Investors make money either by increasing revenues or decreasing expenses.  The expense side of the ledger is very tricky.  At times, it will be important to spend money on regular maintenance items in order to avoid a much larger issue in the future.  Investors should keep this simple concept in mind as they tackle the due diligence of expenses.

When beginning the due diligence process, it is important to verify exactly what was spent.  Most property owners should have a list of major and minor repairs since they purchased the property or at least over the last five years.  Match these expenses with cancelled checks or bank withdrawals.  These should also be given to the property inspector so that they can verify that the work was done as well.  This should also be done with monthly expenses like utilities, taxes and standard repairs/maintenance items.

The next step in this process is to determine what work should have been done vs. what work was actually done.  Deferred Maintenance is a real estate term that describes necessary maintenance items that have been pushed out to save property owners cash today, typically at the expense of significantly more cash tomorrow.  Remember, the value of the property is equal to the net operating income divided by the capitalization rate.  If owners know they will sell their property this year or the next year, expect them to delay expenses to inflate their net operating income to increase the overall property value.

A traditional property inspector can spot deferred maintenance right away.  Small leaks that were never fixed can turn into significant water damage or worse, create conditions for mold to thrive.  Tour the property with the property inspector and ask them to point out any areas where deferred maintenance could exist.  This helps an investor in two ways.  First, it gives the ammunition to renegotiate the selling price.  Second, it helps the investor understand what kinds of items need regular preventative maintenance to avoid major headaches down the road.

The expense side of the equation also represents a hidden value in the property.  Hands off managers could be running expenses too high by paying outside property managers, who have no vested interest in keeping expenses in line.  Appraisals offer an easy check for expenses.  Most appraisals have a section that outlines market expenses.  Check these against the subject property’s expenses.  If the potential investment properties expenses seem too high, ask questions of the owner or the management company.  Older properties typically require more maintenance and have higher yearly expense costs.  Consider installing newer equipment to save money.  Refer back to the renovation section to figure out how to determine if an upgrade is really worth the money.

Expense should be monitored carefully and check against bills and cancelled check or bank statements.  Getting a handle around the expense side of the property could present an opportunity to significantly increase the value of the property.

Investor should be able to make money both buying and selling real estate.  Perfecting the due diligence process is a great way to save money when purchasing a property.  The first step in the due diligence process is to verify the revenue stream.  In order to verify the revenues an investor should request the following documents: Rent Roll, Operating Statement, Rent Receipts, Bank Statement to verify deposits and either the owner’s tax record (past 3-5 years) or the LLC’s tax records if the property is incorporated.

All of these documents work in conjunction with each other.  The rent roll represents the highest possible collected rent.  Assuming every tenant pays on time every month, the operating revenues should match the rent rolls exactly.  This is rarely the case.  Some times tenants receive rent concessions, they pay late, move out mid-month, etc.  The closer the total rent roll and the operating rent are, the better the collections and the higher quality the tenants.  It is a sign of a good operator.  On the other hand, huge disparities could mean an opportunity to increase value significantly through sound operational excellence.  The further the gap, the more important it is to verify all of the items listed above.

Rent receipts and bank statements should be used to verify the rent collected in the operating statement.  It’s very easy to falsify receipts.  While landlords typically will not do this to inflate the NOI, they will do this to give the perception that their tenants pay in a timely fashion, when in reality they do not.  Comparing monthly deposits is a way to ferret out this issue.  In this case, monthly deposits should match the operating statement exactly.

Tax records should be used as an additional check.  Some can be hard to navigate depending on how they were prepared and whether the entity is a stand alone LLC or tie to other properties, but sellers should be willing to provide this information to potential investors.

Remember, all sellers are not created equal.  Some sellers will be able to produce all of these items with no problem, while other sellers may not even have a current rent roll.  Be firm and adjust the offer price according to the data provided.  If there is no way to verify the last 12 months of Net Operating Income, the offer should be extremely conservative.  If bank records cannot be provided to prove when rent was collected, assume a higher than average bad debt collection and reduce the price accordingly.

The due diligence process is designed to mitigate risk.  Even if an investor chooses to purchase a property after receiving very little information, the investor knows the risk of that decision.  Failing to do proper due diligence leaves money on the table.

After the first offer has been submitted, sellers will most likely come back to buyers with a counteroffer.  Sellers will typically only not counter offers if they see the offer as being egregiously low (or high).  In down markets, sellers may also be more likely to accept a well crafted first offer for fear of losing even more value while waiting for the next one.

