How many times have you heard, "I couldn't make the meeting. My customer needed me." On the other hand, one of my favorites is, "I jump through hoops for my clients."-and then after four months of jumping, the client doesn't call back. I often hear "The client will not return my calls" from vendors. What is the answer? It may come from the question "Who is running your business?" Would the vendor have better maintained the customer if he were a little less available?How many times have you heard, "I couldn't make the meeting. My customer needed me." On the other hand, one of my favorites is, "I jump through hoops for my clients."-and then after four months of jumping, the client doesn't call back. I often hear "The client will not return my calls" from vendors. What is the answer? It may come from the question "Who is running your business?" Would the vendor have better maintained the customer if he were a little less available?
This article is special, as it addresses the entrepreneur: those of us in business who have chosen to leave Corporate America behind for the good life. What is the good life? Many describe the good life as having more flexibility, being able to come and go as we please. Most entrepreneurs I interview go out on their own because the values they acquire during a lifetime of experience (15 to 20 years) are different from when they started their corporate jobs. We are taught that the customer is always right. Often we're so eager to please that we compromise the very reasons we start our own business. We attempt to satisfy our customers by compromising our values. Who is running your business?
We say, "I'll slow down as soon as I make it." We continue to work at a harried pace, never really learning how to enjoy the life we attempt to produce. We drive ourselves crazy in an attempt to satisfy our clients. Often we end our business careers never satisfying the client or ourselves.
Many entrepreneurs make the decision to become self-employed to gain quality time with family. Others want more time to spend in the community, giving back to the systems that support their lifestyles. I often chuckle to myself by the idea of the deathbed question, "What would you have done differently?" None will ever answer, "I wish I had worked harder." However, because we're taught that the customer is king, we now decide to jump through the proverbial hoop to satisfy. We lose sight of the fact that now our customers are running our business.
You might equate success as a time in the future when all your business is by referral, and people are lined up at your door waiting for you to be open. That would be nice! What if I told you that you could have that business right now? The only thing that you have to change is how you react to your clients. You need to take charge of running your business.
People want to do business with busy people. Now is the time to become busy. It is important to "couch" your time with a busy-person attitude, even with an empty plan book. If you are running your business, your plan book is full in anticipation of appointments. Many of us who have started businesses from scratch will tell you that initially we'd take any client that came along. However, as time moved on those of us who were fortunate enough to build a successful practice became more selective as to whom we chose for new clients. Being selective is a very important lesson to learn if you want to survive as an entrepreneur-and maintain any form of sanity. When booking appointments you need to pause and evaluate your plan book, even if it's empty. You are in control. Don't just jump at the first empty space. You may consider this deceitful, but reconsider. You are in control, so take control by being in charge of your time and your business time.
How do you pay the bills with no appointments? Consider this, especially if you are just getting by or working harder than ever to make sales: become a strictly referral business today. It is as simple as changing your. Sales reminder: People naturally want what they cannot have. This applies to every sale and every referral. Think about something you once wanted and now have. How about that car that was just too expensive? What about your dream home? OK, maybe not your dream home, but one that was just a little out of your price range. How about that special person? Remember the first kiss? How satisfying was it? It was great. The same thing can happen when selling. It's up to you. Do you want to continue on the same wheel, running in place or just staying ahead? Or would you prefer to be in control of your life? Make the choice today to run your business. When you do, it truly will be the start of a wonderful life.
by Gerry Rose
9.28.2007
9.27.2007
Make Money From Buy To Let In A Property Crash
Over the last few years, most investors who have tried 'buy to let' (buying additional properties in order to rent them out) have profited spectacularly as the property market in most of the world boomed like never before. Historically unprecedented property prices in the USA, UK, Australia and most of Europe have made the concept of becoming a landlord look like an easy route to riches.Over the last few years, most investors who have tried 'buy to let' (buying additional properties in order to rent them out) have profited spectacularly as the property market in most of the world boomed like never before. Historically unprecedented property prices in the USA, UK, Australia and most of Europe have made the concept of becoming a landlord look like an easy route to riches.
Of course, there really isn't any 'free lunch', and the situation now, as property markets start to crumble around the globe, isn't looking quite so good for amateur property speculators. Historically, booms of this magnitude are followed rather predictably by equally large crashes, and the smart property landlords evacuated the market over a year ago, selling at the peak to amateurs lured in by the prospect of easy money. These amateurs have typically paid way over the odds for their rental investments, and are in many cases having to subsidize their tenants (i.e. the rent doesn't cover the interest-only payments on the mortgage!). They did this on the promise that future property price appreciation would justify the monthly losses they make by subsidizing the tenant (Ed's note - a pro landlord would NEVER subsidize a tenant in ANY circumstance - yield is everything).
So what's a newbie Landlord to do? Paid too much for a property, tenant's rent not even covering the interest on the mortgage and property prices likely to slip a dismal 30% or so over the next 5 years... is it harakiri time? No! There IS a way out, a way so obvious you have probably overlooked it.
Sell the property. Simple, huh? In theory yes, but not in practice. Right now, NOTHING is selling. Solution? DROP THE PRICE. You may have to take a 15% or 20% loss on the property now in order to get rid of it. Why on earth would you do this, I hear you ask, after all, aren't you in it for the long term? of course you are. But you must also treat it as a business, so let's look at the business case for the justification.
