. . . and we thought the Freedom Tower was going to be tall . . .

It is always fun to preview cool architectural achievements around the world! We’ve covered everything from the world’s smallest apartment to the coolest architectural projects in the middle east (includes the then proposed-tallest building in the world) to the world’s largest building (proposed in Moscow - slated to dwarf the Pentagon).

Once again, we’ve learned of a building that is slated to make the competition cry tears of inadequacy . . .

The Daily Mail reported today that Saudi Prince al-Walid bin Talal, one of the richest men on Earth, has unveiled plans to build a tower that will be 1 mile tall (5,280 feet) in Jeddah, Saudi Arabia - dubbed the Mile-High Tower.

Photo Courtesy of The Daily Mail

This building, expected to cost £5billion ($10 billion US), if completed, will be more than twice as tall as any planned or completed skyscraper on Earth . . . talk about ambitious!

“Experts say the technical challenges are enormous. Much of the lifting will be carried out by helicopters, which will also be used as commuter transport for builders. The tower will have to be capable of withstanding a wide range of temperatures, with its top baking in the desert sun by day but dropping to well below freezing at night. To resist the strong winds prevalent in the area and stop it swaying, giving its occupants a form of high-rise seasickness, it will be fitted with a giant computer-operated damper. “

Dramamine, anyone?

The Concept

In looking into the concept a bit more, I discovered some insight from SkyScraperPage.com: “Exploring urban issues facing 21st century, The Mile High Tower offers a fresh perspective on an idea that has been debated by architects for a century”1 mile =1600 M . Exploding land values, growing populations and expanding economies are placing extraordinary burdens on many culturally rich, but land deprived Asian regions. In response to these pressures we have proposed a vertical city. In conceiving the tower as a vertical city, the design team has integrated technological, architectural and urban planning strategies into a single structure that breathes with urban complexity. The scale of the building and the scope of the program force the reevaluation of current skyscraper precedents for form, purpose, infrastructure, transportation, structure, and sustainability.”

Pay close attention to the rendering below. To the right of the tower stands a scale size Petronas Towers, one of the current leaders in tall construction . . . Petronas is dwarfed by the Saudi model!

Artist rendering below:

Mile-High Tower compared to other skyscrapers in the Middle-East:

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Tags: Architecture, dubai, Jeddah, Mile-High Tower, Prince al-Walid bin Talal, saudi arabia, skyscraper, tallest, tallest building, tower

Could you imagine driving by a bad car wreck without looking? Could you imagine other drivers whizzing by without gawking at the carnage? Neither can I. Yet, that is exactly what seems to be happening with the economy. Sure, everyone knows about the foreclosure mess and mortgage crisis because the news outlets feast on these stories. But what about the other things that are going on?

Bear Stearns

Bear Stearns was one of the major players in the mortgage and credit debacle. At one point the company’s stock was selling for over $170 per share. On March 12^th the stock was at $57 per share. The following weekend the government agreed to make $2.4 billion in loan guarantees to keep the company afloat. That Sunday it announced that it had arranged a takeover by JP Morgan Chase for $2 per share. This economic news was absolutely stunning.

Looking for the latest on the situation that night, I tuned in the local 10 O’clock news. I was sure that this would be the lead story. Not a word. It was just the usual drivel about car accidents, robberies and a murder or two. Granted, those are serious happenings if it involves you or a loved one, but the economic news affects us all. I surfed through the other channels and could find nothing. It was news on CNN and Fox News, but nothing at all on the local networks. It was as if this had no significance whatsoever.

Ignorance Is Bliss

Most people seem to walk around with blinders on. If something doesn’t affect them directly they ignore it. Politicians know this and that is why they make ridiculous promises that they can’t possibly keep. People just want to know what they are getting, not what it is going to cost. I hear people talking about the stimulus check and when they are going to get them. You don’t hear any talk about the long-term consequences of the Government taking on more debt to pay for those checks.

