I am always amazed when I see the typical real estate agent do their one deal of the year. Mostly, their customer is a family member who felt compelled to work with them because after all, “it’s family.” But what about all of the people who just work with the first agent that they find?

When I see one of these (I’ll just say less than stellar) ill-prepared agents just dragging their customer to hell and back, I really have to wonder why the customer didn’t do a better job of agent selection. It’s not like the tools aren’t available to figure out some basic background information on every productive agent.

But if you are a professional real estate investor, you better have a much smarter way to hire a real estate agent.

First things first, I am a real estate agent so my opinions are biased. But I also have been a real estate investor for  nearly 20 years, so I know a thing or two about how to screw things up when buying, selling, or turning a transaction. Most of these mistakes can be prevented by hiring a great real estate agent, and this can be done by following these general principles.

The 5 Key Steps In Hiring A Real Estate Agent

1. Determine Your Goals First – Do not hire a real estate agent by default. What I mean is don’t call on a home, meet an agent, and then just start working with them. This common practice leads to more heartache and more lost momentum for investors than any other practice that I have seen. Write a plan first. Determine your specific goals, whether buying or selling investment property (or both). Make sure your plan is simple, but thorough (a good test is give it to one of your children and ask them to tell you what it says). Remember the old adage, “nobody plans to fail, they just fail to plan.”
2. Do Your Research – Once you know what you want, go to Google and start a search with a focus on the attributes that you know you want in your real estate agent. If you cannot find them on the web, then they most likely are not wired into all of the resources that will help you optimize your returns. There are some great traditional agents … who are now retiring. Make sure your agent is somebody who is linked in to all of the modern real estate technologies.
3. Demand The Best – This might come as a shock, but you typically pay the same for a crappy agent as you would for a great agent (in terms of commissions, not in returns!). The best real estate agents are very busy, and they will demand your loyalty on each specific transaction. If you have done your research, you should embrace working with an agent who requires a buyers brokerage agreement. Most do not (and most are not very good!).
4. Nothing Lasts Forever – This is a sad fact of life, buy most relationships are not forever. If you feel that your agent is not giving you 100% attention and service, get another one! While there are only a handful of really good agents in your market area, you need to know that your agent values your long-term business and will ensure that your investment decisions get full attention.
5. Pay Attention – Even great performers have a lapse. Create a checklist that you use every time you buy, and create one for every time you sell. As you become more experienced in your real estate investing, your lists should grow to include “all the ways you can screw things up.” Needless to say, I have a pretty long list .

If you follow these basic rules for hiring a real estate agent, you will end up being a much more successful real estate investor. Fewer mistakes in the transactional process will most likely be a major part of your long-term ROI. Finally, whether you invest full time or just most of the time, make sure you surround yourself with the best minds in the business.

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

5 Key Steps In Hiring A Real Estate Agent

Here is a story about perseverance, commitment and drive that has inspired me in such a way that I felt that I had share it with all of you. Let me introduce Chris, an experienced investor who experienced a slow down in his investing business after the market crash. His challenge was funding deals and the way he overcame it was absolutely brilliant.

First, Chris has been relentless with his networking, building strong relationships and surrounding himself with successful individuals. This has really paid off. But what was so brilliant was that he did not focus on making money, he focused on building a long term business. To do that, he knew he had to be doing deals regardless of his return. So, he offered almost all of the profit to funding partners. While most investors told him he was crazy and noted that they will not get out of bed for anything less than 50% profit split, Chris is doing deals and depositing checks. This decision was brilliant and his business has skyrocketed.

Let’s fast forward to today. Since implementing this strategy, he has already flipped 2 properties, wholesaled one, has 3 more rehabs going and has a ton of offers out there. All of this has occurred in only 3 months. He is working 20 hours less per week and is on track to do 20+ deals in 1 years time. He now has other investors offering better profit splits and can easily renegotiate with his current investors. On top of that, he is a real estate agent so he gets the commission from the listing on each flip. It has been incredible watching his success and he could not have done it without the willingness to take only a 20% profit split.

Chris has really inspired me, and I think that every beginner should learn from his incredible story. I now believe that many beginners should think about doing deals for free, just to build their business and a track record; any profit is a bonus. This is a brilliant way to get off the sidelines and into the game.

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Real Estate Investing Hustle: An Inspirational Story

After my first week of full time entrepreneurship, one thing was certain. I need help. When I created a list of tasks that needed to be done to accomplish the week’s goals, it was apparent that there were several items that were important, but were time consuming.  Sure, there were some things that I knocked off the list and deemed as not important, but most of it was work that needed to be done and there were simply not enough hours in the days to do it (even with my husband’s assistance).

My friend and fellow BiggerPockets blogger Steph suggested that I read Dan Kennedy’s No B.S. Time Management for Entrepreneurs. I actually read that book back in October, but I knew that I clearly needed to read it again. In the very first chapter, Dan talks about how to turn time into money and how its important to know “your number.” In other words, how much is your time worth?

**How to Know Your Number**

1. Determine your base earnings target. How much cash do you want to make as a real estate investor in one year?  (And if you’re the owner of a larger company with employees, determine how much of the business’ bottom line profit goal will be provided by your managers/employees and how much will be linked directly to you.  The amount that will be directly linked to you will be your base earnings target).

2. Divide by your number of work hours in a year. For our below example, let’s assume 220 work days at 8 hours a day (which is 1,760 work hours — this gives you the equivalent of 8 weeks of non-working vacation time in a year).  This gives you your base hourly number.

