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The Ground Game Podcast
Welcome to The Ground Game Podcast, where land investing meets real talk! Join your hosts, Justin and Clay, both 7-figure land investors and seasoned entrepreneurs, as they dive deep into the world of land investing, team building, and personal growth.
The Ground Game Podcast
Episode 35: Deep Dive Listener Q&A: Dispositions, Funding, and Crushing Inertia
🎙️ Welcome Back to The Ground Game Podcast! 🎙️
In this episode, hosts Clay Hepler and Justin Piche dive into a Deep Dive Listener Q&A focused on dispositions, funding, and overcoming inertia in the real estate and land investing sectors. They share personal experiences and insights on navigating challenges, emphasizing the importance of strategic thinking and resilience.
Key Highlights
Personal Updates:
Clay and Justin kick off the episode with some light-hearted banter, sharing their recent experiences and the fun dynamics of their group chat. They discuss their upcoming travel plans and the joys of family time at the lake.
Understanding Dispositions:
The hosts delve into the dispositions process, explaining how to validate and sell properties quickly. They share their strategies for working with brokers and the importance of owner financing in expanding the buyer pool.
Overcoming Inertia:
Clay and Justin address the challenges of managing resources and maintaining momentum in your business. They discuss how to keep morale high and the significance of clarity in overcoming feelings of stagnation.
The Importance of Strategic Thinking:
The episode emphasizes the need for strategic thinking in land investing. Clay and Justin discuss how to prioritize initiatives and allocate resources effectively to drive business growth.
Flexibility in Funding:
They explore the necessity of having diverse funding strategies, especially when capital is tight. The hosts share insights on raising capital and the importance of building trust with investors.
Building a Consistent Business:
Clay and Justin stress the need to focus on consistency and volume rather than one-off deals. They highlight how perseverance and strategic decisions can create a sustainable operation.
Leadership and Team Empowerment:
The hosts discuss the importance of strong leadership skills and empowering team members to tackle core problems. They emphasize how effective leadership can foster a positive work environment and reduce turnover.
This episode is packed with practical advice, personal anecdotes, and actionable insights that can help you navigate the complexities of real estate investing and avoid common pitfalls.
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Clayton Hepler (00:00)
Hello and welcome to another episode of the ground game podcast. This is your co host, Clay Hepler.
Justin Piche (00:06)
And this is your other co-host, Justin Piche, and we're here to show you how to win the ground
Clay. What's up, man?
Clayton Hepler (00:24)
Hey, man, we had some funny exchanges in our group chat today, didn't we? ⁓
Justin Piche (00:29)
my gosh,
Yes, I saw that. I won't even repeat them.
Clayton Hepler (00:33)
Uh-uh.
Yeah, we won't, it's just some funny, some funny, funny shit. I'm flying, yeah man, I'm not gonna drive.
Justin Piche (00:41)
Are you gonna fly? Are you flying down to Florida or are you getting a drive? I might drive.
I think it's like a nine hour drive. It'll probably be like five hours if I go park at the airport, wait, get on the plane.
Clayton Hepler (00:56)
yeah
Justin Piche (00:56)
I know, I'll do the
math, see what's cheaper. Probably gas is my guess. I don't have to rent a car.
Clayton Hepler (01:02)
Yeah, I'm gonna like, I'm gonna fly into, man, I think it's Tallahassee. I think it's Tallahassee. And yeah, drive like an hour or wherever. ⁓ So yeah, should be good. Looks like you got some, you're in a fun little location. Got some deer and some, axis, is that an axis in the background? A pool table, foosball table?
Justin Piche (01:25)
Over
there, that's the foosball table, the axis deer. I think that's a white tail. My brother-in-law hangs his kills up here in the lake. Our family has a lake house that we up about an hour and a half north of Houston. And was actually during COVID, my brother-in-law and I were talking about going in together and buying a lake house. then my father-in-law just said, hey, I'll buy one.
Clayton Hepler (01:37)
Hahaha ⁓
Justin Piche (01:54)
And it was fantastic. So we're up here quite a bit in the summer. think we've got like, we'll go ahead.
Clayton Hepler (01:58)
Are you?
Are you on the lake or next to the lake? What's the situation?
