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Believe in your successful real estate entrepreneur skills but never stop improving

Believe in your successful real estate entrepreneur skills but never stop improving
Real Estate Entrepreneurs Without This Trait Have a Much Lower Chance of Success If you truly break down the top real estate executives that have really strong, highly effective teams that love to work together you will find their leader will be, tenacious, have vision, forward thinking, team leader, good communicator but first and foremost they will have emotional maturity. If you are without an awareness of your own emotions and the ability to manage them, you won’t be able to manage other people or your business effectively. What is emotional maturity?  Emotional maturity is when someone can manage their emotions no matter their circumstances. They know how to respond to tough situations and still keep their cool. It's a skill set they can consistently work on over time. Here’s a good example- an employee makes a mistake, your immediate response might be to correct the mistake and move on. An emotionally mature leader would notice that impulse, then decide if it may be better to listen to why the team member made the mistake and walk them through the thought process and see if there is a possibility there could be a more effective method for long-term success.  Building a strong team is easier with emotional maturity.  Today more than ever your organization achieves its goals through a series of zoom calls, conference calls, daily conversations, interactions and decisions. These interactions involve humans, and the more emotionally intelligent we are, the more effective your team will be on all levels. Inv......
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What Are the Main Differences Between Commercial Real Estate Loans and Residential Loans?

What Are the Main Differences Between Commercial Real Estate Loans and Residential Loans?
Investments can be tricky, and if you are looking into making more money in real estate, keep in mind that loans may appear the same, but they are not. Before venturing into commercial or residential real estate, there are a few things that you will need to consider, from different interest rates, loan terms, amortization periods, and penalties. Banks will also look into the types of income you have and if the real estate property generated revenue.    Interest Rates Commercial real estate or CRE and residential loans have different interest rates; CRE are considered at a higher risk, therefore, are required to pay more than residential loans. Commercial interest rates will go up or down depending on the standard index. On the other hand, residential interest loans usually have a fixed rate, depending on the term.   Additionally, the index for interest rates tied to CRE loans is typically different then residential loans, and do not have as much volatility in rate changes.   Down Payments Both residential and commercial loans will require a down payment. For residential loans, it can be as low as 3-5% of the loan. Commercial loans require more, with minimum down payments depending on the asset class typically starting at 25%, but many types of assets start at a minimum of 35% down.       Amortization Periods and Loan Terms Since the risks are higher for commercial real estate loans, their loan term is also made shorter. They typically have a “due in ten year” clause, wit......
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Common Metrics/Terms an Investor Uses to Analyze Commercial Real Estate

Common Metrics/Terms an Investor Uses to Analyze Commercial Real Estate
It’s not a secret that numbers drive real estate investment decisions. But the real question is, which metrics are valid? Which metrics matter? Depending on your investment goals and property type, some metrics are more important than others. The following metrics/terms real estate investors commonly use when making portfolio decisions:  1. Capitalization Rate (Cap Rate)  Cap rate is mostly used for apartment complexes and commercial buildings. Capitalization rate can also be used for houses and small multifamily properties, but the flip side is that operating expenses are unpredictable with houses since you can’t know how often or how bad your turnovers may be. Cap rate allows you to compare properties in the same asset class with different characteristics that make direct comparison impossible. The disadvantage of the Cap rate is that it’s only a snapshot. It says nothing about the expected growth in expenses, rents, property value, and whether using leverage will increase your return.  2. Cash Flow  When evaluating rental properties, it’s vital to figure out your expected monthly cash flow. When determining total expenses, you should include:  Property taxes  Flood and hazard insurance  Water  Sewer  Garbage  Electricity  Property management  General maintenance and upkeep  Capital expenditures  Vacancy rate  3. Return on Investment (ROI)  RoI is helpful for analyzing how well a deal did in the past. This measurement is always good to have because you can’t adjust your future investing unless you know how your previous investments performed.  4. Internal Rate of Return (IRR)  The internal rate of return is used to m......
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Is Investing in an Opportunity Zone Really Worth It?