3. Multiply your base hourly number by a productivity multiple.  According to Kennedy, for the average person, about one-third of our work time is actually productive, so the multiple would be “3″.  However, if you’ve put a lot of other productivity tips into practice, you may say that about one-half of your time is productive or “billable” so that multiple would be “2″.

4. Now you have what your time must be worth per hour!

So for today’s example, let’s say your desired yearly profit (not gross revenues…we’re talking bottom line profit after expenses) is $150,000, and you’ll be working 1,760 hours that year at a 50% “billable” productivity level.  Here’s how much your time would be worth per hour:

$150,000 earning target / 1,760 hours = $85.23 base hourly hour

$85.23 x 2 (productivity multiple) = $170.46 per hour

Now you have your number which leads to two very important points for your business.

1. You need to respect the value of your time and also ensure that you surround yourself with people who value and respect your time.
2. You have to eliminate or delegate tasks that simply don’t match up with the value of your time.

**The Next Step**

Make a list of all the activities for your real estate investing business and categorize them based off of value (high value vs. low value activities) and time (time consuming vs. not so time consuming) and figure out which items you should eliminate, which you should personally focus on, and which items you should get assistance with.

The first order of business for me personally is hiring an assistant who can handle a number of administrative tasks for our business. In fact, I’m interviewing today.

Many people have concerns about having virtual assistants overseas or even outside of their area.  Not to worry.  Quite frankly, with the current economic situation in the United States, there are likely a number of highly skilled assistants right there in your city who are out of work, are enthusiastic, and are willing to work for $7-15 per hour.  If you have 5 hours worth of work to get done, you’re only talking about a $35-75 per week expense!  If you think “I can’t afford that! That’s a lot of money!” then go back to your number to recall how much one hour of your time is worth.  Think about it.  I should also add that if you’re looking for a more advanced level of skills and experience from your assistant, you can expect to see U.S. rates from $25-40/hr. but if your needs are basic administrative tasks, you can certainly keep your expenses low.  

**What can a virtual assistant do for your real estate business?**

Regardless of whether you hire a virtual assistant who is working from their home locally in your city or working outside of the state or country, there are several tasks that assistants can help you with for your real estate business. Here’s just a few:

• Manage your direct mail campaigns (handwritten envelopes, stuffing, addressing, and stamping)
• Call back motivated seller leads and qualify them via a script
• Set appointments for meetings, home inspections
• Create online classified ads to find buyers and sellers
• Update your lead/CRM systems
• Email/Fax contracts

Ongoing communication will be very important with your assistant, and also keep in mind that virtual assistants are professionals and often work with multiple clients so its not the same as having an employee.  You can’t exactly call your virtual assistant and expect them to drop everything to do something urgent for you. Be sure to agree on expectations and understand how your potential assistants operate…and feel free to read about the 4 key lessons I learned from my rotten virtual assistant experience six months ago – there were some great comments on that post.

Now go turn your time into money!

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

How to Turn Your Time into Money

Excuses are the tools with which persons with no purpose in view build for themselves great monuments of nothing. ~Steven Grayhm, Canadian actor

Pretty strong statement, isn’t it? My brother-in-law mentors high school boys and has them say that quote repeatedly whenever he meets with them. Why? Because excuses are dream killers, faith killers, action killers.

Today I’d like to pick on a frequently used excuse among those who are timid to get off the fence and take action towards real estate investing goals.  I’m picking on this one because I heard it just recently and it ruffled my feathers — the excuse of location.  These excuses come in many forms.

“But my market is too expensive!”
“Nobody is buying in my market!”
“Yeah, that worked for him because of where he is, but that will never work here!”

Yes, I am familiar with the old saying “The three most important things about real estate is location, location, location.” In fact, maybe that’s what you’re saying to yourself and it’s holding you back from taking action. Please stop the madness!  There are successful real estate investors in every area — in the most expensive parts of the U.S. in states like California and New York, in rural areas in the midwest, in ridiculously high foreclosure areas like Florida, California, Nevada, and Arizona, and in stable markets that haven’t been heavily impacted over the past few years.   Regardless of your location, you can do it!  Does it mean that perhaps you’ll have to be open minded to the possible need to expand your area of focus by another 25-100 miles? Maybe, but don’t let those few miles keep you out of the game. Be willing to do what others are not.

If location is your concern,  be sure to check the facts to see if they line up:

• Ask a realtor for a quick favor and have him or her pull up data in the MLS on recent sales (in your county or area of investing interest) the past 6 months.  Make it even more interesting and pull up cash sales!  My friend Matt Rosen in Hawaii told me how surprised he was to see so many cash buyers on record in his local market for very expensive homes ($400K and up)!  There is a lot of money floating in and out of hands for real estate all over the country.
• Go to local real estate investor gatherings and talk to experienced investors right there in your local market
• Call the numbers on  “for rent” signs in the area and talk to the landlords — tell them you’re a new investor in the area and just wanted to get some input on their perspective of what’s going on in the local areas they are investing in, etc. (this is a page out of Nick J.‘s book)

With a little bit of investigative work, you will likely find that your concerns are unfounded.   More importantly however is that you have to rid yourself of excuses and become action and solution oriented. Your attitude will make all the difference when it comes to being successful in real estate (or anything else)!

Photo: LowerDarnley

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Location is No Excuse

One of the key skills you’ll need to learn as an investor is how to structure deals. When you get really good at this, you’ll be able to pull some real magic tricks out of your hat and profit from deals that other investors wouldn’t touch because they can’t figure out how to make it work. I’m not there yet…I’m definitely still in the learning stages.  I spent my first year in real estate investing only making offers on bank owned properties, but  once you deal with private sellers it is an entirely different ball game.  In fact, I’ve dealt with lots of rejected offers from private sellers over the past several months.  Sure, sometimes the sellers simply aren’t motivated enough, but I also have to consider how I can structure and present my offers in such a way that I can increase my number of accepted offers.

