Speaker 1 (00:00): After figuring out ways to deliver wow client experiences after pioneering a new business model against the current, after connecting with the right business partners and masterminds, and after becoming number one in California and number three in the nation, Sam Ian of Big Block LPT Realty joins us to share insights from his journey. Watch or listen in particular for the rollup strategy for businesses beyond the three most common ancillaries, mortgage, title, and insurance. Sam breaks down the process for acquiring businesses without putting up any of your own cash upfront. The value of real estate teams versus the value of brokerages and ways to increase the value of your real estate business. There's a lot to learn with Sam Ian right now on real estate team os, Speaker 2 (00:46): No matter where your business is today or where you want to take it, you'll get there faster and more profitably with an operating system. Welcome to Team Os, your guide to starting, growing and optimizing real estate team. Here's your host, Ethan Butte. Speaker 1 (01:00): Sam, I am excited to get some insights into the company. That was number one in volume and sides last year in California, probably several years. I'm not sure. Welcome to Real estate team os. Speaker 3 (01:12): Oh, thank you so much for having me here. I'm a big fan of what you do and excited and honored to be here as a guest. Speaker 1 (01:21): Cool. I appreciate your time very much. We always start with the same question, Sam, which is what is a must have characteristic of a high performing team? Speaker 3 (01:29): A leader that has pigheaded determination, pigheaded enough to do the hard things instead of the easy things, pigheaded enough to invest in their team's development pigheaded enough to be grateful but not satisfied. I think that's a big component of it. At the end of the day, the entire business comes down to performance. How is everyone performing? Are we maximizing our conversion rates? Are we at the same time creating the most profitability that we can inside of the lanes that we're driving in? And I think that all of that is just, it's discipline, it's pigheaded determination. It's the thought process that I'm going to do what others won't because this is where my competition stops. And if we can focus on that and just do the hard things, then luck follows motion. Speaker 1 (02:35): I love it. By the way, pigheaded is just a fun thing. I'm glad you said it so many times because it creates a really clear kind of feeling more than anything else. You mentioned what others won't. Very, very specific question here. So I checked out the core values on the website, the big block website, and I noticed that it was creating, wow experience was on there for you and wow was capitalized. Is that what others won't or is that just coincidence? Because when I think wow experiences, I think doing what others won't, Speaker 3 (03:07): No, but I like that I might borrow that. For us, a wow experience is creating experience for our customers, be it our agents or the clients buying and selling real estate that is worthy of remark, right? It's like, wow, that's outside of the norm. And for us, I've always taken the thaw process that when we're selling real estate, building a team, building a brokerage, everybody has splits, everybody has leads, everybody has tech stack. That's just a prerequisite. What is it that we can do that sets us apart in our own fashion, in our own light? And for me it's always been customer service. I'm a big fan of Ritz Carlton and every time I stay at a Ritz, I love it. At the same time I ask myself, why am I spending $900 a night instead of $300 a night? The beds are mostly the same, the pillows are mostly the same, the property's nicer, but it's the experience that they create and it's the fact that everybody is focused on creating that wow customer experience for their guests. Speaker 3 (04:29): So there's a great book that we read early on that was kind of one of the key pillars of how we've ran our companies, which is the book is called The New Gold Standard and it's about the Ritz-Carlton experience. So for us, just really understanding that the most unquantifiable metric that you have for growth is creating experience that's worthy of remark, remarkable experience. And when you do that well then your customers, your clients, your agents, they become your marketing, they become your brand advocate. And I think that a lot of industries, including ours, that has been forgotten or it's never even really been paid attention to. So for us, it's all about creating that experience that makes people feel at home, makes them excited to talk to other people about us, and it also creates really strong retention. And Speaker 1 (05:49): Yeah, man, so much good stuff in there. I'm really glad I wasn't intending to ask that. And by the way, some of the ways you create that is by doing what others won't in this case, in the seat of an agent, on behalf of your client anticipating needs rather than waiting and reacting to demands and requests and such. I appreciate too your nod to the fact that you're creating something that is insanely valuable but cannot be quantified or measured. And I think that's one of the reasons that it's always been kind of a background thing. I talk with some people that just get it intuitively. They trust, they believe, they know that it's a thing and they invest real dollars in things that don't provide