Want Long Term Success? Realize it is a Relationship Business
Real estate investing is very much a relationship business. And yet because it attracts loners and mavericks, many real estate investors don’t always play their relationships cards well.
In our careers, we’ve seen a lot of people do this relationship business right…and quite a few get it REALLY wrong.
In both cases, there are great lessons which is the topic of discussion for this episode of The Real Estate Guys™ radio show.
We say it’s easier to make friends than money and it’s easier to make money with friends.
But for some reason, when it comes to making big money in real estate investing, some people are willing to toss friendships in the trash can.
Too bad. Because we think the BEST real estate riches are those made with friends.
In the studio for a friendly discussion about real estate, riches and the role of relationships:
- Your rich and friendly host, Robert Helms
- His best temporary co-host, Russell Gray
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The Role of Relationships in Real Estate Investing
Our good friend, mentor, Summit at Sea faculty member and master sales trainer, Tom Hopkins says EVERYONE is in the people business.
So it’s important to be as expert in people as you are in your product or service.
And when it comes to real estate investing, it’s even MORE important.
Obviously, buying and selling includes a certain amount of negotiation. So good people skills help you make better deals.
But because the BEST real estate opportunities aren’t typically available on universally accessible exchanges the way most other investments are, your RELATIONSHIPS play an important role in bringing deals and funding your way.
So just like you manage your credit score, be attentive to your reputation, network and managing your relationship business.
Getting into Good Relationships
Wow. This could be a book. Or a hundred books.
But for purposes of real estate investing, we’ve found some key characteristics to look for…and too look out for!
Scarcity vs Abundance Mentality
If there’s a litmus test, this one is probably it. At least for us.
So if you haven’t read Stephen Covey’s classic Seven Habits of Highly Effective People, you should text Santa a message right now. It’s a helpful read not just in developing yourself, but it learning to recognize good people to build relationships with.
In brief, someone with abundance mentality sees plenty of (good things) in the world. So it’s easier for them to share, to negotiate fairly (win-win), to appreciate others, etc.
All good things.
On the other hand, people with scarcity mentality tend to be takers because they don’t see enough for everyone and they want to get theirs while they can.
Scarcity thinkers believe for them to win, you need to lose. They’re quick to criticize and slow to share.
We find them very hard to negotiate with because they struggle to be happy with what they get out of the deal if they see you getting anything. And at the extreme, they’ll lie, cheat and steal.
No fun.
We typically don’t get into…or we’ll get out of…a relationship when we see manifestations of scarcity mentality.
What You See is What You Get
Surprises can be fun at Christmas. But less so in business.
Trust is about knowing what to expect and then having it happen.
When you’re in the marketplace of this relationship business, you’re painting a picture of who you are. And along with that comes a set of expectations.
When you behave in a way that’s consistent with your image, people begin to feel comfortable around you…even if they don’t necessarily agree with you. In other words, it’s the congruity which is even more more important than the image itself.
On the other hand, if people see you one way and then discover you to be completely incongruent, it makes them nervous.
It’s Okay to Judge
We were in a deal with a guy who held himself out of be a family man. Married, kids, family values, etc.
Then, one day we find out he’s got a mistress. We see him with her. Hmmm….
But we were in a BIG real estate deal with him…MILLIONS of dollars involved.
We decide his personal life is his own business. Let’s just get through the deal and we can be done with him.
Well, we never got through the deal because…shocker…he cheated us.
Of course he did. He was a cheater. And we knew it and decided not to “judge”.
Oops.
Sadly, we have more than a few similar situations. But after this one, we learned to get out when we could see someone was a cheater. Treat this relationship business like a business.
Pressure Reveals Character
The 2008 financial crisis was one of the best things that ever happened to us.
It sucked at the time and we’re still recovering financially.
But we learned a LOT about each other, our families, friends and associates.
We lost a lot of relationships during that time. But the ones that survived became much stronger.
We also gained a lot of great relationships through that time. We could see who held up well under pressure…and who became BETTER because of it.
So given the opportunity, we’d ALWAYS like to see someone under pressure before we get too deep into a relationship.
Success Reveals Character
Success creates a different kind of pressure. But you’ve probably heard it said, “Money changes people.”
We’re not so sure it changes them, as much as it reveals them.
We’ve seen people start out with noble motives and ambitions, and then they get some money in their hands and suddenly they’re different. And sometimes the money isn’t even theirs!
But for some reason, when they have access to it, they think it makes them somehow smarter, more capable or otherwise invincible.
Fame can do the same thing.
So watch CAREFULLY for how people respond to a little success or notoriety.
Trust in Two Areas
This is one of the BIGGEST MISTAKES we see investors make. They trust in only of two areas. But trust MUST be on BOTH areas.
First is ETHICS.
Warren Buffet says you can’t do a good deal with a bad person. He’s right.
But… you CAN do a bad deal with a good person.
That is, just because you trust someone’s ethics doesn’t mean you should trust them in the other critical area…
COMPETENCY.
A good person can be professionally incompetent. You probably trust your mother. Would you have her do your brain surgery?
So an ethical, but incompetent person, will feel really badly when they cost your a lot of money.
But a highly competent person with no ethics will surgically remove your money from you.
In either case, it’s a BAD deal.
So you MUST trust someone in BOTH their ETHICS and their COMPETENCY.
Don’t forget it.
Getting Out of Bad Relationships
To quite Nike… JUST DO IT.
We’re not saying cut and run every time bad stuff happens in a relationship. We’re both pretty loyal guys.
But when someone has demonstrated the are greedy or can’t be trusted, you probably do NOT want to be in a business deal with them. Or to have your name or brand associated with them.
Over the years, we’ve been in some bad relationships. We might even be right now. But as soon as we know, we do our best to get out fast.
It doesn’t mean we don’t like the people (although if they have bad ethics, we usually don’t…just sayin’…), but we realize it’s not a match for business.
The GOOD News…
There are lots of really good, capable people out there for you to do business with.
So every minute you waste with someone less than that is a missed opportunity to find the right people and do good business.
Your mission is to become the most ethical and competent person YOU can be.
When you do, you’ll find yourself attracting better people into your life and into your relationship business. They will bring their resources and networks into the relationship….and if you both have abundance mentality, you’ll share and grow bigger and faster together….whether it’s just for a deal or for a lifetime.
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