FortuneBuilders Founder Than Merrill On Acquisition Systems And Why Continuous Learning Is Key To Building Your Empire

by Brandcasting You

No matter what industry you’re in, continuous learning and education are vital not only for personal development but also for your business. Today’s guest is Than Merrill, the Founder of the company behind this podcast, FortuneBuilders, the leading real estate education and coaching firm. He is also the Founder of CT Homes, LLC, one of the most successful real estate and residential redevelopment companies in the country. He joins Jeff Rakowski and explains the value of continually learning and self-educating in order to grow your business and keep your passion alive. Than also breaks down how he optimizes the acquisition systems for maximum efficiency and gives invaluable tips along the way.

Listen to the podcast here:

FortuneBuilders Founder Than Merrill On Acquisition Systems And Why Continuous Learning Is Key To Building Your Empire

We have with us, Mr. Than Merrill, owner and CEO of FortuneBuilders, the reason why we’re doing this show. He teaches and trains thousands of students all across the United States. He also owns a little company by the name of CT Homes LLC, which is his residential redevelopment company with over 1,000 residential transactions under his belt. He just surpassed $1 billion in commercial real estate owned through one of his other ventures, Equity Street Capital.

Let’s kick it off before we get to Than with our Word of the Week. The Word of the Week this week is Technician versus Entrepreneur. Very simply explained, a technician is a person that simply trades their time for money. They have a job, they check-in, they check out or maybe it’s somebody that owns a small business, but in reality, the business owns them. They don’t have time freedom. We all know people like this. If they don’t show up to the office or show up the business that day, that business is not operating. It’s not going to grow. We call this the technician trap that we want to avoid.

The entrepreneur, contrary to that, is a person that thinks differently. That thinks at a higher level. That is educated. That understands how to leverage that in a good way to create and grow wealth. They leveraged systems in their business so they can accomplish more on a daily basis. They leverage technology and other people to basically hit their goals and accelerate that process of growing wealth.

In this episode, you’re actually going to see that demonstrated as you hear from Than Merrill and how he started owning a Mexican restaurant and fell into that technician trap up to his eyeballs in guacamole. He redeemed himself and learned how to grow into what he is now, which is one of the highest level real estate business entrepreneurs in this country. You’re not going to want to miss this episode. We’re going to have Than break down what we call the acquisition systems, which is everything that needs to happen from the moment we identify a motivated seller to the point of actually presenting them with an offer. Than is going to teach us his system that allows us to get this done in no more than two hours of our time. You’re even going to hear one of Than’s craziest attempts to acquire a property years ago, which involved using a goat. Let’s get into it.

We have the legend joining us, Mr. Than Merrill. I’ve mentioned Than a few times on previous episodes. We would not be here even doing this show if it was not for him and the businesses that he has created. Let me brag a little bit about him here before we get started because I know he won’t do it himself. He has over 1,000 residential deals completed as a real estate investor. He just surpassed $1 billion in commercial real estate owned. He teaches and trains thousands of students all across this country. He is an excellent husband and a father of two. Mr. Than Merrill, welcome to the show.

Jeff, I’m excited to be here in this booth. It’s very cozy and I look forward to sharing some insights with people.

We’ve kind of adopted the name the bunker. Some people might call it the basement, we call it the oasis, but it’s a nice area.

During COVID, you could have locked yourself in the bunker here. You wouldn’t have had to interact with anybody. You just lock yourself away.

With every guest that we come on, Than, we’d like to take two to three minutes so they could hear what you were doing before real estate investing. Obviously, what you’ve accomplished is amazing. For some people, that could be inspiring or intimidating. I remember when I got started as an investor, hearing from a real estate investor that turned investor, it related and spoke to me. Give the audience what was life like for Than Merrill before starting as a real estate investor?

I’ve lived a couple of different lives. I had the opportunity for a very short period of time after college to play in the NFL. I was drafted in the seventh round, which is the last round. I snuck in. I had a couple of years, I ended up getting hurt and I ended up getting cut. Interestingly enough, between my first and second year of playing, I started my very first business, which was a Mexican grill. If you’re looking at me right now, I’m not Mexican. I didn’t know anything about Mexican food. I just thought it was a good idea.

Interestingly enough, I had dined at Chipotle and Chicago and it was a relatively new concept to Chicago. I remember sitting there going, “This is amazing.” In my college town of New Haven, Connecticut, there’s nothing like this. What if we opened up something that was similar? We didn’t realize there was a lot more to it than just having a good idea. We had a good idea but a bad execution of that idea. About two years into it, I was working at that restaurant, not enjoying life and the business that I had invested in and created. I was there protecting my investment, but really searching.

FBL 5 | Acquisition Systems

Acquisition Systems: Having a good process for how you acquire properties saves you a tremendous amount of time and ultimately determines your income level as a real estate investor.

