Episode 57: The Perfect Land Business: Profit Without Prison (Part 1)

Clay Hepler (00:00)
Welcome to another episode of the ground game podcast. This is your co-host clay hepler

Justin Piche (00:07)
And this is your other co-host, Justin Piche, and we're here to show you how to win the ground game.

Good morning again. I said good morning again.

Clay Hepler (00:24)
Dude, was, what's up?

Good morning. Dude, one thing I was talking to you a little bit earlier is I have this thing about coffee cups, okay? So, it's just at my house, like I'm not really that particular outside of my house, although I only drink pretty much cold coffee. Like I don't drink warm coffee anymore. That could be odd, but whatever. Like in the winter I drink cold coffee. People are like, yo dude, serial killer vibes. But.

Justin Piche (00:53)
I don't think that's weird at all dude. I prefer a cold brew over hot hot coffee. I still drink hot coffee. just I prefer I just don't always have it. I have hot coffee. It's easy to make but anyway.

Clay Hepler (00:55)
Okay, cool. I appreciate that, man.

Yeah.

So, long story short, I like very little cups because I feel like it allows me to like enjoy the coffee longer. Right, so I take the sip because I'm the type of guy that like I'm a golfer, right, I'm not a sipper, I'm a golfer, you know those people, you know? I just like, yeah, you're a golfer too, you're a golfer, right? So you're like, you take a sip of something, you're like, boop, right? Drinking a margarita, boop, right? Or whatever it is, I'm a straight up golfer. So. ⁓

Justin Piche (01:16)
Hmm, yeah.

⁓ yeah.

Clay Hepler (01:31)
I have these cups that are like small. almost like they're not even tea cups are like 18th century like ⁓ coffee cups like really small. Right. And so today I actually have my wife got this. My wife is just so amazing. She's like got amazing taste and all these little cute things. But I have this little boo cup. Look at this thing dude. Look at this. It's a it's a ghost.

Justin Piche (01:52)
my gosh. ⁓ Does your

house change by the season? You're in Halloween mode now and then it'll shift to Thanksgiving, type fall, cut this stuff and then, okay.

Clay Hepler (02:02)
yeah.

Dude, I think I have, I think I might have two dozen gourds and pumpkins literally outside my house right now of like different varietals, like green ones and blue ones and like, I'm talking and it works, it all works. But she's so good, man. like ⁓ is all about antiques and like really merging.

new kind of modern looks with a more antiquitous look. And so she will go on estate sales and pick up these $500, $1,000 chairs, right? Because no one in our generation or even below really wants this. So the value obviously, as we know as land investors, is values based on what people are willing to pay. And so she, dude, she gets these like in amazing, like you spend

Justin Piche (02:51)
Yeah. ⁓

Clay Hepler (02:59)
$5,000 and I remember we bought, we have these two sofas up there. I think it was $7,000 each, right, for these sofas. They're so expensive. But an old sofa, right, you can reupholster these sofas. So she is this person that reupholsters our furniture. And you can buy these really old, amazing pieces of furniture at pennies on the dollar. So I'm like, you know, we could build a flipping business out of this. No, I'm just kidding.

Justin Piche (03:04)
Yeah, yeah, they're so expensive.

Clay Hepler (03:28)
But yeah man, so that's my story about coffee and praising on my wife. So what's new with you man?

Justin Piche (03:34)
You know, biggest thing on my mind is taxes, baby.

Let's just say I have a little more or a lot more taxes to pay this year than I had originally anticipated. that's one of the interesting things about real estate like businesses like real estate focused businesses. This is like a very common thing when Pete when you're buying and selling assets and then moving money into the next deal. Objectively your business is quite profitable. It shows on your books. You make a lot of money. It doesn't feel that way to you though.

necessarily because you're probably not the type of person that pulls all that money off the table. You know that you need that money to be reinvested in deals to grow faster. And so you make X amount of dollars and then you throw it back into another deal. And then that deal takes a little bit and then you make more dollars and you throw it back into another deal so on and so forth. So you get hit like I think Clay and I both this year with a lot bigger tax bills than you expected. And you find yourself in a position of

Clay Hepler (04:37)
.

Justin Piche (04:39)
You didn't just hold all that cash in an account, not making any money for you, you know, that you need to be used to pay the taxes. So it's interesting. It's just an interesting problem that I haven't really had to deal with too much in the past. In past years.

Clay Hepler (04:53)
You know, I think you can

do a federal pay, you can do a payment period.

