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What Can Real Estate Investors Learn From The McDonald's Brand?

Like it or not, there is no denying the powerhouse that is McDonald’s. The company has pioneered the fast food industry, and even revolutionized it. In fact, few companies have realized success on a level that McDonald’s has seen since the 1950s. Their business model is exceptional, and there are more than a few things real estate investors can learn from the fast food chain. Here are seven things that real estate investors should take away from their next trip to the fast-food maven:

1. The Power of Branding: There is no denying that, after decades, McDonald’s is still one of the best known brands in the world. Even those that hate fast food can’t deny the power McDonald’s has over the market: everyone from knows the golden arches, from children to grandparents. McDonald’s didn’t develop a brand after it got big, however. Its brand got supersized after it became more reliable and trustworthy. So what does this mean for your business? It is never too early to start developing a brand. Work hard to build trust between you and your audience, and your business will be rewarded accordingly.

2. It’s Tough to Run a Business From a Distance: McDonald’s has franchises and branches around the globe. More and more real estate investors are finding the advantages of diversification to be well worth it. However, if you’ve ever been into a McDonald’s with less than exceptional conditions, it’s a real turnoff. It’s hard to maintain consistency across such a wide expanse. Diversifying and branching out can be great, smart, and profitable, but you’ve got to monitor what’s going on, on the ground, and have boots you really trust in the area.

3. Cheap is Not a Substitute: As great as the McDonald’s brand is, the rise of Chipotle and Five Guys suggests that most grownups would rather spring for a pricier meal that appears to offer better quality. Even McDonald’s is offering higher quality meals to cater to this new trend. The same can be said about real estate sales. You’d think low priced real estate deals would always fly off the shelf, but that isn’t necessarily the case. It’s often more about the perceived value. Just be sure that you are offering the best product possible. Skimping will only hurt you in the long run.

4. Mobile Ordering: While McDonald’s might be behind on the mobile app game, Burger King has been rolling with its national app that allows consumers to order from their phones and skip all the hassle. Real estate has trended int his direction as well, but few have gone beyond marketing to facilitate the whole process to be conducted in a streamlined way. That’s something worth thinking about. It may not work for every transaction, but there are certainly scenarios in which it could be much more profitable for all sides. Will you be the one to pioneer mobile transactions int he real estate industry?

5. Table Service: McDonald’s Canada recently announced that it is hiring 15,000 new employees to start offering host and table service to consumers. This appears to be the complete opposite direction of the mobile app, but a necessary one. Some people do want simplicity and automation, and to operate online. Others want the service, the real world experience, and to be greeted in person. In some select markets, McDonald’s even offers a home delivery service. Some real estate pros may lean one way or the other, but being able to operate in both arenas can have significant advantages.

6. More Options: McDonald’s is always adding more options to the menu, bringing back limited time menu items, exploring new market specific products, and is said to be bringing in higher quality ‘chefs’ to make even better burgers. New plans allow for even more customization of menu items, with up to six different types of cheeses. This may be a chef’s nightmare, but it is all about pleasing the customer, giving each individual what their personal tastes crave at the moment. The more real estate pros can deliver on this concept, the better they’ll stay on top of trends.

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7 Property Types To Watch For In 2016

Which types of properties are trending now, expected to be trending in the near future?

Pre-Fab Construction

Pre-fabricated homes and condos have been growing in popularity, and are now on the fringe of luxury real estate sites in Manhattan. They are not only more affordable and efficient to build, but new real estate startups hope they will offer easy “scalability” of greener buildings. The big question here is how they will fare when it comes to value and appreciation. Will they suffer the challenges of mobile homes, or can they keep up with brick and mortar construction? This may not matter in terms of cash flow for passive income seeking investors in the short term, but it is a factor to watch.

Net Zero & Off The Grid Homes

Not only do utilities represent a significant portion of monthly housing payments, but traditional utility services and connections also represent a substantial cost barrier to building new homes. Conquering this level of self-sustainability will not only be better for the environment and enable individuals to have more freedom in where they live, but they will absolutely bring us one step closer to being able to achieve free and clear home ownership.These homes include features like solar panels and rainwater harvesting systems. Some may ultimately go as far as sustainable gardens and hydroponics. Either way, look for these homes to grow in popularity.

