Frequently Asked Questions About REITs | REIT.com

Frequently Asked Questions About REITs

A REIT, or real estate investment trust, is a company that owns or finances income-producing real estate. Below are answers to fundamental questions about REITs.

Why were REITs created?

Congress created REITs in 1960 to make investments in large-scale, income-producing real estate accessible to average investors through the purchase of equity. In the same way shareholders benefit by owning stocks of other corporations, the stockholders of a REIT earn a pro-rata share of the economic benefits that are derived from the production of income through real estate ownership.

 

How does a company qualify as a REIT?

To qualify as a REIT, a company must comply with certain provisions within the Internal Revenue Code.

 

What Types of REITs are there?

REITs often are classified in one of two categories: equity or mortgage. Equity REITs mostly own and operate income-producing real estate, such as shopping centers, health care facilities, apartments, warehouses, office buildings and hotels. Mortgage REITs mostly lend money directly to real estate owners and operators or extend credit indirectly through the acquisition of loans or mortgage-backed securities.

 

What types of properties do REITs own and manage?

REITs own and manage a variety of property types: shopping centers, health care facilities, apartments, warehouses, office buildings, hotels and others. Most REITs specialize in one property type only, such as shopping malls, timberlands, data centers or self-storage facilities.

Some REITs invest throughout the country or, in some cases, throughout the world. Others specialize in one region or even a single metropolitan area.

 

How many REITs are there?

The Internal Revenue Service shows that there are about 1,100 U.S. REITs that have filed tax returns.

As of Dec. 31, 2014, there were 216 REITs in the U.S. registered with the SEC that trade on one of the major stock exchanges—the majority on the NYSE. These REITs have a combined equity market capitalization of $907 billion.

 

Who invests in REITs?

Everyone. Individual investors of all ages, both in the U.S. and worldwide, invest in REITs. Other typical buyers of REITs include exchange-traded funds, pension funds, endowments, foundations, insurance companies and bank trust departments.

 

How do investors own REITs?

Investors own REITs directly or through REIT mutual funds.

The majority of REITs trade on major stock exchanges. Investors may invest in a publicly traded REIT by purchasing shares through a securities dealer. As with other publicly traded securities, investors may purchase common stock, preferred stock or debt securities.

REIT investors also can buy shares in a REIT mutual fund or exchange-traded fund.

 

What are the investment benefits of REITs?

REITs are total return investments. They typically provide high dividends plus the potential for moderate, long-term capital appreciation. Additionally, REITs offer liquidity, portfolio diversification and strong corporate governance.

 

What factors contribute to REIT earnings?

Growth in REIT earnings typically comes from several sources, including higher revenues, lower costs and new business opportunities.

 

How do REITs measure earnings?

The REIT industry uses net income as defined under Generally Accepted Accounting Principles (GAAP) as the primary operating performance measure. The REIT industry also uses funds from operations (FFO) as a supplemental measure of a REIT’s operating performance. NAREIT defines FFO as net income (computed in accordance with GAAP) excluding gains or losses from sales of most property and depreciation of real estate.

 

How do shareholders treat REIT dividends for tax purposes?

For REITs, dividend distributions for tax purposes are allocated to ordinary income, capital gains and return of capital, each of which may be taxed at a different rate.

 

What are the differences between stock exchange-listed REITs, public, non-listed REITs (PNLRs) and private REITs?

Stock exchange-listed REITs file with the Securities and Exchange Commission (SEC). Shares of their stock trade on national stock exchanges.

PNLRs file with the SEC. Shares of their stock do not trade on national stock exchanges.

Private REITs do not file with the SEC. Shares of their stock do not trade on national stock exchanges.

 

Do countries besides the United States have REITs?

Yes, a total of 31 countries currently have REITs. The majority of REIT laws around the world mirror the U.S. approach to REIT-based real estate investment.

 

via Frequently Asked Questions About REITs | REIT.com.

Types of REITs | REIT.com

 

Who manages a REIT?

Like other publicly traded companies, a REIT’s executive management team operates the company, deciding what properties it will own and manage. Management’s decisions are overseen by a board of directors that is responsible to the shareholders. As with other corporations, REIT directors are typically well-known and respected members of the real estate, business and professional communities. Many of today’s REITs became public companies within the past 20 to 25 years, often transforming to public ownership what previously had been private enterprises. In many cases, the majority owners of these private enterprises became the senior officers of the REIT and contributed their ownership positions to the REIT.

What types of properties do REITs own and manage?

REITs own and manage a variety of property types: shopping centers, health care facilities, apartments, warehouses, office buildings, hotels and others. Most REITs specialize in one property type only, such as shopping malls, timberlands, data centers or self-storage facilities.

Some REITs invest throughout the country or in some cases, throughout the world. Others specialize in one region only, or even in a single metropolitan area.

 

 

How are REITs different from partnerships?

REITs are not partnerships. Most publicly traded REITs are vertically integrated real estate companies that develop, own and actively manage commercial real estate. Shares in these companies are traded, the same as other stocks, on major exchanges, providing complete liquidity and market pricing. Publicly traded REITs are subject to the same financial disclosure requirements as other publicly traded companies. Independent corporate governance consultants have rated the REIT industry’s governance among the best of all U.S. industry groups.

 

 

How do REITs use partnerships?

Like other industries, the real estate industry, including REITs, often uses partnerships to co-venture with others. In addition, REITs are typically structured in one of three ways: the traditional REIT, the umbrella partnership REIT (UPREIT) and the DownREIT.

