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By now, if you’ve read our previous introductory articles, you should have a good understanding of the various types of investors and the various types of income available to those investors. And let me be the first to point out that investors of all types have become rich investing in all kinds of things. What might be right for one person may not be right for another.
But, that said, if you look at the majority of successful investors in the world, the bulk of them have traveled a similar road, and have achieved financial success via a common set of investing philosophies. Let’s review the types of investors and the types of income once more to clarify the pros and cons of each…
First, in terms of investor types, we have the Savers. Savers primarily use time to achieve their financial goals. The big detriment to the Saver philosophy of investing is that it becomes very difficult to achieve your financial goals in anything but long periods of time; because Savers rely on low but consistent rates of return, they plod along for many years before hitting their goals.
Speculators understand that there is another variable – other than time – when it comes to investing: Rate of Return. They use this information to their advantage by creating investing opportunities with higher rates of return, which they expect will allow them to achieve their financial goals in much shorter timeframes than their Saver counterparts. Unfortunately, Speculators rely on excitement and frenetic activity to fuel their investing, and often make uneducated and rash decisions that negatively impact their monetary gains.
Lastly, we have the Specialists. They strive to achieve the benefits of both the Savers (consistent returns) and the Speculators (higher returns), without the associated risks (long time horizons and highly fluctuating returns). While almost anyone has the ability to become a Specialist investor, the key to this type of investing is education; Specialists work hard to learn the ins and outs of their chosen area(s) of investing, and leverage that hard work to succeed.
In terms of income types, we start with Earned Income. Earned Income is generated by working a job – whether that job is salaried, hourly, consulting, or any other work related activity that is paid based on output. Earned income has the obvious advantage that it’s the only type of income that doesn’t require an upfront investment (other than time) to make money. The downside is that the amount of Earned Income you can make is limited by the amount of time you are willing/able to invest and once you stop working, you stop making money.
The other two income types – Portfolio Income and Passive Income – each provide returns potentially independent of time invested, giving them a huge advantage over Earned Income. While there are a lot of nuances between Portfolio and Passive Income (that we’ll cover more in depth in other Three Types articles), the major drawback to each is the fact that they generally require upfront monetary investment before they can generate any financial return.
So, what’s the path to financial success?
It should be clear that in terms of investor style, being a Specialist is the best way to optimize for consistently large returns, which will ultimately lead to financial independence in the shortest period of time. Of course, as mentioned above, becoming a Specialist investor takes time and study, but anyone willing to invest the time and effort can become a wildly successful investor.
So, now that you know being a Specialist investor is the path to financial success, what types of income do Specialist investors pursue?
Specialist investors realize that all three types of income are vital to achieving financial independence. Earned Income is vital to those who are starting with nothing (or in debt), to help eradicate debt and start building seed capital. Once some seed capital is available, Specialist investors use Portfolio Income and Passive Income to rapidly grow their capital and begin to generate recurring cash flow that can be continually reinvested. Finally, Specialist investors use Passive income investments to generate recurring income to support them when they are ready to “retire” from their investing activities.
We’ve spent a good bit of time on this site talking about the different types of investors and the advantages and disadvantages to various investing styles. But, the one thing that remains consistent across all investors is the fact that they want to make money, and they want to be able to use the money they make to generate more.
As you might guess, what you invest in is just as important as you’re investing style. And while there are literally thousands of potential investments you could or may pursue over the course of your investing career, many types of investments have similar characteristics, both in terms of how they generate income and how much.
In fact, when you get right down to it, there are three broad types of income you can generate:
Any money you ever make (other than maybe winning the lottery or receiving an inheritance) will fall into one of these income categories. And each income category has its own set of benefits and drawbacks. Additionally, successful investors (i.e., Specialists) have good reason to prefer certain types of income over the others.
Let’s dig a little bit deeper…
Earned income is any income that is generated by working. Your salary or money made from hourly employment (regardless of whether that salary or hourly income came from working for someone else or from your own “consulting”) is considered earned income.
Some activities that generate earned income include:
While earned income is the most common mechanism for making money, its obvious downside is that once you stop working, you stop making money. Additionally, because the amount of money that is made through earned income is directly proportional to the time and effort you spend working, it’s difficult for someone to make more earned income without either learning a new (or more valuable) skill or working longer hours. Additionally, earned income is taxed at a higher rate than any other type of income.
