Now that the year 2001 has rolled around... it’s time to take a look at our Real Estate Investing Crystal Ball. If you know what to expect out of the coming economy, you can position yourself to take maximum advantage of the opportunities. It’s almost like having the winning lottery numbers a few hours before the drawing. With that in mind, let’s gaze into the future...
Some Interesting Facts
Consumer spending drives the economy. We as consumers are highly predictable. When large numbers of us earn and spend more, the economy grows.
People spend, save, work and mature in predictable patterns as they age.
Newborns don’t spend anything. 18-22 year olds are just moving into the work force and have very little economic impact. Spending for Baby Boomers currently peaks around age 49. Spending demands fall as the maturing work force moves into the power structure of business and industry.
The Baby Boomer generation is the largest in history at 80 million strong.
The Baby Boom generation is defined by those born in the above average birth years between 1946 and 1964.
The most concentrated surge in property buying comes at age 43 when most people buy their largest home. Home buying declines as buyers approach their peak spending age of 49... then drops off dramatically.
Housing is a key factor in the economy. Housing leads the way out of recessions.
The Baby Boom birth wave peaked between 1950 and 1957. This should put the 43 year housing peak from late 1993 through the year 2000.
How Interesting...
The above information is powerful. Most of it was compiled by our own government via the U.S. Bureau of Labor Statistics, Consumer Expenditure Survey and the U.S. Census Bureau.
The reason this information is so powerful is that it can be used to predict what will be happening in our economy way into the future. This kind of stuff will turn you psychic. No kiddin’.
Think about it. If you agree spending is what drives our economy... then the shear number of people spending is where the real impact comes into play. This has been going on in commercial real estate for years. If you put a McDonalds on a street with a high traffic count... assuming easy access... it should outperform a McDonalds on a street with a low traffic count. Make sense?
This has been referred to in Real Estate as location, location, location. In McDonalds’ case... the hungry crowd is bigger in the high traffic location. Every thing else being equal... which location do you think has the higher probability of success? Which would you rather invest your hard earned dollars?
But you see... this is exactly the same impact we can expect from the Baby Boom generation. More people in their peak spending years. As a matter of fact... the most people in the history of the United States reaching their peak spending years as a group.
The Boom Economy
Right now... we’re on the leading edge of a Boom Economy. Because of the tremendous size of this Baby Boom generation... this will be the strongest and healthiest economy we’ll see in our lifetimes. In fact, this boom economy should take us well into the 21st century in grand style... lasting until 2010 to 2015.
Get ready! Position yourself to take maximum advantage of this unprecedented opportunity.
Now... Let’s Take A Closer Look At Your Tea Leaves...
What can you expect from this economy? Come closer and I’ll tell you... First of all, let’s talk about inflation. Inflation has made a lot of real estate property owners rich. In fact... there have been times in the not so distant past... when all you had to do was own real estate to become wealthy.
So... what causes inflation? Some say it’s the devaluation of our currency by our Government via the printing of more and more money. Let’s see if we can’t take it a little further. How about this... Inflation occurs when we have a high requirement for investment and low productivity to help finance that investment. In other words... it’s the economy’s way of financing periods of high investment.
Historically... inflation has accompanied periods of war. High requirement for investment... low productivity to help finance that investment. Inflation also accompanies transitions in technology. Each generation brings with it new ideas and technologies as it enters the work force. The Baby Boomers were far from the exception.
Think of the expense of training this enormous work force (high requirement for investment) compared to their productivity during the training process (low productivity). Add to that the expense of retooling for the new technology they brought with them. This... no doubt... is the formula for inflation. A workable formula we can use to predict inflation.
Pass the Windex
There is no question... barring the possibility of all-out war... this boom economy is going to be one with little... if any... inflation. We will even see many items go down in price. This has already happened to housing prices in some parts of the country like Southern California. It may have even happened in your part of the world.
If you are buying real estate property with the hope you’ll be the recipient of a great transfer of wealth because of inflationary times... you may want to re-evaluate your thinking. Real Estate prices... in the next 10-15 years... will be pushed into higher ground only by the laws of supply and demand. Well located... quality real estate property will be the appreciation play.
O.K. Mr. Hotshot... Know-it-all... Psychic Real Estate Man... What About Interest Rates?
Well... let me ask you. What have you noticed as the trend with interest rates in the last couple of years? Been coming down a bit... haven’t they? Every time you turn on CNBC they’re talking about pressure on the "The Fed" to lower interest rates. "The Fed" is making an effort to protect us from inflation. It is their contention... if you lower interest rates... the economy will heat up... bringing with it inflation.
The reality of the situation is this... every time they have lowered interest rates... the economy has improved without any inflation. In fact... as we have already seen... quite a few items have actually gone down in price.
Interest rates are nothing more than a symptom of inflation. With inflation in check... interest rates will continue to seek a lower level. Look for 30 year real estate mortgage rates to continue to drop... possibly reaching as low as 5-6% by 1998.
"What’s It All Mean... Alfie"
It’s time for Chicken Little to go back inside. With inflation gone... and with deflation in prices in a broad range of categories... interest rates at the lowest levels in decades... we can expect our purchasing power to increase dramatically.
Think about this: If you could afford to pay $1,000 a month on your primary residence with 100% financing at 10%... you could afford to live in a $114,000 home. With interest rates at 5%... you’d be living in a $186,000 pad. Not too bad... but consider this... with a somewhat deflationary trend in Real Estate Property values... that $186,000 house might actually be the equivalent of yesterdays $200,000 - $225,000 crib. Oooh, Baby! That’s goood.
Couple the above with the fact all other consumer items will stabilize in price (or even drop slightly)... savings will increase... spendable income should increase... and you may actually be able to afford $1,500 a month for a house note... moving you into the $280,000 price range. Wow! Can this really be true?
"I Can See Clearly Now... The Haze Is Gone"
What’s this all mean to you and me as Real Estate investors? Well... first of all... we can’t count on inflation to make us rich for a long, long time. We have to buy property based on it’s economic value today. We’ll need to re-negotiate interest rates on our existing debt to bring them in line with lower market rates... increasing our cash flow. Lock in on fixed rates where possible. This may also be the best buying opportunity of the century.
Listen friend... take advantage of this boom economy. There will be numerous opportunities to become truly wealthy in the next 15-20 years. It’s in your tea leaves. But be warned... it won’t last forever. Don’t allow yourself to be caught in the trap of linear thinking. Just because it’s good now and it’s getting better every day... doesn’t mean it will always be that way.
Things are cyclical. The shear numbers of Baby Boomers reaching their peak spending years are what fuels this incredible economy. This was put into play some 49 years ago. There’s not much that can happen to change this direction. However... behind the Boomers is a serious drop in the birth rate. What will happen in 2015 when the number of people supporting our economy falls off dramatically? Will it be worse than the Great Depression? Probably so!
Your future will look bright if you plan accordingly. Entering into a 30 year mortgage won’t have you debt free before the bottom drops out. Consider limiting yourself to 15 year financing or less. The lower interest rates will help. Having large cash reserves will not only help you weather the storm but will also put you in a position to profit from those who don’t have their own Real Estate Crystal Ball.
Sunday, May 24, 2009
Quality Deals
I’ve been meaning to write this article for quite some time and those who have heard me speak in the last couple of years have already gotten an earful of this. This topic isn’t about a neat investing technique or new idea, but about a mindset. It’s my mindset and one that I believe will make many other people successful.
Back in 1998 when I took my first step into real estate investing, I was strongly influenced by others around me who believed you had to be a dominant force in your market to make real money. They stressed doing as many deals as possible and beating out the competition. The world around me was saying that the person who does the most wins. More deals lead to more profits which ultimately leads to greater success – all going hand-in-hand.
As a newbie, I took the teaching to heart and did over 100 deals in my first two years. I was proud of my accomplishments and knew many around me were impressed with my successes. However, when stopped to look at the big picture, I was doing a lot of deals and making more money than ever before, but I had little control elsewhere. My time wasn’t my own and the deals truly controlled me. In short, I wasn’t living a life that felt fulfilling.
I’ve talked with many investors across the country and always ask what draws them to real estate investing. The answers vary, but typically can be summed up in one sentence, “I want a better quality of life.” Over my years of investing, I have come to realize that QUANTITY does not lead to QUALITY. If you want real estate investing to provide you with a good quality of life, you need to pursue good quality deals, not a good quantity of deals.
What are quality deals? They’re deals that contribute to the advancement your goals. They get you moving in the direction that you want to go. Many investors start buying homes with no idea of what they really want to accomplish with investing. As a result, they buy anything that looks like a deal and, all too often, get pulled in directions they never intended to go.
Your goals should drive your decision making. For example, a person who needs money today and buys a property to keep it as a rental is contradicting or not fulfilling the original goal. Rental properties will not reap quick, fast cash today. Let’s say your goal is to free up your time so that you can do other things important to you. If you only want to work 20 hours a week and are taking on deals that require 40 hours a week, you’re not doing quality deals. You’re focused on quantity.
We need to make sacrifices to achieve the success that we desire, but need to be careful not to sacrifice the important things in life. If you are pursuing investing to achieve a better quality of life, focus on quality deals and not quantity.
Back in 1998 when I took my first step into real estate investing, I was strongly influenced by others around me who believed you had to be a dominant force in your market to make real money. They stressed doing as many deals as possible and beating out the competition. The world around me was saying that the person who does the most wins. More deals lead to more profits which ultimately leads to greater success – all going hand-in-hand.
