Rental Housing Journal Colorado November 2015 by Professional Publishing, Inc

Rental Housing Journal Colorado

November 2015 - Vol. 7 Issue 11

2. 9 Tips For Getting Started in Real Estate Investing

4. Will Your Retirement Hit Bottom if the Markets Plummet? 8. Ask the Secret Shopper

DENVER • COLORADO SPRINGS • BOULDER

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Monthly Circulation To More Than 7,000 Apartment Owners, Property Managers, On-Site & Maintenance Personnel

Long-term Hold Investing

Five Real Estate Investing Fundamentals

For Owner/Managers

By – Jeﬀ Watson The Jeﬀery S. Watson Law Firm LTD, General Counsel National REIA

ne of my favorite movie moments is when Ernest Borgnine, portraying the legendary football coach Vince Lombardi, stood in front of the world champion Green Bay Packers at the beginning of training camp and held aloft an oblong object proclaiming, “Gentlemen, this is a football.” What Vince Lombardi taught the Green Bay Packers then applies to real estate investing today.

Master The Basics Practice them over and over again. Consistently do the fundamental things that make you a successful real estate investor.

Repeat Your Successes And Keep Repeating Them

he rental property investing strategy for a hold time of 15+ years is significantly different, than a short term real estate investment strategy. This is even more critical for owners who plan to do their own property management. Owning and managing a property for 15-20 years is similar to raising a child, from birth through high school. Price is always important when buying any property. If you are planning to own a property for decades, do not consider purchasing a potential “problem child”, because it is cheap. Bad pur-

chases are often made when investors feel they must purchase quickly. Adapt the motto that “I can always spend my money” and keep shopping to you find the “right” deal. Investors need to seriously consider the location, quality of construction, target tenants and financing for a long term hold rental property:

Location Properties should be located within 30 minutes of where you reside. Anything longer than an hour round trip drive will become cumbersome over time. It

property and operate it with a vision in mind. That vision should include an annual focus on rent increases and tenant relations.

Rent Increases

...continued on page 7

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Are You Leaving Money on the Table?

The vast majority of “investors” today suffer from what I call “squirrel or shiny-object syndrome.” They have a little success in one area, but then they are suddenly distracted by something else and go to another area, and then another, and then another. The bottom line is they lose their focus and intensity, and they don’t continue to practice the same thing over and over again. Let me remind you, slow and steady wins the race!

By Cliﬀ Hockley CCIM President, Bluestone & Hockley Real Estate Services

ost real estate investors tend to operate their properties with a simple rule in mind: If money appears in their checking account by

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is always a wise idea to geographically diversify your rental portfolio. Therefore, owning properties in different neighborhoods. Within 30 minutes of your home, is preferable to owning all your properties, in one neighborhood. Target property purchases in desirable residential neighborhoods with a low percentage of rental properties. Initially, the annual cash and cash return will probably be less, than what could be bought in less desirable locations.

the end of the month, their property is healthy. As long as they see the same amount every month they’re happy. However this rule inevitably leaves money on the table. Sophisticated investors know that they need to plan for their properties to be successfully operated. They need to buy the right

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Residential Multifamily or single family investors have the opportunity to increase rental income at least once a year through the annual budgeting process. This process starts with an annual inspection, followed by a local area renewal rate review (rental comparison survey). Keeping your property well maintained is the key to managing long term rental increases. Tenants will not be as hesi...continued on page 3

Rental Housing Journal Colorado

9 Tips for Getting Started in Real Estate Investing

By JC Underwood, Crown Properties

reat This As A Business One of the biggest mistakes I see new investors make is to treat real estate investing as a hobby instead of a profession. If you’re counting on real estate investing to provide income now and retirement income later you must treat it like a business. Real estate investing is now your profession. Treat it like one. By that I mean you have to advertise, devote time to it, show up for appointments on time, act professionally, do your paperwork properly and treat your clients professionally. Most real estate investing isn’t passive. Unless you are a private lender most investing takes real work. Even a landlord using a property manager has work at the outset and should continue to remain active in oversight. This is not a get-rich-quick scheme. It takes time to build client lists, credibility, partnerships and associations. A well-grounded business is built over time unlike “overnight sensations.” It will take you 3 to 5 years to become a real success in this field.

