Blog Post 1: Interview

Rashad Evans

3/4/2012

                                                         Industry Interview

For this project I decided to interview: Sean Beattie, real estate agent located in Vallejo, CA.

First off, what do you like most about your job of being a real estate agent?

I like the rewarding feeling you get when you know that you have helped someone find the right home for them and they are really happy with it. I like helping people achieve things that they otherwise couldn’t do on their own because they simply don’t know where to start and I also love learning about people’s different personalities, you can really learn about someone when you ask them what they are looking for in a house.

What do you think is the best schooling or tools that one should acquire to take up this field?

Taking classes in economics is really important because it teaches you a lot about the business side of the real estate world. Getting a doctorate in real estate in something that I really recommend if you know for sure that this is a career that is right for you.

If you had to do it all over again, would you choose this career and why?

I would pick this career again because it is something that I enjoy doing and there is so many different things that go on behind the scenes with real estate it isn’t just about finding houses for people, there is quite a bit math and research that is involved.

Do you think being a people person is important in this job, being outspoken and really relatable, does that help at all?

You almost have to be a people person to do this because so much of what goes into this is talking with the client and reading what they like and want in a future home. It’s always nice when you read someone so well that you find something in a home that you know they will enjoy and they hadn’t even thought of it, it shows I was paying attention to their personalities.

Have you ever had difficult clients to work with or you lost a client because they felt you didn’t understand them?

I haven’t ever lost a client in the way that there was this big blow up and they left. Some people feel that you just might not be the right fit for them. I have gotten clients that have come to me from other realtors because they felt like they were not connecting with their agent. People look for an agent that they can relate to, that has the same values as them because they are more likely to understand the setting you want to be in and accepting that you simply aren’t what a client is looking for is also part of the job.

Do your jobs responsibilities go over into your personal life, a life you have outside of work?

Well if you have a bad day obviously that will probably follow you home, but the great thing about my job is that I love it so anything that comes up while I am out of the office is usually something I am happy to help with. But being on-call is important because it is very common to have clients drive by a house that is for sale and want to call me and tell me about it right away.

And for those clients like that, that call on a Sunday what do you say to them?

I ask them to give me the address and the company the home is listed under and tell that when I get into the office Monday morning I will look up that house and see if it has the qualities you are looking for and if we can go take a look.

What is the longest you have ever worked with a client for one job in particular?

I do have clients that are really urgent to leave their current home but know they will move someday and like to get a head start on looking to see what is out there. A couple came in and gave me a very specific wish list of what they wanted in a house and admitted that they know it will take time and are willing to wait. Two years later I finally found the home that they were looking for. I called them probably every two weeks for two years and went over what had just came on the market that had qualities they were interested in. It is those types of clients where patience is very important.

Is there any advice you would give to someone like me that is studying real estate in undergraduate school right now?

I would just recommend to take in everything that your teacher is telling you but also be prepared that there are a lot of things you will have to learn first hand on the job site. That sometime situations you hear about in the classroom are not the worst cases you will probably hear and to learn patience now.

What do you think is the best way to find a job in real estate after graduating?

Going to any sort of job fair and looking at any announcements in your department at school. Asking teachers is another good resource. And sometimes I find that just walking into a real estate office with your resume is the best way also and volunteering to start at the bottom and you are willing to learn, real estate firms really like to hear that.

In your opinion what should I expect when I am first starting out in the business?

Expect like every other career to pay your dues before you can rise to the top, just remember that all of us started on the bottom and took work to get to where we are now. A lot of clients come by recommendation so getting your cliental will take a little while to establish. I recommend that if someone is giving you advice that is from the business that you really take it to heart and keep it in mind.

My last question is with being a real estate agent; have you found your dream house yet?

I have an idea in my head of what I want my dream house to look like and sometimes I’ll get on and look at houses with myself in mind but most of the time if I find something I really like I think, “oh this client will love this house too, I’ll give them a call.” And then it never works out to me so no I guess I am still looking.

Informational Interview - RE Investor

Scott Buckowski

3/7/12

Fin 180

This interview is with Dave Anderson who is a real estate investor in Texas. I tried to ask various questions to allow an interesting look into the life of a real estate investor.

What education and/or skills are needed to be a real estate investor?

