Archive for Starting A Business
My Friend Byron From Denver… A double success story!
Posted by: | CommentsBack when I got started investing in real estate, I signed up for a coaching program with Mentor Financial Group, I’ve probably told that story before.
I remember when I got started there was one “really cool” student who was a few months ahead of me in the coaching program. His name was Byron Walker and the reason he was “really cool” is that he was already having pretty significant success picking up rental properties in Denver after just 3 months in the program. When I went to a 3-day live training event in Denver, Byron – who lived nearby – came to the event and shared his success after just 3 months in the program and encouraged us to get started!
I remember saying, “Wow, Byron is cool!” – If HE can do it, maybe *I* can do it, too.
(Not that I was anything approaching cool, but just because Byron seemed so real and accessible, which he is…)
I was just talking with Byron last week about Phil Pustejovsky’s short sale teaching program, which I mentioned to you in my last post, to see if he wanted to share it with some of the investors that he knows. (He did – he was excited to get started…)
But I also found out from Byron that he was involved in something other than real estate investing now. basically doing some marketing on the web that had gone from making him $40/day to $1,000/day. I couldn’t believe it, so I had to check out it. When I went to this website, I actually saw a video with Byron as ANOTHER SUCCESS STORY. (He’s the first guy on the video, saying he’s “new to the game…”)
I want to pause here and point out two things…
- It is very common for real estate investors to supplement their investing activities (which are really long-term wealth-building investments with BUSINESSES which are short-term cash-creation vehicles. In fact, my partner Rob Powell and I have a website about commercial real estate and associated topics in which we delve into this philosophy more. The bottom line is BUSINESS for cash flow, and REAL ESTATE for wealth.
- It’s interesting to me that Byron would be “held up” as an example of a success story in two separate businesses where I have watched him succeed. Why is it that “some guys have all the luck?” What is Byron doing to distinguish himself here?
From what I can see… a few things distinguish Byron:
- Byron pays for the best education… He has probably paid over $10,000 to learn real estate investing and another $10,000 to learn about affiliate marketing.
- Byron sets his sights high. When he enters a business, his goal is to make a lot of money, not just to “cover his bills” or “scrape by.” After all, he’s got a wife and kid to feed and a mortgage to pay!
- Byron is willing to pay his dues. There are a lot of people out there who dabble in business ventures. They learn a business model, try it for a while, and when it doesn’t work – they find something “Better” and move on to the next thing. Byron sticks with the same thing until he gets it right, until he masters it. In this case, it only took him about 6 months to go from zero to making significant money with is affiliate marketing business.
- He dumps the losers in a hurry. I have seen Byron work on things that didn’t take off for him, but he didn’t work on them long. From what I understand about his new business, you have to weed out the losers (10-20) to find the ones that work… seems like he’s found an effective system for doing that. Rather than hem and haw about what will work and what won’t… Byron tries things, gets a lot of data from his tests, and makes decisions based on FEEDBACK, not based on his own projections (which could be right or wrong…)
I think these are characteristics we can all learn from whether we’re in business, real estate, or just trying to be the best opportunity evaluators and decision makers we can be!
Til next time!
Emily
P.S. Oh, this is what Byron is doing now to make $1,000/day – check it out!
Popularity: 16% [?]
Status Report – Short Sales Abound, Even in Seattle
Posted by: | CommentsWow, in the last month, I have been surprised by the number of short sale homes in the Seattle area. I have recently started showing homes for Redfin, a low-cost, full-service real estate brokerage started by some local entrepreneurs here in Seattle. (The super-cool connection is that it was started by two guys in my high school class that I ran into last summer.)
How Does Redfin Real Estate Work?
The way it works is that clients do MLS-style neighborhood searches to find the homes they want to tour, then they sign up for a tour for free with a local neighborhood realtor. Once they identify a home they want to put an offer on, they call the “lead agent” who negotiates the deal and handles the paperwork for them.
None of the agents work on commission, so they are free from any sales pressure. It’s all about customer service at Redfin. As a result of doing their own neighborhood research and using the firm, they can save about 1/3 of the commission. Also, statistics are showing that Redfin agents negotiate better (they don’t get paid more if the buyer pays more for the house) so our buyers are getting better prices on the homes they buy, too. All-in-all clients are saving about $10,000 when they buy a home in the $500,000 price range.
