Episode 76: Fewer Deals, More Profit: Inside Clay's Rebuild

Justin Piche (00:12)
Hello and welcome to the Ground Game Podcast. This is your co host, Justin Piche

clay hepler (00:18)
This is your other co host, Clay Hepler. We're here to show you how to win the ground game.

Justin Piche (00:23)
All right. Well, this episode, I'm gonna do a little bit of an interview with the man, the myth, the legend, Clay Hepler. And the theme here is build the business you actually want.

All right. So I'm gonna ask you some questions, Clay, and you're just gonna answer. You're gonna answer. And we're gonna learn a little bit more about where your business sits today, your philosophies, and a bunch of other things. So let's go ahead and get started. why don't you give everybody just a snapshot right now of your existing business? Headcount, active pipeline, what do you look at? What's the number one thing you look at every morning?

clay hepler (01:06)
Okay. head count, transaction coordinator, dispo associate, two basically dispo admin, acquisition manager, another kind of acquisition manager, funding guy, lead manager, two data people, three underwriters, hiring a project manager. So that would be twelve, twelve people.

Justin Piche (01:36)
Twelve people, all right.

clay hepler (01:39)
So that's what the so and and I would say the most important thing is I look at two things, right? Front end, number of qualified offers per day, back end, the percentage of what we call gates completed on time, which is the

time for certain things that happen on our dispo cycle. So

Justin Piche (02:05)
And how's your ex existing pipeline? Acquisitions, dispo?

clay hepler (02:11)
right now we have about I would say probably 1.9 million dollars of net profit ready to sell. Maybe less than that, probably 1.7. and then under contract to buy, somewhere in the neighborhood of like 2.8 to 3 million dollars. under contract to purchase, we're gonna be closing on

10 deals, mostly developments, small subdivide deals, hundred to four hundred, five hundred thousand dollars in profit to us in the beginning of August. So we we got a big capital raise.

Justin Piche (02:50)
That's a pretty that's a great place to be.

clay hepler (02:52)
We got a big capital raise right now, though. It's kind of stressful, to be honest with you. Like I'm raising like crazy because we just have so many deals. It's like, you know, we have so many deals.

Justin Piche (03:03)
Well, I mean,

just to piggyback on that, you you I think like a month or so ago you said you had your best acquisitions month ever and that came after cutting down your team to like let to less people. And you know, a lot of people might think, Hey, that's like how would how did you do that? And so like, what's going on? How did that how did that happen?

clay hepler (03:21)
Yeah, so it's all about the margin. So we we set a higher floor on the type of properties that we're willing to purchase. That's the most important thing, right? So we just disqualify a lot more properties. We fix our th this was after a month of like a horrible month, by the way. So that would have been June was that month, right? And then but May was horrible. Like we maybe had one of our

second worst acquisition months of the last eight months, right? Maybe our worst. Because we were doing a lot of tweaking with our targeting. So higher quality properties properties, minimum profit per deals of $200,000 for development deals and for flips, minimum profit after everything, $50,000. which is kind of painful, man. So we struggled for like I'd say six weeks.

Our team morale was like horrible. Everyone was like, The world is falling down because we weren't getting deals under contract. 'Cause we had to switch our outbound efforts and and it was it was pretty hard.

Justin Piche (04:34)
Yeah, no, I I can empathize with that with the slowdown for sure. And I wanna rewind a little bit because I was going through some of our old episodes and in December you had thirty-eight deals close on the buy and sell side and you specifically called it the most stressful month of your life. Can you like take us back to that moment and like now that you're through it today, what what are the main levers you pulled to to adjust?

