How to Choose a Second Rental Real Estate Property to Buy

A successful initial foray into real estate investing does several things. Firstly, it vindicates your beliefs. You have now proven that you could indeed do what you had believed you could do all along. It also gives you valuable experience which you can take forward into your next property investment, making that even more likely to succeed than the first one. Finally, it provides the capital, or at least the promise of capital, with which to fund your possible expansion.

There is always an instinctive belief amongst investors that a more expansive and highly leveraged investment always carries more risk. This is not necessarily the case in real estate. The conservative investor, who uses a lot of his own money, borrows very little, and then has occupancy problems for an extended time, is a good foreclosure risk for the lenders. There is plenty of equity in the property which they can instantly take back. A more aggressive investor, with a highly leveraged system, is actually more likely to survive an economic downturn, since there is little point in the lender seizing back a property which will give them a loss.

If they work with the investor through the downturn, they can still make significant long term profits. With this in mind, it is strongly advised that you leverage your investment. The downside is limited, and by having more than one property you are moving away from the situation where your entire portfolio is either 100% occupied or 100% empty. All the time, you are reducing the amount of risk which your business is subjected to. Your long term goal of a stable and dependable income.

It is also a good idea to build on the success of the first property by staying very close to it geographically. You will save money on maintenance and administration by reducing the distance between the properties, and you could also find that the good tenant in the first property has friends of a similar age and interest group, who would make ideal tenants for the other property. Anything you can bring to the new project which has worked with the old one increases your chances of success.

One of the greatest benefits of all has yet to be mentioned, and that is the reputation you should now be building up with the banks or lenders who financed the original investment. Having borrowed money and created one successful project, you will now be able to negotiate better terms with the lenders who will be fighting to help with the next one.

This is not limited to institutional investors, either, as you now have a proven case to show a private investor who is looking for a tax efficient, but still profitable, investment. You can even arrange to locate and manage properties for these investors in exchange for commission, bringing in extra income without risk. This can then be re-invested back into leveraging further properties, helping you to build your empire as soundly as possible.

How To Find And Hire Staff For Your Real Estate Rental Business

So you’ve been through the numbers and found a great real estate rental property that you’re proud of. Congratulations are in order for you but the most crucial still lays ahead.

Management of your property is just as important as the purchase of your rental property. Do not sway from this point of contention because you need to have the energy and market savvy to insure that your investment will pay off.

If you intend to make real estate a business then you must treat it as a business. I know you’ve heard that before but no matter what type of business you have you will need a support group.

This support group can make you or break you if you don’t select the right people. A good support group can identify problems and get them fixed right away. A less than acceptable support group can make your life miserable as well for your tenants.

The first step in hiring staff for your business is to advertise. Putting an ad in the paper will give you outstanding results. There are plenty of people each and every day scouring the ads for something that they can do to make money.

Getting these ads in the right type magazines is also important because like minded people for the most part will be reading for these opportunities.

Let’s take a back step at this point to make sure that you need to know what you’re looking for in a staff support person. Congeniality, common sense and being personable are just a few of the personality traits that you must be looking for.

The customer service support team that you select will reflect you. You need to feel comfortable with the person that you will depend on for your real estate business.

Taking your time in hiring a customer service person is the first criteria because you don’t want to pick a person that isn’t out for the good of your company.

This is a time for reference checking to see what type of person is being interviewed. You need to do just as an extensive background check for your future employee as you did with your tenants. Without a proper background check you really don’t know what type of
person they are.

Laying down the requirements of the job like punctuality and good time keeping skills is a must. You must be able to rely on this person for all the paperwork and phone calls that may come in once you start your business.

This person is someone that will come in contact with many of your possible ventures that you encounter throughout your business life.

Making sure that you select the right person for the job will cement in the future for you. You will be able to start making a lot of deals knowing that you have a person that will complement you with a customer service support that is second to none.

You do right by that person and they will do right for you.

7 Ways To Target Your Ideal Customer

No matter how innovative and exciting your marketing strategy is, it is not going to deliver you the desired success unless and until you have a definite idea of the kind of customers you want to target. Misdirected marketing policies can end up focussing on the wrong kind of customers and resulted in flawed and disappointing sales. So how can you identify and target the right one? Read one to know more.

