The Key to Your Long Term Success in the Real Estate Business
When people hear that I have been investing in real estate for 10+ years and that we have built a decent portfolio, the conversation always works around to the following questions:
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“What is your secret?” Or “What is your System?”
I love helping people and wish it was as easy as a simple system that everyone could follow, but alas, it takes work, time and maybe a little luck to be successful in the long term. That said – I do believe there is one key ‘secret’ to increase your chances of long term success.
I believe in this ‘secret’ so much that I try and use it in every aspect of my business. Let me explain. First, the secret:
Always do more than is expected!
Now, granted, this is not some earth shattering revelation, but let me tell you how important I believe this is to our business. I always strive to do more than is expected. Below are some examples of how we do more with the different players in our investment model.
Doing More than is Expected With Your Real Estate Business
Real Estate Agents or Sellers: Whenever I call a new agent, I do so with a specific property in mind and I ask a couple of key questions about the deal. During the call I let them know what I am looking for and a little bit about our track record.
Regardless of how the call goes I will send a hand written thank you card with a business card pointing them to our site. In addition I take time each week to call past agents I have worked with to check in and let them know I am still looking to buy more distressed assets. I believe it is my responsibility to remind them I am still in the market, so I am top of mind should a property fall out of escrow or they get a new listing they need to sell fast.
Tenants: I believe in providing the best property at the best rent. Now granted it takes time to figure this out in each market, but as I buy distressed units, I make sure to repair and replace what is required. I want the unit, once occupied, to require no new repairs for several years. I also make sure the exterior of the rentals have green grass, are well maintained and, frequently, are surrounded by a white picket fence. Tenants have lots of options in my market and I want our units to stand out from the crowd of pretenders. I see some investors slap a “For Rent” sign on properties and tell prospects they will fix it at move in. I don’t know for sure, but I doubt they fix anything.
Investors: My model relies on recycling capital through private investors, and that is why we have created our unique model that is very investor friendly. We want our investors to have enough security where they actually wish we don’t pay them. First, we only look to secure investor capital after we have repaired and leased units. We do not believe in asking investors to lend on distressed assets. We want them to have security in a leased and producing property.
Next, we offer double digit interest rates on the investor capital as we don’t buy “skinny deals”. Our minimum expected return is 20%+ and thus we are happy to pay double digits on repaired and leased properties. We have leveraged this model successfully for several years now. It’s no surprise that investors who have lent money at double digit rates with tremendous security will talk about it with their friends. Once our investors understood our model they started talking to their friends about the double digit returns they were earning on repaired and leased properties. At that point we had more investors calling to learn about our model and the momentum just keeps building.
So there you have it; the key to this business is ALWAYS doing more than is expected!!!
Photo: Rachel Kramer