To celebrate this year’s Winter Olympics, we strapped on our skis for a cross country trip to Vancouver (via our TV remote) to consider the excellence that is Olympic athletic competition – and to glean practical lessons which can be applied to an investor’s daily life.

In The Real Estate Guys™ bobsled for today’s broadcast:

• Your Pilot and Host, Robert Helms
• Brakeman and frostbite strategist, Russell Gray
• Sled owner and Godfather of Real Estate, Bob “that’s my sled” Helms

With a strong push from our engineer, we jumped into our seats behind the microphones and began our rapid descent into a lively discussion.  With so much to cover in so little time, the show took a lot of twists and turns.

Right out of the gate, we talked through the many parallels between the mindset of an athlete and that of an investor.  As each attempts greater achievement, each must deal with issues of distraction, fear, criticism, injuries, competition and all types of adversity.  How do gold medal athletes handle all this – and how does a real estate investor apply those same coping strategies to their efforts?

We also observed that desire, training and commitment aren’t enough.  To get to the highest levels, there are several other critical items top performers must have in place, including proper technique and strategy.  Pros make it looks easy, but they don’t win by hard work alone.   Bob shares a great real estate example of how quantity of effort is largely wasted if good technique isn’t employed.

We also noted that even those athletes competing in an individual sport still have a large number of people on their team – people who affect their physical, emotional, intellectual  and spiritual vitality and effectiveness.  The people and personalities an athlete surrounds himself with can be the difference between a trip to Disneyland with your face on a box of Wheaties – and just fading off to obscurity as an also ran.  The same is true with investing.  So who should an investor have on his team and how does he know they’re the right ones?

As the show progressed we picked up speed and delved into the role of external conditions.  An athlete can’t control the weather any more than an investor can control the economy.  When it’s our turn, we have to compete, no matter what the conditions.

We cross the finish line talking about the power of passion – and how it drives an athlete to push and sacrifice not just for glory and victory, but for the thrill of the sport.  The most successful real estate investors love the game. When you combine your passion with great technique, strategy, training and the right team – you may still not win – but you have a legitimate chance.  And the difference between a true competitor and a delusional dreamer is that a true competitor isn’t looking for a handout or an easy path, they are simply looking for a chance to compete and win.  As John F. Kennedy said when challenging the US to put a man on the moon, “We choose to do this not because it is easy, but because it is hard.”  Overcoming the internal and external obstacles is what makes victory sweet.

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But we’ll stand by that.  Bubbles don’t burst – at least not as long as whatever is underneath them is real.  And there isn’t much that’s more real than real estate.

So we say bubbles are squishy.  In fact, the term “bubble” (in the context of referring to a rapid run up of prices) is really a misnomer.  Better to say “balloon”.

When you squeeze a balloon, it squishes.  It comes out the sides or goes between your fingers; it just finds someplace else to go.

So you’ve heard that real estate prices have dropped.  There’s deflation.  Equity is gone.  Everyone’s underwater.  Life as we know it is over.  It’s real estate Armageddon.

Then you see (like we did) today’s Wall Street Journal article, “Hong Kong Land Sale Raises Worry of a Bubble”.

A bubble?  Didn’t it burst?

Well, no.  Actually, it squished.

According to the Wall Street Journal:

“Government officials here (Hong Kong) grapple with how to cool off overheating property prices”.

When’s the last time you heard “overheating” and “property prices” in the same sentence?  It almost seems like an oxymoron, like “reliable copier”.

Here’s another excerpt:

“The big (land purchase) came after (the real estate developer) sold 900 apartment units in a major new residential complex over the weekend for a total of  US$541 million.”

If you do the math, that’s over $600K per unit!  In ONE weekend.  We haven’t seen THAT in the US for awhile.

More…

“In China…home prices have risen as much as 25% in the past year and land values have doubled.”

That’s this past year, as in 2009.  You know, when US prices were in their third year of decline.

Now, consider where much of the money that fueled the US real estate bubble came from.  Get it?

The bubble squished.  But if your perspective is too narrow, you might think it burst.  Especially because that’s what everyone says.  And if you think bubbles burst, then you will quit the game and hide in your FDIC insured bank account.  Meanwhile, as the dollar crashes, you’re savings become worth less and less.