Justin Piche (02:04)
On
the lake, on the lake. We've got a double lot. We have one big boathouse with a few jet skis and a boat in there. And we're waiting for the kids to get a little older before we buy a wake surfing boat. Right now we just have a big pontoon and we pull tubing. I pulled my daughter up water skiing this weekend for the first time. She's five. So that was pretty fun. She's adventurous and ready to go. The kids will get on the tube all by themselves.
My three year old, my daughter and her cousin, who's also five, they'll get on the tube together. It's fun. It's a lot of fun.
Clayton Hepler (02:39)
That's awesome, man. Yeah. I actually learned water skiing like a year and a half ago. ⁓ and it's just, but I learned it in, ⁓ like on the ocean, like in, in like a Bay, which, you know, it, there, the water is calm enough there, but you know, if you're in the open ocean, you can't really water ski because of the waves. Right. so.
Justin Piche (02:51)
Yeah, interesting.
No, yeah, yeah, yeah. It's fine. have one
of our jet skis was my family. My wife's parents had this other lake house in a different lake in Texas and they had this jet ski in 1997 Yamaha GP 800 two stroke motor. We still have it and it's still running almost 30 years later. And when I was stationed up in Washington, I actually brought the jet ski and my buddy towed up to Seattle and
on this trailer with like a bent tongue. And so like one of the wheels was almost bald. But by the time he got up there from trying to get like several thousand miles up, thank goodness it didn't pop. But we still have that jet ski. It's still running right now, which is pretty sweet. So we take that one out. It's fun. It's like really tippy. You can do like 360 on it. And then we have a nicer, bigger, faster jet ski as well. And then we have one jet ski that doesn't work. So we gotta get rid of that. Get something else.
Clayton Hepler (03:55)
Fun man fun fun. It's cool to have you know the kind of the family going in on it Together that's pretty cool. So ⁓ Awesome, man Well, let's let's jump right into it because I know we have a pretty limited time here today to get into it ⁓ You know, I I love you to kind of kick off the the episode one of the things that It you know, this is a requested by the listener episode. So I posted on Twitter the other day
Justin Piche (04:03)
Yeah.
Clayton Hepler (04:23)
And I've had a bunch of people that were requesting Justin. answer questions, ⁓ just kind of more deep diving versus going through a narrative. and so we're going to focus on some things that have happened in past episodes and other requests from the listeners at doing another series of Q and a podcast to help benefit people specifically. So you want to kick us off here, man, with the first one.
Justin Piche (04:43)
Yeah, yeah,
I like this. I actually like this question that you posted here, which is the dispositions side of things. There's a series of questions I think would be would be good to answer. So the first question, what's your dispositions process from the second you get a signed contract to the wire hitting your account?
Clayton Hepler (05:02)
Yeah. ⁓ so this one was, yeah, the, think it was the first one, like one of the highest rated one, you know, for us, it's like, when we get a deal under contract, it is a sprint to number one, validate that this property is one that has value that we're interested in investing in. Right. So we want to sprint to get our disposition manager, ⁓ validates through finding a broker, getting a broker opinion of value. And, and as soon as we get that validation of the number,
And it hits our profit parameters. Then we are pushing incredibly hard to close the deal as soon as we possibly can. Right. And so there's that period of like a waiting period. If we're talking about the transaction process in between transaction to disposition. And once that waiting period is over, that is the disposition manager getting the value. then we're like, we want to push the title company really, really fast to close it. You know, we're trying to close it really quickly. And then once we close it.
to be really simplistic about it, have two options. either self list or list with a broker. ⁓ And when we close, we're sometimes we're doing a dual self list. actually learned this from you, Justin, right? With Brian, ⁓ but bringing our team and helping with posting on Facebook and posting on land.com and really supplementing if we're working specifically with a broker, really supplementing the broker's efforts to bring in opportunities faster, right? ⁓ And so the...
That that is the process. I mean, I can go into nuances here. But out of the sake of time, Justin, I mean, if you have anything to add to that part of the process.
