7 Successful Strategies Real Estate Investors Can Steal From Startup Entrepreneurs
There is a lot of good advice, free assistance, and empowering motivation out there for small business owners. Remember that flipping a house as a real estate investor is a small business itself, so you can steal the best ideas from the startup world to help you on your journey. Here are a few of the best:
1) Work Harder than Everyone you Know.
Startup Entrepreneurs know that it takes a superhuman effort to get a business off the ground. They obsess over ways to make their venture successful, save money, and win customers. Late nights, busy weekends, and missed vacations are all part of the experience. Real Estate Investors should have the same, indestructible work ethic as their startup peers. Technically, you are starting a business and you should be prepared to make those sacrifices to make it successful. The payoff of being a real estate investor comes years down the line when you can quit your 9-5 job and be your own boss.
2) Follow Successful People to Stay Motivated.
Do you really think all those startup entrepreneurs WANT to be sleeping at the office and living off ramen noodles? No, of course they don’t. Anyone in their right mind would want to be on the beach instead, but entrepreneurs have a secret weapon to stay motivated: they feed off each other’s willpower and find energy in other people’s advice.
Real estate investors can benefit from this strategy too. When you feel overwhelmed by the process or want to give up, look to your peers and the vast network of startup support that is out there.
Tip: Search social media for accounts that use #motivationmonday, #startupgrind, or #growthmindset for a treasure trove of restorative content.
3) Find a Mentor/Support Group.
Startup Entrepreneurs know they don’t need to reinvent what a business is, they just need a good product or service. They borrow business processes, tips and tricks, and strategies from the people who have gone before them. You should do the same thing as a real estate investor. Find a support group, online community, or mentor to help you sidestep common errors that could sink your project and setup business processes that keep your project on track. Check your local chapter of SCORE for a volunteer business mentor from your location. Only a fool would refuse help; the most successful people seek out the knowledge gained from others experiences.
Our Favorites: Facebook groups, Bigger Pockets, Meetup.com
4) Startup in “Lean” Mode.
A lot of books have been written about the lean startup method, but when it comes down to it, it just means spend as little money as possible until you are sure your business is growing. Entrepreneurs know to stay as lean as possible, at least until they can start making a significant profit. You don’t really need a business phone, website, or new pickup truck to get started in real estate investing so don’t shell out the money for those things until you are well into the profit zone.
5) Don’t go it Alone.
When you look at young companies in startup mode, most have a founding team of two or three people. Why? Because starting a business takes a lot of different skills and abilities – never mind hard work. Spreading this need over several people helps keep the business on the right track. Real Estate Investing is no different. By building a strong, multi-faceted team you are more likely to have all the skills you need to stay successful. You’ll look stronger to your lender, have more points of contact for your contractors, and spread the workload among the team. Also, don’t forget, it can be very enjoyable to share this experience with a partner. Long nights and busy weekends will be more enjoyable spent with a trusted ally than alone.
6) Have a Plan.
Startup Entrepreneurs get their first outside investments by having a clear, profit-generating business plan. When Venture capitalists see a positive cash flow they will be willing to invest in the business. You should think of your real estate investments the same way. Plan out your expenditures in as much detail as possible and compare that to your potential return under various market conditions. Is there enough profit in your numbers to make the project a success? If so, present this plan to your rehab lender as proof that you are a good investment for their funding. Be sure to include various exit strategies and contingencies, as most projects hit a snag somewhere along the line. Including options in your plan will only make it stronger and less vulnerable to risk. (We have a free House Flipping Business Plan Template here!).
7) Keep Your Eye on the Money.
When it comes down to it, successful businesses are ones that make money. It may seem fun or glamorous to own and run a business but if it is not making money, it can quickly become your greatest worry. A business that loses money is a failed business and can be the most stressful thing in the world. Startup entrepreneurs know to keep a tight watch over the cashflow of the business, monitoring expenses, watching sales, spying on the competition, and making projections about future costs. Real estate investors should keep the same mindset for their projects. It is easy to lose sight of the financials during the project and let the costs skyrocket. Always remember that the #1 reason for investing in real estate is to make money.
Why is there so much overlap between startup entrepreneurs and real estate investors?
Because successful real estate investors ARE startup entrepreneurs. Luckily, there are a lot of public resources to help small, young businesses be successful. Keep an attitude of learning, a motivated disposition, and a growth mindset to be a successful real estate investor!