We have two main points:

First, real estate is an asset class unlike any other.  It’s real (permanent).  Gold and other commodities can also make this claim so, in and of itself, being real doesn’t make real estate utterly unique as an investment.

But, unlike virtually every other investment, real estate’s value is not universal.  Real estate values vary by markets and sub-markets, and those markets are global as we can clearly see.

Compare that to gold, which is also real.  If an ounce of gold is selling for $1200, it’s the same price all over the world.  There’s no squish, except to another asset class.

To really look at it right, you can’t think of real estate as an asset class.  You almost have to think of each property, or at least each market or sub-market, as an asset class.  So when one is down, another is up.  Squish.  Like stocks and bonds, gold and the dollar, etc.

But the big thing (our FAVORITE) that makes real estate unique, is that it can be financed with bank or private funding and debt serviced by tenants.  This makes it VERY conservative when structured properly.  Why?  Because even if the property declines in value, as long as it produces enough net operating income to amortize the loan (meaning the tenants are paying down your loan) some day it will be paid off.  Then it just generates cash flow forever.  That’s a beautiful thing.  Form that perspective, squish doesn’t matter that much.

Our second main point is that right now many people are forming new financial paradigms as a result of what they’re seeing and experiencing.  The people who lived through the Great Depression came out of it with very powerful convictions about how they viewed and handled money.  There were many great attitudes such as frugality, saving; and loyalty and appreciation for the opportunity to work.  We would all be better off by adopting these attitudes.

However, many of those same people missed out on some of the greatest opportunities in modern history because they brought a lot of fear and rigidity out of the trauma of the Depression.  Many people were hyper-conservative.

To be clear, we aren’t suggesting anyone should take risks they aren’t comfortable with.  And we aren’t criticizing anyone’s personal investment philosophy – no matter how conservative it might be.  We’re certainly more cautious about the risks we take these days.

We are merely suggesting to be mindful of the temptation to be hyper-conservative in terms of your willingness to be an investor.  If you won’t invest in your education or take time to investigate opportunity, you’ve probably decided “investing is too risky” and have effectively quit.  You think the bubble burst, the game is over, and there is no opportunity.  Or it’s so far off or you’re so out of position that you’re on investing sabbatical.   This is probably not you, or you wouldn’t be reading a blog like this.  But, there are lots of people who have quit – or are in various stages of quitting.  Make sure you know who you are and that you’re honest about it.

Now is a great time to be getting started (or re-started).  Talk to the people you know about real estate investing and see what they say – and watch what they do.  How are their attitudes changing as a result of the last three years?  What’s their game plan going forward?  Ask yourself those same questions.

Remember, squish happens.  As an investor, you want to pay attention to the flow of capital and try to be on the right side of squish.  And since you know squish happens, be sure to structure your deals to survive if you’re on the wrong end of it.   We’ll be talking more about this in the future.

Most of all, make sure you take the right lessons out of this Great Recession.  The right lessons are those that make you a better investor, not those that push you back to being merely a saver or a non-participating observer.  Invest in your education.  Investigate and evaluate opportunities.  Keep your head in the game, even if you’re on the sideline temporarily.

We’d love to hear from you!  Use our feedback page to tell us how this recession has affected your investing philosophy and strategy.  What are the people around you saying and doing?  Where do you see opportunity and why?  What are you doing to broaden your horizon, increase your education and increase your network?

In studio today to take a look at the State of Union in commercial real estate are:

• Your President and host, Robert Helms
• Co-host and teleprompter operator, Russell Gray
• Our Speaker of the House, the Godfather of Real Estate, Bob Helms

With so much focus on the residential real estate and mortgage markets, which is of much greater interest to the main street consumer and news outlets which cater to them, we thought it would be interesting to take a look at the commercial side of real estate.  Many observers think that there are dark days head for commercial properties, but what are the current trends?  More importantly, where are the best opportunities today and in the future?

We start out by taking a look at the sales and pricing trends in retail real estate.  What affect is the soft economy and subdued consumer spending having on retail occupancies, rents and cap rates?  Will money be available to purchase and refinance these properties?  Will there be buyers?  Inquiring minds want to know!