A traditional REIT is one that owns its assets directly rather than through an operating partnership.

In the typical UPREIT, a REIT partners with others, and the partnership is termed the “operating partnership.” In return for their respective contributions, the REIT as well as the other partners receive interests in the operating partnership called operating partnership units (OP units). The REIT typically is the general partner and the majority owner of the OP units. For the partners contributing property to the operating partnership, any capital gain tax liability is deferred until such time as the OP units are converted into common shares of the REIT.

After a period of time (often one year), the non-REIT partners may enjoy the same liquidity of the REIT shareholders by tendering their units for either cash or REIT shares (at the option of the REIT or operating partnership). This conversion may result in the partners incurring the tax liability that had been deferred at the UPREIT’s formation. However, the unitholders may tender their units over a period of time, thereby spreading out such tax. In addition, when a partner holds the units until death, the estate tax rules operate in such a way as to provide that the beneficiaries may tender the units for cash or REIT shares without paying income taxes.

A DownREIT is structured much like an UPREIT, but the REIT owns and operates properties other than its interest in a controlled partnership that owns and operates separate properties.

Characteristics of Publicly Traded, Non-Exhange Traded and Private REITs: Comparison Chart

via The Basics of REITs | REIT.com.

The Basics of REITs | REIT.com

The Basics of REITs

What is a REIT?

A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types stable income streams, diversification and long-term capital appreciation. REITs typically pay out all of their taxable income as dividends to shareholders. In turn, shareholders pay the income taxes on those dividends.

REITs allow anyone to invest in portfolios of large-scale properties the same way they invest in other industries – through the purchase of stock. In the same way shareholders benefit by owning stocks in other corporations, the stockholders of a REIT earn a share of the income produced through real estate investment – without actually having to go out and buy or finance property. Learn more.

Why were REITs created?

Congress created REITs in 1960 to make investments in large-scale, income-producing real estate accessible to average investors. Congress decided that a way for average investors to invest in large-scale commercial properties was the same way they invest in other industries — through the purchase of equity. In the same way shareholders benefit by owning stocks of other corporations, the stockholders of a REIT earn a pro-rata share of the economic benefits that are derived from the production of income through commercial real estate ownership. REITs offer distinct advantages for investors: portfolio diversification, strong and reliable dividends, liquidity, solid long-term performance and transparency.

How does a company qualify as a REIT?

In order for a company to qualify as a REIT, it must comply with certain provisions within the Internal Revenue Code. As required by the Tax Code, a REIT must:

Be an entity that is taxable as a corporation

Be managed by a board of directors or trustees

Have shares that are fully transferable

Have a minimum of 100 shareholders

Have no more than 50 percent of its shares held by five or fewer individuals during the last half of the taxable year

Invest at least 75 percent of its total assets in real estate assets

Derive at least 75 percent of its gross income from rents from real property or interest on mortgages financing real property

Have no more than 25 percent of its assets consist of stock in taxable REIT subsidiaries

Pay annually at least 90 percent of its taxable income in the form of shareholder dividends

How many REITs are there?

As of Jan. 31, 2014, there were 204 REITs registered with the Securities and Exchange Commission in the United States that trade on one of the major stock exchanges — the majority on the New York Stock Exchange. These REITs have a combined equity market capitalization of $719 billion.

Additionally, there are REITs that are registered with the SEC but are not publicly traded, and REITs that are not registered with the SEC or traded on a stock exchange. Internal Revenue Service shows that there are about 1,100 U.S. REITs that have filed tax returns.

What Types of REITs are there?

The REIT industry has a diverse profile, which offers many investment opportunities. REITs often are classified in one of two categories: equity or mortgage.

Equity REITs:

Equity REITs mostly own and operate income-producing real estate. They increasingly have become real estate operating companies engaged in a wide range of real estate activities, including leasing, maintenance and development of real property and tenant services. One major distinction between Equity REITs and other real estate companies is that a REIT must acquire and develop its properties primarily to operate them as part of its own portfolio rather than to resell them once they are developed.

Mortgage REITs:

Mortgage REITs mostly lend money directly to real estate owners and operators or extend credit indirectly through the acquisition of loans or mortgage-backed securities. Today’s Mortgage REITs generally extend mortgage credit only on existing properties. Many mortgage REITs also manage their interest rate and credit risks using securitized mortgage investments, dynamic hedging techniques and other accepted derivative strategies.

via The Basics of REITs | REIT.com.

What is a REIT? | REIT.com

What is a REIT?

A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types regular income streams, diversification and long-term capital appreciation. REITs typically pay out all of their taxable income as dividends to shareholders. In turn, shareholders pay the income taxes on those dividends.

 

REITs allow anyone to invest in portfolios of large-scale properties the same way they invest in other industries – through the purchase of stock. In the same way shareholders benefit by owning stocks in other corporations, the stockholders of a REIT earn a share of the income produced through real estate investment – without actually having to go out and buy or finance property.

Most REITs are traded on major stock exchanges, but there are also public non-listed and private REITs. The two main types of REITs are Equity REITs and Mortgage REITs. Equity REITs generate income through the collection of rent on, and from sales of, the properties they own for the long-term. Mortgage REITs invest in mortgages or mortgage securities tied to commercial and/or residential properties.

