Eric Delgado Interview Podcast

All right, welcome back Business Freedom podcast listeners. It's going to be a fun conversation today. I met our guest at a, at a Mastermind recently and just got to talking about his business growth journey. Really authentic guy, really hard working dude, has achieved what most will never achieve in the business. And Eric, Eric Delgado out of Encino, California is joining us today. His team will do about 175 sides this year, which is monumentally hard to do in his market for about 134 million I think is the goal. Eric, welcome and thanks for coming on.

Thank you. Thank you for having me, Mars. Really appreciate it.

Yeah. So let's. So before I even go any further, let me ask you a question that will. And if you answer the wrong way to this question, we'll have to stop the interview. Anyway, are you prepared to share the good, the bad, the ugly about your business growth journey? Are you prepared to share that?

Yeah, absolutely.

All right, good.

I look forward to it. I enjoy doing that.

I say a lot of times in our industry, you know, there's lots of guys and gals that are willing to say like I sold 17,000 homes this year. There are very few that are share their P and L or will say how hard it was or to say how they failed over and over again. So let's start with the real quick story. I don't want you to spend a lot of time on it, but when did you get started? What were the early days like? How long you been in real estate? What's been your growth trajectory?

So I think they make the best use of our time. I got in the industry in 2008. Mid 2008, complete buyer's agent sold 16 homes from June to December 2009 and 2010 complete buyer's agent sold 379 and 42 10. At the end of 2010 I ended up going into business partnership relationship with Albert Magers who is now still op and market center, owner of five offices. We launched the North Valley office and I was forced to then create a system or people around servicing the leads and referrals that I had for my business while kind of personally turning it off and focusing on running and growing the real estate company that was in 2000, at the end of 2010. So through 11, 11 through 14, I was basically out of production. I had a manager, I had buyer's agent and I had a TC running the business that we had, which a big portion of it was fixed flips that I was working on at a high level at that moment. That's How? I. To be honest with you, I was funding the operation for the real estate business because it wasn't as profitable as I would like it to be. High commission, splits for the agents, lots of staff. It was a money pit at the time.

Okay, and so is it a more helpful conversation to talk about 2015 through 19?

Yep.

Okay, so let's.

Yeah, the only reason, reason why I brought that up was because I definitely was forced to really understand leads, listings and leverage through those four years. So it was a growing process and really trying to get to. First, the goal was volume, which I got to volume, but I was not profitable at all. Like we were doing 30, 40 million, $35 million in 2014, and I was losing money, you know, and that's important to know because I still stuck with it and I'm still funded it, number one, because I still, I wanted to be able to have the volume because it helped me in recruiting agents. It was all for the show. But when I decided that this was not enjoyable and it wasn't worthwhile, I stepped down from the team lead and I got into the production. I'm like, holy shit, I have a mess. And I had to make a decision of either scrapping it or keep going. And I kept going and it took me some time to finally break even and then start making a real profit. Okay, that was 14, April 14 to present day.

And so what was 2015 volume? Like, what was the 15, 16, 17, 18, growth in volume?

14, we did about 55 million. 15, we did about 72. 16, we did 78. 17, we did 82 and 18, we basically hovered about 95.

Okay. And so looking during that time where you took over, and it's pretty common in our industry where, you know, guys are posting big top line numbers but no one's talking about profit. Let's dig into the three things that you really had to do in the business to turn it from, you know, marginally profitable or not profitable into profitable. What were the three things you sort of focused on when you jumped back in?

First thing was I had to scrap all the staff that we had and just keep one staff member. We were way overstaffed. They weren't doing the efficiency was in the ground, so staff had completely needed to get wiped out. I went from five to one, five staff members to one staff member who is now the ops manager. The second thing is we had to go from buying leads and giving them to the agents and having them stay within the team because that was a concern. We, I didn't want Them to leave if someone else was offering leads to actively training them and coaching them through how to prospect for seller business, how to sign contracts and how to close deals without having to pay money for it. Because at that point, if we were going to have to pay money to get these deals, that was going to be. That was a profit margin.

