As a real estate license school in Rancho Cucamonga, California, we are vested in local developments and how they impact the surrounding community. Recently, IKEA's announcement of abandoning its initial Read more...
As a real estate license school in Rancho Cucamonga, California, we are vested in local developments and how they impact the surrounding community. Recently, IKEA's announcement of abandoning its initial plans to construct a colossal retail store in Ontario and opting for a distribution warehouse piqued my interest. Furthermore, the city's reaction to this planned shift carries significant implications and is worth observing closely. I wanted to write about this specifically because there are so many lessons here for the new real estate agent or the person studying for their real estate license exam. Among these lessons are exploring the role of cities in dictating land use, how the economy has changed post-pandemic, and how that has influenced this potential new location.
Public records reveal that in 2019, IKEA purchased at least five parcels just north of the 10 freeway in Ontario, encompassing around 25 acres of land. Reporting indicates that IKEA initially planned to build a 330,000-square-foot retail store on Inland Empire Boulevard, across from the Ontario International Airport. This was undoubtedly a massive decision for IKEA as the company only has around 50 stores in the entire United States and there is already a massive retail showroom in Covina - only about 15 miles west of the proposed new location. Reporting also suggests that due to the pandemic, the company pivoted its business model and wanted to build a distribution warehouse instead of a full retail location.
In the same reporting, the Daily Bulletin reports that this proposal to change the site from a retail showroom to a distribution center did not sit well with the city of Ontario. It appears that the city is going to block IKEA’s proposal according to additional reports.
Questions remain as to what IKEA will now do with the around 25 acres that they own and whether they will be able to come to some compromise with the city of Ontario.
From your Real Estate Principles course, you might remember that in urban planning, general and specific plans serve as two distinct yet related tools for guiding land use, development, and growth within a city or a county. Both plans help ensure that development occurs in a well-organized and sustainable manner, addressing various aspects of land use, zoning, transportation, housing, and environmental concerns.
General Plan
A general plan, or a comprehensive plan or master plan, is a comprehensive, long-range policy document that establishes the overall vision, goals, and objectives for a city or county's future growth and development. It provides a framework for land use, circulation, housing, conservation, open space, safety, noise, and other elements crucial to the community's well-being. The general plan guides decision-making regarding zoning, capital improvements, public services, and other land use matters.
The general plan consists of several elements, each addressing a specific community development aspect. These elements are usually interrelated and should be consistent with one another. State laws often dictate the minimum required elements for a general plan, but local governments may include additional elements as they see fit.
Specific Plan
On the other hand, a specific plan is a more detailed planning document that focuses on a smaller, well-defined area within the jurisdiction. It serves as a bridge between the general plan's broader policies and the actual development projects that will take place within the specific plan area.
Specific plans outline precise development standards, land use designations, zoning regulations, infrastructure requirements, and implementation measures for the targeted area. They are tailored to address the unique needs and characteristics of the area in question, ensuring that development occurs in accordance with the community's vision and the general plan's goals.
In summary, while the general plan provides a comprehensive, long-range vision for the entire city or county, the specific plan offers a more detailed and focused approach to land use and development within a particular area. Both types of plans work together to ensure that growth and development occur in a well-planned and sustainable manner, reflecting the needs and aspirations of the community.
The Post-Pandemic Economy and IKEA's Decision
The COVID-19 pandemic has significantly impacted the global economy, forcing businesses to adapt and change their strategies. One major shift has been the growth of e-commerce and the need for more efficient distribution channels. IKEA's decision to attempt to build a distribution warehouse instead of a traditional retail store is a clear reflection of this trend.
As a real estate license school, we must stay updated on such trends and share our insights with our students and community. The evolving economy post-pandemic, the impact on businesses like IKEA, and the importance of cities' role in land use are all valuable lessons for aspiring real estate professionals.
Ontario's IKEA distribution center dilemma is a prime example of how the post-pandemic economy, land use regulations, and city planning intersect in real estate. As a real estate school, we strive to provide relevant, timely, and informative content for our students and community.
Stay tuned to our ADHI Schools blog for more local developments and real estate news updates and if you are interested in getting your real estate license visit www.adhischools.com or call us at 888-768-5285.
Love,
Kartik
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For most people, purchasing a home is one of the most significant financial decisions an individual can make in their lifetime. Given the considerable investment involved, homebuyers need to ensure that Read more...
For most people, purchasing a home is one of the most significant financial decisions an individual can make in their lifetime. Given the considerable investment involved, homebuyers need to ensure that the property they are buying is structurally sound and free from potential problems. A critical step in achieving this is getting a home inspection before closing escrow. I wanted to write an article discussing a home inspection, why buyers should get home inspections, the typical costs associated with home inspections, and the process involved.
This is especially important reading for the licensee who just passed the real estate exam and completed real estate school because this topic isn’t really tested on the state licensing exam in California.
What is a Home Inspection?
A home inspection should be a comprehensive assessment of a property's physical structure, systems, and overall condition, carried out by a qualified professional - a home inspector. The primary goal of a home inspection is to identify any existing or potential issues that may affect the value, safety, or functionality of the home. The inspection typically includes visually examining the property's foundation, roof, plumbing, electrical systems, heating and cooling systems, insulation, ventilation, and other essential components. Upon completion, the home inspector provides the buyer with a detailed report outlining their findings and recommendations for any necessary repairs or improvements.
Who Licenses Home Inspectors in California?
Despite the lack of a licensing requirement for home inspectors in California, it is still highly advisable for buyers to seek a home inspection before purchasing a property. A home inspection performed by an experienced and reputable inspector offers invaluable insights into the condition of a house and helps buyers make informed decisions about the transaction.
