fbpx

One of my favorite authors and thinkers is Tony Schwartz.  Tony is the CEO and founder of The Energy Project, a consulting firm that helps individuals and organizations solve intractable problems and add more value in the world by widening their world view. (https://theenergyproject.com/team/tony-schwartz) 

Tony is the author of several books but he is perhaps best known for The Power of Full Engagement: Managing Energy, Not Time, Is the Key to High Performance and Personal Renewal

I want to share with you one of Tony’s deceptively simple diagrams that illustrates my personal struggle with getting everything done I want to get done – without becoming a danger to myself and others.  This diagram helped inform my thinking about The Rhythm of Our Business and embracing the natural seasonality of the real estate market to ensure we are prepared to seize every opportunity that presents itself, while preserving our health and personal well-being. 

The Rhythm of our Business, and Tony’s diagram below, are both about taking care of the goose that lays the golden eggs.  (That’s you!)

The goal is to spend as much time as possible on the right side of the diagram, alternating between the Performance and Recovery zones.  We find ourselves on the left side of the diagram when we strive to stay in the performance zone at the expense of recovery.  My goal is to be in the performance zone whenever it makes sense, and to spend as much time as possible in recovery before I find myself in the survival or burnout zones

 I hope you find as much value in this simple diagram as I have over the years. 

As always – here’s to the good life!

Care To Learn More About Our Company?

This franchising information is not intended as an offer to sell a franchise or the solicitation of an offer to buy a franchise.  Certain states regulate the offer and sale of franchises.  If you are a resident of one of these states we will not offer or sell you a franchise unless and until we have complied with the applicable presale filing, registration, and disclosure requirements for your state.

I have written repeatedly about the 4 Freedoms for the Real Estate Professional. They are the Freedom of Money, the Freedom of Purpose, the Freedom of Relationship, and the Freedom of Time.  On a practical, day-to-day level, the Freedom of Time has everything to do with balancing the need to seize the opportunities that come your way, with the need to take care of yourself. 

Getting control of your time is not easy.  It requires intentional effort and more importantly, an absolute self-confidence in the value you bring to the market.  A real estate professional should not look at their practice any differently than any other professional would.  You would never pick up the phone and randomly call a doctor, lawyer, or accountant and demand an immediate audience. 

Don’t let anyone try to do that to you.

Having said that, there is a rhythm to our business.  While working by referral undoubtedly makes for far more consistent income throughout the year, there is still a seasonality to the market.  We need to be aware of it and we need to make the seasonality work for us.

Having my tracked my personal productivity and the productivity of my agents for several years now, I know exactly when I need to be ‘in’ my business, working ‘on’ my business, and when I need to be focusing on recovery and rejuvenation so I can go out and do all over again.

Holidays and Long Weekends

First of all, free time, time off, a holiday, or a vacation should not be something you have to earn and reward yourself with.  For a full time, ‘all in’ professional regular time off is absolutely necessary to continue to operate in a peak state.  If you do not take time to rest, rejuvenate, focus on your family, and do something outside of real estate I guarantee at some point you will burn out, lose interest, start making mistakes, and get sick.

I hear time and time again from agents that they like to be on call over holiday weekends because they think they are going to get a step ahead of the slacker agents enjoying some much-needed time off with their families.  I used to be the same way until I realized that the random showings and appointments I took rarely resulted in a closing, much less a referral relationship of any kind.

Therefore, my first piece of advice is this, mark off every national holiday on your calendar as a free day for the rest of your life.  Don’t just mark off the holiday, mark off the weekend that surrounds it.  Start with the Big Six national holidays.  Christmas Day, New Year’s Day, Memorial Day, 4th of July, Labor Day, and Thanksgiving. 

Take this time.  Plan for this time.  Your clients are taking this time off and more importantly they are going to understand if you are.  Customers who do not understand can go find another agent. 

The ‘All In’ Season

Spring and summer without a doubt is the prime season for real estate.  Your referral-based business will produce significant steady income throughout the year, but spring and summer is when you have the opportunity to grow your business and harvest additional financial rewards.

It is easy to see why.  Not only does your past client activity heat up with the change in the weather, but so do your incoming referrals.  Client activity and customer activity both increase in the spring.  It happens every year.

Here in Ohio I tell my sellers that they want to get their house on the market right around Valentine’s Day.  That way when the very first new buyers of the year start to dust off their Realtor.com apps, their property is ready and waiting.  If the winter has been particularly harsh, that first glimpse of warmer weather leads to a dramatic increase in activity in March.

Spring and summer is when we have to be in our business and committed 100%.  Spring and summer is when I know I will be working late at least a couple of nights a week and probably at least one day each weekend.  The business is there.  Our clients need our help and this is what we signed up for.  It’s time to go to work!

The latter half of February, March and April are prime time but there are breaks in the business where things naturally slow down a bit. Significantly, there is a pause in activity during Easter and spring break season.  Your clients are taking a break and I want you to take a break here too.

May, June and July are generally the busiest months of the year.  We are going to be putting in the time, we are going to be busy, we are going to be having a great time making things happen and we are going to make a lot of money. But there are natural breaks I want you to take here too. 

Memorial Day weekend comes the same time every year and I want you to enjoy it.  June tends to slow down every year for a few days around graduation party season and Father’s Day.  If you can swing it is a great time to schedule a weekend or two off.  July is super important but again, take the 4th of July off.  4th of July week is one of the most popular weeks for summer vacations for your clients so it is a great time for you to take off too.

July is transitional.  A lot of business will occur in a short time between the 4th and the last week of the month.  By the end of July however, things start to slow down as people squeeze in their last bit of vacation time before school starts again. 

Which brings us to August.

August – The Mid-Year Recovery

There is still business to be had in August but in reality, it is one of the slowest months of the year for placing houses under contract and securing new business.  It is however one of the biggest months for closings and your customer service and contract management skills are going to be on full display. 

You have just spent six months making the most of your business and opportunity.  Whether you want to admit it or not, you need, and yes deserve a break.  This is the month to take a vacation and back off a few days.  Celebrate. It has been a hell of a year so far.

