Reinventing Success with Leo Pareja

Speaker 2 This is Wake Up to Wealth, a podcast dedicated to helping you change the way you think about wealth. And now, here's your host, Brandon Brittingham.

Speaker 1 Hey, what's up, everybody? We are here today on another episode of Wake Up to Wealth. I have my good friend, super excited about this.

Speaker 1 It's taken us a while to get here, but we're here today, Leo Pereja, who happens to now be the CEO of EXP. Thank you for coming on the show today and taking your time to be with me.
No, my pleasure.

Speaker 1 Always, always good time to spend time with friends. So it's kind of crazy is you and I kind of got in real estate at the same time in very similar circles.

Speaker 1 And you've had a pretty wild journey. You know what I mean? Like for people that may not know you, that are listening to this, like give us the three minute of start to where you are now.

Speaker 1 The quick and dirty one is I got licensed at 19 years old while I was in college. I went on to sell real estate for 16 years.
In that journey, I learned a lot, failed a lot.

Speaker 1 But at one point, I was the number one real estate agent in the world for Keller Williams. I sold close to 4,000 homes.

Speaker 1 The last eight years I was in production, I sold between 400 to 600 homes, like loved systems and processes, doing a lot with a little.

Speaker 1 During the financial crisis, I did a lot of REO and I saw the market shift with CFPB and Dot-Frank.

Speaker 1 I started a hard money lending business in hindsight at the right time in 2012, grew that to a top 20 business in the United States from in the hard money lending space, originating north of $2 billion, learned how to sell debt to Wall Street.

Speaker 1 And while I was building that business, I needed some data feeds.

Speaker 1 I went on to build a pretty large technology company that became pretty ubiquitous in the United States, north of 80% of every realtor in America had access to the software

Speaker 1 while I was running the business. Exited both those businesses, thought I was kind of done with organized real estate, thought I was going to go into either private equity, finance, or tech.

Speaker 1 And then I got a call from a mutual friend saying someone's going to call you, pick up the phone, and turned out to be Glenn Sanford.

Speaker 1 And now I'm the CEO of the single largest brokerage on the planet, which is a pretty wild ride. So

Speaker 1 you said a lot in a short period of time, and

Speaker 1 I don't want to glaze over the accomplishments and the achievements that you've had. You know, just like, how do you,

Speaker 1 you know, you've reinvented yourself, so to speak, a few times. You've gotten into a few businesses and exited.

Speaker 1 You know, one of the challenges that I think a lot of people have is their identity gets so held up in something that they're successful at and can't get around that to get into the next thing.

Speaker 1 So I'm sure it's a ton of lessons, but like, what are like, say, one of your biggest lessons that you learned of kind of like transitioning to a couple things and and then you've been successful at every single one?

Speaker 1 So successful is a is a super like finished product Yeah word right because I've had some pretty cool successes, but I've also failed a lot sure and at a probably a bigger scale than most people ever fail

Speaker 1 But it's getting back up and kind of swinging for the fences But the other thing is, you know I've never been ready. And I think that's like the biggest thing that people get stuck on.

Speaker 1 Like I hear so many people say, well, when I'm ready, when this happens, when that happens, it's like, and the best analogy I have for it is like when you take your kid home from the hospital, the first, the first kid, you're like, wait,

Speaker 1 I don't know how to be a parent. Like,

Speaker 1 is there an instruction manual for this? Yeah. And that's how I could, and for most people that had a kid, it's like, oh, I get that feeling where you're like mortified.

Speaker 1 You're like, this thing's going to stay with me and I'm going to keep it alive. I don't know how to do that, but you figure it out.

Speaker 1 And so I went from a college kid to a real estate agent and I wasn't qualified at 19 years old to sell anybody real estate. Sure.
And then I became an REO agent. I'd never done it before.

Speaker 1 And then, you know, I was a team leader and then I started raising money. And then I started building software and I built and I sold that to Wall Street.
Like there's always a day one.

Speaker 1 There's always a zero to one process. And what I've learned in my journey is like, like, you should be paralyzed with fear.
until you do it. Right.
Right.

Speaker 1 Public speaking is probably the best feeling of that. Like, yeah.

Speaker 1 you know statistically I think it's second to death yeah a fear but like you've done it the biggest stages I've done it to like 6,000 people and like doesn't matter how many times I've done I get that feeling in your stomach

Speaker 1 once the 30 seconds and you're in flow you're good you're good yeah and I would compare that to everything I've experienced in life right like

Speaker 1 There's always a time you don't know.

