WS1338: Nine Steps to Closing a Deal | Daniel Kwak

EPISODE 1338

[INTRODUCTION]

Daniel Kwak (DK):  

It is a big elephant. You know, if you think about like, just ask every regular person that’s attending a real estate conference, like they’re gonna say, I want like 20, 30 doors, right? That’s kind of like the average I get. Some are like I want like one or two deals done. So, people are like, I want to be the next like Ken McElroy, right, or like, you know, or the next Whitney Sewell. All right, like, to their credit. So, it is a big elephant. But, you know, for me, one of the things I did is reverse engineer my goals into my most desired highest performing action step. It’s what I did.

Whitney Sewell (WS):  

Do you set goals or New Year’s resolutions? Our guest today is going to help you to think differently about those things, and how you pursue those things. He’s going to help you to reverse engineer it but in a way that I’ve not heard many people say before, and I know you’re gonna learn a lot. I love making things simple. And I love thinking about man, what is it today that’s going to move the needle for me and or tomorrow? Or if I keep these same tasks going? That’s what I need to be focused on and not getting distracted. And what are those things for you? 

Our guest today, Daniel Kwok, he is going to help you think through that. Motivated by continued financial hardship throughout his life, Daniel started learning about real estate investing. At age 26, Daniel founded Miotti Partner’s Capital, a core-satellite fund that has introduced the equities and management model into the real estate space for the first time. Daniel and his brother currently run an online financial education company, along with a YouTube channel, The Kwok Brothers that currently has over 100,000 subscribers. Daniel is going to go into numerous things today. But a big thing is how do you think about where you’re trying to go and how you’re going to get there. I know you’re going to learn a lot. And it’s going to help you to really think about what you’re doing today? And is that helping you to get to that final destination you’re looking for. 

[INTERVIEW]

Daniel, welcome to the show, honored to have you on just after reading a little bit about you. I know you’re motivated. I know you’re somebody who thinks big goals, tackle things that maybe most people wouldn’t tackle or wouldn’t attempt to tackle as well. I like talking to guys like that, and gals. I feel like I relate to that. And you know, I want to go after it right and make big goals. I feel like you’ve done that. So, give us a little bit about your focus your business model, and maybe your background, let’s talk about that.

DK:  

Yeah, by the way, I love that you said you know, the hard runner, the motivated. And, you know, that’s something that I’ve actually been reflecting on recently, I have a lot of friends who are, you know, my age, but we’re all crushing it in the field of entrepreneurship. And one of the things we talk about how is all of our lives and there’s three friends I’m thinking about in particular, I have a buddy named Chris, Kevin and a buddy named Alex and every single one of them run probably an eight, nine-figure company, you know, so we’re all kind of at this. We’re all peers, you know, and we’re all kind of going the same place. But at the same time, we’re all in our late 20s. But one of the things we talked about, and you reminded me of it, so sorry if I’m going off on this wild tangent than you’d expect me to go to, but I feel like our generation were so enamored by the whole Gary Vee philosophy, right? The whole hustle 18 hours a day, you know, you eat ramen noodles, and all this stuff, boom, boom, boom, and we’re talking about that’s, that’s awesome. And that’s attractive, because I think people are attracted and they fall in love with the idea of being told that they need to work harder, because a lot of us have this narrative, right. And these concepts like impostor syndrome wouldn’t exist if this narrative wasn’t in our head. 

