Build Multiple Income Streams
Some of your income may come from real estate and some may not. If you start out like my wife and I did, full time, then all of your income will come from one place. For my wife and I, that income stream was Wholesaling. It was sufficient but I quickly knew I wanted to have multiple income streams for security. We began to hold a few of these properties as rentals and every once in a while we would fix and flip a property. This allowed us to start building multiple income streams. This gave us more stability and consistency which allowed us to do more projects. Today we have other businesses’ outside of real estate providing us additional income streams but it all starts with just the first one. Once you’ve mastered that first skill you can add another and in turn add another stream of income. Once a year my wife, Melissa, and I take a look at all of our income streams and eliminate the bottom one or two based on that year’s performance. We always eliminate the bottom tier of our income streams because I know the next year I’m going to expand and be faced with more opportunities. You will have to start eliminating areas that are not growing to move forward on the next project or the better performing income stream.
Delegate, Delegate, Delegate
Delegate and track everything in your company… except branding!
What I mean by that is we want to eliminate all the tasks that we, the owner, have to do in the company excluding the task of branding. I want to unload everything I can so I only need to focus and tackle the big tasks. Initially, you will say, “Well I am my company – I don’t have anyone else”. That’s fine for now but start thinking about the things you would eliminate if you had an employee, a virtual assistant, or someone else on your team. Start thinking about how much more productive you could be if you started delegating those tasks – particularly low paying tasks. Give yourself an hourly rate and say I’m going to eliminate everything I’m doing in my business that does not pay over “X” then fill in the blank. You may say “I can hire someone for less than $15 an hour to do this then I shouldn’t be doing it.” Eliminate or delegate the smaller more time-consuming tasks. Once you do delegate these tasks you want to track it. Make sure the work is still being done and most importantly, being done the way you want it to be done. Eliminate all the work that you can, if you can, because that will free you up to tackle bigger tasks and allow you to grow. Remember, there is no one man army.
Study Market Cycles
This tip is one of the LEAST talked about areas in real estate investing and probably one of the most important. All markets move up and down. You’ve probably seen this in stocks, gold, and silver pricing. Those same metrics exist for real estate in submarkets and of a particular asset class. Real estate can be defined by those two things, submarkets and assets classes. Let’s say you’re investing in a particular market and in a particular asset class, such as Houston and the submarket of Galveston, with your asset class being single family homes. You want to be a student of that market, you want to study the cycle of that market. One of the biggest misconceptions in real estate is that values only go UP and that is absolutely NOT true. Real estate goes up, down, and sideways for periods of time. A market cycle typically will last anywhere from 8 to 10 years. This can be from peak to peak, or valley to valley, depending on where you’re starting in the cycle. Understanding what the cycle is doing and expecting what’s coming next gives you a huge advantage over your competition. In the marketplace, most commodities are not predictable because they have what we call high volatility. It is very difficult to predict the direction of a stock, currency, or precious metal but it is NOT that hard to predict real estate. If you understand real estate, you understand that it moves very slowly. It’s not as volatile, it still moves up, down, and sideways, but it does it in a much slower fashion. Start studying the cycles of what you’re investing in and where you’re investing so that you know what’s coming and what to do next. Start online! You can find everything online now. Example: You’re investing in an apartment complex? Check your local MLS – look at the historical data then study the historical data through Costar, LoopNet, or Commercial Gateway. The internet is full of amazing resources to gauge the market cycle in the submarket and asset class of your choice. Start studying now!