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10 Easy Steps to Get 5,000 Friends on Facebook in 90 Days!

Chris Record — Tue, 01 Jun 2010 04:25:59 +0000

As most of you already know, Facebook allows users to have up to 5,000 friends on their personal profiles, and once you reach that coveted benchmark, you will no longer be able to add more friends without deleting some first. Many Facebook users that reach that limit then start focusing on building an unlimited following at their Facebook fan page.

While building your fan page is definitely an important step and a great long term play, there are tremendous benefits in reaching the max of 5,000 friends on your personal Facebook profile, and if those friends happen to be the target audience of your products or service, then this can give you a tremendous advantage in the marketplace to promote your business.

Having 5,000 friends on your personal Facebook profile is going to dramatically assist you in Promoting your Pages, Groups & Events as well as Branding & Credibility. In this article I am going to teach you 10 simple steps to increase your Facebook friends list to 5,000 in as little as 90 days.

I hope you take this seriously and make it happen! Enjoy :)

Request 30 New Friends Per Day
Have People Suggest Friends For You
Provide Massive Value
Create A Social Media Signature
Add More Content To Your Info Page
Create A Great Profile Picture
Import Your Entire Email List
Create Viral Facebook Videos
Start Targeted Facebook Groups
Comment, Comment, Comment

1. REQUEST 30 NEW FRIENDS PER DAY:

The most obvious way to increase your Facebook friends list is to send friend requests to other Facebook users. While this might seem like an extremely obvious concept at first glance, I can assure you that there are some important steps you must follow in order to grow fast and effectively without being a spammer or getting your account suspended.

I have 2 simple rules when it comes to requesting friends

Only send friend requests to my target audience of like-minded entrepreneurs.
Avoid getting suspended from sending too many friend requests per day.

Facebook does not publish the exact number of daily friend requests that they consider spam, but I have found the sweet spot to be right around 30 friend requests per day. I know that some of you are going to test the limits and request 40-50 per day or more and many of you may never even have a problem with that, but I stay safe with 30 requests because I do not want to spend a couple of months building something just to have it taken away.

There is a common misunderstanding about sending friend requests and receiving friend requests. I am suggesting that you send around 30 friend requests per day, but you can have unlimited people request to be your friend per day.

Let’s assume that you request 30 new friends per day every day for the next 90 days. That would be 2,700 friend requests, and let’s assume that for whatever reason only about 50% accept your friend request in return. This will generate you roughly 1500 new targeted friends and you would be over a quarter of the way to your goal already.

The easiest way to find these new friends is by searching for Facebook groups related to your target audience and browsing through members and adding them one at a time. For example, if you are looking to network with Realtors, you would find a group for agents and go through the list until you have added 30 members for the day. Then the next day you would repeat the process until you have added everyone in that group. Then you simply find another group and start over again.

It is OK if you miss a day or two here and there but if you want 5,000 friends in 90 days you have to learn how to make this a habit!

2. HAVE PEOPLE SUGGEST FRIENDS FOR YOU:

Since you are limited to how many friend requests you can send out per day, the key is to get other people to request your friendship. One of the easiest ways to do this is to have your friends suggest their friends to you. They can do this by visiting your personal profile and clicking the link on the bottom left hand side of your profile where it says “Suggest Friends For…”.

Your friends can select all of their friends by clicking on them, and then click "Send Suggestions"

Hopefully they refer ALL of their friends so that your friends list grows quickly! I helped one of my clients get to 3,000 friends in one week just through this strategy alone! Here are a couple of tips to assist you in finding someone who will suggest friends for you.

Offer to exchange services or provide something of value for them
Suggest your friends to them in exchange for them suggesting their friends to you
You can “help” them by sharing these tips in exchange for them promoting your profile :)

Come up with unlimited creative ideas to make it a win-win situation…

3. PROVIDE MASSIVE VALUE:

One of the biggest mistakes that entrepreneurs make on Facebook is that they request friends and then spam them with their latest and greatest opportunities right off the bat. My suggestion is that you create as much value as possible for your friends before talking to them about your business. When you share quality content it will motivate your friends to comment on your posts and updates and perhaps even pass them on to their friends. The more that you can create this viral activity, the more exposure that you will gain and the more friends that will request you.