obvious or even measurable. But these are obvious returns, but they're not measurable returns. More people coming to you unsolicited and pre-sold because their best friend or their coworker or their aunt or uncle said, you have to work with her. She's freaking amazing. And that has value, especially in a world where we're buying leads and we're chasing leads and we're working. Like if someone comes pre-sold and without a dime spent, that was worth whatever investment in training or whatever anyway. Speaker 3 (06:55): And the thing is, Ethan, they come with less objections. They move quicker. You're collapsing time. Yes, that's unquantifiable because you can't measure it. You can't put it on a chart and say, if we just do this much customer service, it's going to yield this return. It's an impossible measure. But understanding that at the end of the day, it's what really drives people and leaning into providing that experience, it's a game changer. Speaker 1 (07:30): Give us the three minute-ish version. When did you start big block? It was kind of a pioneering model from a fees and commission standpoint. What was going on for you in your life at that time and how did you go from, I'm going to try this thing to being number one in one of the world's, I think top 10 economies, which is the state of California. Speaker 3 (07:57): Yeah, thank you. So I got into real estate in 2007 right before the crash. And that was one of the best things that ever happened to me because I learned how to do it when it was tough. And something that I say often is when you learn how to do it, when it's tough, then for the rest of your life, it's easy, right? Come 2009 ish, I turned into an investor. I was flipping properties, there was a lot of foreclosure, short sales, et cetera. And a big part of almost all of the business we were getting were through agents. It was referrals from agents. They could represent us on both sides, strong value prop. So I built a really strong relationship with a lot of agents. And then as the market started to correct, I was in a mastermind for real estate investing. A lot of the guys in the room were more advanced than me in terms of age and financially we flipped three, 400 homes. Speaker 3 (09:08): We were doing well, but the conversation really changed in the room from making spreads and flipping deals to reoccurring revenue by form of buying apartments and long-term holds. And that concept, I always knew about it, but it never really hit home. And I'm sitting there and I'm like, man, I like the idea of reoccurring revenue, residual income. And I just thought to myself, I'm like sitting there in the room, I'm like, given what I have, what can I do to create this inside of real estate college dropout? All I've done is real estate. I don't know anything else. So I thought to myself, man, I know a lot of agents, so I want to stay in real estate. I'd like to do something that's a little bit different. Speaker 3 (10:11): I like reoccurring income. And I was like, man, I bet you that if we started a brokerage and part of our value prop was agents can pay us $300 a month and have a hundred percent commission, I bet you we could get a few hundred agents to do that. And then it just started to snowball in the brain. And within two weeks I really went all in on launching big block, or we did. And it started in 2012. Our first year was really tough because we were the young guys doing something different. The competition didn't want us to win. I was coaching with Mike Ferry at the time directly, and he kept saying to me, he said, Sam, the competition won't allow it to go down the way that you want it to. And that really resonated with me. So I thought, okay, well then that just simply means I have to outwork them. I have to out call them, I have to outmarket them. I have to out event them, I have to out everything. So we went really hard and just built a very strong recruiting machine. At its peak, I had 10 to 12 people in a boiler room just dialing to recruit agents and they would have my calendar stacked. I mean from 9:00 AM to 5:00 PM the team was just, I was in back to backs. Speaker 1 (11:53): Who were you attracting? Who were the first a hundred agents? What type of agent was agreeing to this? I mean obviously it looks very inexpensive, but it's also new. So is this to be true kind of scenario, what types of people were maybe the first one or 200 that stayed? Who shared that vision early on and who stuck? Speaker 3 (12:14): I'll tell you in the beginning it was the average agent, right? They're doing a couple deals a year or maybe they weren't super well known. They didn't have a huge business. And then my business partner was friends with one of the biggest teams in San Diego with the team leader. She was unhappy at the office that she was at. And because of the relationship, she gave us a shot. And that was one of the handful of major pivotal moments for us because when Mary came over, all of a sudden the industry, meaning the agents started to pay attention. They're like, okay, Mary did this, this might be real. And then that combined with, I was like, okay, there's 300 agents at her office. Everyone knows that Mary left, and they're wondering why and where. So we just went full throttle prospecting to that roster. So once we got that team, then really we started to attract all different categories, if you will. But really what set us apart after Mary came over is we created an environment that didn't