 

I was soul searching. Looking for other things that inspired me that I wanted to do with the rest of my life because I knew working with guacamole all day wasn’t my calling. When you’re doing it in a lot of weeks, you’re losing money. It gives you a sense of urgency to look for something else. Real estate had always appealed to me. I had taken a couple of finance classes in college and it was something that intrigued me. I didn’t know anything about it, so I started going to educational events and conferences and learning about real estate. I fell in love with it from day one but that passion only grew over time as I got more and more involved with buying rental properties, buying and fixing single-family homes. It was definitely humble beginnings.

The best thing that I ever did early on was I learned from the restaurant. My restaurant failed because I didn’t have an education in the industry. I didn’t have any mentors. I had no guidance. I literally had no education about that industry and I thought having a good idea was good enough. When we got into real estate I said, “I’m going to take the opposite approach. I’m going to go slower. I’m going to learn from other people.” It humbled me, that restaurant but I think it was a much-needed lesson at that point in my life.

I love that you say that because we’ve talked a lot on this show about the importance of actually failing and making mistakes. Not big mistakes, obviously. We don’t want to lose a restaurant or anything like that but it’s interesting you say that because everything that you’re so passionate about now like education, coaching and all of these things came from that failure. We’re going to get into acquisition systems. It’s one of the things that you teach most consistently. You are an expert in many areas, but I thought that would add value. Before we get into that, talk to us about real estate as an asset class. There are many different ways to invest your money nowadays like the stock market. It seems like cryptocurrency is a new wave and becoming very popular. Why do you personally believe and why do you so strongly recommend real estate as an asset class?

First of all, it’s very tangible. People can touch it. They can feel and understand it. You’re sitting in your office and analyzing stock charts, it never really appealed to me. I wanted to be out and about and in the field. First of all, that aspect appealed to me but in reality, what makes real estate so powerful is that if you’re buying rental properties, for example. Real estate creates cashflow. If you invest in gold, it doesn’t create cashflow. If you invest in Bitcoin, it doesn’t necessarily create cashflow for you.

The one part of real estate that I’ve always loved is that it can create consistent monthly cashflow. The other part that makes it very interesting is that you can borrow other people’s money to go out and acquire it. Now you’re going to need some money. You’re going to need a down payment. You can go out to a bank, you can go to a lender and get 75% to 80% leverage. You can’t do that typically in the stock market or get that much leverage. You can’t go out there and buy Bitcoin and walk through your local bank and say, “Loan me 80% of the purchase.”

The fact that you can borrow makes it a very attractive asset class because leverage used intelligently can make you very wealthy. The third thing is you get significant tax benefits more so than most asset classes out there. You’re incentivized to keep quality properties for renters and the government allows you to pay less in tax by owning those assets. If you own assets long-term, you can benefit from appreciation. Real estate benefits from inflation. If you think about how much money we’re printing right now through COVID, the post-COVID era and historically, how much money we’ve been printing and putting into the system. Inflation, although it’s been moderate, is bound to only continue and real estate is a big benefactor. All of those aspects of it have made it, to me, one of the most attractive asset classes.

Especially that leverage point, as you said. You’re not walking into a bank with a 100% financing Apple stock or something like that. I remember something you actually taught me years ago. In a casual conversation, you said to me, “Jeff, you don’t save your way to wealth. You borrow your way to wealth.” That was such a mind-blowing thing that I learned at the time because it’s contrary to what most of us are taught in life, which is to save our way to retirement but real estate gives us that ability to leverage.

Real estate creates cashflow.

Let’s get into acquiring it. For those of you that don’t know Than, one of the main events that you teach all across the country is the Acquisitions and Wholesaling Bootcamp. I’ve actually had the honor of co-teaching that with you for many years but you handle the portion of acquiring properties. I love the way you break it down. It is so simple into three steps. I thought that would be something to go through to help people provide value. What are the main things and boxes that I should be checking as I’m looking to acquire properties?

This is a business of systems like we’ve talked about many times on this show. It all starts with the marketing systems, generating the leads. When the lead comes in and it activates the acquisition system, kicking it off with step one, which is gathering the property information. Why don’t you just give us a quick overview there? What are the main things you’re doing and the things that you’ve learned over the years?

When we talk about acquisitions and we’re talking about real estate, this is where the majority of investors spend most of their time because you’re constantly looking at properties. A lot of these properties don’t end up being deals or you make offers on the properties that don’t come to fruition. Having a good process for how you acquire properties, saves you a tremendous amount of time and ultimately determines your income level as a real estate investor.

One investor who has a good process can look at 40, 50, 100 properties in a month. Another investor who doesn’t have a good process might look at 3 to 4 properties in the same amount of time because they’re over-analyzing or are trying to fit a square peg into a round hole. The way we teach it is we break it down into three steps. The first step is gathering property information. This step is relatively simple to understand. You’re probably going to be talking to the seller or the agent and you’re going to be gathering key information. Generally, this takes us about 10 to 15 minutes. If you’re spending more time than that, you’re probably asking too many questions. What we do is we have a set criterion of questions that we look to gather information about.

