February 2017

Build Systems, Create Processes

Business systems can help you build massive value in your business. These are a group of documented procedures and processes that allow your business to run without you. Often referred to as an operations manual, its purpose is to capture the collective “know how” of the business. Let’s take a look at and use the multibillion-dollar fast food chain, Burger King, as the poster child for business systems, considering it is essentially run by teenagers who can’t even be trusted to make their own beds in the morning. How is this accomplished, you ask? They run this hugely and wildly successful and profitable business because they have time tested and proven business systems. Their operations manuals cover everything from hiring and customer interaction, to product delivery.

Let’s take a look into two major reasons why small businesses overlook implementing business systems. Reason number one is, unlike the latest marketing strategies and sales techniques or other highly visible aspects of your business, business systems are back end or back office functions and are considered by some as less important or boring.

Reason number two that business systems seem to be neglected is because of a perceived lack of urgency in getting them done. When the business is small, the seemingly much more important things to do like sales, marketing, and order fulfillment take priority over building and implementing a procedures manual.

With all of these important things demanding and requiring the increasingly scarce time of the business owner, business systems seem like something that can be put off until later. However just like any other accumulation of neglect over a prolonged time, it usually doesn’t end well.

It’s a sad situation when a business owner goes to sell their business and finds out after putting in many years of hard work, that their business isn’t worth much at all and not even close to what the owner perceived the value to be. It’s not so much that the business itself is worthless, it’s that they are the business and without them there is no real business to sell. In cases like this they can’t sell it for any kind of reasonable amount, and if they can sell it to somebody based on the value of their stock maybe they will come by an investor that sees the potential through their own vision. There are many benefits to implementing systems in your business. Here are some of the most important.

If built right, it’s a valuable asset: It’s nice if your business gives you a great cash flow to fund your lifestyle. Wouldn’t it be great if one day you decided it was time, and you could sell your business to the highest bidder and have the biggest pay day of your life? You can only do this if you build the value of the business and that can only happen if it is a system that can continue running without you.

Leverage and scalability: Systems give your business the ability to expand and grow. You can replicate your business and move into other geographic areas yourself by franchising or licensing the rights to your business system. Many fortunes have been made this way.

The Cost of Labor: When you and your staff don’t have to waste time and effort reinventing the wheel each time, this improves your efficiency and reduces your labor cost.

Consistency: Consistency is one of the keys to delivering an excellent and predictable customer experience. You may not like the food at Burger King, but one thing you can say about them is whenever you go, they do deliver a very consistent experience.

If you want to determine if you have a business versus if you are the business, here’s a question I’d like you to ask yourself. If you went overseas for seven months, leaving your business behind, when you came back would it be in better or worse shape than you left it in? Would you even have a business left when you came back? If you answered negatively to either of those questions and you ARE the business. A mindset and a business plan modeled like this dooms your business to staying small and you remaining a prisoner in your business. Many real estate investors often find themselves in a catch 22 situation. You have no time to work on the business because they are too busy working in the business. And they can’t get away from the business because they haven’t developed documented systems and processes. So they become stuck in a business that is become a self-made prison.

“If it ain’t broke, don’t fix it”, that’s what my mom always said. She meant to imply if something is working don’t mess with it, there’s no reason to try and make it better. In business I like to apply that same motto, and apply it to something I call “systems modeling”. What I mean is this: if after you do your exhaustive research on a subject matter, and you find something similar to what your system goals are, you can model your work and system flow after that proven method. Don’t reinvent the wheel, you have to be careful with modeling though because this does not imply or suggest that you copy someone else’s work. Instead this idea suggest that you take bits and pieces of what you need that can apply to you and your business systems, rearrange it, reword it, and make it your own. Unless you are in an arrangement where copy written work is given to you to use or expressed consent is given to use someone else’s material exactly, this could get you in the hot water legally. Do not plagiarize.

