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Focus on the Real Estate Numbers, NOT Making Friends.

by Clay Huber on January 4, 2013 · 28 comments

  

Before I get started, I need to give credit where credit is due. A fellow BiggerPockets blogger, Ali Boone, left a comment in one of my other articles that sparked the idea to write about this topic. She made an excellent point, and my goal with this article is to expand upon it and hopefully give you something to chew on.

Have you ever been rubbed the wrong way by someone? Terrible customer service or just them being flat out rude/inconsiderate to you? For whatever the reason/cause may have been, have you ever thought, “What a (insert non-family friendly word here)!”

My advice: get over it and toughen up.

Real estate investing (like any other business) is not about who you like and don’t like, it’s about the numbers. It’s about who is bringing you the deals that make you money. It’s about what contractor is bringing you a solid price/quality ratio.

Real Estate Investing is Not a Hobby

One of my big hobbies is college sports. I really enjoy watching them, particularly Saturday’s in the fall with college football. Would I ever want to watch a game with someone who I absolutely can’t stand? Of course not.

I’m guessing it is the same for you (unless you are a glutant for punishment). Whatever your hobby is, I’m pretty confident that I can assume you want to be doing it in the company of people you enjoy being around.

The IRS will look at your real estate investing as a business, so you should too. The primary purpose of business is to make money, not ‘have fun’. Sure ‘fun” can be a result of business, but it shouldn’t be the primary purpose (like a hobby would be). Once you realize this, it is much easier to not take things personal and not allow external variables to affect your decisions.

Numbers Matter, Personalities Don’t

You try cracking a joke with a contractor and he just stares at you. Awkward! You ask the contractor a question and he gives you a gruff answer that, while completely answers your question, wasn’t exactly ‘how’ you preferred for it to be answered. Awkward! One thing is for sure, you won’t be inviting this guy out to  lunch anytime soon. But wow, he comes with good referrals and his pricing is stellar. Hmmmm…

If you find yourself going “Hmmmm…”, STOP! There should be no “Hmmmm…”. There shouldn’t be anything to think about. While this isn’t someone you will ever be able to really relate to or hang-out with, if they are giving you solid numbers, go for it!

Don’t let personalities decide for you, let the numbers.

Family, church, clubs, athletic teams, etc. are where you should be looking for/making friends… NOT in your daily course of business.

Numbers Matter, Customer Service is Secondary

You try calling the wholesaler and they don’t return your call until two days later (maybe not at all). Frustrating! You ask to see a property, but before they can get you the entry information, it has sold. Frustrating! One thing is for sure, if you were handed a “How Am I Doing?” survey, you wouldn’t exactly be giving rave reviews. But wow, this wholesaler has some smokin’ hot deals. Hmmmm…

Once again, there should not be any “Hmmmm…” going on.

It may seem counter-intuitive, but many times, the better the wholesaler, the worst the customer service. This certainly isn’t a universal statement; however, any quality wholesaler is going to have a hungry buyer list. When you have a sincerely good deal, your phone and inbox will be blowing up, so it isn’t shocking if phone calls and emails can accidentally slip through the cracks for these quality wholesalers.

I’m not advocating offering crappy customer service if you are a wholesaler, I’m just saying it ‘is’ easy to understand how a wholesaler finding great deals can at times struggle with the customer service side of the equation.

If the wholesaler is offering crappy customer service and your spreadsheet is laughing at the “deal” they supposedly have, then yea, no need to hang out with this person on the weekends and definitely no need to keep their contact information.

The spreadsheet numbers trump less than desirable customer service.

The Obvious

I am not saying that numbers are the ‘only’ thing that matters. If a contractor is giving you a really good number, yet they won’t give you any references or reek of alcohol,  then in this case there is ‘more’ to it than the only the numbers.

If the numbers are looking smokin’ hot, yet the proposition to you is pretty darn shady (illegal), then again, there is ‘more’ to it than just the numbers.

If you just don’t like the person, but the quality/legality of the issue at hand is okay, and the numbers look great, then GO FOR IT.

Don’t Take it Personal

In conclusion, remove your feelings from this process. Not your business sense, just your feelings. Business are judged by the amount of profit you turn, not the amount of friends you’ve made. Some of your best ‘business friends’ would be people you would never remotely consider hanging out with as ‘non-business friends’.

If you ever find the thought creeping into your head of, “Wow, I’m liking these numbers but this person is a (insert non family friendly word here), so not sure I want to do business with them”, squash it immediately! This isn’t’ a hobby, it’s a business.