Today, REITs are tied to almost all aspects of the economy, including apartments, hospitals, hotels, industrial facilities, infrastructure, nursing homes, offices, shopping malls, storage centers, student housing, and timberlands. REIT-owned properties are located in every state and support one million U.S. jobs annually.  U.S. REITs have become a model for REITs around the world, and now more than 30 countries around the world have adopted REIT legislation.

via What is a REIT? | REIT.com.

Real estate investment trust – Wikipedia, the free encyclopedia

Real estate investment trust

From Wikipedia, the free encyclopedia

A real estate investment trust (REIT) /ˈriːt/ is a company that owns, and in most cases, operates income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and even timberlands. Some REITs also engage in financing real estate. Created by the U.S. Congress in 1960,[1] REITs were designed to provide a real estate investment structure similar to the structure mutual funds provide for investment in stocks.[2] REITs are strong income vehicles because REITs must pay out at least 90 percent of their taxable income in the form of dividends to shareholders.[3]

REITs can be publicly traded on major exchanges, public but non-listed or private.[3] The two main types of REITs are Equity REITs[4] and Mortgage REITs.[5] In November 2014, Equity REITs were recognized as a distinct asset class[6] in the Global Industry Classification Standard by S&P Dow Jones Indices and MSCI. The key statistics to examine in a REIT are net asset value (NAV), funds from operations (FFO), and adjusted funds from operations (AFFO).

 

REITs were created in the United States when President Dwight D. Eisenhower signed into law the REIT Act title contained in the Cigar Excise Tax Extension of 1960.[7] REITs were created by Congress in order to give all investors the opportunity to invest in large-scale, diversified portfolios of income-producing real estate in the same way they typically invest in other asset classes – through the purchase and sale of liquid securities.

Since then, more than 30 countries around the world have established REIT regimes, with more countries in the works. The spread of the REIT approach to real estate investment around the world has also increased awareness and acceptance of investing in global real estate securities.[8]

A comprehensive index for the REIT and global listed property market is the FTSE EPRA/NAREIT Global Real Estate Index Series,[9] which was created jointly in October 2001 by the index provider FTSE Group, the National Association of Real Estate Investment Trusts (NAREIT) and the European Public Real Estate Association (EPRA).

As of June 2014, the global index included 456 stock exchange listed real estate companies from 37 countries representing an equity market capitalization of about $2 trillion (with approximately 78% of that total from REITs).[10]

Evolution[edit]

Around the time of their creation in 1960, the first REITs primarily consisted of mortgage companies. The industry experienced significant expansion in the late 1960s and early 1970s. The growth primarily resulted from the increased use of mortgage REITs in land development and construction deals. The Tax Reform Act of 1976 authorized REITs to be established as corporations in addition to business trusts.

The Tax Reform Act of 1986 also impacted REITs. The legislation included new rules designed to prevent taxpayers from using partnerships to shelter their earnings from other sources. Three years later, REITs witnessed significant losses in the stock market.

Retail REIT Taubman Centers Inc. launched the modern era of REITs in 1992 with its creation of the UPREIT. In an UPREIT, the parties of an existing partnership and a REIT become partners in a new “operating partnership.” The REIT typically is the general partner and the majority owner of the operating partnership units, and the partners who contributed properties have the right to exchange their operating partnership units for REIT shares or cash.The industry struggled beginning in 2007 as the global financial crisis kicked in. In response to the global credit crisis, listed REITs responded by deleveraging (paying off debt) and re-equitizing (selling stock to get cash) their balance sheets. Listed REITs and REOCs raised $37.5 billion in 91 secondary equity offerings, nine IPOs and 37 unsecured debt offerings as investors continued to act favorably to companies strengthening their balance sheets following the credit crisis.

From the end of February 2009 through the end of October 2014, stock-exchange listed Equity REITs have posted total returns of 312% (28.4% per year) and all stock-exchange listed REITs have gained 295% (27.5% per year), outpacing the return of 217% (22.6% per year) in the broad stock market and 210% (22.1% per year) in large-cap stocks.[11]

via Real estate investment trust – Wikipedia, the free encyclopedia.

Real Estate Investment Trust (REIT) Definition | Investopedia

Real Estate Investment Trust – REIT

DEFINITION OF ‘REAL ESTATE INVESTMENT TRUST – REIT’

A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.

Equity REITs: Equity REITs invest in and own properties (thus responsible for the equity or value of their real estate assets). Their revenues come principally from their properties’ rents.

Mortgage REITs: Mortgage REITs deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans.

Hybrid REITs: Hybrid REITs combine the investment strategies of equity REITs and mortgage REITs by investing in both properties and mortgages.

INVESTOPEDIA EXPLAINS ‘REAL ESTATE INVESTMENT TRUST – REIT’

Individuals can invest in REITs either by purchasing their shares directly on an open exchange or by investing in a mutual fund that specializes in public real estate. An additional benefit to investing in REITs is the fact that many are accompanied by dividend reinvestment plans (DRIPs). Among other things, REITs invest in shopping malls, office buildings, apartments, warehouses and hotels. Some REITs will invest specifically in one area of real estate – shopping malls, for example – or in one specific region, state or country. Investing in REITs is a liquid, dividend-paying means of participating in the real estate market.

Need more details on the REIT? Read The REIT Way and Add Some Real Estate to Your Portfolio.

via Real Estate Investment Trust (REIT) Definition | Investopedia.

101 Simple Ways to Build Trust | Embrace Possibility Blog

101 Simple Ways to Build Trust

The most valuable asset you can have is trust. It allows for flow and openness. When there is no trust, it becomes harder to get anything done. Think of one of your relationships where there is a lot of trust. Now think of another one with very little trust.

