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Being good at a lot of things is one way to end up broke. That may sound counterintuitive, but have you ever heard the expression “Jack of all trades, master of none?” The problem with being a jack of all trades is that the masters are the ones making all the money.
Many real estate professionals, lenders and investors want to make money wherever they can. They want to make everyone happy and work on any deal that has profit potential. But is this the best for their bottom line?
When I started my company almost 10 years ago, I was a licensed Colorado Mortgage Broker. I was raising private money and lending it out to real estate investors and I was originating conventional loans. I was easily working 70 hours a week — and I had a newborn at home. As I learned more about business, I decided to track my time and compare that to my income. The results were astonishing. It was hard for me to believe that 80% of my time was spent trying to close conventional loans, while conventional loans only accounted for 20% of my income.
I had already learned this lesson once through my real estate investments, but apparently, I needed to learn it again. When starting my real estate investment business six years earlier, I was having a real hard time getting momentum. My offers were not getting accepted and I did not know what direction I was headed. Once I shifted my focus to lease options, I started closing a deal or two a month.
Simply focusing on a niche changed everything in both my real estate investment and my private lending businesses. Whatever your area of real estate expertise, you can leverage the power of a niche by taking similar steps.
Focus On A Strategy
Once I started focusing on lease options, I started bringing in enough money to quit my day job. I also noticed how clear my direction was, which gave me both motivation and confidence. You see, I became the expert on this strategy and felt confident that I could buy a house every time I went to look at one. I got good at negotiating this strategy and very good at pulling in leads. Because I was a master at it, I attracted people who I could help, and they wanted to work with me. Once I was an expert and mastered this strategy, I was more comfortable expanding my business to fix-and-flips and wholesaling. This is going to hold true for any business.
Think about any successful business. They all have a niche, or at least started with one. Apple was the home computer (and then MP3 players and now phones), Xerox is copy machines, McDonalds is cheap hamburgers. Think about when you go out to eat or hire an attorney or see a doctor. You don’t want someone who is good at a lot of things; you want the best at the one thing you are looking for. It may be harsh, but there is a reason a specialist makes more money than a general practitioner.
Focus On An Area
Another way I see investors dominate and make a killing is by narrowing their investing area. Maybe they are comfortable with many buying strategies but become well known as the expert in a certain part of town. I am thinking of the real estate agent in my neighborhood who I would call if I wanted to sell my house: the one who I’m certain knows the area better than anyone else and the one who has sold the most houses in my neighborhood. That is who I want working for me. A developer client of mine has focused on a specific neighborhood in Denver where his team knows every house or lot that becomes available, often before it ever hits the market, because all the agents and professionals in that area know he is a serious buyer. If he sees a deal, he knows in less than five seconds if it is one he should pursue, based on his knowledge of values, construction costs and city requirements.
The bottom line is that if your offerings are scattered or you find yourself always chasing the shiny object, you are doomed for mediocracy — or worse in business, failure. Once you can find and stick to a niche, you will see success. That does not mean you cannot change your niche as you progress through your career — Apple is a great example of this. In fact, adjusting to the market, your strengths, your passion and the market demand is a smart way to improve and grow your business.