Scale?

Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing “Cash Flow Mercenary.” Dennis specializes in single-family and multi-family cash flow properties and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.

As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...

From Dennis Fassett, Cash Flow Mercenary...

It seems like the hot topic for real estate investors these days has to do with scaling your business.

Not a day goes by that I don’t receive at least one offer for a course, program or mentorship that promises to teach me how.

In fact, the one I just received promised to teach me how to scale my wholesaling business to $100k per month.

Now that sounds great in theory, and more power to you if that’s what you’re working toward. But is it a realistic goal for someone just getting started?

I bring this up because quite a few new folks I’ve talked to recently, who coincidently have done less than 10 deals, have been all excited about the prospect of getting to that lofty goal.

I’m not saying it’s a bad goal for them. What I’ve told each one of them, though, is that there are 4 very important steps they need to take before they embark on it.

1. Get good at finding motivated sellers

This is the first step.

scale You need to first find something that works – some method, whether it’s direct mail, bandit signs, SEO, PPC or whatever – that produces consistent results, month in and month out.

Why is this important?

Well, quite simply, you can’t scale to anything until you start doing deals consistently.

2. Understand how the business works

This comes from getting point #1 under control.

You start doing deals, you hit speed bumps and roadblocks, and you figure out how to get deals done in different situations and circumstances.

Since scaling involves outsourcing pretty much everything in your business – this is a bit like owning rental properties. Because before you outsource to a property manager, it’s critical that you understand how the rental game works.

How will you know if the property manager is performing if you don’t know how your property is supposed to perform?

Well, it’s the same thing with outsourcing your wholesaling business.

If you don’t know how it’s supposed to work, how can you evaluate what your team is doing? If they’re successful? Efficient?

And more to the point – if you don’t know the business, you won’t be able to take corrective action if it’s not performing.

3. Implement systems

So after you have some consistent deal flow and understand how the business works, then you can start implementing systems to help automate what you’re doing.

See where I’m going here?

These points are building on each other.

Can you imagine putting systems in place before you have deal flow? Or before you know how the business works?

I can’t.

outsource I see too many new folks falling in love and spending big bucks on this or that Podio package before they’re ready. At best they don’t use it. At worst they realize the package they bought doesn’t fit what they’re doing, and they need to start over and find a different solution.

Waste of time, money and effort.

4. Outsource

This is the key part of scaling up your business… and if you choose to outsource, it needs to happen at the right time. And that’s after you’ve mastered the first 3 steps.

When I talk to new folks who are excited to scale to huge numbers every month, I always ask them about their goals for REI.

What do they want to accomplish?
When do they want to accomplish it?
And how do they plan to accomplish it?

More often than not, I just get a blank stare back. Because they’ve never really thought about it.

Now I can completely appreciate it if you want to have a $100k-per-month business just because.

But the crazy thing is, most of the folks I talk to don’t need to get to that level.

I know “need” is subjective, but when I listen and hear that one person is trying to leave their $100k-per-year day job, another needs to pay down some debt and another just wants to live comfortably… should getting to $100k per month be the goal they’re shooting for, right out of the gate?

I don’t know what the right answer is.

But I do know that you can’t really make an informed decision until you get your arms around the 4 steps I’ve laid out.