Real Estate Business and Investing

Real estate comprises many aspects of the economic activity that have both direct and indirect effects on the composition of real gross domestic product. In today’s fast changing world, real estate business grows more and more complex. Specific areas of activity such as real estate management, development, financing and growing influence of real estate investment trusts carry with them specialized bodies of knowledge and concerns. National and world events can conspire with the unpredictable changes brought by investment instruments, tax regulations and market conditions create a business environment.

With the development of private property ownership, it has become a major area of business. Purchasing real estate require a significant investment an each piece of land has unique characteristics, so real estate business has evolved into different fields. The value of real estate tends to increase over time and it is high volatile or erratic.

Real estate business has witnessed a revolution, driven by blooming economy and liberalized foreign direct investment regime. Rising income level of middle class, increase in nuclear families, lower interest rates and modern attitude to home ownership have all combined to boost housing demand. The rapid growth of Indian economy has had a cascading effect on demand of the commercial property help to meet the need of business.

Today’s real estate professionals are changing the way of business by offering potential buyers to view detailed listing online and using the internet to match buyers and sellers. The government support to housing has been centralized and directed through development authorities and state housing boards and it also set up the urban development cooperation plan to finance housing activities.

Real estate business is truly unique since most people will only engage in it once or twice in their entire life. Real estate business has labouredly pursued very means to make this transaction easy and informative as possible. Real estate companies must constantly address numerous issues in their business environment, international tax demands as well as other finance related risks. Real estate is the most highly leveraged sector of an economy, which make it more likely than other sectors to participate in financial crisis.

3 Reasons Why Marketing Should Be Your #1 Priority as a Beginning Real Estate Investor:

1. You don’t have to be able to finance a deal to make money in real estate!

That’s where wholesaling comes into play. What better way to get started in real estate than getting your marketing going, learning how to qualify a seller lead, contract a property, wholesale it to another investor, and make several thousand dollars with little to no risk.

When wholesaling, you do not have to actually close on the property yourself. You can simply assign the contract to another investor for your wholesale fee. Typically, wholesale fees can range anywhere from $3K to $10K but could be any amount as long as the deal justifies it.

2. Give Yourself an Out in the Contract

By having an out in your contract, you have an opportunity to close a deal with little to no recourse if you don’t.

The classic out that we used when getting started as a real estate investor was “This agreement is subject to partner’s approval.” Doesn’t matter if you really have an actual partner or not. If you don’t like anything what so ever about the deal or you can’t get it financed, your partner says “NO DEAL.”

You could also write that the contract is contingent on acquiring financing for the deal. If you are unable to get it squared away, you’re out of the deal clean (accept possibly the earnest money you put in the deal and your time). This is well worth it though compared to the tens of thousands of dollars you can make on one deal.

3. Great Deals Get Financed

If you have an awesome deal under contract, chances are, you’re going to take action like you never have before. This could be just the motivation you need to find someone to finance deals for you. There’s nothing like having a killer deal under contract attached to a deadline to close on it.

That’s how you are going to get started in real estate investing!

Position yourself to be THE person who a seller will sell their property to if and when they get to the point where your offer makes sense. Most sellers are just as disorganized as you and I. As soon as they get off the phone, they move on to the next thing and before they know it . . . they’ve either forgotten that you exist all together or they can’t find your information to call you.

That brings us to a very important question . . . How do you follow up on your seller leads?

3 Step Action Plan to Effectively Following Up with Seller Leads

Step 1 – Ask the Seller if They Would Like to be Added to Your Follow Up System

There is no reason to follow up with someone that doesn’t want to hear from you. If I know by the end of my communication with a seller that we are not right to work together then, I will simply say, “Doesn’t look like we are a fit to work together right now. Hopefully you’ll be able to sell the property but who knows in this market. I’ll tell you what I can do, would you like for me to add you to our follow up system and give you a call down the road sometime? . . . Great, when would you like for us to give you a call back?”

I usually let a homeowner define the time frame when we call back. Do whatever makes sense to you.

Step 2 – Determine How to Track Your Follow Up Call Schedule and Seller Information

There’s nothing worse than following up with a seller and not having any information on their property or their situation (and not remembering it either). You need to decide exactly how you are going to keep up with both of these pieces of information.

When you call back exactly when you say you would and remember all the specific details about the seller and their personal circumstances, watch out! It’s powerful!