matter what you were in the industry, a solo agent, brand new agent, top producing solo or a team leader, we created an environment that would support your individual need. And for team leaders, it was the most amount of freedom we would recruit onto their team for them. For the solo agent. Speaker 1 (14:05): You amazing at that? Speaker 3 (14:07): Yeah. I mean we were already doing it right for the new agent. It was tons of training and coaching and we really tried to give them a million reasons to join and zero reasons to leave. And that was our motto is there was create a Ritz Carlton experience on a target budget, give them a million reasons to join and zero reasons to leave. And if we just focus on those two things, we can create something special. Speaker 1 (14:45): Very specific follow up here on behalf of listeners. I'm just imagining what can you do for a new brand new agent for 300 bucks a month? Was it just sheer volume that allowed you to provide massive support and coaching and training to get a new, because the new agent is like a lot of teams love it, but they've designed their whole thing around, I'm going to take 50% of every deal for the foreseeable future, and then they'll eventually graduate into something like a 70 30, et cetera, et cetera. And so I'm just thinking about the cashflow on new, is volume the answer here or what was the answer to being successful with new agents in that type of a model? Speaker 3 (15:29): It was all the above. Cashflow was really tough in the beginning because it's a volume play, right? I've coached a lot of people that wanted to start a hundred percent shops, and I always said, look, until you get past a couple hundred agents, it's just burning cash. It's tough. So I stayed in production. I was doing other things to help my personal living, but the answer was ultimately volume. We had to have lots of agents to make it work, but that was also the opportunity, right? The challenge is a brand new agent is forced to go and pay 50 50 and graduate to 70 30. So I saw that as an opportunity. How can we create an environment that supports them in becoming successful and also supports us? So we launched our own mentorship program. There was a split for their first handful of deals. Speaker 3 (16:40): It wasn't 50 50, but it's important to say that we didn't go after the new agent. We were always targeting, calling, going after the producers. And in the wake of doing the things we do, the new agents would show up, they'd come to our trainings, they'd opt into the forms. So it only worked because our pig headed determination to just out recruit out, call out, prospect, everybody. The new brand new agent avatar was like I just said, we wanted to be real with the fact that it's important, but also we weren't spending our resources going after them. It was a kind of on accident thing. We never intentionally sat down and said, Hey, we're going to go after brand new agents. Yeah, Speaker 1 (17:39): It's kind of like when you look at any business, there are some less than ideal customers in there, but you figure out how to make it work and you figure out how to provide 'em value and they become a different type of customer over time, potentially. Speaker 3 (17:50): Correct. A hundred percent. Speaker 1 (17:52): Cool. So I already gave just the one stat that you all are number one in the state. A, how long has that been true? B, anything else you want to share about big block as it is today, market size, structure, culture, whatever you want to share. I'd love for you to share with folks just for context. Speaker 3 (18:09): So this is the first year that we submitted as a team because we at the beginning of the year merged into a company called LPT. So I say that saying this is our first year on real trends as a team versus the broker list as Speaker 1 (18:28): The brokerage. Speaker 3 (18:29): And we were number one in California, number three in the country overall, 2.92 billion in volume. Compare that to when we were an indie brokerage. The year prior on real trends, we were, I want to say maybe 59 largest independent brokerage in the country. Making the transition over to LPT was one of the best decisions I've ever made. And I don't want to make this an LPT show by any means, but what it allowed me to do is focus on the things that I'm really good at my superpowers, which is growing and supporting agents. So where we sit today, we are about two and a half to three times the size we were post LPT or pre LPT and now expanding through the nation with the big block brand. So I have a call later on today with some partners to open up two new states as a team expansion. So our goal is to ultimately be the number one overall in team for sides and volume in the nation. In the nation. So we got to jump up two spots. Speaker 1 (19:55): Yeah. Well, I guess let's stay in that for a minute. I don't know how universal this is, but I feel like when you go independent brokerage, you've done it right? You start as an agent, you figured out how to bring some people around you, you figured out how to get all kind of the blocking and tackling in place. You figured out some of the challenges that a team that started six years ago never had to figure out. And I mean big block is probably the biggest one, or certainly one of the biggest ones to go from indie brokerage to being brokered by LPT or one of its near competitors. I've certainly seen that being announced periodically over the past maybe 