In case you’re in a similar boat, I thought I would share a few tips that I’m putting into practice that I’ve received from my mentor as well as fellow investors with several more years of experience under their belts working directly with home owners:

#1: Always provide a written offer

It’s easy to think that you’re saving time by giving sellers verbal offers, but frankly everyone likes to “see it in writing.”  Regardless of whether you think your offer will be accepted or not, put the offer in writing and allow the seller a chance to review it and give it due consideration.

#2: Remember cash isn’t always king – give options!

In the beginning, all I would make are low cash offers thinking “Cash is king, right?”  Well, yes and no.  It can be king for some sellers, but not for others because it really depends on the seller’s situation.  Be sure to give the sellers options.  If you ask the seller some key questions (e.g. how much is owed on the property, why they are looking to sell, what they plan to do with the money after they sell) you will be able to determine what types of deal structures could possibly work. For example, your written offer can include a few different options:

• Cash
• “Subject to” (liens remain in place and you take over the payments)
• Seller financing
• Combination of  “Subject to” and seller financing

#3 Consider an option contract

If your intent is to assign the contract and the seller just doesn’t seem to want to meet you at a number you’re 100% confident with, consider an option contract at the sellers price and just go out there and see if you can find a buyer within the option period (get at least 90 days).  There’s no risk!  If the seller’s price is completely unreasonable, you don’t need to waste your time….but if its just a little bit too high for your comfort level, go ahead and get that option agreement signed and see what you can do with it.

#4 Consider a partnership

My mentor gave me an example of a deal he did where there was substantial equity in the property but the home needed a lot of work.  After a rehab, it was going to be an excellent home to sell to a retail buyer. What he did was set up a contract with the seller and they agreed to rehab the property, market it, sell it, and split the profits.  The seller paid the mortgage and carrying costs while the rehab was completed and they both made a nice profit when the property was sold. A win-win for everyone.

#5 Always follow up

Persistence pays.  Even if the offer is rejected now, the seller may have a change of heart later. Be sure to follow up a few months after you’ve made the offer and check in to see how things are going.  I’m currently working on a deal with a seller I made an offer to back in November! This is more common than you’d think.  Don’t miss out on deals because of a lack of follow up.

I hope these ideas are helpful. If you have others, please do share in the comments below!

Image credit: Icky Pic

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Are Sellers Rejecting All Of Your Offers?

I love to negotiate! Whether it’s buying furniture off of Craigslist or being part of a multi-billion dollar corporate merger team (I’ve done both), I love the challenge of trying to get a great deal for myself while at the same time making the other person feel like they got a great deal too.

And while you may think that the skills required to negotiate small purchases are much different than the skills required to negotiate the purchase of big-ticket items (like cars, real estate and companies), in reality, the basics are the same.

While you can spend your entire lifetime trying to perfect the art of negotiation, learning a few key negotiation strategies can put you far ahead of most of your competition, and can help navigate those times when you’re up against an unmotivated seller, a savvy buyer or a head-strong contractor.

This article will offer seven powerful negotiating tips that you will likely find very useful while pursuing future real estate deals (or any other deals, for that matter):

Tip #1: Let the Other Party Speak First

You’ll often hear people say, “Never make the first offer…let the other party do it.” This is great advice, but do you know why that will help your negotiating position?

There are two reasons:

1. First, it allows you to define a mid-point. Many inexperienced negotiators will find themselves “splitting the difference” in their negotiations; for example, if one inexperienced negotiator starts by asking $200 in the negotiation and another inexperienced negotiator starts by offering $100 in the negotiation, the negotiation result generally will end up somewhere around $150 (the mid-point). This is human nature not to want to give more or less than you’re getting, so people tend to increase or decrease their offers by the same amount as the other party.

But, when the other party states their position first, you have the ability to define the mid-point of the negotiation!

In the example above, if the seller had stated the $200 ask first, the buyer could easily have offered $60, thereby reducing the mid-point of the negotiation (where they expect to end up) down to $130. On the other hand, had the buyer offered $100 to open the negotiation, the seller could have increased his ask to, say, $260, thereby increasing the midpoint to $180. As you can see, the person who states the first position is at a disadvantage to the person who waits, as the person who waits can define the mid-point.

2. Second, it’s quite possible that the other party’s first offer will be better than the first offer you would make. For example, let’s say you want to hire a plumber, and your budget is $500 for a particular project. While you could state upfront that you have $500 to spend on the plumbing work (in the hopes that the plumber doesn’t ask for more than that), what if the plumber was only planning to charge $300? You’ve now told him that you’re willing to pay $500, so he has little reason to quote you anything less than that. By stating your position first, you’ve given away valuable information to the other party (you maximum price), and he will use that information to extract the most money possible from you.

Tip #2: Stop Talking and Start Listening

One of the strongest maneuvers when negotiating is to keep your mouth shut. Unfortunately, it’s also one of the most difficult. People are naturally uncomfortable during a negotiating silence, but this is exactly why you should work to ensure those silent periods occur. If you’re uncomfortable, you can be sure that the person you’re negotiating with is uncomfortable as well. And the common result of this uncomfortable situation is that one party will make a concession to break the awkward silence.

Next time you are negotiating and the person on the other side of the table throws out an offer, make a point to say nothing. Whether it be 10 seconds or 10 minutes, make the other person break the silence. You’ll be surprised to find that he or she will often interpret your silence as anger or disappointment, and will break the silence by revising their offer or offering a concession. Master negotiators will use this tactic to get less experienced negotiators to make successively lower offers without ever having to throw out a counter-offer themselves.

