Check out the new Fannie Mae lending rules for investors. It's good for you!
Click here to read all about it.
Basically,
Now investors can hold 5-10 mortgages and still get Fannie Mae backed loans. This apparently will start as of 3/1/2009 and will be announced on Monday 2/9/2009. The reserve and qualifying criteria for the 5-10 loan range will be more stringent, as well as the down payment requirements but this is great news for the investors out there.
Monday, February 9, 2009
Monday, February 2, 2009
BUSINESS PLAN
Do you have a business plan in place? The reason for a business plan
became evident in a study done at an Ivy League university. They asked
their graduating class how many of them had written down their goals.
Only 5% of the class raised their hands. The other 95% of the class had not
written down their goals. (Keep in mind this is an Ivy League college.)
This was a well-known and very prestigious college, yet many of the
students had not written down their goals.
The university tracked these students over the next several years. When it
looked at their net worth later on, the 5% who wrote down their goals were
worth more than the other 95% combined. That’s the power of writing
down your plan. Get your plan made. I will not take the time in here to
cover all of the sections of a business plan. The information is readily
available on the Internet, so I will speak in generality.
Your plan may be to invest in rundown properties, fix them up, and sell
them (known as flipping and it is done all over the world). In planning for
flipping properties, remember to review your personal strengths and
weaknesses. Your strategy should be in harmony with your attitude and
risk tolerance. Capitalize on your strengths. You need to be completely
honest with yourself on your strengths and weaknesses; write them down
as part of your plan.
You need to have a system because real estate is quantifiable and it’s
systematic. Systematic means you can continuously repeat a process.
Having someone who can create systems was critical for me, and Trond
was perfect because he was good at creating systems, while it was one of
my weaknesses. I also knew Trond had some weaknesses that would offset
my strengths. We used that as one of the building blocks when we formed
our partnership. We set it up to ensure that both of us would accept the
risks. We know that we have our own core motivations.
By enrolling in the RES Academy, taking the classes, and reading this blog you
have proven that you want to do something about your situation; you want
to invest in your future. That’s exactly what you’ve done; you invested in
your future much like someone will spend $30,000, $40,000, or $50,000
to go to college; it’s the same thing. You expect a return on this investment
in your future.
Your personality is going to define the type of risks you are willing to
accept. You need to create a written plan, one which will help you follow
the right strategies. This will help you get rid of some of the unnecessary
risks and allow only calculated risks. You need to do this to be able to take
the risks that you can handle. These risks will enable you to invest in your
future and reap the profits and benefits. We are at a point that we
understand risk and, more importantly, understand how to mitigate it.
became evident in a study done at an Ivy League university. They asked
their graduating class how many of them had written down their goals.
Only 5% of the class raised their hands. The other 95% of the class had not
written down their goals. (Keep in mind this is an Ivy League college.)
This was a well-known and very prestigious college, yet many of the
students had not written down their goals.
The university tracked these students over the next several years. When it
looked at their net worth later on, the 5% who wrote down their goals were
worth more than the other 95% combined. That’s the power of writing
down your plan. Get your plan made. I will not take the time in here to
cover all of the sections of a business plan. The information is readily
available on the Internet, so I will speak in generality.
Your plan may be to invest in rundown properties, fix them up, and sell
them (known as flipping and it is done all over the world). In planning for
flipping properties, remember to review your personal strengths and
weaknesses. Your strategy should be in harmony with your attitude and
risk tolerance. Capitalize on your strengths. You need to be completely
honest with yourself on your strengths and weaknesses; write them down
as part of your plan.
You need to have a system because real estate is quantifiable and it’s
systematic. Systematic means you can continuously repeat a process.
Having someone who can create systems was critical for me, and Trond
was perfect because he was good at creating systems, while it was one of
my weaknesses. I also knew Trond had some weaknesses that would offset
my strengths. We used that as one of the building blocks when we formed
our partnership. We set it up to ensure that both of us would accept the
risks. We know that we have our own core motivations.
By enrolling in the RES Academy, taking the classes, and reading this blog you
have proven that you want to do something about your situation; you want
to invest in your future. That’s exactly what you’ve done; you invested in
your future much like someone will spend $30,000, $40,000, or $50,000
to go to college; it’s the same thing. You expect a return on this investment
in your future.
Your personality is going to define the type of risks you are willing to
accept. You need to create a written plan, one which will help you follow
the right strategies. This will help you get rid of some of the unnecessary
risks and allow only calculated risks. You need to do this to be able to take
the risks that you can handle. These risks will enable you to invest in your
future and reap the profits and benefits. We are at a point that we
understand risk and, more importantly, understand how to mitigate it.
Tuesday, January 27, 2009
Bad Partnerships
There is an old saying that says, "The only ship that is guaranteed to sink is a Partnership". Obviously, that is not the case in all partnerships. However, you may have been in a bad partnership that did not work out. Most
partnerships do not work out for a number of reasons. I work very well
with my partners. I think we will continue to work together for the rest of
our lives. But there is one main reason why, and it is because of the way
we analyze our partnership.
The next thing we are going to look at is why most partnerships fail. Most
partnerships fail because of how we enter them, or how they start.
Investors come in and they think, “Johnny is my little brother and he wants
to get into real estate. He has had these dreams and aspirations and we are
going in together. He does not really have much of anything and only
makes $7 an hour at McDonald’s. He is going to be a great partner for me
because he is willing to work, he is willing to do it and bring that attitude
to our partnership.”
First problem: you have not looked at it analytically. You have not looked
at your strengths and weaknesses and been honest with yourself. You have
not looked at his strengths and weaknesses and been honest with him. You
have not said, “Do we compliment each other?” When you are looking at
partnerships, the value your partner brings is something you need to find
out and remember. The value added to a partnership is a core component.
Why do I bring up partnerships? Your reaction is, “I bought the program
and I’m doing it by myself.” Great; but there will come a time in real estate
investing – because of the mass and the quantity and the amount of money
involved – that you will need partnerships. For those of you who have little
money to start with, you are going to need a partnership to get you off the
ground.
You need to look at what the value is for a partnership. You need to look
at it analytically:
• Are we forming the right type of partnership?
• Are you complimenting my strengths?
• Are you filling in my weakness?
• Are you just going to ride on my shoulders the entire time?
I promise that if you enter a partnership where your partners ride on your
shoulders the whole time, it will not work. You are going to feel
overburdened; you are going to feel unappreciated and you are going to
hate what you are doing to the point that it may force you out of real estate
investing altogether.
You need to understand what your strengths and weaknesses are. And
remember, you need to understand what you are going to do and you need
to do it despite the negative energy out there; despite all the negativity that
everyone is going to give you. You may hear that little devil sitting on your
shoulder telling you that you are not good enough. You are not smart
enough. Why are you doing this? You are going to lose everything. You
will be defeated.
Don’t listen. You need to move forward.
The other reason why partnerships fail is because of one word: greed. Yes,
greed will kill any investment; it will kill any partnership; and it will take
away any added value and destroy everything you’ve built. Check yourself
with your greed. By this I mean that you need to make sure that people are
not going to be greedy.
Write down the details of your partnership. Get everything in writing and
ensure that you follow those details exactly. Become integral in what you
do, be honest with what you say, and move forward. Do not let greed
overpower you, try to trick you, or destroy a good thing.
Now that we have talked about how to understand yourself, your core
motivations, and investor dilemma and risk, let’s sum it up like this:
Remember that you are... The captain of your future.
You can be successful no matter what anyone tells you; I am living proof.
If I can do it, anyone can. I really believe that. Believe it yourself. Take
advantage of everything we have to offer at the Academy. Take advantage
of our knowledge. Make goals– set them and do them. Move forward.
We are excited that you are on this journey with us. We are excited for the
journey you are about to embark on. Be positive about it and have a joyful
journey.
partnerships do not work out for a number of reasons. I work very well
with my partners. I think we will continue to work together for the rest of
our lives. But there is one main reason why, and it is because of the way
we analyze our partnership.
The next thing we are going to look at is why most partnerships fail. Most
partnerships fail because of how we enter them, or how they start.
Investors come in and they think, “Johnny is my little brother and he wants
to get into real estate. He has had these dreams and aspirations and we are
going in together. He does not really have much of anything and only
makes $7 an hour at McDonald’s. He is going to be a great partner for me
because he is willing to work, he is willing to do it and bring that attitude
to our partnership.”
First problem: you have not looked at it analytically. You have not looked
at your strengths and weaknesses and been honest with yourself. You have
not looked at his strengths and weaknesses and been honest with him. You
have not said, “Do we compliment each other?” When you are looking at
partnerships, the value your partner brings is something you need to find
out and remember. The value added to a partnership is a core component.