Franchising and licensing are ways that one gets access and rights to use another company or owner’s material but that’s not the only way. Another way which works for some is to join a membership, club, or become a contract employment where access is given during the timeframe of that membership or contractor agreement. Either way this is a great strategy to leverage the work, materials, processes, and systems that someone else has already taken the time to develop.

7 Things To Know Before You Start Investing in Flips

Once you’ve closed a few deals, you rapidly realize what works and what doesn’t. You find less demanding approaches to get to your ultimate objective and start Fine-tuning your plan of action.

The issue is that there are some hard truths that barely anybody discusses.

It’s made sense of as you get more involvement yet it doesn’t need to be like this!

I’ve included beneath a portion of the little known truths that you NEED to know as a rule about real estate investing.

1. Your market may not be the best market to invest in

It’s true that the easiest way to get started in real estate investing is to start in your “backyard”.

It’s convenient for you to drive by properties and you most likely know a lot about your particular market. If it isn’t an investor-friendly market (meaning you aren’t able to get deals at enough of a discount), then it might make sense to branch out.

This will take some research, no doubt about it.

It’s important to look at economic and real estate factors with any neighborhood you are considering investing in.

A few things to consider are:

Population growth and job growth
Unemployment rates
Rent vs. own ratios
Average market rent
Crime rates
School districts
The number of homes for sale (inventory)
Average days on market for new listings

2. You’re dealing with people who are going through a rough period in their lives

What does this mean for you?

You need to be prepared for a mixed bag of emotions.

Some of your potential sellers will have just lost a loved one. Others might be close to losing their family home and need to get out of the property quickly.

They’re coming to you as the solution to their problem. You have to remember to be understanding and sympathetic.

Regardless of whether you can make the deal work or not, spend a few extra minutes with the seller to listen to their story. You might not be able to help them but you might be able to offer guidance.

3. Some of these properties are DISGUSTING

We’re talking about the pet urine, the backed up septic tanks, the foul smelling junk that no retail buyer wants to deal with.

You (or your buyer) will most likely walk into some hoarder houses that make you want to turn around and walk away from the deal.

When a house reeks of cat urine… it’s a smell of huge profits.

Remember, it doesn’t have to be YOU that cleans the property out.

Look beyond the filth.

Once it’s cleaned up, would it make a good rental property or rehab? If so, run the numbers and go from there.

4. You will spend a LOT of time and money advertising

Your business needs leads in order to thrive.

Setting up direct mail campaigns, pay-per-click ads, social media ads, and other campaigns takes time and if you stop working on this, your business will not survive.

Luckily, once you get a good handle on what type of advertising works for your market, you can become more efficient at this.

You’ll want to set your campaigns so that you’re sending to the same people on a routine basis (once a month is routine but varies from investor to investor). This way, if they weren’t ready two months ago but are ready to sell now, your information is still in front of them.

Advertising takes both time and money. Everyone’s budget is different for advertising and you should be tracking where your money is being best utilized.

This leads right into #5.

5. You need money to get started!

We know you’ve heard people saying that you can get started in this industry with no money.

While technically you can do an assignment deal without bringing cash to the table, you have to consider what it took to get that deal.

Advertising is necessary to bring in leads and ultimately, to find deals.

Advertising costs money.

Sure, some assume they can spend $100 a month advertising and the deals will be flowing in, but that simply isn’t the case.

This is especially true in the beginning when you don’t know the best list to target and are casting a wide net.

6. You only close a small portion of leads

You’re seeing other investors talk about their success of closing another deal. Except, they don’t share how many other properties they visited before securing that one deal.

This is easily skewed when investors only talk to you about the “good”. Know an investor that closed 5 deals this month and made huge profits? They more than likely looked at hundreds of properties that didn’t turn into a deal.

Real estate investing isn’t about making every deal in front of you work. It’s about finding the right deal that works for you.

On average, a close rate of about 5% is normal.

The best part about this though is that you can still make good money by doing that small percentage of deals!

7. A big rehab like you see on TV isn’t where to start off

There’s multiple shows out there about flipping houses and some even with first time flippers.

Most have extensive repairs being done.

