I am one of the cheapest people you will ever meet. I drive a 1999 Toyota Corolla with 126,000 miles on it (a car is a depreciating asset, why would I spend a lot of money on one?). A few weeks ago when I was at Disney World I carried around the same bottle of water all week and I brought food into the park to eat for lunch everyday (there was no way I was paying $4.00 for a bottle of water and $7.00 for a hot dog).
When I go on dates, which is very rare since I am a workaholic, a “nice” restaurant to me is Ruby Tuesday’s (yes…now you know one of the many reasons I am single.) I mean, if I take a girl to the Cheesecake Factory or the Melting Pot, we better be engaged!
That being said, I believe that one of the only reasons to spend my hard earned money is to make more money. This includes my education and power team. I will never understand how any intelligent person, how anyone who is serious about success (only about 5% of people are truly serious) will not invest in their business. I know many folks out there love to “bash” courses and seminars. I guess these people are a lot smarter than me, because I never would have figured out how to do this business unless I worked with other investors, unless I bought courses and unless I attended seminars. I think the biggest problem that people who “bash” courses have, is that they are not implementers. These are the people who have attended a dozen seminars and who have 50 courses on their bookshelf, however, they have never closed a deal. (Just a quick thought…if you own multiple courses and have never done a deal, take a look in the mirror….it’s not the courses, it’s you.) Also, any decent course or seminar should have a 100% money back guarantee…so if the product stinks, which some do, just send it back.
Besides investing in your education, you should be investing in your power team. You need a good real estate attorney and accountant on your team. Sometimes I hear of investors who go to Staples and pay $14.95 for generic forms, rather than have a lawyer review a contract and spend a couple hundred bucks (knuckleheads.)
When investing in your education you need to think of the big picture and you need to think of the return on investment that you will get. For example, a few years ago I bought a course on short sales, which I think cost $1,000. I went on to do dozens of short sales and make a lot of money (I don’t do them anymore, because they are a pain in the butt, however, you get the point). So, whenever I invest in my education and in my business, I always want at least a 10:1 return on my money. And of course, I usually get many times that.
Also, when you are in Staples buying your $14.95 contract, think what it will cost you if you get sued over it, or if you lose a $50,000 deal because you didn’t want to spend $300 to have your lawyer review it. This is just like someone not spending $250 for a home inspection, only to find out later they have $10,000 worth of termite damage.
One more story, which will probably make a lot of folks eyes roll… As many of you know I am a student of direct mail, I am obsessed with increasing my response rates. My favorite niche to target is absentee owners and I am always searching for unique ways to boost my rates…so that I get more leads, more deals and make more money. Anyway, a few weeks ago, I got an idea for a “type” of direct mail which I know pulls very well and I wanted to incorporate this type of direct mail to send to absentee owners, pre-foreclosure lists, free and clear lists, etc. This type of direct mail gets very high response rates but costs a lot more to send out. You can send out a regular letter for about .50, whereas this will cost me about $1.50 a letter.
Anyway, there is a marketing expert who is very familiar with the type of direct mail that I want to use. I have been keeping an eye on this guy through his books, websites and marketing emails. So finally, I decided that the best way to launch my new idea was to somehow hire this guy as a consultant. I called his office, told them I wanted to hire him and eventually I had a phone call with him. To get to the point, I am spending on day of consulting with him at a cost of $5,000. When I told my friends and family about this, they all laughed and thought I was nuts (yes, these are the same people who work in a cubicle every day…when it comes to criticism, the people “below” you financially are almost always the negative ones…very rarely will you get criticized by someone who is financially better off than you).
Yes, $5,000 is A LOT of money. It is about how much I spent on my last car. However, when I think of it with my “business” hat on, I know I will have a very high return on investment. Right now, I specialize in purchasing properties subject-to and selling them on a lease option. My minimum profit is $30,000, but on average around $50,000…so, if this consultant shows me how to use this new type of direct mail and it gets me one more house, then obviously it paid for itself…but of course I will buy many houses with this and get a ridiculous ROI! (also, like I said above, each letter will cost me about $1.50. I could spend a small fortune “testing” this type of mail, or this guy can show me what will work best and save me time and money.)
I know this is a long post, but this is sooooo important to your success as a real estate investor. If you are cheap about investing in your business, then you will have a much more difficult and longer process to making big money in real estate. Another great reason to invest, is that it drastically cuts your learning curve…I can only imagine how long it would have taken me to figure out shore sales on my own!
So please remember that anytime you invest in your business, you:
- Get a 10:1 return on your investment
- Make sure you will implement what you have learned (or it will be a total waste of money)
- If the product or course is terrible, return it
- Think of the big picture
- Only spend money if it will make you money
Now get out there and start treating real estate as a business and not a hobby! (Yes, that means that accountant who charges $30.00 an hour, who just became a CPA after finally passing the test after the 30th time and who does not own a single property………. probably won’t cut it).