How to overcome your fear in real estate investing… and start doing deals!

I know a lot of people who WANT to be real estate investors but aren’t. And the reason is: They’re scared. Some will admit it, some won’t, and some will blame it on an external factor or restate it with words like “unquantifiable risks” but it almost always boils down to fear.

For example…

  • There’s the fear of trying to find the money in the first place to do a deal (either the fear of asking at the bank and potentially blowing up your credit if a deal goes bad or the fear of rejecting when you ask other investors for the money).
  • There’s the fear that you’ll get totally hosed on a deal by someone, perhaps paying too much for a property that isn’t worth it.
  • There’s the fear that you’ll do the deal only to get totally hosed on the other side of the deal — by evil tenants or by a housing market that turns south when you are trying to flip the property.

Not to mention, the fear of liability, the fear of succeeding and having to make big changes in your life, the fear of spending money you don’t have right now, the fear of telling your friends that you are doing something only to have to face them later when it fails… I could go on and on.

So how can you overcome your fears in real estate investing? Well one of the reasons we feel fear is because of the unknown. It’s wired into our DNA to fear the unknown and to stick close to things that are familiar and comfortable. So the system I developed to overcome fear (which I’ve used when doing real estate deals, investing in equities, investing in businesses, or working through a tricky client assignment) illuminates the unknown, helping you move forward confidently.

It’s a surprisingly simple method that I call “sequencing” and it’s a system I developed while being a technical writer for an insurance company.

SEQUENCING YOUR WAY OUT OF FEAR

Sequencing is basically creating a detailed step-by-step list of the entire process or procedure or system or business model that you’re going to do. And it works for any kind of real estate investing.

Start by listing the steps of the process from start to finish, as best as you can. For example, if you want to be a landlord, then your initial sequencing effort might look like this:

  1. Get prequalified for a second mortgage
  2. Find a good property
  3. Buy the property
  4. Rent it out

You’ve created a really simple, basic list (or sequence) of the steps you need to take to become a landlord. But as you look over that list, you realize that there are many steps in there that you didn’t actually cover. So you go back and add a few more detailed steps.

  1. Find out how much downpayment is required for a second property
  2. Look for ways to access that money (i.e. Line of credit, savings, etc.)
  3. Check credit to ensure that it is optimized for the best possible mortgage
  4. Find a mortgage broker who can help find the best rates
  5. Get prequalified for a second mortgage
  6. Identify what qualities make a good rental property
  7. Find a real estate agent to work with
  8. Look for properties that fit the criteria identified earlier
  9. Put an offer in on the property
  10. Close the deal
  11. Advertise for a tenant
  12. Review tenant applications
  13. Sign a lease

Okay, this is a little closer to what the landlord sequence probably looks like. See? Already you’ve started to shed light on the process.

But you’re only getting warmed up! Now it’s time to go deeper. This is where you start to read, research, ask questions, get educated, and get mentored to fill in an even longer list. Look at each step in your sequence and ask yourself…

  • Can I narrow it down even more (perhaps by turning one step into several smaller steps)? If you can narrow it down, do so. In the 13-step sequence I listed above, each step could theoretically be narrowed down to even more, creating a list of dozens of steps. For example “advertise for a tenant” could be several more steps, including “identify the qualities of a good tenant”, “find the most effective locations for rental advertising”, “sign up at 5 rental advertising websites”, “create the copy for my tenant advertisement”, etc.
  • Do I know everything about that step or is there more I can learn? If you’re not sure how to get from one step to the next or how something works behind-the-scenes, make a note and go research that thing.
  • Do I feel comfortable acting on this step? This is a huge question to answer. Perhaps you can narrow difficult steps down into several easier, smaller steps (and you should try to do that) or perhaps you realize that one aspect of the effort is simply too difficult for you (in which case you need to find some kind of work-around).

Expect to create a list of dozens or even hundreds of steps.

“Hundreds?” you ask. Yes. Hundreds of steps. That’s okay. Another reason that people don’t become real estate investors is because they don’t know where to start and everything seems overwhelming. But by creating a sequence of hundreds of steps, you make it easy and obvious what you need to do next.

