Realtor Profile, John Hayden, the “King of Curtis”

While researching and reviewing proposed investment plans for a historic Curtis Park Victorian, several people suggested that I contact John Hayden of Kentwood City Properties.  More than one of his colleagues referred to him as the “King of Curtis” for his knowledge and experience in the neighborhood, so I had to look him up.   We met in the heart of Curtis Park on a beautiful summer morning, where John shared his knowledge and enthusiasm for the neighborhood as he showed our team several past and ongoing remodel projects.  He seemed to know the history and owners of almost every property! It was a pleasure to learn about how Curtis Park has been transformed from an inner-city slum into a healthy and vibrant community with loads of culture and beautiful display of Denver’s architectural history and future.

Curtis Park Neighborhood Information

Curtis Park Neighbors – Association of Denver’s Oldest Neighborhood

Scouts – Dealers – Rehabbers – Landlords

I have a few key methods of qualifying real estate investors to determine whether or not I want to work with them.  This has little to do with the amount of experience they have, and less to do with the amount of money they have then you may think.  These are both important factors in determining how I will work with an investor.  But the critical factor in whether to work with them is based in their commitment and integrity.

During my first interview or call with a new referral, I ask the standard questions about their experience, available capital and credit score.  More importantly, however, are the questions about their goals and intentions.  The way certain questions are answered, including was is NOT said, usually gives me a good indication about whether I can establish a mutually beneficial relationship.  With practice, you can learn these evaluation skills to qualify investors, and only work with those who will be good clients.

The first step in this learning process is to understand the Types of Residential Real Estate Investors.  This will allow you to differentiate between clients, customers and vendors as you grow your business through networking and marketing.  All investors will fall into one or more of the following categories.  Less experienced investors generally require more time, but more experienced investors will require more skill and knowledge to earn their business.  As always, the relationship must be a “win-win.” 

Types of Residential Investors

Scouts

Scouts, also known as Finder’s, are usually novice investors looking to get started in the business.  Many first time investors do this type of work because it does not require  money or credit to start. A scout’s objective is to source property leads for more experienced and capitalized investors.  Scouts gather information about potentially profitable properties and sell this information to another investor.  A good scout will include the following information in his or her report to the investor:

• Location of the property
• Owner’s name and contact information
• Condition of home, including pictures (recently taken)
• Estimated as-is value and remodeled value of the property
• Asking price on the property and current loan balance
• Estimated cost of repairs to the property
• Liens on the property or other applicable circumstances

The fee that a Scout charges for this information and/or lead is determined based on the value of the property as well as the estimated profit that the investor is likely to make.  This can run from a few hundred dollars up to a few thousand dollars on each property.

Many people want to start out in the business being dealers (wholesalers), but should learn by being a scout for more experienced investors.  The best scouts will succeed in the business, and eventually become Dealers.

Dealers

Dealers, also known as Wholesalers, are much like a scouts but with one significant difference.  They sign a purchase and sale contract and/or purchase the property to resell for a wholesale profit margin.  This level of control requires more capitalization and additional risk, so dealers stand to make a larger profit from the investment than scouts.  Typical dealer mark-ups are between $5-$25,000 per property depending on how “deep” it was purchased and if any additional costs or work are involved in selling the property.

You will often find people in the investment real estate business who are acting as dealers, but are really scouts.  Investors who contract a property but are not capitalized to close the property are not dealers.  They are often misleading the seller of the property (i.e., making a “cash offer” without any cash).  This is a tactic often taught in the “no money down” seminars and investment courses.   The difference between a dealer and scout is the dealer will close on the property purchase (or at least have the ability to close) before reselling to a rehab or landlord investor.  Scouts who act as dealers but are unable to close transactions often leave the unknowing seller with no buyer at the closing table.  This creates ill-will about the business of real estate investing and should not be done.