Which one do you prefer?

We can all be better off with more trust in our lives and I’m going to show you a “few” things you can do to build that trust.

Please note: My definition of “client” is anyone that has a relationship with you. This can be your spouse, your boss, your customer, your friend, etc.

Before we look at the different ways you can build trust, let’s look at the benefits of trust:

You become influential – people will seek you out for advice and follow your recommendations without much persuading.

You get valuable information – your clients will open up to you when they trust you. They’ll give you valuable information and feedback.

You can serve your clients more effectively – with access to insider information (#2), you can get to the root of the problem and really make a difference for your client.

You will get more business – people refer you when they trust you. This leads to high quality leads. Would you refer someone you didn’t trust?

You get less stressed – when your clients trust you, they give you the benefit of the doubt. Whether you’re running late for a meeting or hanging out late with friends, it’s less stressful to know that people will be understanding and forgiving.

You avoid bigger problems – with trust, your clients will communicate with you earlier on and warn you of any issues they are seeing. With enough trust, your clients will go out of their way to protect you.

You have more effective negotiations – research has shown that subjects who thought they were collaborators struck better deals than subjects who thought they were competitors. Surprise, surprise.

Now that you see the benefits of getting trust, here are a 101 ways to build trust (no particular order):

How to Build Trust

1. Be honest – if you tell the truth, your clients will trust you. Always be honest especially when no one is looking.

2. Respect your client – treat your clients with the same respect you would show the President of your country. Respect their time as well by never being late. If you need help being on time, check out How to Always Be On Time.

3. Sincerely care – when you truly care about others, it is hard not to trust you.

4. Ask open-ended questions – learn more about your client and be interested in their answers. Open-ended questions give your client the opportunity to tell you about themselves. Ask more questions based on the answers that you get.

5. Don’t be perfect – there is always something fishy about someone who seems to have everything going for them. Don’t waste your energy hiding your mistakes or weaknesses. This sends a message that you’re not hiding anything and that you want to build trust.

6. Don’t look at your watch – we’re all on a tight schedule but looking at your watch when someone is talking is rude. If you must be wary of the time, ask for permission to look at your watch.

7. Find the win-win – in negotiations, always look for the win-win outcome. Win-lose outcomes are one-time only events. When both parties win, you strengthen the relationship.

8. Don’t hedge your answers – be definitive when you can. When you hedge your answers, you are giving yourself an “out”. How can anyone trust you when you keep dodging responsibility. Politicians are notorious for hedging their answers. How much do you trust your politician?

9. Have your clients best interests in mind – clients know when you are looking out for them and when you are looking out for yourself. It’s hard to trust you when there is a conflict of interests.

10. Don’t show off – it puts people off and you come off like a self promoter interested in your own success and not the success of others. This breeds resentment more than trust.

11. Ask others to endorse you – if you prove yourself trustworthy and you offer great products and services, don’t be afraid to ask your clients to recommend you. It’s easier for others to trust you if someone they already trust endorses you.

12. Paraphrase what was said – giving the information back to the client in your own words is a great way to show you were listening and to demonstrate your understanding. People trust others who take the time to listen.

13. Be transparent – I have issues trusting people or companies who are not fully transparent. For example: companies that deliberately hide their prices for their products and services.

14. Call your client – relationships get weaker if you don’t nurture them. Call your clients on a periodic basis, not only when you need to sell them something.

15. Take responsibility – when something goes wrong and it’s your fault, take responsibility right away and focus on the next steps. It’s easier to trust someone who owns up to their mistakes.

16. Take whatever is being said seriously – don’t dismiss another person’s problem as being small or counter with the size of your own problems. Just listen. Whatever they are going through is real and serious for them and you should treat it as such.

17. Add value – value is what people are willing to pay for. Keep doing great work that adds value and others will reward you with trust.

18. Form a common enemy – when you focus on a common cause, it naturally builds trust and rapport to deal with the issue.

19. Be poised – its hard to trust someone who gets emotional easily. Breathing helps.

20. Empathize – acknowledge the feelings behind what is being said and show empathy. Your clients will trust you more when they feel that you understand them.

21. Make the client feel significant – this is a basic human need and if you fulfill it, people will trust you. Always be sincere when making your clients feel important. They can tell if you’re faking it.

22. Be accessible – when people know they can get access to you, it builds trust because they can hold you accountable. People who I can’t reach always seem less trustworthy to me.

23. Look people in the eye – if you constantly shift your eyes, it makes people suspicious of you.

24. Remove distractions – if you’re meeting with clients, remove all distractions (turn off phone, computer screen, etc.) and give them your undivided attention.

25. Have high self-esteem – be comfortable with who you are. Don’t try so hard to impress, it makes you look wishy-washy. Be careful about these other warning signs of low self-esteem.

26. Show commitment – when you show commitment, people trust you. Think of men who propose (and actually get married), employees who sign employment contracts and people who always show up when they say they will.

27. Say “I don’t know” – admit that you don’t know and say it upfront and direct. You’ll get a lot of credibility for that.

28. Deliver what you promise – Do what you say you are going to do. This is one of the best ways to build trust.

29. Use a real picture – if you have an online presence, use a real picture of yourself. An authentic picture lets me know that you’re not afraid to put yourself out there and you’re willing to be responsible for what you write on your website and blog.

