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14 STEPS TO ACQUIRING A PROPERTY

October 23, 2019 by Team RE Mentor 1 Comment

These steps will help you save time and eliminate risk with your investments:

Decide what size buildings you want to start investing in.
Decide where you want to invest.
Determine what types of multi-family properties you’ll buy.
Put your team in place.
Market to get your deal.
Analyze the deals.
Create the offer or letter of intent.
Negotiate the deal.
Create and sign the purchase-and-sale agreement.
Do your due diligence.
Renegotiate the deal.
Start your financing.
Choose a management company.
Close the deal.

Allowing Your Real Estate Business to Run Your Life

October 9, 2019 by Team RE Mentor 1 Comment

We all get so wrapped up in the thrill of real estate investing (once you start buying, selling and cashing those big checks you will know what I’m talking about), that it begins to become all-encompassing. We have cell phones, so we don’t miss a call. When the phone rings at our home office we go running like a bat out of hell from the dinner table because this could be the Next Big Deal.

We take calls from contractors and suppliers at all hours and somehow especially on Sunday nights. We allow tenants to have us at their beck-and-call because we fear that if we don’t say “how high” when they say “jump”, they might move out.

Before we know it, our lives are consumed with nothing else. We left our jobs so that we could stop working for The Man, and be our own boss. Now we’ve come to realize that we are working for a much worse boss, a tyrant. That tyrant is ourselves.

How does this happen? It happens because we don’t effectively plan our businesses. I talked about planning earlier in this report. One of the benefits you will achieve from planning is you will be able to create systems and checklists to control your real estate investing business.

Once these systems and checklists are in place, you will know what needs to be done in any situation. You will look at the checklist daily, to review what has been accomplished and what still needs to be done.

You should have checklists for every aspect of your business. Here are some key checklists:

Property Evaluation: Buying right, market analysis, property analysis
Property Inspection: Estimating repairs, formula worksheets, room-by-room analysis
Contractor Management: Bid process, contracts, and agreements
Renovation Management: Cash flow, required activities, scheduling, and contractor management
Tenant Management: Application process, move-in process, leases, and contracts

These are just a few of the many checklists and systems that you’ll need to create and use on a day-to-day basis. Then you’ll be running your business and your business will not be running you.

One of the benefits of systems and checklists is that—as you grow your business and hire people to work for you—you’ll train them by teaching them how to use the checklists and systems. You will train them to complete the tasks associated with each system and checklist. You will supervise them by revising the systems and checklists that they are working on.

This is the fastest way to grow your business.

To get help on systematizing your business, read this book, The Multi-Family Manifesto. It’s a great book that will teach you how to look at your business in its proper perspective.

If you don’t want to create all of those systems and checklists yourself, find someone who already has a successful real estate investing business and find out what they are using. The sooner you systematize, the sooner you will be free to make choices based on what you want to do, instead of what your business needs you to do.

Convince the Broker You’re Serious

October 4, 2019 by Team RE Mentor 1 Comment

Are you a broker or an agent?

If they’re an agent, then ask them for a little information about their broker. An agent reports to a broker so you need to know about them.

What kind of education have you had?

College or professional in-service trainings are good.

What kind of experience have you had?

You want to see experience in the local area as well as in the property type you are seeking.

What professional associations do you belong to?

These could be national or local associations. Check out the various association websites to see if the members follow any stated Ethical Standards.

What local meetings do you attend on a regular basis?

This will give you an idea of where they network. Those networking opportunities might be good for you as well.

Where are the popular areas in the city and why?

You want to know if the city is investing in certain areas.

What type of properties are you seeing for sale?

You want them to match what you are looking for.

Anyone you know of that’s thinking of selling? Anything coming up on the market?

This will give you an idea of how extensive their network is.

What types of properties does their firm seek out?

Do they match your needs or present new opportunities that you have not considered?

Where are you seeing CAP rates and Cash on Cash Returns?

The higher the better.

Who needs 10X when you have Deal Lab? New new monthly membership with constantly updated investor resources, latest real estate trends, mind blowing case studies, and a portal to connect with real estate professionals.

3 Ways To Increase Income Without Raising The Rent

September 26, 2019 by Team RE Mentor 91 Comments

3 ways to increase income without raising rent

Charge "Cuddles" rent, By that I mean … PET RENT

Almost 70% of all households in the U.S. own pets. Charge Fido a small fee and you won't be isolating a large population that could become your tenants, and also the same tenants would love to pay for a convenience upgrade like a pet-sitting or dog walking feature.

