Common Pitfalls for a Small Business Investing in Homes
Common Pitfalls for a Small Business Investing in Homes — Image courtesy of artur84 at FreeDigitalPhotos.net
Every business, every industry, has
its pitfalls – potential disasters that can cause difficulties. It’s no
different for a small business investing in homes.
Yet, small business owners still venture
forth. They look at the risks, consider the benefits, and develop the
best business strategies to overcome issues and be successful. However,
to make it work requires you to know the common pitfalls of home
investment before you invest.
Common Pitfall: Not Having a Plan
Everything starts with a plan, an
intended course of action that will move you from point A to point B.
Without one, there’s no way of knowing whether you’ve reached your goal.
It’s the old saying, “how will you know you’ve arrived, if you don’t
know where you’re going?”
As a real estate investor, you need to
focus on several factors. These include why you’re buying, what you’re
buying, where you’re buying, and how you’re buying.
Why. There are generally two
reasons to invest in a home: either to resell it at a profit or lease it
out for monthly income. If your option is to turn it into a rental, keep in mind…
…the first pitfall of investing in
real estate is actually managing the property. First, it must be
prepared for leasing, and then advertised. Once tenants move in, the
rent has to be collected and repairs made on a regular basis.
Depending on the location of the
property, you may want to consider hiring a property management company.
Ultimately, knowing how you plan to use the property makes a big
difference in your choice.
What. Homes may be single-family
or multi-family dwellings. Consider the size of the home or the number
of units. Additionally, the sale on a home may be short, foreclosed, or
standard. Know what you want or are willing to accept beforehand. It
will help you focus on the right property.
Where. This is probably one of
the most important parts of your plan. In real estate, it’s always about
location. What’s the rental market in the neighborhood? Are there many
vacancies? How many other homes are for sale? What are the typical
asking prices? Having first-hand knowledge of the neighborhood
strengthens your ability to choose wisely.
How. It all comes down to
financing. The amount of your budget, including down payment and
renovation, and the source of financing – you or other investors – will
affect the choice you make.
Common Pitfall: Not Taking Your Time
Before you run out and invest in your
first home, stop to think. Look around. Compare prices and value. Don’t
jump at the very first deal unless you’re sure it’s the right one.
Though there are those who would have you believe flipping real estate
is a get-rich quick scheme, true real estate investing is about
patience. Take time to do the proper due diligence, establish your plan,
and get your financing in place.
Common Pitfall: Not Fully Considering the Cost
While you don’t want to offend a
homeowner or sound desperate to a seller by extending a low-ball offer,
you do want to find property that offers you a good value.
Consider factors such as the number of
days on the market, other properties currently available in the
neighborhood, and financial investment required to update or repair. Ask
your real estate agent for a Comparable Market Analysis (CMA),
sometimes known as comps.
Once you’ve established a purchase
price, you must consider other costs. For resellers, there are
renovation costs. On the other hand, landlords should be sure to factor
in lost rent if the property sits vacant for any length of time.
Real estate investing may seem like a
great small business opportunity. However, it has its pitfalls. Make
sure you know what they are before you become a property owner.
About Deborah S. Hildebrand Harris
Freelance writer with a Bachelor’s Degree in Business Administration, Human Resources option, from Cal State Northridge, a Certificate in Human Resources Management from UCLA, and over 10 years working in human resources both in-house and as a consultant for organizations of all sizes. My article, "Retention and Job Satisfaction: Compensation, Opportunity, Recognition, Environment" was selected by the Ontario, Canada, Ministry of Education, as an educational tool. Other articles on business and career have been cited in the March 2010 edition of ”A Woman's Guide to Green Jobs" from the U.S. Department of Labor, “Hot Careers for College Graduates 2010” from the University of California, San Diego, as well as in the book, Management, by Richard L. Daft (page 390). Follow Deborah on Twitter (@DSHildebrand), friend her on Facebook and read her Suite 101 articles (http://deborah-s-hildebrand.suite101.com/).Breaking Through To Build Your Business
Has
your business stopped growing? Do your employees go from task to task
with proficiency but with no vigor? Often in life and especially with
work, becoming comfortable and eventually stagnant in a routine can seem
unavoidable.A business which does the same old to simply stay afloat is bound to sink in this world. If you and your employees are bored with your business-then do something about it! Finding a new angle and adding some spice to the bland palate of your business’s platform can mean not only survival, but it can also bring your business to an entirely new echelon you had never dreamed of before. Besides, when you started your business, wasn’t your intention to grow and become a titan in your industry and not merely a pawn?
Although it requires extra work, some creativity, and may put you in a challenging situation, diversifying your business and finding fresh, innovative blood-so to speak-could be your lifeline. As Leonardo da Vinci said:
“Iron rusts from disuse, stagnant water loses its purity and in cold weather becomes frozen; even so does inaction sap the vigors of the mind.”
