The Forgotten Factor Of Successful Real Estate Investing

Posted by Robb Terranova under Buying Real Estate, Real Estate Investing, Selling Real Estate | Be the First to Comment

Taking a minute to understand the people side of real estate investing may help you to quickly become more profitable.

Start by taking a look at yourself. It is possible you have a tendency to think real estate investing is a business, that everyone involved should act logically, and you should be able diagram your profits like a scientist calculating the geologic age of a rock.

The house is worth X, so I should be able to buy it at Y because the seller should agree that a cash sale is worth the discount.

Then I hire several contractors who all, like synchronized swimmers, coordinate the completion of their tasks and finish my house in 3 weeks with no holding costs.

Everyone wants to live in my neighborhood, so I’ll discount the house 1% under market for a quick sale, voila! I’ve made Z dollars, and I’m off to the next deal.

Go ahead and try it this way, everybody does at some point. When nobody listens to you, then you might realize, oops, you forgot to calculate in the people factor.

Every step of the way, the people involved have their own motives, some emotional and NOT financial, and you will make more money figuring out what those are than trying to insist everyone understand yours.

The key to the people side of real estate investing means standing in the other person’s shoes while maintaining a grip on your ultimate objective. Remember, you’re not going to fool anyone, you actually have to understand their perspective, not just pretend like you care.

First, what’s your house worth? It depends not totally on comps, but who is willing to buy it. Who is willing to buy it depends on what people LOVE about the house. They may love the neighborhood, or they may love the schools, or they may love the patio in the back yard.

So it becomes financially important to you what the buyer LOVES about your house. You can research and emphasize these emotional triggers in your advertising, then customize them to the particular buyer in your face to face pitches to sell the house more quickly for a better price.

Second, what’s a seller willing to take? They may think the house is worth twice what they paid for it because they always wanted to sell it for that, or their neighbor’s house for sale is worth that so they should be able to get that too. What the seller will take depends on what they FEEL it is worth.

So it becomes financially important to you how the seller FEELS about the house’s worth. Interviewing a seller with careful listening skills, you can gather a literal wealth of information. You can skillfully address these points in your negotiations to get closer to what you want to pay for the house.

Third, contractors are very independent, not only from each other but from you. They usually have several irons in

the fire at once and cycle in your job based on their priorities, not yours. Coordinating contractors depends on diplomatic handling of their NEEDS interacting with yours.

So it becomes financially important to you what your contractor’s NEEDS are. Sizing up a contractor’s profile in early meetings can help you find those you can work well with and avoid hiring those that you will have trouble with later, which will save during renovation and ultimately make you more money when you sell.

You can find tremendous insight into the people side of real estate investing in my book “The People Side of Real Estate Investing”.

I use deals from my own investing career to demonstrate how to integrate the people side into real world deal making, and provide line-by-line dialogues for successfully handling common real estate investing scenarios.

Even if you think your people skills are terrible, by the time you finish reading this book you will have a significantly better understanding of people’s motives and how to capitalize on them for bigger real estate profits.