Is Investing in an Opportunity Zone Really Worth It?
The main aim of Opportunity Zones is to encourage long-term investments, especially in low-income rural and urban areas throughout the country, and to boost the economy. An Opportunity Zone is an economically distressed rural or urban community that has been identified by state, local, and federal qualifications.  Opportunity Zones offer a great investment opportunity for smart real estate investors. However, investors should bear in mind the risk profile of Opportunity Zone deals, which can be much higher in some targeted census tracts than the exchange. The key is to stay diversified while taking advantage of the capital gains tax relief that is available through the program. On the other hand, if investors remain diversified, there may not be enough funds flowing to these vehicles.  Only time will tell if this latest program will succeed in identifying the areas that will benefit most from the subsidy, as well as in overcoming the issues that have limited the effectiveness of similar initiatives. Although this concept sounds socially responsible, investors are only delaying or deferring their capital gains taxes.   This program could be good for investors in the sense that it lowers their capital gains taxes, but whether or not it’s going to be good for the people in those communities is still to be seen within the next decade. However, waiting may not be the best move for investors, since these assets are as cheap as they’re ever going to be.  Opportunity zones offer three benefits that make real estate attractive to professional inves......
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What Does Barriers to Entry Mean in Commercial Real Estate?

In commercial real estate, an investor can encounter barriers to entry in their investment.  With the competition in the real estate market, the entry of new businesses can bring many challenges. Existing businesses can take advantage of these barriers, such as economies of scale, implementing vertical integrations, and maintaining strong customer loyalty. Let us take a closer look at what those mean and see if they make a better investment. Economies of Scale If the business has been in the area for some time, they are at an advantage. They would have grasped a better understanding of the existing economy. They have learned most of what they need to know to stay on top and be more effective. They can better manage the resources based on the season to save on cost reductions. Other factors can also include their purchasing power from suppliers, whereas newer businesses may have difficulty getting lower prices. They could get better deals even on loan terms based on their existing credit standing.     Vertical Integration Vertical integration is another barrier to entry. These are a combination of two or more businesses operating separately but owned by one entity that complements each other. They could be sports drink businesses that also own the manufacturing plants that bottle the drinks. They may also have several gyms in the community promoting their drinks. A famous example is “McDonald’s,” which owns the properties where their stores operate. For these companies, these integrations reduce their costs and expenses that come with deali......
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The Evolution of CRE Agents and Lead Generation on Social Platforms

The Evolution of CRE Agents and Lead Generation on Social Platforms
COFFEE IS FOR CLOSERS!  Glengarry Glen Ross was spot on for that time, cold call, cold call, cold call. When asking many CRE Agents how they choose to market themselves many say they focus on cold calling, they don’t see the value in utilizing social platforms. However, the modern-day CRE agent has so many more options to generate leads that it’s almost overwhelming.  With so many new social platforms, email programs, CRMs, referrals, cold calling, blog writing it’s almost too daunting to figure which is best for you to utilize.   Sales agents often forget about long-term lead generation, and how social platforms can impact them. The long history of outbound lead generation has proven to be successful but like any marketing tactics it’s designed to create relationships for the long term, that can easily be done on social platforms and create blogs and a good email campaign. The evolution of any business is critical to its success and CRE is quickly evolving thanks to social networks and APPS.   Most brokerages have their social platforms, email marketing campaigns, and sometimes blogs, which are all good except many companies are not showing their agents how powerful of communication tools these have become, and how they can exponentially increase their leads. I am a firm believer in an agent creating their own identity in the marketplace, and social marketing helps to create that personal.   Cold calling everyone if your community can be difficult, plus many other agents are making the same calls to the same pe......
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Due Diligence for Acquiring Commercial Property

As a buyer of commercial properties, you should accomplish two types of due diligence before moving forward with the acquisition. These types of due diligence will protect you against incurring liabilities, and you will be made aware of precisely what you are purchasing. It also gives you a more straightforward overview of what you can negotiate and the terms you could offer. The two types are physical due diligence and financial and operational due diligence. Physical Due Diligence Start with a PCA report or property condition assessment, which physically checks the property's construction. It will also tell you about the capital needs you need to address and the property's future. Next, you will need environmental testing to rule out any hazardous contaminants present on the property. There will be physical surveys done to measure the property, determining the property's legal boundaries.  For older properties built more than 40 years ago, there are two kinds of asbestos surveys you may need. These surveys ensure that the property does not contain the material that, once disturbed, the fibers can be inhaled, risking the development of fatal asbestos diseases. Make sure that the roofs are in good condition, ask when they were last repaired or replaced. These include checking on the elevators, air conditioning, and ventilation that can cost hundreds of dollars in repairs.   Inspect the properties of fire escapes and areas that could be fire hazards. You can also check the property's historical capital expenditure analysis to check what the previous owners spent......
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Barriers to Entry