Although you may be excited by the prospect of changing and invigorating your business, the process can seem daunting. Here are three simple steps from an Entrepreneur article by contributor Erika Napoletano to help you get the wheels of change turning:
1. Cut The Jargon
Burying yourself in buzzspeak is not going to enable you to break out of the norm and find fresh ideas. Whether writing content or talking to clients, forcing people to endure sifting through 20 synonyms of “awesome” instead of an actual, clear-cut solution is going to hurt your business.
“Every industry has them: words used so often they’ve lost their meaning. The same old language breeds nothing but the same old ideas,” Napoletano writes. By simplifying your language and choosing conciseness, your message will scream brilliance. Simply saying you’re a “guru” doesn’t mean anything. As the simple rule goes-show, don’t tell.
2. Learn Something New
Mixing up your day to learn about an industry you’re not familiar with can give you perspective and inspiration for your own business. There are keys to success with every industry and maybe you’ll find one that crosses over into your own.
“Attend a conference in an industry that interests you but has little-or nothing-to do with your day-to-day,” Napoletano writes. “I find the most inspiring ideas each time I speak at an event that goes beyond my field of marketing and branding.”
3. Shake Up Your Reading List
Every morning do you find the same blogs you subscribe to in your inbox, only to leave them unread? It is important to find relevant information that challenges you and offers fresh ideas. However, it is also important to know what your clients want.
“Poll your followers on Facebook, Twitter, LinkedIn or Quora for their favorite non-industry websites or magazines.”
Taking The Dive
Starting with these moves can push you to build your business. Although new waters may seem murky at first, plunging into the possibilities could be the best thing you’ve ever done for your business.
Easy Ways To Increase Foot Traffic
Sprucing up your store will attract more customers. Image Source: http://mrg.bz/Rn8DGr
In retail business first-impressions and image is everything.
Look Outside
The outside of your store is just as important as the inside of the store. Stand outside your store and look at the following items;
- Window Sills & Molding ~ The window sill and molding on the outside should be clean and fresh. If paint is peeing paint it.
- Wind Glass ~ Is the glass clean? If people can not see your product clearly because of smudging, they wont keep looking, they won’t come in.
- Litter ~ Pick up the litter outside your store and sweep the walk ways. A clean outside signals to potential buyers that you care. As well it allows them to focus on the store and product, rather than looking out for what they might step on.
- Outdoor Features ~ If you can, have planter boxes with flowers outside on the window sills. This attracts customers eyes to your window displays and makes you stand out from the shops around you. If you do plant flowers ensure you keep up with it. Dead or wilted flowers do not look good. If you can’t put flowers out you can also consider a bench, decorated garbage can or interesting signage.
The inside of your store should make people want to look around. It should entice people to keep looking around. Walk through your store and take a close look at everything!
- Cleanliness ~ Most retail store owners do sweep or vacuum but cleanliness in your store goes far beyond sweeping. Make sure all shelves and displays are dusted. Have carpets shampooed regularly and replace burnt out light bulb immediately.
- Signage ~ Ensure all signage within the store is easy to read and clearly displayed. If customers can’t find a price for an item or can’t find the item quickly, the customer isn’t likely to purchase that item.
- Merchandise ~ Look through every item you have in the store. Are they within the season or from seasons past? Keep all new merchandise at the front of the store. Keep discount and sale items at the back of the store. Store previous seasons product until the following year.
Events and promotions are a great way to increase traffic. Events could include small give-a-ways, food drives, charity events or sales. Advertise these events in local papers, community boards, email newsletters and social media.
Local Media
Local media strives to include community information, events and businesses to build stories. Reporters love stories that have a “human touch.” Contact your local media and tell them how you started, what you do for the community and the success you’ve had in life. Write a press release for your events and submit them to the local media. Now you have free advertising to increase foot traffic to your store.
There are many inexpensive and easy ways to increase your foot traffic to your retail store. Try small things to make your store more appealing and keep going from there.
About Samantha Hadley
Samantha Hadley currently runs her own small business with her husband. In operation for one year and continuously growing she offers advice based on personal experiences. Graduating with a Journalism Diploma in Print Journalism Samantha Hadley has been writing for five years. Samantha Hadley writes from a variety of perspectives from a daily blog on Construction Business Operation and Management, Daily Briefs on Construction News, How To's for Everyday Life and now Small Business Operation and Management .Is Real Estate Flipping a Good Business Model?
Is Real Estate Flipping a Good Business Model? — MorgueFile
The simplest answer to this question is,
“It depends.” If you’re successful at real estate flipping, then you
likely think it’s a great business model. However, if you’re not
successful, you could stand to lose a significant amount of money in the
process.
It all comes down to whether you’re risk
adverse or not; because flipping houses as a business model is
definitely not for the faint of heart.
Here’s What You Need to Know about Real Estate Flipping
Don’t call it that. David Hicks, co-president of Dallas-based HomeVestors, the “We Buy Ugly Houses” people recently told the Denver Post, “flipping has a bad connotation.”
“Flippers” are people who buy a home and
then remodel it fast and cheap to get it back on the market as fast as
possible. Instead, he prefers the term “professional real estate
investor.”