As a newbie, I took the teaching to heart and did over 100 deals in my first two years. I was proud of my accomplishments and knew many around me were impressed with my successes. However, when stopped to look at the big picture, I was doing a lot of deals and making more money than ever before, but I had little control elsewhere. My time wasn’t my own and the deals truly controlled me. In short, I wasn’t living a life that felt fulfilling.
I’ve talked with many investors across the country and always ask what draws them to real estate investing. The answers vary, but typically can be summed up in one sentence, “I want a better quality of life.” Over my years of investing, I have come to realize that QUANTITY does not lead to QUALITY. If you want real estate investing to provide you with a good quality of life, you need to pursue good quality deals, not a good quantity of deals.
What are quality deals? They’re deals that contribute to the advancement your goals. They get you moving in the direction that you want to go. Many investors start buying homes with no idea of what they really want to accomplish with investing. As a result, they buy anything that looks like a deal and, all too often, get pulled in directions they never intended to go.
Your goals should drive your decision making. For example, a person who needs money today and buys a property to keep it as a rental is contradicting or not fulfilling the original goal. Rental properties will not reap quick, fast cash today. Let’s say your goal is to free up your time so that you can do other things important to you. If you only want to work 20 hours a week and are taking on deals that require 40 hours a week, you’re not doing quality deals. You’re focused on quantity.
We need to make sacrifices to achieve the success that we desire, but need to be careful not to sacrifice the important things in life. If you are pursuing investing to achieve a better quality of life, focus on quality deals and not quantity.
Planning For Success
As Lonnie Scruggs says, "The opportunities are everywhere. There is no reason to be poor unless you choose to be."
So, why do some educated, hard-working people always have to struggle to keep up with their bills? And why is it that everything some people touch seems to turn to gold? Is it just luck? Or, does it have something to do with their frame of mind?
There are two questions you should ask yourself: Are you comfortable with your present income? Are you satisfied with the amount of money you have accumulated to date? If your response to either question is no, you will find answers in the following pages.
Today's American adults are some of the luckiest people in the history of the world. Just think about it. If you were born between 1940 and 1980, you grew up during the most prosperous period in history. You have seen the birth of modern technology and enjoyed the benefits of the space age, the computer age—and, for the most part, a period of peace. Those of us who have good health are indeed lucky. So, why shouldn't we have a positive outlook?
The optimist says, "My cup runneth over, what a blessing."
The pessimist says, "My cup runneth over, what a mess."
Granted, the economic future for some Americans may not be as bright as it could be. Yes, the country still has political and economic problems and some families are experiencing a decline in their standard of living.
But, we should keep in mind that "the flip side of a problem is an opportunity—for those who are prepared to find and implement solutions."
Successful People Have a Lot in Common
People who understand the importance of keeping their money working for them are usually more successful financially than those who fail to appreciate this fact. If you have a lot of money, it is important to keep it working because you have a lot to gain or lose, depending on how well your money is working for you. If you have very little money, it is even more important to keep what money you do have working. It can be the seed that grows to become great wealth. Once you begin wisely investing your money, efforts, and talents, you will be on your way to becoming financially independent.
Yet, those who have been successful in accumulating wealth through their own efforts have more than money in common. They think and plan "long-term." They believe in the planning process, set financial goals that are carefully thought out, put their plans into writing and then into action. They form good economic habits by saving and investing. They study, think, plan and learn from others and by doing. They make adjustments where necessary, continuously reinvesting. They never stop trying—and they always maintain "a winning attitude."
Successful people don't allow negative feelings to linger. They quickly get rid of the feelings by taking steps to solve their problems or by doing something positive.
"Don't be surprised to discover that luck favors those who are prepared."
You, Too, Can Be Financially Independent
Tenacity is also a most important quality. It is difficult to succeed without consistently focusing on the things we want to achieve—and by taking action each day to get closer to where we want to be. We must be willing to do whatever it takes if we are to get the results we want.
Lonnie Scruggs, the "father" of mobile home investments, says "the toughest thing for a lot of people is to actually get out and do that first deal. They let fear of making a mistake keep them from improving their lifestyle and financial position."
The first step in succeeding is that we must believe in what we are doing. If we don't believe strongly enough in the service we are performing, we will not succeed. We shouldn't think, for example, that because we have lived in a nice single family home, that manufactured homes can't play an important role in today's housing market.
Efficient manufacturing methods, low maintenance, and lower utility costs make it possible for millions of people to have a better place to live. For many, it is a way to build an equity that can be used later to make a down payment on a conventional home.
The Miracle Of Compound Interest
When asked to name the seven wonders of the world, Baron de Rothchild once said, "I cannot. But, I know the eighth wonder is compound interest."
Throughout the ages, the constant use of compound interest has made the difference between those who have become wealthy and those who stayed poor. In simple terms, compound interest means earning a return on both the money invested and on interest that was previously earned, but justify in the account to grow.
If you don't understand the concept of compound interest, learn it thoroughly and keep it in mind when planning your investments. If you will continuously use the power of compounding your money at a reasonable rate of return over a period of years, you will almost certainly become wealthy.
The higher the return on your money, the sooner your net worth will double. Once you double your net worth, the same rate of return will double your income. To illustrate the importance of earning a higher return, the chart in Table I below shows how long it will take to double your money at various rates, compounded monthly.
Table I
Time required to double your money,
depending upon the rate of return
Compound Rate Months Required
40% 21
30% 28
20% 42
15% 56
10% 84
6% 139
3% 278
We know that most banks will pay 2% to 5% interest on our money. But, before dismissing 20% to 40% returns as wishful thinking and, no doubt unsafe, bear with me a little longer and I will show you how.
First, there is another important concept that we should understand and keep in mind: The time value of money. We all understand the importance of avoiding losses when investing our money. However, most people don't realize that the profits we could have earned had we taken the correct steps, is just as real as the loss of money when we make a bad investment. The longer our money is allowed to sit idle—or invested at rates that are too low—the more money we lose.
To show the dramatic difference, let's look at the results achieved by our two hypothetical investors. After keeping $10,000 in savings at 6% for ten years, Mr. DeLay discovered he could earn 20% on his money. At the end of ten years he invested the accumulated $17,908 at the higher rate for the next ten years. Now, at the end of twenty years, his $10,000 investment has grown to $110,882 ($10,000 compounded at 6% to $17,908 over the first ten years; then compounded at 20% for ten years).
Mr. Timely, on the other hand, discovered at the outset that he could earn 20% on his money. During the same twenty year period his $10,000 grew to $383,376. Besides earning $272,494 more than Mr. DeLay, what did Mr. Timely do different? He allowed his money to grow at the higher rate for a longer period of time. He understood the concept of compound interest and the time value of money. Other important lessons can be learned by studying the following examples:
Table II
Results of Compounding a $10,000 Investment
at Varying Rates of Return
Compound Rate 2 Years 5 Years 10 Years 20 Years
40% $19,600 $ 53,782 $289,255 $8,366,826
30% 16,900 37,129 137,858 1,900,496
20% 14,400 24,883 61,917 383,376
15% 13,225 20,114 40,456 163,665
10% 2,100 16,105 25,937 67,275
6% 11,236 13,382 17,908 32,071
3% 10,609 11,593 13,439 18,061
Before going any further with this theory, let's get rid of some of your skepticism by reviewing a typical transaction, involving the purchase and sale of a used manufactured home. It was one of my wife's first transactions, done while she still worked as a nurse.
SITUATION
The manufactured home owner was a registered nurse who had just contracted to purchase a house. She had maintained her home in good condition and paid off the loan. Her asking price was $5,000 cash.
My wife had discovered it was relatively simple—and much more efficient—to buy and sell used homes that were already set up in a park and didn't need to be moved.
PROBLEMS
The owner was already under contract to buy a house and needed to get cash for her mobile home to help with the down payment. But, most prospective buyers don't have the cash—and banks wouldn't finance older mobile homes. She also needed to be relieved of her obligation to pay lot rent of $158 per month.
SOLUTION
The owner agreed to accept our cash offer of $3,500, with the understanding that she would be allowed to stay in the home for about three weeks until she could close on the purchase of her new home.
After the seller moved out, Janet resold the home within two weeks for $6,250. Our buyer paid $750 cash down and agreed to finance the $5,500 balance at $189.32 per month, including 14.5% interest for 36 months.
The financial results were as follows:
Selling Price $ 6,250
Less Down Payment from Buyer 750
_______
Net Receivable $5,500
Cost of Mobile Home $3,500
Sales Tax (6%) & Transfer Fee 245
Thorough Cleaning 50
Lot Rent (one month) 158
______
Total Cost $3,953
Less Buyer's Down Payment 750
_______
Net Investment After Sale 3,203
_______
Net Gain (65%) $2,297
Months Investment Annual Return Monthly Income
Receivable 36 $5,500 14.5% $189.32
Net Investment 36 $3,203 57.9%
ADVANTAGES
The owner received $3,500 of the cash needed for her new home and was relieved of $158 per month in lot rent. She no longer had to be responsible for the mobile home and was free to move at her convenience.
Our buyer was able to move into a neat home for only $750 down and $347.32 per month, including lot rent. His cash requirement and monthly payments were about the same as it would be had he rented a comparable apartment. But, unlike renting an apartment, the home will be paid for in three years. After that, he would have only lot rent to pay.
The park manager was happy to have the home stay in the park and to be able to continue collecting lot rent.
On a net investment of $3,203, my wife received $189.32 per month for the next 36 months—a net yield of 57.9% per annum.
Keep in mind, however, that we earn this kind of return by dealing in manufactured homes as a business—not a passive investment. While almost anyone can find ways to buy and sell manufactured homes, it does take a little time and effort.