Justin Piche (04:57)
Can you? I've never

done that. I'm interested. I mean, we'll see what happens. I mean, could pay it. just like, if I do, then I get like really uncomfortable with cash or, you know, there's a lot of things I'm like trying to do. The first is like, I bought that lot next to me. There's a lot of equity in this house, my primary residence. So like on the upside of making a lot of money last year, the upside is I think I'm going to probably be pretty good for the cash out refi.

Like I think like the bank will see the income and I think that that'll work in my favor for being able to refinance this house relatively easily. But I think I might have it's like a chicken and egg. I think I might have to file them first and then I think I might have to pay them as well before the bank will give me the loan. So it's like I can't really use the refinance money like the cash out to pay the it's like a weird it's very interesting. I feel like the the old adium are the old adage Mo money.

Mo problems is so true. It really is. don't money does not solve solve your problems.

Clay Hepler (06:01)
Yeah.

Which I think dude is a really good segue into what we're going to talk about today, right? Which is, ⁓

actually building a business that's not a prison. It was interesting, Justin, I know that right before you and I had that amazing time out in Ajay's Scaling Summit, you and I had some good podcasts out there, I was in Phoenix, Arizona, and I met with two people that are quite prominent in the real estate investing space. One of them is Steve Trang, and the other one is Brent Daniels.

Justin Piche (06:36)
Yep. I used to listen

to, yeah, I know about those, or at least know about that. don't know that personally, but I used to listen to real estate disruptors a lot back.

Clay Hepler (06:43)
Okay.

Cool. Yeah. Steve's a great guy. He's got some interesting stuff going on with an AI lead manager. It's actually incredible. ⁓ but I was talking to Brent before the podcast, we were sitting there. By the way, one thing I'll tell you is I, ⁓ expect a lot of times when I meet people in person to them for them to not be like who they are, especially if they're an online personality. Brent Daniels was exactly who he was.

And I just love the dude. He has this crazy energy on YouTube and in general. you're like, this guy's making this up. But I met the dude in person and he was just a really good human being. A really good human being. So shout out to Brent Daniels. Had a really good time with him. one of the things that we talked about, and we've been talking about this more and more, is profit, net profit over gross profit. And scaling for the sake of scaling,

No, right? And I think we're going to get pretty transparent. I'm going to get pretty transparent here in this episode and talk about a lot of things about what I think about as the ideal business. And the ideal business to me is in a certain profit range and then you have the flexibility in order to do additional things. So, Justin, I'm just setting you up here, ⁓ You know, what's top of mind for you here?

Justin Piche (08:16)
Yeah, I mean, like we were talking about this earlier and and.

A lot of this comes along with market ups and downs. When the market is great for this business, like you want to scale like crazy, right? You feel it. You feel it in your bones. You're like, if I could only have more leads, how do I get more leads? I need more people generating leads. How do I handle those leads? I need more acquisitions managers to negotiate. How do I sell those leads? I need a team to get these things sold faster. Right? And you feel this pressure and this push because things are flowing. Things are moving and you know,

that if you have more the labor to be able to handle all this and the systems in place, then you can do more business and you can make more money and you can add more value and you can provide for more people. And it's like this, this just, I don't know if you're an entrepreneur like me, which you probably are, if you're listening to this, like you feel this inside of you and you cannot stop it. You just need to go. That's great for growth markets. That's great when things are flying off the shelves.

When it's a tougher market when the business is matured which I think that's where we're at right now. I really just think this industry is matured a lot and we're in a much more professional like you need to be very thoughtful risk-adjusted return type analysis. When you're in this type of business things aren't as blown off the shelves as fast. You've got to get more creative with how you.

buy and sell things. You've got to be more niche and focused on the types of properties that you're doing. You got to be better at due diligence. You've got to have higher quality employees like the skill era. When this is the type of business you're in, you don't want to just grow like crazy. Like you want to have the best business that can weather all storms that is as efficient and optimized for return on hassle, your own mental health and for net

Clay Hepler (10:09)
so in other words, when I hear this, think everyone wants to build a seven-figure business, right? They want to just retire their parents when they're 20, right? But most people build prisons.

They build prisons that eat up their time, eat up their mental bandwidth, and it's not worth it. Dude, I was actually doing an analysis of my first year in land made about $650,000 in gross profit. Happy about that, like good year, right? I'm starting from a very limited amount of cash, but that was at the expense of my mental health. I calculated the amount of hours that I worked, and I think I got paid like minimum wage in terms of net income.

