The Real Estate Law Podcast

Entrepreneurship and Surviving Corporate America with Real Estate Investor Luke Andrews

August 23, 2022 Jason Muth + Rory Gill Season 1 Episode 64
The Real Estate Law Podcast
Entrepreneurship and Surviving Corporate America with Real Estate Investor Luke Andrews
Show Notes Transcript

Meet real estate entrepreneur Luke Andrews and hear how he escaped Corporate America with the help of his wife, who was already in the real estate space and coaxed him into getting a real estate license so he could help her with showings on his way home from W-2 World!

Besides building and leading a team of over 20 agents, Luke has purchased and sold nearly 40 properties for himself during the past 5 years, and he hit that goal just months before turning 40 years old.

A skilled negotiator, Luke is an experienced mentor and trainer who loves working with brand new sales professionals, helping them scale quickly and crush their goals.

Luke is native to the Louisville area, and after graduating from WKU and spending several years in Denver, Luke and his family returned home to Kentucky, closer to family and taking his real estate investment knowledge to his brokerage, RE/MAX Premier Properties

Things we discussed in this episode:
- How Luke transitioned from a corporate W-2 job into real estate
- Working with your spouse - what that's like!
- How to switch from work mode to family mode when you're working with your wife
- Training and mentoring new agents by focusing on outcomes
- Debating the reasons for / against real estate investors getting their real estate licenses
- Why it's a great idea for real estate agents to find investor clients
- Buying for appreciation versus buying for cash flow
- Building a team of real estate agents and what goes into a successful agent
- The importance of your sphere of influence
- Referral fee leads - here to stay?
- Why effective communication is the key to success

Get in touch with Luke:
LinkedIn - https://www.linkedin.com/in/salesandnegotiationcoach/
Website - https://lukeandrews.teachable.com/
Email - luke@lukeandrews.us
10 Investor Mistakes - https://10investormistakes.com/

Join Jason Muth and Attorney / Broker Rory Gill of NextHome Titletown and UrbanVillage Legal in Boston, Massachusetts for another episode of The Real Estate Law Podcast!

#realestatepodcast #nexthome #humansoverhouses #realestate #realestateinvesting #realestateinvestor #realestatelaw #realestateagent #financialindependence #financialfreedom #cashflow #investments #quityourjob #passiveincome #workingwithaspouse #kentuckyrealestate #buildingateam
_____________________

The Real Estate Law Podcast is hosted by Jason Muth and Attorney / Broker Rory Gill.

This podcast and these show notes are not legal advice, but we hope you find both entertaining and informative.

You can follow our sponsors here:

NextHome Titletown Real Estate on Instagram
NextHome Titletown Real Estate on Facebook
NextHome Titletown Real Estate on LinkedIn

Attorney Rory Gill on LinkedIn

The Real Estate Law Podcast, because real estate is more than just pretty pictures and law goes well beyond the paperwork and courtroom arguments.

Support the show
Luke Andrews:

I think a lot of people feel like, well, hey, I can get my real estate license and I can save on fees or I can, you know, I'll get automatically get the inside track on all of the great investments. And it's it's just not the case. What I've found is, you know, where you may save a little on commission, you're actually giving up on either negotiating the best deal or the right.

Announcer:

You found The Real Estate Law Podcast. Because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom argument. If you're a real estate professional, or looking to build real estate expertise, then welcome to the conversation and Discover more at realestatelawpodcast.com

Jason Muth:

Welcome to another episode of The Real Estate Law Podcast. Thank you so much, again for choosing to listen to us. We do really appreciate it. This is Jason Muth and we're here with Rory Gill. NextHome Titletown Real Estate and UrbanVillage. Legal in Boston. Howdy, Rory. Hey, Jason. And we're here with a great guest from Kentucky. I don't think we've had any guests on from Kentucky, have we Rory?

Rory Gill:

Last week.

Jason Muth:

Last week?

Rory Gill:

Yeah we sure did.

Jason Muth:

Oh we sure did. That's right. Oh my god. How did I forget this? This is where's my mind these days, Luke? Well, we're going to do back to back with Kentucky then. Okay, so, Luke Andrews is a real estate agent. He's a leader and investor, a leader of a team. He is an investor. He is a survivor of corporate America. And now he's doing real estate full time. He mentioned his wife kind of sucked him in and they worked on some investment properties in the past. And you know, many, many years later, he has a massively successful portfolio and a team that he's leading with RE/MAX. So Luke, welcome to the podcast.

Unknown:

Excited to be here two weeks in a row from Kentucky that may be a little too much redneck for you guys.

Jason Muth:

Rory, how did I not realize that? I wasn't even thinking that our guests from last time that we recorded was in Kentucky but.

Rory Gill:

We don't balance this out very well. So last week, we had Western Kentucky. The past few months, we had a bunch of Boston around so and then a bunch of West Coast ones.

Jason Muth:

Do you know why? I must have a Colorado on my mind or something? You know, because you he started out in Colorado. But here we are back in Kentucky and we can't wait to hear about the real estate market. Where are you in Kentucky, Luke?

Luke Andrews:

Louisville, Kentucky.

Jason Muth:

So we would not say it the way you said it, which is the correct way.

