In part 1 of the “Propertypreneur” article I covered the rising concept of the property entrepreneur, that success in the modern economy is about adding value and shaping a productive asset out of your property, no longer just buying blind and hoping for the best.
Today you will learn what a Propertypreneur needs to do in order to make this happen.
So how can successful Propertypreneur do it?
First… Adopt a mentality of value
Property should provide value to generate cash. So spotting opportunities must become natural to the Propertypreneur.
A Propertypreneur needs to be able to look at possible projects with vision. They need to look at a property and not think about what it can do now, but what it can evolve into. They should ask themselves: “What can be opened in this location and this property that would provide great service?”
The answers that come to mind should then be evaluated as to what can be done economically so as to generate a good return, and what would be too costly. It could be upgrading a basic or run-down apartment into a premium modern unit, it could be a creative conversion of space in a double-storey empty bungalow on a Bangsar main street to provide two commercial outlets, one on each floor. It could be an office space turned into a shared business environment.
A creative thinking exercise will help people start seeing opportunities with new eyes. They will be spotting them all over the place and seeing what others don’t see. That is how Propertypreneurs develop vision.
From there they need to focus on four Key Elements:
1- Assess properties the right way…
Make sure it is a good investment, and have a good plan of how it will be utilized.
One of the biggest mistakes property investors do is going in without a plan. A Propertypreneur’s plan needs to have three parts:
- Know what needs to be done and can set the action points to get there.
- Ensure they have the resources to handle that property.
- Research and Analyze the property itself and make sure it is a good option for the Propertypreneur and his plan.
We call this, a P.R.O. plan. Perception, Resources, and Opportunity. Easy to remember by “Every property pro, needs P.R.O.”
A Propertypreneur’s approach should be to analyze his Perception first. He needs to make sure he has enough understanding and awareness about a property and what he will do with it. It is knowing what is good and what is bad about that property, having an idea about who would want to live there, the tenants who will pay rent for it and how much would that rent be, the people who can buy it back from you eventually and for how much.
Second comes Resources, which is the element of an objective plan where you can see that you have enough to handle this property through thick and thin, that you have what you need to carry out your plan even if things don’t go smoothly.
Resources are more than just having enough cash… You need cash, and you need people… Do you have a good renovation contractor already lined up? Do you have reliable people who will handle legal or some admin work done to get permits? You get the idea.
Finally you analyze the property itself that is on offer from an Opportunity point of view. It is really a distillation of one concept: financial return.
Every property that is out there, has its own uses. Some of them are used by families for residence, some used by small business, some can be summer retreats and you fall in love with them… When you take over a property however as a Propertypreneur, you do don’t do it because you like it emotionally… you do it because you have a vision of turning it into a financially productive asset.
2- Develop the skills and knowledge of taking over property in creative ways, acquiring it with no money down techniques or lease-options, always at a good price.
Buying a property can be daunting, primarily because of the total price of a property. Although mortgages are out there to allow people to buy properties for 10 or 20% only, it gets harder and harder the more units you own, and the 10% itself might be a barrier especially for starting beginners.
A good Propertypreneur knows how to acquire a property without paying even that 10% downpayment. There are no money down techniques that allow you to buy and control a property without needing any cash, it is all taken care of by finance from banks and other financial institutions.
This is the beauty of property, it is the easiest asset in the World to get finance for.
A Propertypreneur needs to not only know the different no money down techniques, but also knows how to negotiate for them, when and who to approach for the finance, and mostly, knows that they don’t always have to BUY a property outright in their name to take it over and control it, but that there are solid Lease-Option agreements now that can give them access to property without any downpayment and without even getting finance from any bank.
3- Understand how properties are improved, upgraded, or renovated, knowing how to do it with quality yet economically, then actively arrange for finding the best operator or tenant to lease it to them.
No Propertypreneur will succeed without learning about renovations and understands how to go about them. There always needs to a plan and that plan depends on one question: What is going to be the usability?
The answer to that question shows you exactly what you need to improve and what needs to go. This is where you start working with a reliable contractor, or if you are comfortable you can get the worker teams directly and save even some more money. The contractor would do well though for beginners as they help in filling up the gaps in your knowledge about where to get different things, but you need to be involved and get educated on WHAT needs to be done, and how can that be made economically while still being in a quality condition.
You then have to get a marketing plan in motion that gets as many enquiries as possible about your property from interested business operators or tenants. There is no point in just leaving the property with a canvas sign on its fence and wait for months and months till one prospective tenant passes by and offers you what could be your only offer. This marketing activity needs to be well-structured and targeted for the type of tenant or operator you want to attract.
4- Systematize everything so that the property and its tenants can generate income without requiring constant operational input from the Propertypreneur.
A Propertypreneur is someone who builds and hands over assets to be run by others. The success depends on efficient operation and administration that keeps everything running smoothly. There are no more decisions to make and therefore the attention of the Propertypreneur should always be on the next project.
So what happens to the upkeep and admin of the previous ones?
They need to be delegated in an organized manner to people who can run it for you. In the beginning you will need some freelance or independent people helping you, but soon you will find yourself with enough property projects that you would need the trust and reliability of having your own staff.
Paying bills, following up on rent, supervising repairs and maintenance, keeping up the inventory lists, legal work… all this is taken care of by either professional agents you hire, or full-time staff who become part of your team.
You need to then establish a cycle of researching and growing perception – finding opportunities – acquiring them – renovating and marketing – handover to team within your operational system, and then wash, rinse and repeat.