Today I want to talk about how we, as small real estate investors or part-time real estate investors, should step back from time to time and don a CEO’s hat, because that mentality can positively influence your approach to real estate investing and the success you ultimately achieve, enjoy and maintain.
What got me thinking about this was a podcast I recently was listening to that posed the question, then entered into a discussion of whether or not you are the CEO of your family. The podcast drew the parallel of how CEOs have a lot of responsibilities in the professional world and how they focus on all of those responsibilities very intensely—whether it’s managing the financials, developing relationships, coming up with new ideas or simply staying engaged and performing at those utmost levels. The podcast was drawing those parallels between how hard a CEO of a business works and how that same intense focus applies to heading up a family. And it made me also think about whether I’m utilizing that CEO mindset as a small business owner and a real estate investor in my own market of Dallas, Texas.
Take a look at the big picture
For me in particular, I spent the last 30 days doing a lot of things that I considered more about working on my business versus working in my business. What I mean by that is, I spent the last 30 days or so doing things that were contributing to the long-term health of my real estate investing business versus producing short-term or day-to-day results. And that is exactly what a CEO does—he or she looks at the long-term health of the business, the bigger picture.
But over these past 30 days as I was doing these activities and really diving deep into my business, at times I felt uncomfortable because I wasn’t engaged in activities that were ringing the cash register every day, so to speak, or generating immediate returns. In our business as real estate investors that typically relates to buying, selling and leasing houses. I was working on other things that were contributing more toward the long-term health of my business.
I had to come to the realization that there are times in any business, including the business of a real estate investor, when you do have to step back and act like a CEO. Look at your business, look behind you, look ahead of you and spend time investing in working on the business so it will sustain and grow in a way you understand. Then it will continue to flourish.
Look and act like a CEO
If it’s not flourishing now it may start to flourish as a result of your putting on that CEO hat. Look and act like a CEO would. Take action—long-term action—the big changes, the big innovations that a CEO would undertake in a large business.
It really hit home with me that not only do I have to be the CEO of my family, according to that podcast, but also the CEO of my own small business. You also are the CEO of your business, or at least you have to act like one.
That’s what I spent the last 30 days doing. And I felt much better by the end of those 30 days knowing that I had done a few things to improve the overall health of my business.
My point to you, as part-time real estate investors, is that it’s very easy to put your head down in the course of your busy day while perhaps working a full-time job and building your real estate investing business on the side. It’s very hard to stop, look up and really assess what you’re doing—really look at your business and understand what’s working or what’s not working. Make the changes, innovations or improvements in order to set the course correctly for your business. And those are all things a CEO does. That’s what we need to do as small business owners and as individual real estate investors.
For me, when I stepped back from my business, I worked on my business versus working in my business. And what I mean is I was working to secure more capital which will ultimately fuel the growth of my business. I was securing new credit lines, working on refinancing existing properties to optimize some of the leveraging and loans I had on those properties. I was also securing capital for long-term growth.
And under that theme of working on my business, I was evaluating current leases on my single-family rentals, I was executing rent increases on some of them where needed. All of these things—
securing new capital, refinancing existing assets, executing and analyzing rental increase opportunities—enable me to sustain my business and sustain growth. They are also things that don’t necessarily contribute to this week’s profits or this week’s revenues, but they enable us to continue to generate revenues and profits down the road much like a CEO might look at and do in a big business.
How you can take that step back
For you as a part-time real estate investor, it may mean you hire a virtual assistant to free up some time for that long-term focus, or you may change some marketing strategies to generate more leads. Maybe you’re going to look at different exit strategies, because you’ve only been rehabbing and it may be time to start holding properties for rentals. You need to evaluate those strategies.
Those are all examples of things you might do as a part-time real estate investor to work on your business versus in your business. Put on that CEO hat for a day, a week, or a month to ensure the ultimate success of your business. Keep in mind the CEO answers for the state of the business. The CEO drives innovation and improvements and is accountable for those. We as individual investors, private investors, small business owners, need to do the same. We need to be accountable to ourselves to drive innovation and improvement in our own businesses.
A CEO has to have a future focus, and so do we as small business owners or part-time investors. It is not always easy. As we’re working and balancing multiple priorities, it’s hard not to live in the moment. The bills are coming in, and we’ve got to generate revenue and profits in order to pay those bills. Those are very real concerns that cause you to maintain a mentality of living in the moment as opposed to stepping back and focusing on the future.
Look at your advertising results
For me, first and foremost, having a future focus involves advertising. It’s the largest single expenditure in my business, and I’m constantly evaluating our advertising strategy. Are we doing the right things to generate the right leads to ultimately convert the right home purchases? I’m always looking at new sources of capital to keep our business alive and funded. And probably one of the most obvious ways is that I’m always, aggressively acquiring more rental properties. That is definitely part of my future focus, not only for the health of my business, because these new rentals generate constant cash flow, but even for my personal life and my long-term retirement. That’s a future focus when it comes to building a rental portfolio.
Now for you, maybe your future focus is to ultimately quit your corporate job and to grow your real estate investing business to the point where you no longer need the full-time career. Or maybe you’re just simply looking out to the future to retire sooner. Whatever it is, there are opportunities to focus on the future. That’s where the real value of your real estate investing business will come in.
You have to step back every once in a while as a real estate investor and be the CEO of your real estate investing business. You have to step back and assess where you are with respect to your goals. That’s a big one for me. You should step back once a month and spend several hours determining where your business is currently, where you were 30 days ago, and where you need to go in the next 30 days in order to ultimately reach your year-end goals.
Study the competition
You also have to look at your competition. Who are the investors out there beating you out of the best buys, and what are they doing differently? Why are they buying more houses or buying the houses you wanted to buy? Get an understanding of what they’re doing. What can you learn from them, and what can you do differently?
A very common way of spending time as a major corporate CEO—and it should be common for you also as a real estate investing business owner—is keeping abreast of the competition. Understand what they’re doing, how they’re doing it, why they’re doing it and what type of results are they getting.
For you too, as a small business owner and a part-time real estate investor, you want to take stock of whether your real estate investing career is going as planned. I’m sure you have certain goals or objectives. You will want to step back and evaluate whether you’re achieving the things you originally wanted.
Are you getting the results you were told you were going to get when you went to that weekend seminar or when you bought that course or when you met with your mentor? You set some expectations and goals, and now you have to step back and make sure you’re on track to achieve those goals.
You also probably want to ask yourself whether you have the time you thought would be available to you to effectively run your business. Are you generating the earnings you thought you would?
Finally, are you having fun?
And finally, you’ve got to step back to see if you’re really enjoying what you’re doing. Is this as fun as you thought it would be? Is it all that it’s cracked up to be?
The CEO does all of these things. The CEO steps back, looks forward, looks back and makes the difficult decisions to address the past, the present and the future. So I encourage you to put on your CEO hat as you look at your real estate investing business. Among the many roles you already fill in your business, you are also the CEO of that real estate investing business.
Remember: It’s up to you to do your job, because no one else is going to do it for you.
Listen to the complete podcast here:
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.