How To Build A Sustainable Real Estate Business


Even the best investors go through periods of ups and downs. As good as the business can be when things are going well, it can be equally frustrating when plans don’t fall into place accordingly. While you can never fully eliminate dips in business activity, there are ways that you can build a business to withstand market fluctuations while keeping an eye on the future. If you love the business and can see yourself in it five and ten years down the road, there are actions you should take right now to cement your place. After all, a sustainable real estate business should be the goal of every serious investor.

There will be times in your business when you face difficult decisions to do what’s best today instead of what will have a greater impact down the road. The decisions you make will have a lasting impact. Make sure they are the right ones. One of the best ways to build a strong business is by building a strong reputation. If you treat everyone in a deal with respect, regardless of the situation, people will take notice. Going the extra mile or doing something that is not really in your job description will make an impression on the people around you. When things are slow or if people in a deal are looking to work with someone, they will think of you. It is not easy to make concessions when you need every dollar, but if you make sacrifices when your business permits them, you will often see a much greater return.

The real estate business is filled with constant trends and changes. The best investors are those who will get out a few months too early rather than hang on too late. If you put all your eggs in one basket, you are certainly doomed to fail. Short sales and foreclosures were the rage five years ago, but they have reduced greatly over the years. There are still plenty of foreclosures, but probably not enough sustain your business. You need to be able to see the trends in the market before they happen and react quickly when things transpire. The more diverse your portfolio and lead generation sources are, the better you can adjust to whatever is going on in the market. You can certainly ride the wave of a hot trend or something that is working for you, but you need to be able to get out as quickly as you got on.

Sometimes the worst thing that can happen to an investor is to have a taste of success. This can cause you to be complacent, lazy and to think that deals will just fall on your lap. To build a strong business you need to constantly network and get yourself out there. When things get slow, people will lean on others they have a relationship with and have worked with in the past. The stronger your network is, the greater chance you have at finding deals and getting through rough patches. This isn’t always easy when you are busy working on deals, but you need to think about the big picture. If you can establish just one new contact every meeting over time, you have a stable of people that know and trust you. The minute you slow down your networking is when you will start to see a dip in your business.

The same can be said for your marketing strategies. Having current deals to work on is great, but when – and if –  they close, you will be left with a dry pipeline. Regardless of what you are doing, you need to have a constant flow of leads coming in. Every lead is an opportunity to work with a new realtor, attorney or mortgage broker that can provide you with further opportunities down to road. Directly getting deals is the goal of networking and marketing, but don’t discount the impact it has on the people in your market. People in the business know who is buying and selling real estate in your area and will remember you in the future. You can truly never have too many incoming leads. You can slow down your marketing efforts if you are busy, but you should never turn it off all together.

Finally, the businesses that are built for the long haul have enough reserves to weather any financial storm. You need to allocate a portion of funds received on every deal to savings so you can brace for dips in your business. The biggest reason that many investors ran into trouble during the mortgage collapse was not a lack of equity, but a lack of reserves. Regardless of what else you have going on, you need to constantly contribute to your rainy day fund. Just when things are going well, a furnace will break or you will be presented with an opportunity to buy if you can close quickly. If you have reserves, you can easily handle what is going on in your business.

To stick around for the long haul, you need to have the right mentality. If you don’t run your business like a business, any success you have can be short lived. If you see yourself investing in real estate ten to twenty years down the road, the decisions you make today can make all the difference.