The ‘On the Business’ Season

While you will still be enjoying a steady stream of referrals over the next few months the fact is it is time look at the past spring and summer with a critical eye.  What worked, what did not, what goals did you meet, and where did you fall short?  While September will be relatively busy, and October is a little bit like August with quite a few closings, now through November needs to be where you start thinking about next year’s ‘All In’ season.

I like to focus on developing new capabilities, marketing ideas, advertising plans and financial goals for the next twelve months during the fall.  I like to make sure I create space to reflect on and make plans to improve my business.  The pace this time of year is a less frenzied than spring and summer.  This is the time of year the National Association of Realtors schedules their convention.  This is the time of year to get better, sharpen the saw, and set new business goals and standards.

The Holidays

The holiday season in the USA starts with Halloween and spills like a hangover into the first week of January.  It happens this way every yearFrom a working by referral perspective the holidays are the most important time of the year. This is the time when making calls, writing notes and cards, giving gifts and going to parties and visiting with your database are the most natural things in the world. 

Those agents that approach the holiday season with a plan and sense of purpose can contact everyone in their database at least once and sometimes more than once.  The seeds you plant and the referrals you earn during November and December can create the closings in January and February that other agents can only dream about.  This is an ‘All In’ season but in a different way than spring and summer.

The Year-End Recovery

Once again you have done great work the last three or four months and it is time celebrate, take time for yourself and your family and get ready for the New Year.  Christmas through New Year’s should be a guilt-free opportunity to enjoy yourself and your accomplishments.  After all, spring and summer is right around the corner. 

Here’s to you and the good life!

Care To Learn More About Our Company?

I love Walmart

If Amazon can’t deliver it or Walmart doesn’t sell it – I don’t really need it. In many communities, Wal-Mart is not only the most economical place for groceries and just about anything else, they are a major employer. In lower and moderate income communities, a full time job at Wal-Mart is a good job indeed.

As an investor, being able to work with a Walmart team member, and other service workers of similar income, is a key real estate investor success strategy. The trick is to have properties to rent that a Wal-Mart Client can afford.

Magical Thinking

Buying and renting property that I could make money on based on what the majority of the people in my market could afford, completely changed my real estate business. Prior to that I was buying houses I ‘liked’ with little regard for who was going to actually rent them.

When I got started in real estate investing, I like to say I was a victim of Magical Thinking. I really thought that by virtue of being a nice guy, going out of my way to accommodate my tenants, and over improving my properties in an effort to appeal to my tenants’ better natures, I would get rich. I did not get rich.  I went broke.

My Brilliant Flash of the Obvious

In late 2009 as I was crawling from the wreckage from my first ill-fated foray into real estate investing, it occurred to me that I had been trying to serve a market that did not exist.  The flash that went off in my brain was that I needed to figure out how to serve the market that was there, staring me in the face.

I used to set my rents based on what I thought my properties were worth. Why wouldn’t every prospective tenant be beating a path to my door to rent from me? My asking rents really had no basis in reality and the fact was, very few people in my town could afford the rents I was asking.  Until it hit me that the market set my rents, I struggled. Once I accepted the economic reality of where I lived, I began to make money.

What do I Mean by ‘Wal-Mart Client?’

When I talk about “The Wal-Mart Client,” I am really referring to the Best Case Springfield, Ohio rental applicant.  Springfield is my home town and where I first got started in real estate investing. Springfield is classic rust-belt working class town with a large number of rental properties and tenants.  A ‘good’ job here does not pay much money relative to other parts of the country because we have no shortage of applicants for entry level blue collar jobs.

In my home town we are steadily losing population as our manufacturing base continues to shrink. We cannot count on our properties appreciating in value over time.  Cash flow is where we make our money.

Given these circumstances, the majority of the working individuals in our market can afford around $450 a month in rent. As long as our cost structure allows us to charge rent in the $450 range, we can count on a large pool of applicants from which to select tenants.

Our Target Applicant

Our ‘target’ applicant is someone who makes between $350 and $400 a week.  A Wal-Mart Supervisor making $8.50 to $10.00 hour and averaging 35 hours a week is a great example of who we want to attract. This person may not make a lot of money, but they work for a very stable company.  Many health care, call center, and fast food workers fall into this category as well.

A Bit of Math

$9.00 an hour at 35 hours a week translates to $1365 a month gross income. ($9.00 X 35 hours a week = $315.00 a week.  $315 X 52 / 12 months = $1365.00) We look for our applicants to make at least three times the rent amount in monthly income.  $1,365 translates to a target monthly rent figure of $455. ($1365 / 3 = $455.00)

Obviously, if you can afford to rent your unit for $400 vs. $500 you will have a better shot at collecting rent 12 months out of the year versus less than 12 months.  Worse, you are likely to compromise on your application standards to get a warm body in a unit which can cost you more in lost rent, repairs, and utilities down the line.

Our goal is to buy and maintain property that we can cash flow at these income levels. Furthermore, by expanding the number of applicants we have to choose from, the better chance we have of finding a tenant most likely to pay the rent and maintain the property throughout the lease term.

What is the ‘Target’ Tenant in your Market?

I hope this post makes you think about what the target applicant in your market can afford to pay in rent. While Springfield, Ohio may be an extreme example, at the end of the day every community has a sweet spot. Your job as an investor is to identify it.  Once you do that, you will be able to make much better purchase and improvement decisions. Just as importantly, you will know the return you should expect. No magical thinking for you!

Care To Learn More About Our Company?

I can’t spend another night in this house.

I can’t spend another night in this house.

Have you ever felt this way about your house or apartment?  Maybe this is your year. Maybe there’s a move in your future.

If you’re like most buyers, you’re excited about the idea of moving but also a little nervous.  After all, whether you are buying your first home or your next home, this is a big deal.  Do any of these thoughts sound familiar?  

Don’t worry, it’s normal. The last thing you want to do is make an expensive mistake. You want you to fall in love with your new place, but you want it to be a good investment too. We’re here to help and have some fun along the way.

A Different Kind of Brokerage

At ROOST Real Estate Co, our agents work by referral. This means that most of our business comes from past clients who refer new buyers and sellers to us.  Our very best clients are those that are referred by people we have worked with in the past.  

