529: How to Play the Long and Short Game in Real Estate

SHOW NOTES FOR EPISODE 529: HOW TO PLAY THE LONG AND SHORT GAME IN REAL ESTATE

He has spent 19 years specializing in acquiring real estate assets below market value. In today’s podcast, podcast host, entrepreneur, real estate investor and creator of the The No Limits Sales System Todd Toback shares how you can find below market value properties and build a successful real estate business.

What You Will Learn

• The importance of sales training for all real estate investors
• How Todd went from selling pharmaceuticals to selling distressed single family homes
• What is the number one best question to ask a job candidate
• How to make $40,000 without your own money or credit
• Where are the best places to invest?
• The best target audiences for a direct mail campaign to find distressed sellers
• How a pregnant wife can be a major job motivator
• What book was the main inspiration to get Todd started in real estate (hint: It’s not the book you think)?

About Our Guest

Todd Toback

Todd Toback has 19 years of real estate experience specializing in acquiring real estate assets below market value.  He has flipped over 1000+ Single Family residences, duplexes, triplexes, and other types of property.  During his tenure as a real estate investor, he has held a small portfolio of single-family homes, multi-units, mobile home parks, and has extensive experience in lease negotiation.

Todd is the creator of the – The No Limits Sales System where he has trained solopreneurs and large teams to double and then double profits again just by making a few small tweaks.  He specializes in teaching others the art of talking to motivated sellers.

He also teaches Next Level Wholesaling, teaching solopreneurs how to break free of the bondage of “the one man show” by building highly effective teams that produce revenue.  In addition, he teaches how to purchase income producing real estate and how to build long term wealth while drastically decreasing you working hours.  Todd is also published in the Wall Street Journal and USA Today on hiring and training salespeople

More About Todd

• He’s from Long Beach, New York
• Went to college in Grand Rapids, Michigan
• It snows from October through May
• In 2001, he had had it with the cold weather and decided to drive out to San Diego, California
• When he got to California, he couldn’t believe how expensive it was
• He knew he had to get serious and get a good paying job
• A friend referred him to a sales job in pharmaceuticals

Learning Sales

• He was shy and uncertain about a sales job but his father encouraged him and thought that the job would be good for him
• He started hanging around medical buildings waiting for the drug reps to come in and, when he could, he would approach them and tell them he wanted to do what they do
• One sales rep responded and managed to arrange a face-to-face meeting with a manager at Pfizer
• He got a job with them selling Viagra in its heyday
• He got a great mentor, named Derick, you taught him everything he now knows about selling
• He remembers Derick asking him a question during in his interview: “Tell me something you wanted to learn that, when you first started, you were extremely uncomfortable but, you applied yourself to it, and then excelled later in life.”
  • He thinks he asked him this to know his desire and commitment to learn how to sell
• He was there for a couple of years and tried to learn all he could from Derick but then, he had a “defining moment”
  • It was one of those moments where you take “I should,” “I might,” “I will” to “I’m doing” and “I did”
  • It was when he realized he wasn’t comfortable there and it moved him to action
  • In 2002, he referred a friend to apply for a job at Pfizer
    • They hired him but brought him in at $10,000 higher than Todd’s salary
    • Todd went to Derick and was upset about this
    • Derick said it’s just what it is
    • Todd asked for a $20,000 raise
    • Derick said it’s just not how the corporate world works
    • Todd was frustrated, angry and everything inside him was real stirred up
    • He was driving to a sales meeting and, while on the freeway, saw a Barnes & Noble and crossed three lanes to exit
    • When he got to the bookstore, he went right to the real estate section (he doesn’t know why)
    • He picked up the book “Multiple Streams of Income” by Robert G. Allen
      • He read the whole book in 2 days and was Fired Up!
      • One of the things he read was that “you need to find motivated sellers.  And the way to do that is to find out-of-state owners – people who live out-of-state and own property where you live.”
        • So he went down to the County Recorders office to pull data.  He talked to the lady at the front desk and brought her donuts and bagels.  She helped him manually go through the records for the condo complex he was living in in Carpinteria, California.
          • He found 64 names of people who owned condos in his complex from out-of-state
          • He hand wrote the names down
          • He prayed over and sent 64 letters (He prayed, “Lord, just send me one motivated seller.”)
          • He got one phone call from a husband and wife
            • He met them face-to-face out of the area
            • He had no idea what he was doing
            • He didn’t have the contract
            • But he knew enough about what he was doing to lock it up
            • It was a condo worth about $380,000 and they agreed to sell it to Todd for $280,000
            • However, Todd didn’t have any money OR credit
            • He called his brothers, dad and a friend and they all said no
            • Then he called his brother-in-law, showed him the property and he said, “Let’s do it!”
            • In 2002, his brother-in-law funded the deal and Todd bought his first real estate investment
            • He had the sellers sign a paper
            • He went to a local title company and explained what they were doing and they drafted up the escrow instructions (He does not recommend people to do it the way he did!)
            • Put it on the market the day after it closed
            • 30 days later, they sold it, made $80,000 and split the profit 50/50
            • That was his first check for $40,000
            • After that first deal, he realized that this business is completely dependent on…
              • The ability to generate leads
                • In the beginning, he was not necessarily focusing on what was generating leads for his business – the emotion of this
                  • And because he wasn’t focusing, he was sort of floundering for the first two years
              • The ability to convert those leads to a signed contract
              • Exiting at maximum profit as a buy ‘n hold or sell it

