I know when I started out 13 years ago I was wearing a lot of hats in my real estate investing business. I was the marketing director, I was the acquisitions agent, I was the sales agent and I was the property manager.
Just thinking about trying to do all those jobs makes me tired. That’s a lot of work for any one person. And it’s even harder for any one person to do them all well.
This is a big challenge for most entrepreneurs. We all think we need to be able to do it all in order for it to get done right. And the truth is we’re all not good at everything. You might be great at talking to sellers about buying their property. You might be really bad at marketing your business or selling the properties or filling them quickly.
I understand in the beginning stages, we all must do most of the work ourselves. That’s Entrepreneurship. That’s how the majority of small businesses are good at, and what we’re not good at.
So, the first thing you must do is write down everything you like to do in your business.
Do you like to talk to sellers?
Do you like to do the paperwork?
Are you good at keeping the books?
Are you good at talking to buyers?
Are you good at selling properties?
Are you good at returning phone calls?
Are you good at following up with potential prospects?
After you’ve made your list of what you truly enjoy doing in your business you must then make a list of everything else that you hate to do. Usually these are things you tend to put off. Like taking care of the books or calling back sellers or maybe showing properties.
I suggest writing down everything you do each and every day for 30 days in 30 minute increments. This will give you a good list and you will also see what you spend your time on. You’ll soon realize if you’re wasting your time on unproductive behavior or if you truly are focused on what makes you money.
Let’s say for example, I wake up every morning and go to the gym for 90 minutes. I then come home and write articles for 90 minutes. I then spend 90 minutes on marketing material for the business. I then take 30 minutes to look over my goals adjust them and make new ones. So every thirty minutes, I’d write down exactly what I’m working on.
Once you have your list of things that you do in your business every day, you can then begin to make a list of what are the most important aspects of your business that have the biggest impact on you getting paid. I’ll share with you my list because I know most of yours will be very similar.
- The Most important aspect of the business is marketing.
- Talking to sellers and making appointments.
- Getting houses closed quickly.
- Cleaning and fixing up properties quickly.
- Getting houses sold or occupied quickly.
This was my list of the most important aspects of my business that makes me money. These are also in the exact order of how they will take place in the real world of buying and selling properties for profit.
We all know that marketing is the key to your business. No marketing equals no prospect which leads to no properties. If you screw up this part of the business nothing else matters, because you’ll soon be out of business.
So, knowing that the marketing of your business is the most important aspect of your business, you must then figure out how to put a system in place that allows this to happen with little involvement from you.
Think of your marketing like this: when a jet goes to take off it takes time to get it off the ground but once it's airborne it flies with little effort.
Your marketing is no different. When you first start out everything goes slowly but after a few weeks of consistency the calls begin to come in one after another and before you know it you have 30-40 leads to pick and choose from each and every month. After you’ve done a deal or two:
*Get someone to put your signs out for you.
*Send your marketing letters or postcards and your prospect lists to a mail shop and let them handle it.
Let me warn you. You must never delegate the marketing completely. You must know what you’re sending to each list and make sure your message matches your targeted audience. If you’re marketing doesn’t get done consistently, your paydays are going to be inconsistent as well.
The next thing you must get done is being able to talk to sellers in a confident manner.
This is a big struggle for a lot of new real estate investors. It takes time to craft your skill at speaking to potential sellers. You must always ask questions and listen to what their needs are. I suggest reading as many negotiating books as possible. This will help you in everyday situations as well. Reality is we’re negotiating with everyone we come in contact with, whether it’s a friend or spouse it’s important to learn good negotiating skills if you’re going to be successful.
Once you know you have a deal, you must be able to close it quickly. Don’t sit around waiting 30 days to close a property. If you do you’ve just lengthened the time before your next payday.
Hopefully you have someone to do your cleaning and handyman work. There is no way that anyone should be doing this work themselves. If you get caught up in a rehab doing the work yourself, you’re going to lose three times what you’ll make on that one deal by doing it yourself by missing out on other great deals, because you thought you could make more money by doing it yourself. Let the professionals do what they do so you can concentrate on other potential prospects.
