All Forum Posts by: Ashan D

Great information :) What do you think of doing business turnarounds (followed by a sale)?

My friend ran into a guy that has owned over 40 businesses. He goes in, fixes the marketing, streamlines operations, and trims the fat in administration. He is worth high 8 figures so he's doing something right!

I've often pondered the thought of intimately learning an industry, scooping up businesses, and building a small empire much like RE investors do. Dry cleaners, nail salons, etc. Sure there's less of them than SFRs or even strip centers, but the cash flows of a business will be higher & there will be correspondingly less specialists competing. With good marketing and operations knowledge one could "rehab and flip" (or hold) their way to a business fortune.

I'm just thinking aloud here and would love what you guys with business ownership experience have to say.

Thanks Dale, those are some good tips!

I'm stuck on this part:

- How and where do you actually get in front of prospects? Do you farm commercial zones with postcards, door knocking etc?

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Knowing this would clarify to me how Commercial REAs generate leads for themselves.

Thanks; I'm mainly just curious in the field and especially the differences between it and residential in terms of bringing in new business.

So if I read your reply right, the commercial agents mostly handle the deal closing? And it's the broker who does all the client generation? I'm guessing I misread because I've seen elsewhere that new brokers can go 6 months to a year without a deal which implies some sort of pipeline.

- How and where do you actually get in front of prospects? Do you farm commercial zones with postcards, door knocking etc?

Hi;

I know that residential agents will typical work a neighborhood by sending postcards, knocking on doors, setting up a website, and doing everything they can to "own" a neighborhood.

But how does a commercial agent attract business? I've been reading that new agents should have a year's worth of expenses covered (!) so I imagine the marketing is significantly tougher.

Hi Everyone;

I was curious how investments are typically handled when there is a large number of investors involved (more than 50). The little I know about REITs suggests that they are not suitable for high risk, high growth projects (ie rehabs of small properties & similar)

Thanks!

Hi,

I've heard that real estate is a decent tax shelter because it allows for a lot a tax write-offs: mortgage interest deduction, building depreciation, deferring capital gains through 1031 exchanges etc.

I'm less knowledgeable about small business taxes. If anyone owns a small business, would you consider your business to have tax-shielding benefits as well? How do the tax benefits of the business compare to your RE assets?

Thanks

The 20% close ratio was a rough standard (Every industry is different)

Originally posted by Marc Freislinger:

You say that $400 is a high ticket sale, lets say we net $800 per tenant. That's $800 every 18 months. That's not a huge sale. It's $1.50 a day. Don't let the big numbers blind you from the amount of time it's spread over.

This is always a point of contention. The client doesn't feel their customer value is is as high as I show or their work involved makes it less. The bottom line is you're still netting $400 or $800 per sale. That's a lot. It's not a lump sum but it's still your average sale.



As someone who sells leads to businesses, I focus on the value I deliver. I sell leads to clients who can profit more from widening their funnel instead of trimming their costs. Those who are happy with their inflow of leads or willing/able to secure more themselves do not need my services.

Hope this explains things better

Thanks again. I see your perspective as a PM but respectfully disagree. If someone is handing you a reliable flow of business and charging per result, there's a lot of value there for you. He can market his business through other channels (and he still will) but my leads are a great source of sales that he otherwise wouldn't have access to. It's a true win-win for both sides.


Your Customer Value focuses on lifetime value of the customer. In your case it's at least $1080 - expenses. Let's say $400 net. That's a fairly high ticket sale. Your estimate of $100 max per sale is about the ceiling of what I would charge. I charge per call so I would typically work with a 20% close ratio and charge $20 per call. My hunch is that rental agencies don't close as high so I'll definitely offer some latitude here.


Thanks again for your insight

Thanks so much! I suspect your net profit would be a higher percentage of the gross since property managers transfer expensive repair costs to the owner and pay relatively little for maintenance services. If this assumption is correct then I *think* each tenant has a lot of value to the PM and my leads may demand a premium.