ROOST agents understand that the way to earn referrals tomorrow is by taking care of business today.  They take the time to get to know their clients and understand their homeownership goals. That is a big reason why our clients return to us again and again.  Many of our agents are at the point in their careers when their early clients are referring their children to them. 

We are the real estate company people turn to at every stage of their lives. We are there when our clients rent their first apartment, buy their first home, buy their first investment property, and buy their retirement villa on the beach.  We create clients for life.

ROOST® Real Estate Co. agents are experts in their field and experts in the community in which they live and work.  ROOST® agents are some of the most experienced in the business.  Every ROOST agent is a full time professional and passionate about helping people live the way they want to live today.

We Work At Your Pace

Many of our clients are motivated to find a house and make an offer right away.  Other clients are on a longer time frame and may not be ready for a year or more.  For others, it may take a few months to address some credit challenges necessary to get a mortgage.  Whatever your time frame, we want you to be comfortable and not feel rushed. We will be ready when you are.

Having said that, It is never too early to begin the process of applying for a mortgage.  Our business partners in the lending industry are the very best at what they do. They understand the needs and concerns of their buyers.  Being pre-approved for a mortgage means you can focus on houses you can comfortably afford, and when you find the right property, you will be ready to make an offer.   

Buy With ROOST™

Buy With ROOST™ is the end result of working with thousands of buyers, over many years, in all sorts of housing markets.  It is everything we know about helping buyers realize their homeownership dreams.  

Whether you are looking for your first home or your next, we want you to have the knowledge and the confidence you need to be successful in today’s market.  Buy With ROOST™ makes the home buying process quick, easy, and enjoyable. Here are some of the benefits you can expect when you work with a ROOST Real Estate Professional.

Agency Law Matters

Most states have some form of buyer agency and seller agency.  Many have a transaction agency and a few have some form of dual agency.

We explain the agency relationships in your state so you know exactly who is on your side – and who is not.

Any Home You Want

It is important to understand that your ROOST Real Estate Professional can show you and sell you any home listed with any other firm or agent.  In some instances, we can help you with homes that are listed by the owner without the benefit of a listing agent.  

We want to help you so you get the agency representation you deserve.

Using the Internet To Your Advantage

Everyone these days is looking at houses online long before they call us.  In our experience, the best website and app to use is Realtor.com. We Realtors have a direct feed to Realtor.com through our multiple listing service or MLS.   Zillow, Trulia, and the rest have a lot to offer as well, but Realtor.com at the end of the day generally has more current information.  

We show you how to use the internet to your advantage so you always have the most up-to-date and accurate information about the local market.

Helping You Find Your Perfect Home

A big part of our first meeting is logging onto the MLS together and entering the criteria you want in a home.  We set up a search in the area or areas you want to live, we enter the price range you want to be in, and the amenities you would like to have.  Then, we ‘save’ the search so that when a home you might like hits the market, it shows up in your email inbox.

We get you information about new listings fast so you can be first In a ‘hot’ market.

Working With Your ROOST Real Estate Professional.

Most buyers look at a hundred or more listings online before actually making an appointment to see one.  Just based on the pictures, maps, and details provided you are going to eliminate at least 70% of them from consideration.  After some quick drive-by’s to check out the neighborhoods, you’ll likely end up with six to twelve homes you want to see.

We work hand in hand with you so we don’t waste your time dragging you through houses you’ve already seen online.

Getting Pre-Approved For a Mortgage

Knowing what type of loan you qualify for is important because it tells us which listings we should focus on.  Getting pre-approved also makes you a more attractive buyer when it comes time to make an offer. Your pre-approval letter is the closest thing to cash you can have.  

We introduce you to the best lenders in the business so you can be the most powerful buyer you can be.

How Much Should I Offer?

The best way to figure out if a home is priced right is to look at the sales of similar homes in the neighborhood going back at least six to 12 months.  This is where your ROOST Real Estate Professional’s experience and expertise is absolutely critical.  

We show you what homes in the neighborhood are selling for so you can make your best offer.

Contingent Offers

If you have a home to sell, and a mortgage to pay off, before you can close on your new home, then we will make your purchase ‘contingent’ on the sale of your current home. Your ROOST Real Estate Professional will guide you through the process, and work with you to coordinate all of the details. 

We can help you sell your existing home so you can get into your new home.

Home Inspections

Your purchase contract will include the opportunity to hire a registered home inspector to go over the home from top to bottom looking for problems.  The contract will be contingent on obtaining favorable inspections. If a major problem is discovered, and the seller is unable or unwilling to correct it, you will have the right to walk away from the purchase.

We will refer you to a reputable home inspector so you know exactly what you’re buying and what to plan for in the future.

Contract to Closing

Finding the house of your dreams and getting it under contract is only half the battle.  Expect that it will take 30 to even 60 days to get from an accepted contract to the closing table.  At the closing, money will change hands, and the seller will sign the deed over to you.  

Your ROOST Real Estate Professional will help schedule your appraisal and inspections, follow up on any repairs that need to be done, coordinate with the title company and handle anything else needed to complete the sale so you can focus on packing up for the move.

Let’s Have Coffee

We invite you to schedule a NO obligation buyer consultation today.  The meeting will take less than an hour. Here are our questions for you:

We will make sure to cover:

We will go over our step by step process of buying a house and talk about how we can best work together.  Finally, we will log onto the Multiple Listing Service (MLS) website together so you can see exactly what we see as we start your search.

The ROOST Commitment

Buying your first, or your next home, can be challenging and a little scary.  There will be ups and downs along the way. Your ROOST® Real Estate Professional will be by your side from start to finish.  We have to do the best job we possibly can for you because our business depends on earning your referrals for years to come.

The best part about Buy With ROOST™ is that our services are absolutely free!

Yes, our services to you as your buyer’s agent are absolutely FREE.  We know that sounds too good to be true. Here is the short version of how it works.

When an owner signs a contract with a real estate broker to sell their home, they agree to pay them a fee at closing.  The fee is usually a percentage of the final selling price. The listing broker then offers a portion of that fee, usually half, to all of the other brokerages in the area in hopes that one of them has a buyer for their listing.  The brokerage that earns the commission shares it with the agent working with you.

