According to Boston Consulting Group and Bloomberg, big fund managers are struggling. As this $100T space faces a revolution, where will the capital go, and how can real estate investors position themselves to benefit?

The Big Issue

The massive asset management industry appears to be facing a major inflection point.

Coverage of the issue reveals concerns that many large financial firms may face extinction in the near future. Their investor customers have been increasingly demanding cheaper, and more passive investment strategies.

At the same time, money managers face the challenge of trying to make more money in a bear market, which has already seen some lose money for 20 quarters in a row.

Reportedly 90% of the additional revenues these firms have enjoyed over the past 18 years is from the rising bull market, instead of attracting new capital from clients.

In the past six years investors have yanked $600B from these fund managers. With Blackrock seeing $13B in withdrawals in the past three months alone.

For Real Estate Wholesalers

As a real estate wholesaler, how can you benefit from this shift in available capital, and avoid repeating the mistakes these dying firms have made.

Don’t Count On Appreciation Alone

Even as a real estate wholesaler and flipper it can be tempting to sometimes make offers based upon a fast rising market. Whereas savvy investors are always looking to build in an equity cushion with their offers, just in case the market shifts mid transaction.

Sell To Those Providing Passive Income Investments

It seems that passive income investments are increasingly trending in demand. Consider how you can wholesale in volume and create a pipeline to those serving the end retail investors in this space.

Maintain Sustainable Margins

Profit margins that are too thin are frequently the cause of businesses failing. It can also be harder to raise pricing later. Be sure you are operating on strong margins in the beginning, with room to offer deals, and still make a profit.

Serve Those Fearing A Bear Market

Whether you believe it is a bear market or there is a new recession looming isn’t nearly as important as what end buyers and their clients think.

If that fear is driving their decisions and where they put their capital, be sure you are catering to them.

This may include altering the price ranges and property types you are targeting, as well as geographic areas.

Be sure to check out our 1% interest rate deals on loans over $600k, and scale your business this season.

Your real estate business needs these six types of people to survive and thrive.

No matter whether you are a small house wholesaling operation, a construction firm, fund, rehabber, or landlord with hundreds of units, these are the separate individual roles you need to have filled if you are going to hit your goals and maintain your gains.

The Visionary Thinker

You need the big picture thinker. The one who sees the vision and casts it for everyone else inside and outside of the organization. They lay down the idea for the business, and spend their time on strategy and the highest level items. Eventually you may need these thinkers and strategists to lead all of your different departments too.

The Builder

This architect or or designer breaks down the visionary’s idea into the parts that are needed to make it happen. Like an acquisitions team, lead generation, vendors to facilitate due diligence, financing and closings, and more. They layout the organizational structure to bring the dream to life.

The Doer

Not everyone can be a thinker or dreamer, or nothing will ever actually get done. You need the workforce that is happy slugging away at the daily tasks required to move the needle and keep things working. They run customer service, admin, handle sales calls, scout for properties and more.

Social Butterfly

The above personalities aren’t always the most social. They are busy thinking, and grinding it out behind the scenes. Regardless of how technically excellent everything else is done, you still need someone who thrives on being social. This is a people business.

The Frugal Bookkeeper

It is essential to have a dedicated, unbiased bookkeeper who just focuses on the numbers. It is their job to make sure the business doesn’t run out of money. They have to be separate to other departments so that they aren’t tempted to say yes to things just to hit the metrics for other departments they are involved in. They keep everyone else in check when it comes to spending.

The Manager

Someone has to manage all of these people. This isn’t a good fitting role for the visionary. It needs to be someone who excels in managing others and the finer details of the operation. This person brings together the doers and thinkers to realize the company goals.

Summary

You simply can’t do all of these jobs yourself. If you try you are sabotaging your own potential and what your business could be achieving. Which roles do you still need to fill to fuel your real estate business?

 

Is real estate investing a race of speed, or is it more like an endurance race or decathlon?

You can approach real estate investing any way you like. Some may be inclined to rush and be highly motivated to go all in at full speed. Others take a very slow and long approach. Which works best? What are the pros and cons of these mindsets? What’s it really like?

The Sprint

Taking big and swift action is required if you want big and quick results. If you are throwing yourself all in to wholesaling houses or fixing and flipping and need it to put money back in your pocket by the end of the month, you had better hustle. You can do it, but you’ll have to go flat out, make decisions quickly and make no excuses.

