Building a Real Estate Team with a Real Estate Investment Mentor

When it comes to real estate investment, surrounding yourself with supportive people and building a talented and educated real estate team is key. Without sharp colleagues and other industry experts by my side, it may have taken me much longer to reach my potential as a professional. If I did not know how to identify the right people with whom to do business, I may not have made all of the amazing business transactions that I have.

And without the best real estate investment mentor, I’m not entirely sure what my success would look like now. I probably would not be as capable of helping you today.

Indeed, building a strong real estate team is a crucial part of the investing process. This is a lesson I learned on my path to success, which has resulted in me gaining more than $300,000,000 worth of real estate, as well as clients just like you all over the country.

Additionally, over time, I have maintained a blog that now includes hundreds of posts that can help you get started with investing today. Below, you can browse a wealth of articles on team building—including posts on the importance of a real estate investment mentor, ways to build your team, common mistakes when forming a business partnership, tips to find the right contractor, and plenty more.

Please explore these articles, and then fill out the form to apply to work with me so I can personally help guide you to your very own successful plan for real estate investing and real estate team building.

firing a property management company

How to Approach Firing a Property Management Company

The property management company is one of the most – if not the most – important member on your core apartment syndication team. They are the boots-on-the-ground who oversee property operations on a daily basis and execute the business plan. Therefore, the success or failure of a deal is highly dependent on the quality of the company managing the property.

Hiring a qualified, experience and credible property manager should be done prior to looking for and ultimately purchasing a deal. However, what happens if are acquiring a deal, the property management company is unable to execute efficiently?

Well, they may need to be let go and another property management company will need to take their place.

In this blog post, I will outline the three reasons why you would need to part ways with your property management company, the five things you need to address in order to ensure a smooth transition and how to approach the conversation when letting the old manager go.

 

When Should You Fire Your Property Management Company?

There are three main things your property management company could do that should start the firing process:

 

1. Criminality or fraud

If you discover that your property management company has committed fraud or a criminal act, you should begin the firing process immediately.

 

2. Lack of execution

Lack of execution is another reason why you would fire your property management company. However, before beginning the firing process, confirm that the lack of execution is due to the property management company and not some other factor. For example, a failure to meet rental premiums on renovated units, a lower than expect occupancy rate or a high loss-to-lease could be due to the current market conditions and not the property management company. Or poor unit renovations or deferred maintenance could be due to a poor vendor and not the property management company.

You don’t want to go through the trouble of firing your property management company if the problem will continue once a new management company is in place, so make sure you do your homework.

 

3. Lack of communication

While this reason is subjective, you will know if your property management company is an ineffective communicator. Are they ill prepared for, don’t show up to, or have to constantly reschedule the weekly meetings? Do they take days to reply to your emails? Is it a struggle to get them on the phone? Do they communicate with you immediately when something goes wrong at the property? These are examples of a property management company that lacks communications and should be fired.

 

Unless the property management company has committed fraud or a criminal act, I recommend waiting at least one quarter before beginning the firing process. If after a quarter they still aren’t executing the business plan and/or lack communication, the first step of the firing process is to find a replacement property management company.

 

5 Things to Address to Ensure a Smooth Transition

Once you’ve made the decision to fire your property management company and found a replacement, there are 5 things you need to address in order to ensure the smoothest transition possible.

 

1. Staffing

First, you need to decide if you are going to fire all of the existing onsite staff or if you will allow some of them to stay under the new management company. To determine who stays and who goes, have the new property management company interview and vet the current staff. After the interviews and vetting, they can decide who to keep and who to let go.

Keeping some of the existing staff can be very helpful with the transition, because they have previous experience of and inside knowledge on operating the property. But if the current staff isn’t performing, the property management company may need to bring on an entirely new staff.

 

2. Financials

Your new property management company should proactively request all of the financial documents they need in order to take over the operations. This include the historical profit and loss statements, the current leases and rent roll and the chart of accounts (list of income and expense line items and the bad debt/delinquency).

 

3. Renovations

The new property management company will also need a list of the units that have and haven’t been renovated. Additionally, they need to know the exact renovations that were done for each unit. This information needs to be as detailed as possible. The new property management company needs to know what units are completely renovated (and what the upgrades were), what units have been partially renovated (and what upgrades remain) and what units have not been renovated. That way, once they take over management, the can start right where the old management company left off.

 

4. Vendors

The new property management company will need a list of all the vendors who work on the property, like the maintenance person, plumber, painter, appliance repair person, carpet person, drywall person, etc. Similar to the staff, continuing to work with the current vendors will help with the transition process.

 

5. Service Contracts

The new property management company will also need a list of all the contractors who work on the property, like the pest control company, pool person, landscaper, security, etc. And, they will need the actual contracts as well.

 

Other Things to Think About

Firing a property management company isn’t easy and unforeseen difficulties will arise. So, in order to minimize these difficulties, I recommend the following.

First, use soft communication skills when explaining the reason why you are firing them. Don’t call them on the phone, say “you’re fired” and hang up. Instead, I recommend placing the blame for the firing on your passive investors. For example, I would say, “I am getting a lot of pressure from my investors to find a new company to manage the property so we are going to have to part ways.”

Next, read the contract between you and your property management company. Make sure you understand how much time in advance you need to notify the property management company before firing them.

Finally, have a representative from your new property management company address the 5 things I outlined above with the old property management company. You shouldn’t be doing them yourself. Also, have your new representative talk with a neutral party from the old property management company. They shouldn’t be talking to the president or the person who oversaw the property. A regional manager who isn’t emotionally involved with the property is the ideal go-between.

 

What about you? Comment below: Tell me about a time you had to part ways with a property management company and how you approached it.

 

Subscribe to my weekly newsletter for even more Best Ever advice www.BestEverNewsletter.com

win over apartment broker

4 Ways an Apartment Syndicator Can Win Over an Experienced Broker

Real estate brokers can be a great resources for finding on-market and off-market real estate deals. However, do not expect a real estate broker to automatically put you near the top of their go-to client list, especially if you haven’t completed your first syndication deal.

 

After finding a real estate broker, one of the biggest challenges you are going to face is proving that you are the real deal. From the real estate broker’s perspective, there is a lot of uncertainty. They’ll be thinking, “if I begin working with them, are they really going to pull the trigger on a deal?”

 

Therefore, in regards to your relationship with a real estate broker, your main focus needs to be proving that you are a serious, credible apartment syndicator who is capable of closing on a deal.

 

Don’t just take my word for it. Thomas “T” Furlow, who is a commercial real estate investor who has specialized in apartments for years, agrees. Experience real estate brokers won’t take a newbie investor at their word. They must prove, through action, that they are serious. In our recent conversation, he offered four tactics a newbie apartment syndication can implement in order to win over the trust of an experienced real estate broker.

 

1 – Consulting Fee

 

One tactic is to offer the real estate broker a consulting fee. To show that you are serious and that you respect their time, offer to pay them an hourly fee ($150 to $200 per hour), even if you don’t find a qualified deal. In return, you can use them as a consultant, including asking them questions, sending them potential deals to review, having them run rental or sales comp reports and – ideally – having them send you prospective off-market deals.

 

2 – Visit Their Recent Sales

 

Another tactic is to get in your car and drive to the real estate broker’s recent apartment sales. Ask them to send you a list of their most recent 10 apartment sales and visit those properties in person.

 

After visiting the 10 properties, follow-up with the real estate broker, telling them which properties meet your investment criteria and why. In doing so, you are not only portraying yourself as a serious investor but are also giving the real estate broker an idea of what type of apartment you are interested in acquiring.

 

3 – How Will You Fund Your Deals?

 

The third tactic is to provide the real estate broker with information on how you will fund a potential deal. Since we are apartment syndicators, we are raising money from accredited investors. Explain how many people have expressed interest or have verbally committed to investing. Tell them about the strategies you are implementing to find potential private money investors

 

Since you will likely be securing a loan, tell them about the mortgage brokers you’ve spoken with.

 

Anything else related to the funding of the deal should be communicated to the real estate broker to qualify yourself as a credible investor who has the financial capabilities to close a deal.

 

4 – Constant Follow-Up

 

Lastly, and most importantly, constantly follow-up. Whenever you perform a task that brings you closer to completing a deal, notify the real estate broker. A simple email will suffice.

 

For example, if you have a conversation with a lender, provide the real estate broker with their contact information and the outcome of the meeting (i.e. “I met with XYZ Lending. I told them about my business plan and they told me that I will qualify for a loan.”).

 

Once you’ve found a qualified property management company, send the real estate broker their biography.

 

Before sending out a direct mailing campaign, as well as when you start receiving phone calls from interested sellers, notify the real estate broker.

 

However, only follow-up with information that is relevant to completing an apartment deal. The real estate broker probably won’t care much about what you had for breakfast.

 

 

Overall, proving your seriousness to the real estate broker is about communicating your effort towards and commitment to finding and closing on an apartment deal. To accomplish this, you can offer a consulting fee, visit their recent sales, communicate how you will fund a potential deal and constantly follow-up with relevant information.

 

How about you? Comment below: What tactics have you implemented to win over a real estate broker?

 

Subscribe to my weekly newsletter for even more Best Ever advice www.BestEverNewsletter.com

 

 

 

The 12 Greatest Mentors of All-Time

Each week, we post a new question to the Best Ever Show Community on Facebook. The Best Ever Show Community is a place where real estate entrepreneurs of all stripes and sizes can come together to interact with each other, me, and the guests featured on my podcast with the purpose of everyone helping each other reach the next level in their businesses and their lives.

 

What better way to add value than to ask you, the community, for your Best Ever advice on a variety of different real estate topics. This week, the question was “you can choose ANYONE to mentor you, dead or alive. Who would it be and why?”

 

To attain your ultimate real estate or business goals, interacting with an actual mentor is vital – or, at the very least, it will aid in increasing the probability of succeeding or expediting the speed in which you achieve massive success.

 

However, an alternative or complementary strategy is to study the unique individuals, past and present, who accomplished greatness. By analyzing the lives of such people, we can determine the habits and strategies the resulted in their success and apply those to our businesses. And what better way to compile a list of history’s greatest minds than by learning about the mentors of active, successful real estate entrepreneurs!

 

That being said, the poll is closed, the responses are in and here are the answers:

 

If you know me, you already know my answer – Tony Robbins. He distills complicated psychological and mindset advice into simple and digestible tidbits and is an AMAZING motivator. If you haven’t yet, I highly recommend reading his best-seller, Awaken the Giant Within.

 

Tim Rhode chose Gandhi because he quietly led a successful movement and did not lose his soul in the process. External success is important, but internal success may be of equal or even greater importance. Click here to purchase Gandhi’s autobiography to learn about how he developed his philosophy that changed an entire country.