12 to 18 months. So you already shared high level some of the benefits, but from your seat in particular, I would love you to spend another couple of minutes on the benefit of being brokered by another company and letting go of some of that responsibility in favor of doing what you love to do. And my goal here is to help people who are thinking about should I go indie brokerage or people that are in indie brokerage wondering, should I do what some of these other folks are doing? So not just necessarily from your perspective, obviously you're super connected in the industry, how would you guide someone through that conversation? Speaker 3 (21:16): Yeah, thanks for asking. There's a few things here. I think first it starts with understanding that the perspective that I think a lot of us have in debating a change, this is the horrible feeling that we're killing our baby, right? I've built this thing, I can't speak for all the companies that offer a solution like this, but with LPT, the baby's still alive, right? There is no killing the baby. The brand is still there. Everything we want is still intact. But my ego had to get past that. And then here's where it started to get really interesting is as our business got really big, the back end, the stuff that I didn't even anticipate being part of running a huge brokerage, ENO and all the things, it made the business so heavy that it started to become unenjoyable, even though I would never admit it to the staff and didn't really admit it to myself. Speaker 3 (22:34): I was showing up different. I had lost my fire because I was drowning in a business that was burning cash and releasing more problems into my world. And when I had the opportunity to really learn about what this could look like, it dawned on me that, look, you're not killing the baby by doing a deal like this. You are releasing yourself by choice of the burdens that hold you down. And if the time right now that's getting burned on the things you don't like was repositioned to your superpower and things you do like that's really special. If I never have to worry about what does opening a new state look like? What does a new MLS look like? All these things, it gave us wings, it collapsed time. And then there was the agent side. My responsibility is obviously I want to do what's best for me, right? I'm an entrepreneur, I didn't do this as a charity, but I hold my responsibility at high regard, at high consideration when it comes to putting our agents in the best possible position for their individual businesses. And as I started to learn more about what everything looked like and how it supports the individual agent, what kept ringing in my head, Ethan, and this was a pivotal moment for me in making this decision, is my subconscious kept saying to me myself, it would be irresponsible of you as a leader to not do this. Speaker 3 (24:33): The reason you wouldn't do it with everything to be true right now is ultimately ego and pride and pigheaded determination to just keep doing it on your own. But I've always been a big believer that success is a team sport and you better have a dream team. So as I started to know the executive team over at LPT, I didn't feel alone anymore. I felt like I had a squad I could run with and I could bolt what we're doing onto the rails of a national company. I haven't been this energized, this excited, this free in the sense of the mental stresses and pressure and all that since the very early days of starting big block, it's been quite remarkable how amazing it's been for me as a human. Forget about the business side of it. Speaker 1 (25:43): Yeah, I love that. Well, and I think it's a reason a lot of people start teams in the first place is they want to be doing more of what they really like doing. And some people catch themselves, as you said, I don't want to figure out how to open in a new state. So for folks watching and listening, whether you're listening to Apple Podcast or Spotify, it's down below in the description or watching on YouTube. It's down below in the description. If you're watching or listening@realestateteamos.com, we write all these up down below in the description. I'm going to link up, Sam, that webinar that you did with Robert Palmer where you go much deeper than we should go in this conversation on how you thought about it for the agents, the different paths that it opens up for agents that are already on the team and that are going to be joining. There's a lot more, if you want more on what we just spent several minutes on, there's a whole 45 minutes of an hour linked up down below. Would love to talk to m and a little bit because of your exposure to it over the years. How did you first get exposure to it? And then we'll kind of move into some of my personal curiosities about it. Speaker 3 (26:41): Yeah, I got exposed to it through a mentor now business partner, Roland Frazier. He ended up becoming a partner in big block and really started to expose me to two things. One was getting off the org chart, which maybe we save that for another show, but the concept that acquisitions are the most predictable way when done correctly to accelerate where you're headed financially. And then I started to learn about roll-ups, which is the idea that you can take a bunch of individual businesses in the same industry or field, combine them into one and create something that has what we call multiple arbitrage. Ultimately a huge spread. Having him in my corner really