Memphis,TN Housing Market Update
Everything
The SmarterLandlording Podcast – Looking Back On Getting Started, A Conversation With A Former Newbie
“The market can take you in different directions.”
Download the MP3 Or, check out the SmarterLandlording Channel on iTunes
Want To Contact Us?
Connect with Jenna on Linkedin
Or like her Green Bee Real Estate Facebook Page
And you can like my Facebook page too
Like the Intro Music? Check out my good friends in the band Kitchens and Bathrooms (Kind of fits right!). They write and play some awesome, original music from right here in Memphis, TN.
Protect Yourself With An Independent Contractor Agreement
Being a real estate investor means working with contractors. As I said in my previous post, many of the properties we purchase need large amounts of work. That work is often where the value for us investors is found. Working with contractors however exposes us to risk. You need to protect yourself with an independent contractor agreement from that risk.
Where does that risk come from? The risk comes from the fact that repairing and rehabbing properties is somewhat dangerous. People can get hurt, seriously hurt. Just think of what is often involved. There are roofs dozens of feet above the ground. Ladders are used to get the workers up to them. Electric cords and wiring are run or strung everywhere. Natural gas lines are opened and exposed. Floors that keep us upright are ripped apart. Debris is often scattered about. Nail guns shoot nails right next to toes. Sharp objects are both used and found all over any job site. All of this and more obviously increases the risk of injury and harm.
You, as the investor and property owner, have to take steps to protect yourself from this risk. Those steps begin with hiring qualified people to do the job, but of much more importance in my opinion is the contract you sign with your contractors before any job begins.
You are using a contract on every repair job with every contractor right? I hope so.
If not, you are exposing yourself to unnecessary risk.
It’s All About The Contract
Contracts are important documents because they spell out who is responsible for what, including the people that are coming to and working on your property. These contracts spell out that these folks are not your employees. You are not telling them what time to show up. You are not telling them when to leave, nor are you supervising every move they make. Instead they are independent contractors who (in many cases) are responsible for their own missteps and for their own insurance. You as the property owner are just telling them to “make it so” and then letting them get it done.
By using an independent contractor agreement, you place much of the burden of responsibility on your contractor instead of you. This is how you reduce your exposure to risk.
If you do not use such a contract and an accident, or worse a death occurs, then you might be held responsible. Further, when these accidents and deaths do occur, people start looking for the deep pockets and who do you think they are going to assume has the deepest pockets? They are going to look at and assume that you, the property owner are to blame and have deep pockets to pay.
It can all happen very quickly. All someone has to do is slip on a roof and be paralyzed or killed in the fall. Even experienced contractors can make mistakes or take a wrong step and if you are not protected, you and everything you own may be liable and open to damages. People often want to blame someone after an accident happens and it is easy to look at and blame the property owner.
The Phrase To Use
It is such a simple thing to get a contract signed with your contractor before work starts. It does not have to be long winded and full of legalese to be effective either. Short and sweet often can and does work. Here is a clause that I use in my independent contractor agreement. Feel free to use it, or some form of it, in yours.
Contractor and Client intend this Agreement to be one of independent contractor and client. Contractor therefore retains the sole right to control or direct the manner in which the services prescribed herein are to be performed. Client retains the right to inspect, to stop work, to prescribe alterations, and generally to supervise the work to insure its quality and conformity with that specified in this Agreement. Contractor warrants that upon signing of this agreement that Contractor has obtained all stated and necessary insurance, including worker’s compensation coverage, and that it will be kept in full force and effect until the completion of the work contracted for herein. As such, contractor herewith agrees to sole and complete liability for any injury to self or contractor’s workers.
Whatever you do, just make sure you use a contract and make sure you use one that will protect you. Beware that the contract your contractor wants you to sign usually protects their interests, not yours. You need your own independent contractor agreement (reviewed by your own attorney too) that protects all you have worked and are working for.
