My last article titled A Call To Action, discussed a program the Government is planning to implement that would allow very well funded and connected large businesses the opportunity to purchase bulk REOs owned by various Government organizations –effectively cutting small real estate investors out of the REO market.
At the conclusion of that article I offered a few suggestions of actions that each of us as real estate investors need to take to both protect our business and start to speak as a stronger voice both locally and nationally.
The cold hard reality is this: real estate investors as a group are not viewed positively within many communities, by politicians, and often times, our customers. It is my strongest belief that this negative view is continually perpetuated because the only news regarding real estate investors is negative news — not news that shares the contributions we make within our communities, but news about how we are slumlords or worse.
And, We let this happen!
When we allow ourselves to think about our contributions within our communities, the fact is that real estate investors make substantial contributions and we need to make this information available to everyone. When we succeed in getting this message across, programs like the one referenced above will include real estate investors like you and me… and not just fat cats!
The contributions that real estate investors make within our communities
I am sure each of you can add at least one item to this list, and then we as a group can make our contributions know within our communities.
Here they are…
1. We take vacant, distressed properties, those not generating tax revenues, improve them, and get them back on the tax rolls.
2. We improve communities, often one home at a time — again, taking an eyesore and turning it into a liveable home.
3. When we purchase a property the following vendors all generate revenue from our efforts. a) Real estate brokers and agents; b) Title companies, title abstractors, title insurance companies; c) Appraisers and maybe even home inspectors; d) Lenders whether banks, hard money or private lenders; f) Fees and taxes paid to various municipalities. The amount of money moving from investors to these various organizations is substantial, and, think about the effects on your local economy when the owners or employees of each of these organizations get paid and then spend these funds within their community.
4. The financial impact of any one of our renovations is substantial. The funds we place into our community when we hire contractors, the subcontractors they hire, the materials they purchase and of course the fees paid to the local community for permits and inspections are significant. And of course, the impact of these contractors spending the funds they earned within their community is also worth noting.
5. Don’t forget that dollars go back to the real estate brokers & agents when the property sells and again the appraisers, inspectors, lenders, etc. is cycled through our community when we sell our properties. And, most importantly the funds that we earn as our profits are recycled back into our communities, which trickles throughout our entire economy.
6. If you are a landlord the funds paid to a property manager, or your mortgage payment, or the taxes paid every year make an impact. Every dollar working its way through your local economy improves the lives of everyone.
We make tremendous contributions within our communities. Above are just six, and I am sure there are many, many more. One of our jobs as real estate investors is to ensure our contributions are clearly defined and known within our communities. We must start now to change the negative perceptions held by so many, though.
I look forward to your additions to this list and more importantly to each one of you taking action to ensure your contributions are appreciated within your communities.
Photo: Chris Dlugosz
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Article Author: Peter GiardiniPeter has written 81 articles for us.
Visit Peter's Website: http://www.theclubmastermind.com
Peter is an active and successful real estate investor in the Baltimore Maryland region for the past 8 years and is one of the founders of The Club Mastermind a real estate investing coaching program focused on local coaches helping investors to perfect their game.
Joshua Dorkin
{ 26 comments… read them below or add one }
Thank you for posting this! You are absolutely correct in that real estate investors actually add a ton of value to our communities and this is something that is often overlooked.
John,
Thanx for the post… What are you willing to do to get the word out?
Pete
I don’t know the exact reason behind this misconception, but real estate investors are usually seen as devils. I’m like you don’t like big cats that take over everything and leave us with crumbs. I would like to add that we also prevent monopoly as individual investors.
Mark,
The answer is political contributions… and lack of good PR.
My question to you is this… what are you willing to do to get a more positive word out?
Pete
Great post, Pete. As I told you by phone, I starting writing this very post myself a few weeks ago, but have yet to complete it. I do believe that there are reasons that investors are looked down upon, and I think many of the reasons are, in fact, justified. However, there are far more good investors than bad ones out there. There is also far more good generated from the community then bad. I’ll press on my post and get it up soon as a follow-up to this one.
Josh,
Get that article posted… the more that we talk about this topic the better the entire community will be for it.
Pete
As a real estate investor, I was spending on average $5,000 per month in the area where I bought property. That’s just me, one investor. Imagine how much the area lost when the goverment said I can’t buy any more. When a property is rehab, then rented, there’s a lot of new tax dollars flowing in/generated in that area which creates jobs. I been doing this for over 45 years, over 800 credit score, never miss or defaulted on a mortgage payment. Yet not allowed to buy any more, go figure! I can’t express how I realy feel, just had to get this off my chess, thanks.
Jim,
And multiply that number by the number of active investors in your community and all of a sudden each one of you is supporting your local economy in a very meaningful way.
Keep it up… and help get the word out regarding how you and others are contributing to your community.
Pete
Why were you forced to stop buying there?
I agree that investors help make a commuity viable. I am currently looking for a private investor or group that gives mortgages wherein I can gain a pre-approved mortgage at some reasonable rate to purchase a short sale of a property that can easily be renovated by myself for a nice home. Looking at a small mortgage of about $80,000. I any investors supply private mortages sucured by good real estate please contact me for this.
David – Thanks for the feedback. Jump on our forums to solicit partners . . . we try to keep that stuff from detracting from our author’s blogs, when possible. Much appreciated!
I have to agree. I work with several investors in the Sacramento/Roseville area and in doing a house the other day… a neighbor ran over and actually thanked me for being there to fix the house up. I wasn’t the investor, nor did I do the “fix-up”, just staging the house which received 10 offers and went 10k over list. All the neighbors were happy to see the property shine. I am seeing this more and more. 3 years ago it was much different though.