And so it's fun to like talk about this on social media, but unfortunately, like I wish I could have said, Hey, no, man, I made six 50 and like, took home like five 90. Like I was all right. Like, right. It doesn't work like that. And I'm not going to lie. Right. Like in, when you look at working 80 90 hour weeks, bro, and you're away from your family, your health, your health struggles, you drink more than you should. You're just not.

Justin Piche (11:05)
You

Clay Hepler (11:21)
your mental struggles and you make you end up looking like bro I could have got a job

for this. ⁓ So I think the perfect land business is simple, it's tight, and it's full of high performers.

⁓ and so I think for me, at least the, the business, the, the, the actual mechanisms is between half a million dollars to 1.5 per year in your gross flipping business. Right. It is basically, I look at this as your safety net. One thing that really struck out to you, you know, months ago or probably a year ago when you and I were chatting is there was a guy that

talented, smart, accomplished, that went in all in on a development deal, wiped them out. Wiped them out. Because he did not have the optionality of the main business. And the reason why I like the land business is it's simple, it's scalable, it's sustainable. Right? The same exact marketing could target someone that has a, you and I both know this man, sometimes you get a deal that you buy for 20, sell for 30. But then you see that's it. Right.

Justin Piche (12:36)
Yeah, yeah. Happens all the time.

Clay Hepler (12:39)
You send that same marketing to that same county and it's buy for 100, sell for 300. And you're like, what's the, no, there's no, it's just time, luck, et cetera. And so building that perfect 500 to $1.5 million per year business, for some people, dude, taking out a quarter million dollars or three quarters of a million dollars a year, they're set. That's really good. And they don't have the crazy stress of trying to scale, scale, scale, right? That's the perfect business. Now,

layer on what I believe to be what people want to do at the highest level is the highest level of real estate is development, right? You're quite good at this, right? But once per quarter, you're getting a quarter million dollars to one million dollar per year profit deal. You put that on your conveyor belt of opportunity. So maybe you add an extra million dollar to four million dollars per year with not an exponential increase in your ⁓ expenses.

Right? ⁓ And so then you have a business that you might be doing three to four in a year, but your overhead is only 500 to a million. And so how many people do you know actually take home two million in net income with not that much hassle? Bro, that's amazing.

Justin Piche (13:55)
very many. Not very many.

Yeah. I agree. No, no, no, I agree. I really agree because it takes a while to like learn this and understand this right when you're starting out in this business. You have no you barely even know who the first hire is like that's a huge common question like who do I need to hire first like you don't even know

Clay Hepler (14:02)
So I think that that's the idea. What do you think, man?

Justin Piche (14:19)
When you first get in this business, you have no idea what the ideal and optimum business is, right? You're learning it. You're taking courses. You're listening to podcasts. You're talking to other people who maybe have done this. You're getting plugged into group coaching. You're starting challenges and you're figuring it out as you go. And I feel like when, when I started and even when you started, nobody really talked about what's the perfect land business, right? Everyone just talked about who's your next VA to hire. How do you scale? How do you send out more marketing? Like you got to get a bigger numbers, more.

more, you know, more gross profit, more top line, more top line. Everybody talks about top line. And then you do this business for a long time or I mean a short time in the grand scheme of things, but a long time because the industry is not, you know, hadn't hadn't been around all that long, I guess, at least in its modern state. And you learn a few things and I feel like what I have learned over the last several years of market ups and downs and how where I've come to the conclusion is I'm very much aligned with how you see the business.

There is a level of stress that comes with a big team and a lot of overhead that just isn't quite there with a very refined, like very tight operation. You know, because you know, you know, in your heart of hearts that when you get a lot of people on a team, there is waste. There's more waste. There's more opportunity for waste in every aspect of the business.

It may be time, them working, like when they work, how much they work, how hard they work. You can't monitor everybody perfectly. It may be transactions and miss things and due diligence and dates. Like you just get too sloppy and there's too many people to look at and projects you might, you might accidentally, we did this, we accidentally paid for a swell test on a property that had sewer. It was like, there's 2,500 bucks.

Gone, you know, like it's just like there's things that you get just get missed as you have more and more people in a like and you're doing more and more deals. And the stress is huge. And then when the market slows down, you've got this big overhead, this budget that you you've got to spend every month or else you can't pay your team or you can't pay your systems or you can't pay your loans or whatever. Like you have to spend it every single month. And if you have a couple of bad months in a row, you start eating through your operating budget.

