Burned-out Barry vs. Successful Sally – A Tale of Two Real Estate Investors

Re: Barry and Sally
It amazes just how much people will jump around looking for “solutions” when they get into a new business. 

My advice for anyone getting into any new business is to focus on a target market.

Your market is NEVER everyone.

In our business of real estate investing, here are two examples of the first few months for many first time “investors”.

confused_accountant.jpg

Let’s call our first guy Burned Out Barry.  He is happily married and makes a good income. He works a sales job that gives him a crazy travel schedule every month. He realizes he needs to find another source of income or he will have to work until “he is 90 years old”.  Since he has a flexible schedule he will “give real estate a try”.

Month 1. I’m going to be an investor like these people on TV. It’s easy!
Month 2. I need a better agent to help me find deals.
Month 3. This is hard. I need to take a class. Online. While I’m traveling.
Month 4. Wholesaling! Quick money sounds great! I need cashflow.  That’s the ticket!

Month 5. People hate me. I’m a bottom feeder with no friends. Even my third agent won’t call me back.

Month 6. I’m no quitter!  I should focus on Commercial Deals instead. If I am only going to do a few deals, they might as well be BIG!……and on, and on, and on it goes. All year.

Until Barry burns out. He never really does anything and eventually moves on because houses were too expensive and that stuff on TV “doesn’t work in my city.”

ON THE FLIP SIDE – let’s take a look at Successful Sally.

women_many_chatting.jpg
Sally went through a divorce three years ago. Even after a few hiccups to her credit score she is financially and emotionally back on track. She is looking to retire in her mid-50s and wants a few rentals to help supplement her retirement income. She really wants to travel as well.

Month 1. Sally decides she wants to help other women who are going through a divorce. She is going to make offers to buy their homes, but as a backup plan, will also offer to list their homes if they want to go the retail route.

Month 2. Sally completes her Realtor class and is hired by a local company that is “investor friendly” to their agents.

Month 3. Sally buys a list of local people whose name appears in the local courthouse for divorce. She starts her first mailing.

Months 4-12 Sally buys updated lists and continues her mailing. Each month her pitch to potential clients gets better.

The first six months, Sally doesn’t make a dime.

BUT SHE IS HAPPY.

Sally gets to talk to other women are going through the same process she went through a few years earlier.  In an odd way, it’s a little therapeutic for her to be helping these new friends.

Sally isn’t making money, but she is helping people.

Suddenly, in month 9 she gets a listing.

In Month 10 – another listing. And A single mom with a big alimony check pops up as a referral from what she thought was a “failed” listing presentation.

Month 11 her offer to purchase a property is accepted. Rental income for her retirement!

By the end of the first year Successful Sally has made a little over 20k in commissions, and now owns a rental property that cashflows $300 each month after all her expenses.

To celebrate her one year anniversary at her brokerage she schedules her first trip to Paris.  In Paris, despite the language barrier and age difference, she has a torrid love affair with…..
Ok, let’s not get carried away with Successful Sally.
Sally did all this PART TIME. Now she is even thinking of retiring a few years earlier and focusing on this new career. (And another trip to Paris.)

 

Why was Barry burned out and Sally so successful?

Focus is the obvious answer.

The not so obvious answer is a little more complex.

But let’s break it down to just 2 parts.

Sally set herself up to succeed because she was uniquely qualified to serve her target market.

And….

Sally focused on a market that was – in certain situations – very motivated to sell property. As we mentioned in our last post, divorce sometimes creates a situation where people are motivated to sell their property for a variety of reasons.

If I talked with both of these “investors” at the end of the year, Sally would be happier and feel more fulfilled with her choice to be a real estate investor. Barry on the other hand would tell me he has a long list of people he has “offended”, wasted their time, or who just flat out rejected his offers to “help”.

One final thought::

Barry focused on making more money for himself.

Sally focused on serving her target market.

And that change in focus made all the difference.

At our April 18th WREIA meeting we will be talking about how to find motivated sellers. It’s a great topic that I am going to break down into easy steps. If you implement just a few of these changes you may see a giant leap forward in your 2016 results.
April 18th is a great opportunity for you to ask a few questions like:
  • Where are people making the most money in DC?
  • How much time does it take to flip a property in our area?
  • How much money, at a minimum, should we want to make on a deal?
  • Where do you think prices are headed?
  • What mistakes do you see people making?
  • What should we do to get started?
Save a few dollars and reserve your seat early.  Then, come join us at WREIA on April 18th. It will be a great way to start the spring season, get you motivated, and get some momentum for the rest of 2016.
*********
Reserve your seat for the fourth 2016 WREIA meeting here.
*********
Make this year a great year for your business!
John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder

P.S.  The Rehab Immersion Course –  Spring 2016 Class we announced at WREIA is off to a blazing start.  We found our subject property, did a deep-dive property tour, two days at my office pouring through details and a second tour back at the property halfway through the renovation.  And it’s not over yet.

