Systematizing That Works With Dan Schwartz

Episode 458: Systematizing That Works With Dan Schwartz

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The vast majority of real estate investors never make it past their first year. Too often, they get buried alive in the hustle and get overwhelmed by the sheer amount of things that they think they need to do. To avoid being one of those investors, you need to be able to systematize your business so that you can focus on working on it instead of in it. Yes, we all have to hustle, but there is a way to do it smartly. Dan Schwartz returns on the show with Mitch Stephen to share specific steps that you can take action on to avoid getting trampled quickly on your way up in the industry. Dan explains what the 80/20 principle means and how you can apply it effectively in your own business. He also stresses the importance of being able to take a step back, delegate processes, and focus on the things that get results. Stick to the end of the conversation as Dan gives away some cool resources that you can use to this end. 

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I’m here with Dan Schwartz with InvestorFuse. We’re going to be talking about why 99% of the investors come into the market, never make it past their first year. They get buried alive. We’re going to talk about why that is and how you can avoid being part of that 99%. I like to pay homage to my sponsor here, TaxFreeFuture.com. Please check out the 37 little video vignettes. If you don’t have a self-directed IRA, 401(k), educational savings account, or health savings account, check it out please. We have the ability to give you TaxFreeFuture.com accounts that are self-directed with checkbook control. It’s important. If you are a fast-moving opportunist, you’ve got to have checkbook control. You won’t believe what your financial advisors are not telling you. We’re going to tell you what they’re not telling you. We’re going to tell you why they’re not telling you. We’re going to show you what you can do about it then it’ll be up to you. Dan, how are you doing? 

I’m doing great. The last time we saw each other was in Austin.  

I’m in San Antonio. You’re in Austin, even any miles maybe. We’re a hop, a skip, and a jump away from each other. This is your fourth time on the show. It’s always fun, always upbeat. This guy is doing 75 hard. How many days are you in? 

This is day 44. I’m past the halfway mark. If it screws up, then you’ve got to go back to day one. There’s no turning back.  

He’s all wound up. He’s standing up. He won’t sit down. He’s got a gallon of water. He’s got a drink while he’s doing this. What are you trying to accomplish, Dan?  

I think this would be a successful interview if we can give people three specific action steps so that they can break the bad habits that most investors have when they get into this business and quickly get trampled by investors that are able to break that habit.  

What does applying the 80/20 percent to your business mean?  

If I had a tattoo, it would be 80/20. I don’t have any tattoos at this point but I am a believer in that principle, which essentially says that 20% of what you do gives you 80% or the majority of your results. If you think about it, what you’re spending your time on, 80% of what you’re doing day-to-day is only giving you 20% of your results. There are these moments that are contributing to the most health, wealth, and happiness. It’s a way to think and view the world. It’s a way to see patterns in how you’re using your time, how you’re spending your money, how you’re acquiring properties, how you’re marketing. It applies wherever there’s numbers and data. It’s the fundamental principle for what I help investors do in their business, which is to scale up their real estate investing business so that they aren’t the ones stuck in the middle of the show, juggling all the balls, spinning all the plates only to find out that the day’s over and they haven’t accomplished anything. My whole MO is to help investors get out of that trap before it’s too late and start to treat their operation like a business. If you don’t, the guy in your backyard is going to do that. He’s going to quickly overtake your deals, your deal flow, and your operation. I’m very passionate about this topic.  

It sounds like you’re going to need some data. How do you know what those functions are? How important are your numbers?  

I always like to ask someone when they come to me and they have a problem. “Why their texting isn’t working? Why their direct mail isn’t working? Why that VA that they hired isn’t performing well? How do you know you’re being successful with cold calling or texting? How do you know your VA is successful? What are the actual facts that can prove the result?” This is why everybody always talks about know your number, Key Performance Indicators, KPIs whatever you want to call it. If you don’t measure your performance in your business then you’re leaving stuff to chance. Why do you want to leave success? Why do you want to leave your legacy and your wealth to chance when you can implement the simple habit of just tracking what you’re doing?  

