Why Passive Income? With Kevin Scott

Episode 511: Why Passive Income? With Kevin Scott

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REIS 511 | Passive Income


Wealth truly happens when your passive income meets all your needs and wants. That is when you know that you are set for life. One way to passive income, as a real estate agent or investor, is to keep working on your deals. Stop worrying about the administrative side of things. You went into real estate to find and close deals. Leave those other things to Kevin Scott, the owner of Top Shelf. Learn what he does as a transaction coordinator. Kevin loves to schedule deadlines and file paperwork, so he made it his business. Learn the type of robots and AI that he is using to speed up the process. Let Kevin and his robots help you achieve passive income today!

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I have Kevin Scott with me and it’s scary because this guy knows me better than me, I think. He’s quoting things out of the book and talking about my stories. I’m having fun but I’m also like, “This guy paid attention for a long time and to a lot of podcasts apparently,” and has made a lot of changes. Also, what I find very interesting is we’re talking about delegation and automation and he creates robots to do functions for you. Not only does he have a service where he’ll do your closings for you. He’ll handle your closing. He also can build robots that can handle billing but we’re going to let him tell you more about it. How are you doing, Kevin?

I’m doing great. I’m fanboying a little bit here, Mitch, because I’ve been following your show. It’s been over 500 episodes now and it’s a thrill to be here.

I appreciate it very much. I’m always flattered and honored when someone is that dedicated to my segments. Why? Let’s start with that. Why do you listen to my segment? I want to hear from you.

For a long time, I’ve always known that I want to be a real estate investor. I want to be involved in real estate investment. My wife is a real estate broker here in the Houston area. Passive income is the way to go. They talk about it in Rich Dad Poor Dad about your wealth truly is when you are passive income it meets all your needs in your wants and then you’re free. More wealth has been made through real estate than any other venture. That’s where I want to be.

That definition of financial freedom changed my life. Financial freedom happens when your wants and needs are exceeded by your passive income, which I changed to cashflow because I don’t believe anything’s passive. What a revelation that was. The biggest thing was I always thought financially free people were billionaires or rich people but I only needed $3,500 to be financially free.

I had a conversation with my father-in-law where he was saying, “How much money do you think I need to have in the bank to retire?” I’m like, “It doesn’t matter how much money you have in the bank. It matters how much cashflow you have coming in on a monthly basis.”

Tell us about him.

He is my father-in-law and he is in his 60s.

What do they teach these people in school?

Wealth truly is when your passive income meets all your needs and wants. Share on X

They sure don’t teach financial literacy.

It makes me crazy. We’re here in the corner of success and opportunity right in the middle of the greatest infrastructure country in the world and people are going to their graves, don’t understand anything about getting free from two to the dollar.

Thanks to you, our conversation was about the solo 401(k) that he set up and he’s rolling all of his retirement money into that. He’s going to be making use of that as he rolls into his retirement.

By the way, if you’re interested in that topic, go to TaxFreeFuture.com. There are two ways to go and they’ll probably be sponsoring this episode anyway so here’s their plug. You can get in to these retirement funds for free but as you grow your funds and do transactions, they bill you to death. You’ll look up and at the end of the year, you’ve paid $1,000 or 1,500 or $3,000 for the year as a maintenance fee for these accounts. You can pay $1,500 one-time through TaxFreeFuture.com plus your LLC and then you could have a retirement fund that only costs $200 a year annually no matter what it’s worth, no matter how many transactions or whatever and you have checkbook control.

It’s much smarter to pay the $1,500 upfront and freeze your annual costs than to get in free and let your annual cost keep floating and growing. That’s the idea behind TaxFreeFuture.com. Thank you very much for sponsoring. You’re sitting there, you have a job and all of a sudden, they let you go at your job. That’s a panic point for most people.

Best time to hit the panic button when they come to you and say, “Thank you so much for all the time and energy you put into helping us grow our business but we found somebody who’s less expensive to do what you do.” That’s the conversation that I had with my former employer. Over the years, I have been building a side hustle. Thanks to you and the advice that I’ve gotten from you over time by being a reader, I got started. That side business is not supporting my family and me. It’s the transaction coordination business that you mentioned where we help residential real estate agents with their contract to close process.

