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When Bad Body Language Kills Your Real Estate Deal

November 11, 2013April 10, 2013 by Julie Broad

One lovely morning last week when we didn’t have any early meetings, we strolled along the seawall towards Starbucks. As we were attaching the leashes to the fence outside the shop another fellow walked up with a dog. We smiled, motioned to our pups and suggested he tie his dog up on the other side of the outdoor sitting area to keep things calm while we all went inside to enjoy a coffee.

He nodded and stopped where he could tie up his dog at a nice distance from ours. All was well.

Inside, as we were waiting for our drinks to come up on the bar he commented on what good dogs we have. I smiled and gave a silent thanks that they were in fact being good at that moment.

I commented on how good looking his dog was and he started telling us the story of how he came to have his dog as part of his family. It was a good story. He’d rescued his dog from a bad situation in the middle of the winter. I was smiling and nodding – encouraging him to go on – until he took a step towards me.

He’d moved into my space and had made me completely uneasy. I couldn’t end that conversation fast enough.

He probably had no idea what happened. I was totally into it one second and running away the next.

Unfortunately the same thing happens to so many people when they are raising money, presenting offers or even showing properties to tenants. When you are trying to build rapport, engage someone in a conversation and ultimately influence their action you need to be aware – very aware – of what you say and do and how it impacts other people.

The words you use are important but your message is impacted DRAMATICALLY by the things you do more than anything else. Where are your hands? What are they doing when you speak? Where are your feet pointing? What is your posture like?

Your Body Language Can Kill Your Real Estate Deal

I have spent a lot of time observing and thinking about body language in real estate. I’ve had the pleasure of meeting and learning from someone who is a worldwide known expert on body language, influence and persuasion (more on him in a minute). And, after hosting 10 different live workshops across Canada on raising money for your real estate deals, I’ve seen a lot of bad body language in action. When someone tells me they have been struggling to raise money, a quick look at what they do when they are talking about their deals can reveal a lot.

Here’s three of the most common things I’ve seen that kill deals (and while these things are most obviously going to impact your attempt to raise money it absolutely will impact your conversations with tenants, sellers, buyers and anybody else in your life that you’re trying to influence in any way!). Check to see if you’re guilty of any of them.

Body Language in Real Estate Tip One: Ignore that itch – scratching makes you look nervous!

In our workshops, when I walk up to a pair who are practicing their money raising conversations I can usually tell within 5 seconds who is the one presenting a deal and who is the one listening. The person presenting is often scratching or rubbing something.

We rub our arms to self soothe which means you’re uncomfortable. Itching anything makes you look nervous.

Get control of those hands. You’ll look and feel a lot more confident.

In Kevin Hogan’s newest book Invisible Influence he pointedly says NEVER touch your face. “Do not touch your face. It is never perceived as professional or attractive and can indicate deception.” (Kevin is the influence and persuasion expert I mentioned above. This is his 22nd or 23rd book on influence, persuasion and body language. You’ll find that gem on page 163 along with six other body language tips. This book is an excellent read by the way! I highly recommend it)

Body Language in Real Estate Tip Two: Where are your feet pointing?

Influence is about engaging and understanding the other person’s point of view. Most of us struggle with that because we are very focused on ourselves and the message we have to communicate. The most important person to focus on when you’re influencing someone is that person. Listen to them. Your entire body – right down to your feet – needs to show them that you’re engaged and really listening.

We first learned this one from Elliot Hoppe (links to a video) at a body language course we took. Where your feet are pointing is a good indicator of where you want to be. If you’re engaged in a conversation you’ll usually find your feet are naturally pointing to the person you’re speaking with. If you’re bored or annoyed or just ready to go, your feet will naturally point to the door or an exit.

You may think that it doesn’t matter because most people don’t know about this but the reality is that a lot of cues are processed subconsciously and the other person may not know precisely how they know you are (or are not!) listening to them, but they will just know you are.

Body Language in Real Estate Tip Three: Sit Still – Especially When Someone Asks You a Question

I had a boss that used to lean back and then cross his ankle over his knee when I asked him a question that made him uncomfortable. It happened every single time.

I didn’t know anything about body language at the time, but I knew enough to realize that I was about to get a story when he did that. It was a defensive reaction. He didn’t want to answer my question so he’d tell me a story. He had great stories but most of the time the story didn’t answer what I was asking.

The point is that I knew it was coming. I also knew that he wasn’t being open and honest. He was hiding things from me.

I would walk out of the meetings where this happened irritated. I was getting a line and I knew it. He would probably feel good that he handled the situation well and told me a motivational story in the process.

When someone asks you a question that makes you uncomfortable pay attention to what you do in reaction. In our workshops the most common reaction is what I call a human pretzel move. Most people cross their arms or legs or both! And they do it without realizing they are doing it … and it’s almost always in immediate response to a question that makes them uncomfortable.

