The Personality of Real Estate Investors
What is your Advantage?
For the past 20 years, I have worked with hundreds of entrepreneurs from all career backgrounds while being an executive at HomeVestors, The We Buy Ugly Houses people. Each one had a common desire to build a profitable business buying, rehabbing and selling single-family houses.
I developed an assessment for those investors to complete as part of the application process. I also met with each investor and their partner to discuss the part of the business that would provide the best opportunity for success.
My other passion was to review the results. What I learned from the process of tracking the more than 110,000 houses they bought during those 20 years is this: Some personality patterns tend to be more successful than others. I also learned that all entrepreneurs—no matter their personalities—can succeed if they recognize what their Advantage is and team with others who can do the parts of the business where they do not have an Advantage.
The Three Levels
My system, called Your Living Talent, presents choices on three levels: Feeling, Thinking and Acting-Advantage.
The Feeling level is what you were born with. It determines why you do what you do.
The Thinking level is developed by age six and determines how you think and communicate. You get that from your parents. Whatever they give you causes you to develop the opposite. For example, if they are very organized, then you tend not to be. This explains why grandchildren and their grandparents get along. You say I will never raise my children the way I was raised, and you don’t. The grandkids say to the grandparents: I’m OK and you’re OK. What is wrong with my parents?
The third level is your Acting-Advantage. This is developed by age 15-16. By that age, you have a half dozen fiber connections in your brain that will always be your best Acting-Advantage. You develop this by choosing what you enjoy doing and through the recognition your family and friends give you for doing well. If you can spend 80% of your day doing what you have an Acting-Advantage to do, you will be energized by your work and you will energize the people you work with and serve.
The Four Colors
The four colors are Red-Doers, Yellow-Talkers, Blue-Thinkers and Green-Controllers. You can have one, two, three or four of these colors on each level. All businesses require all four colors to be successful. Red has an Acting-Advantage to focus on results. Yellow has an Acting-Advantage to connect with people. Blue has an Acting-Advantage to solve problems. Green has an Acting-Advantage to maintain a system.
The two most essential Acting-Advantages for building a successful business are the Red Acting-Advantage that focuses on results (production of revenue and income) and the Yellow Acting-Advantage that connects with people. The key to buying houses directly from sellers who are usually still in their homes is being able to connect with them and helping them make the decision to sell at a fair price in exchange for a quick sale without having to make repairs.
If you have a Blue Acting-Advantage and can solve problems, you are a good listener because you are listening for the problem. The risk is that you can spend too much time trying to solve a problem that cannot be solved.
If you have a Green Acting-Advantage, you are great at analyzing the details of the transaction. The risk is you talk yourself out of the transaction because you are too focused on the details.
Most investors who have the Red/Yellow combination are not good with details. So, it’s important for them to surround themselves with people who can maintain the system. We have found that the most valuable person you can recruit for your team is good with detail and people and has a sense of urgency. Anyone who has had a great personal assistant can attest to the fact that their ability to focus on results was significantly improved by that person. People with Red Acting-Advantage can get almost anything done through focus and force. But they tend to be do-it-yourself people and end up doing things they don’t have an Advantage to do rather than doing what they are the best at doing.
Thinking and Communication Patterns
It’s also important to understand thinking and communication patterns.
Understanding how different people think is a key component of building a successful team that can think through the best strategies and tactics. There is a process for fully utilizing the thinking of all your team members.
First, Yellow determines who should be involved in the discussion. Blue determines why we are having the discussion and focuses on the best alternatives for solving the problem. Before they engage the Red to determine what we need to do to execute, they need to select the best two or three alternatives to present to the Red. Reds do best when they have two choices. Once Reds have picked the best strategy or tactic, Green determines the process or the system to get it achieved and tracked to make sure it is performing as expected.
Partners or teams that take advantage of the thinking patterns of their team will always get better results than those that do not.
Understanding how people feel is very important because feelings determine their decision to buy or sell. We justify our decisions with thinking, but we make our decisions with feelings.
Reds have a need to win, be in charge and make money.
Yellows need to be recognized, to celebrate and to do things with others. They never like it if they win and the team loses. Many of them start a real estate investment business so they can do it with their relatives, friends or neighbors.
Blues have a need to research better alternatives. They focus how they can make life better for themselves and the people they care about. Their challenge is that they get bored with others once they understand them and many times start a business so they can do something different.
Greens have a need to be in control and to stay out of trouble. They especially hate making the same mistake twice. They start a business to have more money, and they struggle with taking risk, which is not usually compatible with starting a new business.
The most common pattern I’ve seen is people who have Red and Green. They need to make and have money, and they usually have enough money that they can afford to start a business.
The greatest takeaway from my 20 years of experience is that it is important to understand how you feel, think and act when you decide to start a real estate investment business. It is even more important to realize the people you need to surround yourself with that have different Acting-Advantages than you. Building a successful business is about leveraging your Acting-Advantage and recruiting a team that can help you build the kind of business that will meet your needs. I have witnessed people from all different backgrounds with different personalities create amazing lifestyles for themselves and their families in the real estate investment business—and it all starts with knowing what you want, why you want it and understanding what your unique personality is that can help you achieve your
dreams.
