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MARKET TRENDS Where to Expect Increased Foreclosure Volume for the Rest of 2023 INVESTMENT STRATEGY 10 Tips for Successfully Managing Your First Rental Property Investment
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Investor Review ALSO IN THIS ISSUE
Six Strategies for Leveraging Your Industry Influence SPECIAL FOCUS
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4 | think realty magazine :: july – august 2023
FROM THE EDITOR
Understanding Real Estate Industry “Influencers”
e hear a lot about “influence” these days, mostly in reference
in the market. These advancements can influence property values, marketing strategies, and consumer expectations. 4. Demographic and sociocultural shifts . Changes in demographics, population growth, and societal preferences can
W
to social media “influencers.” But beyond the cult of social media
celebrity influencers are a number of key indicators that influence, or impact, the housing market. These range from economic conditions, government policies, technological advancements, and cultural shifts. Understanding these industry “influencers” is crucial for real estate professionals, investors, and consumers who are swayed by them as they attempt to predict trends, make informed decisions, and navigate the market effectively. A few notable influencers to pay attention to in the real estate investing space are: 1. Economic factors. The overall state of the economy has a substantial influence on the real estate industry. Factors such as gross domestic product (GDP) growth, employment rates, interest rates, inflation, and consumer confidence significantly impact property values, demand, and financing options. 2. Government policies and regulations. Government policies and regulations, at both the national and local levels, play a vital role in shaping the real estate industry. Policies related to land use, zoning regulations, tax incentives, housing subsidies, and environmental regulations can significantly impact property development, investment opportunities, and market dynamics. 3. Technological advancements. Technological advancements have transformed the real estate industry in various ways. Innovations like online property listings, virtual tours, digital marketing, data analytics, and smart-home technologies have improved transparency, efficiency, and accessibility
impact the real estate market. For example, an aging population may increase demand for senior housing, while changing lifestyles and preferences may drive demand for urban living, sustainable features, or coworking space. 5. Financial and investment markets. Real estate is closely connected to financial and investment markets. Factors like stock market performance, availability of credit, interest rates, and investor sentiment influence property prices, financing options, and investment decisions. Real estate can also exert influence on financial markets because the market’s performance can impact investor confidence and overall economic stability. 6. Industry-specific factors. The real estate industry itself has internal influences that shape its dynamics. These include real estate development, construction, property management, brokerage, and other related businesses. The performance and practices of these sectors can influence market supply, quality of properties, transaction processes, and consumer experience. Understanding each of these and how they influence the real estate market is crucial for real estate professionals, investors, and consumers to make informed decisions and adapt to changing market conditions. Doing your due diligence on these key indicators allows people to identify investment opportunities, assess risks, anticipate market trends, and tailor strategies to maximize returns or meet their housing needs effectively. •
CARMEN FIELDS, MANAGING EDITOR
thinkrealty . com | 5
CONTENTS
INSIDE THIS ISSUE
22
SPECIAL FOCUS
SIX STRATEGIES FOR LEVERAGING YOUR INDUSTRY INFLUENCE Harnessing the power of your influence drives growth and fosters innovation, both necessary elements for achieving long-term success—for yourself and for the real estate industry.
6 | think realty magazine :: july – august 2023
LEGISLATION 8 How Legislation Impacts the Real Estate Investment Industry
INVESTOR REVIEW 4 A Guide to Real Estate Financing Options Depending on the property type, some funding vehicles may be better suited to your project than others. by Damon Riehl 10 Navigating a Changing Market with BRRRR Here’s how to use the BRRRR strategy to lead to profitable investments. by Mitchell Zagrodnik 14 Broker Power: A Key to Investors’ Success
46 Doing the Math: How to Price Out a Fix-and-Flip Loan
Kiavi case study underscores importance of “doing the math” on the cost of a loan. Article Provided by Kiavi 48 Is Stability Finally in Sight for the Long- Term Rental Market in 2023?