 

Grant Rothenburger chose Napoleon Hill for his psychological and mindset advice. A “Tim Ferriss” of his time, Napoleon compiled the principles of the multimillionaires of the 19th and 20th centuries into his world-famous book, Think and Grow Rich, which you can purchase by clicking here. Although, I am sure you’ve read it at least once in your life!

 

Dylan Borland provided a unique answer. He selected Nikola Tesla so that he could get his hands on the plans for Tesla’s perpetual energy device. Of course, I am sure Dylan would reinvest the billions of dollars in profit back into real estate. Nonetheless, click here to purchase a copy of Tesla’s autobiography for a glimpse into the mind of a creative genius.

 

Devin Elder chose Jesus Chris, as he couldn’t think of a more impactful figure in history.

 

Mitchell Drimmer chose Winston Churchill, a Prime Minister of the United Kingdom in the 20th century, because he was resolute. Click here to purchase his autobiography in which he explains how he overcome adversity and major setbacks during the first 30 years of his life.

 

Lennon Lee selected a mentor who is still living – Tim Ferriss. Through Tim, he would get curated bits and pieces of advice from a tribe of mentors. I think Lennon was implying that Tim’s newest book, Tribe of Mentors, is a must read!

 

Eddie Noseworthy picked Rob Dyrdek, who is probably most commonly known for his successful reality TV shows like Rob & Big, Rob Dyrdek’s Fantasy Factory and Ridiculousness. Eddie chose him because Rob seems to squeeze every inch of fun out of the day while being a super successful entrepreneur. Eddie also likes that fact that he has been successful in multiple industries that most people might say he has no business in, which is a testament to his drive and determination.

 

Paul Hopkins chose Richard Branson, because he has started multiple billion-dollar companies and he lives life on the edge. In his autobiography, Losing My Virginity, Richard provides a blueprint to how to balance achieving massive levels of business success and living life to the fullest.

 

Amber Peel went with Beyonce because of her admirable authenticity and legendary work ethic.

 

Going back to the grave, Ryan Groene selected John D Rockefeller. Even though many see him as a negative oil tycoon, Ryan selected him because to amass such an empire, you must know a little something (or a lot of something) about business. Rockefeller’s biography, Titan, is very popular amongst entrepreneurs.

 

Lastly, we have Randy Ramadhin, who chose John Willard Marriott because his legacy is worldwide and will endure for generations. In his autobiography, he shares both the story of and the recipe for the success of Marriott International, one of the world’s leading hotel companies.

 

What do you think? Comment below: you can choose anyone to mentor you. Who would it be?

 

Subscribe to my weekly newsletter for even more Best Ever advice www.BestEverNewsletter.com

 

city skyscrapers

How to Build a High-Quality Sales Team That Consistently Brings You Leads

Are you having trouble finding quality leads? Or conversely, do you have so many leads that it’s impossible to contact and qualify them all? If so, hiring an inside sales person may be the solution to your problems.

 

A dedicated inside sales person can man the phones, contacting and qualifying incoming leads or cold-calling property owners to find off-market deals. However, you don’t want to bring on just anybody as your inside sales lead. Like hiring for any job, there is a specific process you want to follow to screen out the duds and only hire the most qualified individual.

 

Dale Archdekin, who has 10 years of experience selling and investing in residential real estate, is an expert at coaching and training real estate investors on building high-quality inside sales team. In our recent conversation, he provided his three step process for recruiting, interviewing and training candidates for a real estate inside sales team.

 

Step 1 – Recruitment

 

Like any hiring process, the first step is recruitment. And lucky for you, the internet allows you to complete this step with relative ease. When Dale needs to hire a new inside sales person, he simply posts advertisements on the popular job recruitment websites. “Just running different ads. Using Indeed, using ZipRecruiter, using anything that you have, pushing the ads out there just like any other job ad,” he said.

 

To maximize the number of potential candidates, Dale recommends that you do not only advertise for individuals with prior real estate experience. Instead, your ideal candidate only requires a background in any type of sales. He said, “That’s the one secret that I’ve figured out. A lot of teams get hung up on trying to find somebody who’s already licensed [as an agent], and in some states, there’s some very heavy requirements around actually getting a license. So, what we do is we look for people that just have sales experience, because we can teach them about the real estate process.” Dale finds that it’s difficult to teach sales skills, but learning the real estate process is much easier for most people to grasp.

 

Prior to conducting long-form phone or in-person interviews, in order to simplify the hiring process, Dale has interested candidates send in a verbal audition. “What you want to do is you want to get as many inquires as you can coming in, and then you want to streamline your process,” he said. “I prefer to have people calling to a phone number and leave a voicemail about themselves. I’ll just have an outgoing message that says something like ‘Okay, give me your name and your best phone number to reach you at, and then in your own words, tell my why you are the best fit for our inside sales department and why you are a sales rockstar?’.”

 

Once Dale receives the verbal audition, his team reviews the recording and determines if the candidate is worth pursuing further. This verbal audition approach will save you a lot of time. You don’t have to read through a bunch of resumes. Moreover, since the majority of their job will be spent on the phone, you can get a good idea of their communication style too.

 

Step 2 – Interview Qualified Candidates

 

The candidates that the pass the audition phase will move forward to step two of the hiring process, which is a role play over the phone. The first portion of the phone call is answering the standard questions about the job –  pay, location, and responsibilities. Once the candidate has an understanding of the job and are okay with the fact that they will be on the phone for over six hours per day, the role play begins. Dale said he will tell the candidate, “I’ve sent you a for-sale-by-owner script. You’re going to be the agent and I’m going to be the for-sale-by-owner. You have to set up an appointment with me. And the only way that you fail this exercise is if you let me off the phone before you ask all of the questions on the script.” In particular, they need to ask the two most important question, which are “are you interested in selling your property at this time and can we schedule an appointment to discuss this further?” When a lead comes in or when cold calling a lead, Dale’s main outcome is to determine if the lead is worth investing time in. So, if the candidate doesn’t achieve this outcome on the roleplay, they fail the interview.

 

The role play recreates the actual situation the candidate will be in if they are hired, so this approach will indicate if they are the right fit for the job. “If I give you explicit instructions that if you let me off the phone you fail, and you let me off the phone because you didn’t want to be too rough on me, you fail,” he said. “If you can’t do it when I specifically tell you not to get off the phone, you sure aren’t going to do it once I give you the job and I’m not listening all the time.”

 

Also, Dale said, “most of these people have zero real estate sales experience. So, going through that script with them … tells us what the level of sales skill they have. Because somebody with more sales skills can basically BS you through anything that they haven’t sold before. They will stay on the phone with you and they will set up an appointment with you even if they’re selling 3D laser prints and they have no idea what that is.”

 

If the candidate asks the money questions and passes the roleplay, Dale invites them into the office for a three-hour calling session. He said, “for the first hour or so, we teach them the script, and for the next two hours, we put them onto a recorded line and have them make real outbound calls to real consumers. Then we get to listen to that and see how they actually did.”

 

After making it through the entire process, which includes the verbal audition, roleplay and real phone calls to leads, Dale has enough information to make an educated decision on whether or not he should offer this individual a position.

 

Step 3 – Training

 

Once a candidate is hired, they are put through a training process. For Dale, he wants his inside sales person to be like an agent, so they are taught everything on which an actually agent would be trained. During this training, he said they’ll learn things like “How does the process work, how does financing work, mindset, time-blocking, understanding the types of leads that they’re calling and receiving, what the mindset of those leads that they’re calling and receiving, and then scripting.”

 

However, what Dale doesn’t want are robots that never deviate from the script. Scripts are to get them started and for them to have something to say when they call somebody. But at that point, Dale wants his sales people to use his three core principles – experience, process and outcome – to guide the conversation. He said, “For any person who’s trying to do anything or who’s objecting to you, that person has some type of experience that they’re drawing from [and] they’ve created a process in their mind that they think is going to get them an outcome that they’re trying to achieve. If you can ask enough questions to understand what their experience is, how they put that process together and what the outcome is and what it means to them, you can show them a different process that can get them to a better, faster, cheaper or easier outcome, and then you can say ‘Would you like that?’.”

 

Here is an example: You are speaking to a for-sale-by-owner and they say “My neighbor sold their home by themselves. They didn’t use an agent, which saved them a lot of money. I’m going to sell the house myself without an agent and I’m going to save a lot of money too.” So, an inside sales person needs to identify their experience, process and outcome. In this example, the experience is “my neighbor sold his house without an agent.” The process is “I am going to sell my house without an agent too.” And the outcome is “I want to save a lot of money.” Now that the three principles have been identified, the goal is to offer a different process that accomplishes the same or better outcome. A simple response would be “Hey, you’re absolutely right. You totally could sell this home yourself, and that’s great that your neighbor did that too. If I could show you how I could not only net you more money that it costs you to hire me and make this easier for you to do, would you consider meeting with me to discuss potentially listing your home with me?”

 

Who would say no to that?

 

How Much Do You Pay an Inside Sales Person?

 

It is important to understand the cost of having an inside sales team in order to determine if it is affordable. Dale pays his sales people around $2,000 to $2,500 a month as a base salary.

 

Since he is acquiring leads with the purpose of becoming the listing agent, his sales people are also paid percentage of the commission on a closing at the end of sale – between 5% and 10% of the gross commission income. On average, depending on the market, Dale pays between $60,000 and $120,000 annually.

 

Depending on your business model, your pay or bonus structure may differ – hourly, strictly commission-based, etc.

 

Conclusion

 

A great inside sales person will help you screen, qualify, and find high-quality leads. The three-step process for hiring this team member is:

 

  • Recruiting – posting ads online and obtaining a verbal audition
  • Interview – phone roleplay and in-person calling session
  • Training – teaching the experience, process, and outcome principles

 

Did you like this blog post? If so, please feel free to share it using the social media buttons on this page.

 

Also, subscribe to my weekly newsletter for even more Best Ever advice: http://eepurl.com/01dAD

                       

If you have any comments or questions, leave a comment below.

 

 

business conversation

How to Approach Hiring an Apartment Property Manager

As an apartment syndicator, one of the most important members of your team is a property management company. A property manager will obviously manage the apartment for you upon closing, but a great property manager should offer additional services. They should advise on attractive or struggling neighborhoods within your market, offer locations of prospective properties based on your business model, and even provide pro formas (projected financials) on prospective properties based on how they would manage.

 

During the process of hiring a property management company, it’s important to realize that the relationship goes both ways. A prestigious management company will have other investors swarming them for business. Therefore, this must be taken into account when preparing for an interview, because you are being analyzed as well.

 

What follows are the best practices for approaching these property management interviews. First, I will provide a list of questions you need to ask, followed by an outline for winning them over, and finally, a list of questions you should be prepared to answer.