Barriers to entry are restrictions that prevent new competitors from quickly entering an area of business or industry. These include regulatory clearances, securing licenses, tax benefits, and customer loyalty. Startup companies need to contend with these different barriers, depending on their industry. Some may be caused by government intervention or even other firms that deem the new businesses a threat. These firms may be protecting the integrity of the industry, attempting to avoid products that they believe are inferior to the market, and at the same time, watching the market shares. New business ventures have a lot to contend with before entering the market. Without sufficient research, they will have difficulty penetrating a market that already has strong and established barriers to entry. These barriers have already equipped them with years of experience and mastery of the technology. They have already selected the dominant control over the supplies and have the upper hand to the industry's advantages in that area, including the consumers' trust.  Kinds of Barrier to Entry There are two kinds of the barrier to entry 1. Structural or Natural Barriers to Entry These include the ownership of the primary resources such as sugar plantations for soft drink companies or bee farms that produce beeswax, which can be used in various products. There are also high set-up costs from advertising and marketing costs. Increased research and development costs will match the more prominent firms to compete. There are also the risks of competing with a product or service that......
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Can I Negotiate With Commercial Lenders for a New Loan?

Can I Negotiate With Commercial Lenders for a New Loan?
Commercial lenders include commercial banks, private lending institutions, hard money lenders, financial groups, and mutual companies. They are mostly used for commercial real estate acquisitions, short-term fundings or businesses that need resources to address seasonal orders or cater to sudden demand.   Their key responsibilities are handling prospective clients by identifying their needs, interpreting their financial statements, securing collateral, and gathering other required documents such as insurances and agreements. Once the borrower has submitted all the requirements, they can start negotiating the rates and terms of their commercial loan to lessen the burden that interest rates can incur.    What can be negotiated   Here are a few options on what can be negotiated:   1. Interest Rates   Interest rates will significantly impact their monthly payments. Negotiating the lowest possible interest rate will help their cash flow, especially at the beginning of their loan. During this time, renovations are still being completed for new businesses, and the cash flow is at the lowest. These rates may be set for 5 to 10 years, and if they can find lower rates now, they will be able to have more flexibility in the future.   2. Closing Costs   Negotiate that the seller covers some or all of the closing costs. These may include taxes, title fees, recording, and attorney fees. In some transactions, these fees are already included in the seller’s full asking price, and if not, they may be negotiable.   3. Quick Transaction   They can save time by n......
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Top Fastest Growing Metros in the US and Should I be Looking to Invest in Them?

Top Fastest Growing Metros in the US and Should I be Looking to Invest in Them?
Despite the coronavirus pandemic, many are deserting giant cities like New York City or San Francisco and looking to settle somewhere else. Rapid economic growth plays a vital part in what makes up-and-coming cities appealing landing spots as well as lucrative investments. Here is our list of the top five fastest-growing US metro areas and why you should invest in them: 1. Boise, Idaho In recent years, Boise has been experiencing substantial growth in its population and its home values. Just in the last ten years, its population rose by 12%. In the last five years, home values have risen by 75% on average, and just the last year alone, the average home value in Boise rose by $50,000. On top of that, the people migrating there are young professionals with money to spend. Boise also offers the perfect balance between rural access and an urban feel. Its economy is as robust as ever with plenty of available jobs. The city is a hub for many startups and is home to such giants as HP and Micron. Boise is also voted as the eighth safest city in the world.  2. Tacoma, Washington Homes are going fast in the Tacoma metro area, with 73.6% of houses sold in October 2020 going off the market in just two weeks. As a comparison, last year that number was only 51.3%. Tacoma offers better investment opportunities than for example the Seattle area, which can be pretty expensive. Cash flow opportunities are also better because the......
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