Keep going until you have created an amazingly detailed sequence that you can act on. Once you have the sequence, you have a step-by-step checklist that will take you through the entire process, with nothing scary or unknown.

That’s it! It’s almost so simple that you might wonder why you never did it before or you might wonder if it works. Trust me, it works. Build a sequence, act on that sequence.

Remember reading in Robert Kiyosaki’s Rich Dad Poor Dad book about finding a formula that works for him? That’s basically all this is. You’re building a formula in a numerical sequence.

BEST SEQUENCING PRACTICES

There will be times when you learn something that doesn’t seem to fit in your sequence. That’s when you need to ask yourself if you missed something (and add it in) or if there is a reason why this step might not be included in your sequence (i.e. it’s a step that is only done in certain areas but you don’t have to do it in yours).

Once you’ve done the sequence once, you may find that you can make it even better next time. Some steps can be eliminated, streamlined, or done concurrently with other steps. You’ll go faster (and probably more profitably) the next time.

And here are the two most important sequencing best practices (they work in tandem)…

  1. You can never be too detailed. You can create any sequence that is thousands upon thousands of steps, even for the simplest deal. If you need to do that, do so. The more detailed you get, the more knowledgeable you become… and the less fear you’ll have about doing the deal.
  2. A sequence is only useful if you act on it. A lot of aspiring real estate investors mistake research and learning for action. You should learn how to become a better investor but at some point you need to act. This sequencing exercise is designed to empower you to act but it is possible to still use it as an excuse for inaction (i.e. “My sequence isn’t complete yet”). So get as detailed as you can (see the tip above) but don’t get so detailed that you simply don’t move forward.

Bonus tip: Your sequence becomes an asset in your real estate investing business. It’s an asset that you can use over and over… and perhaps even sell to others.

Fast, simple ways to improve your business on the fly

Starting and growing a business can be tough. It can feel like you are juggling and trying to keep a whole bunch of balls in the air at once. If you lose your focus for just a moment, the whole thing seems like it can come crashing down. Then, in the midst of all that juggling, add in the need to improve your business and suddenly you may find yourself struggling to keep up.

So what can you do?

Fortunately, improving your business doesn’t have to disrupt your rhythm and you can make positive changes to your business without losing focus on everything else.

Here are some quick ways to help you:

  • Make better decisions. It might surprise you to learn that one of the biggest drawbacks to an entrepreneur’s ability to grow their business is an inability to make decisions. They’re not sure what to focus on first. Avoid this problem by making a list of the things you want to change.
  • Know what you want to change. Before you make any changes, make a note of the following things: What the current result is, what you’d like the result to be, and what compelled the change. These force you to think through your changes first, perhaps even forcing you to apply a simple metric so you know what’s going on. By asking these questions first, you might discover that something isn’t broken (or that something else is broken instead of the thing you thought). Keep these notes as a journal of your progress.
  • Keep it simple! Don’t try to make sweeping changes to all of your business right now. You may be frustrated by what feels like an inefficient system but it will remain inefficient (or even get worse) if you try to change it all at once. Instead, take one small thing and make it better. Pick one small thing – as little as how you answer the phone or how quickly you respond to customer complaints – and change it. It doesn’t have to be big. But if you make one small change every day, you still make more changes than most businesses make.
  • Measure, measure, measure. Measure everything and test it. When you make a change, don’t consider it a permanent change until you’ve seen improvements. Test the changes as you go and be willing to reverse the changes if you were wrong.
  • Move in the other direction. When working on something that impacts your sales funnel, work backwards. Instead of starting at the top end of your sales funnel (your marketing) start at the bottom end of your sales funnel (the sale). Make adjustments to those efforts first. Then work backwards through the funnel. You’ll see better returns on your changes.
  • Test drive your changes. Before introducing a sweeping change to your business, ask a customer to help you “test drive” the change (perhaps for a discount on their purchase). Get honest feedback from them and use that information to move forward.
  • Learn to sell. Take courses and study diligently. The ability to sell will help you in nearly every facet of your business – from management to dealing with vendors to human resources to customer service and (of course) to marketing and selling your products or services.

Successful businesses are always improving. But it doesn’t mean you have to stop juggling to make those improvements. Try some of these quick tips to help.