If you have followed this guide and made a fact-based offer based on your returns and constrains as an investor, the counteroffer process will be fairly straight forward.  Start the counteroffer by giving on some of the less important contingencies (i.e., shorter due diligence period, seller financing, etc.).  Note, never give up the financing contingency.  No matter what anyone tells you, bank supported financing is never a guarantee and even if you can cover the entire purchase price, your return on investment will be significantly negatively impacted.  Again, NEVER give up the financing contingency.

Next, consider the price that the seller countered with.  Is this is hard counter or a soft counter.  Many sellers will try the nibble, countering with a 1-5% increase in price.  Don’t fall for that.  If a seller will sell a house for $105,000, they will probably also sell that same house for $100,000.  Buyers should be looking for specific selling price increases because it might not be possible for a seller to sell below a certain price.  There could be a recent second mortgage or refinance that you might not be aware of that has to be paid off at closing.  While the seller and their agent will probably not tell you this, their counteroffers might betray some additional information.

After giving on a few of the lesser contingencies and double checking your original offer price against market comparables, consider putting up additional earnest money.  Sellers will value a firm slightly lower offer with a strong closing potential higher than they will a high priced offer with a small earnest money deposit and heavy contingencies.  Additional earnest money costs a small amount in forgone interest payments, but could save you 1%-5% on your purchase price.

When instructing your real estate agent to send your counter offer, ensure that he/she sends the market research that you have done as well.  You want to communicate that your offer is fact-based and fair.

This strategy will vary based on the market conditions.  In a buyers market, buyers should be prepared to give very little and expect to receive three or four counteroffers.  In a sellers market, buyers should be prepared to ditch more of the contingencies (never the financing contingency) and do more market research.  Avoid getting so wrapped up in the negotiation process that you fudge the numbers so that you can offer a higher price.  Stick to your guns and wait for good deals. 

Remember, not every seller or buyer is sophisticated and many make a lot of mistakes.  If something seems to rich, it probably is.  Stay fact-based and unconnected.

Many buyers solely rely on their real estate agents to negotiate their real estate deals.  Regardless of how well a real estate agent performs their job; their financial interest does not align with the buyer.  Real estate agents often argue that they have a fiduciary duty to the buyer and that their reputation is too valuable to sacrifice by not representing their clients properly.  If this were truly the case, they would change the compensation system.  The system has been designed to keep real estate prices high and all parties benefit financially, except the buyer writing the check, from higher pricing.

With that understanding in mind, the buyer should drive the negotiations.  Start by arming yourself with market data.  Many of these items should be provided by the real estate agent, but be sure to do your own research on/in the neighborhood.  Potential investment buyers need to know what comparable properties sell and rent for.  Next, they need to understand the current inventory and the average days on the market.  Then, they need to figure out the trend of the neighborhood (new retails, more jobs, new developments, etc.).  Finally, buyers need to try to understand the motivation of the seller.  This is the hardest piece of the equation because many buyers never meet the seller or never get straight answers from the seller’s agent.

The information above should be used to determine a fair price for the property.  Once an investor gets the value of comparable properties, these valuations should be adjusted for positive and negative trends in the neighborhood.  If market rents seem to be declining or retail sectors seem to be trending down, comparable values might be too rosy.  Additionally, if inventory in the market is high and days on the market have been increasing, potential buyers should take this as a sign that they have the upper hand in the negotiation.

Once a buyer develops comfortable around a potential offer price, they should verify their potential return on this investment.  Investors looking to purchase stable properties should be looking for a return of 5-10% annually.  If you buy a $100,000 home today, assuming no positive or negative cash flow, and sell the home in a year, you should be able to sell it for $105,000 to $110,000 (in two years, $110,250 - $121,000, etc.).

Buyers should also be generous with earnest money deposits.  Sellers equate the size of the earnest money deposit with the seriousness of the buyers.  Be sure before you send a check for the deposit, the contract contains the appropriate contingencies. 

Finally, buyers need to consider what additional terms and contingencies they need in order to secure a painless (and costless) exit if they decide not to buy the property or to maximize their investment.  Buyers should consider asking for seller financing, a 30-day due diligence period where they verify the financials of the property and the soundness of the physical structure, financing contingencies and anything else they can think of to address potential concerns.  Even if these needs are not presented, they can serve as an alternative to price, should the seller prove unwilling to accept the initial offer.