Creating His Own Real Estate Business

• He continued to work in corporate America
• A couple of years went by as he was consistently doing more deals
• Early on, he did most everything that came his way:
  • A lot of lease options (where you lease with the right to buy)
    • This protected him through the crash
  • Wholesaling
  • Buy ‘n Hold
• But, he decided he did not want to continue doing this by himself
• He wanted to free up his own time so he started recruiting and training others to meet with sellers and develop contacts so that he could raise money and use his own money to do this
• He simplified the business by primarily doing wholesaling (although, looking back, he wished he had held on to more properties to rent out)
• In late 2004/early 2005, he quit his full-time corporate job
• His wife was pregnant with their first child and he was very motivated to kick the business into high gear
• He started focusing more on aggressive marketing to generate more leads
• Once he focused on marketing, he wasn’t floundering and had a lot of deal flow

A Defining Moment

• After they had their third child, he slept in one day and he didn’t want to go to work – even though he was working for himself now!
• He realized he had to make a change
  • So he decided to hire his first employee – a sales rep (named Brian)
    • Brian was having trouble getting two words out of his mouth
    • Todd thought that this was going to be a problem
    • So he spoke with a consultant who said, “We have to get what’s in your head into HIS head!”
    • So, that’s when Todd created the “No Limit Selling System”
      • They role played
      • Flow-charted
      • Todd wrote down everything in his head on how to sell successfully
    • 3 weeks after that, Brian got his first deal and they made $40,000
    • 5 days later, Brian locked up another deal
    • And a few days after that, another…
    • They went on to train a bunch of other sales reps and made millions of dollars together
• Todd also knew he needed to create leads for this to continue
  • He started with direct mail that was mailed to his specific target area
    • He sent mailings out every week for the first 90 days
    • Brian took all the calls that came in
      • At first, he wasn’t converting but, over time, a lot of the leads started to matriculate and mature where those motivated and non-motivated sellers become motivated over time
  • He believes that the most effective way to market is to start with one marketing method and to go really deep with it before moving on to something else
  • Today, he has expanded from direct mail to…
    • SMS texting
    • SEO strategies
    • Pay-for-Click advertising
    • Joint venture deals
  • He markets to a multitude of lists
    • Distressed
      • Tax defaults
      • Code violations
      • Utility shut-offs
      • You can buy the lists from brokers but his best leads come directly from the county
    • He also likes to target owner-occupied people 65 years and older
      • Less competition from that list
      • If you’re patient and build the relationship, you’re going to be able to get deals from this group
    • You can target non-owner-occupied but a lot of people are already targeting those lists
    • You can get lists from
      • The county you want to target
      • ListSource.com
      • Software:
        • ProfStream
        • FreedomSoft

His Markets

• Todd recommends that people choose one main market (maybe two) max
• For residential, he focuses on San Diego and South Florida
• He buys mobile home parks in the Southwest and the Southeast

Surviving the Great Recession

• Todd learned a lot from his dad who was a small businessman
• Todd saw his dad deal with ups and downs in his business
• One of the things Todd learned from his dad was that, when things get difficult and go wrong with the economy, the product or the business environment, you need to stay level-headed, calm and focus on what’s real and what’s not
• During the recession, Todd had a lot of lease options
  • He kept level headed and renegotiated the deals he could
• He also had rental properties he was able to continue to hold
• In 2004, he bought a family home in San Diego he knew he was overpaying for it at $335,000
  • He was right – it went down to $200,000
  • But he knew that it would eventually come back
  • There’s a saying that goes, “When there’s blood in the streets, you need to be buying.  If the blood is your blood, you definitely need to be buying.”
  • He found a much better house at the time, in a much better area, that was in foreclosure.  So he bought that place and moved into at that time for $.40 on the dollar.
• He continued to buy other properties at that time that later paid off in a big way

Biggest Mistakes

• First Mistake: After his first deal, he floundered for a few years instead of taking massive action and moving full-speed ahead
  • What he learned: Make sure you are recording your activity every single week
• Second Mistake: He wishes he would have collaborated with others much sooner
  • There’s a lot of talent, money and deals out there and other people have them
  • No matter where you are in your career, everything is right in front of you
    • If you have more money than time, you can partner with someone who is very hungry in taking action and invest your money with them
      • Or if you don’t want to manage properties, you can just invest your money in someone else’s project or become a Limited Partner with them
      • Or if you need talent but don’t know how hire someone, you can always partner with them in the short term
      • The best time was yesterday, the next best time is today