Most dealers will sell their properties “as is” to another type of investor, performing little, if any, work to the property.  In some circumstances a dealer may not close the property at all, or may do what is called a “double closing” or simultaneous closing.  An “assignment” means the dealer is selling the contract to another investor who closes the transaction.  In a “double closing” scenario, the dealer will only own the property for a few minutes between two closings.

More experienced dealers may perform major repairs to a property before selling it to another investor.  In this instance, the dealer will purchase a property, perhaps at a steep discount because of a structural problem, and do the “heavy lifting” of fixing a foundation problem or replacing roof and mechanicals.  This strategy involves the dealer making the property appealing to novice rehab investors who are looking for “cosmetic” type remodel projects.

Experienced dealers make excellent partners for your real estate investment business or investment oriented agency.  They often have deal flow and an inventory of properties that are not available through the MLS.  Good dealers understand the value of your role as a buyer or an agent working with investor buyers.  If you a rehabber or an agent working with fix and flip investors, finding and establishing a relationship with a dealer like the one described above is an excellent source of properties.

As with any business, there are talented and forthright dealers, and there are those who give the business a “bad rap.”  When working with dealers, be sure to get references and check local reputation centers like the Better Business Bureau.

Rehabbers

The rehabber is the most common (and famous) type of real estate investor, and so requires little explanation.  In the investment community they are called “retailers.” On TV and the internet they are called “fix and flippers.” Rehabbers generally purchase properties through agents, or from a dealer or scout.  The objective is to remodel and then sell properties to owner occupants at the highest possible “retail” price.  The rehabber puts the most money into properties and has the most risk.  Rehabbers also stand to make the largest profit if they are skilled at the trade.

Rental Landlords

Rental landlords are seeking properties that enable them to earn a profit on a monthly and yearly basis from rents over and above all expenses including debt service.  Rental landlords are generally the most sophisticated of residential investors because they are working on long-term wealth building rather than short term income.  A large percentage of landlord investors are not in the business of real estate; most have other income sources.  Investing in real estate is usually retirement planning and wealth building for landlord investors.  As such, they require the most knowledge and experience to work for as an agent.  For the experienced investor or investment oriented agent, landlords are very good long term relationship clients because they are usually well capitalized and buy multiple properties per year.

Balance Sheet Investors versus Income Investors

As you meet and qualify investors to work with in your business, you will gain a deeper understanding of experience and capitalization levels within the spectrum of investor types.  On a macro scale, I qualify investors as either Balance Sheet or Income investors.   In very simple terms a balance sheet investor has an amount of capital that he or she wants to grow on a risk adjusted basis for net worth gains;  an income investor is seeking current income from operating and selling real estate.  The difference to the adviser or agent is the level of legal and tax planning that is involved with the projects or investments.

Capitalize on an Underserved $300 Billion Market

As the nation continues to take its proverbial medicine for the spoils of Wall Street’s residential real estate backed securities fiasco, Realtors are suffering massive drops in transactions and income. If you are working the traditional residential market, you’re likely facing pretty grim volume now, and for the near future.  How about this for a change?

Stop Sucking Wind

• STOP wasting your time working evenings and weekends with “liar buyers” who drag you to see hundreds of houses and never make a decision.
• STOP listing over-priced properties that never sell or taking on Short Sales that require hundreds of hours of negotiations.
• STOP begging your friends and family for their real estate transactions and ruining relationships over business.
• STOP expensive and time consuming prospecting and holding lonely Open Houses.
• STOP working with clients that are barely qualified for loans and hoping the deals close to get paid.

Yes, you really can STOP all this nonsense by learning a few new skills and making a simple change in the type of client you work with.  In a down market, residential real estate investors are very active buyers (and sellers too).

Investors are desperately seeking good real estate agents who specialize in investments.

I know, you don’t work with investors because they make low ball offers, use your knowledge, experience and tools and then burned you for the commission.  Right?  Has this really happened to you or have you just heard about them happening to other agents?  Agents who suffer these set backs have not learned to find “real” real estate investors.  It is not hard to find them!  Investors are everywhere, and this $300 billion market segment is extremely under served.   Since your colleagues don’t want to work with them, you will get multiple, consistent referrals right from within your own office!

