Many real estate investors tend to get caught in the trap of believing that since we have been investing in real estate for years that we have that many years of experience.

ā€œHow many years of experience do you have?ā€

ā€œIā€™ve got 18 years of experience in real estate investing,ā€ says the smug, overconfident me.

ā€œNo you donā€™t,ā€ says Jim Rohn as Iā€™m listening to an audio of his from years long past.

ā€œYou have one year of experience repeated 18 times.ā€

OUCH! There is some truth to that statement.

Success breeds complacency

Once weā€™ve worked hard to overcome the difficult push to get started and have built momentum in our real estate investing business, we can slack off a little and feel good about the progress we have made. This happened early on in my business and there was a long period of this ā€œcoastingā€ that cost me dearly. Most of the cost was from lost opportunities because I was not running my business efficiently.

When I was in that spot, I didnā€™t even know what I didnā€™t know. I didnā€™t know how well my business stacked up against other real estate investors. There wasnā€™t a standard to gauge my business.

So when I wrote my book, Flipping Houses Exposed: 34 Weeks in the Life of a Successful House Flipper where I illustrated how I had generated 495 motivated seller leads and everything about how I marketed, analyzed, what I offered, and the deals I did, I thought I was doing really well. It took several years for me to realize that my conversion rate of roughly one out of every 45 leads was downright atrocious.

I did only 11 deals from those 495 leads, and these were qualified leads where someone told me they wanted to sell their house. It was not just a marketing list.

How embarrassing.

After many, many more years of real experience I was able to get it down to turning one out of every five or seven leads into a deal.

Letā€™s unpack what an efficient and profitable real estate investing business looks like so that we can see how we stack up. This will allow us to know where we should be looking to improve…and gain some more real experience.

5 REI Factors for Business Success

After nearly 20 years running a real estate investing business, making all the mistakes in the book, growing through the huge downturn in 2008, flipping/wholesaling nearly 1,000 houses, being a part of several mastermind groups, hosting the Flipping Junkie blog and podcast, and interviewing hundreds of successful real estate investors, Iā€™ve narrowed business success for real estate investors down to five factors:

  1. Marketing Specialization
  2. Sales Training
  3. KPI Tracking
  4. Structured Planning/Meetings
  5. Systems and Processes (follow up)

1. Marketing Specialization

The most successful real estate investors I know do not spread themselves too thin chasing every new direct-to-seller marketing fad.

Rather, they pick ONE channel and become really good at it over time. These are usually the boring, old marketing channels that many new real estate investors cannot believe still work like direct mail, bandit signs, driving for dollars, and cold calling.

Once they run some campaigns, get the results, tweak and run again for six months or more, they start to really dial it in. After a year or so, it becomes predictable. At this point, some decide to add another channel to bring in deals.

How Does Your Business Stack Up?

If you are chasing a new marketing strategy every couple months and feel like you are throwing money away on stuff that doesnā€™t work the first time around, you have room for improvement.

If you have not been testing the campaigns you have been working for a while to improve the results, you have room for improvement here as well.

2. Sales Training

How many offers to different sellers does it take before you get one accepted?

If you are like me, you are probably thinking, ā€œI build great rapport. This is how I get offers accepted. I donā€™t want to be like a used car salesman.ā€

Guess what, I thought I was doing well getting one out of every five offers accepted. The truth is there can be improvement to the point where acceptance ends up above 50 percent!

What makes that possible? Sales training.

Itā€™s not about using ā€œtacticsā€ and being a ā€œpushy salesperson.ā€ Sales training can help you understand how different people handle situations. This allows you to help that person in the way they want to be helped.

If youā€™ve not been through sales training or have members on your team who have not, I recommend John Martinezā€™s sales training at REI Sales Academy.

How Does Your Business Stack Up?

If you are getting fewer than one out of every three offers accepted, you likely have some room for improvement and sales training can be the thing that gets you there.