The absence of a licensing requirement raises concerns about the quality and reliability of home inspections in the state. Licensing home inspectors would ensure minimum competence and knowledge, thereby providing greater protection to consumers. It would also help maintain industry standards and create a more level playing field for professionals. With a formal licensing process, home inspectors would be required to undergo training, demonstrate expertise, and adhere to ethical guidelines, ultimately resulting in better service and more reliable outcomes for home buyers - but that’s not the case as of the time of this writing. Home inspection companies aren’t required to be licensed in California.
By implementing a licensing system, the state would help ensure home inspectors are held accountable for their work, promoting transparency and giving buyers peace of mind.
Despite not needed to be licensed, home buyers should still obtain a home inspection before purchasing a property.
Why Buyers Should Get Home Inspections
1. Identifying Hidden Issues: A home inspection allows buyers to uncover potential problems that may not be immediately apparent during a casual walk-through or from the seller's disclosures. This could include structural damage, water damage, mold, or outdated electrical systems, which could be costly to repair or pose safety hazards.
2. Negotiating Power: A thorough home inspection gives buyers valuable information that they can use to negotiate the purchase price or request repairs from the seller before closing. If significant problems are discovered, the buyer may be able to either renegotiate the price or request that the seller address the issues.
3. Planning for Future Expenses: The home inspection report can help buyers plan for future maintenance or repair costs. By understanding the home's current condition and its systems, buyers can better budget for necessary expenses and avoid surprises.
4. Peace of Mind: A home inspection provides buyers with confidence and reassurance, knowing they have made a well-informed decision about their purchase. It reduces the likelihood of post-purchase regrets or discovering serious issues after moving in.
Risks of Not Obtaining a Home Inspection
Safety and Health Risks
Skipping a home inspection can lead to unexpected financial burdens down the road. If a significant problem is discovered after the close of escrow the buyer may have to cover the cost of repairs or replacements out of pocket. In some cases, these expenses can be substantial, causing financial strain and potentially forcing a buyer to take out loans or tap into their savings to cover the costs. Furthermore, if the property is sold in the future, unresolved issues can decrease the resale value, resulting in a lower return on investment.
Another critical aspect of a home inspection is ensuring the safety and health of the property's occupants. Inspectors (although unlicensed) should be trained to identify potential hazards, such as mold, asbestos, radon, and lead paint, which can pose serious health risks if not addressed. Skipping a home inspection can leave a buyer exposed to these dangers, potentially resulting in long-term health consequences and expensive remediation efforts.
Typical Costs of a Home Inspection
The cost of a home inspection varies depending on the property's size, age, and location. On average, home inspections in the United States range from $400 to over $1,000 with larger or older homes potentially costing more due to the additional time and complexity involved. It is essential to remember that while a home inspection may seem like an added expense, it is a small price compared to the potential costs of unforeseen repairs or disputes with the seller.
The Home Inspection Process
The home inspection process typically begins with the buyer hiring a home inspector. On the day of the inspection, the inspector will arrive at the property and conduct a thorough examination, which may take anywhere from two to four hours, depending on the size and complexity of the home. The buyer is often encouraged to accompany the inspector during the inspection, as it provides an opportunity to ask questions and better understand the home's condition. Once the inspection is complete, the inspector should compile a detailed report, including photographs and descriptions of any issues found. The buyer can then review the report and decide whether to request repairs, renegotiate the purchase price, or proceed with the purchase as-is.
The Home Inspection As A Negotiating Tool
One of the key benefits of a home inspection is the ability to use the information gathered to negotiate with the seller. If the inspection reveals issues that need to be addressed, buyers can request that the seller make the necessary repairs or provide a credit towards the cost of fixing the problems. With a home inspection, you can take advantage of the opportunity to negotiate a better deal, potentially leaving you to cover the costs of any issues discovered after the purchase to ensure that the property is the wonderful investment you and your client believe it to be.
Love,
Kartik
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As a real estate agent, prospecting is one of the most critical aspects of your job. It's the foundation of building a solid client base and ensuring a steady stream of business. One of the most effective Read more...
As a real estate agent, prospecting is one of the most critical aspects of your job. It's the foundation of building a solid client base and ensuring a steady stream of business. One of the most effective ways to maximize your prospecting efforts is to do it first thing in the morning, before you do anything else. In this blog post, I wanted to discuss the benefits of morning prospecting and how it can contribute to your success as a real estate agent, from getting started at a reputable California real estate school to acing the real estate exam and beyond.
Why Morning Prospecting is Essential for Real Estate Agents
Many successful individuals, including top-performing real estate agents, have established morning routines that help set the tone for a productive day. By incorporating prospecting into a consistent morning routine, agents can establish a strong habit that becomes an integral part of their daily success strategy. This consistency helps agents stay disciplined and focused on their goals, leading to increased productivity and success in their real estate careers.
Mornings are when most people feel refreshed and energized after a good night's sleep. This is the perfect time to channel that energy into prospecting, as it will allow you to approach potential clients with enthusiasm and a positive attitude. It’s no secret that after a good night's sleep, the body has had time to recover from the previous day's activities, repair tissues, and consolidate memories. This restoration process leaves people feeling refreshed and rejuvenated when they wake up in the morning - and ready to make those calls!
Also, don’t forget that cortisol levels are typically at their highest in the early morning, which helps increase alertness and energy levels. Cortisol, the "stress hormone," helps regulate the body's sleep-wake cycle. This rhythm is influenced by exposure to natural light and helps the body prepare for waking up in the morning by increasing body temperature, blood pressure, and hormone levels.
Also, in the morning, the mind is generally less cluttered with thoughts and distractions from the previous day. This clear mental state allows for improved focus and concentration, contributing to higher energy levels - you’ll sound better on the phone!
Not to mention that there are typically fewer distractions in the early hours of the day, making it an ideal time to focus on prospecting. With fewer emails, calls, and meetings to attend, you can dedicate your full attention to connecting with potential clients and setting up appointments.
