All Forum Posts by: Rick Howell

How can real estate investors, agents, and businesses get their websites to rank better on Google this year?

Statistically speaking, almost 100% of home searches start online. Any real estate professional or business serious about winning customers this year knows that they need to do well at showing up on the top of Google searches. Having said that, what can real estate professionals do to help their websites rank better in Google search results?

1. Blog: Blogging is one of the easiest and best tools for improving Google rankings. It helps build SEO that lasts, increases sharing and boosts inbound traffic via third party links. If you can’t blog daily, at least make it a consistent part of your monthly real estate marketing. Consistency is the key to having your blog work for you.

2. Articles: Off-site articles can be just as beneficial for real estate websites as onsite blogs. While the SEO benefits of article directories and inbound links may be cyclical as Google constantly updates its ranking algorithms, we’ve recently seen a resurgence in article directory articles showing up in real estate searches. This is a low cost form of real estate marketing that can go on providing long term results. However, it is important for real estate brands to watch where they post. This definitely includes spreading content among a wider variety of sites for more diverse back links, and using a variety of different back link text. Real estate professionals also need to be wary of providing too much support to third parties, which may become competitors, or end up holding that content captive.

3. Press Releases: Real estate leaders influence markets by directing the media, not following it and reacting to competitors’ published pieces. Don’t just read the news. Make the news.

4. Better Social Media Marketing Tactics: Facebook and other social media marketing has almost come full circle, back to its original roots. Systematic changes have been penalizing real estate marketers with big follower and like figures that are not relevant, and which don’t show a truly engaged network. For many, it is time to do a little social media spring cleaning. Tighten up those networks and focus on more meaningful and authentic engagement.

5. Use Trending Keywords: Keywords are the fabric that makes good SEO. Sadly, most real estate marketers have no clue what really makes good keywords. They often end up attracting the wrong site visitors and burning their budgets, or focus too small and don’t attract enough leads. Others are still working keywords they identified years ago. The best keywords are always changing. Stay ahead of the competition by doing your due diligence in keyword research.

6. Long-Tail Keywords: A new review of marketing challenges and opportunities highlights the importance of long tail keywords. Consumers are reportedly becoming more specific in their Google searches, and mobile users are more empowered to be more detailed by using tools like Siri. Get inside the mind of your audience and learn what keywords they are searching,

7. Extend Your Domain Name Registration: While domain name reservation length may come second to some of the above factors in Google’s calculations, it is believed to be important when it comes to ranking. If you’ve only registered your domain for a year or two; upgrade now. Show Google your determination and commitment with a 5, 10, or 100 year registration.

8. Diversify Your Content Length: There have been many debates over whether short or long content is best over the last couple years. The truth is that they both have their unique benefits. Mix it up with in-depth pieces and shorter, more concise ones.

9. Optimize Your Existing Real Estate Website Pages: Most real estate website owners haven’t optimized their core pages for SEO and Google at all. This means using keywords in your page titles and descriptions, mobile friendly design, and a healthy blend of inbound, outbound, and internal links.

10. Google Ads: For those that don’t like to wait to see results, the fast way to get on top of Google is to simply pay for it. Launch a Google Adwords campaign now, and you can be on top of Google in a matter of hours.

Would you like to be in the know about insurance and inspections when buying a home?

All of the information out there about searching for homes to buy, working with realtors, and getting a mortgage loan can be overwhelming. There are even plenty of tips out there to make the moving process easier. However, two of the areas which can cause just as much confusion, and can either make or break the homeownership experience, are home inspections and homeowners insurance. These factors can heavily influence repeat buyers and real estate investors, too. So what do you need to know?

Home Inspections

Many people often try to justify not getting a home inspection. Don’t fall into this trap. Always, always get an inspection. Period.

While the risks of major issues may be lower in certain scenarios, and those buying with enough cushion to tear down and build from scratch without breaking a financial sweat may not be worried. However, not getting a property inspected can be extremely bad news. Honestly, you never really know what is lurking within a home unless you have an inspection. Most people underestimate the costs that can arise if they don’t know what they are getting, and there are more liabilities than you may think.