Learn About The and Stay Informed

Business

“If you think education is expensive, try ignorance.” Derek Bok

You can lose more money with a mistake than you can learning how to avoid one. Even if you have been at this business for years, you need to keep up with current trends and laws. You never get to the point where you know it all or even know “enough”. Some investors honestly believe that there is nothing else that they really need to know to be successful, then a law changes, the market turns, or a new strategy begins to be used. They either miss changes coming in their community that will majorly effect their profits, put themselves in a position of huge liability, or miss out on time and money saving tips because they just didn’t take time to stay informed. In the real estate business, like everywhere else, knowledge is power and for investors it’s profit too.

There Are Many Profitable Strategies In Real Estate Most new investors get into real estate investing after hearing about one specific strategy. They have a friend or family member that has participated in real estate, they saw a TV show or infomercial or they went to their first REIA meeting and heard a charismatic speaker that made them want to pursue a specific investing strategy. They begin to invest using that strategy because they are drawn to the certainty and

proven success of the individual that is in front of them. After the new investor has any success with one strategy they often develop the idea that other strategies are less profitable, more difficult to execute, and generally inferior to the one they are using. Suddenly they develop a certainty that their particular strategy is the supreme strategy so there is no earthly reason to even consider anything else. Following a one particular strategy as a beginning investor can be extremely valuable for the overwhelmed new investor since it allows him to really, really learn how a particular technique works. The downside of being so narrowly focused is that it limits the new investor’s opportunities. If you believe that your investing strategy is the only strategy worth pursing, to the exclusion of all others, you will have a narrow viewpoint of what a “good” deal is, and pass up a lot of opportunities to profit with another strategy. Don’t get so stuck in a mindset that you can’t even see good deals if they are out of your comfort zone. That being said. You can’t try to participate in a dozen strategies at once… see number 4.

Have A Plan All businesses need a game plan. You can’t just wander aimlessly hop-

ing to find a deal. You also can’t rent an office, decorate it and then sit behind your desk waiting for the phone to ring. It just doesn’t happen that way. You need to decide upon a strategy, learn what you need to do, set your goals and make it happen! Have a plan. Pass out 50 business card a week (or whatever goal you decide is appropriate for the amount of business you want to generate). Talk to 50 people by phone. Make 10 offers a week, spend $100 a month on advertising – whatever your goal is, make it happen every single week – day in and day out – work the market. Eventually you will start to see results.

Surround Yourself Like-Minded People

With

Real estate investing can be “creative” and a bit non-traditional, which means that this profession won’t appear on the Forbes top 100 professions. Because those participating in real estate often do so by working for a corporation or as a realtor, investing as an independent isn’t a main stream career choice. Thus, most people you speak with will tell you it won’t work. Some of your friends might even ask if you bought a course from a latenight television “guru.” They may even laugh and call you “gullible.” Attor...continued on page 6

Rental Housing Journal Colorado · November 2015

Rental Housing Journal Colorado

Are You Leaving Money

...continued from page 1

tant to pay more if you treat them with respect and keep the property looking well maintained. A clean property with great looking landscaping, a current paint job without any mold or a refinished roof will net you more rent. Yes, it will cost more to maintain, but in my opinion the payback will be in the form of higher rent, longer tenancies and lower turnover costs. Don’t forget, tenants want to be appreciated just like you do. If you have a property manager you work with, have them help you draft an annual budget and forecast the annual increases. Think into the future; plan your rent increases and capital expenses two to three years ahead so you can better control your long term destiny.