supported my ability to even understand it, let alone go execute on it. And the first acquisition was real quick, his whole thing. And now our thing is no money out of pocket acquisitions. Speaker 3 (28:05): If I could acquire the businesses that support my goal, and it doesn't mean just brokerages or teams or what happens before a transaction, what happens during what happens after. We want to own that ecosystem and do it with no money out of pocket. Are you kidding me? Of course. So our first one was a Facebook group at the time, I want to say it was the maybe second or third largest real estate Facebook group on Facebook. We're able to close that deal with no money out of pocket. Doesn't mean the seller doesn't get money, it just means it doesn't come out of our pocket with the creative structures. And then I got the itch and I was like, man, I can do this. So instead of buying brokerages or teams, we really leaned into the ancillary side of the business, understanding that the wake is bigger than the ship. The ship is big block, it's big, but the wake it creates is much larger. And to be able to capitalize on that to us seemed like the most obvious opportunity. And that led us into acquiring all sorts of different businesses, both in and now out of real estate that really support our financial goals. Speaker 1 (29:33): How did you target particular companies? What were you looking for and what is your engagement with them? What are you doing there in that Speaker 3 (29:42): Great question. So first we started by making a list of every company that falls into before, during, or after. And we identified over 90 different companies that create commerce around a real estate transaction. And then I said, okay, the big three that everyone focuses on, yeah, we'll do those, but let's focus on the things that no one else is looking at, the moving company, the electrician, the home services, et cetera. So the way we started is we would reach out to these companies non-res regulated and do an MSA where they would pay us an affiliate fee, a referral fee for sending them business. Once we established that relationship and we found that this is a business that we can have an impact on, then that turned into, okay, we're going to go acquire this type of business. So for us, it was like test it first before we just decided to go buy it. And a lot of times the businesses we ended up buying were the actual companies that we were doing an MSA or an affiliate relationship with. So it was all about what can we actually make an impact on and then go after trying to acquire that type of business. Speaker 1 (31:21): From the MSA or affiliate relationship, you're doing a variety of things. You're building some familiarity, you're building some trust, you're actually getting probably a deeper or different look than you could from a superficial level, even if they were very open and transparent with you. It's an actual functional relationship and will this work over the long term? And so is that part of the vetting process or is that just in general, just like a functional warmup in the way that people tend to do it? Speaker 3 (31:49): Both. For us, it was one, regardless of wanting to buy a business that does X service, we want to have those relationships and the extra revenue for us and our agents, but it was a vetting process for us to know that we could actually make an impact in this type of business. Every time you say yes to something, you're saying no to something else. And we wanted to make sure that we were acquiring businesses that supported us as opposed to just another business to own. For us, it was a combo of, yeah, it was vetting. And also we were going to create these MSAs with these companies either way. So after we did it and we saw that we had an impact on said business, that was an indicator. Now this is something we should explore to go out and acquire inside of the holding company. Speaker 1 (32:52): I have a feeling that someone watching or listening right now is thinking like, well, I might get to that level at some point, but I have a feeling that this is accessible to a lot of people watching or listening. It's just maybe as it was perhaps for you a little bit until you found the right business part and it was like, no, no, no, no. I know how this goes. Check this out. And then now you're moving forward exploring and achieving together, or based on that someone had already been a step into that room or into that direction or whatever, open that up for someone else that never really imagined the idea of, for example, acquiring an electric electrician or a team of electricians or an HVAC or something else that maybe makes sense in this zone that you're talking about. How accessible could this be for someone? Speaker 3 (33:44): It's accessible to everyone. There's not a reason why anyone that's listening to this can't do it. It's all about, it's the law of price and terms, right? There's the price that the business or the seller wants, and then there's the terms that make it work. So why is that important? It's important because with the right terms, the business can pay for itself. And I'll give you an example outside of real estate. One of the businesses that I'm a partner in is called Mango Automotive, and my business partner Jesse, had never owned an auto repair shop. I don't know how to turn a wrench. Speaker 3 (34:38): I don't know any of that, nor did she. But we saw the opportunity. So three years ago, we