The first step in providing massive value is to find some awesome content that you can share with your target audience. I would recommend bookmarking a list of blogs that offer relevant content and sharing their articles with your users. For example, you are on my blog now, which means that you are finding this content useful. The next step would be to share this article on your Facebook profile to provide value for your following.

There are generally two easy ways to share articles on Social Networks. First off you should start by looking for a Facebook icon on the page. If the blog has one, then you can simply click on it and it will automatically share the article to your website. This same process can work for Twitter and any other social networks that they feature.

At the end of my articles, readers can click these links to share my post on their favorite social network

If they do not have an easy shortcut link to share the article then you will need to copy the URL of the page and visit your Facebook profile and share it as a link. You will be given the opportunity to edit the title, description & picture then leave a personal note about the article and share it! Here are a few pictures to explain the process:

If you are learning a lot from the posts on my blog, then instead of “paying me back” you can “pay it forward” by sharing my articles with your Facebook friends. This is the ultimate win-win situation because I am taking the time to create the quality content for you to share, and you are helping to promote my articles, and at the same time you are providing value for your audience and increasing your friend base at the same time!

For a full listing of all my articles, visit: http://chrisrecord.com/topics/recent/

4. CREATE A SOCIAL MEDIA SIGNATURE:

Most of you have an email signature that you already use, but do you have a Social Media Signature? It is the same as your normal email signature but it includes links to your social networks where people can follow you. A typical social media signature will usually include links to at least the following social networks:

TWITTER – FACEBOOK – LINKEDIN – YOUTUBE

The easiest way to implement this is to just add your social media profiles below your existing signature. You can start with a line that says “Follow me on my social networks…” and then include your top profiles. I highly recommend finding the “shortest” link to your profiles that you can find. For example, if you are linking to Facebook you should set up your Custom Facebook Username and link directly to it.

Here is an example of my Social Media Signature (with my email and phone number changed)

–
Chris Record, CEO
Record Investments, Inc.
888-555-1212 Cell
example@email.com
http://www.chrisrecord.com

Follow me on my social networks…

TWITTER –> http://twitter.com/chrisrecord
FACEBOOK –> http://facebook.com/recordbreaker
YOUTUBE –> http://youtube.com/facebook4business
LINKEDIN –> http://linkedin.com/in/cashflowchampion

* Tip: You always want to include the http:// before every link so that it will become an active link that your readers can click on.

Another powerful use of a social media signature is making a habit of adding a link to your Facebook emails. This is a very clean and professional way to always be promoting your networks without it coming across as spam. Another cool benefit of this feature is that you can always mix up the link that you are promoting, and even target the link based on the email you are sending.

For example, when I send an email on Facebook I will often ask myself if there is a relevant article on my blog that I can promote while I am at it. The key to growing your networks quickly is to always be promoting them in a way that doesn’t take too much time and effort.

Here are some screenshots to explain this process:

5. ADD MORE CONTENT TO YOUR INFO PAGE:

The more content that you have on your “info” tab of your profile, the easier that people will be able to find you when they do keyword searches on Facebook. This same rule also applies to how many status updates that you have, because those are now searchable on Facebook as well.

Some people feel that this step is a waste of time, or they lack the creativity to come up with answers to these questions, but if your goal is to grow your friends list to 5,000 people in 90 days, then I feel this is an important factor in making that happen. Your answers should have two primary purposes:

BRANDING – This is a chance to brand yourself. When other Facebook users consider adding you as a friend they might want to see what your interests are before making a decision.
KEYWORDS – The content that you choose to feature on your info page is also searchable text so think of books and interests that your target market also like.

In a nutshell, it is always important to take the time once to fill in this content, and then forever receive the benefits of it…

6. CREATE A GREAT PROFILE PICTURE:

“You never get a second chance to make a first impression”

Most Facebook users do not understand the true value of a great profile picture. Think about it for a second. Face-Book. It is ALL about your face, and you only get one chance to make a great first impression! When other Facebook users are browsing through friends of friends they will first look at your picture before anything else. You want to make it stand out from the rest with something original if possible, and make sure that it is very professional with good lighting and of course a great smile!