The light at the end of the tunnel is an oncoming train. The National Debt keeps getting larger. Most people are unaware of the biggest Government scam of all. The Social Security Trust Fund is nothing more than a stack of IOUs. Social Security runs a surplus every year, which is used to fund the Government’s insatiable need for cash. That house of cards is due to come crashing down sooner rather than later. With all of the baby boomers retiring, Social Security is expected to go from an annual surplus to an annual deficit in about ten years. This means that not only will the money no longer be available to feed the Government’s spending machine, more money will be needed to pay for the retirement checks.

Where Will The Money Come From?

I clearly recall my grandmother telling me stories of living in Germany after World War One. When Germany lost the war they were required to pay an enormous amount of money to the victorious nations. The German economy couldn’t come close to raising the capital needed for the payments. The solution? The German Government just printed more money. It reached the point where the currency was practically worthless. My grandmother told me how the workers were paid twice a day because the currency was devaluing so fast. The women would collect the money and rush to the food stores where a loaf of bread would cost a bag full of money. This rampant inflation caused political unrest, which ultimately caused the Government to collapse.

Here in the United States we are nearing another Presidential Election. The candidates all talk about change. My fear is that it will just be more of the same. We can’t keep robbing Peter to pay Paul. Some hard choices need to be made. As individuals we need to pay more attention to what is happening around us. I am reminded of the saying that states “there are those who make it happen, some who watch it happen, and others who wonder what happened.”

Tags: debt, deficit, Economy, real estate, social security, sub-prime crisis, subprime

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

- Theodore Roosevelt

Since my last few posts offered stories of hard times on real estate investors using FHA on this end of the country and those who are lacking serious attention to detail, I wanted to change the tune for a quick second. Theodore Roosevelt makes an excellent point about to whom credit is due. We, real estate investors, are the men/women in the arena and we are carrying the housing market’s purchase and sale activity. The opinions and negativity of friends, colleagues, and associates has no place with us. The sad part about success and failure is that most people enjoy seeing you fail or subconsciously would like to be doing better than you are. It is a mindset that comes most natural but must change. Through experience, we know that there is no perfect deal and no perfect acquisition process.

Everyone on this side of the real estate industry is at war. The major example is when someone asks you what you do for a living and your answer is, “I’m a real estate investor.” Their tone quickly changes to, “…but the market is kind of…right” We immediately move into a mode of defense to protect our industry and what it contributes to our communities. In country that is run on the “fear” of an event or an epidemic, we are constantly in verbal quarrel with spectators. Now is our time to ignore what is being said, and buy more than we usually would.

So for those of you who may be in a bad month or two, no problem at all. You are the man/woman in the arena. Your victory is in the courage to continue to remain active in the dream of owning a piece or even pieces of America. Things are never as good as they seem or AS BAD.

Blessings to your Real Estate Investing Successes,

Milton B. Yates

Tags: real estate investing

We’ve got a wonderful interview for everyone today! Christian Malesic is a relatively new member to BiggerPockets, but in that short time, has given quite a bit of himself to help others out! His knowledge, enthusiasm, and energy is captivating, and I thought we ought to find out more about the man. Christian focuses primarily on a buy and hold investing strategy in the Central Pennsylvania area.

Meet Real Estate Investor Christian Malesic

How long have you been investing in real estate?
Round 1 went from 1994 to 2002. Round 2 started in 2006 and is gaining momentum everyday.

While studying Electrical Engineering at Lehigh University in Bethlehem, PA, I was an Air Force cadet with dreams of becoming a career officer and a leader among men. I excelled as a cadet and was a better than average engineering student, especially in digital systems and computer hardware & software, which made me a highly desirable Air Force asset. Partly due to this, but mainly due to our like-minded approach to life and leadership, the Commandant of Cadets took me under his wing. I learned much under his tutelage; the most appropriate to this discussion being (I paraphrase here):

Purchase a home at every duty station. Live in it. Rent it out when Uncle moves you along. Your tenants will pay off the mortgage.

I fully planned on implementing this wealth strategy at my first assignment to Minot AFB, ND in 1992. There was little to nothing for sale, no new construction, and rent was extremely low. I rented a nice 1 bedroom house with a decent yard and a two car garage for around $350 per month. I studied up and began planning for the next assignment.

