Archive for property management

Which Is The Better Opportunity?

By Rob Minton · Comments (10) · Thursday, November 11th, 2010

A few weeks ago, I wrote about a breakthrough in thinking regarding an opportunity in one of my Master Marketer Club weekly membership reports. I’m curious as to what you think might be a better opportunity, so I’ve decided to share what I wrote with everyone. I would love to hear your thoughts on this! Please feel free to add them in the comments section!

Here goes…

My breakthrough occurred when I compared starting property management services to buying an investment property. Most agents are hesitant to offer property management services, but would happily buy a rental property hoping for passive monthly income.

Why is this so?

You would have to do the same things on a month-to-month basis to own a rental property as you would to manage someone else’s property. However,  you have significantly less risk when you manage someone else’s property vs. owning your own rental property.

As an example…

If you own an investment property, you have to keep them rented to remain profitable. If you lose a tenant, you have to cover the mortgage payment out of your pocket. Moreover, you’ll probably have to invest additional funds to paint, carpet and spruce up the property to get it ready for a new tenant.

I’ve learned with my properties that ONE vacancy can suck up every penny of cash flow collected throughout the year. If the property is damaged, you have to cover the cost to make any repairs. And if you live an area requiring city rental inspections, you’ll have to cover the cost of fixing any violations required to obtain an occupancy permit.

Even worse, if the real estate market drops further, you could lose a lot of money when the value of your property gets pulled down.

Now let’s compare owning a rental property to simply managing someone else’s rental property. When you manage a property on behalf of another investor….

1.   You never have to cover a mortgage payment out of your pocket.

2.   You never have to invest money to renovate the property during vacancies.

3.   You can collect a management fee every single month of the year, regardless of whether the home is rented.

4.   You have no risk of loss if the property is damaged.

5.   You never have to pay to correct any violations required by the city for an occupancy permit.

6.   You have no risk of loss if the property values decrease.

7.   You don’t have to put 20% to 25% down to buy the property.

8.   You don’t have to borrow a penny.

9.   Your credit score is not on the line, because you’re not buying the property.

Let’s stop for a second. Which is the better opportunity? Are you starting to have the same shift in your thinking, about property management, as I did?

Now, here are a few additional considerations:

  • It’s pretty challenging to get financing for investment properties these days. How many rental properties are you able to acquire right now? If you’re lucky, you might be able to buy one or two investment properties with today’s lending requirements. More than likely, you’ll have to invest 20 to 25% out of pocket to buy these properties for the down payment. So you’ll have to invest a significant amount of money to generate passive income from one property and you’ll have to carry 100% of the risk of loss.
  • How many rental properties could you start managing right now, assuming you had a few key systems in place? Answer: as many as you wanted. There are no lending requirements, down payments or other restrictions that would limit the number of homes you manage. This simply means you could generate more monthly income by managing properties than you could by buying properties! All without any risk of loss.
  • Some might argue that you lose out on any future profit when the home appreciates. This is definitely true, assuming the home does appreciate. It’s probably going to be a long-time before home values go up by any meaningful amount. Believe it or not, you can receive a BIG check down the road from the properties you manage. Simply turn each property management agreement into a listing agreement and you’ll set your business up for many future commission checks.

Sure property management comes with a few headaches, but what good business opportunity doesn’t?

I had a huge shift in my thinking with this little comparison, because I was reluctant for many years to get involved with property management. However, during this same time period, I would happily run out and buy investment property after investment property.

This seems crazy in hindsight.

I was willing to invest large down payments to buy properties, handle the same management responsibilities, and carry the risk of loss to receive monthly cash-flow. With property management, you don’t have to invest a penny, have no risk of loss and can generate monthly revenue all for assuming the same management duties.

I might venture to make this statement…

It’s more profitable and less risky to manage a rental property than it is to own a rental property. You profit when the home is rented. You profit when the home is vacant. And you have the opportunity to earn a commission down the road, when the home is sold.

Once again, I didn’t think this way previously. I do now. What do you think? Please feel free to share your thoughts in the comments below.

If you’d like to download my new course “How to Start and Run a Profitable Property Management Business” for FREE, simply join my Master Marketer Club membership today at this special link:

Join the Master Marketer Club Now!

Comments (10)
Categories : Investing, Money Management
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Has The Real Estate Market Hit Bottom?

By Rob Minton · Comments (6) · Wednesday, November 3rd, 2010

This is part two to my previous article titled, “The State of the Union Address for the Real Estate Market.”

Before we get to the point of this post, we’ll assume that you’re reading my blog because your a licensed real estate agent. And if so, at least some portion of your income is derived from the sale of real estate. This would lead me to the conclusion that the real estate market is very important to you and, to some extent, you’re financial well being.

So let me ask you a question…

Has the real estate market bottomed out? Watch this powerful video to find out:

The news seems to indicate that our market has hit bottom and is now slowly starting to recover. Do you believe this?

The reason why I’m asking such an important question is because I’m trying to get you to think strategically about your business. You’re answer to the market bottom question will dictate the actions you take within your business. If you feel the market has bottomed out, you’ll happily focus on selling more homes to increase the revenue to your business.