Here is a screenshot of the current picture that I am using on my Facebook Fan Page. You might need to start out with a simple cell phone picture for now, but it should be your immediate goal to get a better picture as soon as possible. It’s as simple as dressing nice and asking a friend to take a few pictures of you for your profile. If you don’t mind investing a few bucks, then have a professional take some pictures. You can get 4-5 quality pictures and then mix it up every once in a while with a different version.

Sometimes we wake up and get dressed and we just feel really confident about ourselves for that day, and I will be that there are many other times that we don’t feel confident about our looks at all. The next time that you have a day where you feel great, you should remind yourself to grab a camera and have someone take a few pictures of you. I know it doesn’t seem important, but it really is! You ARE the brand that people are looking at, and the way that you carry yourself and display yourself is what people will first take in. If they feel comfortable with you, then they will be much more likely to do business with you.

Please make a commitment to upload a quality Facebook profile picture that clearly shows your face in a happy mood in a well-lit environment. Feel free to use something temporarily for now until you find the right picture.

7. IMPORT YOUR ENTIRE EMAIL LIST:

When you first set up your Facebook account you are prompted to invite friends from your email account to look at your pictures. Many people skip this option because they don’t understand it, and when they first join Facebook they are usually pretty cautious about who they want to become their friend. Believe me, I felt the exact same way when I first set up my profile.

Assuming that you now have your profile set up professionally and you are looking to grow your friends list to 5,000 people, it would be very wise to revisit this option and invite everyone from your email account(s). To do this you simply click on the “Invite Friends” link located under the Friends tab on the top navigation bar on Facebook.

Here is a direct link (http://www.facebook.com/invite.php).

The process is extremely user friendly. If your email provider is Gmail, Yahoo, AOL, or Hotmail then you simply click on the logo and follow the instructions. If you use a different email provider then you will need to click on the link that says “Import Email Addresses” and then click on the link that says “How to create a contact file”. This process may seem a little difficult for non-techies, so if you have any questions, just leave them in the comments below and I will do my best to help you through the process.

* Tip: This email importing tool is a great way to import a database of emails that you may have a collection of. I am not recommending that you spam people to invite total strangers, but I am suggesting that there is some flexibility here for the creative marketer that has a quality email list. Also take note if you are importing more than a few hundred emails at a time, that Facebook may stall out and it will force you to retry the process again. The key is to break your database down into groups of about 300 at a time, and also try not to invite more than about 1,000 people per day, this way it doesn’t come across as spam.

8. CREATE VIRAL FACEBOOK VIDEOS:

Did you know that Facebook is now the #3 video site behind YouTube and Hulu?

The reason for this dramatic growth is because Facebook Videos can go viral very quickly. You have the ability to upload the video to your personal profile or fan page, and then tag any relevant friends that may be in the video or that want to see your latest videos.

* Tip: If you just randomly tag people in a totally irrelevant manner, they may get ticked off and remove you from their friends list, or write you a nasty email, so be sure to be as relevant as possible in everything that you do.

So think of some awesome videos that your target audience would love and create them, edit them, and upload them to Facebook! Now you can easily share them on your profile, and share them on the profiles of your friends that want to see them. If your video has enough quality to it hopefully your friends will want to post it on their profiles as well and it will start spreading rapidly across Facebook.

The perfect example of a viral video done well on Facebook is the Grasshopper Campaign (Public YouTube Version). They created a motivational video for entrepreneurs and it had hundreds of thousands of views on Facebook as it was passed along. They simply put a plug for their website at the end in a non-sales type way that made it very easy for people to want to pass it around. I am sure that it drove a ton of traffic and business for Grasshopper, not to mention the awesome branding they received as well.

Every time that your video is spread virally, people will see a link to your profile as the user who uploaded the video. This will cause people to check out your profile and request you as a friend. Get creative and come up with some cool ideas for Facebook videos and encourage your friends to share them! Also, you can use this same process with YouTube videos that you create as well. The only downside is that you lose the ability to tag your friends in the videos, but you can still share them on your friends walls and via private messages.

9. START TARGETED FACEBOOK GROUPS:

Now that your personal profile has a professional touch and your friends list is growing like crazy, it is time to start creating targeted Facebook groups and fan pages. For example, let’s say that you are a Real Estate Agent. You may want to create a group for real estate agents in your metropolitan area, or perhaps even more targeted just for your city. Then you can invite other real estate agents to join the group where you can all discuss changes to local laws, and related real estate matters.

