Why Invest in Apartments

There are many ways to invest in Real Estate so why invest in apartments?  What is so great about them in comparison to fix and flip, lease options, and all the other residential investing strategies?

There are 7 key reasons why you should invest in apartments:

  1.      Reduce risk

The first investment property that I bought was a single family house.  The first time it went vacant, I had a big burden to pay the mortgage payment on my own.  In contrast, I also owned a duplex at the same time and it was not as big of a burden when one of the units went vacant.  I still had the other tenant paying me while I was making repairs and marketing for a renter.  Now, when my Dad had a unit go vacant at his 126-unit apartment complex, it barely dented their cash flow.  In fact, they anticipated  a certain amount of vacancies every month and were pro-active in filling them up.  He never had to risk his personal financial well-being because he always had a majority of the tenants paying his mortgage payment.

  1.      Principal reduction

In the same way, while units are full and the mortgage payment is being made every month, the tenants are paying down the debt that you owe the bank little by little.  The same is true in residential investing, however when your mortgage payment is $10,000 per month instead of $1,000 per month, you are reducing the principal by 10 times as much.  When it is time to sell or refinance, you can put that money directly into your pocket.

  1.     Appreciation

In commercial Real Estate there are 2 ways to benefit from appreciation:  1. Natural Appreciation – Increase in value over time because of outside economic factors.  2.  Forced Appreciation – The increase in value because of internal economic factors.  Basically, what I am saying is that the first one is what most people talk about (Real Estate goes up through time) and the second one is where an investor makes an improvement to the property and forces the value to go up because a buyer is now willing to pay more for a better looking/performing property.  In commercial real estate, forced appreciation allows the investor to make much higher returns because the property’s value is normally appraised in comparison to the income that it produces where in residential the property is valued in comparison to the house down the street.  If you had a 10 unit building and you increased the rents by $100/month per unit, you would have an extra $1,000/month cash flow.  While that is great in and of itself, the bigger benefit lies in the form of forced appreciation.  If you multiply $1,000 x 12 to get a $12,000 increase in cash flow and then divide that by the market cap rate (let’s say it is 8% since I don’t know your market but that is close to the average), you would have increased the value of your 10 unit apartment building by $150,000.  Now, how much work is it to increase rents by $100/month?  Of course, the situation has to warrant that, but overall it is not much work.  I would say it is less work than flipping a house.

  1.     Market Cycles

All markets ebb and flow: supply and demand change.  The good news about commercial is that it tends to lag behind residential by 2 years.  So, what you saw in the market 2 years ago for houses should be happening in commercial right now.  That is a blanket statement because there are many types of commercial property, but for apartment buildings specifically, it tends to be the opposite of residential.  1 is booming while the other is busting.  If you pay attention to which is doing which and you time it right, you can buy an apartment building and do nothing more than hold onto it and make sure the management is being handled properly, and see a multiple 6 figure and even a 7 figure increase in value (depending on the size of the building) just by learning how to ride market cycles.

  1.     It’s easier at the top

There is less competition in commercial real estate investing.  People are scared of big numbers.  If you are over that, you should take advantage of your powerful mindset.  When you have climbed to the top and you are hanging out with the real estate elite, it is almost laughable how easy it is to make big money.  More big deals are done on the golf course, in private jets, at sports games, and other fun venues than in an office setting.  It is all about the relationships and when you have developed a few key relationships with A players, things will be easier, money will turn quicker, and bigger, better, and easier opportunities will come your way.  It seems like the guys who have success in residential are pretty private and don’t want to share their secrets.

  1.     1 Deal to retirement

Imagine having the education, mindset, and skills to acquire just one 100-unit apartment building.  If you were to use someone else’s money and understand the game enough to play it and you cash flowed a conservative $50/unit after paying for management, debt service, and all other expenses, you would have $5,000/month coming in to your household forever (if you choose).  Most people can live on that.  If you can, you are now retired.  When your income is higher than your expenses and you don’t have to work to earn the money, you are retired.  In residential, it will take a lot more than that to retire.

  1.     Timing

Right now, with all the foreclosures, people losing their homes, job security down, and confidence being low, people are downsizing left and right.  They leave their home and rent an apartment.  That creates less supply, which creates more demand, which increases the amount of rent the owner can charge.  Using the cap rate formula, your wealth will increase more dramatically in these times than ever before.  Not to mention, the banks are looking for solutions to this nightmare of theirs, and are more creative and more negotiable than ever before.  You can get a great price on a great property and see the value go up faster than ever.

