4 Principles to Building a Profitable Real Estate Team (Part 1)

Foreign welcome back to the Business Freedom Podcast. This is Lars Hedinborg, founder of Real Estate B School, co founder of High Performance Real Estate Advisors out of Charlotte, North Carolina. And this is the first part of a four part series and I'm calling it Building a Profitable Real Estate Team. So the key word here is profitable and I want to go through really four big principles when it comes to building a real estate team that's fully leveraged, that has a life outside of the real estate team leader. So it's sustainable and profitable. So this is really a profitability conversation for real estate team leaders and I'm going to break this down into four parts. So let me run down the four parts so you really dig in. And if you are coming into this series late, you are going to go to part one. And if you are starting at part one, you are going to listen to all four parts. Part one. And what we are going to talk about today is beginning with the end in mind. Part two is to know and stick to the model. I am going to break down our economic model. Number three is do not chase growth for growth sake. And that's a discussion about knowing your numbers. And part four is the world is changing, there's an absolute shift storm upon us and it's about spending less to make more. And so that's the four part series. Hopefully you're going to consume every bit of all of them. And let's dig into part one. So this is beginning with the end in mind. So I have the. I'm just really blessed that most of my time is spent having conversations with team leaders and whether it's our current members at real Estate B school or it's in a strategy session conversation where we're talking about their business and determining if real estate B school can help them achieve their vision for their business or if it's networking. I'm in some of the highest level masterminds for real estate team leaders in the country. All of my conversations are geared toward are you achieving what you set out to achieve? And I'll ask the question a lot of times and here's a question that I want to stick you with. Three years ago, what did you plan to have this year? So look back three years, your three year plan three years ago, what did your net worth projections look like? What did your business look like in terms of units but also profitability? How much production was of your own versus your team? If you wanted to be out of production three years ago, did you actually achieve it? Are you getting off the charts, grades from your clients in terms of the service you provide. Did you actually achieve what you set out to achieve three years ago? And then also in your physical, your goals, physically or spiritually, or in your relationships with your spouse or your children, you know, are you achieving what you set out to achieve? And so when I say begin with the end in mind, it's. There's an expression, you know, the best time to plant a tree was 10 years ago. The second best time is today. And so if you're listening to this, I don't want you to turn it off. And if you didn't build a three year plan, the best time to have built a three year plan was three years ago. The second best time is today. So you can actually do the things that are necessary to achieve the plan you want and where you want your life to be in your business to be. So my first point in having this conversation, beginning with the end in mind, is that it's hard. It's hard to build a completely leveraged real estate business. And here's what I know though is that it's hard to do it half assed. It's hard to be selling, you know, to sell 40 to 50 homes a year and lead four or five agents and an admin team. To sell 40 to 50 homes like that is a really hard life. To take on the burden of additional overhead and still have to sell a good amount of homes. So the thing is actually profitable because you probably set it up wrong. It's hard either way and it really a joke in our highest level mastermind for real estate, B school, our boardroom level, it sucks either way. Building a team the right way, it's really hard and it really sucks at times. Selling homes seven days a week and going on listing appointments and not having the cadence and structure and accountability, hiring the wrong people and accepting misfit folks on your team, that's really hard and painful. And doing this the right way is really hard. And when you do it right, there's the gratification that you're building something that has life of its own. And it's also serving your buyers and sellers at the very highest level, which gives this sort of virtuous cycle about your business because you're getting more business from that. So that's point number one is that this is hard. And that's why I love it. I love business because business is hard. And I wouldn't do anything else with my time than run and build and build sustainable businesses that are profitable, systems driven and they have really good people inside them that are powered to do the work that needs to get done for that business to be successful. Point number two is that net worth matters. Your net worth matters. It's not the only score that anyone should look at for a successful life or a successful business. It's that question again. You know, what was your net worth three years ago or a year ago versus what it is today? Do you have a plan in place to increase your net worth? You're taking on a lot of risk, you're putting a lot of time and you're stressed out. Likely building this real estate team. Are those efforts paying off at least in one category that matters. Right. Money doesn't solve all your problems by any means whatsoever. So I'm not here to tell you that grow the business and do everything you need to grow the business. Because it's all that matters. Because it is not all that matters. And at the same time, you need to do this in a way where your net worth systematically increases every month and to run a process of moving money around so you know that's happening consistently. There's a quote from the book Profit First Mike Michalowicz. He says profit is a habit, not an event. Really powerful. And I feel that way about net worth. You know, hitting your net worth goals is a, it's a process, a habit that requires consistency. It's not this monumental event. One day my business is going to throw off a million or $2 million of cash. It's every week or every other week moving cash around in your business and making really good decisions about holding your expenses and your people accountable so that you can make more and than you spend and invest the difference. It's not rocket science, right? And then