Always get an inspection, even on new homes, or those that pass the eye test. Think about how much you are investing. A couple hundred dollars on an inspection is a great deal on ‘insurance’ when you are putting tens of thousands on the line. This applies whether you are putting in real capital, or borrowed money.

Many will find it prudent to go above and beyond the basic home inspection and ask for mold tests, termite inspections, and anything else that could be a problem down the road. For those afraid of needlessly spending more money than they have to; consider getting a basic inspection, and then ask the inspector whether they feel there is any value in deeper inspections or not.

Choose a reputable, unbiased inspector. They shouldn’t try to offer to do any repairs for you. A good inspector will be detailed, and will at least find minor issues that can be improved on. If they find nothing, they may be getting paid off by other parties in the deal to ensure you don’t get scared off. However, it is also key that buyers recognize the difference between minor improvements they can make later, and critical repairs than need to be made immediately. If the AC is going to cost $6k to replace, or the house needs new wiring and plumbing, you will want to know up front.

Homeowner’s Insurance

Buyers should always get insurance. If you are taking out a mortgage loan, it will be mandatory to obtain all the insurances your lender deems necessary. This list keeps on getting longer and longer. Buyers that fail to educate themselves on this upfront will soon be made aware of how important it is to have insurance when the time comes that they need it. As you may have heard, it is better to have insurance and not need it than to need it and not have it.

It is common to be required to have general homeowners insurance, flood insurance, separate interior insurance for condos, special disaster insurance and any number of other insurance options.

The costs of insurance is determined by the value of the property, cost to rebuild the property, value of what you own, and risk of damage. Insurance premiums may also be lowered by deductible amounts, having security systems in place, and having disaster protections in place. It is also important to note that some insurance agents are bound to certain higher levels of coverage than others. Those with existing coverage for other assets may even find dual discounts.

How can aspiring entrepreneurs streamline the way they achieve their biggest real estate goals?

Most people set resolutions and goals at the beginning of a new year. Whether they were personal or business oriented, there is probably a large population that has already given up, and we aren’t even two months into the new year. However, I can assure you it’s not too late to get back on track. If you are determined to accomplish your goals, try these tips to keep your head in the game:

1. Take Action: Everyone has ideas, but achievers act on them. They act intentionally, and with purpose. It is never the perfect time, you may never know absolutely everything, it will never all be easy, and longer term plans or features may change. Regardless of all this, achievers are decisive and take action. Do yourself a favor and take action. Nothing will come to fruition if you don’t take that first step.

2. Know Exactly What You Want to Accomplish: It’s hard to achieve your goals if you aren’t clear in establishing them in the first place. Exactly what is it you want to accomplish? If your goal is monetary, how much? If it is helping someone, who is it? If it is a certain number of real estate deals, what is your number? If it is simply being the best, what measurements and metrics will you achieve to demonstrate that?

3. Plan: It sounds basic, yet so few real estate professionals have a real, meaningful plan. Going through the motions of creating a lifeless business plan just because you have to doesn’t really count. Layout the really big vision you want to achieve. Make it engaging and inspiring. Look at any major architectural feats, the creation of ancient empires, historic works of art, and even the rise of Facebook and Uber; they were carefully and intentionally planned. The framework was drafted out in advance. Get a real plan.

4. Identify: Bringing the final product to life also requires you to put the right pieces in place. Uber literally needed vehicles and an app to unleash its empire. Facebook needed code and servers. Michelangelo certainly needed paint and ladders to craft his masterpiece on the ceiling of the Sistine Chapel. The Empire State Building required many materials, and logistics to be worked out. What will you need to learn about real estate? What software tools, building materials, and other resources will you need to make your masterpiece?

5. Create a Model: Facebook started off at a single school. Before you build and sell a massive new real estate development, you’d probably commission a model built to scale. Before you try to buy a portfolio of 100 homes, you’d probably want to work out the quirks and get familiar with the process. However you plan to get into real estate, find a way to begin with a model you can scale efficiently. I can’t stress this enough. It is much better to fail at a smaller level than at a larger one.