Investing in apartments has done my family well.  My Dad has been in the Real Estate game for over 30 years and I grew up learning about it.  He has experienced most of the things there are to experience in Real Estate and he chooses to invest in apartment buildings.  I have been in Real Estate since 2002, and I have bought and sold many variations of Real Estate and I too am continuing down the multi-family real estate path.

Wholesaling Real Estate

In this article, I am going to discuss a quick way to make money in Real Estate that requires little money and can be highly profitable. Wholesaling Real Estate is the highest dollar per hour activity that I have found in Real Estate.

I will explain why and some of the pitfalls to avoid…

– Wholesaling is getting a contract on a property for cheap, marking it up a little bit, and then selling it for cheap to an investor by assigning your contract to them. There are many ways to do wholesaling but that is the most basic form of it.

– Wholesaling is similar to brokerage (or being a Realtor) with the main difference being the licensing requirements. A wholesaler is not regulated by the government in the same way that a Realtor is. They still have to follow the law, but they have ultimate control of the process and report to no one.

– This is the same thing as Wal-Mart does, eBay business owners do, auto dealers do, and most businesses have some component of this in their business model. Realtors tend to work on the retail side of the business and have a goal to sell each property for the highest price possible for their client who is paying them a commission. Wholesalers have a goal to buy properties as cheap as possible and offer it for an attractive price to a cash investor.

– In order to buy properties for a big discount, the wholesaler must get REALLY good at marketing. This means they will have to become experts at sending out mailings, advertising in newspapers, internet marketing, networking, socializing, talking, and any other way imaginable to get leads coming into their business.

– Then, they get good at handling those leads. They talk with property owners on the phone and weed out the bad leads. They meet with owners who are motivated to sell. Do not confuse motivated with desperate. This is the part where Real Estate investors get a bad reputation: Sometimes, people are so desperate that an investor preys on them and takes advantage of the situation and rips them off. This is not wholesaling, this is scamming. A real wholesaler discloses everything. They tell the owner that they make their living by getting a discount on the property in exchange for a quick, cash closing so that they can move on with their life now rather than wait 6 months for a Realtor to sell it and pay 10% in closing costs.

– Wholesaling does not require much money at all. You do not personally need to have the cash to buy the property. The person that you are selling/assigning the contract to has the cash. The only thing you will need money for is marketing. You can actually do this for free. There are many ways to wholesale a property and never, ever spend a dime. The higher your budget, the more leverage you can put in place which ultimately means that you will close deals sooner and will require less of your own time.

– Cost to get started: Free, if you are very good at googling. If you want quick results, you should have at least $2,000 available and upwards of $10,000 depending on how much you want to hire out vs. do yourself.

– How much time will it take to start making money: Usually between 1 month and 3 months if you are aggressive and work smart.

– Income Potential: Unlimited. The guy who taught me how to wholesale makes $2,500,000 per year and has a few employees.

I know quite a few wholesalers who are not real aggressive and still make over $100,000 per year.

I have heard of wholesalers who work with commercial properties that make $1,000,000 + per deal. Imagine doing that 10 times per year!

I have also met dozens of investors who got all fired up about this business model and never made any money. Similar to the brokerage idea, it depends on why you are doing it, and how motivated you are.

This business model takes a lot of guts to get started because you will be making low offers and you may fear rejection. Once you do that 10 times, it is a piece of cake and once you close a deal and the reality kicks in that you actually did that homeowner a good service, you will feel proud about your business and the sky is the limit.

Real Estate Networking

Real Estate Networking is a great way to drum up some new business and close more deals.  As it is said in the world of business, “Your net worth is directly tied to your network”.

The more people you know, the more people that know you, and the more that your brand and business motto are understood by your business affiliates, the more your business will thrive.

If you don’t already have a thriving business full of referrals and incoming leads, then Real Estate Networking is a great method for you to understand.

In this article, I am going to give some tips and cover how to get started with building your pipeline and ways to establish strong relationships that last for years to come.

7 Keys to Grow Your Business Exponentially Through Real Estate Networking:

  1. People will do business with other people whom they like and trust

Think about the last time you bought a car at a dealership, the last time you purchased insurance, the last house you bought, or the last time you bought anything through a salesperson.  Now, think of the times when you didn’t buy something because you couldn’t stand the salesperson.  People will buy what you are selling if you are likable, trustable, and provide your customers with good value.  If you establish relationships and grow your network, referrals will be almost as valuable as personal relationships.

