How to Grow Your Business By Designing & Executing Systems & Processes

There are SO MANY aspects of the real estate game that one could focus on, learn more about, and execute on. 

One thing I’ve picked up from entrepreneurs both in the real estate industry and other fields is that systems–learned over time–keep one focused, motivated, and in a place where they can effectively measure their progress.

It is so easy to get pulled in 10,000 directions when exploring, starting, and growing in the real estate game.  If you’re in a place where new systems can help you in your business, here are a few ways to build them:

Task Tracking

Whether it’s on a white board, calendar, software, or good old notepad, daily/weekly/monthly task tracking can be very helpful when faced with a monumental to-do list. If you’re inclined to track tasks on your computer or phone, here are a few great resources:

  • Wunderlist – This is a wonderful tool for organizing project tasks with multiple people.
  • Asana – Similar to Wunderlist, this program can effectively organize project tasks with multiple parties.  Starting a business or have a business partner? Try Asana out to keep tasks front of mind.
  • Snail – Mac App that times and tracks tasks on your desktop.
  • Do One Thing – If you’ve got a Mac, Do One Thing could be a useful app for your desktop. This app keeps one task in front of you (via the top of your desktop) at all times.  It’s simple (it reminds you to do one thing).
  • Google Calendar – I’ve got 2 calendars (personal & work) synced to my phone and email.  When I need a reminder of future calendar items on my plate, they are at my fingertips.
  • Google Drive – This is a fantastic resource because you can keep documents, spreadsheets, and notes in the cloud and access them on any device with an internet connection.

Block out Buckets of Time

Our modern work day is a jumbled mess. If you’re like me your day could quickly turn into this if you aren’t careful: meetings, emails, calls, reading, following up, research, planning. With all these competing items, it can be very difficult to properly organize one’s time.

I’ve learned to love organizing buckets of time throughout my day.

Here are a few examples: try not scheduling any calls until after 10am, focus the first 2 hours of your day on your most important project, keep every day after 4pm (when possible) as time allotted to long term goals/thinking/planning.

Organizing my days into buckets has helped keep me sane when I’m faced with so much day-to-day work.

Email

I both love and hate email.  Despite being an effective means of communication it is unfortunately a necessary evil of our modern working environment because it can quickly zap your time and energy.

If you’re faced with a never ending inbox, try this: only check and reply to email at set times throughout your day (maybe it’s 8am, noon, and 4pm).

I picked this up from a developer recently when I got a reply from him. In his signature it read: “I only check my email once in the morning and once in the evening. If it’s urgent, call me at this number: xxx-xxx-xxx.” While I haven’t gone to this extreme in email checking, I thought this was brilliant and I’ve tried to adopt the mentality in my own email habits.

If you’re feeling overwhelmed with email, it might be worth a try.

Productivity

Looking for a technique for measuring and improving your productivity? Give these methods a try:

Everyone works at different paces and through different systems.  The above strategies, tools, and techniques may not be your cup of tea. If you’re looking to implement new systems into your day, try testing a few things out. See what works. Then try to build and grow off that foundation.

Properly built systems could help you achieve more in your real estate career.

(note: a version of this article recently appeared on BiggerPockets)

Three Real Estate Shifts to look out for in 2013

2013 new year sparklerAs the year winds down, the flood of “What’s next for 2013” predictions rise. Since I’m no different, here are three real estate shifts to look out for in 2013.

1) Tech entrepreneurship in real estate

Let’s face it, much of the technology we use to analyze commercial real estate is archaic compared to the up-to-the-second innovations in other industries (want an example, check out what Palantir Technologies is doing).  While the argument could be made that commercial real estate hasn’t had to adopt new technologies, products, and services recently because the market simply didn’t need it; we are now at a point where this just isn’t the case.

Tech entrepreneurship should get stronger in commercial real estate over the next year. We are already starting to see the emergence of new businesses and products kicking the old tech guard to the curb. The next year should prove to be an exciting one for the likes of 42Floors, Compstak, and other companies focused on disrupting the status-quo in the commercial real estate realm.