Luke Andrews:

I wouldn't expect it any other way.

Jason Muth:

Yeah, we in the north. We don't know how to say that. But then again, there's a lot of cities up here that you guys probably can't say like Worcester and Gloucester, and Haverhill, and all these things that look like they're spelled one way, but sound like a different. So Luke, how are things going, we are in the back half of the year right now. And you know, what a ride we've had so far. Tell us about your background, tell us about where you got to where you are today, how you led the team that you're leading? How the investments started, just give us some background as to your story.

Unknown:

Sure. So my background, I came from the from a corporate America space, you know, I was I was in that nine to five and a strategic marketing and data analytics role. And my wife who was a licensed agent, she would always say she was like, hey, you know, you're commuting back and forth from from downtown to the suburbs. Wouldn't it be fantastic if on your way home, you could just show these houses and she wouldn't have to go out at five o'clock fight rush hour to do that. I got my license part time just to kind of help her out. I started helping her on the negotiation piece of it, and then just absolutely fell in love. And the broker and team leader that I was working for. He's someone that I have known since I was five years old. He has been a phenomenal mentor for me. And he was just he happened to be in a space to where he was he was in team growth mode. And I had built some teams on the corporate side. So I was able to kind of consult and help on that. And I eventually took on a leadership role within the team and that has just grown and grown and grown and now I have over 20 agents. And it's it seems like it's all happened in the blink of an eye. And I mean, you know, it's been five or six years that this journey has been going on bu,t which in the grand scheme of things isn't a lot, it's really really flown by.

Rory Gill:

I mean, that's incredibly fast to put together that level of success and to transition and to to build a team because each one of those parts of your career is a little bit different you know, managing a team you know, just getting started in real estate and doing the the nitty gritty real estate work and you know, building your presence. These are all very different jobs that you're melded together pretty well in a very short period of time. So definitely congratulations.

Unknown:

I did over commit myself quite a bit. Yeah, easy to do in this world.

Jason Muth:

Tell us a little bit about working with a spouse, and what are some pointers that you have good and bad.

Unknown:

That is a question that I get so frequently because everybody says I can never work with my spouse. My wife and I work very, very well together. It can definitely be a challenge, but we respect each other's opinions and views very much. We work very well together. We have very complementary strengths and weaknesses. So areas where I'm very strong, she's weak and vice versa. And so we we've just kind of established our roles and our lanes that we've gone through, it's worked really well for us. And I understand for some people that it probably wouldn't. And the major con and the pitfall that that we've come across is, it's difficult to turn work off, right? You know, it seems like we're always talking about it, we're always in the midst of it, you can't really get away from it, especially in something like real estate, where your office is quite literally in your car and in your house. There really is no, no reprieve or break. So we've had to make very conscious delineations of, okay, this is workspace, this is home space. What we talked about when we talk about where we talk about and you know, one area that I've I've really had to make some some big adjustments is I get into what my work wife calls work mode, where it's just, you know, I'm used to delegating and leading and solving problems. And I just, I just get very quick and it's like, okay, you do this, you do this, you do this, and sometimes she has to tell me like, Hey, I'm not one of your employees, you can't, you can't tell me to do something like that. So it's, it's something that I'm constantly battling and working on. But we've definitely made it work and made it very successful.

Jason Muth:

Yeah, we're working through that as well. It's not easy. You know, sometimes, like, you know, I wake up early, so The timing matters, because you have the best marketing idea Rory and I are married, which you might not know, but a lot of people know that listen to this podcast. And I'm an early riser. So I get up with the sun. And then there's a list of things to be done that, you know, when Rory wakes up, many of them are that we have to implement, and you thought it through at 5:30 connected to his business. And, you know, I've learned to back off a little bit until the coffee kicks in. And, and things in the morning. If I'm not ready to hear it, if or if it's just will get done a little bit more readily if that's the case. Because if I jump down with a long list of business-related things to do early on, because I've already accomplished them, I've emailed that thing off, I've sent that thing off, I've done that I've done that, you know, that's, it's tough for a relationship. the wrong time in the wrong space needs to be held into a time that actually works. So yeah, I mean, so setting that those boundaries, setting the delineations, it's easier said than done, we can kind of come here and put together a schedule, or even a layout of how things would work. But it's, it's certainly a challenge. Luke, how involved is your spouse with your investments. Not the agency side, but you have a couple real estate investments as well, right?

Unknown:

I do. So I had set a goal a while back, I wanted to purchase 40 properties by the time I turned 40. And we actually just closed on our 40th about a month and a half ago. And then I've got about another month and a half before I turn 40. So just kind of barely squeaking under, under the wire. She is not involved. It's very, very minimal. You know, it's just she just wants high level status updates when she wants them not on a regular basis. It's something that she doesn't really have a big passion for an interest in or you can, you know, she'll tell you, she doesn't have the stomach for it. And so I have a business partner that we do all of our investments with, and she says her only rule is just make money. Right? And she was like, I don't want to hear about the individual details, just just let me know, was this a winner or not.

Rory Gill:

So you actually got into real estate investing before you got your license and became a real estate agent that is that right?

Luke Andrews:

Correct. Yep.