  1.  Hang out in your favorite places

As a general rule of thumb, people like people with whom they have a lot of common interest.  If you like to golf, read, exercise, garden, speak, serve or any other activity you enjoy, you can network with people who you naturally enjoy spending time with.  Make sure everyone in your group, class, team, or association knows EXACTLY what you do and make it a point to hand them a brochure, take them out to lunch, or otherwise discuss your venture (after you have built rapport with them).

  1.  Join networking groups

The quickest way to get in touch with other business professionals in your area with whom you can publicize your business in an accepting environment is the Chamber of Commerce in your area.  Most all cities, towns, villages, and counties have COC groups going on every week or every month.  They meet for breakfast, lunch, dinner, happy hour, etc.  They allow for each member to share their business motto at each meeting and designate time for socializing.  This method may take some time because it may take you a while to get to know the other business owners but the good news is that there are a lot of concentrated business owners in one spot and the fruits that will come later can be tremendous.  Since most networking groups do not have an abundance of apartment building owners, you will probably be best focusing your efforts on raising capital; everyone is looking for a better return on their money.

  1.  Become an expert at asking questions

Most people you network with will get frustrated with you if you pitch your business and expect them to hand you leads.  That is not how it works.  The best way to get their leads is to gain their trust and prove to them that you will provide their leads with value.  The best way to do this is to ask them good questions.  If you are focused on you, they will lose interest in you.  If you place your attention and focus on them and their business, they will quickly form a liking to you.  

Here are a few good questions to get you on the right track:

-How did you get started in your business?

-What separates you from your competition?

-What kind of trends do you see coming in your industry?

  1.  Give to receive

People love when other people send them stuff in the mail, hand them a gift, or send them a referral.  If you set time aside for each person that you meet who you think will be a good referral partner, they will see you as someone who cares.  Don’t get over the top with this, but perhaps, just send them a hand-written note after your first contact.  Then, set a task for yourself to contact them again within the next few weeks.  This time, you could offer to meet them for lunch or send them a referral.  The best way to get referrals from an influential person is to first give them a referral.  The law of reciprocity will take over.

  1.  Virtual Networking

This may be the quickest way to get some relationships started.  If you google “your type of business” and “blog”, you can start to meet other business owners who are in your field.  For example, type in “Chicago Real Estate Investing Blog” in google and go down the list of the search results and start to see what other business owners in your industry that have a different niche are doing and see what you can do to serve them.  You may want to type in similar keywords and instead of blog, type in “forum” to find groups of people in your industry.

  1.  Follow-Up

You may have heard the saying “The fortune is in the follow-up”.  You can go to endless seminars, networking groups, forums, and interest groups and if you do not follow-up with the people you meet, 99% of your efforts will have gone to waste.  Most business owners are not serious enough about their business to do this step and if you can be in the 1% club, you will get a ton of business.  It does not have to be anything fancy, but when you call them back, talk to them like you would a friend, strike up a conversation, and generally find what would make a good referral for them.  Then, they will most likely ask you questions about your business and you will be off to a nice, profitable, give-and-take referral partnership.

These methods apply in almost any business.  When you are in real estate, networking is an important component of a thriving business.  Real Estate is a people business and networking is a people prospecting activity.  If nothing else, this will help you brush up your speaking and connecting skills.  Then, when you are in front of your customers/sellers/buyers, you will be more professional.

Real Estate Direct Mail

If you are in real estate direct mail is one of the better ways to get your pipeline full of deals. In this article I am going to cover the main benefits of using direct mail in your marketing and prospecting campaigns.  I will also give you an easy to follow process and provide you with resources so you can use this method ASAP.

One of the biggest benefits to direct mail is the leverage you gain. Sending postcards, yellow letters, or other letters will allow you to send one message to hundreds of prospects.  The biggest challenge investors face when deal sourcing, is finding the time and/or patience to sort through hundreds of potential deals to find one nugget of gold or needle in the haystack.  

Direct mail solves that problem…

With direct mail for Real Estate, you create a letter just one time that you want to send out to the apartment owners.  Then, you can mail it to one, dozens, hundreds, or even thousands of prospects at one time.  This way you can get the message out very quickly to many potentially motivated sellers.