Yeah. That's awesome. Yeah, it's the days of like just buying leads and having agents join your team and there's no, there's brokerages doing that, you know, so really they're looking from a team leader, they're looking to come alongside, come alongside somebody that really has done the thing they want to do. How does that show up in your business today? I mean, I know you're still producing. Is that sort of the. Are you. The energy, the business? Every day you're kind of showing how.

It'S done every day for sure. And that's large. I think that, you know, you know, I talked to you about one of my good friends, Angel Garcia, who we're really close with, and we talk about this all the time. I, at this moment, would not have a business or team if I wasn't in it, because I'm the one that's pumping in the energy, having the meetings, accountability, bringing in the listings, bringing in the appointments daily. So, you know, imagine the team that I have brings in 50% of the business with about eight of them, and then I bring in the other 50% of it with myself. But I show up earlier, I'm usually, you know, out working till the latest, and it's because I understand how much money I need to make and frankly, I can't rely on the team to make it. But the good thing is, if I do put in the time and I do bring in the listings and I do close the deals, it's just like you can't push a chain, right? So it just by nature, I start seeing that that business becomes more profitable. Just it just kind of does it at the same time. So, yeah, being the person that's the most hungry and the person that's the most, like, almost like starting at zero every day is really what pushes my team members to try to strive to do the same thing.

Let me, let me switch gears on you a little bit. Talk about a low point. Talk about, you know, a time in your journey in the last, let's say five years or so where it was just really hard and you kind of just had that sort of breakdown moment, you know, where you wondered, you know, is it worth it or can I get through this. Was there any kind of really sort of, not necessarily dark moments but times where you just like this freaking sucks?

Yeah, that was, that was in 2016. In 2016. So my team and I have always been 5050 on the business and what we do here is we prospect for seller business expires and by owners and follow up and fund contracts and so forth. What was happening was we were on 5050 splits. So the agents would cold call a lead, set it up, I would pre qualify, I'd comp it out, I'd go to the appointment, I signed the contract, I'd bring back the deal and we would go 50, 50. Imagine that. And so in 2016 I must have gone on like 368 appointments and I was, I was getting spread thin. There was a lot of wear and tear happening in my body and in my mind I'm like, man, this is not effective. Like if I actually prospected for my own business lead follow up and sign contracts, I would be way more profitable. So I was really close that at the time I had five agents scrapping that business and just saying, forget this, I'm just going to be my own agent. I'm going to have my own, just me, my staff and then just have a better lifestyle than having to run a team. That's really been a money set of time for me. And so I had to make the conscious decision to focus on training them, spend a little bit extra time on one on one and group trainings so that they can get better at the pre qualification process and the signing contract process and then on an extra bonus structure for them when they signed the contract and I was completely out of the deal. I was really close to scrapping the team at that point. I'm happy I didn't, I'm happy that I spent the extra time to train him and coach him because now those same agents are with me and frankly I don't go to any of their appointments. They prospect for it, they comp it out, they pre qualify it, they sign the business and it's a win win. You know, they're, I'm not making the 50 50, but I'm not making, you know, we're now currently at about 40%, 40, 60 and they're still doing the whole thing. And that, that number right there and the cost of sale, which at this point would be 60%, it's still, because our price point, it still actually helps us run a profitable business on that side.

You probably read the red book, right? What do you think of the budget model in the red book.