To get great and consistent sales for that new product of yours, you need to sell your story and pitch them to the right audience. Just like how teachers need to find the best ways to engage their students keeping their interests in mind, marketers need to question themselves: “How do you find that audience who suits your product and your story?”

Identify the needs

Before you identify your customer, you need to visualise on what customer need you are aiming to fulfill. You need to identify the needs you are going to fulfil. You also got to do a customer profiling to make a list of characteristics of the customer who will have or express those needs. The demographic profiling needs to be exhaustive, and should contain as much details as possible to get a precise description.

The details may include gender, age, race, income, occupation, interests, personal habit and lifestyle related questions, aspirations, views on related products produced by competitors. There are different sources for obtaining demographic information. Data produced by research companies such as AC Nielsen are very useful and in depth sources of consumer behaviour. 

You can also use online surveys such as survey monkeys. You can even make use of existing customer database and your own employee database to get the preliminary information related to your marketing plans. The key is to always focus on the customer first. The customer needs are most important. As a go-getter and a business interested in making your name, you should not wait for the customer to approach you with their needs, you need to be aware of changing trends and demands and watch out for opportunities as and when they come up.  Pro-activeness and foresightedness can serve every marketing wing very well.

Narrow profiling

Fine tune your audience and customer base to as narrow a margin as possible. This is because with a narrow and specific audience, you can focus on people whom you are more or less sure is interested in the products and services you are offering. You will be able to create effective marketing strategies and you will be able to implement it better. Too broad a range of audience increases the chances of your strategies being ineffective. By narrowing the audience range, you can save up on your time, energy, resources and use only sources and materials required for this. 

Understand the psychology of the customer

To generate effective marketing strategies which would bring in successful sales, a successful marketer needs to identify the psychology of the audience.  Unless you understand the kind of people you want to purchase your products, you won’t get going on this.  To understand the persona of the audience: try to determine the following:

  • Age of audience- determine the kind of people whom you would want to see using your products. Is the product youthful and trendy? Are they targeted to the elderly?  Is it for the very young, kids and infant?  Different age groups behave in different ways with respect to advertisements and promotional material. You may need to use different approaches and different language towards them. Based on the age group you want to target, you will need to decide your marketing strategy
  • Gender- you need to determine whether your product or service is going to target both genders or specifically one. Advertisement campaigns will target the two genders differently as they both are constructed differently and react in different ways to different stimuli. They also perform tasks in different ways. Hence, the campaigns may have to be designed accordingly- the way their message is structured, keeping in mind the male and female psychology.
  • Race and Culture- It is the time when advertisers and marketers have to be sensitive to racial and cultural contexts and sensitivities. This, however, does not imply that one cannot target specific racial or ethnic identities. If the service or product is specifically beneficial to certain communities, you can create your campaigns keeping this in mind. The message can be something which appeals to the values and ideas which are cherished by this community; at the same time, it should not flout existing global values too. This can help your company in getting a very dedicated following, if the product matches up to the campaign.
  • Income status- Intelligent and sensitive marketing need to be attuned to the fact that not everyone would be of the same income levels or financial abilities. Hence, if the product or service you are designing is for the upper end of the society, you need to ensure that your marketing strategy targets such customers. If you want to market something low budget or affordable and suited for the middle class, you would need to tailor your message in that direction. If you target the wrong product for the wrong category of clients or customers, you are liable to end with a disastrous and failed marketing campaign. So, the marketing must understand the social and economic status of the client profile.

Narrow market

When you are starting out, start small. Identify the smallest possible market. And select a niche audience in that market. Establish a presence and get support. Then try and expand the market once you have succeeded in establishing base. This will also save you from unnecessary costs which can happen by starting out big without thinking. As you expand your base, you can promote your service with bonuses and benefits which would strengthen the faith of existing customers and bring in new customers.

Tell your audience why they should try you!