Justin Piche (06:38)
Yeah, we're similar. I'm not necessarily pushing super hard to close it unless it's just a killer deal that I want to buy ASAP and get listed. For me, there's a couple different tracks. Track one is, is this a double close or is this a take title? It's enough margin deal where we're going to buy it. So if it's double close, we basically have about 10 days, that's our target, between getting the property under contract and getting all the title work done.
all the marketing package together and getting our initial listings created, Facebook listings, lands.com, our website. And then with that, we have a series of things we set up. have automated email sequence action plans that we build out in follow up boss for each property. So when we get the property under contract, it slips over to the sales team. The sales team puts together those emails that basically pull in custom fields from follow up boss into the email templates. So whenever we generate a buyer's lead, we can tag them.
with that property or that action plan that's tied to that property and it starts the cycle of sending them automated emails with a bunch of information about the property. Like directions, drone video, drone video of driving up to the property and then a series of other kind of engagement emails to try to get this buyer to respond to us so that we can move towards a negotiation. So with double close, it just happens quicker and we typically aren't going to close on it unless we get the property under contract. ⁓
So that's double close. For something we want to buy, will still target getting all that information really quickly, our due diligence, the drone work and the title work. But I may not list the property until I buy it. And we will do the same type of thing, engage a broker, gauge price. If we're kind of on the fence, we'll create some Facebook listings, engage buyer interest in order to see.
Is this something the market wants? Is our price acceptable before we list on the MLS? Because once you list on the MLS, you really want to have the price dialed in. It's okay to create a Facebook listing too high or too low because you don't actually have to sell it, know, write them. Once you get a list on the MLS with the broker, you want your price to be pretty dialed in. Something attractive enough for buyers where you're to get good interest and start getting negotiations. Not too low where you're going to drop it day one and, you know, probably miss out on some opportunity. But yeah, that's kind of where.
our process, which Brian has built out, you know, from, we talked about it. remember in episode eight is when we had Brian come on and talk in detail about the Dispo process.
Clayton Hepler (09:12)
I think this question comes from a place of, you know, am I doing the right things in selling my property? And so you might hear Justin going through these, you know, these nuanced tags and saying, hey, you know, every single property, we pull this in, we created listing page, we do all this stuff.
You got to meet where you are in your specific journey, right? And so sometimes it's just like finding the right broker is the highest leverage thing that you can do for your dispositions process. And for a lot of investors, think it is. Spend the time that you would be spending on creating all these automations and just find a really good broker that can help you sell these deals quicker. Because when I dig two or three levels below Justin and think about like, what's the root of this question? It's like, my deals aren't selling fast enough. How do I increase the speed?
Justin Piche (09:58)
Yeah, right.
How do I increase the speed?
Clayton Hepler (10:00)
And so it's find the right broker, find the right market, right. Or in an offer, good
Justin Piche (10:05)
Hey guys, this is
Justin interrupting your podcast. This week, Clay and I are asking questions from you, our listeners. We're diving into a couple of, a little bit more detail on things that we've been asked on social media. If you have any questions, please message us. Put a comment below the podcast and we would love to answer these questions in future episodes. Now back to your regularly scheduled programming.
Yeah, exactly. And a little detailed ⁓ piece of this question too, which is what is the single biggest leverage point in speeding up your sales cycle? And for me, it's absolutely owner financing. Owner financing is the biggest leverage point for speeding up and opening up your buyer pool to a whole bunch of buyers that otherwise wouldn't be able to purchase the property. ⁓
I see a lot of folks in the land space with hesitation around owner financing. It used to be like the way people did it. You'd buy these cheap properties and you'd owner finance them for low money down or no money down and a hundred bucks a month or whatever it might be. That works for really cheap, cheap properties. But when you start getting these more expensive properties, like I originated a $300,000 note a few weeks ago. mean, that's a big note. I mean, that's a house, right? It's a house mortgage, but that gets a lot of people into properties that otherwise wouldn't. And then, you know, there's a whole
marketplace for owner finance notes out there where you can sell those and turn those into cash. And I've said this before and I'll say it again, but there are way more buyers for cash flowing notes than there are for a specific vacant land parcel in a specific place, right? You're geographically constrained by where you are and where your land is that you're selling, but you're not constrained at all by a cash flowing mortgage. Anybody will buy that. If it's a good asset, a good borrower, they will buy it.
Clayton Hepler (11:46)
Right, right. And
the question is, do you change because I know I, if I'm thinking from a listener's perspective, do you change the interest rate, the terms if you go up in price?