One huge benefit of earned income over the other income types is that you generally don’t need any startup capital in order to make earned income, which explains why most people rely on earned income from the start of their working life. In fact, earned income is a great way to start your investing career, as it allows you to save up cash that will help you generate the other two types of income…
Portfolio income is any income generated by selling an investment at a higher price than you paid for it. Some people refer to portfolio income as “capital gains,” because that’s how the money is taxed by the federal government.
Some activities that generate portfolio income include:
There are a number of downsides to portfolio income; for example:
Portfolio income certainly has some advantages over earned income. Once you have the knowledge and experience to generate portfolio income on a consistent basis, you can continually reap the benefits (compound your return) by reinvesting after each sale. Additionally, any portfolio assets held long-term are generally taxed at a lower rate.
Passive income is money you get from assets you have purchased or created. For example, if you were to buy a house and rent it out for more money than it costs you to pay your mortgage and other expenses, the profit you make would be considered passive income. As another example, if you owned a business that could operate independently of your working for it, any money that you make from the business would be considered passive income (of course, if the businesses success was limited by the number of hours you worked, the income you made would be considered “earned income”).
Some activities that generate passive income include:
There are some major benefits to passive income over the other two types of income:
As you might suspect from the above overview, many people consider passive income the holy grail of investing, and the key to long-term wealth.
As should be obvious from reading my story, (from the founder of threetypes.com)I progressed through multiple stages of financial wisdom before figuring out the key to attaining wealth:
For the first several years, I hoarded cash and diversified my investments to ensure a consistent return on my capital, regardless of how small that return might have been. Once I realized that I wasn’t going to be able to achieve my financial dreams strictly through diversification, I spent a couple years chasing the next big investment craze, and looking for a big opportunity to strike it rich. Unfortunately, there was no “magic bullet” that allowed to get-rich-quick, and once the market took a down-turn, I found myself back at square one. Finally, I realized that my key to financial independence was to focus my energies on a single investing area, and devote my time and energy to creating and fulfilling my strategic investing vision.
In my experience, most successful investors go through these same stages before they become successful as well. Some, like me, slowly evolve from one stage to another. Others are luckier, and quickly find their investing niche, bypassing the intermediate stages of growth. And others forever bounce back and forth between stages, hoping to find the “golden ticket” to success.
While people have been successful at each stage of investing, one stage stands out for those who aspire to attain wealth. And by understanding the different stages, you can better target the type of investor you want to be.
The following are the three types of investors I most commonly see:
Savers are those people who spend the majority of their life slowly growing their “nest egg” in order to ensure a comfortable retirement. Savers explicitly choose not to focus their time on investing or investment strategy; they either entrust others to dictate their investments (money managers or financial planners) or they simply diversify their investments across a number of different asset classes (they create “a diversified portfolio”). For those who create a diversified portfolio, their primary investing strategy is to hedge each of their investments with other “non-correlated” investments, and ultimately generate a consistent annual return in the range of 3-8% (after adjusting for inflation). Those who entrust their money to professional money managers generally get the same level of diversification, and the same 3-8% returns (minus the management fees).
Savers seek low-risk growth of their capital, and in return, are willing to accept a relatively low rate of return. While there is certainly nothing wrong with striving for consistent returns, what the Saver is doing is really no different than putting their money in a Certificate of Deposit, albeit with slightly higher returns. The bulk of Savers are investing for long-term financial security and retirement. They start saving in their 20’s and 30’s by putting money in 401(k) accounts, mutual funds, and other diversified investments, and in 30 or 40 years, they have enough to retire on.
Savers rely in a single force to grow their capital: time. Because their rate of return is generally consistent, a Saver’s primary mechanism to achieve wealth is to invest and wait. In fact, Savers often use The Rule of 72 to calculate long-term investment growth and plan their retirement. While passive investing is an almost surefire path to a comfortable retirement, it also generally means 30-50 years of work to get to that point.
