YOU Are The Manager - Don't Forget To Delegate

What's your purpose?

As I work with a number of real estate investors in different levels of their careers, I find more often than not that each is somewhat confused on what role they play in their business (with many also failing to consider that what they do is/can be a business). Just take a glance at the Agent forums, or the Contractor forums, or a post about Property Management, and at least weekly you'll find someone trying to eliminate one of these professionals from their business model.

One of my go-to questions during my first meet 'n greet with clients is, "What is your role here, or what do you want to do as an investor?" Plenty of times, I'm told one of the following:

• "I'm the one who finds the deals"
• "I'm the one with the financing/connections"
• "I work on the rehab"
• "I find the tenants and collect the rent"

And in my opinion, all of those are wrong. As a real estate investor, your sole role should be that of an operations manager with all of these professionals as your subordinates (or team members as we like to call them now).

But, But, But - I could save so much!

Every time I encounter someone trying to eliminate a professional, its because of MONEY. Every single time:

• I don't need a buyer's agent, I can find properties myself.
• I don't need a closing attorney, I can evaluate the contract myself.
• I don't need a mortgage broker, I can find financing myself.
• I don't need an inspector, I know what to look for.
• I don't need a contractor, I'll hire the labor myself.
• I don't need a list agent, I can market myself.
• I don't need a handyman, I'll make the repairs myself.
• I don't need a property manager, I can find tenants, collect rent, etc. myself.

And you are probably right!

As a Real Estate Investor, you probably know enough to get by in each of these categories. But you doing everything is not a scale-able model. It might work for one or 5 properties, but what about 50 or 100? The fall back is always, "I'll worry about that when I get to that point." But the time is now folks. If you can't make money including these professionals with one property, you won't make money with 100 properties.

But lets take it a step further. If a contractor makes $5k on your job, and if you take over his job, why shouldn't you make $5k in addition to whatever you'd make off of your investment? Would you do the job for less than $5k for someone else? If not, then your model is not scale-able.

So Let's Grow...

Non-scale-able business models are simply used to justify a less than lucrative investment. In my opinion, its better to say you only make $1k on your deal, but now know how to better analyze a property, than to say you made $15k by eliminating half of these professionals. The first will improve and grow, the second will eventually get burned out.

As a professional real estate investor yourself, you should rarely need to step foot in a property. With all of the above professionals as part of your team, your sole job is simply coordinating each of them at the right time and following up to ensure each is performing their function, much like a General Manager in a retail store. That job takes time, and is all the more reason you can't waste your limited time on the tasks your subordinates should be attending to.

...And Make More Deals!

So with that in mind, the next time you want to make 20% extra on a deal by cutting out everyone else, consider what that 20% has cost you. If you are willing to forfeit that 20% to a group of professionals, you'll not only save time that could be spent on other endeavors and/or your family, but it will leave you more time to find more deals and scale from 1 deal to 10, 50, 100 deals. Don't get caught chasing pennies today for lack of anything else to do, and instead focus on scaling a profitable business model.