Lessons - How Specialization Built eXp Realty Into a Billion-Dollar Empire | Leo Pareja - eXp Realty CEO

In this lessons episode, discover how mastering creative financing and government programs early can set you apart in real estate, explore how losing everything became a catalyst for smarter rebuilding. Understand why adaptability and choosing to stay in the game when the rules shift is the real marker of lasting success and why the American dream still holds strong for those who persevere. When I look at sort of the framework that you deploy for yourself and now for all your fraternity brothers, I mean that is almost showing mastery of real estate and the different levers and mechanisms that you can use at a very early stage because I've worked with a lot of different real estate agents and between government programs and I'm not a real estate investor, I don't pretend to be knowledgeable but I always find that real estate is the one category of investment opportunity where there's so many systems and opportunities that are actually built to support it. Like there's all these creative financing rules, there's all these government programs like it just seems like everything is built to help real estate investors succeed but the real estate agent that I speak to is not knowledgeable about or they don't bring these things to light. Like if I have ever had very few people have ever told me when I'm looking at a house, oh these are other ways to finance it or have you thought about buying a fourplex and living in one of the units and then renting out the other three. So I think that I mean part of your success just outside looking in is the fact you just had like you immersed yourself in not only the surface level of the industry but like all of these again not just selling but investing and that investment actually led you to become a better salesperson but it's just interesting why I don't see that happen quite often in real estate even for like mature 10 year experience agents. So the one thing I figured out early on that I still preach is that the riches are in the niches right like you know blue ocean strategy like I much rather become masterful and maybe just a couple things that resonate and then I can actually be an expert at it right so like do I want to compete with Walmart no thank you because like if everyone's going after the same product or service then you're you know competing on price consumer acquisitions expensive versus like hey let me become really really good at a couple things and demonstrating value to be picked is much easier at that one yeah and that's what you did so um so 11 home 60 grand information so I blow it on the BMW because I'm 20 something but by my senior or college I was I think my senior full senior that year right because I graduated and then still had more time I did about $300,000 in gross commission as a full-time real estate agent and that's like now like a year and a half two years into this yeah two two years in right so and like I mean just tell the audience about statistics I mean that seems like that is unusually high for two years into real estate that is unusually high for today standards right so I think the average agent america makes about 42,000 so it's probably like 8 to 10 x especially back then with the average agent full-time professional made now eventually this obviously ends up turning into like thousands of homes and real estate transactions completed so what was the what was the sort of the playbook to sort of expand on those whatever first 11 first $300,000 in commissions and then now at one point you were number one agent at color Williams okay so what's the journey to get there that's the like the highlight on the internet right of course the the journey is that you know or is it just hard work and well repeat it's also a lot of this right so the journey is like I'm not that special at all $300, $600 happened in 05 right I was a licensed real estate and with a heartbeat in the greatest bubble history of the world and so what that translated to is I went and bought as many properties as I could with a ton of leverage because it was available no income no asset loans um you know the the the real pivotal moment was I think in the summer of 0506 my account told me I was worth $5 million at 14 rental properties at the next five I thought I was God's gift to real estate and then within like a six-month period that same account and so that was where negative a million dollars and in the subsequent like 24 months I gave all that back the banks after doing a lot of crying invaders and so that process was you had achieved last quadrant you you had turned into a real estate investor very very quickly actually but without any of the fundamentals in place right like not real free cash flow and real sustainable fixed debt versus variable debt and all all of the the things that were skipped through in the in the exuberance of the moment in the market so the the you know legislative safety measures and the lending system didn't exist that exists today right you can't do that again today because we collectively as a country learned that was a bad idea but did you hold on did you hold on to any of that no no it was all it was all look at the reset button but what the lesson was learned is like hey there's a whole lot of crying and then you it's it's it's one of those moments in life which is again a philosophy I prescribe to it's like hey the rules of the game changed you can be mad about it or you can just decide do I still want to be a market participant and I feel like this this thought process applies to everything right like you know email marketing worked really well in 2001 right they made a movie about it you got mail and like people get excited versus like we just don't even open it anymore and so whether it's a marketing tactic or hey this this rule changed by the federal government we can't do that anymore do you decide okay I could have big feelings about it for like a day and then you have to make the decisions like okay do I still want to be a market participant and learn to plan to new rules of engagement or I do I just move on to do something else and you also like as a human being you always have that free will to say I want to participate I don't want to participate so for me it was okay the world ended as I knew it what do I do now do I want to get out of rails that are saying real estate in