Technology is no longer a luxury but a necessity for businesses to thrive in today’s fast-paced world. Investing in the right technology, coupled with metrics-based decision-making, can make all the difference in achieving success. In this episode, Don Costa, a real estate rehab and investment expert, discusses the role of technology in business. Don shares his journey as an investor and how technology has become an integral part of how businesses are run today. Don highlights the importance of metrics in making informed investment decisions and how technology has made it easier to track and analyze data. He also shares essential coaching tips for entrepreneurs starting to build a business and the fundamental bits around CRM systems that can help them succeed. Join us in learning more about the power of technology in business decision-making!
About Don Costa
Don is an entrepreneur to the core and loves making deals. As a real estate rehab and investment expert, he purchases distressed houses, conducts quality renovations, and sells turn-key homes, and shares all his knowledge as the host of the popular Flip Talk Podcast.
Real estate investing has genuinely changed Don’s life for the better, which is why it is his mission to help others do the same and grow their real estate business as the guy that gives “real talk for real estate investors.” He attributes much of his success to being surrounded by the best people in the business, which is why he founded the Inner Circle Elite mastermind, to create that community for others.
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Facts vs. Feelings – with Don Costa
Hey, everybody, it’s Jordan Samuel Fleming here with another episode of That Real Estate Tech Guy. And I am delighted that my co-pilot for today’s episode is none other than Don Costa from Flip Talk. Don, welcome to the podcast. Why don’t you give a little introduction to yourself and all the things you do?
I’ve been a real estate investor for about 20 years. I started in 2003. Currently our business model, we wholesale, we fix and flip, we do some buy and hold. And we have a handful of the strategies we implement. But primarily, my game for the last 20 years has been direct-to-seller through different marketing methods. And in wholesaling, and fix and flip.
When you think about your journey as an investor, and particularly in terms of how much technology may have moved to the center of how a business is run, can you give us a little bit of a feel of that journey?
When I started, YouTube was just barely in its infancy. I started back in 2003. I think 2004 and 2005 was when YouTube was starting to become prominent. So we didn’t have YouTube University.
I have a podcast. I’m an educator as well. From an education standpoint, we didn’t have the same resources that people have today. Just to know where to start right before it was like late-night television, infomercials were where we would get an opportunity to maybe buy a product where we could gain some knowledge. So that aspect of it is totally different for those people who are looking to even start in the real estate game.
The opportunities for knowledge and information that are out there are abundant and fruitful. And if you’re not starting your journey and entrepreneurship or real estate investing in general, then you’re doing yourself a disservice because the opportunities that you have today compared to what I had then are night and day different. And then you take the technology and the resources from just being in the business.
So I remember printing. I started pre-foreclosures, I started door knocking pre-foreclosures. We didn’t have the same type of resources with some of the products out there as far as data opportunities, smrtPhone, or other opportunities out there. So we had to dig through newspapers, websites, and go to title companies to get our information in our data. I door-knock pre-foreclosures. So I got listed with the title company. And then I would build out a route and Microsoft Streets maps. And then I would print the pages. And I would literally flip through the pages and I’d follow the route and door knock with Microsoft Streets and Maps. And so, GPS was just starting to become a thing. I remember my buddy took his computer, and he bolted his computer into the passenger side floorboard and ran a little antenna out so that he could do his route on his computer. And that was after about two years in the game.
Technology has advanced so much and become so attainable for us today. Just looking back, there was a lot of blood, sweat, and tears—a lot of grunt work back then. And now it’s like, technology just makes it so easy that we don’t even think about the fact that there was a time when it was hard to do.
There’s something that I’ve seen a lot with investors, which is this shiny key syndrome. They honor this, and the discipline of grafting a craft and really deeply understanding something maybe doesn’t go hand in hand with jumping from one thing to the next. Is there not enough focus on the graft part of the technology revolution?
Shiny object syndrome is a real thing. So, being able to stick to something, having that discipline is very important. It’s there. It is a double-edged sword because it’s so easy. I mean, really, the only thing that really holds anybody back is confidence at this point in time. But the knowledge is there, the resources are there, the technology is there. And it’s inexpensive compared to where it was when I first started out. And so the only thing holding, holding you back at this point is confidence. Just actually taking massive imperfect action and gaining the confidence each step you take.
