I was reading a thread where some new person wanted information and was advised to learn more. I just this morning saw the thread about Russ Whitney’s real estate courses and this made me think about what I do in real estate. These courses give you a lot of information. I have taken a couple myself. I really think that all that other stuff can only get me confused and diffused. The more you do something the better you get at it. You don’t find guys playing 2 or 3 major league sports they take one and get good at it. The basics are the same in most any sport you run jump and throw. The same is true with musicians. You don’t find Slash or Carlos Santana playing lead guitar and the bass guitar although the basics are the same you pull on the strings. I found that I really only use one technique. I buy REO properties, fix them up and I rent them out as a straight rental or land trusts. That is all that I do. I look at other mechanisms but this is all that ends up in my pocket. I am closing on another house next week and they have all been done using one technique. My question is for you out there that are actually buying properties (more that 3). How many techniques do you guys actually use and what are they?
I certainly agree with you that a persons mental dexterity is most efficient doing one thing. However if you create good systems and implement the right people, your opportunities are endless. If you prefer to stay a one-man-band then sticking to a small niche is vital. Yes professional athletes concentrate their efforts, but the team owners most likely owns lots of other companies. If your role is to create successful companies, your only doing that one thing while including numerous streams of revenue.
I rehab everything from SFR’s to medium sized commercial buildings. SFR’s I sell, medium commercial I hold. I acquire the properties in all different ways but every single one is renovated to some extent. Renovating is just the best way to buy as discounts for me. Most often with commercial I convert old abandoned warehouses or factories into office space
Blue,
I’ve always thought just the opposite - that you can’t make a full time business out of only one strategy. I’m not criticizing what you said - in fact, if you can make a business out of one strategy I think that is great. However, here in my little corner of Ohio, I haven’t been able to do so. I’ve bought REO’s, estate sales, auctions, sheriff sales, pre-foreclosure, owner financed, sub-2, lease-option, from disgruntled landlords, and I’ve bought notes (I might have forgotten something). Without using all these different strategies, I would not have been able to do the volume of business that I needed be “full time”.
Mike
I agree with Propertymanager.
When it comes to this industry have an open mind to everything, And not attached to anything.
Human beings are most efficient if tasked with one thing which they can get good at over time. However, purchasing properties from only one source is ridiculous. But for someone who does the work themselves in rehabs and property management, they will be all over the place, all the time, leading to less efficiency. This may be the only option if operating in a small area but over a larger area it would be very difficult.
You may be hanging drywall on a retail rehab in one part of the state when a tenant calls you to fix their toilet 3 hours away.
I use multiple techniques. I view it as adding another tool to my toolbox. I may never use that technique, or heavily favor another technique, but if I ever come across a deal sweet enough that I can only do with one technique, then at least I have that tool in my toolbox.
Piggy-backing on DannyTheGreat… here is my view: there is a big difference between being "self-employed’ vs. being a “business owner”. A business owner can walk away for a 2 month vacation if they wish, because they have the “systems” in place to keep the ship running. A self-employed individual could not do that for too long before the money starts to deplete and not replenish. Apply this to, say, rehabbing. I could choose to be the one swinging the hammer or I could choose to get systems in place to source properties, have contracting crews in place to do the work, have realtors in place to market completed properties, etc., etc. This allows me to find more deals or to work on pre-foreclosures or sit on my couch and watch TV if I wished.
I am actually the type of person that needs a ton of stuff to juggle so the multiple technique fits my style.
Turbo,
I agree with you to a point. However, no small “business owner” can walk away for long without the business falling apart. In your example of rehabbing, it is true that a “self-employed” owner (someone that does all the work) would stop making money the minute he stops working. A business owner (someone who uses contractors) could leave for some short period of time and expect things to continue. However, in almost every small business, if the owner is gone the company will not last long. A key point in managing people is that “people will accomplish what you INSPECT, not what you EXPECT.” Even if your business is large enough to have a layer of management, the management must be supervised and guided or the business will start to decline in a very short period of time.
The Guru hype tells you that the less you do, the more you make. NONSENSE. I have owned many businesses over the years and know many more successful businesss owners with varying numbers of employees. ALL OF THEM WORK HARD. Not a single one sits on the couch watching TV nor would any of them even want to.
BTW, this issue is exactly why I chose rentals for my REI business. I do almost everything myself, but can still take time off whenever I like (expect the first 4 days of the month when I collect the rents). I just got back from about 3 weeks of vacation and everything ran smoothly. There is not a lot that can go wrong with the rentals that demand immediate attention. In fact, about the only thing that would require immediate attention would be a major water problem. If this happens, I can always call a plumber.
Mike
I think we are on the same page; I probably just didn’t use a clear enough example. I certainly don’t think a business owner can “watch TV” for a year, not touch his business, and still have any left to own. All I meant is that a business owner has a bit more freedom to still have the “money machine” working if they stepped away for a bit, assuming he has his systems set up correctly. For a self-employed individual, the “system” is HIMSELF or HERSELF.
For me, in choosing to be self-employed vs. a business owner, I use similar logic why I got into real estate - LEVERAGE. If one plays it smart, one could have, say, a rehabbing business, a pre-foreclosure business, and a note business. To play it smart means one builds the right systems, with the right people. As you put it, I then need to be there to “inspect.”
I have heard said and I agree with the idea that a business owner is a person that has no job description in the business. But any garden not tended will turn into a weed patch. That being said being a business owner frees you up to work on your business and not work in your business. You have to guard against trading time for money. If the amount of money you make is dependant on how much time you spend in that business, you have a job description and are thus self employed.
Compared to you guys, I guess I am just a hobbyist. That is probably why doing one technique works so well for me. I can only do a house ever month and a half. Any more then I can’t work my job. But if I think about it, I probably can’t make enough money to pay my bills doing only one house every month and an half and would have to look at other ways to acquire enough property to do this full time.
“Pouring 40 million caffeinated drinks a week landed Starbucks (SBUX, news, msgs) honcho Howard Schultz on our list of America’s 400 richest.”
Something to be said for cookie-cutter techniques.
Lather, Rinse, Repeat.
-Mike
I don’t know if I totally agree with the Lather Rinse repeat Idea I used a whole bottle of shampoo this morning after reading that on the back of the bottle.
Robb
No, I think he just got momentarily “stuck on stupid”…
LOL
Keith