Why Real Estate Agents Don’t Like Their Buyers To Pursue Short Sales
Anyway, one thing Redfin DOESN’T support is showing or supporting transactions on short sale property. Short sales don’t make a lot of sense to buy for the individual home owner because they take so long to negotiate. It can take 3-6 months in many cases to pursue a short sale, and even then, you have no assurances that the bank will say yes to your offer.
Although this long turn around time isn’t necessarily a big deal for a real estate investor, it can really slow down the average home buyer who might be looking for a personal residence sooner rather than later. Also, most realtors don’t want their clients to be tied up waiting that long (they’d rather sell them something and make a commission sooner) especially since short sale attempts frequently don’t work out.
Realtor’s don’t like the back-and-forth of the negotiating with the bank – it’s a lot of work – and they don’t like the extended time table to close. The hassle factor keeps many realtors and their clients AWAY from the short sale negotiations table.
How That Makes Short Sales A Great Opportunity For Real Estate Investors
So, what that means to us as real estate investors, is that we really don’t have as much competition for the short sale properties as we might on a regular home. Sure, we’ll have MORE competition from other investors, like us, trying to get a good deal on the home… but that’s an opportunity, too.
If the primary buyer pool for short sale homes is investors, the home owners and the banks will have to settle for working with the lower-priced offers investors are inclined to make.
Plus, in today’s economy, there are really a lot of short sales to go around. Many more than there have been in the past. I was amazed when I was out showing homes this weekend, to see how many of the homes we had to scratch off our tour list because they were involved in short sales.
And THIS in SEATTLE which has historically been a very stable market. It is still one of the strongest real estate markets in the country, so the fact that we have an abundance of short sales here, indicates to me that there are many more available elsewhere in the country.
In fact, my buddy Phil Pustejovsky has been investing in short sales for the better part of a decade and he says he’s never seen anything like this in terms of an abundance of short sales available now. In fact, he’s got the corner on the market on his state, and is partnering up with investors from out of state so he can participate in short sale deals all across the country.
If you’re interested in partnering up with Phil, you can learn more about him and the success of the people he’s started working with here. This is not some seminar salesman mumbo-jumbo… that’s HYPE. Phil is not about Hype, he’s focused on HUD-1′s. 
How Long With The Opportunity Last?
I’ve started working with Phil to help him market his short sale business. It’s going very well, as there is a lot of interest amongst active investors and promoters in short sales right now.
A lot of the techniques, like buying on terms that were big a few years ago have fallen by the wayside now… you can’t do a short sale or lease/option deal on an upside down property and still be conservative and make money, it’s just not a good idea.
This is a short sale market – that’s where things are right now. Phil doesn’t know how long this window will last, he thinks probably just 12-24 months, but for those who are working the short sale business NOW, there is a lot of money to be made. Phil is out there making it, and it’s very exciting to see! (He does about one $50K short sale deal per month since he’s cherry-picking them) and he’s making another $10K/month in realtor commissions on the short sale deals that don’t pan out with the bank.
If you want to know more about his methods, you can check out his website, Short Sale Teaching.
Hope this helps!
Emily
Popularity: 19% [?]
Vulnerable Time For Charities, Donate Time and Money to the Ones You Support
Posted by: | CommentsWhen the economy’s down, non-profits suffer.
When we talk about wealth building, our money, our spending plans, and retirement savings, we very often forget to mention a tiny little thing called CHARITABLE GIVING. For some, this is really a small or non-existent part of their budget. For others, it’s a lynch pin. Many people believe that they should give 10% of their income to their church in the form of a tithe. Many who don’t believe that feel that they are “off the hook” and not “required” to give, so they don’t.
Overall, though, Americans are fairly generous givers, and many of us enjoy the feeling of satisfaction that comes from supporting groups that we believe in, religious or not, with our time, talents and money.
However, when the economy is down, giving suffers, too. Many of us take the position that charity begins at home, and when we’re forced to pare down discretionary spending, spending on our charities is often one of the line items found on the cutting room floor.