They might run into a few snags but all-in-all, it works out in the end.

Except, for most people, trying for a big rehab job as your first deal can very easily become overwhelming. You probably don’t have a team or contractor in place and you’ll end up having to do more work than you’d like to get the project done.

If your numbers are off or you didn’t plan for all the repairs the property truly needs, you can find yourself in a not so positive situation very quickly.

Walk before you run.

If rehabbing is your thing, start small and work your way up. Find a reliable general contractor that can manage the day-to-day operations but leave a buffer in your repair budget for anything unexpected.

Learn from other people’s successes… and their failures

Do your research.

Invest in a property that makes sense for you. It might not be your first lead or your 100th lead. Practice analyzing your numbers and have your financials ready for when that perfect deal comes along.

Motion Creates Emotion

Have you ever found yourself sleeping in late, your head is buried in the pillow, your blanket is pulled all the way up to your chin, you’re staring at the ceiling and you just can’t find the motivation to get up and get moving? Once you throw the covers off, swing your legs to the side of the bed, stand up, walk to the bathroom to brush your teeth and wash your face, you have a new energy for your day! That’s all it takes, just one step at a time. Suddenly you’re not so tired anymore and you start thinking of all the things in your day that you’re going to get done once you get moving. That’s because getting moving in a productive direction gets you excited about the tasks you are about to complete. The inevitable anxiety of putting things off and not getting things done fades away. The physical action that your body has started, creates an emotional tie that your mind embraces and now the subconscious becomes a conscious activity.

Progress is good. Progress and hard work are hardwired into our humanity. If something is truly worth having, it is truly worth working hard to obtain, and in this regard we see our mind’s desire start to manifest itself in the physical world. If people didn’t have the desire to progress and advance themselves as a species, we would still be living in the stone ages. At some point that caveman had to wake up and first think about a tool he needed to create in order make his life easier, and he or she had to make it a reality. The end result was something that went from the intangible to the tangible. Action is always better than inaction, and it is usually more profitable too. To do, or not to do, to try or not to try; that is the question and I challenge you to do, and to try. If you don’t do either you will never truly get excited about anything. When your mind feels well your body will feel well. Your mind stays running at full capacity when you keep it uncluttered and free from unfinished thought processes and projects. I do some of my best brainstorming at night in bed and because of that I keep a pen and a pad on my nightstand. Whenever a grand idea enters my head I turn the light on and write it down, then I feel good about it because I have taken action and didn’t let that thought fade away. By the next morning if it is something that required my immediate attention, I start working on it. Why put off until tomorrow what you can get done today? There is no time better than the present. These adages are time-tested, tried, and true. Taking action immediately forces you to become involved, it forces your mindset to be one in which it does not except procrastination. I’ve never heard of anyone winning a race by procrastinating at the starting line. The race is usually won by the person who started first and endures the longest, the runner whose motion carried them through to completion.

One of the more famous laws of physics, Newton’s law of motion states; every object in a state of uniform motion will remain in that state of motion unless an external force is applied to it. In applying this to yourself, do not let the external force be your inability to take action and move. Give yourself every fighting chance you got, working with the tools that you’ve mastered over your lifetime, your hands, your feet, your arms and legs, your mind. Get moving, do something, feel great about it, get excited.

This may seem somewhat like common sense but you’d be amazed how many people don’t get it. You’d be amazed to know how many inventions are lying in the grave or never made it out of the dream phase. Dream without action is simply a fantasy and has no basis in reality no matter how good your intention. Be a doer not a talker, don’t talk yourself out of a good thing. I’ve heard it said before that we as people are our own worst enemy. I challenge you to be your own best friend. Trust in yourself, trust in your ability to learn. Do you know that most successful people in the world only succeeded after a series of miserable failures? People like Bill Gates, Steve Jobs, Martha Stuart, and Oprah Winfrey, to name a few, failed many times at many different things before they made it big. And boy have they made it big, I’m sure you’ve heard of all these people before, and I’m sure in some way or another your life has been affected by something they have built, done, or said. So don’t give up, ever, it’s not even an option, and never accept it as one. Just remember that every “No” you hear, each failure that you experience, brings you that much closer to a “Yes”, closer to a success. It’s simply a numbers game, it’s the law of average. One common trait that you will find amongst all star athletes is that they never give up. They are constantly trying to better themselves. They are always honing their skills and practicing more than the next guy or gal. They don’t want to lose. They are always trekking forward and pushing the limits of their minds, bodies, and souls.