Staying informed about relevant legislation helps investors make decisions about investment strategies, risk, and profitability. By Carmen Fields
There may be no time like the present to take action. Article Provided by Kiavi
MARKET & TRENDS 10 Where to Expect Increasing Foreclosure Volume for the Rest of 2023
INVESTMENT STRATEGY 33 Understanding Equity Sharing
Mortgage servicers expect foreclosure volume will continue to gradually increase in the second half of 2023 as roll rates from delinquency to foreclosure return to pre-pandemic norms. By Daren Blomquist
Working with a mortgage broker for your real estate funding needs offers a number of advantages. by Ben Fertig
One recent model may be in trouble; the other has endured for more than four decades. By Bruce Kellogg 36 Re-Righting—Not Rewriting—the History of African American Real Estate Investors A new wave of African American businesspeople is helping to create generational change in their local communities through real estate investing. By Arvind Mohan
18 Can Real Estate Marketing Be Effective and Affordable?
14 Deceiving Appearances
Here’s how digital tactics help you use your budget wisely and reach your audience. by Jenifer Calandra 22 5 Tips for Deciding Which Investment Loan Is the Best Fit
Dig deeper than the published reports about job growth before you decide to invest in a market. By Ingo Winzer
OPERATIONS 16 Navigating New Norms
38 Green Rush Risk Management
The right type of investment loan for you depends on the property you want to buy as well as your personal goals and financial standing. by Luke Babich
Investors in the cannabis industry must carefully evaluate all factors affecting their target market to minimize risk. By David Jacobs 40 10 Tips for Successfully Managing Your First Rental Property Investment Take the time to consider your goals, plan your acquisition strategy, and decide how to manage the property. By Luke Babich
The influence of millennials and Generation Z buyers is reshaping the property market. By Jamie Cohen
24 Take It Outside!
18 Creating Your Business Flywheel
With so many potential buyers looking for outdoor ameni- ties on the properties they are considering, think about how you can “take it outside” with your next renovation. by Michele Van Der Veen 28 Will Small Loans Be the New Thing for Big Banks? As the cost of deposits increases for smaller banks, will big banks make a run at the small to medium- sized loans the smaller banks have been providing? by Neil Timmins
A good business flywheel compounds a business’ success and influence each time the organization repeats the steps. By Jeff Roth
22 Six Strategies for Leveraging Your Industry Influence
FUNDING 42 The Credit Score Myth
Harnessing the power of your influence drives growth and fosters innovation, both necessary elements for achieving long-term success—for yourself and for the real estate industry. By Jim Tannehill
32 Navigating the No-Loan Landscape
Getting fundable is more than just having a good credit score. By Merrill Chandler 44 6 Reasons Why Real Estate Is a Good Investment An article series on navigating the private lending world By Damon Riehl DESIGN 46 5 Ways to Give Your Investment Property a New Look With remodels on the rise, you want to give your property an updated look without breaking the budget. By Michele Van Der Veen
In the coming months, lenders will be selective when financing commercial real estate deals. by Thomas Eddy
24 How Social Media Thought Leadership Generates Leads
34 Understanding Solo 401(k)s for Self-Employed Individuals
The right strategy and valuable content positions you as an industry expert and a credible community innovator. By Jenifer Calandra and Peter Mishler 26 How to Market to Prospects Effectively Choosing the right channel for your message and audience is a key step. By Justin Silverio 28 Finding Deals With Good Cash Flow
The flexibility and control a solo 401(k) offers can help the self-employed put away more money than traditional or Roth IRAs allow and enjoy certain tax benefits. by Derreck Long
38 A Million Reasons to
Choose the Right Lender Discover how savvy real estate investors are seizing profitable opportunities by partnering with a reliable private money lender. by Matthew Schlegel
Many investors are finding it challenging to locate the deals that provide good cash flow. By Kurt Coleman 30 Establishing Credibility in Commercial Real Estate Building a trustworthy reputation in the commercial
42 Borrowing in an Uncertain Market
Heed these lessons before you commit to a loan from a private or hard money lender. by Bill Fairman, Wendy Sweet, and Jonathan Davis
industry is key to unlocking access to better deals and better opportunities. Here’s how. By Neil Timmins
thinkrealty . com | 7
LEGISLATION
INVESTMENT DECISIONS
How Legislation Impacts the Real Estate Investment Industry
STAYING INFORMED ABOUT RELEVANT LEGISLATION HELPS INVESTORS MAKE DECISIONS ABOUT INVESTMENT STRATEGIES, RISK, AND PROFITABILITY.