They have a big budget. But you know what I didn't realize this was the first time I was the second time I was with the group, but it was the first time that I actually had some really good conversations with people at the Mastermind. They're mostly marketing based Legion enhanced. And you know, I didn't build a business that way because I didn't have money to market. You know, I didn't normally did I have was I really good with systems to be able to say okay, let me go pay Zillow a bunch of money and go pay realtor.com and real geeks a bunch of money and then sell the leads. And my mind didn't work that way in regards to kind of lead managing and learning that stuff. So I think that their budget is really high. I think that that's definitely going to be changing as the market shifts all across the nation and some of these marginal businesses that are us barely making a profit based on the cost of sale and then the cost of all the marketing expenses, I can't see them surviving. I think that most of us are going to have to go back to what we currently do, which is lead but generation based marketing enhanced. We just started doing some marketing to our database just to keep a top of mind for them. Because what we start seeing is they think that we're too busy and they forget about us and then they hire someone else. Because for us the hunt, the daily hunt is pretty fun. And my team, the culture is like, let's go for the daily hunt. You know, new expired, new new fsbo. And you know, we almost all celebrate the expired invisibles on our WhatsApp. When we, when we all say I got this one, I got that one versus oh, I set up a past client listing appointment, they're like, oh, that's good for you. But as the market changes, I'm definitely working hard on making sure that the culture of that changes. But we will definitely remain Legion based and then start enhancing it with getting in front of these people a little more.

Yeah. How many sides will you do from your database this year?

That's a good question. I think that we're probably still going to be about 10 to 15%.

Okay. And what do you think it could be?

Yeah, I would like it to ultimately be at a solid 40 to 50. I mean I think that 50% is a really healthy business. I'm a long ways from there though, because you're talking to someone who literally started over every morning but just because there was a lot of expireds and we're really good and I have a brand in my area, so when my guys cold call these folks and they say, you know, my partner Eric and I have sold about $100 million worth of your neighbor's properties. Because 50 minutes kind of like, oh, really? 100 million? Well, you're not going to hire us because of that, but let's just see if this is a match. And so it's kind of one of those things where we've leveraged off of the brand and the volume that we do, but every day we were starting over. And so as my team members, this is just the truth. I was younger and so were they. As they're getting older, they're getting married, they're having kids. I'm having, I just had a baby. Well, my, you know, my girl and I had a baby six months ago. It's kind of like one of those things where I don't want to have to start over every morning and go for the hunt and then be at the office at 7 and leave like at night. So the goal is 50%. And I think I'm about three years from that.

Yeah, it's, it is. You know, we'll, we have a, we'll do about 3.6 million as a team in GCI this year. And our gross margins are like 72%. So it's definitely. We just have less agents and we don't do any paid home search leads. So we haven't gone down the low Path or the realtor.com path like most and mass media. There are agents in our market doing 100 to 150,000amonth on mass media. We were at like 9,000amonth. So we're very little on mass media. So, yeah, it's definitely something. If you focus on it, it will come, you know, So I definitely encourage that. So what is your path when you look ahead?

You have one child now, one baby, six months old.

Yeah. So when you look ahead, let's say three years from now, what do you see? The path. Because you're pretty. You're pretty tied into the business. What's your path? To free up some time.

So, so, so here's. And I was just talking to angel about this the next 24 months. So imagine June 19th to June 20th, we will be at about, we will be at 225. Let me explain. We. This year we're going to end up at A, at a 175. We're pacing for that. And I'm calculating, I'm counting on. What I'm going to start doing is you know, because I get really busy especially in the peak months which are now prospecting and going on appointments and signing contracts. I start giving the team and accountability and the coaching a little bit of like the backseat. And because I do that I'm more tolerant about their lack of productivity. So the hire that I'm doing today in fact is I'm hiring a. I would guess it would be a pseudo director of sales who's going to be recruiting and who's going to be keeping the team accountable. Two things will happen with that. Number one, I'm recruiting an additional 10 people. I have the space here. And then. And then some our agents right now are per agent productivity is 1212 region. There's some or more. There's a few that are less. I intend on with that with 10 more people. Let's just say it's half of. Because they're revving up time adding an additional about 60 deals. But more importantly the one. The talent that I already have just by having someone keep them accountable. I foresee that to increase from 12 to 15. So within the next 12 months or so I want us to be at 225 sides which will put us at. Will put us at. Will put us at about. That's overall team average right now about 680. That's what we're trending. We will end up being at. Let me see here. Sorry, I'm not really that Good with Matt. 225 times about 680 at 153 million. So for us that, that that's important. That's. That's the. That's the goal for the next those 12 months. And as soon as we start really doing that at a very efficient way I ultimately would like to create. Create a system like. Like a little like franchise books for us so that once we really dominate Aria then just go into a couple of the side areas expansion and then create an additional 50 to 75 deals in some different locations and higher price.

