Posted on: May 06, 2020
WI 421 | Real Estate Results

 

Undeniably, when this COVID-19 pandemic started, no one anticipated how much impact it will have on businesses and the economy in general. If you’ve been complacent, you’re probably all stressed and anxious now, scrambling to find ways to keep the business afloat.

Today’s remarkable guest however knows what it’s like to go from top to bottom and get knocked out (was left with $14 million in debt and had to file for bankruptcy at one point). The good thing is, the whole experience has also taught him how to prepare for business challenges of epic proportions and come out of it victorious!

Billy Alvaro is the President of Max Returns Real Estate Investments and a coach at Flip Masters. He is also the host of Real Estate Investing Radio. The visionary, serial entrepreneur, and practitioner of the law of increase has started and built numerous real estate related organizations and has done over 11, 700 real estate transactions!

In this episode, Billy candidly shared how he transformed his self, body, and mind to prepare for economic downturns, the shifts he did to adapt to the changing economic climate, and the mindset that has helped him stay on top of things. If you need expert, no-nonsense, and wise guidance as you navigate these trying times, this episode is for you!

4 Unusual Strategies Guaranteed to Explode Your Real Estate Results

Episode Transcription

I’ve got a very special guest. Someone that I have a ton of admiration for. Someone that I’ve listened to and over the years has become a dear friend to me. I’ve been down at Tulum a few times. We have gone out. I watch a lot of people on the content they’re producing and what they’re talking about.

Billy Alvaro is somebody that knows what they’re talking about because he’s been there before. We’re going to start hearing a little bit about his story but here’s what you’re going to get. By the end of this show, you’re going to understand the four significant shifts that Billy’s done and it’s what we’ve done. I believe he is absolutely right on track. You want to stay on here for what he has to say. Billy, first of all, tell us a little bit about you. Where are you located? Where are you from? How long have you been in the game?

I’ve been in the game for a bit. First of all, I’m from New York. I live in New Jersey and New York so I go back and forth to both states. We have an investment company in the New York area. We now have about eleven people on the team. We primarily do rehabs, wholesale, and we have a rental portfolio. I’ve been doing this full-time since 2009 but I’ve been flipping and investing in real estate. In 1989 was the first investment property that I purchased. Each year, I do a couple of deals here and there but never as a true business. The truth of the matter is I had no freaking clue what I was doing in the early years. I was just lucky with what I was doing. I got into this business full-time in 2009 because I had no other choice.

Let’s go there. A lot of times, people do a short little intro. We’ll go directly to the meat but I want to add some massive credibility here because your story is crazy, but what has brought the wisdom and the experience you have is because of the pain that you’ve gone through. For those that don’t know a little bit about your story, give us a little background, and then we’ll get to the meat.

This is a three-minute overview. What we’re experiencing now, I experienced back in 2008 when the crash happened. In that life, I had 950 employees. I had a national mortgage company that was in 41 or 42 states. We were doing about $1 billion a year with about $40-plus million in revenue. I was taking the company, doing a reverse merger, taking it public and the whole bottom fell out from me prior to the banking blow up in 2008. This happened to me about a year prior. I went from here to here overnight with $14 million in debt.

Honestly, it was the toughest time of my life. That happened in the middle of 2006. I didn’t get my head out of my ass for three years because I didn’t know what I didn’t know. I built a company fast. I had the wrong people around me. I had a ton of different moving parts. When I finally did come out of it and I realized what I needed to do, I immediately started taking massive action. I cut through all the red tape and all the BS. Believe it or not, I fired all my attorneys and I bought a course online called Jurisdictionary: How to Represent Yourself in Court and Win. I studied it.

I hired a paralegal because I had no other choice. I had to become resourceful because I was broke. I burned through all my cash. $40,000 a month trying to fight lawsuits and I’m realizing the attorneys aren’t doing it for me because their best interest is to bill continuously. They get paid by billing, not by settling. They get paid by billing depending on the law firm you’re going to. When I realized this, I go, “I have to take matters into my own hands.”

You need to hold on to and watch every single dollar that comes in and out of your business.