that point it was like hey people have lived before me let me try to get in front of older wiser folks who've seen this before and as soon as I did they were like hey this movie's played before right like 1992 the SNL crisis there's going to be these things called foreclosures and on the bank ledger books they're going to call REOs so now you need to find out where they're at right and you know Arianna my amazing wife she was in the business and she had been to a settlement with an agent who had a bunch of REOs and she's like hey they told me a lot of these banks are in Dallas you you need to go to Dallas and go get some of these contracts for us and I turned for one opportunity where again showing up and knocking on doors and co-calling say hey I want to do some of this stuff and they asked me to do these things called broker price opinions which paid like 40 bucks for an opinion of value but we did like a hundred of them 30 days and then they're like hey you want to sell some houses and then it went from like at the worst year ever I think we sold seven homes and then within 12 months it was like 99 homes and then that turned into 280 homes and within like a four year period the best year we had we did 603 homes in a 12 month period in 2010 which by today's standards there's teams that do much more than that but back then before the accelerant of high speed internet and the technology that we have available today I think our team was number five in the Wall Street Journal of all teams in the country you know most people that I speak to that now look very successful from the outside in there's always they've achieved a significant mark of success and then seemingly lost it all at some point in their career and this is like not this is a story that plays out again and again and again they could always see it as a rate of passage it is a rate of passage it's always like oh I made a business and it's always you know a million dollars for most people is especially people that are not entrepreneurial if you're entrepreneurial usually you have the the the foresight to say okay if they suppose well I'm going to be making well over a million dollars my business will be making well over a million but for the average like 9 to 5 W2 that's like a big amount of money a big sum of money to get in one year but most people that are entrepreneurial I think what happens is they achieve this milestone they achieve money that they've never thought possible and then there's sort of two paths they can go on because there's going to be a point very rarely will that first success ever turn into the success that you're going to talk about in 20 to 30 years from now usually there's some shit hitting the fan moment when it all goes to crap and all goes to hell but I think that that that point that moment when you again like what you said just to parodate you can choose to be a martin participant you can choose to opt in or opt out you can choose to just complain and cry and and and you know like whoa is me like I can't I can't continue like all these different all these different negative feelings you can have at that point you can choose to take those lessons those learnings and just continue to build or you can opt out and I think that's actually the the biggest indicator of success what you choose to do in that moment so I heard a quote once it's sitting or do acquire a great fortune you must first lose a small one right so I like that you know but you mentioned also like so this happens in every industry so I mean in in in podcasting Apple podcasts where majority of podcasts down most come from they used to auto download so when I used to upload as well as every other podcast in the world used to upload an episode all the people that subscribed to your podcast automatically downloaded onto their player so Apple updated this feature about a year year and a half ago where you don't auto download anymore so if I subscribe to you five years ago and I haven't listened to you since it doesn't make sense that I'm still auto downloading because downloads count towards advertiser but yeah well it counts towards advertiser downloads and cpm in it that that fuels the whole commercial model of podcasting for every podcast or in the world so when Apple did this I mean that's on a on a low end about 20% of downloads and then revenue were cut overnight for every podcast in the world on the high end like 30 to 40% so again this is something that you just have to deal with in every and it doesn't matter what you're doing it could be drop shipping it could be you could be selling on TikTok shops if you're in this space that doesn't really matter it's always going to happen to you where whatever you've been building eventually the rules are going to change and you have to find a way to persevere in spite of it so I hear a lot of people say that they think the American dream is dead what is your perspective on the American dream after going through all these ups and downs and highs and lows yeah and my advantage point is somebody didn't grow up here right I didn't get here till I was 12 so you know my dad worked for an NGO so we moved around to six Latin American countries so like I actually did kidnap injuries was a kid right like I fundamentally believe if my story was in a different country someone would have kidnapped my family because that's what you can do when you get mad at your competitors when there's no rules right in in foreign countries so like just like simple things like our legal system works if I get mad I sue you and for performance or non-performance or you know for payment right if I fail horribly I hit bankruptcy and no one puts me in jail like there's there's debtors jail in other countries right so to me this is still the greatest system on the planet is it perfect no is there a better one show me like I just I haven't seen a better system so you know cost of living everything yes maybe it's a tough moment in history and I don't want to take any way anything away from that because I'm hyper aware that there is a lot of pain in the system post-COVID with inflation but I don't know of a better system on the planet and this one. Thanks for tuning in if you found this valuable don't forget to hit that subscribe button so you never miss an episode and if you want to dive deeper into this conversation check out the links in the description to watch the full episode see you in the next one