Morningstar’s latest U.S. Active/Passive Barometer compared active and passive fund performance over the year ending in June.

Working with a real estate mentor will help you navigate the ins and outs of your career, shorten your learning curve, and help you grow your business faster. It can also assist you in working with investors or buying investment properties. But the key is figuring out what type of mentorship is right for you. I’ve created a detailed guide to learn more about real estate mentorship programs, narrow your options, and maximize mentoring opportunities. I also cover how to find a real estate mentor and what to avoid.

What Is a Real Estate Mentor?

A real estate mentor is an experienced, knowledgeable professional who helps new or aspiring agents or investors advance in the real estate industry. Mentors offer personalized advice, practical insights, and

strategies gained from their successful sales or real estate investing career. Working with a skilled mentor can help new professionals avoid common pitfalls and make informed decisions. Real estate investor mentors support aspiring investors and agents who want to work with investor clients. 

What a Real Estate Mentor Does & Does Not Do

Sometimes, real estate agents hire a mentor or coach because they’re frustrated with not reaching their goals. Once they get a mentor, they think all their problems will magically disappear, but it doesn’t work that way—I can’t stress this enough. A good mentor will challenge you to work to reach your results. They’ll provide accountability and set expectations. They won’t grow your business for you or chase after you to do the work. 

Let’s look at these more closely:

• Expectations: Your mentor should help you establish clear expectations in the mentor/mentee relationship. This may include how much time you invest in the relationship, homework you must complete, and keeping appointments. 
• Accountability: The mentor will provide information in your best interest, but you’ll be accountable for periodically following through and checking in. KPIs (key performance indicators) can help you show data supporting your growth and progress.
• Education and training: A mentor should offer education and training resources and information in your area of mentorship. If you’re working with a skilled investor, this would include knowing how to evaluate cap rates, cash flow projections, and other metrics. It also would include information on how to find and evaluate investment properties. A listing mentor would help you learn how to find clients, prepare for listing appointments, and close new listing contracts. 
• Support: An excellent mentor is someone who will support you. However, don’t expect coddling or babying. They’re there to help you grow but will challenge you as needed. For example, if you’re afraid of real estate cold-calling, your mentor may push you to make a certain number of daily calls and provide tips and strategies to do so effectively. 
• Experience: A real estate mentor needs hands-on experience with the type of mentorship you seek. A residential real estate agent would not make a good commercial real estate agent mentor. Be wary of “I do it all” mentors. Ask to see their resume and get client references. 

Characteristics of a Great Mentor

No two mentors are alike. When figuring out how to find a real estate mentor, you must know what you want from the mentoring relationship. You must also know yourself and what type of mentoring is helpful or shuts you down. Some agents may wish to have a mentor to hold their feet to the fire, while this mentoring style could turn off other agents. However, the specific characteristics of a great mentor are universal.

These include:

• Boatloads of experience
• Empathy
• Availability
• Personal responsibility
• Solid communication skills
• Feedback and guidance
• A positive attitude
• A flexible approach
• Respectfulness
• Active listening

Types of Mentorship 

There are three different formats of real estate mentoring. You could find and work one-on-one with a personal mentor, join a mentoring group, or become an apprentice or intern. If you choose the apprenticeship or internship route, remember that you cannot conduct real estate transactions without a license and brokerage affiliation.

One-on-One Mentoring

One-on-one real estate mentorship is a personalized and intensive learning experience where a skilled mentor provides individualized guidance for your goals and challenges. For real estate agents, this can be someone currently active in the industry or a coach or broker who is no longer active in the field. Similarly, an investor mentor could own a real estate investing business or has since retired and consults.

It involves meeting with your mentor regularly and receiving tailored advice and practical tips to help you learn from your mentor’s expertise, gain valuable insights, and develop the necessary skills to excel in the real estate industry.

Group Mentoring

Group real estate mentoring programs involve a mentor providing guidance, advice, and knowledge to a small group of individuals pursuing the same type of real estate career. They also work with real estate teams. The mentor may facilitate group discussions, conduct workshops, and allow participants to learn from each other’s experiences and challenges.

Real Estate Apprentices & Internships

As an apprentice or intern, you get to work closely with a licensed or experienced professional to get a feel for the industry before diving in. This path is often an ideal way to break into the industry while

you work on becoming a real estate agent or making your first investment. For other real estate careers, like home inspectors and real estate appraisers, an apprenticeship is required in prelicensing education.

Who Can Be a Mentor

If you want to really drill down into a specific aspect of real estate mentoring, such as sales and marketing, or find a mentor for real estate investing, you have to get someone with those skills.