But the hidden benefit of being an admin of a group or page is that you have the ability to message the entire group. So as your group grows, it will quickly become more than just your existing friends who supported you at first. You can now add a line to the bottom of all of your updates to the group that says “Add me as a personal friend on Facebook” and supply them with a direct link to your profile.

While you might not think this will do much for you at first, believe me that as some of your groups grow into the thousands you will start receiving dozens of friend requests with every single message. And how difficult is it to add that simple line to the bottom of a message that you were planning on sending anyways?

There are obviously a ton of additional benefits of Facebook pages and groups for your business, but for now I just wanted to point out the valuable benefit of encouraging hundreds of thousands of people to add you as a friend with a simple email signature :)

* Tip: For some of your creative readers out there, why not joint venture or partner with somebody in a related industry to you that already has a group or page with several thousand members? If they add you as an admin, you will be able to send out an email with your signature to thousands of people instantly without even having to create or promote a group yourself. Get creative and this can be a goldmine for increasing your friend base!

Here are some example Facebook groups and pages that you can join and study from:

10. COMMENT, COMMENT, COMMENT:

If you have attended any of my live Social Media Marketing trainings, then you already know that I hate wasting time on Facebook. While this is an amazing resource for professionals it can also suck you in big time! That is why I take so much time to write articles like this to really teach people how to actually use Facebook for business and not just for pleasure!

However, if you can spare just a few minutes each time you log on to quickly comment on recent posts from other people it can actually go a long ways towards giving yourself exposure and encouraging other users to add you as a friend. Basically, every time that I log in, I quickly check the “news feed” on my home tab to see what my friends have recently posted.

When you only have a few hundred friends this is pretty easy to stay on top of, but when you have 5,000 friends it gets a little out of control! Just do your best to quickly skim through and find quality posts that you find valuable. You should respond with a very thoughtful comment and do it quickly so that you don’t waste too much time on this step. The more that you get yourself out there, the easier it will be for people to find you.

For example, if your target market was people who were interested in social media, and you provided training for social media marketing, then you may want to scan through updates to see where you might be able to offer people advice or troubleshoot their questions. You will quickly brand yourself as a social media coach and people will recognize and respect you for it. The same thought process can work no matter what industry you are targeting.

BONUS TIP!!!

Make sure you set your profile up so that EVERYONE on Facebook can view it! There is a section on Facebook that allows you to adjust your Privacy Settings and if you want more exposure, make sure that you are not limiting the number of people that can view your profile! Other Facebook users are much more likely to add you as a friend if they can see more information about your first, rather than leaving it up to their imagination :)

These screenshots will help you through this process:

If you have learned a lot from this article and you feel that it is exactly what you needed to grow your friends base quickly, then please comment below and let me know your feedback! If you have ANY QUESTIONS at all about any of the points that I made in this article, please ask and I will take the time to answer. I truly appreciate you taking the time to read this post and I encourage you to SHARE it on Facebook to help me spread the word! This is extremely valuable content that I am giving away for FREE, so pass it out quickly before your friends pay for it somewhere else :)

$8000 First-Time Home Buyer Tax Credit Extended!

Chris Record — Thu, 29 Oct 2009 01:21:04 +0000

UPDATE: 11/6/09 – President Obama reups popular tax credit through June 2010 and expands it to include people with higher incomes and some who want to trade up into new homes. (click here to read more…)

11/5/09 – House lawmakers passed the bill today in a 403-12 vote, and now the bill goes to President Obama who is expected to sign. (click here to read more…)

Great news came across the newswire today about the First-Time home buyers tax credit. It looks like Senators have agreed in principle to extend the credit although it still has to be inserted into a bill & voted on by the house. Headlines across the nation are slightly confusing on whether or not this will go through, but many feel that it will surely pass.

Here is what USA Today had to say about today’s announcements:

“Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

The tax credits would be available to homebuyers who sign sales agreements by the end of April. They would have until the end of June to close on their new homes, according to a summary of the legislation being circulated among lawmakers.”

Based on today’s compromise it looks like the income limit would also be raised to $125,000 a year for individuals and $225,000 for married couples, up from the current income limits of $75,000 and $150,000, respectively. This means that more people will be in a position to capitalize on this incentive, which hopefully will fuel more home sales.