But there’s this narrative that we feel like we’re not good enough. And we feel it, our wives feel it, our friends feel it, like every single human being 90% of us at least have this narrative playing in our head that to some degree that we’re not good enough. And I feel like when someone like Gary Vee gets on stage and just goes oh, you’re not gonna, you have to work harder, you have to work 18 hours a day. That’s what you know, a lot of times us millennial entrepreneurs we are attracted to, but there’s another guy that not a lot of people know, a guy named Dan Kennedy, who you know, is one of like, the big like The Godfather of marketing, right. And he was one of the arguably one of the most successful people in business. And it’s crazy that not a lot of people know who he is. But, I mean, his whole philosophy is like, no, like, you get as much done as you can in eight hours because, you know, I gotta be on horses by the time it’s 4pm. And, you know, he talks about the idea of learning how to do in four hours, what it takes most people 10 hours to do. And that’s actually what I personally experienced, when I got married, when I was dating, when I was single, I would work that 14, 15, 16 hours a day, you know, like the whole Gary Vee, go get it, get after it, you know, motivation, you know, stay hard, right. And then when I got married, I was worried that we were going to actually lose revenue, I was worried about that, that I was gonna be less productive. And I was in a position where I can only work nine to 10 hours a day. And surprisingly, our revenue almost doubled year over year, and I was significantly more productive because I told myself alright, I gotta, I gotta find what it means to get done in seven hours, eight hours, what it usually takes me 20-30 hours to do. And that was one of the things that led me to hire a performance coach. And not only that, but really just sit down and learn what it means to slow down, but in exchange know that I’m going in the right direction. 

A lot of real estate entrepreneurs are running 120 miles per hour right now in the wrong direction. And I’m not talking about, you know, just buying really bad deals during a market crash, you know, I’m talking about in every aspect of life. So again, sorry about the tangent. But to answer your original question Whitney, was my business model was my specialty. So, I’ve done a lot of different things in real estate. So, I started a real estate fund about four years ago, that’s a 506(c), and we do lending. So, we do lending that is collateralized by real estate deals, I myself still do real estate deals as well by target 50-plus unit buildings. I’m currently going after helping somebody acquire a 98-unit building. And you know, they’ve graciously offered some GP shares to me, and then I’m going after some other, you know, 80-some units and whatnot. 

But obviously, just based on today’s investment landscape, I’m very selective. And I’m very choosy about how I structure those deals. So, on top of that, I’ve got a nice YouTube channel. That’s kind of like my hobby. We talk a lot about geopolitical finance. And we talk about this fun stuff, things that I personally find very interesting. And then my brother and I have a couple of finance companies as well on the side.

WS:  

Nice. Now, honored to have you on and I appreciate the tangent as well, because I think we can all relate to that, you know, in a big way, or to some degree anyway. And I wanted to I want to focus on that just a moment, because I think it’s crucially important as we get married, or we have kids and just the mindset of man, you thought that you were gonna lose revenue, but it actually doubled. And I find that man, it’s, you know, we can, you talked about, you know, you just run, run, run almost run directions, like running on a treadmill, right? You’re not going anywhere. So, I want to harp on that almost just a moment, or let you, what does that look like? What changed for you? You know, it almost takes something like that to push us to a whole another level. So, we think differently about things. So, we, it pushes us to do things right that much more efficiently than maybe we would have. And so, what did that look like for you, Daniel? How did you learn to double down on things in a way or change the way you looked at goals that were maybe really big or tasks that would have taken, you said, what 24 or 23 to 30 hours, something like that, you know, but now you can do it in you know, in a fraction of the time? What does that look like? How did you learn to do that help us to think through that?

DK:  

Yeah. But I, you know, I think first and foremost are the entrepreneurial culture of today. They don’t reward that, right? Because if you think about on social media, on platforms, on public platforms, the internet just period, we reward short-term success. And a lot of times, you know, when people fall, we don’t post about that, right? Like, we don’t share anything about oh, hey, I lost half of my portfolio because of this because of that. So, it’s just people assume that speed is always better than direction. So, I think a lot of entrepreneurs would be surprised how much more efficient they could personally be if they just sat down for 30 minutes a day, and just said, okay, here are my three, four biggest projects that I currently have, that I have to do the next seven days. For me, what are my own ideas on how I can do them better, faster, more efficient. And number two, who are the people that have done these tasks before that can help me do it much better. And for me, that was one of my biggest cheat codes, right? And I’m all about cheat codes. I remember when I used to play video games as a kid, I would only play if I had cheat codes, like there would be no playing the game. You know, it’s been normal, normal way. I’m like, no forget that, like, give me the cheat codes. So, one of my cheat codes has been developing relationships with people who have just gone before me, you know, mentors. And every task that I do you know, what I call KPIs, right, what people call key performance indicators, you know, I’ll bring them to my mentor. And I’ll ask them, hey, like, is this the best thing for me to do right now at this moment, in this way, and I’ll just go crazy with the amount of questions I asked. 