For example, a real estate agent mentor is likely to focus on helping a new agent set up systems to generate and nurture leads, work efficiently with clients, and build a strong brand, among other things. On the other hand, real estate investing mentors focus on developing ways to understand the current rental market, finding tools to locate properties, evaluating deals using various formulas, and understanding different financing methods, like securing hard money loans and private equity.

Depending on the various real estate career paths you want, there are other types of real estate mentoring to consider. These could include:

• Broker mentor: A licensed broker who mentors you to become and succeed as a broker
• Niche mentor: A successful agent who has excelled in a specific niche such as FSBO, commercial real estate, short sales, luxury listings, or vacation rentals. 
• Business development mentor: A business development mentor doesn’t necessarily have to have real estate experience, but it is useful. This mentor should have advanced skills in business growth and development. 
• Property manager: Many brokers also become property managers, so having an experienced property management mentor can shorten the learning curve.
• Real estate wholesaler: Wholesaling real estate is nuanced, so a mentor with this type of real estate investing is crucial if you want to learn how to wholesale.
• Home flipper: You can avoid losing your shirt by working with an experienced fix-and-flip mentor if you want to flip houses or work with new investor clients.
• Real estate developer: A real estate developer mentor can either be an agent who succeeded in working with builders and developers or a developer who can mentor you in working with developers or becoming a builder/developer.

Costs of Real Estate Mentoring 

Some mentors just want to help and will work with you for no monetary gain. If you’re fortunate enough to find such a real estate mentor, respecting their time and implementing what you learn from them is most important. They’re busy and offering time out of their lives to help you. Giving time to mentoring someone who takes advantage or cannot progress is a drag. If you cannot find a free mentor, you can hire one.

Mentoring costs are all over the place, so the answer to “How much does real estate mentoring cost?” is, “It depends.” You could pay an hourly or per session rate ranging from $50 to $1500 or more, buy a mentoring package that includes both one-on-one time and training materials costing several thousand dollars (high-end mentors charge a premium in the multiple five to six figures!) or you could do passive mentoring by reading a subject matter expert’s blog, books, and watching their pre-recorded programs. These range from free to a few hundred dollars.

Pro Tip: When considering paid mentorship, focus on your return on investment (ROI). For example, if the mentor can teach you how to get a new salable listing every week, think of the long-term value of having that skill! That mentor is worth their weight in gold. Also, you may be able to deduct the cost of mentoring as professional development when you file taxes.

Pros & Cons of Using a Real Estate Mentor

Even though all licensed real estate agents are required to complete prelicensing education, it usually doesn’t cover everything you need to know. A real estate mentor can help you avoid common pitfalls, learn how to find clients, price and market listings, and close deals so you don’t become a statistic. For real estate investors, an experienced mentor can help new investors find and evaluate properties, learn how to find and keep good tenants, and build a real estate portfolio to lessen the risk of loss.

A few of the pros and cons of real estate mentoring programs include:

Tips to Find the Right Real Estate Mentor

A mentoring relationship requires commitment, honesty, and addressing and learning from your mistakes. Make sure that you have valid reasons for wanting a mentorship and that you’re motivated enough to keep going when your mentor may challenge you or when you struggle in your business. Starting with realistic expectations will set your partnership up for success.

Here are seven valuable strategies to help you find potential mentors:

Tip 1: Local Real Estate Events

Attending local real estate events and seminars is an excellent way to network with experienced professionals and find potential mentors who share valuable insights and expertise. You can find events on Facebook, Meetup.com, through word-of-mouth, or in local publications.

Tip 2: Join Real Estate Clubs and Associations

Joining investor clubs or agent associations, like the National Association of Realtors (NAR), can help you connect with seasoned professionals willing to mentor. Many real estate agents join investor clubs to connect with potential investor clients, so you could potentially find a mentor and clients!

Tip 3: Online Forums and Social Media Groups

Engaging in real estate-related social media groups to get feedback and interact with experienced investors or agents who might be open to mentoring can open many opportunities for mentors. Don’t forget to check out The Close Facebook group. 

Tip 4: Real Estate Offices and Brokerages

Check if any local real estate offices and brokerages offer mentorship or networking programs. New agents should consider choosing a real estate brokerage with mentoring or training programs. 

  Tip 5: Real Estate Educational Programs

Consider enrolling in educational programs to further network and find potential mentors, like designation courses, investing courses, or boot camps for new sales agents.

Tip 6: Search Online

Utilize search engines or social media platforms to actively search for real estate mentors available to work with you.

Tip 7: Hire a Real Estate Coach

Although a real estate coach may work differently than a mentor, this can be a great way to start getting support and expertise from someone who already has a coaching system.

