Saturday, July 31, 2010

How to Find Hidden Real Estate Bargains...


The book of the week was How to Find Hidden Real Estate Bargains by Robert Irwin. I am a big fan of real estate, so it is not surprising that this book caught my eye. And up to this point every book that I have read about real estate has had me captivated, I cannot say that this book fell into that category.

This book does have fantastic information about real estate, without a doubt. However, it is written like a textbook. It didn't get me excited, in fact, it was almost like pulling teeth to read it all in one week. It is the same format for each chapter... very cookie cutter. So that being said, it's a good thing you came here because now you get some of the gems of information without the dryness.

A real estate bargain is any way to buy property for less than market value. This book explains the process on the heavy hitters: REO, Foreclosure, HUD, VA, Fannie and Freddie REOs, GSA and IRS Auctions, SBA, Treasury, and Army Corps. Lots of information! In looking for real estate bargains within any of these categories you need to consider 7 areas: Price, Terms, Rental and Resale Market, Location, Condition, Zoning, and Occupancy. Generally, you shouldn't buy a property until you have a good understanding of each of these categories.

1. Price- Is the property selling below market value? Check out the county records, most are online, and see what surrounding properties sold for recently.

2. Terms- Will you still make money off the property after you consider the following: Down Payment? Interest Rate? Is your financing matching the market? Are you doing any risky financing that will get you in trouble 5 or 7 years down the road?

3. Rental and Resale Market- How will you match up in these areas when the time comes? What are the local rental rates? Is real estate sales historically slowing?

4. Location- Is the location better than the seller realizes? Is is worse than you think?

5. Condition- This is the biggest category with bargain properties! Is it a distressed property that you can fix up or will you be spending beyond your bargain savings paying a contractor to fix it up? Do you know how it got to be distressed? How long will it take to make the property livable again?

6. Zoning- What possibilities does the property have for the future? Is it zoned for 3 units and there are only two on it currently?

7. Occupancy- Is the property vacant? Is is fully occupied? What are the terms of the current leases? Will you have grounds for evicting a problem tenant with the way the lease is written?

Seems simple enough, right? If this is your first time buying a property I encourage you to work with an agent. Do some interviews and find the best. They can teach you a ton! Plus it doesn't really cost you any money. Their paycheck comes from a percentage of the sale. And you won't be buying the property unless the price is right anyway.

There isn't a lot more that I want to expand on with this book. Work with an agent and they will show you what is out there and help you find a bargain. Do your due diligence on the property and buy it if all the criteria stacks up. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, July 24, 2010

Coping With Difficult People...


The book of the week was Coping With Difficult People by Robert M. Bramson. I really like this book. I think that encountering difficult people is a daily occurrence for most people nowadays. The worst part about dealing with difficult people is they slow you down. They break down the decision making process by over analyzing, focusing on the negative, stalling, bulldozing, clamming up, the list goes on...

Since these encounters are becoming a daily occurrence, it is imperative that you learn to 'cope' with these people. That is where Bramson comes into play. He is an expert on organizational decision making. The book covers about 15 different personalities, but I am going to focus on just a few...

Clams

It drives me crazy when people clam up during a conversation. Especially when they alone hold the information that you are seeking to make a good decision. This personality is very difficult to deal with because it is natural for us to avoid silence. When you have someone clam up on you, you'll fill the silence with your own words. The trick to dealing with these people is asking open ended questions, so you avoid their "yes or no" responses. Additionally, when the Clam gets really tough, call them out on it. If you ask a questions and they are all the sudden mute, ask them again and address their silence. Say "I asked you a questions, is there a reason you are not talking? Are you afraid how I may react?" You may have to continue to chip away at their silence, but in time, they will start to converse.

Negativists


It's really easy to be negative. You can pull a negative idea out of any situation. And it is good to understand the pros and cons of any situation to make the most effective decision. However, there are people out there that dwell on the negative and use them as prime reason to not do everything. This puts a stand-still to any new initiatives and depending on the source of your negative energy, they may suck everyone down with them. And the tricks to dealing with these people: Don't argue against them, they will start throwing a fit most of the time and it further defeats the goal of making a decision. Make optimistic but realistic statements about past successes, be alert to all the body languages of everyone at the table- including the negativist, and be ready to stand your ground and announce plans to take action without equivocation.

The Complainer


Like negativists, Complainers are a dime a dozen. Some people just love to complain... non-stop. They complain about policies and procedures, other employees, the tools they use, you name it, they will find a complaint for it. It is not at all conducive to a good working environment. Here is how you deal with these people... Listen, yes listen, to everything they are complaining about. Actively listen to them. Acknowledge their complaint by paraphrasing it back to them. Make sure you don't apologize or agree with what they are saying and then help them problem solve for the complaint. If they reject the problem solving at first, insist that complaining won't do any good and that your solution is a way to get it fixed. If all else fails ask the complainer, "How would you like this conversation to end?"

It is essential we learn to deal with difficult people if we intend to work as efficiently as possible. Books like this are a great source to ways to cope with them. Some of the techniques laid out in this book are extremely simple, and that is precisely why I like them so much. If the solution to cope with a difficult person is very complicated then you will never remember how to do it when the situation arises.