 

Questions to Ask a Property Management Company

 

Prior to conducting your interview, you need to define an outcome. Or in this case, a few outcomes. Obviously, your main objective is to find the right property management company that fits your style, business plan and budget. To accomplish this objective, here is a list of 32 questions to ask during the interview:

 

  • How long have you been in business?
  • What geographic area/s do you cover?
  • How many units do you manage?
  • How many properties does each regional office manage?
  • How many do you own yourself?
  • Do you specialize or concentrate in a particular class of property?
  • What kind of due diligence services do you provide? What is the potential cost if the deal doesn’t close?
  • Do you take on value-add properties?
  • Describe your process for managing a moderate property renovation (How is the status of the work tracked? Who manages the contractors? How are invoices tracked and verified against bids? Who approves the work before the contractor is paid? What fees do you charge for renovation/cap ex expenses?)
  • What are some of the names of nearby properties that you are currently managing?
  • Has your firm been sued by one of its clients in the last 5 years?
  • Have you managed any properties that went into foreclosure and if so, why do you feel this happened?
  • What special training do your managers receive from your company?
  • How do you manage a property’s online reputation?
  • What do you see as the on-site manager’s duties? (turnover, cleaning, repair)
  • Can I interview and approve the on-site manager?
  • What kind of relationship do you want your property manager to have with the owner?
  • How often do you communicate with owners?
  • What is the protocol for communication? Will I be talking to you, the regional or the property manager?
  • Will you provide a written management plan?
  • What % of gross rent do you charge for management fee?
  • What is included with the monthly management fee?
  • Which property management software do you use?
  • How much time do you typically take to do a make ready?
  • Can tenants pay with auto-withdrawal? What other methods are available to them?
  • Do you require me to list the property with you upon its sale?
  • Will you give me your cell phone number or home number?
  • What are some of the reasons we should use your company?
  • What are the growth goals of your company over the next 5 years?
  • Describe some of your weaknesses and how you hope to improve?
  • Can you send me some redacted financial statements of properties you’re managing?
  • Can you give me contact information for 3 current clients who have buildings like mine?

 

 

How to Win Over the Property Management Company

 

Again, when interviewing a property management company, remember that they are interviewing you too. They want to be confident that if they bring you on as a client, you will satisfy their business needs.

 

Since property management companies are typically paid a percentage of rental income, their main motivator is to have a client that will close on a deal. At the same time, they don’t want a client with unrealistic expectations of the services they will offer, or to not get fairly compensated.

 

Besides finding a property management company to bring on your team, your other objective is to get them to let you send them deals and offer their expert advice. So, they will only agree to this if you are able to prove that you are capable of fulfilling their wants. You must convey that you are a credible investor who is serious about closing on a deal so that they are confident that you can fulfill their business want. Therefore, prior to asking if you can get their feedback on prospective deals, you need to prove your worthiness. They will accomplish this by asking you questions. However, you can be proactive during the conversation by selling yourself, your relevant experience and/or your team.

 

If you have past investing experience, you shouldn’t have an issue selling yourself. If you don’t however, what relevant experience do you have that will convey to the property management company that you are serious about closing deals? Have you successfully completed projects in a non-real estate related field? Have you started a business in the past?

 

If you are struggling to come up with relevant experiences, this is where having a reputable team comes into play. Sell your team members. Talk about your real estate mentor or advisor’s real estate experience. Tell them about the number of apartments that your broker has closed on. And bring up any other relevant relationships you’ve formed.

 

Finally, I recommend preparing an opening statement or elevator pitch. If you already have a deal in the pipeline, say “I’m buying a property in (city name) and am in the process of making offers.” Or another example if you don’t have a deal is saying, “I’m working with ABC broker and will be buying a property in (city name) in the next few months.” Then say, “I’ve done my research on you and would love to learn a little more about you.”

 

You need to get their attention by conveying that you are interested in doing business with them first. Then, you can ask about sending them prospective deals and getting their feedback.

 

Questions to be Prepared to Answer

 

To qualify you as an investor, an interest property management company will pepper you with questions too. Here is a list of 7 potential questions you should be prepared to answer during the interview:

 

  • Who is your broker?
  • Have you (or someone one your team) purchased an apartment building before?
  • What types of properties are you looking for? What markets/neighborhoods are you looking in?
  • How did you find me?
  • Are you currently working with any other property management companies?
  • What are your expectations for a property management company’s duties and obligations?
  • Can I see a biography of you and your partners?

 

As you interview management companies, if you cannot answer a question, make a note and tell them you will find the answer as soon as the meeting is over and send it to them.

 

 

Did you like this blog post? If so, please feel free to share it using the social media buttons on this page.

 

Also, subscribe to my weekly newsletter for even more Best Ever advice: http://eepurl.com/01dAD

                       

If you have any comments or questions, leave a comment below.

 

calculator and spreadsheet

Why and How to Hire the Best Real Estate CPA

If you don’t want to have a heart attack in ten years, or maybe even sooner, I highly recommend hiring a CPA and bookkeeper.

 

When searching for CPA, first and foremost, you want to make sure they already work with clients who are doing what you are doing, which in my case are apartment investors, or more specifically, apartment syndicators. Therefore, the first question I would ask in an introductory email or phone call is, do you currently work with other apartment syndicators?*

 

*If you aren’t an apartment syndicator, whenever it is referenced in this post, exchange it out with your focus. The process can be applied to hiring a CPA in any niche.

 

If they don’t know what apartment syndications is, that’s obviously an indicator that they don’t work with syndicators.

 

If they know what apartment syndication is, but they don’t work with any syndicators, that’s not necessarily a deal breaker. However, I would recommend finding someone else because you don’t want them learning the ins-and-outs of apartment syndication on your dime. You want a CPA who already knows the types of tax deductions you can take and knows the apartment syndication business model.

 

If they do know what apartment syndication is AND they currently represent syndicators, then the next step is scheduling an in-person interview, with the purpose of getting into their tactics. To accomplish this goal, ask the following 9 questions:

 

  • How are your fees structured? Get an understanding of exactly how you will be charge. Will there be fees for each time you call in? Can you give them a quick call every now and then and not be charged? Do their fees include the tax return at the end of the year or is that separate? Do they charge a monthly retainer for conversations? How do they structure bookkeeping fees?

 

  • Who will be your point person? When you sign up for their services, who will you be engaging with? Will it be someone right out of college, a partner, or a mid-level CPA?

 

  • How conservative or aggressive are you with the tax positions you take? Additionally, does the conservative/aggressive nature of the CPA align with your desires? If taking aggressive stances, how will that be communicated to you for you to understand and accept? You may rely on the CPA to prepare your tax returns, but ultimately when you sign your tax return, you are taking responsibility for it.

 

  • Does the CPA offer a secure portal to transfer sensitive files back and forth? Tax documents contain a lot of personally identifiable information (social security numbers, adjusted gross income, etc.) via regular email. Stolen identifies can wreak havoc on your personal and professional lives for years

 

  • How proactive are you with tax planning and how to your tax planning services work?

 

  • Are you able to file tax returns for all state and local governments in the country?

 

  • If you previously had a failed relationship with another CPA, be upfront with your new prospective CPA about why it failed

 

  • What is expect of me as a client? Expectations should be set early and communicated clearly

 

  • May I have some references? No matter how great the interview goes, always ask for references in order to make sure they are legitimate.

 

After interviewing a handful of CPAs, analyze their responses, determine which one aligns with your interests and goals the most and move forward with using their services.

 

One final note about CPAs/bookkeepers: as your business grows, your needs evolve. Moreover, a CPA who you selected as a beginner wholesaler may not be the best CPA after you’re wholesale business has grown dramatically, or if your business model has expanded to include other niches. So, as these changes occur, it may make sense to conduct additional interviews – even if only to confirm that you’re current CPA is still the proper choice – and make any personnel changes if necessary.

 

Did you like this blog post? If so, please feel free to share it using the social media buttons on this page.

 

Also, subscribe to my weekly newsletter for even more Best Ever advice: http://eepurl.com/01dAD

                       

If you have any comments or questions, leave a comment below.

 

 

 

business deal

The Ultimate Guide to Finding an Apartment Broker

One of the real estate professionals you want as a part of your real estate team is a broker. A great broker is one that sends you deals, and more specifically, sends you off-market deals. However, like all relationships, it must be reciprocal. Most likely, the broker will have countless investors asking them for deals. Therefore, when approaching a conversation with a new broker, it is important to realize that they are interviewing you as much as you are interviewing them.

 

Read on for tips on how to approach these broker conversations. First, I will provide a list of questions you need to ask them. Next, I will outline how you can win the broker over to your side by focusing on coming across as a serious, credible investor who will close a deal. Finally, I will provide a list of questions the broker may ask and that you should be prepared to answer.

 

Questions to Ask the Broker

 

When interviewing a broker, you need to know your outcome of the conversation. For me, as an apartment syndicator, my main goal is to determine their level of experience and success with apartment communities that are comparable to my investment criteria.

 

To accomplish this goal, here is a list of 11 questions to ask during the interview:

 

  1. What is your transaction volume?
  2. How many successful closes have you experienced in the last year?
  3. How long have you been working as an agent? How long have you focused on apartments?
  4. How many listing do you currently have?
  5. How do you find deals?
  6. Do you offer both on-market and off-market deals?
  7. What stage is the local apartment market in?
  8. What is your specialty?
  9. What are the top three things that separate you from your competition?
  10. Will you please provide references?
  11. What haven’t I asked you that I need to know?

 

Ideally, we want to find a broker that will send us an endless supply of off-market apartment deals. However, don’t bank on this, especially in the beginning phases of the relationship. But after you’ve proven to the broker that you’re the real deal, successfully closing on a few deals, it will become more and more likely that you will be the first person who is notified when they have a new off-market deal. It just comes with time.

 

How Do I Win Over a Broker?

 

Again, when interviewing a broker, it’s important to realize that they are interviewing you too. Therefore, put yourself in their shoes and ask yourself “what are they looking for when deciding whether or not to bring on a new client?”

 

Since brokers are paid a commission at the sale of a property, their number one motivator is to close on a deal as quickly and as easily as possible. They don’t like tire kickers, wannabe investors who waste their time asking a bunch of questions but never close on a deal. Their ideal client is an investor who has a proven track record of closing on deals. So, if you don’t have previous investing experience, that will be your number one challenge.

 

To win over a broker during a conversation, you need to sell yourself and your business and build rapport. If you have past investing experience, you shouldn’t have an issue selling yourself. If you don’t however, what relevant experience do you have that will convey to the broker that you are serious about closing deals? Have you successfully completed projects in a non-real estate related field? Have you started a business in the past?

 

If you are struggling to come up with relevant experiences, this is where having a reputable team comes into play. Sell your team members. Talk about your real estate mentor or advisor’s real estate experience. Tell them about the number of apartments your property management company manages. And bring up any other relevant relationships you’ve formed (i.e. contractors, attorneys, CPAs, your meetup group or thought leadership platform, etc.)