6. Break Down Your Action Items and Timeline: Entrepreneurs typically overestimate what they can achieve in a year and underestimate what they can achieve in ten. Achieving your biggest lifetime goals doesn’t have to be a sprint, it’s a marathon. You do need to get going, but giving yourself some time can take off a lot of the pressure and ensure better decision making. Break down your own timeline, break up your actions into realistic steps, and roll with it.

7. Where the Magic Happens: It’s time to seek out collaborators, and to gain leverage by leveraging other people and their expertise. Who can help you on your mission? How can you leverage the time, knowledge, connections, and finances of others? When you start making the connections and establishing these partnerships, you will truly gain traction and make big leaps toward your goals.

Summary

Those that achieve big things take action, have plans, take inventory, build scalable models, allow time for results, and look for others to help drive them forward. So put the above into play, stay focused, make the consistent steps, maintain your passion, and look for leverage to be on your way to accomplishing your goals.

There is a lot that goes into flipping and selling a property. Not only do you have to acquire it at a price that works for you but also, you need to put the right amount of work into it. There are many investors who are disappointed in their results because they fail to see the end of the process before they start. Selling your investment is great but the goal is to maximize your return. This starts from the minute you take ownership of your property. There are a handful of things you can do from the time of acquisition to the sale that will help in this area. Here are five tips to help you with selling your investment property for a maximum return.

• Think Like A Buyer. One of the biggest adjustments new investors need to make is to change the way they think. You need to be able to put your personal feelings and ideas aside when rehabbing. As much as you may like a certain characteristics of a property, you are not going to be living in the house. As you map out what work you are going to do, keep your buyers in mind. This starts with understanding the area and local market. Take some time to research what kinds of properties have sold in the last few months. Review the listing sheets to see what features these properties have. Also, a good idea is to take a look at homes that have sat on the market for a considerable amount of time. After you do your due diligence you should be able to have a good idea which areas you need to improve and which you can scale back. From the minute you start any work you need to think like a prospective buyer would think.

• Luxury Vs. Affordability. When rehabbing there is a delicate balance between luxury and affordability. All buyers want to live in the nicest house possible. They want granite countertops, updated bathrooms and stainless steel appliances. However, many are not willing to pay a premium for them. Throwing money at a property does not guarantee that you will see a return. Over doing improvements to your property for the market may turn out to be a waste of money. When you’re selling you want to create the highest amount of demand. This often means making the property as affordable as possible. A strong level of affordability brings in the maximum amount of buyers. Not only do you increase the chances of a quick sale but you can also create maximum demand. This demand often ends up in a bidding war which pushes your final price higher. Nice things work only in markets where buyers are willing to pay for them. Never put money into a property without understanding the potential return.

• Work With The Right Buyers. Doing the right work does not guarantee maximum return. You need to sell to the right buyer. Regardless if you have one offer or multiple ones you can’t rush to judgement. Accepting an offer that doesn’t end up closing will set you back months. There are times when the highest offer may not be the best one. You need to look at everything involved. The contract, pre-qualification letter, ability of the lender and any financials must be reviewed. It is no secret that the mortgage market is still filled with delays and 11th hour issues. You want to work with a buyer that is as clean as possible and can close without any problems. By accepting a higher offer with a pre-qualification that looks shaky you can end up wasting 45 days before you find out there is an issue. At this point most of the buyers that were interested most likely moved on to other properties. You will be forced to start the process over again and wait at least another month, possibly longer. Price is always important but working with the right buyer can help you get the best deal.

• Don’t Wait To Start Marketing. There is some debate in investing circles as to when is the best time to market your rehab. While it may make sense to wait until all the work is done to show it to the public you can always market to your network. There is no need to wait to generate interest with local attorneys, mortgage brokers, contractors and anyone else associated with the business. You can take advantage of social media and make posts regarding your property. The sooner you get the word out the more likely you can find a buyer.

• Price Right. While this is listed last it may be the most important step in selling for a maximum return. Most buyer interest is based on the list price. If you list too high you will lose a large segment of buyers that may have had interest. By listing too low you can end up leaving money on the table. Trying to squeeze 5% more out of the property has a negative impact. A home that sits on the market quickly loses appeal. Real estate agents will direct their buyers to more affordably priced homes in the area. After a few weeks of inactivity you will be forced with a decision to reduce the price. Once this happens buyers look at your property as damaged goods and any offers that come in will be discounted. You are always far better off listing at the right price and hoping to generate demand than trying to get a price that you know isn’t very realistic.