Do you agree? Let me know in the comments below.
Photo: Yukari

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{ 28 comments… read them below or add one }

Jared January 4, 2013 at 7:00 am

So true. I prefer the contractors without personality. They usually aren’t trying to make you rewire the entire house or replace a 2-year old water heater. The ones with too much personality always seem to be trying to sell you something. And once you get a good one, use him every time.

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Clay Huber January 4, 2013 at 7:02 am

Great point Jared. Maybe I’m just too cynical, but every time someone has a good personality, I’m always wondering if there are ‘other’ intentions, those being (like you said), wanting to sell me or upsell me on something.

Thanks for the comment.

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Jason Grote January 4, 2013 at 8:40 am

Great topic Clay. Real estate investing surely is all about working with people, so I think you must have a philosophy in how your are going to deal with people.

I agree that you should remove your feelings from your business only in the sense of being offended and misunderstood. However, I do not believe you can remove your feelings from your business and become a business minded robot. Your feelings are a part of who you are.

When working with contractors, it shouldn’t matter their personality type, but it should matter how they interact with you. Their great work and their low prices are attractive, but if they are rude or non-communicative, it becomes a problem when trouble arises on the job-site.

Shouldn’t we try to build good relationships with those who we do business with? Isn’t that how trust is built? I personally attempt to make friends with my contractors and those who I work with regularly, BUT if at any time they are unable to meet my business needs, that aspect of our relationship has to be addressed. If we are also friends, then the trust we have built will give us a better chance to work things out. Otherwise, it is time to find a someone else to fill that need for my business.

Sorry for the soapbox, but I believe in strong relationships, especially in my business. When you endear someone to yourself, they will perform better, go the extra mile, and simply bless your business.

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Clay Huber January 4, 2013 at 8:54 am

Jason, we are in agreement 100% that ‘relationships matter’, but at the end of the day, relationships don’t put profits into our business, the numbers do. That’s the point of my article.

While having great relationships can definitely lead to harder work and so forth, my point is that if you have a guy who is not rude, but charges 15% more than a guy who ‘is’ rude, I’m going with the rude guy every time. (this is assuming quality of work is the same)

I am with you in always trying to build relationships, but if a relationship can’t be built for whatever reason, but the work is getting done the way it should and needs to be, then I will always choose to work with that person.

If there customer service/communication is lacking as a contractor, odds are, I won’t ever be meeting with them in the first place, as one of my key criteria are references, and obviously if someone has terrible communication, they won’t have many (if any) references haha.

Thanks for the post! Get up on your soapbox anytime!

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Jason Grote January 4, 2013 at 9:14 am

I suppose it is all a matter of priorities. I would take the contractor of equal performance at 15% higher price if he is more friendly and easier to work with. As you well know, contractors work together on a rehab. I have had too many disputes between subs, and it is always a result of a “rude” or “inconsiderate” contractor. We are willing to pay more money for subs that aim to please and that will be friendly to you and the other subs that you might have working along side of them.

Furthermore, most contractors give you a “honeymoon” period and communicate/perform well initially, but then trail off as time goes by. So in my experience, if a sub that you use regularly does not build a “relationship” with you as the general contractor, they won’t be around long.

Thanks Clay!

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Clay Huber January 4, 2013 at 9:17 am

All valid points. That’s why I love business though, everyone has their own way of doing things.

Thanks again.

Jason January 4, 2013 at 9:59 am

Clay,

Interesting point on relationships don’t put money in our pockets. I tend to believe they do, just not immediately. Often times I will go with the cheaper contractor that I “like” less. They usually have a much much better price and I don’t anticipate using them often or I simply can’t make the numbers work otherwise. I bite the bullet. Other times I will go with a more expensive contractor that I have a better working relationship with. I can usually talk my contractor down to the lower bid because I have a good working relationship. I will give him referrals and get many in return. I found the good relationship increases honesty, reduces issues, helps to have any problems addressed promptly. I get higher quality work and have less corners cut. All those items have no immediately visible value like an estimate and bottom line, but I believe have reaped many benefits for me down the road.

Clay, your point is valid, were not running a charity and the numbers must make sense no matter how much we like a person. However, I think working with caustic individuals can often cost us money, stress, and time not readily visible. The art, in this business, is getting the best of both worlds.