Why do I bring up partnerships? Your reaction is, “I bought the program
and I’m doing it by myself.” Great; but there will come a time in real estate
investing – because of the mass and the quantity and the amount of money
involved – that you will need partnerships. For those of you who have little
money to start with, you are going to need a partnership to get you off the
ground.
You need to look at what the value is for a partnership. You need to look
at it analytically:
• Are we forming the right type of partnership?
• Are you complimenting my strengths?
• Are you filling in my weakness?
• Are you just going to ride on my shoulders the entire time?
I promise that if you enter a partnership where your partners ride on your
shoulders the whole time, it will not work. You are going to feel
overburdened; you are going to feel unappreciated and you are going to
hate what you are doing to the point that it may force you out of real estate
investing altogether.
You need to understand what your strengths and weaknesses are. And
remember, you need to understand what you are going to do and you need
to do it despite the negative energy out there; despite all the negativity that
everyone is going to give you. You may hear that little devil sitting on your
shoulder telling you that you are not good enough. You are not smart
enough. Why are you doing this? You are going to lose everything. You
will be defeated.
Don’t listen. You need to move forward.
The other reason why partnerships fail is because of one word: greed. Yes,
greed will kill any investment; it will kill any partnership; and it will take
away any added value and destroy everything you’ve built. Check yourself
with your greed. By this I mean that you need to make sure that people are
not going to be greedy.
Write down the details of your partnership. Get everything in writing and
ensure that you follow those details exactly. Become integral in what you
do, be honest with what you say, and move forward. Do not let greed
overpower you, try to trick you, or destroy a good thing.
Now that we have talked about how to understand yourself, your core
motivations, and investor dilemma and risk, let’s sum it up like this:
Remember that you are... The captain of your future.
You can be successful no matter what anyone tells you; I am living proof.
If I can do it, anyone can. I really believe that. Believe it yourself. Take
advantage of everything we have to offer at the Academy. Take advantage
of our knowledge. Make goals– set them and do them. Move forward.
We are excited that you are on this journey with us. We are excited for the
journey you are about to embark on. Be positive about it and have a joyful
journey.
Friday, January 23, 2009
Partnerships: To be or not to be
The last thing we want to talk about in investor dilemma is partnerships.
The reason I bring up partnerships is this: Many people start investing in
real estate and they say, “You know what? I’m going to form a partnership
because I need some help.”
When you get into real estate, you are going to have many different types
of partnerships. Some projects are simply too big to handle alone, and that
is when you need to bring in additional staff and resources. Partnerships in
and of themselves are not good or bad. Let me explain. At least once a
week someone comes to my office looking for advice to form a
partnership. It may be a partnership between a father and a son. I often ask
why they are forming a partnership. A typical answer is, “Well, I want to
help my son out. I want to help him become successful.” Okay, fantastic!
But are you successful? Well if the father is not successful, it’s probably
not a smart partnership.
Many people form partnerships on the simple grounds of “Hey, this is my
buddy, and I would love to see him be successful with me.” The number
one thing you have to remember with partnerships is this: never drag
someone along with you. A partner is either going to walk side-by-side
with you or he/she shouldn’t come on the journey... period! Partners
shouldn’t ride on your back; they shouldn’t be dragged along. They
shouldn’t be part of the ride unless they are contributing side-by-side with
you. That’s difficult to understand when you are looking at partnerships,
especially when you bring in family. And you hear of this all the time; but
when it happens, partnerships fail.
Working with family is rarely a good thing. Everyone starts out with good
intentions. “Oh, we want to help out. We want to help our little brother
Johnny become responsible and to grow up a little bit.” That is theabsolutely worst reason to form a partnership. When you are searching for
a partner, you need someone who compliments your strengths and fills in
your weaknesses.
My current partnerships are based on competency. I have a partner by the
name of Trond. He fills in my weaknesses and compliments my strengths.
I do the same for him. I have another partner, Frantz. He is extremely
organized and proactive. Nothing can stop the guy... he is absolutely
dependable.
My partnerships have been fantastic; everybody contributes. They have all
been part of a fair partnership from the beginning. Understanding
partnerships is critical to you and your partner’s success. The only reason
why I bring up partnerships regarding investor dilemma is because in real
estate partnerships come into play all the time.
If you are going to form a partnership, be honest with yourself. Ask
yourself, “Is this person really going to help or am I dragging him/her
along?” What does each partner bring to the table? This is where you need
to look at the strengths and weaknesses of each partner and see if they
compliment each other. Also, remember the partnership needs to add
value, just like everything else in investing. In certain types of real estate
investing, like when working in large volume, you will need a partnership
to get off the ground.
Monday we will talk about what happens for when you have a bad partnership?
The reason I bring up partnerships is this: Many people start investing in
real estate and they say, “You know what? I’m going to form a partnership
because I need some help.”
When you get into real estate, you are going to have many different types
of partnerships. Some projects are simply too big to handle alone, and that
is when you need to bring in additional staff and resources. Partnerships in
and of themselves are not good or bad. Let me explain. At least once a
week someone comes to my office looking for advice to form a
partnership. It may be a partnership between a father and a son. I often ask
why they are forming a partnership. A typical answer is, “Well, I want to
help my son out. I want to help him become successful.” Okay, fantastic!
But are you successful? Well if the father is not successful, it’s probably
not a smart partnership.
Many people form partnerships on the simple grounds of “Hey, this is my
buddy, and I would love to see him be successful with me.” The number
one thing you have to remember with partnerships is this: never drag
someone along with you. A partner is either going to walk side-by-side
with you or he/she shouldn’t come on the journey... period! Partners
shouldn’t ride on your back; they shouldn’t be dragged along. They
shouldn’t be part of the ride unless they are contributing side-by-side with
you. That’s difficult to understand when you are looking at partnerships,
especially when you bring in family. And you hear of this all the time; but
when it happens, partnerships fail.
Working with family is rarely a good thing. Everyone starts out with good
intentions. “Oh, we want to help out. We want to help our little brother
Johnny become responsible and to grow up a little bit.” That is theabsolutely worst reason to form a partnership. When you are searching for
a partner, you need someone who compliments your strengths and fills in
your weaknesses.
My current partnerships are based on competency. I have a partner by the
name of Trond. He fills in my weaknesses and compliments my strengths.
I do the same for him. I have another partner, Frantz. He is extremely
organized and proactive. Nothing can stop the guy... he is absolutely
dependable.
My partnerships have been fantastic; everybody contributes. They have all
been part of a fair partnership from the beginning. Understanding
partnerships is critical to you and your partner’s success. The only reason
why I bring up partnerships regarding investor dilemma is because in real
estate partnerships come into play all the time.
If you are going to form a partnership, be honest with yourself. Ask
yourself, “Is this person really going to help or am I dragging him/her
along?” What does each partner bring to the table? This is where you need
to look at the strengths and weaknesses of each partner and see if they
compliment each other. Also, remember the partnership needs to add
value, just like everything else in investing. In certain types of real estate
investing, like when working in large volume, you will need a partnership
to get off the ground.
Monday we will talk about what happens for when you have a bad partnership?
Thursday, January 22, 2009
INFLUENCES AND ATTITUDE, con't
Let me give you one more example... another example using my father-inlaw.
He is a very good person; in fact we get along fantastically. Back in
those early days he was just a father and was cautious; he did not want us
to get hurt. When I first married, I told my wife, “I want to invest in real
estate. I want to do this.” My wife is fantastic; she supports me and is
definitely not the negative influence that is so often prevalent. She said,
“That’s great.” Again, she comes from a traditional family, so she stated,
“You know what? My father would love it if you would take him along.
He knows a lot about construction and different things.” I said, “Great! I’ll
take him along.”
Well, I started bringing him along to the potential properties, and he would
talk me out of every one. I finally realized what he was doing and I went
to my wife. I said, “Honey, I’m sorry, but I cannot involve your father in
this anymore.” She said, “Why?” My response: “Well, he’s talking us out
of every single investment. I cannot do it.” She said, “Okay, fine.” So, we
found a deal by ourselves.
About a week before I was going to close on the deal, I said to my fatherin-
law, “We are going to buy this property.” He said, “Oh, really?” I said,
“Yes, we are closing in a week.” Then he went silent. I asked him if he
would like to see it and he said that he would. He looked at the property
and went through it, not saying too much. He knew my mind was made up
and that I would do it, regardless.
We put together a deal and purchased the property. It was fantastic. I made
$40,000 the first year-and-a-half with no money down. When I was
working at the bank making $9 an hour, I barely had any credit and
struggled to make a $65/month ring payment. We bought that property and
made $40,000 in 18 months. It was fantastic! Now the tables are turned.
My father-in-law is all about being positive. Why? Because he saw a
success story and that’s important. Had I listened to the outside influences
and negativity, I would not be here today. I would not have made millions
of dollars in real estate, nor would I be facing a multi-million dollar future.