When Writing A Purchase Contract, Do I Need A Lawyer?
Blogger’s Note – The son of a good friend of mine is looking to get started in real estate investing. He would like to become a landlord and find properties that offer positive cashflow to replace his current income. His goal is to ultimately become a full time real estate investor. I have been giving him some advice as he tries to liftoff his real estate investing and I thought it would be interesting to share some of his questions and my answers on this blog as I’m sure there are others out there who have the same questions. I hope to publish more questions and answers in the future. Click here to see the previous question and answer: How Do You Know You Picked The Right Tenant?
Question: When writing a purchase contract do I need a lawyer? Is there a template I can use to keep me safe?
Answer: You do not necessarily need a lawyer every time you make an offer, but you should at a minimum have a you contract reviewed by a local attorney who specializes in real estate law before you first use it. After that first time, you have your template ready to go.
Real estate purchase contracts can come in all shapes and sizes. They can run for dozens of pages and contain so many fancy words and legalese that they are basically incomprehensible to the average person. Is such a complicated contract needed for the average real estate sale and purchase?
No, it is not at all.
The purchase contract that I use runs about a page, two at the most. In my opinion, all of that other stuff found in most contracts just mucks up the works.
To begin explaining my answer, I first need to describe what exactly a contract is. A contract is a document outlining something that two or more people agree to do, in this case sell and purchase real estate. A contract does not have to be very formal and can even be drawn up on the back of a cocktail napkin if an agreement is reached while sitting at a bar. Once signed by each party, a cocktail napkin contract could be legally enforceable and similar documents have been enforced by the courts in the past. But I think you might want something a bit more formalized.
For any contract to be valid, including real estate contracts, they need to contain only two things. The first is terms that all parties to the contract agree to. The second is what is called consideration, or something of value that is exchanged. That is it. The complexity in contracts come come into play with the terms that all parties agree to. Those can be as simple or as complicated as you want them to be.
What Should Be In Your Purchase Contract?
I like to keep things simple, and I think you should as well. This is because it is much easier to get to yes during negotiations if things are simple and easy to understand. Legalese and complicated clauses confuse, and a confused mind often says no. That said, there are several clauses that need to be in your purchase contract. To get started, here are some items I would consider placing in your real estate purchase contract.
- The date of the contract.
- The names of buyer and seller.
- The address and/or legal description of the property.
- The purchase price
- A clause requiring the seller to satisfy any liens (loans or otherwise) they may have on the property.
- Wording on how you want the property to be transferred (usually by warranty deed).
- A clause requiring the property title to be free of defects and able to be transferred to you.
- Wording that allows you to inspect all areas of the property, even if there are tenants living in the property, within a reasonable time frame.
- A clause dealing with the transfer of appliances and fixtures. Sometimes people will take all of the plumbing and light fixtures unless you say they stay. The legal term to use is appurtenances.
- A clause requiring you to obtain “adequate” financing.
- A clause giving you an out if you need it. You do not want to be 100% tied to anything. Give yourself a way out if you need it. This is often referred to as a weasel clause for obvious reasons. Never use this clause except for very good reasons.
- A time frame for the completion of the contract.
- A form of consideration which is usually some form of an earnest money down payment.
That is it.
There may of course be special conditions or clauses with each purchase. Each property and each seller offers unique circumstances that may necessitate further agreement. For example, a seller may want to keep a certain light fixture or you may need to get prorated rents and deposits from existing tenants. You may (and should) also want get the written leases for existing tenants. You might also want to discuss who will pay closing costs and transfer taxes just to name a few.
But all in all the above clauses, along with a place for you and the seller to sign and date, should make for a pretty sturdy contract.
Developing Your Purchase Contract
There is no standard purchase contract that will work in all areas of the country, so a general template is not a good idea. A good place to start formulating a template purchase contract for you to use is by doing a Google search for real estate purchase contracts in your state. Look at a few and then cobble them together. Or, ask around at your local real estate investor’s club. Many people will be happy to share or at least share a source. You might actually want to have several different types of contracts on hand as the terms needed for a property with and without tenants can be quite different.