Sticking with the discussion of concerns about the availability of funding, we delve into a discussion of what’s happening in multi-family where government subsidized money has been plentiful.  With the pressure on Fannie Mae, will multi-family residential funding remain available?  What if it dries up?

Another side effect of a soft economy is financially weak or insolvent tenants.  Are commercial tenants starting to walk away from leases like homeowners are walking on upside down mortgages?  And how likely are they to accept rent increases?  It seems to be a tenant’s market right now.

Now there are lots of facets to commercial real estate and we can’t possibly cover them all in one show, so we decided to wrap up with some talk about office – and what’s happening to vacancy and rental rates in today’s “jobless” recovery.  If that isn’t an oxymoron, it should be.  It’s like saying “reliable copier”.

Of course, we can’t talk about all the challenges without remembering that problems often bring with opportunity – for those willing to think independently and outside the box.  As always, there are no magic formulas or one-size-fits-all solutions.  Challenging markets require courage, creativity and the kind of capital that comes as much from time, talent and relationships as it does from credit lines and cash deposits.  The good news is that when the going gets tough, most of the competition goes off and follows the herd to “greener” pastures.  If you believe the real estate “grass” will grow again, then it might be a good time to stake out some new territory.

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Riding in the jalopy for today’s show:

•    Your host, Robert “Jed” Helms
•    Co-host and Financial Strategist, Russell “Jethro” Gray
•    The Godfather of Real Estate, a very masculine “Granny”, Bob Helms
•    Special guest and more beautiful than Ellie Mae, real estate agent to the stars Sharona Alperin from Sotheby’s International

Well, the first thing we know, we’re not a millionaire…(sorry if you’re too young to remember the theme song from the Beverly Hillbillies!)…but we know they’re out there.  What we wanted to know is: what’s happening in high end real estate?  Are people with money still buying big homes?  And what lessons can we learn about dealing with high profile, high net worth people – because when you don’t have all the money there is, but there are great deals all around you, then you better find some financial partners fast!

To help unravel these mysteries we dialed up someone who is a bit of a star in her own right, real estate agent to the stars, Sharona Alperin.  Even if you think you’ve never heard of her, we’re betting that you probably have – and just don’t know it.  We got her to talk about her 30 plus year claim to fame…about half way through the show.  Yes, that’s a tease.  You’ll need to listen to find out!

Sharona talked about how she markets to and services celebrity clients.  And even though we don’t sell real estate anymore, we got lots of great insights that directly applies to real estate investing – including the important role of discretion when dealing with high profile people.

Probably the greatest lesson and inspiration is that anyone is just one relationship away from completely changing their future.  Sometimes the right people will come knock on your door, but most often you need to go out and find a way to meet them.  There are opportunities all around you if you’re paying attention.  When you see one, don’t miss it!

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And with all the hype about offensive, defensive and special team strategies, we thought it would be fun to do a show on renegade strategies for property owners when lender workout options aren’t working.

Taped up and dressed out in shoulder pads, helmets and eye-black for today’s broadcast are:

• Your Quarterback, Robert Helms
• Your Not So Tight End, Russell Gray
• The Head Coach and Godfather of Real Estate, Bob Helms
• Trick Play Coordinator and Special Guest, Trustee Verification Specialist, Tyler Cohee

After the coin toss and handshakes, we kick off with a discussion about the ethics of loan agreements.  Of course, when you can’t make the payment, your options are limited.  But what about when you can afford to make the payment and choose not to?  Strategic defaults are growing in number and popularity.  What are they?  Do they make sense and if so, when?

When it’s late in the 4th quarter, you’re way behind and you can’t get your loan modified; the lender won’t forbear, your property is headed to auction; and you just need a little more (a lot more?) time – it’s time to call a trick play!  Our special guest Tyler Cohee dials up just the thing when he calls in to explain how trustee verification works. VERY interesting!

Now in the Red Zone, the Guys call several renegade plays for reducing your loan balances, holding onto your properties and gaining more control over precisely when turn a doomed property over to the lender.

