well is that agent referral network. I mean, that is. Yes, it’s easy. It’s no investment. In fact, I just had an agent text me two minutes before we got on the show here and said, hey I sent you two people last month. I need my check. You know, the transactions just closed. I want my check. You know, that’s the happiest 1500 bucks we’ll ever write because we make probably 30,000 dollars on between both of those deals and we have our 1500 dollars a fee so 3 grand to make 30 and I’ll pay after the fact. I mean, it’s kind of a no brainer there. If I would have known how effective the agent referral was ahead of time, I would have worked that angle a lot harder and invested less money on marketing to begin with because we’re getting, you know, 4 or 5 deals a month from agents now and I think that could be 10 or 15 if we had been working that really hard for the last few years.
Larry: That’s awesome, man. I love that. I love that. Do you use a service to do your list stacking or is that something you do internally?
Jared: Yes, we use a company called property list manager to do our list stacking but then we have some custom tools written to kind of fill in some gaps that it doesn’t have. I kind of have a little bit of a coding background and stuff, worked with some developers to make some, you know, software to, kind of, help us out in generating those lists. It can get a little complicated on that side, but you know, if I’m just getting started, my first list I just bought on list source and drop some postcards and get going, you know. So, it’s more about massive active which is, it’s kind of one of the core values of our company. It’s probably the biggest and most important one. You know, just taking massive action to get out after your goals and just get started.
Larry: That’s really cool. Jared. You have a really cool team, man. I like the sound of what you’re doing. It’s very impressive. Are all your people virtual or do you have an office everybody goes to?
Jared: I know a lot of investors have a virtual and they have low overhead and this and that. You know, that’s not really how I run it. We have a nice office in the downtown area and you know, throw big parties and have lots of events and have a cool culture. You know, we have a gong that we ring everytime we close a deal. We have every single person you know, come to the office everyday for daily sales meeting and it’s a little old school but I think it’s really, really effective because it really creates a team atmosphere and then we’ve kind of hired a team of competitors as well. Those types of folks really feed off of everybody’s energy and I think it’s important to have those folks, you know, be together as much as possible. So that’s kind of why we knock on the virtual route.
Larry: Man, I am smiling because I love what you’re saying. That’s exactly what we do. Right? We’ve got a bell hanging on the wall, anytime we close a deal, we ring the bell and everybody in the office claps.
Jared: Exactly. We make sure that we ring the gong when everybody is on the phone too. It’s even better then.
Larry: I know, right? What just happened?
Jared: Hey we just bought another one.
Larry: We got another house from somebody and helped them and got them cash, right?
Jared: Exactly. Yes. I think it’s great. I mean, everybody feeds off of the energy, you know, it’s kind of law of attraction stuff which I used to think was kind of cheesy and everything. You know, a long time ago, watched The Secret and thought it was kind of cheesy, but I really gotten into it last year too. I think that people feed off of the energy that you throw off. You know, we try to have that really cool team culture and the cool competitive vibe and everybody is kind of always in the little competition with each other in some way. You know, we’re just having fun and having a good time. I think customers feed off of that too and our buyers feed off of it, and the agents we work with feed off of it. It really just kind of creates this really interesting dynamic has really helped us propel.
Larry: That’s really cool, man. So what are some of the things that your cold callers do? Are your cold callers the same as your two lead managers or do you have different cold callers?
Jared: So, we’ve actually kind of toned down the cold calling over the last, you know, a month or two and kind of focused on the list stacking. Although it was effective but it’s just a little bit more management. We have some virtual, like kind of virtual people in the Philippines doing that. They have a script and a list and all that kind of stuff. So, it’s just a little bit more to manage. So we’re trying to look for low-hanging fruit where we can do some automated things to kind of generate business without us having to work as hard for it, so we’ve kind of toned that down. Doing it again if I was getting started, yes absolutely would have. You kind of have to use overseas folks for that. I’ve heard that there were a couple of US based kind of operations that are doing well, but I would think that that’s a kind of a numbers game, you’ve got to talk to a lot of people and so you can’t pay a lot to make that happen.
