The Innovator's Edge: Eric Brewer's Strategies for High Volume Success

"Hello and welcome back to another episode of the Collective Clicks podcast. This is your host, Brandon Baitman, and today I'm joined by Eric Brewer. Eric Brewer's company flips or wholesales over 400 houses every year. Today, he shares with me some of the lessons that he's learned over that process through implementing different exit strategies and developing as a leader to help his company grow.

Welcome to the podcast, Eric. How are you doing?"

"Doing great, man. How are you?"

Hey, fantastic. Excited to talk with you again. I can tell you, you're one person every time we talk, I learn something, and I appreciate that a ton. So I'm excited for you to be on this podcast, mostly selfishly, mostly just because I want to learn a few things from you.

"Cool, well I'll do my best not to let you down. We'll see how we do."

So for people listening to this podcast that might not know you, might not know who you are, your background, or anything like that, could you share just a little bit about like, you know, who are you? What have you done? Like the history of how you've gotten to where you are today, and then you know, what are you doing now?

"Yeah, sure. So I am in York, Pennsylvania. It's a relatively small rural area about 45 minutes north of Baltimore, Maryland, and about 30 minutes south of the capital of Pennsylvania in Harrisburg. And then about 3 and a half hours east of Pittsburgh and an hour and a half east of Philadelphia. So if you sort of triangulate that stuff, I am in the southern east portion of PA, closer to Baltimore than really any other notable area.

I am a real estate investor, been doing it since 2006. Currently have roughly 40 plus employees. We operate in three markets within two hours of our home office here. We did just north of 400 real estate deals last year.

I got my start really in business in the automobile industry. Went out of high school, went into the army, got out of the army, got into the car business, spent eight years in the car business. Really learned how to sell there, learned how to manage, learned a little bit of marketing. Got burned out. The car business back in this would have been the late '90s, early 2000s, was very demanding from a schedule perspective, and it's never been known as like the most enjoyable atmosphere to either sell or buy in, right?

I think, uh, most people that sell cars don't love the experience, and I don't know, Consumer Reports said a couple years ago that like 98% of people that bought a car didn't love the experience as well. So I was, you know, that was catching up to me. The hours were weighing on me, and I was about to have my first child.

So in 2005, I left the car business, did some soul searching, decided to get into real estate. Started my real estate career in finance, was basically cold calling refinance leads at a mortgage company. And after doing that for about six months, my previous mentor from the car business got into real estate, knew that I had made the transition out of the car business, and called me. And uh, a couple days later, we partnered up, and in February of 2006, we started flipping houses.

So a little bit of my background, how I got into real estate, and then I think what you asked is what does that look like now. Our business today is mostly wholesale novation, and we'll do about 75 fix and flips. About a year ago, I started a commercial real estate investment group. We have about $200 million in commercial multifamily office and industrial projects currently in our pipeline, actively raising 50 million in private equity to fund those projects. That'll include acquisitions, fundraising, construction, property management, and then obviously the disposition of those properties, whether it be through refinance and retaining those assets or selling them.

And we also do some group coaching and real estate training, taking basically just the systems and processes, best practices that we've used to build our company in the last 17 years, turning them into outward-facing curriculums to share with other real estate investors that are looking to increase profits, reduce drama and stress, and then grow simultaneously. So hopefully that gives you a decent sort of snapshot of what we got going on."

Yeah, absolutely. I mean, it's more than I knew even. I didn't know about your commercial real estate investment. Um, I don't know if you call it company or initiative. Um, so that's pretty fascinating. One thing I've always been super impressed by is the volume you've been able to do in a relatively small and non-populous area. Like, you're always like the example in my mind of like somebody who can show like how many deals can really be done in a market, which is pretty fascinating. And then on the education side, what you mentioned, because I know it's how we know each other a lot, is we're sending people to your novations training all the time because I think, I mean, nobody really invents anything, but of all investors who do novations, I'm not aware of anybody who did it before you did. Is that, I guess, what I'm saying?