Many sophisticated real estate investors are excited about this potential extension because they are able to work with people facing foreclosure to create a win-win-win scenario where they can help purchase their home without them getting a foreclosure attached to their credit. Investors can then fix up the home and sell it at a discount to first time home buyers who can leverage this extended tax credit. Everybody wins and neighborhoods are being improved at the same time.

Question:

Are you glad that Senate leaders compromised to extend this tax-credit or do you think that it will hurt new and existing home sales? I would love to hear your feedback in the comments below!

The Ultimate Business Card System For Entrepreneurs

Chris Record — Thu, 15 Oct 2009 01:28:50 +0000

I received a great question from one of my readers today and I figured I would take a moment to post about it.

“Hey Chris, what do you use to scan business cards into your computer? Where do they sell them?”

In a previous post I wrote about the many benefits of using Digital Business Cards on your iPhone or PDA. In that article I talk about the idea of keeping a database of every single person that you ever give a business card to.

But what about everyone that gives you “their” business card?

I believe that you want to go into every contacting scenario with that in mind. You want to get their business card or contact info so that you are in control of the follow up, and you also want to give them your digital business card so that their is a high chance that they will respond back to you. The problem with most entrepreneurs is that they get dozens of business cards every day, but they end up in the oddest places around their house in the most unorganized fashion. Believe me, this was how I did it for years myself!

Then, I created a system for all of my business cards where I would scan them into a nice and organized database, which I could easily access at any given moment. This system has worked wonders for me. Here is exactly what I did:

I purchased the CardScan Executive Card Scanner on Amazon and it arrived at my house a few days later. I installed the CD, hooked it up and started scanning my business cards. At first I was scanning them one at a time, but then I quickly learned about the “batch scan” feature which allowed me to scan in entire categories at a time in just minutes. This truly is a fast machine!

Now some of you might already be incredibly organized with your business cards, but mine were all just shoved in a shoebox! So I simply put them out on the kitchen table and quickly organized them by category before beginning. I did this very quickly because I didn’t want to spend all day on it and I figured I could always just updated them in the system later.

The first problem that I encountered was that some of my cards were so old that the system wasn’t getting all of their contact information right. So when I was done scanning I did a “once-over” update on the whole database where I at least made sure that the email was correct because that was the main thing I was interested in. This part of the process actually took longer than just scanning the cards! But when it was all done I was happy because we had a movie playing in the background that I was kind of watching, and I was able to get about 500 business cards done during the time it took to watch one movie!

The next thing that I did was sign up for CardScan @ Your Service. Note that this website is located at cardscan.net and not cardscan.com. This feature is awesome because it allows you to keep your business cards up to date.

You can set up the preferences so that it will send out occasional emails to your database to ask them if their information is up to date. Every time that it sends them an email, it also includes a picture of their scanned business card reminding them that at some point they gave it to you. I am sure that some of you have received these emails, but they are very simply to use and update.

Setting up a system is one thing, and following through with it is another. I set up a small container next to my CardScan and next to my Mac and that is where I store business cards at the end of the day. If I have time then I quickly scan them in, and if I don’t then I will get to them later. As soon as they are scanned in then I put a rubber band around the stack and throw it in a shoebox. Pretty dang simple! Now that the scanned card and contact info is in my computer, there is very little chance that I will be needing that card again.

BONUS TIPS:

Before you scan a card, consider writing a quick note on the FRONT of it reminding that person where you met. This will serve two purposes. It will help you remember them months or years from now, and it will also be the picture that they will see when they are asked to update their info via email. This is a quick little tip that makes a big difference. For example I might write: “Met at Starbucks – Discussed Foreclosures” or something along those lines. Get to the point in as few words as possible.
You can export the entire list of emails from the business card database for multiple purposes. For example, you can import the list, and then copy and paste the emails into the Facebook Invite Tool and they will all be sent a request to become your friend on Facebook. Normally you are only allowed to send out 30 or so friend requests per day, but with this tool they will let you send out several hundred at a time. The ones that are already on Facebook will get a simple friend request, and the ones that are not will get an invitation to join Facebook. I have found this is a pretty good way to connect with this database.
Consider creating a “Nice to meet you” template email follow up that you can copy/paste/send to everyone after you scan in their cards. It can be very simple and can have all of your social media profiles for them to check out as well as your blog or website. Little added touches like this usually make the difference in business. Just make sure you send them one at a time or put all the addresses in the BCC field. The last thing you want to do is send out a bulk email with everyone’s email addresses visible!