Rory Gill:

So you know, just one question that I that we've asked a bunch on this podcast and elsewhere is for someone who's interested real estate investing, should they get a real estate license?

Unknown:

It's absolutely not not necessary. I did it because again, I had some other factors as well. And I had some good mentors that I could follow. I think a lot of people feel like it will, hey, I can get my real estate license, and I can save on fees, or I can be and we'll all get automatically get the inside track on all of the great investments. And it's it's just not the case. What I've found is, you know, where you may save a little on commission, you're actually giving up on either negotiating the best deal or the right deal. You're not just automatically plugged in to this underground world off market deals just because you're licensed. I have found many, many investors who are significantly more profitable because they have had a good professional on their team and not necessarily been been that themselves.

Rory Gill:

For investor background, Do you end up working with a lot of investors as clients?

Unknown:

I do. I work with a lot of investors as clients. And in the beginning and something I tell my agents because that's that's one of the cornerstones is I tried to have all my agents working with investors. I think that is a really key piece to their business. The one pushback that I get is also the same pushback and concerns that I had in the beginning was okay well if I tell them investor that I'm an investor myself, their initial thoughts gonna be Well, why would I want to work? With you, you're going to take all the good stuff, and you're going to keep it for yourself and there's not going to be any left for me, I'm not going to work with you. I found out that that's not I mean, it is the case, they do ask that question. Every new investor that I go to work with, they say, Well, you know, you're investing too. Why? Why are you going to bring on a competitor? Or why would I want to compete with you? And I say, yeah, it's absolutely true, the very best stuff I'm going to buy for myself, but I can't buy everything. I don't have unlimited funds to go out and buying anything that I want. And knowing that I'm so plugged into that world, and I, because I do it for myself, I can identify great investments. You want somebody like me in your corner, somebody like me on your team, who can help guide you through that process, and who can bring you those great deals. And I've never had an investor that's walked away, because we were quote, unquote, competitors.

Rory Gill:

There's certainly enough to go around. And there

Unknown:

Yeah, well, and you know, my investor clients have are different kinds of investors all in the same marketplace. If found that because I'm so involved in that world, that I think about our the real estate team in my office, almost every single one of one of our agents is an investor themselves. What that means varies quite a bit, their strategies where they go, are they working in short term when I bring them a deal, when I say, Hey, this is a good deal. rentals? Are they just kind of local landlords, where they live in a multifamily and rent out the other sides. Just a wide range of investments that may make sense for different people, different clients and different members of our team? And no way is that it a threat? Theoretically, I suppose it's possible the same way that if you're working with multiple buyer clients, that they might be competing for the same property, but how often does it actually arise? The numbers make sense. They trust me because I have done it so much, not only for them and other investor clients, but also for myself.

Jason Muth:

What type of investments are you in right now? Like, did you focus on the multifamily approach that we've all heard about for many years? Have you gotten to the commercial road, short term rentals, like what's in your portfolio?

Unknown:

Sure, started in the beginning with a lot of small multifamily duplexes. triplexes, quadplexes went to a lot of single families. I'm not really a big fan of kind of that five to eight, five to twelve unit buildings. I found that a lot of times they're they're more hassle than they're worth. The costs just get astronomical in some cases. And there's not enough there's not enough units to offset, you know, a bad month, a water leak or something like that. I really like the the single families where, you know, clients are responsible for their own utilities, their own, you know, lawn maintenance, things like that. Just starting to get into the short-term rental, as I mentioned earlier, that I just closed on my 40th. That that is my first Airbnb, short term rental.

Jason Muth:

It's good to be diversified across asset classes, you know, in case there's a downturn in any specific one. You know, it's interesting to hear the single families so you're acting as a landlord, right to just people are living their 12 month leases.

Luke Andrews:

That's correct. We had a big influx, we had an area of town that was a up and coming area where you could still find a nice little two bed, one bath, three bed, one bath that was older, you know, built in the 40s in the 50s. And but had been relatively well maintained over the years, but you could still purchase it two years ago for $70 or $80,000. And bring in $800 to $900 a month in rent. Yeah. I mean, those numbers, I was like, bring me as many of those as you can. I'll take those all day long. You know, somebody like Grant Cardone says a $900 a month rental is never going out of style. So if you have something that you've purchased it at a price to where it can cashflow at 900 bucks a month. I'll hold on to it as long as I can.

Jason Muth:

Yeah. How do you feel about appreciation, factoring into the numbers that investors are using these days? We've just been through a period where the interest rates went sky high in relation to what people have been used to over the past few years. And it doesn't seem like that's going to abate anytime soon. So I've read some things about how people were factoring in, you know, beyond cashflow, what's your take on that?