I don't think there's any formal education necessary to do what I do (invest in single and multifamily properties). I think in any business it helps to have some financial/accounting ability/awareness/acumen. You need to be able to understand where money is coming from and where it's going. Some people skills. Confidence. Some ability to negotiate. There's some amount of knowledge you can get from classes/books, for example negotiation (Getting to Yes by Fisher/Ury), multifamily (Multifamily Millions by Dave Lindahl), etc. However, there's no substitute for the knowledge you get doing your first deal.

How did you get into the business of real estate?

My parents bought and "flipped" SFRs when I was younger. So, they would buy a fixer-upper, we'd move in, my Mom would generally do most of the repairs, then they'd sell it and buy the next one. We moved every couple of months for several years. So, I kind of grew up around it. When I was 16 I bought my first fixer-upper with my Mom. Lived in it for about 6 months and then sold it and doubled my (small) investment. From there, passively invested in her multifamily deals. I worked for her development company for a year or so when I was about 20 so helped run construction crews, dealt with banks, negotiated loans, etc. From there I went into IT and stayed in corporate jobs for many years. About 8 years ago, I took a voluntary exit package from my employer and was in a position to decide what to do next. I decided there was a lot I didn't like about the corporate world and I liked the flexibility afforded by generating passive income through real estate and so I started doing that. A partner and I bought a Homevestors of America franchise which I ran for about 4 years. I then decided I couldn't buy houses fast enough to generate the passive income I wanted so, with another partner, I began buying multifamily.

What type of properties do you specialize in?

Distressed class C multifamily complexes in the Houston, TX MSA (Metropolitan Service Area). Target properties will either need significant deferred maintenance or have significant management problems that can be resolved to add value.

How many properties do you currently own?

With partner, 7 complexes comprising 617 multifamily units, 120 single family residences.

Do you manage the properties yourself or use a management company?

We use a 3rd party management company; however we are functionally their only client (they have 2-3 other very small clients).

How do you run the numbers to decide whether to invest in them or not?

There's a couple ways to approach buying. I'm probably not going to tell you what your professor wants to hear. Many buyers are what I'll call "cap rate" buyers. That is, they value their current purchase based on the current unlevered yield produced (NOI/purchase). There are also general rules for "per door" valuation. So, an area might support say a value of $25K/door. I know what those exit rates are for a properly run, stabilized deal. So, I look at a distressed deal fairly simplistically. I don't run complex multipage spreadsheets. Some people do. My cousin has an MBA from a very prestigious university. I've looked at his spreadsheets. I've told him when he has half a day maybe he can explain the basics of them to me. If I look at a building and I know it's going to take about $5K of rehab and the Seller is at $10K/door and I believe the exit rate will in the mid-term support say mid-$20K/door then that's an easy buy for me. I think class C properties are all about the debt level. I can generally get 70% loan-to-cost loans. If I'll wind up with a $9-10K/door debt level that's going to be about $60/door/month of debt service.

Do you have any crazy tenant stories?

Plenty. So, last Saturday a tenant moves in. Tuesday, "baby daddy" shows up and kicks the door in. Police are called. Many police show up. It turns out baby daddy is a murder suspect. BD heads out the second floor window and somehow manages to get up on the roof. Police eventually get him down. Now, new property manager started Monday. So, Wednesday afternoon she asks for onsite police support rather than our security guards. I approve. Thursday morning our real onsite police presence starts. So, by 9 am they had arrested two sisters for stabbing each other. New manager will resolve the issues over the next month or so. Net: don't let your properties get out of control. Make the hard decisions quickly.

How important is leverage in real estate investing?

I think leverage is critical but overused. I've bought a lot of property in the last couple years from banks and CMBS pools because the guys that lost the buildings had placed too much debt. We use leverage to boost returns, but we are conservative. I'd say we're at around 50% or less LTV across our portfolio. Of course, some of the reason that's low is because we buy distressed assets and rehab them so we generally have a fair amount of both equity capture at purchase and equity gain through the rehab.

Debt can be your friend or an albatross. As an example, we recently bought a property where we have approximately $9K/door of debt. As it happens the property next door sold at about the same time. However, that person thought they were getting a fantastic deal because the bank would provide 100% financing (with them posting a $3K/door rehab reserve). Well, his debt is closer to $20K/door. Think about that competitively. We're next door to each other. If we're equally talented operators, at any number he can break even at, I can go under him by say $60/door/month. That's a lot of room on $500 rents.