You should know that your ROOST Real Estate Professional does not get paid by the hour, or earn a salary of any kind.  They work on commission and only get paid when they successfully guide you through a successful closing.

You’re In Charge.

You owe it to yourself to experience the satisfaction of working with a professional that has your best interests at heart.  We don’t try to bind you to us legally with exclusive agency forms like other firms. If you don’t feel comfortable committing to working with your ROOST agent after your first meeting, you are under no obligation to do anything.  But, we’re pretty sure you’ll be excited about moving forward.

You owe it to yourself to find out what’s possible right now for you and your family.  Imagine how great it is going to feel when you move into the home of your dreams. You can do this!  Make the call. What do you have to lose?

Care to learn more?

Click Here for access to The Home Buyer Jedi Master Scorecard.  See if a ROOST Real Estate Professional can help you live the way you want to live today.  If you happen to be reading this offline, the web address is www.kys.coach/HomeBuyingJediMaster-a92753.  

Helping clients make the big moves in their lives is one of the most rewarding parts of our jobs as ROOST® real estate professionals.  It is how we help our clients live the way they want to live today.  We appreciate the trust you are placing in us to guide you through the process.

And oh by the way…  If you know of anyone interested in buying or selling real estate, we hope you will think of us. We promise to take great care of everyone you refer to ROOST Real Estate Co.

Thank you!

This article originally appeared in Forbes.

My Back Story

I spent 2006 and into 2009 fighting the good fight but slowly coming to the realization that I was in a financial position that I could not fix.  I got really good at borrowing money and the banks I worked with were happy to work with me.  

I overpaid for several single-family houses and small apartment buildings.  I managed to buy them with little money down. I had little equity and no room to reduce rents as the economy in southwestern Ohio hit the skids.  I filed for bankruptcy in April of 2009. It sucked.  

I’m No Guru

There are many books, seminars, and home study courses written by industry ‘gurus’ that teach how to buy houses with little or no money down.  I question the ethics of most of these purveyors of ‘get rich quick’ schemes. These tactics have no place in my business today, or this blog post.  I hope this does not come as a disappointment.

It’s Going To Take Some Money

Buying real estate takes at least some cash, either your own, a partner’s, or a bank’s.  Accessing bank financing may be easier than it was a few years ago post-crash, but for most of us, a fairly significant down payment will be required.  Figure 20% to 25%. 

Furthermore, depending on the type of mortgage you qualify for, the condition of the investment property generally has to be fairly good. At a minimum, the lender will look for a functional heating system, running water, and electricity.  

Here’s What Is Possible

It is possible to buy property in a place like Springfield, Ohio, for very little money.  However, the condition of the property will be poor and will require a tremendous amount of physical effort on your part to put it in service, or, a significant amount of money to pay someone else to put it in service.

One way or another, a lower-priced house in the city of Springfield is going to cost $30,000 to $35,000.  You may be able to acquire a property for as little as $2500, which I have done, and put $25,000 to $30,000 in it to get it in service.  

On the other hand, you may buy a property in good if not quite move-in condition for $30,000 to $35,000.  Either approach is going to yield a property in your portfolio that will rent for $600 to $700 a month. 

Pay Now Or Pay Later

The first approach requires a lot less money upfront and usually a huge investment of sweat equity.  It also allows you to improve the property as you have cash available, either from other rental properties in your portfolio or your full-time job. 

The second approach is probably preferable if you have the cash up front or bank financing.  The interest and principle required to service bank debt are going to impact your profit to some degree and your cash flow to a substantial degree.  

Crawling From My Wreckage

Within just a couple of years after the crash and my subsequent bankruptcy, I was anxious to get back into investing.  I was not interested in borrowing money. Unencumbered real estate – real estate without debt or mortgage – is a very beautiful thing.  My goal was to acquire as much as I could afford.

An investor client of mine was in the habit of buying multiple properties with cash at sheriff and tax sales at rock bottom prices.  These properties were in very bad shape. They were literally uninhabitable most of the time. My investor friend would then sell them to me via land contract at a substantial markup.  

I would then fix them up using the cash flow I earned from my real estate brokerage business.  I was able to get help from the people and resources we put in place building our property management business.

Price And Terms

The purchase prices of these properties ranged from $2500 to $10,000.  As a rule, I would make an interest-only payment for six to 12 months while I put the property back in service with my cash and effort.  After the initial six to twelve-month period we would term out the loan usually over 30 to 36 months.  

My investor client was very happy and I managed to accumulate over a dozen cash flowing properties free and clear within five years.  I continue to work with this investor to this day and it has been very profitable for both of us.

No Free Lunch

If real estate investing was easy everyone would be making a lot of money.  Real estate investing is not easy. The only easy thing about it is the ability to lose a lot of money relatively quickly.  I hope you can learn from my mistakes and avoid making the same yourself.

Care To Learn More About Our Company? 

I believe that where our passion for our business intersects with our desire to be heroes to our clients, lies our opportunity as entrepreneurs to be rewarded handsomely for our efforts. This is not a magic formula. If it were, many of us would be very well-off indeed. Profitability requires focus, structure, a set of proven processes and intentional execution.

Hero

Adding Value

Being of Use

Trusted Collaborator

$

Passion

Doing what you love for

 people who appreciate

what you have to offer.

Our business plan is deceptively simple.  It is designed to offer our agents and clients superior experiences not regularly obtainable in the market, at a competitive if not premium price.  In short, we offer superior value.  My goal is to offer our broker owner partners and franchisees superior value as well.

Care To Learn More About Our Company?

You understand that pricing your home is a process rather than a one-time event. Positioning your home to attract the most interest is the key.

The biggest challenge of positioning your property correctly on the market today is pricing.  No matter how much sales history there is in your neighborhood for homes just like yours, there is still a certain amount of art needed to supplement the science.  Every situation is different and market conditions vary with the seasons.

Zillow ‘Zestimates’ And Your List Price

The biggest change in the pricing process today is the influence of Zillow’s ‘Zestimates’ on the housing market.  Every home on Zillow has a Zestimate. The Zestimate is based on public records and user-submitted information. It is generally a close approximation of value, but it is not fool-proof.  Many buyers, however, will perceive it as the true value of your home.