They get their transaction under contract and real estate agents tend to be pretty good at getting deals signed but what they tend to not be all that great at is following deadlines, following paperwork and getting all those T’s crossed and I’s dotted. Nobody ever went into real estate as a real estate agent. I love paperwork and deadlines so I’m going to get into real estate. We take care of that burden for them so that they can focus on the activities that generate what we call the four Cs. More clients, contracts, closings and commissions for them. When you think about it, it’s something that is also directly applicable to the individual real estate investor.

You need to be focusing on what makes money and quit hanging out in the supporting areas that support making money. There’s a certain amount of things that generate the money. What did you say? Clients, contracts?

Commissions and closings.

REIS 511 | Passive Income

Passive Income: Real estate agents are not that great at following deadlines, paperwork. Nobody says, “I really love paperwork and deadlines, so I’m going to get into real estate.”


If it’s not to do with that, you should be trying to delegate it out. For this segment, anything we mentioned or talked about, go to 1000Houses.com/gethelp if you need some help with your transactions. Also, if you want a robot built to handle some functions in your office or if you don’t even know what functions your office is doing that you might be able to get a robot for. Why don’t you get over to 1000Houses.com/gethelp and have a conference call or have a call with Kevin and see because automation is a wonderful thing? I digress. Let’s go back to the transaction coordinator. You said real estate agents but I understand because you even called on my company. We have someone in that chair cause we’re a much bigger organization. You would also do closings for real estate investors. They’re not any different, correct?

That’s right. I did and I have. Typically, when a real estate agent is starting out, it’s only themselves. They get to 1 or 2 transactions a month and they can handle that. When it starts getting over 2 to 3 and 4, it’s hard to keep all those details straight but they still aren’t making enough money to hire someone to be their transaction coordinator. We help them to bridge that gap from, “It’s only me and I know I need to grow but I need help,” to, “Now, I’m at the point where I’ve got enough time and I can hire somebody to handle that for me.”

What we do for our clients is that once they’ve grown to that point, we allow them to hire their in-house transaction coordinator and plug that person into our systems and processes so that they can continue without missing a beat. If, for some reason, that person gets sick or goes on vacation or quits or whatever, then our team can step in and continue to provide that support until that person is replaced on that end. That’s the in-story of bringing people in, having them as our clients and helping them grow past needing our services.

That’s a very honorable thing that you help people grow past. I imagine a lot of people see the value in your service and will hang on. Service is almost dead in this country. It’s horrible. If you have a company that gives good service, people will hang on to you only because they like to be reminded of what service was like. Sometimes I’ll go to a place that has great service. I don’t care how much extra it costs. I only want the service. Show me again what service looks like because I have forgotten.

We started in Texas. Now we have clients in 22 or 23 states. The process that we’ve set up, while it’s great in Texas, it’s great in every single state to the point that we received an endorsement from a national coaching company that specializes in coaching real estate agents from coast to coast. They recommend us as the only transaction coordinator that they think their clients should use.

Let’s talk about one of the successes or one of your successful transaction coordinators, someone who uses that service.

My first client was my wife because she knew she needed a transaction coordinator but didn’t know how to find one. She said, “Go and find me a transaction coordinator, Kevin. Get me one.” We have found one. She was good for a while but Mitch, she was a one-person show and one-man deep. When her business grew to the point where she couldn’t keep up with it, she started dropping the ball and making mistakes. Making mistakes that were taking dollars out of my wife’s pockets. My wife turned to me and said, “Kevin, I need a transaction coordinator that I can trust and congratulations, you’re it.”

You got charged with the duties.

At the time, I was at a process and automation specialist in the oil and gas industry. I took those skills and I applied them to this transaction coordination task. I grew to the point where here I am now. I knew that I didn’t want to make the mistake of getting overwhelmed as a one-person show. I built it from the beginning with the idea that I would bring in other people on my team and share that load. Now, I’ve got four transaction coordinators that work for me and we provide great service to everyone that comes through the door.