First of all, we want to know if the seller’s reaching out to us, where the property is located. Are they living in the property, is a renter living in the property? If a renter’s living there, we need to gather that information. If they’ve lived there, we need to gather some basic property information. A lot of that information, you can look up and find online but we have a process for when we’re talking to a seller, making that seller feel very comfortable sharing that information with us so that we have a basic understanding of the situation.

We ask a lot of questions about repairs. We want to know the ballpark figure for the repair costs because that’s going to determine or help us determine what we’re going to offer on the property. We want to know if the property has been listed or not. If it’s actively listed and the sellers reaching out to you, that information is vital. Has it recently been listed? That’s something that we really want to know. The things that you can’t find out online or what the seller’s motivation is.

The seller may have fifteen, seventeen various different reasons why they might be selling the property. Everything from, they just got a job out of state to it’s been a rental property for them. It might be a pre-foreclosure situation. It could be a probate situation, a house they inherited. There’s a number of different scenarios and we want to understand the complete picture of what’s happening. Why does the seller sell at this particular time frame and why are they reaching out to us? Why are they reaching out to us as an investor, as opposed to going through an agent?

FBL 5 | Acquisition Systems

Acquisition Systems: Every part of this business is a process. You need to have a good system in place so that you can run your business efficiently.

 

There’re a lot of benefits that we offer. We want to uncover what it is and why they would have an interest in doing business this way, that way we can help solve the problem. We need to understand what they owe against the property then that helps us formulate our offer. We want to get a sense of what they’re looking for in price. Is that in our zone of possible agreement or is their price unrealistic? There’re different types of properties. We can afford to pay more for a rental asset where we create cashflow over time.

If we’re going to buy, fix, redevelop and resell this property, we have to acquire that property at a more significant discount to create a margin for a profit. Those are all the things that we do in about 10 to 15 minutes. That’s what we consider to be step one. We train people in our office. There are fourteen members in our office right now who do acquisitions all day long. They’re talking to agents, they’re talking to sellers. That’s what we train our students on is every part of this business is a step or a process. You need to have a good system in place so that you can run your business efficiently.

Before we go to step number two, you said something really interesting. A lot of the information that we’re collecting as you mentioned is public records but really dialing in the person’s motivation. Early in my career, I was very good at setting appointments but then I’d get to meetings where the person wants to sell the house, but in no way, shape or form, would they ever come down to an investor pricing. What are some of the specific questions or phrases that you’ll use to uncover motivation if you’re not getting much from the seller?

A lot of times, when you talk to a seller, most sellers will be pretty open. I feel like a lot of people don’t dig deep enough because oftentimes, there are two or three reasons they’re looking to sell the property. Not just one. A lot of times, whenever I ask a seller, “What’s motivating you at this time to work with a company like ours? Why are you looking to sell the property?” Oftentimes, you might get, “I’m moving to Dallas.” That doesn’t give you a lot of information.

You need to dig a little bit more and find, “You’re moving to Dallas? Why are you moving to Dallas at this particular time? Are there any other reasons you’re looking to sell the property at this time? Would you consider renting the property? How quickly are you looking to sell the property?” All of this gives us a more complete picture of what’s happening with the situation so that we can create a solution. We’re not going to be perfect, an investor is not a perfect fit for every property. Sometimes our offer is going to be too low. Sometimes our offer is going to be just right but what we offer is we offer peace of mind. We offer a solution very quickly where an agent hopes to sell the property and they may ultimately bring a higher price. A lot of times the seller’s going to have to sit and wait for a couple of months with the uncertainty of whether a buyer is going to come. All buyers are going to want to negotiate anyways. All buyers are going to have their closing timelines.

We provide flexibility. They don’t have to have any showing. A lot of times, when we’re presenting our offers to a seller, the seller is weighing it against, “I could take this offer although it might be a little bit lower or I could hope to maybe get a higher offer with an agent. I then have to pay a commission. I have to have all these showings on the property. I have to hope that I can find an offer that’s more appealing.” We can also come in with cash and that allows us a tremendous amount of certainty for the seller. These are all advantages we have as investors that we provide a solution for.

I know you’ve created an effective system over the years, to where on this initial call, whether it’s directly with the seller or maybe with a real estate agent, you will start negotiating price without negotiating price. You’re not necessarily putting your offer there, but you’re getting them to a lower starting point before you even arrive, which is genius. Talk to us briefly about that. What are some of the questions you’ll use there?

People can save a lot of money if they learn from other people’s mistakes.