I remember my own father. Why did he work six days a week, drive
exhausted, and sleep in his car to see his children? What motivated him?
The love that he had for us was greater than anything else he wanted in his
life. If you can find that core motivation, you can drown out the outside
influences and move forward.
He is a very good person; in fact we get along fantastically. Back in
those early days he was just a father and was cautious; he did not want us
to get hurt. When I first married, I told my wife, “I want to invest in real
estate. I want to do this.” My wife is fantastic; she supports me and is
definitely not the negative influence that is so often prevalent. She said,
“That’s great.” Again, she comes from a traditional family, so she stated,
“You know what? My father would love it if you would take him along.
He knows a lot about construction and different things.” I said, “Great! I’ll
take him along.”
Well, I started bringing him along to the potential properties, and he would
talk me out of every one. I finally realized what he was doing and I went
to my wife. I said, “Honey, I’m sorry, but I cannot involve your father in
this anymore.” She said, “Why?” My response: “Well, he’s talking us out
of every single investment. I cannot do it.” She said, “Okay, fine.” So, we
found a deal by ourselves.
About a week before I was going to close on the deal, I said to my fatherin-
law, “We are going to buy this property.” He said, “Oh, really?” I said,
“Yes, we are closing in a week.” Then he went silent. I asked him if he
would like to see it and he said that he would. He looked at the property
and went through it, not saying too much. He knew my mind was made up
and that I would do it, regardless.
We put together a deal and purchased the property. It was fantastic. I made
$40,000 the first year-and-a-half with no money down. When I was
working at the bank making $9 an hour, I barely had any credit and
struggled to make a $65/month ring payment. We bought that property and
made $40,000 in 18 months. It was fantastic! Now the tables are turned.
My father-in-law is all about being positive. Why? Because he saw a
success story and that’s important. Had I listened to the outside influences
and negativity, I would not be here today. I would not have made millions
of dollars in real estate, nor would I be facing a multi-million dollar future.
I remember my own father. Why did he work six days a week, drive
exhausted, and sleep in his car to see his children? What motivated him?
The love that he had for us was greater than anything else he wanted in his
life. If you can find that core motivation, you can drown out the outside
influences and move forward.
Wednesday, January 21, 2009
OUTSIDE INFLUENCES AND A POSITIVE ATTITUDE
The biggest problem with investor dilemma is the outside influence. What
do I mean by outside influence? I own a real estate brokerage with about
200 agents, making it a rather large firm. I had one of my real estate agents
come into my office (he seemed to be negative by nature). He sat down
and here’s how our conversation went:
He said, “I want to be successful in real estate.” I said, “Great! You can be
successful in real estate.” He said, “Will you teach me?” I said, “Sure! I’ll
teach you how to do it. I’ll teach you how to make a lot of money and turn
real estate into your career.”
This is what I told him he needed to do: Any time people ever talk about
anything in their lives, be happy for them. Tell them:
• That’s fantastic.
• I’m so glad you are doing that.
• I’m so glad you are going to go do that.
• You want to buy a house... great!
• That’s awesome... the best thing to do.
• Good for you!
• You want to invest in real estate? Awesome!
Be positive! I told him, “People need positive energy and they need
positive people around them.”
We get bombarded daily by negative people and negative things constantly
telling us, “You can’t do it! You are not good enough!” Even now, they
may be saying, “Why did you buy that program? I cannot believe you
wasted that kind of money and bought that program! Unbelievable! You
are not going to do anything with it!” You may have already heard it.
I told my agent, “If you can change that... if you can be the positive one,
that alone will bring you success in real estate.”
You can guess the outcome!
The man in question changed his attitude. He was happier all the time. He
would tell people, “Yes! That is great!” After about a month he started
getting business. Soon after, he came into my office and said, “Aaron, this
is fantastic!” I said, “Great! What happened?” His joyous response was,
“You were absolutely right! I’m positive. I started telling people they are
doing great and they refer business to me. Or they contact me directly to
do business with me. Or they wish they would have done business with
me. Now I’m busy and I’m making good money.”
It was all because he was positive... and he was not in a great situation at
the time, either. He was strapped financially and was living paycheck to
paycheck. He was doing real estate part time to make a change, so he
didn’t have a lot of hope for success. However, by changing his attitude
and not allowing the outside pressures to influence him, he became
successful, drawing only successful people to do business with him. Oh,
and by the way, he did not ask one single person for business, yet he
became highly successful.
I tell people that investor dilemma is any outside negative influence. You
need to push that away; you need to push it aside; you need to move
forward and do what you want no matter what. Despite what people tell you, despite the objections, despite the negativity you will encounter, you
can do it.
do I mean by outside influence? I own a real estate brokerage with about
200 agents, making it a rather large firm. I had one of my real estate agents
come into my office (he seemed to be negative by nature). He sat down
and here’s how our conversation went:
He said, “I want to be successful in real estate.” I said, “Great! You can be
successful in real estate.” He said, “Will you teach me?” I said, “Sure! I’ll
teach you how to do it. I’ll teach you how to make a lot of money and turn
real estate into your career.”
This is what I told him he needed to do: Any time people ever talk about
anything in their lives, be happy for them. Tell them:
• That’s fantastic.
• I’m so glad you are doing that.
• I’m so glad you are going to go do that.
• You want to buy a house... great!
• That’s awesome... the best thing to do.
• Good for you!
• You want to invest in real estate? Awesome!
Be positive! I told him, “People need positive energy and they need
positive people around them.”
We get bombarded daily by negative people and negative things constantly
telling us, “You can’t do it! You are not good enough!” Even now, they
may be saying, “Why did you buy that program? I cannot believe you
wasted that kind of money and bought that program! Unbelievable! You
are not going to do anything with it!” You may have already heard it.
I told my agent, “If you can change that... if you can be the positive one,
that alone will bring you success in real estate.”
You can guess the outcome!
The man in question changed his attitude. He was happier all the time. He
would tell people, “Yes! That is great!” After about a month he started
getting business. Soon after, he came into my office and said, “Aaron, this
is fantastic!” I said, “Great! What happened?” His joyous response was,
“You were absolutely right! I’m positive. I started telling people they are
doing great and they refer business to me. Or they contact me directly to
do business with me. Or they wish they would have done business with
me. Now I’m busy and I’m making good money.”
It was all because he was positive... and he was not in a great situation at
the time, either. He was strapped financially and was living paycheck to
paycheck. He was doing real estate part time to make a change, so he
didn’t have a lot of hope for success. However, by changing his attitude
and not allowing the outside pressures to influence him, he became
successful, drawing only successful people to do business with him. Oh,
and by the way, he did not ask one single person for business, yet he
became highly successful.
I tell people that investor dilemma is any outside negative influence. You
need to push that away; you need to push it aside; you need to move
forward and do what you want no matter what. Despite what people tell you, despite the objections, despite the negativity you will encounter, you
can do it.
Tuesday, January 20, 2009
BE REALISTIC
When you write things down, you also need to understand some of your
personality strengths and weaknesses. For example:
• Are you realistic?
• Do you undershoot all the time?
• Do you overshoot?
• Do you always hit the target?
I learned these principles young in life. I was a senior in high school and I
had this good friend with whom I was in wrestling. We had about the same
skill set throughout our entire (but short) wrestling careers. I remember our
first year, in which my goal was to be a varsity wrestler. I wanted to be the
varsity guy, but it was unrealistic. I did not have the skills to beat the
varsity guy in only one year’s time because he was so much better than me.
I ended up being junior varsity (JV). My friend’s goal was to be JV and
that’s what he was; he reached his goal. In my sophomore year, my goal
was to take state. My friend’s goal was to go to state; that’s all he wanted.
Yep, you guessed it; I did not take state. I did well, but I did not accomplish
my goal. I never had that feeling of accomplishment. However, my
friend’s goal was to go to state, and when he got to state, he’d
accomplished his goal. The sky was the limit at that point. He continued to
move forward and he placed.
During my junior year, my goal, again, was to take state. My friend’s goal
was to place in state. Like the year before, I placed in state, but did not take
state. My friend actually took state. Because he had previously placed, he
only had to win two matches. Once he had placed, the sky was the limit.
Boom! He took it.
My senior-year goal was to take state. That was the only year it was a
realistic possibility for me. The problem was I’d developed such a pattern
of never accomplishing my goals, that actually accomplishing a realistic
goal was very difficult, and I did not do it. However I did place; they
actually ranked me Number One. I was the shoo-in that year. I beat
everybody, yet I still lost. My friend’s goal was to take state, and with his
pattern of always accomplishing his goal, he was certain. “I am taking
state. This is my year to say ‘Yes, I am the champion. I'm taking it.’” And
yes, he took it.