Also people are generally more receptive in the morning. Many people are more open to having conversations and making decisions in the morning when their minds are fresh and not yet cluttered with the day's tasks. This receptiveness can lead to more productive discussions and a higher likelihood of securing appointments with potential clients.
Reaching Clients Before the Competition
By prospecting in the morning, real estate agents can get a head start on their competition. Many agents may not begin their workday until later, giving those who start early an advantage in connecting with potential clients first. This early-bird approach can help real estate agents stand out and make a lasting impression on prospects before their competitors even have the chance to reach them.
Getting Started: Enroll in a California Real Estate School
Before beginning your journey as a real estate agent, you must enroll in a reputable California real estate school, like ADHI Schools. This is the first step towards obtaining your real estate license, as the school will provide you with the necessary knowledge and skills to succeed in the industry and pass the real estate exam. Our high-quality real estate school will offer comprehensive courses, experienced instructors, and proven results, ensuring you are well-prepared for the challenges.
Passing the Real Estate Exam
After completing your real estate courses at a California real estate school, you must pass the real estate exam. This is a crucial milestone in your journey towards becoming a successful real estate agent, demonstrating your knowledge of real estate laws, vocabulary, and principles. By adequately preparing for the exam, you can boost your chances of success and set yourself up for a prosperous career in real estate.
Before you get too deep down the prospecting rabbit hole, your journey towards becoming a successful real estate agent begins with enrolling in a reputable California real estate school and passing the real estate exam. By investing in your education and honing your prospecting skills, you can build a thriving career in the real estate industry.
Love,
Kartik
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In recent years, California has experienced a significant boom in the real estate industry. With a thriving housing market and a diverse population, it is no surprise that many individuals are pursuing Read more...
In recent years, California has experienced a significant boom in the real estate industry. With a thriving housing market and a diverse population, it is no surprise that many individuals are pursuing careers as real estate agents in the Golden State. After over 20 years in the real estate business
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Los Angeles is currently grappling with a significant homelessness crisis, and city officials are searching for ways to address this pressing issue. One idea that went into effect recently is the so-called Read more...
Los Angeles is currently grappling with a significant homelessness crisis, and city officials are searching for ways to address this pressing issue. One idea that went into effect recently is the so-called “mansion tax”, a controversial policy that has generated considerable debate among residents. While some argue that the tax is necessary to alleviate the city's housing crisis, others contend that it unfairly punishes wealthy property owners and successful individuals. I wanted to write an article that delves into the complexities surrounding the mansion tax, exploring both the benefits of the tax in addressing homelessness and the concerns about its potential negative consequences.
Most of our real estate classes are now on Zoom and done virtually, but I taught at a couple of real estate schools on the Westside of Los Angeles for many years and several of our students wanted to break into luxury real estate and I’m curious to know what you think.
Understanding the Mansion Tax
On April 1, 2023, a so-called “mansion tax” was enacted in Los Angeles. The tax applies to property sales at or over $5,000,000, with an increased rate for sales of $10,000,000 and above.
The tax was approved by voters in November 2022 as a city-wide tax, implementing a 4% tax on properties that sell for $5 million or more and 5.5% on properties that sell for $10 million or more. The mansion tax aims to raise about $900 million yearly for affordable housing, homelessness programs, and other related initiatives. However, the tax has faced criticism from real estate brokers, developers, and property owners.
Arguments for the Mansion Tax
Proponents of the mansion tax argue that it is a much-needed source of revenue to address the affordable housing crisis and homelessness in Los Angeles. The tax is expected to generate millions of dollars earmarked for subsidized housing, housing acquisition and rehabilitation, rent assistance, and homelessness-related programs. Advocates say the tax will help bridge the gap between the rich and the poor and provide resources for those in need. A 2022 UCLA study found that the mansion tax's potential impacts on new construction would be minimal, suggesting that the tax will not significantly deter developers from building new properties in Los Angeles.
The mansion tax in Los Angeles, despite its drawbacks, offers several benefits that could potentially help address the city's homelessness problem:
1. Generating Revenue for Affordable Housing and Homelessness Programs: The mansion tax is estimated to raise about $900 million annually, which can be directed towards various initiatives focused on tackling the housing crisis and homelessness. This additional funding can support the construction and preservation of affordable housing units and provide rent assistance to those in need. It can also help fund comprehensive homelessness programs, such as emergency shelters, permanent supportive housing, mental health services, and job training programs, essential in addressing the root causes of homelessness.
2. Progressive Taxation: The mansion tax is a form of progressive taxation, as it targets high-end property sales and wealthier individuals who can afford to pay a higher tax rate. This approach can help reduce income inequality and bridge the gap between the rich and the poor. By imposing a higher tax on luxury properties, the city can allocate more resources to support vulnerable and low-income residents, often disproportionately affected by the housing crisis.
3. Encouraging Efficient Use of Land: The mansion tax might encourage more efficient land use in Los Angeles. Luxury properties often occupy large plots of land, and the mansion tax could motivate property owners to either downsize or sell their land to developers who might build more affordable housing units in its place. This could ultimately increase the overall housing supply, alleviating the pressure on the city's housing market and potentially reducing homelessness.
4. Increased Awareness and Involvement: Implementing the mansion tax has generated significant public debate, raising awareness of the homelessness crisis in Los Angeles. This increased attention could lead to greater involvement from residents, businesses, and other stakeholders in finding long-term solutions to the housing crisis. This collective effort could result in developing more effective policies, initiatives, and partnerships to address homelessness in the city.
5. Demonstrating Commitment to Social Responsibility: The mansion tax conveys that Los Angeles is committed to addressing its homelessness problem and working towards a more equitable city. By using tax revenue from luxury property sales to fund affordable housing and homelessness programs, the city demonstrates its dedication to social responsibility and the welfare of all its residents.