One of the things that I like to do is I always like to have the seller present their price first. That doesn’t always happen. Sometimes they’re more resistant and they’ll say, “You present me with a price.” I try to get them to commit to a price before I start getting into the price-related questions though. A lot of times, sellers are overly optimistic about the price that they want for the property and they have an emotional attachment to the house. They think it’s worth more than it is. Oftentimes what I do is I will bring up scenarios or things about the property that make me less optimistic. Maybe in this particular market, I’m aware that there are quite a few properties currently listed on the market. If there’s a significant amount of supply, I’m going to bring that up.

I might tell the seller, “Jeff, I appreciate you reaching out to me. There’re a couple of things about the area that does make me hesitant. I don’t know if you’re aware, but there are currently nine other properties, all within a half-mile radius that are very similar in size and scope that are for sale. That makes me more nervous because I know buyers are going to be negotiating on price. Based on what you’ve previously told me, it sounds like the property needs a tremendous amount of work.”

I might bring back what they shared with me earlier about the repair costs on the property. What that does is before I ask a price, it gets a seller to be a little bit more realistic about their situation. That way they start with hopefully a little bit lower of a number when we start the negotiation. I might say, “Keeping those things in mind, if we were to offer you all cash and be able to close in your timeline. What would be the least that you’d be willing to accept?” They’ll throw out a number and oftentimes, they’ll say, “Jeff, can you do any better than that?” We try to get to a lower starting point on the initial conversation. It may work for us, it may not. It may need to have significant, further negotiations, but at least it gives us a starting point and hopefully, they’re a little less optimistic about what price they’re looking for.

In this market, it couldn’t even be more important than getting them down, tempering expectations a little bit here. Let’s move on to step number two but before I do, I just want to let the audience know about a free one day real estate class that we have coming up that takes you from how to be effective in this market. How to get started as a real estate investor or scale an existing business? Usually, I’m going to talk about this class for 30 seconds, but you’re the one that actually teaches the class. Why don’t you let the audience know quickly what they are going to get out of it and why should they be there?

This is the class that we designed that I would’ve loved to have had when I started out. When I was starting out, I was trying to piece information together in different places. That process is too slow. It doesn’t work. It’s a very haphazard process. What we designed was a one-day virtual training. I have the pleasure of teaching that training. We take investors through our systematic process of buying, redeveloping, reselling properties, as well as buying and holding property.

We start with how we find our properties. Different marketing strategies that we’ve used for the past seventeen years and things that we’ve had consistent success with as well as things that are working very well now to bring us leads. I walked through a very detailed aspect of how we evaluate those deals, how we acquire those properties, how we do our due diligence and how to make the right offer because you can make a lot of money in real estate. You can lose a lot of money in real estate. It all depends on your education and the processes you have in place.

We share with people, what is our acquisition process? How do we do due diligence and what steps? What do we do before the contract? What do we do after the contract? That helps keep people safe when they’re out there making offers. People want to know that when they’re making an offer, they’re making the right offer at the right price. That’s a big focus of the morning aspect of the class that we do. We walk people through our rehabbing process. We walk them through the seven steps of a rehab deal from start to finish. How we go out there and estimate repairs to how we create a scope of work to how we manage a construction process, how we find our contractors and everything that’s involved.

FBL 5 | Acquisition Systems

Acquisition Systems: You can make or lose a lot of money in real estate. It all depends on your education and the processes you have in place.

 

We’ve been doing this for many, many years. We made a lot of mistakes along the way. I share a lot of those mistakes that you can avoid. Frankly, that can save people a lot of money if they learn from other people’s mistakes and they can also learn what we did well and what we’ve been able to establish. We talk a little bit about wholesaling. We don’t spend a tremendous amount of time on it but I think it’s a great strategy for people that are just starting out that don’t have a lot of experience. They may not have a lot of capital and a lot of time. It’s one of the better strategies.

We also talk about rental properties, which ultimately create true value and wealth. That’s what creates long-term wealth is owning rental assets long-term. We talk about our process of how we try to redevelop and resell a property or flip property and then we buy a rental. We’ve been doing that over and over again for many years. We even touch a little bit towards the end of the day on commercial real estate and what we’ve been doing. We buy apartment communities and retail properties. It’s a pretty comprehensive day. We have a lot of fun. We have worksheets that you go through so that you can learn and get a lot of value from the class itself.

I love that about the way you teach. It’s a hands-on kinesthetic. You’re breaking out the calculators. You’re filling out the numbers. Real estate is math. When you see the math, it gets exciting. Math could get pretty sexy. Let’s get back here to step number two. Step number one is we gather the property information. If we determine there’s a high level of motivation, we’re going to take that next step. We’re going to move on to deal analysis. Break that down for us.

In the second step, this part of the process usually takes about 30 to 45 minutes, depending on the property and the extent of construction needed. We call this our desktop appraisal and that’s what we’re doing. We’re appraising the value of the property in its highest and best use. We look at the property and we say, “Is this a property that should be rehabbed as is, we’re not going to change the square footage?” We’re going to come in and we’re going to spend $70,000 on this property. Then we’re going to turn around and put it back on the market.