From being so stressed out with an incredible deal volume, to today to having a great, you know, pipeline.

clay hepler (05:08)
I would say that the reason why I felt so stressed at that time was because I had an acquisition manager who was got paid when he we closed deals. All acquisition managers do. And we had a lot of deals that we were kicking, kicking because due diligence was going long, perk tests were going long. There were some questionable deals that we ended up buying. We still own them, by the way.

but there is a guy there was an acquisition manager that was like pushing really, really hard. our transactions team was running off of Notion, which we no lon actually recently switched off of Notion for transactions. because I our no our transaction system was not great, so we were just kind of like wild wessing getting these deals closed. I'd raise a ton of capital. But I think it was mostly around like

not having an identity of the types of properties that we wanted to buy. And so we were buying properties now that I bought for 5,000, supposed to sell them for 15 or 20, which on a return on investment perspective is very good. We still own those properties, right? So there's a lot of those in our inventory. And there's other bigger ones, like we have a couple of big commercial deals that we still own. We have two big commercial deals that we still own, which we thought we were going to be making 400, 500K on.

We're not gonna make that much on them. We might make eighty to one hundred to two hundred, right?

Justin Piche (06:41)
And on on time and on a timeline that is not nearly as good as you probably

clay hepler (06:45)
That's right.

Justin Piche (06:46)
wanted. Yeah.

clay hepler (06:48)
So I I think if if I were to do root cause analysis, I would say it was a lack of clarity and a feeling of pressure to buy these deals from our teammates.

Justin Piche (07:01)
Yeah. I I think I think that's something that a lot of business owners in the land space can empathize with. Maybe on a smaller scale, but like there is a lot of pressure to get deals done. Even not just from your employees, but even from your own voice in the back of your head that, you know, has a scarcity mindset of I've gotta get I've gotta maximize, I've gotta do everything. And y and the truth is you do, but without rules, without you know

guidelines or gates, if you will, of what you're what property type, what type of deal you're willing to do, you might get into a position like you were in and like and you still are, and and I am in, where you have a lot of inventory that's tough to move. it's not terrible, because you will sell it eventually, but it's not very capital efficient, right? And it causes a lot of stress. and it puts puts you in a position where you use resources and tie them up into inventory, either

Funding you have available from other people that you are gonna that you could use for better and faster moving deals

clay hepler (07:55)
Right.

Justin Piche (07:56)
today, or your own capital and your business that gets tied up in these deals. and then that then you get into a a bit of a cash crunch, which which is really uncomfortable to be in. So I I hear ya. I hear ya. back in April, you described a five alarm fire. And I think you kind of talked a bit about it in your last your last answer, but you had too many deals under contract.

Maxed out funding options, dispositions gridlock, probably because some of these deals are just like not great deals that you had pressure from your employees to get under contract. And what was the moment you realized that the machine you had built had been running you a little bit?

clay hepler (08:41)
it's very hard to prioritize in this business. I I I think we can all agree upon that. Like you you you get pulled in a million different directions. One day it's dispo, the other day it's acquisitions or marketing or whatever. And so the clarity of mind to like solve problems is sometimes it's hard to find. And the Faveline Fire was kind of April to May, like I was talking about, which was we didn't have as many deals that were coming through. Our dispo was not

Were our dispo was not working nearly as well as we i it it was. My COO at that point and I we we kinda left like he left the company and we left on good terms, but he left and so I had all this stuff and I was then going to Italy. so and and and we had to raise more capital from people. So

You know, I there was a lot of things that kind of happened at one time. And I think that like business is if you're very good at business, you would just have a very high tolerance of uncertainty and pain. And so in that moment I was feeling pretty overwhelmed. but I had to work through it and guess what? We're here. and even crazier stuff happened, like the Grady County deal that you and I were talking about earlier that you guys

helped us close, there was a big problem with that. There's there's a lot of due diligence stuff that was popping up. So I think that answers your question. It was just a a confluence of different things that added up and just were just face punch after face punch. I thought that it was interesting. My CO left and you know we're we're all we're all on good terms, but the business hasn't really changed.

So what I realized was that hole that he was occupying was he wasn't doing actual revenue driving work. And he was just a glorified EA, which that I don't think that there's I'm not ragging on him as an employee or whatever. I think there was some system problems, there's some personal there's a lot of different things. It's never just one independent variable. But I felt that it was gonna be a larger change than actually what happened, and we're fine, we're more profitable.

Or better than we've ever been at this point.

