It always amazes me to see the thought patterns of novice and intermediate real estate investors. In Winnipeg (my home market) properties are relatively cheap compared to the rest of Canada. Properties are even considered "affordable" when compared to other markets in Canada. Winnipeg scores very well on the national affordability index.
But here's the downside of being so affordable...
Since properties are "affordable" in Winnipeg, many novice and intermediate real estate investors get lazy and actually use their own cash and lines of credit to buy properties. Eventually they will always run out of cash or credit and then they either stop growing or change their mindset. What I have seen happen in Winnipeg is that we have a good number of investors who have decent day jobs, between 1 and 10 doors (depending on the age of the investor) and their resources are usually tied up or close to maxed out.
To grow the real estate business further, it's time to think outside the box.
I started out in real estate investing at the age of 23 and had NO CASH from day one. So if I wanted to play the game, I had to operate with NO CASH. Every dollar that comes into my business is re-invested... but not into properties, because I play the game of NO CASH.
So where does my money go when I earn it? What do I buy instead of saving up for down payments? How do I operate a real estate business with NO CASH?
There are two things that I think every entrepreneur/real estate investor should be purchasing with their hard earned dollars - and it is not more property!
If you want to grow your business at an exponential and geometric rate you must buy two things: Time and Talent.
There is a term in investing and business called Velocity. Velocity is the speed at which money moves. When I started out in Real Estate investing, I was focused on doing 1-2 deals a year. I was a very low velocity investor and I actually tried to use my own cash and credit (which didn't take me far because I had virtually none).
At the time of writing, I am considered an intermediate investor (classified by one transaction a month) and I'm heading towards advanced investor (classified by 100's of transactions a year). The velocity of novice investors, intermediate investors, and advanced investors varies greatly and is the key to moving forward in your career.
What separates the "men from the boys" when considering intermediate vs. advanced investors? In a general sense, there are only two things differentiating the two: time and talent.
In the past, my mentality would be to use my resources to save up or raise funds for a slow buy and hold. Today my mentality is to use my resources to create lead generation, websites, brands, videos, blogs, articles, photos, seminars, billboards, employees, teams of bird dogs, databases, referral programs, books, social media campaigns to build a web of influence. This web grabs large amounts of leads and maximizes the dollars generated per lead.
All of these bells and whistles attract properties, money partners and strategic partners to me. I have access to the best opportunities and have exponentially increased my chances of success.
To create and maintain this web of influence, I need time and talent. There is no way that I can build all of these things with my limited technical knowledge and finite time.
I buy time by outsourcing a lot of my tasks. Digital tasks are outsourced on eLance.com or crowdSpring.com. Purchase time in depressed economies where you can get time and talent for pennies on the dollar. Physical tasks are outsourced to local contractors or delegated to strategic partners who take a share of the profits.
I buy talent in the same way. I make sure to attract the best talent to my teams, pay people what they ask or more, invest in bonus and reward structures and keep my machine well oiled. Coaches and mentors are new addition to my payroll this year. Free advice is too expensive for me now. You only get ahead in this business by paying and you get to choose between blood, sweat, tears, time and money. You can pay in any way you like and I've already paid in blood, sweat and tears...
Paid coaches are extremely expensive, but the knowledge and foresight I get from spending time with people who have reached the "advanced" level of investing is ABSOLUTELY PRICELESS. I often see investors scoff at the prices that some coaches and mentors charge, but I think that it is worth every penny. Why re-invent the wheel? Just hire someone onto your team who knows how to build the wheel - it's really simple. I know that I cannot do everything myself and must purchase Time and Talent to reach my goal of "advanced investor".
My goal is to do 100 transactions in 12 months, realistically starting in January 2013 and ending January 2014. It won't be easy, but with the right thinking, systems and coaches, I don't think it will be too hard either. The biggest challenge will be to think differently than I have in the past, because I have already achieved a degree of success, but not the level that I want. I can guarantee that I will not be painting suites or driving around looking at properties every day if I am going to achieve my goal, that is far too inefficient with my time and resources. Instead, I will be purchasing massive amounts of time and talent to execute my strategic plans.
Before we finish reading, ask yourself: Are you purchasing time and talent in your business? If you are, are you purchasing enough? What are you missing? Who are you missing? Who do you have to hire to get you to the next level? How do you need to change your thinking? Please share your thoughts in the comments below.
Thanks for reading,
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