Which Car Should Real Estate Investors Be Driving?
By JD Esajian on August 28, 2015
When individuals get into real estate, they immediately become aware of the lavish rides that many of their peers and competitors are riding around in. The higher up you go on the ladder, often the more expensive these rides get. Of course, you never actually know whether that vehicle represents their entire net worth, or just a portion. Still (right or wrong), the impression is normally that a nice car is expected, and might even be a sales tool. This is certainly true given that many Realtors spend more on their cars than actual real estate marketing. Interestingly, it is important to note that just as many real estate agents are broke too.
There may absolutely be situations in which a vehicle plays a role in real estate deal making, but it often isn’t in the way most assume. Make sure you do the real math before splurging on a new ride. If you really expect your vehicle to be a marketing tool, how many deals will it help you get and close in the next three months? What is the net cash value of those deals? Now how does that compare to the real cost of the car? Remember as with anything else it will probably cost more than advertised. That $300 lease on TV might be closer to $700 per month when you get the keys. Then there are down payment or deposit, taxes, tag and title. Then there is monthly insurance costs which may exceed the car payment on a nice car, plus a budget for repairs and maintenance. If you are really upgrading, you may spend $1,700 to $5,000 to just replace a light or serious scratch. So when you total it all, what is your real return on investment (ROI)? How does that compare to other real estate marketing options like blogging, Google Adwords, or direct mail?
Best Cars for Showing Houses
What is the best type of car for showing houses? Think about the dynamics of the situation. While real estate investing may be a little different to being a Realtor there can be advantages of controlling the experience by driving prospects around. This can be dangerous, but there are ways to minimize the risks. But if you’ll being showing property in your vehicle obviously a tiny 2 door isn’t going to fly. A comfortable SUV or luxury sedan that can double as a mobile office could be a smart move.
Best Cars for Flipping & Rehabbing Houses
If you are going to be out there fixing up houses yourself, or at least playing a big role in the process it makes sense to have a vehicle that works and optimizes the process. That probably means a truck. It will probably end up being a lot cheaper than renting a truck every time you need one, and will certainly save trashing a new luxury ride.
Best Cars for Making Offers in
The best car for going out to meet a seller or agent and make an offer in does somewhat depend on the property, and the other party. But many get this wrong too. Driving up to a distressed seller’s home in a Rolls Royce and asking for a 50% discount may not be the best psychology. They are going to be turned off, or want more money because you look like you can afford it. At the same time; pulling up to a $3M listing in a 20 year old station wagon could mean you aren’t taken seriously, even if you have the cash. However, note that you can always rent a luxury car for these occasions if you think you really need one. At least you won’t be on the hook for high overhead every month in and out.
Best Car for Raising Money
If you are out to raise money then you still need to find balance. You neither want to appear desperate, or give them reason to think that you are going to blow the money instead of investing it wisely.
Best for Property Management
A vehicle that works well for contracting work may be a good choice if you’ll actually be doing repairs and maintenance work. If you’ll only be collecting rent or inspecting units and showing units then a mediocre or tough looking vehicle that isn’t going to make you look like a target is probably the way to go.
Summary
Do all rich, successful people drive Bentleys? No. Mind your money. Let profits pay for your toys and upgrades. And don’t overlook the most important factor – branding. Does your ride match your brand? If you are a green real estate company, is your car green? If you have a luxury brand, do you have a luxury car?