You're trying to pull levers that you don't want to pull in your business and that's super stressful. That's super stressful. So I think that's a place where you don't want to be. That's not you don't want to be there. The return on hassle like the stress that you feel managing that type of business, especially in a slow slow market. That's not worth it. It's not worth the potential to make a little bit more money, you know, or even in many cases, you don't make more money, right? Maybe your top line grows, but not your net.

Clay Hepler (16:49)
That's right.

Yeah, yeah, think what this, the reason why I feel so passionate about it, I've been talking about this so much, is because this actually informs your next VA hire. It actually informs, so, you what happened to me when I was scaling, I was like, dude, I was scaling without an end goal. Know your goal, that's super important. And so then you will accept lower than the quality that you should accept if you're hiring someone.

Justin Piche (17:33)
Right.

Clay Hepler (17:42)
Because you say to yourself, look, I'm gonna scale this thing. I need people that are executing tasks and the quality of the way that they execute is less important, right? You know, there's the adage that people take at face value, which is 80 % done is better than 100 % me. But if you build a skeleton crew of people that are not true executors, what happens is you might get to the...

know, roles of the land business, like you and I are about to talk about, like the optimal roles, you might get there and then you realize like, dude, wait, Justin and Clay said this on a podcast and like I took this as true, like this is truth and my team's not operating that way or you might reflect in, when we talk about this in about five minutes and say, my gosh, like I had this team and they're not performing like these guys are talking about, why? It's because when you don't have a way of inform, like,

making decisions, filtering through a goal. If you're just scaling the scale, then you'll put any body in the seat to satisfy the emotional need that you have because you're overwhelmed. And the way that you sequentially hire through this, right, is to build this business is important. I actually was just on a client call yesterday, and we were all, he was gonna bring on a lead manager acquisition hybrid, because he thought that I was his core pain point.

And when we really pulled the onion back, was actually he just needs an EA, general admin person, transaction coordination person, because he needs to take that off his plate. But he was not aware, he wasn't even aware of his problem. He was unaware that he had a problem. He was thinking that it was one thing and it was actually another, because he had a ⁓ misinformed ⁓ view of what he thought he needed in his business.

Justin Piche (19:37)
Hey guys, this is Justin interrupting your podcast. Again, to say thank you for listening. This is part one of a two part podcast where Clay and I are going over what we believe is the optimum land business. So if you're getting value from this, leave a comment, let us know, subscribe to the podcast. We really appreciate it. It allows us to keep coming back every week and providing value to you guys. Now back to your regularly scheduled programming.

All right, Later, yes sir. This is a good time, by the way. This is a good time. Like, morning's 6 a.m., good time for me.

Yeah, it's like

when you're so busy and doing thing like doing so many things, it's hard to isolate the things that are repeatable and easily outsourced to somebody else. And what are those logical tasks to push? And so I can totally understand why he's doing all these random things. And with transactions, we know there's a lot of tasks switching and transaction coordination, a ton of tasks switching. You're going from this deal to that deal, to that communication, to this communication, to that piece of information, to finding this, to finding that.

And so whenever you have an activity that you can't do deep focus in, it's going to have less productivity than an activity you can have deep focus in. So for him, going throughout the day, throughout the week, I'm sure he had a lot of trouble focusing on deep focus on core revenue driving activities because he was doing so much task switching.

Clay Hepler (21:14)
That's a great point, ⁓ So let's talk about the role of perfect business. Now guys, this is our opinion. It does not mean that this is the gospel, right? But it's an opinion and your business can be different because of the way that you show up who you are. You could be an engineer versus a sales guy. You could be an operations person and then maybe the way you actually allocate your time is different, right? ⁓ Exactly.

Justin Piche (21:38)
Your goal for your business and what types

of deals you want to do and what kind of regular income you're comfortable with and what type of big swings you want to take. That could be different too. So yeah, I agree that you got to take this with a grain of salt. This is our we agree. Clay and I are aligned on kind of what the optimum what the optimum land businesses or what what do we feel like for us? Maybe that's a better way of saying it. The optimum land business is, but this doesn't mean it's a one size fit all for sure.

Clay Hepler (22:08)
Okay, so let's just assume the playing field that for me the goal is a $1.5 million top line business, right, with 50 % margins, okay?

Justin Piche (22:21)
So

715 net, I'm taking home every year type of thing, okay.

Clay Hepler (22:24)
Yep. In the

base flipping business, let's assume that we're flipping deals or double closing. Let's assume that my average profit per deal, let's say I'm using a funder, is $18,000. Okay? And that's how I would assume to build a business. Okay? So my structure would be my lineup. I'm thinking about like building like, you know, like

Justin Piche (22:44)
Okay.