Larry: You’ve got to keep your eye really low.
Jared: Yes, you really do. Also, you know, there are a little more use to working long hard hours like that. I mean, I used to own a couple of call centers and was in that business for a long time, and figured it is time I kind of got into real estate was I was making money from that and started buying real estate. It’s a tough job, man. You can’t put somebody on the phone for eight hours a day and expect them not to come shoot you up, you know shoot everybody up at the office, right? Like it’s not a fun job. That’s another reason why we’re not doing it as much now. I just didn’t feel like we could have fun with that because it’s a grind. A really big grind. But, you know, the key to it is good data, making sure you’re calling the right people, you have good data on them, so stiff tracing is really important and then having a good script, it’s not really intrusive. You can’t just call up and say hey I want to buy your house. You kind of have to like ease in the back door a little bit better and really focus on, you know, seeing if there’s any motivation or just planting the seed in general. It’s kind of a long term, it’s a long term sell. When somebody goes to our website off of a PPC campaign, you know, we’re buying that thing 30% to 40% of the time, right? But a cold call lead, it’s hundreds of leads to get a deal. You know, because it’s just such a long process and so that’s kind of what we’re looking at. The same thing with agent referrals. We’re closing 30% to 40% of those. You know, because those are motivated qualified folks that are coming to us. So you just kind of have to approach the sales process differently and it’s more of like a long term drip and you continuous follow up campaign until they build up that motivation that they need to sell it to you for 40 to 50 cents of a dollar.
Larry: There you go. That makes sense. That does make sense. I like it. I like it. So, you mentioned you got a couple of acquisition people. One of the biggest challenges that I’ve found is finding really good acquisition people because you need somebody that knows a little bit about real estate to be able to pull comps but they got to be a closer. You need somebody that’s a hammer closer. In my opinion, right? How do you find your guys?
Jared: Yes. So team building has been extremely important to us and I kind of mentioned the core values before but this is how we approached it and that, we really wanted to set our core values to make sure that we’re getting the right kind of people to begin with and we’re kind of living in the right way. So, ours is team first, massive action, positivity, honesty, integrity, and complete domination, right? Those aren’t like kind of cheesy ones you put on the wall, you know, for everybody to see. Those are the ones that, like, we want to recruit people that fit all of those values. So, you know, when we said, we were really intentional about setting those core values and kind of putting off the vibe to the whole community and everything we do, you know, funny things start happening and those kinds of people come to you. It’s really neat. I’m sure you have a lot of energy and you kind of do a lot of cool stuff. You probably just have people that kind of just come to you and you’re not even really sure how it happened, right?
Larry: At times, yes.
Jared: It’s really the same way with us. You know, we’re kind of putting out these vibes that we want competitors, right? All of those are very competitive, you know, kind of, qualities that people have and so once we know what we’re looking for in a lead manager or in an acquisitions manager, and so a lot of our folks have come through my network and the other employees networks and things like that. It might be a friend of a friend of a friend, but it’s kind of coming more organically. Of course, we run ads and things like that too, you know, indeed and I think we use WizeHire. And then, even once we have a referral, we’re still sending them through a personality test which I think is really, really important. We use the DISC test and we used to use Culture Index. We used a couple other things. But it’s really important to make sure that you know, you’re not putting an accountant in a sales person seat, right? When somebody needs a job, they’re going to say whatever it takes in that interview to get the job but when push comes to shove, if you don’t have the right person in the right seat, you’re going to have some serious issues. So you need a closer and you got to have people that can do that and that’s a certain personality type, right? I have that personality type. You probably have the personality type but not everybody does and probably a very small percentage of the population does. So that personality test helps us really weed out people and we don’t even interview them if the personality profile doesn’t match up with the known personality profile of the position we’re looking for. So that’s a really easy way to, you know, make the cut there. We want people who have been in sales before but not necessarily any real estate sales, because I kind of believe once you’ve gone to one of the big normal brokerages, they kind of have you drink the kool-aid and so to speak. It’s hard to get that out of your mind. I’ve seen some former realtors become investors, but I’ve very rarely see realtors make good, you know, employees in an investment business like we have. So we’re trying to stay away from people who actually have real estate experience so we can teach them the way we want to do it. But I really like folks that have some kind of business to consumer sales. We’ve hired some business to business sales reps, didn’t work out. I thought they would because they’re professional, dress nice, hustlers, they’re willing to make a million calls a day but that B to B sell is completely different than the B-C sell. So we have folks that, you know, one of our top reps, she was a furniture salesman and so, you know, kind of really knows talking to people and knows how to sell high priced good too, you know. So that’s important. Our other guy was a, I guess, a bird dog kind of guy for a big fire damage insurance attorney here that, you know, they basically will go up the fire claims and basically do adjusting for an attorney but basically get clients for the attorney essentially. I mean, you’re talking about somebody who is really used to working with consumers in distress and analysing properties as well.
