5 Things Investors Often Overlook
Insight Weekend Investor

5 Things Investors Often Overlook

I think as the part-time real estate investor starts to wind down 2016, it’s human nature to look back with excitement and recognize some great accomplishments you had as an individual investor and a business owner. But will those catapult you into 2017? The obvious things to asses are how many houses you bought, how many you sold and how many rental properties you now hold. And hopefully, those numbers exceed your goals and built your portfolio above expectations you set for the year.

More than likely you know the revenues and profits generated as you wind down the year. So, there’s a lot of tangible measures you can look back on and hopefully celebrate those successes. But what I was alluding to are the things you can’t directly see when you look back at 2016. It’s those things you don’t recognize that are likely where your greatest opportunities lie to build your real estate investing business. And perhaps transition from a part-time or weekend investor to a full-time investor, if that’s your goal. It’s those hidden things you didn’t see in 2016 that will make step-function improvements for your business for 2017.

Let’s talk about these things and maybe we can uncover those areas of your business you can look at in retrospect to possibly identify some of those things. There might be some opportunities you can leverage to build your business in 2017. Those overlooked things could be:

  1. Exit Strategy
  2. Professional Education
  3. Capital
  4. Marketing
  5. People and Processes

Overlooked Item 1: Exit Strategy

Let’s start with your exit strategies. I track my strategy on every single house I buy. I know exactly what I did with it in terms of the exit strategy. My fundamental exit strategies used in my business here in Dallas, Texas, as a HomeVestors franchisee and full-time investor, is wholesaling off-market deals to other investors, as-is, cash sales, fix-and-flips which are then sold on the MLS to owner-occupants, rentals or buy-and-holds and assignments. Assignments are simply getting properties under contract and assigning those contracts to other individuals, typically other investors.

Those are the exit strategies I am familiar with and use frequently. They fit my goals and objectives. And I will be the first to admit in my business there are many exit strategies I don’t use. It’s not because they are bad exit strategies, they’re just exit strategies I am not familiar with, educated enough on or competent enough in that I can execute well.

I challenge myself every year as I look back at my exit strategies and how I use them and the frequency used. I challenge and ask myself, “Am I doing the right things with the properties I am buying? Am I using the right exit strategies to maximize my returns and grow my business?”

I only listed a few common exit strategies but the list goes on: seller financing, seller dues, joint ventures, investing in real estate notes and all sorts of creative real estate investing exit strategies. And when you do look at these other exit strategies and the things you might not have done in 2016, there might be something out there that will complement, expand or grow your business in 2017.

Overlooked Item 2: Professional Education

Look back at your education. As a HomeVestors franchisee I own part of a network and have access to training, development, tools, procedures and processes. That also includes a network of HomeVestors franchisee-colleagues who tend to drive a significant part of my education.

You’ve got to remember as real estate investors it’s easy to get into an autopilot mode or continue to do what you like to do and what you enjoy doing. Before too long you can find yourself in a rut or in the autopilot mode.

When you get in that rut you’re not entertaining new ideas, new concepts, new solutions, new processes, new procedures which could truly grow your business. You know many part-time investors, including myself when I was a part-time investor, come from the corporate world as a corporate employee. We use to call this continuous improvement.

That’s how we educated and committed ourselves to constant improvement, with programs. And they were very deliberate efforts we took on each and every day to improve ourselves as individuals; to grow and improve our business for better results, year after year. As real estate investors, we must do the same type of continuous improvement, efforts and focus.

Overlooked Item 3: Capital

I think you should also look back at 2016 and assess your capital. If marketing is the gasoline or the fuel that starts your real estate investment engine, capital is the oil that keeps it running day in and day out.

Without capital, despite how good your marketing is, when those great deals come across your desk, if you don’t have the capital to invest, you’re going to lock up like an engine without oil. You can have a full tank when you’re marketing but if there’s no oil in the engine, it will lock up right away. And that oil, in our case is capital.

Ask yourself these questions: Did you deplete your capital too early in 2016? Did you have a reliable source for capital? Was it that somebody, some entity or some source didn’t last as long as you did or last as long as your business did? Do you have an affordable source of capital? Other issues could be that maybe you had plenty of capital and it was very accessible but you look back and say, “Perhaps I paid too much for that in the form of interest or in the form of points.”

You really need to look hard at the capital in your business. It is a critical component of your business in addition to marketing and if you don’t have the proper capital, the proper access to capital or the proper amount of capital, your business will come to a screeching halt.

Overlooked Item 4: Marketing

We talked about marketing as the fuel to your business and capital being the fuel that keeps the engine running, so let’s look at marketing a bit closer. Real estate investing, nationwide, has become incredibly competitive—some markets more than others—and marketing is what truly creates the advantage.

Marketing is one of those jobs you take on as a real estate investor in order to generate leads and to generate access to sellers who are motivated to sell their properties at a discount. You’ve got to have a strong marketing engine with a strong, full fuel tank driving and producing leads each day in order to keep your business alive and running.

It’s very easy to get dependent on or comfortable with a single channel of marketing. There are many different ways to market to motivated sellers as a marketer. You can use the internet, which has become increasingly more competitive, popular and more effective at getting access to motivated sellers. There is direct mail, which I will also say is incredibly impactful. It is incredibly competitive because of its affordability and ease of execution. But with that being said, it is still incredibly impactful for a real estate investor. If you’re not doing direct mail order to get leads to support your investing business, I highly encourage you to explore it.

There are also common media you can use, and perhaps as part-time investors these may not be as reachable, accessible or realistic for you. But they are things to consider, such as radio, TV and billboards. These are all things I do here in Dallas as a full-time investor. Granted, I didn’t use those media as a part-time investor, but they are media and marketing that truly elevated my business from a part-time to a scalable full-time business.

The point is, marketing is the key competitive advantage for you in a highly competitive real estate investing market. Challenge yourself. Look back at the prior year and see how you generated leads and more importantly, what didn’t you do to generate leads in 2016.

Overlooked Item 5: People & Processes

Finally, I encourage you to look at your processes and your people side of your business. They go hand in hand in many respects. And I’ll admit, as a real estate investor and a small business owner, processes and people are very easy to overlook.

As small business owners, we kind of get a jack-of-all-trades mentality and we’re willing to do it all. That’s the nature of small business and that’s what many small business owners thrive on—to have their hands in everything.

We do everything and do it with very limited resources. So, with that being said it is very easy to overlook the process and procedures within your business. This may be one of the most difficult opportunities to recognize and change in your business because we are creatures of habit. Sometimes we fail to take the blinders off and look around us at new processes and procedures that we use in our business.

The key point is look at what you’re not doing, what you are doing and what you don’t need to do. What do you need to do to really drive the people and processes side of your business?

As you reflect on what you accomplished in 2016, take equal amount of time to look at what you missed and what you didn’t do. It may be what leads you to the next level in 2017.

You can listen to the complete podcast here:

http://www.blogtalkradio.com/kevinguz/2016/11/03/when-you-look-back-what-dont-you-see

About the Author

Kevin Guz is a Dallas, Texas-based residential real estate investor with more than 10 years of investing experience. He owns a HomeVestors (or “We Buy Ugly Houses”) franchise as well as the Clear Key companies, which focus on residential real estate wholesaling, rental property management and self-storage leasing. He also is a licensed real estate agent in the state of Texas. He enjoys sharing his ongoing personal experiences, perspectives and learnings from his start as a part-time or “weekend investor” and full-time corporate professional through his ultimate transition to a full-time real estate investor and business owner. You can listen to his podcasts at http://www.blogtalkradio.com/kevinguz