Here is a 5 step process that I use when deal-sourcing through direct mail:

  1.  Determine my market:  Do I want to look for small apartment buildings like 2-4 flats?  Maybe 6-50 unit buildings?  Or something bigger like 50-200 unit deals?  The smaller they are, the more local I can be.  If I want to mail to 1,000 owners of apartment complexes between 50 and 200 units, I will probably be picking 2 major cities around the US.  If I am going with the smaller deals, I can pick one tertiary market of a major city.
  1. Create a mailing list:  The fastest way to create a mailing list is to look for a list broker and pay for their service.  You can google “list broker” plus the name of your market area.  For example, you may say “list broker in los angeles ca” if your market was Los Angeles.  Another way to go is to go down to the county courthouse for your market.  You can ask the information desk where you can pull public records for Real Estate taxes.  Then, look for apartment buildings that meet your criteria.
  1.  Create your letter(s):  You can create a personalized letter which you can write by hand or print from a computer.  By hand takes forever.  If you are only sending a few letters, this may be the best way.  If you are sending at least 100, I would recommend adding the names and addresses to a database so that you can print each letter customized to the owner.  The letter can be very salesy, but I do not recommend that.  If you speak your own language in the letter and you get a call from your letter, it will be much easier to have a real conversation with the owner so that you do not have to feel like you have to maintain someone else’s personality.  Here is a link to one of my letters so that you can see an example of what you might want to say.
  1.  Mail your letters:  Now that you have everything ready to go, all that is left is mailing them.  If you have lots of time, you can sign, fold, stuff, stamp, and address the envelopes yourself.  If you do not have time, you can hire someone you know for 10-15 cents per letter to get them ready for you.  Once they are signed and sealed, you can take them to your post office and expect the calls to start coming in.
  1.  Be ready to talk to owners:  Knowing what to say and being pro-active about your deal criteria will go a long way in building rapport with the owner which will go along way to getting them to like you which will go a long way to getting a deal.  Phew, that was a crazy sentence.  You can build your own script or you can use my apartment building seller script.

Direct mail is not cheap but it is effective and well worth it.  Plan on spending $1/letter.  You can get it done for less, but that will allow you some room for error.  If you can afford $100/month, then you can send 100 letters/month.  If you have $1,000/month in your budget, then you can send 1,000 letters/month and so on.  The key to Real Estate Direct Mail success is to maintain consistency.  This is not a 1 pop shot.  It will take about 7 letters on average to get the prospect to think that you are credible and serious.  The owners who are motivated right now will call you anyways regardless of how many letters they have received from you.  It’s always different but if you plan your next year of direct mail campaigns right now, and stick to it, you will have a very good chance of making very good money.

Real Estate Cold Calling

If you are building your apartment building business, you are probably looking for some great ways to talk to sellers.  When you are in Real Estate cold calling is usually the fastest way to get your business running profitably.  It is not the easiest or the most fun, but should definitely be added to your list of prospecting activities, if it is not already.  In this article, I am going to give 5 tips to help  you have success making calls.

Cold calling has  a bad reputation because people think it is all about rejection.  Although you will get a lot of that, you will also get success and depending on why you are in Real Estate in the first place, the joy of success should overcome the agony of rejection.

Making calls every day can actually be enjoyable.  You just need to have the right mindset.

Here are 5 tips to ensuring cold calling success:

  1.  Mindset

– Think about your ideal prospect.  Do they want to sell their property or do they have to?  If they have to, then you are doing them a great service by providing a solution to their problem.

  1.  Skillset

– Are you a rookie or do you have a lot of experience in commercial real estate?  If you are a rookie, than you have to remember that with practice will come experience.  Get a good script going, memorize it, practice it on your own, and then throw the script away.  The main idea is to be conversational.  You will have some key pieces of information you need to get out of the call, but aside from that, you are looking to connect on a personal level with your prospect.  If you are good at listening, good at asking questions, and excellent at building rapport, you will have success.

  1.  Plan

– Prospecting takes time, energy, and patience.  Just know in advance that you will not get deals under contract every day that you make calls.  You will have to go through hundreds of calls before you really start feeling comfortable with a solid pipeline of deals.  Plan to make 10 calls per day or any other number that you can realistically handle.  Also plan to spend several months doing this so that you get in the habit and make it a part of your business indefinitely.