The mansion tax in Los Angeles presents several potential benefits that could help alleviate the city's homelessness problem. By generating additional revenue for affordable housing and homelessness programs, promoting progressive taxation, encouraging efficient land use, raising awareness, and demonstrating a commitment to social responsibility, the mansion tax might contribute to creating a more equitable city and ultimately reducing homelessness.
Arguments Against the Mansion Tax
Critics of the mansion tax argue that it may slow the number of new apartment complexes built in the city. The tax applies not only to mansions but also to apartment complexes, retail and industrial buildings, and other structures. Real estate brokers and developers, including those with real estate licenses from real estate school and those who have passed the California real estate exam, warn that the tax will disincentivize developers from building new housing.
Moreover, the tax has faced backlash from wealthy homeowners, including celebrities, who rushed to sell their properties before it went into effect. Some critics argue that the tax may depress property values and force sellers to cut prices to complete deals before the deadline. Additionally, opponents of the tax are concerned about the transparency of how the revenue will be spent, and they argue that the tax may dissuade people from moving to Los Angeles.
Higher Costs: Wealthy individuals considering purchasing a luxury property in Los Angeles might be deterred by the additional costs associated with the mansion tax. In comparison, other cities or states without such a tax might become more attractive for high-end property buyers, leading them to choose alternative locations for their investments. For example, a prospective buyer might opt for a luxury property in Miami, Florida, with no state income tax or mansion tax, making it a more financially appealing option.
Reduced Investment: Investors might also be less inclined to purchase properties in Los Angeles subject to the mansion tax, as it could potentially reduce the profit margin on their investments. This could result in a decline in the city's overall demand for luxury properties, further impacting the real estate market and potentially leading to reduced property values. Consequently, the city could experience a slowdown in real estate investments, which could negatively affect the local economy and limit available resources to address homelessness and other social issues.
Impact on Business and Talent Attraction: Businesses, particularly those in the entertainment and technology industries, often attract high-income employees and executives who might consider purchasing luxury properties. However, implementing the mansion tax could discourage some individuals from moving to Los Angeles. In turn, this could make it more difficult for the city to attract new businesses and retain existing ones and limit its ability to draw in top talent across various industries.
Celebrity Exodus: Los Angeles is known for being home to numerous celebrities who often own high-end properties. The mansion tax could potentially prompt some of these high-profile individuals to sell their properties and relocate to areas with lower taxes, as seen in the backlash from wealthy homeowners who rushed to sell their properties before the tax went into effect. This exodus could further contribute to the decline in property values and negatively impact the city's image, tourism, and the overall economy.
In conclusion, implementing Los Angeles' mansion tax has stirred a significant debate in the city's real estate market. Advocates argue the tax will generate much-needed revenue to address the city's affordable housing crisis and homelessness issues. However, opponents contend that the tax will dissuade property development, negatively impact non-luxury properties, and ultimately harm the real estate industry in Los Angeles. As real estate professionals with real estate licenses from real estate schools, and those studying for the California real estate exam, monitor the situation, the long-term implications of the mansion tax on the city's real estate market remain uncertain. Time will tell whether this tax proves to be an effective solution to Los Angeles' housing challenges or an obstacle to the city's real estate growth.
As always if you are interested in getting your real estate license, visit www.adhischools.com or click here for a real estate exam crash course. Or if you’re old school - call us at 888-768-5285.
Love,
Kartik
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Secrets to Success in the Real Estate Industry: How to Get a California Real Estate License and Thrive
Introduction: The real estate industry offers vast opportunities for professional growth and financial Read more...
Secrets to Success in the Real Estate Industry: How to Get a California Real Estate License and Thrive
Introduction: The real estate industry offers vast opportunities for professional growth and financial success. However, it can also present challenges for both newcomers and experienced agents. To help you navigate the world of real estate and achieve your goals, we have compiled top insider tips from successful professionals. These actionable steps will provide you with the tools needed to excel in this dynamic and competitive industry.
One of the first steps to success in the real estate industry is investing in continuous education. The field of real estate is constantly evolving, and staying ahead of the curve is essential. Enroll in a reputable reputable real estate school like ADHI Schools, attend seminars, and keep up-to-date with industry trends to maintain a competitive edge. Real estate is a heavily regulated industry, with laws and regulations pervading all aspects of the real estate transaction. Continuing education helps agents stay informed about the latest legal and regulatory changes, ensuring they remain compliant and avoid potential fines or legal issues. Attending courses, workshops, and seminars often provides opportunities to network with other professionals, fostering valuable connections that can lead to referrals and collaboration.
After obtaining your California real estate license developing a solid personal brand is crucial. Your personal brand is your unique selling proposition. Establish a clear, consistent image and message that sets you apart from competitors. Utilize social media, create engaging content, and maintain an up-to-date website. One of the hardest things about social media posting is maintaining consistency around your posts. Develop a content calendar to maintain a consistent presence across platforms to help with this. Identify your strengths and values, and create a cohesive brand that reflects them.
Mastering time management is another key to success in the real estate industry. Successful professionals know how to prioritize their tasks and manage their time effectively. Create a daily schedule, set goals, and break them down into achievable milestones. Use productivity tools, such as calendars and task management apps, to stay organized and focused on your priorities.
Embracing technology is essential in today's real estate landscape. Utilize digital tools to streamline processes, enhance client communication, and market your services more effectively. Research and adopt tools that will boost your efficiency, such as CRM systems, virtual tour software, and digital marketing platforms.
Building a solid network is invaluable in the real estate industry. Attend industry events, join local real estate organizations, and establish connections with other professionals, such as lenders and contractors. Set a goal to attend at least one networking event per month and follow up with new contacts right away. There is nothing better than meeting someone and realizing that they are responsive, educated and willing to help. Vendors and other potential partners recognize this and building a network will help advance your career.