Is this a property that is in an area where there’s a relatively high sell price per square foot? Maybe we’re going to add a thousand square feet to this property. First of all, we look at the property and if it’s a single-family, it’s generally, are you going to fix it up and resell it or are you going to add square footage to it? Sometimes you can knock the property down and build two townhomes. You could split the lot, sell the lot, but most of the time, a single-family, it’s one or two decisions. Am I going to rehab the property or am I going to add square footage? Depending on the choice you make, you’re going to comp the property in two different ways potentially.

This is all happening from your desk. You’re not at the property at this point. You’re in the comfort of your own home.

What you’re going to be doing is the first thing that we’re doing. If we break the steps down is we’re going to, first of all, get a feel for the property on Google Earth. I like to take a look at the property and I’ll ask myself. I won’t go through every single question that I ask myself, but the major questions are, is the property on a busy street? Is there anything that’s going to add value to where this property is located or to track from value? Something that would add value, maybe the property is across the street from a really nice park.

Self-education can transform someone’s life.

That’s more attractive to a lot of people who might be looking at that property. That would draw a premium for that particular house. Some of them might be less attractive is maybe it’s across the street from an industrial warehouse. It’s not the ideal neighborhood-feel. That would detract from value. Those are the first things that we look at. We get a feel for the neighborhood if we’re unfamiliar, just by walking up and down the streets. The second thing that we do is we’ll pull a property card just to verify what the seller or the agent told us about the property. If they told us it is 1,300 square feet, is it really 1,300 square feet? Is it smaller or bigger? Is it something where they’re counting the square footage of the garage and they shouldn’t be? We’re going to pull a property card online then we’re going to match that up against the information that we gathered initially in step one.

When you say property card, this is something in all states they typically have in a tax assessor’s office, they can log into online free.

It’s very simple for people to access a lot of that information. What we’re going to do is we’re going to run comparables. We’re going to go on the MLS and we’re going to do a search for similar properties with certain parameters so that we find other properties that ideally have some renovation or are in good condition, traditional sales or properties that have some remodeling or properties that have been fully remodeled. We’re trying to assess the value and compare it to the property that we are analyzing and that we’re going to make an offer on.

We will run our comparables. We will whittle those comparables down to the ones that we feel are the best. Usually, we’re looking for three to four sold comparables. We’ll look at those sold comparables and that’s when we’ll make a decision, “This looks like it has good potential.” If it doesn’t look like it has good potential, at that time point, we’re going to stop the analysis. We’re going to still call the seller back and we’re still going to give the seller a verbal offer or a verbal range of where we’d be, just to see if it’s anywhere close to what they’re looking for. If it’s not, at that point, we would refer the listing out to an agent if it’s unlisted.

Roleplay that with me for a minute. I’m the seller. You’re going to toss out a number to see if I bite. You’re not wasting your time going to step three. What does that sound like?

Usually, I’d call the seller back and we’d have a small dialogue. When I make the offer, I would just say, “Jeff, I appreciate you reaching out to me. When I did my due diligence, there were a few things about this property that definitely concerned me. I think the property does need a considerable amount of work. There are also quite a few properties in the area that have sold below $300,000. Based on the amount of work that this property needs, we would be somewhere around the $250,000 price point. Is that something that would work for you now?” If it doesn’t, that’s when we would refer that property out to an agent who might be able to assist that seller. We’re going to test the waters and that’s an abbreviated part of the conversation. If they don’t want to play ball then we’re going to move on. We’ve only spent maybe 10 to 15 minutes analyzing the deal in the desktop portion. Now, if it looks good, hopefully, we’ve already set an appointment.

At that point, the remainder of the research is looking at the amenities of the comparables and comparing those to the subject property. We’re going to start making adjustments to value like an appraiser would. We have a chart we use to come up with the after repair values. We’ll spend fifteen minutes on that and then we’ll start estimating the repair costs based on the information we do have. That’ll help us formulate what we consider to be the after-repair value of the property. We’ll plug that into our deal analyzer. We’re essentially ready to verify that information and make an offer.

FBL 5 | Acquisition Systems

Acquisition Systems: If you want to be a good investor, the first thing you have to do is you have to truly believe you are a good investor.

 

A lot of these tools that Than is mentioning you actually get into at the one-day virtual event like the deal analyzer, comp evaluator and all of that. Definitely check that out if you want to see those in action. I think it’s important though to pause here because you said something powerful. You go back, you throw out $300,000. I’d be in the ballpark of $250,000. Let’s say, I call you crazy and I want $400,000. It’s not going to work. Up until this point, you’ve invested about 45 minutes of your time.