Speaker 1 And you get to choose to learn it.

Speaker 1 Because the cool thing that I feel like I experienced early was exposure to really successful people because I chose to like reach out to them and get into relationship with them.

Speaker 1 And once you start spending time with people, you're like, wait, they're just like me. Yeah.
They put their pants on one leg at a time, all those, you know, kind of cliche things.

Speaker 1 But, you know, everything's learnable, right? I always say it's like, you're not an Olympic athlete. We're not, I'm not attempting to break any records physically or, you know, do brain surgery.

Speaker 1 For the most part, most things that other humans can do are very learnable and achievable.

Speaker 1 So

Speaker 1 I'm going to go back to the private money, right?

Speaker 1 Because so I think one of the things people get paralyzed, you know, people get paralyzed with fear. They think things are not possible or limiting belief or whatever.
People get stuck there.

Speaker 1 So you, at a time when it was really unheard of, started selling paper to Wall Street, started selling your notes to Wall Street. Like, how do you, you know, was that just an idea you had?

Speaker 1 And the reason why I want you to deconstruct that a little bit is because

Speaker 1 from the outside looking in, that just seems like, holy shit, this is impossible to figure out or think about. It's very common nowadays, right? But then it wasn't.

Speaker 1 I mean, you're kind of a pioneer from that. I think that's where people get stuck of like,

Speaker 1 I can't achieve this, but you did something very remarkable early on. Like, walk me through that if you don't mind.
Yeah, no, that I actually think I was the first. Yeah.
And,

Speaker 1 you know, the cool part of my journey, like you said, reinvention, but from my point of view, it's been very sequential. Yeah.
Right. So I was an agent, then I became an REA agent.

Speaker 1 And I point that out because that was my first progression from like, I'm a self-employed service provider, which is what a solo agent is, to I became a business owner. Right.
Right.

Speaker 1 When I went from 30, 40, 50 transactions a year by myself to 600 transactions, it didn't matter.

Speaker 1 The point that I was selling real estate, I think, is like less interest, like less important than the fact that I was processing a service with high touch, high deliverables, you know, with KPIs, like list to sell ratio, days and inventory, UPB, all this language that I had to learn.

Speaker 1 that was actually more akin to finance. Right.
And literally REO is real estate owned on a bank ledger And understanding how that went from

Speaker 1 an asset to a liability. Right.
And how they discounted it and how they sold it off. And

Speaker 1 because that actually taught me everything I needed to know for hard money. Sure.
Right.

Speaker 1 And then that's when I was talking to, that's where I made all my relationships with REO companies, hedge funds, and banks.

Speaker 1 So I actually...

Speaker 1 through, you know, happenstance from saying yes and being uncomfortable, I was actually, you know, we're sitting in

Speaker 1 National Harbor in Maryland, but like, you know, eight miles out was the White House. Right.

Speaker 1 And I was actually in the White House while CFPP and Dot-Frank were being invented with a room of about 300 people. I was in my 20s.

Speaker 1 I shouldn't have been in the room, but I went to represent NARAP for Gary Acosta because he couldn't get to the meeting in time.

Speaker 1 And I heard them say, you know, we're going to change this like ability to repay and all these things. And I'm like, well, you're not going to be able to borrow money ever again to flip a house.

Speaker 1 Right. Because a vacant home that produces no revenue, there's no ability to repay.

Speaker 1 And so when I started lending,

Speaker 1 doing hard money,

Speaker 1 the way it worked back then, it was basically mom and pop, wealthy folks in a submarket.

Speaker 1 But I had learned in that previous experience how debt is bought and sold. There's a coupon.
There's a yield. I learned all these pieces of it.

Speaker 1 And I actually just called the same people I knew from REO who did lines of credit to investors.

Speaker 1 And I said, hey, I can sell you this paper. And, you know, it's got a great yield.
And they're like, no one will buy paper with that short of a maturity. Right.

Speaker 1 And what it took was, you know, explaining it, pitching it. Yeah.

