I had someone reach out to me the other day. He indicated that getting to 500 units is not possible for most of the people that follow me on social. The thing is, if you allow negativity and have a “can’t do” attitude, you will not only NOT reach your goal of anything, but you will not experience your full potential. I have personally interviewed people on my podcast and have many people that come to our weekly events that far surpass 500 units. I’m not going to say it was easy getting there, but I’m going to outline 5 of the biggest obstacles real estate entrepreneurs face when growing their business.
1) No Follow Up with Potential Investors
When you are starting out and you build your team, you should also begin by identifying potential investors and partners in your deals. This means creating sample materials, networking, and meeting ‘friends-of-friends’ to explain what you do and why it should matter to them.
How do you do this? There are many CRM providers and often have a free option. I have used Hubspot personally and it does a fine job. It requires some setup, but it is easy. If you’re not technically inclined, use an Excel spreadsheet and list their name, phone, address, contact date and some notes. The important thing here is that if you say you will follow up with a meeting or an update, you do it. The prospect needs to know that you stick to your word. It shows you have character and follow-up.
2) Deals in a High-Priced Market
If you are trying to buy in a competitive market or in a market where brokers are doubling the cost per door compared to average, it can be very discouraging. Some of you may want to focus on the local market because you know it well, but others may want to check out other markets because the numbers make sense.
Many markets are experiencing cap rate compression because of low interest rates, but with rates on an upward trend, there should be some easing. Regardless, you may need to get creative to find deals. For example, my buddy found an on-market opportunity that was publicized and marketed by a broker on Loopnet, which had a high price. Instead of walking from the deal, he had his broker reach out to the seller to see if they had any other deals they would want to sell and had one across the street. After getting to know him and his team, they were able to negotiate a good deal for two buildings and got both under contract at a good price. If he had only looked at the on-market opportunity, it wouldn’t have made financial sense. But because of the cost savings associated with purchasing both buildings on the same street, he was able to close both.
On the other hand, if you know that deal flow in your area is slim and you decide to pursue opportunities outside the market where you live, building an experienced team is imperative. This starts by selecting a market, understanding the area, demographics and opportunity, then interviewing and hiring a property management company and a broker and partnering with an active investor in that space.
3) Chasing Too Many Rabbits
This is something that many real estate entrepreneurs face – both new and experienced – and that is to work on many investment strategies at the same time. As real estate specialists, we have so many ways of making money – enough to even paralyze an aspiring investor because they don’t know which way to go.
The good thing is that the longer you are in the industry and the more relationships you build, you will be presented with a variety of new and exciting investment opportunities that suit you, your personality and goals.
So as an aspiring investor, how do you decide which investment strategy to pursue? I think you need to identify the root of the problem first. Are you struggling with selecting your strategy or are you just using that as an excuse to not take action? If it is indeed the former, pick the business you want to be in, one that aligns with your current interests and skill set and become the very best at it. Keep in mind that investors in many of these fields have had success and built fortunes doing so. You are not creating anything new! If it is the latter, you need to learn how to identify the hang-up and get past your fears. You can do this by building a team and surrounding yourself with experts.
How does the established investor avoid chasing rabbits that are outside of their skill set? By holding yourself accountable. You can do this by joining a mastermind where you meet on a weekly or monthly basis, voice the concern and solution, and commit to the group that you will do what you say. You can also hire a mentor to keep you on track.
4) One Man Band
Whether you want to spend time focusing on the long-term vision of your real estate business or time to explore creative, non-real estate related passions, the solution starts with automating and outsourcing parts of your business, such as scheduling or design work. In addition, you need to also build a a solid, trustworthy real estate team as I mentioned in other videos.
To overcome this challenge, you need to identify what you are doing that can be handed off, find someone on an online freelancing platform, and have them do it. Even the people that have thousands of units don’t do it all. They rely on a team of experts to help build out many important aspects of their business. Ultimately, the real estate game is a team sport.
5) No Money or Experience
Many people I have met at our live events either lack the experience, net worth and liquidity to enter the real estate arena. One individual I know went after seller financed deals to get the ball rolling. He was able to get a couple of deals and is well on his way to building a track record he can talk to potential partners about.
For those that are short on capital, you may want to consider getting into a four-unit property where you would live in one and rent the rest out. You can get in with a low-down payment and get it to cashflow.
In my opinion, the best way is to learn and lean on other peoples experience to take down larger deals. This option requires the most commitment as you really need to know how to sell yourself and a potential partner that you will do what it takes to make the deal a success. For someone with a high ambition, this would be my choice.
Anyway, let me know what’s keeping you from starting or scaling your real estate business. I’d love to hear from you.
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