So really quick story. So, in January 2017, January 1, I did what’s called a New Year’s resolution, we all do them, right? Like a lot of people are like, well, I wanna lose 30 pounds, I want to stop watching this much TV. My New Year’s resolution was I wanted 20 rental doors. That’s what I wanted. I told myself if I can get 20 doors by December 31, 2017, I would have considered this year, a massive success. And so, I shared that with my mentor. And he goes, that’s done. And I’m like, why? He goes, Daniel, word to the wise right, never set goals, always set standards, and expectations. And I looked into that, and that phrase, it’s stuck with me, I got I don’t know why but I just became obsessed over and I started reading about Olympic athletes world-class, you know, chefs, athletes, you name it out for a lot of them, you know, their standard and expectation is what gets them towards success as opposed to a goal. So, I started asking myself Okay, so what are the standards and expectations I can set on myself? Every day, every week every month focused around you know, my tasks that produce 80% of the results stuff like recruiting investors, underwriting, looking for properties, you know, developing my team, you know, like you know, what are these things I could do so, I spent a week just writing every single day I just wrote down, you know, a bunch of items, bunch of tasks that I could do that helped me gear towards success, and then through a two-week process of sharing them with my peers research and bringing them to my mentors. I nailed it down to five things I did every day three things I did every week. And one thing I did every single month for a total of nine regular action steps that I did, and I established my flag, I said, these are my standards and expectations I do every single day. 

It was actually inspired by John Maxwell. Right. So, John Maxwell wrote like 470-something books. Reporter was like, how did you do it? Right? He goes, I just wrote five pages every single day. I didn’t care if it was Christmas, my birthday, Thanksgiving, Canada Day, but right, like I just wrote five pages every single day. But the catch is I did it for 35 years. And if you actually do the math, right, so if people are listening to this episode, and they’re listening to on their phones, like break out your calculator, and just simply do the math just do five times 35 years, however many days that is so 35 years times 365, that’s 12,775, you do that times five, that’s 63,875 pages. So that’s a lot, right. So, you could see how John Maxwell could easily get 400 something pages. So, I did that every single day, every week, and every month, and December 31, I ended up with 87. So, I know my book and my mall, my marketing says zero to 75. It was actually 87 doors, but my brother who’s the marketing genius was like you got to do you know a number that’s more like, well, no, yeah, do 75 or 50 or 100, right? So, either by 13 more doors or just cut it to 75. And I was like, alright, you know what, like, forget it, let’s just do 75. But I ended up at 87 by December 31 of 2017. Because I focused more on the process than I did on the results.

WS:  

Love that. I think that’s interesting. And I don’t hear that talked about too often. It’s like focusing on you said the standards and expectations versus setting a goal. And I really think you’re setting yourself up for more long-term success, right? And just more stamina when you’re just man, just that keeping up. You know, it’s just the steady rhythm. There’s another method of thinking about that I hear people talk about called the 20-mile march. And you know, it’s you’ve may have heard of that before. But you know, it’s like, yeah, you got two guys, right, going from West Coast to East Coast. And you know, it’s the guy that just no matter the terrain, no matter the weather, you just 20 miles every day, 20 miles every day, you know, while the other guy gets up one day, I don’t really feel too good. So, he, you know, he’s a little lax today, maybe he does five miles. The next day, maybe he does 40. The next day, you know, it’s hot outside, I may do five miles, you know, and obviously, he gets like half as far, you know, as the guy that just every day 20 miles, whatever the train was what, uh, however, he felt that they just didn’t matter. He knew what he needed to do. And he just was consistent, right? So, I love that I love how you broke it down, though to nine action steps, like you focus down to say, you know, these are the things that are going to help me to get that done. These are the expectations or standards for myself. Could you help us to think through that a little bit, though? Or maybe how you did that? Because I think that’s yeah, it’s hard to do sometimes we when we see this, like this elephant we’re trying to eat right, you know, and obviously, it’s one bite at a time. But man, where do we start? Which bites first? Almost. Right? How did you narrow that down to nine for yourself?