I recently had the opportunity to mastermind with the pastor at my church about this phenomenon and what could be done about it. I warned her ahead of time that as a business owner, I was coming in with my “sales and marketing” hat on and looking at this thing as an entrepreneur. She concluded that was an entirely appropriate approach, since the church really is a small independent enterprise very much like a business. It just doesn’t happen to sell a product or service.
Ways For Churches To Make and Save Money In A Down Economy
We decided that the church could do a couple of things to increase its bottom line:
- Increase income by increasing membership
- Increase income by increasing donations contributed by each member
- Decrease expenses by cutting programs
- Decrease expenses by using “sweat equity” and volunteer labor from people who would be in a better position to donate time than money.
In the course of our discussion, I was also able to draw upon research I had done on fundraising for a speech to college students I delivered in Chicago last year. In my research I discovered that many people become involved in charities through their friends and associates (personal invitation/referral) and that many people chose to volunteer their time first, before contributing significant amount of money to a cause.
Therefore, in our situation, we decided that action steps would include:
- Surveying members to see how the church was meeting their needs and how it could improve it’s service offerings to members and participants. (This would let us see which programs were most and least valued, as we decide whether anything would need to be expanded or cut).
- Educating members to the financial challenges facing the church and asking them if they are personally willing to do anything (volunteering, giving more money) to help ameliorate the problem. This will help us get a better sense of what resources will or will not be available to us in the upcoming year (Revenue forecasting).
- Adjusting our social events to incorporate more education about church programs and educational activities. This will allow us to consistently draw uninvolved members more deeply and consistently into church activities, and help visiting members and friends become aware of what type of programs they will be able to take part in, should they become a member of the church.
At our church it is very important to us that people not feel hounded for money or that they are being “sold” on giving cash whenever they come. This probably applies to most business customers too. If you say you want to have a relationship with your customers, you need to find ways to have conversations with them that don’t involve pushing them into buying your next product or service. Instead, focus on providing good old-fashioned value, human interest, referrals FOR THEM, etc. when you talk to them, and they will be much more likely to view you as a friend than a salesman. People enjoy doing business with friends, they only do business with salesmen when they have to.
Re-Visit Your Value Proposition
So, we are re-embracing our mission of providing meaningful spiritual experiences, community support, and family-friendly activities to make sure that our congregation continues to have its needs met in full without being pressured to give financially. In this way, we hope to re-inspire and re-excite people about the idea of giving, as they always do, in a way that is respectful and appropriate for them.
Emily
Popularity: 9% [?]
A Day In The Life of A Small Business Owner
Posted by: | CommentsOk, I think I’m back – again.
Ben and I both got a viral pink-eye infection that seemed to be accompanied by a pretty severe cold. Blake was spared. It makes us very grateful for the invention of Kleenex, Tylenol and indoor heating. Every time I get sick, I wonder what it must have been like for the pioneers and other people who didn’t know what they would have, if it would kill them, how it spread or how to get better.
So, in 2009 I am very thankful for HEALTH!
Today is “peek over my shoulder” day. Here’s a list of some of the things on my To-Do List:
- Write a series of 5 posts (2 already completed) on investing in real estate with your self-directed IRA. This will be posted on our commercial real estate investing blog.
- Interview Real Estate Brokers – still have 2 on my list to meet for the first time and 2 to follow up with.
- Do real estate coaching for some single-family home investors.
- Put up some affiliate marketing ads on some of my other web sites. Have been doing this to generate some extra cash flow. I wrote 10 articles recently, one featuring a little pitch for a dog training manual and have garnered 1 sale so far – $68.
- Review test results from Google Analytics… I am comparing two sales letters for my how to knit dog sweaters ebook. If one is clearly more successful than the other, I can improve my conversion rate. I already get plenty of traffic.
- Meet with bookkeeper and property manager to write quarterly investor updates for some of our commercial properties.
- Read The Long Tail by Chris Anderson. I recently got a copy of this after learning more about long tail and small business.
- Deposit rent checks and pursue collections from my tenants.
It’s not exciting – but it’s real, it’s honest, it’s transparent. There will probably also be a nap and lunch thrown in there somewhere.
I’ll try to make it more sexy next time. Maybe I’ll sip margaritas, have a party by the pool, or go sky diving, but the truth is moving forward is about small steps every day. It’s also about FOCUS – something I need to work on a little more. But that’s for another post.