Want a fantastic resource for keeping tabs on tech entrepreneurship in real estate? Here’s one of the best sources out there: astudentoftherealestategame.com.

2) Big data becoming more democratized and transparent  

Observing what happened in other industries (technology, retail, healthcare), he who holds the data holds the keys to the castle.  This shift is gaining tremendous traction in commercial real estate, yet it hasn’t occurred on the scale of other industries despite the sheer size of the real estate industry. Pay-to-play data services should still have their place, but a shift is occurring where big data gets more democratized and transparent.

What does this mean for your business? More democratized and transparent data provides a clearer picture of your deals—which is certainly a good thing. However, this could also drive up competition because the outcomes of your deals will become less subjective.

 

3) Wall Street takes a stroll down Main Street

Tell anyone you work in real estate and they almost immediately ask you if you’re on the residential side or commercial side.  With the emergence of single-family home rentals as a viable asset class for large financial institutions, this line might not be so clear anymore. Many large Wall Street powerhouses, including private equity giants The Blackstone Group and KKR, are investing billions in distressed single-family home rentals across the country.

Quick example: In my market, I was approached by one group looking to acquire 500 single-family homes in the next six months. They want them and they want to move fast. WHOA!

While the motivations and incentives are certainly there for Wall Street to play on Main Street, skepticism is high within tight-knit real estate investing circles. Many investors argue that the sheer magnitude of money pouring in will wipe out smaller and more fragmented investors. Others simply don’t see how large institutions could manage market expertise and operations at such a local level. Arguments for either side are flying high online and in the press (recent WSJ piece).

Regardless of the validity of such large financial institutions pouring copious amounts of cash into a niche asset class, everyone can agree that the trend will likely be disruptive for this piece of the real estate industry.  As throughout history, whenever a disruptive measure occurs, there are always disproportionate opportunities to be made for those that are able and ready to seize them.  While the shift is unresolved and its outcome unclear, it’d be prudent to, at the very least, keep a watchful eye over the pulse of this disruption.  The outcomes, if managed well, could prove to be well worth the effort in the long run.

Good luck in 2013!

7 Tips for More Effective Cold-Call Emails

This post originally appeared on my other site, yet a colleague encouraged me to copy it over to RE-J because it may be useful to brokers, lenders, and developers seeking out new business.  So while not specifically real estate related, I hope you get some value out of it.

Enter original post:

Remember back in the day when you jumped online and the AOL guy said “you’ve got mail“? (I may be dating myself here) If you were like me you were probably thrilled to receive an email–today, not so much! A recent study showed that the average American worker sends and receives 105 emails per day and spends 28 percent of their workday communicating via email.  WHOA!

freak-out (1)

As an entrepreneur, email is a vital communications tool for your venture.  If you are just starting out or looking to grow your business, cold-call emails are one way to reach new customers, partners, and contacts.  But it can also be a HUGE time-suck. While not extensive by any stretch of the imagination, here are seven tips for more effective cold-call emails.

-It’s about them (not you). If you’re cold calling via email, you’re likely selling something…selling a product, service, your skills, encyclopedias (dating myself again). If you type up the first draft of your email and there are more “I’s” than”You’s” then it’s probably time to restructure your approach.

Selling is not about you (probably a topic for a different day). It’s all about the person/company at the other end of the table (computer screen/phone/iPad in this case).  At its basic level, your product or service is about helping them and adding value to their life. In a cold-call email, it should also be all about them, not you.

-Length–make it short and snappy.  I get it, you have a revolutionary product or service and need 3,000 words to fully explain its benefit and value to mankind.  The problem is, if you email a novel, most people aren’t going to read past the second line. So you’re shooting yourself in the foot right away. Structure your email with brevity in mind and consolidate as much as possible. Similar to a resume, make every single word earn its place on your page.  If your product or service truly adds value, explain the A, B, and C benefits in brief fashion, then offer to elaborate over coffee, via Skype, or in a face-to-face meeting.

