Every successful Real Estate Investor has a system of one type or another.
Why you may ask?
Because the System is what makes them successful! Wealthy people use systems, broke people do not.
I heard Write Thurston give this description for the definition of System. I don’t know if he came up with this or not, but I will give him the credit for it.
S Save Y Your S Self T Time E Energy M Money
There is so much truth in this definition. There is only so much time we have here, and remember the old saying, “time is money”? That is why we put systems into place; to be more efficient, more productive, and cost effective to maximize our profits.
One of my personal favorite definitions of a System; a procedure that puts the most amount of money in my pocket with the least amount of work.
What kind of system do you have in place? You may be new to real estate investing and do not have any system in place, or an experienced investor that needs to refine their system.
Are you driving all over town looking at properties you should not be looking at? Perhaps you are trying to negotiate a wholesale price on a home with an unmotivated seller? Now my question, why are you wasting your time and energy?
Stop spending 80% of your time on the 90% that makes you no money.
How do I refine or put a System in place?
The following is an outline I learned when I started out as a Real Estate Investor. I also make it a practice to review the Systems I have in place at least two times a year.
Define your System
For new investors, you will need to determine the correct system for you. Perhaps you are a people person, or perhaps you are an excellent marketer, or you may want long term appreciation or even need cash flow now. You will first need to look at your strengths and needs.
For experienced investors, a good way to look at refining your System is to look at what made you the most amount of money last year? Maybe it was wholesaling houses, rehabbing houses, or even lease-options. Look at what is brining in the most money and get rid of the items that are time consuming and not generating revenue.
Who are you getting advice from?
For new investors, this can be quite intimidating. There are so many courses on the market, we are constantly bombarded with the late night TV Gurus, and there are even so called Guru’s at the local REI meetings selling their mentorship and courses. Because of this information overload, new investors will sometimes purchase the wrong course, get the wrong advice and quickly become discourage and even worse, will give up on their dreams.
Remember, there are three types of people who give advice: People who have never tried People who have failed miserably Experts
As experienced investors, we need to make sure the advice we get is current, accurate and reverent. You would not ask an attorney about how to wire a home, nor would you ask an electrician about life insurance. Every on has an opinion, but not everyone has the correct advice.
Can your System run on auto pilot?
For new investors, your job is to find the correct system for you. As I mentioned earlier, you need to determine what you want out of real estate investing. How much cash flow you need, how much time you have to devote to real estate investing and your short and long term goals. By identifying these items, it will make it easier to determine what you need to accomplish this, but most of all; it will help you to get the right system for you.
For experienced investors, is your real estate investment business a job or is it actually an investment? Can you take a week off and the business run itself? Are you generating leads, are you actually finding deals or are you spending too much time trying to find deals? If your business seems more like a job, maybe it’s time to go back and refine your system
I personally like the systems where I can cherry pick the deals quickly, beat the competition to these deals, but most of all, I enjoy the cash flow and wealth appreciation these systems bring in.
Is your Real Estate Business burning you out?
For new investors, this is a common problem faced by anyone trying a new business venture. You may have the demands of your current employer, and family obligations just to mention a few. Now on top of all your obligations, you want to become a real estate investor.
Most new investors start off strong, putting in endless hours trying to get their business started, only to realize that real estate investing isn’t as easy as what they believed it was. My advice is to schedule time to work on your business with out neglecting your current responsibilities. You need to beware of burn out and take the measures so this will not happen to you. Again, this comes down to the system you decided to use.
For experienced investors, burn out is very common. In fact, I’ve seen marriages and even investment businesses fall apart because of the hours these investors were putting in took a toll on their other obligations.
If you find your real estate investment business is starting to take a toll on you, go back and refine your system. Figure out what is taking the toll and take the measures to correct this part of your system.
What is the return your system is returning in your bank account?
For new investors, you may be spending money from your bank account and not putting any money in it. How will you change this? How soon will you start putting money into your account instead of taking money out? It’s important that your system puts money into your account, and you need to design your system so that it does.
Experienced investors, you should know exactly how much money is going into your account from your system. That’s why it’s good to review your systems at least once a year to make sure they are putting the maximum amount of cash into your accounts.
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Dave Magill is cofounder of QCRES LLC. and coauthor of the Quick Cash Real Estate System, Guide to Wholesaling Houses.