Whatever you do, remember that I am not an attorney and I cannot give legal advice. I am just a real estate investor who will tell you that it is wise to have whatever you are doing reviewed by a competent professional. Clauses and traditions will vary from state to state and even from county to county. Find out what people are familiar with in your area by talking with a local real estate attorney. This may cost you a few hundred bucks on the front end, but it will be well worth it. Plus you need to build up a relationship with a good real estate attorney anyway and a review of a purchase contract is a good place to start.
What does your purchase contract look like? Are there any particular clauses you like to use? Please share with your comments.
Is It Possible To Get A Quality Rehab Quick And Cheap?
Working with contractors is often a significant part of a real estate investors business. Many of the properties we invest in need work, lots of work. Getting that work done on time and on budget can greatly increase our bottom line. But is it possible to find a contractor who can deliver a quality rehab quick and cheap?
Maybe. But it is really difficult to do so.
Working with contractors can be one of the most frustrating parts of this business. Many will over promise and under deliver and you never really know how well they will work out until you have had at least one go around with them. And in a tight real estate market like we have today, your choice of who you can get to do some work may be quite limited.
Many contractors will also tell you that they can deliver a quality job quickly and cheaply, but doing so requires skills that are often lacking. It is much more common to find contractors with two of those qualities, but not all three. It is the rare person who can actually deliver quality quick and cheap.
This situation can put us investors in sort of bind. Which two out of the three do we want? Do we want quick and cheap but low quality or higher quality with an increased price? And what about the time frame for completion? How important is that?
Over the years I have come to the conclusion that quality and price are the more important of the two. I would rather extend a job a few weeks and get it done right than get it done so quickly that I just end up doing it all over (and spending money) again in the near future. I have found that while I may save a bit of money on the holding costs on the front end by getting a job done more quickly, I often lose it on the back end because quality was sacrificed for speed.
Plus, a good contractor is going to need time to make sure that a job is done right. There are some things you just do not want rushed. If you try to rush tings, shortcuts will be taken. I am not a fan of most shortcuts as they always seem to come back later and bite me in the butt.
Contractors who can and will do quality work in a reasonable amount of time are usually not the cheapest you can find. That lower price quote often means that something is being skimped on somewhere. The old saying “You get what you pay for” may sound canned, but it is just as true in the contracting world as it is anywhere else.
Go For Quality
So while I do not think that quality quick and cheap is very attainable, quality at a fair price and done in a reasonable time frame is. How do you find that? Here are a couple of ideas:
- Shop Around – Get several estimates, even if you plan on using the same contractors again and again. Familiarity can often breed complacency along with a mistaken comfort to not double check your numbers. Getting multiple quotes all the time keeps both you and your contractor honest.
- Use Incentives – People respond to incentives. Give a bonus if a job is completed ahead of schedule. Use a penalty if things run too long.
- Be Available – Make yourself available to solve problems. I can tell you that every major rehab job will have unforeseen issues. Be around to help solve those issues.
- Let Them Work – Do not nitpick and do not hover. Sure, point something out that does not meet your standards or looks out of place. But otherwise let them work.
We can all strive for a quality product done quickly and cheaply but when it comes to contractors getting all three can be a tall order. Over the years I have found that quality is the most important of the three. Even if it is often a it more expensive and takes time. Cheaping things out will eventually hurt you, your good name and your bottom line. Remember that part of being in business is making people want to do it all again. A poor product will not get you there.
The Professional Tenant
Your first thoughts when reading the title of this article might have been positive. You might have thought that a professional tenant would be something landlords strive for. They are not. A professional tenant is someone that I hope you never come into contact with.
What Is A Professional Tenant?