I purchase my first single family dwelling in 1994, a three bedroom with two bath house on a _ acre in a suburban neighborhood in Palm Bay, FL.

I kept this property for almost 10 years as my life changed. I decided that almost 6 years in the service of my country was more than my ‘duty’ and promoted myself to ‘civilian’ to start my own construction company back home in Harrisburg, PA.

What attracted you to becoming a real estate investor?
My father – plain and simple - was my inspiration and both parents are still my biggest fans. Dad spent countless hours attending REI seminars, reading, and mostly talking about investing. He had grand plans that he would lay out for me in the wee hours of the night when the rest of the world was asleep. He never pulled the trigger. Still, he is a great success; especially if your measuring stick is the education he gave to his sons.

Are you a full time or part time investor?
By the book I am a part time investor. As of this writing we hold 28 rental units in 14 properties.

How did you get started investing?
Round 2 (see previous for Round 1). My brother and I own our electrical contracting firm together and work very closely everyday. We had researched and debated for years that a REI company would be the perfect compliment to our electrical business.

What’s more, since we are our own bosses, we could do whatever management the REI company needed whenever we felt moved. Thus, the REI company would not necessarily be serviced only in the evenings or on weekends, but rather whenever we could work it into the daily grind. Now that it is a reality, I do it just as planned. Even though the two companies are separate and distinct, my work flow during the day passes through both, in and out, almost without differentiation.

Tell Us About Your First Deal . . .
Round 2. We had spent years preparing… actually our whole lives at the foot of dear old dad. I had learned some previous lessons. We decided to get serious. We lined up financing, planned our strategy for rehab or remodel, started accounts with construction supply vendors, and started looking. Then it happened…

Benjamin Franklin: “the harder I work, the luckier I get.”

We bought a city property. The deal: half of a brick, three story duplex for $25,000. An old man had lived there for years and his Power of Attorney was now moving him to assisted living. It was not abused, but had not been maintained for decades either. It needed work. The owner (POA) allowed us to start removing the man’s discarded things before the settlement. We knew this was risky as the deal could fall through and we would ‘lose’ all of the labor we did. But it panned out.

A neighbor from two doors down approached us three days before our settlement (we did not own the property yet) asking if we owned the property. Hesitantly, we answered that we were buy and hold investors and planned on fixing it up and renting it out. He wanted to know if we would consider selling as-is, stop work ASAP, and let his friend see the place in about and hour. He mentioned a price of around $50k (remember we had paid, or were about to pay in three days $25k plus closing costs). Long story short, we literally went from the closing table to his house three days later to sign a contract (of course, we could not sign a contract before we even owned the property). We cleared $18,500 on that first deal and did only a few hours of clean-out labor.

We got lucky… or worked hard (depending on if you were observing from the outside or were us working the long hours away from our families in the evening and weekends for weeks on end to get ourselves prepared for this new venture.)

What is your focus?
Buy and Hold residential. We rent clean, updated, nice apartments to upper lower class or lower middle class people. We often hear perspective tenants say that ours are the nicest apartments they have seen in all the time they have been looking. We like that. We are building a reputation and have begun to brand ourselves.

Do you prefer the residential side or commercial side of investing? Why?
Residential. Our experience with commercial is limited. We purchased an office building for our electrical firm with HUGE growth potential on one acre along a busy street in a great growth area. Other than that we have done nothing other than walk from less-than-desirable commercial opportunities, though we continue to review them.

What do you look for in an investment?
As Buy and Hold investors, we think long term. Cash Flow is King, but… We are sometimes willing to sacrifice cash flow for an “add to inventory property” (one that cash flows neutral or small positive) if it is in the right shape in the right geographical area.

How many deals have you done in your career?
As of 21 Mar 08 - Completed deals in the business name only: 17 buys and 3 sells. Adding my Round 1 property and our personal homes, it jumps slightly to 21 buys and 5 sells. I am still a newbie, which is why I am profoundly honored to be chosen for this Meet the Investor interview.