He had been realistic, not downplaying himself, but realistic about what he
could accomplish. Thus, he had that feeling of accomplishment when he reached his goals and objectives. I, on the other hand, was unrealistic from
the beginning. Then when I had my chance, I didn’t believe it. I didn’t
believe I could do it and I fell short.
Anytime you face a decision, you need to treat it like we’ve taught you to
treat risk. The decision can be managed, but let’s be realistic: if you are
coming off making $20,000 a year, establishing a goal to make $500,000
the next year is unrealistic. Investor dilemma comes with a realistic choice.
personality strengths and weaknesses. For example:
• Are you realistic?
• Do you undershoot all the time?
• Do you overshoot?
• Do you always hit the target?
I learned these principles young in life. I was a senior in high school and I
had this good friend with whom I was in wrestling. We had about the same
skill set throughout our entire (but short) wrestling careers. I remember our
first year, in which my goal was to be a varsity wrestler. I wanted to be the
varsity guy, but it was unrealistic. I did not have the skills to beat the
varsity guy in only one year’s time because he was so much better than me.
I ended up being junior varsity (JV). My friend’s goal was to be JV and
that’s what he was; he reached his goal. In my sophomore year, my goal
was to take state. My friend’s goal was to go to state; that’s all he wanted.
Yep, you guessed it; I did not take state. I did well, but I did not accomplish
my goal. I never had that feeling of accomplishment. However, my
friend’s goal was to go to state, and when he got to state, he’d
accomplished his goal. The sky was the limit at that point. He continued to
move forward and he placed.
During my junior year, my goal, again, was to take state. My friend’s goal
was to place in state. Like the year before, I placed in state, but did not take
state. My friend actually took state. Because he had previously placed, he
only had to win two matches. Once he had placed, the sky was the limit.
Boom! He took it.
My senior-year goal was to take state. That was the only year it was a
realistic possibility for me. The problem was I’d developed such a pattern
of never accomplishing my goals, that actually accomplishing a realistic
goal was very difficult, and I did not do it. However I did place; they
actually ranked me Number One. I was the shoo-in that year. I beat
everybody, yet I still lost. My friend’s goal was to take state, and with his
pattern of always accomplishing his goal, he was certain. “I am taking
state. This is my year to say ‘Yes, I am the champion. I'm taking it.’” And
yes, he took it.
He had been realistic, not downplaying himself, but realistic about what he
could accomplish. Thus, he had that feeling of accomplishment when he reached his goals and objectives. I, on the other hand, was unrealistic from
the beginning. Then when I had my chance, I didn’t believe it. I didn’t
believe I could do it and I fell short.
Anytime you face a decision, you need to treat it like we’ve taught you to
treat risk. The decision can be managed, but let’s be realistic: if you are
coming off making $20,000 a year, establishing a goal to make $500,000
the next year is unrealistic. Investor dilemma comes with a realistic choice.
Monday, January 19, 2009
Investor Dilemma
Let’s look at what is called “investor dilemma”. Now that we understand
risk and we are going to move forward regardless, we need to define and
deal with dilemma. Go ahead; write it in the notes on the side of this page.
This wraps up everything we have talked about; investor dilemma is all
about choice.
What do I mean by choice? You make all kinds of different choices every
day, including the choice to get into real estate investing. You can invest
your money this way or that way. We live in the information age and are
bombarded with decisions daily. This includes ways to spend our time, our
resources, and our money.
Now that’s a dilemma!
We are showing you how to say “Look, this is what I’m going to do; I’m
moving forward,” much like when I asked my father-in-law for permission
to marry his daughter. He gave me all kinds of different choices, which,
frankly, I did not want. We had set our goal; we were going to reach it and
we were going to move forward.
How do we manage the different demands on our time? How do we
manage all this information... all the outside influences? You make a goal
and write it down!
It’s imperative that you write down what you’re going to do. Write down
your goals; write down what your core motivation is. I know it’s private,
and that’s okay; this is your book. No one else will read it, so write it
down. Why? Because it solidifies it in your mind. It becomes truth. By
writing down that you will do this and why, you are more apt to do it. Just
be sure to be sincere about it, and it’s proven you will make it happen.
risk and we are going to move forward regardless, we need to define and
deal with dilemma. Go ahead; write it in the notes on the side of this page.
This wraps up everything we have talked about; investor dilemma is all
about choice.
What do I mean by choice? You make all kinds of different choices every
day, including the choice to get into real estate investing. You can invest
your money this way or that way. We live in the information age and are
bombarded with decisions daily. This includes ways to spend our time, our
resources, and our money.
Now that’s a dilemma!
We are showing you how to say “Look, this is what I’m going to do; I’m
moving forward,” much like when I asked my father-in-law for permission
to marry his daughter. He gave me all kinds of different choices, which,
frankly, I did not want. We had set our goal; we were going to reach it and
we were going to move forward.
How do we manage the different demands on our time? How do we
manage all this information... all the outside influences? You make a goal
and write it down!
It’s imperative that you write down what you’re going to do. Write down
your goals; write down what your core motivation is. I know it’s private,
and that’s okay; this is your book. No one else will read it, so write it
down. Why? Because it solidifies it in your mind. It becomes truth. By
writing down that you will do this and why, you are more apt to do it. Just
be sure to be sincere about it, and it’s proven you will make it happen.
Friday, January 16, 2009
Risk, continued
We have talked about risk; we know it is unavoidable and that you must
manage your risk. We only want to take calculated risks. We want to
measure every investment to make sure we know what we are doing
without losing our core motivation. The risks I take, come hell or high
water, will not stop me from obtaining my freedom. Period! No matter
what. Risk is unavoidable and I will manage it and so will you. You will
learn how to manage it yourself. What you tell yourself and what you
believe yourself to be, will always be. When you tell yourself, “I’m going
to do this; I’m going to move forward no matter what,” you will.
Let me give you an example that’s rather amusing. My wife comes from a
very traditional family. Before our engagement she suggested that I talk to
her father and ask him for permission to marry her. My reaction was,
“Wow. That would be nice. It would make her mom and dad proud that we
would seek their permission.” After we made arrangements to speak, I sat
down with them and my future wife and talked to her father and mother. It
turned out to be a two-hour discussion about why we shouldn’t get
married; why we should wait... and why we should do this and why we
should to that. After a while, I’d had enough. I’m a very determined
person, and when I decide I’m going to do something, I do it. You can be
the same way.
There is no reason why you need to be wishy-washy; move forward –
make your decisions and follow through. I made the decision to marry this
beautiful woman and no one would stop me. We were going to start a
family and live happily ever after. I looked my father-in-law square in the
eyes and said, “You know, we’ve been talking for a couple hours.” I was
very nice about it, but I said, “We’re getting married whether you like it or
not. I’m here out of respect for your daughter.” That was the end of the
discussion. He did not talk to me for an entire month. I dealt with the
consequences, but I was not going to allow a silly barrier like that stop me.
They thought they knew what was best for me and my wife when we knew
what we wanted to do. I was not going to allow them to get in the way of
our happiness.
It’s the same with risk. Many people let risk talk them out of investing.
When you set up your own barriers – when you create your own obstacles
to overcome – ask yourself why you do that. If you’ve decided to be
happy, well then be happy (darn it), and move forward. If you’ve decided
to invest, to create freedom for yourself and wealth, simply do it! Other
people do it all the time, why can’t you? You are no less special than
anyone else. You can do it, and that’s something you need to remember.
Risk in unavoidable, but can and must be managed; we supply you with
the right tools to effectively manage it. That’s what we do and that’s why
we are here.
manage your risk. We only want to take calculated risks. We want to
measure every investment to make sure we know what we are doing
without losing our core motivation. The risks I take, come hell or high
water, will not stop me from obtaining my freedom. Period! No matter
what. Risk is unavoidable and I will manage it and so will you. You will
learn how to manage it yourself. What you tell yourself and what you
believe yourself to be, will always be. When you tell yourself, “I’m going
to do this; I’m going to move forward no matter what,” you will.
Let me give you an example that’s rather amusing. My wife comes from a
very traditional family. Before our engagement she suggested that I talk to
her father and ask him for permission to marry her. My reaction was,
“Wow. That would be nice. It would make her mom and dad proud that we
would seek their permission.” After we made arrangements to speak, I sat
down with them and my future wife and talked to her father and mother. It
turned out to be a two-hour discussion about why we shouldn’t get
married; why we should wait... and why we should do this and why we
should to that. After a while, I’d had enough. I’m a very determined
person, and when I decide I’m going to do something, I do it. You can be
the same way.