 

Along with the asking them business questions, to build rapport, get to know something personal about them. Find out something that’s important to them and bring it up with genuine interest next time you meet. A quick way to accomplish this is to ask, after having already established yourself, “what’s been the highlight of your week?”

 

Finally, I recommend preparing an opening statement or elevator pitch. If you already have a deal in mind, you can say, “I’d like to discuss making an offering on ABC apartment.” Or, another example would be saying “I am working with ABC Property Management and will be buying a property in (city name) in the next few months.” The purpose of the opening statement is to grab the attention of the broker, come across as a serious investor, and address their “want” – which is to close on an apartment – from the start.

 

Questions to be Prepared to Answer

 

Don’t expect the broker to simply answer your questions, chat about their business and personal life and then get up and walk away. If they are seriously interested in bringing you on as a client, they will want to ask you questions as well. Therefore, you need to proactively brainstorm questions they may ask and have ready-made answers.

 

Here is a list of 9 potential questions an interested broker will ask you during the interview:

 

  1. Who is your property management company?
  2. How many units to they manage?
  3. Are they local?
  4. Have you (or someone on your team) purchased an apartment building before?
  5. What type of deals are you looking for? What markets are you looking in?
  6. How did you find me?
  7. Will you sign an exclusive agreement with me so I can get you the best deals?
  8. What are your expectations?
  9. Can I see a biography of you and your partners?

 

And as you interview brokers, if you are asked questions you’re not prepared to answer, make a note and tell them you will find that answer right after the meeting and send them an answer.

 

In today’s market, buyers are a dime a dozen. So, many brokers will simply brush off an investor who is looking to purchase deals. Ultimately, a broker will bring more deals to buyers that they like to work with, and the types of buyers that like to work with are the ones who will close and not lose a deal due to inexperience, laziness or passivity. However, by following the approach outlined above, you will come across as a credible investor who can make aggressive offers and back them up by closing the deal.

 

Did you like this blog post? If so, please feel free to share it using the social media buttons on this page.

 

Also, subscribe to my weekly newsletter for even more Best Ever advice: http://eepurl.com/01dAD

                       

If you have any comments or questions, leave a comment below.

 

 

mentor

How to Approach Hiring a Real Estate Investing Mentor

Ask a successful investor for their opinion on hiring a mentor and you’re not likely going to receive the same answer twice. One investor will swear by mentors, saying it’s impossible to reach the highest levels of success without one. Another investor will say that mentors are unnecessary and a complete waste of money. And yet another investor will have an opinion of mentors that is somewhere in-between these two extremes.

 

My personal philosophy is more similar to the former than the latter. However, I can find truth in the arguments from both sides, because like most things in real estate, it depends. It depends on what your expectations are of a mentor. It also depends on why you want to hire a mentor in the first place.

 

In this post, I outline what to and not to expect from a mentor, as well as when it is the right time to hire one. You will also learn how to find a mentor, which you should pursue only if you’re expectations and current situation align with the reality of what a mentor actually does.

What should I expect?

 

There are four main things you should expect to get out of a relationship with a mentor.

 

Number one is expertise on how to do what you’re wanting to do. The mentor should not only have experience in the same field you’re pursuing, but they should be active as well. If you are a wholesaler, for example, a good mentor is someone who has a successful track record as a wholesaler and is still completing deals to this day. A poor mentor is someone who has never wholesaled a deal or someone who has stopped wholesaling, even if they have a long list of clients who are actively and successfully wholesaling deals.

 

Secondly, you should expect a mentor to provide you with a do-it-yourself system for how to replicate their success.

 

Thirdly, and – in my opinion – most importantly, a mentor should be an ally that you can call upon to only talk to about yourself and work out any problem you’re facing, real estate or personal. Since you are paying this person, you don’t have to feel guilty about being selfish or asking questions about the other person. You don’t even need to be interesting. You can and should talk about whatever it is you need at the moment.

 

The fourth thing you should expect are connections. Since the mentor should be active, they will have relationships with all the movers and shakers in your investment niche. Therefore, they should connect you will team members relevant to growing your business.

What shouldn’t I expect?

 

There are two main things you should NOT expect when hiring a mentor.

 

A mentor will not be your savior or your knight in shining armor. Do not expect to hire a mentor and poof, have all of your problems solved. Yes, they should offer expertise, be an ally, and provide connections, but you will still be required to take action. Moreover, the best mentors, rather than being your knight and shining armor, should give you the tools and knowledge so that you become your own savior!

 

Also, do not expect a “done for you” program. Actually, if you find a mentor who indeed does offer such a program, run! If a mentor promises you anything that doesn’t require any work on your part, run! The problem with “done for you” programs, assuming it truly is and is not just a scam, is that you’re not learning anything. You are not building the foundation of knowledge required to sustain a business. Even if you are able to attain a high level of success using one of these programs, it is unstable. And once you lose that program, you lose your progress as well.

 

When do I hire a mentor?

You are ready to hire a mentor when you have defined a specific outcome you want to achieve by hiring a mentor. Do you want immediate access to expert advice about your investment niche? Do you want a system for reaching financial freedom? Do you need an unbiased person to selfishly speak with? Do you need to find connections people in the industry? These are all defined outcomes that can be solved by hiring a mentor.

 

Do you want a mentor because you were told you were supposed to? Do you want a knight and shining armor who will do all the work for you? Do you want a “done for you” program so that you can sit back, relax, and enjoy the returns? These are wrong reasons to hire a mentor.

 

How do I find a mentor?

 

There is really only one effective way to find a mentor – word of mouth referrals. That is the only way that I have found to verify the legitimacy of a certain mentor.

 

If you don’t know someone with a mentor, or if you don’t know where to go to get a referral, then you’re probably not ready to hire a mentor. You’ll need to get out in the field and start meeting investors.

 

Conclusion

 

There are many differing opinions on the benefits of a hiring a mentor. I believe that a mentor can be extremely useful as long as you have the correct expectations and have defined a specific outcome.

 

Assuming your expectations and outcomes are in line with the reality of what a mentor can offer, the most effective way to find one is through word of mouth referrals.

 

Did you like this blog post? If so, please feel free to share it using the social media buttons on this page.

 

Also, subscribe to my weekly newsletter for even more Best Ever advice: http://eepurl.com/01dAD

                       

If you have any comments or questions, leave a comment below.

 

 

How to Screen and Hire the Best General Contractor

 

If you are a value-added investor, meaning you make some sort of improvement to a property in order to increase rents or increase the property’s value, or if you are a buy-and-hold investor, or if you are a developer, contractors are probably one of the hardest things you have to deal with.

 

Josh Simon, a seasoned investor and developer, has over $90 million in construction planned in 2017, so he will be dealing with a ton of contractors both this year and beyond. And with 12 years of investing experience under his belt, he already has the expertise and experience to manage all the general and sub-contractors required to effectively complete this year’s projects. In our recent conversation, he provided advice on how to best deal with contractors to mitigate as many headaches or issues as possible.

 

#1 – Don’t Hire the Cheapest Contractor

 

While this advice may seem obvious to most, when selecting between multiple contractor bids, don’t simply accept the lowest offer. Josh said, “let’s say you get three prices in anything in life, just like when you have a handyman at your house or if you are doing a remodel on a rental, don’t always go with the low guy, because you’re either missing something or he’s going to change order you to death and you’ll end up paying more.” In other words, the lowest priced bid upfront will likely end up being the most expensive option by the completion of the project because either the initial bid excluded certain parts of the project or the contractor will tack on extra costs throughout the project.

 

Instead, hire the contractor that is the best fit for the job. “If you need a foot surgery, you don’t call a heart doctor,” Josh said. “I think the same thing with architects and contractors. Have they built that product type before? We’re not going to use a single-story retail contractor to go build a two-story office building. It just doesn’t make sense.”

 

In order to determine who is the best fit for the job, ask. Ask both the contractor AND ask for referrals. Then call the referrals to see how the contractor performed on their project.

 

Pretty straightforward and simple advice.

 

#2 – Ask for Financials

 

When you are bidding out projects to contractors, you don’t only want to confirm that they are the right fit for the job, but you want to look at their financial history as well. Josh said, “What we really want to see is how much revenue are they doing. Are they making money? Do they have cash?”

 

If you are doing a $250,000 project, for example, do they have enough cash to pay a subcontractor who is threatening to not show up unless they get paid for their work? “We’re processing a draw for the contractor, which is how you pay the contractors. You pay them through a draw process,” Josh said. “If that sub [contractor] needs money and he’s only got $50,000 in the bank, is your job going to proceed as fast as you want it? Is he going to stay on schedule?”

 

Obtaining the contractors financials is important regardless, but it’s even more important for development or full rehab projects. Josh said, “When you’re building anything, especially what we do, our construction cost is probably 80% of the total project budget, so that’s one of your biggest decisions you need to make. If it’s not done right, you can end up with legal issues, with a delayed project, with loss of rent from the project being delayed.”

 

#3 – Check the Contractor’s History

 

Josh’s last piece of advice when hiring a contractor is to go to the registrar of contractor’s website and look them up. Do they have any outstanding complaints? Do they have task complaints? What does their history show online? “The registrar of contractors for every state has one. As a contractor, in every state you have to be licensed. And every state has an online database where you can look up that contractor,” Josh said. “You can pull up the contractor’s name, find their license: when does it expired? Do they have all their stuff current? And then also, are there any complaints that have been filed against the contractor? You can actually pull up that information.”

 

Conclusion

 

In order to mitigate the chance of running into contractor issues, developer Josh Simon recommends taking the following three actions:

 

  • Hire the contractor who is the right fit for the job. Not the cheapest
  • Obtain the contractor’s financials
  • Check the contractor’s history online

 

Did you like this blog post? If so, please feel free to share it using the social media buttons on this page.

 

I’d also be VERY grateful if you could rate, review, and subscribe to the Best Ever Show on iTunes by clicking this link: http://bit.ly/2m2XyM1

 

That all helps a lot in ranking the show and would be greatly appreciated. And if you have any comments or questions, leave a comment below.

 

Ask These 7 Questions to Find the Best Property Management Company

 

Out of all the team members you recruit for your real estate team, the property manager is arguably the most critical. They are more than property managers. They are asset managers. They are responsible for collecting rents, and more importantly, sending you the money.

 

Think all property managers are the same? Think again. Marco Santarelli, a real estate investor who is a frequent guest on my podcast, retold a horror story he experienced with a property manager on a recent episode.

 

After building a relationship with a seemly trustworthy real estate agent, Marco decided to hire her on as a property manager. She continued to represent buyers and sellers as a full-time agent and was a property manager for Marco part-time.

 

At this point in his career, he owned a couple dozen units in low-income areas, so the tenants paid cash or by money order, which were collected by his new property manager. As months passed by, Marco began to grow suspicious because he was receiving less and less money.