Point location of the 153. How much do you think you'll. You'll be selling? Are you pretty consistent? 33 like how much selling it? How much volume are you doing each year?

What do you mean?

How much volume are you doing personally?

50% of the business. So out of that 153 I will do 50% of that business. My average price point personally is a million. I'm currently at a million. So this year I'M trending for about 55 sites, so. And it goes kind of hand in hand with. At that point I probably will end up being something in between about 40% of the business. So let's just say if I. The more volume we're doing, the less I will end up being percentage of the business. Let's just say at 153I probably will end up being like 135 because I fully intend being at 35%. I fully intend on still bringing in a solid 50 to 75 million price point deals.

Yeah. And are they all. Yeah, got it.

Yeah. Like right, like so. Like for my listings, like right now I have several. 2 million, 2, 5, 3 million. We just closed one on Friday for two. Two like so for me the volume is a little bit of a question mark because I can very well end up be doing 60 million this year with 40 sides. 38 sides.

Yeah. You know, let me ask you some sort of rapid fire questions and whatever comes to your mind, just kind of blurt it out. What, what keeps you up at night when it comes to your business?

Technology. You know, we, I'm reverting back to old school, old fashioned stuff and you know, the concern that someone's going to come in and you know, kind of swipe us out, you just kind of take us out of the business because we're not really as technology savvy. You know, it worries me for sure.

What, what were you most afraid of when you're building the real estate team?

I was afraid of failing.

Okay.

And that's why I, I would focus on volume because it perceived not failure, even though profit wasn't there. That was like the first two, three years of running the business and actually building it. Yeah, I think a lot of people go through that. You know, they don't want to be embarrassed.

Yeah, I know. Guys doing two and a half million and not making any money and.

Yeah, yeah. All day long.

Yeah. It's crazy.

And anyway, everybody has their own, their own hot points for sure.

Yeah. How about the best advice that you've ever received about business?

I think that the best advice I've ever received about business has to be that it's not perfect. So you know, when I fail daily or when I fail with different things that I try, I can't let that be failure. So as long as I'm not meeting with something that's for my ego or for my client's ego, I'm going to try a bunch of different things. So, you know, success doesn't look Like a perfect straight, you know, diagonal line. It's a lot of up and down, for sure.

How about. Can you share one of your. Maybe a daily or weekly habit that you think contributes to your success?

Yeah, the number one thing I read one audible average a week at least, sometimes two because they're shorter. Like, I don't really listen to any music. I don't really do much. I work out. Like, if you see me right now, I'm in gym clothes because I come in early. I prospect, you know, work on transactions. Then I go work out for a couple of hours and I'm listening to audible and I'm driving for a couple of hours later today on appointments. Just mentally. Fitness is everything. So whatever you put in your head, you know, something that's motivational, something that's business best practices. I mean, like, in the last I think I've read, and I'm just saying that, like, I probably read over 400 books in the last few years since I can, you know, remember being the team lead. And, you know, when I'm feeling like, you know, really, really slow or I'm feeling like I'm having a bad moment, you know, I just listen to something like, you know what? Successful people have bad moments. So that's totally normal. And I just plow through it. So listening to an audible daily and not listening to anything else out there because everything else just puts negative stuff into your mind. And your mind is like a cup. You can only put so much into it if there's trash in it. You know, you have to fill out with good stuff so the trash comes out.

Yeah. Awesome. For someone that is looking to kind of scale their business, you know, there's like 85% of real estate agents don't even have an administrator. And like 97% sell less than 25 homes a year. For someone that wants to build something significant, like you have, what. What book would you recommend for them of all the ones you read? Just one that would help them along their journey.

So I would say if. Because to build the business, you have to have an igniter like I am. So you either hire one or you are one. Right? To someone who's really good at sales and able to demonstrate that that can be done to the rest of the team. 20 hour workweek jumps at me, I would say, you know, I really got a lot from Howard Schultz onward, that was a really good book. I would encourage people to pick up none of those mre, but okay, I would say those two books would be good books to start yeah.

