Do you have a REAL business or a hobby?

Hey ,

What would a real business do?

This is one of my favorite things to ask my team when we are in our weekly meetings, and we come across a challenge we are trying to solve together...

It typically makes all of us smile a bit, because it of course implies that we are not a real business. It also makes us think differently, believe it or not, this simple question "what would a real business do?" has solved so many of our problems as a team.

It TOTALLY has solved a ton of my personal challenges when it comes to investing in real estate.

Inside the Trenches

There comes a point in our investing careers, where out of desire or necessity, we have to stop treating investing like a side hustle and/or hobby...and start treating investing like a real business.

So...do you run a real business? Do you want to run a real business? What is a real business...? Here are a few questions to ask your self…

What is your ACTUAL business in regards to real estate investing?

What do I mean? For example...are you wholesaling real estate? Yes! Ok, what is your actual business then? From my experience, it’s marketing and sales. Not investing. Wholesaling (assigning contracts) is the result of a solid marketing and sales business.

Are you a house flipper? What is your actual business then?

I'll give you a hint...It's not any of the following: direct marketing, materials delivery driver, realtor, handy man, light bulb changer, cabinet installer, superintendant, HGTV wanna-be, social media influencer, etc.

You are a value-add investor. You buy something for as little as possible, force the value up (usually through rehab), then sell it for a profit. The funny part is that we usually mess up managing that middle part (rehab). It’s typically what holds us back from scaling (not money...).

If you were in a coma for 30 days, what would happen to your "business?" What about 60 days?

For most of us, the business would stop. Usually because we are doing it without a team, and it solely relies on our shoulders. Even WITH a team, that team is so reliant on US that they wouldn't really know how to handle the business over 30-60 days without us.

Some of us believe we have "systems" but if WE are not a part of that system, does it still work? If the answer is NO, then it’s not a system...it’s just a cool way that YOU do stuff.

There was a time where I had over 23 active rehab projects going on at one time, and it was just me and one other person (my assistant at the time, Serena). I worked 80+ hours a week, non stop, and I was VERY good at making stuff happen. However...burn out is a real thing, and sooner or later the tires will fall off.

Will the business fail if you become unwell or unable to work? It’s ok if the business is reliant on you for some things, it’s part of being a small business owner, but all things?

There will be a time where you will not want to be tied down by your business, to be able to spend more time with family/friends and travel. This only happens with intention and only happens with the proper systems and people in place.

Do you track your business cashflow? Expenses per project, overhead, etc? Do you project business revenue/profit throughout the year?

A lack of business CASHFLOW management is the number one reason house flippers fail in this business.

Would a real business ignore their financials? Would a real investor ignore their financials? Put the financials off until "later," whenever that is? I have 100% been guilty of doing this in the past, and severely paid for it (emotionally, and in reality $$). Bank account accounting is not how a “real business” runs its books, and not how us real estate investors should run our business and investments either. We are in the business of MONEY...that unfortunately means finance, spreadsheets, and I hate to say it...math.

There are many more questions that I would want to ask you about your business, but for the sake of the newsletter, I will stick with these for now. If you are like most of us in this business, you probably didn't answer "positively" to these questions.

For years, I wasn't sure what my real business was, I just DID stuff...I worked my butt off and so long as I made more money, I felt I was going the right direction. However, I totally couldn't even tell you how much money my business was making back when I was newer because I didn't keep track of everything. It wasn't until the end of a project that I would see if I made money or not. Great way to run a business right!?

The thing is, in regards to single family real estate investing (specifically flips and BRRRRs), I found that there are six stages that we all must process out and master in our investment business in order to become a “real business” and those are:

1. Business Strategy
   

2. Acquisitions
   

3. Funding and Transaction Coordination
   

4. Planning
   

5. Rehab
   

6. Disposition/Stabilization

Out of these SIX stages though...there are really only TWO stages that I think 95% of all house flippers and BRRRR investors struggle the most on.

