What Dictates your Business?
If you let the market dictate your business model for that year, you’re going to have a better chance at success! Why? When you choose a strategy, and create a business model around something the marketplace doesn’t need – you are setting yourself up for failure. You must choose a strategy that is conducive with the marketplace. Unfortunately, in real estate investing MANY people make the mistake of creating their business model around a strategy not needed in the marketplace. Here’s an example: Everyone wants to be a house flipper, and why is that? Because they saw it on TV. Maybe they thought it was sexy, or it looked fun, or “it gives me an opportunity to use my creative side”. Listen to me and listen carefully – those are poor poor poor ways of creating a business model. A business model should be determined by what the market is asking for never because it looks fun. When you look at a business model for yourself you’ve got to ask, “Where is the market?”, and “What does the market need?” That is using this rule of letting the market dictate your business model and it will save you time and money.
One Size Does NOT Fit All
Often, I hear “I am a wholesaler, that is all I do” or “I am a flipper, that is all I do”. Then a deal comes along with the potential for profit, but it doesn’t fit their desired strategy. Using only one investment strategy prevents them from making the deal work for them. They are now working for the deal. You can’t let your strategy get in the way of investing and call yourself an investor. The question is “Can we make money with this lead the way we like to make money?” In other words, does our desired investment strategy fit this deal? If it does, great. But if it doesn’t then you need to go to the next strategy that does work. This is making the deal work for you. When you are new to real estate investing you may only have one strategy available, and that’s okay. Start planning ahead even in the beginning, it is crucial to your success to be looking into the next strategy. After mastering your desired strategy, add another, and another and keep adding to your tool belt until you never have to walk away from a deal. Your ultimate goal is to get to the point where you can make money with any deal using any strategy. Get out of the mindset that “One size fits all” because that is just not the case in real estate.
Start with the End in Mind
No spoiler alerts here – it’s important to keep the end in mind. Know what your company should look like ultimately. Keep your end goal in mind when you start and while you’re building towards it. I often ask fellow investors, “What is your end goal?” I am always surprised by how many cannot answer such a simple question. Some of these folks have been in business for 5 or 10 years but they are still just doing transactions with the goal is to just make money now. That is a pathetic goal – it really is. It’s a lazy goal and a cop-out answer of what you want to do. This is your life, you should strive for making more than money. It’s important to start thinking about the ultimate lifestyle, your dream. “What is my ultimate lifestyle? What do I want my company to represent? Will it make me happy?” Then you need to start working toward what your company needs to look like to achieve these goals. To do this you’ll have to take a couple of things into account: The first one is (obviously) money and the second one is Freedom. Freedom of time is just as important as money. Once you have those two things figured out then – and only then – can you begin to visualize what your company needs to look like. Take my word for it, 12 years ago I created my business on a dream board and now live the lifestyle I choose. My wife and I also have and make the time needed to enjoy it. If I had just strived for a bigger paycheck each year, you wouldn’t really be interested in my advice. So, keep the end in mind whether you’re starting or growing your business.
Don’t be Afraid to take Action.
So many people are hesitant to do this because ‘they have to think about it’ or ‘they have to analyze it’, they think they have to know every variable before they can proceed in getting a contract. There should be no fear of taking the first step. The person who controls the contract controls the world. Start with at least getting the contract. Once this is done if you can’t close on it or if you decide that you are just too fearful to rehab it or keep it as a rental, you can always sell the contract! Wholesale it to someone else and take that extra money that you’ve made and put it into more marketing to get more contracts. The bottom line is, you must take action. You’re not going to know everything, you’re never going to know everything. After 12 years of real estate investing, I’m still learning. You will find out what you need to learn and study after you start. You can’t move forward without taking the first step.