Just 30 days could change your life. Yet, there are potential pitfalls and downsides of only being a sprinter.

It can make it tempting to take shortcuts and make unsustainable moves. Just like those marathon cheaters taking an uber to the finish line or Lance Armstrong in cycling. This is even true for those in buy and hold real estate and multifamily. These are the people trying to sprint, when they are really in a marathon.

You may burnout by going too fast. Or you might wake up and find you’ve smashed your 5 year goals in just 2 years, but didn’t make a plan for how to maintain it after that.

The Marathon

Others see real estate as a marathon. A really, really long race. One which requires a lot of stamina and endurance, patience and a lot of repetitive tasks.

If you end up living more than 5 years, then real estate really is a marathon. Quick results are great and possible, but once you are in the lead, you need to stay there. You don’t want to burn out after the first mile and throw in the towel. Yet, if you get too comfortable in the lead, there are plenty of people behind you looking to pass you.

There are some ways that real estate investing is not like a marathon at all. It’s not just one smooth track. Opportunities are always changing with the market and economy and other trends. There may be times to sprint, slowdown and pace yourself and to pause or leap.

The Decathlon of Real Estate

In reality real estate investing is probably much more like a decathlon or Spartan race. Days of both sprinting and long distance, as well as specialized skills in jumping, throwing and pole vaulting.

It requires many different skills. You’ve got to find the deals, fund the deals, flip the deals, and train in between.

To master it for quick progress and staying a champ for the long term, you’ve got to know when to do what, and where to focus. It’s smart to choose what to excel in, and it takes wisdom to know when to sprint or pace yourself.

If you live in a very seasonal real estate market this should be pretty obvious. Though in addition to larger real estate cycles, every year can bring its time to sprint, and cool down.

One of those coming up is back to school season when families are hyper motivated to sell and buy and move before the new school year starts. Ready, set, go...

 

Watch out for these common mistakes many real estate investors are making now and determine to excel.

There are still lots of profits to be made in the real estate market. Some are enjoying more than others. Some are positioned to keep growing in the months and years ahead, while some may be feeling like their businesses have already peaked.

These are the blunders investors need to avoid and overcome now so they can make more money and sustain their success…

Marketing

Many investors are not marketing nearly enough. They aren’t investing enough in their channels to really make them work. Or they aren’t diversifying into enough channels to keep business consistent. Some keep floating between what they see others doing or promoting, without listening to their marketing teams who already know their business. What works may be slightly different for each entrepreneur and brand. Though, even once you’ve stumbled on it, you’ve got to put enough effort into it to yield good results.

Market Changes

It’s undeniable that the market is changing and evolving. How long this run will last in some areas may depend a lot on changes in the economy and lending world, as well as the media. Yet, investors should have already been preparing to adjust and thrive ahead. That may mean withdrawing from speculative investments in new construction, switching markets, exiting declining investments, and releasing or leveraging equity which is a sitting target for deprecation.

Personal & Business Brands

A recent executive survey shows that the online reputation of the CEO of a company is critical for being able to attract and retain talent, attracting investors, and growing a business. Yet, many real estate execs are not putting a priority on building their own personal brand. Or they have a confused relationship between their personal and business brand. Reputation management should be a proactive mission, that has its own budget and tasks to be done every month. Separating personal and business branding carries all the advantages of separating personal and business credit.

Hiring Remote Workers & Experts

Despite the fact that some real estate businesses have been run entirely virtually for over a decade, and that even in industrial cities like NY 40% or more of the population are freelancers, many investors are still struggling to hire and manage great talent in this environment.

In many ways it is the opposite of old school HR. Instead of making it tough to get hired or micro-managing, you’ve got to make it incredibly simple for great talent to start working with you, and just let them get on with their best work. At least if you want the best results in your business, and to remain competitive.

Taking Advantage of the Market

While most are bullish on the current property market, and are enjoying great incomes, most are not taking full advantage of the opportunities while they are here. They are doing mediocre volume. You might have to look in new neighborhoods or states, find new ways to fund deals, or reach more of the buyers out there. Make the money while the going is good, and build up a chest of capital for when times are leaner.