Real Estate Negotiation Part III: Interests and Options

In Part I of our series, we talked about how negotiating over positions is a lose-lose situation.  No one wins, but it seems simpler and easier.  But what should we do instead?  Today, we’ll dig into two key steps of real estate negotiation: focusing on interests and inventing options for mutual gain.

Interests 1Focusing on Interests

Let’s start by defining the difference between a position and an interest within a real estate negotiation.  A position is a defined point about a particular issue.  For instance, ‘I won’t take less than $60,000 for the house‘ is a position.  Saying ‘I won’t pay more than $1000/month in rent‘ is another.  Threatening to ‘take someone to court’ is a position meant to intimidate others.

Interests are the silent movers behind positions.  They are the desires and concerns that lead people to take a certain stance.  “I really need $60,000 to pay off outstanding medical bills” is an interest.  ‘My hours just got cut at work, and I can’t afford more than $1000/month in rent’ is a concern that motivates action.  ‘I promised my spouse I would take care of this, and I’ll look bad if I don’tis another.

When you find yourself in a real estate negotiation, focus your energy on interests, not positions.  This is how you can create win-win situations that work for everyone.

Shared, Compatible, and Conflicting Interests

In any real estate negotiation, you are likely to have shared, compatible, and conflicting interests with the other party.  Let’s look at each of them within a typical apartment rental scenario between a landlord and tenant. Continue reading “Real Estate Negotiation Part III: Interests and Options”

Real Estate Negotiation Part II: Principled Negotiation

Principled Negotiation 1Welcome back!  In our first post of this series, we discussed positional bargaining, and how it hurts real estate negotiations.  Now, let’s jump into some more proactive steps.  What are some of the keys to principled negotiation, and how does it work in real estate?

First, separate the people from the problem.

As described by Fisher, Ury, and Patton in Getting to Yes, this is easier said than done.  When we’re negotiating over the rent, the price of a house, or a security deposit, we tend to get emotional.  Our homes are important to us, and there is a lot of money on the line.  But the first step to principled negotiation is to look at the other parties involved as people.

They are not the soulless face of a corporation, an enemy to be conquered, or jerks that are just trying to take your money.  They are complex individuals, and have a complete set of needs, goals, pressures, and fears.  If you choose to ignore the person behind the offers, prepare to fail. Continue reading “Real Estate Negotiation Part II: Principled Negotiation”

Real Estate Negotiation Part I: The Myth of Positional Bargaining

Real Estate Negotiation 2Real estate negotiation can send a shiver up your spine.  While some people look forward to the challenges and opportunities of negotiating, most folks feel a combination of uncertainty, fear, and anxiety when approaching the table.

Fortunately, real estate negotiation is a learned skill, not wizardry.  With some planning and methodology, you can walk away with a fair result AND avoid a lot of stress.  So, in this first part, we will break down one of the biggest myths of negotiation, and suggest an alternative to the ‘traditional’ approach. Continue reading “Real Estate Negotiation Part I: The Myth of Positional Bargaining”

Why Integrity is Crucial in Real Estate

Integrity is Crucial in Real Estate 1Integrity.

It’s not a word you hear a lot nowadays, and when you do, it’s usually used to sell something. However, integrity is crucial in real estate. Whether you are buying or selling, renting or managing, appraising or inspecting, acting with integrity makes the whole system run.

Most people will agree with this sentiment in theory. But in practice, when there is an opportunity to fudge something ‘just a little bit,’ the majority will take it.  We see this in a thousand small ways. The landlord who ‘forgets’ to mention that the shower will only stay hot for ten minutes. The renter who breaks an appliance, but stays silent, so they can get their full security deposit back. The home seller who doesn’t fix the electrical system, but installs three-prong outlets to make it ‘look right.’ The home buyer who adds a few months to their work history in order to secure a better rate on their mortgage. The list goes on and on. Continue reading “Why Integrity is Crucial in Real Estate”

Your Commute Can Wreck Your Happiness

Your Commute Can Wreck Your Happiness 1When we’re choosing a place to live, our commute time tends to tumble down the list of priorities.  Our ride to work often ranks far below things like square footage, number of bathrooms, and stainless steel appliances.  However, your commute can wreck your happiness.

Why does this happen?  Can other factors balance out the negativity?  How MUCH does a long commute affect your satisfaction?  And most importantly, what do we do about it?

More Commute = Less Satisfaction

Let’s start with the basics – getting to work is a drag.  Anyone who has an hour long drive to and from their job can tell you that.  However, plenty of people assume it’s just a small annoyance, and doesn’t have a lasting effect on your overall life satisfaction.

This is incorrect.

