Leveraging InvestorPosted on October 1, 2014 by
As mentioned before, real estate investors wear numerous hats and play plenty of roles in their business. If you know me, I am a very hard worker and take my business very seriously. However, any time you see/meet me I am usually in a great mood and in good spirits. People ask me what I do and when I mention being a real estate investor and agent they ask how come I’m not all wound up. My reply is I have a great team behind me that assists in leveraging everything in my business. The more you leverage the better off you will be.
The biggest questions are: How can you risk all that money on a home? What if after you close there are more problems than you expected? What if you cannot sell it? As investors we learn to evaluate a potential real estate investment but you do not want to spend time evaluating deals you may not have a good chance of acquiring. To prevent wasting time I have a team of agents, wholesalers, and bird dogs that I invested time in training to evaluate a deal the same way I do. Therefore, they are out submitting offers on my behalf and only contact me when a seller agrees to consider a price I would like. At this point, I schedule a time to meet the seller at the home and make sure my contractor meets us there as well. I let the contractor who already knows what I expect to look at the home while I get to know the seller. Once the contractor has finished putting his numbers together I ask the seller to give up a minute to discuss what the contractor just evaluated. Before coming to the property, I run a CMA and know what the property can be worth fully renovated, the contractor just told me the cost of renovation, and know I can calculate my offer. I present the cost of renovations to the seller to justify my offer. If the seller agrees I am ready with a contract at that moment. At this time, I now have a property under contract and a bid and the time I personally invested was about 2-3 hours. Of course, the contractor may have over looked a small item or two and there may be a hidden issue discovered during demo but there is always a miscellaneous number built into the budget for these items. Although this is an investment and there are risks, investing in real estate is a very calculated risk and the investment is tied to something tangible. If it does not sell fast I can always drop the price. I may not make as much as expected but you can’t hit a home run on every project.
I have discussed joint venturing before and all this is what I explain to my private lenders and joint venturing partners when we first meet. Some of these lenders/partners are not sophisticated investors but they understand that by working together I am able to leverage both their money and mine at the same time. On the other hand, I do have very sophisticated lenders/partners that see me as an asset and leverage not only my time but my knowledge to their advantage. These investors are not going to go out and learn how to invest in real estate and everything that it involves when I can do that for them. In return, they provide me with more private money funding so that I am able to take on more projects at one time. Another option to leverage your cash is hard money. This is what I used when I started and still use on occasion but I require better terms based on my experience and quality of deals I bring to the table. When it comes to funding always negotiate!!!
Finally, I am a broker but rarely list my own properties. I list with one of my agents at a discount because we both know that the renovation was done correctly and the list price is right where it needs to be to sell, making their job easy. The agent also knows that if he/she ever needs any assistance with the listing I am available. Depending on the price point we also have professional photographers that take the listing pictures and uploads them to the MLS. When a contract comes in I only see that final agreed to contract with the updated terms and sign it digitally. I rarely go to closing because I have an in house notary so I request mobile closings when possible.
By leveraging your knowledge, time and funding you can accomplish much more than if you try to do it all yourself. This is why I always have and always will preach about creating win-win relationships.