In fact, out of all the investors I have met over the years, I would say that the #1 reason investors fail to SCALE how they want to scale are because of these TWO Stages…

Most people think it’s "money" or "acquisitions," and sometimes say "there are no good deals out there!" Those excuses are typically the main reason for when someone is just starting out or maybe have only done a couple of projects.

But MOST, if not ALL, seasoned investors, struggle to scale due to PLANNING AND REHAB. YUCK!

Who got in this business so they can deal with rehab/construction?  NO ONE! Which is why most of us fail at this part of the business...sucks...but it’s true.

When you are a Fix and Flip investor, or BRRRR investor, you are essentially a "value-add" investor. Like I wrote above, that is where you buy something messed up (or under utilized), force appreciation typically through rehab/construction, then sell (or refi and rent) for a profit. If this is the case for someone that does value-add, then a MASSIVE part of their business is managing and running construction projects. 

Imagine you had plenty of funding, at what point does your business break? The challenge with scaling is NOT money for most of us (once we dive deeper).

It’s systems and processes around planning and rehab management.

Could you handle 5 active rehabs at a time right now? What about 10? 15? At what point does it get to be too much, and when does it all fall a part? It’s not the money...it’s the actual operations of the business that prevents us from scaling.

When I figured out that almost ALL my issues and ALL my time in my business was spent in the rehab phase of my business...I realized that something had to change or I was going to quit the business.

Once I took a step back, really broke down my business processes, found where the holes were and then worked ON the business, in a period of about 6 months, I was able to free my self from the rehab phase of the business.

Not FULLY, but about 90% plus from it. Eventually I found ways to get myself fully out of the process all together.

This doesn't happen overnight.

It doesn't happen if we are dropping off materials all the time either.

It happens when you are able to consistently set aside time to work ON the business each week.

It takes effort and determination.

Even if you LOVE the rehab side (you're a psycho if that’s the case), having the ability to step away from it because you CHOOSE to is a nice place to be.

So you have two options:

1. Do what I did, struggle, fail, learn, and eventually figure it all out after a few hundred projects...
   

2. Speed up the learning curve and join me at my workshop coming up October 19th - 20th in Austin, Texas!*

If you choose #1, sweet! You should also join us at Flippers Anonymous then, you will fit right in for sure.

If you decide on #2, then you can condense your time frames and systemize your business a lot faster.

The two day workshop is hands-on, not just some lecture. You will dive deep into the 6 stages of this business and ACTUALLY work on properties exactly how I work on properties.

This whole business can be done with a laptop and a phone.

IF you really wanted to, the whole business can be done with just a smart phone and no laptop.

You can find out more information at the website below.

Additionally, if you are new to my line of thinking, you can check out my presentation at the Limitless Expo for free HERE as well. This 50 min presentation breaks down a lot of my processes.

I hope to see you in Austin and if not, I hope to see you in Flippers Anonymous one day!

Talk soon,

Tarl

Join Me Before the Workshop for a Welcome Party & Birthday Bash!

It’s my BIRTHDAY! Come in a day early on October 18th for a catered BBQ, drinks, and fun at my favorite local spot - Hog Heaven! This is a great opportunity to meet fellow investors and peers before the workshop begins.

Then buckle up for the 2-Day hands-on workshop to turn your side hustle/hobby into a real business!

2-Day Workshop Agenda:

• My Framework: A deep dive into the 6 Phases of Building and Running a Real Estate Business

• Hands-on training on running and systemizing a real estate business

• Real-life application with properties, scenarios, and systems

• Lunch and refreshments provided on both days

• Evening Gathering: Optional networking at a local brewery/distillery on Day 1

What to Expect:

• Actionable training

• Personalized guidance

• Networking opportunities with like-minded investors

• A clear framework to systemize and scale

Sign up ASAP to secure your spot! (and use code: SUBSCRIBER to get an additional 10% off!)*

*Flippers Anonymous members please check the private Facebook group for your members sign up link!