Do you have a system?
I met with a large investor the other day and he (like me) is very systems oriented. What I mean by this is that if you are running a business (i.e. real estate investing) you MUST come up with a documented, reproducible system for everything you do.
So many small business owners “wing it”. While this may work while you are a company of one or two, your growth will be limited because you will not be able to delegate critical tasks to employees.
In the context of residential real estate investing you’ll spend a lot of time analyzing deals, lining up contractors, deciding what repairs you want to do and figuring out how to sell.
Here are a few ideas for investors on things to systemize:
– Do the same basic repairs to every property, using the same products (same carpet, same paint, same cabinets etc. in every rehab)
– Setup rules around what offers you’ll make on properties. While most investors have a basic formula in their head, clearly define them and write them down.
– Know your exit before you enter. You should have a very clear idea of what
your exit strategy for the property is before you buy.
– Documents/contracts/forms. Most real estate investors are in the dark
ages when it comes to automating the many documents required in a real estate transaction. If you are entering any information more then once (sellers name, property address and legal description) you are doing it too much. Technology can be a great tool here.
– The offer process. If you make an offer how soon do you follow up? How do you counter if they say no? If they decide they want to wait a few months how do you follow up?