Consumers have a variety of misconceptions around appraisals.  The most important misconception is that appraisals represent a factual value of the worth of your home.  Your home is worth what someone is willing to pay for it, period.  Appraisals remain an important tool in the world of real estate because banks rely on that valuation to determine how much they will lend against the property.  Following a few simple steps will ensure that you get the maximum value for you home.

Appraisers are certified to value properties.  They go through fairly arduous training to understand how to ferret out the nuances that make each house unique, and therefore adding or subtracting from the home’s value.  Despite all of this training, appraisers will not be able to see every piece of value you have added to your home.  The first rule of dealing with appraisers is to be present during the walkthrough.  You will be pleasantly surprised at how many questions they ask you and how helpful you can be in describing the cost of additions and upgrades that may not be apparent to the naked eye. 

Before the appraiser gets to your property, prepare a simple list of any recent (past five years) upgrades or modifications you may have done to your home to add value.  This can either be given directly to the appraiser or used as a guide when you walk through your property with the appraiser.  Be sure to have accurate cost information because that does make a difference.  A bathroom renovation that costs $5,000 will be more valuable than one that may have costs only $2,000. 

During the walk though, politely point out areas that make your property unique.  Only note items of significant value, as the appraiser will not be interested in the fact that your property has ceilings that are 1 inch higher than your neighbors.  Note items like original hardwood floors that have been refurbished or new windows throughout the property.  These items add real value and should not be missed in the appraisal. 

Don’t forget to ask the appraiser questions as well.  Appraisers are an excellent source of market information because they typically work around a few neighborhoods.  Ask how your property compares to the average properties he sees and ask if there is anything you can do to add a significant amount of value to the home.  For example, the appraiser may ding your home for having a roof that is 20+ years old and he may suggest a cheap alternative to a full tear down that could add significant value.  This can be used later to bargain with potential buyers as they consider purchasing the property. 

Think of the appraiser as a free resource or a guide to help you maximize your properties value.  Not only should you be eager to help them maximize the value of your home, but you should seek information from them as well.  Appraisers can be a true value added resource and cost you only a few hours of your time.

Real estate transactions slant in the favor of the seller.  The seller pays both agents commissions and both agents are rewarded for transacting at the highest price possible.  Given these incentives many sellers select the agent that offers to list their home for the highest price, and then simply waits for the offers to come rolling in.  Sellers employing this tactic are making a big mistake, particularly investors looking to sell their investment property. 

Sellers should first understand that time is money.  Even the best realtor will only dedicate two or three months to actively selling your home.  Furthermore, realtors want to get paid.  Commission based employees love to see a big check.  From a realtors perspective, selling a $100,000 for 6%, nets them a commission of $6,000.  Increasing the price by $10,000 only nets them an increase of $600.  Given the challenges of getting to the closing table, most realtors value a quick closing more than they value getting the extra $10,000 for their seller that could take months to materialize.  What means a lot to you, really only means a little to your real estate agent. 

Always remember that you as the investor should drive the process.  Hire great professionals and let them work for you.  After selecting the best realtor a seller must prepare for the negotiation.  Start by understanding your potential pool of buyers.  Is your neighborhood an active investor community or should you position your property for new families?  By understanding your potential buyer, you can shape your property into a blank slate, with subtle hints of character that might appeal to your audience.  If you expect to have a lot of investors coming by, it might be helpful to do some research on rental rates and neighborhood occupancy details.  Young families might enjoy a list of local parks and recreation activities gear towards family.

Sophisticated buyers will be armed with facts about the neighborhood and property values.  You should know your property and know your competition as well as or better than the buyers.  Shop your competition.  It’s always helpful if you are able to comparatively list off details that make your investment property unique.  These unique items should increase the value proposition of your property.  While your house may be the only one on the block with a bird feeder, that will not drive traffic or stop a buyer in his/her tracks.  On the other hand, if you can say my house is the only one in the area with newly refurbished hardwood floors, buyers might certainly take notice.

Check your emotions at the door.  Creating a value proposition for the buyer means offering a superior product at a competitive price.  Don’t be offended by low offers.  Even low offers tell you something about the market and potential buyers mind sets.  Getting more than one might suggest you are in a buyers market.  Take every opportunity to seek to understand the value of your asset.

