Fears of a looming recession are eating away at consumer confidence. As their fears continue to grow, the uncertainty is finding its way into real estate as well. Many real estate investors are asking if they can still build a successful real estate business in a shifting market.
Tiffany High, CEO of Heels Homes, recently joined Jesse Burrell, CEO of BatchService, on a LIVE WEBINAR to answer this question. She shared the following four tips for building a recession-proof real estate investing business that will carry you and your team through whatever comes next!
Watch the full webinar with Jesse Burrell & Tiffany High.
Master a single marketing channel
When you start out as a wholesaler or real estate investor, the number of different marketing channels you can leverage to reach motivated sellers can be overwhelming. It can be tempting to jump headfirst into all of them at once, but this strategy can actually set you back. Both Tiffany and Jesse recommend focusing on one marketing channel and mastering it before you move on to any others.
Start with your processes
The quickest way to master a marketing channel isn’t to start using it. This may seem counterintuitive, but before you start cold calling, sending direct mail, or driving for dollars, you need to understand the ins and outs of how your chosen strategy works.
When Tiffany started flipping and wholesaling, she focused on cold calling. But before she ever picked up the phone, she focused on understanding which data she should focus on. Then she worked on understanding the cold calling sales process. Finally, she focused on understanding how to achieve her KPIs so that she had a winning process instead of a random strategy.
When she started cold calling, Tiffany focused on foreclosure lists. And it paid off. Tiffany and her team did 40 deals in their first year! Only after she mastered that lead type did she expand her operations to include absentee owners.
As Tiffany says, if you don’t learn how to use your first marketing strategy well, you’re going to spend a lot of your marketing budget jumping around and trying to figure out different strategies instead of landing deals and making money.
Mastering one marketing strategy is also essential for scaling your business. It’s nearly impossible to put processes together and train a team to do something if you haven’t learned how to do it yourself.
Once you master one marketing strategy, a market shift or a recession won’t keep you from landing deals. Because you know how to adjust, improve, and solve problems, you’ll have a reliable business that can pivot to meet any challenge. You’ll easily outlast your competition and whatever market uncertainty comes your way.
Get good at something: building great systems
Another key to building a stable real estate business is establishing winning processes and systems. Accomplishing this is very similar to mastering a single marketing channel because they both follow a detailed step-by-step process.
As Tiffany and Jesse discussed, successful real estate investing is about developing solutions to the various problems and needs you’ll encounter. But if you don’t build and document processes that you can follow to solve these problems, bringing on team members will cause chaos.
The most important thing you can do is master providing these solutions and then write standard operation procedures (SOPs) to document everything that you do.
Writing SOPs may not be your favorite part of building a stable real estate investing business, but it’s essential to long-term success. In fact, most of the businesses that fail as they grow struggle because they don’t have clear documentation. When new team members don’t know what they’re supposed to do, your operations will descend into chaos.
Thankfully, establishing and documenting winning processes is easy. Just think about all of the things you’ve done that have made your business successful and then write out how to do them, step by step. When you hire new employees, make sure they have easy access to these SOPs so that they know the right way to do everything from day one.
Your processes will probably look very different than other investors’, but that’s okay. The most important thing is that they are clearly defined and that you and your team stick to them as you grow.
If you have these processes well-documented, then a recession or market shift won’t be a big deal. You’ll know exactly what’s worked in the past, and you’ll know how to develop a plan for the future.
Hiring and retaining top talent
One of the most important factors in building a stable, growing business is knowing how to hire and retain top talent. Too many successful businesses fail when they start hiring because their leaders don’t know how to choose the right people!
Before you ever start hiring, it’s important to have your SOPs and checklists clearly written so that when you bring talent into your business, they know what’s expected of them. No matter how talented an employee is, if he or she doesn’t know anything about the processes you’ve followed for success so far, then you can’t expect them to replicate and extend the company’s achievements.