This may be the most basic — but most useful — negotiating tactic you’ll ever employ.

Tip #3: Information is Power

I’d estimate that in 95% of all negotiations between experienced negotiators, the one with the most information (pertaining to the negotiation) will walk away with the better outcome. When negotiating, it’s important to know as much as possible, not just about the object of the negotiation, but also about the party you’re negotiating with and their motives.

Most people tend to assume that negotiation is always about money, but often it is not. Smart negotiators realize that in many cases, it’s more important to solve a problem than to offer the most money.

For example, let’s say two buyers show up at an open house and both want the house. The first buyer assumes that the seller wants the most money possible, and offers full asking price, but needs two months to close in order to get financing in order, get inspections, etc. The second buyer asks the seller why he is selling, and the seller says that he has received a job offer in another state, and needs to move in the next two weeks; the second buyer makes an offer for $10,000 less than asking, but agrees to close in two weeks, and has no financing or inspection contingencies. While the first buyer offered more money, the second buyer likely solved a problem that was more important than the difference in the offers. All because he gathered some information from the seller before making an offer.

Tip #4: Always Get the Last Concession

Part of being a good negotiator is “training” the other party to do what you want, without them even realizing it. Here is one way to do that with someone you will be negotiating with multiple times: Always make sure you ask for and get the last concession in the negotiation (a concession is something the other party gives in a negotiation — a price drop, better terms, etc). By always asking for — and getting — the final concession, the other party will, over time, learn to stop asking for things once he essentially has what he wants/needs from the negotiation.

If the other party realizes that every time he asks for something, he will need to give something, he will naturally shy away from asking for more than what he needs in fear that he will be asked to give up something important in return for additional (non-essential) demands on his part.

For example, when negotiating with a contractor, let’s say that he throws out a final price that you both agree on. Instead of saying, “I agree with that price, we have a deal,” instead try saying, “I agree with that price, if you can start first thing tomorrow morning.”

Maybe he’ll come back with, “I can’t start tomorrow, how about the following day?” Your response could be, “That works, but I’ll need you to finish in three days instead of four.”

As long as he counters your request, continue to ask for additional concessions. Eventually, you will train the other party that by “resisting,” they are encouraging you to ask for more and more; they also learn that by just giving in, they end up giving up less in the end. It should be obvious how this will help in future negotiations with this person.

Tip #5: Implement a Penalty for Asking for Concessions

Have you ever been on the phone with a customer services representative from some company negotiating some point (for example, your on the phone with your cable company trying to get your monthly fee reduced by $20), and find that every time you ask for something, the rep puts you on hold for 10 minutes while they “check to see if they can do that.”

You can bet that it doesn’t really take them 10 minutes to determine whether they can give you $20 off your bill. But, they realize that when you ask for $20 off, then wait for 10 minutes, and then they come back and counter-offer you $5 off your bill, you’re going to be less likely to go another negotiating round (“How about $15 off?) if it means you’ll have to wait another 10 minutes to get the response. What they’ve done is implemented a “penalty” for each time you ask for a concession; while you’re sitting on hold, you’re powerless — you have the option to wait for some unknown amount of time, or hang up and get nothing.

If you want to discourage others from asking for concessions in your negotiations, do the same thing — implement a penalty each time they ask (though don’t let them know you’re doing it on purpose). And the penalty doesn’t need to be same for each “offense.”

Making them wait (like the example above) is a great example of a penalty. Perhaps you say, “I’ll have to think about that, I’ll give you a call tomorrow and we can discuss further.” Or perhaps the penalty is that they have to fill out a bunch of forms to get their desired concession. Or perhaps they’ll have to drive somewhere to pick up that extra thing that they want.

If you make the penalty for asking more cumbersome than what they asked for, it’s quite possible they’ll decide it’s not worth the effort — like having to wait 10 minutes to find out if you can save $10 extra.

Tip #6: Friction is Your Friend

On the surface, a negotiation that ends quickly and smoothly without too much back-and-forth appears to be a good one. But this isn’t necessarily the case.

Can you remember the last time you went into a negotiation, and the other person quickly accepted your offer without too much protest or countering? How did it make you feel? If you’re like most people, you probably felt like you didn’t get as good a deal as you could have. You probably felt that, because the other party didn’t put up too much resistance, they were likely very happy with the deal, and therefore, you got the worse end.

Oftentimes, though, the other party feels the same way! There wasn’t enough friction in the negotiation to make both parties feel like they earned a great deal. And because of this, what you will often find in negotiations that go quickly and smoothly is that one or both parties will want to back out of the deal. So, if you really want to ensure that the other side doesn’t back out after the negotiation is finished, make them work hard to get to a common agreement; this hard work will often translate into feelings of successful outcome for the other side.

This is especially important in Real Estate Investing, when the other party often has several days (if not weeks) to back out of an agreed-upon deal.

Tip #7: Check Your Ego at the Door

Oftentimes, we assume that the other side is looking for something tangible in the outcome of a negotiation: more money, better terms, etc. But, a lot of people who pride themselves on their negotiating skills are more interested in having their ego stroked than they are in any real tangible outcome. While some people are going to be all about getting every extra penny in the deal, there are those who will happily give a discounted price (assuming they are still above their minimum threshold) in return for some solid ego stroking.

