Real estate investors love to talk about rules for some reason. The 2% Rule of rent-to-price ratio (which you should totally ignore), the 25X Rule of retirement assets (which is not fixed in stone, as we discuss), the 70% Rule of mandatory minimum equity (okay this one actually holds pretty true). For a group who’s constantly talking about freedom, what’s with all the rules?
Maybe it’s just human nature, to look for shorthand ways to reduce complex truths into manageable mouthfuls.
And perhaps because real estate investors are self-employed, they need the structure of rules to help them stay on track. Everyone loves to hate on their boss, but the truth is that it’s a lot easier to succeed when someone is telling you how to do it!
Keller Williams on Distilling Complex Problems
Gary Keller, co-founder of Keller Williams, wrote a much-loved book entitled The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results. In it, he devotes plenty of pages to how to find actionable solutions to complex challenges.
We’ve all felt overwhelmed by complex problems, right? Questions like “How do I earn more money?” and “What do I need to do today to make my business more successful?” can seem sprawling, with no obvious starting point to build from. These questions have answers, but they’re complicated, multi-dimensional answers. The kind that become overwhelming so quickly that we often just brush them off for another day. And another. And another.
Word on the street is that Keller Williams has so deeply ingrained its 10/4 Rule into their team that agents routinely greet each other by asking “How’s your 10/4 going today?” If that sounds insufferably dorky, well, no one said you have to work with these people. But even an outsider like me can tell there’s something to this 10/4 business.
So What Is this 10/4 Rule You Speak Of?
In its simplest form, the 10/4 Rule goes like this: Whatever your big, hairy, audacious goal is, what are the four most important activities you need to do to reach it? Once you’ve identified these four critical activities, you need to do each of them ten times, every day. Every. Day.
For real estate agents, the four activities are typically: securing new listings, securing buyers, closing deals under contract, and improving local market expertise. So each day could be broken down like so:
- Talk to ten potential sellers.
- Talk to ten potential buyers.
- Follow up on ten issues that could potentially delay pending contracts.
- Walk through ten properties listed by other agents.
And if you have any lingering doubts, consider that this system has helped make Keller Williams the largest real estate agency in the world, by a widening margin. Last year, they added 20,000 agents, for a total of more than 133,000 agents worldwide. Their closed units rose 19%, and their sales volume rose 24%.
Clearly they’re onto something here.
Systems & Routine
As we talked about in 10 Ways Your Subconscious Is Keeping You Poor, mapping your goals is only the first step. Creating routines of effective actions and systems that automate successful behavior are what actually help you reach your goals.
That’s where the 10/4 Rule becomes so useful. It’s a formula for creating your own systematized routine, to achieve your goals. In other words, a literal formula for success.
The first day you try doing ten behaviors in four different areas, it will feel forced, awkward, exhausting. By the end of the first week, when you’ve done two hundred of these behaviors, it will already be feeling smoother and easier.
The extra practice certainly doesn’t hurt – you can’t help but improve if you do anything fifty times each week. But beyond the extra practice, having a routine removes all the effort of planning tasks every day and forcing yourself to do them. Psychologists say that our daily motivation is largely a fixed resource, but you can cheat the system by making certain behaviors thoughtless, just another part of your day.
You probably don’t question whether or not to eat breakfast; it’s just something you do every day. Routinized behaviors don’t cost you motivation, so build a daily routine of the right behaviors to produce success.
Write It Down!
There’s a saying in business: “That which gets measured, gets done.” If you’re a spreadsheet nerd like I am, create a simple spreadsheet, with four columns for your four behaviors. Every day, you can fill in the ten behaviors you did in each column.
Your day will suddenly have an easy minimum metric for success: before you quit working for the day, did you knock out your 10/4 actions?
Knock it out. Git ‘r done!
Applications for Landlords, Property Managers & Real Estate Investors
I don’t know your exact goals. Honestly it would be kind of creepy if I did. But let’s throw around a few possible applications of the 10/4 Rule for different real estate professionals.
If you’re a property manager, the four most important activities for success might look like this: secure new clients, resolve urgent property issues, retain good tenants, retain good clients by maximizing their returns. Each of those leaves some wiggle room for specific behaviors; urgent property issues could mean repairing a roof leak or it could mean filling a vacant unit, depending on what’s most urgent that day.
Real estate investors and landlords will share some of these priorities but not others. They don’t need to secure or retain clients, but they do need to find new properties and push them through to payoff (whether that’s leasing or selling the property). So if finding new investment properties is one of their four columns, some actions for success might include networking with wholesalers and real estate agents, researching new markets, viewing potential deals the same day they go on the market, etc.
And if it occasionally doesn’t make sense to do ten of a particular behavior one day? No problem, do twenty of another behavior on your 10/4 list. A landlord or property manager may have a glorious day when there are no urgent property issues, so they focus extra energy on finding new clients or new properties.
Results come from doing the most productive activities possible, over and over, every day.
Whether you’re a property manager or rental investor, there are things you could do to make yourself feel busy, but which won’t ultimately help you make more money. That’s why you need to distill down the most critical behaviors for reaching your goals, and then systematize those behaviors.
It doesn’t matter how many hours a day you end up working (or not working!), what matters is that you do enough of the right behaviors. Actions that will actually move you toward your goals. Want to work four-hour days? No problem… if you fill those four hours with rock-star actions that will inevitably yield massive results.
That’s what the 10/4 Rule is ultimately about: helping to clarify and systematize the essence of what it will take to succeed. To weed out the busywork, the distractions, the fluff. Remember Pareto’s 80/20 Rule? If you focus on the 20% of actions that yield 80% of your results, you may find you no longer need to run around so much doing all the other nonsense.
You may not like rules (as a general rule?), but they’re even more useful in real estate than most businesses.♦
Ever tried the 10/4 Rule? Like other “rules” for success? Just want to rant about how nerdy Keller Williams agents are? All acceptable in the Comments section below!