Commercial Owners of office, retail or industrial buildings need to think through the same process. They need to develop a plan that lasts through the initial lease term and includes details regarding the tenant’s options to renew, (since commercial tenants tends to stay for 3-10 years, even more planning is involved in controlling the costs and the rental increases). Annually, property owners need to review the comparative position of their property. They need to be realistic regarding the value of their real estate. Just as with residential investments, they must consider the condition and location of their investment. Commercial landlords need to have a long term plan in place that keeps rent increasing on an annual basis.

If you make a concession regarding a starting rent to get a tenant in, plan to step it up to market value within three years. Aim for a minimum of 21/2 % to 3% in annual increases based off the pre-negotiated step increase or percentages that increase on the basis of a business’ success (typically used by retail businesses). I am not a huge fan of CPI (consumer price index) increases because the government has too much control of those numbers. Don’t permit expense caps unless you can stay ahead of the expenses, regardless of the caps. Landlords and their property managers should not automatically cave into very low or zero rent increases at lease renewal time, even if the tenant threatens to move out. Run realistic scenarios regarding the cost of re-ten-

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anting. Include vacancy rates, leasing commissions and tenant improvements in these calculated scenarios. Consider also, the moving costs an existing tenant will face. Understand their business and business goals, their staffing and their success at your location. Most importantly while they are renting from you, fi x repairs that are required by your lease, and fi x them quickly. Show your tenants you appreciate them by treating them how you would want to be treated, otherwise they will blame you and possibly hold back rental payments, do the repairs themselves or, worse yet, move out. We once had a client who took two months to repair the air conditioning units on a newly leased space. It was wintertime and it was raining; the

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Conclusion Inevitably, attention to detail, future planning, a current understanding of the marketplace, and a fair and realistic approach to taking care of your properties will yield higher returns for real estate investors. A key component to profitability is a focus on current and future rental incomes. Sticking to the basics with an annual planning process and taking care of your tenants will increase your annual yield and keep reliable tenants in your properties.

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tenant was livid and hired an attorney to preserve their rights under their lease. The landlord wanted absolutely the lowest price for the repairs and getting the lowest price took over 30 days of negotiating with vendors. The tenant almost moved out because it took so long, and alternative cooling systems needed to be provided. The experience drove them to become a hostile tenant. These bad feelings could have been prevented and we could have agreed on rent increases and lease renewals with this tenant if the landlord would have allowed the property manager to be more proactive. Note: Typically property managers have vendors they work with that are reasonably priced who respond quickly, but they may not be the absolute – lowest, period.

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Rental Housing Journal Colorado · November 2015

Rental Housing Journal Colorado

Will Your Retirement Hit Bottom if the Markets Plummet?

“A portfolio done right should shield retirees from tumultuous ups and downs”, Financial Planner Says

all Street hasn’t been for the faint of heart lately. Jittery investors saw the volatile market play havoc with investment portfolios. But while the ups and downs may have created anguish for some, financial planner Bryan S. Slovon says he fielded few if any calls from nervous clients. And that’s the way it should be when your clients are retirees or people nearing retirement, he says. “Retirees really shouldn’t be seeing major changes in the values of their portfolios every time the market takes a huge dip,” says Slovon, founder and CEO of Stuart Financial Group (www. Stuartfg.com). “A well-constructed portfolio for a retiree should shield them from much of the volatility that happens with the stock market.” If their portfolio changed as much as the market did, he says, they need to revisit their allocation plan before something really significant happens. He says portfolios that have an appropriate level of risk – with a percentage of the money in such areas as real estate or fi xed annuities – allow retirees to avoid significant losses when the stock market takes a drastic turn for the worse.