Some sellers believe the best strategy is to price their home for more than it is worth because a buyer is going to try and talk you down.  I suppose there was a time when this argument had merit but not today. If your home is priced well above the Zestimate, without clearly detailed justification as to why, buyers will not bother to look at your property – much less make an offer.

Zestimates Can’t Tell The Whole Story

Don’t give in the tyranny of Zillow either.  Some sellers are ready to give in because they believe that whatever Zillow says their home is worth, is all they will get. They believe the internet destroyed any advantage a seller had in the market.  Again, pricing a home is as much an art as science and there may be very real justification for an asking price, and final selling price, above the Zestimate.  

Being aware of the ‘Zestimate Dynamic’ is no reason to throw in the towel.  It may be that you and your Realtor® need to tell a more compelling story about the inherent value of the property and what makes it unique.  Sometimes, it is appropriate to call out the unfair Zestimate in the public remarks section of the listing.  

Zestimates Can Cut Both Ways

Believe it or not, sometimes the Zestimate on a property is too high.  This is because Zillow’s algorithms do not take in to account the condition of the property.  I have seen listing remarks with comments like “Priced below Zestimate”. Zestimates can cut both ways.  That, of course, is of little consequence when your goal is to get the maximum amount of money possible on your sale.

You Want Your Money Back 

You may be inclined to price your home at a price that ensures you recoup every dollar you have invested in it over the years.  This is a common goal and I understand it perfectly. You have upgraded your house over the years and you want your money back.  

There are a couple of arguments against this, however.  The first is that expensive ‘upgrades’ like a new roof or furnace are really ongoing maintenance expenses.  If you want to sell your house you need a water-tight roof and a working furnace. And, you needed those things to continue living in your home comfortably.

Other upgrades like room additions or swimming pools may never recover their actual cost of construction.  We add things like these to our properties to maximize our enjoyment while we are there. There is no guarantee a new buyer will value your upgrades as highly as you did.  

Your Value Is Restricted Or Enhanced By The Other Houses In The Neighborhood

At the end of the day, what similar houses have sold for in the neighborhood over the last six to twelve months is the best indicator of a probable selling price.  Your upgrades may get you a sale at the upper end of the comparable sales range, but they will not get you a value much beyond that. Overall price appreciation over time moves the entire sales range higher.

This Is What Your Realtor® Needs You To Understand

Pricing your home is a process rather than a one-time event. Positioning your home to attract the most interest is key.  While you want to ensure that you get the most money possible for your home, you do not want to price your home at a number that discourages showings and ultimately offers.  Ideally, you want to price your house as competitively as you can and encourage multiple competing offers.

Don’t Wait More Than A Few Days To Adjust Your Asking Price

A house that does not sell within a time frame equal to the average days on market for comparable properties in the neighborhood will eventually sell, but for less money than it would have if it was priced right, to begin with. While it may make sense to price a property somewhat ‘aggressively’ out of the gate, leaving the property at that price for more than a couple of weeks without an offer can hurt your return rather than help.  Your primary goal should be to attract as much interest as possible as quickly as possible.

Care To Learn About Listing Your Home With ROOST Real Estate Co?

I Am A Simple Man 

My goal is to be able to make money in any market.  I buy for cash flow as a rule and any appreciation I realize is a bonus.  I will actively position myself for a profitable sale should the opportunity arise.  However, that sales price has to be exceptional to give up the cash I have come to enjoy.  I look at the cash flow from my rental portfolio as an annuity, that when properly managed, will support me for the rest of my life.  Cash flow is king.

I Really Don’t Like To Sell My Houses

Short term gains are nice, but they are often temporary.  The reality is that the market that allows the profitable sale is also the market that may preclude you from buying new properties to replace that cash flow.  In other words, you may find yourself with cash on hand with nowhere to invest it that makes sense. So, unless you have debt to pay off or think you can time the next downturn and drop in values to make a better buy, think long and hard about that short term gain relative to the long term annuity.

I Want To Ultimately Be Debt Free

Real estate without debt is the most amazing cash flow machine in the world.  Debt is what cripples and bankrupts so many real estate investors. Debt has its place and I use it, but only when I am supremely confident in my numbers, and only when I can finance a property ‘to term’.  

If You Must Borrow Money – Finance To Term

Financing to term means your lender is going to hold the note for the entire amortization period.  Many loans are amortized over say twenty years but they have a balloon payment due in say 10 years.  This means you either pay off the balance of the loan or be in a position to extend the loan or refinance it at the ten-year mark.  I do not want to count on being able to do that.  

The Easy Path To Bankruptcy

Taking a mortgage that results in negative cash flow is a sure path to bankruptcy.  Lots of people will teach you how to borrow money, not one of them will teach you how to pay it back.  Real estate is not a liquid investment. You can’t write a check against it and you can’t cash it out at a moment’s notice like a stock or bond.  Even selling a house at a fire sale price for cash takes a few days to close. Debt can ruin you if you don’t control it and yourself.

I Buy And Hold

In a nutshell, I buy and hold.  I do not flip properties. Cash flow is king.  Debt is often death. Real estate markets change every few years.  Access to financing can change even faster based on world events that have no bearing on the local market. And finally, I think investors make more mistakes in markets that are doing well than they do in markets that are struggling.  

I’d Love To Hear Your Story

What works for you?  I’d love to hear what is working for you in your market.  Comment below and join the conversation.

Care To Learn More About Our Company? 

I. About Brevard County – The Space Coast of Florida

Brevard County is a county in the state of Florida. As of the 2010 census, the population was 543,376, making it the 10th largest county in Florida.[1] The official county seat has been located in Titusville since 1894.[2] Brevard County comprises the Palm BayMelbourne–Titusville, FL Metropolitan Statistical Area. It is located along the east Florida coast along the Atlantic Ocean.

Influenced by the presence of the John F. Kennedy Space Center, Brevard County is also known as the Space Coast. As such, it was designated with the telephone area code 321, as in 3-2-1 liftoff. The county is named after Theodore Washington Brevard, an early settler, and state comptroller.

https://en.wikipedia.org/wiki/Brevard_County,_Florida

II. How We Ended Up Here

Kelly and I had been visiting the Disney Vacation Club resort at Vero Beach at least annually since 2003.  The resort is just south of Brevard County, about 30 miles from Melbourne Beach, Florida on A1A. We loved the area but never thought much about investing or working there.

