# He Took Alex Hormozi's Wholesale Real Estate Advice

Channel: Real Estate Skills
Video: https://www.youtube.com/watch?v=cmoEvo9S1WU
Duration: 20 min
Language: English
Words: 4045
Transcript page: https://viewrankai.com/tools/youtube-transcript/cmoEvo9S1WU

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[0:00] After taking Alex Hermosi's advice, here's what happened. It's really good and now that I fired 70% of my team, so most people think that the business has gone through the roof since I went to go meet Alex, but honestly we're taking a chance that back. [music] We went from averaging 450 grand to so far this year I think we're averaging

[0:20] This is a step back. In my original video, Alex Hermosi diagnosed the biggest problem inside his wholesale real estate business. Francis took his advice seriously and within the next several months, 70% of his team is gone. And then there's revenue, it drops by more than a hundred thousand dollars a month. Now, some people might say, "Hey, this looks pretty bad." But after Francis and I talked, this is exactly what his business needed. Because today, Francis can literally leave the country for 30 to 60 days and trust that his business is not only going to be standing when he gets back, but also improved. And the reason why comes back

[0:54] to the exact thing that I broke down in the original video. Francis finally built the machine. I can leave now and then I'll go. Now [music] I can leave in 60 days. To catch you up to speed, here's the story. Hermosi talked with a real estate wholesaler doing about $450,000 a month in revenue. That wholesaler was Francis. He had already proven that he could have massive months of $700,000 plus. But every time he tried to push and push the business harder, it would break and crash right back down. Now, Hermosi's diagnosis wasn't, "Hey Francis, you need more leads, do better marketing." And it wasn't, "Spend more money in

[1:25] advertising." Hermosi told him he has a sales ops problem. So my last video was actually a breakdown of that conversation simply because this needs to be heard by every aspiring and active wholesaler out there. Then something pretty cool happened after I released that video. Francis watched it, his team watched it, and Francis reached out to me personally to chat. I'm going to share with you today, I'm pretty excited about it because I wanted to know the questions that everybody who watched the original video wants answered. So let's dive right in and have Francis break it down from the start of the Alex Hermosi

[1:53] event. So I went to go uh the Hermosi thing and honestly it was a birthday gift to myself. So, this was in November of last year. There were 70 people in the room at the time and Alex's team selects seven people to actually do the Q&As with him. You don't see Alex until day two. So, it's a two-day event. So, day

[2:12] one you you meet with his entire team. That's pretty much who you're meeting with. So, we have all these round tables and they pretty much pay you by revenue. So, they have the zero to a million dollar people and million dollars to five million dollars, five to 10 10 to 50, 50 to 100. In theory, every business doing certain revenue has similar problem. And pretty much yeah, you guys just have these round tables where Alex's team just moves around. One of the guys, he just walked up to me literally last meeting and gave me this thing,

[2:45] "You're going to Mexico." Okay. Well, scream. And so, I I pretty much stood there and but about time I had thought all the answers I came to the event already. So, it was pretty much just what I mean, I didn't get the answers from Alex. I [snorts] would wager that scripted adherence is low because you have such variability in close rates. Unless there's a change in lead quality, which would be something else. But are the leads the same like

[3:12] this month as last month? Yes, the leads are the same. Yeah, so it's a sales discipline issue. Everyone should be reading the same script. If they are not reading the script, why are you on this team? Right? Uh we need to have training that's every day to make sure that they are saying things the right way. We need to make sure that everyone memorizes the scripts. If they are not saying the script word for word, you cannot be on

[3:31] this team. You cannot take these calls. I'm getting these leads and not for you to go cowboy and make up. If we cannot solve that problem, because for whatever reason you keep trying it and they don't adhere and they go off script because they just want to close the deals, it means you have a cultural

[3:43] issue, which is a leader problem. The way [snorts] they operated with their acquisitions, everything they do is they they don't do any cowboy stuff over there. Yeah, the cow- no, all the cowboys Everybody speaks the same way. Everybody feels the same cadence. It was just like it was just seeing that in person. I was like

[3:59] I don't know where to go. And this is exactly why I wanted you to hear Francis say that himself. Because remember what Hermosi told him in the original combo, script adherence, sales discipline, everybody follows the process, and no cowboys whatsoever. And Francis didn't just hear Hermosi say that on stage, he spent two whole days around the actual organization. He saw how the whole team communicated. He saw how standardized everything was. He saw the way that one person operated was the same as another. And that's a completely different business than having five talented sales people who happen to do all their own stuff. Because when everybody does their own thing, you're