What would you tell someone that would like to be where you are today?

Find a deal and do it. The first one's hard. You'll be nervous and second guess yourself. Your family may tell you you're crazy. I had an advantage and didn't have these issues, but I talk to enough people that do/did. Trust me, the second one is better and the ones after that get easier and easier. I can tell you that we buy 60 unit buildings now like I used to buy houses. Don't listen to people that tell you that real estate doesn't work. Don't listen to people that say "If it were that easy, everybody would do it." I tell you it is that easy and they don't all do it. If you want to be rich, get your advice from rich people not poor people. So, if you want to buy real estate go where real estate investors hang out. Go to your local real estate investor club. Read some books.

What are some creative financing options to get started in SFR rentals?

If you don't have money, partner or hard money. There are a lot of people in the last couple years that have a lot of money they don't know what to do with. They're getting 0.5% on their CDs and know that's behind the inflation rate. So, find an angel that will split deals with you. You find a couple deals and do the work. They put up the cash or cash plus their balance sheet to get the loan. Split the proceeds. Repeat. If you want to do it on your own, find great deals on distressed assets. If you buy at under 70% of repaired value minus repairs an asset based ("hard money") lender will put up the funds for you. These loans are expensive - 12-15% plus points. However, if you have no money and you have enough spread you can do these deals. There are now a number of programs where the hard money lender will also arrange the takeout/permanent financing and blend the rates and points between the loans. So, it's a hard money rate during the rehab and a commercial rate on the back end. That's a reasonable option but it's probably 7-8% of the deal value so again you'll need to be buying properties at a discount.

What newspapers/ blogs do you read daily?

I really don't much. ML-Implode. The Economist sometimes. Watch a fair amount of CNBC and HGTV. I also get market information from regular contact with brokers, sellers, our investment groups, etc.

Do you have any partners/assistants/employees that help you with finding deals? If yes, what do they do?

When I did single families, I worked with "birddogs" or wholesalers. These guys find and negotiate deals, put them under contract, then assign the contract to investors for a fee. There really aren't many apartment wholesalers so it's really few and far between. For commercial multifamily we use traditional apartment brokers. Once you've done a deal, you have a surprising amount of credibility. Once you've done a number of deals and the brokers see that you do what you say you're going to do, don't retrade unreasonably, and close when you're supposed to, they go out of their way to bring you deals.

Describe your “typical” day.

Honestly, I don't really have a typical day. I tell my friends with regular jobs that I have an embarrassingly flexible schedule. I try to go to both the gym and to Krav Maga classes a couple times a week. From there, sometimes I'll drive some of the buildings we own to check in. Several times a month, my partner and I will get together and spend a day doing tours of properties on the market. I do all the books for the business so that's probably 1/2 hour a day. Yesterday I had to sign checks so I had the property manager meet me at a restaurant I was at and he brought them. This really is the benefit of larger multifamily. There's onsite staff at the property - manager and maintenance. Then there's the regional manager/CEO of the property management company. It's rare that a problem needs to get to me. We're really more asset managers so the time is focused on looking for new deals, preparing monthly reports for investors, making sure existing assets are performing well, looking for big areas of operational improvement (say water saving devices, new purchasing agreements, etc.). As an example, we just spent a fair amount of time working with insurance agents to buy portfolio insurance rather than pricing each property individually. This was a huge savings that took some effort, but I can't really tell you how that worked into my "typical" day.

What kind of an individual (skills and personality) is best suited for this job?

Entrepreneurial. If you think a corporate job is safe and you need that, stay there. For me, doing what I do is way safer than working in a corporate job where the hand of God can come take me out at any moment with two weeks notice. Know that this isn't really a "job." It's how I derive my income but I think people think of "job" as a place you go for some set period of time to work.

What great insight from Dave about being a real estate investor. It looks like you just have to get out there and do it!

Assignment 1: Informational Interview of a Real Estate Entrepreneur

Olivia Thomas

I interviewed Patrice Page. She is a Real Estate Consultant at Missouri Development and Real Estate, Inc located in Stockton, CA. She has been in the real estate industry for eight years.

What education do you need to be successful in your position?

As far as traditional education, you have to take three basic classes to get your license. It is an ongoing educational process. The industry is always is changing. You need continuing education classes to keep up. A college degree is optimal.