The second thing that usually takes over is the shiny object syndrome system. It’s like, I haven’t given this enough effort to really see results, but I’m gonna go over here. And then I haven’t given this enough effort to really see results. And I’m gonna go over here. And that is a thing. That is a real thing. And, as you said, there’s got to be some discipline. And I don’t think it’s an old fogey thing. Even those of us who’ve been in the game for a number of years have to be conscious of the fact that we have the ability to suffer from shiny, shiny object syndrome as well.
We get to say discipline is hard when you see Facebook highlight reels and somebody’s doing some new crazy thing. Or maybe that looks like they’re winning on the Facebook highlight reels. But you don’t see what’s going on behind the scenes. You don’t see the blood, sweat, and tears that got them there. You don’t see the mistakes they made. You don’t see whether or not it’s really working or if they’re just bragging. So it’s important to stick to the fundamentals. And it’s important to follow a path. It’s important to make sure that path is going to work and that you have it working to its fullest ability before you start to add layers of other things.
The graph shows everybody who’s successful has an element of hard work and mastering what you need to do. There’s luck involved, and all these things. But hard work is no substitute. One of the reasons I started this podcast is I feel like a lot of people view technology as a quick and easy solution as opposed to a structural solution to building a scaled business. What do you think?
Well, that and just everything is moving so fast. Over the past 20 years, it’s not like I just won the entire time. And I’ve come up with this, I’ve won and I’ve lost, and I’ve lost big in some cases. And what I’ve proven to myself over and over again is the fundamentals. They work. And everything else is just a shiny object.
There are fundamentals in business. There are fundamentals in real estate investing that the numbers are the numbers, period. You can’t square peg, round hole, the numbers. You got to have good people on your team. You’ve got to invest in those people and invest in yourself and become a better leader. When all marketing works, if you actually understand the marketing and you deploy it properly, usually, what happens with marketing, that’s the disconnect. Or where it’s broken, after the phone rings and you’re not paying attention to making sure what you’re doing. The proper sales cycles and follow-up properly, and that you’re doing the things in your organization to make sure that you’re maximizing every dollar.
And so many people think well, I’ve deployed this money in marketing, but I haven’t got as many deals as they want. I haven’t got a deal. So I need to change the marketing channel. No. What happened after the phone rang? Maybe that’s what you got to fix. Do you have the right system when people are calling in so the call is being handled properly and going into the right place? Are your calls being documented or recorded? Are your leads being documented so that you can do a proper follow-up in your CRM? Are all those things happening so you can maximize that marketing channel? If you don’t, if you don’t fix the core component of your business, if you don’t fix the fundamentals in your business, then nothing you do outside of that is going to produce the fruits that you want it to produce.
Scaling a business is hard. Starting one’s easy. And that’s where I think your point about the fundamentals and how you execute the business fundamentals. And for instance, if we look at technology, the fundamentals of an acquisition CRM, I look at things like the visibility of leads, follow-up structures, and maybe the ability to view all the communications. What would you say are some of the fundamental bits around maybe CRM systems that you would coach people on and see as essential if they’re starting to build a business?
I still think technology is important and having it in place properly, even if you’re a one-man or one-woman show, because that’s really when you need to be on top of things. So you don’t have the people in place. So for me, I’m a big system and process guide. A system is one of three things- a person, a process, or a product you implement in your organization. So if you have something that’s broken in your system, you look at who can handle that. What’s the process we can put in place? If A equals C, then D, right? So what’s the process, or what’s the product or program we could put in place? For instance, smrtPhone, being able to tie in with a good CRM, documents the calls coming into your organization. So you can see, for instance, that we do marketing.
I’m taking a deep dive here, but I send out postcards. I’ve been known for sending out a million postcards in a year. We track everything. So we will code our postcard with whatever lists we’re mailing to. Not only will it tell me who called, but it’ll also tell me what marketing channel they called off of, what list they called off of, and what postcard I sent. And that way, I know when I sent that marketing piece. And so we just locked up a deal that we’ve had in our CRM for three years. It’s now a marketing follow-up channel in our system. But it tells me, based on what smrtPhone told our system, that that was a list from 2018, and that I actually did originally call in in September of 2018 off of a marketing list. So there was even data from the original call. So we’re able to track things down to a granular level. And we’re able to make decisions on how to best deploy our marketing based on that data that comes in. That’s a deep dive at a high level, but even for a one-man or woman show, to be able to just be on top of your follow-up like a good CRM and having some good components in place to be on top of your follow-up because when you’re running wild, you’re doing it all. You’re doing acquisitions, dispositions, or managing rehabs. You’re not going to be thinking about who you need to follow up with tomorrow, Monday, or Friday. But a good system will tell you. They’ll give you the notifications and say, “This is what you need to do today.” And that makes it dummy-proof. We don’t have to think, and that’s what’s important.