Clay Hepler (22:52)
My wife has been doing this NFL draft thing, I don't even know why. Not even NFL draft, fantasy football with all of her friends. And my brother-in-law is really into fantasy football. He knows everyone's weight and bench press and stuff. And it's hilarious because my wife doesn't know anything about anything and she's winning the league because she's just relying on this guy. So pick the right lineup. My lineup is this. Lead manager, acquisition manager, hybrid. A hybrid role that can do both.

Justin Piche (22:59)
Yeah.

Clay Hepler (23:21)
Preferably United States based hire, right? That's the key. Marketing manager, someone that's handling marketing, whether it's helping with your ⁓ market selection, right? Helping with data, yes, data. Managing, managing, managing your KPIs, right? All your KPIs ⁓ in the marketing department.

Justin Piche (23:34)
prepping data.

Clay Hepler (23:50)
specifically for cost per lead, cost per contract, things like that. I'm gonna open up the floor to you, Justin. What do you think is the next couple of people?

Justin Piche (24:00)
Yeah, those are pretty, pretty core. mean, you need, you need cold outreach, right? Or you need some sort of generating leaves channel. And this is almost like, what do you prefer? Because as everybody knows, some people are better at certain lead sources than others, right? If you, if you don't have success at a certain lead source, that doesn't mean it's not a viable lead source for somebody else. It just means that you may not have been able to crack the code like me and PPC couldn't crack the code. Didn't, didn't, didn't do it at a high enough level to have consistent solid results. So we killed it.

You've got to figure out what that is for you. either I mean, what are all the marketing channels that people use nowadays? Right? You got PPC. You have direct mail. You have texting. You have cold calling and then you have services that do a lot of these different things. So outsourcing. So you just got to figure out like what is the right one for you. But you got to figure out your lead gen piece. What do you think is the right lead gen piece for today's market? I think cold calling for sure. I think cold calling absolutely is one of the things I wouldn't want to give up.

Because it's so versatile, right? You can do it general, but you can also get really niche specific focused lists that you get to your cold collars and you get a really high quality cold collars and you can do things that way as well.

Clay Hepler (25:14)
Yeah,

I think that the ideal inputs to build this type of business is you probably need two marketing channels. Outbound and inbound. Inbound, it would be like direct mail. We see at one in every 6,000 to 7,000 mailers, this changes every, you hear me on a podcast, I'll say something different, it changes every day. Yeah, yeah, yeah, yeah. So.

Justin Piche (25:34)
I know, one in eight, one in four, you who knows.

Clay Hepler (25:40)
between 10 and 30,000 per month. Obviously if you're doing 6,000, that's five deals per month. If we're assuming 18,000 per deal, let's just do 20 for easy numbers, that's 100K, that's $1.2 million per year just in direct mail. If you want to diversify and do partial direct mail, you do 20,000, you might be able to do three deals a month with that, and then you could add later on texting. For texting in order to get the numbers that you need, you need to be sending out 50,000 to 75,000 texts per month.

Find with at least with my clients as one in every 20 to 25,000 texts per deal right per deal not contract deal So that should be another two to three deals per month, okay? Close deal so you can dial up your direct mail or dial down based on that right and then cold callers Like you said Justin three to five cold callers I think or you didn't say three to five but you cold calling is versatile and so you can assume a deal for per cold caller every

potentially six weeks. So if you have five cold collars, you could probably assume two to three deals per month ⁓ with cold collars.

Justin Piche (26:51)
So you gotta figure out the lead up on lead piece. There's a lot number of you know, there's a number of businesses that do this for you to add a little bit higher cost to you. But without the hassle of figuring out the team yourself, I Clay and I are both pretty aligned or my preference is to train and bring folks into my own team rather than outsource that labor. You know, that doesn't mean it's the best way to do things. It means you have.

bigger overhead, you have more responsibility to people when it's time to cut or cut back. Like it's harder emotionally for you to let people go, you know, whereas if it's just kind of paying this third party and you, your contract is up, like it's not a personal thing. You know, it's just, Hey, we're done with this marketing channel. You know, thank you for their service, whatever. So there's a little bit more to it when you have bring people on to your team. But so you said lead manager, ⁓

Clay Hepler (27:42)
you

Justin Piche (27:49)
Acquisitions manager hybrid.

else did you say? did we cover already? Marketing manager, transaction manager.