Awesome. Tell me, if you had to do it all over again, what would you do? Different.

Database building. We were cold calling and then we would just forget about the client after. And the ones that the no's, we weren't monetizing them. That's the number one thing that now I'm just like, oh my God, my business would be completely different. So when we speak to, let's just say 25 to 40 contacts a day and only one appointment. Once the person says yes, getting the email or capturing the email address of at least 20% of the rest of the people and putting them into a database, my business would 100% be different. I would probably be at trending at 300 million at the very least with a much easier lifestyle. And so having the culture in my team of monetizing the no's and getting emails, we already have the name, the number, the address, and now that we have an email and permission to be in front of them, top of mind, that is everything. And I think that the future of the industry is pure just that Gary says it's just database. So database building, high quality of material to them. That would be the number one thing I would do.

Awesome. You know, as we kind of wrap up here, there's a lot of, even in a good market, there's a lot of folks that are struggling right now in our industry. What words of encouragement would you give them?

You know, I would say that if everybody can remember to go back to the basics. So basically generate for, Gary says two to three hours a day. Like if you're, if you don't have a plethora of listings and you don't have a lot of transactions that you're, you're actually putting out buyers in. I would encourage agents to realize that your job as a real estate professional is just contact sport, you know, so get in front of people, knock, call, you know, if you can do some opens, do whatever it is that makes you feel comfortable, but start talking to more people because as the industry starts to convert, you just can go through a correction. There's going to be less sites to be had and so only the people that are a skilled and actually out there getting in front of people will have an opportunity to survive. So increase your skill and increase your contacts. That's the one thing that I could tell you that will hedge your bet and keep you alive. Otherwise it'll be a concern.

Awesome. Last thing I'll ask you, is there any success quote that you sort of have hung on to for the years like something that's on the visor of your car or it's on the wall there in your office. Is there any kind of motivational quote that you've hung onto?

Not a success quote, but I thought about this, you know, in the last few years of talking of wealth and talking about future and that income is the outcome. And let me explain. So the reason why I jump out of bed nine times out of ten is I want to create enough money daily and weekly to fund my operation, then to fund my life and to have a little bit of savings, but to buy property, put it in an arrangement where it pays itself on a regular basis so that ultimately within the next 15 years or so I can start having income. So if for me, income is the outcome, it's kind of like it's a never ending game. And so I've been actively aggressively buying property for the last few years. And so if you can just focus on that being your ultimate game, you will never get bored, you're never going to get complacent. And so, and it's. So it's fun to create income with what we do. You know, we're able to make massive commissions and put ourselves in a position to buy more property and then we can enjoy the appreciation, appreciation of it and the income that comes out of it. And so in my business plan for that, it's set up for within the next five to six years, not have to work and still live, you know, fairly comfortably. I mean, for my standards. And we're talking about LA standards. So income is the outcome. I don't forget it. I live by that. And I'm working really hard to make sure that that's set up for me and my family for the next couple years.

Awesome. Are you guys planning to have more kids?

Yeah. Yeah, one more.

Yeah, yeah, it'll. It'll get more and more interesting the more years you get out in terms of them needing more and more of your time. So put in the time now and then you'll be able to give it back to them later. That's really cool. All right. That's all I've got for you, brother. This has been awesome. If you're at a point in your business where you can't figure out how to grow or get busy or, you know, maybe you kind of built the team on the wrong model, all I've got to offer you is a 45 minute conversation. If you're listening to this, just go to realestatebschool.com and book in a strategy session with me. Eric, thank you so much. This has been awesome. It's really inspiring to listen to a guy that has done what so few will do and, you know, for you to slow down, to let others into your world alongside you that can probably barely even keep up with you. And so it's just awesome to see. See what you've built. And I just look forward to keeping in touch with you, brother.

Absolutely. Lars, thank you for having me. It's been super fun. Let me know if there's anything else we can do together. Awesome.