Lori,
Now if we could only get the greater community to understand how investors are actually saving entire communities…
Help us get the word out in your community.
Pete
I don’t know why it is human nature to notice the bad and overlook the good – but apparently that’s what people want. The “news” is full of it.
So, who gets noticed? The “Flippers” who do a shoddy job and sell to some unsuspecting soul who gets stuck with an inferior house.
Meanwhile, no one even thinks twice about the rehabbers who are doing an exceptional job.
To add to your list: When investors buy a vacant house and turn it into a nice occupied home, it helps the value of every house in the neighborhood. When vacant homes dominate the scene, every other house – no mater how nice – loses value.
So – you don’t just improve the communities, you improve the monetary value of all the homes in the communities.
I’m a little confused by Jim Pratt’s comment. “Not allowed” to buy? Or does he mean that the homes just won’t be available if the government goes forward with its hair-brained plan?
Marte,
Thanx for the additional items.
And, you are correct we humans tend to love the bad news…
So… anything we can do to get a more positive perspective in front of the public eye is very helpful.
Pete
I couldn’t agree more. I’m currently working with very responsible investors that are turning the blocks arounds. Inspiring some of it’s neighbors to do update or maintain their properties.
And, at the same time giving buyers the posibilites of moving to properties that are fully renovated homes with high end finishes that won’t need updates for the next 10 to 15 years.
I began to noticed already the trend that some banks are renovating their properties themselves, But their renovations are CHEAP. Sad CHEAP. Thus bringing the price of the communities down.
Sebastian
Pete,
Good stuff. We are a victim of our own tight lips. Ask an investor if they talk to family members about what they do, or ask them if they talk to neighbors. Some do, but I venture to guess most do not. They act as if they are ashamed of what they do but not talking about it. I tell everyone what I do. As soon as I get the look of concern, I go on to explain the benefits of good rehabbers and good landlords. I get them excited about the areas they live in. I tell them to get excited every time they see a rolloff in the neighborhood. That means someone is renovating a property. Start talking about what you do for the neighborhood. People see the big $ signs from TV shows and think we milk the market. Far from it. We feed that cow that gives milk to the market.
I could go on, but as investors we need to realize that our livelihood is more than crunching numbers. Every business has a PR game to win. Some more than others. If we as investors do not start counting that into our overall strategy, we have no one to blame but ourselves when unfair rules and regulations come down on the big bad investors.
Jason
At the time, investors were only allowed 10 mortgages which I have. All my properties earn a good cash flow, great equity – been retired for over 20 years;) Seems to me, investors with a proven track record like mine should have no problem in getting a loan. But, thanks to banks like Wa. Mutual, no-doc loans and want-a-bee’s the government put a lot of restrictions on investor loans. Having lots of equity and money in the bank means nothing. You pay ALL cash, get a partner or do a lease options in order to buy a rental. Don’t the government understand that we create jobs and pay taxes?
“Don’t the government understand that we create jobs and pay taxes?”
This is exactly why as investors we need to create an advocacy group to speak for our interests. In my opinion, the only way to get a politician to hear our argument is to make them realize the number of investors out there and their tenacity.
Jason – I see that your request for an advocacy forum generated few responses. I’m very disappointed by this. It feels to me like the investing industry is one that is extremely highly apathetic . . . I just can’t understand it. I’d like to try and give the new forum a new push . . . perhaps you could share a few reasons why you’re so passionate about it and hopefully it will resonate with others?
Josh,
I will be more than happy to share my thoughts. I can only hope that most folks agreed and felt no need to chime in. Thanks for keeping on top of this.
Jason
Hi Peter,
Thanks for your article, very timely. I was recently invited to speak at my Rotary Club about my RE investing business and was a bit hesitant to do so because of the negative connotation that investors have in the community and coincidentally your article is here.
With your artilce I have more resources for my presenation and will gladly show more contributions from our “industry” to the community.
I would add #7 and #8 to your article:
#7 – By adding capital improvements (repairing) houses we allow end buyers to buy these houses and finance the improvements. Many end buyers prefer to buy rehab homes because they dont have to put up the cash to fix up a house.
#8 – Investors allow distressed assets to quickly and efficiently be absorbed by the market
I shall now go out there and speak about our positive actions!
thanks,
Juan Carlos
Juan,
Thank you for adding two more contributions to the list.
One other statistic that you may want to work into your presentation is that nationwide over 60% of all real estate purchases have been completed with cash… and since almost all homeowners can’t come to the closing table with cash… the majority of buyers are investors who do have the cash and are willing to make the investment in their community.
Best of luck with your presentation.
Pete,
Thank you for the post. As a brand new investor I feel it is important to get out there and show our communities that we are the good guys (and good girls, of course). I am just getting my business off the ground and would be very disappointed to be pushed out of the game by some fat cats who want to make a quick buck. I am interested in acquiring properties and rehabbing them fully to rent them out as Section 8 residences and also Rent to Own Homes. I wish to help those that we hit hard by the economy and help them rise up on their up swing. It would ashame if I could fulfill my potential because the government wants a quick fix. I would like to add number 9 to the list.
-*9 Real Estate Investors not only revitalize forgetton houses, they also allow first time home buyers to move into the house of their dreams, when they previously thought they never could.
I see the point that you are trying to drill in, is that we must spread the word of our good deeds faster than the news of the misdeeds. To facilitate this I plan to tell every new person I meet of what I do and get them excited that a real estate investor is going to improve their communities.
I totally agree with this. Real estate investors have many positive contributions to a local community especially in its economic growth. They bring money within the community and everyone benefits from it. People should appreciate the contributions that the real estate investors give and stop criticizing them.
Of course.