By Carmen Fields
egislation plays a significant role in influencing real estate
tenant rights. These regulations influence the profitability and stability of rental property investments. NO. 4 TAX LAWS AND INCENTIVES. Tax legislation has a significant impact on real estate investing. Prop- erty taxes, capital gains taxes, and tax deductions related to real estate investment can affect the overall return on investment. Governments may also introduce tax incentives, such as tax breaks for real estate development in certain areas or for affordable housing initiatives, which can influence investment decisions. NO. 5 FINANCING AND LENDING REGULATIONS. Legislation can impact the availability and terms of financing for real estate investments. Regulations related to mortgage lending, interest rates, and loan qualification criteria can affect the accessibility of funding for both investors and homebuyers, thereby in- fluencing property values and demand.
can influence property values and investment viability. Real estate investors need to stay informed about relevant legislation and regulations because they can significantly impact investment strat - egies, risk assessments, and overall profitability. Consult with legal pro - fessionals and experts in the specific jurisdictions where your investments are planned to ensure compliance and make informed decisions. Think Realty’s Government Re- lations Committee (GRC) is actively focused on making sure real estate investors have a seat at the table to discuss legislation and regulations with those in positions of power. •
L
investing. Laws and regulations can impact property acquisition, ownership, development, financing, leasing, and sales. Let’s take a closer look at each one. NO. 1 ZONING AND LAND-USE REGULATIONS. Zoning laws dictate how land can be used, specifying whether it can be utilized for residential, commercial, in- dustrial, or mixed-use purposes. These regulations determine where certain types of properties can be located, af- fecting property values and investment opportunities in those areas. NO. 2 BUILDING CODES AND PERMITS. Legislation establishes building codes that define the construction standards and safety requirements for structures. Investors must comply with these regulations to ensure their properties meet the necessary standards. Obtaining permits and adhering to building codes can impact project timelines and costs. NO. 3 RENT CONTROL AND TENANT PROTECTION LAWS. In some jurisdictions, legislation may impose rent control measures to limit the amount landlords can increase rents. Additionally, tenant protection laws govern eviction processes, lease agreements, and
Carmen Fields is the director of strategic partnerships for Think Realty and managing editor for Think Realty magazine. She is known for her ability to
establish and develop relationships. Through partnership collaboration, she aims to elevate the real estate industry by aligning with like-minded visionaries through strategy development. She intuitively sees the threads of opportunity that wind through an organization, brings them together into a coherent whole, helps others extend their thinking, and drives material business advantage. Carmen is known for her passion around creating legislative initiatives in the real estate investing space. Her past career with Nordstrom has allowed her to develop systems and processes catered toward the client experience. Respected as a credible voice in the industry, finding strategic partners, and establishing relationships, Carmen earns a seat at the table wherever she serves.
NO. 6
ENVIRONMENTAL
REGULATIONS. Laws concerning environmental protection, such as those related to pollution, conservation, and land use, can affect real estate investment. Environmental impact assessments may be required for certain devel- opment projects, and compliance with environmental regulations
8 | think realty magazine :: july – august 2023
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thinkrealty . com | 9
MARKET & TRENDS
2023 FORECLOSURES
Where to Expect Increasing Foreclosure Volume for the Rest of 2023 MORTGAGE SERVICERS EXPECT FORECLOSURE VOLUME WILL CONTINUE TO GRADUALLY INCREASE IN THE SECOND HALF OF 2023 AS ROLL RATES FROM DELINQUENCY TO FORECLOSURE RETURN TO PRE-PANDEMIC NORMS.
By Daren Blomquist
N early nine in 10 (86%) mort- gage servicing industry professionals surveyed at the Auction.com Disposition Summit in June said they expect their organiza- tion’s completed foreclosure auction volume to increase in 2023 compared to 2022. Most (62%) expect volumes to increase slightly while 24% expect volumes to increase substantially. FORECLOSURE VOLUME DRIVERS The survey also sheds some light on why mortgage servicers are anticipating a continued rise in foreclosure volume in 2023. When asked to identify the top impacts on foreclosure volume in 2023, respondents ranked economic conditions (including mortgage rates) at the top of the list. That would indicate that survey respon- dents believe deteriorating eco- nomic conditions in 2023—caused in large part by the Federal Reserve’s string of interest rate increases over the past year—are likely to push more mortgage borrowers into delinquency and are also likely to make it harder for delinquent
FCL STARTS/90-DAY DQ BTA/FCL INVENTORY Roll Rates from Delinquency to Disclosure
9%
8%
7%
6%
5%
4%
3%
2%
1%
SOURCES: MBA ATTOM
0%
foreclosure prevention programs implemented by legislators and regulators during the pandemic will allow some stalled foreclosure volume to be released.
