The secret of successful residential real estate investingSpeaking from my experience as a one-time, part-time real estate investor and active executive in the corporate world and now a full-time investor here in Dallas and the owner of a HomeVestors franchise, I want to share what I have realized is the secret to a successful real estate investing business.

A lot of times, the best secrets to our success are right in front of our face.

In real estate investing, one secret—that is no secret any longer—is that, unfortunately, there are some unsavory characters in our industry. I guess the lure of quick profits has attracted some individuals who are perhaps not representative of our industry.

Unfortunately, their activity over the years has marred our industry. Some people may see our industry as one of greed or one that is wrought with fraud. Or, perhaps the actions of these characters have caused others to question the ethics of real estate investors with thoughts such as, “Hey, they just want to buy my house as cheaply as they can so they can make as much as they can.” Or real estate investors, due to the unsavory tactics of others, may be perceived as relentlessly in pursuit of profit at the expense of others.

These characteristics are not unique to the real estate investing industry. They are apparent in all walks of life and all forms of business to one extent or another. But they are definitely present in our business.

Separate yourself from the pack

My point is that it is easy to separate yourself from the pack as a part-time real estate investor if you focus on one thing. This one thing will separate you from those individuals who we have just described as being greedy, or those who are fraudulent, or those with questionable ethics.

This is the secret I refer to. It is how you separate yourself from those people we have just described. It is simple.

You as a part-time real estate investor must understand, recognize and demonstrate that an underlying mission of your business is to serve. Think about it. This is no different from the mission behind so many successful businesses in America today. Whether the business is large or small does not matter. For example, take doctors, lawyers, the local sandwich shop owner, your favorite plumber or a high-powered executive. All of their roles, and those who are successful in those roles, are based on those individuals and businesses who recognize their role is to serve others. With that service will come success not only for themselves but also their businesses.

The secret of successful residential real estate investing

The secret of successful residential real estate investing is understanding how to separate yourself from the pack and be of service.

We hear businesses and successful companies preach it all the time in the form of customer service. We hear impassioned leaders talk about it, and more importantly demonstrate it. This is typically referred to as “servant leadership.” We even see and witness world changers live by the principle of serving others in their philanthropic endeavors, or their volunteer activities or charitable giving of their time, talent and treasure.

It is no different for you as a real estate investor.

You must ground yourself and your business in this same principle—the principle to serve others. Let me talk about the many, many ways you will find you have the opportunity and the capacity to serve. And, how it will contribute to the success of your real estate investing.

Your role as a buyer

Let’s take the first and most fundamental: Your role as a buyer. As a part-time real estate investor you are going to find yourself dealing directly with sellers of distressed homes. Your success is going to be contingent on your ability to serve up a solution for these sellers.

These solutions are going to be broad and varied. You may be that one investor who can solve their problem by serving them with the best possible price that meets their objective. They may be in an incredible hurry to sell their home and you are the one who can serve them by closing quickly, efficiently and on time. They may live in a home burdened with extreme repairs and you are willing to take on that stressful problem, that unknown and purchase that home and make those repairs. Or you may be serving a remote or absentee owner who has a home far away and who has to sell and cannot do it in a traditional manner because of the distance and because it is too complicated. They need you to serve them by coming in and quickly purchasing that home from a distance and doing it correctly so they can trust you in that transaction.

I see it daily as an investor here in Dallas. I can tell you from experience the one who serves is the one who gets the house. The one who serves that seller with the solution gets the house. It is not always the best-priced offer, but it is the best solution and I see it time and time again.

Your role as a landlord

The secret of successful residential real estate investing

You as a part-time real estate investor must understand, recognize and demonstrate an underlying mission of your business is to serve.

Let’s look at your investor role as a landlord. You are dealing with residents. You are providing a solution and serving them with clean, safe, quality housing with fair and professional management.

I can tell you from my experience as an investor, when tenants come to see our homes the stories are endless of real estate investors/landlords who are not serving their tenants. Those investor/landlords are not providing clean, safe, quality housing with fair and professional management. I see it and I hear it almost daily.

What I also see is those residents are not renewing and leasing those homes from those types of investor/landlords. When potential residents go to see those homes that are not kept clean, not safe or not quality, they are not even renting them in the first place.

The landlords who are committed to serving their residents are the ones who get the tenants and are the ones who maintain the tenants long-term.

Your role as a wholesaler

You are selling properties to other investors and serving a solution. You are offering a price that allows that investor to purchase the property. There is enough room in that purchase price to allow them to make the necessary repairs and ultimately rent or sell that house at a profit.

There is a lot there to you being able to price that house correctly. And, you being able to serve other investors with a realistic rehab estimate so the numbers all come together and provide a profitable solution and serve the needs or the core objectives of that investor. I also see on a daily basis investors who market properties day-in-day out through email blasts or websites and these investors have a reputation—backed by history—of not serving other investors well. They do not depict realistic values of properties. They do not depict realistic rehab estimates. And they ultimately do not serve investors with viable investment solutions. And guess what? Their properties do not sell versus those investors who serve up profitable solutions and realistic numbers—those are the investors who have other investors lined up to buy their homes.

Your role as a rehabber

As a rehabber, you are dealing with buyers. These are owners who will ultimately buy your house once it is done and fixed and ready for the retail market. You are providing a solution for them also. You are providing them quality housing at a retail market value that they perceive as a value.

I see it every day, and I am sure you do, too, as an investor in your market. They are the overpriced properties out there on MLS that just sit and sit and sit because the investor has failed to serve up the retail market with a value. It has not been correctly rehabbed and correctly priced to provide that owner-occupied end buyer with a valuable solution.

Those houses will sit. You will see the signs sit in those yards. You will see Realtors stop showing those homes. Ultimately, those homes will be reduced or pulled off the market and maybe alternative exit strategies will be used because they failed to serve their clients—that end buyer.

Your role serving lenders

These are the money providers, or the financial investors who invest in your investing. These are your banks or hard money lenders and yes, you serve them also. Hopefully you recognize that. You provide a use for their money. They entrust you with their money. And you provide and serve them with a solution where they can get the rates of return they need or want to get.

Those investors who do not provide successful investment solutions for their money sources will struggle to maintain money to run their investment businesses. Cash is king in our business. It is critical that you serve the financial investors who are investing in you and your business with viable investment solutions.

If you are going to borrow money to flip a house and you promise to return their capital within 90 days, then you need to do that. When you fail to do that, you will find it becomes harder and harder to get investment capital for your business. You will also find that those who do what they say they are going to do—serve their investors properly and provide them the results they are seeking—well, those investors will have more capital than they know what to do with. And, their business will thrive as a result.

In conclusion, your mission for your business ultimately defines the success of your real estate investing business. And if it is purely focused on profit, you will have a hollow and unsustainable business model.
But those businesses that are focused on serving—and grounded in a mission of serving their sellers, their residents, their buyers and their investors—those businesses will stand the test of time and produce the rewards of success.

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  • Kevin Guz

    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.

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