A professional tenant is a landlord’s worst nightmare. They are people who prey on unsuspecting landlords and suck the life out of them. Professional tenants do this with a slick presentation and smooth talking. They know all of the right words to say and exactly what you want to hear. They know exactly how to act and have an answer for every question.
Being polite is part of the scam. So is dressing well and showing up to appointments on time. Their goal is to dupe you into thinking that you have just found the best tenant ever, when nothing could be further from the truth.
The smooth talking and slick presentation is often followed by cash in hand. They hold the deposit and first month’s rent and have it in their hand, ready to give it to you. No need for you to do anything further. Why wait? It can all be pretty tempting. Little do you know that the money they have in hand is likely owed to their current landlord.
Professional tenants will say and do anything and everything to gain entry to your property. They hope that you will let your guard down. They want you to let them move in and take possession. But they have no intent of ever paying you another dime. Once they are in, you may never hear from them again.
Professional tenants also know how the system works. They know it takes time to file an eviction and work through the process, because they have been there before. They also know all of the tricks they can try to delay that eviction; from continuances to bankruptcy filings. They know that they will eventually get kicked out in six months or a year (or more in some states), but that was their plan all along. They wanted to pay you to move in, skip the rest and then leave in the middle of the night to prey on another unsuspecting landlord.
Appearances Are Deceiving
Every professional tenant I have run across, and I have run across a few, looks and plays the part well. On the surface, you really cannot tell they are trying to deceive you. They are skilled actors. Their one tell is perhaps their effort to make you feel that they have to move today, that the “good deal” they are offering you will be gone if you do not act. This is their intent, they want you to act quickly and let down your defenses.
Defending Against The Professional Tenant
Your first defense is how you advertise. Professional tenants look for small “mom and pop” operations. They know the big property managers are not going to fall for their ruse. Generic “For Rent” signs are often a major calling sign for the professional tenant. No company policy there they believe. Professional looking signage with a company name and logo are a great first line of defense. Professional tenants want to avoid professional landlords.
The next best defense is to not be tempted by the cash in hand and the deal that will supposedly get away. Always tell every potential tenant that you require an application and a background check. That will scare most of them off.
But it will not scare all of them away. Some will go through your application process, hoping you are just going to pocket the fee and forgo the actual background check. Never do this, do the background check! Because like I said, sometimes you just cannot ever really tell and they work hard to deceive you.
He Spoke Well
As landlords, we have to be aware that there are professional tenants out there looking to scam us. Protect yourself on the front end and never forgo your application process and background check. I once had what I thought was going to be the perfect tenant. He spoke well and dressed well. He was ready to move in. When I checked however, everyone including the phone company was looking for him. He had not paid a single bill in months as far as I could tell.
I feel sorry for the sucker that eventually rented to him. But, I am sure glad it was not me.
Do you have a professional tenant story? Share it with your comments.
Kevin Perk is the founder and publisher of Smarterlandlording.com. He is the author of Advice From Experience To New Real Estate Investors. Contact Kevin here.
Inspecting Properties Before You Even Leave Your Car
Adding properties to your portfolio is an obvious goal of real estate investing. Adding those properties however means due diligence on the part of the investor and part of that due diligence is often a property inspection. Property inspections can be very basic or very thorough and each investor will have their own inspection style. For me, I at least visually inspect every property I plan to buy. That begins when I drive up to the property. You can easily begin inspecting properties before you even leave your car.
When you drive up to your next potential deal, stop, look around and take note of the following items.
The Adjacent Properties –Taking a look at around a property’s surroundings is important for three reasons. These reasons are the three most important factors affecting the value of any piece of real estate. They are location, location, location. What is the setting of the property? Are the adjacent properties similar? Do you notice problems with adjacent properties such as disrepair, trash, junked vehicles, people hanging out, etc? These are potential issues that can and will also affect your property. Plus, they are not issues that can be easily fixed by you so you want to notice them before you buy. Take a good look around and see what the location, location, location of the property is.
