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by atw

Do you want returns of 3% or 30%?

Investors- I wanted to take a moment to talk about one of the most crucial parts of investing in real estate. Those who already know this secret and practice it well, have and will consistently achieve returns in the 20, 30 and higher percentiles. Those who do not yet know this secret or plan to disregard it, should practice saying your prayers because you’re going to have to bank on your financial planner (also known as glorified sales agent) to get you high returns (which they don’t tell you is about 5%).

So I know what your saying, “What is this secret?”

The answer is: Effective Leadership.

You’re probably saying to yourself at this moment, “Huh? What does leadership have to do with investing?”

The answer is: EVERYTHING!

To succeed in real estate you must have a team (everyone knows this). What they don’t tell you is that you must be an effective leader for your team. If you cannot manage you team, they will either leave you or worse they will stay (which means there not worth anything to you).

Below are the three most common attributes to poor leaders:

1. The “I will do it all myself” guy.

At some point, we’ve all seen this guy, heard of this guy or turned out to be this guy. This guy will do the sheet rock, fix the roof, collect rents and market the asset for resale all by himself. This guy is so smart he can do it all.

The problem is YOU CAN’T DO IT ALL! Not to say you cannot possess the ability to do it all. Even if you could do everything yourself, did you get into investing to do sheetrock? I believe the reason someone would feel this way is because this type of investor is afraid to trust others and has a self-confidence problem. There is no leverage at all in doing it all yourself. When you calculate returns on a project like this, the amount of your time and effort put in needs to be considered and this poor guy has put in way too much of both.

2. The “I don’t know how to do anything” guy.

This is the investor who doesn’t know how to do anything and has no interest in learning at all. This guy knows nothing about materials, timeframe, procedure or cost. You’ll know who this guy is by his glazed-over look and excessive head nodding.

The issue here is this guy garners no respect from his team or for his team. Either the team takes advantage of him or worse just leaves. You have to have a base knowledge of the job to garner respect from your team and respect the work they do. Ignorance is not bliss-it’s just stupidity.

3. The ” My guy will take care of that” guy.

This investor is the one who’s too busy for everything-eating, sleeping, drinking. Surely, he’s too busy to lead a team (which in all reality takes maybe 1 hour a week when done right). This guy expects someone else to take care of managing his team.

Well it’s impossible to get your team to do what YOU need them to do when they’re managing themselves. I suggest that this investor either get involved or seek out a financial planner then pray and hope for those wonderful 3% returns.

The point is you must garner control of your team and manage your team. Your team is what produces the return. The team you build is what makes or breaks your investment. They must respect you and most importantly want to see you succeed. Effective leadership is the only way to make this happen and it is truly what separates average investors from great ones.

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