Category: Business
The One Key to Selling Real Estate
I know it may sound like a derogatory term, but in order to be successful as a real estate agent or broker, you are going to have to sell some real estate.
But that doesn’t mean that you have to sound like Billy Mays with his infamous “ShamWow!” scream.
But it does mean you are going to have to focus on what really gets someone to say yes to what you are offering – your services and the property at hand.
So how do you do that?
Well, here’s the one simple statement to selling real estate (really anything for that matter).
Give them what they want, and you’ll get what you want.
The trick, though, is finding out what they want. So you have to really sit them down and ask them as many questions as possible in order to finely tune your marketing strategy. Yes, you need to ask them the basics like what kind of a house are they looking for, how much square footage do they need, how many bedrooms and bathrooms are they looking for, etc. But more than that, what is the one thing they want the most out of the house.
For some, it may be the kitchen. A large kitchen with an island stove may be the one thing that sells the house.
For others, a large porch may be the ultimate.
Or perhaps, they are looking for something on a lake or beach.
Whatever it is, if you can find out what they want, and scour the area to find it for them, you are going to be the hero in their eyes, instead of the greasy used car salesman that everyone dislikes.
So ask them the questions, and then listen to their answers. Get them prequalified for financing, so you can know how to limit your search criteria, and then go to work building a list of perspective houses, and mapping out a route to show them to your prospects, while saving you the most amount of gas possible.
Like with me, I am marketing Belton real estate, so when I am working with a prospect, I’ll talk to them about the school district, do the prefer Belton or Temple, do they want to be on the north side or south side of town, are they looking for a new home or an older home. Listening to their answers lets me know what they want, then I can hunt it down for them.
After that, all you have to do is take them through the paper work process, and close!
From Rentals to Riches: 5 things to consider before investing in rental property
The housing market is still rocky in a lot of areas, but with real estate buy-in prices at an all time low, 2011 is looking like a good year to invest in rental properties.
Like so many other Americans, I spend a large portion of my daily commute listening to NPR and dreaming of a day when I’m my own boss, make my own hours and don’t have to show up every morning promptly at 9am.
Occasionally NPR aids and abets those fantasies as it did one morning last week by running a story on mortgage defaults and foreclosures. In December 2010 the number of houses that had received at least one foreclosure notice was the lowest it had been in 30 months, down a full 26.3 percent from December 2009. But that wasn’t the full story.
The reason why foreclosures were down was because the average time-window between mortgage defaults and foreclosure has grown to 400 days. Allegations were made that lenders were handling evictions improperly causing the federal government to monitor the process far more closely. This extra level of review meant that the banks themselves proceeded far more cautiously, slowing the entire process down.
But with five million borrowers behind on their house payments by two months or more, foreclosures are expected to reach a peak of 1.2 million according to RealtyTrac Inc, the leading online marketplace of foreclosure properties. And when this backlog of houses hits the market, they will be offered at rock bottom prices.
This glut of low-cost housing is having two effects on the market.
- First, many potential buyers, for whom real estate is not an investment but a place to call home, are deferring their house purchases in the expectation that currently low prices will dip even lower in the future. In the interim, these people are renting.
- Second, there are many great opportunities for real-estate investors taking advantage of the renting trend to pick up rental properties. While the average rate on mortgage loans is not as low as it has been at other points in the past few years, it is still quite low – sweetening the deal for prospective real estate investors even more.
Like many others, I dream of becoming a real estate tycoon. Low interest rates and low housing costs make this an ideal time to invest in rental properties. Flipping houses? Not so much. You’ll still have to compete with all those foreclosures dragging down the market for a while. Rental properties, on the other hand, can start to provide a stream of income for the savvy buyer whose willing to invest the time into managing properties.
But rental properties can be a stable source of income but like all investments, there’s an element of risk involved and it’s critically important to anticipate those risks in advance. Before I complete those loan applications and send them out via expedited shipping to my bank, there are five things that I need to consider – and I would advise anyone who’s thinking of pursuing the real estate investment track to do the same.
No. 1- Not All Investment Properties Are Equal
A prospective real estate investor is well advised to formulate a clear real estate investment strategy before he or she begins acquiring properties. Is he or she interested in buying apartment buildings, houses or commercial properties? Or perhaps he or she is interested in buying land and then developing it for rental use? In addition to one’s personal preferences, the current market must be evaluated very carefully when formulating a real estate investment strategy. Right now the commercial rental market and development market are still both depressed; unless a prospective investor is prepared to deal with challenging market-conditions, that might be a reason to steer away from both.