All of those came from our personal networks. Friend of friend or in fact, this one guy, the fire claim guy had called on me for a fire claim that we had trying to get our business over to him, over to his attorney and we end up going with them, they got us a huge check so I was like, hey man, we got to make this official. You know, it kind of comes in a lot of ways but the biggest thing is really putting out the vibes of what you’re looking for, knowing what your expectations are and not settling for the first person that comes around.
Larry: That’s a really, really good point. I totally agree with you that the person you hire needs to be a closer. They need to be a good sales person.
Jared: Yes, I agree. I think the right people in the right seat is important because when I started, it was just me. Really quickly I brought an assistant in. you know, the last thing that I ever gave up was going and closing deals. You know, that was literally the last position that I hired for because that’s what I’m good at. You know, I mean, I know I can go close so I think also hiring, really knowing what your strengths and weaknesses are is really important, like being really honest with yourself like, you know, I am extremely good with math but if I am really honest with myself, I am the worst financial manager bookkeeper there is, right? Like I am just literally the worst. But I am also kind of cocky and confident enough to think that I’m probably better than everybody else, but if you really sit down and you know, evaluate your real strengths and weaknesses, it kind of makes hiring easier. You want to hire people that fill in those weaknesses so that you can really focus on your strengths and you don’t go trying to change your weaknesses. I think that’s really important. There’s no way I’m ever going to be a good bookkeeper, right? So why would I ever learn that, right? I need to focus on what I’m really good at which is closing deals and so I want to, kind of, hire people that they kind of fill those gaps in for me as well.
Larry: That’s cool. So how do you train your guys to figure out what the ARV is and the amount of repairs or do you have somebody that does that before they go out to the house?
Jared: Yes, so that’s kind of blackmagic, right?
Larry: I know, right?
Jared: Yes. especially in a small market, that’s probably one thing if I’m being honest, we really struggle with is knowing what this damn thing is worth, right? You know, I mean, in a larger market that’s more fluid, it’s probably easier, you can probably just look at Zillow, I know it sucks but it’s probably at least what everybody else thinks it’s worth. You know? So it’s a good starting place, but for us, Zillow can say it’s worth 90, and we wouldn’t pay 5 for it or vice versa. We really involve our acquisition managers really heavily with the disposition rep because we’re focused more on what somebody else will pay for it than what the ARV is, right? So that’s kind of how we have taken some of the blackmagic out of it a little bit. We want to say, okay we got buyers that we know will pay about this for this kind of house in this area. Let’s offer enough to make our profit less than that.
Larry: Right, right.