I remember getting started, spending a good portion of a whole day just getting to this point or not even getting to the point until I saw the property. This is something that’s important because real estate is a numbers game. Your company CT Homes is in about every 22 offers, you’re landing one deal. If you’ve invested, six hours on everyone, obviously, that’s not a scalable system. I wanted to point that out there. Let’s chat about step number three, which is the field of appraisal. You’ve gathered the property information. You’ve tested it through the desktop appraisal. You’ve heard motivation. They are not saying they’ll definitely going to accept your offer but you’re telling me there’s a chance, so you move on to step three. What’s step number three about?

Step three is what we call the field appraisal. That’s where we actually go out and verify all the information that we calculated at our desktop. We have an after-repair value. The first thing we’ll do is we’ll drive by the three or four comparables that we feel are the most similar properties, just to verify that after repair value. The only information that we’re missing at that point is the quality of the neighborhood. Sometimes on Google Earth, you can walk up and down the streets, but you get a better feel when you’re driving to the property itself.

We’ll verify that then we will meet with the agent or the seller at the property. Typically, that meeting is about 45 minutes to an hour. If we’re meeting with an agent, it’s about 15 to 20 minutes. If it’s with the seller, and what we’ll do is we’ll tour the outside of the property. During that walkthrough, we’re confirming the repair costs and finalizing what the actual repair cost is. At the same time, we’re also building trust and rapport with the seller because we’re going to be making them an offer within the next 30 to 45 minutes of showing up at their house.

There’re really two things that we’re doing. We’re trying to come up with a solid repair estimate that will ultimately determine the final opening offer that we make. We’re also trying to build a relationship with the seller so that they understand, trust, and value what we offer them and this process of selling their property. Not every seller is completely aware of having an option of selling to an investor. A lot of times, their only consideration, maybe before reaching out to us was, “I could sell the house by myself or I could list with an agent.” All we’re doing is really providing value, communicating what the benefits are of working with a company like ours and then making the offer to the seller.

This is powerful, the three-step process. Worst case scenario, you made an offer that doesn’t get accepted. You’ve invested two hours of your time. That’s how we scale a business like this. I want you to bring these steps to life a little bit. Walk us through maybe one of the craziest stories you had in acquiring a property. I want to bring it to life here a little bit.

We’ve had a lot of crazy stories. When you’re dealing in real estate, it’s definitely a people business. It’s a fun business. You never know who you’re going to meet. One day, you might meet with a lender. Later that day, you are meeting with a seller or with a real estate agent. You never know what you’re going to get. One of my favorites, I think you’ve heard this story a couple of different times but I think a lot of our audience hasn’t. I’ll keep it short because this story could go on for hours.

You’ve got to have a mentor in whatever industry you’re pursuing.

I was in my very first-year of real estate. I was still relatively new to meeting with sellers and learning how to communicate. I took a two-day communication and sales class because I wanted to improve how I was making offers and how I was communicating. Whenever you go to a course, you want to apply everything that you’ve learned all at once. I got a call from the sky in Stratford, Connecticut. It was about 30 minutes away from where our office was at the time. When he told me the price, I was like, “All I have to do is show up and give him what he wants and we got a great home run deal.” I was excited.

This was several years ago and I jumped in the car and drive down. When I get out of the car, I locked my keys in the car. I was so excited. This is before the key fob and all that. I called my business partner and I said, “Paul, come down, bring the extra set of keys. I’m going to meet with this seller. I’m going to get the property under contract.” I knock on the door and the guy who opens the door is the biggest hillbilly I’ve ever met in my life in Stratford, Connecticut.

It was a nice house in a nice neighborhood. I had my khaki pants. I had my golf shirt tucked in and I felt instantly out of rapport with this guy. Immediately I’m untucking my shirt. I’m looking a little more disheveled. We’re walking around the house and this guy’s just a character. As we were touring outside of the property, I realized he had been drinking. This guy has had a couple of drinks. We walk into his garage and he’s explaining about his house. He opens the fridge and he offers me a beer.

You started in the garage.

We toured the property. It was a detached garage. We’re standing there and he offers me a beer. At this point, I’m thinking, “How can I build trust and rapport with this guy?” I’ve just taken this class. Normally I don’t drink when I’m out working but the next thing I know, I’m having a drink with the guy. I got to build a little trust and rapport.

What were you drinking?

Just some beer. We walk outside and he lights up a cigarette. Now, I don’t smoke. At this time point, I’d smoked maybe two times in my life when I was fourteen behind the woodshed with my buddies. I’m struggling to build rapport with this guy. The next thing I know, I’m smoking a cigarette with the guy. I don’t even know how to hold it. You hold it like this. How do you hold a cigarette? I got a beer. I got my little folder with all my comps. We walked outside of the property. As we turn the corner on one side of his house, he’s got a goat tied up to a tree. I grew up in Fresno, California so I know my farm animals. I’m talking to him about this goat. I got my cigarette, my beer, I’m petting this goat.

