Happy New Year to all and best wishes for 2011! I’m hearing a lot of noise regarding a possible rebound in the housing market in 2011. Is it true? Well, as always the market is out of our control. But what we can control are the business decisions we make. In an ever changing industry, we must continuously improve to survive and flourish. So, to bring in the New Year I see it as only fitting to provide 11 ideas that if implemented properly can drastically improve your real estate investing business in 2011. I hope you enjoy and best of luck this year!
1. 80/20 Principle – The 80/20 principle states that 80% of results come from 20% of X, X being a variable such as clients, efforts, tasks, employees, etc. For example, 80% of your profits come from 20% of your clients. This principle can be implemented in many ways. Use it to find out what 20% of your efforts result in 80% of your results. Also, focus on the 20% of your clients that result in 80% of your profits. You can even use the principle to find out what 20% of causes result in 80% of your challenges, 20% of the areas that result in 80% of your deals and 20% of your marketing that result in 80% of your results. Implement the 80/20 principle and you can realize huge positive results.
2. Parkinson’s law – Pareto’s law states that if you have a lot of time to do something, you will make a mountain out of a molehill. For instance, if you have 2 months to do a paper for school, it will take you 30 hours, 24 of hours barely add value to the paper. Now if you have 1 day, you will finish in 6 hours because you will focus only on the items that add the most value. So when you have a task, give yourself a short deadline in order to be efficient. I have found it useful to reward myself when I complete a task such as I get to do something fun like go to a concert or sporting event only if I finish. You can use consequences as well, such as no showers until a task is complete. Just kidding, but you get the idea. When Pareto’s law is used with the 80/20 principle you can be effective and efficient, a true double threat!
3. Do value added tasks that you do not have to do today – This idea comes from Rich Dad Poor Dads Cash Flow Quadrants. The most successful people are not stuck handling daily processes or things that add value and they have to do today. They create systems, delegate and automate those daily processes. Of course we must eliminate items that do not add value. But the people who are the most successful spend their time on tasks to grow the business, improve the business and entrepreneurial tasks. Work hard to separate yourself from the daily processes then do tasks that add value but do not have to be done immediately. Use the 80/20 principle and Pareto’s law to do these tasks effectively and efficiently.
4. Obtain more funding – Funding deals is the biggest challenge for most investors. Work hard to generate funding through private investors, hard money lenders, partnerships, PPMs, business credit lines, money pools and other creative financing methods. Money does not vanish it simply changes hands so it is out there sitting on the sidelines waiting for your tremendous deals.
5. Give the majority of profit to your money partners – My friends called me crazy for giving more than 50% profit to my money partners. But they are sitting on the sidelines while we should be able to shatter our goal of 20 deals in the next year. Give 60, 70 even 80% of the profit for high volume to money partners. You can start at 50% if you want but tell them you will up it if they fund 100% of the deals, more if they do multiple deals, and more for other favorable terms. Do this, and you can profit while building a successful track record and watch the people who call you crazy sit on the sidelines.
6. Dust off that Business Plan – Revisit your business plan. Update it with all your new ideas. Focus your strategies and markets. Not having a plan is planning to fail, your business plan is at the heart of what will keep you profiting for years to come. Have professionals and others look at it and keep your business plan up to date.
7. Learn to evaluate deals in 10 minutes – Create a system to evaluate deals in a maximum of 10 minutes. Figure out the important items such as ARV, rent estimate, rehab amount, good area, etc and how to quickly evaluate a deal. Quickly weed out the duds, write a lot of offers and save the thorough due diligence for escrow.
8. Find deals with no competition – This is no secret, negotiating without competition results in some of the best deals. Properties that are listed often have way too much competition. Consider doing direct mail to distressed sellers such as foreclosure, tax lien, probate and other lists. Learn how to buy at auctions before a foreclosure becomes bank owned, there are tons of great deals and often low competition. Contact out of state and absentee owners, owners with a lot of equity, vacant properties, expired listings, etc. You can even contact rental ads to see if they would entertain an offer. Negotiate directly with sellers. There are a lot of deals out there, if you minimize the competition and find lots of prospects you will get much better deals.
9. Write down your goals and to do list – This is a must for everyone. And it is so simple. Get a small notebook and rip off one sheet of paper. Fold it 3 times vertically and once horizontally. Now you have 6 sections on each side. Use it for 3 days, one side is your to do list and the other is your goals. Write down your to do list and goals and keep it in your pocket with a pen. When you have ideas, write it down. Use the back for big time brainstorming and ideas. This is a very simple idea that is tremendously effective. You become an effective and efficient machine. You can take breaks and start your day right where you left off. You don’t forget. You can achieve business and personal goals that are often neglected, forgotten or fall by the waste side.
10. Join a mastermind group – Mastermind groups are incredible. A mastermind groups is like having free business coaches. You have other experienced experts dissecting your business plan, offering advice, support, networking, contacts and tremendous help. They can even provide accountability as they will not be happy if you do not meet your deadlines and goals that you set. I recommend it to everyone. You can build your own or join an existing one.
11. Educate yourself – Real estate is an ever changing industry. The market, laws, strategies, lending practices, etc are constantly changing. Business and technology are constantly evolving too. Education is the best investment, you can spend 5 hours to learn better negotiating and it can have a tremendous effect on your bottom line. Write down skills that will improve your business then learn them. Read books on business, self improvement, real estate, investing, etc. Some books I recommend are 4 Hour Work Week, Emyth Revisited, Goals by Brain Tracy, The Secret of Success by William Walker Atkinson and Rich Dad Poor Dad.
The idea is to strive for continuous improvement. It is sometimes hard to step away and look at your business from an outsider’s perspective. The New Year is a great time to reflect and look at ways to improve yourself and your business. I hope these ideas are helpful, how are you going to improve your business in 2011?