About a year ago, I got connected with a guy named Brian Ellwood.
When we first started talking, I learned about how his real estate business was throwing off some serious passive income – mainly because of his ability to find and hire talented individuals to RUN his business, so he could focus on GROWING his business.
Finding and hiring great talent is something many of us struggle with, so I was seriously intrigued to learn about the systems, tactics and processes he was using to find the right people and put them to work in his company.
In less than 30 minutes on the phone, he taught me some powerful new lessons and ideas that could be applied to my business. I was impressed with what he had to say, so I invited him to write a guest article explaining the process he uses to remove himself from the busywork and find other capable individuals to handle these important (but time-consuming) tasks for him.
As you'll see below, the information he put together is detailed, actionable and easy to understand. If this is something that interests you, I think you'll get a lot out of it!
Do you HATE wasting your time with tasks like…
- Answering the phone
- Talking to sellers
- Going on appointments
- Making offers
- Following up
Have you been taught that you HAVE to do these things to be successful as a real estate investor?
If so, I’m here with some good news. That advice is FLAT WRONG.
Okay… let me take a step back.
You do need to have those things happening inside of your business, but you personally shouldn’t be laying a finger on it.
This is the single biggest mistake I see in most real estate investing businesses. If your hands are too tied up with your business, you’re limiting your impact and income in a big way.
My name is Brian Ellwood.
I own a fix and flip business and a rental portfolio based in Tennessee. We currently do about 70 deals per year and own a few dozen rentals. We’ve broken 7 figures for the last 4 years running.
The best part? I haven’t talked to a seller OR looked at a deal in years.
In regards to those accomplishments, I give almost ALL the credit to the fact that we made one critical hire, our Acquisitions Manager (referred to as the “AM”). In fact, we’ve had as many as three Acquisition Managers working for our company at one time.
There’s a LOT that goes into hiring, training, and managing an AM the right way, much more than I could ever cover in a single article – so consider this your “Quick Start Guide”.
Before we dive into the how-to, allow me to explain why you should even care about this topic. Once I’m done, I can almost guarantee you'll want to make this hire ASAP.
To accomplish this, I’ll need to throw in a little backstory. Here goes…
Part 1: My Story
When I first started out in real estate, I was broke. I was a one man show, driving around to get addresses of ugly houses, writing letters, taking calls, going on appointments, following up. I wanted so badly to be successful as an entrepreneur, but I was terrified of all the stuff I had to do to make that happen!
The scariest part for me? Talking to sellers! Man, I hated it so much I actually cringed when the phone would ring.
Before I made my daily round of phone calls, I used to put on a full pinstripe suit and tie, with dress shoes. I would pace around my house and listen for the click of my dress shoes on the wooden floors. Somehow that powerful “click” sound gave me a little boost of confidence. I also drank TONS of coffee so I’d be amped up enough to (just barely) get over my fears. Those were very uncomfortable times.
This went on for a couple of years. At one point I met a rockstar guy who was just getting into RE and we partnered up 50/50. We were busy as ever. We did every part of the business ourselves. Answering the phone, going on appointments, following up, working with the title company, managing renovations, checking the mailbox and paying the bills. It was insane! There simply wasn't enough time in the day for us to grow our business. We plateaued at around 300K in revenue for 2 years straight.
We eventually decided to get some help. We hired an amazing coach by the name of Joe McCall. He took one look at our business and quickly said:
“Guys, you need to hire an acquisition manager!”
At first, we were resistant to his advice. Getting contracts signed was the most important part of our business. Why did he think we should find some new person and let them do it?
But, we decided to give it a shot. We had no idea about hiring funnels, personality tests, creating contests for your applicants, proper interview techniques, how to train, onboard, or manage an AM. The best we could do was wing it.
We happened to get lucky and hired a really good AM… but I'm writing this post so that you don’t have to rely on luck!
We didn’t really train our AM. We went on a couple of appointments with him and then we just threw him to the wolves. Now he was officially in-between us and all of the sellers. We had someone answering all of our phone calls live, going on appointments, making offers, and following up, all day every day.
The result? In the next 11 months, our Acquisitions Manager took our yearly revenue from 300K to over 1 million. And we’ve never looked back.
