From Trailer park trash ( his words not mine) to a mega business owner, Erik Hatch shares his secrets on owning 20 business mostly related to real estate. Picking the right business partners, having the right agreements figuring out the proper profit share and laying out the accountability and responsibilities are just a few of the keys to his success... Erik Hatch is an entrepreneur, public speaker, Realtor, author, coach, investor, do-gooder, husband, father, and mediocre golfer. Erik has 25 businesses that he owns/operates with the help of some tremendous partners and relationships. In addition, Erik has built 2 non-profit movements that have raised nearly 3 million dollars to help serve kids and families in need. Don't forget sharing is caring. Show me some love. Please Subscribe and give a 5 star rating and leave a review. Thank you soooo much in helping support Unstoppable REI Wealth, this will help improve the shows ratings and make it easier for others to find it... And for access to all my tools tips tricks strategies secrets and systems we use to drive in 7 figures ++ a year go to www.BillysSecrets.com
UREI21.mp3
Billy [00:00:00] What's going on, guys, Billy Alvaro, if you're brand new, you do not I repeat, you do not want to listen to this episode. This is about partnerships. JVing and growing businesses the right way. I had the pleasure of interviewing Erik Hatch, who is an author and who also owns 20 businesses, one of which is a real estate investment company. Another one's a coaching company and another one is a brokerage. The guy is a stud, his words, not mine. He was literally trailer trash. He said it. He was trailer trash, came from nothing and built himself an empire. And how did he do it? He did it all with the power of joint ventures and partnerships. If you're looking to own multiple businesses, he's going to drop some knowledge and know how on this episode. Now, I'm going to warn you, this is not one hundred percent real estate specific. It's really about business and growing it. Even though we touch on real estate, you're going to learn a lot. He has a lot to offer.
Billy [00:00:53] I want you to tune in because Erik's going to bring the heat and teach you on how he got himself to twenty businesses and what his secrets are. I hope you enjoy it.
Billy [00:01:05] Welcome to unstoppable real estate investing. Well, my name is Billy Alvaro, a.k.a. the Unstoppable, B.A. Former billion dollar mortgage banker gone bankrupt, turned professional real estate investor, where each week you'll learn the tools, strategies, systems and secrets myself and other highly successful real estate investing entrepreneurs use to start, grow and scale their businesses, creating massive profits and how you can, too, and will teach you how to put those profits to work so you no longer have to get ready to finally experience financial freedom and generational wealth. Now let's get started.
Billy [00:01:50] All right, everybody, what's going on? My name is Billy Alvaro, the unstoppable B.A. and this is unstoppable REI Wealth.
Billy [00:01:56] And I'm here with another episode to deliver the heat. And before I introduce this man and what I tell you, if you are looking to start, grow or scale your real estate business, you're in for a treat. This whole podcast is made from one thing to get you from where you are to where you want to go by giving you the tools, tips, tricks, strategies and secrets that I use and my guests use to get them results. Number one thing is results. You don't get results unless you take action. A lot of tools and tips are going to be speaking about well, that we've spoken about past podcasts. You could go on to my website, Billiys Secrets, dot com, all the links, the tips, the tricks, anything. We utilize that to find properties, the lists, anything you could possibly think about to get your business where you want to go from, where you are, where you want to go is on that Web site. So today I have a gentleman who is an author. He's a speaker. He's a businessman. He has a real estate company and investment company. He has this radio show, a podcast. He does a lot. I don't know how he gets don't what he gets done in one day's time frame. Without any further ado, the one and only miss Mr. Erik Hatch. Welcome to the podcast, my man.
Erik [00:02:57] Oh, man. That's like I love being able to write intros for other people because my friends would be like, yeah, this douchebags about to be on this thing. All right. But what I can do when I can give a like a written intro like you made me sound way cooler than I am so thankful that Billy
Billy [00:03:10] Yo one thing I like about you bro is your personality.
Billy [00:03:13] Like you're funny, but I don't know if you realize how funny you really are.
Billy [00:03:17] Like, Oh, I know you do don't you don't look like.
Erik [00:03:22] If you're not laughing, you're not having fun. And why would I do anything if it's not fun, you know? And so that's the attitude I take in it. But like, I am as serious as the day is long when it comes to being focused and mission driven and having purpose in what I do, I'm just going to crack a joke every time I get you.