[4:34] not really running a true system. You're managing five different personalities. And the second one of those people leaves, your numbers fall apart. But Francis went home and decided he wasn't going to operate that way anymore. I know the question that most people want to ask is, well, how has that changed business for me since then? After the event, I come back, and between the event and now, I want to say I've probably fired 70% of my team. When people on your team are used to getting away with things for so long, then all of a sudden you come down with the hammer. It's like, what's

[5:07] wrong with you, teacher? This was okay. And I was bringing in results. Why do we have to do this way? So, it was pretty much just getting the team full of people that just understood and listened. If we want to get predictable results, we need to be taking these predictable actions consistently. And so, things like coming in late, being late to meetings, not sending reports on time, we started like writing people writing people up. And so, it was a lot of alteration and friction. The fallout

[5:34] of that is we're more culturally driven. So, leaving the event, it became more about culture. It's like, what are the people that will stick to the plan, regardless of how they feel. So, there was a lot of streamlining the team and just getting like the culture right. The other challenge I had was around revamping the entire hiring process, making culture like the center of recruiting. When we say we want to sprint, we're sprinting as a team. We're not We're not going to leave anyone

[6:02] behind. This right [snorts] here is where I think most people completely misunderstand what having high standards actually means. High standards isn't yelling at people, and it isn't saying, "Guys, we need to work harder." A standard has to define what doing the job correctly actually looks like. Let me give you an example. Someone on your team says, "Hey Alex, I reached out to

[6:22] that person, but they didn't respond." Did you just send one text message? Because that's not really getting the job done. Or did you call them twice? Did you leave a voicemail? Did you email? Did you call again? And then did you do the same thing the next day? Did you actually exhaust all the options that were inside the process? That's what a standard does. It removes the lack of clarity around what good means. And that's exactly what Francis was

[6:45] changing. Before, somebody could be late, go off script, and still produce a result, and then they're saying, "Hey, what's the problem? I got the deal." But after Hermosi, Francis started saying, "No, the result does not put the player above the process." And as a business owner, as a leader, as a team member, this is hard, especially when you already have tons of people who have been allowed to operate their own way for years. But if you want predictable results, Francis

[7:10] said it perfectly. You need predictable actions performed consistently. What we do that will stick to the plan regardless of how they feel. If you [snorts] want to have a consistent, world-class sales team, the process has to always go above the player. No one is above the process. So, my guys [snorts] are from like 19 to 25. Like a lot of them they're still

[7:32] they they still want to go corporate. Somebody can mess the deal up, right? And then they can go, "Hey, you know what? My fault. I made a mistake." And then maybe fire them. But even in doing that, it already cost you a 65,000 when you find a person or you wrote them up or whatever the case was, you didn't change the fact that we lost 60 grand on that deal. So, what we started to do was we started to pretty much have a junior acquisitions reps and then just straight up closes. You guys are the are the snipers here. I don't need you in the phone hustling the seller, the

[8:05] agent, the realtor because it goes against our policy. That's not your job, right? But, because of that, we're going to meet here heavily new ones descriptive. Before they pick up the call to close the seller, they had a meeting with the head of sales. That's our way of A taking out the excitement in the room from oh, you're going to get in the car and get a steal. No, slow it down. We're going to almost huddle up, come up with a game plan. We need to get A, B, C, D, and E. Get a point before

[8:33] you get on phone or turn the number in. If one of them is missing, you do not make the offer on this property. It's heavily new ones and heavily scripted to where they get on the call and then the performance is a pretty much stable across the board. Now, this [snorts] is probably my favorite part of everything Francis told me because this is what sales operations actually looks like when you take it out of a business book and put it inside a real wholesaling company. Before, a salesperson could basically get a lead, run with it, make decisions, get excited. And if that person screws it up, like Francis said, one mistake can

[9:05] cost 60 or 65,000 dollars. That is real. So, what do you do? They slowed the process down. Junior acquisition rep, then underwriting, then a meeting with the head of sales, then the closer gets the ball. And Francis, he literally calls the closer a sniper. So, your job isn't to do everything, your job is to do your part of the process extremely well. That's sophistication. And here's what I really

[9:29] like. They huddle before the close. Before somebody jumps onto a call where there's 50, 60,000 dollars of profit sitting on the other side, the team stops, slows down, and says, "What the heck is our game plan? What do we know? What are we missing? And what do we need to accomplish on this call?" And Francis, he tells us the result. The performance is becoming more and more stable and standardized across the