“It definitely relieves stress for people when they know they have an investment strategy that matches their stage of life,” he says. Any retirees who felt queasy over the recent swings in the market probably have their money invested in the wrong areas, Slovon says. He suggests options that retirees, or those nearing retirement, should look for as they try to figure out how much investment risk is right for them: • Rule of 100. In trying to ascertain an acceptable level of risk, people should look at the rule of 100, Slovon says. For those unfamiliar with this rule, here is how it works: Start with 100 and subtract your age (or, in the case of married couples, the average of both your ages). The result is the approximate percentage of your investments that you should have in riskier investments, such as stocks. “The rule of 100 is not the end all, but it’s a good long-term financial planning tool that’s stood the test of time,” Slovon says. For example, if you are 60, 100 minus 60 comes to 40 percent risk. “That can vary depending on each person’s situation, but it’s a good place to start,” Slovon says. “Unfortunately, one

Publisher Advertising Sales Will Johnson – will@propubinc.com Will Johnson – will@propubinc.com Publisher Advertising Sales Terry Hokenson – terry@propubinc.com Designer/Editor Will Johnson – will@propubinc.com Will Johnson will@propubinc.com Larry Surratt ––larry@propubinc.com Kristin Flores – kristin@propubinc.com Terry Hokenson – terry@propubinc.com Designer/Editor Larry Surratt – larry@propubinc.com Kristin Flores – kristin@propubinc.com Rental Housing Journal Colorado is a monthly publication published by Professional Publishing Inc., publishers of Real Estate Opportunities in Rental HousingInvesting Journal Colorado is a monthly & Real Estate Investorpublication Quarterly published by Professional Publishing Inc., publishers of Real Estate Opportunities in w w w . r eInvesting n t a l& h o Estate u s i Investor n g j oQuarterly urnal.com Real

of the things that can happen is you work with people who offer nothing but risk. They offer only risk because they are part of Wall Street.” • Annuities. If you want a steady stream of income during retirement, an annuity can be a good choice, Slovon says. Essentially, an annuity is an insurance product that pays income. You buy the annuity, and then it pays money to you on a regular basis for life. You can have either a fixed annuity or a variable annuity. The fi xed version pays a set amount, so market performance isn’t a factor, Slovon says. With the variable version, though, you choose from a list of investments and the payout depends on how well those investments do. • Bond alternatives. Bonds can be a handy part of your portfolio, shielding you somewhat when the stock market takes a dramatic tumble. Bonds tend to lose their value when interest rates rise, though, so it’s not a bad idea to consider some alternatives, Slovon says. One possibility is mutual funds because with a mutual fund you are investing in a collection of stocks, bonds or other securities. That gives instant diversity to your

portfolio. Another alternative is real estate investment trusts, which are companies that own and usually operate income-producing real estate. These could be office buildings, apartment buildings, shopping centers or other types of property. “Whether you are a few years away from retirement, or already retired,” Slovon says, “you want to make sure your money is properly situated for steady cash flow, for health care costs or for that proverbial rainy day. It should look very different from when you were still saving for retirement.” About Bryan Slovon Bryan Slovon is the founder and CEO of Stuart Financial Group (www.Stuartfg. com), a boutique financial planning firm exclusively serving retirees and soon-to-be retirees in the District of Columbia metro area. He is a financial planner specializing in retirement planning and wealth preservation to a select group of clients. He currently holds his Series 65 license and is a Registered Financial Consultant as well as a Comprehensive Wealth Manager oﬀering investment advisory services through Global Financial Private Capital, an SEC registered investment advisor.

NATIONAL REIAU IS HERE TEST DRIVE IT NOW! Enroll In Online Classes And Start On Your Path To Real Estate Education With National REIAU Today Visit Us Today at www.NationalREIAU.com

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Rental Housing Journal Colorado · November 2015

Rental Housing Journal Colorado

Long-term Hold Investing

...continued from page 1

Rental properties in more desirable locations usually are priced at a lower capitalization rate, than rental properties in less desirable areas. Over time, the quality of tenant, ease of leasing, and appreciation potential will compensate for the initial lower return. Buying in a neighborhood, that you feel may decline, is a big mistake. You can change many things about a property, but you cannot change its location.