In Real Estate negotiation, this might mean telling a contractor how highly recommended he comes; it might mean reminding a potential investor/buyer how good he is at rehabbing on a shoestring budget; or it might mean “confessing” to your wholesaler how much you hate buying from him because he is such a good negotiator. You’d be very surprised how far some sincere flattery will go in getting you a better negotiating outcome. Not only will it encourage the other party to put their defenses down, but they will feel an obligation to “return the favor” in some way — make sure you give them a way to return it right then in terms of a lower price (or whatever else you might want).

Remember the last time you negotiated with someone who was really nice? How about the last time you negotiated with a complete a**hole? Which one did you feel better about “sticking it to them?” And which one were you happy to give a break to?

Photo: Aleutia

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

7 Tips for Better Negotiation in Real Estate & Everywhere Else

You may be all too familiar with this very common problem.

As an entrepreneur or small business owner, you find yourself in the trap of spending all of your time working in your business rather than on your business. Michael Gerber, author of the best-selling E-Myth book series, talks about this extensively and promotes systemizing businesses so that owners are freed from being technicians focused on day to day operations and can spend time on strategic issues (if you haven’t read his books, I highly recommend them).

As real estate entrepreneurs, we often run into this same problem. We’re so involved in the tactical daily operations that we may forget to take a step back, breathe, and really evaluate the effectiveness of what we’re doing plus we fail to create systems that will allow us to work smarter rather than harder.

My husband and I are no exception to this, but once we recognized late last year that we were falling into this trap, we decided to implement strategy sessions on a monthly basis.

I find these sessions to be very useful as they keep us from going down a path that simply isn’t working and provide an opportunity to brainstorm on new ideas and ways to work more effectively. By no means have we mastered this, but we’re doing what we can do…you have to start somewhere. We started our real estate business less than 18 months ago and are only part-timers, but we recognize that if we start with good business practices now, we’ll continue them at a time when they are even more critical and there is more at stake.

Here’s a suggested outline for what you might want to cover in your strategy sessions. It’s not an exhaustive list areas to cover by any means because different real estate strategies may require other specific measurements to track and review. This is a basic list of areas that you should – as many recipes say – “season to taste”:

Overall Goals Review

• Goals for the month
• Goals for the year
• Progress toward each of those goals

Marketing Review

• Response rates per each type of direct mail
• Effectiveness and return on investment of marketing methods
  • Direct mail
  • Internet marketing
  • Bandit signs
  • Print Ads
  • Other
• What’s working well and should be continued?
• What do you need to change – if anything – about your marketing to increase results?

Offers Review

• Number of offers made
• Number of offers accepted vs. declined?
• Lessons learned from offer results to implement going forward

Relationship Building Review

• New connections made (realtors, other investors, private money partners, etc)
• Connections still needed
• Outline next steps for follow up with new connections and plan for identifying needed connections

Financial Review

• Dollars in (how much did you bring in?)
• Dollars out (how much did you spend?)
• Any adjustments needed as a result?

You may be thinking to yourself “Shae, that’s great, but I work by myself. I don’t have a spouse or partner to do strategy sessions with!” Don’t let that stop you.  The way I see it, you have two options available to you:

1) Have a one-person strategy meeting. Yes, you can do it.  If you have a structure for what you need to evaluate, you can do this in a couple hours time and really reflect on your business.

2) Find a reliable and trustworthy partner who is willing to do these meetings with you.  If the partner is also involved in real estate investing, even better.  You can exchange ideas and provide a great support system for each other.

If you’re not taking time to work on your business, regardless of your days, months, or years of experience, I strongly encourage you to get started this month.  I think you’ll agree that spending time to review, reflect, and revise will make a big difference.

I would love to hear your comments and ideas!

Photo credit: HDR Cafe

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Strategy Sessions for Real Estate Investing Success

It’s a catchy blog post title and an even catchier song from the 90′s.

I’m not talking about hundred dollar bills in this post per se, but I am talking about the man on the “Benjamins” — Mr. Benjamin Franklin.

Over the weekend I attended a great conference and one of the sessions was led by best-selling author and the ultimate “Go-Giver”, Bob Burg. Bob is an expert at teaching entrepreneurs how to build their businesses by cultivating an endless supply of referrals. One of the things he discussed is how Benjamin Franklin – at the young age of 20 – developed a list of virtues to live by. He had 13 virtues and focused on an individual virtue for an entire week, tracking and noting his progress.

Benjamin Franklin’s 13 virtues to live by were:

• Temperance: Eat not to dullness; drink not to elevation.
• Silence: Speak not but what may benefit others or yourself; avoid trifling conversation.
• Order: Let all your things have their place; let each part of your business have its time.
• Resolution: Resolve to perform what you ought; perform without fail what you resolve.
• Frugality: Make no expense but to do good to others or yourself; a penny saved is a penny earned
• Industry: Lose no time; be always employed in something useful; cut off all unnecessary actions.
• Sincerity: Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.
• Justice: Wrong none by doing injuries, or omitting the benefits that are your duty.
• Moderation: Avoid extremes; forbear resenting injuries so much as you think they deserve.
• Cleanliness: Tolerate no uncleanliness in body, clothing, or habitation
• Tranquility: Be not disturbed at trifles, or at accidents common or unavoidable.
• Chastity: Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another’s peace or reputation.
• Humility: Imitate Jesus or Socrates.

If you’re an American history buff, you probably know that Benjamin Franklin often fell short of these virtues throughout his lifetime, but nevertheless, he provided an excellent model that we can use as real estate investors and professionals.

Bob Burg took us through his own personal list of 13 virtues and shared how he developed into a better person and a better businessman by focusing exclusively on one virtue at a time.  If you have a list of only 13 virtues and focus on them one week at a time, at the end of a year, you’ll have 4 focused weeks (enough time to build habits!) across 13 key things of importance to you.