Billy [00:03:37] Have a good time in life, brother, and you get results and what you do. And so I want people because I don't know a ton of your backstory. I got your bio, but I really want it to come from your words, like tell us your backstory. How did you get into this business? And, like, just lead up to what you're doing now.
Erik [00:03:52] You bet. So I live in Fargo, North Dakota. Yep. People actually live in Fargo, North Dakota. We have cell phones and everything. It's amazing. I wrote a business school, but after that it was all totally normal dirt floors like everybody else had literally built. I grew up as trailer trash. You know, my my dad abandoned my family when when I was two and my mom worked three jobs just to try to keep us fed. And like, we had really, really meager means growing up. We were one foot in the welfare bucket for a lot of my life. And and so I learned early on hard work. I watched my mom be this incredibly hard worker. I then had this opportunity to take who she was and try to reinvent that because my mom was a secretary and and just did whatever she could. She she had the ability to type one hundred and twenty words a minute. And what type kids college papers is back in the day when their handwriting amount and she would type them out and charge them like a dollar fifty a page like my mom was my mom was an entrepreneur just trying to find a way. And so I was the kid with lemonade stands and knocking door to door just to sell these products so I can I can get myself a new snack or something. And so when I was six years old, my mom got diagnosed with cancer. My dad, again, wasn't in the picture at all. And and I had to take care of my mom. And I only knew what she had taught me. And that was exceedingly hard work. The word entrepreneur is thrown around a lot now. I didn't even know what that meant or understood it. So I was probably in my mid twenties because I always thought life was about working for somebody else. Yeah, I learned some amazing lessons. I was working between school and extracurriculars and my own job and taking care of my mom. When I was 16 years old, I was working seventy or eighty hours a week and it was just naturally ingrained in me to to go really hard because I saw the difference it made for the person that I was closest with. And that was my mom. Right. Fast forward. I was twenty one when she died of cancer and so orphaned at twenty one and and she was wise enough to have taken some of her pay and put that into, she put that into some life insurance enough so that I could pay off my student loans. When I was twenty one years old I tucked away like fifteen grand into some IRAs and then I was broke again. But it gave me like a fresh start at life. And I went to work for a nonprofit, worked at my church for eight years and did youth ministry. But I was so broke, but so in love with the idea of helping people. So halfway through that journey, I was so broke that my buddy is like, Hey, man, you're good with people. You should sell real estate. And so in twenty six I got my real estate license to sell residential real estate and I just kept getting better and better at it. Fast forward to 2011. I left the ministry and went into real estate full time.
Erik [00:06:27] Twenty twelve. I started a real estate team. Twenty thirteen I got kicked out of the real estate brokerage I was in, started completely over my team, fell apart twenty fourteen, opened up my own brokerage. And in fact as we record this today, it's been seven years to the day that I open up that brokerage. And in the last seven years we've sold almost five thousand houses, over a billion dollars in volume one of the top 50 real estate teams in the. For what we do for residential production and I have now 20 different businesses that have all stemmed off of this one gift, and that is to to understand people. And so now I fix and flip. I invest in a bunch of real estate. I run 20 businesses that are empowering about one hundred people to do great things. Hopefully I'm just getting started.
Billy [00:07:09] That is freaking amazing. I know the one thought that's popping through my head, Eric, is how do you manage 20 different businesses? Like, what's the secret to doing that?
Erik [00:07:21] I don't you know, I, I have amazing partnerships. There's two businesses I really work in. I work in my coaching business. So I'm coaching realtors around the country, doing a lot of podcasts and webinars and that start teaching and scaling the best way that I can spend about 20 hours a week in this business. And then I spend 20 hours a week running my residential real estate with a six million dollar team. And I like to have a panel that says we made six million bucks last year on the gross is pretty awesome. And then I have all my other side gigs and all those other side gigs started from this main gig. And when I opened it, I always open it with a who and I was the guy like, I understand that. Yeah, I know real estates and I know numbers, but I gave a who a chance and each of these and I was able to give them a world that's bigger than what they could have created on their own. Inversely, I got a piece of all the action on the energy that they put into it. So we're reliant on each other. When I open up a wholesaling business last year, I didn't go and try to be the one to do it. I had a guy on my team that was talented enough. We split it 50 50. And so he's now chasing after all the wholesale deals and I'm the marketing arm of it because I'm already doing it with my residential team. Like I get him all of his at bats. He runs and finds all the buyers and chases down the investors and we get to both benefit from being in each other's world. So it's almost inbred, you know what I mean, Bill? Like we're all dipping our toes in each other's water and benefiting from it.