Speaker 1 And the people I convinced to buy my debt, which, you know, most people don't know this story, is were the people who were early into SFR. Yes.
So the

Speaker 1 colonies, the people who were deploying had raised literally in the last six to 12 months of that time period 10 20 50 million 100 million dollars to buy houses and couldn't buy them fast enough right and they were sitting on twenty million dollars

Speaker 1 but it was earmarked for single family homes so i said take that bucket of money it it it it's in line with your ppm like your fund mandate says you're going to get a yield on single family homes just park it with me and i presented it with a tape and um and it was all relational

Speaker 1 you know i had to sign a bunch of extra paperwork in the beginning

Speaker 1 but six 12 months down the road they're like yo how much of this can you get me right then then it was i started getting calls from strangers who like hey i heard you sold this tape can you get me more of that and now it's a pretty robust sophisticated market yeah yeah and then uh then eventually you you sold you exited from that business as well right

Speaker 1 and then so so you guys got to what? You know, what were you lending a year, do you think? I think $400, $500 million a year. Yeah.
Yeah. And that, and, and what time period?

Speaker 1 Like, how, how long did it take you to get there? Um, it's like everything else, right? It,

Speaker 1 some people who are not watching the process say it was like an overnight success. Right.
But it, it's, it's, uh,

Speaker 1 there's another concept I talk about, which I say we're all remarkably average, right? It took about seven years. Yeah.

Speaker 1 And if you look statistically how long it takes you to scale a small to mid-sized business, it's about seven years, right? Like year one, two, and three is an ass whooping. Right.

Speaker 1 That's where most people don't make it fast, right? Because of that. You're not making any money.
You're probably writing checks. Right.
And then like year four, you're like, okay.

Speaker 1 I think I got this. Then, and then you get your second ass whooping as you scale and you break stuff.
And then it's normally like between year five and seven where you're like, oh, okay.

Speaker 1 Yeah, we've actually done something great. Yeah, I'm scaling.
It's working. We're making EBITDA.

Speaker 1 Yeah.

Speaker 1 One of the great points you just made there is, you know, you said year one to three, you're getting your ass kicked and you're probably writing checks.

Speaker 1 I think that's one of the biggest misnomers of becoming an entrepreneur or

Speaker 1 becoming a business owner that people, oh man, it's going to be easy. I'm going to work for myself.
And it's like, no, that's probably the hardest thing you're ever going to do.

Speaker 1 Like, well, what's that famous saying?

Speaker 1 You trade not having to work 40 hours to work 100 hours for yourself. No doubt doubt.

Speaker 1 so from there you you go into tech um

Speaker 1 you know again just because i i think it's remarkable you know where you you went from kind of i mean they're all related to real estate but you went to different industries like you know where did you see that you know what i mean how did you see that and how did you make that yeah so so again sequential in in like the moment kind of on accident but you know looking back on it it kind of makes sense yeah but while we were building the hard money business we built our own loan origination system from the ground up because

Speaker 1 there is no boomtown for hard money lending. It exists now, but it didn't then.
Correct.

Speaker 1 And so we wanted an API for public record data. And we called a bunch of companies and we couldn't afford what they were selling.

Speaker 1 And funny enough, we participated in a hackathon back in 2015 that Zillow was hosting. And the hackathon gave us access to this national API.

Speaker 1 And Zillow knows the story. My goal was to hit download when I got there and roll out.

Speaker 1 But they set it up so it was read-only. And in 24 hours, we hacked together a beta,

Speaker 1 an alpha of a product with two engineers and we won the whole thing, which shocked us included.

Speaker 1 And the reason was because we actually sold homes. Like we actually understood the process.
And then we got invited to present what we built at an MLS forum, like two months later.

Speaker 1 And all these MLS executives say, hey, you've built that. We'll buy it.
That seems really cool. Like we'll be customers.

Speaker 1 And, you know, just like everything else, got really uncomfortable.

Speaker 1 Spent a whole bunch of my own money up front to build a product. We got some contracts signed.

Speaker 1 Once we had product market fit, we ended up raising $48 million of institutional capital, built a pretty big business.

Speaker 1 And then that was another huge kind of

Speaker 1 learning curve or, you know, maturation period for me because like I went from a self-employed person to, to a business owner to now this is a growth business, right? Yeah.

Speaker 1 So this was the difference, like for me, that was the first time going from SMB lifestyle business to, okay, this is a growth equity business where you're hoping to get to massive scale. Sure.

Speaker 1 And

Speaker 1 it's a different business.

Speaker 1 Technology has, you know, different metrics. Yeah.

Speaker 1 Steve Case wrote a book uh several books the founder of uh aol but he he talks about the differences between a small to mid-sized business which is typically a lifestyle business and i used to be offended when i was categorized as a lifestyle business and i actually now i think they're the best businesses in the world now that i've done all of them including run a large enterprise like this one because a lifestyle business which is what most

Speaker 1 real estate agents or uh investors you're optimizing for your lifestyle. And that's actually a great thing, not a bad thing.
No doubt.