Expect to be thanked many times over for caring so much and remember that Lou said 60 % of his deals come from following up with old seller leads.

Step 3 – Make the Call and Rebook the Next Follow up Call if Need Be

When making the call, simply reintroduce yourself and say something like, “Joe, hey this is Patrick Riddle. I spoke with you x-time ago about your property for sale and am just calling you back like I said I would. Did I catch you at a bad time? . . . Good. I guess you’ve probably already gotten the property all squared away and sold, right?”

Simple as that.

By following this simple advice, you maximize the return on marketing dollars you’ve already spent, save on marketing dollars you didn’t have to spend, and stand out from the crowd in the eyes of everyone you work with.

1. Landlord Burn Out

Being a landlord can be stressful and tiring. Picking just one bad tenant can make your life miserable. And, if you don’t have a clear set of goals or an easy to follow strategy, it’s often easier to throw in the towel and run away from your real estate investments.

Find the frazzled and frustrated landlords, and solve their problem. A frazzled and frustrated landlord is done dealing with the troubles of their property. Most of the time this person will think the only way out is to sell. But, in today’s troubled market they may lose money on that sale. Their real problem is dealing with the bad tenants… if it’s otherwise a good property, you could offer to become a partner on the deal. Maybe you get a 20% share of the property for just taking on the role of property manager? No money invested on your part, just some time, sweat and trouble to get rid of the terrible tenants, place some new ones and take the odd call.

2. Increase the Density

Most investors just look at a property for what it is . . . but you can look at what it COULD be. In cities where the vacancy rate is low, the City is often anxious to add more units to the rental pool so approvals for changes should come easier. Find a house with a basement that could easily be turned into a suite. Or, if you’re more ambitious, find a house that could be lifted, extended or torn down and turned into a multi-unit property. This takes work, tenacity and an understanding of city planning (and permits), but the payouts can be big, especially if you’ve got handy friends and family or just a good relationship with a few contractors.

3. Find Properties that Need Love

With the number of foreclosures on the rise, and more and more distressed sellers, now is the time to find properties that need love. Look for properties where the lawn has been overtaken by 2 foot high weeds, newspapers are piling up, and the lights are never on. These properties may be close to foreclosure or just have an absentee landlord that thinks there is no market to sell. Write down the address, stroll on over to the local municipal office and look up the owner’s name and address. You may just someone that is really happy to hear from you. You could be saving them from foreclosure or just taking over a property they don’t have time to deal with. You might even find an older person who has moved into a home that would be willing to give you financing on the property as a stream of income for them to use to fund their retirement expenses. You just have to take that extra step to investigate so you can find out what is the problem that needs solving.

4. Be a Better Property Manager

Lower costs and increase revenues on the properties you own. Energy efficient light bulbs, low flush toilets and ensuring windows and doors seal properly are all things you can do to be kind to the environment while reducing your property expenses at the same time. Or, if your tenant pays the bills, it’s an additional selling point and can help you retain tenants longer at the highest rent possible in your market.

To increase revenues, you can charge for parking, rent out your garage separately, rent out a storage locker separately, and charge for laundry services.

5. Be a Better Marketer

Make sure you’re following the marketing basics . . . the 4 P’s of marketing a property for sale and for rent.

Product: First of all, make sure your product looks its best when you market it to a renter (or to a potential purchaser if you’re selling). Don’t show it with a promise to fix it up, show it in its best condition. You wouldn’t go out on a first date smelly and wearing last nights clothes would you? Don’t let the first impression of your place be a worn and unloved property. Clean it, paint it and make it smell nice.

Price: Know what your competitors are selling for and price yourself just a tiny bit lower. If you are renting your place out, even $10 less per month is slightly more appealing and will get you looked at. Make sure you’ve done your research though. Do not price too low or you will be leaving money on the table.

Place: Sell the benefits of living in your place – sell the place! Make someone want to live there with your property descriptions. “Easy five minute walk to trendy College Street restaurants and shops” sounds much better than “1/2 mile from College Street”. “Warm and bright main floor unit opens up to back yard and front porch” is so much more appealing than “access to backyard and front porch from this main floor unit”.

Person: Pick a person to sell it to. This is very important. Most people will just try and rent or sell a property to anyone. And really, to market anything, you need to know your target market. Is it a student? If it is, you’ll emphasize different aspects of your unit than if it’s a family or a downtown professional. Think about who the ideal or most likely prospect is and sell it to them with phrases and features that will appeal to them!