30. Be vulnerable – trust builds when you open up. Don’t hide your human side, that’s the side that people connect to.

31. Volunteer information – don’t wait until someone follows up to give information that is important to them. Let them know as soon as you know.

32. Know your audience – make sure you use language that your client will understand. If you’re not talking to a technical person, don’t use technical language.

33. Take time to explain – when your client is confused, be patient and take time to help them understand. They’ll appreciate you for it and reciprocate the next time you’re confused.

34. Don’t abuse privileges – as you gain more trust, you’ll be given more privileges. Don’t abuse those privileges.

35. Don’t fidget – be aware of your body movements. Minimize your leg shakes, body shifts and hand fidgets. It’s hard to trust someone who seems nervous or anxious.

36. Stay up-to-date – your clients’ situation, preferences and needs change over time. It’s up to you to keep up-to-date through proactive communication. Don’t wait for your clients to update you.

37. Give proper feedback – if you want to build trust, you need to tell your client the truth when they make mistakes. “Yes Men” are not very trustworthy

38. Don’t name-drop – you might think this will help build your credibility but when you a drop names, it’s a turn off. It seems like you’re using that person’s name to compensate for your abilities. For better results, have others endorse you (#16).

39. Stand up for your client – if you feel your client is being taken advantage of in any way, stand up for them or at the very least, inform them of what’s going on.

40. Make it personal – get out of the office and meet your clients face-to-face. You need to get personal to build deep trust.

41. Give good advice – if your advice helps people, they’ll trust you and your advice even more.

42. Go ABCD – go Above and Beyond the Call of Duty. I didn’t make the acronym up but ABCD is a great strategy for building trust. Always look for ways to over deliver.

43. Don’t hard sell – You may have the best product or service out there that everyone can benefit from but no one likes to be sold to or feel forced to do things. Build a relationship, educate and persuade, not badger. Check out Permission Marketing by Seth Godin (affiliate) or my How to Sell with Integrity Series.

44. Share ideas – when you come across good ideas, share them with your clients. Share ideas that demonstrate your deep understanding of your clients’ needs.

45. Return calls quickly – if someone leaves a message, call them back as soon as you can. This makes the other person feel important and makes them like and trust you more.

46. Be curious – ask questions and be genuinely interested to learn more. Resist taking over the conversation or trying to immediately solve the problem or issue.

47. Keep secrets – if a client tells you something confidential, keep it to yourself unless it violates your moral and ethical standards.

48. Don’t over-explain – When you over-explain, you’re trying to remove yourself from being responsible. This is one of the best ways to lose someone’s trust.

49. Show compassion – step into the other person’s shoes. When something bad happens to your clients, express your sympathies.

50. Value the relationship – show your client that you’re in it for the long-term and demonstrate that you value the relationship. This may mean taking the first step in a compromise.

51. Ask for clarification – when asked a question, always clarify it before answering. Think Columbo – “I may be a little slow here…”

52. Know your outcome – if your goal is to build trust, then your desire to help the client should surpass your desire to be right or to win. Remember this next time you are trying to prove how right you are at the expense of your relationship to the client.

53. Don’t use a “fake” voice – some people I know use a “professional” voice that isn’t their own. Use your own voice. If you don’t like how it sounds, get some voice lessons, they work.

54. Don’t manipulate – it is possible to use the ideas on this list with the intention to manipulate. Don’t do it because it won’t end well. It never does.

55. Don’t lie – one small lie can destroy a mountain of trust.

56. Understand that your client is unique – every person in this world is unique and should be treated as such. A one size fits all approach rarely works.

57. Don’t finish other people’s sentences – even if they are taking a long time at it, be patient and let them say it.

58. Don’t try too hard – when you are overly servile or deferential, it can be fairly annoying. I find it hard to trust anyone who cannot think and act for themselves.

59. Never talk down to anyone – there is no situation where this is acceptable.

60. Be competent – always work to improve your skills. If you want to be trusted, you need to be competent. This is especially important in a leadership role. Think back to any bosses you’ve had that were incompetent. Did you trust them?

61. Say what you mean – if you think it’s a bad idea, say so. When you build up a reputation of saying what you mean, people don’t have to second guess what you’re trying to say. This helps to increase your trustworthiness.

62. Focus on your similarities – highlight what you have in common with the other person. We like people who are similar and we trust people whom we like.

63. Listen attentively – Replay for the other person something that shows you’ve listened carefully. This is especially effective when you bring up and help someone with challenges they’ve told you about in previous conversations where they don’t expect you to remember.

64. Think abundance – adopt the belief that there is enough for everyone and you are not in competition for limited resources. Actions that reflect this belief builds trust because you become more collaborative with those around you and work to raise people up as opposed to putting them down.

65. Send a birthday card – there is no better way to show that you care than to remember someone’s birthday and to get them a nice card. In this internet age, a handwritten card goes a long way.

66. Give specific compliments – the more specific your compliment, the more sincere it usually is. It shows that you took time to notice.

67. Start and end meetings on time – if you set up a meeting, make sure the agenda is clear and that the meeting starts and more importantly, ends on time.

68. Be consistent – don’t change your views on a whim. It makes people distrustful.

69. Read books related to emotional intelligence – How to Win Friends and Influence People by Dale Carnegie and Emotional Intelligence by Daniel Goleman are good places to start.

70. Don’t gossip – don’t gossip about your clients, don’t gossip about others to your clients.

71. Give freebies – if you sell a product or service, consider giving a free version of it. It allows you to help those without resources to access your expertise. Make sure your freebies are of high quality and valuable.

