#730: The 2030 Real Estate Team with Joel Perso

Episode Transcript
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(00:04):
What is happening?
Everybody, man.
Thank you guys.
Tuning into episode 3 03 of Expert Mentors Live.
We've got the one and only Mr. JoelPerso back in the house, and I'm really
excited to dive into this conversationwith you, Joel, something we, we talk
about a lot and, and really what thebusiness model looks like and you know.

(00:30):
How we're gonna, you know, reallycreate, deliver, and capture value.
Really, that's business model summedup is, is just that simple, right?
How do, how do we createvalue for the marketplace?
How do we deliver it?
How do we capture it, um, to thenobviously monetize to be able
to provide the resources for itto continue to, to move forward.
And, you know, obviously, um, justthe emergence of, of technology,

(00:54):
of, of fractional support.
I mean, obviously all of those things,because once you, once you have the
model, the strategy, then it's theteam, which we won't get into on
this conversation, uh, but something,you know, possible continuation.
Obviously the second part that.
You're gonna be delivering inCleveland next week at agent to

(01:16):
CEO, um, live in Cleveland with us.
And you know, where, where thisconversation falls into the, the whole
agent to CEO framework is, you know,once we've established clarity, which is
kind of where we're at and where we wantto go, and then, you know, what's that
guiding light in the filters that we'reputting in place, which is vision, right?
It's just, to me, vision is just.

(01:36):
Filters, right?
Decision making filters.
'cause it's either, you know, withinour belief system in, in pursuit of,
of the purpose and, and chasing, youknow, chasing what, what the goal is.
But the goal should unlockfreedom and what's my vehicle?
That's the way I think, you know,looking at, at these different models

(01:58):
that you're going to, you know,dive in and unpack for us today.
Is what is the best vehicle forme to get where I want to go?
Knowing my strengths, knowing myweaknesses, knowing my likes, knowing
the season of my life, I think isalso another consideration to take
in, um, into account as we dive in.
But I, I'm excited to, to unpack thiswith you and, um, ready to jump in.

(02:24):
Yeah, let's do it.
Let's
go.
So it fits into the whole agent to CEOframework, um, that we're, we're going all
the way through in Cleveland next week.
Um, I'll give a quick plug for that.
There are still a few tickets left.
So, uh, agent to c c.com.
If you guys, um.
Get out to Cleveland and hangout with us for a couple days.

(02:46):
Uh, also connecting that toan incredible charity event.
Rock the spectrum that STA puts on.
So if you want the full, the,the full experience come up
to, uh, Cleveland next week.
Like I said, still some tickets available.
Um.
But it, it fits intospecifically, uh, the, the flow.
Like you said, there's clarity.
Where are we going?

(03:07):
And now the, the business modelwe're gonna talk about here
is, is the vehicle, right?
Are you, are you building a fighter jet?
Are you building a cargo plane?
Are you building?
Uh, are you building a 7 47?
Right?
There's, there's different models, there'sdifferent vehicles that can get us there.
So we're gonna talk about specificallywhat type of vehicle, and then the

(03:27):
follow up to this is the businessmodel canvas that you teach.
Um, so there's, there's nine elementsof the business model canvas.
We're not doing that today.
Um, Tina call and you, I believe,are gonna do that in Cleveland and
I'm really excited to get her take,um, and see you guys' role on that.
So when, when I talk about the vehicle.
We're gonna go over, over, um,four main but five business models,

(03:50):
five vehicles that real estate, um,agents and team leaders can choose,
um, to get where they want to go.
So the, the, um, the example for whatwe're talking about would be, okay, you
can have a. Of real estate here, butyou could have a subscription model.
Okay?
You've got things like Netflix whereyou're, you're paying a monthly

(04:11):
fee to be a subscriber to it.
Um, you could also have like a, afreemium model where you, there's
a free version and then youupgrade people into a paid version.
There are franchise models like aKW office or a McDonald's, right?
Where there's, uh, you're sellingfranchises and that's the main goal.
Um.
And, and you know, many more thanthat, but those are just some examples

(04:35):
that people are gonna understand here.
So that's what we're talking about.
What are the real estate teamversions of that type of conversation.
And so I've identified five, um, five mainones that I think most iterations that.
We see, and you and I talk to a lotof, a lot of team leaders, a lot of
agents, um, just about everything's gonnafit somewhere into these five models.
Um, four main ones and then one additionalone that I think is important enough

(04:59):
to, um, to kind of call out on its own.
So, um, when we're, when we'retalking about, you know, getting
clear on where we want to go.
Um, one of the great parts aboutowning your own business is
that you get to choose what youwanna do and where you wanna go.
One of the hard parts about businesssometimes is that you have to choose, uh,
you can't let anybody else choose for you.

(05:20):
And so this, this is a, a piece of that,choosing what you wanna build, um, you
know, to get you where you want to go.
So.
Um, so you let me knowhow do you wanna do this?
Do you wanna run throughthe five real quick?
Do you wanna start deep dive on a couple?
Yeah, I'd say let's, let's hit, let's,let's give kind of, kind of what
the five we've identified and thenwe'll, we'll start kind of at the,
at the beginning and, and unpack and,um, what that, you know, potentially

(05:45):
could look like and, and, and maybea, a rationale, a reasoning to why.
That might be the best vehicle for you.
I think that's really super importantto understand, and that's the thing that
we see, um, over time with, with goals.
And that's the question, right?
You gotta make sure your, your goalsnot only align to your values, but

(06:07):
your, your goals have to align to,to you and what it is that, that you.
I don't think you jump in obsessed.
I think it's, it starts withthe commitment and then, and
then the obsession grows.
Um, we don't want, and, and, and listen,I don't think any of these models are

(06:28):
for people that are just interestedor that, that want a hobby and all
the five that you're gonna share.
If, if you're just interested andyou think real estate, in real
estate sales is a hobby, go get on ateam that allows interested people.
Yeah, that's the bestadvice I can give you.
If you have a real estate licenseand, and you actually wanna dabble,

(06:48):
then you're only interested.
You ain't committed.
So go find a team that allowsyou to be a part of their team
when you're only interested.
Now, some of these models are gonnabe requirements of the teams, and a
lot of those teams in their cultureis not gonna allow interested people.
You're at least gonna have tobe committed to doing the work.

