Why “Coupon Clipper” Mentality is Hurting Your Real Estate Business

mindset small business tips for success Oct 03, 2022

There's a reason why most real estate investors plateau at a certain point in their business, and it has to do with their mentality. When you're starting out, you're very lean and mean - you don't have any additional expenses, so anytime something comes up, you just put the tape on and do the work yourself.

However, this approach won't work for you when your business starts to grow. You need to start thinking about building a team that can help you scale your business. At the same time, you also need to start charging some fees that help maintain your business.

If you still have that "coupon clipper" mentality, I am telling you that it's not hurting anybody but yourself. Now, what I mean by that is when you start out your business, you're very lean and mean and you don't have any additional expenses.

You don't have anybody in your team. So anytime something comes up, you just put the tape on and do the work yourself. Now that'll work for you when you have two to ten doors.

But when you start counting the properties to 50 doors and you're still doing it yourself. And then you hit this wall and you're like, what the heck is going on? I got thirty doors.

I got forty doors, but I got no cash. Hey, you got some cash flow, you got some money coming in, but you got no cash beyond a couple hundred or a couple of thousand bucks.

Now a month, you're sitting on this portfolio with investors worth a couple of million bucks or whatever it is. So here's the problem, guys. Most of you don't respect yourselves. And what I mean by that is, you don't build in the cost of you or your team doing business in your acquisition.

So you're missing things like acquisition fees, disposition fees, and project management fees.I can tell you right now that it is okay to charge some fees. You should make most of your money on the success of the project, but it is crazy to think that you're gonna work for free for three years ten years, whatever it is until that project is refinanced or sold.

Look at the big boys. Look at the private equity firms. They charge fees. They have management fees. They have asset management fees. They have a project net. They have all kinds of different fees.

And again, you may not agree with all of them but at the end of the day, you gotta have some fees along the way because if you're gonna live off $12 a door about fifty doors, you're not gonna get far. You're not gonna be an asset to your investors. You're sure as heck you're not gonna be an asset to your family, and your real estate dream might literally just end up being a dream.


Marcin Drozdz

The information contained herein is for general guidance on matters of interest only. This information contained herein is not intended to provide you with any advice on financial planning, investment, insurance, legal, accounting, tax or similar matters and should not be relied upon for such purposes. M1 Real Capital Inc, Marcin Drozdz is not a financial, legal or tax adviser. You should assess whether you require such advisers and additional information and, where appropriate, seek independent professional advice. You understand this to be an expression of opinions and not professional advice. You are solely responsible for any actions you take with the content and hold M1 Real Capital Inc, Marcin Drozdz or any of his affiliates harmless in any event or claim.

Are You Serious About Building Your Real Estate Portfolio?