Business Management

What Real Estate Investors Can Learn from Keller Williams’ Systematic Approach

Expertise: Mortgages & Creative Financing, Business Management, Landlording & Rental Properties, Commercial Real Estate, Real Estate Deal Analysis & Advice, Real Estate Investing Basics, Personal Development, Real Estate News & Commentary
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Keller Williams Realty is probably the most innovative real estate brokerage to hit the scene in a long time. Gary Keller, the author of The Millionaire Real Estate Agent and The Millionaire Real Estate Investor, founded the brokerage along with Joe Williams in 1983. It started out with just a single office in Austin, Texas. Fast forward to April of 2014, Keller Williams had 100,575 agents and was the largest real estate brokerage in the United States!

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Some of this success has been attributed to Keller Williams being able to lure top agents away from other brokerages with a 70/30 commission split (as opposed to the more common 50/50 split at the time). Keller Williams also has a particular focus on teams, which allows for agents to better spend their time by delegating lower level tasks to team members. Those team members, usually newer agents, can gain valuable experience working for a team before moving out on their own (or creating their own team). It also allows for more specialization instead of forcing every agent to be a one man shop.


An Emphasis on Models & Systems

But what I want to focus on in this article is Keller Williams’ emphasis on models and systems. As they put it on their own website, “Keller Williams has always succeeded by leveraging systems to build great businesses.”

Gary Keller notes a passage he read in Unlimited Power by Tony Robbins, “Long ago, I realized that success leaves clues, that people who produce outstanding results do specific things to create those results” (The Millionaire Real Estate Agent, 36).

This passage gave Keller an epiphany. Most people build their businesses backwards. They put creativity at the base and models (i.e. systems) on top, whereas it should be the other way around. He describes this as an upside down triangle that is unstable by its very nature.

Businesses should be built on a model with systems as the integral component. Then creativity should be used to alter and adjust the model. In other words, creativity goes on top of the triangle with a model as the base. This is because creativity, being fluid by its very nature, is simply too all over the place to build a consistent business with. In many ways, this idea is similar to Jim Collin’s concept of “freedom within a framework” that he discusses in Good to Great.

Related: 7 Top Business Books to Help You Put Vital Systems in Place

Keller notes that your business (and your personal life) can only go as far as the model you are currently using allows. Eventually, that model will hit a plateau, and in order to breakthrough, you will need to improve the model.

This is one of the reasons Keller Williams is a big fan of teams. They not only allow more experienced members to optimize their time, but they are great for mentoring and transmitting successful models to more and more of their agents. There’s no need to reinvent the wheel, folks.

A Deeper Look at the Keller Williams Model

As an example of this approach, we can look a little deeper into Keller Williams’ model. No business model works and no system is useful without measurable data, so Keller Williams puts a lot of focus on building a system to measure all the important data. As Gary Keller puts it in his book:

“There are three critical areas of focus in your Economic Model. First, you need to focus on knowing the key numbers you must hit. […] Then you’ll have to focus on the number of appointments you  must make, the driving numbers in your Economic Model, and the conversion rate you must achieve, the key variable in the equation. (The Millionaire Real Estate Agent, 130)

Most people, according to Keller, are not sure where their money will come from or which costs (marketing, administration, etc.) are bringing results and which aren’t. The first key to any system, therefore, is to track and measure the data coming in so you have something to make decisions off of.

The links to real estate investment should be clear. Tracking your marketing dollars and monitoring which sources are providing the most and best leads is essential to optimize the money and time that you spend.


How to Apply Systems to Your Real Estate Business

But that is just the beginning. Systems can and should be applied throughout your business. We buy and hold, and systems are absolutely essential. Our focus is on mostly houses and smaller multifamily properties, and so we do off-site management. While this is anecdotal, it seems to us that many successful investors top out at around 100 doors. From several, we’ve heard that they have no intention of getting any more. And while that’s perfectly fine, we have no interest in stopping there. It seems to us that one of the problems that many of these investors face is that it simply becomes more and more difficult to manage such a large array of properties even with the help of employees.

Related: The Ultimate Guide to Adding Systems & Outsourcing to Work Less in Real Estate

The issue is that employees will either need direction or a system, or you will have to let them just do their own thing (I highly recommend against this). Every system you build and every policy you make allows the company to run without you or at the very least, operate without running through you. You simply don’t have enough time in the day or mental energy to make a decision on everything that comes up.

What my brother does in management, for example, is that every time he comes across a new situation, he tries not just to solve it, but also to create a policy for that type of situation. Yes, every situation is different, but they usually can be placed into categories. As time goes on, there are fewer and fewer situations that we don’t have a ready-made response to.