Think about what you are telling the other person when you do this. You are sending their unconscious mind signals that you want to hide the truth, you’re uncomfortable with the question and you’re not confident.

Not being confident is a deal killer every time.

Just like the man at Starbucks who stepped into my space, every single one of these things can kill rapport in a second. Once rapport is gone it’s hard to get back. You may wonder why your tenant never complies or why you can’t raise money … so take a look in the mirror, ask a friend and start paying attention to the little things you’re DOING that are making your influence attempts difficult. You just might find that you’re saying the right things but not following them with congruent actions that DO the right things.
First Image Credit: Julie Broad
Second Image Credit: © Odua | Dreamstime.com

The Perfect Script for Raising Money for Real Estate Deals

July 11, 2013March 26, 2013 by Karysa

Imagine, after weeks of hard work you finally have a meeting with a prospective investor who is interested in one of your real estate opportunities. You have the perfect presentation prepared. You’ve rehearsed your lines and you’ve dressed the part. You walk into the meeting confident and excited. You walk up and shake hands with the person and sit down across from them. You’re ready to take control and get started when the other person abruptly says “So what have you got? Tell me about the property.”

“Crap!” you think … I didn’t prepare for that. You try to recover and say something like “I’m so glad you asked – I am excited to tell you about that. First let me tell you a bit about what we do and who we are.”

Now firmly back in control you launch into your presentation and because you’ve stayed on the script you think you did a good job. The person, however, says “Sounds interesting. I’ve got a coworker who invests in real estate so I am going to run it by her. I’ll get back to you.”

Weeks go by. You’ve lost the deal and you’ve never heard from the other person again despite emailing, texting and calling them. What happened?

Only about 100 things went wrong here but there are three key things that could have changed the entire scenario.

#1 – Thinking you can follow a script to raise money is an enormous mistake.

That doesn’t mean you should not prepare but following a script only works for actors who are in a production together with other actors working off the same script. There is no magic script that raises money – there are things you should say and should not say to increase your chances of getting a positive result – but it’s absolutely not a script.

#2 – The more you talk the less likely you are to get the money.

When I was a young sales rep working for Kimberly Clark Canada selling diapers, tissues and towels, I didn’t know much about the businesses I was selling to and I barely knew anything about my own products, yet I won sales contest after sales contest. My secret was simply that I didn’t do much talking at all. My Dad always used to joke that it was better to keep your mouth shut and have people wonder if you knew what you were doing than it was to open your mouth and remove all doubt. People tend to think they have to talk a lot to get the deals when in fact the absolute best thing you can do is engage the other person and learn all about them. Ask great questions, be interested in the answers and let that lead the conversation, not your script.

#3 – A focus on the information versus the relationship.

I could interchange a lot of words with information … money, deal, script. The point is that the person was not focused on the most important thing and that is developing a relationship and figuring out if there is a fit to work together. That’s the most important step for you creating a business you like AND in paving the way to many more “yes” responses than “I’ll get back to you’s”.

The good news is that it’s actually pretty simple to raise money if you like to talk with people and get to know them. The bad news is that it’s a lot more complicated that preparing and executing a perfect presentation.

Getting the Money for Your Real Estate Deals

December 28, 2012December 27, 2012 by Karysa

Even after 4 years of running our real estate investment business full time, eleven years of history of never missing a mortgage payment on any property, and a substantial net worth, we still find it challenging to finance our investments. In September we bought an beautifully cash flowing triplex. In order to finance it with the bank we had to show 3 years of mortgage and interest payments just hanging out collecting dust in a bank account. That’s on top of the 25% down payment that also has to be sitting in a bank account for 30 days before we even apply for the mortgage.

We bought it for $325,000. In order to even apply for the mortgage we have to have about $130,000 in cash just sitting around.

If you are starting to think about becoming a full time real estate investor and leaving your job, I encourage you to finance as many properties as you can while you have what the bank perceives to be a secure job. You’ll also want to start planning for your funding and financing future (one of the best ways to do that is to join us for one of our Fund Your Deals in 49 Days LIVE training events – we’ll help you build a funnel of sources for funds!).

The good news is that you do have some options when the bank says no or you don’t happen to have hundreds of thousands of dollars sitting around so the bank will say yes.

No Money Down – No Bank Needed

If you watch late night infomercials you’ll probably feel some attraction to the no money down, no qualifying at the bank strategies. We’ve been right there with you … not once but twice. We’ve invested almost $40,000 into learning “no money down” and no bank needed investment strategies.

The biggest lesson I can share with you is that just because you can do deals with no money down doesn’t mean you won’t need money.

Sandwich leases are a popular one these days for Canadians that want to do no money down and no bank needed type deals. A sandwich lease is simply where you find someone who will allow you to lease option their home from them and you turn around and offer it as a rent to own to someone else. You pocket the difference in monthly cash flow and option fee.

