America is Great, Real Estate Investors don’t speak same language. (Part 1 of 2)

One thing i have always loved about living in the United States is getting to walk down the street of any large american city and hear the different languages.  I hear mandarin, spanish, hindi, arabic and of course my native tongue, English.   Our diversity has made America what it is. (I happen to think America is great.)  The different languages heard represent someone who is here trying to make a life for themselves and eventually we know they will likely find our language to make operating here a little easier.

I have been a residential investor for 19 years.  One thing I have come to know is as residential real estate investors… we all speak english… but don’t speak the same language.

Let me give you an example..

Inquiring investor Client Question;     “Hey Mr/Ms Investor/seller  why should I invest in this house here?”

  Brilliant Investor/seller  Answer;   “Because of the cap rate,  i mean the GRM (gross rent multiplier), i mean the ROI...no the IRR… um because you make lots of cash flow after you pay the expenses...as long as you don’t include the mortgage and property tax… i mean it just depends….”

OMG!   Why?   Why?   Why don’t we speak the same?  We sound like contradicting buffoons all trying to justify our means of justifying the strategy.   

Until an investor can pick up a phone and call another investor and we all have an agreement on how we evaluate residential real estate investments we will continue to lose credibility with clients and we will face up-hill battles on the sales process trying to convince them of our method of investment justification.

We can dig deeper.

Lets all say we agree on ROI as the base-line means of making an apples to apples comparison of one investment next to another.

Then it begs the questions…

HOW did you get that ROI?    Is the ROI Gross or Net?

OK if it is NET ROI then I guess I will assume it is cash on cash ROI …

BUT if I am a buyer  is it safe for me to assume that you considered ALL the expenses as a seller?   Or did you leave out the ones that maybe didn’t appear to be as important like maintenance allocation or vacancy allocation (Both extremely important by the way!)

I think you get my point.  Until we all come together and determine and agree on the best means of evaluating and discussing a residential investment property we may all be speaking english but we will not be saying the same thing.  

These issues put us in the exact same spot as the foreigner who comes here who does not understand what we are saying.   

When we meet this non-english speaking person we believe if we ….  KEEP RAISING OUR VOICE LOUDER THEN MAYBE THEY WILL UNDERSTAND.  :)   

All of the yelling won’t make someone who speaks a different language then you understand you anymore then telling me cap rate, cap rate, cap rate  when I as an investor only believe in evaluating based on ROI or GRM.   

As an investors how do we come together the way the commercial real estate industry has? How do we work together so we have our nomenclature when evaluating and discussing a residential investment.    

***    Part 2 of this topic will be posted next Tuesday.  ***

PS- this was NOT a political post about America being great or not great, Nor was it a post about or against any ethnicity,   Any examples used were merely used to make the point about a real estate topic.

Three Keys to Successful Real Estate Investment

Purchasing distressed properties for renovation and resale is one recommended entry path to the real estate investment field. Knowing what to look for in an investment property can help novices achieve a higher degree of success in their first rehab projects to boost profitability from the start. Here are three tips for better real estate investing.

Location Still Matters

The single most important attribute of any property is its location. Almost everything else can be changed or upgraded to suit the needs of prospective tenants. A bad location, however, will limit interest in the property from buyers and renters and will significantly reduce the flexibility available to investors in the real estate marketplace.

Consider Potential Return on Investment

Homes that are considerably larger or smaller than others in their neighborhood present special difficulties for investors. These homes may be less desirable because of lack of space or higher prices compared with others in the same area. Ideally, investors should choose homes that will be of roughly comparable value to others in the area when fully restored and repaired.

Stay the Course

Holding on to real estate investments even during downturns in the economy can allow investors to enjoy greater stability and improved opportunities for profit when the market recovers. By sticking it out through temporary setbacks, novice investors can position themselves for long-term success in the real estate market.

Sky Mikesell's Unique Approach to Real Estate

Sky Mikesell grew up in Portland, Oregon, with his mother and five siblings. From a young age, he took on significant responsibility for the family's finances and worked two jobs throughout his high school years. Mikesell worked closely with a local construction firm on weekends and acquired the skills necessary to perform basic plumbing and home renovation. During the week, he held down a part-time job at a local retail clothing company and honed his customer service skills in this arena. By acquiring these diverse experiences during his teens, Mikesell was able to become a valuable asset to his employers and to develop his own working philosophy.

Putting the Pieces in Place

His exceptional work ethic and drive to succeed inspired Mikesell to take on the challenges of small business ownership immediately after his graduation from high school. His earliest entrepreneurial efforts were in the niche coffee house market and in real estate. Mikesell soon realized that the real estate market in Portland was not suitable for profitable investment and began investigating the outlook in other areas. After extensive research, he decided to liquidate his businesses in Portland and relocate to Charlotte, North Carolina, to pursue his dream of running his own real estate investment company. Today, his turnkey property management and acquisition firm offers services in five major metropolitan areas and delivers top-flight services to investors around the country.