Hello from the metropolis of Cedar Crest, NM.

I am getting ready to take twenty kids from my youth group up to Durango, CO for the Christ In Youth Conference (www.CIY.com).  I think I am more excited than my high school kids are…..it is always a blast.  I am so grateful for commercial real estate because it allows me to do what I love to do….such as hang out with my youth group for a week long conference and go crazy (I can legally do this you know).

Anyway….Let’s talk doom and gloom….

Almost every article and blog on real estate is doom and gloom.  Forget real estate…almost every article on the economy is surreal and very scary.  It reminds me of the months before Y2K.  Remember Y2K?  If not….recall the panic starting in 1998 about how the whole world was going to turn the off switch because computer ‘date’ glitches.  Which may explain the year supply of beanie weenies and water in your garage. I remember how gas generator prices went through the roof.  Yes…I got caught up in all that too….not the beanie weenies….but the hype.  Is all this commotion just hype….or are we really heading into a disaster?

The fact of rice rationing, fuel prices, natural disasters, record breaking foreclosure rates, the sub prime crisis, Bear Sterns, etc….makes the future look rather dismal.  If history repeats itself (which it seems to always do…good and bad) then yes…it is going to get bad…then it is going to get worse.  But the one thing I have learned is that there are always survivors.  Actually, there will be a group of entrepreneurs that not only survive….but gain mass wealth in these troubled times.

Well…so what, Rob?

Well, there are going to be a number of things that this group of entrepreneurs will do (or currently doing) that will set them apart.  Instead of me writing about the Top Five Things You Can Do To Survive The Coming Storm…I am going to use some reverse psychology and tell you how to fail.  Why?  Well, because the 80/20 rule (Pareto) applies…so most investors will fail (pretty harsh huh?) and I am not immune to the failure I am writing about.  As a coach to many real estate students….I sometimes go by my own rule…”Do as I say, not as I do.”

So….here they are….Top Five Ways To Fail As A Commercial Real Estate Investor In The Coming Economic Storm (why only five?  Well…because there are about a hundred ways to fail…who will read that?)

1. Be over-leveraged

   Make sure that you are mortgage to the hilt on all your assets. This is a surefire way to make you scramble and panic as you come to the realization that you are upside down and if you sell…you will sell at a significant loss….  Even better….if you have any equity in your assets….leverage that too and buy more highly leveraged real estate.

2. Rely on your own inexperience

   Ignore your mentor’s advice…or better yet, do not get a mentor.  Mentors have a lot of advice based on experience.  If you want to make sure you fail.  Don’t get a mentor….and if you already paid for one…make sure you ignore his/her advice.  Don’t fall into the trap of being a student.  Your intelligence based on your inexperience is the best way to fail with flying colors.

3. Be Cheap

   Make sure and do not spend the cash for a great real estate attorney or an asset protection attorney.  This is a must if you plan to fail well.  If your spouse or “partner” is giving you hell about getting an attorney….buy a book “Legal Advice for Dummies” or better yet…sign up for pre-paid legal.  This way…you will still fail…but not fail fast.  Also…make sure you do your own taxes and bookkeeping.  CPAs and bookkeepers are for successful people….

4. Be a Lone Ranger

   If you hate to “network”…then failure is at your doorstep.  Make sure you are a loner and if you hate people….this is even better.  By no means should you build “wealth lifelines” with those that can help you succeed.  “Success breeds success” so say away from building relationships.  Of all the ways to fail…this, by far, is the most successful way to shoot yourself in the foot.