Another thing to keep in mind is that most real estate leads aren’t going to want to buy or sell a property that very day. Most of the time, leads need to be nurtured and followed up with. Because of this, nurturing your leads is essential for success in the real estate world. Develop a system for tracking and following up with leads. Consistent communication will help you build relationships and convert leads into clients. Implement a CRM system to manage your leads and create personalized follow-up strategies.
Offering exceptional customer service is vital for agents with a California real estate license Your clients are your biggest advocates and their referrals are going to be a key lead source as you move forward in your career. Ensure their satisfaction by providing excellent communication, prompt follow-up, and personalized service. They are going to remember the service they received - don’t give them any reason to hesitate to refer you to friends or family.
Being adaptable is crucial in the constantly changing real estate industry. Stay open to new ideas, adapt to market fluctuations, and adjust your strategies as needed. Regularly review your business plan and adapt your strategy based on market trends and your performance. As an example, interest rates back in 2021 were under 3 percent for a 30-year fixed rate mortgage. About a year later these rates had more than doubled. Being adaptable and finding ways to market your services and put buyers and sellers together is a non-negotiable skill you’ll have to develop - even when rates spike so quickly.
In conclusion, the real estate industry offers immense potential for growth and success, but it also requires dedication, adaptability, and a commitment to continuous learning. By investing in education, developing a strong personal brand, mastering time management, embracing technology, building a robust network, offering exceptional customer service, nurturing leads, leveraging social media, and staying adaptable to market changes, you will be well-equipped to thrive in this dynamic and competitive field. Remember, your journey as a real estate professional is unique, and by applying these insider tips, you will be poised to achieve your goals and carve out your own path to success. So, take these actionable steps, and watch your real estate career soar to new heights.
Love,
Kartik
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Maybe you thought this day would never come! But it’s clear that your hard work and dedication have paid off and you’ve earned your first real estate commission!
You already passed the real estate Read more...
Maybe you thought this day would never come! But it’s clear that your hard work and dedication have paid off and you’ve earned your first real estate commission!
You already passed the real estate license exam, chosen an office to work for and now have your first commission in your hand!
Now the big question is - what to do with all that money?!
First piece of advice - please don’t go out and blow all of it at a casino in Vegas. Remember that the real estate sales business is a marathon and not a sprint. I know too many Realtors who got off to a great start but because of improper money management were unable to stay in the business.
I wanted to write this article because even if you are just considering getting your real estate license or researching how to pass the real estate exam at some point you’re probably going to think about all the money you can make in real estate and what you might do with it all!
Here are some options below:
Option 1:
Payoff any credit card or other high-interest debt you have.
Paying off a credit card can be a good idea for several reasons, including avoiding high interest charges: Credit cards typically charge high interest rates, which can add up quickly if you carry a balance. By paying off your credit card, you can avoid paying interest charges and save money over time.
Also, don’t forget that paying off credit card debt can improve your credit score. A good portion of your credit score is based on something known as your “credit utilization”. The more available credit you have the higher your credit score generally becomes.
Another intangible benefit to carrying less debt is your financial will be reduced. I think we all know that carrying debt can be stressful - especially credit card debt. In the process of paying off your credit cards you’ll reduce financial stress and improve your overall financial well-being.
Option 2:
Invest in additional education or real estate coaching.
Real estate coaching (be careful there’s a lot of scammers out there) is supposed to help develop new skills and refine existing ones. Critical know-how like sales, marketing, and negotiation learned through coaching can help agents become more effective in their roles and better serve their clients.
Another big benefit to a real estate coach is a heightened sense of accountability. A good real estate coach will help agents stay accountable for their actions and progress, which can be particularly helpful for those who aren’t on a team and work independently. Coaches can provide feedback, support, and guidance to help agents stay on track and achieve their goals.
Finally, real estate coaches can help with goal setting. A good coach will help agents set clear and achievable goals, as well as create action plans (and accountability as mentioned above) to reach those goals. This can help agents stay focused and motivated toward their progress.
A word of caution about real estate coaching, however. Be aware of long-term coaching contracts that are difficult or impossible to get out of.
Option 3:
Just good old-fashioned save it!
In an industry like real estate sales which can be up and down nothing beats having a large cash bankroll.
Saving money is a good idea for several reasons, including building an emergency fund. An emergency fund is important to cover unexpected expenses, such as medical bills or car repairs and can help you weather a storm in our business if you run up against a dry spell. Having cash reserves can help you avoid going into debt or relying on credit cards to cover these expenses.
Also, if you’ve taken one of my live lectures, you know that the real money in our business is not made through sales commissions but in the acquisition of real estate. Saving money can help you take advantage of investment opportunities when they arise like a great deal on a flip or other real estate you can acquire below market. Investing is a whole lot easier when you have the cash ready to deploy whenever opportunity strikes.
Option 4:
Invest in the stock market
If you are going to invest in the stock market it’s important to remember that stocks have risk and can (and do) go down on occasion. Don’t forget that when the economy enters a recession or experiences slow growth, companies may struggle to generate profits and investors may become pessimistic about the future, leading to a decline in stock prices.
Remember that in the 2008 financial crisis the stock market experienced a sharp decline as a result of the housing market collapse and a series of bank failures - Both the stock market and the real estate market really took it on the chin during these times.
More recently, in early 2020, the stock market experienced a significant decline as a result of the global COVID-19 pandemic and its impact on the economy.
The market rebounded after both of these crises but lots of investors experienced heartburn during these years.
With that being said, the stock market has historically provided long-term growth potential, with an average annual return of around 10% over the past century in a highly liquid investment - meaning that it is relatively easy to buy and sell stocks quickly and efficiently and convert the asset into cash.
