Think Bigger
By Vena Jones-Cox

Real estate entrepreneurs, as a whole, suffer from a serious case of limited thinking. We tend be focused, at any given moment, on the next deal, or the next turnover, or the next private lender, in our efforts to become millionaires.

I often wonder why our sights and focuses aren’t higher: for instance, on building a business that can do 1000 deals this year, and make us hundred-millionaires.

I’d guess it’s a combination of factors: one is that we don’t see any role models for this in small residential real estate. The folks we’ve heard of with names like Trump are worth 8 digit amounts of money are in commercial real estate, not residential. Another is that our own ambitions don’t reach that far; we want comfortable lives and comfortable retirements, not to build gigantic multi-state businesses. And a third is that we’d have no idea what a business like that, involving residential real estate, would even look like.

To take a simple example, let’s assume that there were a market for your wholesale business—as in, people who would buy it for ten times the net revenue. To be worth $100,000,000, your wholesale business would have to be doing $10,000,000 a year in deals, which means that, assuming that you could squeeze $10,000 in NET profit from each deal, your wholesale business would need to consistently, systematically do 1,000 deals a year to get such a valuation.

Holy cow! That’s impossible, right?

Well, yes, if you think like a wholesaler. Finding 1,000 deals a year in your backyard would be quite a challenge…not to mention the incredible amount of work this would be. You’d definitely have to hire people, and since you’re barely keeping up with the work of 20 deals a year, it seems like that would need to be 50 people, which means you’d need a big office and benefits and that would cut deeply into your per-deal profits and and and…

That’s what I mean by limited thinking. A typical wholesaler would get about this far into the mental exercise, and say, “that’s impossible”, and go back to figuring out how to do the next deal. As would the typical landlord who thinks about owning 1,000 rental properties. As would the typical who thinks about renovating 1,000 properties. We just don’t know how to get to this level, because we’re so stuck in the mindset of “how am I going to get all of that work done”—the entrepreneurial mindset—that we can’t even start to imagine a business at this level.

Let me clue you in on something—there ARE companies that sell 1,000 wholesale deals a year. They do this by buying in bulk, not limiting themselves to their own back yards, and hiring sales teams to dispose of the properties. There ARE companies that own 1,000 single family rentals. You just don’t know them, because they’re based on Wall Street or in California, and they don’t come to your local REIA meetings.

What these companies have in common is that they don’t think of real estate as a “job”, or as an “investment”, or as anything that the principals have to directly deal with, see, or, I sometimes think, even understand.

Perhaps you’re not that ambitious—you have no desire to do business at such a level. But even if you’re not, and you’re only interested in building what you’re doing to a modestly higher level, it’s still invaluable to understand the mindsets and business models of these kinds of “big thinkers”. Unfortunately, they’re not out on the seminar circuit teaching people to do what they’ve done—they’re running businesses that just do it. So how do you get exposure to the bigger thinking model?

First and foremost, go where they go. They may not be at your REIA group, but they are at certain more advanced seminars—think along the lines of Dyches Boddiford, Eddie Speed and so on—and at industry events like REO conventions, notebuyer conventions, and so on.

Secondly, expand your mind by studying BUSINESS. Start with The E-myth Revisited by Michael Gerber, and move on to books like Ready, Fire, Aim, and publications like Entrepreneur Magazine.

When you understand the bigger world of business building and hedgefund-level real estate, it truly expands your mind as to the possibilities of the real estate business. Even if all it does is inspire you to double your business, as opposed to growing it by 50x its current level, meeting these folks and understanding how and why they do what they do is incalculably motivating and useful.


Reprinted with permission of Vena Jones-Cox. To get more free articles and tips, subscribe at www.TheRealEstateGoddess.com