5. Don’t sell
   

   This is a great time to be greedy and hold out for your asking price.  Just because values are plummeting does not mean you should give in to lowering your price even though your are getting your return on your investment if you sell.  Most successful real estate investors are moving (or have moved) to a liquid (cash) position (getting ready to take advantage of plummeting values).  By no means should you sell anything you have.   Any equity you have will soon disappear and this my friends will help you owe more on your assets than what your assets are worth.  Most experts ( Robert Prechter, John Williams, Nouriel Roubinii, and Harry S. Dent) are ranting about how property values are going to go down the toilet.   Imagine selling your property today and buying it back at 40 - 60 cents on the dollar?  If they are right….then make sure you stay greedy.  The way to do this is to get emotionally tied to your properties…then your assets will be much more difficult to sell.

An Apology…..

Yes…I am being a drama queen and exaggerating everything….but there is a “nugget” here that I have learned and I hope to pass on to all of you.  I have had the honor of learning commercial real estate from some wildly successful people.  I have listened closely but in some cases I have not taken their advice.  Watch those that are doing well…the great ones do well in good markets and in bad ones.  See what they do and model them.  The great ones are in a liquid position because they sold when the market was buying high.  Now they are waiting to buy as the market plummets. Does the phrase “Buy low, sell high” ring a bell?  In some cases…it is that simple.

Until next time…….rob

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Tags: advice, Commercial Real Estate, commercial real estate investor, real estate, real estate blog, real estate leverage

The Launch of the BiggerPockets Blog

It all started 3 years ago today with a post titled “Real Estate Is Very Hot Investment” On March 13, 2005 I launched this blog about real estate, as an experiment to see if it would interest our BiggerPockets users.

3 Years Later, our BiggerPockets Blog known as Real Estate Investing for Real is often mentioned as one of the top real estate blogs online. In that time we’ve posted 622 articles and have had 2,873 comments (many thousands more if you include the spam we’ve had to delete).

I wanted to thank all of the people who have supported our blog over the years, all of our contributors, all of our subscribers, and finally, everyone who took the time to share their thoughts by commenting here on the site. This blog has undergone many different “phases,” and we’re still feeling our way around today, but we’re confident that we’ve done one thing throughout, and that is serve our readers with timely news, articles, and helpful information.

Blasts From the Past
I thought it might be fun to share a few of my favorite posts from the past few years . . . here’s a sampling:

1. BREAKING NEWS: Pinnacle Development Partners LLC Under Investigation - This article is so important to me because it allowed us to help spread the word about a terrible ponzi scheme with the world. Because of this article and our Pinnacle forum discussion we were able to help hundreds of people affected by this company. With close to 300,000 views and 1,500+ comments between the post and forum discussion, I’d have to say the impact of this article is as far reaching as anything else we’ve done throughout the years.
2. Top 35 Real Estate Blogs - In August of 2006, we thought it would be helpful to share what we felt were the top blogs in real estate. This post has been extremely popular, and over the years I’ve gotten a TON of complaints about non-inclusion. Many on the list are still around and would still be on a new list, but others would likely fail to make the grade today. We’re planning on releasing a 2008 edition of the top 35, and hopefully we can get this out ASAP.
3. How to handle a Real Estate Collapse - In June, 2005 I wrote about how to handle a potential real estate collapse. The market had been over-inflated for years by this time . . . I had been warning my friends since 2004 to get out while the going was good, but when I wrote this I had a terrible vibe that something bad was going to come of the Bubble. Fast forward to today and we can see the horrible ramifications of subprime and the housing run-up. I’m glad at least some people did listen and cashed out of their overpriced property when they could. Too bad millions and millions of others weren’t as lucky.
4. Top 10 Real Estate Lies of 2006 - I got a lot of flack for this post from realtors who thought I was being harsh. The fact is that many realtors do lie to convince their clients to buy or make other decisions and in 2006, this was plainly obvious to see. I couldn’t stop hearing about stories from people who had a sleazy real estate agent who tried to use a line to manipulate them. This post was a tribute to those scum-bags. The great thing about this post was that in the comments, a few of the readers helped to continue the list and we’re now at 35 lies. If we can get this one to 50 I may do a republishing . . .
5. Meet the Investor: Real Estate Investing Interview with Ryan Webber - This post marked the beginning of our feature, “Meet the Investor.” The interview was designed to help newer investors find some inspiration and learn from others who have been successful. We’ve since done quite a few investor interviews and are always looking for new people to interview. If you’re interested in joining the ranks, shoot me an email!
6. A Rental Property Management SNAFU Story - This post is important because, like the Pinnacle Development Partners article, it helped people who had been burned by a company to come together and get informed about the situation they were faced with. It was a very personal matter for me (as I was going through it myself), and I actually faced threats for writing it (and the ensuing follow-ups), but it was important for the 70+ landlords and hundreds of tenants and others who were affected just like me. Like the Pinnacle Discussion, we also set up a Whitener & Flynn Properties, LLC Management forum discussion to help those affected, and as a result, also created an area on the forums completely devoted to finding out about different real estate companies. The forum area is aptly named Ask About a Real Estate Company.
7. It’s Here - This article is so important because it marked the launch of our new Real Estate Social Network. Since launching a little over 2 months ago, close to 5,000 people have joined our site as members, and the feedback we’ve gotten has been incredible! This post is a great reminder for me of that day!

