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Is It Time To Sell Your REI Business?

by blogger1
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on Thursday, 26 May 2022
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Is it the right time to sell your real estate investing business? If so, is your company even sellable?


This could be the ideal time for many real estate business owners to cash in and sell their companies. It is a window of opportunity many will kick themselves for missing out on.


However, not every company is positioned and optimized to be sold or bought. Let’s look at the timing, why you should be prepared regardless of your plans, and what you can do to make your company an attractive acquisition.


Why Now Is The Right Time To Sell


This is the phase in the real estate cycle when many real estate businesses may be peaking in value and appeal. It is also the same peak time in the general economy and mergers and acquisitions cycle for business owners to sell.


Many failed to see this opportunity ahead of 2008. Then either struggled for years while everything fell apart, or just closed the doors and quit, leaving millions of dollars in unclaimed value on the table.


This is a time in the economy when a lot of consolidation is in the works. Capital markets still have cash to fund acquisitions, and bigger companies want to expand by acquiring more market share.


That could all change fast in a downturn. The ability to buy may evaporate. Acquirers will be looking for steals, and to offer a small percentage of what they may offer now.


Why Having A Sellable Real Estate Business Is Important


Right now you may think you will never want to sell your business. That’s what most think, until the moment they need to. Yet, we never know where the market, company values, will go, and when for sure. We never know if we will be healthy enough to work tomorrow. Or if our families will need us to be present for them, instead of running a business.


Selling a business can provide a lump sum payday, ongoing passive income, or a combination of both, without having to be involved on a daily basis.


Even if you never sell, being sure your company is set up for it will only help increase the value of your assets, and improve your operations. You can’t lose. Yet, you can build millions or billions of dollars in extra value into your company, while going about your regular daily work. It’s virtually a no-brainer.


How To Optimize Your Company


Optimize your company for value and appeal by:


  • Creating systems throughout your business
  • Maintaining clean records, accounting, and contracts
  • Use smart leverage for deals and keep your cash balance sheet healthier
  • Make sure your business can run without your daily involvement


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Real Estate Business Planning Smarts For 2017

by blogger1
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on Wednesday, 28 December 2016
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2017 promises to be a big year for real estate. How investors, professionals, and business owners plan now will make all the difference in how much they benefit from the opportunities over the next 12 months.

The U.S. real estate market is definitely entering 2017 on a positive and confident note. The overwhelming sentiment is certainly bullish. That also means it is competitive too. There may be some quick wins to be had while the rest of the industry is still getting warmed back up after the holidays. Yet, who reaps the biggest gains and is still surviving and thriving at the end of 2017 will be those than plan well know.

There are clearly lots of good things happening in the markets, and specifically real estate right now. That has some side effects too. Inflation is a big one. It will catch many investors, agents, and real estate business owners by surprise. We’ve already seen interest rates moving up. Three or more rate hikes are coming in 2017 according to the Fed. This alone means things will get more expensive. Life in general will get more expensive for home buyers and renters, and employees. Hopefully it also means more money in the economy to be spent. Still, it is crucial to factor these rising costs into plans in order to stay afloat and on top of your game.

This will come into play in property costs, and the cost of most types of leverage. That can often be balanced out in the market. Then there are other costs. The cost of building materials, gas, marketing materials, and freelance workers. You have to build these escalating expenses into your plans. Otherwise you’ll quickly be upside down, if not at least be experiencing far thinner spreads than projected. This shouldn’t be a big problem for wholesalers. It may be a little more challenging for rehabbers. Even more so for buy and hold landlords.

With this in mind some will find it highly profitable to lock in contracts and even prepay vendors and contractors in advance before the ball drops for 2017. This will not only hold down costs, but may provide additional tax benefits too. Others might be able to negotiate preferred terms with vendors and contractors by going long with engagements. Instead of month by month print marketing look at quarterly and annual deals. Instead of piece by piece with freelancers consider monthly or annual arrangements. You may get them to put in more effort in investing themselves in your success too.

 

Plan well now. Reap the benefits all year.

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