Before we get started, I wanted to give a quick shout-out to Joe Fairless. He hosts one of the most popular real estate podcasts called “Best Real Estate Advice Ever”, and it's one of my favorite. He has interviewed Barbara Corcoran, Robert Kiyosaki and many others (including me :). It’s a daily real estate podcast and you can check out the latest episode here:
OK, let's get started with today's topic: how do we make as much money as possible while doing it “right”?
Over the past 11 years as a full-time entrepreneur, I have experienced business being done the “right” way but I've also seen business done in a way that makes you shake your head in disbelief.
When a person does business done the “wrong” way it's generally motivated by short-term greed. But time and time again, eventually it back fires.
Traditionally, entrepreneurs ask only one question which drives all decisions:
“What will make the most money?”
No question this should be our primary motivator as business people. But it shouldn't be the only thing. Perhaps we should set a higher standard for ourselves.
We should be proud of what we do. Our children should be proud of what we do and how we do it. We should help others win. We should look for ways to make the world a better place.
Here's how I think we can achieve all of those goals by doing business the “right” way.
What is The “Wrong” Way to do Real Estate?
I have always strived to “do right” but have not always done so.
I've cut corners with my rehab business in an effort to make the numbers work. I didn't get a permit because I wanted to save money and I thought I could get away with it. I did get the project done on time and on budget, until several weeks later an inspector slapped with me a fine and almost forced me to open up ALL of the walls in the house.
I bought a house WITHOUT factoring in the drain tile system upfront to make the basement dry. I got the numbers to work until the buyer's inspector flagged moisture in the basement. I lost the buyer and ended up having to install the drain anyway. I lost money on that project.
I sold a restaurant to a person who considered the court system as an extension of the negotiation process. Three months after closing she intentionally defaulted on her promissory note. After all attorney costs, she ended up several thousand dollars ahead. Two years later she ended up in court with her partner because she shut down the restaurant to spite him.
A real estate investor lost $1M of investor money due to incompetence, fraud, or most likely, both. Once the deal went south, he ceased all communication to the investors, angering them to the point where they organized to file suit.
An owner of several family-run restaurants maneuvered his family members out of the business, become the sole owner. His family no longer talks with him, and his reputation for getting his way precedes him.
Why Don't We Do The Right Thing?
When I have experienced business done the “wrong” way, it's almost always motivated by greed. Making as much money in the shortest amount of time can blind us to the consequences of our actions. Not only to others but ultimately, to ourselves.
It tends to start out small. We tell ourselves it's not a big deal. We do it and it hurt no one. So we do it again, but the crime grows slowly over time. And besides, others do it too. They're not only getting away with it, but look at how much money they're making.
The Impact of Doing Real Estate “Wrong”
We do things in the “not-so-right” way for selfish reasons so that we maximize our gain. We don't' care about the next person. We're not looking for a win-win … a win-lose is just fine.
But what we fail to see is that doing real estate wrong ultimately harms ourselves.
You can call this karma if you want. Or “what goes around comes around”.
I don't care what you call it, but I have observed it over and over again.
Whenever I do business “wrong” or I see others do business “wrong”, the short-term gain we seek is accomplished. No question.
But over time it catches up with us. Somehow, in some way. It ends us costing more money.
A Higher Standard?
Doing real estate right is simply a good business decision because it builds a positive reputation for ourselves, which grows our business and ultimately makes us more money.
But perhaps our calling as entrepreneurs is higher than that.
Maybe we need to expand the scope of our mission to this:
- Make as much money as possible;
- Help as many people as possible; and
- Leave the world better than we found it.
I wonder what our world would look like if all of us entrepreneurs united behind a mission like this.
How have you seen business done “wrong”? What was the outcome? How hard is it to do business “right”? Is it worth it?