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4 Biggest Mistakes Novice Realtors Make in their Commercial Real Estate Career
When it comes to making your career in the commercial real estate, nothing can pay off better than a complete market analysis and research. You will have a plethora of ways to run your business plan and investment ideas past various investors and bankers. Sometimes, when on the prowl for customers and investors, you’ll buttonhole people who’ll see you as a slumlord or salesperson, but that won’t make you one.
Remember, the real estate industry is more a war of attrition than a simple selling and purchasing game. Whether you have an innate urge to squirrel money away in a commercial investment or the stock market, keep in mind that achieving profitability is a long process, like waiting for a little seed to grow into a fruitful plant. But if done right, your business will be in full swing and stand out from the crowd, just like the Stars and Stripes on the flagpole. So if you have just started your epic odyssey in the real estate sector and want a quick kill, then don’t commit these mistakes that other realtors make:
Mistake #1: They Look for a Perfect Deal
Quick Fix: Don’t seek out an appropriate deal or wait for a more suitable time. Remember, opportunities will not knock on your door every day.
Many agents (even, the ones with skills and years of experience) miss out on hundreds of thousands of dollars waiting for a better opportunity. It’s not wrong to comprehend and check all aspects associated with the investment and returns on it, however, giving up on every single chance can cause some severe setbacks and financial difficulties for your business.
For instance, you have an excellent deal and a great investor to get started with your plan. You finally get a break to lease a fourplex to a bunch of renters. But by some quirk of fate, you can’t reach an accord with them, thereby letting the brilliant chance slip away. Next time, on a side note, you might not like the investor or property. Remember, you will never be ready and able to attain your goals until you give it a go.
Mistake #2: They Overlook the Importance of Delaying Gratification
Quick Fix: Make an effort to hold back your cravings and spend dollars wisely. Learning the concept of deferred gratification will help you master the skill of mitigating exposure, financial, and market risks and make a hella lot of money.
Various studies show that people who understand the art of delaying gratification are more likely to succeed in their lives. But what is delayed gratification? It’s the ability to hold over your thirst to purchase or gain something now and satisfy your desires by getting the benefits of those rewards later.
For a quick understanding: Let’s say you take a commercial loan to purchase a property that is not a part of your business plan. You are so keen on procuring it, maybe because an XYZ realtor has recently bought the similar property or you are just purely fond of it. You get caught up in the rat race and pay a hefty payment to buy it. Not to mention, when starting out in the real estate business, you need money on hand before getting any actual profit or positive cash flow.
Now let’s talk about irony here – you don’t live in that property, rent it out, or make a single penny from it. Additionally, you are unable to cover your operating expenses and pay the mortgage.
The smartest decision will be to invest in the multiplex building, slowly rehab it, and then rent it out. Doing so will help you make a killing quickly and cover your daily expenditures. Create a budget, marketing strategy, and business plan, and stick to them. Before making any purchase decision, ask these questions to yourself:
✓ Is this purchase relevant to my business?
✓ How will this product or service benefit me?
✓ How will this product help me achieve my targets?
If the most of your answers are no, then resist the temptation to get your hands on the unwanted things and squander your hard-earned bills on them. And when we say buying unnecessary items and wasting money, believe us, you are well off without them. Instead, make a significant effort to save every single dollar and cent for making commercial investments or other needy purchases.
Mistake #3: They only Think about Risks, not Victory and Knowledge
Quick Fix: Whether you want to walk the well-trodden route or take the risky path, the choice is yours. But, as long as you can achieve victory and learn various things, you should not be afraid to take a risk or two.
While you must learn the importance of delaying gratification and its benefits for your fix and flip properties, sometimes you need to throw the most powerful punches and take risks to win an uphill battle. Don’t fall into the paralyzing “I know everything” trap and try to gain as much knowledge as you can. If you don’t want to take significant risks, then start with the small ones and later take bigger bets.
There’s no denying that housing market is unpredictable and inconsistent, sometimes on the verge of collapsing, and other times in good shape. So when a great opportunity knocks, don’t ignore it because your split-second decision can be your lotto ticket to become a millionaire. To squeeze the profit margin out of your business, you need to identify the best properties and neighborhoods in a particular area. Start by researching and analyzing market conditions of different locations, cities, and towns.
Mistake #4: They Underestimate the Value of Relationships
Quick Fix: No need to be famous for being famous. All you have to do is create an assorted weblog, moblog, or journal of your properties (leased, sold, and purchased) and investments, flash your achievements, and most importantly, build strong connections with your peers and clients.
Just like in any other business, communication and healthy relationships are essential to get more people interested in you and your portfolio; whether they are customers or financiers. Focus on making people like you and satisfied with your products or services. From builders to consumers, try to engage them in the eye-opening conversations and answer their queries with curiosity.
Chatting with your potential clients is not a one-time event, but it’s a repeated process that you should leverage as a marketing and promotional tool. To establish long-lasting rapports, you need to forge face-to-face relationships with people outside the digital world such as emails, texts, blogs, etc. Also, there’s no harm in giving your agent an incentive if he gets you a screaming deal. Don’t forget the golden rule “Happy Employees Make Happy Customers.”
"Good Luck and Bon Voyage!"
If you have just started out with your business and need a commercial loan to acquire an estate, fund the capital expenditures, or cover organizational dues, then contact us for a quote. Call us on +1 (909) 377-3137 or drop a message at bb@arrowbcd.com.