There are advantages working with a Willis and Rife Realty Group agent.
In the grand scheme of a lifelong career, 5 years seems like a drop in the bucket. Yet, this was a milestone that I not only looked forward to, but set as a personal goal. Why? Because of a looming statistic I was informed of early on: 85% of licensed agents get out of the real estate business before 5 years are up. Beyond that, another 85% of people in Ohio who take pre-licensing classes never actually go on to get licensed.
In this world of HGTV reality, the business has become very attractive to a good number of people. In fact, there are approximately 3000 agents in the Dayton MLS alone, but it’s safe to say that a small fraction of that number actually do the majority of sales. I had my own litmus test in finding successful Realtors to work with when I was in the midst of my 20 year career as a loan officer: find their why.
There was a vast difference in the professional trajectory between a person who wanted to be a Realtor because it was “flexible”, “part time work”, and “easy money” and the people who got into the field simply because they love the business and can’t imagine doing anything else career wise except being part of the home buying and selling process. Excitement and enthusiasm for field is imperative to a successful career. In short, if Real Estate isn’t an itch that must be scratched for you, then the odds are already against you.
So, you have the itch, it needs to be scratched. Great start -- now what? There are a few basic tools that can definitely help any new Realtor starting out in the business.
FIND YOUR NICHE
You are now competing with thousands of others in your market. Differentiating yourself is essential for survival and growth. For me, I started this leg of my career journey at a property management company. I learned the ins and outs of leasing, problems that occur and had my first exposure to investment real estate -- which is the exact niche that gave my business partner, Jonathan, his leg up in the Realty world. We went on to own investment properties together, which greatly helps both of us to relate to potential clients. Not only can we help other investors, but we can also help that couple buying their first home in spotting issues beyond the aesthetics that they may not think to look for.
Spend some time finding your niche. What do you know better than the average Realtor? What value can you add that goes above and beyond expectations? Maybe it’s staging and decorating. Perhaps it’s a specific area or neighborhood you live or work in and know better than anyone else. It could be new construction, or a passion for renovation and rehab. Don’t forget that demographics can be a niche, as you could focus on baby boomers downsizing or first time homebuyers… the list is endless. But define your niche and excel in that role. No need dabble in as many areas as possible, but rather by focusing and becoming proficient in a specific area, you will naturally evolve into related areas.
THE POWER OF NETWORK
From your niche, it is time to build your network. For us, we learned early on that you simply can’t be an expert in investment Real Estate without a network of contractors, commercial lenders, title companies etc. You can’t know everything! It is essential to have a team of trustworthy experts surrounding you to support you. Think about the vast number of people with various talents that go into the different arms of the Realty world: lawyers, plumbers, electricians, contractors, cpa’s…… the people who fill these roles can change and evolve with you as business grows for you and for them.
Quite frankly, network is everything. Its a dynamic relationship built and tested over time and projects. You will find that these aren’t just service partners, but rather people you end up doing life with! Partnering with the right people and having mutual respect will result in a beneficial relationship for both you and the people in your network. It leads to loyalty and prioritization. You should always be mindful of how your benefiting your partners.
A big part of your network is the people you associate with in your brokerage. In Ohio, you are required to work under a broker. Personally, I started with a large, National franchise as I believed a well known broker name would offer some legitimacy to me just starting out in the business. The training I received taught me how to sell the company, and also consisted of in house lenders, title companies and home warranty companies all giving their best sales pitch. The issue with this is that the training was in no way niche based. It is impossible for a large company to train you in your personal niche because it is more of a one size fits all type training.
Another important note is that the chasm in cost structure across brokerages is vast, and something to be very mindful of when contemplating who you align yourself with. A commission split of 35-50% is actually very normal for large brokerages. Others charge a transaction fee of a flat monthly fee. Willis and Rife charge agents a flat $295 fee per transaction. In fact we recently had an agent receive a $10,000 commission check that he only had to give our brokerage $295 of, whereas at his previous brokerage, he would have handed them 50% of his take home pay. It only makes sense to do your homework on these options, and find a company that minimizes your cost.
