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The Power of Focus – 100x Results with 10x Less Effort
How should we focus our energies?
This topic has been at the back of my mind every day as we are actively expanding into a new market (more on that later).
It is no secret that I am a big fan of checklists. In fact, one of my favorite books is called The Checklist Manifesto. I highly recommend it as it is a breezy but illuminating read.
We have been actively debating expanding our operations for geographic diversity. Additionally, we want to harvest our gains in Texas and expand into a market which is earlier in the real estate cycle.
We started the process of choosing a new market by conducting extensive market research based off our 20+ factor market research checklist.
We determined the market that best fits our investment strategy by quantitatively ranking markets across the factors.
One of my mentors uses a similar list to great effect in his own business.
Our next step was connecting with our strategic partners to (A) discuss our research and (B) understand their portfolio needs. Luckily, they, too, were looking for geographic diversity away from Texas while staying true to our core values of conservatism and prudence.
Playing away from home has its distinct set of pros and cons. Our biggest concern remains developing the right local relationships.
How will we cut through the clutter to reach our target audience to be heard? The answer is focus.
Focus on our audience. Focus on our message. Focus on our unique offering. In short, focus every part of our business on achieving our target.
We know we have to be proactive in connecting with the right stakeholders. In our experience there are two easy (in theory, hard in practice) ways of doing this:
- Make it easy for people to find what it is we’re looking for
- Deliver value, in every interaction, that is relative and useful for our stakeholders
We planned on beginning by developing the right broker connections. In every market, a handful of brokers control the majority of the juicy deals. A sort of Pareto Principle in the real world.
In our case, we have begun actively engaging with select brokers in our preferred submarkets. We understand the needs of brokers and the messages that resonates with them. Therefore, in our initial email we clearly spell out our investment criteria:
- Class B/C
- 100+ units, prefer 150+
- $5-15M
- 1965+
- Value-add potential
- 10-15% below market rents
- Pitched roofs preference
Clear, concise and to the point.
In fact, if we wrote nothing else in our introductory email, brokers would still take us seriously.
Being a real estate entrepreneur requires us to grasp every detail while also understanding the big picture. In effect, we must understand how all the pieces are put together.
We are now beginning to form deep relationships with all the power players. This is solely because of our precise investment criteria and maniacal focus on particular submarkets.
Our goal is to become the first person the seller’s/broker’s go to when marketing their assets.
Thinking about all of the above is fine in theory but we have had to think deeply about another critical questions: What is our moat?
Warren Buffet popularized the term economic moat. He refers to this as a the “business’s ability to maintain competitive advantage over its competitors in order to protect its long-term profits and market share from competing firms.”
In other words, finding a sustainable edge that the competition is unable to replicate.
Our moat is a local focus within a niche strategy. In the long-run this enables us to source the coveted “off-market” deals.
How do we do this?
We always do what we say we’re going to do. We always pay brokers quickly and don’t haggle on their fees. We don’t re-trade deals. We always make sure our debt and equity is accessible and available.
We understand that brokers are motivated by the path of least resistance, not maximizing price. An extra $100K in price is meaningful for the seller. It is not meaningful for the broker. Brokers want to work with buyers they know will close and require minimal hand holding.
We have positioned ourselves to be that buyer. We network relentlessly with brokers, lenders and owners and always add value to the process. We do this every single day. This approach is in our DNA.
Remaining top of mind becomes very important in this process. We check in with our partners every few weeks. We understand that nourishing our relationships is a key component of our business. In fact, we have closed several deals that we started looking at 12-18 months ago.
The timing may not be right today, but when the seller decides to exit, we’ll be the first people they call.
In other words, sharpening our focus, relentlessly networking and showcasing our value. Every hour, every day, every week, every month and every year.
To Do List:
- Finding the 5 most hungry/creative brokers, lenders, property managers, appraisers, etc in our chosen sub-markets;
- Building an ongoing, mutually beneficial relationship with them
- Provide continuous value by referring additional business to them
- Get to know them outside work – meet family/kids, likes/dislikes, favorite sports/teams, etc – People do business with people they like.
This can also be found on our website.
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