Extra Space

Here's a win-win. Set up storage units on the property that a tenant can rent at-will. That way they are not violating their lease and any fire codes by over-stuffing their unit with their keepsakes, toy collections, or seven extra coaches they found on Amazon, or whatever they click-bought yesterday.

Offer Upgrades

Make life a little easier? Sold. Occupied. Laundry services, dry-cleaning, UPS Dropbox, Netflix subscriptions, free WiFi… Pick one or invent your own. Small conveniences go a long way to make a tenant's life even smoother.

Need more ways to increase income? Check this out.

How Important is a Good Credit Score For Real Estate Investors?

September 25, 2019 by Team RE Mentor 1 Comment

Your credit score can have a lasting impact on your ability to invest and get a mortgage.

Not only can it change a loan from being approved to being denied, but it can affect other aspects like interest and insurance rates, among others. You’ll want to make sure your credit score is good enough to allow you to take advantage of the real estate market. So, how important is your credit score when you’re looking to buy real estate?

A low credit score will impact the cost of your loan because it represents the level of risk to a mortgage lender.

A high score indicates that you pay your bills on time and will be able to repay your mortgage; a low score, on the other hand, means that you could be a potential risk to a lender. To compensate for the extra risk, lenders will increase your interest rates to protect themselves. Therefore, the higher your credit score, the lower your interest rates. But what should your ideal score be?

The short answer is that, ideally, your credit score should be above 740 and your total debt payments, including your future mortgage payments, should not exceed 43% of your gross income. The primary benefit of a higher credit score is that you’ll pay less interest. Forbes illustrates that the difference between a 3.5% and a 4.5% interest rate on a 30-year $250,000 mortgage is over $50,000 in interest.

The importance of a good credit score is illustrated by other benefits, like better credit card terms, higher credit limits, and lower insurance premiums.

Another important factor for home buyers is homeowners insurance. The insurance premiums you pay once you purchase a home will be greatly affected by your credit score. Unlike your regular credit score, your credit-based insurance score isn’t publicly available. To evaluate your risk factor, insurers use your credit report for many of the same things as traditional lenders. FICO estimates that 85% of home insurers throughout the United States use insurance scores to determine monthly premiums in states that allow it. The reason for this is that the Federal Trade Commission determined that these scores accurately predict risk, or the likelihood of filing a claim, to underwriters. What, then, can you do to improve your credit score?

Your credit score calculation is a bit complex. Some of the factors considered are your loan repayment history, the total balances on your accounts, how long those accounts have been operating, and the number of times you’ve applied for credit in the past 12 months. The best way to keep a high credit score high is to pay your bills on time, every time. Additionally, you’ll need to pay your existing debts, like credit card balances and other loans, and avoid opening new accounts, credit cards, or loans.

Content written for RE Mentor

By C. Mendoza

Direct Mail Marketing Campaign for Your Real Estate Business

September 23, 2019 by Team RE Mentor 54 Comments

Consistency

Before anything else I must stress, the most important factor when it comes to marketing is to be consistent. To be consistent you need to design a marketing budget. Figure out what you can comfortably afford to spend every month on direct mail without fail. You don’t want to put yourself in a position where you initially spend $1,500 a month, only to find 3 months in you can no longer afford to do so. By being consistent you will “touch” each prospect a certain amount of times through the year. By doing so you are creating brand awareness and keeping your company on top of their mind if they have a trigger event.

The List

It all begins with having a quality list. Before you begin marketing you need to understand exactly what type of property you are looking for and mail to prospects that meet specific criteria. Something I like to call “laser focused marketing.” You are not just blanketing a zip code and hoping for the best, i nstead you are mailing to a large number of leads with specific criteria. Perhaps you are a land lords in a certain zip code that own 2-4 unit properties and built after 1965. With the right list, you can do that. If you are looking for motivated sellers that need to sell at a discount you need to figure out what sorts of groups you will target whether its marketing to: probate, absentee-owner, pre-foreclosure, or code violations when generating your list. Perhaps you are a realtor and want to announce your new listing to the neighborhood. It entirely depends on your goals as to what type of list you select and ultimately mail to. I pull my list in December and mail them for a whole year. Once December comes up again I pull a new list. However, if your criteria is the same or similar, you will still have overlap and many people will continue to receive mail from you, which is not a bad thing.

direct mail zip codes — via United States Zip Codes .org

The Message

The message on your marketing piece is very important whether you are utilizing letters or postcards. People need to be more willing to put their message out there and be accepting of it, don’t try to hide it, especially investors! You buy income properties. Let your prospects know it! Get that message to the right people and it has appeal, I promise you. People try to manipulate response rate using all sorts of tricks from variable data to handwritten fonts. Again, you want people to contact you for the right reason. Your marketing piece and list should do some upfront filtering for you. Some people think that you need to field 30-50 calls to get one deal. That’s ridiculous and its likely because they are not using a clear marketing message and consequently having to field more unqualified calls.