(07:10):
So let's, let's do a, an overviewand then let's, let's start at the
first one and, and work through 'em.
Perfect.
Yeah, that's a really good point.
These, these are business models.
These, these are, if you wannabuild a business, these are not
ways to be a real estate agent.
These are ways to havea real estate business.
So, all right, I'll, we'll run through'em quick and then, and we can dive in.
So first one is what I call the ATMmodel or the cash machine model.

(07:34):
Um, real briefly, this is the team leaderis doing every transaction for themself.
They have, um, unlicensed team membersor other forms of support to help
them do more deals, um, and, and focuson being as profitable as possible.
Um, oh, I, I built out a quadrant of,of freedom and profitability we can get
into later too of, of high, high profit.

(07:57):
Low profit and high freedom, low freedom.
Perfect.
That be great.
When we come back, when wecome back around, we'll,
we'll really dive into this.
Perfect.
So first model, the ATMmodel, the cash machine.
Um, second one is what I call leveragemodels, where team leader is still
involved in every transaction, butwe've got some license help, whether
that's a production partner, a showingassistant, maybe some of the services

(08:20):
out there like, um, but you're stilltouching every deal in this model.
Um, you get a little more freedomthan you do in the cash machine
model, um, but nowhere near as muchfreedom as some of the other ones.
So second one is leverage models.
There's a few things that fit into that.

(08:41):
Third one is, um, the traditional team.
So traditional team, meaning you've got,uh, you've got a bunch of agents or you
know, a few to a lot of agents on theteam, you're probably offering leads.
You're probably offering somekind of coaching or mentoring
as a value proposition.
You're taking anywhere from, you know, uh.
20, 30 to 50, 60% depending on,um, the specific, you know, lead

(09:05):
sources or splits that you have.
So kind of the traditional, uh,MMRA model, um, so to speak, and
all of its little variations.
We all, we all used to think we were doingsomething pretty unique, um, back in the
mastermind days, but we all found that we.
We're pretty much allrunning in the same model.
Um, plus,
plus or minus.
Just, just a little bit.
Exactly

(09:25):
right.
So that, that's the traditional model.
Um, there's two main distinctionswithin the traditional model, and it's
in production or out of production.
If you're still in production, this canbe a really high, uh, profitability model.
Tends freedom if you're outtaproduction, it tends to be a local
profitability, but high freedom model.
Mm-hmm.

(09:45):
There's certainly exceptionsto all of this, right?
I'm talking about the,the trends that we see.
Um, there's ways to do allof these things, you know.
Badly.
Or, or, or really well.
Um, so traditional model, and thenwe split between out of production.
Um, fourth one is the team, andthis is just all about head count.
We're gonna get as many agents onboardas we can, and we're going to, um,

(10:09):
we're not gonna focus on, you know,the, the smaller team of high producers.
It's all about head count.
We're we're recruiting all the time.
That's it.
And we're gonna of course,still offer value to our agents.
Um, but to a large degree, the ones whoare gonna make it are gonna make it.
And the ones who aren't gonnamake it aren't gonna make it.
In this model, we can afford to havelow producers on the team 'cause

(10:32):
they're not taking a lot of resources.
To have agents, um, onthe team in this model.
And, and then the last one, again,I, I almost didn't make it its own,
but I, I'm calling it a hybrid model.
And this is where you have a leadsteam or you have a traditional
team within your Team Ridge.
So you have a spot for.

(10:52):
All the agents to go and youhave a spot for the people that
you really wanna invest in.
Now this could be actual separate,like, um, hey, you're designated on
the leads team and you're designated,you know, not on the leads team.
Or it could be a model likewe're seeing happen right now.
People like Kyle who say, I'monly going to really invest.

(11:13):
A lot of the time, energy,and resources in the top 20%.
But I'm, I'm kind ofcalling that a hybrid.
Um, even though you could make a casethat that's still either team re or,
or a, uh, or, or a traditional team.
The reason I pulled it out separatelyis because I think it's gonna be
a major trend over the next, um,over the next five years here.
So I wanted to kind ofgive it its own space.

(11:36):
So those are the five.
We've got the ATM or the cashmachine, the leveraged models.
Traditional team, team, rich, andthen kind of that hybrid model.
I love it.
So let's go back through, let's startwith the, the ATM, the cash machine, and,
you know, who's it for, who's it not for?
Um, and, and you know, where it falls onthe quadrant of profitability and freedom.

(11:59):
Yeah.
And be important for you under, yeah.
For you understanding if this modeltouch on my too gonna be for you
or not is understanding how youget out of this model eventually,
what's, what's the exit strategy?
So the ATM machine is, um, is veryhigh profit and very low freedom.
Again, you're stilldoing every transaction.

(12:24):
Staff members, AI agencies tobecome as leveraged as you can, um,
to do as many deals as possible.
But you're keeping all ofthe commission yourself.
You're not paying splits to anybody, soyou can be incredibly profitable, 80,
even 90% net profit, depending on howbig your, your in-person or VAT might be.
Um, the, the reason I call itthe cash machine is you have

(12:47):
to generate all of this cash.
And then do something with it.
So the exit strategy in thismodel is you're acquiring assets.
That are gonna one day get you to yourfreedom Passive income number in this
model, that's gonna be real estate, that'sgonna be maybe like dividend stocks.
It's probably not gonna be otherbusinesses because you're not gonna
have the time to effectively run those.

(13:08):
It's gonna be real estate,it's gonna be security most.
So you're using that cash to generate, uh,opportunities for you to purchase assets.
The goal of one day, those assetsare gonna generate enough income
for me to essentially retire.
That's the only exit strategythat exists in, in the ATM model.

(13:31):
Let's talk, let's talk
thread of that model is, um,if anything happens to you for
any reason, everything stops.
If you get sick, if you have a familymember gets sick, that you need to
take time away from the business.
Um, there are some things we can do,like we can get you a vacation, right?

(13:52):
That's, that's not hard.
But if you have to step awayfor an extended period of
time, all the income stops.
Stops.
And that's
the, the other threat to thisis that cash to support your
lifestyle as your lifestyle expands.
Right?
And, um.
So that's, uh, I mean, it, it'seasy to fall into that, right?