Justin Piche (12:04)
yeah, mean we do all, yeah. I mean it's all negotiable. For me, I really like to see five to 10 year notes or lower. I try not to go above 10 years because when I'm underwriting the sale of the mortgage, I'm underwriting for a discounted, obviously a discounted rate. So the thing that for me personally that net me the most cash for selling a mortgage are highest interest rate and lowest ⁓ term, length of the term. Those are the two things that I...
that I want. want the highest interest rate, lowest length of term and the biggest down payment, those three things. And the borrower obviously has their own motivations. They generally want the lowest interest rate, the longest terms, the lowest monthly payment. So that's like a lot of the negotiation in there. So I have recently actually originated some 15 year mortgages for higher dollar properties, because it's hard. If you're selling something for $300,000, somebody's going to put, let's say they put 20 % down, 60K, $240,000 mortgage.
We're at 10, 12, 14 % interest depending on how much they're putting down. Maybe with that type of note, we'd probably be somewhere around 12, 12 and a half percent. That's a big monthly payment. If you have a low term loan, like if you a five year, that's a big monthly payment. are like, eh. It's funny though, you get crazy offers when you start doing owner financing. I got this offer recently. This is a quick little story. Selling these few lots near Waco, actually in McClinton County, Texas near Waco.
Clayton Hepler (13:13)
It's big. It's big.
Justin Piche (13:35)
And the guys who are offering something like, it was going to be something like a $275,000 mortgage. And even at, they offered $1,200 a month in payments. And I was like, I tried to wrap my head around it. I plugged it into the payment calculator. And essentially they were asking for a 30 year mortgage at 0 % interest. I'm like, guys, this is just, this isn't going to happen. Like you can't even cover the interest. There's no, I have to charge you no interest.
put it out over 30 years to even come close to this monthly payment. Like it's just not gonna work. You can't afford this property.
Clayton Hepler (14:11)
Yeah, so if we're just, just quickly, I'd run the numbers. So a $240,000 loan amount at 12 % interest over amortized over 15 years is a $2937.46 monthly payment. That's big for a lot of people. Uh, and over the period of 15 years, that's $288,000 of interest. Right? That's a lot of interest.
Justin Piche (14:28)
Yeah. Yeah.
Right?
Clayton Hepler (14:40)
Right?
Justin Piche (14:40)
It's not interest. But I mean, you know, people, a lot of people don't like higher interest rates. Obviously, like we all want as low an interest rate as possible, but when prime rate is seven plus percent, know,
Yeah. just prime rates are, I mean, are seven plus percent now. people, especially on vacant land, you know, and especially if you're putting a low money down, getting an eight or 9 % interest rate, honestly, is just unrealistic. I mean, I get a bunch of loans from the bank on properties that I'm vacant, vacant land, and all of the interest rates are eight and half. Now they're up to 9%. So if a bank is giving a very credit worthy borrower myself,
Clayton Hepler (15:18)
Yep.
Justin Piche (15:22)
a loan at that rate on vacant land, how would I possibly be giving that same rate or lower rate to a borrower? I'm not a bank. I don't have unlimited money. They could just make money out of that in there by writing mortgages against it. I can't do that. yeah, interest rates. It's interesting because the more loans you can originate at a reasonably high interest rate right now, you may have to sell those notes at a
Clayton Hepler (15:35)
Yeah.
Yeah.
Justin Piche (15:52)
17, 18, 19 % yield to a note investor right now. But if interest rates fall, which they may, who knows what's going to happen over the next three to four years. But if interest rates fall, those notes become significantly more valuable because investors aren't going to be able to ask for that high of a yield. They're going to have to go, the yield is going to drop with the interest rate yield. So if interest rates drop from seven to six to five to four, whatever they level out at, your note
you'll be able to sell it instead of 18 % yield, you may be able to sell for 12, 13 % yield, which would be right at 12 % interest mortgage. That yield is the 100 % of principal value. You're not seeing a discount to principal. Anyway, that's the single biggest leverage point on our financing for sure.
Clayton Hepler (16:31)
Yep.
Yep. Yep.
