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Last year E&G bought and sold more than 40 properties for investors. At the surface, this seems like a great figure. And it is! The majority of these sales occurred because clients called in looking to buy or sell a home. What we learned is that we are just scratching the surface of what we can help our clients achieve. Our business model uniquely positions us to help build real estate investment portfolios and analyze how to have these portfolio produce the greatest return on investment for our clients. There were dozens of properties that came across our desks that may have matched acquisition criteria for existing clients. However, because we did not have a plan in place to understand what our clients investment objectives are, we never presented the opportunities.

In order to realize our potential of providing the high level turn-key service to our clients we have promoted one of our most talented and tenured agents, Tyson Tomao, to be our first ever Director of Sales and build the E&G Investor Sales Program.

One of Tyson's goals in this new capacity, is to position E&G's agents to provide a consistent and valuable service to help each of our investors gain clarity on their real estate investment goals and be the catalysts for achieving their real estate objectives. At least every 6 months our agents will connect with our clients to share information about both the national and local real estate markets; provide analyses on the current market value of existing homes under management; but even more importantly to discuss how these properties fit into our clients greater long-term investment strategies.

- What percentage of their retirement portfolios does each client envision in real-estate holdings?

- Within the real estate sector, do they prefer single-family homes versus other product types such as apartments or retail properties?

- What are the advantages and disadvantages of each?

Sometimes the properties we currently manage for clients have been owned for more than 20 years and the areas that they own property in may not produce as strong of a return as neighboring subdivisions. We have trained our agents on how to run comparative investment analyses to understand how to maximize return on investment for each asset and share this information with clients to help provide clarity on whether it is best to continue to hold their current assets long-term or to reposition their investment through sale and acquisition of new properties that will yield stronger returns on investment over time.

In 2020, we anticipate one of the greatest years of volatility in both acquisition and disposition of residential investment property. The real estate market has continued to appreciate and for the clients that were looking to time the market and exit at the top, 2020 will be the year of disposition. However, for clients that are looking to expand their footprint and allocate a greater percentage of their investment portfolio in real estate, 2020 will also produce strong results given the continued low-interest rates, high demand among renters for housing and rent appreciation that has kept pace with the underlying real estate value appreciation over the past 5 years.

Jay Thompson is a former brokerage owner who spent six years working for Zillow Group. He retired in August 2018 but can’t seem to leave the real estate industry behind. His weekly Inman column publishes every Wednesday.

Sitting in a near-sterile environment with that hospital smell of disinfectant and something you can’t quite identify sending the telling signals that you’re in a medical office. This one happens to be a “diagnostic imaging center” — the fancy and expensive version of an X-ray lab (for the record, the wife’s visit is just a routine check, all is well).

We have been sitting here since 7:15 a.m. For an 8:30 a.m. appointment. No reason has been provided for why we are required to arrive 75 minutes prior to the appointment — before the office is even open — but here we are being good little customers. Because if you think about it, customer is exactly the role we are currently playing.

Sure, this isn’t your typical customer-business relationship. But we are buying a “product,” an upper GI in this case. Yes, Francy is currently in the back, choking down a liter or so of barium. I’m sure it’s the kind with the fresh minty taste. The imaging center is providing a service, for which we are paying quite handsomely. That makes this a client-to-business relationship.

And here I sit, completely clueless as to what’s going on, no idea why things are happening or what’s next. And I’m paying a boat-load of money for this experience.

Needless to say, I’m not a happy camper right now.

Being a life-long fan of superior customer service, it pains me to experience the dark side. I’d much rather write of customer service success stories — they tend to put me in a far happier place.

As this experience unfolds before me though, I think it provides a learning opportunity. Other than sitting here in uncomfortable seats, flipping through six-month-old magazines and clinical trial notices while I stare into my phone, what else is there to do but cogitate and turn this lesson being served me into a reasonably useful column for Inman readers?

Customer service is, after all, what separates the exceptional from the good. I don’t care if you are selling popcorn, diagnostic images or real estate: How you treat your clients is important, and in my opinion, becoming more important with every passing day.

So let’s breakdown what is going right and wrong with my current (and apparently continuing) customer journey of the day.

Frustration

Yes, fighting Seattle traffic to get downtown at 7:15 a.m. sucks. It’s just not a good way to start the day. It means leaving home at 6:15 a.m., and having to drive because public transportation doesn’t run early enough to get there in time. Why we have to arrive 75 minutes early wasn’t explained, it was more of an order.