"Yes, so I think I innovated, not invented, the wholesale application of novs. The legal concept and application had been around for 100 years. However, until 2008 is really when I sort of stumbled on it, simply because I was looking to circumvent the FHA anti-flip laws that exist. Where now, you can imagine 2008, to give you just how pressing of an issue it was for me to figure this out, in 2008, like 99% of every borrower was using FHA financing.

You might say why? Well, it's because what fueled the economic collapse in the United States was financial, the mismanagement of mortgage loan products and a lot of fraudulent activity and liberal lending policies. So in 2008, like the hardest thing to do in the world was to get a mortgage. Like, nobody was lending money. It's why most investors went out of business, because their lines of credit dried up, not because they couldn't find good deals and renovate them and sell them for more money. They just, like, all of the capital marketplace went away.

So I'm flipping homes, like buying them, renovating them in three to four weeks, putting them on the MLS, and getting offers, but every borrower was using FHA financing. The problem with that is there's a seasoning requirement. So I bought and renovated in three weeks, I got to wait 12 weeks before the buyer can even write a contract. Then once you got an FHA loan on a flip house into underwriting, you were a marked man. Like, they were literally trying to find reasons to decline a loan on a flip house because as these foreclosures and short sales and all of this was unfolding, the biggest loss that mortgage companies were experiencing on their foreclosures were flipped properties.

So that information makes its way back upstream, and underwriters are given basically a directive like, 'Hey, like if this is a flip, you know, there's a lot of risk involved here.' And if you really think about a loan underwriter, their job is to hedge against risk. So FHA was a nightmare for me back then, and I was looking for a way to circumvent it. And novs, as you start to learn more about it, really gives you the ability to sell your wholesale deal to a retail buyer without ever taking deed or being on title or funding or renovating it, which means you're not exposed to FHA seasoning, underwriting, anything that pertains to a flip.

So that's where it started, and as I learned more about it, I realized there were all these other residual benefits, and I just started applying it to every aspect of my acquisitions arm of my business. And come to realize that like, I was passing up 50%, roughly 40-50% of my leads generated from PPC, billboards, mail, TV were properties that were in like turnkey condition. The seller was willing to take a little bit less than retail, and my old wholesale fix and flip, buy and hold strategy of acquiring it just didn't fit for them.

So I was throwing away all these really good leads, and once I started to understand novations, we started converting 10 to 15% of those leads, which, that's why we do such a high volume in a small market. Because we're literally doing another four or five deals per batch of 100 leads than any other investor would do that's only trying to fit those leads into a wholesale, buy and hold, wholetail, or fix and flip model.

That, I think we do a fairly good job of just hiring good people, having good data, managing people, leading people, training things like that. I think we do a really good job of just running a good business. And then you stack that on top of having this, you know, sort of Swiss army knife, you know, exit strategy and acquisition strategy, it compounds, and we end up doing a really good volume in a small market."

Yeah, no, that's pretty fascinating. So yeah, there's the brief idea on novations, which I think is super cool, and it's something if you listen to this podcast, you'll see we talked with quite a few people about those kinds of strategies. And you've been highlighted before as somebody that many people have learned this strategy from. So yeah, definitely if anybody's looking, you know, if you're just like, it drives me crazy when we talk to people that are like only wholesaling. Like, you're missing so much potential opportunity in this market. So definitely hit Eric up if you have any interest in that type of thing.

One thing I want to take a little bit different direction though, because I'm curious to hear myself, like as you look back, I mean, what's crazy to me is you just described like your career in business, and it starts like pretty much when I was born, you know. So you got a couple years on me. You got your beard's a little bit more gray than mine. A little wisdom chocked into that beard.

"That's right, that's right."

So anyways, that considered, you know, seeing that you've been in the real estate game for a while, I'm curious, like looking back, what are the big things in your opinion you've learned at a few of these different stages that have really helped you to grow your business to the next level?