 

Marco is an out-of-state investor, so he flew out the properties to see what was going on. One thing he discovered is his property manager was telling the tenants to put the money orders in her name! Then, one month where Marco had his largest collection of rent to date, $6000, his manager called him up and said the money is in the mail and should arrive in the next day or two.

 

One day went by. Then one day turned into two, and then three, and Marco received nothing in the mail. He called the agent to see if she was certain she sent the money and she claimed she did.

 

To make a long-story short, Marco never received the $6,000. Based on the rent shortages he received in the prior months and learning that the manager was having the tenants put the money orders in her name, he is convinced that she stole the money.

 

What is the moral of the story? Marco said, “the bottom line here is you need to work with a professional full-time property manager that is ideally in or part of a bigger company. If you’re dealing with a real estate agent and/or a part-time property manager, it could lead to trouble because there’s no accountability. There are no checks and balances. If you are dealing with a property management company, even if it’s just a company of three people, at least you will have systems in place, you’ll have people that you can contact and they can report back to you.”

 

Besides hiring a full-time manager vs. a part-time manager that is part of a larger company, Marco has six additional tips for questions to ask to hire the best property management company and at the very least, to ensure you aren’t robbed.

 

#1: How many properties do they manage? – “If they’re managing one, two, three, five, or ten, this is very much a part-time endeavor. But if they’re managing 100, 200, 300, then you know it’s a serious business. You want to stick to companies that obviously do this day in and day out and have the network of people in place to manage your property.”

 

#2: Do they own any rental properties? – “This can go one of two ways. It’s kind of like section 8 – people either love section 8 tenants or they hate section 8 tenants. The property manager, if they own their own rental property, then they understand what being a landlord is like and what they would expect as a property manager. They have expectations, so they might be delivering and giving you the service and communication that they would want as an investor.”

 

“The flipside of that, which is arguable, is if they own their own portfolio of properties and they have a vacancy, is there a conflict of interest there where they’re going to fill their vacancy first over yours? So that’s up to you to decide whether it’s a good thing or a bad thing whether they own rental properties themselves.”

 

#3: Do they inspect or visit those properties on a regular basis? – “I think most management companies will go once per year, but if they make it a routine to go once a quarter or once every six months as just either a scheduled inspection or a random inspection where they just drop by, … those inspections just keep the tenants on their toes. But it also allows you to find out through the property manager the condition of the property and the tenants and just to make sure things are running smooth.”

 

#4: Does your property manager try to make you happy? – “Are they going out of their way to accommodate you and to make sure that they’re meeting your needs and expectations? If they don’t have time to talk to you or they’re just rushing you off the phone or their emails are very short, that’s not a good sign. It shows they don’t care enough to take care of you the right way, or maybe they’re too busy for their own good. So when an issue does come up, are they spending the right amount of time to address your needs and concerns and the problems that you’re having with your property? So it’s all about customer service. You want to make sure that they’re keeping you happy.”

 

#5: Do they collected fees based on collected rents or scheduled rents? – “The important point here is make sure that the percentage that they’re charging you is on collected rent, not on scheduled collections. Not what is expected to be collected, but actually what they collect. Then there’s motivation to perform, and if that property is not performing – in other words, if you’re not collecting rent every month – they’re not making a profit.”

 

#6: How do they address maintenance issues? – “Do they have in-house maintenance staff? A lot of them have in-house handymen that can handle most maintenance issues, a lot of them will outsource it. But it’s really more of understanding how they handle it and are they charging you a fee? It’s not uncommon for them to tack on let’s say a 10% maintenance management fee on top of whatever that bill is on the maintenance issue. So it’s not that that shouldn’t be there, it’s just know what it is before you get into a management agreement.”

 

Conclusion

 

Seven important questions to ask to ensure you are hiring the best property management company are:

  • Are they a full-time manager that works are a large company?
  • How many properties do they manage?
  • Do they own any rental properties?
  • Do they inspect or visit those properties on a regular basis?
  • Does your property manager try to make you happy?
  • Do they collect fees based on collected rents or schedule rents?
  • How do they address maintenance issues?

 

Did you like this blog post? If so, please feel free to share it using the social media buttons on this page.

 

I’d also be VERY grateful if you could rate, review, and subscribe to the Best Ever Show on iTunes by clicking this link: http://bit.ly/2m2XyM1

 

That all helps a lot in ranking the show and would be greatly appreciated. And if you have any comments or questions, leave a comment below.

 

 

bussiness team growth

4 Tactics to Get More Out of Your Business Team

If your vision is to scale and create a massive business, at some point, you will need to hire employees. If you have never managed a team before, you likely won’t have a clue what you’re doing. Even if you have management experience, it’s a whole different monster when you are at the top of the food chain.

 

Fortunately, Shawn Casemore, who has published over 1000 articles, booklets, and resources on improving individual and organization performance, specializes in teaching business leaders how to effectively manage a team. In our recent conversation, Shawn provided 4 tactics to get more out of your real estate or business team.

 

1 – For contractors, consultants, and non-employees, make your business their priority

 

If you are a real estate investor, whether you’ve manage a team or not, you’ve worked with contractors. We all how much of a hassle that can be.

 

To get more out of your contractors, Shawn said, “you have to realize those folks have their own businesses and have their own priorities, and therefore you need to somehow make your business a priority.”

 

One method, which is what you see on the real estate TV shows, is to go out and beat up on your contractor and threaten to pull business if they don’t get their act together. However, TV isn’t reality. Go in and yell at a contractor and they may perform even worse.

 

Instead, here a few examples provided by Shawn on how to make your business the contractors priority that doesn’t involve throwing a temper tantrum:

 

Leverage

 

Give them more business and they will give you more attention. Simple.

 

Make them feel like they are a part of the business

 

For example, Shawn said, “when you’re going out to take a look at a property, you bring your contractor … with you. Do you involve them in the decision making? Do you actually give them the chance to take a look at situations and provide potential solutions, and when they do, do you thank them for it and you take some of their advice?”

 

When dealing with contractors, Shawn said, “it becomes trying to ensure that other people who support me, although they’re not an employee, they feel like this is their business. That comes back to building relationships, which includes things like trust [and] honesty. And you’ll find that a lot of contractors will be very receptive to that, because everybody treats them like crap, so they’re happy to work with those who actually treat them like a human being.”

 

Don’t be a jerk

 

As business owners, we are constantly in the business mindset. We are fixated on the finding the next deal, developing the next opportunity, or maximizing our cash flow. As a result, we’re so busy and stressed out that we may run over those who support us, hopefully inadvertently, and we can come off as jerks.

 

Shawn said that when we are in this business mindset, “that stress then when you turn to answer some questions of your employee or contractor comes out that you’re a little bit of a jerk. And then what do they think of you? They think you’re a jerk, so are they going to stand behind you? Are they going to be there when you really need them? The answer is no.”

 

Therefore, you must complement the business mindset (i.e. focusing on the next deal, cash flow, profitability) with a separate, people-oriented mindset. Shawn said, in regards to the people-oriented mindset, “in order to be successful, I can’t do this alone. I need people, be it employees or contractors, or otherwise, and people are receptive to other people. People are receptive of being treated fairly, being treated honestly. In fact, I can actually warm people up a little bit if I start to maybe go that extra mile or if I drop off a coffee. When I go in to see my contractors, I always try to grab some coffee for the guys.”

 

Other example that your contractors would absolutely love is to drop off a case of beer if they are working late on a Friday or a weekend.

 

2 – Ask for feedback, advice, and ideas on projects

 

Another way to get more out of your team is to ask for input on projects you are working on. For example, Shawn said “I was just speaking with a client this morning. We were working with kind of a subset of a small group of people in the organization. We identified some very minor changes to something. This morning we sent that out to the broader team before it went live and said, ‘Hey, give us your feedback. What do you think?’”

 

It’s important to understand that your team isn’t an amorphous blob. They are a collection of individuals with their own experiences, including personal experiences, work experiences, and their own ideas, and everybody wants to share those ideas and experiences. Therefore, Shawn said, “if you want to create a stronger team and a better business, you need to really understand that everybody’s an individual, and deal with them on an individual basis to get the most out of them, to get these ideas that help them feel like they’re part of something.”

 

Always ask for input and feedback from employees. Some of it might be terrible advice if they don’t have the experience that others on your team do, but many people just want to be heard, even if their ideas aren’t acted upon. If you can listen to them and start to capitalize on the good ideas, you will build a very strong team and an even stronger business.

 

3 – Schedule face-to-face personal meetings

 

Again, when we are in the business mindset, we may neglect to schedule enough time to meet with our employees. Shawn said, “you need to calenderize some time where you’re only dealing with your people… This isn’t a stop by a property and just say, ‘Hey, how’s it going? What’s new?’ … I tell my leaders all the time: Stick it in your calendar every Friday to spend the afternoon or the morning going around and just talking to people. You might not hit everybody every Friday, but make a point of doing that. What you’ll find is you’re able to better understand everybody as an individual, therefore when you’re positioning things, ideas, viewpoints, [and] asking questions, you can position it from a perspective that they personal appreciate.”

 

What if you have a remote team? Will having this interactions over the phone suffice? The answer is no.

 

Face-to-face interactions are important because you’re forced to pay attention and vice versa (you’ll see if they are sending emails), you can see their body language to see how interested they are, and it saves a lot of time (you can get across the same message in a 5-minute phone call that you can in 30 emails).

 

Therefore, if you have a remote team like Shawn, he says, “I schedule time (if they have Skype, or Zoom, or something else) where we get face-to-face. Maybe it’s once a month, maybe it’s once a week, depending on how important that person is to the business and how frequently you can interact… Face-to-face is key with those remote people to ensuring that you’re having a valuable dialogue.”

 

4 – Provide Individualized Recognition

 

Now that you realize you must treat each member of you team as an individual, it should go without saying that you need to recognize them as an individual as well. For example, Shawn said, “let’s say you’ve got a few people on your team and you have a great year and you do the cliché send them all a jacket or give them all a ball cap. That’s fine, but if you’ve ever received the jacket from maybe a business you were working in at some point, some people love that jacket, some people would rather have cash, some people didn’t like the color, some of them got their names spelled wrong. So when you look at recognition or just thanking people, that also has to be individual.”

 

Recognizing each team member as an individual is the only way to ensure that it’s actually valuable to them. In doing so, you are going to find people more appreciative and more supportive of your business

 

Conclusion

 

The four tactics for getting more out of your business team are:

  • For contractors, making your business a priority to them and making them feel like a part of the team
  • Asking for feedback and input on projects
  • Consistently have face-to-face interactions
  • Provide individualize support

 

Related: All You Need to Know About Building a Solid Real Estate Team

 

Did you like this blog post? If so, please feel free to share it using the social media buttons on this page.