Unknown:

I advise all of my investors to not buy for appreciation to not factor that in at all because nobody has that crystal ball to tell you where the markets gonna go. I want to make sure that it's going to cash flow based upon rent roll and if it does, that the appreciation is just your bonus. That's your cherry on top right that's what you're hoping to get down the road. But if if you buy strictly for appreciation, you know, I'm seeing especially some of the some of the larger hedge funds and you know, institutional money coming in and buying in our town the large multifamily they're buying it like negative cap, you know, where it's they're not even covering their expenses hoping for that appreciation down the road. Yeah, it's a great strategy and it might work over time, but there's so little margin for error. And especially, we all think about when we hear the term real estate investor - many people who aren't in this world, they just automatically assume, you know, an institutional fund or the Monopoly guy, right? You know, somebody who is just you know, has $100 bills for toilet paper. It's not. Most of the time it is - hey're just people who have just bought places over time to add to a relatively small portfolio, but they're trying to help, you know, offset and some income challenges or income gaps or, you know, help supplement through retirement. And for me, I have a hard time putting them in a situation to know that there's so little margin for error. And if the market shifts or turns that they're going to be stuck. So I strongly advise against buying for appreciation.

Rory Gill:

Yeah, I would caveat that I'd say that there. It depends on who the investor is and what their goals are. Perhaps if you were the Monopoly man coming in and diversifying your portfolio with something that's a little bit more speculative. You know, banking on appreciation may make sense. If you are late stage investor, where perhaps you've done a whole bunch of cash flowing properties. Now you want to try something that's a little bit different. The time might be right for, for you, as an investor to do something like that. But certainly not for that early investor who's looking at the first property, they're trying to, you know, pay some personal bills with the cash flow. That's the wrong investor for the appreciation markets.

Luke Andrews:

100% I couldn't agree more.

Jason Muth:

You know, when you're an investor starting out, like a lot of times people start out wholesaling, right? Because they're, they're not really holding much. They're just trying to generate money in the delta in the deal. And then they'll start with, you know, we've all heard the BRRRR method, it's been well documented on podcasts. And that's a way to, you know, get some cash flow and pull money out of the deals is really just to get get money upfront. You know, we have a couple investments as well. And I think we've been lucky in having appreciation and cashflow on both of those. But you know, we're on the lookout for cashflow next. You know, to Rory's point into your point, Luke, we got lucky with the appreciation. I mean, here in the northeast, it's been you know, gangbusters as it has lots of markets. And the cashflow is tough to find sometimes, right? I mean, if you're Yeah, if you're not doing your numbers correctly, or if you're miscalculating or not factoring in property management or being generous on capital, you know, on capex or anything saying, well, you know, I'm not going to need a furnace, and then you need a furnace, right? You got to put it in, what do you say to new investors? I mean, I know you do a lot of coaching and mentoring as well that you know, so let's say somebody is just looking to get into the game, where do they start?

Luke Andrews:

So I always send them because I've had this question again, numerous times over the years. And I got to a point where I said, you know, what, I want people to learn from the mistakes that I made and the mistakes that I'm seeing my investors make over time. So I actually wrote a book about that recently, where it was all about just the 10 mistakes that I see every investor make because they're buying their first property. And it was something that I'm obviously uber passionate about - real estate investing and getting people into that world because I think way that our market in our country is shifting, that we're going to have a need for quality and affordable housing that's out there. And so we need good landlords with good values, visions and goals. And so it's something that I was passionate about, and I sat down over a weekend and I wrote this thing and, you know, found somebody on Fiverr to format it for me and toyed with the idea of okay, well, I can pop this on Amazon and trying to run cashflow numbers, and how much can I make and wholesale. And I said, You know what I'm doing that I'm doing it for the wrong reasons. And so I made it 100% free. There's no physical, you know, print option to it other than if you want to go download it for free and print it off yourself. So that's where I send a lot of my investors, like, Hey, here's a website that you can go to download this book for free. And then let's talk through it because I use a lot of real life examples for mistakes that I made, real life deals that I went through, and the things that I've learned along the way. And obviously caveat it with it doesn't work with every situation in every market. But these are fairly universal things that you can go through and that you can learn to nothing else just get you started on real estate investing path, make it a little less scary and a little less unknown.

Jason Muth:

I'd love to hear both your and Rory's takes on running a team - running real estate team, just to compare notes and see what it's like in your market in your office versus what Rory is up to.

Luke Andrews:

Sure. Rory do you want to start? Do you want me to go?

Rory Gill:

Well, I'll say is, you know, we have a small team in our office and with seven agents. And it's, as we kind of look ahead and I kinda look around to other offices that we compete against. There's a lot of space for kind of a well educated, well prepared agent that's out there. So my work as the broker under the team lead is to educate my agents as best they can. best I possibly can and make sure that they're equipped to kind of stand out in the marketplace a little bit and turn around and be an expert and then their niche that they're servicing. So whether they're working with small business owners or they're working with like the struggling first time homebuyer ours, we have, each agent kind of has a little bit of a different specialty that they own, and that they become the expert in. But it's my job to make sure that they feel like they're supported and that they're growing, they have the resources that they need, so they can turn around and be the experts of their clients.

