Scale Quickly By Avoiding These Common Real Estate Mistakes

Mike DeHaan: [0:00] What is going on, guys? Welcome back to today's episode of the Collecting Keys Friday Focus. My name is Mike DeHaan, and I'm the guy that jumped from his engineering w two with no real plan back in 2018. Went from making 6 figures to literally barely 5 figures doing odd jobs and driving for Uber. And now I have a 7 figure real estate investment business, and I own about $14,000,000 worth of real estate. And on this show, the collecting keys real estate investing podcast, we teach you how to make massive income, not just passive income for your real estate investing. And on these Friday focus episodes, these are short episodes where we do a deep dive into something from the community or that we saw on Instagram or social media or somebody DM'd us about or whatever. And on this episode, I wanted to touch on something that has kind of the inclination to be maybe a bit close to home for a few of you newer investors who are still fighting through those New Year's resolutions. And, you know, good for you if you're still hanging in there. You're continuing to make strides towards those goals. But that topic is what I wanna dive into is what are the three biggest mistakes that small real estate investors make that are preventing their growth? And so this is a really common thing that we get right now. People are trying to scale their real estate businesses. People are getting started in real estate in general. And it's kinda like, why am I not going faster?

Mike DeHaan: [1:18] What are my major problems? These are the three ones that I see most common. So let's dive into it. Number one, they are buying too many rentals. Okay? One of the biggest things that a real estate investor can do when they're starting out is buying too many rental properties. Okay? And that sounds kinda weird. You're an investor, you're gonna have to buy rental properties. So that means... Let me explain this. Okay? So I get it. Cash flow is sexy. It's also something that you're probably over calculating as you pretend that so much of a deferred maintenance that you will have in the future isn't going to exist. Right? Or it's your future problem, and you probably are discounting how expensive is actually going to be to fix those things when they pop up. And, you know, like, the cash flow numbers that you're expecting probably won't come to fruition. And so buying these rentals, accumulating assets is important, but not when it'll take all of your capital and hamstring your revenue growth. It's a really common thing I see people do. They get excited when the leads start to come in, and they take all the money out of their business and throw it into rental properties. And it's kind of because there's this funny thing that happens when you start where there's this scarcity mindset with new investors that they think that every decent sort of opportunity that comes across their plate is like a once in a lifetime deal. And as someone who has done hundreds and hundreds of deals, I will tell you there's always more opportunity, and more likely you will find even better deals in the near future. And with just the way the universe works, right, the second that you over commit on one deal, you know that a better deal is gonna come down. That's just that's the way things go.

Mike DeHaan: [2:44] Right? And so, you know, all this being said, it is important to be buying assets, especially discounted assets, one of the greatest ways to increase your network... Net worth. But if you don't do that, like, kinda what's the point? Right? But you should make sure that you are buying it with your surplus capital that you're generating from your business or or from your income, your w two, whatever that is. And that you're looking to invest like that extra money, and that you're not stripping your business bear in losing your entire sort of growth opportunity and not accounting for opportunity cost. Super common thing happens very, very often. So don't be that guy. Second thing that people do is they outsource and they hire too slowly. Okay? And that's right. You heard me on this. The old sort of adage is you should hire slow and fire fast. But honestly, fuck that. Right? When you're a small business, you need to hire fast and fire faster. This is something that I really firmly believe in, and I have taken into my scale community that we run, as well as talking to a lot of other new investors. Because, you know, one of the quickest ways to grow is to hire people to do the things that you are bad at, or that you are simply not doing. You know, they also don't have to be like the best person for that job.

Mike DeHaan: [3:58] They just have to be better than you are, and more committed to putting in the time than you are. Like, honestly, with a lot of jobs, especially with like some of the sales of all jobs when you're getting started, it is better to have someone doing the job kinda just like okay. Obviously, I want someone that sucks, but I'm assuming kind of okay, than having you not doing it at all, which if you're more of like the introverted type investor, which is a lot of people be included on this, believe it or not, that's probably your biggest hiccups. You're not doing the sales tasks. Right? So finding that person to come and fill that role is really, really important or vice versa. If you're really good at the sales, but you're never running your marketing and your data because you you hate it. Having someone that does that, even if they're slow, even if it costs you money, even if you have to, like, spot check at different things, that is better than having it not happen at all. Right? You know, here's the thing. Like, top notch talent is great. But honestly, if you're new, your first, like, one or two or five or 15 hires will not be the ones that take you to 7 figures and beyond in this thing, right, or really in any business. In reality, those people will probably be gone in six months if you're lucky. In our four years of business, I have had almost 50 people come through my companies. K?

