There are only two things that successful investors do every day. When you start getting into real estate investing, it’s easy to get caught up with minutia and busywork. There’s a trend to have everything perfect before launching your product or service when starting any new venture. The truth is, by making sure everything is set up and perfect, you’re just procrastinating from doing the hard work.
People who first hear about investing often come to meetups with fresh business cards and start asking people about creating professional looking websites and structuring their LLCs. What a waste of time, just start!
There’s definitely a time and a place to create fancy websites, business cards, and your own corporation, but that’s not what you should be focusing your time on. Instead of worrying about the small things, focus on the big goals. Look at what successful investors do, and copy them.
Here are the two things that successful investors do every day.
1. Successful Investors Generate Leads
Successful investors spend their time generating leads because every lead has the potential to earn hundreds of thousands of dollars. They spend a lot of their day networking with agents or working with their team to set up systems to expand their reach.
Working with Agents
By working with agents, they outsource their farming campaign to those agents and just let the deals pour into their office. The investors are often so bombarded with offers and deals that they’re able to cherry pick the best ones to secure a great profit. This only comes after spending a lot of time nurturing the relationship with their agent partners and it doesn’t happen overnight.
Acquisition Managers
Sometimes, they go on appointments to negotiate directly with the sellers. Although nowadays I’m seeing more people outsource this to their ‘Acquisition Managers’. Acquisition Managers are people in their organization who are responsible for picking up the phone when a seller calls from a piece of marketing and following up on the conversation until the seller gets into contract. They handle all aspects of building rapport with the seller and negotiating a great deal. The Acquisition Manager then gets a commission for doing all of this work at close of escrow.
Prospecting
Newer investors spend their time prospecting sellers directly by knocking on doors or cold calling them. These are great and effective methods to reach the sellers and build rapport because it’s cost effective. It’s effectively free, but it is time consuming.
More experienced investors don’t door knock or cold call, they get bird dogs to do it for them in exchange for mentorship, guidance, and experience in the business. They may even have a team of virtual assistants calling hundreds of homes a day. It’s well worth the $5 an hour to pay to have someone do a grueling job like cold calling for you.
Marketing and Direct Mail
Successful Investors are also unafraid to spend money on marketing. Direct mail is a favorite among real estate investors. One would think that digital marketing would be more effective in an era where everyone is connected to the internet 24/7, but the truth is, the people selling their homes directly to investors are usually people who are older and aren’t as tech-savvy.
Successful Investors know that for every $1 of marketing they put out there, they get $10 back, but only if they put enough money out there. Last time I checked, investors are averaging $18,000 worth of direct mail for each deal here in the Bay Area.
Direct mail is great because it’s self-disqualifying. If they’re not interested, they’ll either throw away your letter or they’ll call you and leave you a message with some very colorful language.
It’s an effective way to reach thousands of homes without spending a lot of time to do so. To be successful with direct mail, be prepared to spend $10,000/month on your campaigns and know that it’ll be worth it if you’re consistent with it.
To get a more in-depth guide on getting deals, see my earlier post: The Absolute Best Ways to Find Deals
2. Successful Investors Raise Money
The second thing that successful investors do is raise money. Money makes the world go ‘round and there’s no exception to that in real estate. Successful investors typically have deep networks and have people they know who can lend them money for projects, but they’re always looking for more so that they’re not limited by finances.
Tony Robbins says: “You don’t lack resources, you lack resourcefulness”. That’s true in many ways. A lot of people are scared to get into real estate investing because they believe they have no money. Show someone how they can make an extra $60,000 with no risk and I’m sure they’ll put up the money for you. In fact, that’s exactly what my friend Sean Caligagan did. You can hear his story at my podcast here: How to Make a Real Estate Empire at 23 with Sean Caligagan
There is a famous quote that goes: “If you want to go fast, go alone. If you want to go far, go together”. When you start investing in large projects, such as a $10 million commercial building, there’s a good chance that you’re going to have to raise the money to close on the deal (unless you’re super wealthy. In that case, come talk to me :) ). The bank will loan you up to $7.5 million depending on how much the building cash flows, among other factors, so you still need to come up with $2.5 million plus closing costs.
Syndications
To raise this money, investors often create syndications where other passive investors can put in some of their money to get a solid return. Syndications are a great way to get started in the commercial space because the only factor you need to worry about is if you trust the syndicator to perform as expected. There are even companies such asGOODEGG Investmentsthat focuses on raising private capital for other, proven syndicators. Heck, even Grant Cardone raises money for his $100 million apartment complexes!
At the end of the day, being able to raise private money is a great skill to have because it allows you to do more projects than if you tried to do things alone. Banks, hard money lenders, and private money lenders will only offer you so much LTV (Loan to value ratio) on a project (usually up to 90% of purchase price). You need to find someone who can fund the rest of the closing costs. Don’t limit yourself to just the funds in your pocket, find great deals and raise capital!
Conclusion
That’s it! If you talk to the most successful investors in the industry, they spend a majority of their time doing these two things: Generating leads and raising money. They hire out teams of competent people to perform the other tasks for the business.
It’s like it’s said in the book, the E-Myth, entrepreneurs need to learn how to work ON the business, not IN the business. Once the systems are set, the investor should only be focused on these two things. In the future, even these two things can be outsourced to an employee.
If you look at the value of time for an investor, these two tasks are what make you the most money. This is why it never makes sense for you to work on your own projects. You shouldn't pick up your own materials for the job either. Hire it out and work with competent people who do what they say they will do.
Even if it costs you $30 to ship a bolt to a job site, it’s worth it to pay the fee since you should be making more money if you spent that time doing one of the two things.
Focus on the things that make the most profit for your business and hire out every other task. Don’t waste your time on the small things and get good at these two things! Your business will reach new heights if you do.
