Scale Your Real Estate Investing and/or Business with Systems!
Running a successful real estate investing business takes work. But it may not be the type of work that you’re imagining. I’m going to pull back the curtain and show you exactly how the wealthiest and most successful real estate investors spend their time in their business so that you can copy it!
If you saw this video I made for you on the Wealthy vs the Employee Mindsets, you’ll remember how, to the wealthy, the most important currency is time. That means they refuse to trade their time for money. And the most efficient way that they found to protect their time are business systems. As you make your own trek from the employee mindset to the wealthy mindset, you'll use hundreds of business systems every day. Creating that switch in your mind from employee mindset to wealthy mindset will help you avoid common entrepreneurial mistakes, like forcing yourself to stay in the weeds with your business, and doing things you can easily hire people to do. As a wealthy mindset business owner, your most important job is to realize the vision of your company and capture that direction in the form of business systems, and then hiring people to carry out the menial day-to-day work, or complicated tasks that would better suit experts, like accounting or bookkeeping. By freeing up your time in this way you can focus on expansion and growth. All too often I see entrepreneurial spirited people pigeonhole their businesses into small-time operation because the person at the helm insists on spending their time swingin the hammer, or flipping the patty, or sweeping the floor, or reconciling the books, all in the name of saving a few dollars, rather than spending their time moving the business to greater heights that would yield infinitely more profit.
The best way I know of to keep the ground-level business operations running smoothly, so that you can focus on bigger, better things, is through the use of business systems.
I live in the United States of America, a country that has some of the greatest examples of business systems in the world. One of my favorites is McDonald's Corporation. Not because of their food, but because of the way that business is run.
McDonald's is the number one holder of real estate in the world. There's nobody that owns more of this planet than McDonald's. That feels kinda weird to think about! It's the number one restaurant by revenue in the world. They feed 1% of the Earth's population a day. There's about 100 people in this room. That means several of you guys ate McDonald's today. It wasn't me. You know who you are…
Why do we eat there? Because it's just the best hamburger you've ever had in my life, right? Ehhhhh…… No, why do we eat there? It's convenient. It's cheap. It's fast. It’s consistent… You could order a Big Mac in New York and a Big Mac in LA and they would taste the same!!! How is that possible? And yet, you could walk into any McDonald's in the entire world, and you'll notice something very interesting… Most of the employees are under the age of 20.
So, It's the largest real estate in existence, and it's run by teenagers. How is that possible? How is any of that possible? The answer is systems. If you want to work at McDonald's, there's a training system and a handbook that's about yea thick that you have to read and understand. There are systems for opening the restaurant in the morning. Systems for cleaning. Systems for cooking each one of the menu items. Systems for how and when employees take breaks. Systems for closing up shop. Systems for product delivery and storage. There is literally a system for each and every task for each and every employee for each and every day!
Consider this in contrast to the entrepreneur who opens up a restaurant in their home town. Who is the first one there every morning to open the doors; who is the one sweeping and pulling the chairs off the tables while the other employees arrive; who is the one who covers for employees, flipping patties and shaking the fry cage, while workers take their breaks; the last one there sweeping the floor, wiping the tables down and placing the chairs back up on the tables; locking up at night only to return the next morning to do it all again. That business owner is relegated to those tasks for the rest of their career, unless their mindset changes. Worse still, the scale of their business will forever be limited to one location, because the captain has chosen to take on the role of the deck hand.
Systems or self. Which type of business do you want to run?
Fix & Flip System
We use systems every day in our fix and flip business. In fact, that is Maeli’s and my defined role. We don’t swing a hammer. We don’t do landscaping. We don’t clean or stage the properties. We are constantly engaged in creating and perfecting our business systems, and finding qualified individuals to carry them out.
One of the disservices that the popular Fix & Flip TV shows do for aspiring real estate investors, is, for example, if the couple wants to put granite in the house, they'll take a little field trip down to the granite store and look at the different slabs and how they're polished, and how they’re cut. Or they'll take carpet swatches back to the property, and they'll go through each carpet option: “This one matches the trees outside, we should put this carpet in…” That takes so much time!
We put the same crap in every house! Now, it's beautiful crap. Don't get me wrong. And Maeli spends a lot of time making sure that our template system is up-to-date and trendy. We go to the Parade of Homes every year, and we pick out all the stuff we're going to put in every house that we do for that whole year. And then it's the same stuff in every house.