Generating maximum return begins at the start of the process and goes all the way until closing. Just a few percent more on five rehabs a year can equal a large increase in your bottom line.

A successful rental property is all about finding the right tenants. Once you find tenants that truly enjoy your rental property you can expect the lease to go as smooth as possible. To find the right tenant you need to make sure your rental stands out from the crowd. Most markets have a high demand for rentals. It is not enough to have the best location or even the lowest price. Your rental needs to offer certain amenities that other rentals in the area do not. Using these will help you avoid scrambling to fill a vacancy, and stop tenants from looking elsewhere. Here are five simple things you can do to add appeal to your rental property.

• Washer/Dryer. With any rental property it is important that you know your market. A student housing rental does not need the same amenities as a rental you would rent to a small family. Regardless of the rental there are a few amenities that make renting much more appealing. An in house washer/dryer and dishwasher can completely change the perception of the property. Nobody likes lugging laundry to and from the laundromat. This can be a time consuming expense that will push renters in another direction. If you have room in the basement you need to find a way to hook up a washer and a dryer. For around $1,000 you can install a washer and dryer that you will have in the property for years to come. Another good amenity to have in the property is a dishwasher. You don’t need a brand new stainless steel model to attract tenants. As long as you have something in the property it will make things easier on the tenant and feel more like home.

• Extra Storage. No tenant wants to feel crammed in their rental property. Adding square footage to your property may not be realistic but there are other things you can do. You can look at adding storage space in the attic and basement. It is not uncommon to ignore your attic for years. You may think a tenant has no use for the attic and it has become your personal storage bin. It is important that you take some time to clear the attic out. This may force you to get rid of some things but it can work to free up storage space for your tenants. The same goes with the basement. Regardless if the basement is finished or not you need to make it as clean and presentable as possible. There is often a room in the basement that can be used for storage if it is clean enough. Most tenants aren’t going to store dozens of boxes in these areas but room for seasonal items, a bicycle or toy set can be important.

• Garage. If you have a garage on site you need to take advantage of it. As hard as it is to believe there are many landlords who don’t utilize the garage. It may be little run down and instead of using it for parking they use it for storage. There are some tenants who will only rent properties that offer secure parking. Regardless if the garage is attached to the property or not you need to make it useful and functional. You may spend some money restoring it and cleaning it out but it can be an important part of attracting tenants. This is especially the case if the property is located anywhere that can get wintry weather. Tenants do not want to deal with defrosting their windshield and removing ice and snow every storm. If all things are equal they will choose the rental that offers a garage. There is no reason not to take full advantage of an onsite garage.

• Amenities. As a rental property owner it is important to always consider the big picture. There are plenty of occasions when paying a small expense has a much greater return. Take a look at what amenities and expenses you can pay that will allow you to justify a higher rental price. Seemingly minor items like snow & trash removal, lawn care and certain utilities can add instant appeal. Most tenants want to have their lives as simple and easy as possible. Bundling these items allows them to live worry free and not have to worry every time there is a storm or how they are going to cut the grass. As far as utilities heat and hot water are fairly standard but if you find a bundled cable deal you may be able to pass this along to your tenants.

• Furnish Unit. There is a large segment of tenants who do not have couches and other furniture to call their own. By furnishing your unit with these and other items your property becomes much more rentable. Instead of moving a desk, coffee table and other large items they can simply use what is already in the property. Furnishing typically works best for student housing rentals or in properties where moving in and out can be challenging. If there are tricky corners and tight spaces you can partially furnish the property and leave the rest vacant.

It is important to view your property as a prospective renter. Whatever items you find appealing your tenants will probably feel the same.

One of the most common complaints in the investing world is the difficulty in finding financing. Savvy investors have options outside traditional channels. If you know your personal investment style and goals, you can find an option that works for you. Here are four popular capital sources.