Emily
Popularity: 10% [?]
What Brokerage Should I Join as A New Real Estate Agent?
Posted by: | CommentsI’m on the warpath again. Yesterday marked my first post-Christmas interview with a real estate agency.
This time, it was Keller Williams in Bothell, who I was fairly impressed by.
So far, I have interviewed with or applied to the following real estate brokerage houses:
- Prudential Northwest Realty – They pay for a lot of your mailings and have a great online corporate presence and relocation business. However, there’s a lot of expense in supporting the franchise.
- Edmonds Realty – This was a Mom & Pop I interviewed with last year. They say they have great training, but they have a high (50%) commission split when you get started.
- Marcus & Millichap – Read about how that started and ended. They have a great platform to provide value to sellers (namely, lots of inventory throughout the nationwide office, and a nationwide internal MLS to help clients access that inventory. They also have a lot of 1031 buyers). The downside is that you’re at a 50/50 split. Also, Marcus & Millichap focuses just on investment property sales, and they don’t do any leasing.
- Fursse & Hall (local Mom & Pop commercial firm). Generous split (30/70 til you reach your cap, which is also low), but they aren’t a big name and don’t have too many agents or any training.
- CBRE - I heard rumors that this public company was courting the big BK? This is the 200-lb gorilla in our marketplace. They have a lot of corporate clients and don’t focus much on working with individual Mom and Pop investors.
- GVA Kidder Matthews – This commercial real estate firm is big around here (Seattle) and won over a lot of converts from Marcus & Millichap. Their big advantage? 90% commission split. They do leasing and sales, and have a lot of signs up in my neighborhood, but they weren’t hiring when I interviewed there, so I don’t have many specifics.
- Zip Realty – This is a great firm if you want to be a buyer’s agent and drive people around in your car all day. There is no out-of-pocket lead generation. Their agents average 1 closing per month. Only 10% of their business is on listings, they are working on getting more listings, but they are all about buyers. Between the discounted commission and fees to the house, you would only make about $3,000 commission on the sale of a $300,000 house, though. In my market, if I were an average agent there, I would make about $36,000 per year working full time with lots of nights and weekends, presumably. The top agents seem to do about 3-4 closings a month, so you could make in the low 6-figures with this firm if you were good. This is perfect for a buyers agent who wants to be in real estate full time and focus just on fulfillment and follow up, not on marketing.
They don’t charge any desk fees here, but the commission splits are really weighted toward the house. You’ll keep about 30% of your 3% gross buyer’s agent commission.
- Connect Realty – This is the MLM of real estate companies. This one is pretty intriguing and I would probably pursue them if I just wanted to focus on being a real estate investor and have a place to hang my license for the occasional deal. They charge $200/year as a desk fee and you are locked in at an 80% commission split (if you’re a new agent your first 5 deals are at 70% because you’ll pay a mentor 10% to work with you and help you get going). The MLM part of it is that 15% of your commission (taken out of the 20% that you don’t get) goes to the people who brought you into the company… your “upline.” This means that if you recruit a lot of new agents, you can profit from their deals and their commissions as well as your own.
However, I don’t think this model makes a lot of sense to me as a new agent. I need training and support, which Connect doesn’t seem to have available yet. Perhaps if you had a supportive sponsor to bring you into the business and help you get started you could do well, but I don’t know anyone who is in this firm.
Since agents essentially get paid to bring you into the company, it’s harder to find a lot of balanced feedback online – everyone is trying to recruit you.
Keller WIlliams Realty – This is the firm I interviewed with today. I really liked them. You have an $18,000 yearly commission split cap and after that you’re at 100% commission. The desk fee is only $32/month, so it’s very affordable. They pride themselves on having extensive training. 50% of the office’s profit is split with the agents (the other 50% goes to the franchisee).
Even though they’re not a big brand in Seattle, yet, I like what I see here. They pride themselves on a great training program, which I think is critical. They also encourage team building so you can work your way into a leveraged business model (e.g. hiring personal assistants, buyers agents, listing specialists, etc.). They also have a residual income model similar to connect realty, but it seems to be much less of a focus (more the icing on the cake, than half the cake, itself).