borrowers to avoid foreclosure through a loan modification or mortgage refinance. Survey respondents ranked regulatory intervention as having the second-highest impact on foreclosure volumes in 2023. This would indicate that respondents believe the pullback of necessary and well-intended temporary
REBOUNDING ROLL RATES The likely increase in foreclosure volume in the second half of 2023
10 | think realty magazine :: july – august 2023
STATES WITH THE BIGGEST YEAR-OVER-YEAR INCREASE IN SCHEDULED FORECLOSURE AUCTIONS IN THE FIRST HALF OF 2023
is also supported by two other survey results relating to roll rates: (1) from seriously delinquent to foreclosure start and (2) from foreclosure inventory to completed foreclosure auction. On average, survey respondents said they expect 6.4% of their organization’s seriously delinquent mortgages to start the foreclosure process on a monthly basis for the rest of the year. That monthly roll rate is nearly on par with the pre-pandemic average roll rate of 7% between 2017 and 2019, and it is more than three times the 2% roll rate from 2020 to 2022. Similarly, survey respondents expect roll rates from foreclosure inventory to completed foreclosure auction to increase from their pandemic-era averages for the remainder of 2023. On average, respondents said they expect 6.6% of their organization’s foreclosure inventory to complete the foreclosure process each month for the rest of the year. That roll rate is more than three times the 2020 to 2022 average of 2% and even above the pre-pandemic average of 4%. If applied to current foreclosure inventory volumes based on Black Knight data (234,000 as of the end of April 2023), the 6.6% monthly roll rate would result in about 84,000 completed foreclosure auctions in the second half of 2023, up
SCHEDULED FORECLOSURE AUCTIONS IN FIRST HALF OF 2023
STATE
ANNUAL INCREASE PCT OF FIRST HALF OF 2019 LEVELS
Oregon Alaska
497% 194% 143% 127%
104% 121%
Idaho
51%
Colorado
175%
Utah
89% 74% 68% 64% 63% 61%
90% 77%
Montana
New Hampshire
115% 164% 130% 103%
Connecticut
Michigan
South Dakota
substantially from the 48,000 in the second half of 2022, but still well below the 114,000 in the second half of 2019, according to ATTOM Data Solutions data. EMERGING FORECLOSURE VOLUME BY STATE Whether that specific prediction turns out to be correct for the second half of 2023, real-time data from Auction.com shows where scheduled foreclosure auction
volumes are already increasing in the first half of 2023—suggesting corresponding increases in comple- ted foreclosure auction volumes in the second half of 2023. Nationwide, scheduled foreclosure auction volumes in the first six months of 2023 were up 29% from a year ago. Despite this increase, scheduled foreclosure auction volumes nationwide in the first half of 2023 were still at just 61% (or 39% below) what they were in the first six months of 2019.
thinkrealty . com | 11
STATES WITH THE MOST SCHEDULED FORECLOSURE AUCTION VOLUME IN THE FIRST HALF OF 2023
Except for Colorado and Michigan, all these states were coming off extremely low volume in the first six months of 2022, helping to explain some of the dramatic percentage increases. And despite the relatively large year-over-year increases, three of the states—Idaho, Utah, and Montana—were still below 2019 lev- els in terms of scheduled foreclosure auction volume. States with smaller increases, or even decreases (as is the case for New Jersey), may not necessarily be out of the woods when it comes to increasing foreclosure volume. That foreclosure volume may still be coming due to state-level variances in the foreclosure process. For instance, even though New Jersey’s scheduled foreclosure auc- tion volume is down year-over-year, it still had the eighth-highest inven- tory of properties that have started the foreclosure process among all states in the fourth quarter of 2022, according to data from the Mortgage Bankers Association (MBA) National Delinquency Survey. Although scheduled foreclosure auction volume nationwide was still 39% below 2019 levels in the first quarter of 2023, there were 15 states where first quarter volume was above 2019 levels. •
SCHEDULED FORECLOSURE AUCTIONS IN FIRST HALF OF 2023
STATE
ANNUAL INCREASE PCT OF FIRST HALF OF 2019 LEVELS
Texas
40% 37% 63%
69% 56%
California Michigan Colorado Georgia
130% 175%
127% 23% 10% -11% 41%
58% 56% 17% 48% 61% 50%
Illinois
New Jersey
New York
Pennsylvania
8%
Arizona
52%
STATES WITH SCHEDULED FORECLOSURE VOLUME ABOVE 2019 LEVELS
SCHEDULED FORECLOSURE AUCTIONS IN FIRST HALF OF 2023
STATE
ANNUAL INCREASE PCT OF FIRST HALF OF 2019 LEVELS
Colorado
127%
175%
lowa
50%
171%
North Dakota
26%
170%
Minnesota
46%
164%
Connecticut
64%
164%
Indiana
28%
145%
Michigan
63%
130%
West Virginia
44%
125%
Oklahoma
31%
122%
Alaska
194%
121%
Daren Blomquist is vice president of market economics at Auction.com. In this role, Blomquist analyzes and fore- casts complex macro and
Wyoming
29%
116%
New Hampshire
68%
115%
microeconomic data trends within the marketplace and industry to provide value to both buyers and sellers using the Auction.com platform.
