Informational Interview ( FIN 180 Blog Post #1)

Where do you work at? And what is your title with that company?

“ I work for Wells Fargo, and I am a Home Mortgage Consultant.”

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

“ Well I was always interested in the business of real estate. But how I started in this field was when I was going for loan for myself and I was introduced to lending.  The loan officer guided me to what steps to take in order to be licensed. As for my education I have an AA degree from College of the Sequoias, and have completed courses through Fresno Pacific University, I also have taken course material to complete my license as a loan consultant.”

What is a “typical” day like for you?

“  It really depends on the day, there are office days and there days when I am in the bank helping clients that come in and are inquiring about a mortgage loan.  Well office days are where most of my job takes place.  So the day for me starts early in the morning at home, I look over any emails that I have received through the night, through my Blackberry of course, so I know what to look for when I get to the office. I would say its kind of a preparation in the morning. When I actually get to my office I listen to any voice mails, look again at the emails that I have to respond to and check all files that are in process. I then plan my day with any meetings with management and with clients for the day. On top of that I have required training I have to complete for my company.”  

What obligations does your work put on you outside of the actual job?

“ Well I would believe is self networking trying to put ourselves out there in the community so there is a face to the company.  I venture not to say obligations but rather that there are some expectations that we have to do that are a part of the job we have to do. For example we do lunch meeting, we do relator visits, we are at open houses and we are always prospecting with our referral partners.”

What is the most rewarding aspect of your job, least rewarding?  What might you change?  

“ I think that the most rewarding part of the job is being able to help clients with a loan so they are able to purchase their home.  Most peoples dream is to own a home and it’s a big accomplishment for me to be part of that transaction for them to obtain home ownership. I would change is the regulations there are so many regulations.  I might want to change how often the guidelines change or how many guidelines there are.  The guidelines are always changing making difficult at times to keep track of the new processes.”

How high is the turnover?  How does one move from position to position or other areas of the organization?   

“ The turnover rate is high with an organization such as Wells Fargo, not many loan officers can deal with a typical loan officer job but they have to adhere to the processes of Wells Fargo.  That aspect is pretty hard, and just to kind of put into perspective six months ago there were fifteen loan consultants and now we are down to nine.  Because Wells Fargo has goals they evaluate you by a production standard, you have to bring in so much volume, application, and units.  And in order to continue to work in a high level company they expect a return as for production.”

What types of training do companies offer those who enter this field?

“ When entering the field of a home mortgage consultant for Wells Fargo you have an extensive amount of training.  At first you go through training process in Southern California called Sales Essentials, where they teach how to use the company system, which is pretty complicated in it self. You learn how to originate a loan document, and submit files.  There is continuous trainings, this year alone we have twenty-four required training sessions, some which includes RESPA (Real Estate Settlement Procedures Act), ADA (American with Disabilities Act), and DOJ (Department of Justice). Wells Fargo is a huge company and it wants its loan officers to follow policies and regulation to the tee.”     

Has the company made any recent changes to improve its business practices and profitability?

“ Nothing has really changed but implementations and regulations have a strong hold on how we do business.  Referral partnerships are affected by some regulations that allow me to be referred by a potential partner, such as real estate officers.” 

What sacrifices have you had to make to succeed in this field, and do you feel the sacrifices were worth it?

“ The main sacrifice would be time away from home and time that I use at home for work.  You really got to find that balance. A lot of loan officers “the old timers” who have been in business for many years would say, “ you have to learn how to manage your time.”

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?

“ I would definitely focus of course on business classes to prepare you for an professional environment.  In a position such as a mortgage consultant I believe communication classes would be helpful because you are always talking to people.” 

What is the most important thing that someone planning to enter this career should know?

“ The most important thing for someone planning to enter this type of career should know how to manage your time.  I guess I would continue to reinforce that fact that time management has a lot to do with this job and you have to be good at it. The other ting would be that there are ups and downs, some months can be really good and there are those that can be really down. If you go in with this mentality and you are aware of what to expect, you will successful.”  

Fin 180 Blog Post #1

Informational Interview                                                                 Nathan Bertao

Blog Post #1                                                                                    March 1, 2014

This interview was with Scott Schuil who is a property manager in the Central Valley. Currently Scott manages about 83 single-family units that are spanned out from Madera to Bakersfield.

How did you get started in this field?

·      My father has always had his hand in real estate investing from the time I was young. Once I became old enough and had my own vehicle my dad gave me certain property management responsibilities over the local properties that he owned.

What was your educational background?  

·      I graduated from Immanuel High School in Reedley, CA. After High School I went to college at Azusa Pacific University and graduated with a Bachelor’s degree in Business Administration in 2009.