However, what would you do if the market hasn’t hit bottom yet? Would you handle things differently today? If the market hasn’t hit bottom, home sales and market values will continue to decline. As noted in the video within this post, the market may not hit bottom until sometime between 2012 and 2015. This would mean another 2 to 5 years of falling commissions.

Scary, I know.

Although this is scary, it’s critically important to think your dependence on commission income. If the market hasn’t hit bottom, you need to be proactive about finding alternate sources of income. Don’t simply sit around hoping things get better, because they may not. Take action now to start generating new income streams.

It might be helpful to simply think about new income streams as a hedge (or back-up plan) for your business. You really have nothing to lose and everything to gain by hedging against further losses to your commission income.If the market has hit bottom and things are starting to get better, these new income streams will be a bonus. However, if we haven’t hit bottom as this video suggests, you’ll be protecting yourself and your financial well being.

As you probably know, I’m going to be releasing a new program for real estate agents that will help them start property management. The goal of the program is to help you diversify your income away from home sales. Whether or not you decide to pay attention to property management or not, you should definitely take action now to create new income streams that are not dependent on home sales. I know property management isn’t for everyone, but protecting yourself is.

If you are interested in the recurring revenue available through property management, you might want to sign up for my early notification list for my new property management program. You’ll receive priority access. Sign up here:

http://www.NotificationList.com

Comments (6)
Categories : Business Re-invention, Money Management, Succcess
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The “State of the Union” Address on the Real Estate Market

By Rob Minton · Comments (4) · Tuesday, October 26th, 2010

Before you read this article, you should understand that I’m an optimist and I do see the glass as half-full! However, I have learned to try and think accurately in my optimism. I have also learned to look for opportunity in adversity. In this article, I share what I believe to be the reality we face as real estate agents over the next few years. Hopefully, I’m wrong.

A few weeks ago, I received a new issue of the “The Campbell Real Estate Timing Letter.” It’s a great newsletter that studies the economy and the real estate market pinpointing when an investor should be buying or selling real estate. This newsletter is definitely worth subscribing to and studying. You can find out more at RealEstateTiming.com. (Full Disclosure: I’m not an affiliate and do not earn a penny for the recommendation.)

Robert Campbell tracks five “Vital Signs” for 17 housing markets. These vital signs are:

1.   Existing home sales
2.   New home building permits
3.   Notice of Defaults
4.   Foreclosure Sales
5.   30-Year Fixed Mortgage Rates

By studying these five “Vital Signs” for each market, Campbell is able to spot trends that can be used as a guide for when to buy or sell real estate. He has been publishing this newsletter for many years and accurately predicted the housing bust and his “Vital Signs” screamed sell back in 2006 and 2007.

His recent newsletter hammered home the message that our real estate market is poised for another drop. And sadly, I agree with his findings. I do not believe our market is going to rebound quickly, like many in our industry hope. And in fact, I believe it’s only going to get worse.

I realize gurus are only supposed to focus on positive, uplifting news with the “Go Get ‘Em, Tiger” mind-set. “You can do it, if you just put your mind to it!” All you have to do is dial for dollars. Unfortunately, this rah-rah attitude isn’t practical and can actually be dangerous for your business.

It’s critically important to think accurately about the state of the economy and the real estate market.

There are several reasons why Robert Campbell believes the real estate market is going to struggle going forward. However, the two main reasons are the persistent high unemployment rate and  the unusually high level of debt carried by the average household.

In fact, he wrote:

“With the U.S. unemployment rising to a totally unacceptable rate of 9.6% in August – it was 9.5% in July – the recession is not over, nor has the recovery started.”

The U.S. unemployment rate remained at 9.6% in September highlighting that fact that things are not getting better. This seems to conflict with a recently released report in the media, which stated that the recession was over.

Does the recession feel like it’s over to you? Do things feel like they are getting better or worse?

Christina Romer, chairwoman of the president’s Council of Economic Advisors said, “odds are high that even if we can somehow avoid recession, we’re facing a no growth/low growth economy – and this means the U.S. jobless rate will go even higher in the next 2 to 4 coming quarters.

This simply means we have a few years before things get better. Here’s an interesting quote from Campbell’s newsletter:

“How can you expect to have a legitimate recovery in real estate when the unemployment rate is likely to rise from elevated levels that are already near double digits? I’m talking, of course, about a genuine real estate recovery – one that is driven by true organic demand rather than by demand that is artificially created by $8,000 homebuyer tax credits, artificially low interest rates, and government intervention polices that keep the supply side of the equation artificially low as well.”

The most important part of this quote are the words “true organic demand.” Our real estate market will not recover until buyers really want to buy. This isn’t happening now and will not happen for some time. The second major problem plaguing the economy is the astronomical level of debt. Campbell wrote:

“Household (and non-profit) debt, which includes mortgages, credit card debt, auto loans, and student loans, peaked at $13.8 trillion in 2008. After two years of de-levering, however, the balance has only been brought down to $13.5 trillion.”