(14:14):
When, when you, when things are good,you think they're gonna keep being
good, you're gonna think they'regonna keep growing, and, and you get
undisciplined to really personal, personalspending, personal compensation, um,
and, and that will get you in trouble.
That's, that's also a threatto the ATM Cash Machine.
You're not typically a disciplinedtype of, of individual with your

(14:38):
spending and you know, your expensesexpand with the income coming in.
And the downside is like the marketshifted and you know, your revenue
goes from one to in half, but yourexpenses stay as if it was one.
Then you're gonna get yourself in a bind.
Yeah.
Yeah.
This, it's it and, and really the, thethreat side of all of these models.

(15:02):
And one of the things that makesbusiness hard is it's, it's
easy to do it wrong, right?
Like life lifestyle creepis easy to let happen.
Mm-hmm.
And so you, you reallygotta be careful of that.
Yeah.
Because if you, if you, if you letit turn into a lifestyle business
where the cash you're generating isfunding a lifestyle and not funding
the asset acquisition, then you,you've eliminated your only, your only

(15:24):
exit strategy and there's no path.
The, the answer is you're sellingyourself in real estate till you're dead.
So yeah, that's a great, great point.
That's certainly, uh, one of the threads.
Alright, let now let's, let's startto unpack the leveraged models getting
into, um, what that is and, and, andreally maybe, you know, define leveraged.

(15:45):
I think because it's good understanding.
Make sure everybody'sspeaking the same language.
Yeah,
so when we talk about leverage, we'retalking about how do we get an outsized
result for our effort, um, that couldlook like investing, you know, money to
get high quality leads so we don't haveto spend as much time acquiring a client.
Mostly what that looks like forright now is people, whether that's

(16:10):
in person, staff, or VAs, that'sthe, the normal form of leverage.
So there's a ton of leveragewithin the a TM model.
But the leverage model takesa step further because you're
getting, and the main distinctionis you're getting licensee.
You sign up the client and then you kindof hand it off to the production partner.
They get a small split of that.

(16:30):
Um, or it could be like a showingagent, um, or, you know, even
a showing service like ami.
So you've got licensed help onboardto further leverage your time.
So this is still a, um, it's stilla. High profit, low freedom model.
One of the benefits you can getwith a leveraged model is you can

(16:51):
start to get some location freedom.
You're not getting time freedom inthis model, but you could get a lot
of location freedom where you canhave people boots on the ground in the
market, um, running around for you.
Um, probably not complete locationfreedom, but you could get at
least a step in that direction.
So still high profitability,lower freedom.
Um, one of the big benefits of doinga leveraged model is that you free up

(17:15):
enough time to focus on one other thing.
So whether that's.
A revenue share stream, whether that'susing your client acquisition to generate
some affiliate inco income, maybe it'sa joint venture in in mortgage or title.
Um, you've got time to do one other thing.
You don't have time to start abunch of ancillary businesses.

(17:37):
You probably don't even have time toreally start another business yourself
where you're gonna be running it.
You have enough, you have enoughleverage that you've created time
for, um, for an additional revenuestream If you do that right, that
can be part of the exit strategy.
So you're still using your, your cash inthis model to generate, um, to generate
assets, but you might also have the timeto generate additional stream of revenue.

(18:03):
Potentially a passive stream that couldbe part of your exit strategy as well.
You've opened up, you've openedup, still don't have most of
the opportunities open to you.
This,
I love, I love that distinction.
Plus one.
Yeah.
In a, in a traditional sense, thisbusiness is still not valuable.
Nobody's gonna buy thisbusiness from you just Right.
There's nothing to buy.

(18:23):
Yeah.
There's
nothing to buy.
Yeah.
So I, I, I, I love thatdistinction on that exit.
Um, you know, traditionalreal estate investment, which
you should exploit, right?
You should take advantage of,and then you should create enough
time to focus on one another.
That could be, you know, one ofthe cloud-based brokerage that

(18:44):
have revenue share or model.
That could be one path.
Um, it, it, it could be, and, and two.
You know, if you choose that path,it could unlock one of these other
models that we're about to touchon so that, that could unlock the
next phase to the, to the next.
Um, I, I particularly like if, if you'renot wanting to focus on increasing
head count, building an organization,um, I, I do like the other businesses

(19:08):
because if you're high profit, lowfreedom, and you figured out customer
acquisition, you control where.
That opportunity goes and remember,customer acquisition and lifetime value.
That's all you're looking for.
And so what, what, what can you plug into?
And I think too, Joel, thatmight depend upon a who, right?

(19:30):
If you've got a good who,that's a great contractor.
If you've got a great whoin your market like here.
In Pittsburgh, you can use adamn good plumbing company.
You can use a dang goodroofing company, right?
You can, um, use a goodgeneral contractor.
I mean, obviously, you know, if you're,if you're able to, to structure some
type of title opportunity, if you're,if you're able to structure some type of

(19:51):
mortgage opportunity, um, maybe it doesn'tmake sense to, you know, have ownership.
That in that opportunity.
So maybe it makes more senseon, on a trade type of thing,
uh, um, type of service.
I, I, I've been thinking alot about what you had shared
about Leo and Leo's filters.
I, I, I want to own something that touchesevery transaction, so we're really good.

(20:14):
If you're, if you're reallygood on the real estate side of
things, that customer acquisition.
What can something you have a percentageof, of actual equity and ownership in
that touches or has an opportunity totouch every, every client, or even more
importantly, what about the clients?
You can't start your acquisition,your, you know, strategy.

(20:37):
So there's some thingsto think about there.
So I, I really like getting, maybegetting outta the cash machine.
As fast as you can into this leveragedmodel, so it frees you up a little bit
to pursue an additional opportunity.
Yeah, is kind of where,where these models cap out.
Um, so, you know, in the ATMmodel, you're gonna cap out with

(20:59):
your time, just the amount ofdeals that you can physically do.
You, you, you can only getleveraged to a point if you're
still the one doing all the deals.
Um, obviously you're gonna have TC helpand stuff like that, but if you have
to show the properties, if you have tolist the houses, if you're doing the
negotiation, gonna out, the only way is.