What are your major responsibilities?  

·      My main responsibility is to make sure that my father’s rental properties are always occupied with tenants. If somebody is moving out it’s my responsibility to have someone lined up to move in right away. If a property is sitting vacant then we are losing money. Other responsibilities include collecting rent money, maintenance that includes: mowing lawns and repairing general things that need to be fixed that I am capable of fixing with my very limited handyman skill set.

What is the most rewarding aspect of your job, least rewarding?  What might you change?  Would you choose this career again?  

·      The most rewarding part of my job is fixing something for a tenant or solving an issue in a short span of time and them feeling like you are just Mr. Handyman. The least rewarding part of the job is dealing with tenant’s pets. Particularly dogs leave a huge mess outside and tear up the house on the inside. I’m considering changing our policy of allowing pets into our properties or requiring a larger deposit because we lose money in my opinion by allowing pets. I would choose this career a hundred times over again. I love being my own boss and not having to report to anyone. There’s nothing like being your own boss in my opinion.

What is a “typical” day like for you?

·      Overall I would say that I never have a typical day. Each day is vastly different from the next and sometimes I don’t know what I’m going to do the next day when I go to bed at night. I’m always busy however and there’s never a dull moment in my day. An example of a typical day starts of with me mowing a few lawns, I prefer to do this in the morning. If a property has a pool I will clean and maintain that too at this time. Then after that I will report to any repair calls that I need to take a look at. If I can’t fix the issue I will set something up for a professional to come take a look at it. Everyday it seems like I’m dealing with a repair, and since my dad has properties from Madera to Bakersfield, some days I waste a lot of time traveling.

What are some common entry-level positions in the field?

·       I said that I graduated I but anyone can be a property manager. It also doesn’t require any certain licenses like being a realtor does. If you don’t have a connection like I do with my father it’s probably recommended and helpful that you have some type of general contractors license to be a property manager. When I hire people to help me out I like to see some experiencing in the construction field to make up for my lack of skills of working with my hands.

What is the best educational preparation for a career in this filed?

·      There’s not a specific class that I can remember taking in High School that has helped prepare me for what I do now. I would say however that High School sports helped prepare me for this job. Playing football our coach required us to wake up early and we were always working hard. Those traits I learned from my football coach were instilled to me and although I work hard it makes it seem easy since I’ve been doing it since High School now.

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

·      I have hired a few different guys on separate occasions to help me manage properties because as I mentioned I have to cover a large span of area. What I’ve learned from these hires is that most guys underestimate how much work actually has to be done. I have a repair or a concern with a tenant every day it seems like that I have to tend to. Most hired workers come into the job thinking they can do this job and have something on the side as well and that simply isn’t true. This job is very time consuming.

What is the future outlook for this career?  What are the areas of potential growth and decline?  

·      The future outlook on this job for me is very stable. All the properties that we own have no intentions of being sold anytime soon therefore my services will be needed as long as they are around. If anything my father is constantly looking for new properties to invest in and add to our collection. Potential growth and goals for my father is to obtain more multifamily units. Potential decline for us would be if it became easy for people to buy their own homes again because then it would be harder to find tenants.

Can you recommend any specific person for me to talk with and may I have permission to use your name?

·      My father is very knowledgeable in almost all aspects in regards to Real estate. Although he is a super busy man he loves educating younger people and loves to answer questions. His name is Michael Schuil and yes, you have the permission to use my name.

Informational Interview with Randy McAtee of Lazarus Realty

Randy “Lazarus” McAtee, owner of Lazarus Realty in Fresno, CA, has a wide range of experience in many aspects of the real estate, building, and investing industries. After dropping out of college, Randy became a construction worker and eventually obtained his General Contractors License in 1988. As a General Contractor he specialized in Insulation and Acoustics, as well as Weatherization and Energy Conservation. In 2002 Randy became a realtor. He eventually opened his own brokerage, Lazarus Realty, in 2007. I interviewed Randy with the intentions to learn more about how a sole proprietor runs a small real-estate firm and the decisions that are made when considering a potential investment.

Q: Why did you get started in the real estate industry?

A: Well, prior to being in the real estate business I was an investor in real estate. Not a big investor but I had bought some homes, had some rentals, sold some homes, and made some money on them. I know real estate is a good investment. My uncle, who was a cabinet maker, just made a basic living making cabinets but all the money he made was through investing. He worked himself to an early grave in his regular job but he did leave my aunt an estate that turned out to be worth millions through investing. I only ended up going into real estate as a default of not doing anything. Because I was making my money as an investor trader since 1998, but in order to have something to do that was work I got my real-estate license. 

Q: What is your approach to real estate?