Option 5:
Invest in real estate
It would not be right to omit the mention of investing in real estate if you are a real estate agent. Real estate is a sure path to wealth creation and can provide a number of potential benefits, including long-term appreciation, rental income, diversification, tax benefits, and a hedge against inflation.
What lots of real estate investors like about this asset class is that real estate investments provide a tangible asset that can be leveraged for financing, used for collateral, or sold if needed. Real estate investors like the fact that real estate can be felt, experienced and touched. Not to mention the tax benefits, such as depreciation deductions and the ability to defer capital gains taxes through a 1031 exchange.
Whatever you decide to do with your first real estate commission just remember to be responsible. In the real estate industry agents have to work for every deal - and the next one isn’t promised.
With that said - if you feel that you need to blow your first check in Vegas - be my guest but don’t say I didn’t warn you. :)
If you still need to take real estate classes visit us at ADHI Schools or call 888 768 5285.
Love,
Kartik
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The best real estate agents know that it is virtually impossible to become an expert on all real estate throughout the entire state. California (and basically every other state) is just too large to try Read more...
The best real estate agents know that it is virtually impossible to become an expert on all real estate throughout the entire state. California (and basically every other state) is just too large to try and get significant market share in an area that big.
While you had classes at a California specific real estate school your real estate practice should be far more focused. Just because your license allows you to sell real estate throughout the entire state, does this mean you should try to sell in San Diego, Oakland and Los Angeles all at the same time?
Instead of trying to conquer the entire state, successful agents try and build hyperlocal market share within a particular city, specific neighborhood or even on a specific street or building to establish market dominance.
How is this done and why is this important?
Building hyperlocal market share involves establishing a strong presence and reputation in a specific geographic area, with the goal of becoming the go-to real estate agent for a particular community or area. As I mentioned earlier, it’s easier to pick up market share in a small localized farm than throughout an entire city, county or state.
Some real estate agents might call this local marketing “farming”. As a Realtor, farming involves establishing a strong presence in a specific geographic area. By focusing your efforts on a specific niche, you can become an expert in the local market and build a strong client base over time by building hyperlocal market share.
Here are some strategies that will help you build this local market share:
Focus on a specific area: When a real estate agent has focus, it means that s/he has a clear understanding of priorities, objectives, and target customers, and is committed to pursuing them with a high degree of discipline and consistency. Choose a specific neighborhood or community and be disciplined enough to focus your marketing efforts on that area. Become an expert in the local market, and make sure you understand the unique features and selling points of each property and model in the community. Get so good at understanding the floorpans and nuances of the neighborhood that when an owner tells you they have the 3-bedroom model you can ask them if it’s the one with the laundry area upstairs or in the garage because you know the floor plans so well. When a Realtor has a strong local presence, they are seen as an expert in the local real estate market which establishes credibility with potential clients, as potential clients are more likely to trust and hire a Realtor who has a deep understanding of the local market and appears committed to the area.
Attend local events: Attend local events and community gatherings to network and get to know the people in the area. Consider sponsoring a neighborhood event or local sports team to increase your visibility. Attending local events can help the individual real estate agent connect with potential clients. When agents engage with residents at these local events, they are more likely to be viewed favorably and become a familiar face within the community.
Use social media: Use social media to showcase your knowledge of the local market and engage with potential clients. Share local news and events, and use local hashtags to make your content more discoverable. Local hashtags are hashtags that are specific to a particular geographic area or community. These hashtags are used to help categorize content and make it easier for users to discover posts related to a particular location or event. For example, if you are a Realtor in Los Angeles, you might use local hashtags such as #losangeles, #LA, or #LAlocal to help your posts appear in searches related to the local area. By using local hashtags, you can increase the visibility of your posts among people who are interested in or located in the same area. When using local hashtags, it's important to choose hashtags that are relevant to your business and audience. Avoid using hashtags that are too broad or generic, as this can make it harder for your posts to be discovered by people who are interested in your specific niche or industry. Additionally, be sure to include a mix of local and industry-specific hashtags to maximize your reach and connect with the right audience.
Send targeted mailings: Send targeted mailings to residents in the area, highlighting your expertise in the local market and offering your services. Targeted mailings can help establish credibility with potential clients. By providing information about the local real estate market and highlighting the realtor's expertise in the area, targeted mailings can help potential clients view the Realtor as a trusted resource and expert in the local market. There are real estate specific mailing services like Farming Cards that can assist with printing and mailing.
Partner with local businesses: Partner with local businesses and organizations to cross-promote your services. Consider offering a referral program to incentivize business owners to refer clients to you. Create joint marketing materials, such as brochures or flyers, that feature both you the Realtor and the other business. This can help both businesses reach a wider audience and establish themselves as a valuable resource in the community.
Offer community resources: Create community resources such as local market reports, school district information, and guides to local businesses and attractions. Share these resources on your website and social media, and use them to establish yourself as a trusted resource for the community. When potential clients see that a real estate agent is providing valuable resources and information about the local area, they may be more likely to choose that real estate agent over others who are not offering similar resources.
Provide exceptional service: Above all, provide exceptional service to your clients. Word-of-mouth referrals are key in building hyperlocal market share, and satisfied clients can be a powerful source of new business. Remember that when you play the hyperlocal game reputation and word of mouth spread quickly.
Remember that building hyperlocal market share takes time and effort, but by focusing on a specific area and establishing yourself as an expert in the local market, you can attract more clients and grow your business over time.
If you want more tips as a new real estate agent to grow your career, I would recommend reading our Guide To Starting Your Real Estate Business.
Love,
Kartik
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Even if you are just starting out in our real estate school or researching how to get your real estate license, you probably want to know what it takes to be successful in the real estate business.
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Even if you are just starting out in our real estate school or researching how to get your real estate license, you probably want to know what it takes to be successful in the real estate business.
This leads to the question - what defines success as a Realtor?