The Front Yard – Here where I invest, most sewer and water lines run from the property towards the street. Those systems can be very expansive to repair and replace so I always look at the front yard for tell tale signs of problems. Are there puddles when it should be dry? Is there water running into the street? Do you see any depressions in the yard or freshly dug dirt? These could all be signs of trouble that you should check further.
The Roof – The roof of any property is usually best seen from afar. You cannot really tell anything about it if you are up too close and below. Because of this, when driving up to a property the roof is often one of the first things I look at. Do you see missing shingles? What about depressions? Depressions can mean a lot of rotten wood. Look closely. In fact, carrying a pair of binoculars is not a bad idea for a quick inspection when you cannot get up close.
The Property Itself – Take a broad, whole look at the property itself, this simple act can alert you a lot of deeper issues. Does the property look clean and well kept? Is there trash or accumulated clutter everywhere? Are the needed repairs obvious and many? Do things seem out of line and out of place? Can you see haphazard repairs made over the years? If you see of lot of the above, you can expect more of the same on the inside and in paces you may not get to see. Plus, these items can tell you a little bit about who may be living in the property and the accompanying issues you may have to deal with if you take this property on.
Property inspections are a necessary part of purchasing any investment. They can be as detailed as you want or need them to be. You can always tell a lot about a property by just looking through your car window. Be sure to keep that in mind as you pull up to your next potential deal.
How Do You Know You Picked The Right Tenant?
Blogger’s Note – The son of a good friend of mine is looking to get started in real estate investing. He would like to become a landlord and find properties that offer positive cashflow to replace his current income. His goal is to ultimately become a full time real estate investor. I have been giving him some advice as he tries to liftoff his real estate investing and I thought it would be interesting to share some of his questions and my answers on this blog as I’m sure there are others out there who have the same questions. I hope to publish more questions and answers in the future. Click here to see the previous question and answer: Is my market a good place to start?
Question: How Do You Know You Have Picked The Right Tenant?
Answer: You Will Not. But Proper Tenant Screening Will Tip The Scales In Your Favor.
The simple answer is that you really never know if you have picked the right tenant until they move in have lived in your property for a while. Until you have a track record of on-time rental payments and a lack of complaints or unnecessary repairs, you never really can know.
That said, you can tip the scales in favor of you picking the right tenant with proper tenant screening.
What Is Proper Tenant Screening?
Proper tenant screening is made up of a lot of different ingredients. These ingredients are going to vary based upon the landlord, the type of property, the local market and local laws.
Proper tenant screening is also perhaps the most important thing landlords do because bad tenants are extremely costly in terms of money, time and stress. So you want to avoid them. Instead you want to attract and screen for tenants who will pay, stay and respect your property.
To begin thinking about how you might properly screen your potential tenants you should first do two things.
- Learn about federal, state and local fair housing laws.
- Develop a set of rental qualification criteria that you will use to screen and choose potential tenants.
Fair Housing Laws
Federal legislation from the 1960s onward has designated several protected classes. You may not use these classes in any way as a basis for tenant selection. These federally protected classes are: race, color, religion, national origin, sex, disability and familial status. States and local jurisdictions may add more classes, such as age, veteran status or sexual orientation, to the list. Check your local laws to be sure.
You may not deny housing to someone because they are black or from India for example. You cannot deny someone housing because they have children or are unmarried. In fact, you cannot even ask about these items. Why? Because being black or unmarried or from India has no bearing on someone’s ability to pay, stay and respect your property.
Rental Qualification Criteria
There are however many other types of measures available for you to use that do reflect a potential tenant’s ability to pay, stay and respect your property. These measures are what you should use to develop your rental qualification criteria that I mentioned in point two above.
What types of measures might these be? Here are just a few examples.
- Tenant must have income equal to three times the amount of monthly rent.
- No evictions in the past 5 years.
- A credit score above 600.
- No felonies in the past 10 years.
- Not moving every year.
- Not being rude or disrespectful.