Billy [00:08:45] You know, I had Gavin Timms on and you guys are completely different. But the same meeting, same accent. Right. I was a great guy from across the pond. But, you know, the one thing I've learned from him and that I'm learning from you, too, and that the listeners have to take out of this is you don't need to do it all yourself. Partnership's the right. JVs can really benefit all and you can get yourself to the next level a lot faster if you have in force the right relationships. Relationships are everything in this business and in life.
Erik [00:09:12] The wealthiest man in Japan has a minority share in like thousands of businesses because what he's done is he's found great people and he's brought the value. He's a shark tank, right? Those sharks are making their massive worth, not by being the the the seventy nine percent owners in something, but they have a fifteen percent ownership in some amazing companies with amazing people. Bet on the people. And no matter the avenue or the vehicle that you go, they'll find monetization if it's the right who there's there's a great book that I'm reading right now called Who Not How. And it's this awesome idea that the solution to all of your problems and the things that you want in life are not found by having the right How right people are often listening, saying, how can I make a million dollars? Like what what houses do I need to flip and what investments do I need to do? How can I make that? And for me, I ask the question, who do I need to be in relationship with to make a million dollars? And it changes the scope. It changes the philosophy. It's working out well for me.
Billy [00:10:10] How do you go about choosing the right partners?
Billy [00:10:13] Because you hear a lot of horror stories on people getting into business with people they like. That's the last thing I'm ever going to do again. It didn't work out. So like, what is your litmus test for picking out and aligning with the right people?
Erik [00:10:26] So I treat that litmus test when it comes to building businesses the same way I do in building my ecosystem for my real estate team. We'll sell probably twelve hundred homes this year in residential real estate in Fargo, North Dakota. We have two hundred and fifty thousand people in our entire two counties that we serve, and we have a nine percent market share currently. And so we're going after it. And the thing that I do is I make sure that everything is earned and nothing is given. And that's the philosophy that I have. As somebody who wants to climb the ladder in my world. If somebody comes to me and they say, Erik, I want to make more money, I want a higher commission, I want to have more at bats, everybody wants to make more and work less. And so what I say to them is I always say yes. I don't say no. No matter who it is in my world, if somebody is like, hey, can I get paid a million dollars next year, I'll say, Yeah, absolutely you can. Let's let's devise the plan on how we're going to get there and we're going to earn it. Like I'm not going to give it to you. You're going to earn it. Everything is earned and nothing is given. And so I don't say no. I always say yes, comma when and we developed that when. And they prove that they've earned that chance and that opportunity, ownership and shared camaraderie. That's a part of it. Now, like I have I have a marketing company in the building that I'm in right now. I have a marketing company that I own. And four years ago I had hired this amazing marketing talent and I knew that he was going to be gone quickly, like he had helped to produce the Academy of Country Music Awards. He started Ted X in Auckland, New Zealand, and just did these amazing things. But as a friend of mine. And so I gave him a job and he worked for me for a year. And I'm like, this guy is going to go and open up his own marketing company because he's that talented. I was not afraid of amazing talent. And so when it was time to go, I'm like, Hey, Andrew, we should open a marketing company together. It's like, that would be awesome, because now I'm helping him achieve his dreams. Right. Billy, I wrote a book. This is the cheesy promotion, but I wrote a book called Play for the Person Next to You. And it's about servant leadership. And the idea is, if I can help Andrew get what he wants, I'm going to have what I want. And if I serve that person next to me, I'm going to get to benefit from that tide rising. And that's been my philosophy on all of this. And I know where to talk real estate investing and we'll probably get there. But my greatest investment strategy is always in a who and not in the how.
Billy [00:12:37] It's amazing. You're the third person in the last week that recommended that book who not how. So it's definitely going to put the list and go out there and get. Yeah, man, let me ask you this with are you when you structure these deals with your partners, are they true partners on paper? Is it a verbal agreement? Like what does that look like?
