One of the more overlooked aspects of the real estate business is that it is actually a business. New investors get started every day without focusing on how there are going to run the day to day side of things. More often than not, this is the most important factor in determining the success of any new real estate investor. You can close a handful of deals, but if your bottom line is off, you won’t reap the rewards. You don’t need to be a “business person” to run a solid business. In time you will formulate your own small business systems that work for you. Regardless if you close three deals a year or three a month, you need to treat it like a business. Here are some tips to help you run a more effective real estate business.
- Accounting. Do you know how much you are spending to acquire new leads? Any idea what the total expenses are for your rental property? Have you allocated funds from your last deal for Uncle Sam? Just like any business, you need to be on top of all your income and expenses. A few changes to your rehab budget has a direct impact on the profitability of the deal. Even if you enlist the services of an accountant, you need to be on top of your finances all the time. This is your business and you should be meticulous about money coming in and going out. There are many apps and programs that have made accounting for business as easy as it has ever been. Find one that works for you. Your business will thank you for it.
- Organization. Instead of being in a rush to do five different things at once, you should focus on one at a time. As a real estate investor, you often end up wearing many hats. One day, you could be working on an issue at a rental property and the next, you could be sitting in the living room of a seller trying to secure a deal. What is universal among successful investors is how they manage their time. An easy tip to help in this area is to make lists. While this sounds easy enough, far too many people fail to do this. By making a list before you go to bed, you can wake up the next day with a running start. With your list, you also need to have the discipline to stick to your schedule. There are times when you need to say no and focus on the task at hand. This may seem stressful, but being busy is the point of being in business. The alternative is sitting around waiting for something to happen. The more organized you are, the more efficient your day will be. The more efficient your days are, the more efficient your business is.
- Communication. In the real estate business, there are often a handful of people that you are in close contact with almost every day. The communication you have will be a direct reflection of your success, and real estate networking is a critical component of that. When is the last time you and your business partner sat down and discussed your goals? Have you offered to take your real estate agent to lunch lately? Do you ask your mortgage broker to contact you with any new loan programs? Communicating with the people around you is as easy as it has even been. As important as a phone call may be, there are times when a simple text message will do. Composing it will probably take you less than ten seconds. You never want there to be an issue on a deal because you failed to communicate.
- Management. We have already established that you cannot be in four different places at once. If your business has reached the point where you are losing deals, you need to take on help. You can’t just enlist the services of anyone and hope they do the job you are looking for. You need to take the time to talk to them about expectations and demands. Everyone from a property manager to a contractor will follow your lead. If you are lackadaisical in your management, you can bet that the work will be the same. There are a handful of little things that successful managers do. The most important is that they make everyone around them feel important. In time, you will develop a managerial style that works for you, but you always need to think about the people around you.
- Service. When people think about real estate investing, they don’t think about it being a service industry. The reality is that nothing could be further from the truth. You are judged based on performance. How quickly you can close a deal or even how well you respond shapes your reputation. The stronger your reputation, the better the business. In this day and age of technology, everything you do is critiqued and judged. You may not think that the follow up call to a seller you didn’t end up working with is important, but it is. Positive word of mouth is any business owner’s best friend. With everything you do, you need to think about what kind of service you are providing.
If you think about real estate investing as a business, you will start to see your production increase. Losing sight on any one of these areas will cause your business to decline. Keep this in mind with everything you do.