The frustration builds when you arrive at the reception desk at 7:13 a.m., only to find no one there.

Because, you know, they aren’t even open yet.

So we sit and wait.

Yelling into emptiness behind the desk, someone eventually pops their head out with a, “Here to check in?”

Nope, just figured we’d hang out in a medical office at 7:30 a.m., you know, for fun. Got any barium?

We check in. Francy can’t have coffee before this test, so she’s ready to hurt people. I don’t think it’s right to have coffee when she can’t. Yes, we’re decaffeinated and cranky. None of that really matters as the unwelcoming office has no coffee available anyway.

For the next 30 minutes, nothing happens. There is literally no one in the office except us and the receptionist. We sit there. She makes appointment reminders. “Remember, you have to be here 75 minutes before your appointment,” she repeats every time. Sometimes that follows with, “I don’t know, it’s office policy.”

Forty-five minutes later, nothing. Francy asks politely what’s going on, and she gets the, “I don’t know, I’ll check.”

As the first hour ticks by, we are still alone with the receptionist. Still no clue as to why we’re just sitting here, why we had to be here so early. One person comes in and goes back in under three minutes. The office finally appears to actually be open.

Just moments before the scheduled appointment time, Francy finally gets called back. “This will only take 10 minutes” was the last I heard as the doors shut behind them.

That was almost 50 minutes ago …

It’s frustrating. Frustrated is not how you want your clients to feel. Other than raging anger, frustrated is probably the last way you want customers and clients to feel. Unchecked frustration often leads to anger anyway — it’s the spinning circle of customer service hell, and it’s just not a good situation.

“Uhm, any idea why my wife’s 10-minute exam is taking almost an hour?”

“I don’t know, I’ll check.”

What could have helped reduce our frustration?

Communication

Talk to me. Keep me informed. Help me understand. Guide me. Show a little empathy.

All of those matter, and fundamentally, all boil down to communication. Our frustration this morning peaked because no one had a clue, not one question was answered. We felt ignored. There was zero empathy.

Granted, we don’t have a lot of choices in diagnostic imaging services. But there were times I would have walked out if I could. I suspect the management of the imaging office is fully aware that customers are trapped. That doesn’t excuse poor service, it just helps explain why lousy service isn’t hurting them.

You, oh real estate professional, do not have that luxury. People do have choices in real estate agents and services. Customer service matters, and it matters a great deal to your business. In today’s on-demand instant-access economy, it matters even more.

Almost every day, you help someone buy or sell a home. It’s important to remember that the things you know, stuff that’s obvious and second nature to you, could be the deep-dark unknown to your clients. It’s scary out there for your clients. Scary, and frustrating. You must openly communicate everything to your clients.

Find out their preferred method or platform for communications, and use that. Tell them upfront you will probably over-communicate, and they are free to tell you to back off. Trust me, no one is going to complain about too much communication, and I’ll bet a lot of money you’ll never get a request to back off keeping people informed.

Follow up

Several months ago, I wrote about the two hardest things to say to clients. Our receptionist today had no problem whatsoever with one of those phrases: “I don’t know.”

The problem is, she failed miserably at the most important part of using this difficult, but very powerful phrase: she didn’t follow up.

She started off right, and I’m sure with good intentions. “I don’t know, I’ll check.”

If you say, “I’ll check,” then it is paramount that you actually check. Letting the person know you’ve checked helps too. Follow up! Without the follow-up, your words mean nothing.

Your word, your reputation, is everything. It’s OK not to know something. It’s inexcusable to tell someone. “I’ll check,” then fail to do so.

Nice gesture

Ultimately Francy got her upper GI. The barium was not fresh and minty, the customer service sucked, but the place comped our parking and gave us a $5 Starbucks card. Those were nice gestures, and helped wash the bad taste of service (and barium) out of our mouths. I filled out a, “How did we do?” card, checking “no” on several boxes.

I fully expect the follow-up to be about the same as the receptionists’ — that being non-existent. Same for the tweet into the void.

But I did learn some lessons, or at least got some reinforcement of the importance of customer service.

Communicate and follow up. Show a little empathy. Treat your customers how you’d want to be treated. Do that, and they’ll walk away singing your praises. That’s way better than having them walk away with the feeling that swallowing barium was the best part of their experience.

