So, what is it?
The #1 questions you want to ask yourself is, “Whom do you want to serve?”
I talk about it in a recent Periscope session. If you missed it, you’re in luck because we saved it for you. Watch now…
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If you haven’t downloaded the Periscope app to your phone, you’ll want to do that because I’m doing more and more sessions there. In fact, it’s fun for me to teach there, so you won’t see me stopping any time soon.
Go to www.periscope.tv/cashflowdiary and follow me. (I’ll follow you back.)
So whom do you want to serve and why should you care?
A lot of people go into business thinking “me,” “I” and “how can others serve me?”[tweet “Learn to think differently. Stop putting yourself and your needs first!”]
That’s absolutely the wrong way to approach building your real estate investing business. If you want to build your business and grow your lists of buyer, investor and seller leads (and get lots and lots of referrals), you need to figure out:
- Who you want to serve,
- Who you want to work with, and
- What types of properties you want to buy.
You have to understand the market in which you want to work, which includes the human beings… the real people… you’ll be working with. That includes sellers, buyers AND investors.
Everyone needs to be in alignment with your goals, which means you have to know your goals so you can share your mission so you can find other in alignment with what you’ve decided to do in real estate.
The person you work with drives the value of the property.
Value is in the eye of the beholder.
Just because YOU think a property has a particular value that doesn’t make it so. The people you are serving set the value.[tweet “Just because YOU think a property has a particular value that doesn’t make it so.”]
In Cash Flow Diary Land, we break markets into three categories:
In other real estate worlds, that’s known as “C,” “B” and “A” properties… in that order. By equating the property types to these stores, it’s easier for you to understand the differences.
This is important for you to understand because in each of these markets you will find matching customers (sellers, buyers, investors and renters).[tweet “Understand your market, your customer and your identity as an investor for sure success!”]
When you think of whom you want to serve, you get to choose. If you want a luxury customer, go for the Nordstrom market (but be prepared to give an incredibly high level of customer care – this customer expects the whole enchilada served on a silver platter and that platter better be real shiny).
If you choose to serve the Target customer, they are the average Joe, more or less. They are middle America and they don’t expect top-shelf service, but they do expect good service.
Wal-Mart customers have a completely different viewpoint. In this market you typically find lower-end properties (though actual Wal-Marts are in some really nice areas) – remember that this is just an analogy.
Maybe you need a little better explanation about this. If that’s the case, please go listen to this episode of the Cash Flow Diary podcast:
Your job as a real estate entrepreneur is to create value for other people.
To provide value to those you are serving means you have to understand what value is… and there are three types:
- Speculative – this happens in wholesaling where you buy low in hopes of selling higher to the right customers. (Again, here’s where you have to understand whom you serve.)
- Use Value – You are buying, holding and renting the property out, so how that property is being used has a value. If you are renting to a single occupant, the cashflow comes from that renter. If you are renting out per head or per bed, that is a big value driver. For example, if you have a group home and are renting per bed or you have a vacation rental property and you’re renting on the short-term. (To do any of these use plays, you must know whom you serve.)
- Investment Value – What is the appreciation in the property? How much cashflow can you earn each month? What other benefits will the deal bring your investor? He’s not just letting you use his cash and/or credit out of the kindness of his heart. He is expecting returns. So what is the investment value of the property? (Guess what you have to understand really, really well… Yep, whom you are serving, which includes the investor!)
One of my first eBooks was on the topic of understanding your customer… your Investor Identity. But that’s only available to Cashflow Core Members now, so maybe you can learn more about it by reading this article.
It’s pretty good and it’s not a long read, so give it your attention. Learn something new or improve the understanding you already have…
In the article you get to know Hayya, a student who grasped the importance of understanding her customer really fast. In fact, it took her maybe two weeks of starting the Deals at Discounts video course to get out there and start making offers.[tweet “Wanna earn $85K in 4 months like one of our students? You can!”]
Understanding whom she wanted to serve was exactly how she went on to earn $85,000 (yes, with three zeros) in just four months. (That was last year. You should see her now!)
Well, you can read so I won’t retell the story to you here.
Before you get the property you will need to raise the capital for it.
Not to harp, but here again if you want to raise private capital for all your deals you are going to have to ask yourself whom do you want to serve…
Investors must be in alignment with the type of deals and properties in which you are interested.[tweet “Investors must be in alignment with your vision and goals!”]
If you like high-end luxury properties in southern California and you’re seeking a couple of million dollars to get a deal done so you can flip the property and make a large chunk of change or you’re wanting to hold onto the property and rent it out as a corporate event location, your investor has to be of the same mindset.
You can’t go to an investor who likes to fund apartment buildings in a lower-end area in Tennessee or Texas and expect him to want to work with you. You two wouldn’t be in alignment.
If on the other hand you like to provide clean, safe, affordable housing to people in Wal-Mart areas, this may be the right investor for you. At least you two can have some good conversations to get the ball rolling.
And if you want said apartment building and you find the right investor who is in alignment with your vision and goals, the next step is to find the right renter.
It goes back once again to the “whom do you serve” question.
Go here if you want to see a quick video about why answering this question is so important… if you want to quit your day job and earn real income as a real estate entrepreneur.
In short, if you want to keep your apartment filled year-round, you have to market your building to people who are in alignment with that type of living situation.
It’s a sure bet that you won’t fill your “Wal-Mart” type units with high-end luxury customers (a.k.a., renters). You will fill the units likely with blue collar workers who may or may not have vehicles, who might need to live near a bus line, and maybe even a few Section 8 renters (if that is part of your Investor Identity and that who you want to serve).[tweet “To succeed in business you must understand whom you serve!”]
If you want to rent to big corporate executives who earn 8-figure incomes, you better understand what type of apartments they rent and why. Then you’ll know how to market to them and the type of property management team you’ll need. (See? It’s the tip of the iceberg and all of it starts and ends with knowing whom you serve!)
Now that you understand a bit more about the 1st question you need to ask yourself to create the success as a real estate entrepreneur that you seek, I have a question for you…
Have you checked this out yet?