Speaker 1 And and it and i actually sit down with small business owners all the time and i'm like look the goal is not to work 100 hours a week right you you may have to do that for a short period of time to stabilize the business and build a system but the goal is to eventually

Speaker 1 again there's no right or wrong so i'm i don't think the goal is to work zero hours either right right it's it's to balance you know feeling self-fulfilled which is like

Speaker 1 essential human condition. 100%.

Speaker 1 Right.

Speaker 1 Like there's, there's all kinds of psychological studies that showed that the Industrial Revolution was really bad for our mental health because people did the same thing over and over again, didn't like get to start to complete something.

Speaker 1 And like

Speaker 1 supposedly, like woodworkers and iron workers who take like a raw material and finish it into a finished product and like deliver you a chair actually get a whole high level of satisfaction.

Speaker 1 Like I know you do and I do from like buying a piece of dirt.

Speaker 1 rezoning it and building it into something. It's not only the money, but it's actually fun.
Sure. Like it's creative.
Like if that's your jam. Right.
100%. Like, I love that.

Speaker 1 Like, I flipped personally 100-plus doors over here in DC, Maryland, Virginia, and Capitol Heights. And I loved taking an old, busted, molded-out property, making beautiful.
Like, I like the process.

Speaker 1 It was very creative for me.

Speaker 1 And so I think the business, when you think of a lifestyle business,

Speaker 1 it's... obviously income optimization, but it's also like, do you enjoy that? Like, is that fun for you? Yeah.
Right.

Speaker 1 And, you know, when people talk about businesses and they talk about like, what's the best way to build a business? I always tell people, like, have an honest conversation with how you're wired. Yeah.

Speaker 1 What do you want? Because like

Speaker 1 prospecting, it doesn't matter what business you're in, like cold call prospecting works. Yeah.

Speaker 1 That's like playing in traffic for my DNA. Right.
Like I don't. You don't want to do it.
I don't want to do it. Yeah.

Speaker 1 But for some people, it works.

Speaker 1 Like I've interviewed some of our agents who like do it two hours a day religiously and make 400 grand a year right pick up their kids from school drop them off at school are super present with their spouse like and they're good with that that's awesome that's what they want but like you need to figure out a business that works for you

Speaker 1 a business model that works for you and just optimize this for how you're how you're wired i'm asking two more questions um

Speaker 1 one

Speaker 1 it's probably hard to nail this to one but what do you think and i always ask everybody this and i'm always fascinated by the answers what do you think is like one of the things, and it could be an ideology, it could have been something specific you did, it could have been anything that you learned.

Speaker 1 What do you think is one of the biggest mistakes you made in your journey?

Speaker 1 Well, that's a good one because I feel like I've made so many. Oh, of course.

Speaker 1 So, this one is as I've gotten older, I actually think about this daily. Yeah,

Speaker 1 it's

Speaker 1 to worry too much. Yeah.

Speaker 1 Right. Like

Speaker 1 this concept is, especially, I'm a parent now, and my parents are getting older. It's like

Speaker 1 we only live like in a hundred-year spans. Like, think about that.
In 100 years, everyone you knew is going to be gone. Yeah.
Like, period. Yeah.

Speaker 1 Like, you will, like, statistically speaking, none of us know our great-grandparents. Right.
Right. Like, barely know their names.
Sure. So

Speaker 1 like 99.9% of everything that happens to you is literally irrelevant. And when you, again, that sounds kind of like, you know, depressing, but

Speaker 1 in the context. I think it's legitimate.
But in the moment of like, you're losing sleep at night, like you're giving yourself like actual heartache

Speaker 1 and

Speaker 1 stress. And, you know, your brain can go to dark places in those moments.
Of course. You're like, it's all good.
Right.

Speaker 1 I don't know if you saw the other day on Facebook, I said, but did you die?

Speaker 1 It's like, and, and that's actually the biggest lesson learned, right? So, like, and I guess I'm, you know, I think that having talked to you a lot and being around you, I think, um,

Speaker 1 I think you have a very calm demeanor with the amount of shit you're dealing with all the time. Do you know what I mean? Like, and you're very calm around all of it.
You know what I mean?

Speaker 1 I think that, you know, I mean, it's like

Speaker 1 the best analogy I can give people that I coach, and I think that's great what you just said,

Speaker 1 is, you know, the fourth quarter, you're down by a touchdown and you put it in the quarterback's hands, you know, go watch Tom Brady, Joe Montana, all the greats.