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Virtual Home Buying Program

By Appfolio Websites • 20 May, 2022

Interested in buying a new home without leaving the comfort of your couch?

What is Absorption Rate in Real Estate- And why does it help answer the question, “How’s the market?”

By Appfolio Websites • 20 May, 2022

Absorption rate is defined as the number of homes sold in a certain time period divided by the total number of homes available. The rate is determined by dividing the number of homes sold in a certain time period by the total number of available homes. The output is then identified as percentage or a # of months. In other words, what absorption rate shows, is the amount of inventory on the market. For instance if the absorption rate is 3 months, that means if no other homes come on the market, all the homes would be sold (absorbed) by the end of 3 months, and there would be 0 homes on the market. Industry experts vary on what they consider to be a seller's market, a buyer's market or a balanced market but one example uses an absorption rate of 6 months. A 6 month absorption rate would spell a balanced market. Less than 6 months would be a seller’s market and a rate above 6 months would be a buyers market. What does that mean for Phoenix Metro - At the end of June we were at a 1.5 month absorption rate. That is an extremely low number! It displays just how limited the inventory is - 14,382 active listings for all of Phoenix Metro. Even through the COVID-19 pandemic we have seen the Phoenix stay a seller’s market because of the lack of new inventory that has come online. There are many reasons that could be causing less listings going live; some would be sellers are worried if now is the right time to sell, some would be sellers don’t want to move during the pandemic, some would be sellers are re-financing at historically low interest rates and are happy to stay in their current homes, there are countless other reasons. So if you have been waiting for the right time to sell, this could be a great opportunity for you, but of course, every situation is unique! So in your next zoom meeting go ahead and drop in a line about the absorption rate in the Phoenix Metro area and do it with confidence! As always we are here to help answer any questions and make sure you have all the knowledge you need for your real estate journey!

What to Expect: The Turn Process

By Appfolio Websites • 20 May, 2022

Out with the old [tenants] in with the new! How do we prepare tenants and owners for the turn of a property When looking at property management, typically what comes to mind first is often finding a tenant or handling the daily maintenance requests. But in reality, the crux of the tenant and owner experience is often how the turn of the home goes. There are several aspects that come into play. Overall we want to make sure the outgoing tenants leave the home in good condition (or are held responsible for not leaving in good condition), we want to make sure the incoming tenants are moving into to a well cared for home that is prepared for them, and of course we want to make sure we are good stewards of our homeowners property(s). What makes this a hard needle to thread is that each of these parties have different expectations and perspectives. At E&G we work very hard at setting proper expectations all the way around. For the outgoing tenant: We visit the home 45 days before their move-out and we prepare them with lists of preferred vendors for carpet cleaning and professional house cleaning, we also review if there are any major items that should or can be addressed before move-out. We remind them of lease language in regards to how the home should be left. We then provide them with all of the move-out documentation and make sure they know if they were charged, why they were charged and what they were charged. For the incoming tenant: It is always important that we minimize vacancy, but we want to have enough time to get the home prepared for the new tenant. We set the expectations that a few minimum criteria will be met for the home at move-in. This includes: Professionally Cleaned Carpets Cleaned (and/or replaced when deemed necessary) Touch Up paint completed Landscape cleaned up If the incoming tenants have additional requests before move-in we present that to the owner during the application process. After move-in we then give the tenant 7 days to report anything we missed so that we can have everything taken care of in just one handyman visit where appropriate. For the owners: After visiting the property the first time, usually 45 days before the tenant vacates, we will reach out to the owner if there are any larger ticket items that need to be prepared for. In addition when the leasing agent is preparing to list the home, one HUGE thing we do is provide our homeowner multiple options with appropriate suggested rental rates. So if we see an opportunity to increase rental rates by doing certain repairs or upgrades we will lay out the specifics and better prepare the owner for the turn. We always keep in mind and remind owners of the expectations we set for our tenants that the home will be: Professionally Cleaned Carpets Cleaned (and/or replaced when deemed necessary) Touch Up paint completed Landscape cleaned up We are transparent and have all videos, photos and invoices available for review for the entire turn process! Overview We have created some unique practices and procedures to set up the Turn Process and to make it fair and equitable for all. The most important thing for us is to make sure expectations are set and that all parties involved are equally prepared for the process so that all come out feeling like they had a great experience. In the end we want to make sure we are leaving people AND properties better than we found.