If your company gives good service, people will hang on to you because they like to be reminded of what good service was like. Share on X

What might I expect to pay if I got a deal that’s closing? I want to preface it so that everybody knows. I’ll do this work for you, Kevin. Is this the price? The man has the right to change his prices or anytime he wants to but as of this conversation, what’s it running now to close the deal? Tell me how it would work.

As of this conversation, our contractor closes $399 per transaction and that takes you from you have it under contract. You send us the contract and we take care of it from there all the way to closing. The only thing that we cannot do for you is to negotiate the terms of the contract but we can take care of all of the conversations and the routine communications that need to happen to get that thing to the closing table.

We interface with title and inspectors and appraisers if there are appraisers involved. We let you focus on going out and finding the next deal. You, as a real estate agent or as a real estate investor, you’re not watching your inbox all day. When something comes in that is urgent, you may not see it for a while but we see it almost immediately. If it’s something that we can’t take care of for you, we will text you, we will call you and we will make sure you know that there’s something that needs your attention.

That happens to me all the time. People sent me things that were important. It’s like, “Send me a text when you send me an email because we’re like in a never-ending pool of a big dark hole.” I would probably get an email manager for myself. When you do this, the coordination’s for $399. If you’re a good realtor, a good closer or a good shower or whatever, this is way worth your time. To move on to the next deal, not have to deal with this minutiae calling and scheduling an appraiser or finding out when it’s coming in or dinging them like, “When am I going to get it?” To me, there’s no better thing to delegate stuff like that. I hate stuff like that.

You think about it from the perspective of the dollar value of your time. A busy real estate agent, they’re making $300 to $400 an hour that they are working. If they spend an average of 6 to 10 hours per transaction on this administrative stuff, that’s work that they shouldn’t be doing because of the opportunity cost of what they could and should be doing, which is going and getting more deals.

It’s called, don’t work below your pay grade. This would be especially helpful again if you’re a 1 or 2-man show and you’re starting to outrun your infrastructure. You can use it temporarily or you could bring it in permanently as the piece that does this for you. When I say rarely, you might need it until you find the right person to be the central administrator in your office and do it but that comes with a whole other set of problems, too. Now, you’ve got payroll and matching payroll and benefits and everything. You’re only a vendor so there’s none of that with you.

The other thing that’s important to point out and this is something that I learned from you because there’s a lot of people in my industry who don’t do this. That is, if you don’t get paid, we don’t get paid. If for some reason that deal falls out, you’re not going to get an invoice from us. We want to be paid for success.

That might be the magic of this whole conversation. You only have to pay when the money hits the table. You don’t have to pay this person that week when you’re on vacation and nothing came in or whatever the case may be. This is a big point. When you pay per transaction, there’s a lot of peace of mind there. If you hire a transaction coordinator, you better start producing because she needs her paycheck every two weeks or every Friday. You can’t sit down now. You can’t stop. Imagine that’s only one piece of the puzzle. I always like to teach to make sure that as many hands as you need are getting paid upon success and not salary because if you get too many salaries going, you’re like a hamster on this wheel and you can’t get off. That is no way to live.

How many businesses have fallen underneath the weight of the infrastructure and the overhead that they built over themselves? We’re in a great time now in the real estate industry but it’s not going to last. Eventually, the market will turn. If you have increased your overhead, it’s going to hurt when the transaction count falls.

REIS 511 | Passive Income

Passive Income: A busy real estate agent makes around $300 to $400 an hour. If they spend hours on administrative things, that’s work that they shouldn’t be doing because of the opportunity cost of getting more deals.


Not even to mention the personal anxiety of having to let someone go who depends on a check. You hire these people, you get them going during the boom times but as we know, there are cycles. When we hit a low time, you either got to start burning your cash in your savings account to hold on to everybody or you got to let people go. Heaven forbid you burn through all your cash then have to let them go. That’s the worst-case scenario. You got to make faster decisions than that. This is a good solution.