-Diction–write like you talk.  There are times when you should be overly proper in your diction (cover letter, wedding invite, letter to the president) yet we almost never talk to each other like that every day. Instead of stressing over whether to use Dear Sir or To Whom it May Concernopt for what seems natural and comfortable to you. As humans, we like to interact with each other on a personal level.  I’ve found a simple Hi Mark or Mark, to be much more engaging salutations than more formal methods.  The body of the email should also seem natural and comfortable as you write it.

-Clear intentions and means of action.  Ok, so you’ve effectively communicated your potential value to the person you’re emailing–now what? Put a call to action in your email to declare what the next steps would look like. “I’m available next week to discuss further.” “I’ve got a flexible schedule and will work around yours, but would like to set something up for Thursday or Friday.” Since they don’t know you, make it very clear what your intention is and what the next steps are (assuming they are interested).

-Follow up. As noted above, we are inundated with emails from every walk of life.  (I’ve been guilty of clicking a cute cat link from a friend too…they’re just so damn cute!) Because of this flood of emails, we all miss some that get pushed down our inbox and/or forgotten about.  Don’t fret if you send your email into the big black box that is the internet and don’t get a response right away.  Simply wait a reasonable amount of time (several days, maybe a week) and follow up with a new email.

One trick to try: Mention your previous email (maybe forward the original email with a note saying “see original message below”) and plainly state that you are following up.  I’ve tested this over time and found the follow up email to get close to a 75 percent response rate with nothing fancier than “Hi Mark, I wanted to follow up from an email sent earlier in the week. See below and let me know what you think.”

-Don’t spam. This tip goes hand-in-hand with following up.  While it is important to keep in touch over time, don’t spam. Think about the emails you get from some people and wish there was an unsubscribe link because they simply won’t stop emailing you. Respect peoples’ time and keep your follow-ups tasteful and effective.

-Don’t freak out.  Cold emailing is tough because you are trying to generate a professional relationship out of thin air.  Don’t freak out if you aren’t getting results. Start small and test.

What I learned from Startup Weekend

I recently participated in Startup Weekend and LOVED IT! What is Startup Weekend?! Here’s copy straight from the source:

No talk, all action. Launch a startup in 54 hours. Startup Weekend is a global network of passionate leaders and entrepreneurs on a mission to inspire, educate, and empower individuals, teams and communities. Come share ideas, form teams, and launch startups.

In one sentence: Startup Weekend is a weekend-long event that brings together entrepreneurial minds and challenges them to an idea/product/business out of nothing.

I was absolutely exhausted from the weekend. So I took a few days to reflect and collect my thoughts on such an incredible weekend. In rapid fire fashion, here are my thoughts below:

Incredible energy – People came with fantastic ideas, open minds, and a desire to build something new. I expected the energy to be high, but was pleasantly surprised at how much more committed everyone was to making the weekend a success.

Amazing personalities – To give up a whole weekend and work with people you’ve never met before on a new and untested business proposition…it attracts an array of unique personalities!

Passionate people – Everyone wanted to be there and genuinely cared about advancing each other’s ideas, businesses, and products.

Diverse backgrounds and skill-sets – I wasn’t quite sure what to expect before I started the weekend because I didn’t have a purely tech focus/background.  Yet people came from many different backgrounds and brought their specific expertise to each group; which only strengthened the collaboration.

Strong ideas – Many pitches were simple, strong, and convincing.

Wacky ideas – Ok, there were a few wacky pitches…but in the essence of the event, they were welcomed and appreciated.

Open-minded attitude – The theme of the weekend, while not official, seemed to be “Why not?!”.

Business focus – Despite the open-minded nature of the event, each group had to make a strong case for the business principles behind their project.