It’s best to view your business as a series of systems. There should be a how-to manual of sorts (not necessarily written down, although that’s good, too) for each major activity, be it marketing, selling, leasing, maintenance, rehab, financing, etc. These systems save valuable time and mental energy to be used on that creativity that rests atop your model versus wasting it on just trying to get through the day. They also allow you to replicate yourself so you can focus on higher level problems and opportunities.

This is the approach that Keller Williams took, and given their success, it should be apparent that such a systematic approach is also a successful approach.

What systems do you have set up that are essential to your real estate business?

Let me know your thoughts with a comment.

Andrew Syrios has been investing in real estate for over a decade and is a partner with Stewardship Investments, LLC along with his brother Phillip ...
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    James R. Investor from Milwaukee, Wisconsin
    Replied almost 5 years ago
    Andrew, this was an interesting article. I recently heard of KW in my area because as a company it has really taken off. One of the realtors that I now recommend to others is a KW real estate agent and he is “tearing it up” with sales all over the city. It’s not unheard of to see his sign on every house for sale on an entire street.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied almost 5 years ago
    I haven’t seen them too much in KC, but they really started to take off in Oregon before I left. KW really added some innovation to the real estate brokerage industry that was so static for so many years.
    Stephen Hundley Realtor from Lafayette, LA
    Replied almost 5 years ago
    Great article, Andrew! I’ve been w kw going on 6 years and everything you said is spot on!
    Account Closed from Winnipeg, Manitoba
    Replied almost 5 years ago
    I just read it recently and it’s definitely recommended for everyone to read! It helped me shift my mindset on how to approach REI now. I think everyone here should read KW’s book. Worth a read!
    Baron Hicklin from Chester, South Carolina
    Replied almost 5 years ago
    @Andrew Syrios, Thank you for the article. This article comes at a perfect time for me . Developing systems is something I have done in my career and now I am trying to bring it over into my real estate business. I like the triangle analogy and the statement, “Businesses should be built on a model with systems as the integral component. Then creativity should be used to alter and adjust the model. In other words, creativity goes on top of the triangle with a model as the base” It makes me sit back in my chair and do some thinking. Thanks again for the time you took to write the article. Baron
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied almost 5 years ago
    Yeah, I love Gary’s analogy with the triangles. Creativity by itself is just a mess, it has to be channeled through a structure of systems and models to be effective.
    Stephanie Forbes
    Replied almost 5 years ago
    Thank you! I am so very new to real estate investing but this particle article has finally persuaded me to at least get even a few systems/checklists in place for issues with our rentals that always seem to “pop” up. I have thought since we have so few it sounds silly to go through the trouble, but I am hearing you on the whole “build the foundation” idea. Who has time to reinvent when it is all so predictable? I just ordered Mr. Keller’s book!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied almost 5 years ago
    Good to hear Stephanie! It’s never too early to start building systems, although it can feel a bit daunting and overwhelming. It’s just about improving them one bit at a time (preferably with the help of other’s models, like those of Gary Keller).
    Owen Buchanan Investor from Belleville , NJ
    Replied almost 5 years ago
    Wish I could have read this article before diving into real estate head first! In the process of developing systems and structure now. Lessons learned…great post.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied almost 5 years ago
    It’s never too late to start. Indeed, I think it’s almost universal that entrepreneurs have to build their systems during their growth and not before they start. Indeed, there’s no way to know for certain all of the systems you’ll need beforehand.
    Laura Sulak Investor from Temple, TX
    Replied almost 5 years ago
    Thank you, Andrew, for this practical article. You must have read my mind! I’m weeks away from closing on my first two properties, and it is my plan to set up my business up from day one to be able to scale it and teach someone else how to do my job, so I can move on to the next step. Your information landed on my brain at the perfect time, so thank you! The words “replicate yourself” jumped out at me so much, that I stopped reading and wrote that down in my RE notebook. In my current W2 job, I spend a lot of time teaching myself how to do things and setting up systems for what I do (marketing, graphic design, admin stuff), mostly for myself, so I can go back and replicate what I did a week, month, year ago without having to relearn it every time. I plan to do the same in my RE business. Excellent article!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied almost 5 years ago
    You know I think I wrote that almost without thinking about it. My dad has really hammered that into my head and it’s an incredibly important lesson. Finding good people and learning how to delegate (or replicate yourself) is absolutely critical to being able to grow.
    Chris Moeser Flipper from Millstadt, Illinois
    Replied almost 5 years ago
    Great article. I like the idea of systems and believe in them. That’s the whole idea and why franchising is so successful. But, if you’re new to investing don’t you have to start doing first and then figure out your own system or build one from there?