No. 2-What To Expect In Annual Income
Some experts argue that the amount a landlord charges for rent should be a fixed one percent of the property’s value. Really, however, there are no rules here. Rent must be competitive with rents charged on similar properties in the same neighborhood or else the landlord will have difficulties renting the property, but in order to earn a profit annual rent must exceed the annual operating expenses associated with the property. Other landlords and rental management firms can provide
No. 3-What To Expect In Annual Expenses
Rental properties can anticipate two types of annual expenses: fixed expenses and variable expenses.
Fixed expenses include the mortgage payments on the property, property insurance, property taxes and routine maintenance and upkeep. If a landlord chooses to outsource property management, these expenses also need to be counted.
Variable expenses might include replacement costs for various items and systems that wear out over time such as roofs, water heaters, plumbing pipes and flooring.
No. 4-Additional Sources of Expense
The wise prospective landlord will make a contingency plan dealing with unanticipated expenses should they occur. Examples of such expenses include:
• Lowered return due to property sitting empty between renters
• Legal expenses associated with eviction
• Repair expenses associated with tenant damage to property
No. 5-Where To Buy
A rental property’s location determines how much a landlord can charge for rent, the type of tenants a property will attract and the average length of vacancies between tenants.
For example: If the ideal tenant in a landlord’s mind is a young urban professional, then that landlord will buy in a neighborhood with plenty of restaurants, stores that provide expedited shipping and serve as outsourced offices, and other services this demographic group uses heavily. The landlord can look forward to a relatively stable tenant base, but longer vacancies when the tenants do leave and more demand for maintenance and upkeep-related activities.
If, on the other, a landlord buys property close to a university or other institution of higher learning, the landlord can expect frequent turn-over as many students leave for the summer but shorter vacancies as there will be high demand for rentals within close proximity to the school.
One last point to make before closing: buy close to home. If you’re looking at setting up a mini-empire of properties helmed by you—a single-owner—think twice about doing it if you’re not sure that you’ll be staying in the area where you’re investing. If you wind up living far away from properties that you own, domestic shipping and plane tickets—even at all time low rates— tend to add up and cut into your profits. You always want to be able to check up on your properties, and it’s expensive to farm out the duties of a property manager to a contractor.
Remember: a house divided against itself cannot stand. And a landlord separated from his properties will tend to find himself in a tight-spot when the rent comes due.
What Can a Property Manager Do for Me?
photo courtesy seier+seier
My grandparents own a home in Florida, though they live in the Washington DC area for about three-fourths of the year. Last week they received a water bill for their Florida home that was unusually high. They called a friend to check things out and he found three inches of water in their basement. A pipe had broken and the water has done about fifty thousand dollars worth of damage to their home.
In my opinion, this situation would have been avoided if my grandparents rented the property. They don’t use the home enough to justify keeping it without making some money from it. If they had a renter they would have noticed the leak before it did so much expensive damage. However, I understand their hesitation to rent a property that they can’t check on regularly. It’s hard to trust your property to a stranger, especially when you live hours away. A good option for them might be to find a property manager in Florida to help them rent and take care of their home.
Property managers make money by taking care of rental properties for owners that don’t want to have to worry about checking on them all the time, or who simply can’t due to time constraints or location. Most property managers will also screen potential tenants with background checks, credit reports, and sometimes by calling employers and past landlords to ensure that property owners can trust their tenants to pay their rent and respect their property. Most managers will also do a thorough inspection of the home and document the condition of everything before the tenants move in, for the owner’s protection. They also collect rent and deposit it directly into the owner’s bank account. Depending on what level of service they offer, some property managers even check on houses regularly to take pictures and address any necessary maintenance.
In exchange for all of these services, property managers collect a percentage of the monthly rental amount, usually between five and ten percent. For real estate investors or property owners that don’t live near their property, it’s more than worth the expense. If investors and homeowners do their homework and select property managers that are trustworthy, they can feel free to invest in and rent properties that they can’t readily check on or find tenants for themselves.
Do I Need a Letting Agent?