What’s a typical day like for you?

I normally spend a couple hours each work day checking leads for listing as well as returning emails and phone calls. Depending on how many clients I have it could take anywhere between 30 minutes to 4 hours doing this type of administrative work. Once a property is listed for sale, clients are given weekly updates. Buyers get 10 to 30 listing to review. They are asked to pick their top 5. If working with I’m working with multiple buyers showing properties can take a couple hours. I also have to check on our listings to make sure that signs are up and that the property looks appealing. Sometimes I go to the escrow office with clients. Everything depends on the amount of the clients we are working with. I am always doing marketing. It is crucial to getting more clients. I send letters and postcards. I also make phone calls to people in my sphere of influence. I also send cold advertisements to areas where I would like to work in. My workday can be anywhere from as short as 3 hours to as long as 12 to 15 hours. This is because everything you do is based around the client’s schedule.

What’s unique or differentiating about your company?

The most unique and differentiating thing about my company is that it is a small independent firm that is run by someone who has been in the real estate industry his whole life. We have the flexibility to work with clients that we might by prohibited from working with if we were part of a franchised office. For instance, I have commercial property listed for sale. In a franchised firm that listing would have been turned over to someone who specializes in commercial real estate. [Missouri Development and Real Estate] clients get to work with who they came to the company to work with. Someone else in the office would help you get the transaction done, but you still keep the listing. This gives consultants the opportunity to work in sectors that they have never worked in before to get experience in those areas.

What do you like most about what you do, and what would you change if you could?

I enjoy helping the people. I enjoy working with first time homebuyers even though it can be stressful because they do not have a lot of experience with real estate. The information we give clients is for them to make their best decision. Not for us to make a profit. If I could change anything I would make provisions […] in the government programs that are available to try to help people stay in their homes. I would make it a requirement that banks work more with small independent firms. They tend to want to work with large franchises because they feel like they can service the property over a broader distance […] the point is that you’re still not working with the same office. For example, the PMZ office (a real estate firm) in Stockton that is listing a office is different from the office in Fresno that is going to be listing the same office. They (the banks) still are not working with one point of contact. The independent brokers who stayed in business throughout this obviously are taking care of their customers and doing something right. So they need to look more at the experience of the office and less at the size.

What are best types of real estate jobs to go into locally and in the real estate industry in general right now?

That is a tough question because all sectors are stagnant right now. In general, for someone who is intelligent, I would encourage them to go into commercial real estate. Its an area that I’m thinking about trying to break into more myself. The hours are going to be better because you are working with people during a normal work day and the range of opportunity to earn income is greater with commercial real estate. You not only list and sell property, but you list and sell business opportunities. For instance, if I sold a property to a client I could turn around and get paid to negotiate the lease of that space to other people and get paid for doing that. That’s more of a property manager type of responsibility without having the responsibility of actually having to manage the property. You basically negotiate the terms of the lease and get compensated for doing that. People are often afraid of commercial because it looks like it’s harder, but I don’t know that that’s the truth. The properties that you’re going to be dealing with are bigger and the commissions typically are higher. I wouldn’t rule out residential, I would go for both, but I would focus more on commercial.

     How do you think the multifamily real estate market in Stockton       is doing right now?

When it’s a good price, very well, because with the prices are lows and rents are stable enough for you to cover your costs. It is the time to buy. The problem is that it is taking a bit longer to rent them out. Once they are rented people are tending to stay. They may not always pay their rent on-time, but they’re choosing to not to move. A lot of people are having challenges with their credit and other financial issues. Saving the money and having the credit to move are difficult. Especially if you’re working with a property manager who is recording their late rent. Then it shows to other property owners that they pay/have paid their rent late.

What does a typical career path look like in your industry? Would it be easy to transition from being an agent to property manager?

There are specific classes that are required to be a designated as a property manager. The transaction from one to another is not difficult. There are many agents that, during this economic downturn, have turned to property management as a way to supplement their income.  It is relatively easy to go from an agent to a broker. With a brokers license you typically will have a split on your commission, even if you are working under another broker because you have more expertise to bring to the office. Typically you’ll see, especially in a franchise office, multiple managing brokers working for an owner broker. Managing brokers have a specific amount of agents working under them. It is difficult for brokers right now because so many agents are leaving the market.