If I had to do it all over again, I would have hired an AM right off the bat, so I could have skipped that stage all together. If you’re in this phase or about to be in it, you’ve come across this at the perfect time.
Make sure you heard me: If you do not want to talk to sellers, go on appointments, get contracts signed, and follow-up – you don’t have to, but you DO have to hire the right person to do it for you.
Even if you are awesome at sales and want to do it yourself, there’s still a really big problem with that. Someone has to drive leads to the AM to keep them busy. Marketing is a full-time job in itself and if you can’t afford to hire someone to do this, then it’s your responsibility.
Plus, I bet you aren’t going on appointments all week long. An AM should attend 10-12 appointments every week, no matter what. That’s 2-3 per day! The role of an AM, when done properly, is a 40 hour work week, easy.
You can’t beat a guy who is going on 12 appointments per week and following up diligently if you’re only going on 2-3 and not following up like you should. Your rep, even if they are only 60% as good as you at sales, will outperform you 3 to 1 simply due to the sheer volume of activity they are generating.
This is the single reason why our first AM tripled our business even though he wasn’t as good of a salesman as we were. (Note: After he got trained, he became better than us over time)
The best part about hiring an AM is that it creates so much time that you can then apply towards growing your business. Ever read The E-Myth Revisited by Michael Gerber? Do you remember what his main advice in the book is?
The business owner should spend as much time as possible working ON the business and as little time as possible working IN the business. That’s how a business develops. That’s how you can grow to 7 figures in revenue and beyond, while having a team that does every part of the job FOR YOU. That’s how you create a business that is automated, one that generates income for you whether you work or not. Is that something you want?
If you’ve never hired an Acquisition Manager (or any employee) before, then this is a perfect opportunity to learn and grow.
One AM won’t run your whole business for you, but aside from the benefits I’ve already described, there’s one more.
Making this hire will change your mindset. You’ll shift from being less “self-employed” to more of a “business owner”. Once you learn how powerful it is to leverage other people and how to do it, you’ll NEVER want to go back to doing the work yourself. And if you do it correctly, you’ll never have to.
If by now you aren’t sold on the impact this hire would have on your business, then you might as well stop reading. There’s probably some phone calls you’ve got to return anyways. If you are ready to take the plunge, let’s dive into the nitty gritty on what you need to do to make this a reality.
Part 2: The Best Job Posting in the World
Below is the exact job posting we use as a free resource here. Read it before you continue. Otherwise the next section “Automated Hiring Funnel” won’t make sense.
Acquisition Manager Sample Job Posting
Work From Home – Set Your Own Hours – Make 50K+++
(Your Company) is looking to hire and train a hungry, self-motivated outside sales person to join our company.
At (Your Company), you can:
Make 50K ++ your first year
Work from home/coffee shops/wherever
Set your own hours
Be part of an energized, hungry, growing team
Join our book club
Go out for beers with the team after a productive week
Go on snowboarding trips with the team
Be coached towards developing yourself personally, professionally, and financially Be your own entrepreneur within our business
Feel like you have a sense of ownership
Get amazing sales training
Make some damn good friends
At (Your Company), you will:
Call sellers about their properties Negotiate
Go on appointments
Be challenged to reach your goals
Be challenged to grow and think outside the box
Be asked for your opinion on how the business can grow
At (Your Company), you must:
Be a team player
Be a self-starter
Be the kind of person we’d want to hang out with
Be willing to learn
Be willing to examine your strengths and weaknesses Be committed to the growth of yourself and the company
If we sound like a good fit for you, please follow the directions below – explicitly! Candidates who don’t complete all three steps will not be considered.
1) Reply to this posting with your resume attached.
2) Complete this survey (copy and paste into browser): www.yoursurveymonkeylink.com
3) Make a video of yourself (No longer than 5 minutes) telling us a little about you and why you think you are a good fit for the job. Post the video on YouTube or elsewhere and send us a link to it. If you use YouTube, make sure the video is “unlisted” or “public” so that we can see it. We won’t be able to watch a video marked “private”.
Your Company Name www.yourcompanywebsite.com
Note: All candidates are required to pass a background check before being hired.