Quality of Construction Properties that are built in quality materials and workmanship tolerate the abuse of tenants, time and the elements much better, than marginally constructed properties. Tile, metal or shin-

gle roofs last longer and require less maintenance than flat roofs. Copper plumbing is preferred to galvanized plumbing. Tenants damage themselves, rather than interior walls, when they punch a plaster wall. Solid wood cabinets will last decades longer than press-board or veneer cabinets. Even if you intend to remodel a property, choose one that has good â&#x20AC;&#x153;bonesâ&#x20AC;?.

Target Tenant When you preview properties, form a realistic mental picture of who would be a potential tenant(s) for that property. Is it located near a college or a senior center? Is there a major employer or a

hospital nearby? Does the rental have a private outdoor patio? Covered or enclosed parking for a newer car? With the number and size of bedrooms, how many people could realistically live in the space long term? What does the property lack, that the potential tenant might desire? Now that you have formulated a mental picture of your tenant(s), think how it would be interacting with that tenant(s), or a succession or variation of that tenant(s), for the next 18 years. If the mental picture you are formulating is not pleasant, keep shopping for the right property.

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Financing Investor loans are fixed rate amortized loans, up to 30 years, for 1-4 family properties. When you purchase 5 unit or larger properties, it is considered a commercial loan. Institutional lenders fi x the interest rate for 3-10 years, and then it is variable or renegotiable, on commercial loans. Sometimes you can find a fi xed 15 year fully amortized commercial loan. If you are going to hold a property long term with a commercial loan, develop a game plan for dealing with interest rate adjustments or renegotiation, before purchasing. Formulating a long term rental property real estate investment strategy involves more than analyzing the numbers on paper. Location will be a huge factor in future appreciation and convenience of management. Quality of construction will determine long term maintenance and capital expenditures. If you self manage your properties, the tenants you choose and your relationship with those tenants, will contribute or detract from your quality of life, for decades. Securing stable long term financing, while interest rates are historically low, will insure strong cash flows until the properties are paid off. Incorporate the importance of location, quality of construction, target tenants and financing strategy into your long term invest portfolio strategy.

Jade Bossert is a licensed Real Estate Broker in Tucson, Arizona that specializes in multifamily property sales. She has been successfully selling real estate in Arizona for over 35 years. She can be contacted at 520-797-6900 or tucsonrealestate@mindspring.com.

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Rental Housing Journal Colorado

9 Tips For Getting Started in ...continued from page 2 neys and other professionals may denounce it because it sounds unusual. Keep in mind that these people are either threatened by their own lack of success or are looking to protect their own butts. The first thing you should do is join a local real estate association connected to National REIA. These associations will help you keep your thoughts in the right place and prove to you that investing with a plan really does work. You will be connected to investors that have had great successes, those that can share what they learned from their not so successful deals, and to those who are just starting in the business just like you.

• Attorney – preferably someone who’s familiar with the needs of a real estate professional. Make sure they understand the specific real estate strategy that you are using and that they’ve had some experience in that specific strategy. You don’t need to know all of the real estate laws that will affect your business but you need an advisor who does. • Insurance Agent – you need one that also understands your strategy and investors in general. Make sure the insurance products they sell are right for investors. We have needs that are far different than your average home owner.

ginning investors waste time talking to sellers who are only marginally motivated. Even worse, they drive by the house and look for comps without even talking to the seller first. There’s a difference between being persistent with a seller or buyer who hasn’t yet made up their mind about what they want to do and dealing with a seller who really has no intention of selling anytime in the near future. Don’t waste your time if the seller falls into the latter group.