I took matters into my own hands. Within about two years, I got that $14 million down to about $2 million going to court by myself, per se. The last $2 million, I had to go and file for bankruptcy but going through that on the financial side, going from the top to the bottom and getting knocked out. I have a Harvard education in how to transform yourself, your body, your mind, and your finances by going through all that BS.

That’s what’s helped me with this downturn because for the past years, even though I didn’t know what was going to happen with a virus pandemic, I knew a downturn was coming. It was every 10 to 15 years, the cycle happens. I was preparing for myself and my business. Now, we’re at the point where luckily, New York is getting hit the absolute hardest out of all the states. We’re not on shutdown. We’re on lockdown. Nothing is happening in New York but because of what I’ve been through in 2008, the massive action I took over the course of the last month, and because I was mentally and financially prepared for it, we’re going to be able to withstand then come out of this thing. When this thing passes, the opportunities are going to be unfreaking believable.

I love the light that you’re painting at the end of the tunnel. It also reminds me. I know you’re probably a Ray Dalio fan like I am. If you’ve not read the book Principles, there’s a principle in there that hit me hard. He calls it the principle of first encounters. It’s the whole idea that the first time we encounter something, like what you did back in ’07, ’08, the reason that it knocks us down so hard is because we haven’t developed the principles yet to deal with it. It feels life-ending. It feels life-threatening but once you go through something like that, you’ve developed the principles so that when it happens again, you now can tackle this thing entirely in a different way.

It’s like going into battle but going back into a battle in a way that you didn’t go in the first time and that changes everything. What we’re going to talk about now are the four things that you took from that first experience, these principles. Talk about what they are and some practical shifts that you’ve made in your business. One thing I love about you, Billy is while everyone was still talking, you are executing. When everyone was executing on some of the things you’re executing, I’m like, “Billy’s done. He did that a week or two weeks ago.”

It lets you know that you’re not screwing around because you’re smart enough to know that and this could get serious. I’m not going to get caught with my pants down. Let’s start with number one. The first principle is the idea of consistently marketing but also shifting the marketing to what’s driving the ROI. Help us understand a little bit about that principle and practically what that looks like for you now.

Every state now is going through something different. New York compared to Wyoming. In Wyoming, you could continue to do what you’ve been doing because you’re not getting hit that hard. In New York, TV came to a standstill. My direct mail went down to about 0.01% response rate. All the marketing mechanisms that we were utilizing stopped working. What do we do? I didn’t throw the towel in. We did a complete change. I went hardcore over the phone telemarketing to our database of 100,000 leads that we’ve had over the last ten years. We’re re-hitting everybody. We started doing massive text blasting.

By doing that, first, I was able to save. It was about $40,000 a month, cutting my overhead because the marketing wasn’t working. I was able to reallocate part of the resources. I came offline with Facebook and with Google. I put the allocated resources into telemarketing and text blasting and we’re getting deals. We’re still making business happen. Nowhere near where we were before the pandemic happened but we reallocated or re-shifted. Now, go back to when I had the mortgage company years ago. When I started seeing the shifts happen, I didn’t know what I didn’t know. I didn’t have the experience.

WI 421 | Real Estate Results

Real Estate Results: When we come out and this thing passes, the opportunities are going to be un-freaking-believable.

 

As you said, this time around, I was two weeks ahead of what everybody else was doing. Back then, it was two months behind. I didn’t shift my thinking. I didn’t execute quickly enough. If I didn’t turn this thing around within a month, I could have bled out $40,000 that I can now utilize for something else. Every dollar in what we’re going through this pandemic counts to your bottom line. You need to hold onto and watch every single dollar that comes in and out of your business.

If I were to sum that up, the principle is to continue to market but understand that the change in environment might cause you or require you to shift the way you’re doing that. You have got to be agile enough to go, “This marketing’s not working. I’m going to jump over to something that is.” I love that you did two things simultaneously. You reduced your marketing expense but in that reduction, that also gave you some capital to reallocate over to what’s working for you up in New York, which is text blasting and doing outbound cold calling, which is great. I love that, to sum that up, what you did.