[9:52] board. Show almost [snorts] the good thing that the business is going through the worst things. I went to go meet Alex, but honestly, we were taking a chance step back revenue-wise, because the goal was to build it right. We went from average to 450 grand to so far this year, I think we're averaging 320, 340. So, it's a step back from that goal we were planning to do this year. But, on the brighter side, I'm more confident in the systems and the people and the processes that I had to be building over

[10:23] the past 7, 8 months. I could leave now. I've never left the whole time. Now, I can leave for 60 days. Now, this is where the conversation gets really important, because if we only judge Francis on the last 7 or 8 months of revenue, you'd look at this guy and say, "Man, that's a failure. You were averaging 450,000 a month. Now, you're averaging somewhere between 320, 340, and that's more than a $100,000 drop in revenue." But guys, we're not in business for just 7 months. We're building them for years, 7, 8 years, 10 years. And every machine eventually needs maintenance. So, sometimes we have

[10:53] to stop pouring the fuel into it. Sometimes you got to open the thing up, figure out where the cracks are, and make sure it can handle more. Because if you scale a broken business, all you do is scale more problems. And Francis and I on the call we were talking, I said, "If you scale crap, you just get more crap." And this is the trade that Francis decided to make, short-term

[11:11] revenue for long-term predictability. And I think the biggest proof that something changed isn't even the revenue. Before, Francis tells me he basically never left the company. But now, he's out of the country for 30 to 60 days internationally, because he trusts the business to keep standing. I can leave now and just like pull fuel

[11:32] because I already have the machine. Definitely way was because I wanted to see where the cracks are and probably no crack here or anything of that sort. This is what I was projecting and like well, can't get any worse than this. So, if there's any time that I can actually like expose the cracks and then build it

[11:48] up in there. And I love this mentality. Francis isn't leaving for 60 days because he thinks everything is perfect. He's doing almost the opposite. He wants the business and its problems to expose itself. He wants to find out what breaks when he stops touching everything finally. Because if you're an owner and you have to sit in every meeting, solve every problem, approve every single decision, you don't own a machine yet. You own a job with employees. So, right now, it's not the fairy tale ending where Hermosa gave him 90 seconds of advice and now everything is perfect, but he's solving a much better problem now. Instead of asking,

[12:20] "How do I survive another month?" or "What's up with this unpredictability?" he's asking, "How do I remove myself from this machine, let it run on its own without breaking?" Now, that right there, that's real progress and development. The goal for the next 6 months uh between now and then the top of next year is to slowly scale back up to where we are. 750 max under one roof will be like the goal for the next 6 months. We'll just slowly add one person, increase the ad spend, add one person, increase spend, add one person, increase spend, and just slowly make that see how we can get back with

[12:55] it. Notice how different Francis sounds compared to before. He's already proven he can hit $700,000 a month, but the problem was he couldn't hold on to that. And today he's not talking about smashing on the gas pedal and hoping he gets back there. He's talking about strategic moves one at a time. One person, a little more spend. Then another person, then a little more spend. So, capacity first and then the fuel second. And that's a much more mature way to scale because Francis said something that I think every entrepreneur should remember. The bigger you try to get, the faster the chances of breaking. Growth always usually

[13:28] creates pressure, and your system either absorb that or the business cracks. So, now his entire focus is making sure that this machine can actually absorb it. Big difference. How did the fallouts from seeing the moves we were trying to figure out well, how can I optimize the move? And I crazily decided you know what, let's

[13:47] start flipping more houses. Now, there [snorts] was another idea Francis left of Hermosi experience thinking about, and that was the concept of more. Basically saying, how do I take the opportunities I already have and get more out of them? So, more revenue, more profit, more value out of that same lead. Now, on paper, it makes complete sense. If you already paid to acquire a seller lead and you already have a great deal, why wholesale it for 20 or 30 thousand dollars when you can fix and flip it and make 60 or 70? Right? Makes sense. Until you actually have 30 fix and flips going on at the same exact

[14:18] time. As [snorts] of last week when I left, so two weeks ago when I left, we had honestly around 29, 30 flips ongoing on the market. So, I just started buying like crazy. It means that losing people on the team and just like having so much money tied up, you know, I started losing my money. So, starting August 1st, I told my team I am never flipping houses. I can I will not flip a house again cuz you go into the flip thinking you can make seven grand and when it's all said and done all the time is done by, you make 25 thousand. I could have

[14:51] made that eight wholesale there in a week or two, yeah. Yeah. We're neck deep into a lot of flips now. We're trying to offload all of them. Some of them we're just selling them as is. We're just like yeah, take the two thousand and just get out out the way. This is very expensive.