72. Remember names – there is nothing more interesting to us than our own names. Show that you remember the other person’s name. If you need help, check out How to Remember Names Even If You Have Bad Memory.

73. Trust others first – people treat you the way you treat them. Give trust first if you want to get trust.

74. Be comfortable with silence – don’t feel obligated to fill in the silence. I know it can be uncomfortable but let the other person think through their ideas and allow them to break the silence first.

75. Be responsive – if someone is unable to reach you, make sure you respond within 24 hours with an acknowledgment or have a auto-reply message explaining the exact times when you can be reached.

76. Have integrity – stick to your beliefs and values no matter what. Check out this article on the Importance of Keeping Integrity in the Workplace.

77. Allow others to help you – sometimes we are so focused on giving that we do not allow others to give to us. Doing this robs them of the joy of giving. Let others give.

78. Don’t blame – when things go wrong, don’t point fingers. Empower yourself by taking responsibility and then determining what you’re going to do next. Don’t waste the present thinking about the past that can’t be changed. A person that doesn’t blame quickly gains the trust of others.

79. Be yourself – don’t change who you are to please other people. It’s tiring for everyone. If you don’t know how to be yourself, check out this article by Chris Guillebeau.

80. Express emotions – “just the facts” may be appropriate during an investigation but when dealing with people, emotions add the human element which is key for building trust

81. Pay attention – be attentive to the body language to make sure it matches the meaning of the spoken language.

82. Don’t prejudge – listen with an open mind and take in what is being said without coloring it with your own judgments.

83. Understand that the map is not the territory – our reality is only our perception of reality. Understanding that everyone perceives the world differently allows us to be more open-minded and accepting of ideas.

84. Don’t interrupt – when you interrupt, you are telling everyone that what you have to say is more important than what anyone else has to say.

85. Get testimonials – if you do great work, ask your clients to write testimonials for you. These are the first things I read before buying anything. Never fake testimonials.

86. Don’t be a know-it-all – you can’t possibly know how to do everything and you don’t need to. Always be transparent about what you know and don’t imply that you know more that you actually do. Being human is a good thing.

87. Have passion – when I see someone who is motivated by their passion and not money, status or power, I am more inclined to trust them. Perhaps it is the feeling that they are not trying to take anything away from me but rather they are building something great.

88. Show loyalty – a person that demonstrates firm and constant support is usually a person that other people want to trust.

89. Do your research – make an effort to understand your client. The more you get them, the faster they’ll think of you as an insider. Your goal is to be invited to the inner circle.

90. Give credit – the more credit you give to others, the more people will trust you. “There is no limit to the good man can do if he doesn’t care who gets the credit.” – Judson B. Branch

91. Have an opinion – people who never take sides have trouble building trust because they are not willing to take a stand.

92. Don’t expect anything in return – help people and don’t expect anything in return. You’ll be happier for it and giving is always better than receiving.

93. Uphold accountability – trust is not about letting things slide. It’s about doing what is best for your client.

94. Never exaggerate – it’s tempting to play up the benefits about your products and services but exaggerations never end well. Any form of “truth stretching” is a bad idea if you want to build trust.

95. Make things right – when you make a mistake, in addition to learning from it, you should make it right in some way. At Pret-a-Manger, when they got my order wrong, they gave me my order for free along with a free cup of coffee. I now go twice as often.

96. Don’t flatter – insincere compliments are one of the quickest ways to lose rapport and trust with someone.

97. Trust yourself – you can’t give what you don’t have and you can’t get what you don’t give (say that 5 times fast).

98. Be fair – treat people fairly. Like a good parent, don’t play favorites. Reward and punish accordingly.

99. Help their children – if you have clients who have children, find a way to help their kids. You can give them advice, write a letter of recommendation or give them a job. Your deeds will definitely not be forgotten and you’ll find yourself being introduced as a friend of the family.

100. Don’t give up – just because someone doesn’t trust you now, doesn’t mean you can’t build it. If what you’re doing is not working, try something else. You have 101 things you can do.

101. Be enthusiastic – most people can’t fake enthusiasm. When you are enthusiastic about what you do, people are more likely to trust you.

Here is bonus tip:

102. Lead by example – walk your talk.

So which trust building tips resonated with you? Were there any that I missed?

If you enjoyed this article, please share it with anyone you think might benefit from reading it.

via 101 Simple Ways to Build Trust | Embrace Possibility Blog.

The Best Way for New Leaders to Build Trust – HBR

The Best Way for New Leaders to Build Trust

Jim Dougherty

DECEMBER 13, 2013

When I took over as CEO of Intralinks,  a company that provides secure web based electronic deal rooms, the company was hemorrhaging so much cash that its survival was at stake. The service was going down three times per week; we were in violation of the contract with our largest client; our chief administrative officer had just been demoted, and so on.

So, what I do on my first day? I spent more than four hours  listening in to client support calls at the call center.  I shared headsets with many of the team, moving from desk to desk to speak to the reps. To say they were surprised is an understatement: Many CEOs never visit the call center, and virtually none do it their first afternoon on the job.

I made this my priority partly because I wanted to know what customers were saying—but also to make an internal statement. I knew there had to be some radical changes to behaviors, expectations, and attitudes.  There was no time to be subtle.  I needed to show I was different, that things were going to be different, and I needed to establish trust as quickly as possible.

