What if you could pick the brains of seasoned, successful real estate agents? What kinds of questions would you ask them, and what type of advice do you think they’d have for you? We’ve spoken with some of these agents; those that have made their careers into shining successes, and we’ve compiled their most important pearls of wisdom and pieces of advice.
It often takes a real estate agent years to pick up on these priceless pieces of information, so it’s a great benefit to anyone just starting out, or anyone who wants to better their business and profits. By considering the advice of these professionals, anyone can improve their real estate business.
Make Your Career Your Passion
Agent Rob White offers up some important advice about finding passion in your real estate career, and using that passion to improve your business as well as your personal life.
“Make your real estate aspiration your passion; turn everything you do into a labor of love. Understand that those who win big are willing to go the extra mile, knowing that every step of the extra mile is taking them closer to their goal. When your attitude is right, you find yourself with limitless sources of fresh power to keep going.
When I get involved in a new real estate venture, I court it like it’s a beautiful lady. I find out everything I need to know so I can do what I need to do to hear, ‘yes, yes, yes.’ Let’s look at the mechanics of success in any endeavor – it’s a series of yes’s.”
Making it a Spiritual Adventure
“Consider it a spiritual event, and consider yourself a grand wizard that can make things happen. When I met Arnold Schwarzenegger years ago, he spoke of how he considered his biceps mountain peaks. He would wet his fingertips with his tongue, and tap the top of his biceps. It was always the ‘spirit of the endeavor’ that had him break through to new heights in bodybuilding, and then in Hollywood, and then in politics. It is the strong of mind that are effective in the world.
Whenever I purchase a house for rehab, I stand on the outside and imagine how beautiful it will look when I am finished with it. I then wet my fingertips with my tongue and tap the entrance door as I enter. I proceed to go from room to room performing the same ritual – imagining what it will look like fully renovated and tap one of the walls with my wet fingertips. Sound zany? The happy fact is that you can master the art of precise decisions, and fulfill your vision, when you make it a ritual. The more bizarre the ritual, the more quickly it is grabbed by the mind.”
Make it a Win for Everyone Involved
“Make your project a win/win/win. I assure myself winning projects when I do what I feel is best for me, and is best for everyone else concerned. I want to buy the real estate at the right price, but I also want the seller to feel good about the price that we agree on. And, when I complete a renovation and decide to sell it, I want the new buyer to be excited and appreciative about the house and the price.
I have completed many multi-million dollar projects ahead of time and under budget because I learned how to turn a molehill of effective action into a mountain of results. It begins with the power of WOW. I set out to have everyone concerned with the project say, ‘WOW!’ I am Wonderfully Obsessed with Winning and I consistently win when everyone else feels like they, too, have won. This is not a fairy tale; it’s a reality if you allow it to be.
You can turn to dozens of How to Get Rich in Real Estate books that will give you the basics. I’ve been in the business for years and have made millions. I am giving you the inside scoop. Do the work before the work. Do the inner work that enables you to tap into many powers – the power of persistence, the power of resilience, the power of concentrated effort – and then you will have the certainty you need to go out there in the world and do the work to succeed.”
Moving in Quietly and Seizing All
Anthony Lolli, founder and CEO of Rapid Realty NYC talks about how sometimes, discretion is needed when you want to win. The real estate industry is so full of talkers that a bright mind could sneak in and seize a lot of the profits if they just learn to be quiet and not announce their presence.
The Trojan Horse Approach
“One of the biggest keys to our success was that we launched a sneak attack on the industry. When we started expanding, we kept it under the radar. We resisted the temptation to talk up our growth in the press, and avoided making ourselves look big, so as not to attract unwanted attention from rivals. As a result, we were able to open 50 locations in under three years. By the time we unveiled ourselves, we were already one of the biggest real estate firms in New York. Our competitors never saw us coming, even as we were doing business right under their noses.
The real estate industry is filled with big egos. People like to brag about every accomplishment—a big sale, their latest office, etc. If you can resist the temptation to brag (harder than you might think), you can secure your position in the market before your competitors even realize you’re a threat.”
Why You Shouldn’t Overlook Research
Research, Research, Research: It sounds simple, but you’d be amazed how many people overlook this crucial step to success. If you want to be an expert in your business, you have to put in the time to learn about it. You have to constantly refuse to be satisfied with what you already know.