In theory this is a great strategy. The reality isn’t as pretty. It takes a lot of marketing effort to find the deals. It also takes a lot of effort to educate and explain what you’re doing to the seller. Finally, you’ll find the houses are generally in a state of disrepair and need some investment to improve them so you can attract good rent to own tenants. How much money do you want to put into a house you don’t own? The final issue is that it rarely works out that your lease option term aligns with the term that your rent to own tenants are able to buy within. It’s tricky. Your upside is limited in this type of deal and while you CAN do it without the bank, we find most investors get into this type of deal really excited and work hard for a year or two and then look for something new because it’s so much work for a minimal pay day.

Generally when we did creative deals – whether it was a sandwich lease, wrap mortgage or some sort of seller financed strategy – we ended up with problem properties and challenging tenants. We basically created a full time babysitting job for ourselves. That is because the kind of deals you can do creatively generally are not the great properties in good areas. They don’t attract the best caliber of tenant nor do they have minimal maintenance requirements.

The no money down and no bank needed strategies work but they didn’t work for the life and business we wanted to create.

The strategies we use to fund and finance our deals include Vendor Take Back Mortgages, Private Money, RRSP mortgages and joint venture partners. Sometimes we use a combination and other times we just use one. These strategies allow us to focus on doing great deals in areas that attract the best tenants. Our tenants typically love their homes like they were their own, apologize when they are late with rent or give us a heads up that it might happen, and rarely call us with problems. That’s because we focus on doing the deals that allow us to create a business and life we love instead of doing deals just because we can do them creatively or with little money down or no banks.

4 Great Ways for Getting the Money for Your Real Estate Deals

Vendor Take Back Mortgages

Seller financing, more commonly called a VTB or vendor take back mortgage is simply where the seller (Vendor) of a property is willing to provide some (or all) of the mortgage financing on that property.

Seller financing can take several different forms. We’ve done deals where the seller provided the entire mortgage, which amounted to 80% of the property value. We paid her 6% interest amortized over 25 years for a 3 year term with no prepayment penalties and an option to renew. She was able to sell her house in a slower market and made more money from it than she otherwise would have through three years of interest payments. We also have used seller financing to top up traditional bank financing.

Private Money

Private money is simply money from an individual. It’s different than hard money. Hard money lenders finance deals for real estate investors as a business. They are more sophisticated in their investment terms and will typically seek quick repayment at high interest rates. With private money you can have more control over the terms of the loan. You can offer terms that suit your needs and offer a good return for your private lender.

The easiest way to find private money is to call your favourite mortgage broker and ask if they have any private lenders. That money is expensive thought. The upfront fees on those funds alone are usually1-3% of your mortgage amount. On a $250,000 mortgage that means up front you can start off with a $7,500 fee plus pay at least 7% interest on the loan. That’s ok if you’re in a pinch with a strong cash flowing property, but our preferred source of private funds is to raise them ourselves.

We find that a lot of folks have paid off their homes and are willing to put a line of credit on the property and loan that money out for a premium. One of our favourite strategies is to borrow $350,000 from someone’s line of credit to buy and renovate a property. We paid them 5% + their line of credit costs. (See an example of a property we’re doing this on right now in our video series on adding a legal suite to a property).

RRSP Mortgages

Mutual funds and stocks are not the only investments that are RRSP eligible. A mortgage can be held in a self directed RRSP (or RESP, LIRA, or RRIF) account. This is probably the largest untapped source of funds available to real estate investors because very few people know this option exists.

Master this and you’ll always be able to find the funds for your deals. With no management fees or advisor commissions to pay, RRSP holders could be making a stable and predictable 6, 7, even 10% or more return on their money inside their RRSP.

There are some additional rules around using RRSP funds though. For example, you can’t borrow funds from your immediate family to fund your investments. It needs to be arms length. You also can’t use the RRSP funds for a down payment directly on a property. You’ll need to put the funds on a different property as a first or second mortgage and then use those funds on the new investment. **We now cover using RRSP funds in our Fund Your Deals in 49 Days Live Training**

Joint Venture Partners

This is the most powerful strategy in our investment tool box. It’s the strategy that has allowed us to comfortably add a new property to our portfolio almost every month.

Our joint venture deals typically are structured so that we find the deals, oversee all work and management and split the proceeds 50% / 50% with our partner. In exchange for all experience and efforts, our partner puts in the cash required to close on the property and puts their name on title so they qualify for financing from the bank.

If anything goes wrong with the property and requires cash we are partners and split the costs 50% 50% just like we split the proceeds.

Busy people love this option. They don’t want to spend the hundreds of hours we’ve spent learning an area, building a team and digging up deals. And they definitely don’t want to take calls from tenants or handle issues around the property management. They can get into real estate without the hassles of being a landlord.

There are a lot of ways to fund your deals – even if the banks say no. The key is to know where to look, what to say, and what choices make the most sense for you and your goals.
Photo Credit: © Charles Knox Photo Inc. | Dreamstime.com