Unlike Savers, Speculators choose to take control of their investments, and not rely solely on “time” to get to the point of financial independence. Speculators are happy to forgo the relatively low returns of a diversified portfolio in order to try to achieve the much higher returns of targeted investments. Instead of just spreading their money across stock funds, bonds, real estate funds, and a variety of other asset categories, Speculators are always looking for an investing edge. Perhaps they get a hot stock tip and try to cash in on the next Google. Or perhaps they hear about all the real estate investors who have made a bundle flipping houses, so they go out and buy the first run-down house they see.
Speculators recognize that they can have higher returns than Savers, and are willing to do or try anything to get those returns. They’re not scared to throw some money in an Options account and try their hand at derivatives trading; or run out and buy a bunch of inventory from a wholesaler they know and open up an eBay selling account. Speculators are always looking for the next great investment; for them, it’s all about being in the right place at the right time, and taking a chance on getting rich. If today’s investment doesn’t work out, there will always be another one tomorrow.
While the Speculator recognizes the potential gains from smart investing, he doesn’t always invest smart. He is very much a gambler, and while sometimes those gambles pay off, often times they don’t. And just like a gambler, the Active Investor’s biggest rival is the “vigorous,” the commissions and fees he pays to enter and exit all his investments. While the Speculator may have enough luck and skill to be a successful investor, he may show little or no profit after paying brokerage commissions, and other investing fees.
The third type of investor is the Specialist. Like the Speculator, the Specialist realizes that there is a more powerful investing strategy than just diversifying across a range of asset classes. But, unlike the Speculator, the Specialist understands that the key to successful investing isn’t luck, “hot tips”, or “being in the right place at the right time”; it’s education and experience. The Specialist recognizes that investing is no different than any other competitive endeavor — there will be winners and there will be losers, and the winners will generally be those who are most prepared.
The Specialist generally picks a single investing area, and becomes an expert in that area. Some Specialists deal in paper assets, some deal in real estate, and some start businesses. Unlike the Speculator who looks for the next “hot” investing area and the next hot market, the Specialist can make money in his chosen investment area during any market — hot, cold, or in-between. The Specialist knows his investment area inside and out, and instead of just entering and exiting investments, the Specialist has a plan.
In fact, having a plan is the key difference between the Specialist and either the Saver or the Speculator. The plan is the blueprint for achieve investment success, and with it, the Specialist can achieve huge returns with relatively low risk.
So, which investing types is correct?
Each of the three investing types clearly has its advantages and disadvantages…
The advantage to being a Saver is that you free to spend your time and energy on things other than investing, but in return you will wait a long time before you have the opportunity at financial freedom. Speculators have the opportunity to “hit it big” if they end up at the right place at the right time, but when they don’t hit it big, they often don’t even see as high of returns as the Saver. And while being a Specialist Investor requires the most time and effort, the rewards are the most profound – both in terms of control over income and the opportunity for financial success.
As a real estate investor you never know when you will need to quickly sell a property. With a strong list of potential buyers you can make this task that much easier. Your list of buyers can consist of friends, family, co-workers and anyone that may have expressed interested in buying real estate in the past. Forming this list should be something you spend time on every week. All new contacts should be entered in a master list and over time you should have quite a few names. If you are struggling putting your list together here are four ways you can quickly grow your buyers list.
Buyers are out there but they won’t just fall on your lap. You need to think about growing your list a little bit every week. When you are desperate for a buyer and start your search it may be too late. With a little bit of work every week you can quickly grow your buyers list.
by JD Esajian | @JDEsajian
With the global economy in a rather precarious situation, entrepreneurs in nearly every industry are expecting to weather what may be a turbulent 2016. If for nothing else, poor market conditions have made venture capital a commodity of sorts. Not to say that it wasn’t already, but seed money could be harder to come by over the course of this year. There simply aren’t enough venture capitalists willing to take unwarranted risks. Their lending practices will be, for all intents and purposes, contingent on a market that has seen better days. However, that’s not to say raising money in a down market is impossible. In fact, it’s quite the contrary – at least for real estate investors. Real estate venture capital looks to remain promising – if you know how to attract it that is.
Not surprisingly, venture capitalists are forced to work within the parameters of today’s economy. No surprise there; we all are. There isn’t an industry on the planet that isn’t contingent, in one way or another, on the health of respective benchmark indices. That means lending patters, not unlike borrowers, must adjust to what the markets dictate to be acceptable. As a result, venture capitalists are now more likely than ever to look for specific conditions, or criteria if you will, to be met before they consider lending money. Seeing as how those criteria are directly correlated to the state of the economy, I can assure you they are currently looking for a more risk-averse investment vehicle.