It should go without saying that you should always be keeping up with what’s going on in your industry. But it’s more than that. You have to research your opponents. Research the people you’re thinking of doing business with. Research the people and companies whose success you’d like to emulate. Research before making any big decision about the way you run your business.
And don’t just read the things that tell you what you want to hear. Let the facts guide you, not your assumptions. When I decided to expand, I wasn’t planning to franchise. I thought I knew enough about it to be sure it wasn’t the right move for my company. But I did the research, and kept my mind open, and sure enough, I ended up franchising, and it was the smartest decision I ever made.
Beware of Being Greedy
Real estate agents Bernie and Spencer offer some valuable advice on the risks of being greedy as well as the importance of being cognizant of your reputation and doing everything you can to guard it.
Bernie: “There are two things which have guided me in the 45-plus years I’ve been investing in real estate:
- Don’t get greedy.
- Don’t get complicated.
I’ve seen people with good deals, real solid deals, get tripped up because they’re trying to squeeze out a better position for themselves, or they’re trying to get out on top of everyone else. To me, real estate is a long term hold, and there’s plenty of time to build your profits. If you’re greedy, you’ll only get an investor to work with you once. If you’re fair and set realistic expectations, you’ll have an investor for life. The other thing I do is keep it simple. If I can’t explain a deal in one or two sentences, I won’t invest in it.”
The Importance of Guarding Your Reputation
Spencer: “A lot of people think that real estate agents are interchangeable; I make sure my clients know this isn’t true. Because this is a business where you’re often doing deals with the same agents, I really guard my reputation. The result is that other agents know I’m not going to sweat the small stuff just to get a ‘win,’ and they know that I try to keep the transaction as smooth as possible.
Because of my reputation, I’m often able to get my buyers into deals for less money than it might take for someone else, because the other agents know an easy transaction is worth the ten or fifteen thousand dollars of aggravation that an unknown agent might bring to a deal.
One other thing I do is keep the deal in perspective. So many agents won’t try to make the buying or selling experience fun for their clients. I used to be a comedy writer, and there’s some of that still in me. Helping my clients find the humor in a difficult situation helps all of us get to the close of an escrow.”
The Most Important Numbers You Will Crunch
Agent Mike Lavaca discusses the importance of your ARV, or After Value Repair price. By considering this number for every property, you can get a better handle on your potential and realize success more easily.
Stick to Your ARV
“When house flipping, ARV (After Repair Value), is the most important number in your analysis. ARV is simply what the house is going to sell for after you fix it up. Having a good real estate broker who can determine this number is crucial to your success. You then work backwards from this number to determine whether it’s a go or a no go.
First, have the real estate agent perform a market analysis to determine the price of your property. Although there are many online comp services that can give you an idea as to what the house will sell for, nothing beats the expertise of a good real estate agent.”
Killer Tips on ARV:
6 months: Have the real estate agent go back on the shortest amount of time possible for sold comparable houses – ideally no longer than 6 months. The shorter the time period, usually the better to minimize sudden market shifts that may affect ARV at the sale time.
Compare: Once they determine what other properties have sold for, they will be able to tell you what your property will sell for.
No Eraser Math: Don’t “eraser math” your ARV – make sure you stick to the number given to you and don’t deviate from it during the flip. As soon as you start “erasering” the number bigger to suit your needs…you can then say goodbye to your profits.
Always Follow the 70% Rule
“Once you have determined the ARV, the next step in the house flipping process involves the 70% Rule. It keeps you in the money, even when unanticipated costs pop up. That’s why we stick to it always. The 70% rule can vary depending on your market, but stick to it as a firm benchmark.
The reason why the 70% Rule is so important is because it is used to determine:
- How much you can spend on your rehab.
- The maximum allowable offer for the property (known as the MAO).
You can figure out these numbers by using the 70% rule with this simple math:
- Use the ARV (let’s say $200,000) and multiply it by 70%. This equals $140,000.
- Deduct your repair costs from that $140,000. Let’s say your general contractor told you rehab will cost $40,000.
- Using the 70% rule, you have now determined that the maximum price you want to pay for this house is $100,000.
Repair Costs = $40,000
70% Rule = $140,000
Maximum Buy Price = $100,000
By using the 70% rule, you know now the MAO – the absolute maximum you want to pay for this house, which in this case is $100,000. Using the 70% rule will give you a healthy profit margin minus finance, carrying costs and unanticipated expenses.”