acquired our first shop with no money out of pocket, and if we have time, I can go through the deal stack and help people understand how that deal came to life. But the first one we bought was a professionally managed shop, meaning the owner was not on the org chart. It had the full org chart filled out. So when we bought it, we weren't buying a job alongside the asset. Fast forward now almost three years in, we're closing on our eighth shop and the company is doing about 15 million a year in top line revenue. And our growth has been all through acquisitions. We buy them, we magnify them, which is creating our wow experience. Our lobbies are clean, they got pink walls and nice wallpaper and comfortable couches and a refrigerator with Celsius and water. And we really leaned into the service side of it, customer service. But I say all that saying, Jessie has, I think six or seven kids, Jesse has never been in the auto repair space. I can't even spell wrench, let alone use one. Speaker 1 (36:08): I'll just say that there's a letter in it that doesn't really belong there. Pull Speaker 3 (36:12): On, yes. But when you acquire businesses that are professionally managed, you are removing a lot of the perceived, I don't know how to do this risk in regards to running the business. And then it's just about the deal stack. We have identified through Epic Network, which is our mastermind for mergers and acquisitions, we have identified almost 300 different ways that you can stack a deal to acquire it with no money out of pocket. And the reality is not every seller is going to the terms that you offer just real estate, but there's enough sellers that will, and for us, it's always, I'll give, should I get to one example of an acquisition i'd? How the deal tax? Speaker 1 (37:14): Yeah. Speaker 3 (37:14): So for Mango Automotive to just stay on that track, our average acquisition is a company that nets $500,000 a year. Okay? We pay a three x multiple on it, which is 1.5 million. And our average acquisition, the seller carries a note. Seller finances 90% of the purchase price over 10 years. So that means that we have $150,000 delta there. They're carrying 1.35, they need 150,000. So when you acquire a business, a lot of times they have assets. So in an HVAC company or an auto repair shop or whatnot, there's lifts and there's drills, and there's all these assets. So when the shop has about, let's say $600,000 worth of assets sitting inside the business, you can go get an asset based loan against the assets. So we can get $150,000 asset based loan against the assets inside of the business that we're acquiring, which now funds the gap for us. Speaker 3 (38:30): The seller gets their money down, they carry the 90% or whatever it is over a course of 10 years or five years or whatever you work out. The important thing to understand here is the business is netting before we do anything to it. 500,000 a year. Seller financing of 1 3 5 over 10 years is 135,000 a year in debt servicing. Then the asset-based loan, let's say that's another 30,000 a year until it's paid off. So our debt servicing is under $200,000 for a business that's netting 500,000. So when I say the business pays for itself, and anyone can do this, literally anyone can do it. You just have to be real at the fact that it's all about how you negotiate terms Speaker 1 (39:31): And you're looking to push that 500 as well. So you could accelerate that coverage. Speaker 3 (39:35): Yes. Yeah, Speaker 1 (39:36): Because looking to probably drive top line, maybe add some improvement and efficiency and push that 500 net to six 50, and now you're even further ahead of the basic model. Speaker 3 (39:47): And you do that, like you said, by either driving top line, which we're really good at because we have company that does a lot of real estate and we're good at marketing. So we're able to double business on average at Mango in about eight months just by doing what we know how to do. But then on the other side of it, we can create more profitability by centralizing a lot of what's happening on the org chart, bookkeeping, hr, marketing, the list goes on and on. So by simply acquiring and putting it into the ecosystem that we have, integrating it into our current infrastructure, that creates profitability all on its own because we're able to cut expenses and trim some fat. So by creating profitability, by reducing expenses, and also driving top line revenue, a shop that's doing 500,000, you can get that to doing a million. And where it starts to get exciting is now you take a bunch of those and you roll them up into one, and I bought them for three x, right? Three times net income. When you get large enough, private equity will pay you 12 x or 15 x. So when I said earlier, we play multiple arbitrage, that's it. Go, let's go acquire 10 million of net income and let's pay a three x. That's 30 million. Now, once they're fully integrated and rolled up into one entity and I go sell that 10 million of profit to private equity at a 15 x, that's 150 million. So my spread there is $120 million, and that's a good day in the office. Speaker 1 (41:50): Well, it's funny, we're kind of back to where you started with fix and flip. It's just on a different scale and a different timeline. Speaker 3 (41:56): It's a hundred percent the same idea as a fix and flip, same principles. It's just unlocking that part of your brain to understand it. It's doable. I'll tell you right now is a really special time