Novice investors rarely understand the value of a great accountant until after they need one.  Real Estate accountants specialize in tax planning to help investors better understand the tax consequences of their investments.  Numerous laws govern taxes around profits and losses in real estate and a good accountant can help an investor navigate these laws to maximize their return on investment.

Before considering any real estate investment, an investor should speak with their accountant.  Many accountants provide free consultations and typically want to build a relationship in expectation of future services.  Like all real estate professionals, accountants should be vetted with a focus on their real estate experience.  Most accounts will have a cursory knowledge of the real estate tax code; however, an accountant that specializes in real estate taxes provides a much broader knowledge base and stays up to date on all of the latest tax changes.  While investors will certainly pay more for these professionals, the long run value will far outweigh the short term cost.

Investors should familiarize themselves with the following real estate tax terminology: Depreciation, Depreciation Recapture, 1031 exchange, and capital gains and losses.  Accountants also provide guidance around corporate structure.  Many investors don’t understand the value and simplicity of a Limited Liability Company or other forms of partnerships.  Accountants can recommend structures that supply protection against personal liability, while minimizing incremental tax burdens. 

Investors should utilize accountants year-round.  Paying too much in taxes is the same as giving money away.  Additionally, holding a property an extra month or year might not make a difference from a market price perspective, but that simple decision might represents thousands of dollars in tax savings. 

Finally, real estate accountants know real estate investors.  In real estate, access and relationships add value.  Accountants know investors that need to sell or buy properties right away for tax purposes, as well as investors looking for partners.  Their needs should be your gain.

Mortgage brokers provide financial solutions for investment properties.  They provide investors unparalleled access to a number a banking institutions and products, saving them time and money.  Like all real estate professionals, the great mortgage brokers create additional value for investors, while poor mortgage brokers simply take a commission and supply very few useful services.

Every mortgage broker can access the cheapest lending solution for your investment property.  Obtaining the lowest interest rate covers the origination fee mortgage brokers charge, but excellent mortgage brokers have the ability to do so much more.

Great mortgage brokers understand the interest rate environment extremely well.  While it may be impossible to predict future interest rates, having the knowledge of any regulations or economic impacts on rates will help investors make better financing decisions.  When considering whether to secure a fixed or adjustable rate mortgage, helpful advice from a good mortgage professional can assist you in choosing the best financial option. 

Excellent mortgage brokers also provide broader financial solutions.  Many mortgage brokers have familiarized themselves with hard money lenders, other real estate investors, mortgage lenders and other alternative sources of financing.  As a side note, many of these financial solutions should not be chosen by novice investors; however, as investors become more sophisticated it will be extremely useful to have a mortgage broker with access to additional financing sources.

Lastly, good mortgage brokers have great relationships.  Real Estate investors make up a very small world of professionals focused on a single asset type.  Mortgage brokers, who work with investors regularly, can supply potential investment partners and investment ideas as you develop your investment business.  Additionally, mortgage brokers know very detailed financial information about their clients, so their partner recommendations come pre-vetted. 

Great mortgage brokers provide low cost financing, fair pricing and connections to other investors around the real estate investment landscape.  The costs of a good mortgage broker and a poor mortgage broker vary slightly, but the value provided differs greatly.  Maximize your investment in a mortgage broker by choosing an excellent mortgage professional. 

Mortgage brokers provide an invaluable service when the time comes to obtain a financing solution on an investment property.  Great mortgage brokers provide more than loans with competitive interest rates, many provide creative financial solutions that can help maximize the value of your investment.

Like all real estate professionals, all mortgage brokers are not created equal.  Any basic mortgage broker can locate the lowest interest rate loan you qualify for.  It never hurts to call around to ensure your professional is getting you the best rate, but 90% of the time the rates will be the same.  The value of the mortgage broker can be seen in their creative financial solutions and interest rate advice.

It is important to understand how mortgage brokers are compensated, so that you understand the motivations behind their suggestions.  Good mortgage brokers have your best interest in mind regardless of their compensation, but an informed investor should always be cautious.

First, mortgage brokers are paid an origination fee based on the size of the loan they secure.  This fee can range from 0.5% - 1.0% of the loan amount.  In addition to an origination fee, brokers charge a host of processing fees, which should be scrutinized carefully.  Ask a lot of questions and don’t forget to negotiate.  These fees can add up to another 0.5% - 1.0%.

Second, mortgage brokers receive a rate lock fee.  Fee quotes normally last for 30 days; however, consumers have the option to lock in the quoted rate for some fee for a longer period of time.  Normally, this fee is not worth the trouble.  While rates will certainly move up and down as you decide on the appropriate lender and loan, this “insurance” is usually not worth the trouble or the money.