(21:20):
Commission increase my average sale price.
Those are really once, once you'retapped out, those are kinda the
only levers you have left togrow your income in that model.
And then eventually, same thing in the,in the, um, in the leveraged models, you
still will cap out because you're stilltouching just about every transaction.
If you're not touching every transaction.
We've probably moved into the traditionalteam model, and that's separate.

(21:42):
So you're gonna cap out in these.
Can you get a higher sale price?
Can you get a higher,um, average commission?
Those are difficult things to pull off.
Um, you know, but, but certainly possible.
Mm-hmm.
And then with these two, I wanna touchon an exit strategy that I don't think
is an exit strategy, which is, um,you know, people call it the golden
handoff or just going, I'm, I'm not,I'm not selling my book of business.

(22:02):
I'm turning my book of business.
Over to somebody and they'regonna generate, uh, that business
and then gimme referral fees.
Um, that could be a nice supplement.
Um, I don't consider that an exit strategybecause you don't control it and it's
not, there's no predictability with it.
Um, and
nobody's gonna do that with,without a 24 months max.
So like that ain't buying you any runway.

(22:24):
So you might, that could be anice little supplement for a year
or two and make some money, butthat's not really an exit strategy.
Um, so, uh, anythingleft on leverage models?
No, I think it's
great.
I think it's great.
I think, you know, if, ifsomebody does start to.
You know, pursue, increase headcountas, as one of their, you know, what

(22:45):
they're gonna invest their extra time in.
To me, that, that immediately walksinto the next, the next opportunity.
And I think looking at the, theteam bridge and, and the hybrid.
Is also really also going to dictatemarket, market conditions, market size.
Um, there, so there's a lot of otherfactors that go into the decision here.

(23:09):
And I'm gonna keep coming back toalso taking the season of your life.
And, and the supportwhat you have around you.
One of the good things, right?
Like I don't believe youcommit and figure it out.
I believe you reverse engineer what youwant and what does it have to look like?
What is the best model based uponmy level of commitment because.

(23:29):
It takes the support from theinternal team, the family team
around you to be truly committed.
That's where, that's where I seerelationship failure is because,
you know, don't articulate the plan,get the get, get the people around
you, but in to support the plan.
Because if they don't know the plan,then they can't support the plan.

(23:50):
And that's where I see a lot of, um,you know, relationships go sideways.
Um, and it's because they haven't takenthe time to get everybody on board to,
for you to fully commit to what it is.
So I think that's, that'skind of the, the move here.
The, the other, the other plus one, right?
So model, um, I think it goesto, to market, I think it

(24:12):
goes to market opportunities.
I think it goes to who, um, market,market size, market average sales price.
So there's like a lot of, a lot ofdifferent variables that go in, but.
You know, the investmentside is, is real one.
Right?
But you're talking aboutinvesting buy by, by assets.
But you know, there might be investment.
It might be a good, it might be agood flip strategy for you to, to

(24:33):
increase additional revenues, topour back into the other investments.
I mean, if you have connections withthe developer, with the builder, right?
Go create product.
Could be that could be one.
And you have the assetsand the development.
You have the more of theassets in, in the construction.
So there's, there's some other thingsto, to be thinking about that unlocking,
um, to help you grow the business thatcould also fuel bigger chunks, right?

(24:55):
So like for example, you know, ouraverage sales price being 1 21 30, um,
you know, we had to do those, we hadto get into developments because of
our market size and we weren't willing,or, or didn't even really think about
a team bridge or a hybrid at that time.
Um.

(25:16):
I'll, I'll touch on what we did try,but it was, it was a culture, it
was a culture mix, a culture clash.
That's why it didn't work.
Um, but that to me really alsofactors in kind of where you wanna
settle in to one of these models.
Um, you know, it's not justlike, Hey, it's simple.

(25:36):
Check this box, and thisis the model for you.
There's a lot of external factors
and if you want there to be, there's,there's a progression, you know, along,
along all of the models and, and part ofthe reason I structured 'em in this order,
because it's certainly possible to havea goal of a, a large traditional team.
Team and, and you still go allthe way through those models.

(25:59):
You know, you, when you max outthe ATM model, you move into a
leveraged model and you max that out.
You move into a team and then you know,when you feel like you max that out
or you want to rebalance the profitfreedom equation and you move team.
So you can certainly movethrough through those.
And that's the.
That's the traditional way of buildinga team was you max out with what
you can do as a, as a solo agent.

(26:21):
Then you bring on staff.
Then you, when you bring that out,you max that out and you bring on
a buyer's agent, hand them off yourbuyers, so you can do listing teams.
When you max that out, youbring, I mean, that's how
traditional teams always started.
You know, relatively recentdevelopment, real estate that
people set out to build teams.
It used to be.
Okay.
What, what's the optionfor continuing to grow?

(26:41):
Okay.
I have to build a team now.
So, um, you know, that's, well, youknow, the last 15 years probably that
the idea of starting to build a team.
Intentionally even emerged.
Mm-hmm.
Cool.
I love it.
Let's get into the traditional team, andI love the distinction in production,
outta production and there's definitelysome some hot takes on on both of those.

(27:05):
So traditional team in, in production.
Yeah.
So the distinction I'm making herewhen has it become a traditional
team is when you've got.
Um, when you've got agents doing theirown deals, that's when it's, that's
when it moves from a leveraged modelinto a traditional team leveraged model.
You've got help, but you're stilldoing all the deals yourself,
your names on everything.
Um, when you move into thetraditional team, you've got

(27:26):
agents doing their own deals.
So when you talk about in production,which is how obviously everybody
starts, um, still high profitand low freedom because you're
doing all of your own production.
Plus you're trying to, um, deliveron the value that you promised the
agents when they came on to join you.
So, um, can be high profit because you'regetting a piece of everything agents do.

(27:48):
Uh, you're also gettingyour own production, so.
Exit strategy when you're inproduction still pretty limited.
Um, is probably still looks like morelike the ATM or the leveraged models
where you're using, um, you're usingyour commissions to, um, to acquire
assets as long as you're in production.