The property market has begun the downswing. Like an ocean going tanker, the market is slow to change direction, but when it does, it's going the opposite way, and for some time. The market ALWAYS punishes 'irrational exuberance' - that's almost a definition of a market. It could be anywhere between 3 and 5 years before this downswing bottoms out, and over that time, a 30% correction is probably the 'best-case' fall one can expect (this would take prices back to the long term mean. In reality they may even undershoot and fall further). After that, it may be another 3 to 5 years before prices once more claw their way back up to the highs of 2004.
Now let's be optimistic, let's hope it takes only 3 years down, and 3 years back up. Over that 6 years, you will be subsidizing your tenant each and every month, will be responsible for repairs, taxes, finding new occupiers, and all the hassle that a person would normally expect to get paid for. And you will be doing it for nothing. Nada. Zilch. If you are subsidizing your tenant to the tune of 20% or so (a common figure at present according to industry figures) this means you will effectively have lost about 9% of your investment anyway as the 6 years unfold in all their predictability. Add on the lost opportunity cost of using your money more effective over the 6 years, and you can realistically double that figure BEORE you look at all the hassle and heartache of being a landlord. In other words, pretty much the same cost to you as selling now at what looks like a bad loss.
The alternative? You are free to get on with life, and try to find some other way to make money. Additionally, if you manage to sell now, even at a 20% loss, it will probably fall at least another 10%. This means that you can buy again in 3 years time at the lowest point of the crash, and recover your losses in the 3 years that would follow, making a healthy 10% or so whereas as things stand you will only be clawing back to break-even by 2011. And the icing? Buying at the low in 3 years time means a smaller mortgage, which means lower interest payments, which means a respectable yield!. The calculations are quite complicated, but put simply, taking your medicine now in the form a of a 20% hit could mean that in 6 years time you are up perhaps 40%. The choice of course, is yours. And even if you decide to hang on for grim life, there is always a chance that you might make it out the other side with a small profit some time in the next 10 years or so. Best of luck, Landlords!
by Peter Parsons
Of course, there really isn't any 'free lunch', and the situation now, as property markets start to crumble around the globe, isn't looking quite so good for amateur property speculators. Historically, booms of this magnitude are followed rather predictably by equally large crashes, and the smart property landlords evacuated the market over a year ago, selling at the peak to amateurs lured in by the prospect of easy money. These amateurs have typically paid way over the odds for their rental investments, and are in many cases having to subsidize their tenants (i.e. the rent doesn't cover the interest-only payments on the mortgage!). They did this on the promise that future property price appreciation would justify the monthly losses they make by subsidizing the tenant (Ed's note - a pro landlord would NEVER subsidize a tenant in ANY circumstance - yield is everything).
So what's a newbie Landlord to do? Paid too much for a property, tenant's rent not even covering the interest on the mortgage and property prices likely to slip a dismal 30% or so over the next 5 years... is it harakiri time? No! There IS a way out, a way so obvious you have probably overlooked it.
Sell the property. Simple, huh? In theory yes, but not in practice. Right now, NOTHING is selling. Solution? DROP THE PRICE. You may have to take a 15% or 20% loss on the property now in order to get rid of it. Why on earth would you do this, I hear you ask, after all, aren't you in it for the long term? of course you are. But you must also treat it as a business, so let's look at the business case for the justification.
The property market has begun the downswing. Like an ocean going tanker, the market is slow to change direction, but when it does, it's going the opposite way, and for some time. The market ALWAYS punishes 'irrational exuberance' - that's almost a definition of a market. It could be anywhere between 3 and 5 years before this downswing bottoms out, and over that time, a 30% correction is probably the 'best-case' fall one can expect (this would take prices back to the long term mean. In reality they may even undershoot and fall further). After that, it may be another 3 to 5 years before prices once more claw their way back up to the highs of 2004.
Now let's be optimistic, let's hope it takes only 3 years down, and 3 years back up. Over that 6 years, you will be subsidizing your tenant each and every month, will be responsible for repairs, taxes, finding new occupiers, and all the hassle that a person would normally expect to get paid for. And you will be doing it for nothing. Nada. Zilch. If you are subsidizing your tenant to the tune of 20% or so (a common figure at present according to industry figures) this means you will effectively have lost about 9% of your investment anyway as the 6 years unfold in all their predictability. Add on the lost opportunity cost of using your money more effective over the 6 years, and you can realistically double that figure BEORE you look at all the hassle and heartache of being a landlord. In other words, pretty much the same cost to you as selling now at what looks like a bad loss.
The alternative? You are free to get on with life, and try to find some other way to make money. Additionally, if you manage to sell now, even at a 20% loss, it will probably fall at least another 10%. This means that you can buy again in 3 years time at the lowest point of the crash, and recover your losses in the 3 years that would follow, making a healthy 10% or so whereas as things stand you will only be clawing back to break-even by 2011. And the icing? Buying at the low in 3 years time means a smaller mortgage, which means lower interest payments, which means a respectable yield!. The calculations are quite complicated, but put simply, taking your medicine now in the form a of a 20% hit could mean that in 6 years time you are up perhaps 40%. The choice of course, is yours. And even if you decide to hang on for grim life, there is always a chance that you might make it out the other side with a small profit some time in the next 10 years or so. Best of luck, Landlords!
by Peter Parsons
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