These posts mark just a small fraction of everything we’ve shared on this blog, and each post has been important for different reasons. We’ve now got 10 fantastic contributors who help to inform you all about anything and everything having to do with real estate, and I’m confident that we’ll continue to grow our readership and influence in the real estate world.

Thanks again for all of your support and I am excited to see what the next 3 years brings for us!

Our Readers Give Back

I thought it might be interesting to hear your thoughts on the past 3 years (or less for those new readers). Do you have a favorite post? Who are your favorite contributors? We’d love to get some of your thoughts on what we’ve done and what you’d like to see from our blog! Jump in and make a comment for all to see!

Tags: bigger pockets, biggerpockets, biggerpockets real estate social network, biggerpockets.com, josh dorkin, joshua-dorkin, real estate blog, real estate bloggers, real estate investing, real estate investing for real

I’m not sure about the rest of you, but this has been a LONG week for me. Personal issues aside, is seems like there is just so much happening in the world: Lunar Eclipse, US shoots down failing satellite, Kosovo declares independence, Castro steps down from leadership of Cuba, Ralph Nader is back, Clinton/Obama battle continues, McCain facing the heat, and on and on. Otherwise, for some reason, everyone I know is either in the midst of a battle with the flu, or some other ailment that no doctor can seem to figure out.

With that in mind, I thought we’d look at some of the important stories from other real estate bloggers out there:

• Is this the future of real estate search? - The Toronto Real Estate Intelligence Blog shares with everyone a new website called Rotten Neighbor which is designed to allow people to rate their neighbors so potential buyers can be aware of good or problem neighbors in their buying decisions. Frankly it seems like people could be asking for trouble with this one, IMO.
• Tax Shelter — Real Estate Investors Should Beware the Professional Investor Trap - The BawldGuy Talking blog presents a very thorough post that discusses the “benefit to successfully filing your tax return as a Professional Investor.” This is a Must Read!
• My Money Blog shares Subprime Loan Crisis Explained By Cartoon Stick Figures. This cartoon is the perfect analysis of how we got into the current situation that we’re in!
• According to The Real Estate Bloggers, it looks like Metal Roofs are making a comeback. I wasn’t aware of the trend . . . I’m sure I’m not alone!
• The Sacramento Real Estate Blog answers in a concise and easy to understand manner one of the questions every homeowner asks, What is Private Mortgage Insurance (PMI)?
• How Stimulating Will Raising the Conforming Loan Limit Be? - The 3 Oceans Real Estate blog takes a thorough look at how raising the conforming loan limit will truly stimulate the economy, and whether it’s really the right thing to do.

Tags: conforming, Economy, loans, mortgage insurance, neighbor, pmi, private mortgage insurance, real estate blog, real estate blogs, subprime, subprime loan, tax, tax shelter