In leading various companies over the years, one of the most valuable lessons I’ve learned is that establishing trust is the top priority. Whether you are taking over a small department, an entire division, a company, or even a Boy Scout troop, the first thing you must get is the trust of the members of that entity.  When asked, most leaders will agree to this notion, but few do anything to act on it.

Without trust, it is very unlikely you will learn the truth on what is really going on in that organization and in the market place.  Without trust, employees won’t level with you—at best, you’ll learn either non-truths or part truths. I see this all too frequently. Sometimes employees will go out of their way to hoard and distort the truth.

The best way to start building trust to take the time and meet as many individual contributors as you can as soon as you can. In addition to meeting customers, meeting rank-and-file employees should be your top priority.

This is not a common approach. Many leaders see their role as directing and giving information, rather than gathering.  There is pressure to “come up with the answer” quickly or risk looking weak.  Too many new leaders believe they’re expected to know the answer without input or guidance. Nothing could be further from the truth.

Doing this correctly takes time—but less than you might think. The meetings can be on one on one or small groups.  The sessions can’t be rushed.  In the first few weeks I’d suggest you spend up to half your time in these meetings. Take a pad and take notes.  Listen intently.  A simple but effective open-ended question is: “If you were put into my role tomorrow, what would be the first three things you’d do and why?”  Or: “What are the three biggest barriers to our success, and what are our three biggest opportunities we have?” Really great ideas can emerge from these meetings—along with some really mediocre ones—but it’s your job to filter and prioritize them. First, gather the information.

Later on my first day at Intralinks, I began arranging meetings with individual contributors. That’s where my learning really began. Over the next few weeks I met with over 60 individual contributors. Not only did I learn a lot, but I convinced them that I cared what they thought and could be trusted with the truth.

In the middle of my first week as CEO, one of the company’s original VCs called. “So, what’s your plan?” he asked. I said I have to spend a few weeks learning. He was incredulous that I did not have a pre-baked plan. I was incredulous he thought that I should.

Over those weeks I learned how unhappy clients were with our complex bills, why service went down so often, why our pricing gave our clients headaches, that 80% of the customer calls could be eliminated with a simple fix to our service, and that clients wanted predictability of expenditures with us.

After six weeks, I had enough information to return to the management team with specific recommendations on what I thought we should do. Instead of just laying this out in an all-hands meeting, I began laying out the plan in one-on-one meetings in which I talked about how each individual’s feedback had helped guide my thinking. This created a tremendous buy in among all levels of the team.

By mid March, after only 10 weeks on the job, we rolled out the new plan. By the end of the year we’d signed 150 new long-term contracts (up from zero), revenue was up by almost 600%, our burn rate was cut by 75%, and we’d positioned ourselves to raise a $50 million round of financing a few months later in the heart of the dot.com winter.

None of this could have happened without building the trust of the team. New leaders must remember that many of the best insights on how to fix a company lie with employees further down the org chart. Creating a trusting, honest dialogue with these key personnel should be every new leader’s top priority.

via The Best Way for New Leaders to Build Trust – HBR.

The Simplest Way to Build Trust – Harvard Business Review

The Simplest Way to Build Trust

David DeSteno

JUNE 2, 2014

 

In the midst of an intense negotiation, it’s hard to know what’s motivating the person across the table — is he willing to cooperate with you to meet both your interests or does he only want to serve his? You need to build trust with your counterpart so you can align your interests and increase the likelihood that he will honor his commitments.

A powerful way to establish trust is to employ one of the mind’s most basic mechanisms for determining loyalty: the perception of similarity. If you can make someone feel a link with you, his empathy for and willingness to cooperate with you will increase.

My favorite example of this occurred outside Ypres, Belgium in 1914. The British and the Germans had been fighting a long and bloody battle, but on the eve of December 24th, the British soldiers began to see lights and hear songs from across the field that separated their trenches from those of their foes. They soon recognized that the lights were candles and the songs were Christmas carols. What happened next was rather amazing. The men from both sides came out of their trenches and began to celebrate Christmas together. Men who had hours before been trying to kill each other were now sharing trinkets and family photos in complete trust that no violence would occur. Why? No one knows for certain, but I suspect that it was because in those moments, the men stopped viewing themselves as British and Germans, and rather saw themselves as fellow Christians. They came to perceive themselves as similar, and that meant they could trust each other.

Now you might think I’ve constructed a fanciful theory for a fluke occurrence. Fair enough. My colleague Piercarlo Valdesolo and I wondered the same, so we set out to study it. Although it made good sense that the mind would use similarity as a metric to decide to whom to be loyal, we had no hard proof. To find out if our suspicions were correct, we designed an experiment that allowed us to manipulate similarity stripped down to its most basic elements in order to see how it would affect behavior. To do this, we brought participants into the lab one at a time for what they believed was an experiment on music perception. They put on earphones and sat across from another person, who was actually an actor working with us. The task was simple; all it required was tapping the sensor in front of them with their hand to the beats they heard over their earphones. The beats were designed so that some participants could see their hands tapping in synchrony with the actor (who had his own sensors and headphones), while others would see random, unsynchronized tapping. Why the tapping? Moving in time is an ancient marker the brain uses to discern who’s similar. It occurs in rituals, in military drills, and in team exercises. If you’re moving in time with someone, it’s a symbol that right here, right now, the two of you are a unit.

After the tapping, we had designed a situation where the participants would see the actor get stuck while completing an onerous task from which they themselves were excused. But before they left the experiment, they were offered the opportunity to help the actor complete the onerous tasks if they so desired.