It just so happens that U.S. real estate is well on its way to becoming one of the most sought after investment vehicles. In fact, if it isn’t already, it won’t take long until it is even more attractive than it is now. On top of countrywide appreciation and a demand that is intent on growing, global investors have set their sights on America. With everything that has recently happened in China and a handful of scenarios continuing to play havoc with the global economy, investors have turned their attention to the United States; in particular, the real estate sector.
Investors are aware of the nature of today’s global economy, it’s fragile to say the least. Now, more than ever, is the time to invest in security. That said, we have already seen a mass exodus from China’s declining market. People want to place their money somewhere it can be safe. It just so happens that investors are starting to look at U.S. real estate as the “safer” alternative. Those familiar with the industry expect to see an influx of money from foreign investors into the U.S. housing sector.
But why am I telling you this? The answer is simple: the domestic real estate landscape is expected to do very well in the coming year. Naturally, the industry’s health bodes well for those looking to receive funding. With the U.S. real estate market quickly becoming one of the most attractive investment vehicles in the world, venture capitalists are more inclined to lend their money to those procuring real estate.
At the very least, I would expect real estate investors to have an advantage over subsequent industries in receiving venture capital, if for nothing else than the state of the industry they work in. Venture capitalists are more than aware of how well real estate is expected to do this year, and I can assure you they want a piece of the pie. That said, only one questions remains: how can you be the one to give it to them? How can real estate investors and likeminded entrepreneurs maintain their advantage over the competition, and stay at the forefront of venture capitalists’ minds?
My partners over at CT Homes and I believe real estate investors should have no problem attracting venture capital. Let me explain:
Real estate venture capital can really help startups. But to even stand a chance at attracting venture capital, you must first understand the current state of the market. While real estate continues to shine, the global economy has certainly seen better days. In fact, January bore witness to one of the poorest starts by the S&P 500 in recent history. Expectations are, for the most part, tempered and cautious. The sooner you can wrap your head around this, the better.
With the current market environment being the way it is, it isn’t enough for entrepreneurs to simply have a sound funding plan; they must also come to terms with what is likely to be lower revenues. Again, we must temper our expectations, or at least come to grips with what the market is willing to offer. Broadening your customer base and retention is likely to get a little harder this year.
Venture capitalists know this, and are thus looking for companies who are prepared to bunker down and weather the storm.
“We do not want to see companies on the hamster wheel,” said Blair Garrou, who is a managing director at Mercury Fund, “where there needs to be large amounts of money raised on a frequent basis. Rather, we are looking for entrepreneurs who show that they can be lean and capital efficient. We want to make sure that the money can last 18 to 24 months.”
Not surprisingly, venture capitalists are looking for companies with staying power. They want to know you can work on a restrained budget. In other words, how far can you stretch your money?
That said, don’t discount the little things. Instead of buying a luxury desk, feel free to peruse the isles of IKEA. Instead of working from a corner office in a high-rise building downtown, perhaps you can establish a home office. Remember, everything you do has an impact on your bottom line. Just be sure that you are conscious of where every dollar is going, and how you can maximize its return.
“For every dollar you raise, how much value are you creating?” asks Andy Vitus, who is a partner at Scale Venture Partners. “One way to do this is to get more efficient with software development, say with offshore capabilities. But there are also very creative approaches. For example, one of our portfolio companies hired ten interns to write daily blog posts. It turned out to be an effective way for marketing and thought leadership. We like to see leverage points.”
Get creative with the way you go about your business, and please – for your own sake – create systems. There is perhaps no better way to maximize the efficiency of your company, and thus enable every dollar to go that much further. Dedicate a specified amount of time to evaluate the systems you already have in place, and proceed to improve upon them. Leave no stone unturned. I really want you to reevaluate how you do everything in your business. Whether it is restocking office supplies or closing a deal, everything can be broken down into a system. The key, however, is to refine each system until it is efficient and predictable. You need to know how things will turnout before you even start them if you are to have any hope of receiving venture capital for your startup.