Zestimate - Real Estate word of the Century?

By Appfolio Websites • 20 May, 2022

How did one made up word become so important to millions of people? One made up word has encouraged people to buy, sell, cancel contracts, disagree with Realtors and so much more. I first want to take a moment and appreciate that Zillow and other online algorithms have put in countless hours of work to get their calculations to where they are at today - a great accomplishment in its own right and kudos to them! But when it comes down to it, a local expert, a real life agent, a trusted advisor will consistently be more accurate and be able to truly assess the home in its current condition. After all, an algorithm can’t visit your home in person, an algorithm hasn’t sold 100’s of homes in the area, and an algorithm hasn’t lived down the street for years. Zillow does actually publish their estimate accuracy and it’s actually fairly decent in the Phoenix Area, the large amount of homogenized developments certainly helps. For instance in the Phoenix Area over 92% of the homes sold are within 5% of the estimated sales price (not bad!). But in San Francisco, where there is a large variety of homes and many years of highly competitive offers, Zestimates are within 5% of sale price only 63% of the time. There are some factors that affect the algorithm and can throw off the Zestimate as well. Some can be edited and then updated through Zillow, and some can’t. Inaccurate Basic Information Sq. Footage Beds Baths Upgrades since you’ve owned it New Kitchen New Flooring New Pool Limited data points (if there aren’t many sales in your neighborhood, Zillow will have less data to use and this can throw off some numbers) Now, even with all of that being said, me and every other Realtor would be lying if we said we never looked at the Zestimate in helping us get a value of the home. But it is important to remember that the Zestimate should be a starting point or simply a data point to help you determine the value of a home. An experienced real estate agent and/or an appraiser will always be a better more sure fire way to get a true assessment of your home.

Tips and tricks to purchasing a home

By Appfolio Websites • 20 May, 2022

First comes Love, then comes.. The rejection of your purchase offer. In this time of increasingly limited inventory, this is a love story Realtors see far too often. It’s heartbreaking for us agents as well. Whether we are representing buyers or sellers, we feel your pain! I recently had a listing that received many offers above list price, and as I would send the personal letters over to the sellers, they would get emotionally attached to each buyer making their decision even more difficult. At one point the husband said to me, “I wish I had more houses like this one to accept all the offers!” As a buyer, it may seem like you are helpless if you don’t have enough cash to buy the home outright and you aren’t willing to pay tens of thousands over list price - that’s it, no home for you. BUT I’m here to tell you there are ways to make your offer more appealing.. sometimes even more appealing than a cash offer! Here are some techniques our agents have used or seen applied on our listings: Escalation Clause - This essentially tells the seller, “show me a higher offer you’ve received and I’ll beat it by $XX up to a certain dollar amount.” Limited Appraisal Waiver - It’s one thing to have the higher offer, but will the house appraise? With the Limited Appraisal Waiver, we typically use language like, “in the event the home does not appraise at the purchase price, the buyer will pay an additional $XX amount above appraised value out of pocket.” Personal Letters - Selling a home can be just as emotional of a process as buying home. Sometimes these personal letters can really make a difference when the seller decides what offer to accept! Communication from Lender to Listing Agent - Sellers like to know that their buyers are qualified and they like to know that their deal isn’t going to fall through at the last minute. Any communication from the lender to the listing agent helps, whether it’s a simple phone call or an email. Higher Down Payment - Can’t afford to pay for the entire home in cash? Maybe put more money down instead. Sellers love to see a buyer that is able to put more money down. This typically means there is less of a chance of the sale falling through after the appraisal. Buyer’s Concessions - This creative option needs to be cleared through the lender first, but this allows the BUYER to give the SELLER a credit at close of escrow. This can be beneficial because the seller can net more money without raising the purchase price and jeopardizing the appraised value coming in low. Long story short - don’t give up on your love story. We as a team have creative solutions to help you get into the home you love. Call us today to learn more!