Biggest Success(es)

• First Success: Working with others
  • Hiring an acquisition specialist to work for his company was the largest single move because it opened his eyes to the power of working with others, even if they weren’t internal
• Second Success: Hiring someone just to focus on mobile home parks
  • Having them finding deals was another big success
• Collaborating with others is a big thing because you don’t live in a vacuum.  Business is not meant to be done alone
  • There’s so much business out there so, if someone else has a skill or is willing to do something you are not, that was the biggest game changer for him

Hiring New Employees

• His first employee (Brian) came from a referral – which is the best way to find good people
• But, in the beginning, they also ran ads and hired a lot of people who did not work out well
• He joined the Entrepreneur’s Association
  • They are really big on a book called “Scaling Up” by Verne Harnish
    • The little brother book is called Traction by Gino Wickman
    • It is a system of simple disciplines that, if you apply them to almost anything, you are going to see growth
    • It measures “Who are we?”
      • Who am I?
      • What do I stand for?
      • Who do I want to be around?
      • These questions are the most important things for a business
    • For his company, one of the most important values are “Batteries Included”
      • If you come to work for Todd, he should not need to motivate you, show you how to bust through barriers you encounter and come to work everyday motivated to do your best
    • He has another – “Next Level”
      • What got us here is not is not what will get us there
      • They always want to be innovative
    • When they run a job ad, they put in their core values and they try to repel people who think “Oh, this is going to be a lot of work!”
      • Instead, they attract people to their core values and people who say, “I love that!”
      • And that’s how they begin the interview process
      • They really take their time getting to know the person, know their job history
      • He knows that he is not going to take someone who has never been successful and turn them into a “Rock Star”
        • Past performance is absolutely predictive of future results
• First Employees hiring order
  • Acquisitions person first
  • Administrative person to handle paperwork and closings next
  • A couple more acquisition people
    • Had successes and failures
    • Today, they can take their time, be more thorough
      • They now know better who they are and who they want to attract
      • They now have a 90% success rate when they are hiring an acquisitions specialist

Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years

• First, you need to decide what you want to do and what you realistically will do
  • Do you want to just move some of your own money and get a return for your money
    • Find someone who has a project you can invest in and put in your money and ask for a good return
  • Do you want to get into the trenches and find deals
    • Pick-up the phone
    • Get some training
    • Do your own deals
    • If you’re the person generating the leads and answering the phones it’s very labor intensive
      • The dollar per hour is through the roof though
      • You have people who are one man shows, who do everything and are generating between $250,000 and $500,000 a year just wholesaling properties
      • If you’re the one “connecting” it’s less labor intensive but you’re using your knowledge and your wisdom to put deals together
      • You can outsource but he doesn’t recommend doing that in the beginning
  • Or, do you want to be a connector and put both together
    • Go to real estate clubs, be on podcasts and connect the young, hungry people with the people who have the money
    • You could get equity and cash flow for putting those people together and doing deals
      • Todd has done many deals where he found the deal, found the money and has maintained equity and cash flow for putting those deals together
      • That’s a great way to do business
  • Because you’re older, there’s an implied wisdom that you have
  • You can pick what you want to do

Current Business

• He is very passionate about developing leaders within his own organization
• In the beginning, he just had a lot of people following him around, learning from him
  • That will only take you so far
  • It’s not nearly as fulfilling as taking the people around you and grooming them for leadership
    • You get to see them grow along side you
    • You want to “stand on the shoulders of giants,” as John Maxwell says
  • He loves pouring into people and giving them the opportunity to hire and train other people
• He also loves doing big deals with others
  • Loves the mobile home aspect
  • The team has equity
  • The investors have equity
  • He loves winning with other people
• Today, he only works about 20 hours a week
• He had a great coach named Dan Sullivan
  • One of the things he taught Todd was that there is no rush to retirement
    • Some people may never get there
    • A lot of the things we want to do in our retirement, we can do now!
      • Because he sees this is true, he can extend his retirement indefinitely
      • The vacations he wants to go on, he can go now – he just has to delegate properly

Rap-It-Up

• Favorite real estate book: The Slight Edge by Jeff Olson and 15 Invaluable Laws for Growth by John Maxwell
• Favorite business book: Traction by Gino Wickham
• Favorite app: Productive App
• Favorite quote: “You cannot fix what you won’t face.”
• If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to re-launch your real estate investing business? I would go to a local real estate club, find some young, hungry wholesalers who have some deals and I would either partner with them on their own deals or I would take their deals and partner with someone else in the club who had money and put the deal together, taking equity and cash flow from the deal.

How to Reach Todd

• Check out the “No Limits Real Estate Investing Podcast“
• His website: NoLimitsRealEstateInvesting.com

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