Beware of hidden costs. Some brokerages upcharge for things like signs and lock boxes -- watch for it. As a new agent, you are a target for what we call the “good idea fairy”. People will want to sell you all sorts of things. One such thing is leads, and while a good lead can be worked and are legitimate, analyze the cost benefit. We would advise to avoid costly software programs or CRM’s, as they are unnecessary and at times even lead to clients receiving marketing from a company even after you have left it. Also refrain from paying big bucks for newsletters that most people will never even read. Be wary of long term contracts. Analyze every dollar you spend. If it doesn’t make money or drive traffic, avoid it.
BRAND YOURSELF, NOT A COMPANY
The solution we arrive to, is that every Real Estate Agent who is truly serious about their craft should aspire to become a broker. In Ohio, you need the equivalent of an Associate's Degree to start the process. Hondros offers courses for about $3,000. Once the educational requirements are satisfied, you will need to take a test that is very similar to the licensing test that made you a Realtor in the first place. While insurance and office space are necessities, they are more affordable than you may think. We have gladly and proudly supported agents within our company in this type of endeavor.
It all goes full circle. Your niche will lead you to growing your network which will lead to a built in support system for a potential brokerage. It may sound simple, but the best and most successful systems truly are. Keep relationships legitimate and real and in doing, so, business will flow from them.
Something that we take pleasure in doing is taking people we have met and worked with out for coffee, or to happy hour -- even taco Tuesday. By reaching into our contact list and touching base with people who are important to us, we nurture very real relationships with people. We have found that most of what we do, comes from relationships that are real. I would encourage you to get eye to eye with your centers of influence and see how easily personal conversations can turn into mutually beneficial business opportunities with people you trust. It comes down to the motto we have built our business on…
We are a couple of guys, not gurus, and we practice systems, not schemes.
Scot Rife, managing broker of the Willis and Rife Realty Group and co-host of the Real Estate Systems Podcast
Real Estate Agents: Be safe out there.
The Real Estate Bottle Rocket;
May Be Hazardous to Your Wealth
In the world of real estate investing, whether a massive commercial venture or a small portfolio of residential properties, it is vital to be able to bring together the skills of many players to accomplish the goal. Investors, Realtors®, contractors, lenders, and managers must coordinate their efforts to move toward the common benefits of profitability. Having a well-oiled team, committed to each other and the collective win is a great situation, but it takes significant effort. The reality of the matter is that in real estate, as with many other aspects of life, you will be dealing with disproportionate commitment levels and waning work quality. As the honeymoon phase passes, what was originally seen as a wonderful opportunity to build wealth, earn a great weekly wage, or expand a client base, can become overshadowed by the day to day. The “shiny” can wear off and the vigor with which you once completed your tasks slumps into drudgery. We often refer to this as the “Bottle Rocket Phenomenon”.
As with any growing business network, key players and their positions can rather naturally have to change, especially if the player shows himself or herself to be a bottle rocket. How do you know? Well, it’s pretty simple. If a team member comes into the fold and displays a meteoric rise in the in the skill or scope of their work that, after feeling they’ve solidified their position, drops of dramatically to the detriment of the common goals, YOU HAVE A BOTTLE ROCKET. You light their fire. They ignite and launch vertically. You gaze with wide-eyed wonder and excitement. Then………BOOM! It’s over, as the shredded debris falls to the ground. Dramatic? Probably yes, but we’ve all seen it.
Bottle Rocketry can be found at every level of the real estate business. For most investors the first exposure is with the contractor that comes out of the gate strong, knocking out projects in epic high-speed fashion. Once they sense that you’re a captive customer other jobs can start to slide in and push you to the back burner. (BOTTLE ROCKET) This is why when you find that contractor that is able to maintain a strong pace of turning your rehabs, charge you fairly for quality work, and prove themselves a committed member of your team, you do everything in your power to treat them right and keep them. (NOT A BOTTLE ROCKET) Pay them promptly, buy them lunch every once in a while, and above ALL else treat them as a teammate!