Justin Piche (11:09)
Yeah. I mean, a lot of times it takes that kind of trial and error and understanding to get back to like what actually drives revenue. I mean, I think you had mentioned when your integrator left, you went you sat down with your team and said, I'm the problem. Like, I'm the reason why we're in this position, you know, take taking ownership and moving the team forward. And like it takes, you know, humility to be able to do that in in your business. Especially when you're talking to a bunch people that rely on you.

clay hepler (11:39)
You know, it it as I so the big month that we had in June, and the thing is, like, we're gonna close all these deals and it's gonna be crazy. But the big month we have in June, right? that was not because of me. That was because of people that came into my organization. And and I hate saying that because it's just so cliche, but the reality is, dude.

Once you find those truly incredible people, I have two guys that I hired, both sales guys that came in. They're freaking killers. They're killers. And once you have people that are like, this guy is a killer.

You you're you you don't I don't want to deal with any more a A player or B players and C players. You know, and and the thing is it's hard to find that A player. sometimes we hire we're trying to hire an A player based on the skill set that they have versus the attributes that they can gain and the skill sets that they can de gain. And what I realized over the past three months as a business owner is

I this really profound conversation with one of my team members. And he was expecting me, because I messaged him like, hey man, we gotta have we have to have a conversation. We gotta sit down. and I had a really straightforward conversation. He was being inconsistent. He was not posting, he was not doing the things that I needed him to do. He was being very inconsistent. And we went to a personal side like what's going on personally? Have you always struggled with being consistent?

And so when you level up the people, whether that's they have the capacity to level up, they're an A player in their core, they might just not have the skill sets that are required to do the job. Dude, that's where the the business grows. So all my business growth has never been from like just working harder. It has literally been from finding the best people. And and I hate saying that. But it's so true, dude. It's so true. and in in having that standard of

I only want a absolute and absolute the best is is really important. so yeah, I can go to that more if you want me to, but yeah, that's

Justin Piche (14:01)
Yeah, well let me ask maybe a follow up. You're you're deliberately building a team, a smaller, lean team of high quality people. You mentioned acquisitions, TC, you're hiring a project manager, data folks, outsource cold calling, et cetera. W why does that smaller team rather beat the bigger org in today's land investing market?

clay hepler (14:28)
Yeah.

I think that there's like a saying in I forget who said it, maybe it's Peter Peter Thiel or Mark Andreessen, that that a 10x engineer, maybe Naval Ravakant, whatever, a 10x engineer, software engineer can do more than 10 2x engineers, right? And I think pe people are the alpha. And we hire people, especially global talent. and we

We we expect just by hiring more people, it solves our problems and our constraints. And I think that's masking the true problem underneath. and so oftentimes when we're building a business like the business that we're building, we're hiring someone. We we we don't have enough time to build the systems that are required to have, let's say, a McDonald's worker or the equivalent of a McDonald's worker within the system because we're an immature business.

And so when we get frustrated when the outputs of our organization are lower than what we expect them to be. and so we need to have a builder and a strategist in most positions. Even for administrative positions, we want someone who can give us like very clear feedback, what's going right, what's going wrong, critically think. you have to enable that as a CEO, but you also have to find that person and hire them.

Because of the immaturity of our business, right? So like there's a whole thing of like the E miss thing, which is, hey, build the systems and your team could fit within them. But when you're our business and you're bootstrapping this and you're learning from a guru and you're trying to figure it out yourself and the market's shifting and deals are taking longer to sell and you need to raise capital, you really have to take a different approach. And so you you s you kind of instead of saying, I just need to hire more people to solve this problem, you say what

What's the actual problem that I need to solve? And so by having a leaner team, the kind of meta thing around that is I'm actually solving a bigger problem, a better problem. And so you don't need all these people to chase rabbits when you're hunting a a buffalo.

Justin Piche (16:53)
Yeah, I I think that's a good illusion. I agree with you, by the way, a hundred percent. it is yeah, I mean it's really challenging to get maybe call it lower level, lower skill, lower attribute employees to work in a business as small and immature as most of our land businesses are. I think that's a really in profound, you know, insight as to why a higher quality, smaller team is gonna win over more people doing more things.

we've we talked about this I think a couple episodes ago, that the alpha in 2026 is quality conversations. I think we talked about it even last episode. And at the same time, we've got these, you know, AI models are becoming more and more prevalent. We've got all these AI enhanced tool companies that are coming out to to pitch, you know, software to land investors.