Let’s go to number two which is to get control of your expenses. Now, I think everyone at this point reading is going, “I heard that.” Can you drive this home? Can you get the audience to understand? Let’s go to Dave Ramsey, gazelle-like intensity. Can you talk about the intensity that you did and what you accomplished in the sense of cuts and the timeframe you did it in?

As soon as I saw s*** hitting the fan, I went into war zone mode and I got completely focused on the task at hand. Number one was keeping my business afloat liquidity-wise, not to burn through. We could last for a while but why would I want to still burn money? The first thing I did was download all my expenses. I added QuickBooks into Excel. Everything I did for the last year, by how much we spent from the most to the least. I literally spent two days hunkered in this office and I started cutting through every single expense highlighting which ones we needed to whack out.

I contacted the vendors and it was either stop it permanently, stop it part-time for the next 90 to 180 days, or cut back the amount that we’re spending for that particular service because there are certain things we still needed. I contacted every vendor, every marketing company, and my landlord. I went through the entire list and I looked at my employees. Who are the A players, the B players, the C players? I went through this whole thing. When I came out, we had $32,000 to $38,000 which was a hard cut to the bottom line that I’m not going to take back overhead-wise.

The rest of it was either forbearance or negotiated down. That was two days. When I got that done, I sat back and I’m like, “With what we have now if I don’t bring another dollar in, absolute worst-case scenario. If I keep the staff the way it is without letting anybody else go and I don’t bring a dollar in, how long could I survive with no money coming in?” Now, I’m at a 17, 18-month run rate where if I can’t bring a dollar in, I’m good for the next 17 to 18 months.

Before the cutbacks, I was at nine months. It doubled my lifeline in the business. Now, money is still coming in, thank God. It’s nowhere near what it was but if I didn’t do that again, I’d be burning through money unnecessarily. When the opportunity arises, when this market shifts and it will, I want to have the financial resources to attack, go out there and start taking off properties.

The one good thing that came out of this pandemic is that we realized that we can organize, run, and scale our business virtually.

I went through 2008 as well. To affirm everything you’re saying, we went through the same exact process. I’m saying this because if you’re reading and you haven’t done it, you’re already behind. You should clearly get off this show and start this process. Can we renegotiate it? Can we cut it? Can we defer it? We roughly cut off about 35% but the mentality that you have is what I agree with. It’s all about extending the runway as long as you can because the whole game is, don’t run out of money. Money is oxygen. When the oxygen runs out, you die.

Every dollar cut, everything you can shift and defer as long as you get more time, that’s what you need. Because the more time you have, it leaves room for more creativity, more ideas, more shifts, more adjustments and to get on the other side of what we’re talking about. That’s the winning side when the opportunity comes because we want to be on that side when it happens. If you ever saw Forrest Gump when Jenny goes out, everyone gets wiped out and then Jenny with the boat is coming in. What’s the next scene? The shrimping business gets easy and they’re killing it because it’s all about those that survived the storm and made it to the other side. I couldn’t agree with you more. Let’s go to number three.

One thing before we go to number three because a lot of guys and girls that are on this webinar will be saying, “This doesn’t pertain to me because I don’t have a big business. I don’t need to cut back.” I didn’t go through and cut back on my business expenses. I went through and I said, “What am I going to do on my personal side?” Personally, I didn’t have to but I went through and I cut back close to $4,600 a month. That’s $60,000 a year off the top of what you call the line right down to the bottom line. The other thing I said to myself is, “I have a s*** ton of money on the side personally.”

This is the mistake I made when I had my mortgage bank. If I didn’t cut back on my business side, I would have been bleeding financially on the personal side and take what I’ve accumulated to dump into my business. Why would I want to do that? I have a complete separation of powers. I have my business, income, and expenses. I have my personal income and expenses. If you’re out there and you’re reading, if you’re a business, you don’t want to bleed yourself personally to fund your business. If you don’t have a huge company, you’re a solo practitioner, cut back your expenses. I don’t care if it’s $500 a month. Cut it back because it’s $500 a month that’s going to stay in your pocket then you’ll have more money to start marketing for when this thing is over.