3. KPI Tracking

If you only had five minutes each week to get the pulse on your business, would you be able to know whether things were going well, and if not, what things needed to be addressed?

If youā€™re not tracking Key Performance Indicators, youā€™re not likely going to be able to know when things need improvingā€”or whether they are improving. You might think, ā€œI know how things are going because Iā€™m getting leads and deals.ā€ That might be true, but KPIā€™s give you fine-grained insight into what is happening at every level of your organization.

Imagine being able to see trends week over week of how many leads were required to get an appointment. This can help you spot problems with your lead intake. If your number of appointments goes down over several weeks but the number of leads generated stays the same or goes up, you could have a problem with your lead intake person.

This happened to us. It turned out the lead intake person had been yelled at by a seller and was now making an assumption that most callers were not motivated and didnā€™t want to set appointments.

Donā€™t wait until youā€™ve gone months with a problem like this. Know your numbers.

One of the reasons we developed and launched Forefront CRM for real estate investors was to have a way for KPIā€™s to be tracked automatically. It was worth the time and effort to be able to see how everything is going in real time.

How Does Your Business Stack Up?

If youā€™re not tracking your numbers in fine detail every week at the least, you definitely have room for improvement here. Visit https://forefrontcrm.com/kpis to get a list of the KPIā€™s you need to be tracking.

4. Structured Planning/Meetings

The times when my business was not doing well were almost always periods without regular planning and meetings.

We get busy. We make some plans at the beginning of the year with huge ambitions. Marketing cranks up. Leads come in. We get busy! The meetings would be rushed and done for the sake of just having them. So after a while, it was more important to go on an appointment or check on rehabs instead of having the meeting.

Donā€™t fall into this trap.

The most successful real estate investors I know all subscribe to the idea that you must dedicate time each week to work ON the business.

If you donā€™t take time to plan and ensure you are sticking to the plan, or you learn the plan stunk but donā€™t change it, you will spend a lot of time being busy doing the wrong things.

Weekly meetings are when you review your KPIā€™s. Itā€™s when you make plans to move the needle on getting your yearly goals completed.

I recommend the Level 10 meeting from the book Traction by Gino Wickman. This book has been instrumental in transforming my businesses.

How Does Your Business Stack Up?

If youā€™re not having weekly meetings (even if itā€™s just with yourself), you have room to improve here.

5. Systems and Processes

Do you have all the knowledge for the workings of your business in your noggin? Not good. It might not seem important if you donā€™t plan on ever bringing on help, but you eventually will.

Wearing all the hats in your business is fine for a while. Eventually youā€™ll discover that itā€™s impossible to have the freedom we are all looking for by running everything ourselves.

Itā€™s time to document what you do and how you do it. Trust me, you will be so glad you did when you start hiring help.

In fact, we started documenting processes way before making hires and those became lifesavers. Many of the decisions we make are for situations that donā€™t come up every day. Nothing stinks more than having to try and research and figure out how we handled something in the past when we donā€™t remember. It feels like such a waste of time because it is! If we document what we do, we know how to handle everything and we can spend time improving those processes.

This process improvement over time is what really moves the business into greater efficiency (more profit while doing less).

How Does Your Business Stack Up?

If you donā€™t have your processes documented and organized in a way where they are easy to find (use Tettra for this), you have room for improvement here.

You Likely Have Work to Do

I hope the five factors opened your eyes to some areas of needed improvement within your real estate investing business. It can seem daunting and like added work, but this kind of work (working ON your business) reduces your workload in the long run and makes you more money.

Remember: Knowledge not used is the same as not knowing.

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  • Danny Johnson

    Danny Johnson has flipped hundreds of houses over the last 11+ years in San Antonio, Texas. He blogs about flipping houses at FlippingJunkie.com and is the author of "Flipping Houses Exposed: 34 Weeks in the Life of a Successful House Flipper," a best-selling book on Amazon. He also provides real estate investor websites atĀ www.LeadPropeller.com.

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