Erik [00:12:55] Everything is legally documented. Yeah, I, I haven't made that mistake of getting into a partnership, not had paperwork to back it up. So it's a lot of elss which makes my tax time really expensive. And that start I will tell you this, I have my brother in law, he, he does some videography on the side. So you open up a videography company and he and his partner were fifty fifty partners. So they all brought their expenses in and then he came to me, he's like, dude, I'm so frustrated because I'm a fifty fifty partner in this, but I'm doing eighty percent of the work. Yeah. And so many people in partnerships will say that same kind of adage. And then like I got to get out of this partnership like no you don't. You just have to create for yourself a paid position within that partnership. So to my brother in law, I said, listen, you can be 50 50 partners in owner profit, but you're an employee and the business, you're the guy going out shooting the videos and capturing all this information. And so you should be paying yourself a dollar per hour for the time you're working in the business. And then you guys can share on a profit afterwards, and that's forever transformed. So if you're working with an investment group and somebody is a silent partner, but there are 50 50 partner and you're just pissed because you're doing all the work and they're getting the half of the profit, change that strategy and pay yourself and get agreed upon terms. But pay yourself a salary or pay yourself an hourly for the time you're actually working in the business, have agreed upon terms of what the partners are going to do simply as partners and then what you're going to be doing as an employee of the business. And that way you're able to justify your compensation a little bit better.
Billy [00:14:26] That is a nugget right there, brother. I mean, that's a nugget for anybody on this call that wants to scale their business, grow their business. This is not information. When somebody wants to start, it's really growing scale partnerships. The right ones put together the right way with the right documentation could create a lot of wealth for all involved. Have you ever had a partnership that went south, went sideways?
Erik [00:14:46] No. Now there's there's people that piss me off. In fact, I'm in one right now where I'm kind of bashing my head against the wall. I got the I got our P&L back for the last year and the company didn't make any money, you know? And I I'm not I'm not driven by money. I think money is like oxygen. Right. It's not the purpose of what we do, but we need it to breathe and we need it for our businesses to function. And seeing that a business didn't make money, it was this like come to Jesus meeting like, dude, I trusted you in this. I'm paying a handsome salary. We're paying you a handsome salary to run this business. And it didn't make any money. And so. Far before we got into the partnership, we had agreed upon what those conversations would look like and how we would have them, you know, it's like a it's like a and we have divorce decrees and all of our agreements. It's imperative that you have that that in the beginning, when things are good, you're still talking about what would happen if you were to divorce. And we just we had our come to Jesus meeting to say, dude, I am frustrated with this. How can I help? And what do you need and what are you doing? Different, right. And we had by the end of it, I'm not as pissed. I mean, I'm still pissed that I didn't make any money, but.
Erik [00:15:49] We'll get there,.
Billy [00:15:50] You have a process inside that address that you guys agreed upon up front before you got into the business, did you do you have when you created your agreements? I know you have an attorney. There's a legal side, but you have a business adviser that helps with the deal points inside there to make sure this thing is going to work the right way.
Erik [00:16:04] I don't. I probably should.
Billy [00:16:06] So this is this is you who does all the negotiation figures out. How are you going to create these things?
Erik [00:16:11] Pretty much, yeah. And I've done it now a dozen times. Right. And so I have I have an idea of who's going to go where and what's going to happen at this point. It is getting very, very clear. And I want to circle back to a point I made is getting very, very clear. When you're sharing ownership, you have to have written clear boundaries of what responsibilities each of those owners is taking on. Oftentimes in an LLC, you're going to say, well, you're president and I'm vice president. But that doesn't actually mean anything in terms of duties and responsibilities. The accountability matrix has to be crystal clear inside these things. Yeah. And so I will be so painfully diligent with all the written things ahead of time when we get it signed off on so that we can go back to say, did you uphold your end of the bargain or did you not? Because the biggest thing that leads to frustrations and disdain are people that have unmet expectations. You know, I expected this company to make one hundred thousand dollars this year and it lost money. Right. It's rooted in that unmet expectations. So we're going to dove in to say, did we all do what we said we're supposed to do? That key, that key element. That's one of my favorite nuggets. And I have it written all over my office. Is that one phrase of unmet expectations that that's where that's where all the boiling points inside our hearts and our gut come from is simply unmet expectations. So that means do all the work ahead of time, create the clear expectations and over perform always.
Billy [00:17:33] Do you and I know this is real estate, but this has to do a lot with real estate on scaling your business. Partnerships are very important when you're creating these partnerships. Erik, do you is it a here's your percentage, 20 percent, 40 percent up front or do you have an earn and over time based on certain milestones that they have to hit, what does that look like?
