Grow Your Real Estate Business By Expanding Into a Different Market (VIDEO)
Grow your real estate business by changing with the real estate market not going against it. How many of us have seen and been a part of what the market has been doing over the past several years? Have you been watching the market change? Have you been caught doing the same old thing, even though the market says you should be doing otherwise? This has affected us as well. Instead of sitting back and watching though, we have grown our business. We have done two major things in our business. We expanded to a different market and we expanded into larger deals. Grow your business by expanding.
Expansion is the Key to Broaden Your Business
Expanding into other markets can be a great way to grow your business. I hear from a lot of investors that they are looking at other markets all the time. But what are they looking for? How will they pull it off? First, do not rush into this. There are many variables that go into expanding into other markets.
I think a lot of investors take for granted all the knowledge they have in their local market because they have been there so long. Just because the price point is similar, or even lower, does not mean that the market is similar. Take the time and do the diligence. There are costs associated with this. You will most likely be traveling out there several times to get to know the area. Investors also need to build the right team. You will have to kiss a lot of frogs as well, in order to get the right team in place. This will cost you time, and possibly money if you use them on a deal or two that does not end well.
Expand in Los Angeles County Real Estate Market
Expanding into new markets does not necessarily mean into a new state. If you are in Los Angeles, you might want to look North or South, or maybe into some of the smaller towns East or West. You might just want to start looking on the other side of I-91 depending on your area of focus. Whichever direction you expand in, know that it will take some time and a lot of effort to do so. It might be well worth those costs, even if you only do one more deal a year.
We allowed ourselves to expand our horizons and step outside of our comfort zones. Investors are now funding new construction, but we did not dive right into that from funding cosmetic fixes and flips. We started with clients that were doing some smaller additions, maybe blowing out a back wall and adding in a master suite. Then pop-tops came and we saw our clients adding a significant amount of square footage, thus increasing the value of the home. As these clients got more comfortable with these deals, so did we with lending on them. We all were getting to know the added costs of doing business with the cities, architects, and engineers. We had one client that took on a 10,000 sq. ft. home that was just a cosmetic remodel.
Take a Step Back and Look at the Numbers
This was a huge jump in price point, as well as the size of the home for the client, but they took a step back and looked at the numbers. They looked several times and from several angles, but the numbers were the numbers and they still added up. It took a long leap outside of his comfort zone, and it was a huge learning experience, but it was profitable and has really expanded their horizons as an investor.
I am not saying that you should jump into a 10,000 sq. ft. home or knock a place over and rebuild. You should be taking a step back from your business though. What is working? What is not? Where is that comfort zone and more importantly, what lies just outside of it? Just because the Local Records Office did this and it has worked for some of our clients, it does not mean that you should or that it is right for you. There is certainly risk in all of these, so we have to make sure that we are willing to take on that risk. We have to be willing to put in the effort to figure these out and grow.
Change With the Market Not Against it
As the market changes, so should we and our business. Have you been making these changes? How have you rolled with the punches the market has thrown at you? Let us know on Facebook and Twitter, and of course, let us know how we can help you keep your business growing.