Scaling from 3 deals a year to 33 deals in 6 months
I wasn't exactly sure where to put this post but it looked like it fit best in success stories. This is a blog post I wrote recently on my website and I thought it would be worth posting here as some motivation to those who are looking to scale now or in the future. I hope it falls within the BP guidelines, I got rid of all the links and non compliant items.
I looked at how things have changed in my business this year, I compared what I have done up to this point in 2016 to what I did the last few years, and I tried to figure out what has gotten me to this point. So, here is what I have come up with…
Last year:
In 2015, I did one flip and bought two rental properties. All three of these properties were purchased and renovated using cash. The flip sold quickly and I made a nice profit on that one. However, I spent a lot of time there and managed the project myself to save money on the renovation. For the rentals, I did a very light renovation, got them rented out, and performed a cash out refinance on them. Each property now cash flows around $500 a month and I only have $2,500 of my own money in one and about $20k in the other. You don’t have to be a rocket scientist to figure out that the cash on cash return for those two properties is great, not to mention the built in equity that I achieved. I thought this was a great year, until 2016.
This year:
This year we have done 10 flips, 8 of those are traditional flips with a full renovation and 2 of those are more of a wholetail deal. When I say wholetail, what I mean is that we bought it and either did no work to it or just a very light cleaning and put it right up on the MLS for a quick sale. Of these 10 projects, 2 have sold, 1 is closing in a few weeks, 4 are listed on the MLS, and 3 are under construction.
In addition, we have closed 12 wholesale deals where we have found great properties and turned them around to other investors for a small profit.
We currently have 11 properties under contract that will end up in one of the three buckets above depending on our exit strategy. 5 of these 11 will close by the end of next week. On average, we are putting 2 houses per week under contract, which is exactly where I wanted to be by the middle of 2017.
So, how did this happen? And most importantly, how did it happen so quickly?
I am going to break that answer down into 3 different sections because they really are the pillars of my business and what make us so successful.
Mindset
I can’t say that one of these pillars is more important than the other but without the right mindset, you will limit yourself somehow. If you don’t have the entrepreneurial, millionaire mindset you will not be able to achieve the extremely lofty goals you set for yourself. It is so important to forget limitations, remove doubt, and shatter the glass ceiling above your head.
I still remember running my first marathon. When I got to the 20-mile mark I could feel my mind wandering and trying to convince my body that it needed to stop. The body is incredibly strong and can easily make it 26.2 miles, however the mind is stronger and it can convince you that your body can’t make it. It is a mindset problem, not a fitness problem. I think that the same goes for business, if you are mentally limiting yourself to a specific income or a specific number of deals; that is where you will land. However, if there is no limit then you free yourself and your business to perform at any level without a governor on it.
My goal wasn’t to get really deep on the mind and body, however this is the main reason my business has been so successful this year. How did I get to this mindset? By watching others succeed and surrounding myself with other people who have no limits. It’s so easy to say negative things like “that can’t be done” or “there aren’t any deals out there” or “he’s lying, they didn’t do 100 flips last year.” But, if you are sitting next to the guy or gal who did then you will not be saying any of those cop out lines. You will be saying the one statement that will get your mind exactly where it needs to be to succeed, “if they can do that, I can do more!”
So, remove the glass ceiling and don’t ever put a governor on what you or your business can achieve. Break free from the everyday limits, I have.
People
Once I had the right mindset I got to work on surrounding myself with the right people. This is kind of like the chicken and the egg scenario. First I found the right people (peers and colleagues) to surround myself with in order to get to that mindset, and then I had to hire the right people to implement my vision. Both of these sets of people are a major reason for my success this year and the scaling of my business.
I still remember talking to one of my mentors, Andy, on the phone in December. When we were talking about where I wanted to be and what I wanted to do this year I said, “I don’t want employees, I don’t want to be responsible for other people in my business.” Looking back now I can’t believe I said that. What kind of business do you run by yourself? I would suggest the answer is a small, fairly successful one with no upward trajectory at all. Andy, being the great mentor he is, didn’t say that is a horrible idea or what are you talking about. He said, “Ok, I can help you get to where you want to be without other people working for you if that’s what you want.” He put the doubt in my mind by talking about scaling and limiting myself by working on my own, and let me come to the conclusion I made on my own instead of forcing me there. I can say with all of my heart, I owe a great deal of my success this year to that one guy! If I was in his shoes, I’m not sure I would have been able to sit there with a straight face after someone told me what I told him.
Ok, back to the people on my team. The key for me has been to hire for where I want to be in the future and not where I am right now. Throughout this article, you will see that when I talk about the business I use the term “we” instead of “I.” This is because I have built my business around my incredible team of people. The key to my success is that I have great people working with me who enjoy what they do and are GREAT at it. Putting the right people in the right positions and incentivizing them has been the key to our success this year. I’m not going to dish out any secrets on how to do that as it will be different depending on your business, but the underlying theme will stay the same. Place your folks where they will flourish and give them autonomy and empower them to do their job without looking over their shoulder all the time and micromanaging them. Your people are capable of doing what you hired them to do and they don’t need you holding their hand and limiting their capabilities. Give them the keys and you will be surprised at how great they can be.
Systems
This is the thing I thought would be the most important part of a successful business but after 6 months of scaling I can tell you it’s not. The mindset and the people are far and away the most important thing. Systems are important, however without the right people and the right mindset, the best systems in the world won’t make you or your business successful. What I love about the systems I have put in place is that they ALLOW the people in my business to be more successful. They reduce their workload and allow them to achieve more in less time. The systems also allow me to keep an eye on what is going on inside the business remotely without having to micromanage my team or ask them to tell me what they are doing everyday.
I have gotten into a lot of the specific systems that we use in previous posts so I won’t get in depth on that. However, I can tell you that I am always looking for new ways to reduce the workload on my team so that they can get more done by doing less. My goal is for them to work less and make more! I think we are doing well in this arena but I am always looking for new ways to cut down on unnecessary tasks and figure out the most efficient way to get things done.
Action
I’m not going to get into this much but I thought it was important to mention. The speed of implementation and taking action without over thinking everything has been a big key to my success this year. Everything doesn’t have to be perfect, just get things setup as well as you can and take action. There will be bumps along the way but that will just help you to perfect things as you go. Trial and error…
Mastermind Group
Lastly, I want to give MAJOR credit to my mastermind group. The mentors and peers in that group are certainly what have gotten me to this point in my business. I had a choice last year to reinvest some of my profits into this group or just keep doing what I was doing. It was a true turning point in my life as a person and as a business owner. If you are reading this and are considering joining a high level mastermind group or even a smaller entry level flipping or wholesaling group then don’t think about it any longer. If you haven’t already done it you need to. I would highly recommend Justin William’s House Flipping Formula group if you want to get started, he is a great guy who gives way more than he gets. And best of all, he is currently doing the business and not some guy on late night infomercials selling real estate courses. He has helped me immensely and you will get back 10x what you put in I guarantee it.