If you review your rules of engagement for working with flippers or those buying rentals, you’ll know that at the end of the day, you’re going to spend another quick 10 minutes going through the properties you’ve seen and narrow that down, to eliminate the wheat from the chaff.
That’s when you say, “Was this day as good for you as it was for me? Great, we’ve got a lot of work to do to analyse what needs to be done physically to the properties. Would you mind going ahead and signing this buyer agent’s agreement while you’re doing that? This is important to me. And my broker requires it. It basically commits me to represent you and keeping your information confidential and finding you the best property for the least amount of money and the shortest amount of time. Does that sound good to you?”
That’s how you get a buyer-agency agreement signed. You don’t have to make a special appointment just to do that. They will see that as a huge waste of time. Get them engaged first. Make sure they’re actually doing the work. Those are the people you’re going to want to work with.
By the way, the reason most of our offers get accepted is that these Investors have followed my procedures and they’re more motivated. Because they have skin in the game, they are more
likely to follow through with offers through to negotiation and closing as opposed to all those other Investors trained by the gurus to do No-Money-Down techniques or For Sale by Owners. Frankly, all those methods would take them forever to build wealth and income.
The same holds true for Buyer representation. If you use our procedures, you’ll have much better results.
Landlord representation, though, we start to depart from basic the rules of representation for buyers and sellers. With owner-occupants, you typically don’t get into landlord representation. We’ll expand on this in Module Five when we talk about how to further leverage what you’re doing. Right now, I just want to lay the groundwork.
Many of your Investors are going to be buying rental properties. Some may want property management right out of the gate. Some will buy three, five, or ten properties and realize, “Hey, I’d rather be the Investor and let somebody else finish the properties.”
Because you’re a licensee, you’re allowed to manage properties for a client – for somebody you represent – and charge them a 10% management fee. There’s a whole business around this we’ll talk about in Module Five. You don’t have to create a giant company to do this. You can do it on your own. I know plenty of people who do it because I’ve taught them. I used to do it myself and actually did build a big property management company. But I started off just managing a few properties myself.
In every state, the only way you can manage somebody else’s properties without a license is if you manage only for one owner. In other words, you are dedicated to only one owner. That’s if you’re not a licensee. If you’re a licensee, you can manage for multiple owners. The law lets you do that.
Part of Landlord representation is being a leasing agent. I don’t really recommend this too much. I have a secret formula I’ll show you how to accomplish in Module Five but essentially, you can charge leasing fees roughly equivalent to one month’s rent. You’ve got to be responsible for paperwork and signatures but you can have somebody else open doors. You just can’t have them discuss pricing or sign contracts. There, I just revealed part of the secret. In any case, part of Landlord representation is getting their units leased, shown, and rented. You can make money on that.
I generally don’t recommend Tenant representation. However, if you or your brokerage has large properties or large units for sale in Southern California around Malibu, Santa Barbara, or Laguna Beach, those can rent for up to $75,000 a month. I’m not kidding you.
I would do that Tenant representation in a heartbeat for $75,000 a month rental fee. But in most parts of the country, your average rent might be only $1000 a month. I’m really not going to represent tenants in that situation because my focus is on the owners. I want to represent the owners. When I create a property management company, the tenants come to me, but indirectly because they’re really clients and customers of the owners. I’m only showing apartments, signing leases, and managing units on behalf of the owner. That’s my contact with the tenants.
However, if you’re dealing with larger commercial properties and have large leasing contacts, there can be a good bit of money involved. Say someone is leasing 10,000 square feet and paying $12,000 a month. You better believe I’ll get involved with that tenant representation. A lot of commercial brokers do this because there’s a lot of money in it. But there’s a big difference between a $12,000/mo commercial client and a $1000/mo renter.
Tenant representation, you get into contracts and contractual obligations with them. Remember, whether you’re representing Investors or tenants, all of these folks have friends, relatives, neighbors, coworkers, and fellow church members – people who want to buy and sell properties. You can leverage these contacts through referrals to build up your owner-occupied business, your traditional Real Estate business. Always remember that.
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