BiggerPockets

A Winning Attitude – Key to Your Success

Monday, July 18

Many years ago, Henry Ford uttered the immortal words: “Some people succeed because they are destined to, but most people succeed because they are determined to.”  Inspiring expressions such as that from Mr. Ford can cause us to reflect our own attitudes and perspectives.  What about yours?
 
I am in dialogue nearly every day with highly anxious Boomers who see the world changing in front of their eyes.  Many feel less and less useful in today’s high-tech climate.  Boomers everywhere are increasingly stressed over ageism in the workplace.  They are tired of watching their fleeting retirement plans passing away.  So, what are you going to do about, yourself?
 
There are three experiences I want to share with you.  All of them come from the music industry.  If you’re a Boomer, it will mean even more to you.  The first is that of Diana Ross and the Supremes.  Did you know that their first 9 records bombed?  It wasn’t until their tenth album that they made fame.
 
Then there was the young singer who was told (by the Manager of the Grand Ole Opry) after his very first performance: “You ain’t going nowhere, son.  You ought to go back to driving a truck.”  That was Elvis Presley.  Ever heard of him?  Finally, the Beatles were rejected by a major record company with the words: “We don’t like (your) sound, and guitar music is on the way out.”
 
Now let’s look at the lesson we learn from these Entrepreneurs.  In all three cases, they had every confidence that they could succeed.  The truly effective part of each story is that they kept on it!
 
Let’s put this into perspective.  If you are a Boomer, you have made mistakes; true?  Of course.  In fact, you have probably learned a great deal from those mistakes.  Now, if you are faced with the challenge of starting a new business, you must be prepared to make even more mistakes.  This is part of the strategy I preach called “taking massive action.”  As New York Times bestselling Author, Harvey Mackay states it: “If we want to triple our success ratio…we might have to triple our failure rate.”
 
Do not allow past failed business attempts to sway you from your mission.  With all of your years of life experience you are better equipped than the kid competing with you for the business.  Youth tends to be impulsive and (like us when we were kids) they will have to make many of the same mistakes.  You have the advantage!  Hold your head up and stick your chest out.  Carry yourself with confidence and you will find yourself attracting more people to your business.

Here’s One REI Improvement That’s Worth Doing

Tuesday, June 28

In this series, I have been discussing specific ways in which the savvy real estate investing entrepreneur can maximize his/her profits through the rehab process.  We have discussed the folly of over-improving an investment property.  As a real estate mentor I usually advise my students to choose repair over replacement whenever possible.  There are, of course, exceptions.  When a feature costs more to repair, has become obsolete or outdated, and is inefficient it is likely good to explore alternate methods.

We must remember that over the years, architectural standards have changed…often for the better.  One area that this applies is in kitchen work surfaces.  Yes.  Counter tops are often a focal point when showing a home to prospective buyers.  How often have you seen “granite counters” in the Realtors comments as a “plus” for a retail listing?    In the last decade, the cost of natural stone slabs has come down exponentially so that many landlords now feature stone in their rentals.  I do.

There are direct importers in most metropolitan areas across the country, who offers a nice selection of pre-fabricated slabs in their huge warehouses.  These can be found in 8’, 9’, and even 10’ lengths depending on the type of stone.  They are pre-cut with a standard bull nose finished edge.  Usually for a $20.00 up charge you can get a right or left return finished edge as well.   Also, 4” or 7” matching back-splash stock is available.  Many offer free delivery, too.

What I like is that some stone selections have an available 36” wide bar top with 3 finished edges.  In some cases it may pay to reconfigure the kitchen to accommodate the cheap stone acquisitions.  Either way, if you’re smart, you can often buy pieces that reduce the complexity of installation.  I have been doing that for some time so that now I have my Painter do my installs.  It’s that simple.

A typical galley kitchen can be completely done for under $800.00 labor and materials.  Obviously, some kitchens require more.  The point is that for a small price you can get more “bang for your buck” by including this upgraded feature in a simple fix and flip.  In many cases, the home does not need to be on the higher end of value.  The funny thing is that the cost to replace an inferior counter top material isn’t much cheaper!

