Real Estate Strategy and Investing

My phone rang, and at the other end was someone who can safely be called a risky investor. He was from, and in, California, and at the moment he was barreling down the Pacific Coast Highway, attempting to drive, talk, and surf the web for cheap real estate deals, all at the same time.

That’s not that made him a risky investor. That came from the fact that he was looking to invest in a city that he had never visited, in which he had no human connections, or of which he had any knowledge.

That might sound strange to you, but many otherwise smart people get caught up investing in places about which they know next to nothing. Wrong decision.

Investing in places where you have little or no knowledge of market trends, inventory, future plans for development, construction costs, or the lending climate is like throwing money away. By purchasing property “sight unseen,” you are accepting at face value (only without the “face” part, since you haven’t seen it) all of the hidden unknowns that experienced investors spend time and money studying, the better to make informed decisions.

I’m not simply talking about doing research online. Yes, the internet is helpful for gathering many important facts. But it provides little in the way of“boots on the ground” intelligence about the current buying and selling market, or about who the ideal buyers and sellers are in any given region. That has to be learned firsthand.

There are some great ways for interested investors to learn about a neighborhood. These include determining market trends, visiting the city’s permit office to learn future planning goals, investigating housing prices and rental rates, examining regional demographics, and most important, finding out the job market and prospects for employment in the region.

Most serious investors or people of business would think it ridiculous to build or invest in a market where the jobs are being transferred to another city. Knowing the market is probably the single most important factor on an investor must get a handle.

As a real estate professional, it’s important for me to know how deep are an investor’s pockets, and what are his or her holding parameters. If this sounds unfamiliar to you, chances are you’re not yet ready to become an investor.

Investing often requires more time and money for marketing than most people realize, and these “unseen” potential costs need to be discussed before making the transaction. If an investor doesn’t consider holding cost, repair cost, marketing cost, and factors like downward market trends, then he isn’t prepared for when these expenses cut into the bottom-line profits.

Getting into the business of investing means knowing that purchasing a property is a small piece of the puzzle. If your resources include only enough to make the purchase, you’ll have to consider where the other monies will come from. That’s the foundation of Strategic Real Estate Investing.

Merrick Damon Williams
Owner/Broker
MerrickDamon Residential Brokerage
Georgia, Florida, Costa Rica
Direct 470.296.0116
Fax 404.745.0665

Is a Career in Real Estate Right for You?

It’s estimated that between now and 2024, the number of real estate professionals will grow 3 percent. That’s according to the U.S. Bureau of Labor Statistics, which also estimates that the number of brokers will grow 2 percent in that same time.

That’s tremendous growth when you consider that there isn’t any more real estate being “made,” and that the amount of actual real estate for sale is constantly, forever shrinking.

Why is real estate such an attractive profession? I can tell you some things that real estate professionals love about their jobs.

1. THEY ARE THEIR OWN BOSSES
Because the majority of real estate agents work for themselves, they get to set their own hours and determine the best way to manage their priorities and time. They can decide if they will work from an office or from home. They are also responsible for setting their own goals. And they get to reap the rewards of their individual successes.

2. ONCE IN, THEY HIT THE GROUND RUNNING
For motivated people who are looking to switch careers, becoming a real estate professional is a less time-consuming process than, for example, becoming a lawyer. Don’t take this to mean the choice should be an easy one—but it does mean that real estate school students have a wide array of educational opportunities accessible to them, regardless of where they previously were in life, educationally or professionally. And they get to decide if their hours are full- or part-time.

3. HUGE EARNING POTENTIAL
Real estate school graduates are not limited to how much they can earn. The greatest challenge is their ability to manage expectations about the time and finances necessary to start and grow their businesses. It’s very rare to make money overnight. The good news is that, for serious real estate professionals who develop an ethos of putting the clients first, success is a real proposition.

“Don’t get into it for the money,” advises broker and real estate school owner Merrick Damon Williams. “Work like you don’t need the money. If you care about your clients’ needs, you’ll make sales. When you help people get what they want, that’s a formula for success.”

4. THEY HELP PEOPLE DURING IMPORTANT LIFE MOMENTS
There’s a lot of satisfaction to be gained in the knowledge that you are helping people reach their goals and achieve their dreams at major moments in their lives. A college grad buying his first apartment; a new couple buying their first house; an established family buying a vacation getaway: real estate agents help people through vital stages in their lives, becoming like part of the family. A successful real estate agent is part friend, part advisor, and part cheerleader.

