How Faith Will Ruin Your Real Estate Business
Chris Clothier, who is a Partner for a group of passive investment companies that specializes in purchasing, renovating, leasing, and managing passive portfolios for single-family property investors, which manages just over $400 million in real estate assets, is one of many speakers who will be presenting at the 1st annual Best Real Estate Investing Advice Ever Conference in Denver, CO February 24th to 25th.
In a conversation with Chris all the way back in 2014, he provided his Best Real Estate Investing Advice Ever, which is a sneak preview of the information he will be presenting at the Best Ever Conference.
What was Chris’s advice? When screening potential business partners, including brokers, agents, property management companies, etc., never take anything on faith.
Faith =/= Success
Chris has been an entrepreneur all of his life. He and his family have founded a combined nine different companies. Each of the nine has achieved over $10 million in annual revenue. Of those nine, three has reached over $50 million in revenue and one company, which is his current endeavor, has over $100 million in annual revenue. The point is, Chris has accomplished, experienced, and seen a lot in the business realm, which makes his Best Ever advice that much more powerful.
From being involved in nine multi-million dollar businesses, Chris described his Best Ever Advice: “Before you do business with somebody, I tell investors all the time [to] take nothing on faith.”
“Make sure that you check, double check, and do your due diligence,” Chris continued, “even as you begin to get to know someone. Don’t take anything on faith. That’s when investors get hurt.”
This advice applies to newer investors, as well as experience investors who already have a standard of excellence that has brought them their success. “Always make sure that the standard you’ve come to expect remains the standard you receive. Never, ever begin to take anything on faith.”
What are some tactical ways for investors to check, double check, and perform due diligence on potential business partners? It’s quite simple actually. Chris said, “Number one … Ask them!”
“If you’re going to do business with somebody, … they have a certain level of experience, and they’ve been around for the last 8 to 10 to 12 years, ask them [two questions]: ‘What’s the biggest mistake they’ve made in real estate?’ ‘What are they doing to keep you from making that same mistake.’”
Chris finds that there are three typical responses to these questions, which will allow you to qualify or disqualify them from working with you.
- No Answer: “What you’ll find is that if they can’t answer the question, they’re not trustworthy in my opinion.”
- Vague: “If the answer they give is very meaningless, it’s not a mistake, [and/or] it’s something small and harmless, they’re probably trying to hide something from you or they just don’t have the experience level that matches what they say they have.”
- Honest: “If they get brutally honest, they lay it out there, and they tell you that ‘this is the mistake I’ve made,’ ‘this is where I’ve been,’ and ‘this is how you avoid it,’ you’ve probably found somebody pretty good.”
If you receive a response like 1, no answer, or 2, vague response, RUN! However, if they provide a brutally honest answer, as well an explanation of how to avoid the mistake in the future, Chris says, “[That’s] somebody worth investigating a little deeper and [somebody to] go a little more in-depth with.”
Chris’s Best Ever advice is to never take anything on faith when screening for potential business partners. This is one of the main reasons why investors fail.
To accomplish this, Chris recommends that you always ask two questions: (1) What’s the biggest mistake you’ve made? and (2) What will you do to avoid making that mistake again.
There are three standard responses you’ll receive: (1) no answer, (2) a vague response, or (3) a brutally response. The only person you should pursue further is the individual who provides the brutally honest response, while avoiding all others!
Want to learn more about screening potential business partners, as well as information on a wide range of other real estate niches? Attend the 1st Annual Best Ever Conference February 24-25 in Denver, CO. It’s the only real estate investing conference whose content and speakers are curated based on the expressed needs of the audience. Visit www.besteverconference.com to learn more!
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