Is Project Management the most important vertical in your REI business?
Sep 30, 2024
Is Project Management the most important vertical for a successful Real Estate Investment (REI) and development business?
I'm not sure if I’m ready to give a definitive "yes," but there’s a strong argument to be made. Not all real estate investors are involved in construction, but all flippers, BRRR investors, developers, and home builders have significant project management responsibilities.
Here’s my argument…
First, let’s use a business audit exercise. Take a look at all of the verticals in your business—things like:
- Marketing
- Acquisitions
- Project Management
- Sales/Property Management
- Bookkeeping/Office Management
Now, every time we audit our own business, we should ask:
- Where is the most money lost?
- What is the most unpredictable?
- What is the most difficult to control?
- Where are the most delays?
In most REI businesses, the majority of their "leakage" comes from the construction and project management vertical. Doesn’t that suggest we should focus more on this part of the business?
We all know the direct benefits of effective project management:
- Accurate budgets
- Efficient schedules
- High-quality contractors
- Thorough scopes of work
But project management also indirectly impacts other parts of the REI business, such as:
- Making better offers
- Ability to execute deals others can’t
- Predictable cash flow
- Confident profits
- More time working on the business, not in the business
These indirect benefits ripple through the entire operation, leading to smoother processes, better decision-making, and ultimately, a more scalable business. By mastering project management, you can turn potential obstacles into opportunities, resulting in a more controlled and predictable business environment.
So, what do you think? Did I make a decent argument? All of our verticals are important in different ways, and all are necessary for running a successful business. However, I challenge you to put a little more focus on your project management responsibilities and see how much easier this business can become.