live your personal life in such a way where you're spending less than you're bringing home and you're investing the difference and do that consistently and it's game over. Okay, so that's the second point here, that your net worth matters. It is really the ultimate score that we look at of three main scores and I'll get into some of them. It's time, money and stress. So if you set this thing up the right way, systems based on the right model, which we'll get into in part two, you could have a life worth living in, a business worth owning. Most real estate teams that I see, they weren't built with the end in mind and the team leaders in this sort of paralysis state where they can't make a move because they feel like they built up this thing that could be a sizable business. I know guys that are doing 2 to 3 million of GCI on their team and they're not making any money and they're actually taking on personal debt to sustain that business. How crazy does that sound? And I know more than one guy or girl that's doing that. It's absolute insanity. So don't be that person. It has to come boil down to net worth and you taking money out of the business. And then the last point here is it's the concept of, you know, in the Bible, I forget what verse it is. Basically when you, when you take on debt, you become a slave to the person or entity that, that gave you that debt. So whether it's, you know, student loans or consumer credit card debt, or if you have a car loan or even a home mortgage, right, you're indebted, you're enslaved to the lender. And in your business, taking that same sort of thought for your real estate team, are you the slave or the master? And it's a bad analogy because I don't want anyone to have slaves or for you to be the master of anyone. In that analogy though, are you a slave to your business? Do you need to produce, sell homes so you can afford to pay the overhead and hope your agents are going to sell some homes? And you don't have any structure, any cadence or achievement metrics or systems for your agents. And it's this constant sort of grind, this treadmill that you can pull, possibly get off of, or have you built it in a way where you really have the things set up foundationally correct so that you can scale and get more time, get more money and ultimately have less stress. So really ask yourself the question where you are right now in your real estate team building journey. Are you more the slave or the master? And, and if you're more a slave to your business and it's this constant point of stress or contention with your spouse or you're constantly frustrated with your agents, it's because you haven't set the thing up properly. And so, and that just comes down to drawing a stake in the ground. Now I'm going to put my life first and I'm going to build this thing in a way where ultimately it's going to serve me no matter where it is. Right now, I don't care if you're doing 500,000 or a million GCI with your team or you're doing 3 to 5 million with your team. I know guys that are doing 5 to 6 million that are in single digit profits. They're not making a million dollars from their real estate team and they're doing five or six million dollars. They're straight up chasing growth for growth sake, which is part three. I'll cover all these guys. None of them are sharing their profit loss statements. They're. They're simply touting their top line. And that is not something that we believe in and that's not something that's going to really have you living out a life that gives you that time, money, stress, freedom that hopefully you're looking for, which is why you're tuning into the podcast. And so the activity I want you to do as a takeaway here for the part one begin with the end in mind is think about your business, where it is today in terms of units, profitability, the people that are on your team, the quality of your administrative team, the quality of your agents, perhaps. Are they A talent, B talent, C talent, the experience that you're delivering to your clients, the referability of your business, how many referrals you're generating before your clients leave the closing table. That's a metric we started using in our team. It's been a real game changer. And think I and I don't say that term lightly. If you know me personally, you know I hate the term game changer. That one was an absolute game changer. And so look at those sort of metrics, the things that are important to you. How much production is your own personal production, how many days a week you're working, your net worth? What are all those important things? How many date nights did you take in the last 12 months? How many Saturdays did you have completely free from your business and Sundays completely free from your business to invest in your children and your family life, whatever those eight to 10 metrics are, be honest with yourself where you are in those metrics and then decide where you want to be three years from now. So if whatever the date you're listening to this podcast three years out, draw another column and say, I want my units to go to here. I want my quality of my agents and their accountability and their productivity. Go from here to here, my administrative team from here to here. My, my experience I deliver to buyers and sellers from here to here, my net worth from here to here. The time I spent in my business, the stress I have in my business, the amount of weekends that I can take completely off. You know, if I'm working 70 hours a week on average now I want to be working 40 hours on average. That's the first step I want you to take here. Once you get really clear on what you want for a future, we can move forward and put the tactics, the tools, the systems, the strategies in place to help you move the needle. So join me for part two. Y' all know that I'm here for you. If you ever want to jump on a business growth strategy session, the only thing I can offer you is a 45 minute conversation with me about your business to really dig into what's working, what's not working. It's the only offer you'll ever hear from me. And so if that's you, go to realestatebschool.com, click on the business growth strategy session button and answer three or four questions about your business book in the calendar and I'll get you on for a really great conversation with me about your business, about where you are, where you want to go. And the agenda there is, it's simple. It's to serve you in that 45 minutes. And if there's a fit with real estate B school, we'll talk about it. If there's not, totally cool. So that's all I've got for part one. We'll see you in part part two, which is to know and stick to the model. We'll talk to you next time.