Part 1:
Five Keys to a Successful Real Estate Investing Business

After you’ve been investing in real estate for a period of time – or maybe even in the idea stage – you might become interested in turning your investing into a real business.  While a lot of investors don’t start their business until they’ve gained some experience, some investors start their business first.  When you start your business isn’t as important as the habits you form.

Remember that there is no one formula to success.  Many successful people got that way by taking different paths.  And for that matter, everyone's definition of success is going to be different, depending on what your personal goals are with real estate investing. 

When it comes to your real estate investing business there are some key things that will enable your success.  Here are five keys:

1. Maintain a balance when building your real estate investing business.  There are two key parts of a real estate investing business – the investing and the business itself.  You can’t sacrifice either of these components for the other.
   
   Building the business is important, especially in the early years.  But if you're focusing exclusively on the little details that come along with putting a business together (filing paperwork, creating a logo, etc.) and neglect actually doing any investing, you're not going to have any cash flow and you're going to put yourself out of business in a hurry.
   
   So set aside a certain amount of time on a regular basis to focus on business-building activities, but devote most of your time initially to actually doing deals and keeping money coming in.
   
   Some people will spend all this time and money in the beginning registering a business entity like an LLC, having a logo designed, printing up business cards, maybe even finding an office to rent, etc. and never actually do their first deal.  I'm sure you can see the problem with that.  What good is it going to do you to have an LLC to protect your assets if there are no assets to protect?  And what good is a business that isn't really in business?
   
   So sure, if you're going to stick with real estate investing for the long haul, you should be thinking about turning it into a real business.  But don't get so wrapped up and consumed by the details of building a business that you neglect what's going to make it a profitable business - doing deals and putting cash in the bank.

2. Beat your competition on more than just price.  Low price may have worked for Wal-Mart, but don’t depend on it to work for you. If the only thing that makes you better than the next guy is lower price, then you should rethink your real estate investing strategy.  Don’t waste your profit margins trying to undercut other investors, for sale by owners, and real estate agents.  In the long run, that'll likely put you out of business.
   
   Find ways to stand out from the crowd in other ways.  Find a unique approach to solve people's problems and really deliver quality service and you'll be building a solid business.

3. Don’t be afraid to work solo.  If there’s one thing most all successful real estate investors have in common, it’s an entrepreneurial attitude towards their business.  You might have cold feet about building a real estate investing business on your own because it may feel a little overwhelming.  It’s perfectly alright to make mistakes as long as you quickly learn from them.
   
   One thing that can really help is to have a mentor who can give you advice based on their personal experience.  If you've learned to invest by following a particular real estate "guru" and you feel comfortable with them and their methods, see if they have a coaching program.  And if so, make sure you'll be dealing directly with them or someone else who is really investing in real estate.
   
   Some of those "gurus" will outsource their coaching to companies that do coaching on all different topics and the people doing the teaching have absolutely no investing experience.  Now they're probably not going to tell you that, but that's the truth of the matter.  So be careful where you go and make sure you deal with someone who's real.
   
   If you have a local Real Estate Investment group or know of other local investors, see if someone would be willing to take you under their wing and give you guidance. Maybe initially you could see if you could help them with their own deals and take off some of the workload for them for the learning experience.  Again, just be sure to pick someone who's been doing investing for a while and really know what they're doing.  You don't want to pick someone who has just ordered a book from a late-night infomercial and is just getting their feet wet because they're not likely to be a good source of advice.

4. Know when you need to hire another person.  There might come a time when in your real estate investing business when you need to take on an employee or maybe just some part-time contractors.  If you notice your business falling behind because you don’t have the time to complete certain tasks, hiring some help is worth considering.
   
   If you can't justify bringing someone on board full time as an employee or partner, see if you can just outsource that particular task to someone on a part-time basis and not as an employee but as a contractor.  For instance, let's say it's handling the accounting paperwork that you hate or tend to get behind on.  While you could hire a secretary to do that and other things, another approach would be to get a CPA (certified public accountant) to do your bookkeeping.  They have lots of other clients too, so while they may be a little pricy, it'll certainly be less than having an employee.
   
   You could put an ad in the classified section of your newspaper or on Craigslist.org to find someone.  Or for some tasks, maybe even see if there's somewhere you can post an ad at a local college and find some college kids looking to earn a few bucks.
   
   If you're not hiring people as employees, but as a contractors, be sure you're clear on what the difference is and make sure you abide by the laws that govern that, otherwise you can get in trouble if you're calling people contractors who are really acting as employees.  It's not too complicated or anything, but you just have to be aware of how that relationship has to work.

5. Don’t cut costs at the sacrifice of quality.  You might be inclined to hire cheap labor or purchase cheap materials to cut costs.  There’s nothing wrong with that until it begins to compromise the quality of the properties you’re selling.
   
   Remember that people talk.  And bad news spreads faster than good news.  If you’re not offering a quality product for the price, it will hurt your real estate investing business.  You don't want to be known as the investor cheapskate who scrimps on materials and labor to make a quick buck.  In the long run, that'll cost you a lot more than spending a few extra dollars on quality work because no one will want to buy your properties.

These items are not the end-all list of things necessary to building a successful business, but they're a few important points to keep in mind and can help you avoid some of the pitfalls that come with making that transition from being an investor to owning a real estate investing business.

Sincerely,

John Smith

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