Rules For Setting Effective Goals
To become financially independent, we believe it is necessary to set effective goals. Here are some rules you may want to follow:
1. Your goals should be written. An unwritten goal is merely a wish that you probably won't achieve. When you write your goals down, they become a commitment you have made to yourself. Since your situation today and your goals for tomorrow are both unique, your plan must be personalized.
Ask yourself, "How will I know if I am accomplishing my goals?" If you can't answer that question, you should rewrite your goals.
2. Financial goals should be specific. State your financial goals in terms of numbers and dates. For example, you might decide to have investments worth $250,000, producing an annual net income of $25,000 within five years.
Break your goals down into smaller sub-goals. If the value of your investments don't increase by at least $50,000 each year with an increase of $5,000 in income, you will know that you are behind schedule and should take steps to do better.
3. Focus on the things you want to achieve. Setting your priorities is of utmost importance. Keep a daily or weekly list of things that you need to do. Arrange them in order of importance. Ask yourself: If I could accomplish only one of these objectives, which one should it be?
Once the list is arranged in order of importance, take some action each day that will get you closer to where you want to be.
4. Your goals must be challenging, but attainable. Excitement and challenge are important ingredients when setting goals. If your goals don't demand your best efforts and push you beyond where you have been before, the lack of challenge may cause you to lose interest. However, if it becomes apparent as you get more involved that your goals are unrealistic, adjust them to a more realistic level. If you don't believe you can achieve the goals, you won't be willing to pay the price. When they begin to lose their challenge because they are too easy, adjust them upward.
5. Review your goals regularly. This is another reason it is important to have written goals. In a world that constantly threatens to overwhelm us with alternatives, reviewing written goals will help you stay on course and make adjustments when appropriate.
6. Evaluate your progress regularly. Without the satisfaction of reaching some of your goals for long periods of time, you may lose interest in your long-term goals. It may be helpful to reward yourself when achieving one of your sub-goals. Such things as new clothes, a new car, or a vacation could be a part of your goals. Don't spend any more of your profits than necessary. The more you spend, the less you have justify to work for you.
7. You must want to achieve your goals. The stronger the desire to reach those goals, the more willing you will be to pay the price for achievement. Spend a little time visualizing yourself possessing the things you want to acquire—then go out and do it. A plan that is not implemented is really no plan at all.
Obstacles You Will Need to Overcome
To become financially independent, it is essential to know the obstacles you will face, and then devise methods of overcoming them. Three major obstacles which need to be considered are:
1. The fear of taking a risk: The inability or unwillingness to take risks is a major handicap to financial success. Those who will not take risks often become spectators in the economic world and eventually blame everyone but themselves for their lack of wealth. Most people, in their desire for safety, choose methods that are familiar, rather than keeping an open mind and considering new ideas.
2. Procrastination and indecision: The best opportunities are usually brief and do not wait for those who are unprepared. How many times have we missed an opportunity by waiting too long? Almost everyone procrastinates to some extent. The difference is one of degree and only a small degree of difference can separate the successful from the unsuccessful.
3. Taxation: Our income tax system tends to punish the uninformed and reward those who are informed—provided they plan ahead and then take action. While the existence of taxation is beyond our control, there are many ways to minimize taxes, while working within the system.
Avoid Making Decisions By Indecision
If you are like many others, one of the big problems facing you is indecision. Usually, indecision is based upon a lack of information. When you are faced with making important decisions that you are not sure about, why not talk to people who are in a position to help? Ask each to list all the advantages and disadvantages.
Once you have the information necessary to make an informed decision, evaluate that information and then take appropriate action. The best decisions are made by design and systematic planning—not by acting on impulse.
You probably learned in school that Benjamin Franklin was famous for making wise decisions. If it was the right thing, he wanted to be sure to do it. If it was the wrong thing, he wanted to be sure to avoid it. His simple method of making decisions is used by many astute people today.
Taking a sheet of blank paper, Benjamin Franklin would draw a line down the middle. On one side he would list all the reasons for taking the action. On the other he would list the reasons not to take the action. When he was through, he counted the reasons on each side and the decision was made for him.
However, some reasons are more important than others. To be more precise when making important decisions, we could give each reason a weighted number on a scale of one to ten. When the totals on one side out-weigh the totals on the other, the right decision becomes more apparent.
Some decisions, such as buying or selling a large property, involve many different considerations. How will it affect your monthly income? Will cash be available to meet obligations? Do you have capable management? Will it result in additional taxes or tax savings? Is the property likely to increase or decline in value? Such decisions may be too complex to be made by approaching it as one decision.
Complex decisions should be broken down into "bite-size" pieces with each consideration listed as a separate issue. Then focus your attention on one issue at a time. When in doubt, get advice from people who are experienced in that area. When one issue is resolved, go to the next. When you are finished, the right decision will be clear.
Just Do It!
Knowledge, ideas, and good intentions will not pay the bills—until we decide to make it happen. Why do so many capable people fail to take action? They talk, read and think about all the great things they would like to do. And, then they fail to take action.
In his outstanding tapes, "Personal Power," Anthony Robbins explains that our actions are based on pain and pleasure. We have allowed our sub-conscious minds to believe that we can get more instant pleasure by sitting in front of the television set than by taking action. We are pained by the fear of making mistakes, failing to get the desired results, or what others might think about us. So, rather than take a chance, we procrastinate.
But, that same fear and pain can be turned to our advantage. Spend a few moments thinking about the pain you will have if you miss the opportunity to enjoy the benefits because you failed to use the talents you have. Then think about all the pleasures that come from achievement; the personal satisfaction of knowing that you are a person who can make a decision. And, think about the security, peace of mind and freedom from financial worry when you become financially independent.
Change the way you look at failure. And always remember that failure is a condition—not a person. The first time you tried to ride a bicycle, you probably had a few falls. You picked yourself up and kept trying until you got it right. Then you "practiced" riding the bicycle until you got very good at it.
You can avoid any feelings of fear or rejection when dealing with buyers and sellers by reminding yourself that you are just "practicing." Don't be shy about asking for more than you expect to get. If you don't get the desired response, you won't be discouraged. You simply discover one of the things that didn't work with that particular person. As adults, we practice in our trade or profession. Lawyers practice law and doctors practice medicine.
Start with the easy deals first and "earn as you learn." In the years to come, "we regret what we fail to do much more than what we have done."
So, why do some educated, hard-working people always have to struggle to keep up with their bills? And why is it that everything some people touch seems to turn to gold? Is it just luck? Or, does it have something to do with their frame of mind?
There are two questions you should ask yourself: Are you comfortable with your present income? Are you satisfied with the amount of money you have accumulated to date? If your response to either question is no, you will find answers in the following pages.
Today's American adults are some of the luckiest people in the history of the world. Just think about it. If you were born between 1940 and 1980, you grew up during the most prosperous period in history. You have seen the birth of modern technology and enjoyed the benefits of the space age, the computer age—and, for the most part, a period of peace. Those of us who have good health are indeed lucky. So, why shouldn't we have a positive outlook?
The optimist says, "My cup runneth over, what a blessing."
The pessimist says, "My cup runneth over, what a mess."
Granted, the economic future for some Americans may not be as bright as it could be. Yes, the country still has political and economic problems and some families are experiencing a decline in their standard of living.
But, we should keep in mind that "the flip side of a problem is an opportunity—for those who are prepared to find and implement solutions."
Successful People Have a Lot in Common
People who understand the importance of keeping their money working for them are usually more successful financially than those who fail to appreciate this fact. If you have a lot of money, it is important to keep it working because you have a lot to gain or lose, depending on how well your money is working for you. If you have very little money, it is even more important to keep what money you do have working. It can be the seed that grows to become great wealth. Once you begin wisely investing your money, efforts, and talents, you will be on your way to becoming financially independent.
Yet, those who have been successful in accumulating wealth through their own efforts have more than money in common. They think and plan "long-term." They believe in the planning process, set financial goals that are carefully thought out, put their plans into writing and then into action. They form good economic habits by saving and investing. They study, think, plan and learn from others and by doing. They make adjustments where necessary, continuously reinvesting. They never stop trying—and they always maintain "a winning attitude."
Successful people don't allow negative feelings to linger. They quickly get rid of the feelings by taking steps to solve their problems or by doing something positive.
"Don't be surprised to discover that luck favors those who are prepared."
You, Too, Can Be Financially Independent
Tenacity is also a most important quality. It is difficult to succeed without consistently focusing on the things we want to achieve—and by taking action each day to get closer to where we want to be. We must be willing to do whatever it takes if we are to get the results we want.
Lonnie Scruggs, the "father" of mobile home investments, says "the toughest thing for a lot of people is to actually get out and do that first deal. They let fear of making a mistake keep them from improving their lifestyle and financial position."
The first step in succeeding is that we must believe in what we are doing. If we don't believe strongly enough in the service we are performing, we will not succeed. We shouldn't think, for example, that because we have lived in a nice single family home, that manufactured homes can't play an important role in today's housing market.
Efficient manufacturing methods, low maintenance, and lower utility costs make it possible for millions of people to have a better place to live. For many, it is a way to build an equity that can be used later to make a down payment on a conventional home.
The Miracle Of Compound Interest
When asked to name the seven wonders of the world, Baron de Rothchild once said, "I cannot. But, I know the eighth wonder is compound interest."
Throughout the ages, the constant use of compound interest has made the difference between those who have become wealthy and those who stayed poor. In simple terms, compound interest means earning a return on both the money invested and on interest that was previously earned, but justify in the account to grow.
If you don't understand the concept of compound interest, learn it thoroughly and keep it in mind when planning your investments. If you will continuously use the power of compounding your money at a reasonable rate of return over a period of years, you will almost certainly become wealthy.