How does location influence real estate decision making?

The three most important things in real estate are location, location, location. It determines the value, desirability, profitability and marketability. If I know things about a certain area and historically I can show clients that the values have not appreciated and there are other areas that are more appealing I will always let my client know that an area is not raising in value as fast as other areas. Location in real estate is everything.

What are some of the biggest challenges facing your company and the real estate industry today?

The economic problems the biggest challenge the industry is facing right now. The small amount of money for people to borrow restricts buyers and sellers. It is also a challenge dealing with banks that want to continue to keep their earnings high, which is understandable, but it makes everyone else suffer too.

Are there any professional or trade associations I should connect with?

Property managers have an organization that would be good for you to look into. CAR is something that you definitely need to be a part of because they keep informed of laws, what has changed, what is innovative in the industry. They also lobby on behalf of California real estate professionals in Washington to make sure that the things they are doing are not going to destroy our profession.

What do you read — in print and online — to keep up with developments in the real estate field?

As a member of CAR I get a monthly magazine that has articles with updated on information on real estate. For example, one of my clients may have gotten bad information on real estate based on information provided to by the CAR magazine. They send out weekly emails as well.

How do you see the real estate industry changing in the next 10 years? Are there any emerging trends that you see?

At one point, it was questionable as to whether people were going to use real estate agents with the introduction of internet sites such as realtor.com. If something happens you need someone with expertise to help. There is a lot of liability when it comes to proper disclosures. As a real estate agents we know how to do disclosure forms and how to protect clients with that type of recourse. People are working with agents because they want to be sure that their interests are protected. Most people look online before they even call a real estate agent. Often times they are disappointed because they are looking at properties they cannot afford. People often do not realize that the first thing they need to do is make sure that they are qualified and able to get a loan. There many things other than your credit score that can keep you from getting your property. They do not understand that they need to be preapproved for a loan.

If you were just getting involved in the real estate industry now, where would you put yourself?

I would look into doing commercial transactions as opposed to residential. All the residential area is our area is depressed right now. This does not mean that you cannot be successful. There are always opportunities. For many people this is the best time to buy.

How do you conduct a market analysis?

When you become an agent you join a multiple listing area service. It means that you can work on any MLS listing in California. As a member you have tools for you to perform market analysis. For example, we listed a property last week. We went on the site to check similar properties in the area to see what they sold for. You can pull together a property profile for a specific geographic area at a specific time. Selling prices in the area are what people most look at to determine current value. If the trends and sales are up, we know the seller is going to want a full price or almost full price offer. There is no exact science. The only thing we can say for certain is that the market is going to decide what a property is going to go for.

Informational Interview

Vue Her

Fin180 2-3:15pm

Dr. Hansz

           

For this information interview assignment, I interviewed a colleague majoring in construction management with 10 year real estate background and also working part time as a painter. He has retire from real estate before the market drop and now currently attending CSU Fresno trying to get his bachelor degree in construction management. While working as a Realtor he was located in Santa Cruz focusing on single residential housing and commercial. Through out this paper my colleague would like to be anonymous. The following are some questions I asked him during the interview:    

How did you get started in this field and what was your educational background?  

“I was always interested in business during high school. Once I got my high diploma I went into real estate right away by taking some private classes at Anthony’s School. That school has the highest success rate in the central valley or entire state with the rate of 95% passing. It was a 4 month program while working a part time job during the day and went to school during the night. It was really tough for someone right out of high school, but my passion in real estate help me through. As soon as I got my license, I start off working as an assistant for a real estate agent working under a broker. While working as an assistant I would takes calls when the Realtor would be away and also run and file papers for him.”  

What is the most rewarding aspect of your job, least rewarding?  What might you change?  Would you choose this career again?   "The most rewarding aspect for this job would be helping people to become homeowner, handing someone a key is what makes it rewarding for me. Not to mention the payment after a sell, since I was still young those two things were really the most important aspect for me in real estate. The least rewarding for me was telling a client they did not qualify for a house and have to be turn down. What might you change? I said the competition, but there is no way you can change that. That was the only reason why I left real estate. Would you choose this career again? Yes, I would if this economy wasn’t this poor because the reward in real estate is excellent. But right now I would like to try something in construction instead.”

What is a “typical” day like for you?

