Stages of Real Estate Investors

Doug Fath and Jeff Greco discuss the different stages of real estate investors in their latest video. Click the video below to watch now.

Stages of Real Estate Investors


Jeff Greco: Jeff Greco, co-founder Legacy Capital.


Doug Fath: Doug Fath, also co-founder of Legacy Capital.


Jeff Greco: And in this video, we’re gonna be talking about the four stages of the real estate business owner. So specifically, you may have received one of our emails with a blueprint for your business after we had a meeting talking about some of the challenges and what you’re currently dealing with in your business, and most importantly, where you want to go. And Doug and I wanted to quickly lay out what are the four stages of a business owner and how we think about helping you scale up, not only in terms of money, but also building the business you want that brings you fulfillment.


  So the first stage of a real estate business owner is really when you’re moving away from something, right? So if you think about you may be doing real estate part-time or doing your first rehab, and it’s not a full-time thing yet. You’re kinda in the testing phase, whether seeing if you like it or not, or if you can truly provide the type of money you want to support you and your family, so really the first stage of a real estate business owner is moving away from something that you don’t like.


Doug Fath: Right, ’cause you may, as you said, kinda still be in a job, but there’s something that you’re looking to move away from. And then the second stage is where you’re really moving toward something. So you may be doing real estate part-time. You may be doing it full-time, and really what you’re moving toward is called a level of stabilization, so you’re probably looking to move toward some sort of income goal, to maybe completely replace your salary or the money that you were making before. So this stage, again, you’re in real estate, you’re doing deals, but the business and your income still isn’t quite stabilized. That’s what you’re looking to get to that first level, where you’re making enough money on a consistent basis to pay the bills, cover for you and your family, and that’s what you’re moving towards in that second stage.


Jeff Greco: And stage number three is some good news and some bad news. Stage number three is, you’re hitting your income goals, some things are going great. Right? It’s most likely become a full-time thing, or you’re making the type of money that you wanted to make for your business. You’re able to pay yourself some money out of the business for the work you’re doing. Maybe you have a team around you, and you’re wondering, “Is this level of stress gonna sustain itself?” Meaning, how do you build a team around you, what type of challenges are you thinking about at the next level, which when it was just you managing a crew or some other people who were maybe external to your business, you didn’t face those challenges.


  So really the question at level three is, “Is it possible, or how can I have a business that delivers me everything I want, not only from a money perspective, but from a time perspective,” as well as focusing on the things that you do best.


Doug Fath: Right. Because, as Jeff mentioned, at level three, again, your income is less of a problem at that stage. You’re making good money. You’re paying yourself back. You’re paying the entire team. And then on top of the salary and what you’re paying the team, the business is profitable, right? So if you want to make owner distributions, or you want to invest back in the business, there’s actually surplus of cash to do that.


  And then, as Jeff said, that’s the good news, and that’s the bad news, right? Because then there’s a whole array of potential issues, and that’s when you can move into that stage four of a real estate business owner, which we call the self-managing company, where really the business runs by itself. You’ve hired the right team. You’ve invested those dollars in the processes and the systems, where you don’t need to be an operator in your business every morning. You can actually take a step back, and the business essentially runs itself.


Jeff Greco: Yeah. And talking about the four stages of the real estate business owner, after we have the conversation with you in terms of understanding your business, what challenges you have, where you want to go, we can get pretty clear on what stage you’re at and really what are those specific challenges to go to the next stage, to really help you go to the next level and build the business you want, not only based on our experience, but our experience helping our clients as well. So you do enough of these, there’s patterns and things that we can relate from our collective experience.


Doug Fath: And I think that’s the key, those patterns. And some of the challenges and whatnot, we probably did talk about in the business blueprint, even if we hadn’t specifically identified what stage you were at, but the reality of it is, each of those different stages has a different set of problems and pain points to overcome and come up with solutions for it. So being able to locate yourself in that stage makes it easier for you, makes it easier for us as well, to help identify what those issues are and provide solutions for that.


Jeff Greco: Yeah. And finally, just being transparent, our ideal clients are at stages two and three, right? So people who are newbies, or they have come out of a seminar, and they want to flip their first house, and they’re gonna be a millionaire tomorrow, that’s not our target, right? We work with experienced real estate investors who have done a certain amount of rehabs, ideally three at a minimum the last two years, and really we get to help them build the business. They’re in the business of rehabbing real estate, but helping them go from, “I know I like this. I know I wanna do this. I enjoy doing it. I’m making money,” to actually building a business that serves them so they can do more either to make more, or give more away, or whatever that looks like. And then certainly, when you have a self-managing company level four, we may or may not be a fit at that point, but certainly nothing gives us greater pleasure than to help you get up the levels. If we do business forever, awesome, and if we do business for a certain amount of time to get you there, that’s great too.


Doug Fath: Yeah, because the reality of it is, the majority of our clients, they are master operators, probably much like yourself. They’re skilled at their trade, what they do, and they’re great working in their business. And a lot of the conversations and things that we assist with and help cultivate is moving those successful real estate operators to become real estate business owners and move towards stage four.


Jeff Greco: It’s so easy to be in your business every day and not think about the ideal capital structure or really the specific challenges, and so really inside of our conversations in getting to know you, we look forward to helping you resolve those challenges.




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