Clay Hepler (27:54)
If you have, if you do, the thing is, you,

transaction coordinator, one last thing that I would say, which is what you were bringing up was with the texts and calls, if you use a outbound service like this, first of all, check with an attorney. Second of all, make sure that if you're doing any of these things that you understand that it's a different sales motion, okay? And so,

Justin Piche (28:01)
Our transaction over.

Clay Hepler (28:22)
You will need probably, if you're doing 75,000 texts per month, we see one in every thousand texts per lead, 800 to 1,000 texts per lead. Okay? So that's 75 deals in a month. And say you send out 20,000 mailers, or let's just say that's maybe 90 deals in a month, 22 days of texting. So 20 days. So you're at like four to five leads per day for texting.

Justin Piche (28:43)
Yeah, texting per month.

Clay Hepler (28:50)
So Hess just joined us here in the podcast. We're just going to keep going. ⁓ So I think with 75,000 texts per month, you're going to assume that you're at four to five leads per day. And then so if you're laying around direct mail, so you have 20,000 pieces of direct mail per month, that should be about 100 leads per month-ish. And so that means you're at about eight to nine leads per day.

Justin Piche (28:57)
Let's go.

Clay Hepler (29:19)
That's going to be hard for your single acquisition manager to manage. And so you might need a lead manager who can also do part-time cold calling.

Justin Piche (29:27)
Yeah, I think that's a good point. That's one of the reasons why my business has grown so substantially in terms of number of staff is because when you're doing active lead gen, like a lot of cold calling, for example, you need people to handle all those leads. Like you can't just like you're generating these leads, they're kind of like lukewarm in most cases, and they require tons of follow up and nurturing before they turn into a deal. I mean, we regularly have deals that we first reached out to three to six months ago.

and that are finally converting after months of follow-up. I think for me, at least in my ideal business, one of the core players is an underwriter or project manager. And I think a lot of folks who are starting their land business, underwriting, right, is not something that they are hiring for because they're generally doing all the comping themselves. That's usually where people feel most comfortable starting is having control over what we assume the value of these.

properties were buying to be and being the decision maker on whether or not we buy them, right? But my size business and at least the ideal business where I would want to be is underwriter project manager. This is somebody who can both help underwrite and comp flips. Ideally, the lead manager acquisition manager is the primary person, but they're like a support role for flips. ⁓ And they are also managing all property improvements of which we do a lot. I mean, like there's a lot of properties that just need to be cleaned up.

You know, we know that we spent a couple thousand dollars on cleanup work. We're going to sell this property for 10, $15,000 more than if we just leave it like completely overgrown kind of forest land type thing. And then the other thing is. Subdivides and developments because at least in my optimum business, yes, we are focusing on some amount of flipping and trying to find and identify good sales markets to buy and sell and double close properties. And we are also very focused on subdivides.

and targeting developable properties. And we need somebody who can underwrite those deals and also manage all those deals because it gets to be, it's a lot.

Clay Hepler (31:32)
So is your project manager the one that's actually calling the surveyors to... Okay, so your TC is not doing that.

Justin Piche (31:36)
Yes.

Clay Hepler (31:42)
important nuance.

Justin Piche (31:42)
Now, project

manager is the one who is actually finding the surveyors, finding contractors, vetting them, getting multiple bids, calling them, calling the county, calling the county engineer, calling utility companies, getting scopes of work, like all of that, managing the...

Clay Hepler (31:56)
Got it. So the project

manager is the one who verifies the due diligence.

Justin Piche (32:02)
Yeah, for the most part. TC has a role. TC has a role. for, and this is, this is like a nuance. I think that happens at a certain scale, right? Because if, we weren't doing as many deals, the TC would have probably more bandwidth to do some of these things. And a lot of these actions like ordering per tests and things like doing drone work. used to have these sit on TC because I consider them a part of due diligence. And I had TC managing most of due diligence.

But then we started, we got to a place where the transaction volume just got too much. And so we, we narrowed the scope of TC's role and we brought in a project manager who had an expanded and different role that handled some of those things, but also handled a whole lot more things as well. But I think in this, in this type of business, at least for me, my project manager is a core, a core person because I want to be going after those developments, right? I want to see, I want to go after on market stuff as well. want to underwrite.

quality properties on market. There's already motivation there. I want to I want to be able to underwrite off market deals to to elevate to the highest and best use. was just listening to Seth Williams podcast man with Ron Appke. It was they just recorded. They just released it and I was listening to it yesterday. Drive it in the car and they're both talking about how early on in their business when they started they left so much money on the table.

