For any real estate professional, the competition represents more than a sign in somebody’s lawn, and more than a website.
It represents opportunity.
Opportunity to learn, to gauge, to grow — to recalibrate one’s own approach to the profession.
Competition, far from bad, makes you better. It reveals weak spots and gives you a chance to step up your game. That is why, in the Information Age, it is essential to familiarize oneself with your rivals — to learn the different approaches and ideas that might be in use, and how to not only counter them, but also, perhaps, to “borrow” something, if not build upon it.
So go ahead and attend the competition’s open houses — or, better yet, have an associate do so; no need to be too obvious. Attend real estate classes or other functions where they will be. And by all means do the online legwork, via Google and such websites as Yelp, as well as social media outlets like Facebook and Twitter. Knowledge is power, and the more you know, the better off you are.
Also, check back often. The landscape is ever-changing, and it’s critical to be cognizant of those alterations.
It’s helpful to remember that your competitors aren’t always enemies. In fact, sometimes they can be friends. Building a good relationship with a competitor not only better familiarizes you with your market, it can better position your firm.
Friendly competitors won’t think twice about sharing best practices and challenges, insights that may prove valuable to your business. Sometimes there’s even an opportunity to collaborate or partner. With a little willingness and creativity, you can work together on larger projects, or wholesale properties to one another when work piles up. In these scenarios, forging a competitive relationship can spell more profits for everyone.
But if your competitors aren’t interested in cooperating, that doesn’t mean your work stops there. You can and should continue to perform reconnaissance, diving deeper into their operations, your operations, and what — if anything — distinguishes you both. This soul-searching, with an eye toward refining a competitive advantage, can often prove the most valuable, profitable endeavor a real estate investor undertakes.
Begin by thinking about niche. Have your competitors carved out an area of expertise for themselves that attract opportunities? Are people spoon-feeding them the types of deals at which they excel? This is an ideal scenario, because when it comes to real estate, the more you specialize, the better you do financially. Plus, you can’t be everything to everybody.
Niches can involve property types (multifamily, condos, large or small apartment buildings, etc.), seller-driven niches (foreclosures, bankruptcies, water or fire damage, etc.), end-user niches (vacation rentals, student rentals, Section 8, rent-to-own, etc.), or location. Chances are, you already have a location niche and a property-type niche. How does this compare to your competition? Are you both competing in the same space, or are they more narrowly focused? Is there a way for you to draw upon past experience to pivot into a smaller, more specific category? Or do your natural strengths position you well for a certain type of work (i.e. one involving less competition)? A thorough analysis of a competitive marketplace can help you identify areas already saturated by competition, and hopefully provide some ideas on realms that are underserved.
Establishing a niche also allows you to uncover your best lead source and stick with it. From there, if you consistently do your job well, you can establish a great reputation and position yourself as a thought leader within your specialty. Plus, putting a repeatable process in place to execute deals of a similar ilk saves money, too. Everyone is more efficient when they’re not recreating the wheel with every project.
Another strategy is to find a way to execute the deals that your competition avoids. Perhaps they won’t touch foreclosures, or properties in need of certain types of repairs or extensive remodeling. Savvy investors identify this distaste and figure out a way to make the work feasible and cost-efficient. Once they’ve proven the model works, it can be repeated ad infinitum.
The bottom line is this: Whether you decide to join forces, swim in the same pond, or distance your firm as much as possible from its competitors, it pays to gauge what’s out there. Having a solid grasp of the competitive landscape can act as a springboard for your firm’s strategic direction and market differentiation.