Consider this cost-effective improvement on your next project.  This represents a huge improvement in the value of your investment property.  Nevertheless, if you acquire a home with plastic laminate counters in pristine shape, the course of wisdom could be for you to leave it alone and let the new homeowner make their own choices…or not.  When considering whether or not to repair or replace, I generally follow the rule:  “If it ain’t broke, don’t fix it.”

 

Let’s Talk About Flooring

Thursday, June 09

Let’s talk about flooring.  One nice thing about figuring costs on flooring is that when an entire house needs it, we can quickly multiply the square footage by a predetermined “price per sq. ft.” number.  This especially comes in handy when we are pressed to come up with an offer price because it simply doesn’t take a lot of time.

As I stated in my article Real Estate Investing Rehab Tip #7, a good real estate mentor would encourage repair over replacement whenever possible.  Flooring is one of the exceptions to that rule.  This is primarily true when there is a textile floor covering (carpet).  Carpet retains dirt, not only that which is visible, but odorous.  Try and sell a home to a retail buyer that smells bad!

With few exceptions, there are basically 4 types of floor materials that meet the accepted standard for today’s home.  They are:

• Carpet
• Ceramic Tile/Stone
• Linoleum
• Laminate (simulated hardwood)

In many U.S. communities, carpet is a preference.  This is especially true in the bedroom.  The other three on the list are more resilient and most often used in bathrooms and kitchens.

While tile of all sorts is often attractive and wears like iron, for real estate investment purposes, is too costly and cannot be completed in one day.  It often involves 1 or 2 return trips.  From both a labor and material standpoint, tile is prohibitive and (in most cases) I don’t recommend it for the investor.

Linoleum is commonly used in kitchens and baths, yet its’ downfall is that is can rip and stain.  It is also a problem by the bathtub as it can delaminate from exposure to excess water.  I say:  If it’s there and in good condition, leave it.”

Over the last 15 years or so a variety of simulated-wood flooring products have come to us.  I believe the concept originated, or was at least refined, in Scandinavia.  Now, thanks to free enterprise, there are a plethora of knock-offs at a very attractive price point.  It is possible to procure laminate flooring less than $9.00 per sq. yard.  Compared to carpet, the price is competitive and its’ lifespan should out live carpet by a long shot!

Other advantages include:

• 1-day installation
• No special tools required
• No special skills required

A word of caution: Avoid purchasing the special trim pieces.  This is where they make their profits!  It may be cheaper to replace the baseboards altogether.  Many times, as in older homes, baseboards could use some improvement and the pre-primed fiber-board baseboard stock available at your local home-improvement center is really rather cheap.  If the project moves to this extent, it will look stunning when you’re done!  This may be an improvement that proves to be well worth the investment.

 

When Does it Pay to Replace rather Than Repair?

Monday, June 06

The world of real estate investment is full of subtle nuances that can yield handsome profits, if handled intelligently.  The flip side is that we may lose everything without properly regulating our spending on a “fixer.”  One of the reasons I am recognized as one of the nation’s most effective real estate mentors is the fact that I have made my share of mistakes and I have learned some valuable lessons from these.

I cringe when I see novice real estate investors remodeling a house on a street that doesn’t deserve that kind of attention.  This is called over-improvement and is a very costly mistake.  That’s why it pays to know your market and the neighborhood where you buy.

I always try to help my students see the need to “rehab” rather than “remodel.”  Rehabbing is more closely associated with repairs than replacement.  There are, however, times when replacement is more cost effective than repairing an old or outdated fixture.

The following 3 reasons are:

    * When the cost of repairs exceed reasonable replacement
    * When the perceived value of the property increases due to an upgrade
    * When yours is the only house on the block w/o (energy efficient windows)

In my real estate mentor program I advocate never over-improving a property.  It would be tantamount to throwing your money in the trash.  Each and every rehab decision must pencil out and NEVER be based on an emotional impulse or personal taste.

I will be discussing more specific types of improvements that are fiscally responsible in subsequent articles.  For now, a good rule of thumb is to repair when possible, and only replace when it makes sense.

 

Will Real Estate Investing ever be the same again?