The Response Rate

This is a metric that is often discussed at length. My personal thoughts: who cares about response rate? I would rather get 8 calls a month, 4 of which turn out to be deals. I have enough going on and the last thing I want is to be sorting through tons of unqualified leads. An 83% response rate isn’t meaningful or impressive if they are all unqualified and unmotivated leads. What would you rather have, an 83% response rate with a bunch of tire kickers that generates no deals, or a 2% response rate and 3 properties under contract? I think you know the answer to that.

The Marketing Snowball

Direct mail marketing initially starts out rather slow. You may receive few, if any, calls your first mailing or two. The end goal is to market enough consistently on the front end that you are regularly generating leads on the back end. I like to call this the marketing snowball. Sadly after the first few mailings is when most investors quit. They don’t give the marketing snowball enough time to grow or nurture it by consistently mailing prospects every month. In the early stages of marketing things start rather slow; however, as you consistently begin to touch the same prospects through the year you will begin to build a critical mass. Once you have been mailing for a decent amount of time (6 months to a year) you will start generating leads regularly. You may find someone calling you about a house they want to sell from a post card you sent them over a year ago. Or perhaps someone that has no interest in selling you there home, but may give your post card to a friend who does (I have had this happen several times). You never know, so keep mailing.

Putting It All Together

Remember, as I noted earlier, the amount of mail you send out is completely dependent on your marketing budget and how much YOU are willing to spend for at least 6 months without getting a deal. Again, figure out how much you can COMFORTABLY spend every month. Let’s say that’s $1,000. Next choose your marketing piece. We will use post cards in this example. For printing and postage fulfillment its we will say its .40 per post card. If you’re using yellow letters it will probably be closer to $1 per a letter. Whatever marketing budget you decide upon, make sure you STICK to it. Come up with a budget for 1 year to 6 months and mail them rain, sleet or snow. Calls or no calls.

Here is how it looks in practice:

Your monthly budget / cost per marketing piece. Lets plug in our numbers. $1,000 / .40 = 2,500 post cards you can send each month as per your BUDGET. If your budget is $250, who cares, spend that consistently and persistently and you will find deals eventually. And guess what, when you do you can put that money directly into your marketing budget and scale your business accordingly.

Personally, I like to form 3 groups for mailing: Groups 1, 2 and 3. Use list source or whatever you want to generate this.

Group 1 = 2,500 unique leads (for example probate)

Group 2 = 2,500 unique leads (for example pre foreclosures)

Group 3 = 2,500 unique leads (for example code violations)

So that means you will need 7,500 unique leads sum total (Group 1 + 2 + 3) from your list generation service.

Mail each group on rotation:

Group 1 – Jan

Group 2 – Feb

Group 3 – March

Group 1 – April

Group 2 – May

…etc. through the rest of the year rotating the list based on the amount of groups you have.

If you follow the above plan each group will be “touched” by your marketing piece 4 times through the year. This is critical. You are establishing an identity and the seller may not be ready to sell the 1st, 2nd or even 3rd time you contact them. However, as you “touch” them more often you will begin to see a higher yield in the amount of deals produced. Remember circumstances change through time ,that’s why you’re mailing them throughout the year.

Other popular mailing schedules are using 4 groups total for example:

Group 1

Group 2

Group 3

Group 4

The advantage to this method is you are casting a wider net and have a large number of prospects to market to. The disadvantage is they will only hear from you 3 times a year on rotation.

Another popular mailing schedule is to mail the same list every 6-8 weeks. The advantage to this approach is you will constantly be on your prospects mind and create brand awareness since you are marketing to them so often. The down side is, since you are mailing the same group every 6-8 weeks , the total amount of leads you will be leading will be much less. You won’t be able to cast as wide of a net.

It all comes down to personal preference on selecting a mailing schedule. What’s more important is being consistent with the mailing schedule whatever you decide upon.

In Conclusion

You must be consistent with your marketing, don’t give up 3 months in, if you do you might as well not mailed anything at all. I hope you found some new ideas in this action plan that you can use to implement in your own business.

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The one thing, if you add it, that will increase your response rate dramatically.