In the UK, they have a term for real estate agents that specialize in rentals: letting agents. In the U.S. most “letting agents” take the form of real estate agents or property managers. If you are looking to rent a property but you are intimidated by the prospect of finding a qualified, trustworthy renter and maintaining a property on your own, a letting agent can make the process easy.
Most letting agents or property managers will screen potential tenants, market and show your property, and perform credit and reference checks to determine if people can afford to make payments. They can also give you an idea of how much you can reasonably charge, and what you can do to make your house more appealing to tenants. Some even arrange for maintenance, collect rent, and deposit it in your account every month. In exchange for this help, landlords can expect to pay a percentage of the rent they charge for the length of the contract, usually five to ten percent. So if you rent your property for one thousand per month for one year, and the agent charges ten percent, you will have to pay twelve hundred dollars when the contract is signed. Property managers that provide more ongoing services will charge more.
Many landlords that don’t live near their property, have too many properties to manage, or are simply inexperienced at finding good renters on their own would benefit from the help of a letting agent or property manager. If you decide that a letting agent is a good option for your needs, ask friends and local landlords for recommendations and compare each agent’s credentials, fees, and experience. If you can get names of landlords each agent has helped in the past and permission to contact them, it would help take some of the guesswork out of the process. It’s obviously not necessary to employ a letting agent or manager to help you find a renter, but if you will be living far away, are inexperienced at finding renters, or simply don’t have time, they can be very helpful.
How to be Productive and Happy at the Same Time
All too often, the most productive, successful people in the world are also the most stressed out, unhappy, basket cases in the world. Most of them probably think that happiness is more of an indulgence than a necessity and that if they want to stay on top of their game, they need to sacrifice leisure, balance, happiness, and all other time-consuming, fluffy sentiments. This is false! Life is too short to spend every moment of it in a flurry of anxiety and guilt and toil. Teach yourself to change the way you think about productivity and happiness. You’ll be happier and more productive because of it.
Don’t follow the format – There’s a good chance that in your lifetime you’ve been told what professions will make you the most successful: doctor, lawyer, investment banker, etc. – these are all great careers if they appeal to you on personal level. But you shouldn’t pursue a career just because it is supposed to be lucrative. If you don’t enjoy your work, you won’t put in the effort necessary to be good at it, and if you aren’t good at it, you won’t make any money. Everyone should spend some time trying to figure out what they want and who they want to be, and building a career for themselves that points them toward their goals. If you are passionate about what you do, your work won’t seem like work, and you will be able to spend more time on it without sacrificing an ounce of happiness.
Spend time on yourself and your dreams – So, maybe your love of writing children’s poetry or playing guitar doesn’t translate into a viable career. Don’t give up on your passions just because you can’t make money from them. Instead of wasting time watching TV shows you don’t care about or fretting over the next day’s errands, do something that fulfills you. It’s funny how leisure time can feel productive when we spend it doing things we really love.
Learn to focus – Ok, so it’s a lot easier said than done. Our minds are almost always entertaining more than one thought at once, but it’s possible to learn to control it. It’s a skill that takes time and patience and practice, but it’s possible. A method that works well for some people is setting a timer for a short amount of time: 15 or 20 minutes, and really focusing on one task for just that period of time. Then, when they finish with their 15-20 minutes, they take a quick break to stretch and do it again. It’s also much easier to focus when you are organized and aware that each issue will be attended to in order of importance. With practice, you will be able to acknowledge erroneous thoughts as they come up and dismiss them before they take up any of your time.
Live in the moment – Do you ever have days when it feels like you’ve had way too much time to think? Sometimes we get caught up in our cerebral world of worries and philosophies and all of the things we didn’t have time to get done yesterday. Live in the moment. If you feel overwhelmed by thoughts, stop and just appreciate your surroundings and your senses. It sounds all earthy and “enlightened”, but it’s true! Open the windows, smell the air, or have a cup of tea. Appreciating your physical state and surroundings helps you to stay grounded and makes you feel alive.
Push yourself – Within reason, obviously, but the more often you push yourself, the easier it becomes to go a little further the next time. Also, contrary to common belief, the more you do the more energy you have to keep doing. Push yourself in every aspect of your life – physically, intellectually, and emotionally. When you work, try to be more productive and focused. When you play, try to appreciate each moment. The more you push yourself, the more you stretch, and the greater your capacity becomes for productivity, balance and happiness.