DK: Yeah, and it is a big elephant. You know, if you think about, like, just ask, you know, every regular person that attending a real estate conference, like they’re gonna say, I want like 20-30 doors, right? That’s kind of like the average I get. Some are like, I want like one or two deals done. So, people are like, I want to be the next like Ken McElroy, right, or like, you know, or the next Whitney Sewell. Right, to their credit. So, it is a big elephant. But, you know, for me, one of the things I did is reverse engineer my goals into my most desired highest performing action step. It’s what I did. So, what my mentor walked me through was they took me to, we roll dice from the rows doing this. So, we got an office, it was a whiteboard. And he says, okay, your goal is 20 rental doors Perfect. Let’s think about all the things you have to get done in order to reach that 20. Because there’s a lot, right, like real estate is not an easy game, right? Otherwise, everybody would be doing it right? I mean, think about the amount of things you have to do. You have to develop your whole team, like your maintenance guy, your attorney, your broker, your appraiser. I mean, you name it, and then you have to raise the capital to be able to do that. In order for you to do that, you have to know about partnership structures, you have to know about legalities, you have to know about capital stacking you have to know about distribution waterfalls. I mean, there’s so many different technical things you have to know about and we haven’t talked about underwriting or even identifying the opportunity, which by the way for finding deals, my biggest golden nugget I ever got on finding deals was this guy named John Dessauer told me and he’s got like 3000 doors phenomenal guy. And he told me, “Daniel, you want to know the best ways I find deals?” I’m like, yeah, what’s up? “I never looked for properties. I look for people because at the end of the day, we’re a people business and real estate just happens to be the product.” So instead of focusing on tactics like going on the MLS, Zillow, Redfin to try to focus on finding the building. What I did is I build relationships with people like property managers, bankers, attorneys, people who can find these sellers and not properties. 

Okay, so going back, there’s a lot of things that we got to do right, the elephant is certainly a big thing to eat. So, my mentor and I whiteboard, he wrote down 20 rental doors, and we reverse engineered all the things that we had to do. Okay, so let’s start at closing and let’s work our way back. Right? So before closing what do we have to do? Okay, we got to do this, we gotta do that. And all we got to the point where it’s like, okay, what is your deal finding strategy? What is your lead people seller finding strategy?  And that’s what we focused on. And you know, if you think about any other business, right, like you have marketing, and then you have sales, and it’s the same thing with real estate, whether you’re raising capital, or you’re trying to buy a property, you have marketing, and you have sales, the reason why most people are really bad at negotiating is because their marketing sucks. They don’t know how to put them in the best position for the individuals to say yes, so I teach this to my coaching clients all the time, where it’s just don’t focus on saying the right thing so you can sell them. Focus on building the environment so that they can’t say no, right? Focus on creating a situation and finding the people that are not going to say no to your product, as opposed to finding people that you can sell to. So, a great example of that is, so my specific goal was to do 20 rental doors, but kind of subtitle below that was buying them seller financing, mainly because part of my story is at 18, you know, I had negative $187.65. In my bank account, I had to maxed out credit cards. And one night, I found myself trying to look for my dinner instead of a dumpster. So, I didn’t have the best credit. I didn’t have, you know, 10s or hundreds of 1000s of dollars in capital saved up to buy buildings. I didn’t have a massive network, you know. So, all these excuses that people come up with, well, guess what, buddy? I’ve gone through them myself and probably worse situation. So, I couldn’t go to the bank. I actually told a commercial lender one point what my DTI was, and, you know, my financials. And they, they laughed at me, right? They were like, yeah, no way, kiddo. So, for me, like what most people would see as a handicap, I saw it as a benefit, because most people are like, oh, like, I have to buy them seller financing, I have no choice, right? I saw it as I get to buy these properties, seller financing, and I the mindset shift, focused on what I needed to do, which was okay. And this was the reverse engineering part, right, that my mentor helped me walk through, it was okay, if I have to buy these 20 rental units, seller financing, let’s talk about how do I create a situation where people want to buy and I don’t have to sell them. So, I started listing off all the benefits of seller financing everything from hey, like, you know, you get, it’s an opportunity for you to defer your taxes, right, or at least at the very minimum, depending on what state you’re in, put yourself in a lower tax bracket. Number two, it’s an opportunity for you to make money, like the largest entities in the world, which are the banks, right, you get to make money, like the bank, make money on the interest. And on top of that, you get continuous money coming in. So, I asked myself, okay, those three, four, or five benefits that I drew up, who benefits most from those benefits? And this is the question that every single successful business asked, which is, who are the people that benefit the most from my product? Right, who resonates the most with my message? And so, I started thinking about it. And I started asking you a lot of questions. And you know, asking a lot of mentors, and you know, after about three or four days, I realized, and forgive me if this offensive word that I’m gonna use its old people, right? It’s well-seasoned individuals, I’ll use that. There you go. It’s well-seasoned, experienced individuals who resonate the most with that message. Because, well, if they’ve owned the property for more than 27 and a half years, well, like, chances are that the Oh, it’s paid off, right? And then there’s no loan that they need to pay off and, you know, they’ve depreciated the asset, there’s a lot of depreciation recapture a closing. So, they need to find ways to save money, you know, to, to mitigate not only the ordinary income tax, that they depreciate, but also the capital gains tax because well, what does real estate tend to do over a plus 27-and-a-half-year period tends to appreciate, right? It’s one of the things we love about it. But not only that, but you know, these are individuals who, they are in their phase in life where they wanted their money to work for them, a.k.a. make money as the bank off of the interest and also, you know, get money coming in every single month, right? These are the golden years, as they say they want to travel they there’s a certain lifestyle they want to uphold. 

