Real Estate blog

People and real estate investing :: three things to remember

I’ve often mentioned that real estate investing is all about people. Here are three ways in which this general principle manifests itself.

Information wants to be free: Real estate investing certainly has an element of secrecy, as does any business endeavor that involves negotiations. For example, when you’re on the buy leg of a 1031 exchange you don’t want the seller and you’re running short on time you don’t want the seller to know that you’re under pressure to make a deal work. And when you’re selling a property that you just bought FSBO you don’t want the buyer to know that you purchased it for a song.

But that said, there is a great amount of general information that you can be generous with. This isn’t altruism; information truly wants to be free, and professionals who are open with sharing their expertise will in the end benefit in many ways.

This is a principle that I try to demonstrate myself – in this blog, for example. Everything here is free. And I frequently receive emails from readers who compare the things they read here (and on other free resources) with the stuff that they pay thousands of dollars for. The internet is a sleazy place when it comes to real estate. Want to find out “…closely guarded secrets for real estate investing” or ways to get “a whole new level of jaw-dropping wealth and financial independence” then all you have to do is whip out our credit card. (note: these are actual quotes from various websites). If you’re paying for a secret you’re getting scammed; there are no secrets out there.

But this “free information” principle applies directly to all of us as investors. I deal with a relatively small number of real estate professionals: contractors, real estate agents, lenders. And I share with them what I’m doing – how I make deals work, what’s been successful and what’s failed, and what my strategies are. And they reciprocate – which means I learn a lot more about, say, peer-and-beam foundation leveling and realtor commissions than I otherwise would. Information wants to be free, but it’s also very valuable. Give a little and you’ll get a lot.

I want the people around me to make money: I’m not a big fan of paying a 6% commission to sell a property. But that doesn’t mean that I mind when the people around me profit when I do a deal. Most successful corporations don’t get that way be paying their employees the bare minimum; this rarely is a sustainable strategy. Likewise, most successful investors don’t get that way by squeezing every cent out of every deal at the expense of the people who support them. When I call my contractor or my real estate agent I want them to be happy to see my name on their caller ID. I want to be known as a repeat customer who closes deals. I expect to be charged a repeat-customer rate, but they know they won’t have to twist my arm to get paid fairly.

Relationships aren’t just about dollars and cents: This is an area that I have to be vigilant about reminding myself. I generally show appreciation through repeat business – and since I’m generally a dollars-and-cents type I might tend to think this is enough. But it isn’t. Independent professionals get a great deal of satisfaction from the appreciation that their clients show them. Good businesspeople aren’t in it just for the money, and they won’t know you appreciate their expertise and hard work unless you tell them. Write a note. Post a recommendation on Angie’s List. Remember them at Christmas.