Third, mortgage brokers receive a fee from the lending institution that originates your loan.  This fee is sort of like a “finder’s fee.”  This is the big watch out because most banks tie the highest compensation to the loans they really want to push on consumers.  While a 30-year fix rate standard loan might be your best option, if a mortgage broker is being paid an extra 1% to put you into a 30-year Adjustable Payment/Adjust Rate Mortgage, you can bet most brokers will be pushing the later even though it is not in your best interest.

Additionally, watch out for fees you don’t understand.  Yield Spread Premiums for example represent the amount a broker charges over the offered interest rate.  Essentially, if you pay this fee, it means your broker did not get you the best rate.  Know your credit score because the more challenged your credit score the more fees brokers will assess.  Ask questions and negotiate, negotiate and then negotiate some more.  

Investors make money when they buy smart and when they sell smart.  Finding the right real estate agent to market and sell your property can help secure substantial profits; however, their services come at a steep cost, usually ranging from 4-6% of the selling price. 

Remember, time is money.  Getting your investment property sold quickly for an above market price should always be the number one objective.  A great real estate agent can help achieve this goal for a savvy investor. 

As with all real estate professionals, an investor should conduct a rigorous screening process before settling on one real estate agent.  Investors should interview at least three agents and focus specifically on each agent’s marketing plan, valuation assessment, personal fit and commission.  For more information on questions to consider when interviewing real estate agents, please see the download section of the site. 

Many sellers do not negotiate commissions.  Everything in real estate is negotiable and every dollar saved on fees and commissions goes directly to the bottom line.  Maximizing value means getting the best services for the lowest costs.  Note, this does not mean sacrificing excellent service to simply save a few dollars.  When choosing a professional it means choosing the person that can achieve your goal at a fair price.   

Real estate marketing should go beyond putting up a website and an MLS entry.  Excellent real estate agents have a stable of potential investors they have worked with in the past and connections with other agents that represent active real estate investors.  They should also be able to do a walkthrough of your investment property and provide helpful suggestions to maximize value.  Putting in as little as $500 worth of finishes could increase the value of a home by $5,000 simply based on presentation. 

Always remember the goal is to get the property sold quickly and for the highest possible value.  Investors should communicate this goal with their agent during the interview process.  Additionally, any real estate agent should be able to provide an investor with time on the market data, comparable properties currently in the market and recent sales comparables.  A great agent will also know more detailed information about the recent sales and the comparable properties in the market currently.  They should be able to comment on the finishes in comparison to your property and provide a comprehensive analysis for their pricing suggestion.   

After choosing a real estate agent, trust their instincts and be responsive.  An investor should not expect quick and timely performance from their real estate agent if they are not quick and timely in their responses back to the real estate agent.  Furthermore, a great real estate agent should know the market at least as well and hopefully better then you.  Be vigilant, but trust their pricing, marketing and negotiating guidance.

  All real estate agents are not created equal. In fact, a vast majority of them provide no value, I repeat, no value in a transaction. Real estate buyers suffer from the false belief that they get a free ride since the seller pays both real estate agents in the transactions. This could not be further from the truth.

In truth, the real estate system stacks the deck against the buyer. Think about two key points:

1. Both agents compensation is based on the selling price. The higher the price the seller achieves, the higher the compensation to BOTH agents.  

2. If a seller did not have to pay an agent 6%, they would be able to lower the price by some amount up to 6% and still come out ahead. Both the buyer and the seller would be better off.

    

Considering the incentive alignment, buyers should naturally be on their guard when dealing with real estate agents. Every buyer and seller should interview at least three real estate agents. If the agents get uncomfortable with this in anyway, they should not even be considered. Great agents know their greatness and can prove it.  For a list of potential interview questions see the download section of the site.

Buyers should consider working with a buyers’ agent. These agents only work with buyers and tend to be more familiar with buyers issues and negotiations from a buyer perspective. Although these agents still receive their compensation from the seller, the additional experience working with buyers can be helpful.

Real estate agents should also be chosen based on their past experience with INVESTORS. Even when buying single family homes, a real estate agent, who is familiar with investors needs, will be able to answer questions about market rents, comparable rental properties, tenant/landlord laws, etc. better than agents that work with primary home buyers. Additionally, these agents should be able to source investment properties much better than other agents.

