If you’ve known me for any amount of time, or been to one of my Rehabbing Remotely Field Trips, one of the topics we discuss at length is how to understand your teams priorities and how to make sure they align with your priorities.
Even to this day, I find myself “trusting” that everyone understands MY priorities, that is UNTIL the project starts to turn bad, or somewhere along the line a critical detail was missed, or there was some major issues that impacted progress.
I fall in the category of believing that everyone is a professional and that I’ve delegated projects to those professionals. I assume they will work hard, fast, and with the utmost professionalism. When I find I’m wrong I revisit the personality of whom I’m dealing with and their motivation because I am their customer.
The Roles and Priorities
- As real estate Rehabber’s, our priority is TIME. Time costs us money in many forms. Having our money tied up, or even and investor’s or hard money lender’s money costs us either in more money or in reputation as a rehabber. Our first priority is expediency for the project. The faster the project is finished, the less it will cost us, the sooner we will get our money back and the more projects we can do in a year.
- As Contractors, their priority is money and keeping their sub-contractors aligned with their team. The more money that can consistently flow their way, the better their chances of keeping their good team together and the more they can count on a steady income. This will also create loyalty with their sub-contractors.
- As Hard Money Lenders, their priority is a consistent flow of income, combined with a regularly scheduled influx of more cash (aka “points”). They want their client’s money to be at work for them at all times, consistently, and they will invest regularly with proven entities that maximize their profits. It’s their investor clients that must be happy with the Hard Money Lender’s selection of rehabbers.
- As Real Estate Agents, their priority is to close on a real estate transaction. Don’t read any more into their intentions. If you fail to close, they will fire you. They will want your property to be perfect, sparkling clean, and in a position to sell as quickly as possible. Most don’t know the “bang for the buck”. Just know that is part of your job is to educate them.
Bottom line, everyone is concerned about the PAYCHECK and/or their REPUTATION, including you.
When you realize this, when you can understand in integrate everyone’s motivations, it’s easier to understand why certain things happen. For example, I wrote 3 posts about my Traveling Contractor and the delay after delay after delay. Time wasn’t his most important priority. The steady paycheck was.
I had an agent that even though I had already rehabbed the property, he insisted I add a door in a certain location. I had educate him on the “bank for the buck”. That house was going to sell for a certain amount, no higher. It didn’t matter whether I diamond studded every doorway, the house would not go over a certain price.
In one of my earlier days, I had a run of bad contractors funded by a hard money lender. (Actually this hard money lender recommended one of the contractors to me because the contractor owed the HML money!) Needless to say, the term of the loan expired and I couldn’t make any more payments or pay the renewal points. We hit the holidays that the property just sat on the market. My reputation was tainted, the HML’s reputation was tainted, the contractor SHOULD be in jail, and I will never face that HML again.
If as rehabbers, we can understand everyone’s priorities, we can provide incentives to motivate, see through empty promises and lies, and run a very profitable real estate investing business!
We go more in-depth with issues like this at the Field Trips – consider this an invitation – September 6-8, 2013 in Seattle – I hope you can make it!
What are your thoughts or experiences?