How would you like to have your best volume year ever this year while your colleagues fight over the few good listings available and cut their commissions to get them?

• Learn how to dramatically increase your commissions and income in a segment that is booming during the current housing slump and credit crisis.
• Learn how to find serious and qualified buyer clients who each purchase multiple homes per year, during normal business hours, treat you with professional respect, and make decisions quickly without emotion.
• Learn technological skills that will streamline your business and protect your most precious asset – TIME!
• Learn about the business that has created more millionaires than any other business ever! Real Estate Investing!

Learning to separate the short-sighted amateurs and “seminar graduates” from professional investors or well qualified high-income “retail investors” is paramount to earning and enjoying business success for agents.  The objective in attracting the latter two is building long-term mutually profitable relationships.

What can you do now?  Start by bookmarking this site.  This entire blog is dedicated to teaching agents and investors about investment property.  It is written by people with significant real world experience in the business of investments, agency, construction and finance.  You are also invited to download our Investment Property Training manual and subscribe to the Private Market Newsletter in order to be informed as the content and information grows.  Our team offers specialized training for both investors and agents.  We look forward to communicating with you further.

Web 2.0 – Real Estate Blog – Realtor Networking

Dramatically Increase your Sphere and Reach.

(wink., Follow Me to the Twitterverse…)

We all know that more than 90% percent of people starting a buy or sell real estate transaction begin their research online.  But what are you doing about it?  If you haven’t already, it’s time to master the incredible marketing advantages and potential for real estate agents of social marketing via sites like these:

• Twitter – short but sweet, use links, don’t spam, meet LOTS of new people
  
• Facebook – OK, nobody is looking for a Realtor on Facebook, but you WILL connect with old friends
  
• You Tube – start recording NOW, figure it out later, web surfers LOVE video
  
• Plaxo – keeps you organized and works as a drip campaign
  
• LinkedIn – expand your “rolodex” – remember that word?
  
• WordPress Blog – trust no one else with your blog (trust me on that)
  
• Naymz – bad spelling, but the best search engine plug ever
  
• ActiveRain – the standard for agent blog networking
  
• BiggerPockets – Active Rain for young, fun types
  

Start by Doing a Little Test…

What comes up on the first page of results when you Google “Your Name” in quotes?  What about “YourCity real estate market?”   Imagine the difference in your business model and productivity if your name and website came up on top pages of either of those Google searches:  instant credibility; leads filling your email inbox everyday; the ability to be choosy about who you do and don’t work with because you are a busy professional that people are eager to talk with about real estate!

Internet marketing used to be expensive because a good website would require the services of a technical coder.  The good news is that new tools make it easier than ever to create and maintain a domain and website and utilize powerful internet and email marketing techniques.  Today, there are lost of resources on the web that enable novice computer users to set-up and maintain an online presence with very little experience and very little expense.  That resulting message to your potential clients will be that you are internet savvy and technologically competent.

Before you go online to explore the resources below, take time to write professional and personal biography.  It does not have to be long, just a few paragraphs about your business experience, education, specialties and interests.   You will also want to have at least two pictures of yourself, one professional photo and another more casual personal photo.

Below is a list of resources that I use to market my real estate business and steps you can take to improve your search engine rank and awareness among prospects doing real estate research online.  It does not take long to begin realizing the benefits.

20 Steps to Mastering Internet Marketing!

Preliminary Steps:

• Write a professional and personal biography – not too long, just a couple paragraphs about your business experience, education, interests
• Get two great pictures of yourself, one professional and one personal (fun)

Beginner Steps:

• Download Mozilla Firefox internet browser
• Get a Gmail and iGoogle account
• Set-up a Google Reader account
• Set-up accounts at Facebook and LinkedIn
• Set-up a WordPress Blog
• Write (or hire writer) to create good original local interest content for your blog site

Intermediate Steps:

• 100% complete profiles on Facebook, LinkedIn
• Add profiles at Naymz, Plaxo, ActiveRain, BiggerPockets
• Get a Twitter account and download Tweetdeck
• Get an Avatar and start blog surfing and making comments using links back to your blog
• Buy an inexpensive camcorder and begin videotaping house tours, interviews with clients, etc.