Erik [00:17:53] Yeah, that so, so vested interest is certainly an option and an opportunity. There's also the financial gain and prowess that you can go after. And so that person could simply buy in or you could gift it to them. And as a business and real estate coach, I talk people through this stuff all the time. And really it's a matter of the gauge of level of what that person has brought in the first place. I'll give you an example. With my coaching company, I had been one hundred percent owner from the day in which we opened this last year. I gave up 30 percent of my ownership to my two key players that have been with me since moment one that have blood, sweat and tears grind it in the business. And simply, I didn't know what I know now and I didn't invite them in to be a shareholder from from day one. And so I gifted them ownership into the company. They had earned it over time and performance. And so I had ended up gifting that to them. I also have some ecosystems like my Hatch Realty world, my real estate team, where it is all profit share based. So those that have been with me for at least three years and that serve as a key leader or an admin, they receive some profit share from the company. So it's another way to compensate without actually giving up ownership. Yep. Then I have then I have some others that we start off as a fifty fifty partner from moment one. So really it all depends on the relationship and what has been proved, what has been earned and the risk level that goes into it in the first place.
Billy [00:19:11] When you're drafting these agreements and you're coming into how people get paid out. I mean this is a question that I've gotten in the past with my derivs is that you have a partnership. The company earns argument's sake a million dollars for the year. You have a net profit margin of five hundred thousand dollars. How do you go about paying yourself, your partners? Because you can't liquidate all the money in the company. The company needs to be sustainable with cash, otherwise it's going to go out of business. So what does that look like when you're paying out your partners?
Erik [00:19:38] Yeah, again, going back to the unmet expectations and communicating everything up front is we have a written I know from my coaching company, we say we're going to always keep one hundred thousand dollars in our checking account. Right. Our our expenses monthly are thirty grand or so. We want to keep at least three months of operating expenses in our checking account and then we'll pay our quarterly dividend. So if we have three hundred thousand of the checking account, we're going to split our two hundred and then keep one hundred in there. So we just we agreed for a moment, one what that cushion should be. And that's always three months of operating expenses. So that's actually a moving target. Right. If right now we're thirty thousand expenses, that means we're going to do just one hundred and round up. If we're all of a sudden fifty thousand in expenses, we got to get one hundred and fifty in there before we share, share any profits.
Billy [00:20:18] And use your profit allocation on a quarterly basis.
Erik [00:20:21] I do. This is this is so important. Losses carry forward. So let's say you have a quarter where you lose 10 grand and then a quarter where you make one hundred grand. That means you actually made 90 grand that quarter to make sure that those losses carry forward.
Billy [00:20:37] I love it. Do you ever and I know we're going on a different subject here, but it is important because there are people on this call that are going to want to scale. Do you have for your company, by the way, that just lost money. What would the partnership? Are you going to have a capital call? Would you require him to put money in because the company is driving at a loss?
Erik [00:20:52] No, what we're talking about is we're talking about his is salary. He's, I think on a ninety thousand dollar salary or so and a company car. Right. And so we're going to talk about those things. And we are on what I call a pick a performance improvement plan, which means that I'm spending more time in the business. He's spending more time working with me. And we as owners are working on the business together so that we're to get it back to the profitable point. So a performance improvement plan. Eighty four percent of the time somebody gets put on a pip, they fail. And the reason why is, Billy, if you were struggling and I'm like, dude, you're struggling, you're not mean. None of your numbers clean it up. Right. And then I walk away as the leader of the manager saying, well, I sure hope Billy gets this crap figured out. And realistically, a performance improvement plan is for that owner, for that leader, as well as for that team member. And so I have to spend more time on this pip. My partner has to spend more time on this pip so that we can have mutuality and that we can.
Erik [00:21:51] What I say is monitor the crescendo. The crescendo is above your comma button on your keyboard and it means greater then. So if his performance today is little, I want to make sure that tomorrow is a little bit better and the next day is a little bit better. And we monitor the smalls in order to capture the big.
Billy [00:22:05] Bro, you're very, very good at structuring this whole thing, like I'm loving this conversation right now because I love business, I love wholesaling, I love real estate, but I love business and structuring deals and doing JVs. I love this. And you've been doing these JVs, these partnerships for how many years now?
Billy [00:22:20] Seven years about.