When you start to spend money on marketing, it’s a little terrifying. The scariest bit is when you first start out, so when you think back to when you were starting to spend money and your ability to track and make metric-based decisions. How did you manage it then, and how much easier is it to do now with the technology that we have at our fingertips?
When I first started, I was door-knocking. We were in a time when you couldn’t even track. I did direct mail back then as well. We did some other things. I even did phonebook advertising. We didn’t have the ability to track your move into 2012 and beyond.
Even then, most investors are like, “I think, I feel, I hope.” And so we’re sending out marketing, we’re getting deals, and we’re saying, I think it came from here. I think it came from there. But we really didn’t know. It wasn’t until 2018 that I got wild hair. And I’m an ADD guy. I’m not necessarily a data guy. But I got a wild hair, and I was like, Okay, we’re going to change the phone number for each postcard we send out. Basically, if we change, like, three different postcards or send it, if we change the postcard, we change the list, and we’re going to change the phone number. And then we got granular and said, Okay, if we send it in the first quarter, second quarter, or third quarter, it’s going to have a different phone number corresponding with the quarter. And we started just diving into data.
This is a great example of when I sent out an unoccupied list and an unknown equity list in January 2018. And I got a whole bunch of calls. And I started buying off of my team, where it was telling me that the calls were coming in off the nonowner occupied list. And so that’s what my team was telling me. And so we started buying deals. And it seemed like that’s where all the deals are coming from the email for the first quarter. So that’s where most of the deals are coming from. But then I started to stop mailing to the owner unknown equity list. In May, in June, we got 22, and then 29 contracts consecutively back to back. And so for the last couple of months, I’ve been mailing them to a nonowner-occupied list.
I started thinking, well, that’s where all the deals are coming from. Think right. Think and feel. But we had the data now. We’re tracking, and when I sat down and looked at the data, the split test told me where the people we’re calling in from, all the contracts, about 90 plus percent of the contracts we got in May and June came from the unknown equity list we mailed in January. Had I not had that data, I would have thought and felt that they came from the nonowner-occupied list, and I would have doubled down on that list. An unknown equity list what happens, you have high-hanging fruit lists. You have low-hanging fruit lists. Some poppers list, some pop later, and some pop and follow up. That unknown list was one of my most profitable lists that year. And then just real quick, the reason why it was the most profitable is that your head analyst brought in the same amount of money. But it was the most profitable list I had that year because I mailed to it less than other lists. And what I learned was that my mail cadence was too often. And so now I was able to test that and say, Okay, I don’t need to mail every 30 days. Every 60 to 90 days is more appropriate for certain lists. And so it gives you a lot of decision-making power and your marketing. Whether it’s cold calling or direct mail or anything that you do, if you look at the data, you can start making decisions based on facts and feelings and start really, it may not be you’re bringing in more deals, but you can at least increase the profit on the deals you’re bringing in. And that’s where it matters.
I remember in conversation with an investor, a customer of mine, when I was building their CRM, probably six years ago. He thought he was making a lot of money here. But actually, when I’m looking at the metrics, I’m looking at how much money we’re making for the deal and how much effort we’re making for the deal. The sweet spot is here, not here. So now let me double down here because I’ve got the context to make an informed decision as opposed to, Well, I think this is gonna work.
That’s when technology really matters. It’s informed decision-making. And that’s when it goes from a hobby and a knee-jerk reaction to a real business.
There’s a lot of conversation around metrics and KPIs. I worry sometimes for new investors who hear these words but don’t necessarily use the data to make an informed decision. If you go much further than that, you’re going to become an Excel nerd, who is so happy with numbers that they never actually do anything. Do you see that ever happen?
I do. We did a deep dive into the data. We went crazy. I have probably over 100 phone numbers. Did trend tracking and testing and different things like that. So then that may have been overkill, but it really gave us some decision-making power in our marketing. But that’s the tracking component of things. Again, we’re changing phone numbers. Do they call on a different color card? We found Google Street charts, Street View, for instance. You’d think that would be the most popular card in our dataset, right? But it was actually—we call it a dual card. It looked like a five-year-old road. It was the one we had the most completed conversions from the most contract spot. So there are aspects of it where you do want to deep dive and really nerd out on your data.