Traditional banks are the most commonly used source for capital. This works best for buying properties you intend to keep in your portfolio long term. Interest rates are competitive, and the turnaround time can range from 30 to 45 days. However, there can be a few hurdles, including few programs for damaged credit. Banks are looking for borrowers who fit their criteria, which include:

• good credit
• low debt-to-income ratio
• significant down payment

As the name implies, private money comes from individuals willing to loan you the cash. A friend, family member, or co-worker may have the means and desire to assist in securing the property you want to rehab. You are creating a partnership. Mixing money and friends or family can be tricky, so proceed carefully. Communicate goals, hesitations, and strategy before committing. On the plus side, these arrangements are more flexible than traditional channels and you and your partner can allocate the funds as needed.

Working with hard money is more like securing a line of credit, rather than a traditional loan. These lenders have terms, fees, and guidelines, but instead of evaluating credit scores, they look at the potential profit. They can also use personal assets as collateral. Closings are quick, and hard money lenders are easy to find. Most real estate agents, attorneys, and mortgage brokers have connections to hard money lenders. This option may not work for every deal, but they have their place in the industry.

Don't forget to look at your own portfolio if you need money. Since property values generally increase over time, you may be able to sell off some assets to raise capital. By reinvesting that money, you might be able to avoid tax penalties. You can also look at refinancing or taking out a home equity line of credit (HELOC) on a high-performing property. With a HELOC, you only repay the money you use, and interest rates are generally competitive.

While the prospect of securing financing can seem daunting, the money is out there. Any of these four options are potentially the right solution for you. With some due diligence and an understanding of your personal goals and strategy, you can find the capital you need.

No one in the property investment business sets out to make mistakes. But with any complex project, mistakes can—and often do—happen. Contrary to what we see on television, rehabbing houses is anything but simple. First, you must find the right combination of property, location, and rehab needs. Then, you must budget properly, sometimes without the benefit of having a full idea of what may be lurking behind those walls. Finally, you must complete the work quickly so you can list and sell the property sooner.

One wrong move can cost you thousands and jeopardize your hopes for turning a profit. By taking steps to minimize your exposure to risk, you can avoid large, costly errors that will cause you the biggest headaches. Here are four of the most common mistakes and how to avoid them.

We all know the saying about what happens when we assume. This holds true in the world of investment properties. Do not be so rushed to get a good deal that you miss signs the property has costly issues. Never skip property inspections unless you intend to demolish the structure. A home inspection will find foundation problems, extensive roof damage, and mold. These issues can be financially devastating if not factored into the repair budget. Investors are better off losing the deal than getting into a situation where major repairs come as a surprise after the fact.

Likewise, investors are ahead of the game when they do their due diligence on the contractors performing the rehab work. Contractors play an important role in the overall process. When you have good people working with you, the process runs smoothly. Due diligence in checking references and seeing the type of work product each contractor can deliver may take more time at first, but once you have established relationships with the right people, you will save time and money.

On television, property flippers take a quick tour through the property, throw out some numbers, and get to work. In reality (and behind the scenes on television), investors must spend more time investigating the property needs and consulting with their trusted contractors. Even seasoned pros know surprises can be hidden in the walls and attics. They build in extra padding, so the unexpected does not derail the entire project.

When creating your budget, make a room-by-room outline of work needed and estimated costs. Do this before you make an offer. Having documentation will keep you from acting impulsively and trying to force a deal that may not be in your best interests. The last thing you want to do is overpay for a property that will not ultimately turn a profit.

When crafting your budget, you may be tempted to take shortcuts for the sake of the profit margin. This is a mistake. You do not have to spend extravagantly to get a high-end look. Buyers will notice, however, if the tile looks like it’s falling off the wall, or the cabinet drawers don’t open properly. Part of this equation goes back to the importance of working with good contractors. The other part is in your style choices and attention to detail. Look at where you can save money, and where you need to spend it. For example, shop around for sales on tile that is being discontinued, and then put those savings into better quality light fixtures that make a statement.

Your work is done, and you are ready to list. Your goal is to make money, so you look at how much you can squeeze out of this listing. The mistake comes in going too high with your list price. Look at the neighborhood comps. Have other agents take a tour and provide feedback before the property hits the market. This is yet another case of doing your due diligence on the front end to save you time in the long run. After all, a property that is listed too high will sit on the market for weeks with little or no interest. A good price point will attract more interest, ensuring a faster close.