Aaron Hoos’ weekly reading list: ‘social media, business failure, web design, and copywriting’ edition

Aaron Hoos: Weekly reading list

  • Moneyball and the reality of social business at The Brand Builder‘s blog. I don’t usually watch sports movies but I loved the movie Moneyball — I’m a fan of the actors and I’m particularly a fan of Aaron Sorkin (who co-wrote the screenplay). I also loved the movie because it’s a movie about economics and statistics, which happens to take place in the world of baseball. So when I saw the title of blog post (written 6 months ago — time to update the blog, Mr. Blanchard!) I had to read it. The post talks about how baseball thinking was medieval until a couple of characters from the movie turned that thinking on its head. And then the post highlights a parallel situation that many businesses face in which they’re trying to build social media marketing campaigns and hire social media marketing people but failing… because of the medieval thinking. Read the article.
  • My 4 biggest professional disappointments of 2013. I was riveted to this post at The Sales Lion. With disarming frankness, blogger Marcus Sheridan discusses the areas in his business and life that he feels were not achieved this year. As someone who sets high goals and frequently misses the mark, I get his frustration.
  • 5 profoundly important parts to every business website in 2014 and beyond. When was the last time you updated your website? It’s been a few months for me. As I think about the trends that we’re seeing in website design/usability, as well as the direction of my business, the question of “what should I put on my website?” is something that comes up a lot. In this blog post at The Sales Lion, Marcus Sheridan discusses 5 elements you should consider for your site. Great stuff here! I’m scheduling some time to revisit the websites I own and to consider how to include these things in my sites.
  • 2014: The year of the rainmaker. Does it feel a little old to read posts that proclaim “this is what 2014 will be like?” I think there’s a deadline for it — only a week from January 1. But this was on my RSS feed and I’m getting to it now. What I like about this article is how Copyblogger positions the importance of a writer. Sure, some of it is to make writers feel better about themselves (hey, we can be a sensitive bunch) but some of it is true: Content — in whatever form it comes in — continues to be the way leads are attracted and turned into customers online. So the writer — especially the copywriter — will play an increasingly important role.

Case study: Dealing with the problem of rapid business growth

Business growth sounds good, doesn’t it? But rapid business growth can cause problems — perhaps more problems than you realize. There was a year in my business when I enjoyed rapid business growth. It was awesome! But the next year brought a tax bill that caught me completely by surprise and I spent the rest of that year struggling to make ends meet because most of my income was flowing to the government to pay off that tax bill. I learned my lesson: While rapid business growth is good, you should expect and prepare for challenges.

Rapid business growth brings another problem, as well…

One client in the automotive space had grown rapidly in a very short time. Through new company offices, acquisitions of competition, and a new franchise model, they went from a regional success story to a multinational one in just a few years. Times were good. But one “cost” of rapid business growth is that their customer experience started to falter.

When they were starting out and growing steadily, they were able to train staff and control the customer experience closely, and, in fact, it was that very customer experience that helped them to continue to grow so well. However, once they started opening new offices and acquiring other companies and franchisees, that customer experience was no longer consistent from one office to the next. In company-owned offices, the customer experience might be one way, in franchise offices, the customer experience might be another way, and in acquired companies (especially long-established ones!), the customer experience might be completely different.

This client hired me to help them develop training that could take them to the next level. There were three other challenges that I faced in this project:

  • The company already had computer-based training and web-based training that they delivered to their staff, and that training worked when they were smaller and had more control over each office. But now, their company had grown and out-grown their training, but they still wanted to use some of it.
  • The company was now located in multiple jurisdictions, which changed some aspects of their customer experience based on the laws and business environment of each different jurisdiction.
  • Additionally, they wanted to shore up their income by integrating more sales into their customer service experience.

So here’s what I did to help them…

  1. I outlined the training that their staff needed in order to be up-to-speed with the company’s preferred way of serving customers.
  2. I carefully reviewed the training they had and, when possible, plugged pieces of that existing training in where possible. (Some of it could be used verbatim; some of it needed to be revised).
  3. I wrote extensive new content where their training needs were not being met, providing specific best practices and scripts, as well as integrated sales material.
  4. I worked closely with their team, not only to ensure that it met their needs but also to ensure that the training material was accurate for each jurisdiction they now did business in.
  5. I wrote this content to be deployed in computer-based and web-based training and supported with a manual and workbook.