So hopefully this blog post has inspired you to get more focused on creating a system to organize your business cards. Most of you will be collecting cards for life, so you might as well get the system in place now. Imagine that you will one day become an author and write your first book. Everyone that you have ever met is a great candidate to buy your book right? If you can get your database built right from the beginning, you could potentially email that book link to tens of thousands of people and possibly become an Amazon.com best seller for the day, which could catapult your career! Just a thought :)

QUESTION: What system have you currently been using for organizing your business cards? Or has it just been one huge mess up until now? Please share your comments with the rest of us below!

Digital Business Cards have 50x the response rate!

Chris Record — Mon, 28 Sep 2009 22:10:56 +0000

Answer this question seriously. If you pass out 100 business cards, how many responses do you end up getting? 1%? 5%? 10%?

I bet most of you get no more than a 1% response rate from your business cards yet we all use them every single day. I would propose to you that the traditional business card model is outdated and is not effective.

About 6 months ago I switched from regular business cards to digital business cards and I watched my response rate from prospective clients jump by over 50x!!!

I use the iPhone as my phone/PDA, and it has a cool notepad feature that allows me to type up notes and then email them to people. I decided to create a “digital business card note” and then everytime someone asks me for my business card, I tell them I have a digital business card and pull out my phone, ask them for their email address, and then send them the note.

The note includes all of my contact information and a paragraph asking them to reply to the email with their contact information as well to let me know that they received mine. What I love about using digital business cards is that I am automatically “following up” with my prospect, which was one of my weaknesses, because when they get home their is an email from me sitting in their inbox! Not to mention that digital business cards are FREE!

Another thing that I did was created a filter in my gmail account that organizes all of the digital business cards that I have ever sent out. This allows me to track all of their emails as well so that I can stay in touch with them or add them to a mailing list of some kind. It also allows me to see how many of my sent emails were directly responded to. I am pleased to announce that I currently have a 70% response rate to my new business cards! I love how technology helps to simplify our lives!

STEP 1:

CREATE THE DIGITAL BUSINESS CARD IN YOUR NOTEPAD

STEP 2:

CLICK THE EMAIL BUTTON TO SEND THE NOTE AS A MESSAGE.

CLICK THE EMAIL BUTTON TO SEND THE NOTE

STEP 3:

ENTER THE EMAIL ADDRESS OF YOUR PROSPECTIVE CLIENT.

ENTER THE EMAIL ADDRESS OF THE RECIPIENT.

Another cool benefit is that you can log into your email client and you will have a record of everyone you have ever given your business card to! I use Gmail and I simply do a search for sent messages that say “Digital Business Card from Chris Record”. It gets even better though, because not only do I have an email database of everyone I have ever exchanged contact info with, but I can also identify which ones responded and which ones didn’t. I can simply reply to the email I sent and remind them to respond with their contact information so that I have it on file. The last time I did this I improved my response rate to well over 70%. This is flat out one of the most effective strategies that an entrepreneur can use to get greater results.

What are your thoughts on this creative marketing strategy???

7 Tax Strategies Every Real Estate Agent Should Know!

Chris Record — Wed, 16 Sep 2009 04:46:28 +0000

Mark J. Kohler

My personal lawyer, Mark Kohler, specializes in helping Realtors and Entrepreneurs with Tax and Legal Strategies to help them KEEP more of the money they work so hard for. Recently I invited him to Raleigh, North Carolina to speak to a room full of business owners and real estate investors and the feedback that we received was amazing! I wanted to share with my Active Rain community 7 Tax Strategies that Every Realtor Should Know. I would love to hear your feedback :)

7 Tax Strategies Every Realtor Should Know

By Mark Kohler, CPA (KKO Lawyers)

In our practice, we have helped many Realtors in tax planning for themselves and for their businesses in order to maximize tax savings that have helped many of our Realtor clients be successful in putting more money in their own pockets, as well as that of their customers.

