INVESTOR: Why Pareto Principle will give you a Bigger Profit Harvest

 

Hey gang, this is Mike with My Real Estate DOJO and today’s lesson is about the 80-20% rule in real estate business and entrepreneurship. So let’s go ahead and dive in and get started, gang. All right, I know that all of you guys have heard the 80-20% rule.

If you haven’t, I’m going to go ahead and explain it to you right now. This video is divided into two parts: 1). Learning by the 80-20% rule in my business, in my moving company, in the real estate business, in the investment business and 2). How you should use the 80-20% as a real estate investor or just an entrepreneur. Let’s dive in and get started, gang. What I came across with the 80-20% rule and implemented in 2015 was there are two types of customers out there in your business and my business.

Let me go ahead and talk about the customers in my business. In my moving company what I realized is that 20% of my customers, which is this much, will give me 80% of my business. Again, 20% of my customers will give me 80% of my business. On the other hand, there is 20% of my customers in my moving business that give me 80% of headaches.

Again, 20% of my customers give me 80% of my headaches. So there is 20% that give me 80% of my business and there are the ones in the middle and there is the 20% at the end that give me 80% of my headaches. The same thing has happened in my real estate business as Mr. Investor or being a property landlord, same thing with renters. No matter what business you are, you are going to see this 80-20% pattern happening in life. What do I mean by 20% of my customers give me 80% of my headaches. If you take my moving company, there’s customers that don’t read my terms and conditions, there’s customers that failed to do their own due diligence and fill out the form or pay the deposit. When they move, they don’t know the terms and conditions of their services or when they move they call and complain, like “Hey, the movers didn’t show up”. “Well, you didn’t pay your deposit, so we didn’t make a reservation for you”. So what I learned is that 20% of our customers will give 80% of your headaches. On the other hand, there is that 20% of your customers that will give you 80% of your business. What I mean, in my moving company Dr. Move, there are those customers, that will move with us, then they will tell their friends and family. In a year or two they will come and move with us again and they will again tell their friends and family.

Over the span of 13-14 years when I’ve done the tracking, these people have given me the most amount of business than all my other clients out there, ok? Say, another situation with the 20% rule is that in the investment world. Say you are a real estate investor, you have to understand that 20% of your motivated sellers are going to cause you 80% of your bullshit or are time wasters, or the deals that are not going to go through. These motivated sellers are going to make you run around, drive everywhere and end of the day, they are not going to do one thing or another for the deal to get closed. Either they are not going to open their door for you, maybe for you to show the property to your buyers or maybe to your inspectors, or maybe they will not show it to the title company for the closing or maybe after you sign the contract they will go behind your back and sell the deal to another investor. Whatever the story may be, that 20% of motivated sellers will create 80% of your headaches.

The point of the story is, don’t fuck with those sellers even though you’re hungry and you think you can make some money out of it, which I am sure you can, but at the end of the day, that 20% is going to give you the most amount of pain and suffering, because you may not make the money, you are going to put in a whole lot of time in there, they are going to put you a roller-coaster ride etc. On the other hand, there is that 20% of motivated sellers that are going to give you 80% of your business, they are going to give you 80% of your profits. My suggestions to you is, what I’ve implemented in my business is that work on the 20% that are going to give you 80% of your business and then work on the other people in the middle, and fuck the 20% that are going to cause you 80% of your headaches. Again, for example, in my business Mr. Investor, if my motivated seller calls and I could use my experience of 14 years to say “Hey this that type of motivated seller that is going to waste my fucking time”. He is that type of motivated seller that is 20% that will give me 80% of my headache. If I can tell that right of the phone with them from that conversation, I am going to tell him “Hey, Joe, sorry I can’t help you out. Have a great day!”

The reason I do that is because I’d rather put my time and energy on the 20% that are going to give me 80% of my business. I’d rather put my time and energy on the ones in the middle that are going to give me a good deal. I don’t want to put my time and energy into the people that are not going to be grateful. I don’t want to put my time and effort into people that are not going to be appreciative. I don’t want to put my energy onto shifty people that are going to be wishy-washy. I don’t want to do that because no matter what extra mile I go to, no matter if I go above and beyond their expectation, they are not going to be fucking happy. End of the day it is going to come back and hurt me, because it is going to waste my time, bring me bad review. Whatever the story may be, it is not worth it. My suggestion to you is stay the fuck away from those 20% of your customers that are going to give you 80% of your headache.

Put your attention to the 20% that are going to give you 80% of your profit, because that is the key to success - to deal with the motivated 20% that put money in your pocket that want your help, are seeking your help. It’s a win-win. You don’t have to convince them, you don’t have to sell them, you don’t have to persuade them- they are believers, they believe in you. They want you to help them out and you really need to put all your energy, all your extra mile into these people, because these people are going to go out there be rating fans, tell their friends and family and going to be using you over and over. Let me give you an example in my moving company. When I was a young entrepreneur I would be happy to take any customer. Now I realize that if that 20% is going to give me 80% of headaches, 80% of my bad reviews and most of the time they are the cheapest mother fuckers, they are the cheapest clients out there, so it’s not worth dealing with them in my book. If somebody calls me for a moving and I feel like they are going to cause us 80% of our problems down the line, we just say “Hey, thank you for choosing Dr. Move, but we really are not interested. Have a great day!” because why try to pick up this little amount of money and then have so much headaches, when there’s other people out there that you got to put this much in and they are going to give you so much out. Why not work with people that really want your help, instead of working with negative fucking people that are never going to be fucking happy that are just always going to bitch and moan. End of the story, simply put, the 80-20% is a very true pattern that is in every business if it is from complaints, if it is from profit, from regeneration etc.

For example, if you are talking about lead generation. There’s 20% of marking that you do that is going to bring 80% of your business. Then there’s that 20% that you are going to put all your money into, but doesn’t bring you any fucking money. Unless you’re tracking your leads, you’re not going to be able to use that 20% rule. If you’re busy like me, you use the 20-80% in your favor so you don’t have to deal with the 80% of the population. You are only dealing with the 20%. For example, in my company when sellers call I only want to deal with the crème of the crème, only the crème of the crop. All the other 80% I don’t want, because I don’t have the time for it and I am not in the wholesale business. I don’t need to do so much volume, because I have other companies making money for it. I am looking for the crème of the crème, I’ve learned the 80-20% rule and I am sharing it with you, because not only will it save you a lot of money, a lot of headaches, but it’s going to make your business more profitable. End of the day, you are having a more enjoyable life, because that 20% of the people aren’t going to give you 80% of your headache. Nobody wants to deal with that shit.

This is Mike, with My Real Estate DOJO. Go out there and hustle and bustle. This is the New Year, don’t take ‘no’ for an answer. This is America, this is the greatest country ever. If you are really-really hungry this is the place to be. You got to keep believing, you got to keep dreaming and don’t take ‘no’ for an answer. This is Mike with My Real Estate DOJO, I’ll talk to you soon, gang. If you like these videos, please share, please comment and please leave a review. Have a great day!




Leave a comment

Please note, comments must be approved before they are published