It’s a third-party vendor that will handle your transactions. You pay upon success. I love my acquisition people and my salespeople. They get paid upon success. I’ve never reached in my pocket. I’ve got an acquisition guy. When I pay for the house, I borrow the money to pay for them too, then I have a basis in the property. Now, I’m trying to make a profit on top of that. When the salesman sells it, someone brings a down payment and he gets paid out of that. That’s two huge pieces that I don’t have to lay awake at night and wonder like, “When is it going to slow down and these people are going to get disenchanted?” Let’s switch gears into robots.

In my previous job, the one that I was laid off from, my entire function there was to build and lead a team that created robots for our employer. These robots can do anything that you and I can do on a computer. When you think about automation, you usually think about computer nerds. There’s one computer at company A and there’s another one at company B. They got to talk to each other and make sure that their computer systems, all interfaces and all of those things get done. We have to wait for them to get that right but the robots that we built are based on the user interface. They interact with the systems in the exact same way that you and I do by reading the screen and sending keystrokes and mouse clicks. I’ll give you a good example.

We have automation now running for a real estate investor that goes out to a number of different law firm websites in Texas. It reads the PDFs of the properties that are going to the tax auction in the following month. It goes through and it pulls out the information that we need on those specific properties. It then goes to the tax site of accounting and questions and pulls out a little bit more information about each one of those properties.

It goes to Zillow and pulls out a little bit more information. It takes all of those disparate inputs and consolidates them into one single, commonly formatted output that goes to the investor. He loves it because this is a process that he and his team had been doing up until recently, manually. Now they don’t have to do it anymore because the robot’s doing it for them.

I imagine it could do your cashflow analysis and your comparative analysis to see what properties are worth. I can mention a lot of different things. Anything, really.

It’s easy to say, “Yes, it can do anything,” but it helps to have specific use cases and the process that is ideal for automation is a process that is repeatable, redundant and honestly, it sucks. I’ll give you another great example. My wife has a lead source that, on purpose, does not have a way to take leads out of this lead source website and put them into her CRM because they want her working in their system. What I did was I built a robot that logs in using her credentials.

It looks for all the new leads that are waiting for her and it clicks into each one of those. It reads the contact information and it goes into her CRM and does all the data entry for her into her CRM system. When you think about things like list stacking and going to the county websites looking for probate suits, divorce suits, things like that, the robot is ideal for doing that because it’s the same thing every time. Maybe a little bit of a difference each time that we can handle through smart coding of the robot.

Talk to me about a program that goes into the courthouse and pulls out some things. I know this is an open-ended question but try to answer it the best you can so we have an idea about it. How much does it cost for me to get a robot to do a task for me? I know that’s a wide-open question. I don’t want to be stupid but can you give me an example of one thing you did for somebody and how much it cost?

The ideal process for automation is if something is repeatable, redundant, and boring. Share on X

The way that we charge for the robot is we charge based on the robot’s time. When the robot starts doing something for you, it starts to the stopwatch and it keeps track of how much time has elapsed between when it starts and when it ends and then it deducts that amount from your time bank. When you think about this, think about the fastest typist in the world. The robot is faster than that. When you think about an employee or even a contractor that you might pay to do that, they’re not working for you 100% of the time. They’re taking smoke breaks, checking Facebook or doing whatever they’re doing. The robot is working for you 100% of that time. We charge $100 per hour of robot operating time. When you think about the robot is working roughly 10 to 20 times faster than a person can, the cost gets down to the level of a VA.

I imagine it can burn through a set of files in a couple of hours that would take a VA all day long to figure out.

I had a conversation with somebody who was questioning that and I said, “I am willing to take that Pepsi challenge. Give me a task that your VAs are doing now. Let them do it, time them and see how long it takes them to get that done. Then let’s have my robot do it. Don’t tell them that they’re being tested. I guarantee you, the robot is going to crush them.”

How did it turn out?

We haven’t done that yet. I haven’t had any takers yet.

They all know. What’s the use. Why even bother? I know these people are not focused.

You said a lot of times, you take the sawdust from one business and you take that and have that feed another business. That’s what I’m doing here. I’m taking the sawdust that’s coming out of my TC business and I’m turning it into pressboard in the automation business because there were a lot of things in my business where when this task comes up and it’s ready to be done, it’s the same thing, every time. You cook here. You cook there. You check that. It’s done. Now we move on to the next thing.