with baby boomers and so many different things going on where the average business owner, especially home services and all these, what we call boring businesses, their kids don't want to take it over. Their kids want to go be TikTok influencers. So we have this remarkable opportunity. Speaker 1 (42:35): Why pursue something stable and proven profitable for two decades? Exactly. Why do that? Let's let someone else identify that value and capitalize on Speaker 3 (42:44): It. Yeah. Yeah. So it's these sellers don't, they've been turning wrenches for 60 years or 40 years. They don't really know what they're going to do, but they know they want to move to Florida and go fishing. So there is plenty of sellers that will give the right terms. That doesn't mean we're taking advantage of people because we won't, but we are going to get terms that are win-win. Speaker 1 (43:15): Even just going to the real estate transaction, you have a buyer and a seller and you come to terms, and if you come to terms, then it's fair for everybody because you agreed to terms. Speaker 3 (43:23): Yes, exactly. Speaker 1 (43:25): That's Speaker 3 (43:25): Exactly it. It's Speaker 1 (43:25): Just that simple. Yeah, I love it. One specific question before I go to my fund, three pairs of closing questions in this zone, it came up in a couple of our conversations. I'm thinking of the past six to eight episodes here on the show, and that is the value of a real estate team. How could this possibly be valued? It's going to be difficult for a team leader to get themselves off the org chart. What is the future for someone that doesn't want to do that anymore? Let's just say they've pretty well got it on the rails. They're running profitably. It's not like a big problem thing. They're running with 10 or 20 agents and they like doing it that way and it's working for them, but they want out for any of a variety of reasons. Either they're, I just want to go fishing off the coast or in the Gulf, or it's, I'm just tired of this and I want to do something else. How should those folks be thinking about the value of the business that they build? Because it's not necessarily a three x multiple on revenue. Speaker 3 (44:20): Yeah, no. One of the biggest heartbreaks that you'll experience when owning a brokerage or a team is when you find out what it's worth. And that's just the unfortunate reality. It is changing though, and I'll touch on that in a moment. A brokerage right now, the average independent brokerage, you're getting a one to three x of profit. So if it's professionally managed, you're trading off of ebitda. If you are in the trenches, it's trading off of SDE, which is seller discretionary earnings. Now when you get to a certain size, then you jump from the one to three x to four to seven x, and then when you get even bigger, now you jump into private equity and that you could hit the tens, the twelves, et cetera. So my suggestion is someone that's a team leader or a broker is really start to shop the business. Because even if you have no intention of selling, you can find out what has to be true for the business to be worth, what would make it exciting for you to sell. Speaker 3 (45:45): And a lot of times that's the simple things like it's professionally managed. Your numbers are within these ranges, so consider acquiring other real estate companies and helping yourself get to that number where you can get those bigger multiples. Now, on the other side of it, look, if you have something that's humming and it's spitting out profit for you and it's professionally managed and you don't like the idea of a one X or a two x, just take the profitability and go build whatever's next or talk to someone like me that is doing roll-ups and see how you can participate in playing a bigger game. Right now, what's interesting, Ethan, is the team landscape. Right now what we're seeing is teams are starting to get stronger valuation than brokerages because the team doesn't carry the burden and the liability, they just drive revenue. So we're starting to see that in the world of m and a, all of a sudden the buyers are starting to say, instead of owning the brokerage, let's buy the team that's actually driving the revenue. And right now the teams are again, one, two, maybe three x that is dependent upon the revenue, the numbers, the profitability, how professionally managed it is or isn't. Speaker 3 (47:27): And when you bolt onto a brokerage, build your team, I anticipate that what we're going to see in the next couple of years is teams are going to start to get evaluated much stronger than they have men in history. Speaker 1 (47:49): When someone is acquiring a team, what are they acquiring? Is it the local reputation? Is it the systems and processes that allow for a particular profitability so that we can predictably say, if we ramp up inputs into this system, leads, let's say lead generation, then we can predictably get something. Is it the predictability? Is it the brand reputation? What's the difference between a one x and a three x, I guess? Speaker 3 (48:16): Yeah, it really is at the end of the day. Number one is profitability. How much money is getting spit out in profit? They are buying reputation to a degree, which we call goodwill. They're buying the goodwill of the brand, the team, the company, and really what they're buying is the database and the attention that that goodwill carries. So a team that I recently did a deal on, they've been farming in