Make the case that the winning move is fewer deeper seller conversations over higher qual lower quality seller conversations or AI enhanced seller conversations.

clay hepler (18:08)
Think this kind of goes beyond just having solar conversations, but people want to connect with people. and

The further away I've been from my business.

And the further my team members have been away from quality conversations, the less deals, the less profit, the less fun we had. And I believe that is a result of

These sellers have emotions, they're tired of the bullshit. People hate AI. People hate AI. It's all doom and gr gloom. And I think we also use technology a lot of times to like people use global talent to mask the deficiencies underneath. And if we just focus on having quality conversations and that becomes the North Star.

It becomes a lot easier for us to measure whether or not we're moving closer to our goal. I know you text me about that the my one of my land letters this week about every conversation should be value added and it should move the co it should move the relationship forward.

Justin Piche (19:30)
That was a great I I texted but it was a great that was a great insight to put out in the land letter.

clay hepler (19:35)
Thank you. but it's true. And and that's how we think about that's how we think about follow-up, right? Cause I think that maybe dude ten years ago, all of a sudden the automated follow-up was like happening. Right. And so people were able to text and people started to respond to automated follow up. And then automated follow up became like everyone's getting inundated and no one even respond. I ignore any automated follow up I get. I ignore it.

Because we're so inundated with more technology, more noise. And so the whole point of my statement about quality conversations, why that matters, is that it it it separates the distraction, the noise from the the the actual things that matter. and if we build a organization around that, we're good.

Justin Piche (20:32)
Yeah. I think that's really well said. I agree. I I mean I do the same thing. I mean how many how many pitches do you get in your email, you know, your inbox about r that you know are one hundred percent automated? And how often do you reply to them? A goose like never, right? Never. But when somebody calls me on the phone, I'll I actually like enjoy listening to a sales pitch from a real person calling me. And I love it when they say, Look, this is a sales call. And if they say that

I'm like, I will listen for a few minutes. I'm probably not gonna do anything with it, but I'll least hear them out.

clay hepler (21:05)
My dude, my wife loves

doing that too. My wife wallace it gets sold too.

Justin Piche (21:09)
Yeah. but yeah, I mean building that quality relationship on the first call, I I agree, is the alpha here. We talked about well, you mentioned specifically talking to some big wholesale or big house guys. and I think you went to a mastermind or something, and you were talking about revenue per employee being up in the half million to six hundred thousand dollars being a benchmark target. If a listener ran that number on their own business today and it came back ugly, and my guess is it would come back ugly for a lot of people.

what is the first move?

clay hepler (21:47)
I think that there are a couple of big things that we must fix in our business in order to get to the next level.

there are certain actions that we can take that have pretty significant downstream effects that I'm aware of. One of those actions, Justin, is quality higher quality deals. Because you said, Hey, I went from 83% to 41% in closing my deals. That was because you probably were going after less quality deals.

And if you just changed to going after bigger quality deals and had more quality conversations, you might have been at 75% or 70% close rate. That solves like all your business problems. But the thing is, it's not about the opportunity per employee, it's about the revenue per employee. Right. And so you can lock up as many deals as you want. If you don't close them, it doesn't matter. So the revenue per employee is this really interesting number that is the combination of a lot of different factors.

It's not just a direct through line though, because like I said, if you go after more quality properties, you'll have the higher revenue per employee. Because if you have a higher profit per deal, you need fewer people to hit your revenue goals. I also think that people oftentimes hire based on emotion.

Like they feel overwhelmed one week and they heard a podcast about hiring an EA and then all of a sudden they hire an EA instead of actually like hiring based on the constraint of their business.

So I think if people took those both into account and they generally ask themselves, how much revenue is this person actually actually adding to my business, it would be a very different, they would have a very different feeling about what they should and should not be doing in order to hit that number.