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Because of all the changes in the mortgage mitigation business over the last several months, we thought it was time to re-visit this fun and exciting (not!) topic.  After the show, we decided to lighten up a little and go get a root canal.  Of course, dentists like it when people get root canals, so it appears we can’t escape the reality that there is opportunity in pain.

Enjoying the nitrous oxide in the studio for this week’s show:

• Your Host, Robert Helms
• Co-Host and Financial Hygienist, Russell Gray
• The Godfather of Real Estate, Bob Helms
• Loss Mitigation Industry Insider, David Lies

Once the nitrous kicked in and we were feeling no pain, we drilled into our discussion starting with the State of the Union in the Loan Modification business.  With changing laws and attitudes, plus bailouts and political pressure – as well as an industry that is no longer considered fledgling or renegade, we had a lot to chew on.

To fill the cavities in our understanding, we quickly turned to our special guest David Lies.  Davis is a 20 year loss mitigation industry veteran, 10 of which he spent directing the efforts of lawyers and collectors to reduce the lender’s losses.  Even though it’s a whole new ball game, he has a great understanding of what motivates lenders to re-negotiate.

David shared what he sees as the most common misconceptions and misunderstandings about mortgage loss mitigation.  He reminded us that lenders are actually the source of some of the confusion – and that lenders loss mitigation department’s mission is to reduce the lender’s loss, NOT the borrower’s.

David also shaped our understanding of who the ideal candidate for a workout or modification is.  When time is short, it’s important to know what scenario is most likely to be accepted by the lender – and why professionals often can delay foreclosure faster, better and longer than do-it-yourselfers.

We talked about the government programs like HAMP, HASP and HEMP.  Actually, there is no HEMP, but after the nitrous it sounded like a good program.  Anyway, when the smoke cleared, David explained the 4 step waterfall process that lenders go through when deciding if and how to modify a mortgage.  Then he shared the two things lenders always require before they will consider modifying a loan.

Before we knew it the show was over and we could feel our cheeks again.  But it was so much fun, we’re going to do a follow up show on renegade strategies for delaying foreclosure.  Even if you are not personally facing the loss of a property (and we hope you’re not), if you’re trying to acquire a property from a distressed seller, it could be very useful to know how to help them hold on until you can get your deal done.  Be sure to tune in!

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Long time listeners know we were bullish on real estate from 2002 to 2005.  We still liked it going into 2006, but also started talking about hedging strategies.  We’d be lying to say we anticipated the mortgage meltdown and all of the resulting carnage to the economy and real estate values.  Even the really smart people we talked to, like Robert Kiyosaki and Walter Sanford, who’d started sounding the alarm in late 2005, couldn’t tell us why. They just knew the market would change. They had faith in the cycle (see Part 1).

Many consumers were attracted to real estate in the wake of the tech bubble.  Its strong history of stable appreciation, the fact it’s tangible and easy to understand, plus low interest rates, liberal loan programs and an international investment community eager to buy mortgage-backed securities (oh my, how things have changed!), all fed the fire.  Of course, standing here in 2010, we know the reality of cycles cannot be avoided – and in spite if its remarkable history, real estate was not immune.

The lesson?  Cycles are real and inevitable.  The good news is that cycles go both ways.  If the cycle down was inevitable, is it reasonable to think that a cycle up is also inevitable?  If the cycle down occurred with a reason that was only understood after it happened, then is it reasonable to think that the cycle up might also occur before we understand the reasons why?  If we wait until the reasons are obvious, the cycle may have passed the point of ideal opportunity.  Hmmm.  That’s a dilemma.

There’s no doubt it takes a certain amount of faith to invest.  This is certainly true if you’re seeking to optimize cycles.  By definition, you have to be willing to invest when most others aren’t.  That’s how you buy low.  Duh.  But should man invest by faith alone?  We don’t think so.

So in addition to faith in market cycles, there are some things to think about when investing in real estate.  And these things are fairly unique to real estate:

When properties produce enough income to pay a fully amortized mortgage, after allowing a reasonable amount for expenses and contingencies, then even if prices don’t increase over the long haul, you’ll build equity through amortization (the pay down of the loan with the tenant’s money).  What other investment can say that?