[15:05] It takes a lot of time. Now, I want to be really clear here because I don't want somebody watching this and thinking the lesson is never fix and flip any houses. I made a lot of money flipping houses, but I've also lost a good amount of money flipping houses. And Francis and I we're saying

[15:19] almost the same exact thing here. Wholesaling and flipping, they're two different machines. When you wholesale a deal, you put it under contract, you find the buyer, you sign the contract, and you get paid in a very short time usually with little to no risk. But when you fix and flip it, now you introduce capital, financing, and contractors, construction. You have payment draws, change orders, holding costs, insurance, you got utilities, market risk, and way more time. I mean, a fix and flip can take 90 days, 120 days, 6 months, it just depends. And if you're doing that in multiple markets, just like Francis, you're just kind of creating another

[15:53] operating company within an operating company. But this does not mean don't flip. It means understand what game you're playing. Francis had just spent months trying to simplify and stabilize one wholesaling machine, and then he suddenly had almost 30 renovation projects demanding capital and attention. So the lesson isn't wholesaling's good and flipping is bad, the lesson here is that complexity has a cost. And sometimes the bigger gross profit number on your calculator is not

[16:20] actually the better business decision. You have an ops [snorts] issue. Which is sales ops. There's probably like 20 things that you need to be doing, and you're probably doing like 13 of them, and the other seven are going to be the thing that make the difference in creating the consistency of the team. That's at the service level. At the at the at the deep root of this is if you want to have a consistent world-class sales team, the process has to always go

[16:44] above the player. No one is above the process. The better you get at training sales and create a consistent sales processes, the less skill someone can have and create a consistent outcome within your team, which becomes the arbitrage of your business. You have to take the raw input of somebody who has no skill and just has work ethic, just has energy, and in 14 days you can get them closing deals on wholesaling. That box is the

[17:07] value that your company That is your IP. That is the trade secret. That's how your company is valuable. And one more [snorts] thing from Hermosi that wasn't in the last video. Winning's It's for everybody. And so that means that on the team there's probably some losers. And it's not for everybody. So that's a decision you make and that's from top

[17:23] down. All right, now that [snorts] Francis and I were able to chat, do I still agree with the diagnosis I made in the original video? The answer is yes, and I actually agree with it even more. Francis never had a lack of opportunity problem, right? He's a guy doing $450,000 a month. He's already hit $700,000 a month. He clearly knows how to generate opportunity. The main problem was predictability. Could he take a lead, put it into his business, and have a consistent process, produce a consistent result, regardless of which person in his company touched it? That's the machine. So Hermosi told him he had a sales ops problem. And Francis went

[17:56] home and discovered that fixing sales ops meant way more than just changing a few words in the script. And then changing the standard, changing the culture. It meant changing who the heck was on the team. Then changing the hiring process, separating roles, being sure to underwrite before we close. It meant getting the head of sales involved in every single call. And most importantly, it meant putting the process above the player. And yes, revenue went backwards while he rebuilt it. But now Francis believes he has a business that can operate without Francis. Guys, that's the asset. Not one great month, not one cowboy or rockstar salesperson, the system that can turn

[18:34] normal inputs into predictable outputs over and over and over again. This is exactly what Hermosi was talking about when he called that box the intellectual property of the company. So yes, Hermosi was right. And now we actually got to see what following the advice looks like in the real world. Now today, if you actually want to implement everything we're talking about, instead of just watching it or agreeing with it, grab our full wholesaling sales script below in the description. It's completely free. And if you want to see the actual system that we designed for you to win, so the wholesaling box, all of the scripts, the frameworks, the

[19:08] calculators, and a team behind the scenes that reviews all of your deals with you every single day and every week, that's exactly what we do inside of Pro Wholesaler. Now, link is in the description. Watch the free training there first because it's going to show you the whole entire system end to end, and then hop on a call with my team and I. So, just like Hermosi, we'll spot the real problems going on, we'll set the game plan, we'll set the road map, and

[19:29] we'll give you the business in a box. And now, if you want to see me cover more of the wholesaling sales process on real deals from start to finish, watch any of these videos next.

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