Empirically, having a long commute systematically lowers subjective well-being.  Accounting for other variables, including the quality of the home, job, and means of transportation, the results hold true.  Many studies correlate high commute times with increased stress and social isolation, and consistently rank it among modern life’s largest annoyances.

However, when it comes to deciding where to live, we don’t give it enough weight.  Psychologist Ap Dijksterhuis calls this a ‘weighing error,’ a common mistake where we lose sight of what’s really important. Continue reading “Your Commute Can Wreck Your Happiness”

Investing in Real Estate While Working Full Time Part III – Accelerating Growth

Welcome back to our series on investing in real estate while working full time.  If you’ve read the first two portions, you’ve already got a great idea of the mindset you will need for long-term success and some excellent ways to get started.

Today, we’ll take the next step.

Now that you’ve gotten off the ground, how can you accelerate your growth?  What daily steps can you take to ensure that you move forward efficiently and effectively?  Let’s go.

1.  Plan Big, Plan Small

At this point, you likely have your end goal in mind.  Perhaps you want to own several rentals, flip a certain number of houses each year, or have X dollars in the bank.  It’s fun to think of the end result of your hard work!

However, getting from the starting blocks to the finish line is a marathon, not a sprint.  You will encounter many obstacles along the way, and you can’t get derailed by the inevitable challenges. Continue reading “Investing in Real Estate While Working Full Time Part III – Accelerating Growth”

Investing in Real Estate While Working Full Time Part II – Getting Started

getting started in real estate investing while working full time 1Getting started in real estate investing while working full time is very difficult.  In our last post, we discussed the essential mindset to earn success in investing.  Now, we’ll talk about the next step – getting off the couch and into the game!

For the purposes of this guide, I will assume that you have a 9-5 job that does not give you flexibility to work on your real estate goals during the day.  You may have to adjust the specifics to fit your personal situation.  But power on…your future success in investing depends on it! Continue reading “Investing in Real Estate While Working Full Time Part II – Getting Started”

Investing in Real Estate While Working Full Time Part I – Mindset

Investing in Real Estate While Working Full Time 1Investing in real estate while working full time is a tough gig.  You have to balance long-term goals with short term needs, and somehow stay sane while juggling your responsibilities.  And if your 9-5 doesn’t allow you much flexibility, get ready for some long nights.

Understand that the short term sacrifice is worth it.  But how do you get there?

Let’s start from scratch.  Let’s assume that you’ve just caught flipping fever from HGTV, or recently read ‘Rich Dad, Poor Dad‘ and are rearing to go.  Where do you start?

Learning Curve

First, accept that real estate investing has a huge learning curve.  It takes a long time to earn success.  While many investing fundamentals are common sense, there are a lot of small details that can make or break a deal.  TV shows make house flipping look like an easy way to earn $40,000.  They make remodeling a rental property look like a weekend job.  It is not nearly that simple. Continue reading “Investing in Real Estate While Working Full Time Part I – Mindset”

Crafting Your Real Estate Investing Team: 5 People You NEED in Your Corner

crafting-your-real-estate-investing-team-1In our last post, we discussed how real estate investing is a team sport.  It’s very difficult to walk this long road alone, and having a real estate investing team is crucial.  But who are the key players?  Who will you need to work with to speed up your success?

1.  A Subject Matter Expert

Real estate investing is a big field.  You can invest with rentals, flips, liens, syndication, and much more.  As a result, there are very few ‘jack of all trades’ investors in the business.

Once you decide what type of investing best fits your goals, find someone who has done it.  If you want to flip houses, locate the people renovating properties in your town.  If you want to purchase a triplex, call around to find the best rental owners.

There are a thousand small things that go into a successful deal.  By allying with someone who’s been through the fire a few times, you can speed up your learning.

This person could be a friend, a friendly local investor, or a true ‘mentor.’  Once you find a great person, LISTEN to what they say.  Experience is much more valuable than an online article. Continue reading “Crafting Your Real Estate Investing Team: 5 People You NEED in Your Corner”

Real Estate Investing is a Team Sport: Why You Shouldn’t Go Alone

real-estate-investing-is-a-team-sport-1It’s easy to get excited about real estate investing.  Whether you read Rich Dad Poor Dad, caught ‘flip fever’ from HGTV, or just want to help people with their housing, it’s easy to get fired up.  This is a great thing, and you can improve a lot of lives!

However, many people look at investing as an individual sport.  Since many entrepreneurs are fiercely independent, they try to do everything themselves.  From analyzing properties to making offers, from installing tile to listing the property, every task falls on one person.

This is exhausting.

So change your mindset.  Rather than working as a one-man band, think of investing as a team sport. Continue reading “Real Estate Investing is a Team Sport: Why You Shouldn’t Go Alone”