Let’s go to number three, Billy, selling virtually. Why is this important? Again, I think everyone has now been bombarded with the word virtual but let’s get into some practicals. What does this look like? How do we sell virtually now and maintain social distancing?

This is key for us. I think the one good thing that this pandemic had for my company coming out of this is for me to realize that we can organize, run, and scale this business virtually. I know you’ve been doing it for years. I’ve never done a virtual business like this. This pandemic forced us to work from home and not only that but to contact, connect, and get the sellers of these properties to know, like, and trust us over the phone or through Zoom. To leverage technologies, whether it’s an iPhone or having the seller Zoom through the house, we can see the process and see the type of property it is and what it looks like.

Take that video or have a professional videographer go out and sell the properties without a buyer going into the house. We’re buying and selling virtually. We’re closing on these deals. Is it easy? No. There are all humps that we’re going through but it all starts with the sellers upfront. It’s a completely different psychology of closing. My guys, when they go out to a home, it’s a one-time close. If they don’t close it, there’s a follow-up.

WI 421 | Real Estate Results

Real Estate Results: When the opportunity arises and this market shifts, we want to have the financial resources to attack, go out there, and start taking off critical properties on the cheap.

 

When we go to that house, our intent is to go there, know, like, and trust. Let’s settle on a number. Let’s sign the paperwork. When you’re dealing with them over the phone, it’s 4, 5, or 6 touches. You have to get them over the phone and it’s a psychological process you have to take them through. You’re not going to call them, connect with them, and on the first phone call, send them over a contract and try to close it.

In my experience, you’re going to lose more deals if you do it that way than gain them. Leverage your personality style and mirror it with the people you’re connecting with over the phone. You have a process that takes them through 5 or 6 steps and slowly inches them to the next step, I think you’re going to have a high success rate with closing these deals.

That’s good. What I hear is a shift in the way that we sell but particularly the speed of the sale. As you said, I’m used to the face-to-face where my sales team for me goes out and we call that a one and done close. Now, you’re moving into a little bit more of dance if I could say it that way, in the sense of slowly leading somebody to that close because you’re having to do it virtually. At that point, it requires some self-awareness about myself as a salesperson and the seller on where they’re at as well as some patience.

What’s interesting that hit me is we understand that process with people that are elderly by nature. As long as we’ve been in sales, we’ve always been told you can’t rush, usually the older generation. They’re a little bit slower. We have adjusted historically to that. Now, it’s taken that mentality, it sounds like, and applying it down to people, even at younger ages because we’re doing it virtually.

You nailed it right on the head.

Is there anything else you want to drive home on selling virtually before we go down to the last and fourth nugget?

No, I think buying and selling is the way to do it virtually now. You have to have all your ducks in a row and know. As you said, it’s a slower process.

Increase your efficiencies and leverage any technology that you possibly can to make your job better, faster, and easier.

Did you say that you had a video series or something? I know you said you encourage people to do it but is there one that you’ve come across that people could go online? Have you come across someone that’s put out some training on how to do this?

Honestly, John Martinez has the absolute best training out there when it comes down to buying and now buying over the phone. He’s very good. All my guys have been with him for years and going through the sales training process. On the backend, when this whole pandemic happened, he put out another series of how to take what he’s taught you and now shift it and do it over the phone and it’s working. Hands down, his s*** works.

John Martinez, again, we’re familiar with him. I’ve heard nothing but great things about him. I did a little video series with him too. I highly recommend that. Check that out. It sounds like he’s on the forefront of driving some practical virtual training, if you feel like you need it. Let’s go to the last thing. Point number four, leveraging technology. Specifically, what are we talking about? How do we leverage tech now to be able to close more deals and make money?

This ties and wraps up the whole conversation that we’re having. We’re leveraging on the marketing side all different types of technologies from the dialers, to the text blasting services and the email services that are going out. We’re also using it on here now. Everybody’s familiar with Zoom but this is running our company. It’s keeping us together as a company. We might not be in the same office but we’re having huddles daily. All ten of us are on this thing like The Brady Bunch. We’re all reporting on what’s going on and keeping each other up to speed.