You must be this way! You must challenge yourself the same way. It may take some practice at first but this is not your normal everyday way of being. Get used to being productive. Get used to accepting a greater challenge for yourself. Tell yourself right now out loud, you can do this! You can be a successful real estate investor! This is not someone else’s dream, this is your dream! Financial freedom is within reach and the life you always wanted is right around the corner. Get excited about your own life!

Stop Preparing, Start Doing

Is it time to stop preparing, and to just start wholesaling real estate deals?

Recently I read a blog of a top wellness guru who as of late had a lot of coaching clients who assert they want to eat healthier and get in better shape this year. His recommendation? Stop getting ready to eat well – just get it done. That can surely apply to real estate wholesaling and all types of investing as well.

The primary issue is that many individuals invest an excessive amount of energy in planning and get the Analysis Paralysis, so much that they never get the outcome they were after. With regards to health and fitness there are such a large number of vision sheets in homes, cooking devices that are gathering dust, treadmills that are rusted, old formula books, and dumbbells that are being utilized as door-stoppers as opposed to working out. People love to plan. We want to get the gadgets and contraptions, get the gear, and set goals, but then what?

So, when it is time to stop preparing? When is it time to start doing? Where do you start taking real action?

You Need to Prepare

When it comes to your health or real estate investment, you do need to prepare. You need to know what you are doing. You need to know how to eat and workout smart so you don’t get injured, or actually get yourself in worse shape. In real estate you want to understand what makes a good deal, and how to pass it on to the next player.

You should have a basic idea of the mechanics of buying and selling homes, your local real estate laws, contracts, and where to find buyers, sellers, and lenders, and marketing. However, at some point you really have to put it into play.

Nothing Happens Until You Take Action

Some people have been preparing to do real estate deals for years. There are real estate agents who have never done a single transaction. There are ‘investors’ who still haven’t made offers. Learning is great. It is necessary. But if you just keep waiting and using it as an excuse then you will never make any money or enjoy any of the time freedom rewards that real estate can deliver.

If you are serious about wanting the success that real estate can deliver, you have to draw a line in the sand, put a date on the calendar, and commit to start taking action. Period. Fortunately, real estate wholesaling is one of the best and fastest ways to get into the game and for getting quick results.

It’s also important to know that while there is a lot to learn in real estate, things are constantly changing. You’ll never know it all. So much of the volumes of books, CDs, and online articles out there are well out of date. In fact, some are so out of date that what they teach is now illegal.

There will always be more to learn, and you may not know all the steps or pieces of the puzzle yet, but don’t let that stop you from stepping forward.

So where do you start?

10 Things You Can Do TODAY To Start Wholesaling Real Estate

Cycle your neighborhood, look for FSBOs, and distressed property, get the addresses
Write a letter or create a postcard to send to buyers, sellers, renters, or private lenders
Get a list of buyers, sellers, and lenders
Send an email to prospective clients, referral partners, friends and family
Contact 10 lenders to get qualified for lines of credit
DM your contacts via Instagram or Twitter and let them know you are in the game
Meet with someone who you can partner up with on a deal
Book your place at an event, networking evening, or local meetup
Give out 10 business cards and ask for referrals
Make 10 offers on properties, they can be random, extreme low balls if you need to

To Wrap This Up

Now is the time to take action and start doing deals. You should be prepared. But you can earn and learn too. Make today the day you change things. Mark it on the calendar so you can look back and point to when your life really started changing for the better. Then take as many of these 10 actions as you can.