- Being truthful.
- Being neat and clean.
There are many more that you may choose to utilize. This is because these few rental criteria examples that I mention may or may not work in your local market or for you. You may want to have tenants who have never been evicted for example. Credit scores may not be good indicators in certain areas. In others, like those near military bases, people may move all of the time.
Remember too that liars, jerks and slobs are not protected classes. You do not (and should not) have to rent to someone who has provided false information on your rental application. You do not have to rent to someone whose car is full of trash or has food spilled down the front of their shirt (guess where all of that trash will end up). Nor do you have to rent to anyone who is rude or disrespectful to you.
You do however need to write your rental qualification criteria down, keep that written list in a handy to find file and use them to rank each and every potential applicant in the exact same manner. If, for example, one of your criteria is a credit score above 600, you cannot break that rule “just this one time for this one person.” The criteria must be applied consistently.
There is a lot more to tenant screening than I can write here in this short post and I am actually developing a lot more future material about this topic. For now, use the above advice as a start and download my report on 22 Tenant Screening Red Flags by entering your e-mail address in the link directly below this post.
What criteria do you use to screen your tenants? What works and does not work in your local market? Please share with your comments.
Is Mass Marketing Worth The Hassle?
There must be a new real estate guru out there selling a new mass marketing system. I say this because I have received too many calls in the past few weeks all repeating the same script asking if I want to sell for it to all be a coincidence. Someone, somewhere just put on a seminar and sold a “system.” Marketing is something we all have to do. I just wonder, is mass marketing worth the hassle it generates?
I have not seen whatever this system is, read it or watched it. But I have been down this road before and I have a pretty good idea of what the system entails.
Some entrepreneur has managed to put phone records and real estate records together. It had to happen sooner or later. Then, they wrote a course describing how one can get rich quick with real estate. It lays out an “easy script” that anyone can use to quickly buy properties. Buyers are told that people will be banging on your door in no time. All they have to do is buy the list, record their message, broadcast it and then wait for the money to come rolling in.
These systems, usually in letter formats, get peddled every so often. I know every time another real estate seminar has come to town because I start receiving tons of letters asking to buy my properties. The phone call aspect is just an updated version of this mass marketing technique, and I have to say it leaves me with feelings of annoyance and trickery.
Why?
For one thing, you called me on my phone. Phones today are basically computers. I am always looking something up or doing some other kind of business on my phone. Your phone call interrupts that, instantly blocking whatever I was doing. It is not like getting letters in the mail, where I choose the timing of the interruption. You have instead inserted yourself into my time. It is annoying, no one likes it and it honestly starts you off on the wrong foot.
Secondly, most of these calls are hidden behind an unknown number. Sometimes, the phone does not even ring. Instead it chirps and vibrates, shows the phone screen and just goes to voicemail. Thing is, about the only person who leaves voicemail anymore is my 82 year old mother. Many folks I know do not even check it or delete them outright (Perhaps because of techniques such as this).
Why hide behind the “unknown” number? If you really are interested in my property, why use such a trick? It conveys an impression of shysterism.
So why even use such a system? The answer people are sold is that the system will increase response rates. That may be true, but no matter what mass marketing system you use you will get responses. But they will likely not be the responses you want and here is where the hassle comes in.
Most people who will return your call fall in one of three positions. They are either tire kickers just testing the waters. They are upside down in terms of taxes, liens, loans or repairs. Or they are experienced investors like me. None of these three are going to give you a deal.
Motivation is the key to any real estate deal. Tire kickers are not motivated. They may want to sell, but they do not need to sell. They will often then get angry with you because you promised a “fair” offer in your message that does not sound very fair to them. People who are upside down may be motivated but they are of little value because there is often no way a deal can be made. The bank, the lien holder or the taxing authority have to take the hit first. Again, people are going to get mad at you because you will not take over their problems. Plus you likely just had to sit and listen to a long sob story. Finally, people like me are not going to play by your script and are angry at you for interrupting them. We have heard your script many times before.