Once you have the house fixed up you need to get it sold or occupied quickly.
It’s easier to sell or occupy a property if you have several exit strategies so if you’ve been listening to anything I’ve said you know you want to take-over existing loans subject-to. This way you can sell it to anyone with money or credit.
Just like a grocery store doesn’t make any money unless they move the merchandise...and business is exactly the same. The quicker you move the merchandise, the quicker you get paid.
So now it comes down to what are you good at? When you first start out in most cases you’ll wear all those hats. You’ll be the buyer's agent, the seller’s agent, the manager and the marketer but you should never be the handyman.
So, mark that off the list of things you need to do in order to get paid. That doesn’t mean you won’t hold your handyman’s feet to the fire to get things done quickly and professionally.
Next thing you’ll need to figure out is are you better at buying houses or selling houses. If you’re better at buying than you are at selling then you’ll need to train a salesperson to sell or occupy your properties quickly. And do the same if you’d rather be selling than buying. These people will be hired as subcontractors and they will be paid a commission only.
Here’s how I set up my Subcontractor/ Salesperson: I had my sales lady sell my houses. Here’s how I paid her: $5,000.dollars for an outright sale, provided that the buyer cashed me out completely. I paid her $1,000 for each lease/option buyer that she put into a property. By the way, who really paid her? That’s right-my lease/option buyer paid her. With their non-refundable deposit, and the worst case scenario is that I still made $1,000 on each property while my buyers paid my saleslady her commission.
I also had her get the houses ready for sale. She got the contractors agreement signed along with everything else that needed to be done with the property like paint, carpet, cabinets and yard maintenance. She didn’t do any of this work herself; she just managed it and made sure it was done professionally and in a timely manner. I paid her $2,500 after we signed off on the work and the property was ready for sale.
So, if she did her job quickly and occupied my properties quickly, she would make at least $3,500 dollars a month or $42K a year, worst case. We always had at least two houses going at one time so double those numbers and that’s what she made.
Do you see how this freed me up to buy more properties and in turn make more money?
Most new investors look at what they have to pay out instead of looking at what the returns will be. Let’s say that I could buy one house a month and complete all the tasks involved from start to finish by myself, or I could hire someone and pay them 80K to manage the sale and the entire fix-up without my involvement.
Specifically, I could buy at least one more house a month. Let’s say I made 20K on each house. I could make approximately 120K dollars in a year by myself wearing all the hats in the business.
If I subcontracted someone to handle my sales and take care of getting the properties fixed up quickly and paid them 80K a year to do so I would have made an extra 40K without me having to do any of the work.
Doesn’t this make sense to hire people to do things that you hate to do? So let me explain. If I can do 12 houses a year by myself wearing all the hats, that’s $120,000 a year. If I could add just one more property each month by hiring someone to take care of the fix-up and the selling of the properties we would make $240,000 minus her $80,000, which leaves me with $160,000 with half the headache.
The great thing about this is... you get your life back. These people are paid well but they are NOT employees. So you don’t pay their insurance or taxes. They’re only getting paid on their performance. If they take too long to sell the properties then they get paid less; it’s that simple.
What if you hired all the jobs out and you only made 70K a year net income. Would you rather do nothing and make 70K net income or work two jobs and make 120K net income? I personally would prefer to do whatever I wanted and collect the 70K. I would then look at how I might double that next year by hiring another subcontractor to buy or sell more properties.
It’s about owning a business. You should be working on the business and not in the business. Because if you’re working in the business you don’t own a business; you own a job and the sad thing is that you’re working for a lunatic.
If you haven’t read E-Myth Mastery by Michael Gerber, I would highly recommend it. It’s probably one of the best books you’ll read on being a true business owner. I want everyone to understand that time is always of the essence in business. Don’t ever let anyone tell you that they’ll get to it tomorrow or I’ll get to it when I have more time. NO it’s now! And you should never tolerate anyone working for you that doesn’t understand that time is money. The more time it takes to get things done the less you will make.
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