Luke Andrews:

We take a very similar approach. Now, you know, our team has grown significantly over the last couple of years. And it's, we started with, we know, we want to grow into scale, and we need to be efficient. And so we started looking at, okay, who are our successful agents, what are their DISC profiles look like. And then we just want to hire that person, not realizing that, you know, it's not all about the DISC profile, that there's some other personality traits and some work ethic that goes along the backside of it. And we also started realizing that we've got very successful agents with, you know, completely polar opposite profiles, right. And so we stopped trying to take that, you know, quote, unquote, efficient model, and just hire there and realizing that there are, you know, as you said, agents who are going to do things in many different ways, they're all going to have many specialties and work with different types of clients, some of them are going to be highly dependent upon the leads that we provide. Others are going to be really good at working their sphere of influence or finding clients on social media, some are going to be really great at investors, or commercial, some are going to be little combinations of one, two or three of those things. And so what we did is we just started looking for people who we thought were going to be self starters AND great culture fits. Once we found that and tried to provide them the tools now realizing that all agents are going to look a little bit different, we wanted to make sure we weren't taking a one size fits all approach. So we wanted to kind of personalize the onboarding experience, but by still having some some standard operating procedures in place, so that we can be as efficient as possible. And make sure that everybody gets a very similar amount of of training, at least on the basics, program, software, that kind of stuff. But really, I've what I've found the agents that are the most successful, they focus on three things. One is making sure that they're maximizing their sphere of influence. Number two, is learning the skills that it takes to compete in today's market. Because you know, what worked five, six years ago, isn't working today. I mean, really, what worked six months ago or yesterday isn't necessarily working today, because the markets evolving so quickly. And then three, we tried to get all of our agents, at least comfortable with investors and starting to look at that model. Because we believe that, you know, working with investors, they can keep you fed when the markets slow, right. So if we end up with a turn down, be in our downturn, and the market slows and shifts, investors are going to be there ready to go, they're going to be ready to spend money, they're ready going to be ready to shop when things are on sale. Even if the market is hot, things still slow down during the holidays, you know, kind of that Thanksgiving to New Year's timeframe. As markets are slowing down. Investors are starting to heat up because again, there's less competition, so they think they can find some deals. And then potentially, those are the times where they're finding out that like, Oh, hey, I made too much money this year, I need a couple of quick write offs at the end of the year. And so they'll come through and they want to buy something before December 31. And they're usually quick, easy hits. They're smaller deals, but they're quick, and they're easy, they're less emotional. And so those types of things they can, they can keep you fed when the market slows down. And then it just gives you a different skill set that most agents aren't paying attention to that they're so afraid of the process, that they're not out there working investors, so it just sets you apart from 95% of your competition that's out there. It's I don't know what it's like in your market. But our agent count has nearly doubled in our market in the last three to five years. Because the market's been so hot. And so now it's like the pie has gotten a little bigger, but not proportionate to the number of agents that we've gotten. So we're having to work harder. So we need those additional skill sets to set us apart.

Rory Gill:

No, I mean, I completely agree. I mean, with the DISC personality profiles, there are successful and unsuccessful agents across all the different categories. The key is making sure that what they have in mind for the business fits their personality. So teach agents that they should always have at least two to three different lead channels that they're using to gain clients. One of which is just about always sort of sphere of influence, knowing how to work your sphere of influence for every single agent. But the other two needs to be something that fit your personality profile. If you are afraid to pick up the phone, then you shouldn't put into your business plan cold calling at all. If you don't like having to respond instantly, then perhaps doing online leads isn't something that's great for you. But you can always come up with something that fits your personality profile, to grow from there. And if you do the work, you'll grow. Second thing I heard in there and I love is working with investors now making sure that that's, you know, part of everybody's plan in our market. Even before the growth in the number of real estate agents there were just a lot of real estate agents out there didn't know the basics, couldn't speak The language of investors at all. So it's a really easy way to differentiate yourself, if you could point to more potential in the property than just the the nice countertops and appliances, if you could actually talk about the numbers intelligently that would set you apart from from a ton of people. And lastly, we have seen up here certainly a boom in the number of agents that are out there in the market. In the past few years, we've had, I think it's instilled a lot of bad habits with a lot of agents because I think it's relatively easy. And I think that's going to be create an opportunity for the agents who are willing to and have built the good habits in the past couple of years to actually thrive in the market if it does slow down. We can kind of go on to the next set of questions about what the markets going to look like in the future. But if we rewind back and listen to lots of things in the past, I'm sure I've been wrong with a ton of my predictions of where the markets going.

Luke Andrews:

You and me both, brother.

Jason Muth:

Can I ask one question, before we get into that? How important, Luke, do you think is social media and having a presence and active presence to a successful agent? And it's a bit of a leading question, because you know, we're on it a lot. So I see a lot of agents that are on social doing reels and talking about themselves and giving good opportunities to educate folks. But is that necessary? Like, do you have some really successful agents that have not embraced jumping in every social media video that they post?