FBL 5 | Acquisition Systems

Acquisition Systems: Passion will fade. You have to constantly find new ways to be excited about what you do. A lot of times, that’s learning.

 

Right at that very moment, my business partner, Paul pulls up. He sees me with my cigarette, my beer petting this goat. I’ll never forget him walking up going, “What the hell are you doing?” I’m like, “I’m trying to build rapport with the guy.” We got the property under contract. A couple of days later, his wife calls our office and I was still new to investing. I didn’t know all the ins and outs and she’s yelling and she’s upset. She goes, “By the way, you signed a contract to buy my property from my husband. I just want you to know he’s a drunk and he’s not even on title.” All this work and we didn’t even get the deal. You’ll meet some fun people. Maybe you might pet a goat or two. It’s a fun business because you never know who you’re going to run into.

We’re going to start bringing this to a close here a little bit. I got to know, why are you so passionate about teaching others? You’re very successful on your own. I’m with you as you leave family and travel across the country to teach students and these one-day virtual events. Why are you so passionate about that?

Real estate changed my life. It changed my life. It gave me something to be passionate about. Before my only passion was football and that was my greatest joy. After football, I was searching for something that I would have any passion for. I couldn’t really find it until we got involved in real estate. Financially, it changed my life but more importantly, I think it gave me purpose. What I’ve realized teaching, that’s the gift you’re giving to other people. You’re allowing them to change their lives financially, which transforms their lives personally.

We have students who do the business with their sons and daughters and create this special relationship they’ll remember for the rest of their lives. We have students who do it with their best friends. We have the husband and wife teams. Getting involved in investing, having a common purpose and passion. It gives them more life fulfillment. It empowers people to become the best version of themselves. It’s very rewarding obviously to improve your own life financially, but it’s equally rewarding, if not more rewarding to help other people transform their lives. That’s why we teach. That’s what we’ve been doing for a long time and we love doing it.

We talk a lot about in FortuneBuilders and your “why.” I’ve watched you over the years and you’re so driven. Anything you put your mind to, you focus on whether it’s real estate. Two years ago, you said, “I want to start playing basketball.” In two years, you’re almost as good as I am. What is it that drives you?

It’s my family, my friends and the students that we serve. Those are the three areas that I focus the majority of my time on. I enjoy doing it. We teach people around the country and it’s inspirational to hear people’s stories and what they do with the information. I’ve always believed in giving people an opportunity. What they do with it is up to them. We have some students who don’t do anything with the information. We have other students who change their lives. It’s amazing when you get with somebody who’s motivated and driven. You give them the tools and a process to go out there and follow, and they have success doing it.

I’m a student. I love learning. Every single day, I’m reading. I’m trying to better myself in some way, just like a lot of people probably reading right now. One of the reasons you’re reading is you’re doing the same thing. You’re trying to improve yourself as opposed to just watching a show on Netflix. It might be an entertaining show. This type of show can make a profound difference if you continue to self-educate yourself. I think self-education is what can transform someone’s life.

There’s a big difference on working in your business and working on your business.

That’s one of the things I’m very thankful to you for in my life. I hated learning growing up. I wasn’t the best student and had a hard time engaging in traditional education, but you taught me to fall in love with learning. We got a cheesy little slogan we use, but it’s so true, ‘The more you learn, the more you earn.’ As you keep learning, you see your finances usually rise alongside that. I have two more questions. You’re talented in many areas but I heard you say one time that you are put on this Earth and the one thing that you can do better than anything else is to help people or yourself set and hit goals. We have an Ultimate Entrepreneur Camp that we do once a year and you teach a series. A couple of quick tips on somebody getting into the business, or forget the business, just in life setting and hitting goals.

I think the first thing is forming an identity around what you’re trying to accomplish. A lot of people, let’s say they take up a new sport and they’re trying to golf for the first time. People have a hard time becoming a good golfer until they self-identify as a golfer. Getting into real estate investing, was new to me but I realized, “I’m an investor. That is who I am. This is my identity.” That gives you a greater sense of passion and purpose. Whatever field you’re looking to improve upon, I think you first have to identify that is you. If that is in your core system and your blood, that is who you are.

You meet the best athletes. You ask them who they are, “I’m a basketball player.” That’s what I am or I’m this. They truly believe. I think if you want to be a good investor, the first thing you have to do is you have to truly believe you are a good investor. You have to identify as an investor. When people ask you what you do for work, you may do something else on a day to day, but hopefully in that conversation, you let them know, “I’m an investor. This is what I do.”

The second thing is setting weekly goals. That’s something that I’ve done for a long time that has helped. I take those weekly goals and I put them into small, tangible goals. I’m going to set aside three hours this week to spend on my education in this area of what I do. Trying to reach those goals and track the time that you spend. If you’re trying to improve your fitness, writing down what you do every day for your workouts. Very few people do that. Very few people track their times of running, what they’re lifting or whatever it is they’re doing for exercise. I think that’s extremely important. Small tangible goals set weekly have been a great process for me.