Erik [00:22:22] Yeah, yeah. About my my very first joint venture was twenty was. That's nine years ago now myself and a couple of buddies from high school said that hey, we should invest in real estate. Sure enough, the very first deal came up, that was a foreclosed home, bought it for eighty nine thousand bucks and I was so scared Billy to buy it on my own because what if I can't get any renters and what if it's super expensive? And so I was scared to death. And also I didn't have that much financial capital at that point. And so I put in 10 grand in each partner, put in 10 grand and all of a sudden became a third owner of a house. That's unbelievable. Right. And we got after it now. And we've just we've done that twenty five times with that one group. And then I have some other investment groups that are doing the same thing. But like, my kids are going to go to college on that one house I bought and I had a third ownership in and I paid ten grand on it because after 15 years, I'm going to own it outright. After 15 years, it's not worth 90 grand anymore. It's worth two hundred and thirty grand because we bought it. Right. And then it's going to be cash in out eighteen hundred to two thousand dollars a month and rent like seriously my kids can go to Ivy League. They're not smart enough but like my kids and they're, they're, they're six and four. Right. So I don't know if they're smart enough to feel like they can have these Ivy League educations paid for by one house of a ten thousand dollar investment. I made back in twenty twelve with partners because I was too scared to do it on my own.
Billy [00:23:44] Bro, it's amazing, it's amazing, your story is amazing, so these 20 companies that you have give us a general idea, like what kind of volume are you doing in 20 companies?
Erik [00:23:54] So my residential real estate business is the biggest. We are a six million dollar GCI company and we sold two hundred and five million dollars worth of residential real estate in twenty twenty. Amazing. My next biggest is my coaching company. We are about a two million dollar company annually. We have about five hundred users right now. I coach people one on one on a lot of Zoom calls and deep conversations. And then we have a whole bunch of tech and things that we've built on that have people doing the sexiest thing possible, and that's MRR monthly recurring revenue. So they are subscription based. And that for me is mailbox money like I've never dreamed of before. It has created such a huge ecosystem for what we're doing. Our coaching company is growing by about 50 users a month. Right now. It's just it's on fire.
Billy [00:24:43] Focus is just for a second. Is your focus realtors or real estate investors or combination.
Erik [00:24:47] mostly realtors
Erik [00:24:49] One of the spinoffs that we've done, I opened up a company that is essentially doing I Buy Our Stuff, which is wholesale. And I just happened to be the first wholesaler I get I get the first at bat. And a residential real estate company really is a marketing and servicing company. That's that's the core of it is its marketing and servicing. And so we have a lot of eyeballs and a lot of attention. And we're now offering our our clients, our potential sellers, a choice. Do you want to sell direct to an investor or do you want to go to market?
Erik [00:25:18] Because go to market? There's a lot of Paines, there's a lot of expenses, there's a lot of headaches. Sell directly to an investor. You don't have to do any fixes fed up and you pick the closing date. Right. Which one do you want? And there is a major void in Qasm right now in residential real estate that most realtors aren't offering that. If you're listening right now and you're not a residential real estate agent, there's no reason that you shouldn't go and partner with a local realtor in your area and you become that wholesale option for them. So you were given a menu of services. And that's what most people who are doing wholesaling right now are not doing, is they're not offering them any services. They're simply saying, all right, I'll buy your house. It's at a discount. I'm going to flip it and sell it to somebody else or whatever it may be. But you're not talking about the choice of what if they want to maximize their dollars and there's monetization and all those? Yeah. And so that's what we've grown. I'm flip in probably 30 homes a year and wholesaling another fifteen or twenty. We're just one year into wholesaling. So it's very new. So those are small businesses that I'm running. I just open up a handyman business because I want to cater to not only my past clients, but I want to cater to the flip's that I'm doing because I got tired of paying somebody else's margin.
Billy [00:26:31] I love it.
Erik [00:26:32] I own a marketing company that's about a million dollars a year. I have a bunch of investment groups. I have a private social club, which is like a hidden speakeasy. That's the only thing I have. That's not like real estate related, but it's pretty awesome. So if you ever come to Fargo, I can have you can have some moonshine in my basement.
Billy [00:26:48] I love a little moonshine, some cigars and mixing it up.
Erik [00:26:52] So the final pieces that are important to talk about is there's ancillary businesses from the core of what we do, like the handyman service is an easy ancillary business for me.