There is no reason why you need to be wishy-washy; move forward –
make your decisions and follow through. I made the decision to marry this
beautiful woman and no one would stop me. We were going to start a
family and live happily ever after. I looked my father-in-law square in the
eyes and said, “You know, we’ve been talking for a couple hours.” I was
very nice about it, but I said, “We’re getting married whether you like it or
not. I’m here out of respect for your daughter.” That was the end of the
discussion. He did not talk to me for an entire month. I dealt with the
consequences, but I was not going to allow a silly barrier like that stop me.
They thought they knew what was best for me and my wife when we knew
what we wanted to do. I was not going to allow them to get in the way of
our happiness.
It’s the same with risk. Many people let risk talk them out of investing.
When you set up your own barriers – when you create your own obstacles
to overcome – ask yourself why you do that. If you’ve decided to be
happy, well then be happy (darn it), and move forward. If you’ve decided
to invest, to create freedom for yourself and wealth, simply do it! Other
people do it all the time, why can’t you? You are no less special than
anyone else. You can do it, and that’s something you need to remember.
Risk in unavoidable, but can and must be managed; we supply you with
the right tools to effectively manage it. That’s what we do and that’s why
we are here.
Thursday, January 15, 2009
INVESTMENTS AND RISKS
To end the week we are going to break this topic into two, easy to digest, parts.
Today and tomorrow's topic will cover the risks involved with investing.
Risk is another key element with any investment. Why? Risk is
unavoidable. You are always going to have some type of risk in your life...
in general, and certainly when you are investing in property. There are two
things you should understand in order to manage risk:
1. Risk is unavoidable.
2. Risk must be managed.
I say “must be managed” because risk is unavoidable; there is risk in
everything you do.
Now that we’ve identified the two things that go with risk (it’s unavoidable
and must be managed), how do we manage risk? It comes down to
personality strengths and weaknesses.
Looking at your personality will tell you how to manage your risk. What
do I mean by personality? Let me give you this example... Think back to
when you were a kid at the public swimming pool and it was the first timeyou were going to jump off the high dive. As you were going up the ladder,
did you see a bunch of people jumping off the diving board and you yelled
out, “Hey, that looks fun.” Were you the type of person who got all excited
at the bottom and then went up and the higher you got, you became scared?
Then suddenly you were at the top and were clinging onto those little
handrails as you looked over the side. You started crying and you climbed
back down... or even worse, you were paralyzed and started crying and
your mom had to come get you.
Were you that kind of person? Or were you the kind of person who
watched other people jump off the high dive? Then you figured out how it
was done and you climbed up and jumped. Or you may have been the type
who screamed, “Yeah!” as you climbed the ladder, ran, and jumped off the
board, diving straight into the water as you screeched “Geronimo!” Bam,
you did it. It would not have mattered if there had been water in the pool
or not; it could have been solid concrete. You were jumping because
someone obviously put a diving board there for a reason. Are you that kind
of person, or are you the second type of person; the calculating guy who
watched carefully and then jumped in?
Personality strengths and weaknesses tell you a lot about your core
personality. As you think back on how you reacted to this situation as a
child, ask yourself if your behavior was rational or irrational. In my
example, being scared of the high dive was rational as a child; as an adult,
you know it is irrational. How many of you were scared to ride a bike for
the first time and never wanted to ride it again after falling? I have several
friends that it took years to learn how to ride a bike while everyone else,
including myself, was off and riding. We were in the dirt playing around
and riding all over the neighborhood while the other kids did not want to
do it because they were frightened. Is that rational or irrational?
That’s what you need to ask yourself: is the risk that I am taking rational
or irrational? Am I the type who is going to be paralyzed? Am I going to
talk myself out of investing? Am I going to find every excuse under the
sun not to act, to do nothing... including not investing in property? If this
investment is wrong, I’m sunk. (That’s rational! That’s obvious; it’s
quantifiable; just stay away from it.) But don’t use petty excuses to talk
yourself out of investing; just stop using excuses.
However, if you are the type of person to run and jump off the diving board
– you have a high degree of risk tolerance – you need to be very careful.
I’m that type of person; I’m the type of person who will do something
regardless of what is at the bottom. That’s a recognizable problem. To
counteract this, I have established checks and balances for myself to make
sure I’m okay and that I’m going to be safe, because my personality
strength is that I’m okay with risk and weakness.
We will continue with this topic tomorrow.
Today and tomorrow's topic will cover the risks involved with investing.
Risk is another key element with any investment. Why? Risk is
unavoidable. You are always going to have some type of risk in your life...
in general, and certainly when you are investing in property. There are two
things you should understand in order to manage risk:
1. Risk is unavoidable.
2. Risk must be managed.
I say “must be managed” because risk is unavoidable; there is risk in
everything you do.
Now that we’ve identified the two things that go with risk (it’s unavoidable
and must be managed), how do we manage risk? It comes down to
personality strengths and weaknesses.
Looking at your personality will tell you how to manage your risk. What
do I mean by personality? Let me give you this example... Think back to
when you were a kid at the public swimming pool and it was the first timeyou were going to jump off the high dive. As you were going up the ladder,
did you see a bunch of people jumping off the diving board and you yelled
out, “Hey, that looks fun.” Were you the type of person who got all excited
at the bottom and then went up and the higher you got, you became scared?
Then suddenly you were at the top and were clinging onto those little
handrails as you looked over the side. You started crying and you climbed
back down... or even worse, you were paralyzed and started crying and
your mom had to come get you.
Were you that kind of person? Or were you the kind of person who
watched other people jump off the high dive? Then you figured out how it
was done and you climbed up and jumped. Or you may have been the type
who screamed, “Yeah!” as you climbed the ladder, ran, and jumped off the
board, diving straight into the water as you screeched “Geronimo!” Bam,
you did it. It would not have mattered if there had been water in the pool
or not; it could have been solid concrete. You were jumping because
someone obviously put a diving board there for a reason. Are you that kind
of person, or are you the second type of person; the calculating guy who
watched carefully and then jumped in?
Personality strengths and weaknesses tell you a lot about your core
personality. As you think back on how you reacted to this situation as a
child, ask yourself if your behavior was rational or irrational. In my
example, being scared of the high dive was rational as a child; as an adult,
you know it is irrational. How many of you were scared to ride a bike for
the first time and never wanted to ride it again after falling? I have several
friends that it took years to learn how to ride a bike while everyone else,
including myself, was off and riding. We were in the dirt playing around
and riding all over the neighborhood while the other kids did not want to
do it because they were frightened. Is that rational or irrational?
That’s what you need to ask yourself: is the risk that I am taking rational
or irrational? Am I the type who is going to be paralyzed? Am I going to
talk myself out of investing? Am I going to find every excuse under the
sun not to act, to do nothing... including not investing in property? If this
investment is wrong, I’m sunk. (That’s rational! That’s obvious; it’s
quantifiable; just stay away from it.) But don’t use petty excuses to talk
yourself out of investing; just stop using excuses.
However, if you are the type of person to run and jump off the diving board
– you have a high degree of risk tolerance – you need to be very careful.
I’m that type of person; I’m the type of person who will do something
regardless of what is at the bottom. That’s a recognizable problem. To
counteract this, I have established checks and balances for myself to make
sure I’m okay and that I’m going to be safe, because my personality
strength is that I’m okay with risk and weakness.
We will continue with this topic tomorrow.
Wednesday, January 14, 2009
What type of investor are you?
Most people do not understand the importance of determining what type
of investor they are. It is one of the most important concepts you should learn; your profile will govern how you invest your time, energy, and money from now and into the future.
To help establish your profile, examine your aspirations, which are based
on how you answer the following questions. (No one but you will know
your answers, so be honest with yourself.)
• Why are you doing what you’re doing?
• Why did you take the risk?
• Why did you spend the money?
• What are you going to do with it?
I ask this question at seminars all the time: “Why are you doing this?” The
typical response is, “I want more money.”
There’s a reason why you are doing this... why you are sitting there reading
this, and spending your time learning how to become a real estate investor. Why are you doing what you are doing?
I would like to share a story with you. When I was a young boy my father
worked extremely hard; combined with many long hours, we did not see
him very often. There was a time when we lived in Boise, Idaho, and his
job was in Salt Lake City, Utah, where he worked six days a week, 12-hour
days. On weekends he would make the six-hour drive home to Boise. He
would sleep in his car on the way so that he would be able to spend all day
Sunday with us. He did this every week for two solid years. I recall that as
a little kid (I was only six) that I really respected my dad for that. I
remember thinking: “That’s amazing that my dad would make that
sacrifice.” I recall another time when I was older and in high school, I was
on the high school wrestling team. I had wrestling practice and a meet
every week; my father usually missed them because of his work. He had
to make sure we had food, shelter, water, and an education. It’s my guess
that many of you sitting and watching me are thinking, “Yeah, I had to
miss my daughter’s ballerina recital just last week and that killed me
inside.”