How to Evaluate a Real Estate Mentor

Choosing a mentor who aligns with your career goals is a major decision since their knowledge, experience, and support can significantly impact your success. With so many options, making the right choice can be overwhelming and confusing. Here are five ways to evaluate a potential mentor to help you find a mentor who will significantly impact your real estate career: 

• Define your business goals: Be crystal clear on what you want to ensure your mentor can help you achieve them. Ask yourself where they will fit in.
• Evaluate their commitment level: A mentoring relationship is a commitment, so ensure you’re both in it for the long haul.
• Look for personality traits and business expertise: Ensure your mentor has proven expertise in the areas you want mentoring. Also, consider their reputation and personality traits, like patience, empathy, approachability, and honesty. Their ability to offer supportive, constructive feedback creates a nurturing environment, allowing you to have honest and challenging conversations.
• Do thorough research on them: Carefully evaluate if they’re a good fit and watch for red flags. Research their online reputation and feedback from former mentees. You should also thoroughly review their social media pages and website, ensuring that they’ve given you accurate information and that they are the right person to guide you in your business. 
• Get it in writing: As time passes, it’s easy to forget what you both agreed to, so put your mentoring agreement in writing. Define expectations, timeframe, costs (if applicable), and desired outcomes. 

Frequently Asked Questions (FAQs)

Bringing It All Together

As you begin your real estate mentor search, remember that choosing the right person is crucial to having a successful mentorship relationship. Determine which type of real estate mentorship is best for you, and ask qualifying questions to determine if a potential mentor is the best choice to help you succeed. Have you worked with a mentor before? Tell us about your experience in the comments!

The post How to Find the Perfect Real Estate Mentor: A Guide for Agents appeared first on The Close.

According to the commission, Donald Anthony Wright made false statements when selling promissory notes to clients to fund the purchase of a Texas-based media marketing company.

Latest lawsuit accuses Johnny’s widow of trademark infringement.

For an upfront purchase price of $50 million, the deal brings $47 billion of assets in the emerging and mid-market retirement plan segments and competitive ESOP administration.

The five firms represented by this year's rising stars all saw tangible results as a result of their efforts.

The AI-driven platform, which launched in 2022, shares many similarities with Finny and Aidentified.

Wealth management executives discussed how their firms are responding to criticism of DEI initiatives during a recent WealthManagement.com think tank.

One obstacle retail investors face is a lack of appropriate recommendations from their financial advisors, according to the FTSE Russell Wealth Survey.

Fractional ownership is a creative way for investors to get into the market. Imagine owning a sliver of a plush vacation or a commercial property without taking on the whole cost of ownership. This investment opportunity essentially democratizes property investment for the mass investor through affordability and manageability. I will cover what fractional ownership is, its advantages versus disadvantages, and how it stacks up against more traditional timeshares. 

What is Fractional Ownership in Real Estate?

Fractional ownership in real estate is a concept where property ownership is divided among several investors. Instead of buying an entire property, investors buy fractions of that property, which are usually between 1/8 and 1/2. The notion of shared ownership allows a single investor to afford high-value real estate without the large financial upfront costs normally required for owning an entire property. 

Basically, it’s sharing expenses and benefits that come with owning a property. Each investor owns a share of the property directly proportional to each invested amount. Ownership interest does not confine itself only to shares in the property but extends to its usage rights, rental income received, and appreciation. The structure of fractional home ownership is different, but most of it includes a formal agreement spelling out the rights of each owner, duties, and terms of usage.

Key Elements of Fractional Ownership

Fractional ownership real estate allows someone to invest in prime properties and diversify a real estate portfolio without committing the full finances toward purchasing an independent property. This formula combines personal use with an excellent potential for income generation, hence an investment alternative attractive to your lifestyle and investment purposes. Here are some key elements of fractional ownership homes: 

• Ownership share: An investor gets a certain specified percentage of the property on top of a share of equity, usage rights, and income.
• Usage rights: Generally, owners have the right to use the property for a certain number of days or weeks per year. Again, this would depend upon the fraction of ownership interest and terms specified in the contract.
• Income and expenses: The owners share any income from the property, including any rental income, based on their proportional interest in the property. Likewise, expenses such as maintenance, property tax, or management fees are shared proportionately.
• Management and maintenance: The property is usually managed by a professional management company, which takes care of everyday operations, maintenance, and other administrative tasks, relieving owners of those responsibilities.
• Exit strategy: An owner may sell their share in the property after an agreed-upon holding period. In some fractional home ownership schemes, there is a secondary market through which shares can be traded, and the investors achieve liquidity.