Let’s say you want to do one deal a month. You break that down into the component parts that you need to do in order to get the deal. You track each step of the progress, focus on that. If you keep optimizing each of those steps and put blinders on or everything else, you’ll eventually get to the result. That’s why we track our performance. What gets measured gets managed. What gets managed gets improved. I’m a firm advocate on that. The reason why is because initially, I’m not a numbers guy. I’m resistant to all of this. I’m sure, Mitch was at first. I’m sure a lot of people reading are.  

There are things that I don’t do good but I learned quickly to hire people that were good at it or would do it. That segue me into the next question and you got to find your sweet spot. Talk to me about doing things that drain you or doing things that you’re excited about.  

Systematize Your Business: Why would you want to leave your legacy and your wealth to chance when you can implement the simple habit of just tracking what you’re doing?

This whole concept can apply to how you’re spending your energy. Twenty percent of the output of your day-to-day like what you’re doing in the day, it’s going to give you 80% of the fulfillment, happiness, fun, and enjoy. It’s simple, just ask yourself, “What gives you energy and what drains you?” I got this initially from Trevor Mauch, who I’m sure you’ve had on the show with Garrett. It’s an energy audit. “What gives you energy? What drains you? Are you good at numbers like Mitch, or do you resist it? Do you like high-level strategy? Do you like being in the background? Do you like being in the front?” You just got to know yourself and structure your business around the things that you enjoy doing. If you don’t, then you quickly will burn out. The whole goal of entrepreneurship here is to be resourceful enough to figure out what your strengths are, what you’re good at, and to bring people in that can support your weaknesses.  

Why I say be resourceful for those who don’t have a lot of cash, there are ways to bring talent in that doesn’t require a lot of upfront cash like partnerships, deal splits, go wholesaling, things like that. I don’t want money to ever be an excuse because there’s an abundance of partnerships and relationships that can be formed to create a business where everyone’s doing what they want to do essentially. Life’s too short to cold call all day if you hate cold calling. I’m sure there’s going to be a little hustle that needs to happen. The whole thing that I teach is you’ve got to get some traction first before you can hire someone. The goal at the end of the road is you focus on the thing that you know is going to produce the result, which the wholesalers knew. Creative financer is getting on the phone with sellers. You shouldn’t have to worry about anything else. You don’t need to worry about the website. You don’t need to worry about the business card. You don’t need to worry about the LLC. You have to start talking to sellers and tracking that. I call it systematic hustle.  

I bought a lot of houses before I ever had a business card or a website even a nice shirt, before I thought about any of that stuff.  

It comes natural to you.  

I was so broke. I needed to focus on where the target was. I got to go right to it. I didn’t have any time to waste. I could only trade water for so long and then I wasn’t going to be able to. I had to make a strike fast. What is it about that 99%? They go out and they get into this business. They get overloaded by listening to 10,000 strategies. What happens to these people?  

It’s overwhelmed. It’s the internet. It’s distraction. It’s lack of execution. People are great at consuming but not great at producing. It’s not for a lack of ability. It’s the lack of their attention that is on the wrong ball. Attention needs to be on this ball over here. Everybody’s looking at the shiny object. They’re trying to look under all the rocks to figure out what’s that shiny new strategy, tool, deal, contract, script, software, webinar and course. They’re trying to find that rock that’s going to help eliminate all of the other problems. If you take a step back and look at your business, you are essentially the chief everything officer. You’re in charge of marketing. You’re in charge of dispo. You’re in charge of acquisitions. You’re in charge of finances, bookkeeping, cold calling. Everything has to be on you.  

The crazy thing is people are trying to find new things to add to that mix. What if you can take all that energy that you’re spending doing a million things and focus it on one thing at a time? The brain can’t do more than one thing at a time, the same thing with business. People are trying to do ten different strategies all at once. When they do that, they go 10 inches in ten different directions. Meaning, they don’t go anywhere. If you can just apply all that energy and focus it on the thing that will produce results, that worked to get you that last deal, to get you on the phone with the seller, to help you lose 50 pounds like Mitch, all of these things can be applied. You use the 80/20 Principle to determine what those activities are. When you start to focus all your energy on the things that are going to move the business forward and they’re going to help elevate you out of doing stuff that you don’t like doing, the $5 per hour stuff that you can outsource, then you start to have a business. Things start to evolve a little bit and you can make more progress. If you get stuck in this trap of thinking that you need to do everything yourself and you’re constantly juggling, that keeps you stuck. It’s like you’re running on a treadmill and you’re not going further.  