I’ve taken a lot of those tasks in my business and I’ve automated the crap out of it so that my team can be more productive on the things that need their attention and their judgment falls to do. We’re using the right tool for the job. We use humans to do the things that only humans can do and we use robots to do the things that the robots do.

Kevin, are you giving away anything? Do you have a free consult or something?

REIS 511 | Passive Income

Passive Income: An employee that you pay isn’t working for you 100% of the time. They’re taking smoke breaks, checking Facebook, doing whatever they’re doing. Robots work for you 100% of that time.


Yes, we do have a giveaway. I understand that handing over a transaction to somebody on a promise is somewhat difficult to do so we have a free offer for your audience. If they come in and they come in on the transaction coordination side of the house and want to give us a try, we’ll do two transactions for them for free. There are no credit cards, no tricks, no gimmicks, truly.

If you don’t think it’s worth paying for then we’ll part ways as friends because we don’t ask for a commitment or a contract because if we’re not providing value to you, we don’t deserve your money. That’s what we’re doing on the transaction side. On the automation side, normally, we charge a $500 fee to develop the process for you. For your audience, we’ll cut that to $100 to get started.

That’s an amazing offer. Both of those offers were amazing so thank you very much. Let that be a lesson to your audience out there. Sometimes we have a special deal for you, for sure. It’s not contrived. We work together with different people’s audiences and they want to tempt you to come to meet them so they give a good introductory offer. I think both of those offers were good.

I want to talk to you later about getting a meeting with my office and finding out what we can automate because I am sure there are things that I haven’t even dreamt of yet that need to be automated at my office. That will probably help my office tremendously.

I’m looking forward to that conversation. I was part of what I did for my former employer was to look at your processes and identified the opportunities for automation. The team that I was leading there returned to the bottom line of my company more than 5X our entire cost and that included our salaries. We’re confident that once we take a look, we can find things to put some money on your bottom line.

Go to 1000Houses.com/gethelp Try a couple of transactions with them. See how you like it. He’s offering you two transactions free.

I’m still going to pay my people because they do good work and they need to be paid but I am so confident that you’re going to be thrilled with it that I’ll give you two for free and I’ll make it up in the long-term.

If you think you need some automation in the form of a robot, call him up and give him a chance to look at your system, look at what you’re doing, look at your daily workload, what you’re doing and don’t be surprised. Don’t discount him. Just because you can’t think of what can be automated doesn’t mean he can’t because he’s a pro. He can see things that you’re not going to be able to see. “What did you do over there?” “I did X, Y and Z.” “You don’t need to do that.”

You shouldn’t be doing that. It is right for automation. We have that conversation all the time.

If you're not providing value to someone, you don't deserve their money. Share on X

I have a new book, just so you know and the audience out there. It’s called The Art of Private Lending, where I teach people how to lend their own money and how they can make 12%, 14%, 16%, 18%, whatever. You don’t want to get users in your state or whatever.

Thanks to you, I am a private lender. I was a private lender to one of your deals. I was thrilled with the outcome and looking forward to more.

Here’s the nugget of the day. I wrote this book with Mike Powell. It’s not a big thick book. It is about 121 pages. It’s the basics. It shows people how to take their IRA funds or whatever. Roll them over into a self-directed fund and then start making loans with the collateral and protectionism that you want, the risk level that you want instead of throwing yourself to Wall Street and hoping they do a good job for you.

About three-quarters of the way, it’s like, “You can do all this but you’re going to have to roll up your sleeves and go to work. You’re going to have to find a customer, size up the deal, have to figure out what the collateral is worth and go to work or you can loan me your money at 6%, 7%, 8%, 9%, 10% and I’ll do everything for you. I’ll include all this protectionism that I was telling you to protect yourself. I’ll include all that and you can keep playing golf.