The higher the return on your money, the sooner your net worth will double. Once you double your net worth, the same rate of return will double your income. To illustrate the importance of earning a higher return, the chart in Table I below shows how long it will take to double your money at various rates, compounded monthly.
Table I
Time required to double your money,
depending upon the rate of return
Compound Rate Months Required
40% 21
30% 28
20% 42
15% 56
10% 84
6% 139
3% 278
We know that most banks will pay 2% to 5% interest on our money. But, before dismissing 20% to 40% returns as wishful thinking and, no doubt unsafe, bear with me a little longer and I will show you how.
First, there is another important concept that we should understand and keep in mind: The time value of money. We all understand the importance of avoiding losses when investing our money. However, most people don't realize that the profits we could have earned had we taken the correct steps, is just as real as the loss of money when we make a bad investment. The longer our money is allowed to sit idle—or invested at rates that are too low—the more money we lose.
To show the dramatic difference, let's look at the results achieved by our two hypothetical investors. After keeping $10,000 in savings at 6% for ten years, Mr. DeLay discovered he could earn 20% on his money. At the end of ten years he invested the accumulated $17,908 at the higher rate for the next ten years. Now, at the end of twenty years, his $10,000 investment has grown to $110,882 ($10,000 compounded at 6% to $17,908 over the first ten years; then compounded at 20% for ten years).
Mr. Timely, on the other hand, discovered at the outset that he could earn 20% on his money. During the same twenty year period his $10,000 grew to $383,376. Besides earning $272,494 more than Mr. DeLay, what did Mr. Timely do different? He allowed his money to grow at the higher rate for a longer period of time. He understood the concept of compound interest and the time value of money. Other important lessons can be learned by studying the following examples:
Table II
Results of Compounding a $10,000 Investment
at Varying Rates of Return
Compound Rate 2 Years 5 Years 10 Years 20 Years
40% $19,600 $ 53,782 $289,255 $8,366,826
30% 16,900 37,129 137,858 1,900,496
20% 14,400 24,883 61,917 383,376
15% 13,225 20,114 40,456 163,665
10% 2,100 16,105 25,937 67,275
6% 11,236 13,382 17,908 32,071
3% 10,609 11,593 13,439 18,061
Before going any further with this theory, let's get rid of some of your skepticism by reviewing a typical transaction, involving the purchase and sale of a used manufactured home. It was one of my wife's first transactions, done while she still worked as a nurse.
SITUATION
The manufactured home owner was a registered nurse who had just contracted to purchase a house. She had maintained her home in good condition and paid off the loan. Her asking price was $5,000 cash.
My wife had discovered it was relatively simple—and much more efficient—to buy and sell used homes that were already set up in a park and didn't need to be moved.
PROBLEMS
The owner was already under contract to buy a house and needed to get cash for her mobile home to help with the down payment. But, most prospective buyers don't have the cash—and banks wouldn't finance older mobile homes. She also needed to be relieved of her obligation to pay lot rent of $158 per month.
SOLUTION
The owner agreed to accept our cash offer of $3,500, with the understanding that she would be allowed to stay in the home for about three weeks until she could close on the purchase of her new home.
After the seller moved out, Janet resold the home within two weeks for $6,250. Our buyer paid $750 cash down and agreed to finance the $5,500 balance at $189.32 per month, including 14.5% interest for 36 months.
The financial results were as follows:
Selling Price $ 6,250
Less Down Payment from Buyer 750
_______
Net Receivable $5,500
Cost of Mobile Home $3,500
Sales Tax (6%) & Transfer Fee 245
Thorough Cleaning 50
Lot Rent (one month) 158
______
Total Cost $3,953
Less Buyer's Down Payment 750
_______
Net Investment After Sale 3,203
_______
Net Gain (65%) $2,297
Months Investment Annual Return Monthly Income
Receivable 36 $5,500 14.5% $189.32
Net Investment 36 $3,203 57.9%
ADVANTAGES
The owner received $3,500 of the cash needed for her new home and was relieved of $158 per month in lot rent. She no longer had to be responsible for the mobile home and was free to move at her convenience.
Our buyer was able to move into a neat home for only $750 down and $347.32 per month, including lot rent. His cash requirement and monthly payments were about the same as it would be had he rented a comparable apartment. But, unlike renting an apartment, the home will be paid for in three years. After that, he would have only lot rent to pay.
The park manager was happy to have the home stay in the park and to be able to continue collecting lot rent.
On a net investment of $3,203, my wife received $189.32 per month for the next 36 months—a net yield of 57.9% per annum.
Keep in mind, however, that we earn this kind of return by dealing in manufactured homes as a business—not a passive investment. While almost anyone can find ways to buy and sell manufactured homes, it does take a little time and effort.
Rules For Setting Effective Goals
To become financially independent, we believe it is necessary to set effective goals. Here are some rules you may want to follow:
1. Your goals should be written. An unwritten goal is merely a wish that you probably won't achieve. When you write your goals down, they become a commitment you have made to yourself. Since your situation today and your goals for tomorrow are both unique, your plan must be personalized.
Ask yourself, "How will I know if I am accomplishing my goals?" If you can't answer that question, you should rewrite your goals.
2. Financial goals should be specific. State your financial goals in terms of numbers and dates. For example, you might decide to have investments worth $250,000, producing an annual net income of $25,000 within five years.
Break your goals down into smaller sub-goals. If the value of your investments don't increase by at least $50,000 each year with an increase of $5,000 in income, you will know that you are behind schedule and should take steps to do better.
3. Focus on the things you want to achieve. Setting your priorities is of utmost importance. Keep a daily or weekly list of things that you need to do. Arrange them in order of importance. Ask yourself: If I could accomplish only one of these objectives, which one should it be?
Once the list is arranged in order of importance, take some action each day that will get you closer to where you want to be.
4. Your goals must be challenging, but attainable. Excitement and challenge are important ingredients when setting goals. If your goals don't demand your best efforts and push you beyond where you have been before, the lack of challenge may cause you to lose interest. However, if it becomes apparent as you get more involved that your goals are unrealistic, adjust them to a more realistic level. If you don't believe you can achieve the goals, you won't be willing to pay the price. When they begin to lose their challenge because they are too easy, adjust them upward.
5. Review your goals regularly. This is another reason it is important to have written goals. In a world that constantly threatens to overwhelm us with alternatives, reviewing written goals will help you stay on course and make adjustments when appropriate.
6. Evaluate your progress regularly. Without the satisfaction of reaching some of your goals for long periods of time, you may lose interest in your long-term goals. It may be helpful to reward yourself when achieving one of your sub-goals. Such things as new clothes, a new car, or a vacation could be a part of your goals. Don't spend any more of your profits than necessary. The more you spend, the less you have justify to work for you.
7. You must want to achieve your goals. The stronger the desire to reach those goals, the more willing you will be to pay the price for achievement. Spend a little time visualizing yourself possessing the things you want to acquire—then go out and do it. A plan that is not implemented is really no plan at all.
Obstacles You Will Need to Overcome
To become financially independent, it is essential to know the obstacles you will face, and then devise methods of overcoming them. Three major obstacles which need to be considered are:
1. The fear of taking a risk: The inability or unwillingness to take risks is a major handicap to financial success. Those who will not take risks often become spectators in the economic world and eventually blame everyone but themselves for their lack of wealth. Most people, in their desire for safety, choose methods that are familiar, rather than keeping an open mind and considering new ideas.
2. Procrastination and indecision: The best opportunities are usually brief and do not wait for those who are unprepared. How many times have we missed an opportunity by waiting too long? Almost everyone procrastinates to some extent. The difference is one of degree and only a small degree of difference can separate the successful from the unsuccessful.
3. Taxation: Our income tax system tends to punish the uninformed and reward those who are informed—provided they plan ahead and then take action. While the existence of taxation is beyond our control, there are many ways to minimize taxes, while working within the system.
Avoid Making Decisions By Indecision
If you are like many others, one of the big problems facing you is indecision. Usually, indecision is based upon a lack of information. When you are faced with making important decisions that you are not sure about, why not talk to people who are in a position to help? Ask each to list all the advantages and disadvantages.
Once you have the information necessary to make an informed decision, evaluate that information and then take appropriate action. The best decisions are made by design and systematic planning—not by acting on impulse.
You probably learned in school that Benjamin Franklin was famous for making wise decisions. If it was the right thing, he wanted to be sure to do it. If it was the wrong thing, he wanted to be sure to avoid it. His simple method of making decisions is used by many astute people today.
Taking a sheet of blank paper, Benjamin Franklin would draw a line down the middle. On one side he would list all the reasons for taking the action. On the other he would list the reasons not to take the action. When he was through, he counted the reasons on each side and the decision was made for him.
However, some reasons are more important than others. To be more precise when making important decisions, we could give each reason a weighted number on a scale of one to ten. When the totals on one side out-weigh the totals on the other, the right decision becomes more apparent.
Some decisions, such as buying or selling a large property, involve many different considerations. How will it affect your monthly income? Will cash be available to meet obligations? Do you have capable management? Will it result in additional taxes or tax savings? Is the property likely to increase or decline in value? Such decisions may be too complex to be made by approaching it as one decision.
Complex decisions should be broken down into "bite-size" pieces with each consideration listed as a separate issue. Then focus your attention on one issue at a time. When in doubt, get advice from people who are experienced in that area. When one issue is resolved, go to the next. When you are finished, the right decision will be clear.
Just Do It!
Knowledge, ideas, and good intentions will not pay the bills—until we decide to make it happen. Why do so many capable people fail to take action? They talk, read and think about all the great things they would like to do. And, then they fail to take action.