Jason

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Clay Huber January 4, 2013 at 10:07 am

Thanks for the comments. It sounds like I didn’t effectively communicate what I was trying to say.

If you are not choosing a contractor because you can’t joke around with them and can’t envision seeing yourself ever meeting them for lunch, then that is a wrong reason to not choose them.

If you are not choosing a contractor because they have terrible work, attitude, customer service, etc., then I agree 100%.

When I use ‘relationship’, I mean we’re in the business to find those who will get the work done effectively, not find those who will laugh at our jokes and have the same sense of humor as we do.

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Jason January 4, 2013 at 11:20 am

Clay,

Thanks for the clarification. I agree with what you are saying.

Jason

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Clay Huber January 4, 2013 at 11:24 am

Thanks for bearing with me! Appreciate the comments. Cool site by the way!

Michael January 4, 2013 at 1:29 pm

You’ll never be an REI person that accomplishes much if you are thin skinned and sentimental. Carry yourself strong, honest and transparent. Do what you say you will do. Walk the talk. You’ll find that you will have enemies no matter how great you think you are, particularly if you are successful. A man that doesn’t have any enemies in the REI game hasn’t done much dealing! Can’t let it bother you. Just make sure that even if they hate you, they are forced to have a grudging respect for you. By doing business straight, being heavy handed when you need to be, but always fair, even your worst people will respect you.

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Clay Huber January 4, 2013 at 1:32 pm

Well said. While you shouldn’t go out actively seeking “enemies” (which I know is what you are ‘not’ saying), in the business world, there are always going to be those who don’t exactly ‘care’ for you.

Real estate is a place for those who can set feelings aside. That’s for sure!

Thanks for the comments Michael.

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Brian Gibbons January 4, 2013 at 3:29 pm

Contractors and Rehabs and Dale Carnegie “How to Win Friends and Influence People”!

I have tried to be “buddies” with contractors, and have not had much luck. Since I work with a pen and not a hammer, I do not have the talent to “inspect what I expect” with contractors. They are fee for service people. Some charge more and quality is high. Some, well, make excuses and blame.

So what I do is get a tough Project Manager that works for me, and stay out of inspecting rehabs! lol

On the other hand, regarding personalities, I work mainly in Leasing to Own with Home Sellers and Home Buyers, and the rule is, “Only work with Nice Sellers and Buyers”

I see these people as partners and not adversaries.

Sellers want the lease purchase payments paid on time, they want the property clean and tidy at all times, and minor maintenance done and paid for by the Buyer.

Buyers want to get mortgage financing and not feel like if they do not get financing they will lose out of buying the home.

So the partnership attitude is imperative, and liking each other is important.

That is my 2 cents on personalities.

Happy new year, everybody!

Brian Gibbons
Select Lease Purchase Homes, LLC

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Clay Huber January 5, 2013 at 6:30 am

Brain, thanks for the comments. Good mention of that book, I’d recommend everyone read it!

You said…

“On the other hand, regarding personalities, I work mainly in Leasing to Own with Home Sellers and Home Buyers, and the rule is, “Only work with Nice Sellers and Buyers” ”

I, with all due respect of course, disagree here. I could meet the nicest person ever, but if their credit score is terrible, sorry, no deal! Especially in a situation such as yours will they will eventually need to do a refinance if they want to own the home.

I’d rather have the person who most people wouldn’t necessarily classify as nice, but when you run their credit you can see an overall trend towards being able to eventually purchase your home.

I do understand the points of wanting “nice” people so that they will be take care of the home, pay for minor repairs, keep it tidy, etc., but banks don’t care about “nice” people, they care about credit and money.

Being in almost the same category as you (I instead do land contracts), I know I’d choose a person who is on the right track to do a refinance than one who is just “nice”.

Thanks for your thoughts!

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Brian Gibbons January 5, 2013 at 11:43 am

Clarification – Nice people with “potential lendability” vs difficult people with the same “potential lendability”.

Nice wins.

I did not mean to say that nice with crap lendablity trumps difficult personalities with good potential lendability.

Rule 1- they (tenant buyers) need lending potential to get a bank loan or no way in my lease 2 own program.

Rule 2 – they (tenant buyers) need to be nice to all concerned.

Thanks, Clay, love your articles.

Brian

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Clay January 5, 2013 at 3:27 pm

Ahhh okay! Then after the clarification, we’re in 110% agreement.

Thanks Brian. Appreciate the comments.