Friday, October 01

       Left under the ominous shadow of the megabanks is the bruised and tattered small real estate investor.  The large lending institutions have brutalized the businesses of many small investors who were only out to turn a modest profit from turning a polished property…something the banks wouldn’t typically do.

It used to be that whenever we would hear about an REO we would get excited.  Since they were so uncommon an investor would feel like they had struck gold….not any more, though!   The term “REO” represents more of a retail proposition rather than a bargain.  Lenders have been flexing their muscles and held out far longer than logic would dictate until the market stagnated to the demise of the industry as a whole.  I personally know once-successful Realtors® who have been forced to file bankruptcy as a result of the stranglehold the lenders have placed on their escrows.  Repeatedly, escrows fall off and they need to start over again.

From my experience and continued research, I can confidently claim that without the investor, the real estate market would be an entirely different ball game.  Over the last 2 years it has been the investor that has kept the market somewhat alive.  There is still a large segment of the buying public who will not touch a home that is not in pristine shape.  That’s just human nature.

One of the ways my team has fought back is by making things happen with private money.  This is, in fact, a productive way of profitably operating our REI business while boycotting the Godzilla-like banks who leave a wake of devastation everywhere they go.  Private money has helped many of my students and clients to make things happen quickly and without sterling credit.

Of course, as a leading real estate mentor, I teach and employ a proprietary system in which we can get around the lender-generated mine fields.  We could stay and cry about the changes being made or we can be proactive and change with the times.  In my company, we have chosen the latter.

Real estate investing will never be the same, but does it ever remain the same?  No.  Like every industry, there are always changes-some good/some bad.  Nevertheless, the wise investor will roll with the punches.  This is a great reason why buying many of the REI programs out there isn’t wise.  Methods don’t last forever, so get a qualified mentor with decades of experience who can adjust with the changes the market brings.  Be open-minded and ready to make changes yourself.  Only the strong survive!

 

 

C.J. Lauria

Founder of Invesdoor^TM 

www.invesdoor.com

916/419.3442 office

916/206.3442 cell

 

"Attitude is Everything" 

 

My Advice to the Wise Investor

Thursday, September 16

 

 The American housing market may have officially crossed the line from correction to stabilization. Historically, after stabilization the phases are recovery and revival. All entrepreneurs should take a close look at real estate investment opportunities over the next few years, since this is when the money is really made.

As you can imagine, timing the real estate cycle is critical to achieving big returns on investment. Of course, there are other strategic objectives like picking winning markets, purchasing investment properties, increasing value by rehabbing the property, maximizing cash flow in any market and more. This article, though, is dedicated to the market cycle, how it works and where we are in it.

Visualizing the cycle in its entirety is the easiest way to grasp its predictability. But in order to see the pattern you have to zoom way out and see the forest through the trees, as it were, because one pulse in investment properties takes 12 to 15 years.

Now, consider the following two cycles of median home prices. The first, from 1983 to 1996, started with the economy in rough shape. Then an economic boom pulled real estate and the Dow index way up. It was a big party, everyone was making money, and then banks got a little crazy with their lending standards and the whole thing went off the rails — stock market crash, massive bank failure, real estate market correction and a serious recession. You know the rest of the story.

In summer of 2009 I predicted values to hit bottom in summer 2010 and stay flat for five years, only to go back up significantly when tax-cutting becomes the policy and the economy booms again.  Note that price point will play a crucial role in recovery.  Entry level housing will see recovery long before the luxury home market sees the light of day.  Some markets across the country will emerge much sooner than others.

The good news is that it’s pre-boom all over again. The better news is that now you are aware of it at a very early point, so it’s the perfect storm.  And the best news is you have plenty of time to get your assets in gear and take a position.

You don’t have any liquid assets at present?  Your credit score is shot due to the impact of the recession?  You fear taking that leap back into the REI market because of the unknown?  Then you probably need to speak to a real estate mentor.  I suggest you check out the Mentor for Life business plan that I put together with my awesome team.  It may just be your answer to the foregoing questions.

 C.J. Lauria

Founder of Invesdoor^TM 

www.invesdoor.com

916/419.3442 office

916/206.3442 cell

 

"Attitude is Everything"