Archive for April, 2008
6 Steps To Properly Position Your Real Estate or Mortgage Business For Financing
April 30th, 2008 Categories: Real estate economics, XBanker, business financing
Below is the final post in a three part series by Ryan Page who maintains the not so ironic nom de plume of The XBanker. Ryan and the crew over at XBanker, which also include renowned personal credit guru Gerri Detweiler and incorporation specialist Garret Sutton, focus on small business advice and financing strategies.
Bookmark this site in your RSS reader as it’s chock full of great business advice that any real estate or mortgage professional should consider. Just because you’re a good agent doesn’t mean you’re a good business person, in todays volatile market of attrition every advantage needs to be explored. What’s most refreshing is that the content is not your typical regurgitated vanilla flavor, it’s spicy real world advice given by people who are active in the trenches.
Enough with the intro, the floor is now Ryans…
This is the final post in a three post series on financing your real estate or mortgage business. Before I dive into the meat of this post, I’d like to briefly recap what I’ve discussed thus far.
In my first post, I discussed how important it is to form an S-corporation or LLC. I recommended S-Corporations for most circumstances, with LLCs being a preferred entity for working with partners. In my second post, I demonstrated how forming a corporation or LLC can limit your tax liability. In my last post, I turned my focus to accessing capital for your business.
The objective is to create separation between yourself and your business - for asset protection and to preserve your personal credit. Properly obtaining business credit and bank financing can help you access thousands of dollars for your business, without impacting your personal credit scores or ratios.
As the final post in this series, I want to share six concrete next steps for getting your business in position for financing.
- Choose the right name. Believe it or not, what you name your business and how you define your business activities can have a huge impact on your ability to obtain financing. So whatever you do, please don’t: use the words “mortgage,” “real estate” or “investments” in your business name. All three of these words are akin to saying “bomb” on an airplane. I recommend setting up a management or marketing company.
- Set-up your business entity - now. The age of your business will either open or close doors for financing. The best time to incorporate was yesterday. Some of the most attractive lending products will require you to be in business for 2 or more years. If you’ve been operating as a contractor or sole proprietor you can sometimes sidestep this, but age is always an advantage.
- Legitimize yourself. It’s important that your business look legit. That means you should have a website and email address at that domain; and that your kids don’t answer your business phone. Look and act professional/corporate and you’ll have a lot better chance of obtaining financing.
- Get a couple business credit cards. If your personal credit is decent you should be able to easily secure a couple credit cards, even as a start-up. Your limits may start out small, but they can routinely be increased and most importantly - the balances won’t mess up your revolving debt ratios on your personal credit.
- Unsecured lines of credit. This is the holy grail of small business financing - cash that can be readily accessed! You’ll need stellar credit, good ratios and typically 2 years in business. Most banks offer these products, but you’ll rarely get all that you want from one line. I recommend establishing lines with multiple banks. You’ll be able to increase each line and you’ll have access to enough capital to make all your dreams come true (well, at least your business ones!).
- Build business or trade credit. Trade credit is the financing that business extend to other businesses. Like building your personal credit, you’ll need to proactively build your business credit by obtaining, using and paying off lines that will report to the business credit bureaus. If you properly do this, you’ll find that you can access thousands of dollars of credit, without the dreaded personal guarantee, with just about every business or supplier in the country. I’ve had a number of clients build their business credit so they could lease their business vehicle on the corporation without showing up on their personal credit. Others have leveraged credit accounts with the likes of Home Depot to finance the supplies needed to flip properties. There are endless possibilities - it just takes preparation and strategy to make it happen.
I hope this series has been useful. My partners and I will continually dive into these topics on our blog come pay us a visit sometime.
Thanks Ryan, you’re welcome back anytime…
Also See:
How Real Estate Professionals Should Properly Finance Their Business
How To Use The Proper Corporation To Minimize Your Tax Liability As a Real Estate Professional
How To Maximize Your Income and Minimize Your Liability as a Real Estate Professional
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I Said I Want to See ALL The Listings
April 30th, 2008 Categories: Real Estate Technology, Redfin
Also See:
Redfin The Transparent Real Estate Brokerage
The Psychology of Property Listings and Interest Rates
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5 Tips For The Brave Soul Considering Real Estate Sales As a Career
April 29th, 2008 Categories: 4realz, Active Rain, Blogging Tips, Real Estate Technology, SEO Tips, social networking optimization, twitter
What are your three tips to someone wanting to become a real estate agent today?
Hi Im Rudy at Trulia, a social media guru, inspired this post with a question on Twitter last week.