Michael January 4, 2013 at 4:36 pm

Brian I once bought a whole heaping bunch of properties, maybe 25 SFRs and needed to turn them fast. I was stretched to the breaking point and a friend suggested his unemployed brother in law as a “project manager”. Did not do anything but make things worse. He was supposed to do some “easy stuff” like hang a door, a little spot painting, etc. Every time he did something he thought that he was going to charge a la carte or something on top of the reasonable salary i was giving him for what amounted to a part time job, and would start pitching a fit when I refused. Well, ended up up telling that loser to take a hike. My friend got mad at me and so did his wife and the whole relationship went up in smoke. Haven’t spoken since. Just one of the hundreds of tales I have to tell! LOL!

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Brian Gibbons January 4, 2013 at 5:17 pm

OMG! Family and Rehabs!

My FAVORITE HTV SHOW is the Property Brothers, ones and agent and ones a Rehab Gen Contractor.

The dramas of the new Owners! So many impossible construction situations that can never be predicted!

Thanks for the comment!

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Clay Huber January 5, 2013 at 6:32 am

Ouch. A good example of why I try at all cost to avoid any relationships with friends/families (business wise that is).

If I ever do (my bro-in-law is a project manager for me), I make sure we really talk out all the details so they understand ‘what’ is expected of them.

Sounds like you were in the right though. Charging for additional even though he was getting a salary? Give me a break… ha

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Michael January 5, 2013 at 10:19 am

Let me tell you the time when I was a really green mortgage broker who got an opportunity to do a real whale of a refi for a very affluent family member and the deal went south. Way…South. I made a whopper of a commission on that transaction, but the ill will follows me around well more than a decade later.

I’m always making fun of these greenhorn real estate brokers who never seem to think much of anything but their own commissions and who are always overvaluing their contribution to the transaction. Looking back, I realize that I was once just as bad…if not worse! LOL!

Life sure is funny.

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Paul Wiseman January 6, 2013 at 3:26 pm

Great point Clay – thanks for bringing it home – must look past personalities and do what’s best for the business; absolutely. But my question is, what’s a “glutant”?

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Clay January 7, 2013 at 7:05 am

Thanks Paul.

I guess it is spelled “glutton”. The way I say it in my head is “glutant”, but apparently I’m not saying it right (nor spelling it right haha).

I meant it as “glutton for punishment”.

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Rolanda Eldridge January 6, 2013 at 4:45 pm

Investing in People is my #1 Priority. This is part of my mission statement. I enjoy having good relationship with both tenants, realtors,contractors, colleagues,etc, but there are times when we disagree. After 7 years in this business, I have learned to respect all involved, but cut losses when necessary. It’s not personal but business..

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Clay January 7, 2013 at 7:06 am

Well said Rolanda.

I’m by no means against relationships, but the relationship must serve in the best interest for your company, not your personal enjoyment.

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Melodee Lucido January 6, 2013 at 4:50 pm

Great topic Clay. Sometimes it’s a toss up. I had to dawn a new layer of patience (skin so thick cream) dealing with a new seller this week. The guy had the finesse of Archie Bunker (remember him?).

Anyways I wanted to tell him where he could go flyin’. BUT I was calm cool, collected …. and got the deal!!! We’re still workin out the details but sometimes it good to go with the old addage,

“Diplomacy is the art of telling people to go to hell in such a way that they ask for directions.” Winston S. Churchill.

I am a sweet, yet FIERY woman who is learning the balance of it allll . . . still.

Thanks Clay,I love your stuff.

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Clay January 7, 2013 at 7:09 am

” “Diplomacy is the art of telling people to go to hell in such a way that they ask for directions.” Winston S. Churchill. ”

Thanks for that quote Melodee! Never heard it before but it made me laugh.

Congrats on your deal by the way. That is the PERFECT example of what I’m talking about. The guy was not being easy to work with, but you put that aside because you knew the deal (numbers) was good for your business.

Congrats!

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Michael January 7, 2013 at 6:09 pm

Hi Clay –

Good book not only for your personal life but just as important in your business life is the 4 agreements. One of the agreements is don’t take things personally which I had a hard time with but not much anymore. I have purchased properties off wholesalers and done some business with some people that live by different rules than I but as long as nothing is illegal & they get it done as promised then sometimes that is just fine. Developing the perfect team is something I strive for but excellent is probably what I will get.

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Clay January 8, 2013 at 6:43 am

Well said Michael. I agree on all accounts.

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