The Short Sale Assembly Line
62When we talk to our short sale coaching students about building the best real estate investing business, we discuss systems all the time. Henry Ford started that discussion, actually. If he hadn’t done what he did, today we might be struggling a little and wondering why.
Henry Ford decided to conquer efficiency by setting up an assembly line to build his cars during a time of intense competition in the automotive industry. That industry has gone through several transitions since then, but the basic idea of automating repetitive tasks was so influential that it crossed over into other businesses besides manufacturing. Ford became a trailblazer, and is now a fixture in at least one case study in every business school in the world.
In real estate investing, we know that the personal touch and the legal environment make our business a little more complicated than putting a car together. Our variables aren’t quite as fixed as a piece of machinery, but we can still learn a lot from the assembly line system. There are elements of real estate investing that are repetitive, just like building that car.
I’ll simplify both processes — building cars and building short sale deals — so I can show you what I mean.
Henry Ford chose the most basic, repetitive tasks to incorporate into his assembly line. You probably already know the basic steps:
1. Manufacture the frame and the parts, and group them all together.
2. Start the assembly line with a frame and send it on down the line.
3. At each stop on the line, add the parts to the car.
4. At certain stations, hook the parts up so they function as a whole.
5. Test the car and make sure the process worked correctly.
6. Ship the cars to the dealer and market the products.
7. Find a buyer for each car and close the sale.
No matter what kind of car is being built, the plant has to go through each of those steps in order to make sure your car runs well and finds its way into your garage. When you think about it, you could say the same about a real estate deal. No matter what kind of a deal it is, there are certain things you’re going to do every single time.
What does a real estate investor’s assembly line look like?
1. Draw up your paperwork and get your game plan together.
2. Find a problem property and begin setting up the deal.
3. Get the seller on board and sign some paperwork.
4. Send an offer to the lender and begin the negotiations.
5. Conduct the BPO and wrap up the negotiations.
6. Rehab the property and market it for sale.
7. Find a buyer for the property and close the sale.
These are the tasks that you automate. You’ll customize your deal as you go along, just as some of those frames will end up as bare-bones Focuses and others will become high-performance Mustangs. Some of your deals will be one-mortgage negotiations on behalf of an amiable seller, and some of your deals will challenge your skills with multiple liens and grumpy people at every turn. But they will all have those seven steps in common.
When you’re setting up your systems during step one, think about delegating and automating those repetitive tasks. Ford’s assembly line doesn’t make one person do all the work. Things go more quickly if people specialize. McDonald’s does the same thing. They can serve burgers and fries a lot faster if the person handling the money doesn’t have to handle the food.
Your goal is to take your business through those seven steps as quickly and efficiently as possible. It may not be practical to hire an entire staff up front, but you can still group similar tasks together for the people you already have on board. Once you get deals in the pipeline — and I can say this from experience — you’ll begin to see the efficient results of automation and your profits will explode!