And even though you should never base an investment decision solely on the tax advantages (a revenue starved government can be fickle), investment real estate has a strong history of favorable tax treatment.  Few investments can claim this.  If you really pay attention and use strategies like cost-segregation and are careful to organize yourself (or your spouse) as a full time investor, the tax benefits of investment real estate can contribute substantially to your overall wealth building program. We could go on, but that’s not our main point.

Here’s where we think real estate gets exciting.  It doesn’t take much of a mood swing to affect real estate prices. That’s bad when the mood swings down as we’ve just seen.  But if you’re cash flowing as previously described, it’s not a train wreck.  You’ll get wealthy over time as the property gets paid off.  Even though it’s a much slower road, it keeps you safely in the game for the long haul.  Most people who got killed in this downturn (aside from losing their non-real estate sources of income), were carrying an unsustainable number of negative cash flow properties with no plan B.  We aren’t opposed to a little negative cash flow when a property has good upside, especially when you’re just getting started and prices are running away from you, but you need to be sure you can handle it if the market turns (as it did).  And just because it might make sense to buy one or two that way, don’t buy several unless you’re sure you can carry them if needed.

But when it comes to market appreciation (passive equity),  when consumer confidence begins to swing up, even small amounts of extra cash flow dedicated to real estate can have a dramatic affect on property values.  For example, when a buyer is willing pay an additional $300 per month on a 6% 30-year mortgage, the lender will provide an additional $50,000 in purchase loan.  That means that the buyer can afford to pay up to $50,000 more for the property even though they are only confident by $300 a month.  Of course, the property needs to appraise in order to justify the higher price to the lender.  This can be a challenge for the first properties sold in a market that is turning.  It’s another reason why real estate cycles more slowly.  You’d never have to wait for an appraisal to bid up the price of a stock.

But once the first property is sold, every comparable property in a 1 mile radius will have a better chance at appraising at the higher price – making it easier for each subsequent buyer to get the loans necessary to convert their $300 a month into $50,000 of equity for the seller.  If you didn’t get that, take a minute and think it through.

Once a few properties close at the higher price, IF there is the right supply and demand imbalance (big IF, but that’s what we look for when selecting areas to invest), the market will heat up, things will move faster and the up cycle will be in full swing.  If you wait for all that to happen before getting in, you’ll find it’s much harder to acquire properties that will cash flow.  Chasing trends is always dangerous – even in real estate.

Which brings us full cycle (pun intended).

If you believe in the resiliency of the American economy, the permanency of real estate in the lives of people, the probability of a growing population and the inevitability of real estate market cycles, then when do you want to be a buyer?  Real estate and loans are on sale today – at prices we haven’t seen in some time – and if the cycles are true, we may not see conditions like this again for awhile.  With as slow as real estate cycles are, it would be a shame to miss the next one.

We’re not telling you to buy.  We’re just saying don’t get lulled to sleep watching the glacier and then miss the opportunity.  Fortunately, with real estate, no matter what shape you’re in right now, you have time to expand your education and organize your resources to participate in the next cycle.  We encourage you to keep steadily advancing.

We’d love to hear what you think – and more importantly, what you’re doing.  If you’re stuck, let us know and we’ll work on a radio show or tutorial to help.  Just Ask the Guys or use the Feedback page.

“It’s the economy, stupid.”

When everything’s good, people go about their business and don’t worry too much about what’s happening on Wall Street or in Washington.  The Real Estate Guys audience has actually grown over the last two years, even through real estate investing fell off the hot list of things to do.  We think it’s because people are concerned and many are downright scared.  They’re looking for insights to help them understand what’s happening – and what’s coming.

One of the things the talking heads say is very important is consumer confidence.  The theory is that when people are confident, they spend money.  When people spend money, businesses make profits, hire more people; they buy more equipment, supplies, etc – and even give out raises!  Then people become even more confident and spend more money and the cycle builds…until something comes along to burst the bubble.  Ahhhh, those pesky bubbles!

When the bubble bursts the consumer confidence cycle does a u-turn and the whole cycle works in reverse.  People stop spending; businesses lose sales and profits, and cut back on people, supplies and plans to expand.  No raises are given.  People become less confident, spend less money and the downward spiral continues…until something comes along to turn that cycle around.