Jared: So we focus more on what a buyer would pay for it and if somebody else is willing to buy it, I’m kind of assuming it’s probably a pretty good deal so we just lock it up. At the same time, you know, our people are also offering us to take flyers too. You know, I tell them they can go buy the white house as long as they use my contract, so sometimes, we get it wrong, sometimes we get it right. You just never know. And then we kind of evaluated after the fact. We’ll use realtors that, you know, we worked with to send us comps on stuff that we’re going to flip. You know, we want to make sure we have our numbers really dialled in on those. We get kind of CMAs from a couple different realtors for every project that we ever close on. But other than that, we kind of use the same tools that everybody else probably uses, Zillow and looking at houses that are sold in the neighborhood, off on the MLS, and that kind of thing, and kind of getting a little range of ARVs, and then guessing the repairs is pretty easy. We have a little calculator we use that’s paying carpet is this much per foot, that kind of thing, and then we pat it up a little bit and make our offer but we’re kind of offering at such a low percentage that it’s almost always works out in a good way. That’s one key I think especially in a small market, it’s buying really deep. Because the market is not as fluid and dynamic and so you have to be really cautious on what you pay for something and you need to buy it as deeply as possible. But it’s also possible to buy deeper because you don’t have as much competition fighting for that same deal either.
Larry: That’s a really, really good point. It really is. You know, I’m really glad you shared that about the ARV and about the repairs because we do all of ours over the phone, right? You mentioned earlier that the last thing that you gave up was actually doing acquisitions. I still do all of our acquisitions, right now. Right? I mean, I’ve got guys that tee it up for me. I call them setters. They tee it up for me but I get on the phone, but that value is hard to determine, not only in a small market but anywhere but if you buy deep enough, you know, you’re going to make money. You know what your buyers are willing to pay. Right? You’re going to make money which is really, really good.
Jared: Exactly. You know, we’re not opposed to buying over the phone and I think it’s a cool model. I’ve really looked into it. It’s probably a lot more scalable that what I’m doing, you know, in a way because you don’t have to have a physical presence in each area, but what I’ve seen is that face-to-face, we can really dig in deep on the motivation. You know, it’s pretty easy for me to hang up on a telemarketer but it’s harder for me to kick somebody out of my house that’s sitting on my couch that won’t get up, right? That’s kind of our philosophy. We don’t leave without a contract or restraining order.
Larry: I love it.
Jared: Not in a bad way, like one of our reps is just a good old country farm boy and at least that’s, you know, how it comes off. So we’re not intimidating or slicked back hair car sells or anything like that, you know, we’re just real genuine people that are connecting. As long as we know what we’re offering is the right thing for the customer, we’re not leaving until they say yes so we’re kind of trying to intrinsically believe what we’re selling so that we are acting in the customer’s best interest and that means getting them to do the deal because a lot of these folks, they need to do the deal like there is a hoarder houses, these are pet hoarders, these are people that have so much deferred maintenance to it, safety hazards, bad tenants that are screwing up the neighborhood, you’re killing your neighbor’s property values. I mean, I think what we’re doing is the right thing. It’s morally right. It’s ethically right and so when you believe that, you kind of come off very confident and you’re going to get the deal. You know? That’s why I like going face to face. I can close over the phone yet no doubt I have, but I can close really really deep in person.
Larry: So how many appointments do your guys run a week?
Jared: They’re probably averaging 15 to 20 a week, you know, that scheduled and probably going on 15 of those, so they’re pretty stacked up. Probably too many to be honest. We could probably use one more acquisition rep if that level of appointments stay the same.
Larry: That’s good, man. That’s good. So tell us a little bit about some advantages and disadvantages of being in a small market.