Louisiana
24%
112%
Oregon
497%
104%
South Dakota
61%
103%
12 | think realty magazine :: july – august 2023
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MARKET & TRENDS
JOB GROWTH
Deceiving Appearances DIG DEEPER THAN THE PUBLISHED REPORTS ABOUT JOB GROWTH BEFORE YOU DECIDE TO INVEST IN A MARKET.
By Ingo Winzer
1-Year Job Growth
Adjusted Job Growth
f the many jobs that were lost during the pandemic, some quickly returned
O
when lockdowns ended, some turned out to be gone for good, and some are still finding their way back. That makes measuring current economic growth difficult. Touting the number of new jobs the economy has created is a staple of politicians but for real estate investors, unfiltered data are a nightmare. If local markets really are adding new jobs at annual rates of 3%-4% a year, demand for residential and commercial real estate will quickly outstrip supply and boom times are ahead. If, on the other hand, many of these jobs are just recovery jobs, the effect on demand will be much lower. The people who go to those jobs already live in the area, and the businesses they’re joining already have commercial space. One way to arrive at a more realistic esti- mate of new job growth in local markets is to separate the types of jobs that normally grow no faster than the population: jobs in health care, government, and restaurants. We’ve assigned these jobs a 1% annual growth rate (twice the current population rate) and recalculated total job growth. As the table shows, appearances can be deceiving. Overall for the U.S., the recent job growth rate of 2.9% drops to 1.6 %, pretty much the same as before the pandemic. And in markets like Fayetteville, Fresno, and Philadelphia, the drop is even larger. In Jacksonville, Florida, it may not matter whether growth is 5.6% or 3.8 %—both figures are high. If, however, you’re thinking of investing in Sacramento because you think jobs are growing at 2.7%, you might want to take a closer look. •
5.6%
3.8%
Jacksonville, FL
4.8%
2.8%
Fayetteville, AR
4.3%
1.7%
Fresno, CA
4.1%
2.1%
San Antonio, TX
4.0%
2.1%
Seattle, WA
4.0%
1.2%
Philadelphia, PA
3.9%
1.8%
Oklahoma City, OK
3.4%
1.4%
New York, NY
3.2%
1.3%
Atlanta, GA
3.1%
1.2%
Charlotte, NC
2.7%
0.8%
Sacramento, CA
2.6%
0.6%
Fairfield County, CT
U.S.
2.9%
1.6%
LOCAL MARKET MONITOR, CARY NC
Ingo Winzer is president of Local Market Monitor. The company’s Investors Metro Analysis shows the opportunity and risk in 200 local real estate markets at www.LocalMarketMonitor.com, including strategic analysis of all local ZIP codes.. Winzer has analyzed real estate markets for more than 30 years, and his views on real estate markets are often quoted in the national press. Previously, Winzer was a founder and executive vice president of First Research, an industry research company acquired by Dun and Bradstreet in 2007. Winzer is a graduate of the Massachusetts Institute of Technology and holds a master’s degree in finance from Boston University.
14 | think realty magazine :: july – august 2023
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OPERATIONS
GENERATIONAL TRENDS
Navigating New Norms THE INFLUENCE OF MILLENNIALS AND GENERATION Z BUYERS IS RESHAPING THE PROPERTY MARKET.