As we expected, relatively few people (18%) decided to come to the aid of the other when they hadn’t been synchronized. But if they had tapped in synchrony, the number who helped (50%) jumped dramatically. What’s more, the increase in helping was directly tied to how similar participants felt toward the actor. Surprising as it may seem, those who tapped in synch believed they shared more in common with the actor than those who didn’t, even though they had never said a word to the actor.

There’s nothing magical about hand tapping. We’ve found the same effect in several ways, including telling people they shared some esoteric (or even phony) characteristic with another. All that’s required to increase people’s willingness to support each other is any subtle marker of similarity.

Try it in your next negotiation.  Find and emphasize something – anything – that will cause your partner to see a link between the two of you, which will form a sense of affiliation. And from that sense of affiliation —  whether or not it’s objectively meaningful – comes a greater likelihood of trustworthy behavior.

via The Simplest Way to Build Trust – HBR.

Brian Halligan: 5 Ways to Build Trust Fast | Inc.com

Brian Halligan: 5 Ways to Build Trust Fast

Today faith only goes so far. Earning trust is the sure path to success. Brian Halligan, CEO Of HubSpot, shares five tips for building trust fast.

BY KEVIN DAUM

Inc. 500 entrepreneur and best-selling author@KevinJDaum

All collaboration is built on trust. Whether making sales, building a team, or managing people, without trust productivity falls apart. Often, you’ll take action, requiring trust even before it’s earned or secured. You might have to buy, transact, hire, or participate, not on trust but on blind faith…at least until that trust is confirmed, or broken.

Best-selling author and HubSpot CEO Brian Halligan knows a lot about building trust fast. With Halligan’s company adding nearly a person a day, and growing at a screaming 82 percent annually, he has to build trust among his partners, employees, managers, and customers quickly and efficiently. Without trust, HubSpot, the leader in inbound marketing software, would waste valuable resources on politics and concern.

Together, Halligan and I identified key trust-building insights from HubSpot practices. Whether you are a CEO, salesperson, manager, or team member, we’re sure these five tips will help you build trust today:

1. Be Transparent and Consistent

Inspired by the book The Cluetrain Manifesto, Halligan and co-founder Dharmesh Shah dedicated the company to open book management and transparency. Nearly every aspect of financials is shared with employees, investors, and customers alike. As a private company, they’re not required to publish financials, but they do. In fact, they’re publicly releasing 2012 annual numbers today, which you can see right here. Regular communication is encouraged in an open environment with few walls, and no offices, allowing for constant interaction. No question is off limits at HubSpot company meetings. Everyone’s trusted with sensitive information and expected to capitalize on their inclusion by driving the company forward.

Lesson: Share information openly and regularly so people can use it to help. Otherwise they’ll assume you’re definitely hiding something.

2. Tell True and Relevant Stories

When you meet people, you fill in your own story about them until truth is provided. They, of course, do the same about you. People use often-wrong stereotypes and archetypes to gain much-desired context quickly. HubSpot counteracts this with constant storytelling within the company. In today’s meme-dominated world, broadcasting your own real stories of hardship, achievement, success, and failure are important to show patterns of true behavior amongst management, employees, and customers. Co-founder Shah says, “Whether it’s right, wrong, or different, it is. And all of us need to be acutely aware of what’s going on in our business and be able to talk candidly about our company narrative.” Halligan himself takes employees on off-site “Story Walks” to give them insight to HubSpot thinking and culture.

Lesson: Share stories that define how you have dealt with tough situations so people can understand and appreciate your character.

3. Celebrate Individualism

People want to stay in their own comfort zone. Buyers, employees, and managers want to adapt as little as possible when engaging in something new. HubSpot purposefully highlights individual traits among their people. They make the point very quickly that their solutions are adaptable to the way you do business. Internally, they emphasize that people have individual personalities and all are accepted. They often host “Lunch Roulette” where all employees, including senior management, submit their names and are randomly picked to have a company-paid lunch with other HubSpot employees.

Lesson: Let people see who you really are and readily accept them for who they are.  Authenticity is the shortest path to trust and the surest way to keep it.

4. Give People a Preview

Uncertainty makes people uncomfortable and drives distrust. People automatically fill in the worst when there are gaps in the upcoming story. The drama of surprise can be fun, but not when stakes are high and people are making critical decisions. Earn trust by giving information as it comes in even when it’s unfavorable. People handle the truth better than optimistic projections that don’t come true. Halligan not only informs about the present, but shares his intended future tempered with realities of the journey. This way he inspires his team, solicits valuable feedback, and also prepares them for road bumps ahead.  Painting a positive but realistic vision lets HubSpot constituents dream and execute with excitement and confidence.

Lesson: Share where you are going and why. Manage expectations about the journey so fear is minimized and participants can help.

5. Prioritize Safe Authority

Trust doesn’t exist at the outset because people need to prove themselves trustworthy.  Noted credibility and references help, but until people show trust in action you’re flying on faith that they will perform as expected. Give people a chance to try something and succeed early. HubSpot does this immediately by letting people determine their own vacations. Seriously, there is no formal policy or guidelines. Employees are told on day one to “Use good judgment” and then given the authority to design when, where, and how long, to optimize for productivity and lifestyle.

Lesson: Give away authority early, in ways that position people to succeed. They will then trust themselves first, opening them to trust you as an ally in their journey.

via Brian Halligan: 5 Ways to Build Trust Fast | Inc.com.

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