When you first start out, you are the one–man guy. Is that right? Are you saying that there’s a way to do it besides that? I always thought you had to get out there with your own fortitude, gumption, and drive. You had to make a couple of deals so you had a budget. You got to wholesale something for $5,000 or $6,000, take a little load off and get some help for a month or two, get another strike for $10,000 or $15,000. I was living lean. I was putting everything back into my business, everything all the time, living lean. I wasn’t one of those guys that made $20,000 and went out and bought a boat. That was not me.  

You do get to hustle at the beginning.  

Here’s two months’ worth of living. Here’s $10,000 I got to make pay. I got two months to get another check at maximum of two months. I can’t go any further.  

it’s crazy what type of output you can have when your back is against the wall. However, when you’re operating from this place of feeling overwhelmed and there’s a million things getting thrown at you, it keeps you from doing the things that are going to get you traction. What you have to do is think about, “What are the three activities that are going to produce results. I have to time block. From 1:00 to 4:00 PM every single day, I am going to go on Facebook Marketplace and reach out to FSBO’s for three hours straight. By run out, I’m going to go to another market.” Do whatever strategies that you’re learning from Mitch. You have to block the time out, do it, and track it. If you’re doing stuff willy-nilly, you’re not going to see what’s working, what’s not working, and what you’re supposed to improve. You got to hustle. You have to juggle a lot of balls. You can do it systematically. You don’t have to be scrambling to get that first deal. It’s the same concept applies when you’re starting. You reinvest and back in your business. You reinvest into systems, automation, and team, which helps you get out of some of those things. First, you have to prove the process.  

If I have to look back a long time ago, I’d have hired a personal assistant, years before I did. I don’t even know what I was thinking like why, same thing with my business partner, Mike. He struggled for 1.5 year, almost 2 years going back and forth to get a decent person we’re talking about $36,000 a year that we didn’t want to get. We want someone who’s self-motivated, not dumb. The go-getter. You don’t get them for $8 an hour. We figured about $36,000 a year. Not even 30 days after we hired this person, he’s like, “I don’t know why the hell it took me so long to get some money. We’re already going to make $150,000 extra because instead of doing all this crap I was doing, I was able to go out here and meet this guy. He dragged me over here and we ended up buying this, and the other. I never would have been able to fit it all in.” One hundred fifty minus 36 is good. We’re just getting started. 

You’re talking about an executive assistant.  

Someone to do about anything you can think of at the drop of a hat. “I need you to do this. Call me in the morning and tell me what you got done off all this list today. What’s still left over to do? I’m going to tell you what I’ve come up with to do since yesterday. We’re going to prioritize it. I don’t want to see it again until tomorrow.” 

Are you telling me that there are people in the world that are good at that in organizing that and keeping you on track? 

Yeah. Better than you, way better than me. One is because I don’t like doing it. When you do things you don’t like or when you know is a waste of your talent, you’re pissed. You don’t have a good attitude. I’m like, “What the hell am I doing down here? I’m waiting around at CPS to get a water meter. What the hell am I doing?” 

People don’t understand that. There are people that are great at what you legitimately aren’t good at and what you’re incompetent in.  

A lot of people are Pennywise and dollar dumb. You need to get out your checkbook and start writing some checks and quit doing this stupid crap button on your own. It’s stupid. I used to be like that. Are you married?  

Not yet.  