Rena Smith, who has worked with us for almost 15 years relocated to West Melbourne, Florida in 2009.  Rena helped us with our Springfield, Ohio REO division assisting with Broker Price Opinions from her home office both when she lived in Springfield and in Florida.  We did not make the connection until 2014 that Rena and her husband Craig had relocated just north of Vero Beach. Craig transferred to the Space Coast area with PNC bank.

Once I took a closer look at the Melbourne area the more impressed I was.  This area got hit hard during the recession but bounced back like very few other areas in the country did.  Craig did extensive research on the area before agreeing to transfer with PNC. All in all, I know of no place in Florida I would rather be building a business.  We seriously got to work when Rena earned her Florida Real Estate Sales Person license in early 2015.

III. Trends

The median home value in Brevard County is $164,900. Brevard County home values have gone up 10.6% over the past year and Zillow predicts they will rise 4.8% within the next year. 

http://www.zillow.com/brevard-county-fl/home-values/

IV. Our Plans

Melbourne, Florida is a great place for our current and future clients to expand their portfolio of rental properties.  As of August 2019, we have 20 or so properties under management and expect to expand this business rapidly just as we have in Ohio.  We will have a licensed property manager(s) on the ground in Florida but will continue to run our accounting operations from our offices in Springfield, Ohio.

V. Case Studies of Properties under Management

At this time our owners are treating their investments as rental properties but an attractive alternative for many of our clients will be to sell these homes via land contract.  Both the rental market and land contract markets are hot due to the number of people moving into the area. Many of these people are not yet in a position to obtain a mortgage and therefore welcome the option of a land contract. 

For each of the case studies below, I am showing both a rental scenario and a land contract scenario.  I am using what I consider very conservative figures. You will see that insurance costs are estimated higher due to our proximity to the coast, but property taxes are in line, or even less than, what we see in Ohio.  

The land contract exit strategy is a terrific option for many investors that could have a positive impact on their income tax liability.  The land contract strategy also allows the investor to ‘lock-in’ anticipated appreciation gains with a buyer now. For the buyer, at the end of the two or three-year term, the final ‘purchase’ can be treated as a refinance which is often easier and quicker than a new purchase mortgage.    

We have had great success marketing land contract purchases in Ohio for various clients by using all the marketing and screening tools we have developed over the years for our rental clients.  Rently boxes, www.ROOSTRentals.com, Zillow, Facebook, and Appfolio have made the process of marketing, advertising, showing, and screening applications a routine process that just works.  We have all of these tools in place in Florida right now.

Zillow.com has the last 12 months appreciation trend in the area at just under 11%.  The home Kelly and I purchased in Melbourne 2015 has appreciated by 50% in the last 4 years.  I use a 6% appreciation rate in my case studies. I think that is an appropriately conservative approach.

Case Study 1

Case Study 2

Case Study 3

Case Study 4

Case Study 5

VI. Vacation Property Management via AirBNB

We are also moving slowly into vacation property rentals.  We are working with an owner of a home on Cocoa Beach that will rent weekly during peak seasons and monthly in the off-season.  Cocoa Beach is very interesting because of its proximity to Orlando and its theme parks. Cocoa Beach is aggressively marketing itself as “Orlando’s Beach”.  Once we work the kinks out of this new operation we will begin expanding the service in 2020.

VII. Brevard County/City Information

From the Melbourne Regional Chamber of Commerce Website:

Brevard County is located on the east coast of Central Florida just 35 miles east of Orlando, and home to such businesses as Harris, GE, NASA and the Kennedy Space Center, the only facility in the world that launched the Space Shuttle; Port Canaveral, the second-busiest cruise port in the world; 72 miles of beautiful Atlantic Ocean beaches; and the largest collection of endangered wildlife and plants in the continental United States.  With its tropical weather, cultural activities, educational opportunities, active and passive recreation options, high-technology industries, and family-friendly atmosphere, the Space Coast offers an exceptional quality of life that residents and visitors enjoy year-round.  With a small-town feel and catering to the Florida lifestyle, it’s no wonder more than 500,000 people call its16 municipalities and unincorporated areas “home.”

 Cities/Towns

City of Cape Canaveral 
City of Cocoa 
City of Cocoa Beach
City of Indian Harbour Beach 
City of Melbourne
City of Palm Bay
City of Rockledge
City of Satellite Beach 
City of Titusville
City of West Melbourne
Town of Grant-Valkaria
Town of Indialantic
Town of Malabar
Town of Melbourne Beach
Town of Melbourne Village
Town of Palm Shores

Brevard County is known to many residents as the Space Coast for its link with NASA and the Kennedy Space Center.  Since the retiring of the Space Shuttle, the question remains: what will happen with the Space Program? In addition to the rockets that launch periodically, plans are in the works for a new spacecraft coined the Orion.  It will be a heavy-lift rocket that will propel astronauts into the deeper reaches of space. Expected to be completed by 2017, Orion will be the future of our space program. Until that time residents, as well as visitors alike, can still gain access to the rich history of our country’s space program by visiting the Kennedy Space Center.

If golf is your passion, Brevard County is sprinkled with many excellent public golf courses at affordable prices.  If golf isn’t your idea of fun, the Space Coast Stadium is the proud home of the Brevard County Manatees; our very own minor league baseball team.  In addition to housing the Manatees, the stadium also hosts spring training for the Washington Nationals.  Some other great outdoor area activities include; boating, jet skiing, airboat rides,  parasailing, fishing, diving, surfing, eco-adventures, kayaking, horseback riding and much more.  The Brevard Zoo and Forever Florida are also great options as it’s family-friendly and provides great views of Florida wildlife.  

Are you looking to shop?  You will find that antiquing, farmers markets, art festivals and street parties are home to many of our downtown districts from Titusville to Port Canaveral and Eau Gallie to Melbourne.   If you are looking for that one-of-a-kind shopping opportunity then you must visit the world-famous Ron Jon Surf Shop in Cocoa Beach offering an assortment of surf and beach gear.  But if mainstream shopping is what you prefer there are many shopping centers scattered from Palm Bay to Viera and beyond.  