Luke Andrews:

Yes. And yes, I think that it is very important. That said, I am absolutely terrible at it. I have had a number of agents, including myself, who have been very successful without really riding that social media train. But I also look back and think that there were probably a lot of opportunities missed and left some money and some transactions on the table because I wasn't as active as I needed to be. And part of that, for the longest time is just an insecurity of people don't want to hear from me any more than they need to that I don't want to bombard their feeds, or their email accounts, or whatever, with my latest and greatest at the house that I just sold. But there's also this fear of why they might want to listen to me, I don't have anything interesting to say, unless you're actually in the process of buying or selling a house. And both of those things just aren't true. I think what I found with myself and with my agents who have given me, you know, similar objections is, it's a cop out, it's an easy way, you know, because I'm afraid to get on they're too lazy to get on there. It's an easy way to say, Oh, I don't want to bombard them with that they don't want to hear from me. Well, that's it's just not true. If people didn't want to hear about real estate, even when they're not in the process of buying or selling shows like Million Dollar Listing, and House Hunters and all that they wouldn't be popular. Real estate is a very voyeuristic niche in our society. And people just love looking at houses, they love seeing things, they love hearing about the real estate market, they're all super interested in it. And we have an opportunity, because there are so many agents that have come into the market, like you talked about Rory that there's a lot of bad information out there. There's a lot of bad agents that are out there. And so we need to take it upon ourselves to make sure that we're giving good quality solid information out there to people that actually want it and need it. And not setting unrealistic expectations, or not just giving them a bunch of fluff, we need to make sure that we're giving them the real hard facts.

Rory Gill:

That's all great. And I think, you know, social media itself is often confused as a marketing strategy. The way I see it, it's it's not you know, working as your sphere of influence as a marketing strategy, and perhaps social media as a tactic to get into that to, you know, remind people that you you do this, and that you are professional at what you do. So that's the marketing strategy and the social media as a tool. If you're trying to work with first time homebuyers to give them confidence enough to you know, pull the trigger and use you as a resource, then you need to demonstrate that you are the resource. So that's the strategy and social media is just the tool that you can use to implement your marketing strategy.

Luke Andrews:

100%

Jason Muth:

Before we get to the final questions, let's talk about the back half of the year. We're recording this in 2022. And we've been through a lot of ups and downs in the market so far. So what are you seeing trend wise, Luke, whether it's, you know, prices or number of buyers, or what people are looking for, or inventory or anything, like just kind of, you know, what's your, what's your pulse on the market now?

Luke Andrews:

Sure, from a true market perspective for buyers and sellers, I see the market softening a little bit, you know, I'm seeing, you know, where a house may have sold in two days with 15 offers is maybe now selling in seven to 10 with two offers, which is still a very competitive environment, but it's definitely softening and we can we can see that moving in the right direction and probably in the direction that that we need it to go in right to have a little bit more of a balanced market. From an agent perspective. I see lead generation changing significantly. I think people need to put a strong focus for it like you talked about on sphere of influence. And one thing that I'm I'm going through what I'm trying to tell my agents it's about the sphere of influence math, right, and how that works. Because I see a lot of them doing math, but I think they're doing the wrong math. You know, what I've heard in the past. And what we've been able to kind of flesh out over the years is if you take the size of your sphere of your of influence, roughly 10% of that you should get back in number of transactions each year. So easy math, if you've got 100 people, you should get roughly 10 transactions each year on average. So if I know that's the case, and then there's no point of diminishing returns in sight, I should be wanting to grow my sphere as much as possible, which means I need to be actively involved and engaged. Now, we may see some changes and shifts because where in the past, everybody knew two to three real estate agents. Now everybody knows seven, right? So we need to make sure that we're staying engaged but we're also growing that sphere. And so I'm telling my agents referral fee leads are a big topic of conversation right now. Zillow Flex kind of seems to be the big one, but I'm also seeing we've been asked to pilot a lot of new lead sources, good solid lead sources in our market and they're all in this referral fee model. And you know, Zillow, love them, hate them, the Zillow Flex referral fee love it or hate it, whatever it is, that's where the market is trending. So we at least have to look at it and examine it. But I had an agent who came to me and said, Well, I got this Zillow Flex lead for $400,000. $400,000 buyer, and they want to take a 35% referral fee, I will tell you in my market $400,000 is a is a great buyer, our average price point is about $250. So $400 is of for you all that may be slumlord material. But for us, slumlord, they were doing the math and saying okay, well, they're going to take 35%. And here's what my commission would be. And then here's what I ended up with. And I said, Okay, that's like, forget that. I've got a $260,000 buyer over here, no referral fee attached, do you, would you rather have that? And they said, Hell yeah, I'll take those. Give me Give me those all day long. And I said, Okay, I said, I see you're doing the math, but you're doing the wrong math. So did you realize that that $400,000 Zillow Flex buyer, you're gonna get the same commission is this $260,000 buyer without without a referral fee. The only difference is, is that in 3-5-7 years, when they go to sell, instead of selling a $400,000 house and helping them upgrade to a $700,000, you're selling a $260 and helping them upgrade to a $400. And if numbers prove out, and we are the average of the five people that we hang around with, you know, $400,000 buyers hanging out with other $400,000 buyers, that's where your referrals are going to come from. $260,000 buyers hanging out with other $260,000 buyers, those are the referrals that you're going to get, what do you want out of that. So going back to the sphere of influence side of it, and how we grow that I'm telling agents to embrace these referral fee models, because these are inexpensive ways for us to be able to get into higher price points. And especially if you were a new agent, where the old old model of I pay lead source $3,000 a month and they give me a certain number of leads, whether I close zero or whether I close 10, that $3,000 a month is going out either way, it's a good way for new agents to go broke. This way you at least know you're not paying anything until you actually get paid yourself. And you're continuously growing your sphere and the process, because when they do go to buy or sell in 3-5-7 years, there's no referral fee attached to that.

