Scaling your real estate portfolio can feel like the ultimate step toward financial freedom, but it’s not without its challenges. In this video, I share a personal story of a scaling misstep that taught me valuable lessons about smart growth. You’ll learn the benefits of scaling—like leveraging affordability and focusing on top activities—and the potential downsides, such as burnout and increased workload. I’ll also discuss how people and technology can help you scale smarter, ensuring you grow your portfolio without overwhelming your life. If you’re ready to scale with intention, dive into this guide for practical insights and strategies
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Does scaling your portfolio guarantee success or could it lead to burnout? Let’s break it down. Stick around to the end where I’m going to share the one strategy that helped me grow my portfolio without overwhelming my life. Whether you want to grow your portfolio or keep it the same size, I’m sure you would love for your investing portfolio to give you more time and more money.
Alright guys, as we talk about scaling, I am going to share a personal scaling fail from my own life to hopefully entertain you and give you some takeaways and some of the lessons I learned from it. So before we really got into real estate investing, I had a hobby farm.
My husband and I were really into clean eating, healthy food, and so we started a farm to get that for ourselves. We decided, having never done it before, that we were going to raise some chickens for meat. We figured we’d probably do about 10 for our own family to have over the year, to get started and test it out. Well, because I am a scaling fan most of the time, I was like, “Well, aren’t there economies of scale? Why would we do just 10 chickens? Why don’t we do like a hundred chickens, and then we can sell the extra, and that’ll probably help pay for ours and make it practically free and, you know, help our friends,” all that good stuff. So having never raised any animals for meat before, we jumped into raising roughly a hundred chickens.
They showed up in the mail. When you get poultry in the mail as little chicks, the post office calls, and you go to the postal center nearest you to pick them up and take them home. We had brooders set up in our garage, which are the boxes the chicks live in when they’re really young with heat lamps and everything. While these chicks were in my garage in these brooders, I was feverishly still finishing the pens that we were going to put them in once they were big enough to move from the brooder boxes to outside. It was an unseasonably cold spring. I was behind on building these, and there was a lot of chaos that ensued. This taught me the lesson that we want to scale, and yet we want to scale smart.
We probably don’t want to think about scaling up on our very first time doing things. That’s one of the lessons learned, and two, we want to maybe have some more—just cut that, let me redo that. So this experience led to me learning a lot of lessons about scaling and how to scale smart. One of the big lessons was maybe we don’t scale the first time we’re doing something.
Maybe we just try a little test situation, build up our personal experience, our personal knowledge, see something we want to do and how we do it well, and then we move on to scaling from there. Let’s go ahead and dive into all of the things you want to take into account as you consider maybe scaling up your real estate investing portfolio. Let’s dive into the pros of scaling, and I have three big pros that I’ve experienced in my own life and I see with others when they scale as well.
The first is that you can leverage affordability. With a larger portfolio, you can afford some tools, systems, or even team members like virtual assistants or boots on the ground to help manage the portfolios more efficiently. There’s a lot of financial economies of scale that can come into play when you get a little bigger and you’ve scaled up.
Second, when you have some scale, you can focus on what you enjoy. You’re able to delegate tasks that you dislike because you can, again, afford that leverage of someone else to help in the business. That means that you can do your top 20% and you can afford someone else to do the other 80%. While that also can lead to quality of life and enjoyment, it can also help you scale success because when you’re able to spend your time in your top 20%, you’re able to focus on those core activities that move the needle the most.
So when you start to get some scale and you’re able to niche down to your most important activities, you should start to see your activities and your success snowball faster because you’re doing those most important critical activities and not the other 80%. The third thing that can really be a positive—the third thing that is the reason people scale—is, of course, it increases your profitability. There are two ways that we’re doing that.
One is, of course, when we have more properties or more income sources, we’re going to make more money. Second, like we kind of talked about before, there are economies of scale with our expenses. So you’re going to have one account for some sort of software. Let’s say, like I use Monday.com as my project management software—I love it. I pay per user, and it’s a pretty nominal fee. So I can manage with the same number of users two properties or eight properties as an example, or 10 and 20. So my costs don’t always scale in the same way that my properties or other income sources do. So it can really increase your profitability because you’re making more money, and you’re not necessarily increasing your expenses. Those play together to really increase your profitability.
That’s why people want to scale—they want to scale because they can take advantage of these economies of scale. They can make more money without having as many expenses. They can focus on their top activities. They can afford help to do the other activities, which means better quality of life and more success happening. Now, of course, the pros aren’t the whole story. There’s going to be some cons too. So what does that look like within your real estate investing world?
The first con is that when you scale without leverage, your work is going to increase exponentially. If you try to go from 10 doors to 20 doors and you don’t bring on someone to help you do that, like a virtual assistant or boots on the ground, if you don’t bring on better technology tools, you’re going to have so much more work. It’s going to be like the 100 meat chickens example I said at the beginning, and you are going to be questioning all the choices you’ve ever made in your life. So if you scale without leverage, you are going to have a ton of work, and you’re going to drown. You need to leverage people and technology to help with this workload as you scale.
The second thing that can happen with scale is you can burn out. There’s a much higher risk of burnout because, again, if you’re not using technology or people to help, you’re really brute forcing your growth. That’s going to lead to exhaustion, reduced results, and burnout because you’re doing a ton of activities that don’t bring you joy, and you’re probably just doing a ton of activities and working a ton in the first place. So what’s the best way forward? We’ve got these great pros of scaling. We’ve got the opportunity that we can bring people in, and we can make more money. Then we’ve got the cons of, well, we can also get exhausted and burned out. So what do we do? How do we move forward? Do we scale? Do we not?
I am a big proponent of scaling. I would just say scale smart, and that means that as you grow, make sure that you’re putting in the systems you need with people and technology to support the added needs of your real estate investing business as you scale. So as you get those extra properties and make more money, realize you’re going to need a VA to help with whatever aspect of however your business looks, whether that’s vetting properties, helping with lead gen, operating the properties, overseeing renovations, or managing tenants—whatever your investing looks like. You can get a virtual assistant to help with that, and that is often a very great solution to use.
The other thing is technology. I love technology, and you can have both people and technology. So you’re going to scale. You’re going to get these benefits, and you’re going to get the time and financial freedom because you’re going to have people and technology helping you along the way. To me, that’s the secret sauce—that’s the chef’s kiss perfect way to grow your real estate investing portfolio so it’s really transformational and helping you create the life you love.
I told you I would give you one of my top tips on how to scale well and how to scale smart, and this is learned from the chicken example. Start small before you think about scaling. Have that first experience in that field. Do your first investment right. Do what makes sense as a first step. The first step isn’t going to be this huge life-changing step where you’re going to be bringing in six figures of income from this one project—probably not. Yet, it also means that it’s not going to be a huge failure, and you’re going to get to learn along the way. So to scale, don’t worry about it. Start small at first, realizing that scale comes over time. Start small at first, and realize that scale comes over time.
Investor friends, scaling can transform your portfolio. I entirely believe in it, and yet you want to do it with intention and with the leverage of people and technology to help, so it doesn’t just scale your workload as well. Thank you so much for tuning in today. Make sure to check us again next week for more smart tips and wisdom to help you be the best real estate investor you can be. See you then!