5 Pitfalls Your Real Estate Business Needs To Avoid
As a real estate investor it often gets lost that you are actually running a business. Like any other business you need to stay on top of market trends, numbers and lead generation. By focusing too much on any particular niche or individual deal eventually you will find yourself in trouble. The best investors are the ones that constantly look at ways they can improve their business. They realize that businesses often getter better or worse and rarely ever stay the same. Your business may be on top of the world today but things can change at the drop of a hat. If it does you need to be ready to adjust on the fly and adapt to your new reality. Here are five areas in your real estate business that you need to avoid.
- Putting All Your Eggs In One Basked. Anyone associated with any type of investing will tell you the importance of diversifying your portfolio. This isn’t just some fancy jargon but reality. The more diverse your portfolio is the better it can withstand losses in one particular area. The same philosophy should be applied to your real estate business. It is ok to have a bread and butter investing niche but you can’t put all your chips in middle. Consider how popular foreclosure and short sale investing was just a few years ago. In many markets the volume of these types of deals has declined in recent years. Couple that with the increase in competition and it is difficult to find A+ deals in this niche. If you allocated all of your resource you may have a tough time sustaining your business. Instead of only one niche you can have a main one and several other fillers you rely on. Putting all of your eggs in one basket is a gamble you should never take.
- Being Stubborn With Your Business Niche. Running a business requires a delicate balance of staying with what is working while knowing just the right time to get off. Having current success in one particular area doesn’t mean it will continue for the future. This doesn’t mean you should constantly hop from one niche or one marketing idea to the next. It means that you have to go into everything you do with your eyes open and an open mind. It is always better to be off something in business a little too soon rather than a little too late. The sooner you get off something that isn’t working the sooner you can start something new. Just because something may have worked in the past doesn’t mean it will work in the future. You can bang your head against the wall all day but it doesn’t mean it will crack. Don’t be stubborn with your business. Recognize when it is time to start fresh and try something new.
- Not Reinforcing Relationships. Relationships are the key to real estate success. You can have all the capital and education in the world but if you don’t have contacts it may not make a difference. With every new contact you make you should do everything you can to enhance that relationship. Even if the relationship is established you need to constantly do things to make that person feel comfortable and confident in your abilities. Little things like answering your phone when it rings or quickly returning a text message has a bigger impact than you may think. As soon as a deal closes you should reach out to everyone involved in the transaction. Send them a text or email thanking them for their efforts and asking if they would like to sit down and discuss how you can work together in the future. This minor step can help you get your foot in the door and then it is up to you to kick it open. Relationships are everything in real estate. Do something every week to reinforce the ones you have.
- Not Getting Involved In Your Market. Relationships are typically developed by becoming active in your local market. People like to work with people that they see or talk to on a regular basis. In most cases all it takes is simply showing up at networking meetings or local events to build your profile. Not only does this help build your business but it helps understand where you are buying. Things can change quickly in just a few miles in any given area code. The more open houses you attend or neighborhoods you visit the easier it is to make quick decisions when a new deal presents itself. With any down time you have you should get in your car and drive around your market. You never know when you will notice something that changes the way you think about a market.
- Lazy Lead Generation. The amount of leads in your pipeline directly impacts the type of business you have. There are very few times when you will have too many leads to handle. If this is the case you can always bring on help or find ways to deal with it. When a lead generation source is working you should stick with it as long as you can regardless of how many deals you are working on. It is when you get lazy in your marketing that the flow of new leads slows down or stops all together. When this happens you will crank things back up again but lose weeks or even months of time. Always stay diligent with your marketing to keep your pipeline full at all times.
Like any business there is a fine line for success in the real estate world. Avoid these five business trouble areas at all cost.