Jason Muth:

That is an amazing analysis. Also, and I couldn't agree more, you know, I've always heard, you know, I know your price points a lot different from the northeast. But yeah, the numbers accelerate higher, when they're bigger, you know, and the commission's are higher when the numbers are bigger. So it's not easy to get those million dollar deals. But you know, you take a million dollar deal with a referral fee versus $600,000 deal without one and using your logic of playing the long game. It makes all the sense in the world to to take that. People just have to get used to the referral fees. You know, I mean, this is this is kind of how marketing works. I mean, you worked in Corporate America also, before this, and I don't know if you've worked in pay-per-lead models or acquisition, or pay-per acquisition models, but you know, a lot of times, businesses will pay a certain amount - contractors will like off of, you know, some of the online lead sources, you know, a contractor might have to contact 30 people for they get a deal. And they paid for each of those leads, and have to factor that into their calculation. And they have a hard time understanding that where they'll say, whoa, I'm paying for all these leads. I'm not getting business out of it. But no, no, you have to think about how what your conversion rate is, what your overall lead cost is. And if that is favorable to to that lead source, then continue with it. And if it's not, then you need to, like you know, cut it loose.

Luke Andrews:

Yeah, it's acquisition cost versus lifetime value, right. You just got to see where those numbers come in. And if you're making money on that, again, it comes back to I'll take all those that I can. Yeah.

Rory Gill:

And from the perspective of a team lead trying to retain agents. These programs allow something nice quick victories for that there's newer agents so that they can, you know, gain traction and grow their business, but so they can feel accomplished and not be a flight risk that first year, not a lot of agents stick it out.

Jason Muth:

Well look, why don't we get to our final questions, then you could tell everyone where they can get a hold of you if they want to reach out because you know, you're a wealth of information. I know, you do a lot of coaching as well, you lead a team, you have investments yourself, you know, I think we've only scratched the surface in what value you could add. And you know, you've you've written books and whatnot, you can read for free. So we should all be so lucky that this information is being imparted upon us at no cost. But you know, thank you for all that. Here's the first of the final three questions, we ask these of all of our guests in the podcast, just to kind of get to know you a little bit better. First one is if you can get on stage for half hour and talk any subject in the world with zero preparation, what would that be

Luke Andrews:

Effective communication. I feel like our society is moving to a spot now to where everything is text and email and emojis and everything else. And I feel like we've lost the ability to actually have a real life conversation, I think so much gets lost in the text piece of it. I will talk teach preach whatever you want to call it on effective communication as much as possible, because it's this effective communication leads to more confidence, which leads to improved relationships, which ultimately, at the end of the day, when we're in business, it leads to more money in our pockets, which is why we get up and go to work every day. But it's effective communication is something that I'm super passionate about.

Jason Muth:

You're turning 40. So I think you're you're an older millennial or younger Gen X.

Luke Andrews:

Depending on which Google cite, you look at I am, I am one of both or some new term called Xenial. I'm a little bit of a hybrid, you know, kind of grew up early on without the technology, but then, you know, started adopting it through high

Jason Muth:

You know, I, I'm Gen X, like, right, tried and true. school. About seven years older than you, I see this communication that you've described, as I see it as generational, you know, the pandemic certainly didn't help a lot of people coming out of college in their early 20s, right now who don't understand office environments, and how to communicate with people, not through a zoom screen as we record this via zoom, you know, and I've seen some people that want to be in office environments, because they didn't get that, you know, they graduated college, and they're working in their bedroom. I mean, how fun is that right? It's not. A second question is tell somebody happened early on in your life or career that impacts the way that you're working today.

Luke Andrews:

I had to speak on this recently, and it was was very, very relevant. Because this actually happened to my son at the same time in his life, I very distinctly remember, I was in sixth grade, and I had to give up and give a presentation on an individual. And I gave a presentation on Michael Jordan. And Michael Jordan, I mean, especially the age I am, where I grew up, everything is I could have talked about him all day long. And so I decided, I'm just gonna wing it, I'm just gonna get up there. And I stood up, and I completely froze. And it was the first time that I can ever remember, like, I thought something was wrong with me, because like, my face got super hot, like cheeks getting flushed and things like that. It felt like somebody was shining a lamp on me. And I thought there might be a problem. And even somebody in the class just looked at me right in the eyes and whispered, you are such an idiot. It had this massive effect on me and my teacher pulled me aside, like, she made me stand up there for quite a while and embarrass myself and then said, you're going to redo this project. And then you are going to present again to the class, but I'm going to wait several days after everybody else is done. So that you have a reminder that, you know, everybody else has already moved past this, and you're still working through it. Harsh. I don't think any teacher could get away with that today. But what it taught me was to never be unprepared, again, to never go into something saying oh, I can just I can wing this. I know everything about it. I'm good. I am. I tried to be over prepared and everything that I've done. And I said it kind of goes back

Jason Muth:

