“How many years of experience do you have now?”
“I’ve got 18 years of experience in real estate investing!”, says the smug, overconfident me.
“No you don’t…”, says Jim Rohn as I’m listening to an audio of his from years long past.
“You have 1 year of experience repeated 18 times.”
OUCH! There is some truth to that statement.
We tend to get caught in the trap of believing that since we have been investing in real estate for several years that we have that many years of experience.
The reality is probably not as harsh as what Jim Rohn said as he was making a very valid point, but it’s probably closer to true than us having the number of years of actual experience.
Success breeds complacency.
Once we’ve worked hard to overcome the difficult push to get started and have built momentum in our real estate investing business, we can slack off a little and feel good about the progress we’ve made.
This happened early on in my business and there was a long period of this “coasting” that cost me dearly. Most of the cost was from lost opportunities because I was not running my business efficiently.
When I was there in that spot, I didn’t even know what I didn’t know. I didn’t know how well my business stacked up against other real estate investors. There wasn’t a standard to gauge my business against.
So when I wrote a book called, ‘Flipping Houses Exposed: 34 Weeks In The Life of a Successful House Flipper’ where I showed how I had generated 495 motivated seller leads and everything about how I marketed, analyzed, what I offered and the deals I did, I thought I was doing really well. It took several years for me to realize that my conversion rate of roughly 1 out of every 45 leads becoming a deal was downright atrocious.
I only did 11 deals from those 495 leads (we’re talking qualified leads where someone told me they wanted to sell their house…not just a marketing list).
How embarrassing.
After many, many more years of real experience I was able to get it down to turning 1 out of every 5 to 7 leads into a deal.
Let’s unpack what an efficient and profitable real estate investing business looks like so that we can see how we stack up. This will allow us to know where we should be looking to improve…and gain some more real experience.
5 REI Factors For Business Success
After nearly 20 years running a real estate investing business, making all the mistakes in the book, growing through the huge downturn in 2008, flipping/wholesaling nearly 1,000 houses, being a part of several very high mastermind groups, hosting the Flipping Junkie blog and podcast, interviewing 100’s of successful real estate investors, I’ve narrowed business success for real estate investors down to 5 factors:
- Marketing Specialization
- Sales Training
- KPI Tracking
- Structured Planning/Meetings
- Systems and Processes (follow up)
Marketing Specialization
The most successful real estate investors I know do not spread themselves too thin chasing every new direct to seller marketing fad.
Rather, they pick ONE channel and become really, really good at it…over time. These are usually the boring, old marketing channels that many a new real estate investor cannot believe still work like direct mail, bandit signs, driving for dollars, and cold calling.
Once they run some campaigns, get the results, tweak and run again for 6 months or more, they start to really dial it in. After a year or so, it becomes pretty predictable. At this point, some decide to add another channel to bring in deals.
How Does Your Business Stack Up?
If you are chasing a new marketing strategy every couple months and feel like you are throwing money away on stuff that doesn’t work the first time around, you have room for improvement here.
If you have not been testing the campaigns you have been working for a while to try and improve the results, you have room for improvement here as well.
Sales Training
How many offers to different sellers does it take before you get one accepted?
If you are like me, you are probably thinking, “I build great rapport. This is how I get offers accepted. I don’t want to be like a used car salesman.”
Guess what, I thought I was doing well getting one out of every 5 or so offers accepted. The truth is there can be improvement there to the point where acceptance ends up above 50% (some of this has to do with your lead sources however – which we will discuss later in this article).
What makes that possible? Sales training.
It’s not about using “tactics” and being a “pushy salesperson”. Sales training can help you understand how different people handle situations. This allows you to help that person in the way they want to be helped.
If you’ve not been through sales training or have members on your team who have not, I recommend John Martinez’s sales training at REI Sales Academy.
How Does Your Business Stack Up?
If you are getting fewer than 1 out of every 3 offers accepted, you likely have some room for improvement and sales training can be the thing that gets you there.
- KPI Tracking
If you only had 5 minutes each week to get the pulse on your business, would you be able to know whether things were going well and if not what things needed to be addressed?
If you’re not tracking Key Performance Indicators, you’re not likely going to be able to know when things need improving…or whether they are improving.
You might think, “I know how things are going because I’m getting leads and deals.” That might be true.
But KPI’s give you fine-grained insight into what is happening at every level of your organization.
Imagine being able to see trends week over week of how many leads were required to get an appointment.
This can help you spot problems with your lead intake. If your number of appointments goes down over several weeks but the number of leads generated stays the same or goes up, you could have a problem with your lead intake person.
This happened to us. It turned out the lead intake person had been yelled at by a seller and was now making an assumption that most callers were not motivated and didn’t want to set appointments.
Don’t wait until you’ve gone 3 or 4 months with a problem like this, know your numbers.
One of the reasons we developed and launched Forefront CRM for real estate investors was to have a way for these super important KPI’s to be tracked automatically. It was worth the time and effort to be able to see how everything is going in real time.
How Does Your Business Stack Up?
If you’re not tracking your numbers in fine detail every week at the least, you definitely have room for improvement here.
Visit https://forefrontcrm.com/kpis to get a list of the KPI’s you need to be tracking.
Structured Planning/Meetings
The times when my business was not doing well were almost always periods without regular planning and meetings.
We get busy. We make some plans at the beginning of the year with huge ambitions. Marketing cranks up. Leads come in. We get busy!
The meetings would be rushed and done for the sake of just having them. So after a while, it was more important to go on an appointment or check on rehabs instead of having the meeting.
Don’t fall into this trap.
The most successful real estate investors I know all subscribe to the idea that you must dedicate time each week to work ON the business.
If you don’t take time to plan and ensure you are sticking to the plan…or finding out the plan stunk and changing it, you will spend a lot of time being busy…but busy doing the wrong things.
Weekly meetings are when you review your KPI’s. It’s when you make plans to move the needle on getting your yearly goals completed.
I recommend the Level 10 meeting from the book ‘Traction’ by Gino Wickman. This book has been instrumental in transforming my businesses.
How Does Your Business Stack Up?
If you’re not having weekly meetings (even if it’s just with yourself), you have room to improve here.
Systems and Processes
Have all the knowledge for the workings of your business in your noggin? Not good. It might not seem important if you don’t plan on ever bringing on help…but word of advice…you eventually will.
Wearing all the hats in your business is fine for a while. Eventually you’ll discover that it’s impossible to have the freedom we are all looking for by running everything ourselves.
It’s time to document what you do and how you do it. Trust me, you will be soooooo glad you did when you start making some hires.
In fact, we started documenting processes way before making hires and those became lifesavers. Many of the decisions we make are for situations that don’t come up every day. Nothing stinks more than having to try and research and figure out how we handled something in the past when we don’t remember. It feels like such a waste of time…because it is! If we document what we do, we know how to handle everything and we can spend time improving those processes.
This process improvement over time is what really moves the business into greater efficiency (more profit while doing less).
How Does Your Business Stack Up?
If you don’t have your processes documented and organized in a way where they are easy to find (use Tettra for this), you have room for improvement here.
You Likely Have Work To Do
I hope the 5 factors opened your eyes to some areas of needed improvement within your real estate investing business. It can seem daunting and like added work, but this kind of work (working ON your business) reduces your workload in the long run and makes you more money.
Remember: Knowledge not used is the same as not knowing.
Tired of Feeling Leads Are Slipping Through the Cracks?
Looking for the best real estate investor CRM? Give Forefront Real Estate Investor CRM a look! It’s the simple way to keep a real-time 30,000 ft view of your business.
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