But now the question then became how do I find seller financing deals all the way to how do I find seasoned landlords? Right? And it became more simpler, right? But then I started thinking of ways well, how do I attract and find seasoned landlords? So, I started doing things like calling the for rent ads on the newspaper, I started doing stuff like driving around and calling the for rent signs, you know, because, again, this is a stereotype. But I know that older landlords probably aren’t going to use the most technologically advanced way of marketing their property, I again, that’s just an assumption that I made. And I started building relationships with property managers who are in their 50s and 60s. And sure enough, like 90% of all my leads that I talked to were landlords who are 65 and older, and that led me to some of the best deals I’ve done. So, my KPI is my regular, you know, action steps, but one of my weekly ones was actually spend four hours a week driving around a particular neighborhood and calling the for rent signs. And I have like a two-hour training I do on just how to do that. But, you know, just to give you an idea, that’s that was one of my weekly action steps that I had is every week, you know, it’s like a 20-mile march, right? Every week four hours, no matter what I’m gonna get up, and I’m gonna do four hours of calling for rent signs, you know, every single week, newspaper ads, you know, I’m gonna build at least one relationship, one new relationship with a property manager, or a banker or an attorney, somebody that might know a landlord that’s 65 and older, I’m going to build a new relationship every week. You know, that’s what that was another one of my weekly stuff.

WS: I mean, you just made it simple for yourself, ultimately, right? I mean, you did, you’ve reverse engineered that you started at the closing table versus starting at where am I going to find a deal and worked your way backwards and figure it out those nine things, I appreciate that Daniel, grateful to meet you and have you on the show, I look forward to having you back. There’s numerous things I’d love to go deeper into that I know you’re very focused on and really good. Tell the listeners, though, how they can get in touch with you and learn more about you.

DK: We give a lot of free stuff away. We all like free stuff. So, if you go to thekwakbrothers.com and there’s a tab where it says free stuff. I mean, we have a free real estate course in there, you know, we give away owner financing course we give away, you know, a mini-course on how to raise capital. So, I mean, a lot of these things I talked about here. I mean, if you want more detail, more how-to version of that. I mean, feel free to just go there. And then all we ask is your email address, so we can add you to our database. But yeah, it’s I mean, there’s a bunch of free stuff in there. My book is for free, which outlines you know, my journey on how I went from zero to really 87 doors in one year, and a setup to that. So, all of its there, I just want to give stuff away and so thekwakbrothers.com Just click on the free stuff and all that’s there.

Whitney Sewell: Thank you for being a loyal listener of the Real Estate Syndication Show, please subscribe and like the show, share it with your friends so we can help them as well. Don’t forget, go to LifeBridgeCapital.com, where you can sign up and start investing in real estate today. Have a blessed day. 

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