My initial reaction was ‘Why would anyone want to enter the real estate sales industry today?’ but the prevailing thought became: It would be a great time to enter if you knew how to play the game with new rules and better tools.
The information below is nothing new to the experienced re.net professional, it’s meant to be a simple guide to help a new agent put their feet in the re.net pool without inundating them with too much information.
Study, Subscribe, Crowd Source, and otherwise increase your Social Networking Optimization Skillz.
Read the real estate sites indexed in my re.net tab (for starters). Look for other sites of interest from their blogrolls. Commit your favorites to an RSS Reader and read them like the daily newspaper. Track the latest news, trends and general pulse of the online real estate and mortgage community. If someone writes a post that inspires a question, comment thoughtfully and you’ll likely gain some influential friends along the way.
Once your social base membership increases you will be able to crowd source for information better than any search engine can provide. What is crowd sourcing? Leveraging mass collaboration amongst human beings to further ones knowledge and experience levels.
Enroll in social networks like Active Rain, Twitter, Facebook, and LinkedIn, doing so is a well guided, relatively easy process. If you get stuck ask someone in the community for help, there’s a high degree of altruism in these spaces.
It’s easy to get a little crazy joining new social networks, it gets even crazier trying to keep up with them all, so choose where you’re going to spend your time carefully. The communities I mention have all yielded positive returns in exchange for my time spent ‘in’ them.
Active Rain. The #1 social network for real estate and mortgage professionals. If the community does nothing else it gives a wide range of feedback, from active professionals to interested consumers, and offers good targeted marketing leverage/exposure. Most every ‘online’ real estate related professional I’ve run across has contributed to Active Rain at some point in time, it’s a great place to gain online traction.
Twitter is an enterprise class text messaging social network who’s potential upside is best described in my last post.
FaceBook is a more mature, clean version of MySpace in concept and user type. Throwing sheep, feeding a friend to a Vampire and a slew of other spamapplications argue the contrary, granted. But, Facebook also allows one to create smaller specialized ‘communities’, affiliate with specific geographic and demographic groups, and otherwise socially promote yourself and your wares for free. FaceBook can connect you with ALOT of people.
LinkedIn is a resume and networking community for professionals. If you’re looking for business, products, services and the people that provide them, LinkedIn’s ’six degrees of separation’ community is a great place to crowd source higher level expertise and experience and even land a better job.
Join Trulia Voices and Discussions on Zillow, engage the conversations as people subsequently tend to link back to your home site, which is the goal. One thing here: answer the damn questions honestly not according to the kool-aid infused NAR psycho-babbletalk rulebook that currently dominates these sites…get in there and mix things up, you’ll stand out and win in the end.
Give away your knowledge and listings freely.
Start a blogsite by paying a service provider (there are a number of them in the RE Tech section of the re.net tab) to create a nice clean ‘home’ in cyberspace for you. Yes you can do a lot of this yourself for relatively free but thats not where you should be focusing your time. Allow the professionals to handle most of this, at least the set-up, the cost in time savings alone is worth the price tag. Don’t make the mistake of putting up an ad hoc site, it’s the first thing most people will see of ‘you’ and first impressions are important.
It wasn’t all that long ago that uttering the idea of open listing distribution outside the traditional MLS would get one tarred, feathered and hung from NAR’s flagpole. Today it’s accepted as necessary for survival. Customers want to see listings, all of them, so give them the most intuitive experience possible. Make sure your site provider has a really good IDX User Interface (UI). In other words, you want something that looks almost as good as Redfins, Zillows or Trulias User Interface to redisplay the listings in your farm area. Push your listings out to these well trafficked sites too.
Consider yourself a real estate journalist, report (blog) on your market 3 times per week. Mix it up, the stories can vary from statistical to satirical but should always tie back to relative real estate information, and enlighten to otherwise benefit your audience.
Familiarize yourself with various multi-media tools to properly market yourself and the real estate you represent, i.e. Turn Here, Real Estate Shows, even sites as simple as Flickr can help make an otherwise vanilla listing drip with sweet sizzurp. Teresa and Daniel epitomize this practice. Current agents and profound bloggers are even developing their own technologies for the benefit of all…
If you notice another professional doing a property or client an underachieving disservice, pass these tools and advice along to them. There is nothing more frustrating to a buyer and insulting to a seller than reading some boiler-plate MLS description of a property with no (or disposable camera) pictures.
The re.net community is rather ‘cliquish’ and protective of their own. Differentiating yourself with novel opinion is one thing, personally attacking someone for your benefit will get you ostracized in the greater community. It should also go without saying that plagiarism is stealing and will get you ‘rubbed out’ too. Never copy someone’s work without permission or proper citing.