Contractors are in no way the only ones. We’ve had experience with bottle rockets in most facets of the business. The most important thing is that you recognize it, take the necessary corrective steps and move forward. Don’t dwell on it, it happens to everyone. Learning from every little hiccup will over the long term make you better at what you do.
My business partner and I were talking about this topic the other day. Insightful as he is, he says, “We must also strive to avoid becoming bottle rockets.” Man he’s good! And he’s right. To go down this path, we must remember that every time we point a finger we have three pointing back at us. Owner, Investor, landlord, however you define your part, we must hold ourselves to the same high standards we require of others. It’s fair to say the real estate investor must continually strive to better themselves in service to not only their bottom line, but to every player on their team. We may own the property and write the checks, but this is a leadership position and with that comes responsibility. We use terms like velocity, momentum, progress and growth which all suggest a strong movement forward. This requires a leadership mindset. Even better, the “servant” leadership mindset.
So remember, real estate investing is a long, slow, uphill marathon. The participants who are able to maintain a steady strain of forward momentum will, in the end, be the victors. As I right this, pausing regularly for introspection, I recall the famous quote by Teddy Roosevelt, “I wish to preach not doctrine of ignoble ease but the doctrine of a strenuous life.”
If real estate investing was so easy, everyone would do it, and you are not everyone, so give some thought to this topic. And remember, Bottle rockets are hazardous to your wealth.
Jonathan Willis, owner of the Willis and Rife Realty Group and co-host of the Real Estate Systems Podcast
Agents: Is your tech authen-tech?
1. Commit to working with one agent who will work hard for you on your behalf. Keep in mind that you do not have to pay this Buyer's Agent. The seller of the home you buy pays your agents commission. It's also good to have a lender on your team. We can recommend some great Loan Originator that done a great job for our clients.
2. Send all listings you see online and would like to see in person to your Buyer’s Agent. Zillow is a great encyclopedia of Real Estate data. However, when you're in serious home buying mode, we recommend using the most up-to-date resources such as HomeSnap. It's also a good idea to have your agent set up a search in the MLS. Your MLS Search will allow you to know immediately about new listings and price drops. You also won't be chasing homes that are already under contract. Your agent will then organize a home tour to allow you to see those homes quickly and efficiently.
3. When you find the right home that you would like to buy, meet with your Buyer’s Agent to discuss an offer. In this market, clean, well-priced, homes move fast, so it is important to act quickly! The inexperienced buyer often judges a good deal by how low below the asking price they pay. The relation between the offer price and the asking price is not as relevant as the difference between the offer price and what other buyers have recently paid for similar homes. Your agent can help you research recent sale history and formulate a good bid.
4. Once you have negotiated a fully accepted offer, then the time clock begins ticking. It is important to start your loan process and schedule your inspections. We know a couple inspectors that has done a great job for many of our clients. Be sure to provide all paperwork to your loan officer as soon as possible so that there are no delays in getting your loan approved. And be sure to complete your inspections quickly so that you can address any issues within the time frames delineated in the contract.
5. It is a good idea for you to attend the inspection. Be sure to understand and address issues that affect the livability and safety of the house.
6. After the inspections, you typically have an opportunity to ask that the sellers make repairs to the home before closing. Your request should include safety and livability issues found by the inspector. It is not appropriate to ask for cosmetic or maintenance items to be repaired by the seller.
7. Once you have negotiated the inspection items, then you should focus on getting your loan closed. Contact your loan officer regularly to make sure things are moving forward. And be sure to provide any paperwork or documentation quickly along the way.
8. Before closing, you will need to set up your homeowner's insurance as well as make preparations to get the utilities put into your name.
9. Do not make any other purchases with credit before closing on your home.
10. Before closing, you will need to wire funds to the title company for the amount of your down payment and closing costs. Your loan officer will provide the precise dollar amount for that check within 24 hours of the settlement. It's also important to bring your picture identification to closing. If you are married, your spouse will also have to attend closing or make arrangements to sign in advance or by power-of-attorney.