  1.  Resources

– In order to have a good pipeline, you will need a good contact manager to track your prospects.  You will also need a good list.  You can google “commercial real estate crm” and “commercial real estate list broker” and come up with some good stuff.  I use www.prospectnow.com because it is an all-in-one solution.

–  You will also need a good script.  I would recommend making one that fits your personality which will get the owner to like and trust you in the short amount of time that you have with them on the first call.  Here is a copy of my script.

  1.  Coaching

– This may be the most vital of all of the tips.  A good coach will hold you accountable to your actions.  They should specialize in your niche as closely as possible.  They can provide you with resources, networking, and almost unlimited opportunities because they can see things from a different perspective and do not have the same emotions about your business that you do.

Follow the steps above and you should be well on your well to your next apartment building deal.  

Real Estate Classifieds

One great way to find apartment building deals is to look in the local Real Estate Classifieds every day or every week.  When owners want to test the market or they choose not to use a commercial broker and sell their commercial property “by owner”, they post an ad in the local paper.  Staying on top of the ads is 1 way to keep a competitive advantage in your market.

To find prospective apartment building deals for sale, look under the “investment property” or “real estate for sale” section.  Depending on the size of your market, there may be several for sale or none available at all.  If there are none, do not be discouraged.  This may be a good opportunity because if you persist, you may be the only one that sees the ad the day it comes out and have little to no competition.

One reason why real estate classified ads work well is because the owner probably believes in pinching pennies.  If they are not willing to hire a broker because they want to save a little money, there is also a good chance that they followed this philosophy in managing the property.  This might mean that you find justified reasons to ask the owner for a discount if the property has deferred maintenance.  Also, they probably have more room to negotiate since they are not paying a broker.  If you are really lucky, they may even be asking less for the property than what you believe it is worth.

Real Estate classifieds also come in the form of internet advertising.  You do not have to rely solely on the local paper.  Some of the more obvious places you can look which probably have a lot of investors competing against you already include www.craigslist.org, www.loopnet.com, and www.realtor.com.  If you are not familiar with these, they are worth a look.  There are deals on these sites and they do provide you with a great opportunity to meet local owners, brokers, and other commercial industry professionals.

Some of the less obvious sites you can check out are:

www.propertyline.com

www.cimls.com

www.cityfeet.com

www.costar.com

Regardless of where you go to find your classified ads, there are a lot of deals out there for you to start sorting through.  Just like with any other lead generation strategy, the more property you weed through, the closer you will get to the needle in a haystack deal which could end up netting you millions of dollars.

Follow the steps above and you should be well on your well to your next apartment building deal.

Real Estate Canvassing

When I got started in the business (with very little money but plenty of time), my Dad taught me real estate canvassing to meet owners.  He knew that I did not know the market and the best way to learn it was to go out and see the apartment buildings themselves.

In this article, I am going to teach you what my Dad taught me.  I am going to cover what canvassing is, the best way to get started, and how canvassing will translate into money in your bank.   By the end of this article you will have a tool in your tool belt that most successful brokers and investors implement in their business but don’t talk a lot about.

Real estate canvassing is a very effective method for the newer investor/broker.  The main idea is to get in your car and drive by all of the apartment buildings in your market.  In doing this you will bump into owners, brokers, appraisers, and all sorts of industry specific professionals.   Start up a conversation with them, let them know what you do and how you may be able to help them and you will begin forming relationships.  

This works best in the spring time when owners are out organizing and spring-cleaning.

The first step in canvassing apartment buildings is to go down to your county courthouse and ask to see the plat map for your town or market you are interested in.  If the area you are interested in is un-incorporated, you will need to go down to the township hall to get this information.

Find out what zoning district multi-family properties are in and look for that code on the map.  You may be able to buy a map to take with you or they may even offer you one for free.  If not, ask the clerk if you can take a picture and if they do not allow that, record the streets that the apartment buildings are on.

Once you know where the apartment buildings are at in your market, drive by them and take pictures.  Also, jump out of your car and count the amount of electric meters, gas meters, and air conditioners.  This will tell you how many units there are and/or who pays what utilities.  In doing these things, you will get a great start in building a database and to know more about the properties when you are talking to owners.

