There may be many factors involved in your success in real estate, yet one of the most critical is also one of the most overlooked - vendor relationships.
As great as any real estate investor or CEO is it takes a team to get each deal done. Even without any in-house staff or assistants that means appraisers, inspectors, title companies, lenders, media contacts, and more. Yet, these relationships are often taken for granted. If you want to achieve your maximum potential and last you need access to the best vendors. Not only do you need access, but you need the best vendors to be eager to work hard to do great work on your deals, and fast.
There are two main parts to achieving and maintaining great vendors…
The first is financial. How fast and reliable do you pay? There is often a temptation for real estate investors and companies to drag out invoices as long as possible. Many bite off more than they can chew, and try to use this lag time as a form of credit line.
The best practice here is to put yourself in the vendor’s shoes. How long after doing some work or closing a deal do you expect to get paid? What if you did the work to fix and sell a property but the end buyer or title company didn’t send you a check for 3 months? How would you feel? How motivated would you be to do business with them again?
Of course money only goes so far. If you’ve ever had a job you hated you have already experienced that. At some point the money just isn’t enough to keep you there.
The main part of this is how easy you are to work with. Toyota is famous for its approach to working with vendors. Toyota may push them hard, but they do it with a mindset of helping their vendors to be better and reach their potential, not just to squeeze as much out of them as possible.
If you are a difficult client the revenues you offer may not be enough. Sometimes this is just about being better at delivering clear requests and specifications to empower vendors to do their best for you the first time around. It’s also about treating them, and their staff well.
The best in this area are proactive about building relationships and making a positive impression with each staff member at a vendor who they deal with on a regular basis. Have you ever sent a thank you card to a title processor or loan processor? How about event tickets for a Realtor or mortgage broker to take their family to do something special? Do you talk well about them to others?
Your effort in these areas will form your reputation in the real estate industry. And you better believe that word spreads fast. Are you the investor or firm that vendors are climbing over each other to work with? Or are you running out of vendors to choose from? This dynamic will absolutely determine how long you last in real estate, and how high you go.
So what have you done to excel in these areas? Or what have others done in this respect that wowed you?
Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.
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