He goes on to argue that we need to get rid of another $3 to $4 trillion in debt before things really become stable. This additional de-levering of debt will take a number of years.

This has many implications for your real estate sales business.

Every single real estate agent in the states has already suffered many losses. The number of homes we sell on a consistent basis has dropped significantly. Even worse, our commissions on homes sold have dropped along with home prices. We now have to work a lot harder for a lot less money.

If Campbell is right, this trend is  going to force additional losses to your business, UNLESS you take action now. You cannot continue to focus on commission income from home sales as the main source of income for your business.  You must proactively diversify your income away from home sales. In a recent article titled, “4 Ways You Can Make More Money“, I highlighted a few ideas on how you can diversify your income.

One of the ideas presented was to consider starting property management services, because you’d set yourself up to earn recurring monthly revenue. More importantly, once you have a new property under management, it usually stays under management providing long-term revenue. This revenue can be used to support your business, if things do get worse as predicted.

In the next week or two, I’ll be releasing a new program that will help you start property management in your real estate business. This will include everything you’ll need to get started including how to get property management clients, property management agreements we use in our business, and how to automate property management without hiring any employees. Because this is a new program, I’ll only be releasing 100 copies and it will only be available on a first come, first served basis. If you’d like to receive early notification of when this new program is going to be released and have priority access, join the early notification list now at:

http://www.NotificationList.com

Comments (4)
Categories : Business Re-invention, Money Management
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Life Is About Inches

By Rob Minton · Comments (6) · Wednesday, October 20th, 2010

In the video below from the movie “Any Given Sunday”, Al Pacino gives one of the most inspirational speeches ever. As you watch this video, think as if he were talking to you about your real estate business.

Here it is…

We’ve been through hell a lot lately in this market and his speech should resonate with you.

As I watched this video, here’s what heard:

“Life is a game of inches. So is real estate. The inches we need are everywhere around us. They are in every minute and every second. In real estate, we fight for that inch. In real estate, we tear ourselves and everyone around us to pieces for that inch. We claw with our fingernails for that inch, because we know when we add up all those inches that’s going to make the fucking difference between winning and losing. Between living and dying. In any fight, the agent who is willing to die who is going to win that inch. If we are to have any success in this market, it’s because were willing to fight and die for that inch. That’s what living is. The 6 inches in front of your face.”

In my previous article on this blog titled “4 Ways You Can Make More Money in a Slow Market”, I gave a few examples of how to increase your income without selling additional homes. These ideas would be considered inches. The question is…

Are you going to fight for one of those inches in your real estate business?

One of the suggestions was to offer property management services. This is because property management provides monthly recurring income and can be setup to run WITHOUT any full-time employees. And more importantly, property management is recession proof. This is a BIG inch that may be the difference between winning long-term in your business, or failing.

At the end of this video, Al Pacino said, “I can’t make you do it.” He meant that he couldn’t make any of the players on the team fight for each inch. They had to decide for themselves. The same goes for you with your business. I can’t make you diversify your business away from home sales. I can make you fight for monthly recurring income. I can’t make you build a business with real value. But I  I can help.

In the next week or two, I’ll be releasing a new program that will help you start property management in your real estate business. This will include everything you’ll need to get started including how to get property management clients, property management agreements we use in our business, and how to automate property management without hiring any employees. Because this is a new program, I’ll only be releasing 100 copies and it will only be available on a first come, first served basis. If you’d like to receive early notification of when this new program is going to be released and have priority access, join the early notification list now at:

http://www.NotificationList.com

And Pacino’s final words were….

“Now what are you going to do?”

Comments (6)
Categories : Succcess
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How to Avoid Dealing with Incompetent People & Make More Money at the Same Time!

By Rob Minton · Comments (2) · Tuesday, June 22nd, 2010

In our businesses, we are dependent upon other people to get homes sold and closed. Every single sale involves many other people and one incompetent person can cost us a lot of money and a great deal of time.

How many times have you had to deal with another agent who doesn’t return your phone calls or doesn’t know what their doing?
How many deals have gone south because of an appraiser incorrectly valuing a home?
How many loans have been messed up because the lender was slow and didn’t get things completed in time?

It’s pretty hard to get paid when we have to deal with so many other people to get one home sold.

A few months ago, I participated in a special meeting with agents here in Cleveland. During the meeting, we were brainstorming different ideas we could implement. I’ve detailed some of the findings from this meeting and how I evaluated each opportunity in a new report, which you can download below. In the meeting, one of the agents shared how he helped a seller that couldn’t sell their home. He created a $3,000 fee and recurring income of $99 a month. More importantly, the seller was extremely happy and absolutely loves him.

It’s a very unique way to create income from sellers who can’t sell their homes. This is something you should definitely study and contemplate for your business.

In the report, you’ll also see how to eliminate dependency in your business and how to create recurring revenue.  You can download this report right now by clicking on this link:

Listing Income Report – PDF

I shared this report with my Master Marketer club members a few weeks ago and have received a ton of feedback. Download it while it’s still available!

Comments (2)
Categories : Business Building, Business Re-invention, Sales
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