The First Time Real Estate Investor: A Chronology — Part II (Info Dumps)
Posted @ 11:08 pm - Filed under Buying Income Property, Purposeful Planning, RE Investment Practice, Real Estate Investing
Those of you who’re regular readers know I like using pictures to help illustrate points, while breaking up the text monotony. Some posts, (this series for sure) make it difficult to maintain photo/prose continuity. (Great phrase, eh?) Anywho, I mention all this so I can now warn you — today’s pics are more random than a soccer game in a league for five year olds.
Yesterday we got part way through the process a new investor experiences with Brown and Brown. What wasn’t discussed was the behind the curtain kinda stuff that goes on just before, after, and between steps. Info dumps one client calls ‘em. I like it.
First Info Dump
This comes more in verbal form. The newbie hears about the differences between the investment lending process vs buying the family home. They hear terms like declining market, rapid acquisition, and ‘Hey, no problem, we just need one more thing.’ (They mean well, but that last one is almost always a lie.)
They hear why this loan is better for them and their particular properties than that loan. Also, the nuts and bolts of real life investing are at this point beginning to become a part of the vision they have for their retirement. That’s an important moment, as it brings excitement to what is often a tedious process.
They also learn about the importance of speed of response when dealing with your lender(s). Especially in these times, when what’s true at 10 AM is only a distant memory at 3 PM. They learn what locking a rate means, and why it’s a crap shoot no matter how smart you are. They also realize being flexible, as Purposeful Planning demands, is tantamount to the long term success of your Plan. (See Purposeful Planning podcasts.)
Second Info Dump
This one comes between the news lenders think you’re worthy of their largesse, and before you sign your first contracts. Usually, the question arises — ‘Can we get some pictures, or, uh, some numbers? Do you have a spreadsheet or something?’ Well, yes, it turns out we do. We have various and assorted studies, articles, before and after cash flow analysis, with and without internal rate of return. We’ve almost completely stopped givin’ ‘em the IRR ‘cuz to most it doesn’t mean much. We still do it for ourselves though, as it does add value to our decision making process.
Typically we email them an analysis on 1-4 separate properties. This will include income/expense, debt service, net operating income, cash flow before taxes, and depending upon the client’s level of sophistication, (or their desire) after tax analysis. Along with the parade of numbers is the welcome relief of pictures. Inside, outside, this room, that room, the pretty driveway, and the very impressive kitchen. You want pics, we got pics.
Whatever info we’ve garnered about the area we pass along. New commercial projects, a hospital opening nearby, you know, the new company looking to hire 200 new employees. Stuff showing how smart you are to invest there.
We also begin to introduce our team. Your management company is ‘Such & Such’ company, run by Mary. Mary’s assistants are Jerry and Marilyn. Here’s their contact info. The same is done with the various other team members as required during the process. More on that later.
Please don’t infer that by ‘info dump’ we do a fly over, dropping bags of indiscriminate info without offering explanations. First and foremost, our info is anything but random. It’s a result of our own ‘boots on the ground’ research combined with objective analysis done with a critical mindset, and a decidedly conservative bias. We often spend entire phone conferences giving richly detailed and in depth explanations for all data sent your way.
During these sessions clients will sometimes let us know we’ve given them several answers to questions they hadn’t known to ask. Always makes my day.
We’re now up to the contract stage and ready to address what happens during, and after escrow is open. This means explaining inspection reports, work repair orders, and the previously mentioned danger period, when it’s tempting to relax a bit. We’ll continue tomorrow.
You’d make my day by either calling my office or hitting the link here to Contact me. I’ve been told my afternoon is gonna be taken up with certain goings on in Del Mar. Got out of it last year, so I’m being a good boy and smiling as with what I hope is a look of excited anticipation.
This entry was posted on Wednesday, June 18th, 2008 at 11:08 pm and is filed under Buying Income Property, Purposeful Planning, RE Investment Practice, Real Estate Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