Novice investors should take their time with this process. The interviewing process should be a great time to learn about the market, the neighborhood and any other quirky real estate news happening around town. The agent should be chosen based on experience, knowledge of the market and personal fit.   

Lastly, be upfront with the agents. Let them know exactly what the process entails. If you plan on interviewing three agents and then buying a single family property in the $150,000 to $200,000 that can rent for $1,000, let them know the plan. Importantly, do what you say you will do and get back to them right away. If you choose one agent, let the other two agents know that they were not chosen and why. This professional courtesy keeps the lines of communication open and provides avenues for future deal sourcing.

 Real estate professionals represent the real estate investor’s base. Agents source investments, mortgage brokers arrange favorable financing, accountants minimize tax liabilities and offer investment structuring advice, management companies maximize the value of the asset and leasing professional secure cash flow through tenant location. Consider who each of these professionals call first when they get a great opportunity and then consider why they call that investor or client first.

The easiest answer is professionals call their biggest clients who bring them the most business. While this certainly happens more often than not, there are also times when they call a small investor who they worked with in the past that they value. In Detroit, my partner and I build a great niche single family investment property business. Working with us never brought our professionals tremendous income, but time and again we were the first people called with single family investment opportunities. We always received the best financing rates and we were able to work with one of the best accountants in Michigan for a bargain rate. 

Why? The answer lies in the way we did business with people. Great professional relationships start with honesty, integrity and simply doing what you say you will do. Time is money for professionals that get paid on commission. It is extremely important to understand that a mortgage broker or a real estate agent works for free until the deal closes. They can spend hours with a client and get to the closing table only to see the client walk away from the deal and thousands of dollars in commissions slip away. The more certainty a client can provide these professionals, the more eager they will be to work with them in the future.

New and novice investors often try to exploit professionals to get free advice or simply don’t understand the value of loyalty in real estate. More importantly, these investors don’t understand the payoff of building professional relationships. Making it easier for professionals to work with you by providing them information on a timely basis, being reasonably demanding and doing what you say you will do gives professionals more confidence that they will be rewarded for their time. 

Every investor expects nothing but the best from their hired professionals, but remember they are people with their own lives and motivations. When they have finished assisting you with your needs, you want them to feel they worked hard with you, not for you or in spite of you. With time, honesty and integrity, you can become top of mind with your real estate professionals mind no matter how big or small you are. 

 Unlike many other asset classes, real estate investing requires intimate interaction with people every step of the way. Many successful real estate investors are great salesmen or great marketers or simply great people persons. While this is not an acquired skill, basic people skills can be learned relatively quickly and can greatly aid in the success of the smallest investor.

Understanding people starts with understanding their motivations. It is natural to assume that every person you interact with will be concerned with finances. The real estate agents in the transaction receive a commission, the mortgage broker receives a commission, the account receives a fee, and the tenant must decide to part with a large portion of their income every month in order to keep your investment thriving. 

Being successful with people goes beyond understanding their base motivation for assisting you with your transaction. Taking five minutes to talk genuinely about life can often reveal astonishing detail about secondary motivation. People respond uniquely when they feel someone has genuine concern for their well being.

A real life example of this kind of interaction helped me get my tiny real estate business off the ground. My first investment property was a small bungalow in Detroit, which my partner and I rented to a couple who told us they had no kids and were looking to move from their current residence because of landlord issues. While not the optimum first tenants, my partner and I had a good feeling about them and they were willing to pay our asking rent, so we agreed to let them rent the house.

At the end of the first month, my partner and I went over to collect the rent and we discovered at least four additional people living in our tiny rented bungalow. While I expressed concern about the additional tenants, my primary focus was on collecting the rent and getting on with my evening. My partner decided she would take a minute and ask how, Gloria, our tenant, was doing. Needless to say, they share about 20 minutes of conversation and begin to build a relationship. 

Every month my partner would go over to the house and collect the rent and sit with Gloria for as little as five to as much as sixty minutes chatting about life. One month, Gloria had a particularly tough month and had significant financial troubles. When my partner went over, the lights had been cut off, but astonishingly Gloria had the rent. When asked about what was going on, she informed my partner that she was having troubles, but knew how important the rent check was to our life. So rather than disappoint my partner, she went without paying her electric bill so that she could pay the rent.

This is an extreme example and not to be expected in every situation, but taking a little time to remember the people behind the business will pay dividends.