The common link among these four tips is due diligence. By putting the time into researching on the front end, you will save time on the back end. Saving time means fewer mistakes, fewer delays, and better profits.

The financial collapse that started in 2007 created a massive wave of foreclosure properties. Now, more than ten years later, most of that glut has worked its way through the system. Still, many bank-owned houses are out there, all of which are potential investment properties. The trick is to know how to buy them. Here are five tips to help you close more bank-owned property deals.

1. Update your Proof of Funds. Cash is king in bank-owned deals. Before you make an offer, update your proof of funds. You need a letter signed and dated by a bank representative, which verifies you have enough cash on hand to cover the cost of the offer you are making. To better your chances even more, include an updated bank statement. These documents go a long way toward showing the banks you are serious.
2. Increase your Earnest Money Deposit (EMD). Earnest money is submitted when you make an offer, to further demonstrate your financial stake in the deal. If you decide to back out of the deal, you will lose that money, but if a home inspection reveals a bigger issue than what you are willing to tackle, you will get that money back. Most banks will state a minimum EMD required with each transaction. Instead of just meeting the minimum, prove your interest in the property by submitting a higher EMD.
3. Prepare Easy Contracts and Few Contingencies. In the real estate world, a fine line exists between protection and acceptable risk. When people are attempting to buy bank-owned properties, banks want as little confusion with the contract as possible. Double and triple check that you have signed, initialed, and dated everything required. Write legibly. Include as few contingencies as possible. Ideally, the only contingency you should specify is the home inspection. By paying cash, you are eliminating the need for a financing contingency. Do not ask the bank to make repairs—they almost never do, and including that contingency is likely to send your offer to the bottom of the pile. The easier you make it for the bank to say yes, the more likely they are to do so.
4. Offer a Quick Closing. In keeping with the theme of making it easy for the bank to say yes, offer a quick close. The sooner the bank can get the property off its books, the sooner they can quit paying the carrying costs associated with that property. While a 30-day close is standard, offering to make this happen sooner is always better. This is yet another benefit to paying cash, since the money is already available.
5. Respond Quickly to Counter Offers. If the bank does not accept your first offer, be ready to respond to a counter offer. Counter offers are better than a flat-out “no”. They show the bank is interested, but maybe they have received multiple offers, or maybe they are not quite to the dollar amount they projected. If you have a threshold in mind before you submit the first offer, you will be ready to make a quick decision on any counter offers that come back. Out of courtesy, if you decide you cannot go any higher than your first offer, let the bank know that too.

Bank-owned properties represent a large pool of investment opportunity. By preparing ahead of time and acting quickly, you can acquire these properties and be on your way toward financial profit.

Growing your referral base is key to your success as an investor. The wider your base, the more likely you will find new deals. If you feel you have exhausted your existing options, consider these six networking channels.

Most towns have networking opportunities for individuals and small businesses. Look into local chambers of commerce, for example, to socialize with others in your immediate area. Don’t focus just on real estate, either. Build connections with contractors, plumbers, and anyone else with whom you may cross paths in the future. Approach these meetings as opportunities to make personal connections. You want to be remembered as someone those contacts want to work with in the future, even if there is no immediate opportunity.

Clubs more specifically tailored to real estate may be more infrequent, but certainly no less valuable. Fellow investors, real estate agents, and hard money lenders come together to share experiences and look for partnership opportunities. Because they are directly connected to your business, they can be a great networking resource for future deals.

Building recognition about you and your business requires continued effort, but the return on your investment can be huge. Consider starting a newsletter specific to your business and distributing it to everyone you know. Use email to stay in touch with individuals who may be more likely to want to partner with you. Tell people what you are working on. You may be surprised at who wants to get in on the action.

Today, social media is not only everywhere, but it is mandatory to grow your referral base. The most effective means to reach people, social media encompasses everything from Facebook and LinkedIn to personal blogs. With social media, consistency is key. Post frequently, and do not create social media accounts you do not intend to use. Follow others in your world, comment on their posts, and respond to people who comment on your posts. Additionally, targeted advertising will reach specific groups interested in what you are doing. Neighborhood-specific social media networks like Nextdoor are great networking opportunities as well. Here, you can communicate your message and you can search and respond to posts from residents who need your services.

