The golden rule of real estate and small business
A lot of fields are numbers games.
Sales, venture capital, startups, dating. It’s about taking a lot of shots. Try to get the batting average as high as you can, but take a lot of at bats and something is bound to work out.
But once you get the funnel whittled down and you’re about to take serious action...
My golden rule:
Quality > quantity.
In real estate, one good deal can change your life.
Like this one. We purchased that facility in October 2019 with $100k down and it will generate $40k in FREE CASH FLOW in 2021.
One bad deal can set you WAY back. Ask anyone who levered up and bought a lot of (non cash flowing) real estate in 2007. Many of them lost everything.
There is nothing wrong with staying SMALL. Because guess what a big old real estate private equity company with $500MM under management has to do?
They have to keep on doing deals just to do them. A great deal doesn’t move the needle for any one person. A bad deal doesn’t wreck the firm. They just have to do deals no matter what.
You have an advantage. If you stay small and nimble, one good deal can change your life. And you can stop doing deals if there are no good ones to be had.
Small business is the same way.
A giant company with $50MM in overhead needs VOLUME. They have to move X amount of product to break even and anything above that is butter.
But a small company, like my brother’s lawn care company, can do less work at a higher price point. He can make $150k a year working 30 hours a week 32 weeks a year and spend 20 weeks in the FL keys fishing.
That’s because he has made the decision to stay small. To win less bids at a higher price. To only work with a certain TYPE of customer who values quality and speed over price.
Going big is great. Hell, I’m about to do it myself.
But remember, if you stay small, you get to pick and choose WHAT you do and where you invest your time and money.
To choose quality you need quantity. You still need to cast a wide net. You still need to make 500 cold calls to find that one self storage facility. You still need 100 customers a month filling out a quote request form on your website to get 30 new (high paying) clients.
But once you have the funnel full, be careful where you spend your time and money.