Part 3: Build Your Automated Hiring Funnel
So you’ve run the ad and people are applying.
What I’m about to share will save you TONS of time in this phase. You can expect to get 50-100 applicants from a well-written job posting. That’s a LOT. You don’t want to look through all those resumes. Nor will they tell you that much. That’s why your job posting contains a “funnel”.
Like the sample job posting above, your job posting should ask applicants to complete the following steps:
Step 1: Reply to the job posting by email with their resume attached.
You want them to do this but you don’t need to read any of the resumes yet. In fact, you’ll look at only a few of them, later.
PRO TIP: Create a separate email address for the job posting replies to go to, so these emails don’t get mixed up with your personal or work email. There’s way too many of them and it's much cleaner to keep it separate.
Step 2: Click on the link provided and fill out the survey (through Survey Monkey).
You’ll need to create a survey inside Survey Monkey and then post a link to it in your job ad. Come up with 5 to 10 questions that you’d like them to answer. The survey questions aren’t super important at this stage, but they can be helpful. The larger purpose of the survey (and this funnel) is to find out if they are serious about the job and if they can follow directions.
Step 3: Record a short video (5 minutes or less) introducing themselves and explaining why they think they would be a good fit for the job.
This is the secret: Out of every 100 applicants, only 3-5 of them will actually send in videos. The job posting clearly states that you have to complete all 3 steps to be considered, but 95% of applicants didn’t read that far down, or ignored it. So now you get to ignore them.
Now, instead of combing through 100 boring resumes, you get to watch 3-5 short videos where you can actually see and hear the people you might be hiring. You can then go into your email and review the resumes for ONLY those that submitted videos.
All those other resumes? Forget about them. Those people can’t follow instructions.
I love the videos because I operate largely on intuition and I believe I can get a good feel for someone’s attitude, energy, personality, and motivation when I watch their video. Sometimes I know within 30 seconds whether or not someone is going to be a good fit.
So, if I need to hire a new sales rep, here’s what the process looks like:
- Ask the office manager to post the ad
- Wait a couple of weeks, receive around 5 videos (and 100 resumes, 95 of which I ignore).
- Watch the videos and schedule 2 – 4 phone interviews
- Conduct phone interviews
- Schedule 2 – 3 in-person interviews
- Hire someone (if I find the right person)
Bottom Line: The funnel is a beautiful way to skip RIGHT to the people who are more likely to be a good fit for this role.
Part 4: How to Pay Your AM
I’ve seen probably a hundred real estate investing businesses at this point. The way they pay their acquisition managers varies. What I’ll give you here is what we do, and what I think the industry average is.
Most businesses pay their acquisition managers somewhere from 8-20% commission on the gross profit. That means if you grossed 30K profit on a flip, and the AM was paid 10% commission, he or she would take home $3,000. To tighten up that range a bit, I’d say 10-15% is probably the sweet spot. How much you want to give is up to you.
You can also play with the idea of paying them a flat fee per deal, plus bonuses if they are able to negotiate deep discounts on the properties.
For example, you could pay your AM $1,000 per closed deal plus an additional $500 for every 10K they negotiate off of your MAO (Max Allowable Offer). So if you send them on the appointment saying “The most we can pay for this is 70K” and they bring it back for 50K, they just earned an extra $1,000.
In our company, we’ve paid AM’s anywhere from 8 – 15%. We increase their percentage a couple of points if they have to do the Transaction Coordination (coordinating the closing between the title company and seller), because that’s more work for them and it saves us money by not having to pay someone else to do it.
One mistake we made in the past was starting too high in the beginning.
We offered our first AM 15%. Later, we really needed to move him down to 10% to make our numbers work. That was an awkward conversation. I can tell you that it’s much easier to go UP than it is to go down. Start low and you can increase their pay later. Follow the principle of under-promise and over-deliver.
Another important variable is draw.
If you don’t know what draw is, it’s money you pay an employee that they have to pay you back out of their future commissions. Many commission-only sales jobs come with draw for the first 30-90 days. This is because it takes a while for sales reps to get deals in the pipeline and start earning commissions.