Announcing – Rehab Immersion Course – Summer 2016 Class is limited to 12 students.  If you are looking for an intimate and hands-on setting to learn the details of the renovation process here in the DC area – this is perfect for you.  Don’t miss this chance to get some real-world experience.  The summer class is starting to fill up. If you are interested in joining us, simply call the office and let us know to reserve you a remaining spot.

Divorce and Real Estate

house-puzzleRe: Divorce and Real Estate
 
When people go through a divorce the real estate involved is many times one of the biggest pieces of the puzzle.
Obviously, divorce is a terrible situation to be in. We can all agree on that.
Because it is such a huge problem it also creates a lot of opportunity for people who want to help provide a solution.
I was surprised when someone recently showed me that divorce attorneys have one of the highest professional satisfaction rates in their field.  The process may not be enjoyable, but people want results – and they get results with a competent attorney.
If you know someone who has been through a divorce, you understand that every home life situation is different.
Let’s focus on the real estate for a minute.
In the process of a divorce both sides have to agree on how to split the marital assets.  Many times the real estate involved is one of the largest assets.  Of course many times there is debt associated with the real estate in the form of a mortgage or note.
All parties have to agree on the value and if one party will be able to continue living in the property or take possession of the property after a divorce is granted by the courts. The person who gets possession of the property usually gives up something else of equal value.
Here in the DC area, both spouses may be working and without a second income there is not enough money left in a budget to satisfy a monthly mortgage payment.  In that case the property may need to be sold.
BUT EVERY SITUATION IS DIFFERENT.  A couple in my neighborhood went through a divorce a few years ago.  One spouse kept the home they were able to provide very little disruption to the home life for the children.  They kids stayed in the same schools until they graduated a few years later.
On the other hand, you have people who go through a divorce and in order to meet the financial demands of the other party, properties must be sold.  It doesn’t matter if the market is good or bad at that point – it gets sold.
I just had a discussion on this topic yesterday and was told about my friends uncle who after 40 years of marriage was forced to sell his main residence and two vacation properties in the middle of the recession. All in, the total property value was just under $2 Million. And still, no one came away happy.
One of the oldest jokes about divorce is:
“Why is divorce so expensive?”
Answer: “Because it’s worth it.”
Tell that to Harold Hamm who last year wrote a personal check for $975 Million to settle his messy and public divorce.
Harold-Hamm-Divorcecheck

Most people will never know what it’s like to go through a divorce of that magnitude or on a very public stage like Mr. Hamm did.  However, most people do want some privacy when they go through the process.

And that is where we can offer some help.  For people who do not want their neighbors going through their home at an open house, we can make a private offer to purchase a home. No signs in the yard, and no public open houses.  Just a quick cash offer and a quiet closing.  The documents for the sale are public record, as they should be, but the entire process can take place away from the very public MLS system.  No photos, no brokers opens and no quiet whispers by strangers about the condition of the house.
Most people going through a divorce just want to get to the next phase of their life.  The entire process is tiring, heart wrenching and seldom enjoyable for either party. More than once I have heard people say “Let’s just sign this and be done with it.”
When I hear of people who just want to “be done with it” I know there is some level of motivation.
Not every divorce results in the sale of real estate.  But it is a process that you can find very motivated people who just want to “be done with it” and price may not be a major negotiating point.   You may also find vacation property or second and third homes that need to be sold in order to divide assets fairly.
At our April 18th WREIA meeting we will be talking about how to find motivated sellers. It’s a great topic that I am going to break down into easy steps. If you implement just a few of these changes you may see a giant leap forward in your 2016 results.

April 18th is a great opportunity for you to ask a few questions like:
  • Where are people making the most money in DC?
  • How much time does it take to flip a property in our area?
  • How much money, at a minimum, should we want to make on a deal?
  • Where do you think prices are headed?
  • What mistakes do you see people making?
  • What should we do to get started?
Save a few dollars and reserve your seat early.  Then, come join us at WREIA on April 18th. It will be a great way to start the spring season, get you motivated, and get some momentum for the rest of 2016.
*********
Reserve your seat for the fourth 2016 WREIA meeting here.
*********
Make this year a great year for your business!
John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder
P.S.  The Rehab Immersion Course –  Spring 2016 Class we announced at WREIA is off to a blazing start.  We found our subject property, did a deep-dive property tour, two days at my office pouring through details and a second tour back at the property halfway through the renovation.  And it’s not over yet.
Announcing – Rehab Immersion Course – Summer 2016 Class is limited to 12 students.  If you are looking for an intimate and hands-on setting to learn the details of the renovation process here in the DC area – this is perfect for you.  Don’t miss this chance to get some real-world experience.  The summer class is starting to fill up. If you are interested in joining us, simply call the office and let us know to reserve you a remaining spot.