It shows especially when you're being compared to to my son, who's in sixth grade, just finished up sixth grade, had to do a project and wasn't as prepared as he needed to be and got up and had a very similar floundering situation and had to go back and redo the presentation in front of the class. And so I was able to share that story with him like, Hey, you're not alone. But you need to take this and understand and learn. Like, it doesn't matter what the project is, or how well you think you know, the material you need to be prepared, in everything that you're doing. peers, you know, if you had other classmates that were giving a similar presentation, and they did their homework, literally their homework on it. Yeah. And then you got up and didn't do it. You know, now you're saying, Well, I thought I knew the subject. I just didn't prepare my argument or my presentation all that well. And that becomes apparent. Amazing lesson to take, you know, preparation, you know, take couple minutes to like, figure out what the situation is like, even if you're running between meetings, you know, figure out what meeting you're about to get into and what are the talking points, who are you talking to? What do you want to convey? You know, it doesn't have to be, you know, eight hours or even eight days of preparation. It could just be a quick preparation. If that's all you have, you know, don't just turn the camera on and start talking or don't just like walk into the middle and be like, alright, what are you talking about here today? Yeah, that's great advice. Final question we have for you is tell us something that you're listening to watching or reading these days,

Luke Andrews:

Probably not going to be super exciting or helpful for anybody else. But I am - it drives my wife crazy, but I can find the same stupid comedy. And I can just I can watch it over and over again. So like The Office, Friends, Parks and Rec, Modern Family, things like that, I will just I'll go over and over again. But there is currently a podcast called Parks and Recollection with Rob Lowe, and then one of the producers from Parks and Rec producers and writers, Alan Yang. And they just go through and they just talk about each episode. And some of the behind the scenes stuff and things they remember about the show. And so I just, every Tuesday, when that comes out, I'm excited about listening to the podcast episode, hearing some cool things about it, and then going back and rewatching that episode, just to see oh, hey, here's what they were talking about. There's what they're talking about, it's a good way for me to just kind of unplug and unwind at the end of the day, and just have some nothing more than just nonsense, turn my brain off.

Jason Muth:

All those shows that you mentioned, great sitcoms, that you could do exactly just that. Like you don't have to follow along, you could jump into any episode and kind of get what's happening with the characters. You know, I think Family Guy mastered that, you know, they were on, God they've been on for decades, and then they're off the air for a little bit and they came back with a vengeance. And you could just jump into any family guy or Simpsons episode and you know exactly what you're gonna get. Think about nothing for half an hour, you've taken a little bit deeper, like, you know, you are getting the behind the scenes with those episodes, because you're clearly a Parks and Rec fan. But we're there. I mean, like, you know, we have a toddler right now, and sometimes she's not asleep till 10. And then, you know, what do I want to do? Like, turn on some serialized show that we have no, I'm gonna fall asleep in 15 minutes anyway. So you know, it's either watch the bad news, whatever your source, or watch a sitcom that's just totally innocuous. So that's great advice. All right! Well, Luke, tell us where we could find you. We're gonna put all this stuff in the show notes, all your websites and social media and what have you. But if people want to get a hold of you, how can they find you?

Luke Andrews:

Easiest way? I mean, you can they can email me directly, luke@lukeandrews.us. I answer all my own emails. I don't I don't have my my VAs working on that for me. So if somebody has a direct question, they're welcome to reach out anytime. I know, you talked about the coaching and mentoring I do. I don't, I don't formalize my coaching. So I'm not I'm not charging for any of that. I do have courses that I sell. But it's from a coaching perspective. I'm happy to answer any questions that anybody has. If you go to my website, lukeandrews.us. You can connect with me on social channels or things there. Or if anybody's interested in the free real estate investing book that I talked about, it's 10investormistakes.com And the number 10. They can go download that book for free.

Jason Muth:

And if you're looking for a new agency in how do you say it Louisville?

Luke Andrews:

That's it. That's perfect. Louisville, Kentucky.

Jason Muth:

Reached out to Luke, you are with

Luke Andrews:

RE/MAX Premier Properties

Jason Muth:

RE/MAX Premier Properties. Rory, where can people find you?

Rory Gill:

You can find me through my real estate brokerage. NextHome Titletown nexthometitletown.com - or my law practice UrbanVillage Legal - urbanvillagelegal.com

Jason Muth:

Yes, both in Boston. If you're in the Boston area pop by we're right downtown Boston in South Boston, also known as Southie. I am Jason Muth, you can reach me at jason@nexthometitletown.com. If you have comments or questions about the podcast if you'd like to be a guest on the podcast, shoot me a message or reach out to us on social media. If you've enjoyed this and want to leave us a comment or rating we really appreciate that it's really helps the podcast get heard by more and more people. So Luke, thank you. We really appreciate your time today. This has been a blast. It's been an excellent discussion. I can't wait to to circle back with you in a couple of months and figure out how things have been going on the back half this year. And into next though, on behalf of Luke and Rory and myself, thank you very much for listening to The Real Estate Law Podcast. We'll see you later.

Announcer:

This has been The Real Estate Law Podcast because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom argument. We're powered by NextHome Titletown Real Estate are Boston's progressive real estate brokerage. More at nexthometitletown.com and UrbanVillage. Legal, Massachusetts real estate Council serving savvy property owners lenders and investors more at Urbanillagelegal.com. Today's conversation was not legal advice, but we hope you found it entertaining and informative. Discover more at the real estate law podcast.com Thank you for listening