As a real estate investor, you are in charge of your business. One of the biggest adjustments new investors make is transitioning from making offers to actually running a business. Regardless of how many deals you close you must treat real estate like a business. At the end of the day if your bottom line is not robust it doesn’t matter how many deals you close.
Real estate investing is full of daily decisions and choices that impact where your business goes. Fortunately, you make these decisions and oversee everything around you. Running a better business is often about minor changes to your mindset or the people on your team. Once these are in place your business will be tough to stop. Here are five tips to help get your business where you want it to go.
- Be the boss. Being the boss can be a difficult adjustment. Even if you dabbled in real estate previously there is a big difference in making it your business as opposed to just a hobby. With a hobby you don’t necessarily need to worry about monthly expenses and overhead since there is only a deal or two a year. If real estate is your career you need to know every dollar that is coming in and going out. You also need to get comfortable delegating authority and making difficult decisions. The best investors have a team around them they lean on for help and have handle a bulk of the work. If you want to make lions share of the profits you need to handle a lions share of the responsibility. Making tough decisions isn’t fun and can drive you crazy but is an essential part of any strong business. Being the boss is an adjustment but is one that you need to handle if you want to run a better business.
- Know your business. The buck stops with you for your business. The best investors are those that take the time to know every aspect of their business. They may not need to know the ins and outs of what a contractor does but they know enough to make requests and provide feedback. They don’t have to be a mortgage broker to know some basic guidelines and formulas. The internet has made gathering knowledge and information easier than ever. Watching a ten-minute YouTube video doesn’t make you an expert but it can provide a base of knowledge. With that you can reach out to your contacts, ask questions, and find out any information you may need answers to. With any down time, you should take the time and learn something new. Eventually you will be put in a situation where you need to answer a question or address a problem you never expected. Even if you have a quality team around you, you can’t rely on them to help answer every question you have.
- No fluff team. Running a business means surrounding yourself with the best possible team. This doesn’t always mean the most experienced or who you know the longest. It means putting people in place that you trust will always give you honest feedback. It is ok to butt heads and differ sometimes. Some of the best partners you will ever have are those that think completely different from you. Where you are aggressive they tend to be a little more passive. Where you swing for the fences they are conservative. When you see the upside, they focus on the downside. Hearing an opposing view may be frustrating and difficult sometimes but it keeps you sharp and helps avoid crushing losses. Setbacks may happen, but they are much less likely if see every side of a situation.
- Listen to advice. There is a fine line in any business between listening to advice and acting on everything you hear. Regardless of who you are or how long you have been in business for you should always listen to advice. You never know when you are going to hear an idea that offers a different perspective and changes the way you think of something. That being said you should never blindly act based on advice. Weigh the pros and cons with everything and do your own due diligence. The more advice, opinion and suggestions you hear the easier it is to shape the way you think. Real estate trends have a way of changing unexpectedly on a dime. If you are not one step ahead of a trend you are essentially one step behind. Don’t be afraid to listen to the noise around you.
- Do things with a plan. Where do you see your business six months from now? How about a year or even five years down the road? Without a business plan acting as a roadmap you can easily find yourself in trouble. You will pursue properties in markets that you really don’t want to be in and will have a tough time getting out of. You will bounce around from opportunity to opportunity without a vision and often be left disappointed with the results. Every decision you make and property you pursue should be part of a bigger plan. This plan can adjust over time, but you need to have a purpose for your actions.
Running a business gets easier over time. You will figure out what works and what you should stay away from. Use these five tips to help improve your business, regardless of your experience.
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