“A typical day for me when I was starting off was: show up at 9 am dressed up and ready to go, start off by delivering paper in the morning then come back and prepare for an open house until lunch, and then go back to office to finish the day off with more work. My time would usually go from 9am until 5pm.

What are some common entry-level positions in the field? What kind of salary range and benefits are typical of an entry-level position in this field?

“There is only two common entry level position that is offer in the field, Assistant or Secretary. When someone just got their license you can not really start out as a Realtor agent without any hands on experience first. This is why I start out as an assistant for a Realtor and try to get use to the work first.” 

 “When I was start off, I worked full time with a pay of 9 dollar an hour. 9 dollar seems low but at that time the minimum wage was much lower compared to now. So a month I would make close to 6000 – 7000.”

What kind of an individual (skills and personality) is best suited for these entry-level positions?  What are the most important factors used when hiring?

“I think the three most important skills and personality is best suited in this field is: someone that who like listening or enjoying talking to people, quick thinker and communication. Out of those three I think communication is the most important, because without good communication a Realtor would not survive in the real estate or business field. The most important factor used when hiring is a Realtor license, you can not do anything without it in real estate and the above personality.

What is the best educational preparation for a career in this filed?  Which classes and experiences would be most helpful to obtain while still in college?

“The best educational preparation in this field is a minor or major in business. Most important is having an interest in business; beside those take classes in real estate principal, Finance, and gets hands on experience.”

What have you found to be a major weakness in this field?

“Major weakness in this field is disclosure, because not all information will be disclosed to the buyer and not enough regulation to protect the buyer. Beside that is communication and reputation for a Realtor, without those two factors managing a business will be hard.”

What is the typical career path from entry to top management and how do people usually find out about full-time openings in this field?

“The typical career path in this field is nothing but major sells and reputation. Once you have enough experience and reputation that is when you can start your own business or move onto the next level. While doing this job the only way people usually find out about full time openings is through word of mouth or the newspaper, but today all those information can be obtain from the internet.”

What is the future outlook for this career?  

“Right now I see the market becoming more of an honest field/career since the bubble burst; is reflecting more on the honest price of real estate.”

Interview with Broker

Interview with Melba Baquero, Broker with Platinum Funding

1.) What is one major reason why you enjoy your line of work?

A: I love working with numbers. My brain seems to look at everything as a puzzle, like having to match income with bank guidelines.

2.) How long have you been working as a broker?

A: I started about 8 years ago.

3.) What sparked your interest to pursue a career in this field of work?

A: The thing that I really wanted was a flexible schedule that I was able to make really good money.

4.) What measures did you take to pursue this line of work?

A: I did a little research on the field and asked a relative who was working as a loan officer if I could spend some time working with him on his files then I shadowed him for a little

5.) How did you go about landing your first job?

A: I was taking a call for my cousin and it ended up being the broker, he spoke to for a bit then asked me if I was interested in working with the company so I started off as a loan officer.

6.) What were you doing to generate leads?

A: I started off like most other folks by working on some loans with family then I started meeting more people and then I started working with those individuals. I also connected with a realtor.

7.) How did the downfall of the economy affect business in the valley?

A: I believe it weeded out the people who should not have been in the business.

8.) During that time what did you do to generate leads?

A: I just tried to go back and help any individuals get out of bad loans they were put into.

9.) Were you able to find other methods to keep existing clients?

A: yes, I got into doing loan modifications for people I knew and had done business with in the past.

10.) What do you believe the downfall of the market was due to?

A: I believe it was due to the lack of regulations and corporate greed. There were a lot of people who were not following the laws and getting away with it.

11.) In your opinion where do you believe the real estate market is headed in the next 5 years?

A: I think it’s going to be a slow crawl back up to the top, it will be better, but never like it was.

12.) Have you worked in any other area than loans and brokerage?

A: No, I enjoy this area of the field and wouldn’t do anything else

13.) What do you use to stay informed about the market?

A: through emails my corporate office sends out. Now with the new MLS guidelines we have to have training and tests every year.

14.) What kind of projects are you currently working on?

A: I am just working on residential properties. I am also looking into other cities down south like Temecula, CA.

15.) In this business what do you think are important traits or skills to have?

A: Networking is very crucial in this line of work, it is a people and business and communication is key in being successful in this career.