Don’t you wish you knew what those “somethings” that break the cycles are?  Us too.  But we don’t.  We’re not sure anyone does.  Even though “experts” like to talk all about the reasons behind the phenomenon (and all have different opinions, so don’t be shocked if you can’t find a consensus), the smartest investors we’ve met have simply accepted that these “mood swings” which drive business cycles are one of life’s great mysteries.  They happen.  Just accept it and act accordingly.  Our observation is that faith in the certainty of the cycle is one of the keys to investor confidence.

Important distinction: “investor” confidence is different than “consumer” confidence.  Investors are confident in the certainly of the cycles.  Consumers are confident in results once they’re reported.  Investors get in ahead of the next wave up.  Consumers wait until the results are in and then get in.  Investors get out ahead of the next wave down.  Consumers wait until the results are in and then get out.  You don’t have to be a rocket scientist to figure out how it works out for each.  One buys low and sells high.  The other buys high and sells low.  It takes substantial emotional fortitude to “buy the dips” – especially in a market as fickle as publicly traded stocks.  It also takes courage to stop buying or to diligently shop for the right deal, especially when everyone around is racing to buy anything because all they see is sunshine!  Seasons change and so do markets.

Right now, the world is fixated on the economic cycle.  Underneath that, stock investors watch stock market cycles.  Some on a daily basis!  Others watch currencies and commodities like gold and oil.  Those are all exciting.  They move pretty fast, there’s lots of data and opinions readily available, and they’re easy to trade.   That’s why those markets move fast.

Real estate is more boring.  The most meaningful data is highly localized, so there isn’t as much information easily accessible.  And we all know how challenging a real estate transaction can be, so “easy to trade” will never apply to real estate except when talking about publicly traded REITs.  Over the last 8 years, we’ve witnessed one of the most dramatic and extreme cycles in the modern history of real estate.  From 2001 to 2006 we saw a substantial and rapid (by real estate standards) run-up in values as prices went far over the trend line.  Over the last 3 years we’ve watched arguably the most precipitous fall off in values since the Great Depression.  But that process took 8 years!  That’s a very slow cycle when you compare it to almost every other type of asset class.  In fact, the cycle is so long that many people don’t even think about it as a cycle.  It’s like watching a glacier and trying to think of it as landslide. It is, but it doesn’t seem like it.

Nonetheless, when you think it through, it’s most logical to conclude that real estate isn’t dead.  Real estate isn’t going out of style.  More people, not less, are coming in the future.  People’s need for real estate to live in, work in, farm on and recreate to isn’t going anywhere.  There will always be demand for real estate.  And if there’s money in the economy, sooner or later it will find it’s way into real estate -when the mood is right.  So logic dictates that this current price suppression is part of a cycle even though it doesn’t feel like it.  The glacier doesn’t appear to be moving.

So the question is:  Are you an investor or a consumer?  Do you have faith in the cycle or are you waiting for results?  Is your mantra “think and do” or “wait and see”? The answers to those questions will affect the actions you take and where you are in 10 or 20 years relative to the cycle.  If the cycle is real, then real estate could easily be worth much more in 20 years than it is right now.  Will you?

Tomorrow in Part 2, we’ll take a look at why income property is one of the safest ways to buy “dips” and maximize your upside, while substantially reducing your downside.

Not Christmas. Tax time!  This is the time of year when all the bills from the holidays show up in the mail, along with your 1098’s, 1099’s, W2’s, 1040’s and our personal favorite, the K1.  Let the fun begin!

Before you tune out, we invite you to listen to our recent interview with CPA Tom Wheelwright.  He promised us he could make taxes fun, to which we said, “Great!”

So we broke out some month-old eggnog, stoked the fire in the fireplace, and tossed a few chestnuts into the pan for some good old fashion roasting.

Huddled around the microphones to talk taxes:
•    Your Host, Robert Helms
•    Co-host and Financial Strategist, Russell Gray
•    A man who has probably paid more taxes than everyone else on the show combined, The Godfather of Real Estate, Bob Helms
•    Certified Public Accountant, Tom Wheelwright

Like little kids on Christmas morning, we came into the studio to open up gifts of tax wisdom from one of the brightest real estate tax advisors we know.  After a few opening comments, we got Tom Wheelwright on the phone and started the grilling.