Jared: Well, so I’ll start off with the disadvantages. The market isn’t as fluid, right? Which, you know a share of Coca-Cola stock is worth whatever it is 100 bucks today, maybe it’s one cent different when I clicked sell on eTrade, right? Because there’s an extremely efficient market to gobble up that. Well, real estate is a super inefficient market but that also means that there’s a huge arbitrage opportunity between, you know, what I can buy it for and what I can sell it for, because the value to you isn’t the same as the value to me and it isn’t the same as the value to the end buyer. So you know, as long as we can identify those arbitrage opportunities, then we win. That hurts us in a small market because there’s not as many buyers and the prices aren’t running up and it’s not as crazy. It also hurts us that we don’t have as much appreciation normally which really hurts with the seller because like if you’re in Tampa and you bought a house a hundred thousand dollars 15 years ago, that thing is worth 200 now. I can still pay you a hundred as a wholesaler. You can still probably even make a profit on it, right, to the dollar. While here, that 100,000 dollar house they bought 15 years ago is probably worth 120 so now I can only pay you 60 so you’re having to rationalize a huge loss that you’re taking on the house. That’s a big objection that we have to overcome. A really big objection and I think that’s really applicable to small markets, you know? And you don’t really have that same thing in a market that’s doubled or tripled in the last 20 years.
Jared: Now, the advantage is, there’s a lot less sophisticated competition, you know, chasing the same deals so you’re not having to necessarily fight as hard and you can be more aggressive with how you buy. You can walk away, you know, from a deal over a couple of thousand bucks that you would never even think twice about doing in a hot market or big market because you know, you know ten other people are on their way but we can do that because we know that nobody else is on their way. It’s also good because you know, the sellers know that it’s not a hot market and, so therefore we can soup up better deals. They are more motivated to sell to us because there’s less option. So, there are some really good advantages and really big disadvantages as well. I think over time, we’re kind of bought in hot markets before and we’re doing a couple of deals and Pensacola which is still a small market, but hotter next to us. It’s much hotter and it’s harder to buy but it’s easier to sell. So it’s kind of cuts both ways. I felt like we’re really good at marketing and sales so I wanted to focus on getting a lot of properties, a lot of opportunities, and then let’s focus on how to sell those opportunities so we spend a lot of time on the disposition side on how we market these things, how we build our buyer’s list, how we kind of, or a part of the community, we started an REIA group so we can actually sell our properties into that group a lot and convince buyers that they’re getting deals because they are. They’re cash flow, right? But you know, you’ve got to kind of create a little bit of a feeding frenzy in a way so we do that with along with events and really building up our buyer’s list in that way.
So being in a small market, you kind of have to focus more on the people and the community and that kind of thing if you really want to be successful.
Larry: That’s really good, man. That’s good advice, good advice. Jared, you shared a ton of really, really good information. I really, really appreciate that. Do you have any parting words or anything else you’d like to share? Are you working on any contact info or anything like that?
Jared: Yes, definitely. You know, just the last words is kind of about massive action, right? Like, I have gotten to where I have gotten in life and you’d probably gotten to where you got in life to where you want to be, you know, because you took a risk, you took a chance and you did it lots of times and you did it over and over and over ahead. You did it when everybody told you it was a bad idea and you know, you’re back to the wall and you didn’t quit. We really believe in massive action and to me that’s extremely important in this. Try our new ideas. Take some risks. Take some flyers and see what happens. But you know, the biggest thing is getting started, getting going, getting up when you fall down, you know, just always moving forward to me is really really important and that’s probably the best business advice I have ever gotten. I never really thought about it and it applies to every business, but real estate especially because, man, you get your teeth knocked out every day for some new problem, and you know, being able to, like kind of pull your big kid bridges back up and get going is really important so that the massive action to me is really important. It’s kind of a big kick that we’re on right now. That’s really important. And just to close out, you know, I’d love to link up with anybody that’s, you know, an investor. Social media is the best way, Facebook, Jared Irby on Facebook. IrbyHomeBuyers.com is our website. I will share my email with you. Maybe you can put it in the notes. You are welcome to link up with me. So yes, social media is the best way, IrbyHomeBuyers.com or EmpireForgeMastermind.com.
Larry: Sounds great, man. I really, really appreciate you being on. It’s been a lot of great information and I know it’s going to be one of the greatest shows that we’ve done because you did share a lot of detailed information, so thank you so much. I really appreciate it.
Jared: Awesome. Thanks Larry for having me on, buddy.
Larry: Man, no problem at all. Thanks a lot. Take care.
Jared: You too.