Brevard County provides the community and visitors to the area with many cultural opportunities throughout the year. The Maxwell C. King Center has a live theater, Broadway shows, and concerts throughout the year as well as summertime children’s programs.  You can also find exciting entertainment at The Cocoa Village Playhouse or The Henagar Center in Melbourne.  If you are a country music fan you may want to plan to attend the 3-day Runaway Country Festival that is held in the spring of the year at Wickham Park.

Whatever you’re looking for we hope you’ll find it here in Brevard County.  We think you just might be surprised by the treasures you’ll find!  

http://www.everythingbrevard.com/Government/BrevardCountyInformation.html

VIII. Why Florida is Primed to Stand Out in the New Commercial Space Race

By Matthew Richardson.  The Orlando Business Journal July 15, 2016

On a clear, sunny morning on June 15, a crowd of people, young and old, gathered at the top of Exploration Tower at Cape Canaveral to view the launch of SpaceX’s Falcon 9 rocket.  “What direction should we look?” asked one teen. “Don’t worry, you’ll see it when it launches,” someone replied.

A moment later, a large plume of white smoke and orange flames appeared at a distance, as the rocket rose in the sky. The crowd focused their cameras, phones and tablet devices to the sky, hoping to get a good shot of the spacecraft.  While the rocket was miles away, viewers could feel the rumble of the blast in their chest.

“We drove from Largo to see this launch,” said Sandra Sapien, 57, as she held her 3-year-old grandson. Although Sapien has seen eight launches in total — her first when she was 12 — she and her family traveled nearly three hours to catch the activity.  “There are more launches than there used to be when I was younger, and it’s more of a rush now to share it with my husband and grandson. It’s history in the making.”

More launches, indeed. It seems every month, there at least two launches. June had three launches, and by the end of 2016, 30 launches will have taken place — an amount not seen on the Space Coast since the 1960s.

While tourists were cheering as the rocket disappeared into the clouds, business owners in the area likely were thankful for the boost in business the launches bring.  After all, business in Brevard Country fell off drastically when NASA’s space shuttle program ended in 2011, resulting in more than 8,000 job cuts in the area. But now, a new economic behemoth is awakening in the form of commercial space launches, and Florida is primed for its growth.

In fact, Florida is racing with Texas and California, among others, to see which state will take the lead in calling the shots for commercial space launches, and the big economic impact that accompanies rocket manufacturing plus space exploration and space tourism.

This special report explores what the Florida Space Coast has to offer, what other states are doing and which of those states Florida is watching closely and why.

IX. Rebuilding Florida’s Space Coast

Frank DiBello has been watching rockets take off for decades: “There was an added edge when humans were on board, but the activity today is just as important, as it brings on innovation and business diversity.”  For DiBello, business diversity is an important issue. That’s because the area had put all of its eggs in one basket — NASA, with many local manufacturers gathering work orders from the organization — and those eggs all were crushed at once when the shuttle program ended.

“When I took the job as president of Space Florida in 2008, we knew the shuttle program was going to retire and this would be the second or third time Florida was going to be hit hard from a program being canceled,” DiBello said. “We never developed a broad industry, so we set a goal in 2009 to diversify the space industry and build a deep supply chain.”

Brevard County and Space Florida, the agency charged with growing the state’s space industry, noticed a greater opportunity to rebuild — focusing more on commercial launches rather government-funded projects. And doing so has paid off.

Today, 75 percent of the $300 billion space industry is from commercial space programs. “That is one reason we want Florida to be the global leader in space commerce,” DiBello said. “We don’t want to be solely dependent on federal programs.”

Right now, Florida has a head start to be the leader in the commercial space industry.

Eric Stallmer, president of Commercial Spaceflight Federation, based in Washington, D.C., said Florida is at the forefront of the industry for three reasons:

“Florida has the advantage of having large established facilities,” Stallmer said. “There is obviously Kennedy Space Center, but Cecil Spaceport [in Jacksonville] is another exciting option for firms interested in horizontal suborbital launch vehicles.”

Those advantages are the reason Brevard County is experiencing a rapid expansion for high-tech and aerospace-related companies.

For instance, Brevard County and the Economic Development Commission of Florida’s Space Coast are in talks with a high-tech engineering and design company under the codename Project Marathon to expand in Melbourne.  If the company selects Central Florida, it would create 327 engineering jobs by the end of 2020, paying an average annual wage of $64,356. Those jobs, in turn, would lead to 370 spin-off jobs. Greg Weiner, senior director of business development for the Space Coast EDC, said the firm’s final decision will be announced sometime this month.

Project Marathon is just one way the Space Coast is diversifying its business:

Central Florida schools also are helping boost the talent thousands of local aerospace and aviation companies need to grow their firms.

For example, Daytona’s Embry-Riddle Aeronautical University has nearly 30,000 students mastering their craft in aeronautical science, aerospace engineering, civil engineering, commercial space operations and more.

Embry-Riddle’s 3-year-old commercial space operations degree program is seeing “explosive growth,” said Justin Karl, assistant professor for the program, which has 130 students, a number expected to grow to hundreds more.

“We had multiple contacts from individuals in the commercial space industry who expressed the need for a workforce they didn’t need to retrain. This program helps solve that problem,” Karl said.

And last year, Aviation Week magazine named the University of Central Florida the No. 1 U.S. supplier of employees for the aerospace and defense industry. UCF’s College of Engineering & Computer Science has more than 9,000 students.

However, Florida’s legacy of NASA is a double-edged sword when it comes to the commercial space race.

“It’s a blessing and a curse,” DiBello said. “We have a 50-year history of federal government processing, and that needs to evolve to be commercially responsive. As other places are developing spaceport capabilities, they will not be saddled with the history of federal grounding, but they can build from the ground up to be commercially responsive.”  Still, the region’s history, infrastructure, support, talent and location are major reasons it stands out, as well.

“Canaveral is an ideal location because it is close to the equator and launch vehicle providers can take advantage of the Earth’s spin by launching eastward,” Stallmer said. “As long as NASA continues to partner with commercial companies, people will continue to flock to Florida’s Space Coast.”

