Running a Low Cost Operation

John Harcar (00:01.03)
Hey guys, welcome back to the show. I’m your host, John Harkar, and I’m here today with Cody Dover. And what we’re going to talk about is running a low cost operation so you can spend more time doing things you want to do. Guys at Investor Fuel, you know, we help real estate investors, service providers and all real estate professionals, two to five X their business by giving resources and tools that allow them to build the businesses they want to live or build and live the lives that they want to live. Cody, welcome to the show.

Cody Dover (00:29.878)
Hey, what’s going on?

John Harcar (00:31.814)
I’m super excited about, about our topic today. you know, a big theme that we hear a lot is how to really streamline, how to really make things, you know, a bit of a low cost operation. But before we talk about all that share a little bit with our audience about you, how you started, where you came from, how you got here.

Cody Dover (00:50.637)
Yeah.

So I started in 2017 after college. I didn’t know what I wanted to be when I grew up. So I just got the typical business degree just to see what was what. And I fell into this real estate course, the Rich Dad Poor Dad. And from there I bought in, you I got sold. And luckily we got sold because it kind of kickstarted the whole action thereafter. So buying the course kind of opened up the doors to real estate. And the first five months we bought five houses.

John Harcar (01:05.482)
yes.

Cody Dover (01:21.104)
additional wages on the market and maybe structuring each deal differently, whether we raised the down payment or financed it in. early on, we were able to structure deals three different ways between the five units that we bought there. And then we’re like, well, if we can buy a course and then do this success and what else is out there. So we kind of got distracted and started chasing syndication apartments and other things. Not, yep, not single family. So it wasn’t until

John Harcar (01:46.953)
Shiny object syndrome

Cody Dover (01:50.976)
2019 the end of 2019 where we stepped out of the W2 world and jumped in full-time But this time with a different approach we didn’t realize back then that there’s actually a sales marketing method to generate deal flow and and qualify leads and so 2020 was the first full year that we were no longer W2 and What’s crazy about that is the first four months or first six months of 2020? We had only done four deals

man, I don’t know if we keep it, you know, we have to go back to the job. Well, lo and behold, we didn’t realize that we were building a sales pipeline of leads. And so the next six months, we ended up doing 54 deals compared to four the first six months. So that was a big aha for us to realize, there’s actually a sales marketing engine to it. And it takes us to kind of work it and go from there.

John Harcar (02:36.127)
That’s incredible.

John Harcar (02:45.119)
Yeah, no. And that’s that that’s I think it’s what a lot of people experience, right? As you hit that, you’re like, oh, man, is this sustained? But the realization is within our business, fortune is in the follow up. Fortune is in that pipeline that you built. So you were a banker. What college you go to? What school did you go to? OK.

Cody Dover (02:57.059)
Yeah.

Cody Dover (03:03.02)
I went to Henderson State, just a small school here in Arkansas, a D2. And like I said, I went there not knowing what to do, just kind of doing what everyone else did.

John Harcar (03:07.698)
Okay.

Sure. Sure. So you’re what part of Arkansas? Central Arkansas. Okay. Do you do all your business in Arkansas or do you go outside the lines? State lines.

Cody Dover (03:15.592)
central so Little Rock.

Cody Dover (03:22.05)
We’ve been outside the lines a few times, I’ve realized there’s so much more to improve my current structure here. So before I can expand, I want to make sure I have that down.

John Harcar (03:28.456)
Yeah.

John Harcar (03:32.029)
Yeah. And it’s funny you mentioned that the shiny object syndrome. mean, that’s something that, you know, a lot of people when they’re getting into it fall victim to, guess you could say, I noticed you kept saying, we, we bought our property. We, is it you and your wife, you and a partner.

Cody Dover (03:48.268)
I had a partner, we started it together. We’ve since split up amicably and so he does the same thing, I do the same thing. We still talk, just different operations now.

John Harcar (03:50.514)
Okay.

John Harcar (03:56.178)
Nice. Nice. Okay. so once you went full time, what do you think was one of the biggest struggles or biggest things that you ran into making that transition? Because that’s one of the hardest things for people to do is let go of that. Hey, my guarantees here, right. And go into the unknown.

Cody Dover (04:13.998)
Well, it’s really the mindset. It’s a really big mental game. mean, your brain tries to kidnap you and take you back to the past of, no. And so for us, luckily, we had a mental therapist coach. I don’t know what you call her. But we’re able to kind of stay in the moment and stay with what’s working and not create the story in our head of, no. And so for us, we realized by reflecting and looking backwards, we see, the first four deals that we did actually came

John Harcar (04:20.711)
I’m

Cody Dover (04:43.952)
from a few months prior to that, meaning it’s not just a one-hit wonder. You don’t just get a lead and get a deal. There’s a process to it. So really understanding that game of it, but really what changed to us, John, was becoming of service to people versus having commission breadth. And that was an orientation shift for us.

John Harcar (04:50.12)
Yeah.

John Harcar (05:00.776)
That’s huge.

That’s huge. I love that. Let’s talk more about that because a lot of people are and do have that commission breadth because that’s all they want. They’re looking for the money, but tell me how, you know, tell me how you set yourself apart in that, in that respect.

Cody Dover (05:10.958)
Yeah.

Cody Dover (05:19.82)
Yeah, it’s understanding the seller’s concern.

We understand that as investors, we’re not everyone’s best fit. And I’ll tell people that off the jump. I am a for-profit company here, but at that same rate, I’m able to provide a superior offer to you. And John, the offer’s not the price, it’s the streams attached to the offer. And so understanding how to really fit an offer to cater to their concern versus just coming in and doing something that’s maybe not best for them. So for us, we expose them to different options.

John Harcar (05:41.385)
Yes.

Cody Dover (05:53.584)
And some of those options may not include us, but it’s a way for us to showcase our authority and really just leadership and sincere interest in helping them out. Yeah.

John Harcar (05:56.508)
Yeah.

John Harcar (06:05.289)
curiosity and empathy. You know, a lot of people don’t really understand the power of that alone to where it could really make the price really non non-issue, you know, so so that’s awesome. So your team currently is just you.

Cody Dover (06:17.666)
Yeah.

Cody Dover (06:23.022)
I have five people. I have a junior sales guy that kind of does a few things. Then I have a property manager who’s my assistant that does the management of our houses that we have. And then just a VA and a cold caller. And so I would say I’m the major actor in the configuration, but I get a lot of part-time help from these folks.

John Harcar (06:46.425)
And are all these like virtual type of folks that work with you or?

Cody Dover (06:50.798)
Four virtual ones, local, and that one that’s local is the property manager.

John Harcar (06:55.591)
Okay. Do you have plans on growing your team? Are you looking to really expand and bring more people into broaden out?

Cody Dover (07:01.762)
Well,

That’s a good question. That’s kind of part of the low-cost transaction that I’m alluding to. Because of the ways we have our structures set up, it’s easy and low-cost for us to operate in a way where it don’t take too much human capital. We do more inbound now than anything, so we don’t really go after people. And with that structure, it allows us to be in different practices where we can coordinate, communicate in a way that allows for help to help when needed.

John Harcar (07:07.263)
Mm-hmm.

John Harcar (07:31.551)
Okay. So when we’re saying low cost operation, right? We’re not necessarily talking about monetary costs, right? We’re talking about just the overall. So elaborate more on that. Like how did you decide that when you build this business, this is kind of the focus you want to do, you know, low cost, just streamlined.

Cody Dover (07:32.56)
you

Cody Dover (07:51.148)
Yeah, so and when I’m saying cost, you said it, John, it’s not the money that I’m referring to. It’s the time and energy into it all. And so low cost for us, it’s like when the inbound lead comes in, we’re going on a property visit usually that same day. And that same day, we’re also getting under contract. And that same day, I’m also already know who’s going to buy it if it’s not me. And so at that rate, I don’t have to send a parade of people through to look at the house. I have a one or two stop one stop shop.

John Harcar (08:12.329)
Love it.

Cody Dover (08:21.072)
buyer and I’m one of them. And so that’s what makes it easy is I’m able to kind of buy my own deals and take control of it and then go from there to maximize profits.

John Harcar (08:24.126)
Mm-hmm.

John Harcar (08:32.563)
How many deals are you, do you think you take down on your own versus, you know, maybe sell out to somebody else or wholesale out to somebody else?

Cody Dover (08:39.342)
It’s a mix now, 50-50. When we first started in 2020, we didn’t have the structures in place to do so. But along the way, we developed other players, money, contractors, and then we had the deal flow. So you just marry the three together, and now have operation. So I would say that it’s the help strategically that we have in place that makes it low cost.

John Harcar (08:57.065)
Mm-hmm. Mm-hmm.

John Harcar (09:07.377)
And how did you find a lot of these strategic players that you’re working with?

Cody Dover (09:12.206)
Well, just about playing the game. mean, it’s a community, it’s a marketplace. And there’s people out there in places, domains that I don’t know exist. But in the real estate space, there’s so many players in it. And you talk and you build and add value and you just start knowing who’s who.

John Harcar (09:25.695)
Mm-hmm.

John Harcar (09:31.045)
Awesome. What were some of the biggest challenges or what are some of the biggest challenges you’re facing or have faced in starting this business and, you know, a low cost operation?

Cody Dover (09:35.212)
Thank

Cody Dover (09:42.349)
Really the challenge for me is delegating properly. It’s all in my head. so the, like I would love to have an operations manager, an office manager, or even an EA, executive assistant. But each time I try to go down those rabbit holes, it’s struggling for me to find the help that I need. Because a lot of them are trigger-based events. Like if I get this email, or I gotta go to this closing, there’s things beyond the email that you have to do, and it’s in my head to just go ahead and do it versus

John Harcar (09:55.508)
Yep.

John Harcar (10:10.836)
Mm-hmm.

Cody Dover (10:13.424)
delegating it out. So I’d say my trouble is just finding what kind of help I need.

John Harcar (10:14.825)
sure finding the right people. Have you in your hiring process, do you use anything like predictive index or do you use any other type of personality tests to really find the right person, right. But for that seat.

Cody Dover (10:29.388)
You know, not to the extent that I would like to. I did do that early on just to see who’s who, who I’m working with, but not to use it as an assessment to hire. Because I think that the person, before I can find the person, I have to find what it is I need them to be doing. Yeah. Yeah. So it’s usually me, not them.

John Harcar (10:39.45)
Okay.

John Harcar (10:47.679)
You got to find the The the quote unquote scope of work that you want them to do. OK, all right. Yeah, no, and I understand that one man shows, you know, are a little bit more difficult when you’re doing things and trying to get everything done. And it does take a good person to delegate them to if you can find them. What do you what’s what’s your biggest real estate success story? Like what’s your most favorite deal or maybe your biggest deal or, you know, the one you had to jump through the most hurdles. But in the end, it just helped everybody out.

Cody Dover (10:57.848)
think it’s off the manner there.

Cody Dover (11:17.966)
Well, we’ve done about 350 transactions and I’ve lost money on three of them.

And losing money on three deals is really the best teacher that anyone can get for free except at my cost. with that came new contractors. It came a different approach to managing the rehabs. You know, and people don’t want to talk about the bad stuff, but that bad stuff has shaped to where I’m at today with being able to underwrite deals better or being on top of the contractors. that would be one. I did a pretty good flip.

John Harcar (11:24.777)
Wow, okay.

Cody Dover (11:54.588)
in a higher end area. But where the wind there was, was just being able to help the seller out. was out of state, the wife passed away, and all the stuff’s left behind in the house. And he knew that he was selling to me at a discount. it’s again, the price is maybe the least factor to most of our customers. It’s the convenience and value that we add and contribute to. Yeah.

John Harcar (12:14.611)
Mm-hmm.

John Harcar (12:18.173)
You solved the problem. You know what I mean? And kind of back to what you had mentioned about how you lost a deal, the money on three deals, and those are your biggest teachers. Yeah, I mean, you got to go through the suck, but the suck is what really helps you understand the way to not suck next time. You know what I mean? What are you? What do you think that are some common mistakes and real estate investors should avoid when getting into this? Like, you know, maybe some things you’ve experienced or you know, you’ve

Cody Dover (12:28.302)
Mm.

Cody Dover (12:33.058)
Yeah.

John Harcar (12:46.995)
messed up or things like that.

Cody Dover (12:48.942)
Yeah, I just had a meeting with a guy who’s a doctor but wants to get into the real estate game. And I think the biggest mistake is getting stuck up on it and tied up on the wrong stuff. Like, what’s the name of the company? And instead of, hey, yeah, yeah, and instead of, hey, who should I talk, who’s your banker? How do you underwrite this deal? Here’s the deal I’m looking at. So I think that the biggest mistake is people get caught up on the wrong things, And it’s like the real skill lies in

John Harcar (13:03.315)
Do I get a website?

Cody Dover (13:19.016)
domains like lead generation, sales and marketing, fulfillment. So craft your skills and those sets of concerns and not the stuff you can Google.

John Harcar (13:22.375)
Yeah. Yeah.

John Harcar (13:30.835)
How long did it take you to get a CRM?

Cody Dover (13:33.742)
I mean day one. Yeah.

John Harcar (13:35.84)
Oh, did you? Okay. I was a little bit more old school. Like, you know, I, cause I knew people that fell into that trap of, know, I gotta get this set up and I gotta get this set up. And for me, I, I operated off of a spreadsheet for the longest time. Yeah. Spreadsheet with phone numbers. That’s all I needed to do and have a contract. So yeah, I mean, and I think that that is the biggest thing that, that I eat. That’s a great advice is to focus on the things that’ll move the needle. A website’s not going to move your needle. Yeah.

Cody Dover (13:44.425)
Mm, yeah.

Yeah.

Cody Dover (14:03.138)
Yeah, the true skill. Because the skill, mean, like, you can take away my house and my clothes, but you can’t take away the knowledge that I’ve learned or the network that I’ve built. And that’s another thing, the network, too. There’s two categories fundamentally that I try to orient myself to. That’s knowledge and networks. What do I need to know? Who do I need to know?

John Harcar (14:05.971)
Exactly.

John Harcar (14:14.494)
Yeah.

John Harcar (14:25.971)
Yeah. Yeah, it’s not what you know. It’s who you know. Yeah. So what does your business look like today? Obviously, you got yourself how many deals are you doing?

Cody Dover (14:28.888)
Yeah, who know how.

Cody Dover (14:36.206)
I’m know I’m after quality over quantity right now. The most deals we’ve done in a single year is 120 but each year we’ve declined the deal volume but increased the deal average and so we’re working on that.

John Harcar (14:52.125)
You’re moving the needles the right way.

Cody Dover (14:53.846)
Yeah, and so I wouldn’t be doing about 40 to 60 a year. Last year we did 50. This year will be around the same, I’d imagine. But for me, I’m in a space where I want to venture out to new things, like new construction, maybe build to rents, and develop neighborhoods. And so that’s part of my strategy in building the knowledge and networks in those spaces while I continue to operate just the current configuration.

John Harcar (14:59.422)
Mm-hmm.

John Harcar (15:11.207)
wow.

John Harcar (15:23.507)
Got it. Man, it sounds like your business is running smoothly. Are there any specific obstacles or roadblocks that you’re running into as far as trying to get up to these other things or do these other things?

Cody Dover (15:33.25)
Yeah, just autonomy, bandwidth. It’s finding the right help, but it’s really not who, it’s really what help can I delegate. It’s really going to allow me that space to develop the network’s knowledge.

John Harcar (15:53.044)
Yeah, for sure. What trends are you seeing nowadays in the real estate market? In your area? I know that the country is different, right? mean, I’m personally in Boise, Idaho. I know my market is 100 % different than than Oklahoma or Arkansas, I think you said. So where do you where do you see the trends in the business going?

Cody Dover (16:06.594)
Yeah, Arkansas.

Cody Dover (16:12.02)
Well, I think there’s still a lot of distress out there, a lot of motivation, which calls for help. There’s still help to be provided. What I’m noticing is, you know, property sitting on the market longer. So what does that mean? You just underwrite a longer hold period and underwrite a lower sales price. And so usually that gets passed on to the seller at a lower price. But so long that you stick to the fundamentals and you’re adding your buffers in on your underwriting, well then

it’ll fundamentally can still work. What’s good thing about our market is it’s a it’s a really good rental market so it’s a it’s price point to where if I can’t sell it on the market I can refinance and keep it as a rental property too. So I have a few different ways of exiting there but yeah I mean noticing just the value you got to continue to be fresh with your narratives and how you speak to the customer really to get them off of price because the moment you’re priced then they’re just gonna go

John Harcar (16:55.976)
Yeah.

Cody Dover (17:12.88)
the next guy is going to pay a higher price. Yeah, and for us it’s always about the value that we’re adding. I told you early on, not the price, it’s the offer, and the offers, the strings are attached.

John Harcar (17:14.303)
Your pigeon hold. Mm hmm. Yeah.

John Harcar (17:30.513)
the other things outside of the price of what you can do, how you can help those type of things. You mentioned rentals. Are you holding a lot of rentals right now?

Cody Dover (17:40.974)
I’ll try to. Last year I think I kept five of the 15. I’ve got 27 right now. 20 of those are with another partner and the 7 to myself.

John Harcar (17:50.65)
Okay, so you went from five to 27?

Cody Dover (17:54.35)
No, I had some 20 something last year or before, but I’m saying overall 27 units is what I own. my goal really is more so than the value or the equity than more so the door count. So for me, I’m looking to achieve a $25 million portfolio by the time I’m 50.

John Harcar (17:58.003)
Okay. Got it.

John Harcar (18:17.055)
Wow, big goal. I love it. What’s holding you back from holding more of them?

Cody Dover (18:24.845)
structure.

That’s a really good question because that’s a problem I’ve been trying to solve. So like me being an operator, an owner operator with DealFloat and sales and marketing costs, I have to keep operations at float. So I’m forced to sell most of them and keep them because if I keep them, well, I don’t get the active income that I need to earn. So part of that this year is for me to structure strategic partnerships to be able to hold more but still take care of the concern of getting some type of marketing.

John Harcar (18:45.233)
You don’t get, yeah, yeah.

Cody Dover (18:55.926)
costs back on the front end.

John Harcar (18:57.678)
Yeah. Yeah. And I’ve heard a lot of the lot, you know, when it comes to people who are trying to dive into holding the rentals is that you need that capital to come in. That passive stuff might not be there until you grow it big enough. You know what I mean? What resources do you recommend that folks may be trying to get into the business could use that would help them kind of maybe accelerate a little bit?

Cody Dover (19:19.982)
You’re breaking up a little bit. What was that question?

John Harcar (19:24.223)
Oh no, what type of resources do you think that, you know, if someone was getting into the business and they reached out to you and said, Cody, you know, what are some things that can help me get going?

John Harcar (19:37.855)
Can you hear me?

Cody Dover (19:39.816)
Let’s see, think I’m either you’re freezing or I’m freezing.

John Harcar (19:43.251)
I think you’re freezing a little bit.

Cody Dover (19:47.148)
Okay, that’s better, I can hear you now.

John Harcar (19:49.606)
Okay, so yeah, so what give me some resources that you know, if someone were getting into the game would be good for them to use to help them accelerate their learning curve.

Cody Dover (20:03.278)
Don’t get stuck at the starting line. My philosophy is the more you put yourself in situations, the more directed questions that you’ll have.

Can you hear me okay? It still looks like it’s freezing up a little bit.

John Harcar (20:20.221)
Yeah, yeah, yeah, you’re fine.

Cody Dover (20:25.302)
Yeah, the advice I’d give is don’t get stuck at the starting line, but also build a network. Add value to that network. don’t just take, but see where you can contribute. And sometimes that’s your time.

John Harcar (20:41.184)
And that’s a good point. Give and you will receive back. So where do you want your business to be in five years? What does it look like to you?

Cody Dover (20:56.206)
Well, I don’t know actually.

Part of me is trying to find what lane I’m in and I think it’s producing deal flow. And so part of that could also be land, land development. It could be a commercial. More so just being able to spot leads and have the network and structures in place to monetize. I think that’s where I’m headed because ultimately I’ll continue to still be in the single family space just with the inbound structure that we have set up where leads come in to us.

John Harcar (21:12.702)
Okay.

Cody Dover (21:33.26)
grow that space of doing development or doing building neighborhoods.

John Harcar (21:38.195)
Yeah. And I don’t think I asked you this. How are you generating your lead flow now? mean, you’re doing PPL or PPC.

Cody Dover (21:47.084)
Yeah, PVC, SEO, direct email.

John Harcar (21:50.045)
Okay. You don’t do any type of outbound reach.

Cody Dover (21:52.482)
Facebook.

John Harcar (21:56.031)
Okay, what call? Well.

I love your operation. mean, it sounds like you’ve made the strides now. I just think that, you know, or let me ask this question, last question. What do you think are your biggest needs in your business?

John Harcar (22:18.163)
Did you hear that?

Cody Dover (22:20.73)
I’m going to connect to my hotspot and see if that helps. Okay, let’s see, I should be good.

John Harcar (22:24.54)
Okay.

John Harcar (22:28.891)
All right. my question was, you know, the last question, what do you think are some of the biggest needs for your business?

Cody Dover (22:37.55)
The biggest needs for my business? Really structure. I think I’m pretty loose in a lot of things I do. So discipline and structure would be one need.

Yeah, I think that’s it.

John Harcar (22:57.823)
Okay. Well, very cool. Well, Cody, I want to thank you a lot for being on this podcast. I know we had a little bit of some technical issues, but if anybody wants to learn more about you or, get a chance to get on the phone and talk with you, how do they reach out to you? What’s the best way to get in touch?

Cody Dover (23:13.07)
Facebook, Instagram, all the social medias. I’m really not on there as a consumer. if I get on there, I’m usually posting something. So I might miss your message. I think I gave you all the links in the… Okay, so yeah, just Facebook and all that.

John Harcar (23:26.516)
Yeah. Yeah, we’ll put all those in the show notes so anybody can click on any of your social media sites. Guys, I hope you enjoyed our episode today about really running a low-cost operation and really being able to streamline your process. Cody, I thank you very much for your time here today. And guys, I hope you enjoyed it as much as I did. Take care.

Cody Dover (23:41.038)
Thank