Do you have your real estate license?
I do not. My wife does. She became an agent at the beginning of 2007 and serves mostly one client – me. This was / is our strategy. I have written on this in a BiggerPockets thread entitled, “Don’t Rely on Agents, Become One” in the General Real Estate Investing forum on 12 Mar 08. Check it out.

What advice would you give to a beginning investor?
JUST DO IT! It literally took decades for the Malesic clan to get off our collective butts and get out there. Don’t do as we did, do as I say. I learned more in the first year of actually being a REI than I learned from all the books, tapes, forums, meetings, and talks with dad. Start small. Do not buy 12 or 7 or even 2. Get one and work it through. Learn. Make your mistakes. Come here for advice. Recover. Then, my friend, then you are ready to own the world.

What was your toughest deal?
In glass-is-half-empty-thinking: every deal is tough. I know that sounds like an end-around, but I do not mean it as such. Every deal is about controlling all of the time-tables. Every deal is about reminding everyone to DO THEIR JOB. Every deal is about padding suspense dates so when they are missed it does not mess up the deal. We have gotten good at it.

There is something that I keep in mind every deal at the eleventh hour when we are making it all happen. As soon as the deal is done, the deal is done. “We may never see these folks again once we close,” I say to our team. I try not to ever let it get to me. I keep a smile with my chin held high, stay professional, roll up my sleeves, and get to work. So, I guess you could think glass-is-half-full in that every done deal is a good deal.

What would your dream deal be?
A deal that goes smooth. I sign the contract at the beginning and the paperwork at the end (closing). Everyone else does their job and gets paid. Done Deal. Win for us. Win for the Buyer / Seller. Win for all of the folks helping us to do the transaction. Win - Win - Win. That is business, American style (all winners, no losers).

Do you have any thoughts about the current state of the real estate marketplace or economy?
It sure seems as though the perfect buying storm is headed our way. Sellers and flippers beware! I am taking advantage of the current economic climate to hunker down, ensure the fundamentals of my business are sound, and prepare to buy the heck out of my target market in the very near future.

Is there anything else you’d like to share with the rest of us?
It is difficult to go it alone and expect that you have the talent, personality, education, and perseverance to do EVERY PART of this business. It may not be possible for some, but where it is – get a partner.

My brother is our Construction Manger. He estimates and manages rehabs, repairs, and remodeling. He does the small maintenance himself and manages the contractors for the larger jobs.

My sister-in-law is our Property Manager. She handles tenant relations; that is: showings, lease paperwork, complaints, evictions, etc.

My wife is our Bookkeeper and Office Manager. She does the filing, research, and general paperwork as well as enters in the bills, receipts, and rents. She works with deposits, withdraws, and general banking.

I am the President / CEO. I do everything else. I buy and sell, which includes all negotiations, paperwork, and closings. I work with the accountant, insurance broker, and lawyer. I network.

We are all different and so should be our jobs. Keep this in mind as you are formulating your company or growing it.

Finally, in a bit of self promotion, I wanted to ask what do you think about BiggerPockets.com?
Even though I am a relatively new investor, I do consider myself ‘advanced’. I have: a college education, tons of experience with construction, lots of management background, am a fast study, and just can’t get enough (sorry to brag).

It was not until I found BiggerPockets that I found myself among others like myself. It is an environment that is honing my skills everyday. I am glad to play a small part.

Tags: buy and hold, landlord, real estate, real estate guru, real estate investing, real estate investor, real-estate-deals

Need an incentive to help move a home?

The answer is PITI Abatment. Do not let the financial jargon scare you. For years production builders have used this incentive to move inventory. Now every seller/investor has the opportunity to participate.

What is PITI Abatement?

• An incentive to the buyer to have the first 6 months of the mortgage paid by the seller/investor.
• PITI Abatement program is a product designed specifically for home-buyers. You can give a 6% Seller Contribution that can be used for Principle, Interest, Taxes and Insurance payments.

What are the General Guidelines?