I love owner. I think ⁓ that's a great point. I would, what I would add here is that ⁓ brokers finding the right people to represent you, you know, as cliche as it is, it's a difference maker. If you're calling people and you're trying to get ahold of them to represent you and they are not picking up their phone, what do think is going to happen with a buyer?
Justin Piche (17:03)
100%. And how many times have you fallen victim to that? Because I know for us, so many times in rural areas, especially, when we find a broker finally that, you know, it's been hard to get ahold of, we finally get them, we get the listing. And it's like, trying to get an update from them on who's interested in your property, you get nothing, you get nothing. If they can't answer your phone, they're not going to answer the phone for buyers. It's not going to happen.
Clayton Hepler (17:24)
That's right. That's right. And
so depending on the size of your business, then it kind of the decision tree is if in this specific area, we don't have responsive brokers. Do we listen internally? Do we do we take the the the listing internal and depending on I think it's the price of the property, anything below $100,000, I would say a lot of times.
You got to check your bandwidth. You got to focus on what's the highest dollar value for me. But if you're out of acquisitions, you're out of that part of the business and really you can create value through selling it. ⁓ List self listing. It might make sense. It really might.
Justin Piche (18:06)
Yeah, we, I
mean, I found self-listening to be incredible, an incredible process for us to help move properties faster. But I have to like for the listeners, the reason I'm able to do that is because of the team that I have, right? If when I first started, I was drowning in trying to be able to list and market and negotiate and all the different tasks. And it certainly would have been, ⁓
Clayton Hepler (18:23)
That's right.
Justin Piche (18:34)
easier for me to just go straight broker right from the beginning. But at some point you get to a scale where you can support the extra staff required to get a dispositions process organized and it becomes really, really effective way to move properties faster. And when you think about it, if you're using a broker and you're, let's just say you're paying them kind of the industry standards, 6 % is what you're paying them plus the buyer's agent. Depending on how much margin you have in the deal, it's not like
6 % of your profits, it could be 12 to 20 % of your profits is what you're actually paying the broker. And if you're able to bring that in-house, mean, every, you know, let's say you just are able to sell 30, 40%, let's just do, yeah, 30%, a third of your properties that you have in inventory with your own team, you're saving, I mean, that's a lot, right? That's a ton. That's like 10 % additional profit that you get to keep in your pipeline. Now,
Clayton Hepler (19:29)
That's right.
Justin Piche (19:30)
depending on how much your team costs and your system's cost that could could be a net negative for you but you got to do the math on that ⁓ but it's been great.
Clayton Hepler (19:37)
Right. There's a cost,
but there's also the velocity. Right. And so there could be like like a, like a catchall. This is what it's costing me. But if I can reduce my, you know, my, my time to sell by 30 days, 60 days, then it becomes a, a, you know, multivariable decision. So that kind of brings me to, know, the, the next question that listeners brought us to, which is, you know, prioritizing initiatives when resources are limited. Right. I mean,
mean, how many times has this come up? And it's true because it's hard, right? It's a really hard thing. What do you think about this when you hear this question?
Justin Piche (20:07)
man.
This is a constant question. Like this is like something, this is something that every entrepreneur probably, probably I say, I say probably, but every entrepreneur has to deal with. I can't think of very many cases where you have unlimited resources. There's always a constraint. And this is a big reason why I really like the EOS process and the quarterly and annual planning, because it forces you into.
An exercise where you identify what your goals are for the year, where the key metrics and key milestones that you're trying to achieve and forcing you into each quarter picking goals or blocks that actually move you towards that. And you're going to have more ideas. I mean, we always have way more ideas of things we want to get done than we actually will have time and bandwidth to do. And so we have to pick what is the, what are the things that are going to move us the farthest along towards that goal or the fastest towards that goal. And those are the things we have to focus on.
And the rest of the things will have to either get pushed or work the side projects or worked when there's time, but they're not going to be the priority.
Clayton Hepler (21:25)
Yeah, I completely agree. And also kind of brings me to, you know, we were just talking about dispositions and I find that most of the times the problem in our business is not enough opportunities, not enough quality opportunities. And so I think about this in a very layered approach, right? So at the beginning, when you're just starting out, let's say you're level one, you just don't have enough opportunities, right? And so you start, you know,
Square one, it's you and me. Imagine this is your first day. And I'm like, Justin.
