Today’s REI Classroom Lesson

Today, Marck De Lautour talks to us about how finding one market to dominate in has worked better than trying to expand and invest in multiple markets.

REI Classroom Summary

With having one market that you invest in, it will be easier to find and keep quality team members and contractors. Become the best in your market instead of spreading yourself too thin.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Marck: Hey, guys. Marck de Lautour with SBD Housing Solutions in Kansas City, here as your host for the REI Classroom for the day. I just wanted to bring a few things to point today about how to really dominate your marketplace.
Mike: This REI Classroom real estate lesson is sponsored by the, FlipNerd’s private investor coaching program and your blueprint to investing success.

Marck: It’s one thing to kind of dabble in it and be a player but it’s another to dominate it and that’s what we do here in Kansas City. So I just wanted to share a few tips on how we’ve got to the position of dominance in our local marketplace.
The number one is, focus geographically. I always get asked, “Hey, you guys are so big, you’re doing so many volumes in Kansas City. Why don’t you go to Springfield, St. Louis, Omaha,” all these other states and territories? But the answer is I want to be the biggest and the best that I can possibly be and I think you have to focus geographically to do so.
Again, others that have succeeded with different models, more power to you, but for us personally, it’s been very hard to recreate our model in different marketplaces. And so, we’ve just chosen to focus geographically to do that. I think it’s wise to become the expert in your market so that when someone gives you an address in a three or four county area, you know exactly whether you would want to buy it and at what price. It certainly helps when you’re building your block of business.
The second one is to find quality contractors. They can truly save you so much money down the road. And how do you do that? Finding them, I think, is the easy thing but keeping them is another. We’ve been in business for 15 years and I’m proud to say that we’ve always grown with our existing group of contractors. Most of our contractors have worked with us for more than five years, some of them even longer. The very first contractor I ever had is still with me today and I think it’s because I pay them very well, I pay them on time, and treat them as equals, not talking down to the them or yelling at them.
I’m not that guy that goes on to a job site and starts barking orders, but really talking to them about how we want the things done and making sure that they buy into my philosophy of why I’m remodeling the house that I am and why we’re making the decisions that we do.
They truly think that the house is their own and normally save me far more money than I could possibly do by going to Lowes and Home Depot and hammering down the individual subcontractors for painting or plumbing or electrical or whatever. So a good GC goes a long way to help you save money and control your job site because you can’t be there all the time.
Third thing is to focus on mainly one source of acquisition. You’ve really got to think through how you’re going to acquire your properties and there are so many ways to do it. Just touching briefly on ones that we kind of specialize in is buying direct on the courthouse steps, buying off the MLS, trying to work with wholesalers, working with PPC Google AdWords campaign, being a good presence on billboards around town, there are so many ways to attract attention. But we have been experts in one and we hammer that market to death.
And then once you get purely proficient at it where you can absolutely know without a shadow of a doubt that you’re executing everything to get the absolute most out of that particular source of acquisition, then go on to another one. But don’t try and work with wholesalers and all the different acquisition methods I just mentioned. Don’t go and do all of them all at once. I think it’s a huge waste of time and effort. You really need to focus and become really, really good at one or maybe two before you start going into all these different areas and it’s truly going to be a waste of money.
If you start throwing money up on billboards without having a good . . . with the lead generation model that you have, if you don’t have good call capture, or tracking how you’re getting your leads, it’s going to just cause headaches down the road for you and you won’t really know whether it’s a good ad spend or not.
Fourth is always, kind of similar contractors, is to hire good people and pay them well. We’ve grown to where we now have 12 people in the office and obviously many, many contractors. We’ve got ten GCs that are working for us as well outside the office as well as a whole bunch of subs.
But the key in the office is to hire really good people that just care about what they do. And that’s a hard thing to do. I think you’ve just got to, they say hire slowly and fire quickly. Likely, I haven’t had to do too much firing but you’ve certainly got to do personally profile tests and make sure that they’re a good fit for your culture. You are the leader of the organization. You are the one that’s going to building your company culture so make sure you have an idea of how you want your business to run and make sure you hire well.
It’s pointless for you to just hire the first person that comes along if it’s not going to be a long-term fit. Again, we’ve got longevity in the office place, is something that is extremely valuable. You will find yourself with turnover comes a lot of lost revenues, time, and resources. So try and hire well and pay them fairly so they’re not looking for another job because you’re being so cheap.
Hey, lastly, have a plan. How many homes do you want to buy and what areas do you want to buy? But have a plan. Challenge yourself to put something down in writing on paper and try to do your best to put math to it. The math doesn’t lie.
The same thing on a flip, you have to write down the numbers before you buy the house. The same thing with a business, you’ve got to know what the potential profit is for the year before you start going and doing an ad spend.
So have a plan, stick to it, and you’ll find out later that when you look back on a two-year or a three-year or a five-year business plan and you keep them around, you’ll look back and just see how well you’ve done to succeed in your goals and hit it out of the park.
So again, dominate the marketplace by those five things and you’ll go a long way. Hey, Marck de Lautour with SBD Housing Solutions. Good luck out there.
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