This is the show.

This is episode 2052. This episode’s topic is called Institutionalizing the Operations Portion of your Real Estate Business. This is a five-part series from Monday through Friday. This is number four. We’re talking about the five phases of your real estate empire. On Monday, for a recap really quickly, we talked about nailing down the basics. On Tuesday, phase two, we talked about putting your land business on autopilot, the operations portion.

On Wednesday, we talked about expanding your land business into other different real estate types and really taking a look in the mirror at what you’re good at and where you can use improvement. In this episode, we’re talking about institutionalizing the operations portion of your real estate business. I’m going to quote a movie on this topic.

In the movie Caddyshack, there’s a very wealthy guy teeing off with one of the other cast members in that movie. The cast member says, “What do you do for a living?” He said, “I own a bunch of lumberyards, but I’m not really sure where they are.” That’s what this episode is about. This is about institutionalizing the operations portion of your real estate business to entirely and completely free you up to make whatever magic or special sauce happen that makes you very successful in real estate. It could be your dynamic personality on their phone, like Jill.

If I said to Jill, “In an effort to institutionalize the operations portion of our real estate business, I would like to replace you with two other people,” she would hit me over the head with a clipboard and would say, “Why would you ever want to do that? I’m good at it and I like it. That’s it.” I’ll then say, “How about we institutionalize in the operations portion for anything to do with the actual transaction, like closing it and doing the research to get a real estate agent?” She would give me a big, huge kiss and a hug.

We’re past that. We have institutionalized our business and removed ourselves entirely and completely from the things that don’t create the magic. I was tired of doing mailers several years ago, so I created Offers 2 Owners. Those guys do my mailers under my direction. That’s how you should use it. You should never completely outsource it because there is a little bit of magic there.

Discord Question

We do want to answer a question from a member of ours in our Discord community. Jesh wrote, “Looking for a funder. We have 5.58 acres under contract in Blank County, Indiana. We have it under contract for $70,000. According to a local agent, it will likely sell for around $120,000.” Buy for $70,000 and sell for $120,000. I hate this, whatever this is.

I wonder if we already used this question. We’re going to do it again.

“The sell-through rate for the county is somewhere between 0.8% and 1.1%.” That’s so subjective but whatever. I’m looking for more in-depth comps, not just this county. Jesh said, “The seller tells us he purchased the property 12 years ago for $95,000. It’s across the street from a Walmart Supercenter and a Home Depot. It’s zoned residential and close to many SFRs, but also adjoins a commercial district. Please let me know if you’re interested in funding or would like to learn more. The details are here.” Why is this question here?

This is the kind of stuff that goes on in Discord. I am sure when you start to talk about buying a property that’s adjacent to Walmart and Home Depot, and I wish I could convey on this episode the screenshots, this is an amazing deal. This is an absolutely amazing transaction from start to finish. I’m sure it’s funded and probably acquired by now. The sell-through rate, which Jill didn’t want to hear about, is something that makes sense to this person and probably will attract a funder that it makes sense too.

When you’re looking at new areas, you’re looking at, “Look how many properties are listed. Look how many are sold.” I do look at that, and I look at, “How many sold in the last 30 days, 60 days, 90 days, 1 year, or 6 months?” I play around with a lot of different numbers. That makes a difference to me going into it. When I’m staring at an actual purchase agreement with an APN and a price on it, I don’t want all the numbers in the whole county. I’m zeroing in on that ZIP code.

If I can get even closer to that part of the city, I’m going to look at that. In this example, instead of the sell-through rate for me for the county, I’d like to see the lot next door that sold two years ago for $200,000, the lot across the street sold yesterday for $300,000, or whatever it is. You got my attention. That’s what I like to see. I’m sure other funders appreciate that as well.

Institutionalizing The Operations Portion

It is Thursday. We’re institutionalizing the operations portion of your real estate business. To me, this is fourth gear. You got the basics of your business out of the way. That’s first gear. For second gear, you’re finding your groove. You’re on autopilot. You’re creating systems or maybe building out a team. That’s that second gear. For third gear, I can come up for air and go, “I’m making money. Where else should I be putting my money? I am growing the business.” This is the fourth gear or phase four. To institutionalize an operation, to me, says, “This is now how we do business.”

You’ve got the right people in place. You’ve addressed staffing issues, which you’re sure to have, turnover, and all of that stuff. It’s past it. You’ve got the right people in place. We have a transaction coordinator who has been with us for years. Her name’s Jan. She’s the one that is the transaction coordinator for everybody who’s in Land Academy Pro. I can’t imagine doing a transaction without her and neither can anybody else in LA Pro. We have passed through phase four here largely because of her and people like her who work for us.

Here’s another thing you can think about. Who’s doing your data? You’re still in front, like our business, picking the areas, deciding what to do, pricing, and that stuff, but for the actual work part of it, you’re way past this. You are going, “That’s our person. Send it over to the concierge,” or, “Send it Joe,” or whoever it is on your team. Maybe they’re going to go on every Monday, and then by Wednesday, they have it for you to review because that’s part of your system. You review it and then the mail goes out on Thursday, Friday, or something like that.

You’ve been using the same tax guy every year for a lot of years or however long and you’ve settled into the fact you’re a business owner and you’re comfortable. That’s the good news. The bad news is you’re too comfortable.

It is good news to use the same tax guy every year for a lot of years. The bad news is you are too comfortable. Share on X

Have you been in that situation?

Yeah. It has bitten me hard.

I do remember that. I’ve heard stories about that. It changed when we got together.

Episode Wrap-up

Jill changed all that. Jill came in and rattled it all up. She said, “Are you kidding me? This is what we could be doing, and it’s not really any work.” She was right. I fought it for probably a good two years. This is leading me into the next episode. Let’s do that. Join us in the episode where we’re going to discuss the fifth and final stage of building your real estate empire. It’s called capitalizing on the ever-present industry and cultural changes, not comfort changes, in real estate. You are not alone in your real estate ambition. We’re information and inspiration to buy undervalued property.