Investor Secrets

By Appfolio Websites • 20 May, 2022

For decades we have been encouraged to invest in real estate. Nearly 90% of all millionaires have been created by investing in real estate, so it’s a no brainer right? But some of us need that extra security before investing - whether that be more examples of actual results or a helpful hand to guide you in the right direction. In an upcoming blog (stay tuned!) we will talk about how to pave the way to how you can invest in real estate, but today I want to share one of our most profitable secrets that has been consistently successful for us. Whenever we talk about investment opportunities we always seem to mention the city of Tempe. Over 25% of our rental properties are within the Tempe area and we even moved our office to Tempe in Spring of 2019. It has been a repeatable and successful avenue for real estate investment that we can’t get enough of! Due to COVID-19, we saw some atypical results this year and while we are keeping an eye on it to see if any of those effects linger, we are still aggressively pursuing Tempe rental properties for our investors. In the example below, we break down the costs and income for one of our clients. In July of 2016 we helped him purchase a home for $307,000. It was a 4 bedroom 3.5 bathroom home with a pool and easy access to the ASU Tempe campus, making it the perfect home to use as a student rental. We immediately leased it out for $2,650 a month & increased to rent to $2,750 a month the next school year. (That’s an easy additional $1,200 a year!) As a full 45 months went by, the owner collected $128,843 in rental income with only around $17,200 worth of expenses — In that time, he earned $111,643 in net rental income! In May 2020 we helped the owner sell the property for an appraised value of $395,000. After escrow costs and fees, the owner's proceeds were $372,140. When you remove the initial investment amount, you are left with a net return on the sale of the house of $65,140. Now combine the net rental income with the net return on the sale of the home and the owner made a total of $176,783 in just 45 months. (That equals out to almost $4,000 a month!) He made an annual return on his cash of 14.4%! Over the life of the asset (45 months) he made a profit of over 57%! There aren’t many investment opportunities where you can see that type of return on your money. If you’re interested in learning more, stay tuned for more posts on how to get into real estate investing!

November 2020 Housing Report

By Appfolio Websites • 20 May, 2022

Top 10 Cities People are Migrating Due to Covid

By Appfolio Websites • 20 May, 2022

What's More Important for Real Estate Investing: Equity or Cash Flow

By Appfolio Websites • 20 May, 2022

Both, right? Of course! We always love to purchase properties below market that will appreciate in value but also bring in some great cash flow in the meantime. It doesn’t end there though. Sometimes there are decisions to be made, and that depends on your short and long term goals. When we discuss equity in this context, we are talking about under market value homes as well as properties expected to appreciate quickly with little more than routine maintenance. As discussed in another article here, let’s break it down below. When Cash Flow Matters More: Cash Flow is a focus for investors who are truly relying on or desire to have “mailbox money.” For investors that want to pocket cash on a monthly basis. For small investment property owners, this could be for short-term planning, “I want some additional money in my pocket to supplement my day job!” or long-term planning, “I’m not worried about what this house will sell for in 3-5 years, I won’t be selling for the foreseeable future, I just want to make sure I’m making money each month!” This is typically the focus of Institutional investors. For them, cash flow is the name of the game. They are constantly talking about gross yield (annual rent divided by the price of the properties) and what their “buy box” is (what range they’ll accept for the gross yield of a portfolio). These firms need to hit a certain return for their investors. For example, a fund might estimate an 8% return for its investors or an insurance company may estimate it needs a 9% yield to cover their expected losses. When Equity Matters More: Equity, especially built-in or instant equity, can be a huge factor for most of our short term investors. A home that hits certain criteria can allow for money in and money out more quickly and possibly the ability to invest more or on a grander scale. “The market is soaring right now, and this home is below market, let’s buy it cheap and sell it when the market tops!” It’s not always a super short term play though, an investor could be willing to take a lower cash flow monthly if they anticipate to sell during another peak. “I need some cash flow now to help, but I really want to max out my equity and sell the property when I retire in 10-12 years.” While in the Phoenix Metro area, there are still a myriad of opportunities for a property that has built in equity and cash flow there are other markets where cash flow just isn’t possible, but equity can still be found if you can buy below market; I.E. in the Bay Area, Austin, or NYC. Bottom Line E&G Real Estate is here to help you understand the differences between Equity and Cash Flow and we want to make sure your decisions are setting you up for success for your future goals! Call us today and one of our Real Estate Investment Advisors will walk you through it all!

Property Owner Resources - COVID-19 (Updated April 1, 2020)

By Appfolio Websites • 20 May, 2022

Mortgage Relief • Fannie Mae - https://www.knowyouroptions.com/covid19assistance • Freddie Mac - https://myhome.freddiemac.com/own/getting-help-disaster.html • Save Our Home AZ - https://housing.az.gov/save-our-home Check back for more!