Alternative Construction

So far, really progressive building experiments in America have appeared almost exclusively in California. Straw bale houses, and dome homes are not uncommon in CA. Yet, shipping container architecture and even luxury earth homes are making more appearances in the national media and luxury real estate blogs. They have many advantages, from an environmentally friendly perspective to affordability. Still, there are many challenges facing Americans who hope to engage in alternative construction. There are building codes and inspections, and then there is the financing. At least one shipping container home has been given the green light, according to building codes. Yet, financing with conventional mortgages could be a struggle. New crowdfunding platforms could help negate this. It is also worth noting that it has been possible to get title, insurance, and mortgages on Spanish Cave Homes for years. International banks and mortgage brokers could, as a result, become another power player in transforming the lending industry.

Ranches

Ranches are making a comeback, according to the media. Yet, with prices high and fragile in places like N.Y. and D.C., having an expansive ranch estate in the country for the weekends can be a breath of fresh air, and possibly a more appealing investment. With a ranch, you own the land, can enjoy entertaining clients and hosting corporate retreats, as well as building memories in a multi-generational family retreat. Even for middle income earners, moving out to ranch estates can provide way more property for the money, with fewer building restrictions.

Cabins

As the economy improves, second homes and vacation home sales traditionally pick up. Luxury cabins are one of the staples that do well at these times. Mountain cabins, cabins in small golfing communities, and fishing cabins can all be great choices as getaways, and often as high priced rentals.

Trophy Homes

New York, in particular, is seeing a rise in trophy home prices. New listings are touting the magical $100M price tag in order to gain attention, and offer buyers the prestige that comes with dropping a lot of money on prime real estate. Some may be considerably over priced. In one case, a waterfront estate purchased for only around $15M a couple years ago was put back on the market with a $100M asking price in 2015. In other news headlines, one hedge fund manager purchased the home of his ex-boss only to flatten it and build a bigger statement home over it. Not all of these properties may be worth the asking price as an investment, but it is worth noting the marketing trend.

Smart Homes

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The No Debt Strategy: Does It Really Work?

Can the no debt philosophy really work when it comes to home buying and real estate?

The financial crises, which peaked in 2008, has sent many on a mission to being debt free, and refusing to borrow anything. Some consider this the result of waking up after a decade of debt madness. Others consider the extremes of this to be a poorly led over correction just like property prices went through. So what value is there in really racing to debt freedom and putting off investing or buying real estate? Or is it counterproductive, if not impossible, in the society we live in today?

Dave Ramsey is one of the most visible personalities in the no debt movement. He promotes a ferocious approach to paying off all debt, and staying debt free, even in investing afterwards. The two exceptions in his work appear to be that he recommends against cashing out and selling good assets and investments like retirement accounts (which may be invested in real estate), and that his website promotes for a mortgage company.

Not owing anyone is great, but there do appear to be disadvantages of both extremes. Refusing to take on any leverage at all would mean putting the brakes on all investing for many, or owning much. It would also stop the global economy, and progress in its tracks. Dead. We all know the dangers of over-leverage and being too deep in debt.

It is also worth noting that right or wrong our whole society and ecosystem is effectively designed to keep us in some form of debt. It is virtually impossible to live without it. In America we are technically born in debt. Our only hope appears to be money hacking and time hacking with real estate.

Think about it. Even if we have no credit card debt, student loan debt, car loan payments, or mortgages we still aren’t free of payments. Most will have cell phone contracts and cable TV contracts. If you rent you are just paying someone else’ mortgage, for longer. If you own a home and pay off all loans you still have annual property taxes and insurance. Unless you have (and are allowed to maintain) a completely self-sufficient home which runs off the grid for power and water, you’ll always be married to the utility company bills. Then what about health insurance and taxes. You now no longer have a choice about having health insurance. If you can’t afford it you get penalized additionally by the IRS. Life isn’t debt free. In fact, this may be one of the only 100% for sure things we can count on.

