What I Would Do If I Had to Start My Flipping Business Over Again (Without Much Money)
So many people ask me how to become a real estate investor. It's a common question because it's sort of hard to find a detailed answer. Well... today's post fits the bill and approaches the answer to this question in the perfect way.
Recently, I did an interview where I was asked what I would do if I had to start all over again from scratch, without much money.
This is a very interesting question and one that most people answer with a lot of motivational hoopla about how they would be confident and persistent.
I agree with that, but I really got to thinking about how I would do things differently.
Instead of just saying that I would do more of what I did that worked well, I wanted to consider also what I might do that I didn't do before. Interesting... take the best of what I did that worked, but also some creative things that I hadn't done but could do.
Not only did I want to consider what else would work, but what would accelerate the progress?
What would allow me to flip more houses, make more money and do it faster?
Starting Over Again Knowing What I Know Now
Hindsight being 20-20 and everything, I am able to see what worked and what didn't.
I'm able to see where I wasted a lot of time and where I should have been spending more of my time.
I'm able to see exactly why my wife was so smart when she chided me for wasting so much time designing our business cards...
So what didn't work well enough to do again?
Business cards didn't work so hot. Neither did door hangers.
The 15 billboards worked to get name recognition and some deals but not really much else. The cost per lead and cost per deal ended up being too costly.
The car magnets didn't do anything more than make me feel embarrassed everywhere I went for the month or so that I used them. I don't recall getting a single call from those.
What did work that I would do more of?
I could say bandit signs. Those worked very well for so many years, but lately, just haven't been pulling. I think maybe my area has become a little saturated and the city has definitely cracked down on them.
Of course, being that I was starting over, it would have to start as being a brand new site and taking the time to get it to rank in the search engines would take several months. But, this would be very well worth it.
I've done well with targeted direct mail and would certainly mail to probate lists.
I'd skip the absentee owner lists as the competition locally for those has made them a lot less productive. I think a lot of new investors get burned out by trying to mail to absentee owners where there is a lot of competition.
Later in this post, I'm going to share with you my thoughts on how to better utilize direct mail.
Wasting Time Sucks
Time is the one thing we can never get back. Making a crap ton of money won't buy it back for you!
Wasting time on unproductive tasks is especially a problem when you are starting flipping houses part-time, as most people do.
You just don't have the time to be doing things that don't further your chances of getting awesome deals and making serious cash to create lasting momentum.
[tweetthis]Momentum is the key to starting flipping houses. You don't start by moving a mountain, you start with baby steps.[/tweetthis]
But.... some people seem to start with leaps and bounds. How?
Some people seem to have more time in the day than the rest of us... what gives?
Doesn't it seem like some people are able to do way more than we are able to? We all have the same 24 hours in the day, but some people seem to be able to accomplish twice as much.
I just finished a very good book by Gary Keller. He talks about how super successful people get more done. According to Gary, the secret is focus.
Well... not only focus, but priority. The reason why some people are able to achieve so much is because they focus their energy on the right things. This gets into Pareto's principle, which states:
Roughly 80% of the effects come from 20% of the causes.
Put another way:
[tweetthis]20% of the things we do, produce 80% of our progress.[/tweetthis]
This is the secret!
We simply need to determine the shortest possible course to success and focus like we're an OCD-psycho, hell-bent on reaching our goal.
What I Would Focus my Precious Time On
Like I said, I don't want to just throw out some motivational, pep-talk... so, let's get to the meat and potatoes.
Birddogging leads and wholesaling dealswill allow me to generate money faster, with a hell of a lot less risk. This would allow me to build momentum much faster so that I could go full-time... if I was starting part-time (which most people do).
So, what exactly would the 20% that would produce the 80% of results in getting started and succeeding at flipping houses (starting with bird-dogging and wholesaling) consist of?
Number one would be building relationships with the right people:
Step 1: Find the most successful active real estate investors in the area.
This can be accomplished pretty easily by:
- Asking around at the local REIA meetings who buys the most properties in town
- Having an agent pull recently sold houses in the median to lower price ranges that were bought with cash and look up who bought them in the deed records
- Call other investors from their 'we buy houses' type advertising and asking them who the big shots are
Step 2: Get in touch with the top 3-5 investors in town
Here are some tips on this step:
- If you only have addresses from deed records, you could send them a letter telling them you want to be their number one supplier of off-market deals
- You could try and find their phone number. This shouldn't be too hard to find these days with the internet if they are doing any sort of marketing.