"Oh man, I might need a notepad. So I would say originally, one of the early lessons was we call ourselves a real estate investor, and this is assuming someone that's running, you know, some level of direct seller marketing, acquiring, wholesaling, noting, maybe renovating or fix and flip, or financing these properties. The reality is that a real estate investor has to market, acquire, lead manage, disposition, possibly construction, finance, and what am I missing here? Operations support.

So even though I thought I had one job, that was to be a real estate investor, early on when I started the business, I was literally wearing eight different hats. And one of the things I think I learned early on was that rather than trying to be great and accepting average in eight different departments, the quicker you can get your business in a position where you can start to hire a more qualified person to do that segment of the business, and you only live in the segment of the business that you're really great at and you love, I think I would have made more money, I would have made more friends, I would have had less turnover, I would have probably simplified my life, I would have reduced stress.

Um, so you know, I think a lot of times we say, 'Well, I'll hire that person if,' or 'If I can only get to this stage of my business, I would add that person.' A lot of times we do that because we want to conserve the profit that we have, which I understand, and I was in the same boat. However, the majority of the time, that hire is what prevents us from actually ever getting to the next phase because it's impossible to be an A player in eight different, um, sort of misaligned departments.

If you're a great marketer, you probably suck at finance. If you're great at finance, you're likely not good at sales. So whenever we take on too much responsibility inside of our business, we generally accept below-average performance in one or more of those departments, and that makes business hard. So I wish I would have maybe made that adjustment a little earlier.

And then the second part of that is, okay, I need people. Well, what makes you a great marketer, acquisitions person, lead manager, dispositions person, construction project manager does not make you a good recruiter of talent, retainer of talent, trainer of talent. It's actually sometimes almost a completely different skill set.

So you probably hear, and I hear it all the time, where real estate investors say, 'I want to scale my business,' and you ask them why, and it's, you know, you might get 10 different answers: more money, more time off, more impact. And the number one thing I can tell you that's required to scale a business is people. And then I'll ask them, 'Well, what's causing the majority of all of your stress and frustration and bottlenecks in your business?' And it's people.

So the number one thing that's needed to scale and grow a business is people, and the number one thing most people struggle with at their existing phase of their business is people. And I didn't even see that. I thought I just needed to get better at marketing and acquisitions and sales and all that stuff. I didn't recognize if I stopped doing all of that and I just got really good at developing people and coaching people and teaching people and connecting with people and leading and influencing and nudging and correcting and mentoring people, all of that other stuff would figure itself out.

Because if you get good at that, the best marketers will come to work for you, the best salespeople want to come work for you, the best finance people want to come work for you, the best construction people want to come work for you. So as a business owner, I think a lot of times we overlook what it really means to own a business, and we spend too much time running a business. They're two different things."

Yeah, that's pretty fascinating. Okay, I'm gonna ask you a few questions out of curiosity. So I totally understand what you're saying, where like, you know, having experts in each of the individual things. Like, I've seen the same thing in my business, that like, oftentimes all that you really need for growth in a business is just to do like the most basic things in every department, and that's what a business needs to flourish. You know, you think you got to do something like crazy innovative, but it's like, you know, it's the simple stuff. Like, a lot of businesses, they just don't like, they don't answer their phone, you know. Does it take a genius to know you got to answer your phone? You know, no, but like actually doing it, people struggle. Like, we struggle to execute even these basic things. Um, so I agree with you on that.

But let's just say we put the lens on of like, I'm just going to give you some constraints. Let's just talk like, how do we deal with the difficulty that this is? So somebody looking at that, okay, what's the long-term plan? We have a leader of each of these eight departments, or whatever this looks like, and we probably have an operator over all those leaders, and we probably have some element of redundancy. So when people leave, blah blah blah, then we have ways that we can fix those problems, etc., right?

So that's kind of what this business looks like scaled, but when you're trying to figure out like, I have limited budget, limited resources, and I know that I can't necessarily accomplish that right now. Like, help me understand what you're saying. Are you just saying like an early-stage business should just be investing as much into people as they possibly can for the purpose of growth? Or like, how would you go through, like assuming you can't have the cake and eat it too, like how do you prioritize what's most important there?

