1. Know Your Market
When I first jumped into the Real Estate business I found myself trying to generate deals anywhere I could find them. It became obvious very quickly that my opportunity pool was much too large for me to effectively advertise with my limited budget. So instead of mortgaging my first born, I limited my marketing to small specific geographic areas where I could become an expert. I call these areas ‘target markets.’
Every Real Estate investment business should have one or more target markets. These are the neighborhoods where you know the types of houses, likely repairs, reliability of potential buyers, property values and pitfalls for everything within its borders.
Knowing your market allows you to quickly identify opportunity and take immediate action when deals present themselves.
2. Define Your Exit Strategy
Your exit strategy will impact many parts of your business – cash flow, return on investment, marketing, negotiation. To be successful in your Real Estate business you first need to define your exit strategy or strategies.
My favorite strategies are the most consistent and conventional methods of investing in residential Real Estate. This includes buy-fix-and-flip, buy-and-hold, and wholesale.
Every Real Estate investment business owners should pair the strategy with their own tools, assets and comfort level. Know where you want o go will help to define your next step in the journey.
3. Consistently Market for Seller Leads
Leads are the bloodline of the business. The only way to consistently have enough leads to feed your growing business is to consistently market to motivated sellers. Target the types of properties that fall within your target markets and fit the criteria for your exit strategy. Build a marketing plan based on the types of properties that you want to find. Then implement the plan without fail.
4. Trust Your Numbers
Numbers do not lie. So don’t try to fool yourself. It can be tempting to believe that you can trim a few thousand dollars here or there from the cost of your project. That’s why it is important to use a checklist or construction generator with predetermined values on it. When you run your calculations, stick with the values these tools will generate. Even though it is tough to walk away from a deal, sometimes the best investment is the property you never bought.
5. Define a Process and Stick to It
At one point my home buying business was generating 1-400 leads on a weekly basis and wholesaling 8-12 properties each month. This would never have been possible without some defined processes and procedures. The structure provided a freedom in which my business could grow and thrive. If you want a growing business, you’ll need to work on processes that can be easily duplicated over and over again.
6. Be Honest and Realistic when Working with Others
If you want to separate yourself from the competition, tell the truth.
There are a handful of industries where you can make a large amount of money in a relatively small amount of time. Real Estate is one of them. It seems that these types of businesses also tend to attract scammers and hooligans.
Sellers have a right to an honest and realistic explanation of your intentions. If you are wholesaling the property, you can let them know that your funding partners will need to see the house and fund the transaction. If they are asking too much money, let them know. If you cannot close in their timeframe, let them know.
Your buyers deserve the same respect. When you present the property value to a buyer, do your best to make sure the numbers are accurate.
Bending the truth will only make your look like a crook or and incompetent. Neither option is the image you want for your business or yourself.
As you build and grow your business, make sure to keep an eye on the important. Now go make some money!