Let’s wrap it up with this, Than. The top three tips you would leave the audience with thinking in the mind of somebody looking to start the business and somebody looking to scale the business. What are the top three tips you want to leave them with?

The first one was what worked for many people throughout history and for myself, is you got to have a mentor in whatever industry that you’re pursuing. That’s extremely important because you have to have someone that can help guide you. The second thing I’d say is you have to carve out time every week to study the industry that you’re going into. If it’s real estate investing, you have to set aside time to build your educational foundation. I think most investors are undereducated. We live in a society right now where we think a five-minute YouTube video is a solution to everything. You’re not going to invest hundreds of thousands of dollars piecing together a bunch of 5 to 10-minute videos on YouTube about investing in real estate. I read recently, somebody said, “I can learn investing on TikTok.” I’m like, “Holy shit. What the hell is going on with this society on TikTok?”

To me, that was a good example of this instant gratification culture we have, which is shortcutting. If you look at Warren Buffett, what makes Warren Buffett? He’s just studied and educated himself more than probably 99.9% of investors out there. He’s dedicated his life to studying business. It’s obviously reflective of his results. The third thing I’d say is to find passion in what you do. If you’re not passionate about what you do, it won’t last long and that passion will fade. You have to constantly find new ways to be excited about what you do. A lot of times, that’s learning. The educational process will keep you excited about investing because you’re growing.

I read an article not too long ago. It said the number one reason, according to a study and survey that people don’t hit financial goals was actually the inability to defer instant gratification. Not willing to go through a process, learn and get a mentor. Let’s bring it to a real estate investor. I’m a brand new investor. I’m looking to do my first deal or maybe my 10th deal of the year. What are some tangible weekly goals that you would have on your weekly list?

I’ll share what works for me and what I have on my weekly list. The first thing is I have business goals that are working in the business. For a real estate investor, it might mean I’m going to make ten offers this week or I’ll make five offers or fifteen offers. That would be a tangible goal that is KPI-driven. That is you performing the business to generate revenue. The second set of goals are working on your business goals. Things that may not pay off this week, but in the future are going to save you a tremendous amount of time.

Maybe you’re going to improve your construction management process. You’re going to add, you’re going to implement some systems or create some systems that will help you save time on your very next construction project. That would be working on your business. I have an in your business and an on your business goal. The other thing is to have an education goal. I’m going to set aside some time to improve some area of my real estate education or maybe it’s something else in your life. Some educational goal that’s going to help you learn and grow and develop personally. It can be a personal development goal. That’d be the third category. The fourth category for me is health. What are you going to do for your health? A lot of business productivity is depending on how you sleep, what you eat, your energy levels, your exercise levels. Improving some areas outside of your business is important because it keeps you balanced.

The other one and I used to follow this when I was younger. I don’t anymore. I used to have some sacrifice goal, which I always felt was important. For two years after college, I didn’t have a TV in our condo and that was a sacrifice we had to make. That was something that was difficult to do. I have a TV now. I watch it and I definitely enjoy that part of my life but at some point, I think when you’re trying to build something, you have to sacrifice something to get to your goals. Now, I don’t have that anymore because I don’t like to sacrifice anymore. Early on that was very helpful because it made me aware of what am I going to do that is going to propel me towards those goals that most other people aren’t going to do.

I love the ‘in’ and ‘on.’ That’s how you teach something about avoiding the technician trap and the importance of doing something every week that, as an entrepreneur, a big picture.

There’s a big difference between working in your business and working on your business. I think it’s important to distinguish those activities throughout the daily course of your work.

Words of wisdom from Mr. Than Merrill. I appreciate having you on the show. We’ll get you back here again. We could have spent a whole show on each one of these steps, but hopefully, you enjoyed this episode. As always, follow us and subscribe to us on YouTube, Facebook or social media. Like us on iTunes and share it with somebody you know that could benefit from this education. It’s great spending time with you guys. I’ll see you next week.

Important Links:

About Than Merrill

Real Estate Investor, Author, Speaker, and TV Star

Than has over 15 years of professional experience in the real estate investment and lending industry. He is the founder and principal in several real estate investment companies and has been involved in over $1 billion of residential and commercial real estate investments.

In the last two years alone his companies have acquired over $300 million dollars worth of residential and commercial real estate around the country. Than’s residential real estate business, CT Homes LLC, redevelops between 25 to 40 properties at a time. His commercial real estate investment company, Equity Street Capital, acquires apartment communities, retail shopping centers, and office properties.

As a national real estate investment expert, Than has also starred on TV, authored multiple investment books, and has spoken at conferences around the country.

Than is also the founder of FortuneBuilders Inc. a real estate educational company that has trained thousands of real estate investors around the country and helped them start successful businesses.