Collaboration – Diverse group of individuals + amazingly high level of talent + passion for innovation  = strong collaboration.

Mentorship – Mentors gave up their time all weekend to give amazing feedback and advice to each group.  Where else can you tap into decades worth of business, startup, and technology expertise–invaluable experience!

Obviously I am a huge proponent for Startup Weekend and any events like it.  If you get a chance, definitely step outside your comfort zone and dive into the world of fast-paced entrepreneurship for a weekend. While I can’t guarantee anything, you’ll likely walk away with new ideas, new contacts, and a fresh perspective. Worst case, it was only a weekend! Still not sure…just DO IT!

Real Estate Due-Diligence Tip: Estimating Real Estate Taxes

Whether you are buying a home or developing a commercial property, real estate taxes are one of the biggest expenses you’ll face. Here’s a quick breakdown on how to reasonably estimate current and future real estate taxes for your property (with free data)!

Real estate taxes are typically based on your local assessor/auditor’s appraisal value of your property.  The assessor will establish an appraised value of your land and any improvements (buildings) on that land every one to two years. Once an appraised value is established, the assessment amount is calculated based on the property type (commercial, residential, agricultural).  This assessment amount is calculated as a simple percentage of the total appraised value. Depending on the municipality, assessed values will likely range between 15 and 35 percent of the total appraised value (agricultural property and residential property typically are assessed at the lower end while commercial property is assessed at the higher end).  Once the assessed value is established, the tax bill—the actual real estate tax expense we are trying to estimate—is derived from multiplying the assessed value by the “mill rate” for the taxing district.  To get this rate (if it’s not online), simply reach out to your assessor’s office and ask what the current mill rate is. If you can, also ask what future rates might be. If they have a good handle on the taxing district—or if it’s close to a new taxing year—they might give you a good estimate. This can help when estimating future tax expenses for the property.

To sum everything up, here’s the flow:

Appraised Value–>Assessed Value (percentage of appraised value)–>Tax Bill (assessed value times mill rate)

The best part about estimating real estate taxes: this information is available to the public for any property.  Many assessors have a free online database where you can track appraised values, parcel data, historic tax bills, property improvements, and many other sources for information.  So you can make a very reasonable estimate of this expense based on a plethora of actual data. To find this data, do a simple Google search of “Fill in the Blank County/Parish/Municipality Assessor”. Once on the main page, look out for “Real Estate Information”, “Property Data”, etc. When you click that, you should find a page that prompts you to input the address, owner, parcel pin number, or intersection.

Quick note: When you can, always try to double check this data with other sources.  Real estate taxes represent a large chunk of the total expenses for your property—it’s important to get right.  If your estimates are contingent on a few data points that were found on the assessor’s database, you may have a big problem on your hands if that data is wrong (wrongly imputed into the database, old data, etc.).

Let’s walk through a quick example to see how you can get real estate taxes for your property.

Say I am very interested in acquiring and/or developing industrial property in Naperville Illinois. I get wind of a vacant parcel up for sale in a great location for industrial properties in the area.  On top of many other parts of my due-diligence, I want to understand what the current taxes (for carrying costs) and future taxes (if I decide to develop) will be.

Naperville Illinois falls under the DuPage County Assessor’s Office. I start by looking up the parcel in the public records and GIS mapping information found on their website.   (http://www.dupageco.org/PropertyInformation.aspx). Luckily, DuPage County’s property information is easily available on their county GIS parcel map. From here, I have the exact address, PIN number, and owner of the parcel I’m interested in. Here’s what comes up when I select the parcel:

Once I have this information, I switch over to their “Tax Information” section and search for my parcel.  Here’s what comes up when I search:

While some counties will only show appraised or assessed values online, I’m lucky with this example because the actual tax bill is available. If this weren’t the case, I’d simply give the assessor a call and ask about current and historic appraised values, assessed values, and mill rates for the property. From the data above, I can see that the tax bill has been increasing relatively steadily each year. Under the assumption that this growth rate remains the same in the near future, I can now plug in an estimate of future (carrying cost) taxes for the property.