Following Ben and Bob’s lead here is a great idea, choosing your own 13 virtues for personal development.  Another angle you may want to take is to choose 13 things that you struggle with in your real estate business and focus on them in the same manner.  For example:

• Keeping organized records
• Developing systems for your marketing
• Building new relationships
• Following up and maintaining relationships
• the list goes on….

People are constantly looking for ways to improve themselves and improve their businesses.

Good ol’ Benji just provides us with one more way to get there.  It’s not all about the Benjamins, but developing yourself as a person is sure to get you more of them!

Image: Photos8.com

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

It’s All About The Benjamins, Baby

Frankly, I wouldn’t be surprised if the title of this post alone was enough to make some of you groan and think one or both of the following:

“You’re kidding me, right? Writing in journals is for pre-teen and teenage girls!”

“Do I really need something else to add to my plate? Sounds like too much work!”

Regardless of your initial impressions, I’d like to build a quick and perhaps even compelling case for why I think keeping a business journal for your real estate investing can be a very effective success strategy for any serious real estate investor.

1. It’s good to have a place (one consistent place) to capture great ideas you read or hear about

How often do you come across an awesome idea in an article or a blog or simply in conversation with others and think to yourself “I don’t have the time to do this now, but that would be a great idea!” or “Some day I’m going to give that strategy a shot for my business”?  I know it happens to me often — I’ll read great ideas in real estate investing forums such as the one right here on BiggerPockets or see a great video tip from one of my real estate investor blogging pals.  It’s impossible to process or take action on all of this.  Rather than be distracted by the ideas,  you can file them away in your real estate investing journal to refer to at a later time.

2. By the way, you also need a place for your own random thoughts and killer brainstorms

Ideas (whether good or bad) can be forgotten as quickly as they are formed in your mind.  Why not get those ideas written down so that you can truly evaluate them later?  Sometimes you’re so concerned about forgetting something that you’re unable to move forward with other important things, but if you write it down you can get it off your mind and move on.  Perhaps you’re having a challenge and need to brainstorm some solutions…do it in the journal where you can have record of it later.

I know some people who are really savvy about this and keep a voice recorder at all times so that they can capture their thoughts even if they are driving or are somewhere that makes writing impossible.

3. You have a written history of your businesses successes and failures (lessons learned) to celebrate

For me personally, this is one of the greatest benefits of keeping a journal for your real estate investing business.  You can capture what is working well, what isn’t working at all, the obstacles that you had to overcome, etc.  Not only will this help you moving forward in your business, but it will also allow you to truly appreciate how far you’ve come when you go back and read the journal in later months or years.

You can take this a step further and also consider the value of handing a journal like this over to a child, sibling, or someone you mentor in the years to come.  It’s bound to be inspiring when you have reached some or all your real estate investing goals!

There are actually a number of other reasons I can think of to keep a journal for your real estate investing business, but these are three solid ones to consider.  Your journal can be on paper or electronic, but even as a major technology fan I will tell you that I do believe that there is something powerful about putting pen to paper.  You also don’t have to write on a daily basis, but the idea is to be consistent (at least weekly) to gain the most from the process for your business.

Would love to hear your candid thoughts. Do you keep a business journal?  Do you think this could make a difference in your business or does it seem like a bunch of fluff?

Image: digitalalan

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Why You Should Keep a Real Estate Investing Journal

The key to developing a successful real estate business is building relationships. However, if you’re not good at it, you may be damaging your own potential. This past week my wife was interviewing for a job in the security and surveillance field. To her surprise, she was hired on the spot and was invited to come to a two day orientation. The first day she got there, she was among thirty other people who were recently hired as well. When she showed up the next day, only five people returned for training.

Why did this happen?

It’s simple — the company sucked at building relationships and ended up chasing away twenty-five people in only one day!

So, what happened that caused these people to suck at building relationships? After speaking with my wife and hearing what she had to say, I boiled it down to seven key reasons, and they all pointed to relationship building:

You’re Not Being Transparent

Nowadays, people want to get down to the nitty gritty. They want more details that can help them make better decisions. This security and surveillance company failed to mention that they didn’t pay by the hour and that it was commission based job only. Basically, the position required people to get others to buy a security system for their business or home. I’m not saying that this is a bad idea, but they tried to hide the details of the position until the last minute. They weren’t open and upfront about it. They just said you could make $35,000 a year without revealing how that was possible.

If you tell a seller you’re going to buy their house and you plan on flipping it, you need to be upfront about that. Some investors will try to hide this sort of thing because they don’t want to get rejected. However, doing business this way will only cause you to waste the seller’s time, your time, and may leave a bad mark on your reputation. Let them know how you plan on helping them get their home sold. Give them reasons why working with you will benefit them. Show them how you are the solution to their problems. If they see the benefit in doing business with you, then they’ll work with you; if they don’t, then they won’t. Show people you have nothing to hide and they will be more inclined to trust you.

You’re Trying To Be Someone that You’re Not

If you’re not a comedian or if you’re just not funny, don’t tell jokes! From what my wife was telling me, this company was trying too hard to tell jokes — but they weren’t funny. In fact, some of them were a bit offensive. They were telling jokes, laughing their heads off, but their audience (potential employees) were not impressed. Supposedly they were trying to show compassion and she could see the realness in what they were saying about wanting to help people secure their homes, but they tried too hard to “convince” and relate to the potential employees, which obviously backfired on them.

If you can put a smile on your seller or buyer’s face over and over again, you’ve opened an emotional gateway. They’ll instantly be attracted to your personality and may be more open to doing business with you. However, if you’re only putting a frown on their face, then they’ll be instantly turned off. Laughter is a powerful emotion that can really be a great way to build relationships with your buyer and sellers.