Pros & Cons of Fractional Ownership

Fractional ownership has its own set of advantages and disadvantages. Understanding these can help investors understand if this investment model supports their investment goals and preferences. Here are the key pros and cons of fractional ownership:

Types of Fractional Ownership Models

Fractional ownership comes in many forms, all of which are targeted at different investor preferences and goals. Knowing about these models will help investors invest in the best form that suits their needs. Whether you’re looking for personal use, investment returns, or a mix of both, a fractional ownership model covers each of these preferences. Here’s how to break down the primary types of fractional ownership examples:

Equity Shares

The investors have a percentage of equity share in the property. Emphasis is placed on investment returns through property appreciation and rental income. A deeded interest in the property is included with the ownership. In this model, the investors have an opportunity to share both the usage time of the property and its financial performance. This can be clearly noted in luxury vacation homes wherein the investors can personally use the property while reaping its financial benefits.

Use-based Shares

This fractional ownership is based on the right to use the property for certain days or weeks per year, emphasizing personal usage other than financial returns. Ownership is often paired with a contractually agreed-upon right of usage and direct ownership. This is often used with vacation properties where owners can take regular vacations.

Syndicated Shares

In syndicated shares, investors pool their resources to acquire larger properties, typically managed by a professional syndicator. This model combines usage and financial return and focuses on larger-scale investments. Investors own a share of the syndicate, which holds the title to the property. 

Common examples include commercial real estate or multifamily apartment complexes managed by a syndication company. This model enables an investor to acquire a share of high-value property with professional management and share in usage and financial benefits.

How Fractional Ownership Compares with Traditional Real Estate Investments

Fractional ownership, like any other form of traditional real estate investing, has differences that make it more or less appropriate for specific investors. We’ll break down how fractional ownership differs from the traditional model below:

Timeshares vs Fractional Ownership

While timeshares and fractional ownership are often confused with one another, they meet different needs and provide different advantages. Timeshares are basically for holiday or vacation use. They grant the purchaser the right to use a property for a specified period, usually a week, every year. Normally, most of the timeshares do not grant an ownership interest in the property, so there is little or no possibility of financial return from property appreciation or rental income. 

On the contrary, fractional real estate ownership is an investment and usage model. While both models provide a kind of shared use of high-value properties, fractional ownership combines the advantages of personal use with real estate investment benefits, hence making it more versatile and potentially highly lucrative compared with timeshares.

Tips for Investing in Fractional Ownership Real Estate 

Fractional ownership is a strategic way to invest in real estate without many burdens associated with outright ownership. That means diversification into a portfolio and the potential return on appreciation in value and rental income make it a great investment opportunity. Success in fractional ownership requires careful planning, just like any other investment. The following are some of the essential tips to consider when handling fractional ownership:

Tip 1: Thorough research

Research the property and the market conditions before you get involved in investment. Investors need to understand the fractional ownership structure and specifics of the property and its location. This will assist in making an informed investment decision and enable an investor to project the returns that may be generated through the investment.

Tip 2: Assess management

Ensure that the property is managed by a reputable and experienced management firm. Professional management impacts the property’s maintenance and profitability. Look for firms with a good track record managing similar properties.

Tip 3: Understand the costs

Clearly mention all ongoing expenses, including maintenance fees, property tax, or management fees. These could reduce your return on investment, so make sure to incorporate these into your financial planning.

Tip 4: Review legal agreements

Go through all the legal documents concerning the fractional ownership arrangement. These documents will specify your rights, duties, and usage constraints. Consulting a real estate attorney can add more assurance to your interest protection.

Tip 5: Exit strategy evaluation

Be aware of the terms for selling your share and the restrictions involved. Some fractional ownership arrangements will have a secondary market for trading shares, while others might require holding your share for a certain amount of time before selling. Knowing your exit options will help you plan for any kind of liquidity or future financial needs.

Tip 6: Consider the investment horizon

Consider the investment time frame and goals. Fractional ownership can be long-term and should align with your financial objectives and time horizon. Ensure that the property and market conditions support such an expected investment duration.

Tip 7: Diversify your portfolio

Diversification reduces risk and increases returns. To balance out the potential risks and rewards, consider investing in a few different properties or in several types of real estate. The reduced capital requirement for real estate fractional ownership makes diversification much easier to achieve.

Tip 8: Staying current with the trends in the market

Keep yourself updated with respect to real estate market trends and economic factors that can possibly impact your investment. Noting the market condition regularly will help you decide at the proper time whether to hold, sell, or acquire more shares.

Frequently Asked Questions (FAQs)

Bringing It All Together

Fractional ownership real estate provides access to valuable real estate investment opportunities without the high financial commitment and management responsibilities. Investors can benefit from expanded diversification, rental income, property appreciation, and professional management. 

However, it comes with its own set of trade-offs, like reduced control over property decisions and possible difficulties in selling shares for liquidity. Ultimately, fractional ownership is very good for those who want to break into the real estate market without the full issues that arise from traditional property ownership.

The post What Is Fractional Ownership in Real Estate (+ Investor Tips) appeared first on The Close.