(28:10):
And as long as you're a major partof production, um, it's gonna be hard
to, to effectively do everything else.
The one caveat to that is one ofthe real big benefits of doing a
traditional team is when we talkabout the value of client acquisition.
Um, and all the doors that opens.
Now you're not only having your clients,but you're having all the clients

(28:31):
for the team are now your clients.
So maybe you were doing 50 dealsa year on your own, but now your
team's doing 300 deals a year.
That's 300 opportunities to capture.
'cause you've got a lot of clients.
So you have the opportunity here, evenif you're still in production, to get
a a bunch of joint ventures going.
You could do mortgage, you cando title, you can do property

(28:52):
management, you can do home warranty.
You know, you and I, we've beentalking a lot about contractors now.
Um, so there's a big opportunity thereto partner where you're focused on client
acquisition and whoever you're partneredwith is focused on fulfillment there.
So that's a, uh, opens up that nextlevel of exit strategy can do a bunch

(29:12):
of things because you've got so manyclients that you, your team is acquiring.
Um, yeah.
So you still have.
In the short term, youstill have low freedom.
Um, but you can accelerate, uh, youcan accelerate the path to freedom.
You can do your productionplus joint ventures.

(29:32):
When we start to move towardsyour outta production, the,
the real estate team itself,profitability tends to go way down.
Mm-hmm.
Your freedom goes up in termsof your time freedom, but
profitability tends to go way down.
If, if you were making a half milliondollars a year because of your production.
You might be making a hundred KAyear now based on what the, the

(29:56):
team itself can afford to pay you.
Right?
Um, everybody, almost everybody whosuccessfully gets out production does
sufficient to pay for itself, plus someprofit, provide you with some income.
Um, but now you're gonna spendyour time growing a rev shared, uh,

(30:16):
organization, um, acquiring or, uh.
Or doing more flips or, you know,investment properties, um, or doing
other businesses, whether that'sJVs or businesses that you, you
purchase or, or start yourself.
Um, so the exit strategy opens up again,another level because you've got the
time freedom to focus on building thingsthat do have more traditional value.

(30:42):
Um, a title company, a mortgagecompany, especially what we're seeing
moving into home services, those arecompanies that have more traditional,
predictable acquisition value.
So your exit strategy can be, um.
While the real estate team is stillgoing to power client acquisition for
all these businesses, you can startto grow these other businesses that

(31:03):
have real value in and of themselves.
That could either generate passive incomefor you as an owner, or you could actually
sell, um, the businesses themselves.
Or you still, you still struggleto sell a real estate team.
The, the thing that I see in, in a hundredpercent spot on everything there, I, the,
the tradition of end to out has got to besetting, setting a, a, a profit target.

(31:28):
I would say 25%, setting a, setting a25%, you know, net profit before taxes.
Let's set that in concrete.
Let's make sure we hit it andlet's get to where we can hit
that number with you still hittingyour personal income requirements.
You're doing less than 25%of the overall revenue.

(31:49):
That's, that's the, that'swhat we wanna pay attention to.
So if you're doing a million and we'vegot two 50 and then you're only two 50
of, of that revenue, we're getting there.
Because what that should do is thatyou should give us enough time to
go get the other investments wherewe have the revenue streams to.

(32:10):
Market based wage, the thing thatwill suck you right back into
production is if you continue to payyourself as if you were doing 60,
50, 40, 20 5% of, of the revenue.
Now when you back out and you'renot doing any revenue, your market
based wage is gonna go down.
And, and so there is sometimes alittle bit of a hybrid, you know,

(32:33):
but you still, the, the, the, theof the, the production or less.
Then we need to reallocate your timeto pursue other, other entities, other
opportunities to get that revenue streamup to where it can compensate you.
And it was, it was the thing that wehad to, we had to learn the hard way
and, you know, it took a little bit ofback and forth until the other revenue

(32:57):
stream could support lifestyle to wheredidn't need the cash burn over here.
And, and the real estate company couldthen be free of that, of that obligation
to free up to now continue to grow.
So there's, there's, there's a littlebit of a transition period that
it takes to go from in to out, butyou're a hundred percent spot on.

(33:19):
The only people that truly get out, um,they have, they have other revenue streams
or their investments are starting tocash flow enough where they don't need.
Money.
Money or all the money to supporttheir lifestyle from that business.
Yeah.
There's also an importantdistinction between out production
and out of the business.
Usually your, your first stepis out of production, but you're

(33:40):
still head of the company now.
That's where it's especially criticalthat you're on a, you're on a getting
paid, a market based wage for head ofcompany, because then once we talk about
getting outta the business completely.
That salary that you were payingyourself is gonna go to whoever
takes over head of company.
And now you move all the way, you're offthe org chart completely, and you're only
generating, you're only taking in whateverprofits there are from the business.

(34:03):
So when, when you have thesalary, you're paying yourself.
Great.
That's already earmarked forwhoever's gonna take over head
of the comp company eventually.
But out of production and out of thebusiness, there are two different things,
and that's an important distinction too.
Very important.
Let's then we're out.
Let's start then let'slook at a team bridge.
Um, and, and really whatthat starts to look like.

(34:27):
Um.
I, I don't know if you go from atraditional team in, out to ultimately
just becoming a team bridge, I thinkyou kind of work in your yourself,
you know, in, in that direction.
I think where that manifests and wherethat really comes from is you're in market
to where you have a lot of agents andyou're able to, and you're really good.
At, at a bringing agents in.

(34:49):
And I think that's, that's where thatmodel really starts to make sense.
So let's kind of talk, you know,profit freedom pros, cons and kind
of exit strategy from a team bridge.
Yeah, I, I think again, with, with,there's certainly exceptions to this,
there in, in high price markets,that's kind of its own thing, right?
If your average sale priceis, is a million dollars.

(35:09):
All options are on thetable for, for most of us.
For most of us, the, the team is, isI think, the only path to high profit,
high freedom within the business itself.
Um.
And the, the reason I say thatis because there's no cap on how
many agents you can bring in.
Mm-hmm.
And if you get the model right, um,even the agents who are doing five

(35:31):
deals a year are profitable for you.
And so all you have to dois focus on recruiting.
You still have to, again,you still have to add value.
There still has to begood systems in place.
There has to be a level of support.
There has to be a level oftraining, but that can be either.
In the term, in the, in the formof systems or recorded stuff, or it
can be in the one to many, um, wherethere's, there's team trainings.