In his outstanding tapes, "Personal Power," Anthony Robbins explains that our actions are based on pain and pleasure. We have allowed our sub-conscious minds to believe that we can get more instant pleasure by sitting in front of the television set than by taking action. We are pained by the fear of making mistakes, failing to get the desired results, or what others might think about us. So, rather than take a chance, we procrastinate.
But, that same fear and pain can be turned to our advantage. Spend a few moments thinking about the pain you will have if you miss the opportunity to enjoy the benefits because you failed to use the talents you have. Then think about all the pleasures that come from achievement; the personal satisfaction of knowing that you are a person who can make a decision. And, think about the security, peace of mind and freedom from financial worry when you become financially independent.
Change the way you look at failure. And always remember that failure is a condition—not a person. The first time you tried to ride a bicycle, you probably had a few falls. You picked yourself up and kept trying until you got it right. Then you "practiced" riding the bicycle until you got very good at it.
You can avoid any feelings of fear or rejection when dealing with buyers and sellers by reminding yourself that you are just "practicing." Don't be shy about asking for more than you expect to get. If you don't get the desired response, you won't be discouraged. You simply discover one of the things that didn't work with that particular person. As adults, we practice in our trade or profession. Lawyers practice law and doctors practice medicine.
Start with the easy deals first and "earn as you learn." In the years to come, "we regret what we fail to do much more than what we have done."
Partnering On Real Estate Deals For The Right Reasons
My personal investment strategy has constantly changed over the years as I've discovered what works, what don't and how to "tighten-up" my deals to maximize cash flow. I've always felt that investing alone is better than splitting the pie and sharing my profits! However, I have had several excellent partnership ventures over the years. And I must tell you this, when they work, you can achieve your financial goals many times faster than doing deals alone. But remember, I said when they work - that's the tricky part.
Partnerships are like marriages - there are some good ones that last a lifetime and many that don't last till they're paid for! Like marriages, partnerships stand a much better chance of working and lasting if the partners are selected for the right reason. When I talk about partnership investing, I don't necessarily mean you should form a legal partnership. I'm talking co-ownership or two investors owning real estate together for the purpose of making money.
Why Would Anyone Want a Partnership?
There is only one good reason I know of to take on an investment partner. It's when you don't have enough financial horsepower to do the total deal by yourself. Most often, it's financial assistance you need. However there might be other legitimate reasons. Equity sharing and timeshare contracts are two examples of partnership investing. Both arrangements are specifically designed for investors who can't purchase the whole "enchilada" themselves, or at least they don't think they can!
Do Not Take on a Partner Because You want Companionship!
Always ask yourself these questions: Do I really need a partner or do I just think I need one? Is it wise for me to split my profits with someone else? The answers should be very clear before you look for a partner. Every so often I hear about a "lonely investor" who apparently doesn't have enough confidence to buy real estate by himself. Generally this type of person lacks courage. He wants a partner for moral support. That's not a good reason to form a partnership. It's like the guy who thinks he's better oft crashing in an airplane with 100 people aboard rather than crashing alone. Take my advice here, do not take on a partner because you want companionship. Partnerships are tough enough when you have a good reason.
Partnerships Must Be Based on Mutual Needs
Consider the want-to-be investor who knows just enough about real estate to be dangerous. He has more guts than it takes to fight a mountain lion, but not enough cash to use the pay toilet at the bus depot! Nine out of ten times, this joker will attempt to convince someone with money that by simply joining together, they'll both end up millionaires. Nearly always they both end up broke instead! Stay away from people who have million-dollar ideas, but no money!
My first thoughts when anyone approaches me with a partnership proposition are -
What's in the deal for me?
What's the risk to me and what assurances do I have that a partner will do what he says?
One question you should always ask yourself is -
What's the most I can lose if I do this deal?
Naturally, I'd be very concerned that my partner and I shared equal risk!
Partnerships Can Solve Your Money Problems
Developing partnerships to pool individual resources, knowledge and experience can provide an excellent vehicle for acquiring wealth at a much faster pace than would otherwise be possible. I've discovered that in most successful partnerships, the partners themselves will often have very little in common with each other except their desire to make money together. Sometimes an accountant will team up with a carpenter or handyman. A doctor might select a contractor, or a school teacher with extra hours and mechanical skills might work very well with a real estate broker.
Sometimes the best way to find investment partners with the particular qualifications you need is by advertising in the Help Wanted ads of a local newspaper. Many folks would like to create a profitable partnership, but don't have any idea where to start! The first thing you must determine is what can you provide to the partnership! Will it be investment capital, your time or the specialized skills you possess. Write it down on paper, then advertise for a partner. There are many people looking for what you have to offer, but if they don't know you exist you must speak up and let them know.
The Courting Period Requires Honesty
The biggest mistake for no money partners to make in trying to entice a person with money is to oversell and overstate the benefits the money partner is supposed to receive. If I were to show you all the proposals offered to me and added up all the profits I've been promised over the years, I'd need to rent the Bank of America headquarters building to store all my money. Fortunately or unfortunately, whichever way you view it, I didn't invest my money, so I'll never really know for sure. I can tell you this much however, a very high percentage of the deals went bust!
Jay's Rules for Finding a Money Partner
My "no-compromise" business rule for finding an investor with money when I need financial help is the same rule I use for landlording. I call it my 60/40 rule. It means I'm willing to give more than I take! I've always felt that broke investors should be willing to give up at least 60% of the partnership benefits in order to attract the money. This means if I'm the broke partner, I'll be content with taking 40% of the deal for myself.
Always ask yourself this question about the partnership. Who could most likely make it on their own - the partner with or without the money? I think it's clear - the party with the money will always have a much greater opportunity than the one who's broke.
Partnerships are like marriages - there are some good ones that last a lifetime and many that don't last till they're paid for! Like marriages, partnerships stand a much better chance of working and lasting if the partners are selected for the right reason. When I talk about partnership investing, I don't necessarily mean you should form a legal partnership. I'm talking co-ownership or two investors owning real estate together for the purpose of making money.
Why Would Anyone Want a Partnership?
There is only one good reason I know of to take on an investment partner. It's when you don't have enough financial horsepower to do the total deal by yourself. Most often, it's financial assistance you need. However there might be other legitimate reasons. Equity sharing and timeshare contracts are two examples of partnership investing. Both arrangements are specifically designed for investors who can't purchase the whole "enchilada" themselves, or at least they don't think they can!
Do Not Take on a Partner Because You want Companionship!
Always ask yourself these questions: Do I really need a partner or do I just think I need one? Is it wise for me to split my profits with someone else? The answers should be very clear before you look for a partner. Every so often I hear about a "lonely investor" who apparently doesn't have enough confidence to buy real estate by himself. Generally this type of person lacks courage. He wants a partner for moral support. That's not a good reason to form a partnership. It's like the guy who thinks he's better oft crashing in an airplane with 100 people aboard rather than crashing alone. Take my advice here, do not take on a partner because you want companionship. Partnerships are tough enough when you have a good reason.
Partnerships Must Be Based on Mutual Needs
Consider the want-to-be investor who knows just enough about real estate to be dangerous. He has more guts than it takes to fight a mountain lion, but not enough cash to use the pay toilet at the bus depot! Nine out of ten times, this joker will attempt to convince someone with money that by simply joining together, they'll both end up millionaires. Nearly always they both end up broke instead! Stay away from people who have million-dollar ideas, but no money!
My first thoughts when anyone approaches me with a partnership proposition are -
What's in the deal for me?
What's the risk to me and what assurances do I have that a partner will do what he says?
One question you should always ask yourself is -
What's the most I can lose if I do this deal?
Naturally, I'd be very concerned that my partner and I shared equal risk!
Partnerships Can Solve Your Money Problems
Developing partnerships to pool individual resources, knowledge and experience can provide an excellent vehicle for acquiring wealth at a much faster pace than would otherwise be possible. I've discovered that in most successful partnerships, the partners themselves will often have very little in common with each other except their desire to make money together. Sometimes an accountant will team up with a carpenter or handyman. A doctor might select a contractor, or a school teacher with extra hours and mechanical skills might work very well with a real estate broker.
Sometimes the best way to find investment partners with the particular qualifications you need is by advertising in the Help Wanted ads of a local newspaper. Many folks would like to create a profitable partnership, but don't have any idea where to start! The first thing you must determine is what can you provide to the partnership! Will it be investment capital, your time or the specialized skills you possess. Write it down on paper, then advertise for a partner. There are many people looking for what you have to offer, but if they don't know you exist you must speak up and let them know.
The Courting Period Requires Honesty
The biggest mistake for no money partners to make in trying to entice a person with money is to oversell and overstate the benefits the money partner is supposed to receive. If I were to show you all the proposals offered to me and added up all the profits I've been promised over the years, I'd need to rent the Bank of America headquarters building to store all my money. Fortunately or unfortunately, whichever way you view it, I didn't invest my money, so I'll never really know for sure. I can tell you this much however, a very high percentage of the deals went bust!
Jay's Rules for Finding a Money Partner
My "no-compromise" business rule for finding an investor with money when I need financial help is the same rule I use for landlording. I call it my 60/40 rule. It means I'm willing to give more than I take! I've always felt that broke investors should be willing to give up at least 60% of the partnership benefits in order to attract the money. This means if I'm the broke partner, I'll be content with taking 40% of the deal for myself.
Always ask yourself this question about the partnership. Who could most likely make it on their own - the partner with or without the money? I think it's clear - the party with the money will always have a much greater opportunity than the one who's broke.