Don’t expect instant success. Building an audience takes time, at least 3-6 months.
F*@k SEO
A good blogsite provider will build you a site that innately optimizes your content for the search engines. Many SEO pundits (trust me, you’ll run in to them) will have you chasing your tail focusing on template style (= boring) writing. You can’t ‘game the system’, trying to do so is often called ‘black hat’ or ‘grey hat’ tactics and will likely get your site penalized. The best SEO advice anyone can give centers around composing well written, compelling, relevant content and producing it with consistency. The rest will take care of itself.
The SEO related sites I link too in my re.net index are there because they’ve proven to spur the creative writing juices and address the basic do’s and do nots very well.
The time you spend trying to keep up with SEO tactics is time better spent researching your market data, trends and other far more interesting content to provide your readership and subsequent clients.
Always remember, you should be building an audience not fishing for ‘traffic’.
Don’t call yourself Realtor.
Sorry, but it’s the truth. Call yourself a licensed practitioner of the real estate arts, marketing guru for real property, property pimp, or whatever. The name Realtor creates strong feelings of aversion in the mind of a consumer, and the NAR doesn’t like anyone using the word very much anyway.
Drop the confusing acronyms. I get these visions in my head of local NAR meetings where Realtors wear their uniforms with patches and beads sown on, like in boy (or girl) scouts.
Distance yourself from traditional real estate economics. I’m not saying charge less, I am saying charge whatever you charge, just have it make sense to the consumer.
Don’t put your picture on biz cards or the front page of your website. People can be shallow, jealous and unforgiving…propping your face up for all to see may be deemed pretentious, too pretty/ugly, or doesn’t look enough like you (so you’re lying). One of the (many) things I took away from the 4RealzEd.com seminar was Jim Marks demonstrating via a real client example, where simply removing an agents mug from the front page of the website caused a substantially higher click-through rate.
It’s not personal, but its hard for a few good apples to un-spoil the bunch. For every Jay Thompson, Kris Berg and Teresa Boardman there are a hundred clowns out there insuring the name Realtor elicits a furrowed brow and curled lip on the face of the consumer status-quo. Imitation is the sincerest form of a compliment, it’s OK to try and emulate what these good folk are doing, the industry is better because of people like them, which leads to:
Pay it forward
For too long the real estate industry has been in competition with itself.
Sphere: Related ContentScarcity breeds scarcity, the bigger you give the bigger you get. Help out other agents that didn’t get the love you got and make the entire industry a better place than when you arrived.
Crowd Sourcing Applications Social Networking on a Granular Level
April 22nd, 2008 Categories: Social Networking, social networking optimization, twitter
I’ve been into Wikipedia lately, it may not be the most perfectly politically correct source for definitive information, but it works. Crowd sourced information is far denser than an algorithm when it comes to encyclopedia worthy content.
Twitter turns out to be a great source of crowd sourced information too, it’s the main reason I ‘put up’ with the enterprise class texting application. I follow a group of smart people and ‘ask Twitter’ when I have a question that I feel members of my little society are likely to know.
For example:
I was in the market for a new portable camera and so Twitter’d as much. @ResPres , The Dude when it comes photography utensils, clued me in to the Lumix TZ5 and posted pictures on Flickr using the camera. Sold, bought one 2 days later and love it. @respres and I never exchanged an email or phone call, all done via Twitter.
@tyr needed a new passport fast. I told him about a service I successfully used in the recent past, and believe he engaged them too, solving his dilemma.
@Morganb was looking for suggestions on a new site template, I recommended @tcar (serial blog-site creator with mortgage experience) and a few other @’s quickly joined in with their suggestions.
@Alex_Stenbeck twits daily mortgage rate pricing and related trends, very useful and cool. Many mortgage brokers pay Barry Habib a good buck for similar info.
@bnix had a question about configuring Twitter with Google Talk, he got his answers from the community.
The side effect to what’s becoming a pretty useful little tool is the ‘noise’ of consistent text messages that goes with following 60+ people like I do. Trust me following 60 people is peanuts, some follow 600. Twitter offers designations for ‘twiting’ a certain number of times. One can achieve ‘E-Twit’ status by sending 1000 ‘Twits’, and many aspire to be. This causes the mix of emotions many have toward Twitter; many curse it but more use it. I find most of the noise to be a tolerable level of comedy, many twits make me laugh thruought the day.