In fact, while we are on the subject, there is no reason you shouldn’t have a system for attracting venture capitalists. Hone your skills and be prepared for the next time a potential funder comes your way. I can assure you the extra effort you put into your next pitch won’t go unnoticed. It may be the one thing that lands you the capital you need to fund your business. At the very least, they will come to appreciate your attention to detail. Who knows; perhaps they will even come to like the systems you have put in place to ensure efficiency and proven results. There are few things venture capitalists covet more so than a proven track record and results. Don’t hesitate to show them what you have in place.
I could also argue that the diversity of the housing sector and the many exit strategies real estate investors have at their disposal bodes well for those looking to receive venture capital. For the same reason investors aspire to diversify their portfolios, venture capitalists will appreciate the diversity the housing industry has to offer. There is essentially a viable exit strategy for nearly every market cycle. In other words, there are always chances for them to realize returns on their investment. Not every industry can provide the same stability, making real estate investors that much more attractive to venture capitalists.
Above all else, real estate investors will want to remain disciplined and practice sustainability. Only then will they truly be able to capture the attention of those that can provide startup venture capital.
by Than Merrill
The start of the New Year is often known for resolutions, cold weather, and taxes. As a real estate investor, tax time is often the source of dread and confusion. In a perfect world, you will have kept impeccable records over the last twelve months and can file without any issues. If you are like most investors however, this is not the case. Even if you are somewhat organized, there is always something that has been forgotten about or omitted. Here is where a good CPA (certified public accountant) comes into play. Technology has made it as easy as possible for anyone to do their own taxes. This doesn’t mean you should. A good accountant can not only save you time and money, but also give you piece of mind. There are plenty of accountants out there, but you want to find the best one for you and your business. Here are some tips to help you know if you are working with the right CPA for you.
With tax time quickly approaching, it is time to think about your accountant. If you have an established relationship, you should consider yourself lucky. But if you are just starting your search, keep these five tips in mind.
by Than Merrill
Still looking for motivated sellers?
Real estate investors struggling to find motivated sellers and more deals may be encouraged to know that almost 14,000 of these properties sell every day of the year!
Around 5,000,000 homes sell each year in the United States. That’s an average of 13,698 closed sales each day. That number could be significantly higher in 2016 if analysts’ positive forecasts are accurate. These may not all be the dirt cheap steals some real estate investors are seeking, but someone is doing these deals, and making money on them. It’s also worth noting that every seller is a motivated seller. Some individuals and companies may throw properties up on the market to test it – to see how much they can get. Yet, few actually make it through to a sale unless they are motivated. Selling a property can be work. It takes some time, planning, and it can cost money.
Why Properties are Sold
Some of the common reasons real estate is sold include:
These are just some of the reasons owners sell. All of these represent some form of motivation. Even if these sellers aren’t desperate at the time they start exploring listing their properties, these factors can put a lot of pressure on them as time moves on.
How Long Does it Take to Find a Real Estate Deal?
In one recent shocking post online, an ‘investor’ said he had been searching for motivated seller deals for five years, with no deals done! Others brag about doing 10 plus deals a month, every month. Some say they even pull in six figures a week. So how long should it take to find a real estate deal?
Results can be dramatically different. Some investors storm in and find deals in their first 30 days. Others might take several months to close their first deal. If you go over six months, something may be wrong. It certainly warrants reviewing what you are doing and coming up with a new game plan if you are going months without securing purchase contracts. This is true even in the hottest markets and when there is significant competition.
12 Ways to Find Properties for Sale
Where to Find Deeper Discounts
One of the biggest challenges of those taking longer to find deals is not a lack of inventory, but a lack of deeply distressed, discounted, and cheap deals. So where are those deals? In addition to the above where might investors want to look?
In early 2016, 58,000 homes were headed to foreclosure in Detroit alone. So the deals are out there.
If you still aren’t signing deals, then take a moment to review what the issue really is. Is it a lead generation problem, volume problem, pitch problem, closing ability, or offer problem? Or is there a chance you haven’t been working off of up to date deal analysis models and maybe have unrealistic goals?
It could be that a minor tweak needs to be made. Or there may be more real estate education and training needed. Is it worth getting a coach to go over your marketing, and the deals you are looking at together? In other cases, you may benefit from hiring some help. Perhaps you are great with numbers and marketing, but just can’t respond to leads fast enough or aren’t skilled at closing deals over the phone.