The company started their training with a single course covering the high-level points that their staff needed to be reminded of. When the project was complete, they had a thorough training package that delivered their must-know information through multiple modules covering different aspects of sales and customer service.

How one magazine lost thousands of dollars in repeat sales

A couple of months ago I advertised my services in a magazine. Unfortunately, I didn’t have a great experience working with the sales department and it’s enough to make me think twice about working with them again.

What’s surprising, though, is how small and easily fixable their problems are. So I won’t name them here because it’s not my intention to shame them but I’ll describe m experience with them as a sort-of case study to show you how a bunch of little things can really add up when it comes to customer experience.

Let’s start with…

WHAT THE MAGAZINE DID WELL

When I called them in July to place the ad, the guy who took the call was really helpful and gave me a great deal because it was my first time advertising with the magazine. He was friendly and pretty easy to work with. He sent me the advertising contract right away, which I paid the same day. Deals, communication, and high responsiveness. That’s great!

But after that interaction, things started to go downhill:

WHAT THE MAGAZINE DID POORLY

They never spelled my name correctly. That’s kind of a little infuriating. (Disclaimer: I’m guilty of doing this from time to time so I fully recognize that this street runs both ways).

When I sent my ad into the magazine, I never received a confirmation that my ad was received.

I paid promptly for my ad but got an invoice about a month later with my name misspelled and a lower amount, and the invoice gave a somewhat clear warning to “please pay this within 7 days or your ad won’t run”. I suspect what happened was that my higher payment plus my misspelled name meant that the accounting department didn’t correctly match up my payment with the receivable. When I tried to rectify the situation with an email (both with the person who sent me the notice and with the person I originally worked with) but never received a reply of any kind.

I followed-up about the payment again, a week or so before the ad went to print, just to ensure that the invoice was now marked as “paid” and my ad would run. Again no answer. In fact, as I write this months after the fact, there has never been a reply.

After the date the ad was supposed to run, I sent another email to just check and see whether or not the ad ran. That email was never returned. I did a small spike in traffic to my website so I’m assuming that the ad ran. Unfortunately, the results of the ad were disappointing as well. (Note: I don’t blame the magazine for this. Advertising is an ongoing process. I did receive some results but no where near the results I wanted and I take responsibility for that — advertising is a process of tweaking and modifying and adjusting).

Then, about 3 weeks after the ad was scheduled to run, I got a call from a different guy from the sales department. He tried to sell me some additional ad space. He also mentioned in passing that my ad hadn’t run yet and I said, “I thought it had.” He put the phone down for a moment then came back and said that it had.

As you can see, it wasn’t anything major but it was a bunch of little things that made them appear that they just couldn’t get it together. I guess I’m kind of surprised because this is a decent-sized magazine company with offices around the globe and several publications. They’ve been in business for a while and supposedly have a decent subscriber list.

SIMPLE FIXES FOR A LONG-TERM CLIENT

So what could they have done better? Here are some tips — that not only apply to them but really these tips apply to any business:

  • Spell the client’s name correctly.
  • Answer emails. Even if there is no question in the email, or even if it will take a while to find out the answer, just acknowledge that you received the email.
  • Equip sales people to sell more effectively on the back end. If they were trying to communicate with me as a client, they should know what my ad was and when it was published.
  • Bonus tip: Why not also create a resource for first-time advertisers like me that educates me about the process and maybe gives me tips on how to create a better ad.

These seem so simple as I wrote them out. And they’re things we take for granted and don’t even notice… unless they are missing.

I’m purposely not naming the company because I’m not here to shame anyone and I may yet choose to do business with them again. They know who they are and if they happen to read my post then I hope that my recommendations will improve their clients’ experience as well as the magazine’s bottom line. But this experience is a great reminder for all of us that no matter who we are and what industry we’re in, we need to make sure to focus on even the little things in the customer experience because those little things can add up to some big things.