Mastering Business - Written by Mentors Elmer Diaz and Tony Reaves
In our Road 2 Success Real Estate Success model the core is Real Estate. Real Estate provides the instrument and products to become wealthy. Our Road 2 Success program teaches, The three stages of real estate investments, we call our exit strategies.
- Flipping – Selling properties
- Keeping- Holding properties
- Lending- Private loans between you and other people.
Marketing is another segment of our business model that many of us focus on. Often to the exclusion of what is most important - You the Entrepreneur.
As an employee you don’t have to worry about meeting payroll or the many functions of a business owner; you are there renting your time to the business owner for a fee. As a real estate investor you must start thinking like an entrepreneur, like a business owner. Entrepreneurs and business owners focus on projects, which result in the creation of time and money. The entrepreneurial mind will take you to levels of creativity that will be necessary to solve problems. An entrepreneurial mind will find solutions for needs. Entrepreneurs are go getters who go and get whatever they need to get things done.
Remember, you are in business for yourself, it is up to you.
You as the business owner must also focus on three areas:
- Mastering Taxes
- Mastering Legal Issues
- Mastering Business Management
As the CEO your business is no longer just tenants and toilets, contractors and contracts.
It now consists of the following:
- Managing Task and People
- Doing a Business Plans and Marketing Plans
- Becoming a “Financial Analyst” You will need to work with financial reports, cash flow analysis-projections, etc. These will help you determine how much revenue you must generate to pay your overhead (the cost to operate your business). It is wise to be conservative on anticipated revenues and the lead-time it will take to reach a break-even point, etc.
- Incorporating into your strategies: ideas, products, and services.
- Managing your time wisely
- Creating your own research and development department
- Learning how to use “entities” in an effective way for minimizing taxes and lawsuit protection. Your legal, tax, accounting, and financial advisors are very important.
Below is your ideal Road 2 Success model as an Entrepreneur:
Your job as the Entrepreneur is to Minimize, Cover and Build.
As your business grows, it is essential to maximize your wealth by:
- Minimizing your Taxes
- Covering your Assets
- Building your “Dream Team”
Minimizing your Taxes and Covering Your Assets:
You have to plan and implement your tax strategies and asset protection and preservation plan through competent financial planners, CPA’s and Attorneys to explore your options for entity structuring. It is imperative that you understand the relationship of one of the entities with the other. The way in which they relate to each other will help you on your way to creating wealth.
For most investors the first entity you create should be a Limited Liability Company. This should be used to manage and sell properties quickly. The Second - once you start making money with real estate should be for keeping properties for long term cash flow and equity build up. For that you will need a Limited Partnership or a Family Limited Partnership. Your third and final entity for estate planning should be a family living trust.
Building Your Dream Team
Building a team does not mean becoming a tax expert or a lawyer; this is not the best use of your time. Being an expert at carpet installation is not the best use of your time either. Learn enough about the basics, contract experts to do the work. The hourly rate that you pay for someone with years of experience will more than pay for itself. A good business person understands that you can’t do it all –and probably shouldn’t.
Once you fully understand the business that you are in, focus on building your dream team. This team will help you accomplish your real estate investment goals. Initially, your team will be professionals such as lawyers, accountants, real estate agents, etc. You rent their time for a fee and you aren’t their only customer. Eventually, you will have your own team of people working for you, either part-time or full-time. Some of them will be your employees and other will be commission-based subcontractors or associates.
Be careful as you build your dream team. You will have to learn the basics of each trade so that you can lead your team and ask the right questions when interviewing. When it comes to people be slow to hire and quick to fire. When it comes to employees, there are no guarantees. You will be working with many different personalities and many different trust levels. Above all watch for the right attitude. Avoid those with a “can’t do”attitude.
Who should be on your team?
Initial List
- Acquisition Specialist – A hybrid between a bird dog, a scout and real estate agent. He or she will be in charge of looking for good deals, but you can also train this individual to be on the phone bringing leads or page through the MLS
- Personal Assistant/Manager – This person will help you with the many tasks of running your business.
- Foreman – This Key individual will help you on the street with multiple tasks. He or she will be in charge of the rehabs, maintenance and emergencies. Supervising contractors, coordinating purchasing etc.
- Retail & Leasing Agent - This individual will help you with the exit strategies of you plan, whether that is retailing and or renting properties.
- You – The decision maker and the one who signs the checks.
How Should You Be Organized?
The following is a functional organization that we recommend in our Road 2 Success business model.
We wish you the best of luck in your business ventures. Remember the Road 2 Success is easier with a Guide visit us at Yourlearningcenter.com for more information.
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