You just need to send out, you need to send out mail, you need to send out whatever, texts or calls or whatever you're doing. And then the next step, level two is you're not doing consistently enough. And then level three is you don't have enough sales function to maintain the amount of volume. And then you get the sales function and all of a sudden you don't have enough marketing anymore because you're like, I have too many salespeople so I have to hire more marketing people. And it just keeps stacking. And so you go through this layer of not enough,
not quality enough, need to add additional capacity in that part of your business. Now, of course, there's nuances here. You're going targeting a specific type of niche. You just only infill. One ⁓ the requestees said, hey, I want to hear about niche. Are you doing infills? Are you doing trophy properties? Are you doing subdivides? Are you doing entitlements? Are you doing rural rec? Are you doing whatever?
And so this same type of process of approaching prioritization happens here. But imagine you have that problem, but also you're hearing us talking about, also have to focus on dispositions and then you have to focus on getting the right transaction coordinator. And then you have to focus on KPIs and cost per leads and finances and P and Ls and things like that. And so you're like, how do I actually prioritize things? Right?
And so the way I think about it is, you know, first of you got to pick and the way you pick is what is going to lead in my opinion to the highest production of value in my business. At some point, if you have so many opportunities, through your conveyor belt and you need to sell them that highest production of value could be standing up a disposition department, refining your processes to find brokers. It could be that part, right? It could also be.
just getting more deals through the door. It could be having clarity on cost per lead, cost per contract, cost per deal, ROAS, average profit per deal, cash conversion cycles, under contract to close, lead to under contract ratios, all these important KPIs and financial metrics that you have no idea because you're saying to yourself, hey, I think I need to add more people, but the reality is I need to know if the people that I'm adding are valuable. Are they bringing dollars through the door?
Justin Piche (24:10)
Yeah.
Where is the most valuable place to add them? That's what the KPIs can tell you that you won't know unless you're monitoring, tracking, measuring, and improving, focused on improving those metrics.
Clayton Hepler (24:24)
That's right. So there is no one size fits all. It's like we as entrepreneurs are ⁓ rewarded in proportion to our ability to allocate people, our team members, capital, money, financial resources and our time. Right? And so our time as a CEO is we are the biggest problem solvers in our business. And so our abilities to do this is ends up defining how successful we are.
Any other thoughts about like how people prioritize? mean, of course, there's a constraint analysis. What's the one thing that's going to create the biggest amount of ⁓ leverage in our business for profit? But is there anything else that you would add to that?
Justin Piche (25:05)
Not, I mean, not really. think the other, you touched on it, your time, one of the resources is your specific time as the business owner, CEO, et cetera. That is probably one of the harder things to determine of how you need to be spending it. I mean, you can, if you have a pool of resources at your disposal, employees or money or whatever they are, I feel like that's an easier problem in my mind to solve, but then what are the highest value tasks that you can be doing personally?
That's something that is a little bit harder to allocate because you don't just have the, this is the highest dollar thing that I need to be doing to increase my profit or whatever. You also have, what do you enjoy doing and what kind of life are you trying to build? That's the harder piece, I think, ⁓ to solve for.
Clayton Hepler (25:51)
Right, because it's sort of like you have to hold these two competing beliefs in your head, is depending on the stage of your business, you have to say it's the CEO's responsibility. Well, you don't have to. This is my opinion, right? It doesn't mean this has to be your reality. But I believe that it's the CEO's responsibility to handle the most difficult, hairiest problems, right? But also you want to create a business that's not a prison.
And so how do you balance those?
Competing priorities. It's so hard, right? It's it which is why it's helpful to have you know people that are ahead of you consultants groups of people the mastermind right the mill pond mastermind Right And that's an inside joke between Justin and I so so that that's the ⁓ That's how I think I think about prioritizing resources in that way ⁓ But you know to sum it up for me. I think it's all about a constraint analysis
Justin Piche (26:24)
It is so hard.
Clayton Hepler (26:51)
Right. And you know, what's, what's the constraint of my system and how do I put the majority of my resources, energy effort into solving that specific constraint.
Justin Piche (27:04)
Absolutely. All right, let's move on to another question here. There's kind of two that go together, execution and capital timing and capital and underwriting. But this is a good one. I haven't been asked this question before, so I think this is a one to answer. How do you time your own subdivides or developments to fund themselves or at least not stall other projects?