X. Edging out the competition

However, just as Florida is focusing on the commercial space business, other states want a piece of the action, too. “Multiple states, aside from Florida, are involved in many facets of the commercial space industry,” Stallmer said.

For example, there is a significant presence in Washington state — particularly in the Seattle region — as well as in California, Texas, Colorado and Alabama. In addition, New Mexico and Arizona have activity, too.

Currently, there are eight states with spaceports in various stages of operation: Florida, Alaska, Texas, Georgia, California, Oklahoma, Virginia and New Mexico.

While none has had as many launches as Florida — California has had two in the past five years — Florida ranks No. 3 in aerospace and aviation employment with 85,044 workers, compared to California (168,774) and Texas (131,652), according to Enterprise Florida.

Further breaking that down, Florida is No. 8 in the U.S. for number of aerospace engineers, with 2,400. The top three spots are held by California (12,950), Washington (8,620) and Texas (6,500).

Those numbers don’t surprise Dale Ketcham, Space Florida’s chief of strategic alliances. He said while Texas does not have any rocket launches yet, the Johnson Space Center in Houston houses plenty of engineers to help man the mission control center, which takes up nearly 1,700 acres. Texas is moving into rocket launches, too, thanks to a deal with SpaceX.

“An experienced, educated workforce is critical, as well as support from state governments, tax incentives and indemnification laws,” Stallmer said.

For example, Texas convinced SpaceX to build its private spaceport in the southeast corner of the state near Brownsville “by providing extensive tax incentives,” he said.

Ohio, while it lacks launches, is another contender, having 4,850 aerospace engineers. NASA’s Glenn Research Center in Brook Park, Ohio, does not have any launch pads but houses 3,400 employees on its 350-acre facility.

“Our legacy is big, too,” said Frank Jennings, spokesman for the Glenn Research Facility. “We have more astronauts than any state in the country.” The research facility’s major role is to test NASA technology, but it also serves as support for smaller companies to use its equipment. “For aerospace companies that may not have the budget for a major facility, they come to NASA to use our space,” Jennings said.

Ohio also boosted itself as a top place for aerospace and aviation manufacturing by forming a committee in 2014 called Ohio Aerospace & Aviation Technology. The organization brings together industry experts to develop a statewide strategy on how to grow the business. And it’s working.

Ohio ranked as the No. 3 most attractive state for aerospace and aviation manufacturing by PwC’s U.S. 2015 Aerospace Manufacturing Attractiveness Rankings.

Meanwhile, Washington boasts 1,350 aerospace-related companies, and it builds 1,400 aircraft and unmanned aircraft systems a year, including nearly 700 commercial and military jets. Boeing has a major presence in the state, as well.

So, who’s winning the space race? Some experts say Florida stands the best chance to lead the pack. “Florida has been dominating in space for a long time and rightfully so,” said John Thornquist, director of aerospace for Washington State Department of Commerce.

“Logistics would be really important for a rocket company. While there is a large presence here on the West Coast, companies may want to be closer to the area that launches rockets to avoid the trouble of transporting such big devices across the country.”

But experts also don’t feel the need to compare the states, claiming any area that’s building in the industry is a win for everyone.

“This is not a pie we are trying to piece out,” Thornquist said “All of the states will feel an economic impact. [Washington] works to create the spacecraft, and Florida launches them.”

Micah Walter-Range, director of research and analysis for Space Foundation in Colorado, added that competing states “are trying to improve their competitiveness and that’s great for America. If you are looking at launch site and manufacturing plants, success in one area will lead to a lot of different growth in other areas.”

XI. Launching the future

In the midst of the burgeoning commercial space race now underway in Florida and other states, Central Florida businesses are watching with great interest as the industry growth draws other players into the region.

Take Carol Craig, CEO of aerospace and defense manufacturing company Craig Technologies. As she drives past Exploration Park on the Space Coast, she sees a large, empty plot of land with a bulldozer pushing around dirt.

It’s clearing out space that later will be a buzzing business area filled with engineers ready to roll out the newest rocket that will ferry astronauts to space and possibly let tourists experience the feeling weightlessness for minutes in Earth’s lower orbit before landing safely on the surface.

“Blue Origin is building this big facility, and it’s nothing Brevard County has seen before,” she said. “Once these things are built, it’s a light in the tunnel for these manufacturers. Five years from now, this place will be booming.”

Currently, the Space Coast has four active launch pads and will activate another in the next decade to launch NASA’s Space Launch System.

Once those additional launch pads are ready, DiBello said three rocket launches a month will be nothing compared to what he has in mind. “I’m looking at an era today where we will have 30 launches a year, but I’m also looking 10 years out when we will have 100 to 200 launches. In the future, I want there to be a launch every day.”  

XII. By the numbers

66,980: Number of U.S. aerospace engineers, who earn an average annual wage of $110,570

10,370: Number of U.S. atmospheric and space scientists, who earn an average annual wage of $90,210

10,890: Number of U.S. atmospheric Earth, marine and space sciences college teachers, who earn an average annual wage of $92,540

Source: U.S. Bureau of Labor Statistics

http://www.bizjournals.com/orlando/news/2016/07/14/why-florida-is-primed-to-stand-out-in-the-new.html

XIII. Come Visit!

If you would like more information about investing in the Space Coast please call me at 844-806-6577 or email me at Chris@ROOSTRealEstateCo.com.  We always welcome visitors and are eager to show you around.  I think you will be as excited about the prospects here as I am.

Care To Learn More About Our Company? 

If you’re like most buyers, you’re excited about the idea of moving but also a little nervous.  After all, whether you are buying your first home, or your next home, this is a big deal. The last thing you want to do is make an expensive mistake. You want you to fall in love with your new place, and have it be a good investment too. 

Your Guide to Becoming a Home Buying Jedi Master illustrates each of the eight mindsets every buyer needs to ensure a successful home buying experience.  As you work through each mindset, your brain will naturally come up with things you can do to make sure your home buying experience is successful and enjoyable. 

To receive your FREE copy of Your Guide to Becoming a Home Buying Jedi Master, please complete the form below: