Is focusing on fewer deals actually the key to making more money in real estate this year?
Real estate investors, agents, and other professionals often rush in and try to ramp up as much volume as they can. They perceive volume as the path to more money, and more freedom. But that’s not always the reality. In fact; it frequently ends up delivering the opposite results.
Even when you look at massive giants like Zillow and Airbnb, they often just post bigger annual losses. That’s not to say volume and market share can’t one day turn into profit. But common sense says to build a model you can scale, not to create a big business and then hope you can make money from it.
Going after volume first can often just mean being busier. It can mean being busy hiring, training, managing, putting out fires, and sometimes for less money. Flipping more houses is great, but the focus should absolutely be on profit.
Ask yourself what’s better; doing one wholesale deal and making $100k this month, or trying to do 10 rehabs for $10k each this month? Which will give you more of what you really want?
Take a look at the deals you’ve done over the last year; which are the most profitable top 20%? What’s different about those deals, and what do they have in common? How can you do more of those and less of the bottom 80%?
Your time is literally priceless. Don’t waste it. Get the most return on your time that you can. When you do that you’ll have the freedom to do more volume with deals that have even better profit margins, but you’ll be able to afford to take time off for the things that are even more important.
Some ways to get a better ROI on your time may include; delegating more and micromanaging less, streamlining your financing strategy, wholesaling versus rehabbing or renting real estate.
Build in more profit by slashing your turn times on deals, negotiating better rates with vendors or paying them more to take on more responsibility, building relationships with good buyers that won’t nickel and dime you on deals, and empowering any team members you have to make decisions faster based on a good system.
Net profit or volume – which is your goal this year?
Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.
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