Many talk about ‘Web 3.0′ or a semantic, smarter web…Twitter is pretty close to that on a primitive, granular level but its evolving quick. 3rd party applications like twhirl integrate Twitter to ones desktop. Sites like Friend Feed aggregate content from multiple user feeds in classic Mash-Up fashion and Alert Thingy (great name) is to Friend Feed as twhirl is to Twitter.
So if you can tolerate a little conversation, Twitter is a pretty dang useful tool if you’ve got a question neither Google nor Wikipedia may answer particularly well. I’m far more likely to buy a camera that a trusted professional in my social community recommends than Google…
This was a completely random post, it was supposed to be about Innovation vs Imitation and being ‘just a little bit better’…maybe next time 
The Economic Realities of Transparency for The Mortgage Brood
April 20th, 2008 Categories: Business Models, Mortgage Boom 2.0, Mortgage News, Tranparent mortgage pricing
Transparency in the mortgage industry has become a hotly debated topic over the past 18 months. With major corrections in the marketplace, declining home values, volatility in mortgage securities, and a white hot media focus on the viability of mortgage professionals in general, we are primed for the paradigm shift towards the type of market transparency that has taken over the economics of other commodity markets.
Searching Wikipedia, Transparency has no less than 17 definitions; focusing on the ‘Economics’ classification:
“In economics, a market is transparent if much is known by many about:
- What products, services or capital assets are available.
- What price.
- Where.
A high degree of market transparency can result in disintermediation due to the buyer’s increased knowledge of supply pricing.
Transparency is important since it is one of the theoretical conditions required for a free market to be efficient.”
I was going to delve into it’s philosophical definition and application, but that would cause too many peoples heads hitting their keyboard out of boredom.
‘Web 2.0′ is all about augmenting the speed and lucidity of delivering #’s 1-3. The very expensive technologies that ‘disintermediated’ traditional commodity brokers on Wall Street are now readily available at far less cost to most any industry that deals in information, this much we know. I can today, while being out of the industry as a practicing mortgage broker, monitor what’s going on in the industry better than I could when I was in the day to day grind. Much of the valuable information that was available in ‘expensive’ short supply just 2 years ago is now readily available in buckets.
To a great degree, the resourcefulness of the trusted crowd in the re.net space allows me to maintain a keen perspective about the industry in a fraction of the time. Any consumer who reads the mortgage websites indexed under my re.net tab could assimilate 90% of the knowledge they need to select a mortgage product that is fit for their personal situation.
It makes me smile when I read affluent bloggers post about how valuable their advice is as they simultaneously give it away. Here’s six figures worth of advice, for free. I’ll even expound on Roberts advice:
Next time you take out a mortgage, commit yourself to making the payment a 30 year fixed amortizing loan yields (20 or 15 year fixed payments are even better if you can afford it) that your situation qualifies you for. Execute a 5 year ARM Interest Only (or ‘cheaper’) product, take the difference between your ‘qualifying payment’ and your actual payment, and invest it.
Thats valuable counsel, now its out there for free…I just disintermediated myself
The mortgage industry, with it’s migration into the Mortgage Backed Securities arena of Wall Street, is square in the same cross hairs that pre dot bomb ’stock brokerages’ found themselves. The environment is strikingly similar: market has recessed substantially, quality information is getting easier and cheaper to find, and its ‘brokers’ are fighting for their careers.
Remember when stock brokers repeatedly uttered how ‘people need my advice’ to choose the right investment vehicle? If someone would have told them then that they would be selling mortgages (or real estate) in the near future, they’d have laughed so hard at you they’d cry. Speculative investment vehicles are far more difficult to evaluate risk in compared to a mortgage, yet I hear many of todays current mortgage practitioners repeating the same ‘people need my advice!’ jargon. Mark Twain said, ‘History may not repeat itself, but it does rhyme’…this is straight-up Nursery style.
Brokering information inherently gets easier, faster and cheaper. If you’re in the mortgage business and you can’t deliver more information to consumers easier, faster and ideally cheaper than your competition, your value is diminishing. The quicker a mortgage (and real estate) professional learns to become an uber resourceful information broker, the more ‘future proof’ you and your business becomes. Banks have already clued into this, they’re positioning themselves to crush the small to mid size shops, continuing to keep Washington in their pockets by lining it’s pockets, to keep the unscientific disclosure laws in place.
How does one compete in an industry that has disparate transparency/disclosure rules? Get lean, efficient and be more transparent than the next guy. It’s always been about survival of the fittest, today is no exception…you must offer more information, be quicker, better and cheaper than your competition.
Mortgage professionals had best stop trying to refine their image on the outside and instead get real personal with how they do business internally, or it’s on to yet another career…
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