Estimating future taxes for a newly developed property involves more research and due-diligence because the assessor will almost certainly increase the tax bill for the property once it’s improved.  Using the assessor’s data as a guide, analyze comparable properties in the area to get a good understanding of the likely increase in taxes for the improved property once it’s completed and re-appraised.  While more in depth due-diligence is likely needed, using the free and easily obtainable data provided by the assessor should get you on the right path.

Good luck!

Getting an investor to say yes…how?!

Lately, I’ve been very interested in understanding what it takes to attract investment from outside sources. If you’re growing a business, this is probably always on your mind—if not now, then it likely will be sometime in the future.

Fundamentally, the notion of attracting outside investment is both an extremely challenging endeavor and an incredibly simple one.  On the challenging side, one must convince another party to give up their limited resources (money) to hopefully make a required return on that investment sometime in the future. This investment comes with the hopes that your venture, among other things, will beat out aggressive competitors, adapt to ever changing market conditions, manage future growth, and ideally expand into the next big thing in the business.  Of course, the issue from an investor’s perspective is that none of these things are known or guaranteed.  On top of this, said investor likely has multiple options to consider when deciding where the BEST place is for his/her/company’s money (other ventures, stocks, bonds, savings, plain-old cash—all with varying degrees of risk and expected returns). So from square one, it’s a competitive, uphill battle to convince someone to cough up their hard earned cash on your venture.

On the other hand, attracting outside investment is also very simple.  On the surface, you just need to explain to said investor exactly how and why your venture is the right option for them (easier said than done).  This post by John Greathouse initially got me thinking about the “simpler” side of the topic. What struck me is that, from his perspective—which is one of the most trusted in the venture capital world, early-stage investment is not as complicated as it seems.

Here’s an excerpt from his blog post:

Business Plans are dead. Most sophisticated investors ignore them, focusing their attention on an entrepreneur’s pitch and presentation materials, financial forecast and executive summary. As noted in Entrepreneurs Shouldn’t Pitch Their Ideas To Venture Capitalists, most sophisticated investors place their bets on people rather than opportunities.

Entrepreneurs routinely seek my advice regarding their executive summaries. In most cases, I provide some combination of the following advice:

Brevity – Maximum length: two pages.

Visuals – Given the limited space, use images, graphs, charts and photos to tell your story; team pictures, logos, etc. work well.

5th Grade – Many entrepreneurs use overly dense, academically oriented language. As best-selling author Stephen King once said, “Any word you have to hunt for in a thesaurus is the wrong word.” Most newspapers are written at a third-grade reading level, White House press releases average a fourth-grade reading level and the New York Times is easily digestible by the average fifth grader. Apply the Flesch-Kincaid Readability Test to your executive summary to ensure the average 5th grader can understand it.

Buzzkill – Overuse of buzzwords and jargon convey an entrepreneur’s professional immaturity; it can also confuse a 5th grader, so use plain English.

While the points above demonstrate that attracting outside investment is simpler than most people think, it should be noted that “simpler” doesn’t mean easier…in fact it actually means quite the opposite.

Yes, this is also another Shark Tank related post (you can find the original one here). Several things brought this on. First, Shark Tank is back on TV for another season—and I couldn’t be happier! Second, after reading John’s blog post, I re-read a great series of blog posts by former Shark Tank-pitcher Fleetwood Hicks from Villy Customs that revealed the exact process he went through to prepare for the show—and in turn to pitch potential investors. The end result: he walked away with the investment he needed. The most fascinating part: by connecting his preparation with the pitch on the show and John’s blog post, one can begin to breakdown the fundamentals of what it takes to get an investor to say yes.