"Yeah, I mean, I think, you know, so this is where the difference between small business and real business is different, right? If you were to start a conventional startup, they raise money and they hire all of those people first. So the way corporate starts, which there's a lot that we don't like about that, right? We don't feel like we have a voice, we get lost, there's too big, they can't pivot quick enough. But the one thing they have right is they know how to run businesses, right?

So what they would do is they would raise capital and say, 'Hey, it's going to take us three years to be profitable. Here's what we need as far as operating expense and salaries and marketing and all of this stuff, and we need that for three years before we become profitable.' So there's a lot of merit to that, right? It's probably the correct way to do it.

However, the reality is, when we're talking about small business entrepreneurs, that's just, that's literally the difference between corporate and entrepreneurs. They do that completely differently, and even though it's the right way to do it, it generally just doesn't work for guys like us. We, that's not where we are. We're grinders, workers, right? We don't fit inside of that corporate box. We like to blaze our own trail.

So now that we know that the correct way to do it, right, that's done through corporate, that doesn't necessarily, those same opportunities aren't made available to us. We really have to figure out, I think, what our unique ability is, right? So like for me, it's the ability to influence people. For you, it may be the ability to map out a very complex idea and make it simple for your customers to understand and make it simple for your employees to understand, right?

Um, those two skill sets, why they may sound similar, may put us, like they have in this instance—you in a different business and me in a different business—I don't think we give that enough thought. Sometimes people just gravitate towards something they think they can make money in without really understanding whether or not their skill set aligns. So, let's use an example of real estate wholesale. If you boil that down to its most basic concept, it's marketing first, sales second. So, if you're a good marketer, which means you understand how to connect words and messages to a potential customer's needs, that's all marketing. Here's what we can do: if you put that in front of the right group of people, they're going to call you. And once they call you, you have to sell them your product or service. Everything else is secondary, tertiary, and of lesser importance than generating and monetizing leads.

So, if you're good at marketing and sales, real estate wholesale would be a good business for you. Do that for a period of time until you've created enough income. Now, you start to look at what you're incompetent at and don't enjoy. That becomes your first hire. A lot of times in real estate wholesale, hiring an executive assistant would be my first hire—things like scheduling, replying to emails, booking travel—activities that don't produce income but are necessary. Hiring an executive assistant for $25 an hour, $40K a year, if we're running a business that nets us $150,000 a year. The first limiting belief is if I'm making $150K and I hire someone for $50K, I now only keep $100K. Follow me? I think the reality is if I make $150K, I pay this person $50K, now I make $250K. Does that make sense? Because now I'm working on more income-producing activities.

So, there needs to be a strategic hire with an entrepreneur, always moving the lowest income, lowest impact, lowest energy task off your plate and onto someone else's. That allows you to function in this concept: only in things that either generate a lead or convert a lead. So as a wholesaler, you hire an EA. Everything else that doesn't involve talking to a customer and writing a contract, you've delegated. You're now talking to twice as many people, writing twice as many contracts. Got it? So it's almost like what you described before as the end state, but you're saying the process to getting there is looking at what sucks your energy away and what takes your time, and then delegating those one piece at a time.

So, probably at the beginning, you do start out like day one, you lead eight departments. And then slowly getting rid of a few of those things as you go along. Yeah, when we start, that's exciting, exhilarating, right? Because it's new, it's fresh, and it's us breaking the mold of what everybody told us we had to do. But at some point, the excitement wears off, the honeymoon phase is off. It's like, 'Hey, doing that stuff is no longer cool because I've started my own business.' We've got to start being smarter about how we spend our time. And we have to, you know, the value of small business in our country is to create opportunity for more people. So if we just operate in this little shell and we're a one or two-person operation and we never create a big enough organization to bring other people into that with us, to me, that would be a shame. But that's just me. When I look at business, it's at least twofold, right? It's the ability to help more customers and maybe of equal or greater value to me is the ability to help more employees. Like, give people a place to work where, you know, generally in corporate, most people would tell you corporate sucks to work at, right? I think we have a unique opportunity inside of small business to create a more meaningful experience for people inside of our businesses. And to not grow and expand, to open up that opportunity to more people, to me, would be a shame. But that's just me. That might not be for everybody.