I shared my father’s story with you because I need to make this perfectly
clear: achieving your financial goals will be tough. Any investor who has
been investing for a while will tell you that you’ll always go through tough
times. No matter what you do, there will be something that is tough for you
to deal with and overcome. You will experience rough times that will seem
almost impossible to get through.
If money is the only motivation you have, it will leave you empty. But if
you have deeper motivations – like freedom, time to be with your family...
all those things that mean more than just money – they will help make you
successful. These motivators will force you to wake up in the morning
earlier than ever before; they will help you work later than you’ve ever
worked before; they will help you work harder and be more effective than
ever. That’s why understanding yourself, understanding why you are doing
what you’re doing and being honest with yourself, are the most important
things you can gain from this learning.
of investor they are. It is one of the most important concepts you should learn; your profile will govern how you invest your time, energy, and money from now and into the future.
To help establish your profile, examine your aspirations, which are based
on how you answer the following questions. (No one but you will know
your answers, so be honest with yourself.)
• Why are you doing what you’re doing?
• Why did you take the risk?
• Why did you spend the money?
• What are you going to do with it?
I ask this question at seminars all the time: “Why are you doing this?” The
typical response is, “I want more money.”
There’s a reason why you are doing this... why you are sitting there reading
this, and spending your time learning how to become a real estate investor. Why are you doing what you are doing?
I would like to share a story with you. When I was a young boy my father
worked extremely hard; combined with many long hours, we did not see
him very often. There was a time when we lived in Boise, Idaho, and his
job was in Salt Lake City, Utah, where he worked six days a week, 12-hour
days. On weekends he would make the six-hour drive home to Boise. He
would sleep in his car on the way so that he would be able to spend all day
Sunday with us. He did this every week for two solid years. I recall that as
a little kid (I was only six) that I really respected my dad for that. I
remember thinking: “That’s amazing that my dad would make that
sacrifice.” I recall another time when I was older and in high school, I was
on the high school wrestling team. I had wrestling practice and a meet
every week; my father usually missed them because of his work. He had
to make sure we had food, shelter, water, and an education. It’s my guess
that many of you sitting and watching me are thinking, “Yeah, I had to
miss my daughter’s ballerina recital just last week and that killed me
inside.”
I shared my father’s story with you because I need to make this perfectly
clear: achieving your financial goals will be tough. Any investor who has
been investing for a while will tell you that you’ll always go through tough
times. No matter what you do, there will be something that is tough for you
to deal with and overcome. You will experience rough times that will seem
almost impossible to get through.
If money is the only motivation you have, it will leave you empty. But if
you have deeper motivations – like freedom, time to be with your family...
all those things that mean more than just money – they will help make you
successful. These motivators will force you to wake up in the morning
earlier than ever before; they will help you work later than you’ve ever
worked before; they will help you work harder and be more effective than
ever. That’s why understanding yourself, understanding why you are doing
what you’re doing and being honest with yourself, are the most important
things you can gain from this learning.
Tuesday, January 13, 2009
The "Money" Box
Let’s talk about one more thing in The Box; let’s talk about lending. I call
it the “Money Box”. Here’s another thing that people don’t understand,
and it’s a true fact everywhere: The Money Box is made up of lots of
different traditional and non-traditional lending institutions, such as banks,
seller financing, private money, and people’s own money. The Money Box
provides us with an understanding of types of lending institutions that
thrive in a given market. Knowing that information can tell you what’s
going on in the market and how to structure your strategy.
For example, we are currently in a credit crisis (2008). Thus, the banks’
guidelines have become extremely stringent and they have scaled back
their lending practices. According to the Money Box, since the banks are
scaling back, another institution within The Box will step up and make
money available. Seller financing, for instance, may become more
available, or private money; or buyers may bring a larger amount of money
for the down payment. You need to understand that there are never holes
in The Box; someone or some institution will always be there to make
money available. The market always wants to meet equilibrium.
To give you an example of this, in the 1980’s, seller financing was very
popular. Why? Some people needed to get rid of their homes. Interest rates
were too high for buyers and it was difficult for them to qualify, so seller
financing came in and filled the gap. In a credit crisis like the one now
(2008), the banks have scaled back their creative loan programs. Hence,
other people and/or institutions are filling in the gaps and providing money
to borrowers. In a credit crisis, seller financing and private money are
usually the first entities to lend money. Personal cash usually takes a little
longer to come in.
As far as strategy goes, the Money Box helps you determine that if banks
are being tight, and you don’t want to bring in personal cash, you ought to
look at seller financing or private money. There’s always a way to get
financing in any market; it doesn’t matter what the market is doing. If
banks are taking the vast majority, then use banks because their interest
rates may be more attractive than other financing options. And if banks are
scaling back, use other financing means.
it the “Money Box”. Here’s another thing that people don’t understand,
and it’s a true fact everywhere: The Money Box is made up of lots of
different traditional and non-traditional lending institutions, such as banks,
seller financing, private money, and people’s own money. The Money Box
provides us with an understanding of types of lending institutions that
thrive in a given market. Knowing that information can tell you what’s
going on in the market and how to structure your strategy.
For example, we are currently in a credit crisis (2008). Thus, the banks’
guidelines have become extremely stringent and they have scaled back
their lending practices. According to the Money Box, since the banks are
scaling back, another institution within The Box will step up and make
money available. Seller financing, for instance, may become more
available, or private money; or buyers may bring a larger amount of money
for the down payment. You need to understand that there are never holes
in The Box; someone or some institution will always be there to make
money available. The market always wants to meet equilibrium.
To give you an example of this, in the 1980’s, seller financing was very
popular. Why? Some people needed to get rid of their homes. Interest rates
were too high for buyers and it was difficult for them to qualify, so seller
financing came in and filled the gap. In a credit crisis like the one now
(2008), the banks have scaled back their creative loan programs. Hence,
other people and/or institutions are filling in the gaps and providing money
to borrowers. In a credit crisis, seller financing and private money are
usually the first entities to lend money. Personal cash usually takes a little
longer to come in.
As far as strategy goes, the Money Box helps you determine that if banks
are being tight, and you don’t want to bring in personal cash, you ought to
look at seller financing or private money. There’s always a way to get
financing in any market; it doesn’t matter what the market is doing. If
banks are taking the vast majority, then use banks because their interest
rates may be more attractive than other financing options. And if banks are
scaling back, use other financing means.
Monday, January 12, 2009
The Box Simplifies economic laws.
Now let me provide you with an example of how The Box can simplify the
economic laws. The Box can be used to understand rental versus
ownership in the market; I call this the “Housing Box”.
The Housing Box represents the fact that people always want to have a
roof over their heads. In the Housing Box, people can only get a roof over
their heads in one of two ways:
1. Ownership
2. Renting
Obviously there is the homeless population; but generally speaking,
people either own their houses or rent them.
As we focus on ownership and renting, realize that no matter what happens
to you in your life, you have a choice: you can either own your home,
condo, etc., or simply rent – that’s it! After that there’s nowhere else to go.
That, in essence, is what the Housing Box consists of. The wonderful thing
about the Housing Box is that no one can go outside of it.
Why is the Housing Box important to understand? In boom time, when
salaries are going up and people are buying a lot of houses, ownership
takes over.
You’ll see property ownership take a bigger space of The Box and renting
will take a smaller space of The Box. What this means is that you’ll have
a soft rental market, yet a strong sales market. In other words, it will be a
seller’s market. But, since nobody is going outside The Box, renters will be
moving over to the ownership pile – it’s a good time for people to start
owning property.
Now what does this scenario tell you about the strategy you should follow
as an investor? It is a great time to sell; it’s a great time to flip houses. Buy
multiple properties, fix them up, and sell them. Another way to look at it
is to assume that there are many houses in foreclosure (like in the 2008
market when this manual was produced). If people are being kicked out of
their houses, they’ve got to go somewhere for housing, so they can either
own or they can rent... period! There is nowhere else to go. Consequently,
the rental market will start to take over.
You will see the shifts; supply and demand is basically all we’re talking
about. The Box is never going to change. No one goes outside The Box. So
when you see foreclosures out there, you now know where the market is
going. You should know that in the Housing Box when there are a lot of
foreclosures, renting will take over ownership. Therefore, there’s going to
be more demand for renters. Where there’s a higher demand for renting,
the price of rental properties goes up.
In this case, renting takes a bigger space of The Box and ownerships takes
a smaller space. So it tells you where to put your money (rental properties).
It tells you what strategy to get into, and that is key. Again, The Box helps
us understand simple economic laws; economic principles that will help us
decide what strategy we should move into.
economic laws. The Box can be used to understand rental versus
ownership in the market; I call this the “Housing Box”.