- Windermere Realty – This is the big “prestigious” local player in the area. I haven’t interviewed with them yet. They seem to lead with the company attitude of “you need us more than we need you” when it comes to their agents, and don’t give agents much freedom to agents to market themselves prominently.
- Redfin – This is an online broker who pays you “by the job” – you go show a property, they give you $120. You go let the property inspector in, they give you $50. This is a great “part time job” or “independent contractor” model. You can earn a little extra money with your license without needing to build a business or have marketing expenses. This would be ideal for the person who wanted to be a freelance real estate agent. Unfortunately, after they initially responded to my resume, I’ve called and emailed about 7 times and haven’t been able to hear back from them.
My conclusions as a new agent looking to choose a real estate broker:
Based on my research of the residential real estate brokerage model, I don’t see that any individual firm is able to offer sellers a distinct advantage. (Am I wrong here, experienced agents?) What one firm can offer you is pretty much as good as another. When a consumer chooses to buy or sell a house, he is most often making the decision to work with an individual AGENT rather than choosing a firm. The exception to this may be the one or two “name brand” firms that dominate a given marketplace.
What that means to me – as an agent – is that I should set up my business to be able to market MYSELF, through blogging, websites, postcards, signs, etc., rather than marketing my COMPANY first and foremost. I should also align myself with a company that lets me keep as much revenue available as possible (low commission splits and caps) so I can reinvest in marketing myself.
Although most sellers choose to work with the first agent they meet, some (about 30% as I understand it) interview multiple agents. When they choose an agent, what are they going to make the decision based on?
What sellers are looking for in their real estate agent:
- Is my house priced correctly so it will sell in the desired time frame?
- Is my house marketed correctly? What investment in marketing is my agent willing to make?
- Communication – how often does my realtor get in touch with me? Is she/he pleasant to deal with, return my calls, etc.
- Negotiations – How good is the realtor at negotiating on my behalf?
- Closing details – How much hassle will I have in getting the closing together?
- Price – Will the agent discount his/her commission?
What Does the Brokerage Offer That The Individual Agent Doesn’t?
When push comes to shove, most agents don’t sell their own listings any more. The buyer and the buyer’s agent usually come through different venues – not through the listing agent. That reduces the listing agent’s job to primarily just exposing the property, making sure it is priced correctly, and then coordinating communication to get the deal done. As agents, we offer these services and our expertise in performing them. Assuming we offer excellent service, the only other place for us to compete is price. The question of whether or not to cut commissions is one that could develop into a completely separate blog post. I don’t know the inside perspective from the realtor’s view point yet, but as a consumer, I can say the following…
I continue to maintain (sacrilege, I know…) that the reason so many realtors flood the marketplace is that it is such a profitable high-margin business. Especially when realtors market themselves on the basis of availability and relationship (I’m friendly and smiley) rather than expertise, it seems that there is very little to differentiate one agent from another. We’re ALL nice when we want your business, right?
Brokerages that serve their agents well, will ultimately build a reputation for serving their clients well, too.
Plus, what do agents do with all the profits that they earn in business, they plow it back into marketing… and not marketing to SERVE clients, but marketing to FIND clients. This giant inefficiency is my primary gripe with the real estate brokerage industry. It would go away if it was less profitable, and it would be less profitable if consumers insisted on using discount-priced agents. While some clients use these, many believe that you get what you pay for in life, and are more comfortable going with a full-price agent. So be it.
So, what it comes down to – if the well-informed consumer were really able to make an educated choice is finding an agent who is good at doing their job, and getting the best possible price for the agents services.
Hint to Clients – ask the agent if they’ll negotiate on commissions.
Hint to Agents: Don’t offer to negotiate on commissions – show your value and then stand firm on your price, Americans hate to negotiate, so if they’re not sold on working with you, it’s rarely because of price… find out what their other objections are.
In my opinion, finding an agent “who is good” comes down to training and hard work. As a new agent, I want a real estate broker who offers me in-depth training when I get started, and ongoing training to help me get better and better. I don’t just want to be trained in how to get leads (this is good for ME) but how to implement systems and serve my clients better. (This is good for THEM.)
In the long run, I think the best agents will choose the brokerage that allows them to serve their clients best, and make the most money. Brokerages that serve their agents well, will ultimately build a reputation for serving their clients well, too.
Popularity: 32% [?]
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