Another 14,000 real estate deals will close tomorrow, and the next day, and the next. How many of those will be your deals?
by JD Esajian | @JDEsajian
We’ve all heard about how “bad” the real estate market is. But what’s bad for sellers can be good for buyers, and these days, savvy buyers are out in spades trying to take advantage of the buyer’s market. Here are 13 thing you can do to help sell your house.
1. Audit your agent’s online marketing. 92% of homebuyers start their house hunt online, and they will never even get in the car to come see your home if the online listings aren’t compelling. In real estate, compelling means pictures! A study by Trulia.com shows that listings with more than 6 pictures are twice as likely to be viewed by buyers as listings that had fewer than 6 pictures.
2. Post a video love letter about your home on YouTube. Get a $125 FlipCam and walk through your home AND your neighborhood, telling prospective buyers about the best bits – what your family loved about the house, your favorite bakery or coffee shop that you frequented on Saturday mornings, etc. Buyers like to know that a home was well-loved, and it helps them visualize living a great life there, too.
Plus: 13 Moving Tips to Keep in Mind
3. Let your neighbors choose their neighbors. If you belong to neighborhood online message boards or email lists, send a link to your home’s online listing to your neighbors. Also, invite your neighbors to your open house – turn it into a block party. That creates opportunities for your neighbors to sell the neighborhood to prospective buyers and for your neighbors to invite house hunters they know who have always wanted to live in the area.
© iStockphoto/Thinkstock4. Facebook your home’s listing. Facebook is the great connector of people these days. If you have 200 friends and they each have 200 friends, imagine the power of that network in getting the word out about your house!
5. Leave some good stuff behind. We’ve all heard about closing cost credits, but those are almost so common now that buyers expect them – they don’t really distinguish your house from any of the other homes on the market anymore. What can distinguish your home is leaving behind some of your personal property, ideally items that are above and beyond what the average homebuyer in your home’s price range would be able to afford. That may be stainless steel kitchen appliances or a plasma screen TV, or it might be a golf cart if your home is on a golf course.
6. Beat the competition with condition. In many markets, much of the competition is low-priced foreclosures and short sales. As an individual homeowner, the way you can compete is on condition. Consider having a termite inspection in advance of listing your home, and get as many of the repairs done as you can – it’s a major selling point to be able to advertise a very low or non-existent pest repair bill. Also, make sure that the little nicks and scratches, doorknobs that don’t work, and wonky handles are all repaired before you start showing your home.
Plus: 5 Easy Improvements to Hook a Buyer For Your Home
7. Stage the exterior of your home too. Stage the exterior with fresh paint, immaculate landscaping and even outdoor furniture to set up a Sunday brunch on the deck vignette. Buyers often fantasize about enjoying their backyards by entertaining and spending time outside.
8. Access is essential. Homes that don’t get shown don’t get sold. And many foreclosures and short sale listings are vacant, so they can be shown anytime. Don’t make it difficult for agents to get their clients into your home – if they have to make appointments way in advance, or can only show it during a very restrictive time frame, they will likely just cross your place off the list and go show the places that are easy to get into.
9. Get real about pricing. Today’s buyers are very educated about the comparable sales in the area, which heavily influence the fair market value of your home. And they also know that they’re in the driver’s seat. To make your home competitive, have your broker or agent get you the sales prices of the three most similar homes that have sold in your area in the last month or so, then try to go 10-15% below that when you set your home’s list price. The homes that look like a great deal are the ones that get the most visits from buyers and, on occasion even receive multiple offers. (Bidding wars do still exist!)
10. Get clued into your competition. Work with your broker or agent to get educated about the price, type of sale and condition of the other homes your home is up against. Attend some open houses in your area and do a real estate reality check: know that buyers that see your home will see those homes, too – make sure the real-time comparison will come out in your home’s favor by ensuring the condition of your home is up to par.
11. De-personalize. Do this – pretend you’re moving out. Take all the things that make your home “your” personal sanctuary (e.g., family photos, religious décor and kitschy memorabilia), pack them up and put them in storage. Buyers want to visualize your house being their house – and it’s difficult for them to do that with all your personal items marking the territory as yours.
