Archive for July, 2009

Why Real Estate is Similar to Dating

Thursday, July 16th, 2009 at 10:31 PM

If you have been reading real estate websites and tips on real estate marketing, you may have noticed that they often characterize the real estate business as something similar to dating. The truth is, the analogy does not only apply to the real estate business, as it works for most industries that are driven by a client agent relationship. Much about real estate is dealing with clients, and dealing with clients is much like how one would treat a person they are dating. As in dating, you need make your client trust you as an agent, because any type of relationship is always based on trust.

But more than that, real estate is similar to dating for many more reasons. And it is important to know these reasons because, as with dating, being prepared can lead to better things. Here are some of the similarities:

1. You want to know what they know about you. In dating, our curiosity usually leaves us dying to know what our date has heard about us, especially if a friend referred them. Pushing too far may come across awkwardly and is better left for later. So instead of asking this, you should ask what does he or she know about you and the property you are selling. This question actually will still help you learn what actually made the client come to you.

2. Best foot forward. When dating, you always make sure that what the other person sees and hears from you are only good things, to highlight your good traits and qualities that will make the person believe that you are worth all the trouble and the effort. Same goes for real estate before you give the client the whole picture, you paint a good picture first. No person is perfect, and no property is perfect either. But you have to make sure that when the client learns about your background and experience, as you ll need the credibility later in the home search and in negotiations.

3. Persistence pays… but don t be too persistent. It pays to be persistent. In dating, the other person may have dated you, but unless you two have made a pact to exclusively date, it is possible that he or she is scouting for other people. Therefore, you need to be persistent; give her a call once to show that you re interested. Do this is an appealing way, so you won t look needy and desperate. But cross the line for instance, calling her several days, even during inappropriate times and she ll probably cross you off in her life. Now, apply this to the Realtor client relationship. An agent should always be persistent professionally.

4. Know when to move on. If your dating status does not work, move on. There many other possible options out there. Same goes for a real estate deal. When you and your client cannot work on an agreeable transaction, leave it at that. Do not waste your energy on someone who can no longer be persuaded.

Beverly Manago is a freelance real estate writer and a consultant for: http://www.mysinglepropertywebsites.com a marketing tool that lets real estate agents and photographers create stunning virtual tours and single property sites easily, with a free version available for listing presentations.

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Commercial Real Estate: Do not Steal From Your Property

Monday, July 13th, 2009 at 6:33 PM

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When you purchase a Commercial Property and leave the Closing Table … you will take with you several different piles of cash you don t see in a Residential Real Estate Purchase.

They come in the form of
Tenant Security Deposits
Pro rations
Credits

And in a larger Property these can easily total hundreds of thousands of dollars.

WARNING:
We know of other Commercial Property Educators who advise you take this money at the close and use it to purchase additional Property. They crow about Cash Back at the Close as a major reason to move up to Commercial Property.

We strongly disagree … and absolutely discourage you from taking cash out of ANY Commercial Property at the Close!

That is because all of this Money has a dedicated purpose.

If you use this money for anything other than its intended purpose in this Property … you are literally Stealing it from the Property and your Investors. Taking this money can and will sabotage the success of your investment.

Always use this cash wisely and Only for its intended purposes…

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Tenant Security Deposits …
Are to be returned to the Tenants when they move out. Set up an interest bearing account for them and transfer the appropriate amount of money directly from the closing table. This cash is spoken for.

Pro rations and Credits …
Are money already set aside for operational expenses and need to be kept off to the side until these expenses are actually due.

EXAMPLE #1:
If you buy the Property on July 1st you will receive a credit from the Seller for 1/2 the year s Property Taxes. This money is dedicated to paying the taxes when they are due … and if you spend it instead or use it for ANY other purpose you have just stolen from the property.

EXAMPLE #2:
If you buy the property in the middle of the month and the Seller has already collected the rent you will get a prorated share of the rent collected … in this case, 1/2 of it. This money has been generated this month to pay next month s bills … leave it set aside in your operational account for use when the bills come due.

If you siphon off any of these funds for yourself or other investments, you are setting yourself up to run short of operational cash very quickly.

When this occurs your only recourse will be to ask your investors for more money … this is called a Capital Call. AND there is nothing worse for your reputation as a Project Sponsor than a quick Capital Call.

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We recommend you open three bank accounts when you take over ownership

Operations Account for the monthly in and out of income and expenses

Security Deposit Account best if it is interest bearing. Transfer all Security Deposits directly into this account.

Reserves Account always keep your reserve account topped up (we recommend at least one month of operating expenses). This is your rainy day fund and can be an interest bearing account as well.

We recommend you raise enough money from investors to fill the Reserve Account at the Close of your Purchase … this way you will not need to make a Capital Call if the furnace goes out in the first 6 months of your ownership.

With these accounts set up … simply transfer all Closing Table funds into the appropriate account.

AND whatever you do … don t steal from your own Property!

Learn Insider Secrets of Commercial Property Investment from Monte Lee-Wen who has personally purchased over $150M in Commercial Real Estate. visit his website at: http://www.investortours.com

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