The Housing Box represents the fact that people always want to have a
roof over their heads. In the Housing Box, people can only get a roof over
their heads in one of two ways:
1. Ownership
2. Renting
Obviously there is the homeless population; but generally speaking,
people either own their houses or rent them.
As we focus on ownership and renting, realize that no matter what happens
to you in your life, you have a choice: you can either own your home,
condo, etc., or simply rent – that’s it! After that there’s nowhere else to go.
That, in essence, is what the Housing Box consists of. The wonderful thing
about the Housing Box is that no one can go outside of it.
Why is the Housing Box important to understand? In boom time, when
salaries are going up and people are buying a lot of houses, ownership
takes over.
You’ll see property ownership take a bigger space of The Box and renting
will take a smaller space of The Box. What this means is that you’ll have
a soft rental market, yet a strong sales market. In other words, it will be a
seller’s market. But, since nobody is going outside The Box, renters will be
moving over to the ownership pile – it’s a good time for people to start
owning property.
Now what does this scenario tell you about the strategy you should follow
as an investor? It is a great time to sell; it’s a great time to flip houses. Buy
multiple properties, fix them up, and sell them. Another way to look at it
is to assume that there are many houses in foreclosure (like in the 2008
market when this manual was produced). If people are being kicked out of
their houses, they’ve got to go somewhere for housing, so they can either
own or they can rent... period! There is nowhere else to go. Consequently,
the rental market will start to take over.
You will see the shifts; supply and demand is basically all we’re talking
about. The Box is never going to change. No one goes outside The Box. So
when you see foreclosures out there, you now know where the market is
going. You should know that in the Housing Box when there are a lot of
foreclosures, renting will take over ownership. Therefore, there’s going to
be more demand for renters. Where there’s a higher demand for renting,
the price of rental properties goes up.
In this case, renting takes a bigger space of The Box and ownerships takes
a smaller space. So it tells you where to put your money (rental properties).
It tells you what strategy to get into, and that is key. Again, The Box helps
us understand simple economic laws; economic principles that will help us
decide what strategy we should move into.
Friday, January 9, 2009
How "The Box" works
Now you know the four sides to The Box. Today we are going to look at other ways The Box works. The Box serves three important functions:
1. As stated earlier, The Box defines the principles and rules that
govern real estate investing; it defines your parameters. It
teaches you what works regardless of market conditions and
location or individual – it is dummy proof and market proof.
2. The Box helps simplify economic laws. Let me explain: The
market behaves according to economic laws. These laws, in
most instances, tell you where the market is going. You need to
understand where it’s going in order to become a more savvy
real estate investor. There is always a way to take advantage of
the market; there is always a place where you can make money,
no matter what the market is doing and where it’s going. Even
in the Great Depression there were areas that investors could
have taken advantage of and profited from. You need to
understand the ebbs and flows of the real estate market and how
to navigate them.
3. The Box keeps you safe because you know the principles and
rules governing real estate investing. It is not the “flavor of the
day or year”. Rather The Box encompasses what has worked for
years and what has made millions and millions of dollars for
individuals. It will do the same for you and in a secure fashion.
Isn’t that a comforting feeling? It really is. It helps us take risks
in markets where people are running scared. The Box is your
safety net, your warm blanket on a winter day. All you need is
to stay inside The Box, follow the principles and rules, and you
will win. I have proven this time and time again.
The Box Does Three Things:
1. Defines the principles and rules of
investing.
2. Helps you understand economic
laws and principles.
Monday we will talk about examples of how The Box can simplify the
economic laws.
1. As stated earlier, The Box defines the principles and rules that
govern real estate investing; it defines your parameters. It
teaches you what works regardless of market conditions and
location or individual – it is dummy proof and market proof.
2. The Box helps simplify economic laws. Let me explain: The
market behaves according to economic laws. These laws, in
most instances, tell you where the market is going. You need to
understand where it’s going in order to become a more savvy
real estate investor. There is always a way to take advantage of
the market; there is always a place where you can make money,
no matter what the market is doing and where it’s going. Even
in the Great Depression there were areas that investors could
have taken advantage of and profited from. You need to
understand the ebbs and flows of the real estate market and how
to navigate them.
3. The Box keeps you safe because you know the principles and
rules governing real estate investing. It is not the “flavor of the
day or year”. Rather The Box encompasses what has worked for
years and what has made millions and millions of dollars for
individuals. It will do the same for you and in a secure fashion.
Isn’t that a comforting feeling? It really is. It helps us take risks
in markets where people are running scared. The Box is your
safety net, your warm blanket on a winter day. All you need is
to stay inside The Box, follow the principles and rules, and you
will win. I have proven this time and time again.
The Box Does Three Things:
1. Defines the principles and rules of
investing.
2. Helps you understand economic
laws and principles.
Monday we will talk about examples of how The Box can simplify the
economic laws.
Thursday, January 8, 2009
Can you Replicate your investment strategy?
The fourth and final side to The Box is: Your investment needs to be replicable or, in other words, duplicable.
Consider this last rule and principle as your fraud meter or your fad meter. For example, there are so many ideas that are presented to you on late night TV. Many of these ideas are fad: they may work for a certain amount of time, but they’re temporary, and that’s not good enough.
We want to make sure that the successful real estate investment we make
is something we can repeat and do over and over again, regardless of
market conditions.
What you’ll learn with The Box is how to make money when the market is going up, when the market is flat, or the market is going down. In other words, every investment we teach you is replicable and sustainable in any market condition. It is predictable in any market and it is quantifiable in all markets.
Again, by thinking inside The Box and using the principles and laws that
govern real estate investing, you will safeguard yourself from future
losses. So, let’s explain further how The Box really works. Let’s begin with
the concept of quantifiable.
Quantifiable means that you always look at measurable key indicators to
analyze when you will may make a profit on your investment. When
quantifying your investment, what you need to ask: “What is my rate of
return going to be every single year?”
Predictable means you can predict what you will do with the investment, what type of strategy you should select, how much profit you’re going to make from it, including the time table and the effort that will be needed.
Sustainable comes down to one thing: can you continue to make money over time? Can you make this an investment? If things change and your analysis is wrong, can you keep it? Time heals all real estate woes,
remember that. What I mean by this is that if something goes wrong upon
your initial investment, you can hold on to the investment and make
money later.
Replicable, again, is your fraud meter... your fad meter. If you cannot duplicate your strategy in any market, you need to acknowledge that this is something you don’t want to get into. It’s something that is probably not the right way to go. It’s probably an idea that only works in a certain type of market... or it could simply be a fad.
There are all kinds of different ways to make money in real estate.
However, what we teach is how to make money in real estate no matter the
market conditions. We want to make sure that if you are using a strategy
that only works when a market is going up and yet the market is going
down quickly, you can change and select the right investment strategy.
Remember that to ensure you have the right strategy, it must meet all of
the four laws and principles of real estate investing we’ve discussed. Don’t
get into fad investments or frauds; stay away from them. This is how The
Box protects you, so stay inside The Box. Think inside The Box and don’t
go outside The Box.
Consider this last rule and principle as your fraud meter or your fad meter. For example, there are so many ideas that are presented to you on late night TV. Many of these ideas are fad: they may work for a certain amount of time, but they’re temporary, and that’s not good enough.
We want to make sure that the successful real estate investment we make
is something we can repeat and do over and over again, regardless of
market conditions.
What you’ll learn with The Box is how to make money when the market is going up, when the market is flat, or the market is going down. In other words, every investment we teach you is replicable and sustainable in any market condition. It is predictable in any market and it is quantifiable in all markets.
Again, by thinking inside The Box and using the principles and laws that
govern real estate investing, you will safeguard yourself from future
losses. So, let’s explain further how The Box really works. Let’s begin with
the concept of quantifiable.
Quantifiable means that you always look at measurable key indicators to
analyze when you will may make a profit on your investment. When
quantifying your investment, what you need to ask: “What is my rate of
return going to be every single year?”
Predictable means you can predict what you will do with the investment, what type of strategy you should select, how much profit you’re going to make from it, including the time table and the effort that will be needed.
Sustainable comes down to one thing: can you continue to make money over time? Can you make this an investment? If things change and your analysis is wrong, can you keep it? Time heals all real estate woes,
remember that. What I mean by this is that if something goes wrong upon
your initial investment, you can hold on to the investment and make
money later.
Replicable, again, is your fraud meter... your fad meter. If you cannot duplicate your strategy in any market, you need to acknowledge that this is something you don’t want to get into. It’s something that is probably not the right way to go. It’s probably an idea that only works in a certain type of market... or it could simply be a fad.
There are all kinds of different ways to make money in real estate.
However, what we teach is how to make money in real estate no matter the
market conditions. We want to make sure that if you are using a strategy
that only works when a market is going up and yet the market is going
down quickly, you can change and select the right investment strategy.