(35:53):
You're doing an hour a week, you're notdoing one-on-one mentorship anymore.
Um, but, but you can scale this upto hundreds of agents if you need to.
And so if we say our average agentsstill only does industry average
six to eight deals a year, well,gosh, with a hundred agents, we're,
we're doing 6, 7, 800 deals a year.

(36:14):
We can be incredibly profitable.
You're gonna relatively early on inthis model, move into, uh, a head of
company role and be out of production.
And, and you need to be relativelyearly on because you're also gonna
have to have staff and support,um, to make this whole machine run.
And, and you're gonna need to bemanaging that in the beginning.
You're gonna need to be helping that grow.

(36:34):
You're gonna be really involved in hiringdecisions and in recruiting early on.
But this is the one that has thepotential to have the high profit,
high freedom, because you're creatingsomething that's a little bit more
like a lot of traditional businesses.
Um, you've got, uh, you've gothigh volume and, um, and you

(36:55):
can still have decent margins.
Your net profit percentages aren'tgonna be anywhere near as they,
they would be with, you know, theATM model or the leverage model.
Um, but the actual dollar amount you canend up with at 25% or 20% net profit.
Um, is unlimited, so you're notgonna scale your profit percentage,
but you can scale your actualincome based on scaling revenue and

(37:19):
keeping the same profit percentage.
Here's, here's a couple, uh, uh, acouple distinctions I was thinking
about as you were talking through that.
The in and out of production.
Back on the, on the, onthe traditional, the game.
The game.
The only reason the game can changefor you there is leadership, right?
That's, that's the main skill thatyou have to develop is, is leadership
capabilities at that point, and duringthat, you're juggling two customers.

(37:42):
You're juggling buyers and sellers,and you're juggling agents start
to become your other customer.
In the sellers, yourcustomer is the agent.
So your whole business model is cateringto the agent, whereas the atm, the
leveraged, um, the traditional in and,and in could still be buyers and sellers.

(38:09):
Getting out now you'retaking on two customer bases.
That's where it gets a little diceyand that a lot of people struggle
to go beyond on that point becausethey're, they're still thinking
they only have one customer.
You got two customers, so yougot two value propositions.
You nine block of the, ofthe business canvas for two.
For two different, uh, uh, types.

(38:31):
And then the team bridge, tome, you have to understand if
you build the team bridge, yourclient is not buyers and sellers.
It's not investors, it's not builders.
Your client is the agent.
And if you, you canunlock that model fast.
If, if you, you know, walkinto it with that mindset.
Yeah.
And the, the big, the big threat,talking about threats, the

(38:53):
threat from my point of view.
Is the, the success of that model, likeyou said, is, is not only dependent on
your leadership skills, but also yourability to, uh, to develop additional
leaders within the organization.
Because one of the potential downsidesin that model is if you've got a
lot of, let's say you have a hundredagents in this model, you're gonna

(39:15):
have 20 who are really crushing it.
Are self-sufficient.
You'll have another, youknow, 30, 40%, 50, right?
Who are, um, they're doing fineand hopefully they're mostly
self-sufficient, but you're gonnahave bunch if you let that happen.
And so this model can becomereally overwhelming if you're
not able to lead effectively.

(39:37):
Part of leadership is accountabilityand then, you know, putting,
putting the right systems in place,putting the right people in place.
Because you have to insulateyourself from getting sucked into
e every problem that your one deal.
Yeah.
A year agent might have.
Your, your, your top 20%.
They're, they're gonna do two tothree deals a month on average.

(39:58):
Collectively all 20 of them together.
Your middle is gonna do one to two,uh, a month on average, and then
your bottom's gonna be 0.1 to 0.25.
A month on an average, and youjust have to no matter what.
Like, and that's why, you know,I, I, I love Kyle as when I pour
into them, then they will pour intothe next, that, that middle tier.

(40:24):
And then the bottom people areeither gonna do what they can to
get into the middle or they'regonna go find another place.
And that's fine.
That's okay.
That's just part of.
Part of that.
And so I think understandingthat team bridge, um, is, is key.
And you know, you either have areally good business partner or
you, you cannot be in production.

(40:46):
Um, and so maybe you got a good businesspartner that's an operator to where you
can still get into the trenches and,and slink some real estate with folks.
Um, your, your, your customer is,is the agent and you're utilizing,
you know, the agent's production tounlock other, other opportunities.

(41:07):
To me, this is where yougo unlock other business.
Business.
Yeah, definitely.
And this is the only one.
This is also the only one thathas a path to kind of a, a
traditional business acquisition.
Um, it's, it's dependent on a few things.
It's dependent on either scale.
This is a large business atthis point that somebody's gonna
be interested in acquiring.

(41:27):
Um, another path to it is really,really strong, um, brand presence where
somebody might be interested in thisbrand that doesn't depend on you anymore.
Um, so you're not gonna getincredible multiples of, you
know, net profit or ebitda.
Still in this model, but there is a pathto traditional acquisition within the team

(41:48):
reach model where your business is bigenough and your brand is strong enough.
Maybe you've got some, um, some realIP and you know, some real kind of, uh,
proprietary systems in your businessthat you've developed over the years.
Um, that, that there's a,there's a path to that.
It's really the only one that we see thatthere's the real path because it's, it's.
Um, is a, is an easy path to itnot being dependent on you anymore.

(42:12):
So where does this fall on the
profit and freedom for you?
Yeah, this, so this one, again, Ibelieve this is the only one that has
the potential to be high freedom, highprofit, um, because you can start to
capitalize on economies of scale as yougrow and you have to nail the model.
You have to take enough and split.
Um, to make sure that even your lowproducers can be profitable, um, but

(42:34):
you still have to offer enough valuethat a, a decent producer would,
there'd still be value for them to stickaround, you know, within that model.
Mm-hmm.
So you, you have to get thatright and that can be tricky.
Um, but I think it's the only onethat, that there's a real path to
high, high freedom, high profitabilitywithin the business without you
having to go outside of the businessto create other opportunities.

(42:55):
Now, you certainly can.
Just like you get the benefitof going from, from yourself to
your traditional team in termsof how many deals you're doing.
You get the benefit of going froma traditional team to a team ridge.
You, you can do a thousand transactionsa year in this model, that's a thousand
opportunities to feed all the otherbusinesses that you could be a part of.
So you could really supercharge allof the other, um, opportunities in

(43:18):
this model because if you control.
In any of these models, wellgreat, this is the one that's
getting the most clients, um, andtherefore the most opportunities.
So you, you can reallydo some pretty big stuff.
And, and, and a lot of the majorplayers within, um, within real
estate are, are doing exactly that.

