Why Dumb People Get Rich In Real Estate, An Agency Selling For a 5x Multiple

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Newsletter goal: You get one lesson or idea towards that helps you make more money.

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Today's Outline:

• Why Dumb People Get Rich In Real Estate 🏘

• Reputation Management 🧳

• Creator Brand Incubator 💡

• Why Quiet Quitting Is Fake 😬

📚 1 Business Lessons:

Let's talk about real estate for a second.

At this point, I own 4 properties down in TX.

When first getting into the real estate game, 90% of the reason was because I had this internal belief that "This is what rich people do".

So 55 weeks ago I bought a $400,000 storage facility outside of Dallas.

Last month, that same facility just appraised for $1.25M.

So I want to spend 3 minutes breaking down why 'dumb people' can get rich in real estate. And how I look at these deals:

1. Zero Business Model Risk:

The first thing you need to understand when it comes to real estate is that there is substantially less business model risk compared to other businesses.

• People might get over the Keto trend

• People might decide they don't need a $2,200 stationary bike

• People might decide that VR isn't the future

But in our lifetime, there's very little risk of people not needing places to live.

This is great. Because you no longer need to invent the next Uber to make millions.

And because there is reduced risk, there are billions in resources to help you get started (banks)

Why My Deal 3x'd in 1 Year:

OK for this part you need to understand 2 terms:

NOI = Net Operating Income (How much money did you make after expenses, not including debt).

Cap Rate = How Real Estate Is Valued (Calculated by Property Value divided by NOI)

$1,000,000 property making $100,000 in profit = 10 cap

We raised the NOI on the property from $3,500/month to $7,300/month.

Napkin Math = 7,300 x 12 = 87,500. The average cap rate in the area was a 7 cap. 87,500 divided by 0.07= 1.25M.

I really wanted to walk through this example because 1 year ago today I had zero idea how this all worked. So if this is confusing for you, I promise you're not alone.

We also bought the property for under what I think it was actually worth.

Why I'm Continuing To Bet On Real Estate:

Let's face it.

The S&P is down 25%+ Year To Date.

If you're reading this, you're probably looking for ways to make more money.

There's a huge wave of retiring baby boomers over the next 10 years.

They represent 22% of the population but 42% of the home ownership in the US.

I'm not smart enough to pick winning stocks. Or control the outcome of public companies. But I feel confident competing against local boomers (3 of the 4 properties we bought didn't have websites or Google listings).

💰 2 Business Ideas

1. Reputation Management –

One of the best ways to understand what separates a good business from a bad one is to subscribe to business brokers email newsletters & read the prospectuses.

Here's a favorite I found 2 months ago:

Reputation Management Agency:

The first thing I think of is... a 4.75x multiple for an agency??

Seems high.

How It Works:

• They help rank popular press about you online

• They remove Google autocomplete predictions. So "John Smith Fired For Fraud" isn't what is suggested when someone Google's you

• Relationships with website owners to remove negative content directly

The Numbers:

• 50-70% gross profit on all services

• 75% repeat business

• 68% B2B vs 32% B2C

This is a really cool business when you consider how much more content is being posted online and the rising concern of getting canceled.

Partnering with Law & PR firms can be a great way to generate leads for the business and grow sales even more.

2. Speed Reading Google Chrome Extension

This idea was given to me from my buddy Sam.

He recently showed me bionic reading. A web app that bolds certain letters in each word to make it easier for the reader to process.

Here's how it looks for the last 3 sentences:

Right now you need to copy & paste text into their web app.

I think building in a chrome extension that auto-applies this to web pages could be a big business with a dead simple value proposition.

😎 3 Cool Internet Things:

1. Franchise Times – I recently interviewed Brian Beers who is making $36M/yr running 30 Auto Franchises. He showed me this resource on what the biggest franchises are by locations and sales (ACE Hardware Shocked Me)

2. Quiet Quitting Isn't Real – Quit Quitting refers to employees doing the "bare minimum" at work instead of quitting and changing jobs. This piece by Derek Thompson shows why that's not actually a new thing and if anything employees are doing more than they were between 2000-2014

3. Standing Desk Foot Stool – Nothing to do with business but I work from a standing desk & I recently purchased this stool to lean on underneath my desk. Alleviates lower back tightness and makes standing all day much easier. Btw – this was the best looking one I could find. Maybe an opportunity to build more modern designs.

✌️

-Connor

PS – Want to chat 1:1?

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2 Areas I know about: E-commerce (Amazon & DTC), Buying & Managing Commercial Real Estate

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