Remember that to ensure you have the right strategy, it must meet all of
the four laws and principles of real estate investing we’ve discussed. Don’t
get into fad investments or frauds; stay away from them. This is how The
Box protects you, so stay inside The Box. Think inside The Box and don’t
go outside The Box.
Wednesday, January 7, 2009
Is your investment strategy sustainable?
So now you know your investment strategy needs to be first, Quantifiable (Profitable) then second, Predictable. Now you have to have a very important part of the box. This is a very powerful part because just like fashion, trends come and go and real estate or even investing in general, is no difference. Make a mistake in this third area and you are almost guaranteed to pay for a seminar in the "school of hard knocks". How do you thing we know this?
The third key to the box is your investment needs to be sustainable. Sustainability is probably
one of the most important things you could possibly measure when you’re
getting into any type of investment strategy. What do I mean by a
sustainable investment? Sustainability simply means that your current
investments should not put you in a financial bind. In other words, if you
purchase a property and you expect renters to make the payments, you’ll
need to have sufficient savings to make the payments for a reasonable
period of time if you don’t get renters right away. You have to be able to
hold the property without going into significant debt, or even foreclosure.
Any time you get into a real estate boom where things are going up 10%
or 20% per year, you get people who start breaking the sustainability rule.
Here’s another example: some people buy a home or a property with
negative cash flow. They think this is okay because after a year they
believe they’ll sell the property with an appreciation of 10% to 20%.
However, some people forget the market is sometimes unpredictable and
that appreciation may not take place as anticipated. Some people find that
they can’t sell the property after a year, and then they are stuck with a
property that has negative cash flow that they can’t sustain for another two,
three, four, or even five years.
Making sure that your investments are sustainable over time is key to
becoming a successful real estate investor. The rules and the principles we
teach you throughout the this blog are going to teach you how to make sure
that every investment you make is sustainable.
Tomorrow we will unveil the fourth and final side of the box that will support your investing success.
The third key to the box is your investment needs to be sustainable. Sustainability is probably
one of the most important things you could possibly measure when you’re
getting into any type of investment strategy. What do I mean by a
sustainable investment? Sustainability simply means that your current
investments should not put you in a financial bind. In other words, if you
purchase a property and you expect renters to make the payments, you’ll
need to have sufficient savings to make the payments for a reasonable
period of time if you don’t get renters right away. You have to be able to
hold the property without going into significant debt, or even foreclosure.
Any time you get into a real estate boom where things are going up 10%
or 20% per year, you get people who start breaking the sustainability rule.
Here’s another example: some people buy a home or a property with
negative cash flow. They think this is okay because after a year they
believe they’ll sell the property with an appreciation of 10% to 20%.
However, some people forget the market is sometimes unpredictable and
that appreciation may not take place as anticipated. Some people find that
they can’t sell the property after a year, and then they are stuck with a
property that has negative cash flow that they can’t sustain for another two,
three, four, or even five years.
Making sure that your investments are sustainable over time is key to
becoming a successful real estate investor. The rules and the principles we
teach you throughout the this blog are going to teach you how to make sure
that every investment you make is sustainable.
Tomorrow we will unveil the fourth and final side of the box that will support your investing success.
Tuesday, January 6, 2009
Second question to ask the Box
Yesterday we touched on some criteria you should have for your investments and that we here at the RESA focus on keeping you in the box. One of those reasons was because the instructions for your success are IN the box.
One thing we do not want you to misinterpret is thinking we don't want you to think outside the box. Being creative in this industry is critical and necessary, especially in the market we are in now. However, when it comes to becoming financially free through real estate there are a few rules you need to follow when getting into any deal.
We talked yesterday about a deal being quantifiable.
The second part of the BOX you need to look at when it comes to a possible investment is your investment needs to be predictable. A lot of people ask me,
“Predictable and quantifiable, isn’t that the same thing?” Not really. What
I mean by predictable is that you can predict the future based on what your
numbers should be. Based on how you quantify things, you can predict
where things may end up. Again, predictability is key to any investment.
In other words, if you’re going to buy a property – say you’re going to flip
a property (fix it up and sell it for a profit) – you can use what you’ve
learned here to quantify it, to predict time tables; thus, you’ll predict how
soon that profit is going to come. And with that time table, you’ll then
predict your true rate of return on your investment over a one-year period.
Now you have two sides to the box. Tomorrow we will continue with the third and very critical side.
One thing we do not want you to misinterpret is thinking we don't want you to think outside the box. Being creative in this industry is critical and necessary, especially in the market we are in now. However, when it comes to becoming financially free through real estate there are a few rules you need to follow when getting into any deal.
We talked yesterday about a deal being quantifiable.
The second part of the BOX you need to look at when it comes to a possible investment is your investment needs to be predictable. A lot of people ask me,
“Predictable and quantifiable, isn’t that the same thing?” Not really. What
I mean by predictable is that you can predict the future based on what your
numbers should be. Based on how you quantify things, you can predict
where things may end up. Again, predictability is key to any investment.
In other words, if you’re going to buy a property – say you’re going to flip
a property (fix it up and sell it for a profit) – you can use what you’ve
learned here to quantify it, to predict time tables; thus, you’ll predict how
soon that profit is going to come. And with that time table, you’ll then
predict your true rate of return on your investment over a one-year period.
Now you have two sides to the box. Tomorrow we will continue with the third and very critical side.
Monday, January 5, 2009
Think inside the box!
One of the key things we’re going to talk about is a concept called The Box. I really love The Box. The Box is something totally different. Chances are you haven’t heard about it before, but you’ve wanted to be in it your entire life. The Box is all about security.
Everyone wants to take risks (whether you realize it or not). You take risks
whenever you invest – whether it’s real estate, the stock market, or any
other type of investment. By applying the principles of The Box, you can
safeguard yourself against things that could make you lose money, or push
you into places that you shouldn’t go – thus, the security. So, we’re here
to say, “Think inside The Box.”
I’m going to teach you about the principle of The Box and proceed from
there. As you listen to what we teach about real estate, think about the
principles of The Box and ask yourself how these principles can apply to
you and your investments. We will come back to The Box at the end of the
course and show you, using The Box, how you can make millions of
dollars... but only if you follow the rules we teach and illustrate here.
First, let’s talk about how to think inside The Box – not “outside the box”,
as we’ve been taught the last two decades, but inside The Box. Granted,
thinking outside the box does help you to come up with new ideas, but
when investing in real estate, I want you to think “inside The Box” for your
protection.
Each of your real estate investments must meet the four laws and
principles that define The Box:
1. Quantifiable (Profitable)
2. Predictable
3. Sustainable
4. Replicable
First, The Box is all about having investments that are quantifiable, meaning
they can be measured. You need to be able to measure whether or not an
investment is going to be profitable. If the investment is not profitable you
don’t want to do it, nor waste your time and effort with it. Also, you need
to be able to measure your costs, what your rate of return or your return on
investment (ROI) is going to be. So, it needs to be quantifiable. If any
investment is not quantifiable, you can automatically throw it out.
Our next entry will discuss #2 principle- Predictable.
If you are interested in coming to a free preview event of the RES academy please visit RES Academy.com
Everyone wants to take risks (whether you realize it or not). You take risks
whenever you invest – whether it’s real estate, the stock market, or any
other type of investment. By applying the principles of The Box, you can
safeguard yourself against things that could make you lose money, or push
you into places that you shouldn’t go – thus, the security. So, we’re here
to say, “Think inside The Box.”
I’m going to teach you about the principle of The Box and proceed from
there. As you listen to what we teach about real estate, think about the
principles of The Box and ask yourself how these principles can apply to
you and your investments. We will come back to The Box at the end of the
course and show you, using The Box, how you can make millions of
dollars... but only if you follow the rules we teach and illustrate here.
First, let’s talk about how to think inside The Box – not “outside the box”,
as we’ve been taught the last two decades, but inside The Box. Granted,
thinking outside the box does help you to come up with new ideas, but
when investing in real estate, I want you to think “inside The Box” for your
protection.
Each of your real estate investments must meet the four laws and
principles that define The Box:
1. Quantifiable (Profitable)
2. Predictable
3. Sustainable
4. Replicable
First, The Box is all about having investments that are quantifiable, meaning
they can be measured. You need to be able to measure whether or not an
investment is going to be profitable. If the investment is not profitable you
don’t want to do it, nor waste your time and effort with it. Also, you need
to be able to measure your costs, what your rate of return or your return on
investment (ROI) is going to be. So, it needs to be quantifiable. If any
investment is not quantifiable, you can automatically throw it out.
Our next entry will discuss #2 principle- Predictable.
If you are interested in coming to a free preview event of the RES academy please visit RES Academy.com
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