When you are creating your message for the specific target audience, be convincing about why you think you are the best to fulfil that particular service. Your ideal customer should be able gauge you and respond to you. Of course, this is not as easy as it sound. It may need a certain amount of iterations to get it working and creating that perfect message, aimed at that specific audience. You can test out your messages using social media and other platforms as well as through surveying strategies to see how it pulls in the desired audience. If it works, then you can use it for a full fledged campaign. This ensures efficiency, keeps costs low and keeps the team focussed.

During communications, you need to reinforce clearly the benefits which you are going to provide to your customers. If it is a health care product you are marketing, you need to communicate authentic, verifiable results and research which will bolster your claim. Trust and honesty matters a lot in genuine advertising and marketing.  A sense of humour, provided it fits in with what you want to say, always helps.

Identify the customers who LOVE to do business with you

For companies and organisations, whose customers are other companies or corporate, this would be one way of coming up with trustable client list. This can be done by analysing your client and customer records. There would be certain indicators which show up in your records which indicate this such as revenues paid by customers/sales derived from these customers to your company; regularity of purchases; long standing customer (indicates loyalty and trust); ready to support and recommend you at all times and willing to provide testimony to your good business practice. These criteria can be used to evaluate existing and future customers with whom you intend to conduct business. 

You can create an ideal customer list, using professionals for this. This list can be based on criteria such as annual earnings, number of employees (preferably in hundreds), kind of business (B2B or B2 C transactions); positions they hold.

Determine the location of potential clients/customers

Sometimes, the kind of customers you need for your product or strategy may not be found around you. They may be located in other places, may be even in other regions or countries. You need to target their locations and identify them.  So your strategy may have to focus on these customers and identify markets, where others have not seen opportunities; it may even be far flung areas.

Even within a city area, some customers are constantly on the move and you can identify such customers for marketing campaigns which are tailored for them. Some may be more home bound and may be interested in products which help their lifestyle. As such, these customers may be more influenced by advertisements on the traditional media such as newspapers or television. Everyone may not be digitally comfortable. 

Every effort counts to get that interested customer and if it means that you have to even use different media for this purpose, you may have to do so. 

Successful? Expand!

Now that you have been successful with your first real estate rental property, you will want to expand your business to own even more properties. There are some things you need to think about first.

Perhaps most obviously, it is not a good idea to start expanding your empire if you haven’t figured out how to be successful with your first attempt. If you’re profiting from your first property, then go for it! If you’re not in profit and you are floundering, then it’s time to reevaluate instead of trying to expand right now.

Even if you do consider your first attempt to be a success, it’s a good idea to review your mistakes. The chances are high that you might do things differently if you had a chance to do them over again. The more you do this the less mistakes you will make with future properties!

Note that the process you will go through to purchase additional properties will be extremely similar to what you went through to purchase your first property. You need to examine the area, understand the demographics and psychographics of the area, and so on.

That doesn’t mean you need to choose the exact same type of property you went for the first time. You can diversify and be very successful as you begin to learn more about this business.

It can also be a good idea to use the money you are making from the first investment to invest in the second. This is one of the best ways to quickly grow your business. You may be very happy and satisfied with the amount of money you’re making, but you can increase your income far more when you have more properties.

Some people have concerns that they will not qualify for another mortgage to purchase a second property. As always, as long as you have a compelling investment lined up, you should be able to get a good mortgage. Lenders will certainly be interested to know how successful you were with your first property. They will know that you are serious about this as your business and that you know what you are doing. It can be a lot easier to get a mortgage that way!

As we’ve already mentioned, you may want to diversify. In past lessons, we talked about getting multi-unit properties. If there is a single home property available, you might look into that this time (just remember the reasons why we like multi-unit best). Or, perhaps you want to look into purchasing a duplex. If you like owning a multi-unit property, you may want to purchase a much larger apartment building than you went with the first time.

When you’re expanding your real estate business, the choices are absolutely open to you. You can consider your first attempt to be part of your education. Now it’s time to grow to epic proportions, making more money than you probably ever thought possible!

Once again, do not be timid to expand. It is one of the best things you can do, and as long as you follow with the right steps, you should find that it is as successful as your first — or even more successful!