As a nugget, I use the book to help find private lenders for myself. In the process, I’m sure a certain amount of people will use the book to go start their own private lending business and I’ll never meet them and that’s fine. They’ll go off and make 12%, 14%, 15%, 16%, 17%, 18% rate of return on their money but there’ll be working. There will be this other set of people that are like, “Sounds good but I don’t want to work anymore. I’m done working. My job is to fish every day so here, Mitch. You take my money and give me 8% or 9% or 10% and I’ll be more than happy. I would want to keep fishing or playing golf.” There’s the tactic of the day.

That book and what I about you is that one of the things that you’ve mentioned many times over the course of me listening to you is the idea that it’s good to be successful but it’s important to pay it forward. That book is one of the ways that you’re paying it forward. I appreciate that about you. I wanted to tell you about a conversation that I had where I was standing in a house that we had put under contract for $150,000. When it’s fixed up, it’s going to be worth a heck of a lot more.

I turned to my young daughter and I explained to her what we were doing and why she should be investing her money in this venture with us. She was standing there and started asking the contractors questions about, “What work are you going to do here in the kitchen? What are you going to do in the living room? How much is that going to cost?” It was a proud father moment to know that my kid is marinating in this real estate investing stuff. She’s already a partner for us in one of our rentals. She gets a little bit of rent from that every single month. She put $500 in it. She gets $5 back every month because that’s the chunk of the deal that she bought.

There’s the education that they are not getting at school, the physical education. They don’t know what to do. A person would start out at a young enough age making sure they invested 10% of their money from the very beginning, whatever it was they made, whenever they made it. Maybe they are using the Acorn app where every time you buy something on a credit card, it throws $1 or $2 into your savings account or IRA or whatever. Money that would never be missed that would one day turn into tens of thousands or hundreds of thousands or maybe even millions of dollars would start.

The problem is it’s always so daunting to start out with nothing. If you start early enough, those pennies will add up and you’ll never start with nothing again because it will always have something in it or early enough. It helps if you help your kids somehow figure out how to make the first $500 so they can get their snowball.

She had invested. She’d taken her on birthday money and stuff like that and built it up. She had a bunch of money in her little purse. She was asking me, “How do I make more money, dad?” I said, “Here’s a great way that you can make more money.” She had already invested in this rental so she was getting her $5 a month. I said, “Why don’t you go outside and mow the lawn and I’ll pay you the $50 that I would have paid somebody else to do it.” She found out pretty quickly that it was a lot of work. She wanted to quit halfway through. I said, “Ma’am, I don’t pay for an incomplete job. You have to finish.” That night in bed, I told her, “Think about the money that you made. Here’s the $50 for the lawn and here’s the $5 from your rental. Which flavor of this money is the best?”

It was the $5. She made it doing nothing.

She like, “I had to do a lot of work for the $50. It’s more than the $5. I didn’t have to do any work for the five. I want to figure out how to get more of these $5. When’s your next deal, dad? Can I put more money in the house?” “It’s not quite how it works but I’ll include you in the next one, sweetie.”

That should be documented a little bit, even if it’s only 25 pages or your thought process there. I think a lot of people could use that. A lot of people don’t know how to make money themselves. They might even be teaching the adults a thing or two.

I want her to have the idea and she does now that passive income is the best income to have.

I appreciate you taking the time to be on. Go to 1000Houses.com/gethelp You can get your two free transaction coordinations done so you can see how it goes, how it works. Try them out. It’s quite a bold offer. You have nothing to lose. Also, call them and get some consultation to see what a robot might do for you in your business. I’d like to thank you for stopping by to get you some Kevin Scott.

Also, I would like to think LiveComm.com. There’s a reason why my last 250 houses average four days on the market. They average four days on the market. I use no signs. Not even one in the front yard. There’s a reason why. Watch the video on the homepage at LiveComm.com. LiveComm works for all kinds of businesses. They are smartphone numbers. They are lead generators. They help sales. It’s an amazing technology that once you wrap your head around how it works, you start to see how it can do all things for you and all different businesses. Check it out. We’re out of here.


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About Kevin Scott

REIS 511 | Passive Income

An Air Force veteran and recently departed from the Oil & Gas industry, Kevin lives in Houston with his wife and 2 daughters. Kevin’s business supports retail real estate agents and investors alike.





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