Leveraging People to Create Multiple Income Channels – Part I

Real estate is not about houses or location, but rather your ability to leverage certain people.

One great quality that real estate has over other businesses is that there are several avenues or channels to obtain a desirable level of income. Do you think holding and landlording is too risky? Then be a rehabber. If you cannot stomach rehabbing and running construction crews then be a Million Dollar Middleman (MDM) who markets to find hungry buyers and flips homes other people own to those buyers. If you don’t like any perceived risk at all, then broker real estate loans, sell homes as a licensed Realtor or build a real estate related business such as a property management firm. The excuse “I’m afraid” doesn’t work in real estate because in reality, there is nothing to ever be afraid of. Real estate is completely risk free if you can execute various income producing strategies and leverage the efforts and services of certain types of people.

Multiple Channels

Imagine if superstar athletes only focused on the particular sport they specialize in and never signed any endorsement contracts. What if such a superstar skipped out on autograph signings and special appearances? Many sports heroes surely make a lot of their income from the sports they play. But more noteworthy is how they are able to make even more money outside the stadiums they play in by using several different marketing streams to bring a maximum amount of income in. We see these sports heroes all the time in Gillette commercials or Nike ads and even on late night TV giving interviews to celebrities like Jay Leno.

Real estate investing and related businesses work the same way. With the acquisition of highly specialized information along with practice, you’ll be able to utilize several different income streams of your own in the real estate trade. By maximizing these streams or “channels” of wealth, you – like many pro athletes, can open a lot of new doors for yourself and truly maximize your earnings potential. It is extremely important to understand and utilize multiple profit channels to maximize your wealth. I have yet to meet a millionaire real estate investor that made their fortune using just one wealth channel having ignored the others.

The most talented investors I consult with use six different profit channels which have contributed significantly to their wealth. They decide which of these wealth channels to use based on current market conditions and bank lending guidelines. Based on how large their operations are, or on any given day, they could be using all six of these wealth channels, or just two or three. Here are the six main channels that successful investors constantly use to make money in real estate:

Real Estate Investor’s Profit Channels:

1. Lease Options/Rent to Own Programs (short term hold with eventual sale to tenant)
2. Rehab Flips – wholesale or retail pricing
3. Owning Rentals/Land Lording – short term and long term
4. Originating/Brokering real estate loans
5. Million Dollar Middleman (MDM) Quick Flips (wholesale and retail price points)
6. Providing real estate services (Construction, Prop. Mg’t, Advertising, Consulting, Realtor, Credit Repair, Information Marketing etc.)

The entire success of your business and the effective utilization of your money channels revolve around other people. It is other people that will provide your profits and your support system when you need it. Don’t ever forget this fact.

You must understand that people are the lifeblood of the six money producing channels.

To be most effective in making money with the six channels introduced above, you have to develop large networks of people, each coming from different and specific genres. Every different genre or human resource group listed on the following page plays a distinct and very crucial role in your quest for real estate riches. It is these people who will contribute to the healthy development of your chosen money channels from the list above. Whoever it was that said “real estate is about houses and location” was completely wrong. Real estate is not about houses or location. Real estate is about developing relationships with people, and your ability to leverage them to create a mutual benefit. Your mastery of networking and leadership skills will allow you to tap each kind of human resource group and allow your income levels to grow larger than you ever thought possible. Every one of these people in your network will bring a piece to your real estate puzzle – none should ever be neglected.

The Successful Investor’s Network

• Business Partner – main partner and satellite partners
• Mortgage Brokers/Loan Officers/Bankers
• Other investors – beginning and experienced
• Accountants/Bookkeepers
• Private Money “Angel” Investors
• Realtors, MDM’s and Bird Dogs
• Buyers and Sellers
• Insurance Agents
• Property Managers
• Appraisers
• Attorneys
• Financial Planners
• REIA Leaders
• Consultant/Mentor
• Title Agency Owners/Escrow Officers
• Sub Contractors/Handymen
• City Employees (inspectors, permit workers, desk clerks etc.

The network of people you set up and the relationships you keep with them are the key to your future profits and the depth your support system for when you encounter problems. In next month’s issue you’ll find Part II of this article, which will show you how to build an investment team from the ground up. This will allow you to develop and profit from the six money producing channels introduced in this article.