What’s that one secret property strategy that you must know? Why is it not a common knowledge? Stuart Zadel reveals what that is in this post.
As you know, we’re about training financially independent property entrepreneurs.
So my discussion in this post is all about the strategies that we teach.
That is, how to become a profitable renovator, a profitable developer, a profitable distressed housing buyer, commercial property, etc.
However, bear in mind that the concept is equally applicable to many, many areas of your life.
FARMING YOUR STRATEGY
I’m sure you’re all familiar with the concept of farming. That’s where you own or lease a piece of property and you farm it for a profit. In farming, a farmer will obviously acquire the land, will do their research based on local knowledge, and will decide on what they’re going to plant.
Afterwards, they’ll prepare the soil, they’ll sow the seed, and they’ll tend the crop. If everything goes according to plan, they’ll reap a profit.
Property is exactly the same, my friends. I first heard this concept many, many years ago when I was getting started.
The Beginnings Of Nicholas
At that time, I was actually working with one of the leading real estate agents in Australia. This gentleman’s name is Nicholas. He’s based in Melbourne, and he had quite an inspiring story.
From a very young age, Nicholas knew he wanted to be in property. Real estate was his thing. So at the age of 15-16, he was knocking at the door of his local real estate franchise to be a sales agent. He was told that he can’t due to his age.
But one franchise suggested that they pay him to drop leaflets for them. Being young, he didn’t have a car, he didn’t have money, just his pushbike and his legs.
So what he did to walk the local neighbourhood and drop the monthly flyers on houses for sale. Sometimes he’d go up to the neighbours’ doors, and slip one under the door.
Because he was just basically a kid and non-threatening, he got to know all the neighbours, and sooner or later, they started asking him questions about what was selling, what the guys next door and up the street were doing, and so on. He became quite knowledgeable and trusted in the area despite his young age.
The Rise Of Nicholas
Nicholas would then funnel that information back to the Sales Reps in his office and they’re able to generate sales by being the first to the punch if you will. Of course, I’m not sure how much Nicholas was being paid at that time. But what I do know is that this went on for a number of years.
He became extremely well-known and proficient in that area, and when the time did come, he became a real estate agent with that franchise. In his first year, at the age of 18, he became the number one salesperson in that franchise. I believe at a nationwide level.
THE CONCEPT OF FARMING YOUR STRATEGY
Nicholas’ story demonstrates the concept of the farm area. Now you might say that you have 10,000 houses in your suburb and that you should be able to farm them. Nicholas said that that’s too much to focus on. What you want to do is to focus on a little bit of what he called your ‘farm area.’
Nicholas’ farm area was typically about 1500 houses. He said that this is the amount you can concentrate on. Now this was built with other information like, at that time, the average house in his area or in Australia sold every 7 years.
So regarding the 1500 homes in his farm area, every single one, in theory, sells every seven years. Now, some sell more, some sell less. We get that. But on average, at that time, the average house sells every 7 years. So if you divide 1500 by 7, that’s about 214 houses that go on the market every year. Your job, of course, is to be the one that sells them if you’re in real estate sales.
FARMING YOUR STRATEGY IN PROPERTY
Now, the same concept applies to being a property entrepreneur. You need to identify an area that is conducive to your strategy. So whether or not you plan to do renovations, property developments, discount buying, or whichever strategy you choose to follow, you have to make sure that your area is conducive to it.
This is where research and local knowledge comes in. It’s also where you need to prepare ‘the soil’ – which is your knowledge and your skills. And finally, it’s where you need to sow the seeds. That means you need to go out and meet people and build relationships.
But keep in mind that, farmers also know that you don’t sow and reap in the same season. There’s a bit of a lag time there but the work needs to be done.
WHAT FARMING YOUR STRATEGY ISN’T
In contrast to farming where you chase an area, other people chase the deal. For example, if they hear that there’s a distressed house for sale over the other end of the city, or if there’s a property that’s up for renovation, they drive over there. As a consequence, they’re all over the place.
They’re mixing up their strategies and just looking for any opportunity to make money.
It’s a short-term approach. It lacks focus, and it generally does not produce a sustainable result. You can see that it’s a lot better for to you identify a farm area that will be profitable and fruitful to farm, and get to work on it.
So don’t go wide. Go deep. The advantages & the compounded benefits are massive. You can save time, you can save money. The relationships you build, and the networks would be exponential over time.
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