For example, you might decide to pay your AM $400 in draw per week for the first 60 days. By the end of that, they're going to owe you $3,200 if they haven't generated any closings during that time. If a deal closes the following month that the AM was set to make $2,500 on, they will make nothing, and the draw owed will be reduced to $700.
One important thing to NOT screw up: don’t ever pay any employee draw for more than 90 days. Commissioned employees must earn their keep. If you pay draw for too long you take the pressure off them to earn. If your AM isn’t filling the pipeline within 90 days, there’s a bigger problem somewhere and you’ve got to find it.
If someone quits or gets fired while still owing you draw, just write off the loss and move on. This is another reason to cap the period during which an employee can receive draw (to 90 days or less). It limits your exposure.
Ultimately, you'll need to run your numbers and come up with the best pay structure for your situation. Settle on something you feel comfortable with and good about.
I know some of you are cringing at the thought of giving up 10% of your profit to someone else.
Consider this scenario:
Let’s say your business is doing 400K per year, with an average deal size of 20K. That’s 20 deals a year.
If your AM came to work for you (at 10% commission) and didn’t increase your revenue at all (which would be an epic failure), he’d take 40K of your revenue and you’d keep 360K.
If he only brought in a mere 2 extra deals beyond what you were already bringing in over the entire year , you’d be a 440K. He’d earn 10% of that (44K) leaving you with 396K for the year (and that’s almost exactly where you were before you hired the AM).
So 2 extra deals per year is the “break even” point in this scenario. Anything beyond that is more money than you would have made. If your AM isn’t bringing in an extra 2 deals per year, something has gone horribly wrong. Plus, we haven't even discussed the power of you getting your time back to work on marketing, strategy, etc.
Part 5: Become a Rockstar Sales Manager
So once you’re not the AM anymore, how should you spend your new free time? Can you just kick your feet up and expect results?
You now have a new role. You are your company’s “Sales Manager”. Even if you only have one rep to manage, you must give yourself that title, officially and publicly to the company.
There’s SO MUCH that goes into being great at sales. Many books and courses exist on this topic. You AND your AM will need to devour them if you really want to skyrocket to the next level. I’ll leave you with this to illustrate the power of increasing your ability to sell…
Imagine this scenario: You generate enough leads for your AM to schedule about 6 appointments per week. Your AM is converting about 1 in 6 to contracts, so you’re getting about 1 contract per week, or 4 per month. You wish you had more money for marketing, but you don’t. 6 appointments is the most you’re able to schedule for the time being.
You add powerful sales techniques like Advance Agreements, “Going for the No”, and other elements that make up your Sales Process. You apply things you learned from the great sales books. These things add up, and instead of closing 1 in 6 customers, your AM starts bringing back 2 signed contracts for every 6 appointments.
What does that mean for you?
It means you DOUBLED YOUR BUSINESS.
Notice that you didn’t need to spend any additional money on marketing, analyze any additional leads or go on any additional appointments. All you had to do was increase your conversion rate.
This is the kind of impact that sales training will have on your bottom line. It’s the easiest money you can make. Learn to negotiate and everything in your business will get much better.
There is a lot that goes into making this powerful change inside your business. It won’t all happen overnight. You have to stay committed to the process if you want to see real change. You’ve got to commit to being a better leader, manager, and sales coach. You’ll eventually need to treat ALL hires the same way you did this one. Find the bottlenecks in your business and “Fire Yourself” from those positions, once and for all!
If you want a deep dive on how to hire, train, and leverage an AM to explode your revenue and get back your free time, grab your FREE COPY of my new book at:
Thanks for reading! See you on the other side 🙂
Brian Ellwood spent most of his childhood growing up near Nashville, Tennessee. After graduating from the University of Tennessee and spending a total of 15 years in dead-end jobs, Brian turned to real estate. He started his first real estate investing business in 2011. Brian’s company now does over 70 fix n’ flips per year in Middle Tennessee and owns a portfolio of rental properties. Brian lives in Denver and manages his team and his projects virtually. Brian is also a real estate investing coach, teaching others how to build virtual real estate businesses in any market and create a portfolio of low-risk rental properties that generate passive income.