A: For me, I approach it as an investor. I’m a real estate broker and it think if you check the statistics, less than 3% of the realtors are brokers. Mainly because to be a broker you have to be in “x” amount of years, then you have to take the broker test. But still I approach it as an avocation 

Q: What types of properties do you deal with?

A: I sell any kind of real estate because a lot of times the people I am dealing with are people that have money and they may want to have an investment in agriculture, land, or homes. Whenever they come to me and say “this is what I want to do,” I will seek to help them achieve their goals. I am probably the lowest sales of anybody in Fresno. Maybe that’s an exaggeration, but what I do, when I do it, I do well                

Q: Do you manage properties as well?

A: I do property management, some. I only manage a couple properties and I’m not out actively looking to manage properties, but if somebody comes to me, I can manage their property.

Q: What is you process for guiding a client in the investment process?

A: If people are coming to me wanting to invest in real estate, I go over their goals, see how much money they have, and determine what they want to achieve. 

Q: What kind of ROI do you clients tend to see on their investments?

A: [Runs Calculation] After running the numbers on one particular property, to be really precise, the return on their investment, when buying the property with cash and after paying taxes, fees, and whatnot, is 6.7%. Assuming no major deferred maintenance or repairs. Since this is a nice property they don’t have that, but if you make an allocation for repairs, which you should, I would safely say 6%. So the range of 5-7% has been pretty common, and that’s for really good homes. I find, in general terms of a return, more money is made when purchasing lower priced properties, but then there are more problems that go with it. In other words, if you buy a property for $65,000 and you can go in and do $10,000 in repairs and you’re in it for $75,000, still in Fresno anything decent is going to rent for about $800 or $900 dollars. So if you can rent that property following the 1% rule than that is a good deal.

Q: Can you explain the 1% rule?

A: The 1% rule, a rule I remember from my parents, is that your rent should equal the purchasing price of the property. That’s why a lot of times in California renting doesn’t work in terms of an investment very well, unless you’re looking to get capital gains. If you go in 93720 and you buy a house for $300,000 and you rent it on the 1% rule, you would want to make $3,000 rent. Chances are you will be getting closer to $1,500 to $2,000, far below the 1%. I’ve had properties that I bought for $30,000 and rented for $600, resulting in a lot of cash flow, but you can easily run into problems with those low income tenants that can end up costing you. In general the higher priced properties bring a lower rate of return. You pay a lot of money and you are not going to be able to recoup it through rent.

Q: How do you evaluate a property to invest in?

A: I would probably do the same as everybody else except I’m so conservative that somebody else is usually buying. Maybe it’s a function of my age and stage too. Maybe if I was younger I would just jump on it. I look at the comps and see how much houses in that specific neighborhood are going for. If you’re going to make money in real-estate, it’s not unlike stocks. You’re going to make it because you bought it at the right price. So when evaluating a property that I am going to flip, I factor in repairs, financing costs, carrying costs, and then look at the bottom line and say, “if I do this deal how much am I going to make in the end, and is it worth the blood sweat and tears.” If it’s just an investment, that’s a lot easier for me, it just has to carry itself. 

Q: How does location factor in when evaluating a property?

A:  It really is location, location, location. But there is a price at which anything is a bargain. 

Q: What do you look for in a location?

A: Well there are properties out there that I call penny properties. Properties that you can find and make good money off of. There are a lot of penny properties out there that you can make money off of, but finding them is like finding a good penny stock. You have to be a treasure hunter. You look and scout, and sometimes there’s good fortune and people bring it to you and you buy it.

Q: What advice would you give to someone interested in investing in real estate?

A:  I have a saying, “watch your downside.” Protect your downside. I don’t care whether its real estate or stocks, just manage your risk on the downside and the upside takes care of itself. You buy the real estate at the right price, it goes up, and you don’t have to worry about it. You don’t make money on every one of your properties but I look at your investments as a whole. Too many people look at one thing and they’re afraid to take losses. You have to look at the whole basket and say “you know what? The best thing for me right now is to take this loss and move on.” I’ve seen people loose huge amounts of money because they were too focused, too afraid, or too proud to take small losses, and then they see the market crash right under them.

Q: What is your evaluation of the current local real estate market?

A: The current market has firmed up and is pretty good. God help us with rain though. With no water for the farmers there could be a reverse dust bowl and we all go back to Oklahoma [laughter]. I see water as being a big factor for the Fresno Market. In other words, you just don’t know what the future holds. If the extreme worst case scenarios happen, it isn’t going to be good. The market in general depends upon a lot of monetary factors within our economy, things that can change over time, but I’ve been telling people over the last couple of years that the market has bottomed out.