11. When you get to the closing table, everything should be correct by that point. Don't hesitate to ask if anything doesn't look as disclosed to you. Your agent will be by your side to address any questions or concerns.
As my business partner, Jonathan Willis, and I seek to share what we’ve learned in Real Estate with our clients and friends, we have come across a recurring theme, and that is “systems”. Some might expect Real Estate investing is about get rich schemes, or visits from the good idea fairy, but really, it’s much more simple, but to us, it’s just as exciting. Systems are powerful, and when you find a good system, and implement it consistently, you can see a mighty effect. We’ve gone though some trial and error to refine our systems and hopefully can save you some of that.
One of the first systems we developed is the steps immediately before closing. What you do before closing on an investment property can have a huge impact on the success of the project. I purchased my first rental property several years ago and it was a turn-key condo. Literally, all I had to do to this place was change the locks and fix a handle on the toilet. This could be done in an hour, but as I recall, it took me about 2 weeks to get out there and do it. Why’d it take so long? I was busy, and I didn’t have the right mindset regarding this investment. I was looking at it as more of a hobby than an investment and was not running it like a business. For me, that was a huge benefit of finding a business partner with a level of intensity that would not let me do that anymore. Moving on to the second property, we had our ducks-in-a-row. Prior to closing, we had our insurance set up and wired our funds, met our contractors for estimates and were well prepared. However, I remember sitting at the closing table and had a “oh-crap” moment remembering I forgot to call about utilities, and fortunately, Jon had remembered. As we went from 2 properties to over a dozen, we didn’t take these steps to chance and developed a process. At one point we were using a spreadsheet, but since then, it has become more of a habit.
Here are some essential steps prior to closing…
Utilities: 2-3 business days prior to closing call to get water, gas, and electric in your name. Your property will likely need some renovation and you want to have contractors lined up day 1 to get started. Nothing frustrates a crew more than showing up and not having power and water. You also want to make sure there are no unpaid water bills from the previous owner. These follow the property and if not discovered prior to closing, they can be your responsibility. It is not the title company’s responsibility to check for this, so the buyer needs to make the call. If the property has been vacant for a while, and utilities are off, this may need to be done earlier in the process to see if permits are needed and inspections are required.
Insurance: My insurance agent told me about an investor that over 30 days after closing on a rental property has still not purchased dwelling insurance. This is an epic fail for obvious reasons. Start working on this a couple weeks before closing so that your insurance agent has time to explore options. Our approach is to have one agent partner we trust that handles all of our properties rather than shopping around to different agents each time. He does the shopping for us and we have one point of contact.
Dumpster: Got demo to do? Have the Dumpster delivered day 1. I personally love “Dumpster Days”. There is a great sense of satisfaction getting the old junk out of the house and preparing a clean slate to start working with. I’m not known for my home improvement skills beyond calling the pros saved in my phone, but everyone can get involved in Dumpster Days and jump-start a project.
Contractors: Meet with your contractors prior to closing at the home. Have estimates prepared and a plan of action. We will hold off on buying materials that can’t be returned such as windows in case closing falls through. However, the windows can be measured and ready to order as soon as we close.
HOA: Make sure you have contact information so you can set up payment of HOA fees through on-line banking.
Final Walk Through: I’ve seen Air Conditioning units stolen just prior to closing and have heard of break-ins where plumbing has been stolen. It’s a good idea to do that final walk through to make sure there are no unpleasant surprises.
Funds to close: Whether you’re wiring money or bringing a cashier’s check. This is an important step the day before closing. Also make sure your Drivers License or other picture ID hasn’t expired. You will need that at closing.
Starting your investment property project off on the right foot will help you finish strong. You WILL have surprises along the way, but you can minimize their impact by being prepared up front.
Scot Rife, managing broker of the Willis and Rife Realty Group and co-host of the Real Estate Systems Podcast