When I finally figured out not to work below my pay grade and I figured out what that was per hour, if it wasn’t worth $200 an hour, I’m not doing it. That didn’t go over good with the why for a little while. “When are you going to mow the lawn?” “I’ve never mown a lawn.” “Can you pick up the dry cleaning?” “I’m worth $800 an hour. Can we find someone else to pick up the dry cleaning please for God’s sake?” They’re not impressed at all. Finally, they stopped asking me to do all this stuff because I wouldn’t do it anymore. I wouldn’t do anything. “You just want to come here and lay down when you get home?” I said, “Yeah. That’s what I’m going to do. I’m going to get ready for tomorrow because tomorrow is worth another $20,000, $30,000, $40,000 if I do this right. It’s not if I don’t.” What is this system’s thinking? Are we on this?  

Systematize Your Business: The brain can’t do more than one thing at a time. The same goes for business. You can’t do ten different strategies all at once.

We’re on this path. It’s a way to look at instead of you being the cognitive machine to see looking at the whole machine. Whereas instead of the thing that you’re scrambling to figure out being the main focus, the main objective, and the product of the day, the whole business is the product. You’re building an asset that produces revenue. You’re not going out there and trying to hustle for deals. It’s a mindset that’s hard to see when you’re starting out because you want to get that the first deals done.  

It’s a whole shift because there is this phase you go through where you’re the deal maker, you make the deals, and you do all that stuff. If you’re lucky, that phase will burn you out shorter than later. It takes me getting burnt out on something before I’ll stop doing. It’s that smart. I was about to throw my business away when I finally kept looking at the numbers and go, “It took fifteen years to get $26 million worth of private money. It took fifteen years to get this name, this brand, and these people calling me out of the blue. I’m going to throw it away?” I look in the mirror and go, “Yes, because I’m exhausted. I’ve been doing everything and I can’t do it anymore.” That’s why I went to a mastermind to say, “I shouldn’t have to throw away a million dollars a year plus net profit. At worst, I should give up half of it to a handful of people that make it run like a clock and pay them good.”  

You know that doesn’t work. You can’t just throw money at the deal. You can try but that was my rationale. Even if I spent $700,000, I’d still be taking home $500,000, which was better than putting this thing in a box and dying because I was going to go live off my stories. This time I do it different. I’m going to hire someone who knows how to do this because I don’t know how to do it. I’ve tried five times before and I never got it done. I couldn’t do it. I didn’t do it. I failed five times in a row. I said, “I’m going to go someplace and I’m going to pay someone handsomely. I had to figure out where that was. They need to know my business well. They need to have done it before and/or doing it now.” I went and found those guys. The reason why I failed the first five times in large part was one, I didn’t know how to do what I was trying to do. I was ill-equipped. I was not good at that. The other thing was I had never given myself permission not to buy 100 houses a year. I was trying to fix a business. What was left over from me buying 100 a year, which was nothing.  

On the year that I was going to quit, I didn’t give a damn anymore. I only bought 30 houses that year. Those houses walked in the door and laid down on the desk. I didn’t even have to try for those houses. That year, we spent working on the business. “Where are the chairs in this office building?” There’s one over here. “What does she do?” She does this. There’s one over there. “What was that person going to do?” They’re going to do that. “How much are they going to get paid? How did they get paid?” We wrote the whole free map and spent a whole year trying to find the right person for those chairs. Maybe we could have faster or maybe not faster but on that year, we fixed the business. We didn’t make much money. You got to go to step sometimes. Is this normal? You have to go backwards a few steps before you can go forward.  

You work hard once so that you don’t have to work hard every single day. That’s how I think of it. It’s a little bit of an upfront cost. Take a step back to build a system that someone else can run. That takes a little bit of work. It doesn’t make you money initially, which is why people resist doing it. It’s a delayed gratification when you’re working on your business, instead of working in the business, putting out fires, which feels good. There’s something we can dislike about juggling, spinning plates, and putting out fires.  

At least I knew how to do a lot of these jobs or at least I was familiar with a lot of what it would take. I think you do have to have some hands on to know but my mind thinks they’re way too long, thinking I was the only guy that knew how. You can’t sub this out. I had brainwashed myself into that. This business isn’t a systematized small business. Some guy grabbed me by the collar and slapped me a couple of times and says, “What do you think’s harder, buying a house or building a Mercedes-Benz one every 30 seconds out of back door of a building?” This is nothing compared to what the engineering feats that they have to go through to get all that done, to push a car out the back of a building every 35 minutes or every 30 seconds. You’re right. What does it look like when someone hires you to help do this?  

