Existing real estate investors already know how to get deals, but often want to fish in less crowded waters. There is the red ocean, which is where everybody is. There’s basically blood in the water. Then there is the blue ocean, which is wide open and here you do whatever you want. What can you do in your business to just be fishing where less people are fishing?
If you do not get a solution to that, it can be a big problem because as competition increases, what happens? Lower response rate. You are spending more on your marketing. You are getting more resistance to offers because there are a lot of other people and skinny deals almost to the point where it does not even make sense to flip anymore. Some people start going wholesale and that can be a good thing.
The problem is that you need to complete three or four of those wholesale deals to make the profit of one fix and flip deal, and you still must fund your same office, staff, and other bills from when you were doing a lot of fix and flips. It is a struggle, and it can lead to unprofitable deals or even being forced out of business.
What I have found to be a clear solution, and what my students who plug into one of our book systems have found to be a good solution, is to pick a niche. Ask yourself, “What is an area that I can swim in? What pond can I go fishing in that doesn't have as much competition?”
Perhaps you have never asked yourself this before because you do not want to say no to any deal. Sometimes we fall into a mentality of scarcity, saying, “I'll take down deals from one side of the town to the other. 18-year-old home buyer or 98-year-old, I don't care.”
One of the things that was happening with me was all my competitors were doing and saying exactly that too. Some of them were willing to pay a lot more for the same deals. I did not stand a chance, but now that I have decided to go niche, it's different because I can offer a different level of value to the clients that I'm working with.
What is my preferred niche? Seniors. Recently a Senior homeowner’s son reached out to me about his mom’s house. I sent them a copy of my book and my workbook, which it teaches Seniors and their adult children how to navigate this Senior housing journey. None of my competitors did that – none of them had any educational marketing, let alone a published book.
Why did I choose Seniors? It is the fastest growing demographic. But of course, if you like something different or have a unique expertise, focusing on those clients will be the most beneficial to you, your business, and your clients. The objective is to pick a niche where you can provide unique value there are a lot of different niches available. It could be people who want to flip their home before they sell it. It can be like mine – Seniors. It can be veterans or homeowner whose primary language is not English. There are a million different niches out there. It could be millennials or maybe an exit strategy niche, where you work with people who need help moving or seller financing. Whatever you choose, the more you focus in on helping one particular group of homeowners or solving a specific problem, one of our student’s owns a short sale company for example, the more value you will add to all of your deals. More value and happy clients lead to more referrals, all for focusing on the skills and expertise you already have.
How do you position yourself to look totally different from everyone else in your market? If you can differentiate yourself from your competitors, suddenly you are not swimming in these like shark infested waters. You will become the captain of your own ship. Here in our market, if somebody else wants to work with one of my Senior homeowners, they are going to have a tough time because this community already knows that Seniors are my specialty. Now I rarely work with people who are not Seniors. Instead, I refer them out to other folks.
Why didn’t I go niche earlier? The reason is that I had a scarcity mindset. I thought, “Wait, no, what am I doing? I cannot turn away a bunch of deals! All these other buyers will not want to work with me.” I have not found that to be the case.
Now, depending on what your goals are going niche might not be the best option for you. If your goal is to do a thousand deals a year, maybe you need to choose a bunch of niches. There is no rule saying you must choose only one niche, but it has been extremely valuable for me and my business. It lowers the competition. It gives you a truly unique offering. When you are dialed in to one particular niche, it becomes difficult for other people to compete with you.
Most of the deals that I go out on and my students go out on, we do not have a lot of competition because people have picked us on purpose. This is powerful. Think about what Carnegie and Rockefeller wanted to do; they wanted to have as little competition as possible. Specializing is a proven strategy because you have less competition when people see you as the subject matter expert for that niche, but also because you can add more value as you spend more time learning about your area of focus.
When I bought a house from an older gentleman, his daughter was there. Adult children are very protective of their Senior parents and their home – which is often their greatest asset. They were clearly overwhelmed and on the defensive, but I was able to spend some time with the family educating them on their options. The daughter said, “This has been great. You know, you've really helped us. You should write a book about this.” At first, I said, “No, I don't think so,” but then I went to my car and I thought about it. Then I decided, you know what, I am going to do just that. The book was a success so I wrote a companion workbook, which led to hosting workshops in the community where I could teach multiple homeowners at a time, for free.
Eventually we scaled to hosting virtual workshops to reach more people. When you go niche, whatever you choose, you can really dig in. The best one that I have found by far is Seniors. I enjoy working with them the most. Find the group of clients or type of deal that you enjoy the most and leave your competition behind.