And then what's your game plan when capital is tight, but you've got multiple strong deals on deck. I think those are good questions to go together. What do think?
Clayton Hepler (27:41)
think about this within the lens of an opportunity cost calculation. so if I think about this, question under the question here, it's how do I spend almost all of my own money and not give up the pie to anyone else? That's what I'm hearing. And yeah, in right.
Justin Piche (28:03)
I can kind of see that. Yeah, funding themselves. They don't
usually fund themselves when you have too many opportunities. Let's just say that.
Clayton Hepler (28:14)
I always think of the opportunity costs of like, am I, I want to bring in investors and, and give them a great return and while simultaneously, you know, getting a good return for myself. And so, ⁓ this is very market specific, right? Like if you're selling investment to a hedge fund, for example, or maybe even a institutional fund for, know, the teachers union, right? They're going to, they're going to require
lower return than if you're selling it to a highly sophisticated real estate private equity operator, right? And so I think about funding opportunities as the archetype, the person who I'm raising capital from. Inherently within that is I'm raising capital for my deals. know Justin is as well. And it's all about what is the market want? What's the risk adjusted return that the market's looking for?
But I'm always trying to bring investors in because, you know, can't do this without them. And I really, I really enjoy the, the part of our business where we can really spread the wealth and people can get involved with us and build their wealth while we are building ours. Right. So it's an excellent opportunity vehicle. ⁓
to do that and so my game plan when capital is tight to answer the second question is find more investors that are interested and in participating, right? Offering them really attractive returns and being the type of person that sticks to what I say I do. So there's, I don't see how else to answer the question.
Justin Piche (29:49)
No, I mean, I agree. I think.
Capital is always tight as you scale. I mean, there's this nature to scaling where you're always going to need more capital to do deals. And the deal timelines, especially as you get into larger and larger deals are longer. So if you're doing larger scale developments, you're going to run out of money and you're going to have to go out and raise from folks. That's just how it is. And honestly, it's awesome. It's exciting that you can actually bring other people exceptional opportunities to invest.
and make them money while making money. I agree 100%. When I get new projects now, it's where am I going to raise this money from? What's my pitch? What's the return I'm willing to give? And then generally, whatever investor comes in first kind of sets the terms. If you're pitching, let's just say, you're trying to pitch a 20 % IRR on your deals, you may not find a single investor that wants to invest. So you may say, OK, well,
What will get you to invest? Let's say you're raising a million bucks. You're looking for 10 investors, 100,000 a pop. You can't find anybody at 20%. And then somebody says, hey, I'll do it for 28%, 28 % IRR. Well, bum, now you've got your number. Now you can pitch all the rest of your investors at that same price, because you've got one in. And if you can't get any more, well, you've got to up it a little more. That is just kind of the game. And once you've built up trust with a pool of investors, and that's where
being able to do multiple large deals and bring profits to people multiple times. You start to identify the investors that want to keep investing in this asset class and you become lower risk in their mind. At first, well, you're an unproven entity. may have done, here's the problem. I'm dealing with this right now. I may have done hundreds of deals and made investors and myself lots of money, but to a new investor, I'm just a guy who's pitching them that they don't know.
Clayton Hepler (31:43)
Right, right, right.
Justin Piche (31:46)
And so I'm high risk, regardless of how good the deal underwriting is, regardless of my track record, the track record gets me in the door for a conversation. But until I've proven it to that investor and given them the return that I've promised, I'm high risk. So on deal three, deal four, deal five, when I'm raising from them, that's when you may be able to get into some of those lower IRRs because you're now proven to that investor.
Clayton Hepler (32:08)
what helps you overcome inertia when the business gets heavy and it feels like everything is at 80 %?
Justin Piche (32:15)
⁓ man.
that's a good question.