By Jamie Cohen
n recent years, the property market witnessed a new tide of
these generations are proving they can invest in property, often as a result of strategic financial planning and a different perspective on investment strategies. But what’s driving these generations to the property market? The answer lies in their shifting property buying trends. Many are abandoning the “rent forever” mindset and embracing property ownership. They see it as a worthwhile investment and a step toward financial independence. Still, their priorities when choosing a property differ from older generations. They are more interested in lifestyle, location, and work-life balance rather than owning property as a status symbol. INFLUENCE ON THE PROPERTY MARKET Let’s take a look at the preferences for millennials and Gen Zers and how they are influencing the property market. City versus suburban living. Millennials’ and Gen Zers’ preferences for city or suburban living varies, but their choices have substantial implications for the property market. Some lean toward the vibrancy of urban living, attracted by job opportunities, cultural amenities, and walkability. Others favor the quieter, more spacious
suburban life, particularly in the era of remote working. The factors influencing these preferences extend beyond mere housing affordability. They include proximity to work (physical or remote), lifestyle choices, and the search for a sense of community, leading to an uptick in property purchases in urban and suburban areas tailored to meet these preferences. Technology and online platforms. The digital-native Gen Zers and millennials are leveraging technology in their property hunt. Online property listing and buying platforms play a massive role in this shift. These platforms offer the fingertip convenience of virtual tours, price comparisons, and access to real estate professionals. Further, innovative technologies like virtual reality (VR) are reshaping the property-buying experience. Potential buyers can now virtually “walk” through a property from anywhere in the world—game changers in the property market. Sustainable and eco-friendly living. Sustainability is another key consideration for these generations. They are increasingly seeking eco- friendly living options and are willing to pay more for sustainable housing. This preference pushes construction and design trends toward
I
influence as the baton passed from baby boomers and Generation Xers to younger generations: millennials (born 1981-1996) and Gen Zers (born 1997-2012). Their values, priorities, and lifestyles are significantly molding property market trends and dynamics. Among these are their love for technology and their commitment to sustainability. These preferences aren’t just changing how homes are bought and sold but redefining the entire property market. Understanding the influence of millennials and Gen Z on the property market begins with a look at their representation in the current population. Combined, these two cohorts currently make up a substantial part of the global population. Millennials, sometimes called Generation Y, constitute about a quarter of the population. Gen Z, the digital natives, aren’t far behind, as they age into adulthood. Although many millennials have already established themselves in the job market, Gen Z is relatively new to the workforce. They might be early in their earning years, but it’s important not to underestimate their buying power. Despite facing economic challenges like student debt and a competitive job market,
16 | think realty magazine :: july – august 2023
energy-efficient systems, renewable materials, and green spaces. Shifts in investment strategy. Finally, we see a shift in investment strategies. Rather than focusing solely on homeownership, there’s increasing interest in rental properties and shared spaces. This shift is partly due to high property prices in certain areas and the flexibility renting offers. Further, trends in investment properties are changing. More millennials and Gen Zers are exploring property investment earlier, viewing it as a viable means to generate passive income and bolster financial security. This trend is shaping a new dynamic in the property market that real estate professionals and investors must adapt to.
these challenges, many remain undeterred, finding innovative ways to navigate the market and achieve their property ownership goals. Challenges for property sellers and the real estate industry. Property sellers and the real estate industry are grappling with the shift in buyer behavior. Adapting to new technologies, changing consumer preferences, and evolving investment strategies can be complicated. It demands flexibility, innovation, and a keen understanding of the needs and expectations of the younger generations. Opportunities arising from market shifts. Despite the challenges, these market shifts also present opportunities. The growing emphasis on sustainable living opens avenues for builders and developers specializing in eco-friendly construction. In addition, the demand for online property platforms and virtual reality technology offers vast potential for tech-savvy businesses. The shift toward more flexible housing options creates opportunities for investment in shared spaces and rental properties. Property sellers and real estate professionals who successfully adapt to these changes will likely find themselves at the forefront of a market increasingly driven by millennials and Gen Zers.