Then the money comes with it, right? If I help more customers and I make working for me a more enjoyable, rewarding place to be, in my experience, you end up making more money. Yeah? No, that totally makes sense. Let's talk about attracting and retaining great people. I'd love to hear a little bit more about your strategies there. I've always kind of thought of it as the number one trump card in business because you can learn to market, you can learn to sell, you can learn operations, you can learn finance. But if you just learn to attract good people, then you have the ability to acquire the greatest of any skill that could exist in the marketplace, right? So that's obviously the most scalable long-term solution there. And it seems to be something that a lot of people don't agree on—what good people are. I know my definition of a good employee has changed a lot over the years that I've been in business. What I thought was the right person at one point is really different from what I could think is the right person now. And also, finding those people can be really hard. Sometimes it's easy. I'm just curious to hear, in your opinion, the right way to go about that. What's been successful for you? And what have you found is the key to attracting and keeping those people?

The short version is the best way to find great people is to become a great person. Let me say that again: the best way to find great people is to become a great person. So what does that mean? Each person may see it differently, but for me, I think there's defining and upholding standards, you know, five to seven characteristics. Or if you've ever read the book 'The Seven Habits of Highly Effective People,' right? So how do they take care of their body, how do they take care of their friends, how do they take care of their family, how do they take care of their spirit, right? How do they take care of their finances, right? And you know, what I think, to your point, like what I would have thought a good employee was 15 years ago is someone who would take instruction, if they just did what I told them to do. Now, today, that's almost opposite. I want someone to challenge whatever anybody tells them to do, to potentially find a new or better or more efficient or more cost-efficient way. So that's almost a 100% opposite, right? I don't want people to do; I want them to think.

Now, what you start thinking about is, well, let me go back. The number one way that I hire talent is through social media. And the way that I attract talent through social media is just myself. I talk about what I'm going through as a father, what I'm going through as a business person. I read an awful lot every day and every week. And then I sort of take that information that I read, I apply it to my own experiences, my own circumstances, and then I share my perspective. And that attracts people who—it attracts people that are in sales, it attracts people that are into being an entrepreneur, it attracts people that are into becoming a better father and a better husband and a better leader. So my experience has been a well-documented personal and professional journey on social media that's authentic and organic has attracted A-players to my organization. That's been my own personal experience.

Then I think what you have to document is what your version of an A-player is. And in our organization, we look for what we call an ideal team player. That's from a book written by Patrick Lencioni. And the three aspects of an ideal team player are they're humble, hungry, and they're smart. And by smart, he means EQ, not IQ, right? So they have the ability to handle conflict, maintain meaningful and respectful communication even when there's a lot of pressure or there's tension or disagreement that arises, right? And then we look at core value fit. So we have a set of core values that are non-negotiable for us. That is perspective, having a can-do attitude, integrity, doing the right thing, excellence, which means improving and getting better every day, respect, which is our EQ core value that means to treat people the way they want to be treated, not the way I want to be treated, the way you want to be treated. So I have to have an awareness about me of what other people want, what their desires are. And then humility and discipline. So we run them through a series of questions and interviews that verify those core values are something that they align with.

And then, of course, we look at their ability to be able to do the work. Do they have the skill set and the cognitive thinking ability to do the job that we're interviewing for? And then there's some, what I would call soft skills. And I'm in the process of actually—we're going through what we call like a force-ranking, top-grading process in our organization right now. And we just did it last quarter where we ranked everybody. Before I got there, it was A, B, C, D, E, F. And when I got to the quarterly, there were all these people batched into this B category. The problem with that is it doesn't make you make a decision. It doesn't—like nothing happens with that. Like most people, if we said they were a B player, we'd probably leave them alone. So I said, "Hey, we're going to redo

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