Successful Investing while Holding a Full Time Job – Key #4: Focusing on Your Business Core

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We are half way through the 6 keys to successful investing while working full time.  As a quick recap we have secured commitment from your significant other, you have done the required homework in your market and you have established and written down your buying criteria.

With this foundation we are ready to adopt a concept preached in management books and MBA programs across the country.  Key #4 works for Fortune 500 Companies and it will work for your real estate business.

To start I suggest you take a review of your skill sets and figure out what is “Core” to your business and outsource everything else called “Context”.

As a full time employee you have limited time and you need to make sure you spend your sliver of available time on the most valuable part of your business.  Once you figure out what is “Core” to your business you need to look for team members that can handle the non core or context items.

Some investors have a real hard time with this.  They feel they have to do everything and they sweat every detail.  Having seen this many times I would tell you that this is a horrible idea, very short sided and you will eventually burn yourself out.

By outsourcing items to team members that are “Context” you can focus your energy where it is most valuable and insure your business is getting the maximum return from your effort.

Your job is to quickly find team members that can tackle particular task quickly and efficiently.  These team members just need to do the job they say they are going to do.  Don’t get yourself wrapped up in stress sweating the small details.

You pay the team members to do certain tasks and if the job gets done pay them and move on.  Don’t get distracted by the idea you could do a better job.  Remind yourself it is not “Core” and move on.

I know it is hard and as a very Type “A” person myself I had real issues with giving up this control.  But it was the absolute best thing for my business in the long run.

This simple idea of outsourcing “Context” and focusing on “Core” aloud our business to focus on Finding Deals and Securing Investor Passive/Private Investor Capital.

By focusing on the “Core” of our business we were able to adopt an investor model that leveraged our relationships, history in the central valley and the unique ability to find or create profitable deals while paying 10% interest rates to private investors.

Our model allows for continued recycling of capital through the use of passive investors and the ability to pay double digit returns while maintaining a healthy margin of safety for both parties.

One last caveat about Core and Context — please make sure your core is not too large.  If your core is too large you will know it; your business will not make steady progress because you become the bottleneck.

If you find yourself becoming the bottleneck to your business success I suggest reevaluating the “Core” and outsourcing more tasks by finding more help.

Key #5 coming Next week.

Good Investing

Photo: Alan Cleaver

About Author

Michael Zuber is an active buy-and-hold real estate investor who still has a full-time job. Michael is not an agent or broker, and simply uses the internet and agent relationships to drive his business. He currently averages at least one deal a month and has developed laser focus on his 5 step process.

8 Comments

  1. Thanks Michael. I first thought of my wife, she’s very controlling. I great worker-bee, bad delegator. I’ve worked on her for years about giving up the small stuff. I think your blog will help her let some of that go.

    Tod

  2. I see the same thing from people I work with on my day job. It’s hard to go from doing everything one minute to outsourcing it or delegating it the next. But it’s an important step if someone wants to successful or very successful.

  3. Thanks for this series. I’m in a very similar boat where I’m investing and managing properties with a separate full time IT job. I’ve agreed with almost everything you’ve said so far. I’m pretty much a generalist and I do like to do things myself. I don’t have trouble subcontracting larger repair jobs, but I went so far as to get my real estate license just for my own deals and we manage all the rentals we’ve aquired. Reflecting I can see that we need to work on defining our core and finding additional subcontractors/team members.

  4. Jacob Sampson on

    Michael,

    I have been enjoying your posts. I am a small time REI. I have 9 units located in Topeka, KS (been doing it for about 7 years). My business partner and I have been approached by friends of ours wanting to invest some money with us. This would be the ‘passive investors’ you mentioned, I assume. What we struggle with is why would I pay an investor 6, 10, or 15% return when I can just pay a bank 4 or 5%?

    To restate, “why pay an investor a higher interest rate than I could get from a bank?”

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