Check out his Shark Tank pitch here (skip forward to 31:20 into the YouTube vid):

Now let’s rewind a bit to see exactly how he prepped for the show here:

https://www.villycustoms.com/shark-tank-experience-luxury-fashion-bicycles-beach-cruiser-bike

The interesting thing, which connects back to John’s blog post, is that his pitch was simple, convincing, and confident—yet it also took months to craft and years before that to get the business to the point where it was the right opportunity for the right investors! So while simple seems easy, it required an immense amount of work, planning, and iteration.

How are jobs and economic impact of a project estimated – a quick analysis

This past weekend I helped pace and crew for several good friends in the Leadville Trail 100 mile race. This is a high-altitude ultra-marathon mountain race that’s regarded as one of the toughest and most prestigious long distance races in the world.  This year, 802 crazy souls started the race and only 45% finished. I know what you’re thinking because I thought it too: running 100 miles (continuously for almost 30 hours) over mountain passes and at high elevation sounds ridiculous! But pacing this race was an amazing, life-changing experience that I felt privileged to be a part of.

The Leadville Trail 100 is part of a race series held in Leadville Colorado every summer that also includes a 10k, trail marathon,  50 mile trail ultra-marathon, 50 mile mountain bike race, and 100 mile mountain bike race (Lance Armstrong and Floyd Landis won these in previous years). For an old mining town with a population of little more than 2,500 residents, these races have a huge impact on the local and regional economy.

After spending several days in Leadville, my entire team got to talking about how impactful this race series is from an economic perspective.  Similar to real estate development projects serving as economic generators (increased jobs, income, and GDP) this race series attracts large sums of money that generate increased economic activity for local businesses, the municipality, and area residents.  Since there are basically two things that get me up in the morning—running and real estate—I decided that it’d be fun to do a quick back-of-the-envelope economic impact analysis of the Leadville Race Series. 

Economic impact studies are typically done using Input-Output models such as the Regional Input-Output Modeling System (RIMS II). Regional input-output multipliers such as the RIMS II attempt to estimate how much a one-time or sustained increase in economic activity will be supplied by industries located in the region. Essentially, what you have from an economic activity such as a race series (or real estate development, municipal infrastructure project, etc.) is a series of inputs that come from money spent during that activity that get multiplied throughout an economy.  In the case of the race series, these invested inputs likely take the form of money spent on race fees, hotel fares, restaurant dining, local shopping, and transportation. By spending this money in an economy, jobs are supported, salaries/wages are paid, and dollars get trickled through the region that wouldn’t otherwise be there.

Money invested in the local economy through these inputs are then multiplied by outputs (RIMS II multipliers) to generate estimates of total jobs supported by the race series, added income in the community, and total output (GDP) for Leadville. These output numbers are derived from census data on local and regional economies (at the county level).  So through this analysis (with some general assumptions) one can actually estimate how many jobs and income is generated by the Leadville Race Series. This analysis could also be useful if you’re developing a property and want to show how the construction, operation, and maintenance of that building will improve/impact the local economy (great as a marketing tool if you need to state your case for entitlements, public opinion, etc).

To do this, we’ll take a look at some general assumptions on money spent on and during this race series. Here we go!

First we need inputs:

Here are some general assumptions made for money spent on various categories.

Ok, this next part is pretty simple. We simply collect multiplier estimates for the industries affected by the race. These numbers are available from the Bureau of Economic Analysis.

(Quick note, since each order of data cost $275, I have substituted data I collected from a previous economic impact study for this post…so final conclusions will not be completely accurate. The big assumption here is that these multiplier numbers are correlated with those for Leadville).

Here are the numbers we’ll use to multiply against our assumed expenditures:

And now for the interesting stuff—the results!

Below are the total jobs, earnings, and GDP of the Leadville Race Series (again, similar analysis could be done for a real estate project, master planned community, rehabilitation, etc.)

So, through some basic assumptions (and some large ones), an estimated 190 jobs are supported, $12.2 million in earnings is created, and $13.3 million in total output is produced! For a town of 2,500, I think that’s pretty incredible!