While investing in real estate can be a very profitable venture, it’s one of the riskiest. The latest figures
from RealtyTrac® suggest investors lost money in over 25 percent of the
top 100 markets in the first half of 2013. Still, real estate flipping
is up 19 percent from this same period in 2012 and 74 percent from the
first half of 2011.
The national average gross profit on
single-family home flips was $18,391 for the first six months of 2013.
That’s up 246 percent over the first half of 2012 and 2011. Florida as
well as Virginia and Pennsylvania have some of the most profitable real
estate flipping markets.
Experts suggest that typical real estate
investors look for homes priced 30 percent or more below market value.
So keep that in mind when looking for a good deal.
Here’s Where You Could Lose Your Shirt
If you’ve decided that real estate flipping is a business you have an interest in pursuing, be prepared for the risks.
As with all things, there just is no
guarantee. So much can go wrong. The housing market could crash, a local
company could go bankrupt and close its doors, or a natural disaster
could hit the area. All these factors and more, affect your ability to
buy and sell property.
To protect yourself, know your
neighborhood. Don’t invest so much time and money in upgrading a home
that you over improve it. In terms of resale value, Realtor.com suggests…
…the best home improvements are
largely cosmetic – a new roof, painting, carpeting, minor kitchen and
bath re-dos, and only those alterations and additions that bring your
home in-line with others in the neighborhood.
Additionally, make sure your profit
expectations are realistic. Accurately calculate the cost of supplies,
tools, and labor for the remodel along with monthly house payments if
you don’t flip it immediately and factors such as realtor commission,
closing costs, and title exchange when you finally do.
Don’t overestimate what you can
personally handle. Be realistic with regard to timing, budget, and your
own ability to remodel. Know when to hire professionals. Then take the
time to find the people to do the job right.
While it appears real estate flipping is
likely to remain profitable for those who know how to do it properly,
only you can decide if it’s the right business model for you.
About Deborah S. Hildebrand Harris
Freelance writer with a Bachelor’s Degree in Business Administration, Human Resources option, from Cal State Northridge, a Certificate in Human Resources Management from UCLA, and over 10 years working in human resources both in-house and as a consultant for organizations of all sizes. My article, "Retention and Job Satisfaction: Compensation, Opportunity, Recognition, Environment" was selected by the Ontario, Canada, Ministry of Education, as an educational tool. Other articles on business and career have been cited in the March 2010 edition of ”A Woman's Guide to Green Jobs" from the U.S. Department of Labor, “Hot Careers for College Graduates 2010” from the University of California, San Diego, as well as in the book, Management, by Richard L. Daft (page 390). Follow Deborah on Twitter (@DSHildebrand), friend her on Facebook and read her Suite 101 articles (http://deborah-s-hildebrand.suite101.com/).How To Improve Time Management
It
may sound cliché but there really aren’t enough hours in the day. An
abundance of work commitments get mixed in with personal engagements and
responsibilities – almost seamlessly. Each day it seems like the to-do
list continues to grow while the time needed to complete the list
continues to shrink. While there are many tools that help us to organize
our busy lives, some of these end up making the problem worse rather
than better. Here are some ways that you can manage your time better.Prioritize
The key to getting everything accomplished that you want done in a given day is to prioritize what it is that you want to do. Make sure that you schedule your biggest priorities in advance so that you go into each day knowing exactly what you want to accomplish. The key trait that underlies the ability to properly prioritize is judgment. You must, almost ruthlessly, determine what tasks are of utmost importance and which tasks can wait. The ability to determine what needs to be done right away and what can wait is one of the defining traits of those who manage their time wisely.
Edward Hess, contributor for Fast Company wrote an article about the importance of prioritization. In the article, he touched upon the benefits of choosing what to focus on, “To be successful, businesses must prioritize their focus. Any growing business has resource constraints: limited people, time, and capital. It is critical that the entrepreneur spend his or her time on the most important areas that can drive success.”
Keep a journal
One of the great ways to determine where your time goes is to keep a nice handy journal by you. The point of this journal is to keep a log of what you do on the day-to-day. This is a particularly helpful step to the time management process because it helps you to track the parts of the day that you are most productive as well as the time that you can be using much better. You may be surprised to find out that your biggest problem may not be that you don’t have enough time, but that you waste too much time doing other things.
Determine Desired Results
Before, after and between each task, make sure that you take the time to determine what result you would like to get out of each one. Get a clear picture in your head of the desired outcome of the action that you are about to take. Ask yourself, “What outcome will I be most happy with from this action?”. Your ability to bring each action to your desired outcome, day in and day out will have a positive cumulative effect on your success.
Juan Canas, writer for Blueprint For Your Life wrote about the importance of keeping a time journal, ” A time journal is a simple but brilliant tool that will help you identify and eliminate the time wasters in your life. I cannot recommend this enough; keeping a journal is by far the most effective tool I’ve found for changing ingrained habits.”
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