3 More Mistakes Investors Make in Scaling Up Their Businesses

A few articles ago I covered 3 common mistakes that Short Sale Investors make in building up their businesses.  There are so many critical factors involved that we decided to cover three more mistakes that can keep the Investor from successfully expanding the business.  They are:

1.  Failure to use the Internet for marketing.  Remember, most people will check out your business online before they ever decide to do business with you.  It is critical to have not just a brochure-style website that tells about your business, but also a blog that covers news and suggestions for Buyers, Sellers and potential Partners.  There should be a single-focus landing page, or squeeze page, for every niche market you are in that will gather up contacts and potential clients.  The squeeze will be different for Sellers than Buyers, and may even vary for Sellers and Buyers with luxury homes compared to those that will appeal more to owners in blue collar or white collar neighborhoods.  There should also be different pages for markets in different cities.  The more targeted you can be, the more successful your online marketing will be.

The more you use video in your marketing, generally, the more successful you will be as well at building a base of Buyers, Sellers, Agents and Lenders who know, like and trust you. You’ll need to keep the conversation going with the people on your contact list by constantly updating listings, creating a social media presence, and corresponding via email through an autoresponder.

2.  Failure to find private money or negotiate a line of credit from a bank.  A pre-foreclosure business can coast for awhile on limited funds by plowing a good portion of each profit check back into the business. It is hard to reach the next level, however, without some private capital or a line of credit.  This transition to needing outside money commonly takes place at the time the Investor outgrows the home office and needs to take on staff.  The responsibility of paying staff or contractors on a consistent basis brings up the need to have a supply of ready cash when the money coming in from deals suddenly dries up.  To see the business through those rainy days it is important to have some lines of credit or a source of private capital for your business.

Eventually, the Short Sale Investor will probably also want to hold some properties, and that will take some cash.

3.  Failure to diversify into other real estate Investment strategies.  Short Sales will be a strong source of business for many years to come.  But it is important to focus on more than one strategy.  As you grow the business it is critical to your survival to develop multiple streams of income to make sure there is an ever-increasing cash flow into the business.

Most Short Sale Specialists will eventually decide to hold on to property that is particularly attractive for rentals, or will add other types of wholesale work—probate, REOs, bankruptcy leads, buying and selling notes—to supplement the income from the Short Sale business.  As you grow in experience and income, analyze your marketplace and add another strategy or two that make sense for your business.

Use the Internet to dominate marketing in your area, find private and Lender sources of financing, and add multiple streams of income and you will go a long way toward taking your business to the next level.