Objectively, every business (even the individual real estate agent) needs KPIs - also known as Key Performance Indicators. KPIs are measurable values that businesses and organizations (and Realtors) use to track progress toward specific goals and objectives. They are typically used to assess performance over time and provide a way to measure success or failure in achieving specific targets.
KPIs can be used in a wide range of contexts and industries, from marketing and sales to finance and operations. They are often tied to specific business objectives, such as increasing sales revenue, improving customer satisfaction, or reducing costs. As a real estate agent, knowing what KPIs are and how to measure them can give you a way to look at your business outside of just dollars and cents.
These KPIs are particularly useful to a new agent because there will likely be a few months early in your career where you are getting your bearings and might not see any revenue - but you are still making progress.
In the broad world of business, examples of KPIs might include:
Sales revenue: This might be tracked on a monthly or quarterly basis to assess how well a company is meeting its revenue targets.
Customer satisfaction: This might be measured through surveys or other feedback mechanisms to assess how happy customers are with a company's products or services.
Website traffic: This might be measured using web analytics tools to track how many visitors a website is receiving over time.
Employee productivity: For bigger and more established businesses, this might be measured using metrics such as sales per employee, number of calls or emails answered, or projects completed on time.
By identifying and tracking KPIs, businesses gain insight into their performance and make data-driven decisions about how to improve their operations and achieve their goals. It is important to select the most relevant KPIs for each specific business or project and to ensure that they are tracked consistently over time.
So how does this relate to real estate agents?
KPIs for real estate agents are measurable values that can help agents track their performance and progress toward specific business objectives. Here are some examples of KPIs that real estate agents may use:
Number of listings: The number of listings an agent has at any given time can be a key indicator of their success in attracting new clients and building their business.
Time on market: This KPI measures the average amount of time it takes for an agent's listings to sell. Agents who are able to sell properties quickly may be viewed more favorably by clients.
Sales volume: This KPI measures the total dollar value of properties an agent has sold within a specific timeframe. This metric can be used to track an agent's overall business performance and success.
Conversion rate: This KPI measures the percentage of leads or inquiries an agent converts into actual clients. Agents with a high conversion rate may be more effective at closing deals and building long-term relationships with clients.
Customer satisfaction: This KPI measures how happy clients are with an agent's services. Agents who receive positive feedback from clients may be more likely to receive referrals and repeat business. In order to measure this you or your broker might need to send review forms out to past clients to gauge satisfaction.
So how does the individual real estate agent improve customer service and satisfaction?
One tip is to be responsive - one of the most important aspects of good customer service is responsiveness. Respond to client inquiries, calls, and emails promptly, and make sure you are available to answer their questions and address their concerns.
Don’t forget to listen actively - Good communication is key to providing excellent customer service. Listen actively to your clients' needs and preferences, and make sure you are clear in your communication with them. If they ask for a single story home with a pool, don’t show them 3-story townhomes with no pool.
Another tip is to brush up on your knowledge. As a real estate agent, it is important to be knowledgeable about the local real estate market, trends, and regulations. Clients rely on you to provide them with accurate and up-to-date information.
Its important to be professional and proactive: It is important to maintain a professional demeanor at all times when working with clients. Dress professionally, be on time for appointments, and treat clients with respect and courtesy.
Anticipate your clients' needs and take the initiative to provide them with relevant information and resources. Offer suggestions and advice based on your expertise and experience.
By focusing on these aspects of customer service, real estate agents can build trust and long-term relationships with their clients, which can ultimately lead to increased success and referrals.
Referral rate: The final KPI I wanted to write about measures the percentage of new clients an agent receives from referrals. Agents with a high referral rate may be viewed as more trustworthy by their clients.
Real estate agents can generate more referrals by building strong relationships with their clients, providing excellent service, and actively seeking out referrals. Here are some specific strategies for increasing referrals:
Focus on customer service: Providing exceptional customer service is key to generating referrals. This includes being responsive to clients' needs, providing accurate and helpful information, and maintaining a professional demeanor at all times.
Stay in touch: Keep in touch with past clients through regular communication, such as email newsletters or phone calls. This will help you stay top of mind and increase the likelihood that clients will refer you to others. Make sure to stay active on all the social media platforms so your past clients know you are still in business.
Ask for referrals: Don't be afraid to ask for referrals directly. Ask satisfied clients if they know of anyone else who might be in need of real estate services, and make it easy for them to provide referrals.
Build a network: Develop relationships with other professionals in related industries, such as mortgage brokers, home inspectors, and contractors. They may be able to refer clients to you, and you may be able to refer clients to them.
Provide valuable content: Offer valuable content, such as market reports, home buying or selling guides, or other resources that clients may find helpful. This can help build trust and loyalty, and increase the likelihood of referrals.
By focusing on these strategies and providing exceptional service, real estate agents can generate more referrals and build a thriving business.
By tracking these KPIs real estate agents can gain insight into their performance and make data-driven decisions to improve their operations and achieve their objectives.
Love,
Kartik
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Preparing for your real estate exam involves looking at a number of concepts that are likely to be on your exam. Financing is one such topic that is worth directing some of your time to. The DRE says Read more...
Preparing for your real estate exam involves looking at a number of concepts that are likely to be on your exam. Financing is one such topic that is worth directing some of your time to. The DRE says that 9 percent of the exam covers financing and a financing concept that is commonly tested is “amortization”.
Amortization of a loan refers to the process of paying off a debt with regular and fixed payments over a specified period of time. Each payment includes a portion allocated to both principal and interest.
Principal is the amount of each payment that actually goes to reducing the amount owed. Interest is the fee that is charged for borrowing the money.
The word "amortization" comes from an Old French word "amortir," which means "to kill" or "to deaden." This is rooted in medieval times and idea was that each payment would "kill off" a portion of the debt, reducing it gradually until it was fully paid off.
