Real Estate Investing
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Today's Article: "The Workplace of a Real Estate Investor"
The old saying goes that a man’s home is his castle, and beyond the medieval reference, I think there is still some truth to this in the modern era. The home is the most sacred of places, where one does not have to put forth their best show, can relax, and enjoy those things unrelated to work or business. That’s all well and good but what happens when a home-based business enters the picture? Things may get a little more complicated and it could impact your performance as an investor so let’s explore the issue of business workplace a little more.
You have a number of options for where to conduct your real estate investing business. Let’s look at the three main options: a dedicated office (purchased or leased), a time-share office and a home based office.
The dedicated office is a great idea for many investors but is also the most expensive of the options available to you. You’ll have to locate space to either rent or purchase, which can be a considerable expense in some areas, or at least beyond the scope of a start-up business. Dedicated office space also has no furniture, shelves, etc. and will require separate utilities. All of these things can add up pretty quickly and can thus be prohibitive for many new business owners, including real estate investors.
The advantage of a dedicated office is that your business has a separate location, and thus makes it easier to both separate work from your home life and also maintain personal privacy, with respect to your team and your clients. The latter issue alone is not enough to warrant a dedicated office, as a simple business mailing address is sufficient at first to give your personal life and address the privacy they deserve. Beyond privacy, a dedicated office is clearly a sign of credibility and will generally be seen as a plus to both team members and clients.
There is no need to rush into an office, however, in my opinion it is an essential step at some point if you want to take your real estate business to the highest possible level.
Therefore, if the move to a dedicated office seems warranted, congratulations! This decision is most likely based upon a need that is fueled by a certain volume of business. Basically, it should be a sign that things are going well and when the time is right to move to a dedicated office, you’ll probably know and should also have the revenue to support the move.
Time Shared Office
A newer office concept that is gaining popularity is what I like to call ‘time share’ office space. Here’s how it works. You lease the right to use office space at a particular location for certain blocks of time each week. In some cases, you can also pay a set fee and schedule the space when you need it, say for meetings or conference calls. This can offer the appearance of a dedicated office but without the cost and headache of having to manage it all yourself. As a real estate investor who will likely not need a full-time office right out of the gate, this may be a good option to consider. It also displays professionalism by having a formal meeting place to offer clients that isn’t a table in a coffee shop.
The downside to this option is that the ‘tenants’ at these part-time offices are usually not given storage space so don’t plan on being able to store all your files and equipment there. You’ll have the flexibility of office space but will likely still need office space at home for the rest of your business needs.
The home-based office is where I originally started and is without a doubt the most common starting place for the beginning real estate investor. There is no need to purchase or lease an office and it will require far less capital to equip the office when it is at home. Spare or reconfigured bedrooms are probably the most common locations for home offices, followed by finished basements, and nooks or extra space in an existing room in the house. The latter is the only one I really don’t favor, although I recognize that, for some readers, this may be the best current option.
When considering where to set up your home office, consider the following factors that are all relevant:
- You will spend time on the phone in your office and need peace and quiet
- Storage space for your equipment and files/paperwork
- Uninterrupted access to computers and the Internet are essential
- Lack of distractions potential distractions (TV, barking dog, crying child, etc)
I recognize that a home office is often something of an intrusion to the space and time dynamic for you and/or your family. You really need to be able to make or take calls when necessary and be able to access your computer at a moment’s notice so consider these things carefully. Having to go outside to do your calls or wait until your child is done surfing the Internet before you can use the computer will get old real quick, in the absence of a Plan B.
At this time you may also be wondering how to conduct client meetings when you work from home. Should you meet with them at your home office? I wouldn’t recommend it. To me, privacy is very important and you’ll be surprised how nosy some clients can be. Instead, set up meetings at any one of your many local offices such as; Starbucks, McDonalds, Wendy’s, etc. If anyone asks why you are meeting there, be honest. Tell them that you work from home and you like to keep your business life separate from your personal life. This is not uncommon nowadays, and as a result people will and should respect your honesty.
In my next post, we’ll discuss all the physical components you need to run a successful office.