This gives us several advantages! We can buy it all in bulk. We buy tile by the pallet. I never thought that my relationship with tile would be measured in pallets, but we just bought a pallet of tile. And it's because we're going to be putting in ten or more different houses. Because we buy in bulk, we get a discount. It's a lot less expensive when you buy your material by the pallet than when you buy it in a box. This system saves us time too, because we don't have to explain to our contractors what goes in the house. They already know! They know the paint color, they know the tile, they know that down to the model of toilet that we put in every bathroom. And if they forget, it’s written down in a system that they can easily reference. Systems save us money, they save us time, and most importantly, they allow us to scale our business.
As you journey through real estate investing with a wealthy mindset. you're going to be using hundreds of systems every single day. But you know what, there are four business systems that we use more than any others, we call them the Four Pillars of Wealth. These four pillars of wealth are taxes, banking, business, and real estate. As you learn about these four business systems, and start to apply them in your life, you can own anything you want. You want an apartment building, you can own an apartment building tomorrow. I know what you’re thinking: “Wait a second, I got $100 in my checking account and my credit sucks. How am I supposed to buy an apartment building?” Well, that's how we were taught how to buy stuff in our employee mindset. Building in a wealthy mindset. When you understand how to use business systems, you can buy anything you want. It doesn't have to be assets, either. It can be liabilities, you want to jet by jet. You want to have your dream car?
Let me share a story with you of how my wife, Maeli recently purchased her dream car. A 2021 Audi SQ7. A three-row luxury SUV with a twin-turbo V-8 engine putting out 500 horsepower and 568 lb-ft of torque. A final price of $111,000.
Now, most people have been told at some point in their life that buying a car cash was the smartest way. I know I was told that. And on the surface it makes sense, so I believed it, as I’m sure you did too. However, if you do the math it’s actually not very smart at all. If you were asked to make a cash investment of over $100,000 with the promise that in 6 years it would be worth $40,000 you would never do that! But somehow we just accepted that it was smart when we attached the idea of a car to it. Let me propose a different way…
Maeli knew what she wanted. She knew how much it was, and she made a game plan to save $111,000 through our fix and flip business. Once she had the money saved up, rather than stacking cash into a briefcase, handcuffing it to her wrist and walking into the Audi dealership, she identified what she refers to as “The Audi Property”. A 3200 square foot single family house in Roy, Utah. She brought her cash to the table, found an equity partner for the rest of the down payment, and negotiated seller financing with the seller of the property to pay them over time for the house, rather than having to get a mortgage. She found competent licensed professionals and set up the property as a home for disabled young adults. This deal brings in $2200 a month in cash flow. She used the bank's money and completely financed the Audi on a six year loan, which demands a roughly $1600 a month payment, and is debited from the cash flow each month. Her tenants pay for her dream car!
Now, at the end of 6 years, rather than having paid $110,000 cash for a car that is only worth $40,000 (as the prevailing knowledge would have us do), she will have a paid for dream car, increased cash flow, a real estate asset AND the original $110,000 wrapped up as equity in the property.
It’s amazing the impact a little bit of knowledge and the right systems can have on your life!
Of course, there is risk in real estate. And I’m not your attorney or your accountant, so I’m not qualified to give you direct advice that would be applicable to your exact situation. These are just some of the things that I’ve picked up along the way and have found success with. There are ALWAYS risks in any of these strategies, so make sure you’re educated before you go out and try any of them on your own!
A great place to start is our weekly live education webinar! Get access to our nation-wide community of real estate investors! We meet on Zoom every Wednesday at 7pm Mountain Time for exclusive trainings, real deal walkthroughs, question and answer, guest speakers and all around real estate investor shenanigans. Beginners, experts and everyone in between is invited. Just go to www.MitchAndMaeliLIVE.com Wednesday at 7pm MST. There is no better place to start getting your investor legs! Best of all - we made it FREE just for you! Can’t wait to talk with you live!
I’m curious what you thought of this Article. If you have any thoughts you’d like to share or if you would have done things differently, please reach out and let me know! I’d love to hear from you! We’ll be bringing you some more amazing content very soon! See you on the flip side!