We have a group coaching program called the 80/20 Investor Academy. For those of you who don’t know who I am, InvestorFuse is the software company that I own. I’m an Owner of it. I stepped out of the CEO role. InvestorFuse helps you automate your follow-up and manage your lead management process. I am now the owner of that company. In the process of growing the company, I learned how to scale the software business. I got to work with some of the top investors in the country and realize that you need more than just technology to have a self-sustaining business. I started this group, 80/20 Investor Academy. There are over 100 high level scaling companies now. This isn’t a newbie training, how to get your first deal. This is a how to turn your operation into a deal doing machine. We have a training program that shows you how to systemize your business and a group that meets twice a week to hold each other accountable, keep their ear to the ground for new best practice, and an outlet to share what’s working and not. That’s what I’m working on.  

I want you to go to 1000Houses.com/IA for Investor Academy. That will take you over there. Dan’s going to have anything and everything you’ll need over there to figure out how to learn more about the 80/20 Investor Academy. When people sign up, you’re going to give them an access to a scaling REI Facebook group.  

I have a good epic blog post that shows you all the best tools and systems that I recommend. It’s totally free. All you got to do is go to ScalingREI.com and request the access to that Facebook group. I’ll make sure you get a copy of that blueprint. It’s called the Lean Flipper Blueprint. Mitch will have a link also to book a call if you want to schedule a call with myself to talk about your business, to dive a little bit deeper into what’s your goal? What’s your intention with this business? What have you done up to this point? What are the roadblocks? I’ll help you map out a game plan and see if you’d be a fit for our group.  

I got to tell you the story. You’d be proud of me. I’m proud of myself. I got pulled over by DPS. I have a concealed handgun license. I have to pull out my driver’s license and my concealed handgun license. At the same time, I have to present them together by law. Handing him the deal, he goes, “Where’s your weapon?” I said, “I think I have three but I know there’s at least one in here.” I pointed to my gun. My console is locked inside the safe. He goes, “Can you open up the console? Let me see the safe, sir. Open it up.” He could see the safe was closed. He goes, “Where’s the other one?” I said, “I’m not sure if I have the other two or not, but if I have them, they’re under the back seat of my pickup truck.” I have an F250 pickup truck. I said, “There are under that seat.” He goes, “If you have them, are they loaded?” I said, “They’re loaded if I have them.” He goes, “You got some loaded guns but you don’t know where they’re at.” I said, “It gets way worse than that.” He goes, “Really?” I said, “Yes.” He goes, “Do tell.” I said, “I own 300 houses. I don’t know where any of them are.” 

What did he say?  

He started laughing. He said, “What?” I said, “I own 300 houses. I can’t tell you where one of them is. To lose two guns is nothing.” He let me out. It feels good to be able to say like, “I haven’t seen the last 300 houses I bought. It might be 400.” I’ve been saying that for a long time. I haven’t seen the last 400 people that bought my houses. My job is something that I like to do. What I do for that is I take wealthy people or people with idle money out to dinners and lunches, make friends with them, take them to my ranch, and get them become one of my $26 million worth of private lenders. That’s what I do for that company. I like doing that. It’s not very hard work. It’s fun. I’m socializing with people that maybe I can help. Maybe they can help me. Maybe we can help each other.  

You surpassed the owner’s space. You’re in the investor phase where you’re helping allocate money, instead of working in the business.  

I have no desk at my office. There are no people I walk in like, “Where’s your office?” “I don’t have one.” Sometimes people want this cookie cutter thing. I have them all the time. They say, “Can I use your CRM?” I go like, “My CRM won’t work for you. I’m doing this kind of volume. I have all these seats. My office runs a certain flow.” Is that true for every office or have you found a way to standardize things? 