A word of caution: some owners will feel threatened by your action.  They don’t know who you are and what business you have on their property.  Just tell them that you are an investor in the area who is trying to get to know the local market better.  If they ask you to leave, then adhere to their request but unless there is a “no trespassing” sign posted, you should be ok.  I actually had the cops called on me once and when they arrived they asked who I was.  I showed them my business card and they told me it was legal.

Tip:  Look for properties that have tall grass, peeling paint, or any other signs that the owner is not managing the property well.  These are usually more motivated owners.  Look for a “for rent” sign and call the owner.  If there is no sign, knock on the tenant’s door and ask for the owners number.  Let them know you would like to make some repairs to the building and need to contact the owner to give them a quote.

Lastly, you are probably wondering, “When/how do I make any money out of this strategy?”.  Remember, this is one of the tools in your tool belt.  You need to be making a lot of offers in order to find deals that are priced right.  The more exposure you have in your market, the more owners you will be talking to and making deals with.  Although this is not the fastest way to your first deal, this is probably the best way to build a thriving business if you could only pick one tool.

It will probably take you a few weeks to get to the point where you are making offers.  It will probably take a few months until you get to the point where you have a property under contract and then a couple more months to close.  So, if you put all of your focused effort into this one strategy, you are probably looking at a 6 month timeframe until you are cashing a check.

If you are a broker, you already know how you can make money at this.  If you are a newer investor who does not plan to get a license, you can wholesale the property.  If you find a good deal and you have a nice database of owners in the area, you can call all of the owners when you get a contract and ask them if they are interested in the property.  All you do is sell the contract to them.  You contract the property for one price, you mark it up a little bit, and sell the contract to another investor for another price.  They will use their funds to close, so you can do this with virtually no money.

When I say mark it up a little bit, I am comparing the dollar amount to the value of the property.  A little check in commercial real estate is around $10,000.  An average check is probably more in the range of $50,000 and some go up into the millions.

Although this strategy isn’t the quickest, it is well worth doing.  You may also want to add more tools to your tool belt.  

Follow the steps above and you should be well on your well to your next apartment building deal.

Multi Family Buildings For Sale

If you are investing in this market, you are probably scratching your head looking for multi family buildings for sale. There are plenty of deals but lots of misinformation. The internet has created a frenzy of promotional offers and get rich quick ideas and those looking to earn a quick buck are fast to solicit properties which they have no control over.

In this article, I am going to help you find REAL deals so that you can save time and work efficiently in your business.

7 Ways To Find Great Deals on Multi Family Buildings For Sale

  1.  CCIM.com – This is the most under-utilized and valuable service that I am aware of.  It is free and it contains real nuggets of gold.  Of course, you can go to http://www.ccim.com and find all kinds of resources about investing in commercial real estate, but the gold is found at http://findaprofessional.ccim.com/search.  At that little-known link, you now have access to some of the best, most experienced commercial brokers in the market you are interested in and the property type you are looking for.  Treat this information with respect because if you can nourish the relationships that you have the ability to develop, this may be the only resource you need to find great deals on multi family buildings for sale.
  1.  Evictions Court – If you own any rental property and have been through an eviction, you have seen a concentrated group of frustrated landlords.  They are not ALWAYS looking to sell, but a good chunk of them are.  Just go down to your county courthouse and find the days and times of evictions courts.  Get in the habit of going to all of them.  Just watch your first couple times and see the frustration.  Introduce yourself and let them know you are interested in buying multi family buildings.
  1.  Canvassing – This is usually the best way to start finding buildings in your area.  Canvassing is driving up and down the streets and neighborhoods where the multi family buildings in your area exist.  You are not necessarily looking for buildings for sale.  The main point is to get to know your market, know the buildings, and actually find the owner out at the property.  You can uncover some golden nuggets if you are dressed well but not overkill, have a good conversation, and are good with followup.  This is also a great way to build your database.
  1.  LoopNet – Everyone goes to loopnet first to find deals.  This is a great place to get started because you can learn how to analyze deals.  Once you are past that stage, the main reason I would use loopnet is to source multi family brokers.  If you look for multi family for sale in your market, pull out all of the listings and call all of them.  Don’t do it just to get a deal, do it to build relationships.  Keep in mind that commercial brokers on loopnet are probably getting a lot of tire-kicker buyers.  If you are qualified, then show them that.
  1.  Direct Mail – Sending letters to building owners is probably the fastest way to weed through all of the potential riff-raff and get straight to a good deal.  This really depends on your budget.  If you have at least a few hundred bucks a month, you can go to the county courthouse, record all of the 5 unit and up multi family buildings in your market and send a series of letters to them.  You will get calls and most of them will be owners who are trying to get more than their property is worth.  Expect to get 1 good deal from every 100 owners you talk to.
  1.  Ads – Of course, putting an ad in the local newspaper is one way to get leads.  The bad news is that newspaper readership is way down because of the internet.  The good news is that most investors, whether buying or selling, do look at their local paper still.  Although, it is not the best way to spend your money, it is good if you have a sizable budget.  Also, you can advertise using Adwords on Google if you know of some good keywords that owners may be typing in.
  1.  Banks – Forming key relationships with asset managers in your local banks can be a great source of great deals.  If you can show that you are serious and qualified, you can work your way into getting direct access to OREO and pre-foreclosure assets.  If you are buying distressed properties or distressed commercial notes, this is a must.