“It’s easy to become personally invested when you’re dealing with residential buyers,” notes Williams. He adds that for some real estate agents, it’s that emotional connection with their clients that makes them thrive. “You’re finding someone their dream home. How can you not feel connected to that experience?”

5. THE INDUSTRY IS NEVER BORING
There’s very little of the tedium or downtime that many people experience working in an office environment. Real estate is about adapting to changes in the market, taking note of new trends, and serving as a guide for your clients, especially if you have an interest in the real estate investment market. And there’s no shortage of interesting personality types.

“Many agents love the social aspects of the industry,” says Williams. “You meet every kind of person and get to work with every sort of personality.”

6. THEY’RE THE EXPERTS
After you complete real estate school, and spend time learning the ins and outs of being a practicing real estate professional, you’ll be amazed at how genuinely knowledgeable you are, and—if you care about the details—how good you’ve become at what you do. Clients will turn to you for market advice, and you’ll know precisely what to tell them. Real estate professionals take pride in their expertise. Seriously—who doesn’t like being the smartest person in the room?

7. THEIR HARD WORK IS REWARDED
Because real estate is in short supply, the prices generally reflect its relative scarcity. And real estate professionals, especially those who put in the time and build their businesses, are the beneficiaries.

“The financial rewards are real. And you can work as hard as you want,” Williams adds. “If you work for someone else, you don’t experience the same level of gratification because you’re doing it for someone else.”

Welcome to the NFL: Becoming A Professional Real Estate Agent

There are lots of questions that come up when people think about becoming a professional real estate agent. (“How do you get started in the business?” “Do I need to work with a broker?” “How much [money] do agents make a year?” “Can I make money selling real estate part-time?” etc.)

For many people who are considering a new career, or starting a side business to earn additional revenue, becoming a real estate agent has a lot to attract it.

Although becoming a realtor sounds great if you enjoy working with people and seeing interesting houses, it’s not the dream job some might imagine it to be. There’s a common misconception that real estate agents earn loads of money for doing little-to-no work.

The truth is a lot different, and there are some things to consider and commit to if you’re serious about starting down the path to selling real estate.

The first thing to do if you want to sell real estate is get your license. Some people prefer the flexibility of online classes while others do better in a classroom setting. Either way, plan to study during and after, to prepare yourself to pass the state exam.

Once you’ve finished the class you can take the state’s official test to become a licensed real estate salesperson. The test isn’t cheap, so be sure to study before signing up for the exam.

New agents usually work under the guidance of a real estate broker. Brokers provide marketing support and legal protection for agents. Before you decide where to hang your business sign, so to speak, it’s a good idea to interview with at least three different brokers, to get a sense of how they work.

Some agents enjoy working out of a large brokerage with well-known company name recognition. Others prefer mom-and-pop operations because of flexibility in terms of hours, ability to work from home, and the freedom to choose their own vendors.

The Brokerage Umbrella

Although you’ll be selling under the umbrella of a brokerage, a real estate agent is an independent contractor. That means you will need to budget money for advertising and other start up expenses.

It’s smart also to plan for annual real estate association dues, as well as membership fees in the local Multiple Listing Service (MLS). Most rookie agents work with buyers rather than taking listings. That level of house-hunting will expend a lot of gas driving around town. Take these expenses into account also.

Showing property is usually done in the evenings and on weekends, but it’s not uncommon for buyers to call asking to see a property with just a few hours’ notice.

Like many other sales positions, real estate is a commission-only business. Although the financial rewards for real estate sales can be quite lucrative, an agent may go months without a paycheck. It’s important to learn to budget for that level of variable income.

Commissions are usually paid by property sellers and are negotiable by law. Some agents get 2.5 percent of a contract purchase price and offer out the same to buyers’ agents, but that varies.

But unlike other jobs, a real estate agent or broker has limitless income potential. It isn’t unusual to see some agents who earn over a million dollars a year.

One last thing. Don’t worry if you aren’t what some people consider a “People Person.”

Investors and others who buy or sell property are undertaking one of the most expensive and important journeys of their life.

With hundreds of thousands or millions of dollars at stake, most clients consider trustworthiness, ability, and experience to be far more important than their agent’s personality. Although being sociable never hurts anyone’s real estate career, what you say is usually more important than how you present it.

The ball is in your court.