When it comes to KPIs, you’re right. What does it cost you to get the phone to ring? What does it cost? What does a lead actually cost you, because every time the phone rings, isn’t it a lead? How many leads does it take to get you to an appointment? And how many appointments does it take to get you a contract? And that’s really the four you need? You could throw in there in the middle between appointments and contracts, how many offers. And you can look at “Am I making enough offers? And is it 10 or five offers for a contract?” But really, the four you need are what makes my phone ring. How much does it cost to get me a lead? How much does it cost to get me an appointment? And how much does it cost to get me a contract? And then the last one is the money. How much does it cost me to actually get a closed deal, and what’s that profit? If you just follow those basic KPIs, for the most part, you’re going to be able to make some good decisions for your business.
If you’re trying to establish a goal for the future, with enough data, over a period of time, you should be able to reverse engineer and know the activity you need to do at each of these steps and be able to calculate.
You should be able to calculate. But I just want to throw this out there for anybody who’s listening. There is the law of diminishing returns. And that’s what I learned in 2018. Sometimes the more money you throw at a marketing channel, ad, or something doesn’t mean more money is coming back. So being able to say, “Okay, now my average KPI to get my phone to ring is x, but it’s starting to go up, and what am I doing differently in that marketing channel? Is my team broken? Or have they fallen off? And I haven’t had the proper conversations? Or have I done something different in my marketing channel by spending more money and mailing more often? Am I not refreshing my list enough? I’m cold calling, like, where is that process broken? And those KPIs let you see that there’s something broken, or have I just hit that point in that marketing channel or that market where it doesn’t matter?” If I spend any more money no more deals are coming in.
You’re not gonna do anything with it. Knowing that the sweet spot is getting enough is definitely not a marketing channel to get that sweet spot. Stay there and not go past it.
That Real Estate Tech Guy Fast Five.
- What technology product has had the biggest impact on your real estate business?
I’m gonna use smrtPhone. And this is not kissing up in any way, shape, or form. I mean, it really helps me track my data and dial in my marketing in a way that I never would have thought possible, and being able to just put those tracking mechanisms in place was huge for us. So yeah, - What is the biggest mistake you’ve made with technology and your real estate business?
Taking it for granted. Thinking it’s push-button automation. It’s going to do itself, not understanding that I gotta either get in there or have somebody on my team get in there and make sure that we’re utilizing it to its fullest potential. - What is your best advice for a new investor on how to start integrating technology into their business?
Baby steps. Utilizing technology is huge, even for newer investors. The biggest advice I would give you is to start like you’re going to be the business you want to be. So sit down and define the business that you want. And then start like you’re going to be the business you want to be. Well, that’s a one-man or woman show. You want to have a big operation and start putting that in place. If you want to have an operation with a team, then you’re going to want to get something like smrtPhone in place, you’re going to want to get a CRM in place because you’re going to want to start those habits of tracking your KPIs and building your systems and process. So as you bring people on, you’re not bringing them into chaos, but you’re bringing them into purpose.
- What is the one thing you wish you’d known in general, but mainly technology when you first started your business?
I wish I would have known its importance. I really was naive. And I think I was old school at that point because I started without technology. We were using Excel spreadsheets and sticky notes for a couple of years. And I wish somebody would have kicked me in the head and said, Hey, buddy, there’s a better way, there’s an easier way of doing this. And I just wish I would have started sooner. - If someone’s just starting out and they had to decide what three technology products they were going to spend their hard-earned cash on to start out, what would you recommend that they spend their hard-earned money on? In terms of three technology products?
I would do something like PropStream for data. They’re a great data source. I would definitely get a CRM in place, REI. And then, I would utilize smrtPhone, definitely to start tracking and that thing. So there are a number of good CRMs out there. There’s beast mode, and there’s REIvolution. But get something you’re comfortable with. There are off Podio CRMs. Get something you’re comfortable with, and just make sure it’s something you’re gonna utilize
How to reach Don Costa
I’ve been hosting the podcast for almost seven years now. You can always find me at fliptalk.com. And you can find me all over social media. We’ve launched the ICE Accelerator for new or newer investors. It’s a mastermind coaching hybrid that I’m very, very proud of. You get all the coaching and stuff, and you get the opportunity to work with somebody along with a community as well. If you are interested in that, just send me an email at don@fliptalk.com with ICE Accelerator in it in the subject line, and I’ll show you how you can come to check out one of our meetings in person for just a $1 deposit. It’s basically free to come to check us out and even see if we’re a fit for you.
Don, thank you so much for giving us your wisdom and expertise tonight. Fantastic to meet you. And I appreciate all your time and wish you the best.