How to Make Money as a Real Estate Agent

In this article, I am going to cover some hard-core, to-the-point, and un-biased information on how to make money as a real estate agent. If you are looking for more generic advice on getting your Real Estate license, click here to see my article on how to Become A Real Estate Agent.

The first thing we are going to talk about is what real estate agents do on a daily basis and what benefits and challenges this business model offers.

Next, we are going to cover why entrepreneurs choose to be a real estate agent and why many fail.

Last, but not least, we will discuss how to make money as an agent and how much money you can make.

Being a Realtor has some great perks and some pitfalls that you will want to avoid.

Read on to find out if brokerage is right for you…

Real Estate is not all glitz and glamor as many people think. It requires work! It means getting up early and staying up late at times. It means getting on the phone and calling people. It means spending some money on marketing expenses, office equipment, and sharing in commissions with your broker. It means negotiating contracts, meeting with lawyers, showing properties, helping clients with due diligence, and serving the needs of your clients.

I guess when compared with most jobs, that is not all that bad. It is especially not bad when you compare these things to the benefits that brokerage offers. My favorite part is a free schedule. I like to golf, and I do plenty of that. I like learning, and I attend lots of seminars, conferences, and networking events. I control my income. I control my appointments and my free time. I have no boss. I choose who I want to work with and I fire the ones I don’t like. I also feel good about my service and I get cards, hugs, testimonials, tickets to sports games, and other kinds of gifts from my clients.

You can see that brokerage has its pros and cons like anything else, but why do SO many entrepreneurs flock to brokerage?

What makes it so special?

  1. They live in Real Estate and understand it
  2. The numbers are big
  3. Control their schedule

These all make sense but unfortunately, they are the exact reason why most people fail in the industry. Check out the other side of the coin for each of these reasons:

  1. What they don’t understand is that everyone else thinks the same way and that creates a lot of competition
  2. What they don’t understand is that big numbers end up scaring most people who are used to making smaller paychecks on a regular basis
  3. What they don’t understand is that having control of your schedule requires discipline which most of us do not have a lot of

As long as you are aware of these issues before you decide to go head-first into this arena, then you will be good to go. Some people are highly disciplined and/or have a really good reason why they WILL make it in business and nothing will stop them.

And, of course, you are probably wondering about the $$$$ in Real Estate…

You know the saying, it takes money to make money? Well, that is half-true in brokerage. The better way to say it is, it takes money or time to make money. The truth is, you can get started for around $1,000.

You need money to get your license and to pay your MLS dues. Other than that, you can be creative, energetic, and hard-working and make a ton of money with little to no more money than that. But, as I said, this will require a lot of time.

If you do not have a lot of time then you will need more money. You can send mailers, pay for internet marketing, post ads in local newspapers, and a myriad of marketing techniques which require money but work well. If you had $1,000 to invest per month, you could start profiting over $10,000 per month within 1 year.

In fact, if you got good at delegation and had the drive to earn 7 figures per year, that too is possible. I sell commercial real estate and the numbers are much bigger than in residential. If you choose to go down that road, you can probably get to 7 figures within a few years if you have some good help. There is a very good, free resource available by a commercial broker who runs the #1 contact management program in the commercial real estate industry. He talks about his past experiences and what it takes to get to that level.

I have seen many agents fail and I have seen many have success. It really boils down to you. If you want it bad enough, you will get it. Be realistic, think it through before deciding, and when you decide, don’t look back, don’t get distracted, and follow your plan on a daily basis.