Once you’re ready to hire, you need an interview process that matches the culture you want to build and maintain. As Tiffany pointed out, making a single wrong hiring decision can significantly change the energy of your business, especially when you first start hiring. The first few hires set the tone for your business, so it’s important to choose the right people.
The best way to do this is to create a rigorous interview process. This process isn’t intended to run people off, but it should definitely weed out the people who aren’t a good fit for your organization.
Tiffany’s team has a four-step interview process. First, her team sets up a 15-minute Zoom interview where they verify that the potential employee understands the pay, hours, location, and responsibilities of the job. They also ask about core values to make sure the person isn’t a complete mismatch for the role.
After this interview, Tiffany’s team invites the person to the office for an in-person interview. In this stage, they give the person questionnaires to learn more about them and ensure that they align with her company’s core values.
The next step is a working interview. Anyone can tell you what you want to hear in an interview, but when you put someone in a job role, you’ll see what they’re really like.
The content of this interview varies based on the role, but for sales team members, it involves role-playing sales calls. This interview shows Tiffany’s team that the potential hire can use a computer and phone system well enough to do the job. During this process, they also give the potential hire feedback to see how coachable they are. Someone who can’t take and incorporate feedback is not a good fit for your team, no matter what role you’re hiring for.
Finally, Tiffany’s team takes the potential hire outside of the office for a lunch or dinner interview. During this final interview, Tiffany’s team gets to know the potential hire. This is a final check to make sure that the person is a good culture fit. When you interview someone outside of a professional, formal environment, you see an important side of them that wouldn’t come out otherwise.
Retaining your employees
Once you hire employees, you need to have a process for getting them up to speed as quickly as possible. At BatchService, we clearly define exactly how an employee’s first three weeks look. This gives us a chance to train them quickly, answer their questions, and show them what the role looks like.
These first three weeks are part of a 90-day onboarding process designed to make sure all employees are a good fit for their roles. During this time, employees regularly meet with their managers so they know where to find support when they need it.
Hiring and retaining talent isn’t hard if you have clearly defined processes. Unfortunately, many businesses rush past this step because it’s one of the least exciting parts of growing a business. However, if you can develop winning hiring processes, you’ll create a hiring machine that runs itself. Then you can get back to focusing on the parts of your business that actually excite you while your business grows beyond your wildest dreams!
Why a recession doesn’t matter
Right now there are a lot of news reporters and YouTubers saying that a recession is coming. But it doesn’t actually matter. Why? Because there are opportunities in a good economy and a bad one.
When COVID hit, a lot of buyers stopped trying to build their real estate portfolios, but Tiffany’s team just adapted their numbers and their investment strategy. As a result, they did more deals than ever before! If you modify your investing tactics in the coming months, a recession can actually help you make more money than you ever dreamed!
For example, you may have to start focusing on affordable housing and first-time home buyers, but you can find a lot of opportunities in these markets. Instead of trying to pursue what has worked in an abnormal market for the past two years, get to know your cash buyers, brokers, and agents and talk to them about numbers. Then backtrack from there to figure out what numbers you should be working with.
As Tiffany says, “These things only take 30 minutes to do, but because the media and all these people are throwing out the word ‘recession’ it creates this fear mindset and then we freak out instead of just saying ‘Okay, how do we adapt to what’s needed?’”
Finally, you have to decide what kind of person you are. Are you the kind of person who runs out or runs in when things get hard?
Remember that everything is temporary, but not all of your competition realizes that. If you adapt to the temporary situation and use your talents to capitalize on it, you can come out of any economic situation better than when you went in!
Whether there’s a recession or not, building a stable business and understanding how to adapt to change is crucial to success. Don’t focus on bad news; instead focus on building a winning real estate strategy by mastering one thing at a time, building processes, and taking the time to hire the right people.
If you follow these steps, you can invest in a recession. An economic downturn doesn’t have to set you back if you’re willing to adapt. It can’t take away your processes or the things you’ve learned, so use them to your advantage, no matter what happens.