Mike DeHaan: [5:09] 50 people between VAs and American staff that have come in and worked for us. Some of those people have lasted for years. In fact, we still have some of the ones today. Other ones will come in and last for days. I literally made it when I say we fire fast. I think the quickest we have been able to gather those stuff for three days before we let them go. The key is that you get people in to do your weaknesses, so that you can focus on your strengths and the things that will actually grow you. Okay? So number two thing is they outsource and they hire too slowly. And then the last thing, and this is I would say honestly, one of the most common is they ramp up their marketing too slowly. And this is such a weird sensitive thing whenever I bring some with people. You know, and it's crazy to me how many investors I meet that they get things going, they're starting to make some moves or getting traction. They finally have their first big month, they make like $40.50 grand, $100, whatever it is. And they go right into the next month with their little shoestring budget that they've been running for the previous six months of like $2,000, and are just hoping that the next big month happens again. It already took you six months of $2,000 a month in marketing to get that first big month.

Mike DeHaan: [6:17] Right? If you make $50 after doing six months of marketing at 2 k a month, like, you didn't make, like, it's not really a 50 k a month. Right? It's really like what's that $8 a month from the last six months. We... Which is great. That's cool. You know? But that's no way to grow a business. I'm always like, dude, what the heck are you doing with all that extra money? You wanna replenish the coffers? That's cool. But what you should be doing is taking a big chunk of that and just throwing it into your systems and your marketing. Specifically, your marketing. You know, not building a CRM, not like going and doing whatever else people do, but, like, actually throwing into your marketing system to try and get more leads, you know, and thinking, oh, I don't have the system for that yet. It's like, I don't care. Get the leads coming in, see where the wheels fall off. And then after that, once it starts rolling, can start hiring and systematizing from there. Right? Like the difference in systems you need from like say $2 a month to honestly, would say like 15 or $20 a month. Is it that much? If you have a decent CRM, which I recommend already simply if you're not using that or trying to bust something else. You have a decent CRM, and you have like, a follow-up person, you can get pretty dang far up to like a $1,015,000 dollar a month marketing budget, depending on what you're doing. Okay? So like, you don't need to get complex, but so many people, they just really hesitate to pile it in.

Mike DeHaan: [7:34] And I understand it hurts to pay the credit card bill, to order the marketing, to set up the, you know, cold callers, to see the missed opportunity in your leads. Instead, see that as like building your lead snowball, and just do everything you can to keep building that snowball bigger and bigger and bigger, and then working on getting pieces to carve that snowball more and more. Learning and getting better at finding opportunities, getting better at marketing and... Sorry, at sales and follow-up. And all those things, it will just add to your future revenue, all the marketing that you do right now. And so that's probably one of the biggest things I see for number three is they ramp up their marketing too slowly. They don't invest the money once they start making it, and they just try to be, like, super super lean. Realistically, guys, like, if you wanna make money in this business, you gotta spend money. I've talked to so many different investors, and the typical KPIs for cost per deal, profitability, things like that are always so similar. And if you're not meeting those same metrics, you're not just gonna be better than those people that are, like, doing these full times and are spending the money.

Mike DeHaan: [8:32] K? It's gonna always be a really difficult road. So... Alright, guys. Well, those are my three biggest mistakes that I see with new investors that are trying to grow. How many of them are you guilty of? You should send me a DM on Instagram at Mike underscore invests and confess those sins. Right? Let me know. Something to be ashamed of. Like I know for me, it was all of these at some point. Right? So first one, number one, the buying too many rental properties that caused Dan and I to waste months getting our business off the ground. Literally, first thing we did was we bought a duplex. That came into our pipeline, and it ate all of our time and money for months and was a nightmare. Now it's a great asset, admittedly, but because we benefited greatly from the 2021 boom that we bought it at a huge discount, the way that we went around and sold it was very creative. So our lease option is turned into a great, great asset for us. But I guarantee you, if we hadn't done that, we probably been able to buy a ton more deals over like the five months it took us to get that one figured out. Okay. And the second one was the biggest issue for us was getting like the hiring thing figured out. Like we brought on one person really quickly, but it took us a while to sort of figure out how to really outsource some of the other stuff that we didn't like to do. A lot of that was scarcity mindset. A lot of that honestly was the fact that we felt weird, like not working in our own business. That's our thing to overcome. But that took us honestly years to kind of figure out how to do that correctly.

Mike DeHaan: [9:55] And then number three, when it came to scale the marketing, we did that one a little bit. But I'll be honest, that probably wasn't that big of an issue for us. We always sort of made the pact that we were going to invest as much as we could back into the business to try and grow this thing. And we did, obviously, we feel a little bit weird sometimes when like we were cutting things really lean, and we were investing it, but we also recognize how important that was. So I would say out of the three, that was our least biggest sin. But the other two, we definitely really showed. Anyways, guys, I really appreciate you all listening. Leave us a review, share this with your friends, and most importantly, keep doing your lead follow-up, making offers, and looking for the next key hire that's going to bring your business to the next level. So thanks everyone for listening, and talk to you guys next week.