I recommend this book. I think it is very smart and easy to read. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, July 17, 2010

Financial Peace...


The book of the week was Financial Peace by Dave Ramsey. I really enjoyed this book. I have no doubt in my mind that if someone is on board to change their dire financial situation, they can pick up this book and find the solution. The book is very similar to Total Money Makeover by Ramsey that I read almost a year ago. I think that Financial Peace is more of a workbook than Total Money Makeover, but ultimately they have the same road map outlined.

The books are so similar, and my post over Total Money Makeover was so long ago, I am going to repost the bulk of that posting. But before I do, let me lay some shocking facts on personal finance on you:

-Between 8 and 12% of Americans have a obsessive-compulsive shopping habit.
-72% of credit cards have a variable interest rates.
-In the book What is a Wife Worth, author, Michael Minton applied the national average wages for the amounts of time homemakers spend performing their daily tasks (purchasing, maintenance, housekeeping, bookkeeping, nurse, deititian, child psychologist etc.) and total costs for services provided = $108,048 a year.
-Only 37% of American workers say they have calculated how much money they will need to have saved by the time they retire.
-On average, Americans owe about $8,000 per household on credit cards. The average household with at least one credit card has 6.0 bank credit cards, 8.3 retail credit cards, and 2.4 debit cards for a total of 16.7 cards.
-Twenty-eight percent of students age 16-22 say they have a major credit card. Twenty-eight percent of those students with a major credit card say they roll over credit card debt each month. Forty percent of students are likely to buy a pair of jeans (or something similar) they really want even if they do not have the money to pay for it. Twenty-two percent would pay for it with a credit card.
-Only 40% of Americans have read a nonfiction book since their last year of formal education.


That last one is why I'm here... And now that I (should) have you interested in making some changes here is the post I did on Total Money Makeover:

"This book can help anyone who reads it. I feel like a lot of people have a immense amount of misguided pride about personal finance. People won't pick up a book like this one because they hate to think that there is anything wrong with the way they are spending their money. Well, I hate to break it to you, but if you are like 95% of Americans, you are using your money unwisely.

People don't learn about how to make the most of their personal finances in this world. And if they are one of the lucky ones that actually did get taught the basics of how to manage their money, they were most likely taught by someone who didn't have their own finances figured out.

Ramsey's book is a 7 step plan to provide "financial fitness." The basics of the 7 step program is to get rid of all your debt and live right. There is an incredibly powerful trend in this world to live beyond your means, finance your whole life, and live real close to paycheck to paycheck. It might be because someone is trying to keep up with the Jones' or because someone never told them that it was wrong, but there is a better life.

Ramsey's book has a lot of success stories of people who did the steps and turned their life around. I'm not one for sentiment, but the idea is that this program really works. The steps are: make a $1000 emergency fund, paying off ALL your debt, make your emergency fund larger (6 months of living), save towards retirement, save towards college, and finally, pay off your mortgage. Once you have that done you will be completely financially secure.

Most people can't imagine not having any debt because that is just not what they were taught. But it is possible and you will be so much better off if you get it done. The trick to getting rid of your debt- step 2- is to figure how to just get by for awhile (groceries, mortgage/rent, not a lot extra) and put all the money you have left towards your debts. Start with the credit card with the smallest balance and just keep going until every single one of your debts is gone. This includes student loans and car payments. From then on you will be paying cash for everything... your clothes, gas, and even your cars. It can be done, but it means living within your means.
Quick side note within the book - The average multi-millionaire doesn't buy a brand new car off the lot. They buy a 2 or 3 year old car that was previously used as a lease. It costs over 60% less and all the bugs have been worked out.

Now to the millionaire part! If you are living within your means with absolutely no debt you have the opportunity to invest in your retirement. There is nothing more powerful than the power of compound interest. The Standard and Poor 500 has had an average return of 12% for the last 70 years. We aren't talking about day trading here. If you are going to be in it for the big bucks you have to look long term. Find a good index fund and invest every month, as if its your new car payment, and you will see huge rewards. Let me illustrate this for you... If you invest in a Roth which grows tax free at 12% interest, with $3000 a year, starting when you are 30 years old. You will have $873,000 tax-free at the age of 60 years for retirement. Not to shabby! Or another example from the book if you invested $464 into a different index fund (Roth caps out at normally $5000 a year or $10k if you are married) from the age 25 to 65 you would have $5,448,854.45.

This book is not about getting rich quick and it's not about being adventurous and opening up a business. Anyone, seriously, anyone can do this... You just have to throw your pride away and really do it. It will probably be painful making the transition to living within your means and people will probably tease you because you aren't spending money as frivolously as they are. But I guarantee you if you read this book and take Ramsey's words to heart, you will change your life forever. You will have a wonderful retirement, your kid's college will be paid for, and you will have money to really have fun with."