1. The Value of an S-Corporation.

In our opinion, every Realtor that is independently employed by brokers should seriously consider the use of an S-Corporation as their form of doing business. The major benefit to using an S-Corporation versus a Sole-Proprietorship is the ability to save on self-employment tax. The self-employment tax rate is 15.3% on every dollar earned, while through the use of an S-Corporation the owner can split salary and dividends to save dollars on the dreaded self-employment tax. As an added bonus, the S-Corporation provides liability protection for the Realtor and may protect their personal assets in the case of a lawsuit from a project gone bad.

2. Self Directed IRA’s.

In the last several years many more self directed IRA management companies have come into the market, providing IRA owners the ability to take their IRA funds out of the traditional stock market and invest their IRA funds in real estate. Often times, individuals would like to invest in real estate but do not have the available cash to afford the down payment and get the project ‘jump started.’ Utilizing IRA funds has become a very popular strategy in allowing people to better utilize their retirement funds. However, care must be given to plan appropriately with your accountant or tax attorney familiar with these types of transactions. Most IRA Managers require a Limited Liability Company (LLC) to hold the investment for the IRA and thus require further consultation and support. In sum, the time and cost to implement a self-direct IRA real estate project is affordable and often times outweighs other options.

3. 1031 Exchanges.

Although there has been a reduction in the capital gain rates through the Job’s and Growth Tax Relief Reconciliation Act of 2003, signed by President Bush in May of 2003, the 1031 Exchange is still very viable for real estate investors and their agents helping them to invest in property. The 1031 Exchange allows any property owner to exchange their property for equal or greater value into multiple pieces of property while deferring the capital gain tax regularly due upon sale. The higher the value of the property the greater the tax savings. Generally, it is going to behoove the investor or their agent to utilize the services of an intermediary 1031 exchange company. An intermediary handles the transactional documentation and escrow services while working closely with the title company during the purchase and sale of the properties.

4. Tax Benefits of Rental Real Estate.

Many new Realtors have not experienced the power of depreciation and flow through losses from rental real estate. I would recommend that every Realtor take the time to study and learn about rental real estate and the deductions related thereto, such as depreciation, chattels, and tax-free appreciation. Many times the greatest financial return from rental real estate is not the cash flow from the rental itself, but from the tax-free appreciation and the depreciation flow through losses from the operations of the business. Many of my clients feel that they have a fantastic rental property when they break even with cash flow because of the ancillary tax benefits that are created there from.

5. Stepped-up Basis in Capital Assets Upon Death.

Even with the current changes to the estate tax provisions of the Internal Revenue Code, the “stepped-up” basis provisions are still in effect for several more years. What these provisions provide is that when an individual passes away, any capital assets they owned receive a stepped up basis to fair market value. Sometimes, holders of real property will make the mistake of placing the children or other family member’s names on the asset that would have previously received a stepped up basis. Therefore, when a person passes away, only a portion of the property is stepped up due to the fact that they only owned a portion of the property. Agents and real estate investors should be very careful as to how they change the ownership of the property with a person that is older or has health concerns because the tax impact can be dramatic.

6. Estate Taxes.

Every real estate professional should be generally familiar with the estate tax provisions so they can advise their clients that own large pieces of property. It is too bad that some people “loose the Family Farm” due to the estate taxes because they were not properly advised to do estate tax planning. Many agents have land owners that are farmers and ranchers that have large tracts of land but are cash poor. These land owners should consider the use of Charitable Remainder Trusts and other mechanisms to save on potential estate taxes.

7. Keeping good records and planning.

Many business owners wait until April 15th to try to do their tax planning for the past year. It is critical that taxpayers keep good records of the tax deductions they are trying to take throughout the year and meet on a regular basis with their accountant or tax attorney to go over strategies that may be helpful in their business. Travel, entertainment, home office and advertising expenses are deductions a realtor should certainly consider and take advantage of. Due to poor planning and record keeping, many Realtors don’t take deductions that are legally theirs. In summary, we recommend that every Realtor take the time to build a strong relationship with a business/tax planner that can facilitate and advise on many of the above strategies for the realtor and for the Realtor’s customers.

You can learn more about Mark Kohler by visiting him online at http://www.MarkJKohler.com or http://www.KKOLawyers.com