If you’re not funny, then its best to tap into other emotions. If they’re in a tough situation, then you want to be compassionate. This shows that you care and that you’re actually listening.  I’m not saying that you should cry if they cry. You need to be yourself and show them that they have a way out of their situation with your help. Not only that, but keep in mind that trying to be a “tough guy” will only get you the boot. There are ways to be firm and compassionate at the same time. You just have to figure out the right timing. The only way to do that is to listen, be yourself, and know your audience.

Understand that there is a key difference between simply being someone you’re not and being the someone you aspire to be.

You Keep Beating Around the Bush

Specific questions deserve specific answers. This security company beat around the bush a lot, and many people had questions that simply didn’t get answered. When they started revealing the part about the pay being commission based, people asked simple questions like…”What is the percentage of commission we will make for each sold system?” and their answer was, “Well there are many bonuses and incentives that we offer along with paid vacations that you can work your way up to. It all depends on how motivated you are and we have the best training to make you successful.” Ok? Well that sounds nice, but you didn’t answer my question…Then they just said, “Well we’re getting off track, so let’s move on..”  Huh? 

When talking to sellers, you primarily want to be the one asking questions. However, there will come a time when they will have questions that need to be answered. When people ask questions, they’re showing interest and trying to make sound decisions that the specific situation calls for. Your ability to effectively answer those questions depends on your expertise and can help your clients understand exactly what they’ll be getting into. If you don’t know an answer to a question, then tell them you don’t know, but that you’ll be sure to get an answer. Don’t leave them hanging and don’t beat around the bush. I recommend checking out Jeff Brown’s recent BP blog post called, “Answering Questions The Right Way”

You’re Being Too Cocky

If you’re really good at what you do, there is no reason to throw it in people’s face. Also, if you want to be firm with people and reveal a harsh “truth”, there’s no reason to say it in a condescending manner. The guys talking about the company were bragging about how they moved up quickly in the company and began talking down to people who just ”couldn’t cut it.” Sure, a commission based job isn’t for everyone, but there are ways to relay that to people in a manner that avoids offending them.

When talking with sellers and buyers, there is no need to convince people that you’re the best thing since sliced bread. It’s not necessary. They want to know about you, but their primary goal is to solve their own problem. They won’t care about you as much as you’d like them to. If you can show them how you can help them, then you have a deal because they’ll see what you bring to the table, not just hear about it. 

You’re Being Too Shy or Fearful

This company was definitely not shy or fearful. However, I mention this because it can really cause you to miss out on building that relationship. Being too shy or fearful not only shows a lack of confidence, it shows that you may not have what it takes to close the deal. If you’re not a people person, then you might be in the wrong business. However, if talking with people is something that you want to work up to, then you need to break out of that shell and take charge of your life. This is key if you have a family and your expected to provide for them. Being too shy or fearful about doing real estate deals won’t keep food on the table. Especially if it’s your main income source.

Perfect example: When I first got started in real estate, I was afraid of making mistakes when doing deals. So when a seller said, “No Thanks” to my offers, I felt kind of relieved because I didn’t want to “screw it up.” However, once I realized that I was not only hurting myself, but my family as well, I took charge and got over it. If you want bigger pockets, you need to do deals.

You Don’t Show Any Tact

As I mentioned earlier, the guys representing this company told offensive jokes they thought were funny and rubbed people the wrong way with their cockiness and ignorance. Having tact means you have a keen sense of knowing what to do or say, while avoiding offensive comments.

It’s important when inspecting a seller’s property to not insult them if they need cosmetics or if you don’t like how they painted the wall. You probably don’t want to say something like, “Oh these Pink Walls make this room look like crap!” Maybe you can say something like, “In order to sell your home faster, we may want to go with a neutural color scheme for this room.” (Thanks for the word Tom Koziol | BP Post: 2010 Real estate Buzz word) If they need repairs, don’t insult them and come down on them about not “taking care of there home.”

You don’t know what happened and you might end up hitting a nerve. I’m not telling you to ignore the repairs. I’m saying to use tact when you address it, especially if you want to talk about renegotiating. “Well after inspecting your home, I have some reservations about…XYZ.” Be honest and open with your clients and show them respect because they’ll likely do the same.

You Don’t Have Any Interpersonal Skills

What this all boils down to is interpersonal skills, and the guys representing the company I’ve been talking about really need to work on this. Interpersonal skills are how people relate to each other through effective communication. This is a skill you want to constantly develop. The better you get at this, the more relationships you’ll build, and the more successful your business will be.

Would you want to do business with someone who was hiding something, someone who was phony, someone who refuses to answer your questions, someone who just talks about themselves, someone who shows a lack of confidence, someone who offends you, or someone who you can’t relate to?

It’s a long question, but I think you get my point.

The fact that only 90% of the people showed up the next day for that company says something about the people in that company, especially in this economy where the unemployment rate is at an all time high.  The only reason my wife showed up the next day was because she was trying to be optimistic and wanted to challenge herself in this type of sales field, however after seeing the type of people she’d be working with, she had enough and left the orientation early.

Don’t get in your own way when it comes to your success!

To Your Success,

J.Lamar Ferren
New Breed Real Estate Investor

PS- What do you do when building relationships with others that contributes to any type of success in your business?

Photo: Alejandra Mavroski

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Seven Reasons You Might Suck at Building Relationships

I’ll admit it. Despite the great time with the family over the holidays, the excitement of reflecting on the year’s achievements, and planning for an incredible 2010 with our real estate business, I’ve been feeling a little overwhelmed over the past few days.