Never Forget That Real Estate Is Really About People In the end real estate isn’t about the land, the house, or even the money. On a practical note and an altruistic note, it really is all about the people. • CPA or Accountant – find one that’s Be Persistent Many people go through their first a real estate investor – they’ll know years of real estate investing making Anyone who’s ever been in sales will the ins and outs of the business and all their offers based on the properties. tell you that being persistent is the key when to be aggressive. You can lose This is a huge mistake. These investors to success. Just because a person says $1,000s in deductions and tax breaks worry about making really low offers “No” to an offer the first time doesn’t without a professional that knows because they are concerned that it will mean that’s the final answer. Waiting the most up to date tax law as it apmake them a “bad” person to “take a couple of weeks and checking back plies specifically for investors. advantage” of a seller, especially one to see if the situation has changed can make all the difference, or chang- • Contractor – you need a reliable in a tough situation. What they don’t professional that shows up on time, understand is that many people will ing the terms of the offer slightly to completes the job within budget and happily forgo profits if other benefits accommodate the seller can jump VALLEY, METRO, ARIZONA APT. NEWS knows how to make suggestions that are more important to them. Some start negotiations. will save you money. Free estimates people need speed, some need ease of Have a good follow-up system for exit, some need someone else to blame. don’t hurt either. tracking contacts, leads and conversaI’ve heard more than one investor tell tions you’ve had with both buyers and • Mortgage broker, private money a story about a seller who happily sold sellers. You’ll get to the point where below market because their son, sister, lender, hard money lender or othyou’re so busy you can’t possibly reer money professional – find one nephew – pick a relation – wouldn’t member all the conversations you’veAug, Feb, Apr, Jun, Oct, Dec with investors, pay rent or move and they honestly that’s experienced had with everyone – it’s important to knowledgeable and creative. You can just wanted to sell the house and let be able to pull up that information so never have too many people who are you deal with the situation! you know where you are in the negowilling to fund your deals. tiation process. Anyone who has ever

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been in sales will tell you that few deals are ever made on the first try. Use a system that allows you to schedule follow ups and keep a running history of calls and conversations. One of the National REIA benefits is a huge discount on Realeflow, but you could also use ACT by Sage, an Outlook or Gmail plug-in or one of hundreds of apps for your phone or iPad. It doesn’t matter what software you use as long as you actually use it.

There is a scale of client motivations, the Hustead Scale, that concisely describes the level of motivation a seller has. The most motivated sellers will pay to get out of a house. Something in their life makes being out of that property so important that they will pay you to take the property. Many investors make offer after offer, receiving rejection after rejection, never bothering to ask the seller what they want, assuming they already know. Making offers on the properties because you think you understand the value is far less effective and far less profitable than making an offer that provides the seller an option they didn’t know existed, a solution to their problem. The moral of the story here is that if you listen, and I mean REALLY listen, and try to solve the seller’s problem you will always make more money than if you try to just apply your cookie cutter approach. Zig Ziglar used to say “You will get all you want in life, if you help enough other people get what they want.” He’s right. This business, at its core, is about people. We provide housing, we provide solutions, and sometimes most importantly, we provide options they didn’t know were available. There you have it. Follow these nine simple steps and before you know it, you’ll be an outstanding real estate investor.

• Mentor – someone who’s been there and done that. • Title or Escrow Company – find one that caters to investors. Make sure they understand double closings, land contracts, etc.

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Rental Housing Journal Colorado · November 2015

Rental Housing Journal Colorado

Five Real Estate Investing ...continued from page 1 Establish Your Parameters In addition to becoming good at the basics, I urge real estate investors to establish their investment parameters. • What kind of investments or deals do you want to do? Are you going to do loans? Are you going to use options? Are you going to buy rentals or tax liens? Are you going to invest in commercial properties? Pick two or three (no more than that) of these things and get very good at doing them. Do them over and over again.

• Determine what you are looking for in each of your potential investments. • How much capital per investment are you willing to put at risk?

• Who is involved?

• How much time will you put into this investment?