Speaker 1 They were always so calm in those situations.

Speaker 1 So

Speaker 1 there's a couple of things that are really clear in my head. Like, cause again, I love psychology.
I love how the brain works. I love how we're wired as human beings.
So first of all, like,

Speaker 1 you know, we're a product of evolution. And so our brain is wired to keep us alive.
Correct.

Speaker 1 Which means like all the stress and all these responses are biological to keep us alive.

Speaker 1 And, you know, but did you die is a really good question.

Speaker 1 And so one of the things is like, this is the life I chose. Sure.
And I actually, I was at dinner with a friend of mine who's a very successful developer last night.

Speaker 1 And he said something, and I was like, but this is the life that we chose. Sure.
You can always choose to do something else. And the aha that I got once was the human experience is problems.

Speaker 1 Like I've never met a human being who was completely zenned out and had no problems, independent of income and success, right?

Speaker 1 So like a real problem

Speaker 1 is I don't have enough capital to raise for this amazing deal I locked up.

Speaker 1 I don't have the right people to handle all the leads I've created.

Speaker 1 I can't hire fast enough for customer service because my software is doing this.

Speaker 1 Those are awesome. Those are problems.

Speaker 1 You know what else is a problem? That's a great problem. But you know what else is a problem? I can't feed my kids.
I can't pay my rent.

Speaker 1 I can't take care of my parents.

Speaker 1 They are both stressful. Of course.
I choose those.

Speaker 1 And I've, and with, to your point about me, it's like,

Speaker 1 at all times, there's always a crisis.

Speaker 1 But I've chosen this life. Sure.
Because the other one is also a very real, tangible problem.

Speaker 1 But these are the ones I want. Yeah.
No, I think that's powerful. I'm going to end it with this the way I do with everybody.
We call the show Waking Up to Wealth.

Speaker 1 I call this show Waking Up to Wealth because I think

Speaker 1 we've been taught about money wrong

Speaker 1 and we've been taught about how to get wealth wrong.

Speaker 1 So

Speaker 1 the reason why I bring people on here like you is to enlighten people out there to see and hear what's possible. But to you, what is waking up to wealth? And it's wherever your version is.

Speaker 1 So,

Speaker 1 the thing that

Speaker 1 I've come to really appreciate, because my journey has been very focused around building wealth and creating wealth, is

Speaker 1 I think there's the ultimate luxury is time. Yeah.

Speaker 1 Right. So

Speaker 1 I think financial independence is something that has always been the goal while going on a wealth building journey but um

Speaker 1 time

Speaker 1 and then i will add location and dependence which are newer concepts to me right so like if you can build a business that doesn't physically require you to be there all the time and especially in a post-covet world sure right i i i think covet was super interesting because it was a mass experiment on like first

Speaker 1 have you questioned your mortality? Like,

Speaker 1 look, we were wiping groceries down. Yeah.
And for a second, we're like, oh, shit, what happens if this is the end? Yeah.

Speaker 1 And then I think a lot of people were like, well, I don't want to live here anymore. I want to live over there.
Right. Near the ocean, near the mountains, near my family, near my cousins.

Speaker 1 Like, so you had a lot of that where it's like,

Speaker 1 you know, at this interesting phase of life, like I'm traveling like four months of the year with my family. Yeah.
Right. I just came back from Europe for a month.
I'm going to spend next week.

Speaker 1 like six weeks in the west coast.

Speaker 1 And so

Speaker 1 like for me, it's not only like the financial financial independence was always the goal, but like having enough time to do the things that I want to do with the people I want to do it with, but also like the location independence is a really cool one for me now.

Speaker 1 And again, it's also the phase of life I'm, I'm 10 years from now, I may want something like maybe I want to be closer to my kids and their kids one day, right? So Yeah, absolutely.

Speaker 1 Well, man, I greatly appreciate you. You dropped all kinds of gems, which I knew you would today.
I know how busy you are. So taking the time to get on the show with us is greatly appreciated.

Speaker 1 I know my audience will appreciate it. And if you don't pay attention or follow this guy, find him on social media, pay attention to him, follow him.

Speaker 1 He's a wealth of knowledge, super successful, and lucky enough to call this guy one of my hobbies. Thanks, brother.
Thanks for having me, bro.

Speaker 2 Thanks so much for tuning into this episode of Wake Up to Wealth.

Speaker 1 We sure do appreciate it.

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Until next time.