(43:40):
Yeah.
Moving to the hybrid.
And I think this is where youget into certain market sizes to
where you, you know, you kind ofget capped out at the Tea bridge.
You can't make that next jump, uh,obviously strategy that we, we've seen,
uh, saw with, with, you know, Zan and, andScott Benson and Ryan Campbell and Canada.
And then obviously with, with Whistle beeris rolling, rolling teams in together.

(44:06):
Right.
Um, but you get to a certain point.
The additional value to make thenext jump is that you've gotta
start providing opportunities.
You just, you just have to, right.
You know, the market.
You can only get to a certain sizeby, you know, support and training
and branding and things like that.
You're, you're really gonna have toget in and help create opportunities

(44:29):
for agents to be more productive.
To me, that's where kind ofthe hybrid starts to kick in.
You have, like you said, the leads team,which also can increase gross margin.
Might not increase profitability, but itmight increase that gross margin to where
you have more company dollar coming in.
Um, so yeah.
Where, where does this one start to fall?

(44:50):
Um, and, and who is this, who isthis model for and who is it not for?
Yeah, so the, we, we started to see thishappen, um, even back in the mastermind
days when people said, all right, whatdo, what do I do with my top producers
who have kind of outgrown the team?
They're not willing to pay 50% anymore.
Um, but I don't want himto go to another brokerage.
And so even before joining exp,Kyle Whistle another, you know, uses

(45:13):
him as an example, he started doingthis just within Whistle Realty.
When he was independent was ifyou can go off the team and you
can just go into the brokerage.
So he was running a hybrid model asa way to retain top producers and
still get value, not only the, thefinancial value of their production,
but just the, the brand value.
Um.
And the, the recruiting value,the reputational value of keeping

(45:36):
these top producers around.
Then when you move into modelslike exp it's even more valuable
to do this because they can go intoyour rev share group, um mm-hmm.
Potentially.
So we started to see that happen.
And, and, and like I said, the reasonI pulled out the hybrid model is 'cause
I think it's gonna be a major trend.
Um.
Because it's a way to, uh,to really profitably, um,

(46:03):
have a place for everybody.
And that's always been a challenge.
Um, top producers, they eitherwant freedom and economic
opportunity or they want proximity.
And so you've got a place for everybody inthis model if you wanna stay on the team.
The leads team, you know, kind ofwithin the, the team ridge or within

(46:23):
the larger organization, you'regonna get some benefits from that.
You're gonna get additional support,you're gonna get additional proximity,
or in a less formal version like Kyle'swhere he's just investing in that top 20%.
The, the value of gettingface-to-face with Kyle and Dan in
that, in that model is incredible.
And that's a huge motivator forpeople to get into that group.

(46:46):
Into that top 20%.
But it's also a huge retention tool.
The people who are, who are in a, in asmall mastermind with Kyle and Dan on a
regular basis, they're not going anywhere.
And if they do, it's gonna be to goback out to the big team and build
their own team within it, right?
So you're gonna be maintaining thatvalue and then you're still gonna have
that proximity 'cause you're gonna bea big player within the organization.

(47:08):
So the reason I think, yeah, can,
can Kenny, Kenny Char doesthe same thing, right?
Like they, you know, they have multiplelocations, but part of the, you know,
the connection and being part of theteam is, you know, and rewarding,
you know, your top 20% rewarding.
You get masterminds with, with, withhim, you get masterminds with his key
leadership people when you're in that bigof an organization, you know, they, that
there's real value there in being able to,to really dive deep and, and mastermind

(47:31):
with somebody that's just gonna pourin you to help you grow your business.
So that is a huge value proposition,not just providing leads, but.
Being able to, to now you have timeyou can pour into these people.
Yeah.
Yeah.
And it, and it, it lends itself reallywell to the acquisition side because,
um, we'll use, you know, Kyle andDan as an example, we can integrate
those, those two, two teams much moreseamlessly when we have that approach.

(47:57):
When, when we're having ourtwo key leaders, Kyle and Dan.
Focus on the top 20% of the teams.
We can bring them together, we can getthem on board, we can get them brought in.
We can fix things really quickly.
What are our top agentsstruggling with or dealing with?
Um, they have a direct line to what the,what the people on the ground are doing.
Um, so you're getting, you know,constant feedback from that.

(48:19):
So it's a really powerful model.
Um, another thing Ireally like about it is.
One of for, for most of the teamsthat have grown really big, there
was a time around 10 agents whereit was the most fun it's ever been.
Everybody was bought in,everybody was producing.
We hung out together.
We had that, you know,that family kind of feel.
And you just can't, you can't scale that.

(48:41):
You can't hang outone-on-one with 50 agents.
You can't even reallydo it with 20 agents.
So it's a way to bring some of the mostkind of like fun and exciting parts of a
really small team into a really big team.
And I think that's, yeah.
That's something that I love about it.
How do we get that feeling back of whenwe were all in this together, everybody
was on the same page, everybody wascrushing it, and we were just having

(49:04):
the time of our life in real estate.
Like for, again, when we had ourbrokerage, it was, it was like
seven agents is when that happened.
And when we hit 30 agents,it's like, well, that's.
That's pretty much gone.
We still have a great culture.
We still have an incredible business,but that part is kind of gone.
Mm-hmm.
Um, so it's a way to bring someof that back to a, a larger
organization in a really cool way.

(49:25):
Um, and so many other benefits too.
Right.
Clear paths to success for youragents who aren't in that group yet.
Um, like you said, your, your top20%, your, your leaders are gonna
rise up within that environment.
They're gonna start mentoring and pouringinto that middle group of agents who want
to grow, um, but aren't quite there yet.
So I, I think that there's a huge, ahuge, uh, move to that again, acquisition.

(49:48):
There's so many benefits to runningsome version of that hybrid model.
So even though, I dunno if from apurely business model standpoint,
it's really its own thing.
Um, I wanted to, I wanted to pull it.
There is a distinction in there.
There is a massive distinction.
And I think too, the, the other importantthing is, is when you're trying to,
to, to merge into together, right?