We started getting into doing Zooms with sellers on their phones. They’re walking us through their home on their cell phone and it’s being recorded. Now we have that information and what the house looks like. It’s on the recording side. If we can’t get in somebody with a video camera because the people inside the home are like, “I don’t want anybody in.” We already have the footage that we need to take that property and sell it to a cash buyer on the backend. It’s doing things differently. Increasing your efficiencies and leveraging any technology that you possibly can to make your job better, faster, and easier.

What would you say are the top 2 to 3 software, apps, and tech that you are leaning on now where you’re saying, “There’s a bunch out there but here’s the three that I think we’re literally utilizing the most day to day in our business.”

I’m having a brain fog with the texting one. I can’t remember what it was but there’s a texting platform that my guys have been utilizing and it’s fantastic. Zoom, definitely. On the email side, simple email, which is the GMass. We’ve been utilizing GMass to blast these properties out to the buyers of the property.

WI 421 | Real Estate Results

Real Estate Results: We’re buying and selling virtually, and we’re closing these deals. Is it easy? Absolutely not. There are old homes that we’re going through, but it all starts with the sellers upfront. It’s a completely different psychology of closing.

 

Wrapping up, Billy, anything else you’d like to leave with the audience in the sense of like, “I’ve given you some practical stuff. This is what I did in 2008. This is what I did much faster.” I know you now, again, there are some challenges but you’re not stressed out. You’re not having sleepless nights. You got this fear, you got things under control because you’ve been proactive and got ahead of it. What would you like to close and say, “If you guys hear me on anything, this could be on principle, heartfelt, or whatever it is.” What’s the last thing you want to leave everyone reading with?

It’s very simple. Get it clear, get focused and take action. Those three things you need to do immediately, daily and consistently because if you don’t, you’re going to lose. You also have to realize s***. No matter where you’re at, it might be decent where you’re at now. In New York, it’s extremely hard. There are people here that are struggling. If you keep your mindset straight, this is going to pass. It always does. It’s an up and down type of business.

The opportunities that are going to become available. If you’re in the right position, in the right frame of mind, you’re going to create a tremendous amount of wealth over the next two years for the next fifteen years. It’s going to be an outrageous and unbelievable experience that we’ll all be going through in the next couple of years.

Billy, I appreciate it. As always, if you’re tuning in and you’ve got an interest in utilizing radio. Billy, I know for us, in Texas, we didn’t have to shift that. We’ve pushed harder on the radio because it’s working well in Dallas, Fort Worth. On top of that, we’re running the same 600 ads per month but we’ve negotiated the rate down 45%, which is crazy. It’s the same frequency at 45% of a less price and that’s not only for a month. We’re hoping that’s going to continue to stick with us even as we come out.

They might try to negotiate at some point but now we know they’re willing to go. I say we buy it dirt cheap. I don’t know how you describe 45%. I couldn’t believe it. If you’re interested in that, go to WholesalingInc.com/reiradio. Billy, if people want to hear more about what you got to say and follow you, where do they find you?

Online, on Facebook, the Unstoppable BA same thing with Instagram @UnstoppableBA and you can go to my website, BillyAlvaro.com.

We’ll talk to you soon. Billy, thanks for your time. I appreciate you.

Thank you. Anytime.

 

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About Cody Hofhine

Cody Hofhine, a multiple Inc 5000 Business Owner. Co-Founder of Wholesaling Inc. the #1 Real Estate coaching program across the nation. Co-Founder of Joe Homebuyer the leading Real Estate Franchise. A successful Real Estate investor/mentor and sought-after Speaker.

Cody has coached over 3 thousand students on how to successfully build their Real Estate businesses through his real estate training as well as helped individuals perform at their highest levels with his one-on-one mentoring.

Cody used his background in sales to quickly build multiple 7 and 8 figure Real Estate Businesses that all start on the foundation of clarity or Vision and Purpose.

Cody loves being with his family and doing crazy tricks behind a boat.

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