Erik [00:27:01] The coaching, the marketing, those were ancillary businesses because we're all doing the same thing. I've now opened up a mortgage company. I've opened up a moving company. I'm capitalizing on all these different opportunities. There's there's opportunities with insurance and with title and with property management, landscaping, all these things people are coming to me. Remember, my brand of Hatch Realty is a marketing and servicing company and I have a nine percent market share. I have the eyeballs, I have the ears, and I may as well keep every service in my own wheelhouse, from cleaning to lawn care to you name it.
Billy [00:27:36] That's like Virgin Mr Virgin. He's capitalizing everything. Everything is virgin related and you're Hatch related and you're just making shit happened out there in Fargo. Yeah.
Billy [00:27:45] Fargo, for chrissake.
Erik [00:27:47] If I go on vacation, nobody does.
Billy [00:27:50] So let's get into now your how you got. I know you got into the wholesaling and the flipping because obviously the business that you're in tell us some of the struggles in the beginning when you started doing the wholesaling that you experience, because I know you're you're a business guy. I know you understand business, but I'm sure there were certain things as you got down this road of wholesaling that we're a little bit different from the real estate. So maybe I'm wrong. But if you hadn't,.
Erik [00:28:12] It has been a giant learning curve. The and I didn't start off as a wholesaler. I started off as a guy that was going to fix and flip. And so that was I didn't want to sell to anybody else. I thought my ego had said and that would be lesson number one is my ego is like I can make a lot of money on this place. And when I started, I was paying eighty two cents on the dollar or so for prices and.
Erik [00:28:37] I remember I bought a place for two hundred and fifty thousand and put like 20 grand into it, and then I had my realtor fees and by the way, I'm paying fees to my company every time I do it, like my investor arm is totally different than my residential real estate arm. So I'm getting paid in a couple of different coffers. But when it was all said and done, I had risked in total, almost three hundred thousand dollars and I made 11 grand.
Erik [00:28:58] And so I'd like to do that. Made 11 grand. That's so awesome. I'm like, holy cow, I just risked how much to make.
Erik [00:29:05] And so now I'm getting more and more aggressive with my offers and less apologetic about beating somebody up after an inspection than that. Sorry. It has been it has been a learning lesson where I've wanted I'm an empath by nature. I feel what other people feel and I want to be a servant to them. But I recognize that it was at the at the cost of my own financial health and my mental well-being. And so I had to deal last year that I still own because I'm contract for it now to somebody. But it was it was like the Money Pit. And we all have those stories of the money pits. Right. I figure there was 60 or 70 grand worth of work that needed to go into this house. And the bigger the project, I thought, the bigger the profit margin.
Erik [00:29:48] And that was a really stupid mistake, Billy, turns out that the smaller the profit, the more predictable the the smaller the project, the more predictable the profit margin. And so I thought I looked at this house and like, I can make 60 grand on this one deal. Amazing. I'm going to spend 70 in it and then I'm going to sell and I'm going to profit 60 grand and it's going to take me four months. Well, the flip took eight months. I ended up putting one hundred and thirty thousand dollars into it. And then it sat on the market. It fell apart twice. Then it hit winter in North Dakota and winter in North Dakota is the exact definition of hell as far as I'm concerned. And so that thing just continues that I've now lost a sixty thousand dollars on that house. God, that the bigger the swing, the more aggressive my price has to be. Not I saw the I saw the potential of 60 or 70 grand in profit, but I didn't see the potential of 60 grand in lost. And that's what I have to pay attention to, is what is my risk versus what is the potential reward. And that's that's something if I can go back and do it again, I just wouldn't.
Billy [00:30:51] So in that particular deal, lessons that you learned that when was it the fact that you didn't have your construction course dialed in for your ARV? I'm sure your interviews and your realtor, you know, your numbers like the back of your hand. So I'm assuming it was the fact that you just didn't do due diligence enough on the rehab side.
Erik [00:31:06] So when we open up the walls, we learned some stories, things that we couldn't see from the inspection and we ended up having probably thirty five thousand dollars in wet basement things that were behind sheetrock that we couldn't see. And so that would have been one of them.