(50:08):
To kind of create this hybrid,the thing that won't allow it
to come together is culture.
Uh, we try, we learn thisthe hard way when, um.
We were evaluating, you know, takingover, uh, the whole, the whole
franchise, the whole brokerage.
'cause we had our ownteam, our own building.
We were separate from justthe traditional brokerage.

(50:31):
Right?
That's not even somethingthat even think about anymore.
We didn't even probably make the top 10,it's like on the brokerage, um, and try
to merge those two cultures together.
It didn't work.
It just, it didn't work.
And, and so, um, I think.
You know, if you do consolidate, youknow, culture is everything, core value

(50:52):
alignment, you know, um, you know,believing in a, you know, a shared common
vision of what we're trying to accomplish.
But, you know, I think, I think inthis, this hybrid piece, like you
said, you could, you could have the,the traditional team operating within,
like you said, the EXP ecosystem andyou know, they're either on the team
or they're just in the organizationand you're still providing value.

(51:16):
To those in the organization could betraining support, um, could be very
limited, but you wanna get on the team.
This is how we, this is the standard.
It's, it's a step up.
Right?
And it's may, maybe it's, it's maybeyou still wanna run the Navy SEAL type
of team structure, but you gotta buildthe Navy to build the Navy Seals.
And so I think that that's where thehybrid, the, these big massive teams,
they're only gonna keep getting bigger.

(51:38):
I mean, before the merger, Kylewas at 120 something agents.
Their, their objective is to bring in,you know, 10 agents every, every 30 days.
They know they're gonna net only fourof those 10, um, after 12 months.
So, I mean, you can just, you canjust run the churn and math to where,
you know, head count's gonna be.
But when you start rolling inthese other mid-size, you know,

(51:59):
small to mid-size teams, that, thatallows you to grow much faster.
But the key component in thereto me is it's, it lives and
dies on culture at that point.
Um, the team bridge lives anddies on culture at that point.
Um.
So to me, those last two become,um, the agent is your client and

(52:19):
culture is the thing that youthink about all day every day.
Yeah.
If you want to build those two models
Yeah.
Yeah, I love it.
I, I think about this a lot.
Not enough people to talk about it.
A couple months ago when you hadKyle on one, one of your, uh, one of
your podcasts, he just said, look,you know, if you don't like, people,

(52:41):
don't, don't start a team, you know?
Yep.
And so that's such a key.
Yeah.
So, I, I kinda wanna bring ushome here for a minute, um,
and tie it back to vision.
So we laid out all of these businessmodels, these different vehicles
that you could, you know, buildto get you where you want to go.
Think about how some of those thingsmade you feel like did, did hearing

(53:03):
some of those things make you just likecringe and be like, oh my gosh, I would
never want to do something like that.
Great.
That's a huge data point for youand getting clear on your vision.
Did you hear somewhere like, Ooh,I think I could do that at a really
high level, and that sounds fun to me.
I think I would enjoy my daysin that type of business model.
I think I would enjoy.
You know, the people that Iget to be around in that model

(53:26):
specifically, or the people I don'thave to be around in another model.
Yeah.
Um, start, and, and it's the reasonI, I like to start out with this
frame and then do the cam, youknow, lay the canvas on the frame.
It's because you get a lot of clarity, um,for your vision on, on doing it this way.
So we titled this episode,the 2030 Real Estate Team.

(53:46):
Part two of this session is reallywhen we get into kind of seeing
what I think the future is gonnahold, um, how, especially with ai.
Um, some of the other trends I seecoming in VAs fractional leadership,
um, freelancing and agencies.
So, you know, we do the frame, weapply the business model canvas to
the frame, and then when we start toactually paint on that canvas is, is

(54:07):
when we're really talking about, um,what is the team gonna look like?
And that's where, um, howAI VAs fractional effect.
What these models look like inthe future really, really starts
to, um, to gain some clarity.
So we're doing the full, the fullrun through in Cleveland next week.
Um, you and I can hit some of it ina recap that we'll do, but um, yep.

(54:28):
But layering on the next kindof components after the frame
here is really where we see.
What's gonna change in the future?
Awesome, brother.
I'm excited for next week.
I'm excited to kind ofcontinue to, to unpack this.
Uh, I mean, I love, I lovethe, the, the five to me.
These are, these are the only five.
If you don't like one of these, thenyou need to just go be on a team.
Um, that's, that's reallythe default, right?

(54:50):
You're like, Hey, I'm not ready to,to step out there and run, run an ATM.
I'm not ready to step off, leveraged.
You know, I just need to go get on a team.
That's a different typeof leverage, right?
You're, you're trading, you know,whatever percent of your commission
for them to do all of this stuff, andyou just get to focus on this lane.
You don't have to thinkabout everything else.
And, and, and for somethat's the best move.
Yeah.
That is really the bestmove for a lot of people.

(55:11):
I would say for probably90% of the agent population.
That should be your move.
That really should be theonly move that you have.
Um, and you can have an incrediblelife and you can unlock.
You know, opportunities with your cashflow to go make investments yourself.
So it could still be probablya leveraged model for you.
You're just not responsible forlicensed help that the, the team

(55:34):
lead is, is supporting that.
Yeah.
The, the, the ATM is really justthe, it's kind of like the logical
conclusion of, of just being an agent.
Mm-hmm.
So you, you being anagent is an ATM model.
It just takes a lot longerto get where you need to go.
Yeah,
you get, I mean, you're not, you'renot getting as much of the dollar
as, as you would out on your own.
And some, and, and, hey, listen, likeyou said, it's, it's progressions.

(55:57):
Uh, and that's really the wholeagent to CEO concept and, you
know, um, the evolution, uh,for yourself and your career.
So brother, I appreciate you.
Uh, fantastic.
Uh, those of you guys listening in, um.
Get, get plugged in.
I mean, obviously if you're notable to make it to Cleveland
with us, we will do a recap.
But, um, if this, if this interests youand you want to continue the conversation,

(56:19):
DM Joel or myself and, uh, we'll uh,connect with you guys and, and look
forward to, to hearing from you, brother.
Appreciate you.
Fantastic as always.
Thanks.
Awesome.
See ya, you
guys.

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