12. De-clutter. Keep the faux-moving in motion. Pack up all your tchotchkes, anything that is sitting on top of a countertop, table or other flat surfaces. Anything that you haven’t used in at least a year? That goes, too. Give away what you can, throw away as much as possible of what remains, and then pack the rest to get it ready to move.
13. Listen to your agent. If you find an experienced real estate agent to list your home, who has a successful track record of selling homes in your area, listen to their recommendations! Find an agent you trust and follow their advice as often as you can.
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Posted: February 18, 2016 in Business
Tags: For Sale By Owner, Real Estate Investing, real-estate, sell, Sellers, selling a home
Anytime you are looking to generate interest in a property, the manner in which it is presented is of the utmost importance. Even if you are in a hot market that is ripe with demand, you can’t assume that the location is enough to sell or rent a property. With every new lease or finishedrehab, you should take the time to put the finishing touches on the property. In many cases, these seemingly small items can make all the difference in how much interest you can attract. The greater the amount of interest you create, the greater the impact on your bottom line. Here are a few cost-effective items that can greatly improve your property’s presentation.
1. Landscaping
One of the first things buyers or renters notice when they pull up to a house is the condition of the exterior. If the grass is burnt out and there are overgrown bushes, their opinion on the property may be made by the time they enter the house. You don’t need to make the yard look like a tropical paradise, but it has to look presentable. Something as inexpensive as a few bags or mulch or even just a few hours with a hedge trimmer makes a huge difference. A few plants by the front door can also add to the appeal of the property. Make sure the yard is free of any debris and that all entry points are clear. A few hours improving the exterior often has a greater impact than you may realize.
2. Flooring
Hardwood floors are nice, but if they are scuffed and damaged they can leave a negative impression. Redoing the floors could be an expensive proposition. In some cases, this may be a waste of money. Not because they wouldn’t look great when they are finished, but you may not need to take that step. Instead, try giving them a good clean and polish treatment. You may be surprised at how much better this can make your floors look. The right products can almost make them look like new. If you have carpets, give them a good high quality steam clean. This will cost you a little more, but it can give your carpets a completely new look and feel. If the floors look dirty and worn, that is the impression you will give off.
3. Update the Walls
In much the same way as the floors create an impression, the same is the case with the walls. Start by getting a sponge and wiping down dirty parts of any painted walls. If this doesn’t work, consider giving the wall a fresh coat of paint. Even if you are not a skilled painter, you are probably capable of painting the bedroom for a rental. If you are looking to try to stretch your dollar, you can start by getting just the trim updated. If you are putting the house on the market, you may need to spend the money to make the walls shine. Even the tightest budget should be able to find a few hundred dollars to get the walls painted.
4. Kitchen Upgrades
Regardless if you are looking to generate interest for a rental or a flip, you need to focus on the kitchen. Bells and whistles with a property are nice, but kitchens (and bathrooms) attract interest. In a perfect world, the kitchen is where you will spend a large majority of your budget. If you don’t have funds to replace the countertops, add new appliances and update the cabinets, there some alternative approaches you can try. Start by simply sanding and repainting the cabinets. This, coupled with some fresh hardware, can often give the kitchen a completely different look. There are also new types of flooring that aren’t overly expensive. If you are going to make tweaks and give life to a property, the kitchen is the place to do it.
5. Finishing Touches
There are countless small things in a property that can increase its appeal. Something as simple as new rugs by the toilet or tub can freshen things up. The same is the case with any fixtures in the property. If they are old, the property will feel dated. New fixtures certainly will not break the bank, and can make a world of difference. The same is the case with window curtains, shower curtains, blinds, lights, welcome mats, mailboxes and garages. Replacing these items may not make a world of difference, but they are enough to set the tone for the property. Additionally, they show that you care about the property, which may be enough to add just enough appeal for one person. That one person is all you need to make an offer on your property.
There are many little things you should be doing every time you show the property. Things like how the property smells, how bright the lighting is and the temperature make a bigger difference than you may realize. If you approach showings like you are making a presentation, you will get more out of them. The nuts and bolts of a presentation are easy to remember, but it is the little things that make all the difference.
by JD Esajian | @JDEsajian
DC Wealth Builder$ LLC 