Erik [00:31:19] And the second story that is the true story is I had the wrong crew. Yeah. I had people that were slow to deliver on their work and they worked their bid in their actual like I was in some I'm not a guy that gets heated very often, but it was one of those red faced. I'm so pissed off I'm losing my mind kind of conversations and ended up getting I mean, I'd be seventy five grand in the in the hole if it wasn't for that one conversation that I had to have. So I had the wrong crew. They did shoddy work. We had to redo some of that work and that just that bit me really hard and then seasonality matters. I don't know if it matters in your market Billy, but seasonality matters here. And so when I plan on putting the house in the market in the middle of the summer, I put the house on the market on three and a half acres of land. I put I put it on the market in December, worst time of the year. And so now I had all the snow removal costs, all these extra heating costs. And then the deal one of the mistakes I made is I didn't stage the house. I left it vacant because I thought this is a hot market right now and a property like this should sell quickly. Well, I didn't. I then paid twenty five hundred dollars to a stager. It sold within a week. Yeah. So then we took the stage material out. It fell apart the week before closing and I had to pay twenty five hundred dollars again to restage that same damn house. And so now, now what I've done is I bought all my own stage and stuff. I'm done paying, I'm done paying a stager, I have a storage garage and I have a bunch of stuff. And my gal who runs all this for me, she doesn't have ownership of the company. She just has five percent on the flip's that I do. Plus I pay her a salary and she gets commission two. She gets kind of three, three different ways to get paid.
Erik [00:32:54] She does all the staging for me to like she's she's just kind of one stop shop.
Billy [00:32:58] You know, I just I want I want the listeners to hear this, though, because I want to reiterate, this is Erik Hatch. You heard me speaking of him in the beginning. This guy knows business, knows people, knows jobs, knows how to grow. But yet still, even with all that knowledge, you're going to run against troubles and issues, problems and shit's going to go sideways. And I say this all the time, whether it's one on one or over the podcast or from talking from stage, people in this business, people in life, you have to realize when you're traveling down a road, it's never going to go according to plan. Shit's always going to go sideways. But you need to have the mental fortitude, as you did, to get your shit together to realize, look, it's going to be a loss. It is what it is. What are the lessons that I've learned? How can I take those lessons and then bring them into my next deal so that shit doesn't ever happen again? But guess what? You can experience another set of problems on the next deal you do, because it's just the evolution of business, a life. It's all about learning and overcoming obstacles and taking yourself to the next level.
Erik [00:33:52] Yeah, yeah. Big, big swings require big kahunas and you've got to be able to deal with it and roll to the next one.
Billy [00:33:59] Yeah, I call it elephantiasis of the testicles.
Erik [00:34:05] Well, I think there's an ointment for that, Billy.
Billy [00:34:10] Listen, brother, if people you delivered a ton of value. Thanks, bro. I want to know if people want to find you out there, where could they find your social media website? Give them all your information?
Erik [00:34:20] Put my put my name on everything. So if you just look at Erik Hatch, I'm all over, hopefully. And that's Erik with a K, Erik Hatch on Facebook, Instagram, the YouTube's all that. I think some of the best value we can provide is via hatch coaching. So we have an awesome YouTube channel with lots of content, some about leadership, some about selling residential and some about wholesaling in that search. So we have a nice potpourri of things, but that's coaching over on YouTube.
Billy [00:34:45] I love it, brother. I love it. If you guys please subscribe to is YouTube channel, go to my podcast. Subscribe here. Like it. Give us five stars. Erik, you have been an absolute windfall of information today. I really value you, bro, in February, because I'm actually going to Puerto Rico for a month. I'm looking to get a move over there. I'm going to be moving there full time, hopefully within the next 12 to 18 months. So wow. Well, that's the move. Six months in a day for tax reasons. Of course. I get it. I get it. And so thanks again, brother. I really appreciate you coming out today.
Erik [00:35:14] It's a real joy. You the man, Billy.
Billy [00:35:20] Thank you so much for listening to today's episode of Unstoppable Real Estate Investing Wealth.
Billy [00:35:24] My mission is to keep you, my listeners, the blueprint for success, the insider secrets for starting, growing and selling. The Real Estate investing. You can experience it live the unstoppable lifestyle. I've made it simple for the catapult yourself to success, go to Billys Secrets Dotcom and billyssecrets.com. There you will find every single tweet, trick, strategy, system and secret use to make millions of dollars as real estate. Everything my team uses and my guest use all in one place for you to tap into. So you can start, grow and scale real estate.
Billy [00:36:08] Best, I really hope you implement what you're learning. I could utilize these tools, tips, tricks, strategies, secrets and I hope to see you on the other side god bless.