Justin Piche (23:43)
I agree. I think the only thing, you know, not necessarily even to add, but to expand on is like deal quality is so is is so important. You know, you talked about that and it is just and w one of the things, just introspectively, last episode I talked about like the the contract to close rate, how it dropped drastically each year. We did more deals each year despite that contract to close rate dropping. And we did more high-quality deals each year. But

The amount of churn in contracts just created so much busy work, lost cash flow on due diligence on properties we had no business getting under contract. More and the busy work and the number of employees required to handle it, the complexity, the headaches. That is that that that that's like what we talked about, like r return on brain damage or whatever you want, you

clay hepler (24:33)
Yeah.

Justin Piche (24:33)
know, whatever you want to call it. That just made it not not worth it. It that was the biggest detraction, is that the team couldn't focus on

as much the higher quality deals because we had so much churn on these lower quality deals.

All right, moving f on to where where you're going. I th I I and maybe this number has changed, so I've just changed, updated. But a while ago we talked about the fifteen fifteen million being kind of liquid, being a number for real financial freedom.

clay hepler (25:04)
Yep.

Justin Piche (25:05)
And I want you to t tell me right, like is tell our audience, is the business you're building right now the vehicle to get you there?

clay hepler (25:11)
Yeah.

Justin Piche (25:11)
Or is it funding the thing that's going to get you there?

clay hepler (25:14)
It's it's the thing that's gonna get me there.

Justin Piche (25:22)
I don't think you need to expand expand anymore. I think that's that's good. I mean, that means you're all in. I love it. So you've got a funding business, the deal engine, you're working on subdivisions, you're starting your fund. Five years from now, what is the headline of your business? And what are you what have you killed? Are any of these stepping stones and there's an end state in mind, or are all these pieces of a bigger puzzle that will continue to grow?

clay hepler (25:51)
I think the media approach is a really big part of what I do. I think that the deal engine right now is the n single greatest way to scale the land business. So I've been really enjoying doing that. It's obviously profitable for me, but you know, people that are like there are people that are at

Three deals a month, four deals a month, they come in and double their business. Like there's a lot of stuff in there that's not just, it's a it's a beginner's community, right? And that's what I want to build through that. I don't know if it's gonna always be the deal engine, but events, conversations with some of the top people in the in the business, like that's that's where I want to go with that. The funding thing is, you know, mm that's a core part of our business. We are crushing funding. We're funding deals.

we're funding a lot of deals. five, eight, ten a month, depending on the size. it's all a part of the ecosystem, man. I love playing the game, brother. I love it. And it's all can it all is very complimentary. As soon as I realize that one thing is not gonna like I will tell you one thing. I am shutting down my I had a mid ticket thing, which was a you know, basically it's called the deal accelerator. Like I'm killing it. It it's just not

We're we're doing too well on our business. The deal engine for me is an enjoyment. I really l like talking with higher level operators. I'm killing the mid actually in three minutes, two minutes, I'm having a conversation with everyone and killing it. All the people in the g community, right? Because I we're doing really well in our main business and I just don't have the time to do it. So I'm I'm killing my mid ticket.

Justin Piche (27:31)
Yeah, it it's a

yeah. I mean if I I agree that I I think I kind of expected that to be your answer. I think the the funding side, the deal engine, all of those foster partnerships and opportunities and they complement the core business that you have as an operator. I I agree with that. I think those are smart things to grow alongside.

we've talked about a ton of different things, philosophies you have on your business and where you're going a little bit here. Last question I have for you. When the business finally and fully runs without you, what is Clay Hepler doing with his time?

clay hepler (28:09)
Well, I am an operator at my core, so I don't I don't ever want to busin build a business that I'm not in.

Justin Piche (28:20)
That's good answer. I agree with you. When people ask me what does it look like to be retired, I'm like doing deals. All right,

clay hepler (28:28)
Right.

Justin Piche (28:30)
man. Well, I appreciate your time. this is a good episode. I'm excited to to release it and let people learn a little bit more about your business at a high level. And that's it for the podcast. As usual, we we appreciate you guys. leave a comment if you want to get some give us some feedback.

rate review subscribe. We do this every week or every other week or on some frequency out of the goodness of our hearts because we love it. We love talking, we love learning from each other and we love putting out information that can help other people.