There is so much good information in that post. Until you get your finances straightened out with eliminating debt and budgeting accordingly, you can't do the fun stuff like investing in real estate or trying out some other paper assets. More than anything, I encourage you to ask me or someone for help if you need it. Financial education is a very difficult subject to grasp if you have no formal education on the subject, which most people don't. Here is the tools page from Dave Ramsey's website http://www.daveramsey.com/category/tools/, it has all kinds of great information to help out as well.  As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.




Saturday, July 10, 2010

The Present...


The book of the week was The Present by Spencer Johnson. This is another quick read written by Johnson... Fictitious stories conveying a great idea. This one is about maintaining a good mental focus on life and using it to stay happy.

The story was about a boy and an old man. The old man is a mentor to the boy and guides him through his life using his life philosophies. The story is just that simple... and the philosophies go like this:

Be Present- Focus on what is right now. Use your purpose to respond to what is important now.

Learn from the Past- Look at what happened in the past. Learn something valuable from it. Do things differently in the Present.

Plan for the Future- See what a wonderful future would look like. Make plans to help it happen. Put you plan into action in the Present.

All these things seem so simple, but sometimes the simplest idea is the one that we overlook. I have been thinking a lot about this subject lately. I had a big old master plan based on my current living situation and now my living situation is changing.  I would say the most disappointing thing is that I felt like I was unable to make long-term plans. Then this week I was hit with some wisdom from a friend when talking about this very subject. He said "Plan to depend." I have been thinking a lot about it... I am a religious man and I have been thinking about that phrase. I now have a newer outlook on planning.. I will now make plans to depend on God. I will still make plans, but I will make plans with more adaptability depending on where he needs me.

So how does this change the way I make my plans? In the future I will be making my plans with sub-plans. For instance, if I am living in Colorado and I make a few commercial real estate purchases I will make plans to cover me if I have to move to New York. This can be done by lining up property management companies if you are self-managing or having potential buyers in place in case you want to do a complete liquidation. This whole concept really makes the tie between both of Johnson's books; Who Moved My Cheese and The Present. Understand change will happen and then adapt to it... while at the same time living in the Present and learning from past experiences to do better in the future.

There is a lot of places I can go with this subject, but the most important thing to realize is to focus on today, this will keep you happy and less stressed. Today is the only thing you can control... You can't control the mistakes you've made in the past and you can't completely control where you'll be 5 years from now. Just do your best at everything you do today, in the Present. Now, I don't want to discourage anyone from planning because it might not happen precisely how you envision it... it's still very important to plan, but instead of having your plan be the end-all-be-all... "plan to depend."

This book is a quick and easy read, and I think it's worth while picking up. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

Saturday, July 3, 2010

Crucial Conversations...


The book of the week was Crucial Conversations by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler. A very good book! There are all types of great tips and tricks to make communication happen and happen successfully.

It's not just a coincidence that the individuals that get the promotions are the individuals that are unanimously chosen by their peers and colleagues as fantastic communicators. If you can communicate effectively then you are able to get things done right while utilizing the least amount of time possible. And in any organization, time equals money. In addition to being able to get things done quickly, great communicators are also able to harness the creativity of everyone on their team. They bring the group together by keeping the focus on the goal and constantly have focus on the big picture outlook of the conversations to prod ideas.

This book was really interesting. There is a lot of information packed into its pages too.. However, I would like to focus on one area specifically- what makes conversations "difficult." This book had an interesting causation outlined at the beginning of the book and made many points to come back to it. The cause to conversations becoming difficult is that in those difficult conversations we are not able to use reason or logic. Bare with me.. When conversations get tense or if a person is passionate about an idea or if someone is nervous about the outcome of bringing up an idea our physiology changes. It all reverts back to the times of our ancestors, if they felt challenged they had two choices... run or fight. We still have the same base "caveman like" brain functions in certain events. When we get tense in a conversation the blood flows from the logic and reason portion of our brain to the fight or run side of our brain. Additionally, the little glands above the kidneys start pumping adrenalin into the blood stream, so our muscles tense up, our heart starts beating fast and you'll even notice some people have noticeable redness in their necks and faces. It is a very difficult thing to think with reason and logic when our body and brain can only focus on slugging someone to ground.

We have an incredible obstacle to overcome. But!... Now that you know what it is you can look upon yourself from the outside and notice these changes and focus on what is really happening. The most effective way of coming out of this aggression mode is to verbalize the goals of the conversation. Verbalizing things will change your physiology as well. When you tell yourself- "My goal is to ask my boss for a raise, and have a conversation about what I have to do and on what timeline I will be working on to reach my goal"- Your brain say "hold on, hold on... we aren't running or fighting, we are just trying to have a conversation about getting a raise. Call off the big guns" You'll still be nervous, sure, but you will be able to think more clearly and articulate yourself much better.

When it comes down to it, the best way to handle difficult conversations is to focus on whole picture as unbiased as possible. Who am I in this scenario?, Who is the other person?, What is the goal of this conversation?, Is it reasonable for us to talk about this?.... Ask yourself big questions and be honest with yourself and the other person. The more comfortable you are having crucial conversations, the more valuable you will be to your organization and the more successful you'll be in life.

This book is about a very important subject. Whether you read this book or use some other form of media to learn about communicating effectively, just make sure you do it. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.