Wednesday, May 13, 2009
Overcoming Fear (Beginning With A Vision)
Typically I write "how to" articles about real estate investing - particularly flipping homes.
Today is a little different. I have something important on my heart to share with you, and I hope you'll take a few moments to take it in.
For years I’ve wanted to write something about overcoming fear. And for years, I haven’t had a clue what to write.
But today, as I was doing my daily devotion, it hit me like a brick on the side of the head. The Lord put it on my heart to immediately stop and begin writing - right then and there!
Fear. It's a big word. Fear is about control, or lack thereof. Fear can motivate you. It can drive you, distract you, petrify you, and ultimately completely control you, if you allow it to.
There are more than a few interesting facts about fear. I believe one of them is that fear is the number one reason most people walking the face of this earth will choose to settle for a life of mediocrity.
For many, it is an insurmountable obstacle, with too many risks to even try to escape. The masses of society live through each day-to-day voluntarily bound up by the fear that enslaves them.
My experience in this life so far has taught me that most people are secretly disappointed with the lives that they live, but rarely, if ever, will admit it.
They measure themselves up against others and, in doing so, sink lower and lower into a dangerous pit. They look around and find someone not doing as well as they are (or not seeming to), and somehow, seeing them makes their own situation seem all right, even though they're still living in fear. The dominating vision I see so many people hhaving created is to be just a little better than someone else.
Have you ever heard someone say something like, “I’m not an alcoholic; I only drink on the weekends. But John -- he goes to happy hour ever day!” ...or maybe something like...“We’re not doing so bad. At least I can figure out a way to get my car payment made.”
These thoughts and other like them are what go through the minds of people who have settled for mediocrity. We’ve all had grand visions of what we wanted out of life. We have allowed our circumstances and others around us to steal our vision for the greatness we are capable of.
Here are a few of the qualities I believe a person must possess in order to overcome mediocrity, break free from fear, and make their vision a reality. I also challenge both of us (you and me) to strive for our vision:
A Good Attitude
If you are pessimistic and believe that everything is going to fall apart, why would you ever take a step toward your vision? A positive attitude gives life to a vision; a negative attitude kills it.
My challenge - look at yourself and get rid of any negative thoughts.
Turn them into positives and reflect on the positive thoughts when you catch yourself thinking negatively.
Belief In Yourself
If you don’t believe in yourself, why should anyone else believe in you?
My challenge – look at the things you wish to accomplish and have confidence that you CAN do them.
If you need to take steps to make your visions a reality (i.e. more knowledge or education, making better choices, etc), then start those steps today. Don’t put off until tomorrow what can be done today!
Willingness to Grow
The fact of the matter is that none of us are capable of carrying out our grand visions in our current state. We need to be stretched and have to allow it to happen. Stretching is oftentimes painful as we go through it; however, it makes us stronger and better.
My challenge - let your desire to be better exceed your desire to avoid the painful stretching called growth.
World class athletes put themselves through excruciating pain during their workouts because they know it will pay off and they’ll be better athletes for it. If they opted to avoid the pain because it hurts, they would also opt to give up their status as world class athletes. Mediocrity is the easy way out.
Focus
To overcome your fears, you need to truly know what it is that you are pursuing. You need to have an end in mind and focus on it.
My challenge – come up with a plan on how to achieve that end and muster up the determination to follow it.
Following a plan isn’t always easy. In fact, most things are never easy the first time we do them. However, the more we do them, the easier they get. Your plan may be difficult to get rolling, but once it starts moving, you’re on your way. It’s like pushing a stalled car. On a flat surface, it takes a lot of work to get the car moving. Your efforts are far greater to get it started compared to the effort needed once it’s moving. On occasion you’ll hit little hills, and sometimes big hills, but if you are determined enough, you will push the car over the hill and get to a point where it rolls by itself.
Enthusiasm
This is the fuel that gives energy to your vision. If you aren’t excited about your vision, it’s going to die.
My challenge - maintain your enthusiasm by exercising all of the items above.
I stated earlier that the Lord put it on my heart to write this, and to write it now.
The Lord gave me the vision and with that vision He gives the tools to carry it out. When you have a vision, you will also have all of the tools available to you. You can either pursue your vision with a good attitude, a belief in yourself, a willingness to grow, focus and enthusiasm or choose a life of mediocrity. Which will you choose?
Today is a little different. I have something important on my heart to share with you, and I hope you'll take a few moments to take it in.
For years I’ve wanted to write something about overcoming fear. And for years, I haven’t had a clue what to write.
But today, as I was doing my daily devotion, it hit me like a brick on the side of the head. The Lord put it on my heart to immediately stop and begin writing - right then and there!
Fear. It's a big word. Fear is about control, or lack thereof. Fear can motivate you. It can drive you, distract you, petrify you, and ultimately completely control you, if you allow it to.
There are more than a few interesting facts about fear. I believe one of them is that fear is the number one reason most people walking the face of this earth will choose to settle for a life of mediocrity.
For many, it is an insurmountable obstacle, with too many risks to even try to escape. The masses of society live through each day-to-day voluntarily bound up by the fear that enslaves them.
My experience in this life so far has taught me that most people are secretly disappointed with the lives that they live, but rarely, if ever, will admit it.
They measure themselves up against others and, in doing so, sink lower and lower into a dangerous pit. They look around and find someone not doing as well as they are (or not seeming to), and somehow, seeing them makes their own situation seem all right, even though they're still living in fear. The dominating vision I see so many people hhaving created is to be just a little better than someone else.
Have you ever heard someone say something like, “I’m not an alcoholic; I only drink on the weekends. But John -- he goes to happy hour ever day!” ...or maybe something like...“We’re not doing so bad. At least I can figure out a way to get my car payment made.”
These thoughts and other like them are what go through the minds of people who have settled for mediocrity. We’ve all had grand visions of what we wanted out of life. We have allowed our circumstances and others around us to steal our vision for the greatness we are capable of.
Here are a few of the qualities I believe a person must possess in order to overcome mediocrity, break free from fear, and make their vision a reality. I also challenge both of us (you and me) to strive for our vision:
A Good Attitude
If you are pessimistic and believe that everything is going to fall apart, why would you ever take a step toward your vision? A positive attitude gives life to a vision; a negative attitude kills it.
My challenge - look at yourself and get rid of any negative thoughts.
Turn them into positives and reflect on the positive thoughts when you catch yourself thinking negatively.
Belief In Yourself
If you don’t believe in yourself, why should anyone else believe in you?
My challenge – look at the things you wish to accomplish and have confidence that you CAN do them.
If you need to take steps to make your visions a reality (i.e. more knowledge or education, making better choices, etc), then start those steps today. Don’t put off until tomorrow what can be done today!
Willingness to Grow
The fact of the matter is that none of us are capable of carrying out our grand visions in our current state. We need to be stretched and have to allow it to happen. Stretching is oftentimes painful as we go through it; however, it makes us stronger and better.
My challenge - let your desire to be better exceed your desire to avoid the painful stretching called growth.
World class athletes put themselves through excruciating pain during their workouts because they know it will pay off and they’ll be better athletes for it. If they opted to avoid the pain because it hurts, they would also opt to give up their status as world class athletes. Mediocrity is the easy way out.
Focus
To overcome your fears, you need to truly know what it is that you are pursuing. You need to have an end in mind and focus on it.
My challenge – come up with a plan on how to achieve that end and muster up the determination to follow it.
Following a plan isn’t always easy. In fact, most things are never easy the first time we do them. However, the more we do them, the easier they get. Your plan may be difficult to get rolling, but once it starts moving, you’re on your way. It’s like pushing a stalled car. On a flat surface, it takes a lot of work to get the car moving. Your efforts are far greater to get it started compared to the effort needed once it’s moving. On occasion you’ll hit little hills, and sometimes big hills, but if you are determined enough, you will push the car over the hill and get to a point where it rolls by itself.
Enthusiasm
This is the fuel that gives energy to your vision. If you aren’t excited about your vision, it’s going to die.
My challenge - maintain your enthusiasm by exercising all of the items above.
I stated earlier that the Lord put it on my heart to write this, and to write it now.
The Lord gave me the vision and with that vision He gives the tools to carry it out. When you have a vision, you will also have all of the tools available to you. You can either pursue your vision with a good attitude, a belief in yourself, a willingness to grow, focus and enthusiasm or choose a life of mediocrity. Which will you choose?
No Money Down Real Estate Investing: Is It For Real?
You see it bookstores, read about it in newspapers and magazines and hear about it on late night TV. But many people are still begging the question, “Is no money down real estate investing really possible?” The short answer to this question is, “Yes”. I’ve done it. But to understand how this is done, you must first have the proper mindset. Regardless of how much cash you may have, if you think like an investor without any money, then you’ll be forced to either admit defeat or be creative. And if you choose the latter route, you’ll almost always be able to find a way to buy properties without any of your own money.
Now notice that I said, “…without any of your own money.” The term “no money down real estate investing” can be a little misleading. It’s really better stated in saying “none of your own money down” – but someone’s money is still likely going to be involved in most cases. Interestingly enough, I actually have new investors frequently come to me who are fortunate enough to have a large nest egg which they can use to get started in the business. Many people have approached me and said, “I have $100,000 in the bank. How should I invest it?”
I always advise them to put their money aside and learn how to do deals without money. Money can kill your creativity, and creativity is essential in this business in my opinion. Even $100,000 doesn’t go very far when buying homes, and if you always rely upon the cash that you have, you will often find yourself without any cash and unable to do more deals until you sell something. So even if you have access to some of your own money, my advice is to first cultivate your ability to do deals without use of your own money. Not only will this help keep you creative, but it allows the cash you do have to act as a safety net, making you even stronger. Never underestimate the value of a BBC (Big Bag of Cash).