Looking to the Outskirts and Speeding Up the Process
Adrian Sushko of Cummings & Co. Realtors discusses how he helps his clients find prime properties on the outskirts of hotter areas and reminds agents of how important it is to use speed in your approach.
“One of my strengths is to help my clients find an investment property (typically a flip that requires extensive work) in an area that is outside the typical neighborhood where most other investors are fighting over the same house.
By truly understanding the dynamics of a local area, I usually can project trends before they become a statistic and thereby find my clients an undervalued project that will deliver an above average return by the time the home is completed.
In many cases, a small sliver of neighborhoods that are at a tipping point surround top dollar neighborhoods. This gives the investor a bigger margin because others simply do not yet see the trend.”
Be Fast When Making Deals
The second tip I have is simple and obvious but missed by many – and that is to use speed to find, submit an offer and close the deal. If a property is priced below market value, there will inevitably be a huge rush of numerous investors to get the property, thereby typically driving up the price. If a buyer’s agent can schedule, see and write an offer on an investment opportunity within two hours of the house hitting the market, the chances of getting a score for the buyer increase dramatically.”
The Value in Not Nickel-and-Diming Your Clients
Agent Aimee Elizabeth offers some wise advice regarding repairs and a little trick that will keep you on better terms with your tenants while allowing you to enforce all of your rules.
Pretend You Are NOT the Owner!
“Pretend you are not the owner. This allows you to enforce all of your rules (as the “property manager”), and still keeps you on friendly terms with your tenants. The “owner” would surely fire you if you didn’t enforce every aspect of the lease.
And then you would not only lose your job, but you would lose your “free place to live” that the owner supplies you as part of your pay. This keeps the tenants on your side and happy to follow the rules to protect you, as you are one of them now.”
Don’t Be Penny Wise and Dollar Foolish
“On minor repairs that are actually tenant damage caused by children, my lease spells out that this is the tenant’s responsibility to pay for. However, unless it’s deliberate damage done by an adult, I don’t enforce this clause. I send my full time handyman out to do the repair, free of charge. He is on salary, so it only costs me parts, not labor. Because of not nickel and diming my tenants to death, I have tenants that have stayed with me for 10+ years! I’d rather spend $20 on parts than thousands to rehab a place, lost rents while vacant, cost of advertising, etc.”
The Importance of Getting to Know Your Community
Agent Ryan White discusses how he’s seen a lot of his success simply by getting to know his community and the people in it.
“I host a Real Estate Radio show: ESPN 1700 AM, The Real Estate Radio Hour, which lends me enormous credibility and allows me to meet many business professionals in the community as well as develop referral partners with those people.”
Keeping the Business Close to Home
“I brought my business VERY close to home. Let’s face it, with the advent of the internet, the differences between real estate agents is minimal.
Some of the small advantages are knowing whom may want to sell, but is not on the market as well as whom wants to rent that is not on the market – insider information like that, which can only be found from a grass roots approach like door knocking, which I do in my local community.”
Why it’s Better To Give Than To Receive
Agent Kim Clark has found that most of her business has come from her efforts within the community to give, rather than marketing efforts to receive clients or business. She offers up sage advice for all real estate professionals.
“You can have a deal with a good person go bad, but you can never have a deal with a bad person go good. Do business with good people.”
Give First, Receive Later
Kim spends an exorbitant amount of time, energy and money in the local community giving back. She never asks for anything in return but the positive karma always comes back. Her philanthropy and action have brought her tons of business.
How to Find Mature Renters That Are In It For the Long Haul
Agent Bob Costello explains how real estate professionals can ensure that their homes
attract a mature renter that is better for the home.
“Buy a nice home in a family neighborhood. This will attract a more mature renter that typically stays in the house longer and takes better care of it.
Fix the house up BETTER than the others in the neighborhood, i.e. granite, stainless steel, appliances and nice paint schemes. This allows you to rent it out for a premium price.
Our ROI on the upgrades from the increased rents is 2 years. Plus, it adds to the value and eventually sale-ability of the house.
Overall, we are currently seeing a 12% ROI on the rental income after the mortgage payments and reserves for maintenance and vacancies.”
In closing, there is a running theme in the advice of all of these successful agents: do what is best for your clients and take the time to really care about their needs and desires. When you do this, you’re ensuring that everyone is happy with the deal. Work smarter, not harder, and don’t sweat the small stuff. By implementing these practices into your own business, you will see the difference in your number of clients, returns on investment, and the growth of your business.
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