Advanced Steps:

• Visit GoDaddy.com, get an account and register one or more domain names
• Set-up Gmail to use your POP3 email address from the domain you purchased
• Go to MediaTemple.com or HostGator.com for website hosting
• Upgrade from WordPress.com to WordPress.org hosted domain blog
• Choose Aweber or Constant Contact (or both) for your email marketing management
• Create a YouTube account and upload some short videos of yourself or house tours
• Open a Google Adsense account and drive traffic to your blog site

To be continued…

Would you like to read the in-depth post article that has detailed instructions for implementing each of these steps?  The full version includes live links and a video tutorial to walk you through the entire process of dominating your local market with internet marketing.  Enter your first name and email below to be notified of the link for this new post and video. I promise I will NEVER sell or use your email for any purchase other than sending you my permission based information and you can unsubscribe at any time.  Or, feel free to subscribe by RSS (if you don’t know what that is you really need to read the next post!).

See some web 2.0 marketing examples for this company in action by clicking the icons below. Then be sure to subscribe get this valuable and targeted information specifically for real estate professionals.  Thanks for reading, I look forward to communicating further with you.

photo credit: marketingwithmiles

I had lunch recently with a real estate agent who was pitching me to hire him as a buyer’s agent for investment properties.  He presented himself as a having a solid work ethic and excellent knowledge of the market.  But when he handed me his card, he had a firstname86 at hotmail dot com account as his email address.  This turned me off to working with him because of my impression that he was not technologically savvy. 

This may sound silly to some, but I assure you than many of your potential customers are evaluating your professionalism and business by your email address (and your website or blog, but that’s another post).  The good news is that getting and using a more professional email address is very easy.  Below is a review of the different types, and instructions to move toward a more professional image.

Best

Purchase a domain address for your business name and/or your personal name.  Your email address should be as short and memorable as possible.  firstname@mycompany.com ,  firstlast@myfullname.com are both excellent.  You can also purchase a catchy domain like billsellsfast.com.  To do this visit www.Godaddy.com and register a domain.  During the sign-up process you will be coached on how to set-up pop3 email hosting which can be accessed through any email client like Outlook or on the web through a Gmail account.  If you are a computer novice and configuring your own domain through Godaddy seems too much, you can perform similar domain set-up through Google Aps.  Go to www.google.com/a and “get the details.”  This option gives you less control over the domain, but the email address will be the same.

Very Good

If you hang your license and a recognized brand in the industry like Coldwell Banker or Remax or otherwise and you have the ability to use yourname@yourbrokerage.com this is a solid choice.

Good and Acceptable

Finally, if this still seems like too much tech, a Gmail address is the most “acceptable” free email account you can have.  Many internet savvy people understand the power of Gmail and will view this address as novice, but less so that any other web based email.  Even if you do get a domain, getting a Google account and Gmail address should be on your list for reasons I’ll address in another post.  If any variation of yourname@gmail.com is available grab it now before its gone!

Poor

An email address with yourname@someinternetservice.com, which usually comes with cable or DSL service, advertises that you operate your business out of your home and should be avoided.  It is one step up from other web based free email accounts, but having name@comcast.com or name@qwest.com as your domain is not professional enough in today’s market.    If you are using the dreaded @aol.com I can assure you that you are losing almost all internet savvy clients!  It screams “rookie.”  The most common email addresses, like name9876@hotmail, something@msn, and kindofname@yahoo.com are fine for personal addresses but should not be used as your professional email address.

Agents:  Please don’t advertise on your card that you are behind the technology curve by using a free web based email address.   It is fairly simple only costs $10-$20 to purchase a domain name and the accompanying email address. I guarantee it will help portray a better image to your prospects!  Do it today!