- DO NOT ask them for a bunch of advice right off the bat. DO NOT go asking questions about flipping houses that you can find easily online yourself.
- You need to sound somewhat educated about flipping before you contact them.
- These initial conversations need to focus on what types of deals they prefer. Find out what criteria they use to determine what makes a deal. Find out what part of town they prefer. Find out as much as you can about them.
- Most likely, these investors are asked all the time to meet for lunch so that some newbie can "pick their brain". Don't ask to do this. Find out how to bring value to them with the least amount of effort from them by just finding out what they want. If that means just a phone conversation, so be it. If they love coffee, see if they want to meet for a cup of joe or offer to bring them some.
Step 3: Find deals that meet their criteria
Here's the fun part. Get out there and find the deals that the top investors would kill for. Let's take a look at what the 20% top approaches would be for doing this quickly without much money look like, in my opinion:
- Find a hungry agent that is willing to submit lots of offers and make offers on distressed properties in the areas where the buyers are looking for them. Banks and sellers will usually counter, especially with low offers. So, if you are a new investor this would be the time to have your end buyer investor confirm that they would buy it at the given price so that you know you have a buyer right away...thereby eliminating your risk!
- Work to teach the agent how to do the analysis for me so that they can find the properties and make the offers without me having to do all the work
- Build relationships with wholesalers and keep in touch with them constantly to see if they have any deals that meet my buyers’ criteria
- Set up a real estate investor website and start using content marketing to get the site ranked for the most searched terms by motivated sellers - this is a longer-term strategy but is a great way to leverage money and time, over time
- Find a college student or someone that works downtown to get probate leads for me to send direct mail to
Direct mail to focused lists with the mail pieces focusing on specific problems.
Always, Always Be Thinking About Systems
In my quest to accomplish as much as possible in the shortest amount of time, in order to build momentum, I would constantly be thinking about systems and working to get time-sink tasks removed from my daily to-do list.
There are a million-and-one time killing tasks house flippers end up doing. They only need to be doing a handful of them. This is where systems come into play.
Believe me when I say, stuffing envelopes and handwriting addresses on the outside will drain your will power very quickly. Going to Home Depot 5 times a day will make you want to drive off a cliff.
• Optimize for efficiency.
By documenting your daily tasks, you create a way to optimize for efficiency. You will have a written guide for when you do a particular task that you can refer to and improve as you find ways to improve the process.
Then, after you've done some wholesale deals, you can afford to bring on some help. This is where it gets really cool.
• Have someone else do the tasks you shouldn't be doing.
You will have already documented and improved the efficiency of your tasks and so training is super simple. All you have to do is hand them a binder with the documented processes!
Make rules regarding needing your approval before updating the processes and make it very clear that the processes are to be followed strictly.
Now that you have someone else to do the time-killing tasks, focus on the tasks that produce the most....like getting out there and making offers!
You will now be in a much better position to give that call from a motivated seller that found your website the attention it truly deserves. You won't be thinking about how you need to get off the phone to finish stuffing that stack of letters to probate leads.
Don’t Fear the Uncomfortable Stuff
It’s not that people don’t want to be productive, it’s that they are afraid to get out of their comfort zone.
Most of the 20% of things you can do that will produce 80% of the results, will most likely require you to get out of your comfort zone.
I really feel that this is one of the absolute biggest reasons most new investors don't get very far and give up.
Getting yourself out of your daily routine to make a point to contact the TOP people flipping houses in town is probably going to produce a high level of anxiety. Accept that and do it anyway!
Yeah, you will probably look like an idiot during most of those first phone calls. But who cares, besides you?
I know I looked like an idiot... but it helps me to grow and improve each time. It's the only way.
So, if I was starting out all over again (without much money, without much time, without any contacts in the business), I would do the things outlined above as the 20% of actions that will produce 80% of my results. Doing those things will create anxiety, but I know that by doing them anyway, I will climb the ranks of successful house flippers very quickly.
Then, people will be seeking me out as someone they want to find deals for and then things grow exponentially.
If you have anything to share that would help people skip over wasteful tasks while getting started flipping houses, please share in the FlippingJunkie group on Facebook. I look forward to reading your suggestions and I know a lot of other members will be very grateful for anything that helps them progress faster. Thanks for visiting FlippingJunkie.com!