digital solutions and sustainable living to continue to shape the property market. Technology’s role will likely expand, incorporating more augmented reality and artificial intelligence solutions in property- buying and selling processes. Property developers, investors, and real estate professionals will need to continually adapt their strategies, from catering to sustainability demands to embracing technological advancements. Those who do are likely to be the winners in the evolving market. The future property market will likely be marked by more personalized, flexible, and sustainable solutions. The influence of millennials and Gen Zers will remain significant, increasing as these generations move further into their prime property-buying years. It’s clear that the property market is no longer being shaped solely by older generations. Instead, millennials and Gen Zers are leaving their mark, steering market trends, and setting new norms. As we move into the future, the property market must adapt to these changes to continue thriving. The enduring influence of millennial and Gen Z buyers on the property market is an exciting journey to follow—one that will surely redefine the contours of the industry. •
CHALLENGES AND OPPORTUNITIES Any market shift creates
challenges and opportunities. The same is true for the shifts taking place in the property market as millennials and Gen Zers exert more influence. Impact of economic conditions. Although millennials and Gen Zers are steadily becoming driving forces in the property market, economic conditions impact their buying power. Issues such as inflation, student loan debt, and the high cost of living can hinder their ability to save for a down payment. In addition, the economic fallout from global events like the COVID-19 pandemic also adds to the uncertainty. Despite
WHAT DOES THE FUTURE HOLD?
Jamie Cohen is a freelance digital marketer and writer with a passion for real estate investing. He enjoys remod- eling his family’s first home as a hobby
As we look ahead, specific trends stand out. We expect the preference of millennials and Gen Zers for
and spending time at dog parks with his two Boston terriers.
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OPERATIONS
COMPOUNDING SUCCESS
Creating Your Business Flywheel A GOOD BUSINESS FLYWHEEL COMPOUNDS A BUSINESS’ SUCCESS AND INFLUENCE EACH TIME THE ORGANIZATION REPEATS THE STEPS.
By Jeff Roth
18 | think realty magazine :: july – august 2023
goes through the steps, it gets better and better at each step and the results compound. This, Collins explains, is why some companies experience sustained momentum of their growth, become great companies, and wield industry influence.
“The key to successful leadership today is influence, not authority.” — KEN BLANCHARD
them and the results compounded without the organization expending significantly greater effort. Collins’ example of Intel’s flywheel serves as a good example. STEP 1 Design chips that customers want. STEP 2 Price the chips high before the com- petition catches up. STEP 3 Drive down unit costs. STEP 4 Achieve greater profits even as prices fall. STEP 5 Invest profits into R&D. BACK TO STEP 1 Design chips that customers want. Each step naturally leads to the next. Each time the company
im Collins, author of “Good to Great,” wrote a short book to accompany it called “Turning the Flywheel.” In this 40-page book, Collins explains one of the most profound concepts surrounding what makes great companies great and able to experience compounded and sus- tained growth. He provides examples from companies such as Amazon, the investment company Vanguard, Intel, and the Cleveland Clinic. These organizations looked at the practices that gave their organization the best results. Then they incorpo- rated those best practices into no more than four to six steps, each step naturally building on the next, so that completing the last step put the organization back at the begin- ning. Each time the organization took the steps, it got better and better at J
WHAT IS YOUR BUSINESS FLYWHEEL?
You can apply the concept of the flywheel to a real estate consulting and sales business. The following is an example of applying it to company marketing efforts. STEP 1 Create valuable content. There are many forms of content, including written, long-form videos, short videos, and podcasts. Establish a weekly goal of producing one writ- ten piece of content on the topic of real estate and real estate investing
that others find valuable. Place the content on the
company’s website or in publications such as Think Realty as well as other national and local publications. Also
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share it on Facebook groups that are interested in real estate and on other social media channels. Once written and distributed, the content will work in the background and benefit the company as new people find the content useful and perhaps even share it. Think of the different types of content as a fishing metaphor. Each piece is a bobber in the water with a different bait (content topic) placed in different locations. Unlike fishing, these content bobbers work all day and night, day after day. Hypothetically, you can have as many in the water as you want. Once a person consumes enough content, the hope is they will voluntarily show interest in learning more by filling out an interest form on your website or signing up for the company newsletter. Through consistent and disciplined effort, over time you will gain A well-designed flywheel allows you to take the most effective actions toward your goal, with each step building on the last and results compounding over time.
20 | think realty magazine :: july – august 2023
more interested followers who not only become clients but also refer others to us. STEP 2 Build a community of interested followers. The key to building a community of interested followers is holding yourself accountable to providing valuable content on a regular schedule. For example, you might create a schedule of producing one quality piece of long-form written content each week. Then you post it on the company website or have it published in a local or national publication. Next, post that same content on social media channels and in related Facebook groups each week. An added goal could be to share something useful related to real estate at least once a day on your social media accounts. STEP 3 Ask for an email address after providing value. It’s great to build a community of interested followers on social media, but your goal should be to move those followers to a platform you have more control over email. When you give your followers the option to sign up for your newsletter or complete a Contact Us form to receive even more valuable content, you will capture their email address. In addition, the content you create should provide a way for you to be contacted directly or explain how to subscribe to your newsletter. You can decide on the frequency of your newsletter. Just be consistent with whatever frequency you choose. Keep in mind that each issue of the newsletter does not need to contain completely new content.