Allow me to explain why these questions are so important. It doesn’t matter how papered-up or how careful your lawyer is when drafting the agreements. If the person on the other side is a person of weak or poor character whom you know has a tendency not to honor their word, it will not be a good deal. You want to be in a situation where someone you know who has very high character and is a capable investor is involved in the transaction. You still need to know HOW they are involved. Are they going to be involved in a way that will make sure the deal goes well, or are they just on the periphery and their name is just being “borrowed” for marketing or window-dressing purposes? Once those key questions have been answered and you understand who is involved and how, and you have done some basic due diligence on them, then you are able to determine if you want to proceed with further due diligence on the deal or investment. Even though you may have a long, successful track record of doing multiple deals with individuals, it never hurts to check up on them again to see if things have been going well in other aspects of their lives. Allow me to share a brief story to illustrate this point. A client of mine indicated that he had made a series of large-dollar, hard-money loans to a rehabber who always got the properties finished in great condition, and they sold for top dollar. After doing several of these

• What is the length of time you want your capital to be out working? • What is the projected rate of return you are seeking? • What is the minimum rate of return you want from your cash and/ or time in each of your investments? When I say “rate of return,” I’m not just talking about an interest rate. • Do you want your investments to result in your receiving monthly income payments, either interest only or something else, so each investment is generating a monthly cash flow to you? These are just some of the parameters you need to establish for yourself. There is no one book, manual or class where you can learn all this information. No, it requires your spending some time working on what you think is best for you. That means you may have to do one of those activities in which investors should engage on a regular basis but often don’t – think and plan. As you think and plan, you will be able to clearly define your investment parameters in a way that you can clearly communicate with others who may want to do business with you.

Do Your Essential Due Diligence Another key component of real estate investing involves your due diligence process. There are two very crucial questions to be asked at the beginning:

• How are they involved?

deals, he began to feel very comfortable with this borrower. Unbeknownst to him, this borrower was having marital problems. Once those problems grew to the point where domestic relations court and lawyers became involved, this individual’s rehabbing business fell apart, and one of my client’s loans was put in a great deal of jeopardy. Fortunately, things worked out and full payment was made, but it was late and destroyed my client’s belief that this rehabber could be counted on to perform and pay on time. Make sure you develop the type of relationship with the individual with whom you are doing business that allows you to look them in the eye and ask them how they are doing and what else is going on in their life so you can pick up on what issues may be on the horizon that could affect the way you are doing business with them.

cy and security over what you’ve done with other deals. I often see individuals who grab the last document they used (last lease, last trust agreement, last operating agreement, etc.), and they begin making edits to that one for the next deal, not realizing that there may be holdovers, both digitally and facially, in that document. Has that ever happened to me? Embarrassingly, yes. I have taken steps, however, to prevent it from happening again in the future. That’s why I’m sharing this concept with you. Whatever the type of document, whether promissory note, mortgage, deed of trust, option agreement, due diligence checklist, or borrower questionnaire and loan application, have them saved in a baseline format that you can quickly modify it for the particular deal on which you are working. This will allow you to be much more organized as you prepare these documents on your own to be sent to your lawyer or other licensed professional for review and then used in the transaction. Remember, it’s all about getting good at the basics. Make sure you master the basics of real estate investing, establish your parameters, do thorough due diligence regarding those with whom you are working, and work from the same, consistent set of documents so you can continue to repeat your successes.

Organize Your Deal Paperwork There is one last fundamental principle that investors need to understand that I want to share with you. You need to organize your paperwork. You need to have all your baseline transactional documents saved in Word format so you can easily do your own word processing and create nearly-completed drafts of your documents to be reviewed by the appropriate outside professionals and other parties to the transaction (yes, get a professional review each time). By always working from a baseline document, you have a template in place so you aren’t reinventing the wheel every time. You are also able to maintain a greater degree of priva-

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Rental Housing Journal Colorado

