Whether you are a newbie or a seasoned investor, you are ALWAYS looking for ways to grow your business. Some of us want to maximize our current investments, while others are looking to 10x their portfolio in the next year. Regardless of your goals and aspirations, we all need ideas and strategies to grow. Over the 10 years we have been in this business, we have tried various ways to grow our business. Some have worked — and some, of course, have not. The strategy of bartering has worked really well for us over the years. Many people don’t consider this as a strategy to use. However, I would highly recommend that you consider bartering to grow your business!
Let’s first define “bartering” so we are all on the same page.
According to Merriam-Webster, bartering is defined as: “A system in which goods or services are exchanged for other goods or services instead of for money.”
Bartering, in a nutshell, is trading goods or services with another person with no money involved. Bartering by no means is new; this type of exchange has been used for centuries. And with today’s global marketplace, bartering is an activity that can be done across cultures and across the world!
3 Examples of Bartering in Real Estate Investing
As I shared earlier, we have been relying on this type of strategy for many years. We have bartered with various people for various reasons over the years. In order to have a successful bartering experience, the parties involved have to be able to trade something that they have for what they want. Both parties have to give something of value and in return get something of value. This is a true “win-win” scenario. Bartering does not work if there is not an equal exchange from both parties.
Let me share a few examples to help explain.
1. Front Desk Support for Our Commercial Building
We have an office building in downtown Trenton, NJ that was once occupied by one single tenant. Many years ago when the building was purchased, we decided to break the building up into small offices to rent out to small business owners. Over the years, we have added more office space in the building and currently have 19 tenants.
There is one main entrance. And as soon as you walk into the building, there is a receptionist desk. Many of our tenants have asked us to staff the front desk with a DeRosa employee. Most of the time, we are happy to accommodate our tenants’ requests; however, the rent that we charge our tenants does not include any type of front desk office support. We have gone back and forth on hiring someone to staff the front desk, but we just can’t justify the expense. Therefore, we have shared with our tenants that if they have an employee or someone they know who would be interested in bartering with us, then we’d be open to the opportunity.
For the last several years, we have had various folks who have been our front door receptionist. The value that they offer us is that we have someone to open the front door and greet tenants’ visitors, someone to handle the mail, and someone to direct visitors to tenants’ offices. The value we offer to a front door receptionist has interestingly varied depending on the person.
The most recent front door receptionist is a person who has been out of the work force for a long time and was looking to get professional exposure in an office setting. She was also looking to have access to a desk to work on her own projects. The front desk is equipped with a computer and wifi. The result has been a win-win situation — we get coverage for our front door, and this person gets the exposure she was looking for and the space and tools (computer) to work on her own projects for free.
2. Landscaping & Snow Removal for Our Apartment Complex
Several years ago, we purchased a 10-unit in central NJ. Like many multifamily properties, the landlord (or property management company) is held responsible for many tasks around the building, two of which include landscaping and snow removal. During the due diligence phase, we learned that the previous owners had worked out an arrangement with a local landscaper in the area.
The owner allowed the local landscaper to park his vehicles in the back parking lot (which tenants never used). In exchange, the local landscaper would cut grass during the spring and summer months and also remove snow at the building. When we took ownership of the building, my husband Matt met with the local landscaper to determine if it would make sense to continue this arrangement.
Overall, this bartering exchange has worked out pretty well over the years. We have learned that he does a good job of removing the snow with his equipment, but he is not always as fast to remove the snow from the walkways. So we have our maintenance person help us with part. Sometimes we need to check on the work, but overall, we have been pleased with the arrangement. Most importantly, we have saved our investors involved in this project thousands of dollars over the years with this bartering exchange, especially with the winters we have had!
3. Social Medial Support for Multifamily Coaching
Most recently, we met a great guy at a BiggerPockets networking meeting in NYC. Between all of the networking we are involved with, we meet quite a number of people, especially people getting started. We have had many people over the years approach us for mentoring, coaching, internships, and even bartering. We are always open to these various scenarios, especially bartering; however, the key to successful bartering is that there is a fair exchange between what each party is offering and what each person needs. Sometimes people have skills to barter, but these skills might not be needed by the other person.
After meeting this person in NYC, Matt and I both connected with him afterwards, and we discovered that there were definitely ways that we could help each other. He was looking to purchase his first multifamily property and wanted to get coaching from us during this process. We were looking to ramp up our social media, YouTube page, and branding, and he had a lot to offer in this area. I am happy to report we are a month into the bartering arrangement, and it is working out really well. We just launched our first “branded” YouTube video that he helped us create, and we have been coaching him through his multifamily purchase.
3 Tips for Successful Bartering
Overall, bartering has worked well for us over the years. However, there have been times that it has not worked out. Here are some tips to prepare yourself with if you consider utilizing bartering to grow your business.
#1 Tip: There needs to be a “win-win” for a successful barter exchange.
This one might seem obvious, but it is absolutely essential for a successful barter exchange. You need to seek to understand what the other person REALLY needs in their business. There are a lot of “nice to have” things in business, but what is it that they really need?
We have had people in the past say that they have “some experience” with Facebook and that they can learn as they go. And in return, we are going to teach them how to be a real estate investor. This type of example is not a “win-win.” People need to offer skills, experience, assets that the other person needs, and they need to be able to hit the ground running. That is best way to create win-win scenarios.
#2 Tip: The “services or goods” that you are trading have to be of equal value.
This is another key tip. Many times, one person is willing to trade a skill that is worth a ton, and the other person does not have the skills or experience to match that person. In order to have a successful barter situation, you need to ensure BOTH people feel like what they are offering is equal value to each other. You don’t want one person feeling like what they have to offer is a huge value, while what the other person is offering is not even close in value. If these two people decide to move forward in this type of situation, resentment will build up and this will end badly.
#3 Tip: If you are bartering services, you should create a plan for one another and be in constant communication with one another.
When we began working with the BP person I mentioned earlier, during our initial conversations, we decided it would be helpful to create a “game plan” for one another, that way there is something in writing to refer back to. I created a “game plan” for purchasing his first multifamily, and he created a “game plan” for us growing our YouTube page and other social media outlets. These plans have acted like a reference for us as we support each other in achieving our goals.
I hope this article was helpful to you. I hope this article inspired you to think differently about your business and how you can grow your business by bartering.
For those who have bartered in their business, what have you bartered? How has it worked out for you? Am I missing any important tips?
Thanks for reading!
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.