What does it take to be successful?
Why is trust such an important attribute for success?
One of the biggest hurdles to overcome in real estate is finding the money to do deals. Houses are expensive, especially in Colorado. I have done up to 22 flips at one time, which takes a lot of money. Doing one flip takes a lot of money if you have never done one before. Finding money to do deals is about trust. We all know people with money: banks, hard-money lenders, friends, family, coworkers, etc. The problem is some people have created no trust with these people or they have destroyed trust with them.
- Banks: you create trust with banks by building your credit score and making your payments.
- Hard-money lenders: you create trust by finding awesome deals and by having decent credit.
- Friends and family: there are a thousand ways to build trust or destroy it.
Many people take advantage of situations because they can. The problem is they create a hole for themselves which is very hard to dig themselves out of. It is easy to lose someone’s trust but much harder to gain it back. It can take years to rebuild bad credit or a relationship. If you are only trying to rebuild your credit or a relationship to borrow money, that can make it even harder. To become successful, you need to have help. You cannot do it all on your own. If you destroy others’ trust in you, it can be extremely tough to ever make it.
How has trust helped me in my business?
I have made a lot of mistakes in my life. I have made stupid decisions; I have been sloppy; I have forgotten important appointments; and I have done much worse. When we screw up, the natural reaction is to hide it. Maybe no one will notice, or maybe things will magically work out. How often does that actually happen?
Building trust does not happen when everything is going perfectly, just like it is easy to be positive about life when everything is going well. You find out what people are made of in the bad times. Trust is built over long periods of consistent behavior. In good or bad times, people need to know how others will act to be able to trust them.
I have been very honest on my blog about mistakes I make. I have been an open book about my business, and I have always tried to be honest and do the right thing when dealing with people. Thanks to doing business this way for years and years, I have built up a solid reputation. I have also never been late on a mortgage payment, car payment, etc. My track record has built trust and allowed me to build my business with others’ help. I have a number of people I borrow money from:
They all lend me money because they trust me to pay it back. They trust I know what I am doing, and they trust that if something bad happens, I will make it right. I also put some skin in the game. I have some of my own money invested in every deal I do. Putting your own money into a project is another way to build trust and show you are serious. If you have no money, it throws up red flags because you have nothing to lose.
How do you build trust?
A bad situation can actually be the perfect time to prove what you are made of. If you screw up, you can show that you will do the right thing. It is hard to do, but here is the best way to handle a mistake or even a malicious act:
- Own up to it ASAP. The sooner you tell all involved parties the better. If you wait until someone finds out about your mistake, it is not nearly as impressive.
- Come up with a way to fix things. Spend time figuring out how to make the situation better. It may take personal sacrifice from you: time, money, or both.
- Make sure it does not happen again. Come up with ideas on why this happened, and figure out why it will never happen again.
If you put forth the effort to fix the things you mess up, it builds trust. If you try to hide things you mess up or shift the blame, it destroys trust.
I have dealt with many agents, lenders, title companies, and attorneys in this business. Some are great and amazing to work with. They all make mistakes, and you can tell the good from the bad by how they handle mistakes (and also how many mistakes they make). Most people do not want to own up to mistakes because they think it will cost them money. They are worried about short-term problems instead of long-term problems. Yes, owning up to a mistake may cost you money, but it may also make you much more money in the future by building trust.
I have had investors or lenders tell me, “I wouldn’t normally do this deal, but because it is you, I will.”
It feels pretty good to hear that. When I heard that, I knew that doing the right thing for years had paid off, that being honest and transparent had paid off, and that I better keep doing things the right way.
How can you keep and build trust if you have no money or have already screwed up?
A lot of people want to take the easy way out. They want to make money now and not wait the years it could take to build a successful business. Sometimes, the easy way out means doing things that are not right. Even if you have no money and don’t plan to need help for years, what you do now will affect your success. You can start building or eroding trust right now. The choices you make will change how people perceive you and whether they want to work with you or avoid you.
The sooner you take action to build trust and make things right, the sooner you will be successful.
These principles do not apply to just borrowing money. They apply to:
- Work. Are you getting that promotion if you can’t be trusted?
- Family. Are you making the most of your relationships if you can’t be trusted?
- Partners. Partnerships can be amazing in the right situations.
It is also important to remember that who you surround yourself with affects how people trust you as well. If you have a bunch of friends who are not trustworthy, that makes you look bad. If you run a business that has unscrupulous people working for you, that makes your business untrustworthy.
If you want to be successful, you will need help along the way. If you are selling things, hiring people, ot providing services, you will need people to trust you. It is easy to lose trust but hard to earn it. The sooner you can start building trust, the better.