It’s tough for real estate investors to pass up opportunities – it’s in our nature to look for new ways to be successful, and sometimes, we just want to try everything! But today on Financial Freedom Friday, Matt shares the benefits of resisting new opportunities in favor of going deep before wide. Learn 4 specific things you can do to set yourself up for success in future properties, markets, and asset classes.
What You Will Learn About Going Deep Before Wide:
- What it means to “go deep”
- What to do with your first investment property before expanding
- How to avoid making real estate investing an “unfun” experience
- 4 things you can do to ensure you will go deep before wide
- How to prepare yourself for success with multiple properties
- What to do with your market and asset class before starting in another
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Matt Theriault: Hey, Matt here at Epic Real Estate. Welcome to Financial Freedom Friday.
Speaker 1: It’s time for Financial Freedom Friday with Matt Theriault.
Matt: This last week I just got an email from Mike. He’s a podcast listener. He asked me a really good question, a really simple, basic question, but it’s really good because if you get this wrong, you’re entire real estate investing can just go right down the toilet. We don’t want that. I wanted to address this with everybody because you might have the same question as well.
Mike had asked me, “Listening to the last podcast, I have a question. What do you mean by going deep before going wide?” Mike, he says, “I recently bought my first investment property. Are you saying learning the business ins and outs with this property before I go buy another? Focus on this property, don’t go buy another property too soon?”
Yeah, kind of. That’s a great question Mike because as entrepreneurs, real estate investors and entrepreneurs, we have this desire inside of us. It’s just part of our DNA that we just want to go further faster than anybody else. We just want more and more and more. This is good, this must be better. How fast can I get to the top so I can have it all? That can be really dangerous if you’re not careful with that. It can be a blessing as well, but it can be dangerous.
The other part about us as entrepreneurs is we look at everything as an opportunity. When these different opportunities come along, we have this fear of missing out. “What if that’s going to be good? What if that’s going to be the winner? What if this is going to be more profitable?” We end up saying yes to all these little opportunities and all these deals that come our way. What happens is our attention, it starts to get dispersed over all these different opportunities. Our attention gets wider and wider and wider. That’s a really scary place to be if you didn’t do it right up front.
When I say go deep, I’m talking about basically doing it right the first time before you go take a second stab at it. For example, with your property, Mike, I’d make sure that the property is in good condition, everything is functional, everything is working, everything is safe, everything is up to code. Just make sure it’s a really good solid property. Then you want to go out and find a really good solid tenant. Do almost as due diligence, within reason of course, but do as much due diligence on the tenant as you did the property itself because you want that to be a good stable, a good paying tenant that’s going to cause that property to perform for you.
Then whether you’re managing the property yourself or you’re having somebody else manage it for you, you want to make sure that you get all of those systems in place, or your property manager has those systems in place so that it’s running as passively as it possibly can. No piece of property is ever 100% passive. It involves people. It involves houses. Things happen. You’re going to have to get involved here and there every once in a while, but you want to make sure that all the systems are in place so the property’s running in the way that you would had expected it to when you purchased it right up front. If you don’t have good systems in place with one property, with one deal, by adding a second, it’s not going to make it any better. It’s actually going to go the other direction.
The more and the more you add without the good solid systems in place, without the good people in place, without the good tenant in place, without the property in place, real estate investing can actually get rather unfun. It can become a miserable experience if you don’t do that right if you go wide too fast. Definitely with that first property just get it performing the way you want it to before you get the second one.
The second is look at your teams. You got contractors and you got realtors. You got property managers. Really go deep with those relationships and get a good relationship of trust. You want competency. You want a good history. You want a good experience. You want their expertise. You want that one person. Whoever it’s going to be, find that one person, the good one, first. For example, if you’re out there and you’re fixing and flipping properties and you got two mediocre contractors working on the two different properties, that’s not necessarily better than finding that one contractor to work on the one property. If you go wide too fast that way with your teams, that can become a lot of problems as well.
The third thing would be to go deep on your actual market. Mike, if your property’s in a specific market, obviously it is, just make sure that you understand that market and the nuances of that market because real estate, it’s all about location. You’ve heard that before. Location, location, location. It’s all about location. It doesn’t have to do with the value. It has to do with the performance of the property as well. Little nuances. Local knowledge. Get to know the area. Get to know where the dangerous places are, what to do, what not to do, where the school systems are good, and just where the streets are safe and where the tenants are employed, and all that. Just get to know the market really quickly before you go out into another market.
Fourth thing would be asset class. Now you’ve got a single family residence and now you’re going to jump into multi-family. Then you heard somebody else was having a really good time flipping land, so you go over to flip the land. Then you heard about the storage facilities. Then you heard about the mobile home parks. You start going all over the place and have all these different asset classes. That’s okay. It’s okay to diversify in that fashion, but make sure that you really understand how your single family house works first before trying an additional asset class. If you go into something like mobile home parks, that’s like a business within a business. That almost could be like a business within a business within a business, so there’s a lot of nuances there. If that were your second choice, I’d want you to go deep there. Get that running functionally and to your expectations. Just in the same way your single family is running for you, because you went deep there, do the same thing with that next asset class before adding that third and the fourth and the fifth.
That’s what I mean by going deep. Just make sure that you get everything working in the way it’s supposed to the first time so when you add a second one, it’s better, not more complicated and more of a headache. Make sense? Thanks for the question, Mike. I will see you next week on another episode of Financial Freedom Friday. Take care.