Virtual channels are great, but don’t get so caught up in social media that you forget to make contact the old fashioned way—by knocking on doors. Stop into local professional offices. Introduce yourself, provide a brochure or marketing piece, and let them put a face with a name. Staff members always appreciate small treats, like coffee and bagels or an afternoon snack. Keep your meeting brief, in case they do not have the time for lengthy conversation at that moment. Your goal is to increase your profile down the road, rather than instantly making a deal.

Another option that’s been around for awhile is the listing sites like Trulia, For Sale By Owner sites, and even Craigslist. Respond to posts or make your own for the sake of creating interactions and making contacts. This may not be a primary avenue, but it still has the potential to pay off in the end.

The key is to get yourself out in the public. The channel you choose is perhaps less important than the effort itself. Do not rely on just one option. Develop an approach that works for you by incorporating several into your weekly routine. Or look for other avenues. Write an article in a local magazine, sponsor a youth sports team, or place an ad in neighborhood newsletters. The options are many, and the potential return is great.

Aristotle once said, “The aim of the wise is not to secure pleasure, but to avoid pain.” So how would Aristotle classify the idea of working with family? Is it wise, or just asking for a lot of pain? Only you can decide what will work for you and your family, but with good planning, it can be done well. For anyone wrestling with this question, consider these points.

In any good partnership, everyone must have clear expectations. Ask each other:

1. “Do you want the long-term income rental properties can provide, or do you want to get in and get out quickly?”
2. “Are you interested in only providing capital, or are you looking to be involved in the physical work?”
3. “How do we settle disagreements?”
4. “How much capital are you willing to contribute?”
5. “Are we equal partners? If not, how are we agreeing to split the workload?”
6. “Are we able to lose this money without ruining our relationship?”

The answers to these questions will dictate the direction you take together, from the property selection to the design choices and resale price point. Differences in philosophy, opinion, work ethic, and personality will come to a head when tensions are running high if expectations were not outlined ahead of time.

Working with family comes with the added layer of past history and emotional ties. Family members know each other not just as professionals, but also on a very personal level. Past experiences have a way of impacting everything from decision-making to argument tactics. If you can agree on expectations before getting into the property deal, you will be more successful at navigating disagreements along the way.

Business partners must agree on their risk strategy ahead of time. Working with family is no different. If one person is looking to play it safe in the suburbs where risks are low but more modest profits are likely, and the other person is looking at speculative markets where profits would be higher but come with more risk, you will run into trouble. There is no wrong strategy if the specifics have been researched properly, but for partnerships to thrive, everyone must be on the same page.

Be very clear about the expectations regarding how long the invested money will be tied up in the project, and who is responsible for what. If one of you has more experience in this industry, that person must explain expectations with regard to time frame. Break this general idea of “time frame” into specifics, such as how long it may take to:

• find a good property
• close the deal
• gather bids from contractors
• complete demolition

Use charts, graphs, or any other tools you normally use on your own to show your partner what to expect.

When dividing the workload, look at strengths and weaknesses. Maybe one partner can contribute more financially, and the other has great construction skills that cut down on the overhead. Decide ahead of time how to weigh these skills. This will determine how you split profits. Break down the specifics who is doing what, particularly if one partner intends to complete the physical work. Is this person prepared to pull permits? Will you need to get bids from other contractors for some of the work? What about completion time frames for each phase of construction? For the financial contributor(s), outline whether all capital is expected up front, or whether there is a series of points at which investors must contribute money.

Working with family may not be for everyone, but that doesn’t mean it can’t be done successfully. Of all the questions outlined in the beginning, the most important may be the last one—“Are we able to lose this money without ruining our relationship?” The old adage about not gambling with more than you are willing to lose certainly holds true here. But with careful planning and clear expectations, you have great potential for financial profit. By being up front about expectations, strengths and weaknesses, and division of labor, it is possible to tell Aristotle, “we partnered wisely and found success in working together.”