So ‘if’ becoming 100% debt and bill free is impossible in America, then what viable and wise medium is there?

If you take out a reasonable loan, and by a property intelligently, it absolutely makes sense to own a home versus renting. We might not like that, but it is a fact. You can always plow down that balance as fast as you like. Although some certainly argue that maintaining some mortgage balance is smart for taxes and that it is better to keep that cash, or invest it, rather than to lock it up in your own home, as insurance almost invariably appears to fail a great many people when they need it.

When it comes to investing it is really hard for most to get by or get ahead intelligently and safely without some form of leverage. You could put off buying an investment property for twenty years until you can pay cash. However, consider the average home price in some neighborhoods is already over $1M, and growing daily. So smart financing can help to ensure safety with diversification. That means you can by perhaps 3 to 5 properties with a reasonable mortgage loan, rather than just one for cash. Then consider the power of compound interest. Putting real estate to work for you today can add years of compounding growth. That includes while you are sleeping, on vacation, or are sick.

The good news is that the extra income and wealth building from investing in real estate earlier can be used to become ‘debt free’ earlier. You can use those proceeds to pay off your credit cards, student loans, cars, and home mortgage a lot faster. Just don’t go splurging on taking on new consumer debt in the process.

For the few still on the fence about this there are five potential hybrid alternatives:

Use non-recourse loans (that means you are not personally liable for them)

Wholesale properties using transaction funding (in and out, and carry no debt)

Loan the small amount you do have to other investors as a private lender

Invest what you have in a partnership

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It's Time For Real Estate Investors To Embrace The Competition

As a real estate investor, you should be begging for more competition. Here’s why:

Is more competition what many real estate agents, investment firms, and brokerages need? Should independent real estate pros and CEOs be craving more, rather than less, competition?

Many in the real estate industry wish they had a monopoly, with no competition. Some believe they already have a monopoly, when, in reality, they don’t. Others spend their nights, weekends, and much of their days plotting how to beat the competition. Many invest a lot into doing so. Sometimes they expend more energy and money than building up their own business. So why on earth would you want more competition?

Do you want to be the best? Fulfill your maximum potential? Serve others as much as possible? If so, competition can help. Competition forces you to be better at what you do.

If you don’t feel that you have a lot of competition, there may be nothing else motivating you to do better. This is one of the main reasons we’ve seen such stagnant and horrific customer service in recent years. However, whether anyone feels it or not, there is always competition in the works. This is the biggest fear of companies like Google, and Apple and Facebook. It is what keeps them up at night, keeps them striving to innovate every day, and keeps them buying up every potential threat. They love it, they thrive on it, and they know it makes them better, but they also take it seriously.

3 Ways to Force Competition & Improvement

Many popular business leaders are known for having a nemesis. Those executives at the top of the game love having a peer to duel with. Bill Gates and Steve Jobs were a prime example. It doesn’t have to get out of control, and there is no reason that when rivalry becomes counterproductive you can’t actually collaborate. Remember, “iron sharpens iron.” So who might make a friendly rival?

Make others make moves. How about igniting some competition? Make bold statements in the media. Announce big new plans or goals. Announce how you plan to disrupt the industry and dominate. That ought to ruffle some feathers and get somebody to shake the dust off and pick up the gauntlet.

We are now in the sharing economy, and investors are demanding more transparency than ever. What if you shared more about what you were doing that was working and how you were helping others? Now you know that ,while the extra PR can help, someone might try to replicate some of those things. That means you’ll have to immediately begin thinking about what you’ll do next, and how you’ll do even better than you were.

Tips for Beating the Competition

Just because competitor can be great for keeping your edge sharp and improving the industry for everyone it touches, doesn’t mean you want it to bite you back too hard. So what are some ways to best the competition?

Control your expenses better than the competition so that your margins are better

Make the competition spend in the wrong direction

Make sure you aren’t taking on competitors you can’t beat

Hire the competition’s best talent

Buy them out if they prove to be really good

Lock up market share and vendors with strategic partnerships

Starve the competition out of deals and cash flow

Build a bigger war chest for jumping on the best opportunities