benefit from the content you create. The exposure creates more awareness of your company and expertise, potentially generating more clients and an opportunity to increase your business revenue. In turn, increasing your business revenue gives you more time to create valuable content. BACK TO STEP 1 Create valuable content. A well-designed flywheel is essentially a circle of your most effective activities that naturally build on each other, increasing your reach and impact each time you go through the steps and ultimately bringing you back to the beginning step of your flywheel. IMPACT OF A WELL-DESIGNED INFLUENCE FLYWHEEL? A well-designed flywheel allows you to take the most effective actions toward your goal, with each step building on the last and results compounding over time. In the example of writing high-quality content, you only have to create that piece of content once, but it works for you over and over again to attract new followers that refer other followers. This leads to greater business success not only for your company but also for your followers who benefit from the content. •
STEP 4 Write a newsletter for email subscribers, resharing content you’ve written previously. What’s nice about a newsletter is you control when it goes out and who sees it (you can’t control who sees your content on most social media channels). Often you can share the same long-form content you wrote for the week because people are busy and may not have seen it when it was originally published and shared. Your newsletter might also give readers a brief market snapshot and update each week so they can see how interest rates, inflation, and housing inventory are changing. Doing so has the added benefit of keeping them informed as they work with you as clients. STEP 5 Ask followers to share the newsletter with their friends. You can ask your email subscribers to share your newsletter with their friends and associates in order to gain more subscribers/followers. Some email newsletter programs allow you to track how many times a person shares with others so you can reward them with specific incentives, prizes, or additional content. Also, resharing or reposting others’ content on social media is a great way to add value to them. In turn, many times they will do the same for you, giving your content further reach and influence—and earning you more followers. STEP 6 Add new email subscribers to your newsletter. The goal is to impact and add value to as many people as possible. As your newsletter content is shared or reposted by others, you will gain more email subscribers who will
Jeff Roth is the founder of Arbor Advising in Ann Arbor, Michigan. Arbor Advising is a real estate consultancy dedicated to growing and securing clients’ wealth.
They are passionate about helping clients invest, buy, and sell in Michigan. You can contact Roth at jeff@arboradvising.com, visit www.arboradvising.com, or subscribe to the weekly newsletter at www.arboradvising.com/subscribe.
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COVER STORY
LEVERAGING INFLUENCE
Six Strategies for Leveraging Your Industry Influence HARNESSING THE POWER OF YOUR INFLUENCE DRIVES GROWTH AND FOSTERS
INNOVATION, BOTH NECESSARY ELEMENTS FOR ACHIEVING LONG-TERM SUCCESS—FOR YOURSELF AND FOR THE REAL ESTATE INDUSTRY.
By Jim Tannehill
s the leader of your business, you hold a pivotal role. Your
ability to influence. Building a strong reputation starts with demonstrating integrity, transparency, and consis- tency in your business practices. By establishing yourself as a trusted and respected leader, you gain credibility and earn the trust of industry peers, partners, and stake- holders. Remember, your reputation precedes you, and it can serve as a powerful tool in shaping the indus- try’s perception of your company. 2. ACTIVELY PARTICIPATE IN INDUSTRY ASSOCIATIONS Industry associations provide a platform for collaboration, knowl- edge sharing, and networking. Actively participating in these
associations positions you as an industry expert and thought leader. When you engage with peers and industry stakeholders, you have the opportunity to exchange ideas, discuss emerging trends, and contribute to industrywide initiatives. Sharing your insights and experiences not only elevates your personal brand but also gives you the ability to influence industry standards, policies, and practices. 3. DEMONSTRATE THOUGHT LEADERSHIP THROUGH CONTENT CREATION In today’s digital age, content is king. Creating and sharing valuable content positions you as a thought
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decisions and actions not only shape the direction of your company but also have the potential to influence the real estate industry. Understanding and harnessing the power of your influence is essential for driving growth, fostering innovation, and achieving long-term success. Let’s explore six strategies for leveraging industry influ - ence effectively. 1. BUILD A STRONG REPUTATION You are the face of your company. Your reputation carries weight and can significantly impact your
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