Now lets go back to my earlier statement that “no money down real estate investing” should really be better phrased as none of YOUR money. Their bears further explanation. Here’s a quick list of a few ways to invest in real estate with none of your own money:
Use OPM (Other People’s Money)
I’m referring to such things as a hard money lender or private lender to purchase and rehab a property. Make sure you’re getting a good enough deal so that your lender can safely loan you enough money to cover your purchase price, closing costs, holding costs and rehab costs. I do it all the time. Then you can either refinance or just sell. None of your money was ever used.
Use Owner Financing
Many individual sellers will be open to this scenario – especially if you’re offering it on the short term and they can make a little more money because of it. (I will often pay a little more for a house if owner financing is involved because of what I save in closing costs.)
Purchase “Subject To” Existing Loans
Many people will get into arguments with on this one about the “due on sale” clause. I won’t go into that here – that’s another article (or an entire course) entirely. But suffice it to say that it’s another variation of owner financing, and can be a powerful way to get into a deal with no money down.
There Are Other Ways – These Are Just A Few Of Them
Make Sure You Have All Bases Covered
Keep in mind that even though it may not be coming out of your own pocket, you must have a source for the working capital needed to hold and possibly renovate a property. This source can be your own bank account if it must, but if you want your deal to truly be “no money down real estate investing,” consider finding someone else (a friend or colleague) who is willing to make an investment in you and fund these holding costs. This can be much easier than you may think, trust me. Whichever you choose, you should be sure of your source for working capital before you buy an investment property.
Is No Money Down Investing Ethical?
Can you invest in real estate with no money down and keep your ethics intact? The answer to this question is a 100%, absolute, unequivocal “yes!” Many people find this difficult to believe because they feel that we are taking advantage of someone when we buy homes really cheap. In fact I struggled with this issue myself when I first started, especially when it came to offering less than what a seller was asking. If they were asking $80,000, then offering $60,000 made me feel uneasy. But after getting a few of these offers accepted I realized that I wasn’t such the bad guy after all. The sellers were just happy to have someone willing to buy the home, and I was solving their problem in a big way.
Another example involves a woman who sold me two homes which had appraised for $100,000 (combined) for $29,000. She was crying when she sold them to me because – not because she was so upset, but because she was so happy that I had taken these “house problems” off of her hands. I realized at that moment exactly what a motivated seller was, and what kind of valuable role I had to provide them. I was truly providing a desperately needed service.
Am I A Home Stealer?
As a result of my experience, I have but one comment to make with regard to the sentiment that we are somehow stealing houses. IF THE SELLER COULD GET MORE MONEY OR A BETTER DEAL FROM SOMEONE ELSE, THEN THEY WOULD TAKE IT! Get over it! The reason the seller is willing to sell you their home really cheap is because no one else is willing to buy it or give them more for it. Most of the properties that I buy really cheap are from banks or government agencies. Do you think they don’t know what they’re doing? Wouldn’t they get more for their homes if they could? Would you feel bad if a bank sold you their home for 50% of fair market value?
If so, relax! It’s all part of the business of finance and real estate. You are going to get paid for knowing how to buy and flip houses. You will be helping not only the sellers by buying their “problem properties” (something which few are qualified or willing to do), but you will help other investors by providing them with a profitable opportunity, the local community by doing something productive with an otherwise vacant home, and eventually a family by providing them with a nice place to live. So all things considered, I would submit that not only is no money down real estate investing possible and ethical, but when properly practiced, it provides the community at large with a number of benefits and a much needed service.
Now notice that I said, “…without any of your own money.” The term “no money down real estate investing” can be a little misleading. It’s really better stated in saying “none of your own money down” – but someone’s money is still likely going to be involved in most cases. Interestingly enough, I actually have new investors frequently come to me who are fortunate enough to have a large nest egg which they can use to get started in the business. Many people have approached me and said, “I have $100,000 in the bank. How should I invest it?”
I always advise them to put their money aside and learn how to do deals without money. Money can kill your creativity, and creativity is essential in this business in my opinion. Even $100,000 doesn’t go very far when buying homes, and if you always rely upon the cash that you have, you will often find yourself without any cash and unable to do more deals until you sell something. So even if you have access to some of your own money, my advice is to first cultivate your ability to do deals without use of your own money. Not only will this help keep you creative, but it allows the cash you do have to act as a safety net, making you even stronger. Never underestimate the value of a BBC (Big Bag of Cash).
Now lets go back to my earlier statement that “no money down real estate investing” should really be better phrased as none of YOUR money. Their bears further explanation. Here’s a quick list of a few ways to invest in real estate with none of your own money:
Use OPM (Other People’s Money)
I’m referring to such things as a hard money lender or private lender to purchase and rehab a property. Make sure you’re getting a good enough deal so that your lender can safely loan you enough money to cover your purchase price, closing costs, holding costs and rehab costs. I do it all the time. Then you can either refinance or just sell. None of your money was ever used.
Use Owner Financing
Many individual sellers will be open to this scenario – especially if you’re offering it on the short term and they can make a little more money because of it. (I will often pay a little more for a house if owner financing is involved because of what I save in closing costs.)
Purchase “Subject To” Existing Loans
Many people will get into arguments with on this one about the “due on sale” clause. I won’t go into that here – that’s another article (or an entire course) entirely. But suffice it to say that it’s another variation of owner financing, and can be a powerful way to get into a deal with no money down.
There Are Other Ways – These Are Just A Few Of Them
Make Sure You Have All Bases Covered
Keep in mind that even though it may not be coming out of your own pocket, you must have a source for the working capital needed to hold and possibly renovate a property. This source can be your own bank account if it must, but if you want your deal to truly be “no money down real estate investing,” consider finding someone else (a friend or colleague) who is willing to make an investment in you and fund these holding costs. This can be much easier than you may think, trust me. Whichever you choose, you should be sure of your source for working capital before you buy an investment property.
Is No Money Down Investing Ethical?
Can you invest in real estate with no money down and keep your ethics intact? The answer to this question is a 100%, absolute, unequivocal “yes!” Many people find this difficult to believe because they feel that we are taking advantage of someone when we buy homes really cheap. In fact I struggled with this issue myself when I first started, especially when it came to offering less than what a seller was asking. If they were asking $80,000, then offering $60,000 made me feel uneasy. But after getting a few of these offers accepted I realized that I wasn’t such the bad guy after all. The sellers were just happy to have someone willing to buy the home, and I was solving their problem in a big way.
Another example involves a woman who sold me two homes which had appraised for $100,000 (combined) for $29,000. She was crying when she sold them to me because – not because she was so upset, but because she was so happy that I had taken these “house problems” off of her hands. I realized at that moment exactly what a motivated seller was, and what kind of valuable role I had to provide them. I was truly providing a desperately needed service.
Am I A Home Stealer?
As a result of my experience, I have but one comment to make with regard to the sentiment that we are somehow stealing houses. IF THE SELLER COULD GET MORE MONEY OR A BETTER DEAL FROM SOMEONE ELSE, THEN THEY WOULD TAKE IT! Get over it! The reason the seller is willing to sell you their home really cheap is because no one else is willing to buy it or give them more for it. Most of the properties that I buy really cheap are from banks or government agencies. Do you think they don’t know what they’re doing? Wouldn’t they get more for their homes if they could? Would you feel bad if a bank sold you their home for 50% of fair market value?
If so, relax! It’s all part of the business of finance and real estate. You are going to get paid for knowing how to buy and flip houses. You will be helping not only the sellers by buying their “problem properties” (something which few are qualified or willing to do), but you will help other investors by providing them with a profitable opportunity, the local community by doing something productive with an otherwise vacant home, and eventually a family by providing them with a nice place to live. So all things considered, I would submit that not only is no money down real estate investing possible and ethical, but when properly practiced, it provides the community at large with a number of benefits and a much needed service.
Nine Characteristics of Successful Real Estate Investors
In my 10 years in the real estate business, I bet I've met 5,000 investors at all levels of knowledge and experience. Some have become amazingly successful, while others have lost steam or experienced dramatic failures. In this time, I've noticed that there are certain characteristics that come with real estate investing success. As a matter of fact, that I have come to believe that I can predict with fair accuracy whether a particular investor will be successful. All I have to do is find out a little about their attitudes and actions, and I'll know what their chances of becoming successful are.
Before I outline the specific characteristics that I've found in successful investors, I’d like to define what I mean by "successful investor". A successful investor is not the person who owns the most properties or does the most deals, or who has the most zeros in his net worth. A successful investor is simply a person who knows what he wants - financially, personally, and in terms of what he wants to contribute to the world - and uses real estate investing as a way to get those things. For a successful real estate investor, real estate is a means to an end, not an end unto itself. A successful real estate investor works to become as financially secure as is necessary for his peace of mind and who is happy and comfortable with his investment activities.
Successful investors I've known include high school dropouts and PhD's, men and women of all races and backgrounds, people born into poverty and people born with trust funds, guys who started investing at 19 and those who started in their 70's, part-timers and full timers. There is no single predictor of success, but there are things that I've found that all successful investor have in common. Here are a few.
Successful Investors Have a Plan - and Work It
It's simple enough to put pen to paper and figure out how to become financially independent in two or five or ten years. It's another thing altogether to wake up each morning and do the things you need to do to reach this goal. Somehow, your real life always seems to get in the way of your long-term goals. Successful investors battle this tendency to get caught "in the thick of things" by creating not just a list of goals, but a daily plan for getting there.