Because they had one tool, it was a hammer, was called flipping land. And they didn't have all these other tools that they now have in their belt. And so they left hundreds of thousands, if not more, of potential profit on the table for not doing things like subdivides. And I know that that's why I started doing it too, because I did the exact same thing when I started. Everything was a flip, everything was a flip, gotta flip it.

Clay Hepler (33:49)
Justin, one nuance that I would add here is like one of the difficulties of scaling and building this perfect business is actually in what you know, and how you do the sequential nature of hiring. The problem I ran into when I was trying to do this and scale and get to 25 employees, right, was sequentially, I didn't actually know what the next step was. Of course, I hired based on constraints.

But like the nuance that you get from, I'm a transaction coordinator doing calling counties, but now the project manager is, dude, that nuance is built through either you borrow it by getting coaching from a guy like yourself, or you burn. Like you get burned, ⁓ man, my transaction coordinator is gonna burn out, right? And so.

That is a nuance. Obviously the benefit of listening to a podcast like this is dude, we're actually building, like helping you understand like these are the actual positions and do it in this order, right? So I would say, yeah, the underwriter project manager is a good position and then ops manager, chief of staff, general EA, you can level this person up to be full on ops. In my case, I have a literal COO in my organization. That's not a cheap hire. That's a six figure hire plus like gross profit.

you know, the guy, six figures, but you need to be able to have a business that can support that. And the business of our size wouldn't be of the, you know, 500 to 1.5. The only way you can support that is if you go big into the development deals, right? So I would say that that's the, the ops manager, chief of staff, and then maybe like a general VA for data scrubbing or other sort of general tasks and

Justin Piche (35:14)
Share.

Clay Hepler (35:42)
Guys if you're interested in like going deeper into the you know how to actually build this foundation You there's a link down below and you can check out a challenge that I'm going to be running here at the end of November ⁓ If you have any interest in building a business kind of like this and being able to see around the corners Anything to add there Justin?

Justin Piche (36:02)
Yeah, I mean, there's also some other option out. I think that's a good core team. I don't think in the tightest possible business, you'd need a sales disco team. I think that you can consider outsourcing all of that. I found it challenging ⁓ when you are marketing to multiple geographic areas to have a really good realtor broker everywhere.

I found it really challenging and maybe I'm sure there's people that have had success doing this and maybe that's where you spend your effort rather than hiring a good sales team. ⁓ But I think for my core optimum business, we do have an in-house sales team that is working hard to build the buyer's list and move property. we've just found that ⁓ great sales and marketing on the Dispo side can save hundreds of thousands of dollars in broker fees.

And I feel like we have our marketing more dialed in than 95 % of brokers.

Clay Hepler (37:06)
Yeah, one thing I would push back on for you is like, you have a really good disposition manager that you wouldn't be able to afford in this structure.

Justin Piche (37:16)
I don't know about that.

Clay Hepler (37:19)
You don't think so? Like your disposition manager is very talented and maybe that becomes what the CEO does. But like when I say you wouldn't be able to afford, mean like your margins would compress significantly.

Justin Piche (37:25)
Yeah.

Yeah.

Clay Hepler (37:37)
So if you want to, yeah.

Justin Piche (37:38)
I got I would have to think about that. I got to think

about that because in my optimum business it doesn't it doesn't I think I have a few more people. I more think about it as like a more of like a budget things like what do I keep my overhead like how do I? How do I keep my overhead at $60,000 a month or less? What is the best most often business I can build for that price and what is the most optimum way to allocate funds?

At that price, that's kind of how I think about the optimum business. And I think that looks that's probably a little more inflated than this. I don't know. What do you think? Is that the right budget for this size team?

Clay Hepler (38:18)
Um, no, no, that wouldn't that would be you would not have enough margin. Like the way I think about it is, you know, your lead manager is gonna be 1200, 1600 a month, maybe 1800 acquisition hybrid, it's gonna be 2500 base marketing manager might be anywhere between 1200 to 1800 per month, maybe 2000 transaction coordinator for US base could be 3500 to 4000 a month.

Justin Piche (38:33)
Yeah. Yeah.

Clay Hepler (38:46)
Ops manager, depending on where you're at with that could be, um, you know, chief of staff 3000. Yeah. Operations would be maybe 10 to 11 if you want to do that, but a chief of staff could be three to four, like a really good chief of staff. And then your underwriter could be anywhere between 1200 to 2000. Um, so, you know, that's like two to 10,000, maybe all in maybe a little bit, maybe a little bit more.

Justin Piche (38:52)
10. she was there, I feel.