I’m sure you can relate to the feeling. Those times where you feel there is just too much to do, you have a million thoughts running through your mind simultaneously, and you have this underlying sense of being “stuck”. It’s not a good feeling and it’s highly unproductive.

I thought I’d help by providing some quick tips on how you can get over that feeling of being overwhelmed. These are things that have helped me personally to go from “stuck” to moving forward in my real estate investing (and this can of course be useful outside of business):

1. Put things in perspective (i.e. look at the brighter side of things). Take a moment to reflect and/or write down some of your accomplishments and what you’ve overcome – you’ll appreciate where you are and will also realize that in the grand scheme of things, this “endless to-do list” is not the end of the world! It can be tackled. You may even want to talk it out with a trusted friend or advisor who always helps you see the brighter side.
2. Write it down. If you have a million thoughts running through your head, you’ll feel a great sense of relief when you can at least get them down on paper.
3. Break it down. Once you’ve written down those thoughts and that seemingly endless list of things to do, categorize and prioritize.
4. Take one step at a time and enjoy the experience of completion. Even after you break it down, you still may feel like its just too much to do. Remember that you can only do one thing at a time. Complete just one thing and you’ll be motivated to complete another. One step at a time.
5. Delegate. Remember you don’t have to do it all. Divvy out tasks that can be done easily be others, even if your only affordable resource is a willing spouse or child.
6. Set a timer. One of my fellow investor buddies shared this one with me. To ensure she can stay on target and not be distracted, she’ll set a timer to complete the task and stay focused on that one task during that specified time.
7. Take short breaks and treat yourself for even your small accomplishments. This works wonders for me personally. I give myself a treat whenever I complete a few items on my prioritized to-do list. That treat can be whatever makes you happy – catching up on some reading, calling a friend, watching TV, etc, but the idea is to make it a short break (15-30 minutes) and then get back to work!
8. Under promise and over deliver. You’ll feel much better and garner more goodwill with your clients/customers, employees, co-workers, etc. when you can promise only on what you know for sure you can do and then – if time and motivation level permits – work your tail off to give more.
9. Learn how to say “No”. This doesn’t just apply to saying “No” to others…sometimes you need to say “No” to yourself!

Hope these tips help you to get over overwhelm and avoid complete burn out. They certainly help me!

Happy New Year everyone and wishing you a monumental 2010!

Image: Brett Baxter

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

9 Great Ways to Get Over Being Overwhelmed

Sometimes your greatest asset is simply your ability to stay with it longer than anyone else.
~Brian Tracy

I believe that many investors will agree with me when I say that persistence is a vital key to your real estate investing success.  As Brian Tracy (awesome author – read his books!)  indicates, a person’s ability to keep working on something longer than anyone else is often the key to winning as most people quit either before they get started or right as things get hard!  One of my favorite uncles refers to this success skill as “sticktoitness” so today I’d like to discuss 5 ways that you can exercise your sticktoitness in 2010 and make persistence pay off for you.

#1: When doing direct mail, don’t mail once. Not even twice or three times.  Try 5-6 times.

Well, unless the person calls you to say “leave me alone” or calls you to discuss the property.  Then stop mailing them. I mail to the same people repeatedly and can tell you from experience that sometimes it takes people 2 or 3 times before they respond to your mailing.  This can be for several reasons.  1 – your mail could be getting lost among the hundreds of other pieces of mail they receive or 2 – at the time they read your mail they aren’t interested….within a month or two something changes and they are ready to talk/sell.

#2: When a homeowner rejects your offer, consider it a temporary no instead of a dead lead

If you have taken the time to screen a seller who calls you, inspect the house, and make an offer, you’ve invested a little time there. If the seller says ‘No way’ to your offer…take that as a “No way, not today!”.  Truth is that a seller may change his or her mind in due time.  Now depending on what type of no you received, you can follow up one of two ways.  If your offer is way off in terms of what the seller was looking for, I’d recommend following up via mail.  If the seller seemed pretty motivated but just not quite ready, its worth calling that seller on the phone in a couple months.  I’ve heard countless stories of how sellers move from a NO to YES within 6 months.

#3: When your REO offers are rejected, check back in a few weeks

Keep a record of all REO offers you make and continue to check the MLS to see which properties come back on the market or are still waiting to be sold within 3-4 weeks after your offer is rejected.  Don’t give up on that property until its showing as CLOSED SALE (not pending sale as many of those fall through).  Resubmit offers for the same amount or even less if the list price has dropped over that time.

#4: Make lots of offers

You’re going to get a lot of NOs before you get to a YES when it comes to making offers, whether the offers are to homeowners or banks. This is indeed a numbers game.  Don’t be discouraged. Keep making offers. I made 30-40 offers before I snagged one. More offers means more deals. No offers means no deals.

#5: Keep dialing even when people hang up on you

My friend and fellow BiggerPockets contributor Steph Davis recently shared a great story of how persistence paid off for her and she scored a buyer for her latest wholesale deal.  In a nutshell, she called a long list of landlords from numbers she wrote down from “For Rent” signs in her farm area. She had to deal with a real jerk on the phone and rather than letting that call take the wind out of her sails, she refused to give up and kept calling those numbers. Wouldn’t you know the 24th call she made (the 24th!!) ended up being the buyer of her wholesale deal.  Talk about persistence paying off!

I hope this gives you some solid ideas on how you can get a nice payday from simply sticking to it longer than anyone else.  Would love to hear some additional ideas if you have them!

Image credit: Tim Norris

This Article is Copyright © 2004-2011 BiggerPockets, Inc. All Rights Reserved.

Marketing & Making Offers: 5 Ways to Make Persistence Pay in 2010