their town like 20,000 homes for 15 years. Everybody knows this person's name. They've been mailing nonstop. They own the attention of those homes. Me, as a buyer, that's what I'm buying. I'm buying the attention that took them 15 years to materialize. And to me, the brand means less because of what we're doing as the buyer. So again, they're looking at profitability, goodwill, I think is a better way to say it than brand. And then the assets that the team holds, right? Your systems, your lead flow, your attention that you have with customers, your database, all those things that help them collapse time. Speaker 1 (49:47): So running a really good business is going to get you a better multiple, Speaker 3 (49:51): Only always. Speaker 1 (49:52): Yeah. Sam, this has been awesome. I really appreciate you sharing what you've learned over the years. Of course, I wish you continued success. I'm so glad that the move from indie brokerage to LPT has been so good for you and all of the agents. Before I let you go first, I've got three questions. First is, what is your very favorite team to root for besides big block? Or what's the best team you've ever been a member of? Speaker 3 (50:16): Oh, it's going to have to be the Lakers, but in general, I'll tell you who I love to root for is the underdog. I love, not that the Lakers are the underdog, but in real estate, man, I love seeing someone come into the industry and think big and do the hard things and act in spite of everything that should keep them down, right? I love that. I love, love rooting in supporting that type of person. So that's my favorite team to root for. Speaker 1 (50:53): Same whenever I don't have a specific, and now I'm thinking specifically in sports, but whenever I don't have a rooting interest in their two teams in front of me, always going for the underdog. Speaker 3 (51:01): Same. Speaker 1 (51:01): What is one of your most frivolous purchases or what's a cheapskate habit you hold onto even though you probably don't need to? Speaker 3 (51:10): Cars. I like my cars. I recently put a deposit on a pretty wild supercar that's been on my bucket list for a while. So cars, I've had several supercars. I just keep leveling up the game. So yeah, Bentley McLaren driving Speaker 1 (51:41): 'em. Speaker 3 (51:42): I love driving them. Yeah, okay. For me, it's like the feeling that I can reward myself because of all the things that I've done. It's like pulling the door up and getting in. Even if no one sees me. It's like, yeah, you did it. You did it. This is yours. And that's badass car. And I love the noise, and I love just all of it. So for me, it's cars. And also I have an obsession, probably unhealthy obsession with leather goods. So I spend more than I should on bags and backpacks and all those things. Speaker 1 (52:30): That's funny. That actually came up on a very recent episode. That's so funny. It's like a bag. It's wild bags. What does it look like for you, Sam? What are you doing when you're investing time in learning, growing and developing, or what does it look like for you? What are you doing when you're investing time in resting, relaxing, and recharging? Speaker 3 (52:50): That's a great question. For me, it's all about masterminds. I'm a big believer that success starts and ends with the environment you put yourself in. So I invest time and money in rooms with people that are where I want to end up. I want to be the least successful person in the rooms that I pay to be a part of. I always make a joke that I pay for my friends, right? I'm paying to level up my peer group. So I've been a big fan of coaches and seminars, and I still love all of that. But masterminds for me, are really special. They really affect the way you look at possibility, the way you look at challenges. What's really interesting is they change the way you count. Right now, you might be counting in thousands or in hundreds of thousands, but when you're in the right room with the right people, you start counting in millions and then tens of millions and then billions. So to me, it's Masterminds have been the most pivotal part of our success. Speaker 1 (54:01): Really good. I love that. That also calls back to the beginning of the conversation too. Really well done. This has been an absolute joy. I know folks have gotten a lot out of it. If they have gotten to this point, they obviously enjoyed it too. Where should they go to learn more about you, follow up with you, connect with you? Speaker 3 (54:15): Thank you for asking. Instagram's probably the best. My Instagram is the number nine TH nine zero spelled out, so the nine T-H-Z-E-R-O on Instagram. Shoot me a message if you care to give me a follow. I always reply to my dms and I'm all about supporting you on your mission and your path, whatever that is. So if there is a way that I could be of value and support to you, the answer is yes. Now what's the question? Speaker 1 (54:56): Awesome. He did not share that specifically an invitation to DM him because he does not want to hear from you. He does. So follow the ninth, zero on Instagram, linked up, down below. Wherever you're watching or listening. Sam, appreciate you. Hope you have a great rest of your day. Speaker 3 (55:09): Likewise. Thank you so much. This has been really special and I appreciate you having me on. Speaker 2 (55:16): Thanks for checking out this episode of Team Os. Get quick insights all the time by checking out real estate team Os on Instagram and on TikTok.