Clay Hepler (39:16)
And then you have your direct mail. ⁓

Justin Piche (39:19)
which if you're doing

30,000, that's about 18.

Clay Hepler (39:24)
Right. So you're probably at around 30 to 40 K, um, in monthly spend, right? Of course you can bump that up to 50 or, or, or 45. You, you, you move a couple of levers, um, based on base salary, but that business probably gets you to, or that level probably gets you to, you know, 1.5. Um, but those guys, knew that

Justin Piche (39:52)
Gross.

Clay Hepler (39:53)
Yeah, gross. Yeah. But you know, if you have a 60,000 per month, you know, that's 720. And so, like, yeah, that's your 50 % margin. But that doesn't include any commissions, that doesn't include any. you know, it's, it's a, whether or not you want to have people that are more senior.

Justin Piche (40:05)
Yeah, so maybe you're up at two.

Clay Hepler (40:22)
in these roles or you can do global talent, that's really where it comes down to. And that comes down to, you want margin? Like how do you structure margin to be at 45 versus 55? Like, or 60 % or 40%. That just depends on who you have in the right seats. And you might be willing to give up a little bit extra so that you can have more off your plate, which is kind of the next iteration of this, which is like, have your core team, like you were talking about. Seven to 10 people, six to 10 people.

that maybe you are paying a little bit more for, you can't afford them, but then that frees you up as a CEO to go out there and go after big deals, development deals, right?

Justin Piche (41:04)
It's it's, fun. Cause while we, while we agree and you know, there's obviously different ways we see this business spaces on our unique experiences. ⁓ and, and even like, some extent loyalties to the people that have helped us build our businesses on, on, along the way, at least that's how I generally feel. Like I don't see myself building a business without a Dispo manager. And maybe it's just, maybe it's just like, Hey, maybe it's just a little bit bigger, you know, but.

Again, we're trying to arrive on like, what is the optimum? Like we said at the beginning of the podcast, there is no like perfect optimum for everybody. Everybody has slightly different goals and different desires and what they're good at and what they want on and off their plate. This is just kind of a maybe a middle, maybe a framework of which you can shoot for and tweak to your own tastes.

Clay Hepler (41:49)
So look, ⁓ I think at a very base level, like Justin and I are talking about, like there are different ways to skin this cap. There is a foundational way to do it. I think with marketing, is importance of data is super important, given the right data. And I know Justin, you have something as it relates to data cooking in the background. What's the deal?

Justin Piche (42:09)
Yeah, I guess

why not do a little plug here. We presented it and we've talked about it before at Auge's land scanning summit. But one of the things that I did early on in my business is outsourced data management to I mean, I hired I hired a data scientist to work on my data to basically find good markets, get all the data downloaded, format the data for all my marketing channels, skip trace the data. And it's been awesome. That's been awesome. And so

My data manager got to the point where she was only working in my business for two hours. And so she started doing her own kind of consulting thing. It was called Terra data consulting and Tara data consulting is essentially a data scientist who helps you pull your data and find out the best markets to market to and can help you analyze past trends and look at your leads and figure out characteristics about them that make them, ⁓ you know, that can inform your next source of data.

skip trace and format all your lists for all of your outbound marketing channels. So that's that's what Teradata Consulting does. And along with that, I started a little skip tracing company called Solid Skip, which is basically designed to bring bulk skip tracing prices to people who don't necessarily have the budget to drop 12, 15 grand a year on skip tracing like in one and you know in one transaction. So check it out. SolidSkip.com

and terradaticconsulting.com.

Clay Hepler (43:38)
Yeah,

cool, man. We'll throw that below. I know we got to wrap up here. Guys, we're to do part two here of actually the capital and cash flow of this next week CEO's role transition pass. How do you actually transition through here to make this happen? Again, guys, if you get benefit from this, please write, review and subscribe. We would really appreciate it. It allows us to know that you guys are actually following and getting benefit from the podcast. And again, if you're interested in building out the foundation for a business like this.

You can check the LAMEN challenge below. It will be in the descriptions, which will be launching sometime in November. We already have our first cohort and people are absolutely going wild and they really have gotten a lot of benefit from it. Justin, anything else before we sign off here? I'm on in.

Justin Piche (44:18)
Yeah,

I mean quick plug for the land man challenge. I mean like you are offering this thing at an crazy deal. Like almost a no brainer for anybody who wants to get to this point in their business so. For those of you who are listening, you have literally nothing to lose and everything to gain. So that's it until next time we'll do part two. ⁓ Sign our.