Successful Investors Network
Real estate investing must be the only profession in the country that has no accepted curriculum of formal training. Since your success as a real estate entrepreneur relies in no small part on your ability to get reliable information and advice when you need it, and since your local community college doesn't teach courses on important topics like how to evict a non-paying tenant, the only answer is for you to find a mentor who can teach you the ropes.
Choose a mentor who is knowledgeable, motivating, accessible, and is known for high ethical and business standards. Don't abuse your mentor by constantly asking for information that you could get from a simple trip to the library. And don't forget to thank your mentor by taking him to lunch, giving him gift certificates to his favorite restaurant, and, of course, letting him in on good leads when you find them. Where do you find mentors? Try your local non-profit real estate investment or landlording association. It's full of people who are there to share.
Successful Investors Cull Their Herds
When I was a little kid, I read an article about chicken farmers. This article mentioned that when the new chicks hatched, the farmer killed the weak, undersized, and deformed chicks before they had a chance to grow up. I was, of course, horrified, and immediately began making plans to open an orphanage for runt chickens. Unfortunately, my home in the suburbs and my insensitive parents conspired to keep my project in the planning stages to this day.
Most real estate investors look at selling their "dud" properties with the same horror with which I view the wholesale slaughter of slightly imperfect baby chicks. They will keep a property year after year despite the fact that it loses money, doesn't fit the owner's goals, is a huge management hassle or is in a neighborhood that has become a warzone. Successful investors review their portfolios at least once a year, and aggressively get rid of their loser properties before they can damage the profits from their winners.
Successful Investors Protect Their Assets
What's the use of building a huge real estate portfolio if a single lawsuit could wipe it all out? Why bother to achieve financial independence if the bulk of your estate will end up in the hands of the government? And why is it that the average real estate investor does absolutely nothing to reduce their #1 yearly expense - taxes? Arranging your affairs to protect your assets from creditors, plaintiffs, and the taxman is tedious, complicated, and time consuming. Yet every successful real estate investor takes the time to do it, thus assuring that their hard-earned money stay theirs.
Successful Investors Have a Code of Ethics
We tend to think of our investment activities in terms of bricks and cash. In fact, the real estate business is about people. Without sellers, renters, contractors, agents, and so on, you would have no real estate business. And since your business activites affect so many other people, I think it's important to decide how you are going to treat the people you come into contact with each day.
Since there is no formal code of ethics for real estate investors, it's up to each of us to decide how we'll behave toward customers, tenants, sellers, workers etc. Instead of using as a measure, "what can I get away with?", or "what allows me to sleep at night?", perhaps the proper question is, "what’s fair?". Take the time to think about your activities and how they affect people that you come into contact with.
Successful Investors Involve Their Families
In ten years, I have yet to meet a truly successful investor who did not have the support of his (or her) significant other. Because your real estate activities generally involve spending (or promising to pay back) tens of thousands of dollars at a time, and since your business will take time away from your family, I think it's very important to sit down with everyone who's old enough to feed themselves and explain what you're doing, and why, and that you'd really like to have their help or at least their understanding. If you have a spouse who's reluctant to allow you to take out a second mortgage on your home in order to invest in the deal of a lifetime, try sending him or her to a beginner's seminar on investment. Some of your significant other’s very natural fears may be overcome by an understanding of what you're doing.
Successful Investors Treat Everyone Better Than They Expect to Be Treated
What goes around comes around. If you think that your reputation as a buyer or landlord doesn't precede you, think again. When you go the extra mile to solve people's problems, both profit and success will follow.
Successful Investors Stay Educated
Since I began investing in real estate full time in 1989, my state has passed a mandatory seller disclosure law. The federal government has made lead-based paint disclosures mandatory and expensive to ignore. Congress has changed the rules for capital gains taxes twice. HIV-positive people have become a "protected class" in terms of fair housing. My city has passed ordinances that say that I can be fined or jailed for renting to drug dealers. Mortgage money for high-risk borrowers has become cheap and easy to get. The Fair Credit Reporting Act has been revised to include landlords. Things change. Your business is affected. Stay on top of it.
Successful Investors Pass On What They've Learned
Just as successful investors have mentors, successful investors become mentors. By passing on their knowledge to novices, they keep our industry alive, give others at chance a financial independence, and get a wonderful sense of their own accomplishments. Now that's what I call success.
Before I outline the specific characteristics that I've found in successful investors, I’d like to define what I mean by "successful investor". A successful investor is not the person who owns the most properties or does the most deals, or who has the most zeros in his net worth. A successful investor is simply a person who knows what he wants - financially, personally, and in terms of what he wants to contribute to the world - and uses real estate investing as a way to get those things. For a successful real estate investor, real estate is a means to an end, not an end unto itself. A successful real estate investor works to become as financially secure as is necessary for his peace of mind and who is happy and comfortable with his investment activities.
Successful investors I've known include high school dropouts and PhD's, men and women of all races and backgrounds, people born into poverty and people born with trust funds, guys who started investing at 19 and those who started in their 70's, part-timers and full timers. There is no single predictor of success, but there are things that I've found that all successful investor have in common. Here are a few.
Successful Investors Have a Plan - and Work It
It's simple enough to put pen to paper and figure out how to become financially independent in two or five or ten years. It's another thing altogether to wake up each morning and do the things you need to do to reach this goal. Somehow, your real life always seems to get in the way of your long-term goals. Successful investors battle this tendency to get caught "in the thick of things" by creating not just a list of goals, but a daily plan for getting there.
Successful Investors Network
Real estate investing must be the only profession in the country that has no accepted curriculum of formal training. Since your success as a real estate entrepreneur relies in no small part on your ability to get reliable information and advice when you need it, and since your local community college doesn't teach courses on important topics like how to evict a non-paying tenant, the only answer is for you to find a mentor who can teach you the ropes.
Choose a mentor who is knowledgeable, motivating, accessible, and is known for high ethical and business standards. Don't abuse your mentor by constantly asking for information that you could get from a simple trip to the library. And don't forget to thank your mentor by taking him to lunch, giving him gift certificates to his favorite restaurant, and, of course, letting him in on good leads when you find them. Where do you find mentors? Try your local non-profit real estate investment or landlording association. It's full of people who are there to share.
Successful Investors Cull Their Herds
When I was a little kid, I read an article about chicken farmers. This article mentioned that when the new chicks hatched, the farmer killed the weak, undersized, and deformed chicks before they had a chance to grow up. I was, of course, horrified, and immediately began making plans to open an orphanage for runt chickens. Unfortunately, my home in the suburbs and my insensitive parents conspired to keep my project in the planning stages to this day.
Most real estate investors look at selling their "dud" properties with the same horror with which I view the wholesale slaughter of slightly imperfect baby chicks. They will keep a property year after year despite the fact that it loses money, doesn't fit the owner's goals, is a huge management hassle or is in a neighborhood that has become a warzone. Successful investors review their portfolios at least once a year, and aggressively get rid of their loser properties before they can damage the profits from their winners.
Successful Investors Protect Their Assets
What's the use of building a huge real estate portfolio if a single lawsuit could wipe it all out? Why bother to achieve financial independence if the bulk of your estate will end up in the hands of the government? And why is it that the average real estate investor does absolutely nothing to reduce their #1 yearly expense - taxes? Arranging your affairs to protect your assets from creditors, plaintiffs, and the taxman is tedious, complicated, and time consuming. Yet every successful real estate investor takes the time to do it, thus assuring that their hard-earned money stay theirs.
Successful Investors Have a Code of Ethics
We tend to think of our investment activities in terms of bricks and cash. In fact, the real estate business is about people. Without sellers, renters, contractors, agents, and so on, you would have no real estate business. And since your business activites affect so many other people, I think it's important to decide how you are going to treat the people you come into contact with each day.
Since there is no formal code of ethics for real estate investors, it's up to each of us to decide how we'll behave toward customers, tenants, sellers, workers etc. Instead of using as a measure, "what can I get away with?", or "what allows me to sleep at night?", perhaps the proper question is, "what’s fair?". Take the time to think about your activities and how they affect people that you come into contact with.
Successful Investors Involve Their Families
In ten years, I have yet to meet a truly successful investor who did not have the support of his (or her) significant other. Because your real estate activities generally involve spending (or promising to pay back) tens of thousands of dollars at a time, and since your business will take time away from your family, I think it's very important to sit down with everyone who's old enough to feed themselves and explain what you're doing, and why, and that you'd really like to have their help or at least their understanding. If you have a spouse who's reluctant to allow you to take out a second mortgage on your home in order to invest in the deal of a lifetime, try sending him or her to a beginner's seminar on investment. Some of your significant other’s very natural fears may be overcome by an understanding of what you're doing.
Successful Investors Treat Everyone Better Than They Expect to Be Treated
What goes around comes around. If you think that your reputation as a buyer or landlord doesn't precede you, think again. When you go the extra mile to solve people's problems, both profit and success will follow.
Successful Investors Stay Educated
Since I began investing in real estate full time in 1989, my state has passed a mandatory seller disclosure law. The federal government has made lead-based paint disclosures mandatory and expensive to ignore. Congress has changed the rules for capital gains taxes twice. HIV-positive people have become a "protected class" in terms of fair housing. My city has passed ordinances that say that I can be fined or jailed for renting to drug dealers. Mortgage money for high-risk borrowers has become cheap and easy to get. The Fair Credit Reporting Act has been revised to include landlords. Things change. Your business is affected. Stay on top of it.
Successful Investors Pass On What They've Learned
Just as successful investors have mentors, successful investors become mentors. By passing on their knowledge to novices, they keep our industry alive, give others at chance a financial independence, and get a wonderful sense of their own accomplishments. Now that's what I call success.
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