 

I’d also be VERY grateful if you could rate, review, and subscribe to the Best Ever Show on iTunes by clicking this link: http://bit.ly/2m2XyM1

 

That all helps a lot in ranking the show and would be greatly appreciated. And if you have any comments or questions, leave a comment below.

 

 

interview

Top 3 Questions to Ask When Interviewing a Mortgage Lender


Unless you are paying all cash from your investment properties, you are going to need a mortgage lender on your team. So the question is, how do you find the best lender in your market?

 

Stephanie Weeks, who has been a mortgage lender for more than 13 years and is in the top 1% of loan officers in the country, finds that the best way to find a lender is simple – ask them pointed questions.

 

In our recent conversation, she provided the top three questions an investor should ask when interviewing a potential mortgage lender for your team.

 

 

The reason why you want to find the best mortgage lender possible is fairly obvious. Stephanie said, “If you’re investing in properties, then that’s your business, that’s part of your livelihood. And time is money. And wasting money on appraisals and inspections is also a waste of money. So, my best advice is that if you’re an investor and you are going to have mortgages when you’re purchasing these properties, team up with the best mortgage lender that you can find. [One] that is going to do everything they need to do to get you to that finish line. So don’t take that decision lightly.”

 

No two mortgage lenders are that same. To find out who is the best of the best, Stephanie provided the top three questions you should ask a lender before obtaining a mortgage from them and/or hiring them for your team.

 

Question #1 – When was the last time you read the guideline book?

 

The first question you should ask is when is the last time you read the guideline book? Stephanie said, “this sounds [like] kind of a joke, but it’s kind of funny and kind of true. For me and my team, we actually review guidelines on almost a daily basis, because on almost a daily basis, guidelines are changing. We actually get the guidelines printed out… We are learning how everything works, how it is done, how it puts us all together.”

 

When I asked her when was the last time she read the guideline book, her response was “yesterday.”

 

Stephanie said, “It’s kind of mean for me to say, but I still think it’s funny. You should see their face, or here them stutter, because unfortunately, most loan officers have never picked up a guideline book. That’s frustrating to me.”

 

This is a great question to determine their level of passion and how serious they take their profession. While this may not be a deal breaker, it’s important to know if your lender is staying up-to-date on the updates and changes that are occurring constantly throughout their industry.

Question #2 – What kind of added value do you bring?

 

Any mortgage lender is capable of providing you with a loan (assuming you meet their requirements), so you want to know what else they have to offer that is unique to them. For example, Stephanie said, “If someone asked me, ‘Okay, Stephanie, what kind of added value do you bring?’ I would say, ‘Well number one, the mortgage industry is broken, and I wanted to change that, so I wrote a book on mortgages. The second thing is I’m going to treat your money like it’s mine. The third thing is I’m going to advise you on your overall situation based on a five-year plan that you tell me that you have, your goals for closing costs, cash out-of-pocket, monthly payment, etc. I am going to shop [around for] insurance for you to get you a good deal.’”

 

Ask this question to a potential loan officer and see how they answer the question. If they have trouble explaining what they bring to the table that other lenders do not, that may be a sign to pass and find someone else.

 

Question #3 – How many __________ did you help last year?

 

Fill in the blank depending on what your investment strategy is.

 

  • How many families did you help?
  • How many investors did you help?
  • How many closings did you do?

Why is this important? Stephanie said, “According to the last stats that I read last year, the average loan officer closes 1.4 loans/month… If the guidelines are changing on almost a daily basis with updates, and there are a pretty decent number of programs that are out there and available, and you’re closing less than 2 loans a month as a loan officer, how are you going to be the best in your field. How do you know how to put that file together? How do you know how to get that approval? How do you have the experience to know how to work around the problem if you haven’t done it enough times?”

 

While the more loans isn’t necessarily the better in all cases, if the lender isn’t doing high volume, it may point to a lack of experience or expertise that you want for the lender on your team.

 

Conclusion

 

The three questions you want to ask when interviewing a potential mortgage lender for your team are:

 

  • What is the last time you read the guidelines book?
  • What kind of added value do you provide?
  • How many (families, investors, etc.) did you help last year?

 

 

Did you like this blog post? If so, please feel free to share is using the social media buttons on this page.

 

I’d also be VERY grateful if you could rate, review, and subscribe to the Best Ever Show on iTunes by clicking this link: http://bit.ly/2m2XyM1

 

That all helps a lot in ranking the show and would be greatly appreciated. And if you have any comments or questions, leave a comment below.

 

 

 

 

 

 

 

shoes on the road

The 3 Common Mistakes When Forming a Business Partnership

 

“To partner or not to partner – that is the question.”  Whether you’ve done zero deals or 100 deals, if you are a one man show, you will inevitably come to the point where you will ask yourself this question. Should I partner up?

 

How you answer this question can be the difference between failure and success. Or at the very least, success and massive success. However, an answer in the affirmative isn’t a guarantee that your business will expand either.

 

Chris Clothier, a partner at one of the largest turnkey real estate companies in the world, which does over $100 million in annual revenue, purchases over 600-single-family homes yearly and manages over $400 million in assets, learned the pros and cons of partnership the hard way – through first hand experience.

 

In our recent conversation, he provided an example of a partnership that resulted in a six-figure loss, and he outlined the lessons he learned that ensured the success of partnerships in the future.

 

Chris’s Sticky Partnership Situation

 

The first company Chris founded was a grocery arbitrage company in Denver, Colorado. “I was very successful thanks to having some really good mentors and my family around me that helped me to build my first company successfully,” Chris said. “I was taking my earnings from that company and I began to invest in real estate.”

 

Even with this previous entrepreneurial success, rather than going at real estate investing alone, Chris decided to partner up. “I should have been smart enough to look around me and say, ‘I’m a smart person, I’ve got good people around me, I’ve paid attention, I’ve got good mentors’ … but I still felt like I needed a partner in order to invest in real estate, the fix and flip stuff.”

 

However, rather than selecting the best and most qualified partner, he picked a friend. “Let me be clear: great guy, phenomenal person. He was a good friend of mine, but the problem was that neither one of us had any experience in real estate, and the funny thing was we both were scared of losing. Rather than lose alone, we chose to lose together.”

 

Chris said, “that’s what happens so often in partnerships. We made the decision to be partners for all the wrong reasons. Not because he had strengths and I had strengths, but because we both had a weakness, which was a lack of faith, lack of bravery, lack of courage to go do it on our own.”

 

Even though they were both unexperienced, since they had a preexisting relationship, things seemed to go smoothly in the beginning. But that initial success turned out to be a double-edged sword. “We picked a couple of deals and we were doing well,” Chris explained. “We had no idea that we were spending twice as much as we needed to spend and taking twice as long to do it, but we were selling the houses and making money. And we mistook making money for success.”

 

The main problems Chris and his partner faced were not tracking their progress, moving too fast, and not holding each other accountable. Instead, Chris said, “we basically were just kind of relying on the other to be the smart one.”

 

The combination of these three issues resulted in their eventually downfall and the dissolution of their partnership. “The problem is that we purchased a home that was literally two blocks away from where it needed – both school district and taxing district. The way that homes were going to be appraised and what would be used as comparable sales, it literally was the difference between a home being worth $500,000 and a home being worth $300,000.”

 

What Lessons Did Chris Learn?

 

As a result of this failed deal, Chris and his partner lost over six figures, the partnership broke apart, and they aren’t friends anymore. Here are the lessons Chris said he learned from this deal and partnership (my emphasis):

 

First, don’t partner out of comfort

 

“I tell people on the backside when it’s all said and done that I went into a partnership with someone that I was comfortable with, someone who told me all the right things that I needed to hear.”

 

“I chose to take the easy route, which was, ‘I’ll get a partner instead and let him do these things. I’ll provide the money and make it on the backside.’”

 

“The point of it was that all of it I did with a partner, because I wasn’t brave enough to go on my own. It’s interesting for me, because I look back on it… I had all the tools, I had everything that I needed, I just didn’t have the confidence and the bravery to go on my own.”

 

Second, find a partner with complementary skill sets.

 

“I did not partner with someone who had the ability to run good forecasts as far as what we’re spending, how to budget that money, and how to model that money. I didn’t partner with someone who could pull comparable sales and could analyze that [two block] difference. I didn’t partner with a person that had the right skill set for me, because my skillset was absolutely at my business, and I had money. I had the ability to stay organized and stay on point, but I didn’t know real estate. My partner, unfortunately, didn’t have money, but also didn’t have the real estate skills that were needed, so he was managing a project that he didn’t know how to do.”

 

“I just didn’t recognize what I needed in a partner. Instead for me it strictly was, ‘I like this person, I’m good at what I’ve been doing, he’s been good at what he’s doing. It will be fun to be in a partnership with this person. He and I can make some money together.’ … These things say, ‘hey, this is what makes us a good partnership, and he’s got time on his hands, he’s got some experience…’ but I was never asking the question ‘does this person bring to the table exactly what I need?’ Forget anything else about it, and [ask yourself] ‘do they bring to the table the specific things that are going to make me successful in this project?’”

 

on’t partner based on fear.

 

“I [partnered] out of fear, and that is never a good reason to go into any type of transaction… You should never enter one out of fear. We were fearful of losing money, so rather than losing money as individuals, we lost it as a partnership.”

 

“So when you’re making a decision on whether to bring a partner in based on fear of what could happen, then you’re probably not ready to bring on a partner.”

 

Conclusion

 

Based on previous successful and not so successful partnerships, Chris’s three main pieces of advice when approaching a potential partnership are:

 

  • Don’t partner for comfort or lazy reasons
  • Don’t partner because you are afraid of going at it alone
  • If you do partner, make sure that person has the skill sets that complement your strengths so that you two are an ideal fit

 

Surround yourself with good people, know your strengths, know what you need, be clear, and see what happens.”

 

How about you? Comment below: Tell us a fairytale or horror story on your experience with selecting a business partner.

 

Subscribe to my weekly newsletter for even more Best Ever advice www.BestEverNewsletter.com

 

 

thumbs up

How to Find the Right Contractor for the Right Job

 

There are many challenges to making a successful transition from small fix-and-flip projects to larger, new development deals. Jason Gaston, who has completed 75 fix-and-flips and wholesale deals, decided to try his hand at new construction and has first-hand experience with these challenges. In our conversation, Jason explained the main lessons he learned from performing new construction and how he will apply these learning experiences moving forward.

 

New Construction, New Numbers

 

Currently, Jason is in the middle of 4 new construction deals. The first project is almost completed and should be on the market by the end of the month. Jason is purchasing infield lots in existing neighborhoods for, on average, between $40,000 and $60,000 per lot. After knocking down the existing building, it costs $80 per square foot to re-build. The new homes are around 1,600 square feet, which means Jason is all in for around $200,000 per new home. These neighborhoods are located in Tampa, where new construction is hot. Newly constructed properties are selling for upwards of $200 per square foot!