I think that this is where your ability to lead your team is really important. ⁓ If you're feeling that way, your job is to make sure your team doesn't feel that way. the morale, team morale is one of those things that if you have it, things are good. And if you don't, they're bad. They're really bad. They're really bad. ⁓
I think one of the things that I try to do in my business is regardless of how I feel about it at the moment, I'm always bringing a high level of energy to my team meetings. I'm always encouraging the team. know, people can get down, especially when you, this is like, especially true. think of like high performing salespeople. If a high performing salesperson who by definition is an incredibly competitive, motivated and driven person, if they're striking out over and over again, like they can get really down and.
you know, giving them the kind of take a step back. Let's look at this through a different lens of, hey, how many deals did you get over the last six months? And how many calls did you make? And over the last two weeks, you haven't gotten one. How many calls did you make? All right. So your 50,000 calls behind, know, whatever, 10,000 calls behind where you were last to do this number of deals. next 20,000 are the ones that are going to produce all these deals and get them excited and pumped up and motivated.
I think helps overcome that kind of 80%. And then also, again, I touch back to EOS, staying focused on what are the metrics that are gonna drive you forward. When you're in constant churn and you're changing everything about your business all the time, I don't know how you could ever feel like you're not operating sub 100%. You're always gonna feel that way. And I think even as you're scaling and improving, you're probably gonna feel like, we're not operating at 100%. But those wins that you book,
when you achieve a milestone or you achieve a goal for the quarter that you set up for yourself, those are morale boosters that help you feel like you're on track. so setting those goal posts each week, each month that you can achieve, that'll help you feel like, okay, we're moving things along, we're getting better. And that can help a lot with morale and help you feel like things aren't, you know. It's like, how do you eat an elephant? One bite at a time. The same thing in business. How do you...
improve how do you scale to this huge goal that you have one step at a time improving one thing at a time every day.
Clayton Hepler (34:51)
Yeah, man, I think that's a great point. I would add, uh, the data is the way to get out of the 80 % and into the 20%. Right. Understanding what's going on. Chaos, a lot of times creates that and chaos is when you're outside of, um, clarity. so usually when you're in the 80%, it's a lack of clarity. Right. And so what I've done is sometimes I just sit down and I just
write
out some stuff and 20 minutes of writing man, 25 minutes of writing just with myself, 30 minutes of writing. I'm good. I'm good. Right. I'm back to it. ⁓ and also having the type of understanding of what's going wrong in the business through understanding our P and L or financial metrics, our KPIs data really, really.
puts us in a position where we have the right context and we get out of the 80%. And so that's the way I would answer it.
Justin Piche (35:53)
Yeah. That's a, I mean, that's a really good point. The times that I felt the most like unsure or frustrated or not confident have all been because of a lack of clarity. And the only way that I was able to get over it was I remember the most acute time was just in the middle of scaling, maybe a year and a half ago, I just felt like, what am I doing? Like, where's the money coming from?
We just bought all these properties. I don't have clarity on where the sales are or how many offers we're negotiating. I don't have clarity on when these deals are closing. I don't have clarity on where the capital is coming for all these deals. And I just felt so stressed, like I'm going to run out of money. ⁓ It woke me up in the middle of the night. I'm like, 2 a.m. I'm awake. I can't sleep because I'm just running through these things in my head. And the only thing that was able to solve it was getting on and doing a very detailed 13-week cashflow analysis.
and going in and plugging in for the next quarter, every out and every in that I knew that I was going to have. And that helped me to see all these places where I needed to either raise capital or where I could breathe a sigh of relief because we had deals closing or maybe it had me renegotiate certain deals that we were going to buy or get extensions on deals or all kinds of different things. But it gave me a lot more clarity of where I was exactly financially in the business and kind of helped me sleep at night.
Clayton Hepler (37:21)
Yeah
Yeah, man. Well on that note that the listeners know at the end of the podcast the gentleman's agreement is you get benefit from this please guys rate review and subscribe no one's the rate review and subscribe for like a month and a half and I So so guys seriously if you get the benefits totally understand spend the five minutes man are not even five minutes five seconds ten seconds give us a five star review
Justin Piche (37:34)
Yeah, we've hit our we've hit our audience, I guess. And there's there's no new listeners. So share, share, share with a friend.
Clayton Hepler (37:51)
Um, and yeah, um, until next week, we appreciate you guys as always listening and we'll come back to you next week with some additional questions. got a lot of amazing listener questions. Let us know if you like these episodes on our social media, Justin, anything else before we head out? See you next week.
Justin Piche (38:12)
That's it. We'll see you guys next week.