The modern financial meaning of the term, which refers to the gradual repayment of a loan through regular payments that include both principal and interest, evolved from this earlier usage.
Example: You borrow $800,000 to buy a house and pay off the loan over the 30 year term. At the end of the 30 years, the loan has been “fully amortized”.
In simple terms, amortization breaks the loan into smaller and more manageable payments over a set period. As an example, in the case of a car loan the time to “fully amortize” or “kill” the loan is typically 4-7 years. In the case of a home mortgage, the loan term is usually either 15 or 30 years.
Every loan has an amortization schedule which outlines the amount of the payment and shows the portion of each payment that goes towards paying off the principal and interest.
Because amortization “kills” the loan, each payment made during the amortization period reduces the outstanding balance of the loan by some amount. In the early part of the payment schedule, most of the payment goes towards interest, but as the loan progresses, more of the payment goes towards reducing the principal.
Over time, the amount of interest paid decreases, while the amount of principal paid increases. At the end of the loan term, the full amount borrowed is “amortized”, and the borrower owns the property outright.
Not all loans are full amortized. For example, there is another type of loan known as a straight note or interest-only loan. In this arrangement, the borrower makes interest-only payments and none of the payment goes to actually reduce the principal balance.
Straight notes may be used in certain situations, such as when a borrower expects to have a large amount of cash available at a future date to pay off the principal balance, or when a borrower needs lower monthly payments in order to afford the property.
However, straight notes can be risky for borrowers because they may result in higher overall interest costs, larger future payments, and potentially owing more on the loan than the value of the property. As a result, straight notes are generally less common than fully amortized loans in the mortgage industry.
So which loan is better?
Whether a fully amortized loan or a straight note is better depends on the specific circumstances of the borrower and their financial goals.
A key benefit to the fully amortized product is that it results in the loan being completely paid off at the end of the loan term. This type of loan provides predictability and stability in terms of payment amounts and a clear path toward paying off the debt.
As mentioned earlier, a straight note requires the borrower to pay only interest on the loan for a set period of time. This type of loan can result in lower monthly payments and may be beneficial for borrowers who need more flexibility in their monthly budget. However, because the principal balance is not being paid down during the interest-only period, the borrower will need to make larger payments or refinance the loan to pay off the principal at the end of the interest-only period.
In general, a fully amortized loan may be a better choice for borrowers who want to build equity in their property and pay off the debt over a set period of time, while a straight note may be a better choice for borrowers who need lower monthly payments in the short term but are willing to take on the risk of potentially higher payments in the future. Ultimately, borrowers should carefully consider their financial goals and the terms of each loan option before making a decision.
There is another type of even riskier loan product common before the financial crisis of 2008 is known as negative amortization. It’s called negative amortization because instead of the loan balance going down, in negative amortization the loan balance actually goes up.
The reason the balance rises in negative amortization is because the payments are not sufficient to cover the interest owed on the loan, resulting in the interest being added to the principal balance. This means that the borrower's loan balance actually increases over time rather than decreasing as it would with a fully amortized loan.
Negative amortization typically occurs with certain types of loans that have adjustable interest rates, such as option adjustable-rate mortgages (ARMs), or payment option loans. These loans offer a low initial payment, often resulting in a payment that is less than the interest that is accruing on the loan, causing the unpaid interest to be added to the loan balance.
Although the payment on a negative amortization loan is much lower compared to even a straight-note, this type of loan has several horrific consequences for borrowers, including increased interest costs over the life of the loan, larger payments in the future, and potentially owing more on the loan than the original amount borrowed. Therefore, borrowers should carefully consider the terms of their loan and ensure that they can afford the payment amount both currently and in the future.
Because of all these risks associated with the negative amortization product, when Arnold Schwarzenegger was governor, California passed legislation actually banning new negative amortization loans.
Federally the Truth in Lending Act (TILA) requires lenders to disclose the terms of a loan, including the payment schedule, interest rate, and total cost of the loan over its term. Additionally, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 includes provisions that require lenders to evaluate a borrower's ability to repay the loan, which has led to tighter regulations on certain types of loans, including those with negative amortization.
If you are reading this article and want practice questions related to real estate finance to prepare you for your real estate exam, I’d recommend checking out our exam prep website for tons of practice questions and updated content.
At the end of the day, fully amortized loans can offer several benefits for borrowers, including:
Predictable payments: With a fully amortized loan, the borrower knows exactly how much they will need to pay each month and over the life of the loan. With an interest only loan, on the other hand, there may be a balloon payment at the end of the loan or a variable rate after some fixed period. Full amortized loans can make budgeting and financial planning easier and more predictable.
Reduced interest costs: By design, fully amortized loans are created so that the borrower pays off the loan balance over a set period of time. Because of this borrowers will typically pay less in interest costs over the life of the loan compared to other types of loans, such as interest-only or balloon loans.
Equity buildup: As time goes on and the borrower makes payments on a fully amortized loan, the loan balance gradually decreases, resulting in an increase in equity in the property. Combine this with expected appreciation of the home and equity can start to build quickly- no doubt an important factor for homeowners who plan to sell the property in the future or use it as collateral for another loan.
Lower financial risk: Fully amortized loans offer a lower level of financial risk for owners because the loan balance is gradually paid down over time, reducing the risk of owing more on the loan than the property is worth.
Potential tax benefits: In some cases, the interest paid on a fully amortized loan may be tax-deductible, which can result in additional savings for the borrower.
Overall, fully amortized loans offer borrowers a stable and predictable path towards paying off their debt, with lower overall interest costs and reduced financial risk. Much of the real estate industry (and society at large) learned their lesson in 2008 when borrowers got risky adjustable rate and interest only loans in the few years prior.
As always if you are interested in taking real estate classes with our school and for in-depth instruction to help you pass the real estate exam visit www.adhischools.com.
Love,
Kartik
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