SK THE SECRET SHOPPER

vailable for a limited time! Only one of its kind! Offer expires at midnight! These and similar phrases are used to make people “spring boldly into action.” They conjure up images of people rushing into department stores and retail outlets to take advantage of incredible offers on quality merchandise, especially during the holiday season. The advertisers and merchandisers are trying to create a sense of urgency in the minds of their customers; which will motivate them to take immediate action. They are in the “sales” business and want the customer to immediately purchase a product and part with some of their money! You may not have to meet monthly or quarterly sales “quotas,” but undoubtedly you have specific occupancy standards which must be met and maintained. Therefore, you need to rent a certain number of apartments each day, week or month to achieve the goals set for your community. It’s no secret that in the Pacific Northwest, many prospective renters decide to hibernate for the winter and dig in their heels until after the holidays. The phone isn’t ringing off the hook like it was in July, and the few people who are moving, may or may not make it to your community before they decide to rent somewhere else first. A vacant apartment today, could be “ringing in the New Year” with you on January 1st. The Secret Shopper phoned three communities, looking for immediate availability. Each leasing person seemed

interested in helping me, but only one motivated me to visit. My first call was answered promptly by a friendly voice. I stated that I was new to the area and needed to find a place right away. The consultant asked where I was moving from and what was bringing me to the area. She then asked for my name and began to inquire about the specific needs and requirements I had. It was a pleasant exchange that went on for several minutes. Once the consultant learned what was important to me, she began to talk about various openings. She said that I had called at a good time because there were a couple of great apartments to choose from. The consultant invited me to visit and told me the office hours. She said, “If I’m not here, anyone in the office can help you.” She gave me directions and closed with, “I hope to see you soon.” The next call I made was answered with a great deal of enthusiasm. The consultant asked for my name right away, and I could hear the smile in her voice as she spoke and offered her assistance. I explained that I was new to the area and needed to find a place to live right away. The consultant asked questions to determine my needs and find out what was important to me. She told me there were only two apartments available, and briefly described the positive attributes of each one. She asked when I would like to come by, and we discussed the driving distance and the fact that it was raining. The consultant said, “It’s been kind of slow today

because of the weather. If you want to wait and come by tomorrow, I’m sure the apartments will still be available.” I said, “I think I’ll do that.” The consultant said, “Great! I’ll see you tomorrow!” My final call was met with an energetic greeting and an immediate offer of help. When the consultant learned that I needed an apartment immediately, she said, “Well, you better get right over here because I only have one left!” I laughed and asked if she could tell me a little bit about it first. The consultant described the apartment interior, as well as the view. She explained that the “view apartments” don’t open up very often, and said this one was especially nice because of its southwestern exposure. The consultant said she had a model to show, and she could take me by the location of the apartment for rent. She told me they were still getting it ready, but that I could move into it by the week-end. Th e consultant asked if I had time to come over right now. She said she had another appointment in an hour and if I waited, the upcoming apartment would probably be gone. I agreed to come over within the next twenty minutes. The consultant then gave directions carefully, since I had stated I was new to the area, and said, “Call me if you get lost.” Before we hung up, she asked for my number to be able to check back with me if I didn’t make it by. The consultant thanked me for calling and ended with, “I look forward to meeting you. I’ll see you when you get here.”

What are you doing to create URGENCY when the telephone rings at your community? How do you convince the caller that what you have to offer is worth their time and consideration? Your community may be just one of a dozen competing for their attention. Why should they visit YOUR place, and why should they DO IT NOW? Is there something about your apartments or community that stands out from all the rest? Could it be a unique floor plan or desirable location? What about the easy access to area conveniences or your sensational staff ? Whatever it is, use it to create urgency to get your callers to visit TODAY! Tomorrow is TOO LATE! By then, they will have already rented from the leasing consultant who invited them to visit YESTERDAY! If you are interested in leasing training or have a question or concern that you would like to see addressed, please reach out to me via e-mail. Otherwise, please contact Jancyn for your employee evaluation needs: www.jancyn.com Ask The Secret Shopper Provided by: Joyce (Kirby) Bica Former owner of Shoptalk Service Evaluations Consultant to Jancyn Evaluation Shops E-mail: shptalk2@gmail.com Copyright © Joyce (Kirby) Bica

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Rental Housing Journal Colorado · November 2015