Getting A Cab On A Rainy Day

  taxi-rain
Re: Getting A Cab On A Rainy Day
 
Have you ever had trouble getting a cab on a rainy day?

You probably thought to yourself “Well, it’s raining and everyone else needs a cab too.”
It turns out that rainy day demand is only half of the reason you can’t grab a cab.

The other half of the reason is…. THE DAILY INCOME GOAL of cab drivers.

Most cab drivers want to make double the cost of renting their cab on a daily basis. As it turns out, more people use cabs in the rain. The cabbies are busy, much busier on rainy days, and meet their daily goal much earlier in the day.

It works the same way with our business as well. I see it all the time. Around this time of year people have either had early success and start to relax a little too much, or they are getting frustrated because they “can’t find a deal”.

To the people that found early in the year success, may I suggest that it’s time to stretch your goals a bit and try to do more this year?

The frustrated people on the other hand usually have unknown factors, like the rainy day cab drivers, that they don’t fully understand.

One of the biggest factors that most people don’t include in their formulas is MOTIVATION.

There is a huge difference in talking with people who would like to sell their house and talking with someone who is MOTIVATED to sell their house.

Most houses in the MLS are listed by people (in some cases banks) who would like to sell their house for X price.

Typically, they are not too worried about how long it takes. Retirees, for example, might say “Well we would like to move south by the fall. But we are really in no big hurry.”

No motivation there – unless it’s November and the first snow is in the 5 day forecast.

On the other hand is the real life example of someone I made an offer to a few months ago.

It was a Wednesday when we first talked. He had a job transfer and had plane tickets to leave town and head overseas on Sunday night.

He did not want to rent his house because he had a “bad experience” with renters and just wanted to sell. He was getting a huge hiring bonus as soon as he set foot overseas and – within reason – just wanted a fair price, all things considered.

I made an offer.

And then I KILLED THE DEAL by following it up with some advice.

Why not sell this house retail? “Just use an agent and go through the MLS” I said. It was a well kept home. I strongly suggested that would be the better way to go.

He was concerned about all the paperwork. He would be overseas and thought it would be a big hassle.

I asked if he had any family nearby that he could trust and that would also be easy to work with. His ex-brother-in-law lived not too far away.  As it turns out, he was an early investor in his ex-brother-in-laws company and they had a great working relationship.

I suggested he hire a local agent that specialized in his neighborhood and sign off on a Specific Power of Attorney. Let his brother-in-law help him sign all the transaction paperwork and sell the property for a higher price.

That’s exactly what he did.

signpapers

Was that bad for my business? Not at all.

Two people now know me as someone who is fair, says what I am going to do, and does it.

I showed up, on time, and suggested an alternative to my home-buying service that didn’t help me in the least, but put a few extra 10’s of thousands of dollars in his pocket.

I made a couple of new friends – and that is never bad for business.

My point is this – don’t stand around in the rain wondering where the cabs are. Look for motivated cab drivers.

This business if much easier if you are talking to people who are MOTIVATED sellers. Once you find motivated sellers, if you treat them fairly and make reasonable offers that all parties can agree to, this business can be both life-changing and profitable for everyone involved.

The gentleman I just talked about was motivated, but I was not the right solution for him because he still had other options.  They were just options he did not know about, or hadn’t thought of, mainly because he had a lot of other things to think about.

If you are out for yourself first, and want to make a deal that only works for you, I guarantee you are going to struggle. If you spend your time helping MOTIVATED sellers your business life will be much, much easier.

At our April 18th WREIA meeting we will be talking about how to find motivated sellers. It’s a great topic that I am going to break down into easy steps. If you implement just a few of these changes you may see a giant leap forward in your 2016 results.

April 18th is a great opportunity for you to ask a few questions like:
  • Where are people making the most money in DC?
  • How much time does it take to flip a property in our area?
  • How much money, at a minimum, should we want to make on a deal?
  • Where do you think prices are headed?
  • What mistakes do you see people making?
  • What should we do to get started?
Save a few dollars and reserve your seat early.  Then, come join us at WREIA on April 18th. It will be a great way to start the spring season, get you motivated, and get some momentum for the rest of 2016.
*********
Reserve your seat for the fourth 2016 WREIA meeting here.
*********
Make this year a great year for your business!
John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder

P.S.  The Rehab Immersion Course –  Spring 2016 Class we announced at WREIA is off to a blazing start.  We found our subject property, did a deep-dive property tour and have already spent two days at my office pouring through details.  And that’s just the beginning.

Announcing – Rehab Immersion Course – Summer 2016 Class is limited to 12 students.  If you are looking for an intimate and hands-on setting to learn the details of the renovation process here in the DC area – this is perfect for you.  Don’t miss this chance to get some real-world experience.  The summer class is starting to fill up. If you are interested in joining us, simply call the office and let us know to reserve you a remaining spot.