That is a lot of anger directed at you. Do you really want that?
I answered one of these calls the other day just out of curiosity. You could instantly hear the timidity in the person’s voice. I am nearly positive that timidity came from not knowing what they are doing and not realizing the deluge they were in for.
The call went something like this.
Caller: “Would you like to sell your property?”
Me: “Sure, everything is always for sale (it is too!). Make me an offer.”
Caller: “Uhh. Umm. Well…what will you take?”
Me: “No, no, no. You see you called and interrupted me, so you make the offer.”
Caller: “Click.”
Was I too harsh? Maybe, but I am already annoyed at the interruption.
Is any of the above really a good use of your time? I learned quickly when I tried these systems that it was not. I got tired of being yelled at and I do not think I ever got a deal out of it, even with follow ups.
Today, I am much more specialized and zeroed in with my marketing techniques and get much better results. Sure mass mailings and phone calls can generate a response, but everyone else is doing it and the mess you have to wade through is just not worth the hassle to me.
I got into real estate to work and be yelled at less, not more.
Anyone else getting these calls lately? What are your thoughts on these mass marketing techniques? Please let me know with your comments.
Real Estate Investors Must Create Value
I have been writing a lot lately about the business side of being a landlord and real estate investor. I recently discussed working on not in your business for example. While that is an important lesson, I think another is that we as real estate investors must create value. Not just value in terms of properties, but value for everyone we come in contact with.
Landlording and real estate investing is not just about real estate, it is about running a business. And as any business owner will tell you, running a business is about creating value. By creating value, we businesspeople persuade other people to work with us or give us some of their hard earned income. We real estate investors cannot force tenants to live in our properties, nor can we force people to sell us property or work on out properties. We have to earn it.
We earn it by creating value.
How can you create value for everyone you come into contact with and thus run a leaner and more profitable business? Here are some ideas.
Creating Value
Make It Easy – Nobody, and I mean nobody, wants a hassle. Do not be in the business of creating hassles. Make it easy for a potential tenant to find you. Make it easy for property sellers to work with you. Make it easy for contractors to get paid. Make it easy for your banker to get your financial information. Making it easy creates value for other people. Do it.
Be A Person Of Your Word – You would not think that I would not have to say this but there are a lot of people in this world, and in real estate investing, who do not keep their word. On more than one occasion I have been told I have a deal only to see it slip away to someone else. The numbers suddenly change, the terms suddenly change, tenants make up stories and on and on. The thing is, you cannot be a person of your word to me only once. After that, you have failed to create value for me and I am no longer going to waste time on you. Do not be that person, keep your word.
Offer Solutions – A major part of the business of real estate investing is offering solutions. How? Offer a solution to the property owner that feels upside down. Offer a solution to the tenant who is having roommate issues. Being creative and putting puzzle pieces together to create workable solutions to almost any problem creates a lot of value for most people.
Make It So – This is where a lot of people fail. They can talk the talk, but when it comes to implementation, they fail. Not being able to implement, be it property repairs, new management systems or just closing a deal, fails to bring value to the table. No one wants to work with someone who cannot get it done.
“I want to do this again.”
If you do the above you will be well on your way towards crating value for people and being successful. Creating value makes people say “I want to do that again.” which is honestly the best thing any business owner can hear. Think about it. You want most of your tenants to tell you that they want to renew their lease. You want your banker to make another loan to you. You want that contractor to return your calls and take on more of your jobs. You get people wanting to do it again by creating value and you create value, in part, by following the tips I outlined above.
Author’s Note – This post was inspired by my friend and fellow real estate investor Terry Kerr. Terry owns Mid-South Home Buyers and recently spoke at the Memphis Investors Group. Terry has been fabulously successful by adding value for everyone he meets. Check him out discussing turnkey investing on Episode 5 of the SmarterLandlording Podcast.