• Loan amounts up to $417,000
• Up to 100% of the purchase price in some markets
• Minimum score of 575
• Fixed Rates and ARMs
• Interest Only is available
• Income limitations may apply
• Closing costs can be paid by seller too
• No prepay penalty

What is the Realtor or Investor marketing element?

• 6 MONTHS PAID!
• BUY THIS HOME AND I WILL PAY YOUR FIRST 6 PAYMENTS
• 6 MONTH PAID MORTGAGE INCENTIVE
• BUY MY HOME AND I PAY CLOSING COST AND 6 PAYMENTS

In today’s real estate market investors need all the help they can get. With increased inventory in just about every market place, realtors and investors need to use unconventional tools to create benefits for their potential buyers. I have seen cars, furniture, pools, and televisions given away. But those items can be difficult to include in the average investor transaction. Giving away 6 months of payments can create separation from the other sellers in your market place.

Tags: home for sale, home sale, investor, PITI Abatement, real estate, real estate investor, realtor, seller, selling home

During the heyday of the residential real estate market boom a few years ago many investors were exclaiming: “why should I hire a realtor to sell my property and give him 6% of the sales price when I can just as easily sell the property myself and keep that money in my own pocket?” This made a lot of sense at the time as residential houses were selling like hotcakes and all you had to do for marketing was to hold an open house. In fact, during those days, many sellers were actually getting offers ABOVE the asking price. Times have changed, and about 95% of commercial real estate sales are handled by licensed commercial real estate agents. In fact, there is not even a multiple listing service for commercial real estate sales. This means that unless you work with a licensed commercial real estate agent you won’t even access to or knowledge of the properties available for sale.

I recommend that the commercial real estate investor educate himself as much as possible before even contacting a commercial real estate agent. Commercial realtors are busy people and they normally work with a group of closely guarded buyers and sellers of commercial property. The beginning investor should want to be taken seriously from the start and the best way to accomplish this is to at least have some book knowledge of the subject before you begin.

The investor should look for a commercial real estate agent who specializes in the marketing, sales and listing of apartment buildings. Additionally, try to find a realtor who has gone through the intensive training and education to receive his or CCIM or Certified Commercial Investment Member designation. This certification ensures that you are working with a commercial realtor who has extensive experience and education in the investment aspects of commercial real estate. The knowledge of a CCIM certified realtor can help the beginning real estate investor save a lot of time and perhaps even make more money in the long run. You can search for a CCIM certified realtor in your particular geographic area on the CCIM website.

Tags: ccim, Commercial Real Estate, commercial real estate investment, commercial realtor

Just in case there was an oversight in your real estate investing plans in 2008; be sure to look toward Panama to buy land and build on it. The widening of the Panama Canal has been underway for over 6 months now and the real estate market is hotter than ever. With an estimated cost of $5 Billion and a delivery date 8 years from now; the opportunities are endless.

Dan Schlossberg of Consumer Affairs mentioned that “After consuming 10 years and 25,000 lives, the Panama Canal opened on Aug. 15, 1914.” I shouldn’t be the only investor that gets excited about those numbers. We figure with today’s equipment and construction technology; the number of employees being used falls shy of 25,000 but is still overpopulating the surrounding areas of the project. A shortage of rental housing in these areas can be addressed with the purchasing of land and the building of mid-size multi-family homes and/or apartment buildings. It is a dream come true even for a newbee investor. For 8 years there is a group of people who need somewhere to live close to this project. Most of these persons do not desire to own but are better suited as renters within the term of the delivery of the expanded Panama Canal.

It is still early and hopefully they will not launch a dual-citizenship drive similar to what Dubai is doing. I have investor clients and colleagues that purchased in Dubai 2 to 3 years ago with expenditures of less than $20,000. Dubai’s dual-citizenship marketing created a huge buzz among non-residents and before you knew it, several people were holding and/or flipping with GUARANTEED RETURN!!!! If you know what is good for your future money (the most important money), then you will certainly consider Panama as your next place for off shore real estate holdings.

Blessings to your Real Estate Investing Success,

Milton B. Yates

Tags: developing panama, foreign investing, international real estate, panama real estate, real estate investing