InvestorFuse has figured out a way to standardize things. It’s not going to be a fit maybe if you need a project management tool for rehabs. There are some use cases that we wouldn’t recommend it. I would recommend going to InvestorFuse.com, going through the book, a demo process, talk to a product specialist and see if it’s a good fit for you. We’ve been cracking that standardization code for years without someone having to rebuild from the ground up on a tool like Podio. Plug into an existing solution that can do 90% of what you wanted to do.  

We did that rebuild with Podio. It cost a fortune. It took forever. It was a pain in the ass. It still works exactly how. I bet you, we spent close to $50,000 so far. That makes InvestorFuse real affordable. Plus, if there are any little inequities for your specific situation, they seen them all. There’s a way to cover that base.  

One hundred percent, there’s work around. You’re right. If it’s 90% the way you want it, to get that extra 10% is going to suck up 3000% of your time, energy and money. It’s not worth doing it.  

Your office changes, the flow isn’t right anymore. What do you want to say to these people that have some real legitimate businesses but they’re stuck in the day-to-day grind?  

You can keep doing what you’re doing.  

Systematize Your Business: Try not to be an expert at the things that make you the least amount of money.

You can’t keep doing what you’re doing forever because eventually, you’ll go burn out. That’s what I’ve found out. Is that what you learned?  

Of all the investors that I’ve talked to, that’s pretty much it. Someone that I talked to said, “I feel like I’m an expert at the things that make me the least amount of money.”  

I can give a warning to people. I almost waited too late. Don’t wait until you’re completely fried at both ends because you won’t have anything left. You’ll be so out of it that you won’t have anything left to even begin to think about all this stuff again. Part of what Dan and his people do is to not let you get overwhelmed with the process. I go to people like Dan when I went to my place to figure out. The part of the thing was this is all we’re working on. Forget about all this other stuff. Let’s get this done. They haven’t mapped out. I would say go get your free consultation. You want to go over to 1000Houses.com/IA for Investor Academy. Check it out. Get a consultation.  

I’m sure if it’s not a right fit or you’re not ready for it, you all will come to the same conclusion at the same time. No one’s here trying to grab someone’s wallet. People want to sign people up if they think they can help them. I’ve known Dan for a long time. If he can’t help you, he’d rather move along or he’ll refer you to someone else or whatever you need. He’s not going to do it. Like me, if I can’t take you as a one-on-one coach, if I don’t think I’m going to help you get your money back and get your money’s worth out of it, I don’t want to play on that team. I want to play on a winning team. Try that out. I’d like to thank the audience for stopping by to get you some Dan Schwartz. Check it out. Go over to 1000Houses.com/IA. That’s evergreen over there, Dan. You can put whatever you want over there. We’ll have all kinds of stuff over there that we haven’t even thought about. You had the chance to meet up. I thought let’s meet up. We’ll worry about all that stuff but we’ll get it filled up.  

I already have a couple of things that I can include too as a bonus for people.  

You were talking about Lean Flipper Blueprint. The way to get that will be over there. Get a little free education. Let people see what you’re about, see what your company’s about, and see what you have to offer. If you want to go deeper, you go deeper. All the information will be over there. I appreciate you taking the time, Dan. I would like to thank Tax Free Future for sponsoring this episode. Please check them out if you need a self-directed IRA, 401(k), educational health plan, educational savings plan and educational health plan. They’re a self-directed with a checkbook control. That’s important, especially if you’re an investor that’s taking advantage of opportunities quickly. You can’t steal these deals in slow motion. Make sure you have checkbook control, TaxFreeFuture.com. We’re out of here. Bye.  

Important Links

• 1000Houses.com/IA 
• 1000Houses.com/TFF  
• 1000Houses.com/Livecomm  
• 1000Houses.com/100 
• 1000Houses.com/101  

About Dan Schwartz

Dan has helped thousands of real estate entrepreneurs systemize their business.

After learning the hard way to grow his own real estate business, he created InvestorFuse and the 8020 Investor Academy to help investors automate the messy stuff and focus on what matters.

• Here’s How »

• reinvestorsummit.com
• Real Estate Investor Summit Facebook
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• Mitch Stephen LinkedIn