 

Renovation Contractor vs. New Construction Contractor

 

The main lesson that Jason has learned is that the contractor used to build new construction is not necessarily the same contractor that does the typical renovation projects. He started with the contractor that had done renovation projects for them in the past. However, it turned out that new construction was more than he could handle.

 

With renovations, you can usually use a handyman and don’t need a full-fledged general contractor. With new construction, you have to use someone that has prior experience in that field if you want to get the job done correctly. The last thing you want to be is a GC’s guinea pig, being the first client for which they have done a new construction build.

 

Ask Questions to Find Right Contractor

 

Jason’s best ever advice is that you have to be very meticulous to make sure you hire the right contractor. The first question that Jason will ask is if they have ever been a general contractor on a new construction project. Obviously, if they have never done one before, Jason won’t hire them. Just this question alone can save you a lot of headaches!

 

Also, Jason has an application form that he has every contractor fill out. The application asks very detailed questions like:

  • Do you have your GC license?
  • How many people are on their crew?
  • What are the total number of jobs have they completed?
  • How many new construction homes have they built from the ground up?
  • What is the average square footage they have built?
  • Can we see some of your recent work?
  • Do they have experience doing custom homes?

 

This last question is specific to Jason’s situation. They are buying lots in a historic area of Tampa. Therefore, to sell the property at the full asking price, they have to build a brand new house with the same style as a 1920s bungalow)

 

Investigate and Verify

 

Even after receiving the contractor’s answers to these questions, Jason doesn’t just take it at face value. Instead, he actually conducts further research and finds out more about the person:

 

  • Sometimes, he will do background checks if feels it is warranted
  • He check their license number to make sure that it is up to date and active
  • He check their references

 

Some of Jason’s biggest headaches have come from dealing with contractors who weren’t as honest as they should be. Or, they weren’t as experienced as they needed to be for the type of deal he was doing. He has learned that in order to make sure that he is doing business with the right person, whatever they tell him, he investigates and verifies it.

 

Never take a contractors word at face value. Whatever information you get from their application or interview, make sure that you investigate it to make sure that they are giving you true and hones answers!

 

 

winning team

How to Create a Win-Win Scenario With Your Contractors


In my conversation with Tom Olson, who is the owner of four different real estate related companies and is an expert in all things real estate including developments, creative transactions, and wholesale deals, he provided his Best Ever Advice on the importance of focusing on value.

 

There are three parts of any transaction, whether it’s real estate, business, or anything: price, cost, and value. If you focus on price and cost, you will have a linear business. However, if you focus on value, then your customers, contractors, lenders, and investors will come back to you over and over.

 

Tom defines “value” as what you bring that is emotional and builds upon your trust factor. Therefore, when he is doing a deal, he focuses on adding value to all the parties involved, like the community, the new buyer, and especially, the contractors. Tom’s main focus is on bringing value to his contractors. Many people believe that the opposite is true – that contractors should only be bringing value to them – but Tom finds this to be completely false. It is a win-win scenario.

 

Tom provided three examples of ways that he brings value to his contractors:

 

  1. Process and Systems

 

Tom puts all of his general contractors on his Podio platform. This gives the contractors access to Tom’s project plan so that they understand exactly how a project is supposed to be run.

 

Tom also has systems in place that help the contractor’s business run more efficiently. For example, he created automatic weekly payments that are paid out as long as the contractors submit their invoices by a certain time.

 

  1. Events and Speakers

 

Tom has events and speakers for his contractors that help them run a better business. Most contractors are hands on practitioners and know very little about business. The events and speakers focus on teaching them the business side, help them understand how to grow personally, and how to do their jobs quicker.

 

  1. Cost Savings

 

Tom brings value to his contractors by helping them save money in two main ways. First, they don’t have to spend a dime on marketing. They know that once they get in with Tom and successfully complete projects with him, they will never need to market their services. Tom will continue giving them jobs and projects.

 

Secondly, and this goes hand-in-hand with 1. Processes and Systems, Tom creates service level agreements with all of his contractors. A service level agreement explains exactly how long a project should take. This helps the contractors save money, because if they can get the project done ahead of schedule, they will save on labor costs.

 

 

 

statue of team working

4 Ways to Improved Your Odds of Hiring a Good Contractor

In my conversation with Taylor Takacs, who is a fix-and-flipper that raises private money to fund his deals, he provide his Best Ever advice, which are 4 ways to better your odds and chances of hiring a good contractor.

 

Taylor stressed the importance of building good relationships with contractors. However, before you are able to build solid relationships, you have to find solid contractors first! Taylor has gone through plenty of bad contractors. He actually believes that is was necessary. He had to work his way through the bad contractors before getting to the good ones.

 

Fortunately, Taylor discovered 4 tips that he continues to use in order to sort through “good” and “bad” contractors. These tips can help in avoiding some of the mistakes, and resulting headaches, that Taylor has faced through his organic sorting process.

 

Tip #1 – Contractor Referrals

 

The best way that Taylor has found to avoid bad contractors is to ask for referrals from other serious investors. For example, if Taylor was in need of a roofing specialist, he would simply go to his local REIA meeting and ask around: “Who do you use as a roofer.”

 

Some of the investors may be hesitant to give up their contractors. However, most of them will be more than happy to provide you with a referral of whom they use. More than likely, if the contractor is doing work for a full-time, active investor, they will work out for you as well.

 

Tip #2 – Avoid Down Payments to Contractors

 

Until Taylor sees a new contractor perform a few jobs, he never provides any sort of down payment. Not even if they have come referred.

 

Taylor is not paranoid. Based on past experiences, when working with a contractor for the first time, there is a possibility that they take the down payment and disappear. Once they are gone, it is very difficult to track them down and get them back to complete the job. Therefore, he will hold out payment until the fully or partial completion of the job. He will only provide down payments to the contractors that have proven that they are trustworthy and reliable.

 

Tip #3 – Background Checks on Contractors

 

Another way that Taylor avoids bad contractors is to perform background checks. If a contractor’s background check shows that he was arrested 3 times in the past year, he is probably not the guy to hire for the job. However, if the background check shows that he has a few citations dating a few years, but not recently, that doesn’t necessarily count him out. Ultimately, the choice is up to the investor and their personal comfort zone.

 

Tip #4 – Ask Contractor For Recommendations

 

When Taylor is down to a few potential candidates that he is considering, he will ask them for recommendations. He wants the contact information of other investors that they have done work for in the past. If a contractor provides him with 3 investors, and all three give raving reviews, more than like, they are a solid contractor. However, if they are hesitant to provide referrals, say that they don’t usually work with investors, or say that they don’t have referrals at the moment because of any number of excuses, that is always a red flag.

 

 

Note: Following these 4 tips are not guaranteeing that you will never deal with a bad contractor again. But, they will greatly increase your chances of hiring a good contractor, as well as put yourself in the best position to achieve success. And in real estate investing, that is all we are after!

real estate business team

All You Need to Know About Building a Solid Real Estate Team


 

In my conversation with Martin Boonzaayer, who specializes in probate and residential investing, he provided the takeaways and lessons he obtained from his experiences hiring people for his real estate business.

 

The First Hire: The Hardest

 

Martin’s believes, as do many other entrepreneurs, that the first hire is the most difficult. Prior to becoming a real estate investor, Martin tried his hand at another entrepreneurial endeavor. He helped private, green companies raise capital for their businesses. However, during the market adjustment in 2008, Martin and the companies he worked with lost the majority of their money. After seeing how quickly things could go bad, Martin decided to batten down the hatches, He wanted to “do his own thing,” which meant focusing on real estate and to avoid exposing other people’s capital to the market. As a result, Martin became fairly risk adverse, which made the idea of adding the overhead of bringing on somebody else outside his comfort zone.

 

Besides the risk aversion, another factor that was holding Martin back from hiring his first employee was the excuse of being too busy. Fortunately, he had a colleague that understood the importance of starting a real estate team, and encouraged him to take the first step: hiring an assistant. This friend had experience helping others hire assistants in the past. All it took was putting up a post on an online hiring website (www.indeed.com but you can also use Craigslist or any other comparable online platform) and Martin had his first employee.

 

Martin has had an assistant for 6 years. Their first job duties were to simply help him and be his right-hand man (or in this case, woman). She helps him with book keeping, answering the phone, office management, paying the bills, and handling paper work. She works from home most of the week. However, since she is local, they get together face-to-face one time per week to go over any outstanding issues.

 

The Second Hire: Acquisitions Manager

 

Martin’s second hire was an acquisitions manager. The acquisitions manager is responsible for seller communication and making offers. Martin had an existing relationship with the individual he hired for this position; he was the project manager for his fix-and-flips. He had told Martin for a long-time that he was a master salesmans and that he really wanted to come on board.

 

Similar to the assistant hiring process, Martin put this one off as well, but for slightly different reasons. Meeting with potential clients who may be interested in selling you their property is a crucial aspect of the business. Martin was hesitant to outsource that. However, after taking his project manager on multiple training appointments and seeing him in action, Martin felt comfortable enough to bring him on as a full-time employee. Good thing he did because in his first month, he picked up 18 contracts.

 

What to Look For When Hiring an Acquisitions Manager

 

When hiring an acquisitions manager, there is the common misperception that the individual must be a construction expert. While there is some truth to that, the role is not so much defined by the person’s knowledge of the actual property, but more about their problem solving skills. The acquisitions manager must be able to determine what the potential seller is looking for and figure out the solution that will fulfill the seller’s needs. Therefore, it is about finding someone with great people skills, someone who can understand people’s problems, and someone that understands the real estate business enough to be able to determine if what your company offers can solve the seller’s problem.

 

Ultimately, there will always be issues with properties that you look at. There are plenty of professionals that know a lot about houses that don’t understand the process of helping a motivated seller get the solution that they need. Therefore, it is vital that you are able to understand which one of these skills is most important when hiring an acquisitions manager.

 

Hire Who You Want to Work With

 

Finally, Martin’s Best Ever advice is that if you choose to hire people, hire people that you would want to actually spend time with. Hopefully this is fairly obvious, but you will be spending the majority of your time interacting with your team. Therefore, if you have great relationships with your team, you’ll be rewarded with a great business. And the opposite hold true as well.

 

passion definition

How to Outsource Your Real Estate Business and Explore Other Passions

 

In my conversation with Scott Bower, who is a wholesaler that is transitioning into multifamily syndication, he explained how he was able to create the extra time to explore his multifamily passion by outsourcing some of his wholesaling duties to an eager, young investor.

 

Scott has recently made the decision that he is going to pursue his entrepreneurial passion and dip his toes into the multifamily syndication pond. However, there was initially an issue that was holding him back. His wholesale operation was what paid the bills, so he needed to find a way to keep that machine running while he explored another real estate niche. The solution presented itself when he came across an individual, George, that wanted to become a wholesaler, but didn’t know where to start. George was hungry, willing to learn, and wanted to get out there to put in the time and effort that it takes to become a successful wholesaler.

 

Talk about perfect timing. Scott explained to George about what his plans were, in regards to the need to outsource labor so that he could explore multifamily investing, and they discussed how George could fit in. All the stars seemed to align, so Scott put the wholesaling ball in George’s court, and George picked up the ball and ran.

 

The first responsibilities that Scott provided George was answering the phone. Since Scott already had a successful wholesaling business that was consistently generating leads, the company received phone calls every day. Therefore, whenever a lead comes in, George’s responsibilities are to answer the phone and obtain the following information:

 

  • Seller’s information (Name, address, phone number, etc.)
  • Get an idea of what their situation is (i.e. why are the selling?)
  • How can Scott’s business help them?
  • Why did they pick up the phone and call Scott?
  • Set up an appointment to view property

 

After the phone call is completed and an appointment is set, Scott accompanies George to the property, and teaches him what to look for, how to talk to the sellers, how to stay involved in conversation, and how to negotiate deals. The goal is to provide George with all the experience and knowledge that he needs, so that eventually, he can go out to these appointments and negotiate the deals on his own.

 

In return for his services, George gets a piece of the deal. In a way, he is like a sales guy. Scott has structured George’s compensation plan as follows:

 

  • 14% of the deal on the first $40,000 of revenue to the company per month
  • An additional 1% for every $10,000
  • Capped out at 20%

For example, if the company brings in $60,000 in revenue during the month of August, then George receives the following:

 

  • 14% of $40,000 = $5,600
  • 15% of $10,000 = $1,500
  • 16% of $10,000 = $1,600
  • Total = $5,600 + $1,500 + $1,600 = $8,700

 

This is the preliminary compensation structure, and Scott plans on giving him more as time goes on and he becomes more experienced.

 

Now that Scott has been able to outsource most of the wholesaling process, he plans on focusing on:

 

  1. How to generate more leads for George or more people (if they are able to grow and bring on more Georges)
  2. How to become more profitable
  3. How to generate more income for everybody involved in the business

 

And of course, Scott will now have the time to pursue his true passion, which is multifamily syndication.

 

His parting advice for those that reach similar points in their businesses is that if you really want to do something, whether it is multifamily syndication, fix and flipping, etc., you will find a way to make whatever else it is that you need to do work (like in Scott’s situation, his existing wholesaling business). Think outside the box and don’t let any obstacle stop you from achieve what it is that you want to do.

 

shaking hands annimation

3 Questions for Selecting the Right Business Partner

 
In my conversation with Jason Balin, who is a private moneylender that has financed over 1000 real estate investment deals, he outlined a sticky situation he had when he unintentionally partnered with the wrong operator for a project that involved the purchasing of a high number of properties. The project was ultimately salvaged, but was not as profitable as it could have been if he had performed his due diligence and partnered with the correct investor. However, Jason learned from this sticky situation and provided advice on, moving forward, 3 questions he answers in order to make sure that he selects the right real estate investing business partner.

 

Jason believes that it is extremely important to interview all potential business partners. The main outcomes of the interview process are three-fold.

 

  1. What are their goals?

 

First, you want to make sure that their real estate goals align with your own. In Jason’s sticky situation, he neglected to determine his partner’s goals before agreeing to do large deal together. It wasn’t until the deal began going downhill that Jason realized that they weren’t on the same page. For Jason, when he invests in real estate, he measures his success based off of how much profit he gains. He understands the importance of improving neighborhoods and making a nice product for a retail buyer or tenant; however, there is only so much of that you can do before you are no longer profitable. On the other hand, his business partner measured success by how hard he worked and how many hours he had put in. Therefore, the lesson Jason learned is that, on the front end, you need to ask questions like what are you goals? and where do you see yourself in 5 years? In doing so, you will know, without a doubt, whether or not their goals are aligned with your own up-front, so that you won’t have to come to the realization that they don’t align in the middle of a deal!

 

  1. What are the roles?

 

Secondly, if you have a specific deal, when you are seeking a partner, make sure you ask, “What do you think your roles will be and what do you think my roles will be?” One of the main reasons why partnerships, and the subsequent deals, fail is because clearly defined roles and expectations were not set in stone before agreeing to go into business together. Therefore, Jason advises that you not only have an operating agreement created and signed, but also take the time to sit down with your partner and go over, in extreme detail, the responsibly, roles, and expectations for each member in the deal.

 

  1. Can you get along?

 

Finally, make sure that you get a feel for whether or not you can actually get along with this potential partner. Just because someone brings more money or experience to the table doesn’t automatically qualify them to be your partner. If you can’t get along, no amount of money or experience can save you from failure. You are going to be in constant communication with this person, and any level of tension will end in disaster. Find a partner that you can be your truest self with and your will be setting yourself up for success!

 

teambuilding for real estate

Set Goals + Don’t Be Greedy + Create a Incredible Team = Success

 

In my conversation with Alex Franks, a real estate investor that has closed on over $15 million in single family and multifamily deals, he provided his 3 best pieces of real estate investing advice. In order to avoid making the same mistakes he did and to ensure that you create a solid, successful real estate business, Alex advises that you 1) have to create goals, 2) don’t be greedy and 3) need to create an incredible team.

 

Alex’s first piece of advice is that you have to set goals for your business. We have all heard of the goal-setting acronym S.M.A.R.T., which stands for specific, measurable, achievable, realistic, and time-bound, and you need to leverage it, or a similar technique, in order to create a plan and a vision for your business. If you don’t, and you are just chasing deals wildly, it will ultimately end in disappointment and failure to achieve your desired level of success. Therefore, instead of setting a pie-in-the-sky goal like I want to be financially independent and be able to do what ever I want, create a goal like I want to make (exact dollar amount) per year in passive cash flowing by (specific date), and I will do so buy purchasing (how much real estate you need to purchase to achieve specified dollar amount). Then, create a plan on exactly how you will achieve that goal!

 

Alex’s second piece of advice is to not be greedy. He wishes that he had followed this piece of advice when he first started investing in real estate because he has gotten greedy on multiple occasions, which has cost him a lot of business. Alex believes he has made many more mistakes than most investors and greed was the main catalyst. Therefore, adopting a non-greedy principle as one of your business values will help you avoid making many mistakes.

 

In tandem with not being greedy, instead of trying to perform all of the business functions on your own so that you can keep all the profits for yourself, Alex’s last piece of advice is that you need to surround yourself with the strongest team as possible. Many people like to think that they know everything that there is to know about real estate and decide to go at it alone. However, it is almost impossible to know it all, and as a result, it is almost impossible to create a real estate empire with no outside help. Therefore, you need to surround yourself with an incredible team. That way, you don’t have to know everything; you just have to know who to ask when there is a gap in your knowledge. It is okay to not be the smartest person in the room. In fact, you shouldn’t even want to be the smartest person in the room. Surrounding yourself with people that are smarter than you can be a very humbling experience. Ultimately, it can allow you to let your smarter team members run the show, while you take a back seat.

When has 1) the lack of setting a goal, 2) being greedy or 3) not having an incredible team resulted in some level of failure for your real estate business?

Why Hiring a Mentor is a MUST!

During a conversation I had with Jay St. Hilaire, I learned how he was able to close over 140 deals since he began investing in 2009, while continuing to work a full-time job! How did he do it? By finding an experience, successful mentor.

Jay’s best advice that he would give to ANY investor, whether they are just starting out or have been in the real estate game for a while, would be to find a mentor. Here are some of the main benefits Jay has personally gotten from finding a mentor.

  1. A mentor can show you the tried and true methods that work
  2. A mentor will provide you with the fastest path to success
  3. When you have a mentor, you can learn from their mistakes
  4. When you have a mentor, “you pay for speed”

Maybe you are telling yourself “this all sounds great, but I still have my reservations! Aren’t mentors expensive?”

Well, you are not alone. When Jay first began thinking about hiring a mentor, he had his reservations as well. He didn’t have much money at the time, so it was a huge risk. However, what pushed him over the edge was an offer that the mentor he found was offering. The mentor would provide Jay with a full refund if he were able to close on 5 deals and make a certain amount of money in one year.

As a result, he put the full amount on his credit card and took a chance. One year later, Jay had completed 13 deals instead of the 5 he needed in order to get a refund! Jay still has a mentor, and to this day, he also has the refund check pinned up to his wall as a reminder.

The real risk isn’t taking a chance and spending money on a mentor when you don’t have it, but rather, not finding a mentor at all.

Whether it is a mentor for real estate investing, time or outcome management, personal development, or all three, I believe (as well as Jay and many other successful individuals) that hiring a mentor is a must if you want to take your business to the highest level possible!

 

Who else out there can attribute their business’s success to having a mentor?

building a real estate team

Real Estate Is a Team Sport by John Carney: BOOK REVIEW

Just wrapped up Real Estate Is a Team Sport by John Carney.

Here are my overall thoughts:

It’s a great book for investors just starting out or who haven’t purchased their first property. The book is structured so that it describes each of the 9 team members you’ll need to be successful. The author, who is a Best Ever Guest (hear is Best Ever advice here) is originally from the United States but has lived in Australia for many years so there’s a heavy slant towards investing in Australia in the book. However, tips and most of the team members he mentions are applicable in both countries.

Perhaps the most valuable aspect of the book is at the end of every chapter John summarizes the key points and in most cases gives you things to watch out for and questions to ask the prospective team member.

My 3 Takeaways from the book:

  1. Active management of your properties is required to be successful. On page 18 he compares the constantly check-ins on a property to the constant check-ins and maintenance you have to do on your car. You wouldn’t just buy a car then not fill it with gas, right?? Right. Same goes with your properties. You’ve got to constantly be vigilant when overseeing the mgmt. even if there’s a property mgmt. company involved.
  2. A couple questions to ask accountants when determining if they will be on your team:
    1. How many properties do you own?
    2. How do you help your clients profit?
  3. On page 136, John lists out the two must have characteristics that you should have in a partner. They are:
    1. Shared values
    2. A skillset that you don’t possess

You can buy the book here: http://amzn.to/1P1qqND

Hope this is your best day ever,

Joe

Want advice? Choose wisely.

There’s so much real estate investing advice out there. We aren’t lacking information. We’re lacking the proper way to easily cultivate the best information.

Here’s an example of a good expert giving bad advice. And the scary thing is how many shares the article had (over 200+ on FB). That’s a whole lot of people sending around info that just ain’t right.

And, I’m never one to focus on the problem. I focus on the solution. So in this video I talk about your challenge and a solution.

Join the convo below.  What’s some well-intended advice you received that wasn’t good?