Tom opened up with some paradigm breakers as he explained that taxes are not only fun, but actually a very powerful tool for wealth creation.  Wow! Sounds good to us!

Then we asked him, “What are the most common and costly mistakes most real estate investors make?”  One of his answers astounded us when he told us about a special form every investor should know about, but few use properly.  Getting it wrong can cost you many thousands of dollars!

It would be sacrilegious to talk taxes and leave out 1031 exchanges, but for most experienced investors, the 1031 is old news.  And in today’s challenging economy with so much equity in hiding, who cares about a 1031 anyway?  So Tom gave us some great tips on why we might NOT want to use a 1031 exchange.  What????

Now that the eggnog was kicking in, we got into some of the tax changes for 2010 (and beyond) that affect real estate investors.  Then he gave us the inside scoop on how to find a great real estate CPA.

Before we knew it, the show was over!  Time flies when you’re having fun.  The topic wasn’t as taxing as we thought!

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On the other hand, if you’re a dyed in the wool, gun-toting Republican, you’re thrilled. And if you’re an ultra-conservative, Obama demonizing, big government conspiracy theorist, you’re euphoric – and possibly hung over.

But what if you’re just a regular American, who goes to work everyday, pays your bills, and are busy trying to navigate all this change while you’re building toward financial security – and maybe even financial independence?  In that case, it seems, you’re in the majority.

You see, this isn’t about which team won.  The talking heads, though they feign “objectivity”, all really have a team they’re pulling for.  But when things get really tough, most Americans don’t care about political parties.  They don’t care WHO is right.  They want to work and enjoy the fruits of their labor.  And right now, it seems, they want more balance.

“Healthy tension” is a more accurate word to describe “balance” or a move to the middle.  Massachusetts, like it or not, was a move to the middle.  This is the place where Americans seem to be the most comfortable.

Back in the old days, people would have antennas on their house to capture the television broadcast signals.  These antennas were up on poles that could be 10 feet or taller!  To hold them up, the homeowner would attach wire cables high up the antenna pole and then to 3 or more corners of the roof.  Then they’d cinch those cables up real tight so they pulled against each other with the antenna stuck securely in the middle, where it stood tall and strong against the gusts of winds and storms that would blow against it.

Of course, if one cable snapped – or even stretched and lost its resiliency – the antenna became unbalanced.  In this weakened state, even a modest storm could easily knock it down.  When this occurred, the homeowner would get up there and tighten up (or replace) the loose one and restore healthy tension.

The American people, in their wisdom, using their rights of free speech and to vote, have jumped up on the roof of the house and are attempting to restore healthy tension.  If you’re on one side or the other, you don’t like it because you have to work so much harder and wait so much longer to advance your agenda.   To which the people in the middle, say, “Good.”

When things get too extreme one way or the other, or if things change so fast that people can’t keep up (whether that’s in understanding the change or adapting to it), then Americans want to move to the middle.  That’s where they are comfortable. That’s where they feel safe.  That’s where they have confidence.

Now there’s an interesting word. Confidence.  Don’t they say that consumer confidence is the key to economic recovery?

Bill Clinton and Ronald Reagan were opposite in many ways, yet America thrived under both.  The reasons can be debated, but one worthy of consideration is that both were great communicators held in check by an opposite party Congress (just as their respective Congresses were held in check by them).  People felt like they knew what was going on and it wasn’t too much too fast.

So, as we often ask, what does this have to do with you and your real estate investing?

Well, in our (not always so humble) opinion, quite a lot actually.  Here’s why (and it’s pretty simple):

When things are changing too fast, it demands too much of our attention.  When people are uncertain and uncomfortable, they don’t act until the dust settles.  Without the American people taking action, nothing happens.  You can’t legislate motivation or confidence.  And we’re finding out, you can’t stimulate it either.  It’s the product of an environment.

Conversely, when things are chugging along at a comfortable pace, people can make plans.  They can assess risks and take action.  Americans are not the kind of people who like to be taken for a ride – no matter who’s driving.  We like to be in our own driver’s seat.  This is especially true of entrepreneurs and small business owners.  When people are confident they start businesses, they hire people, they make investments, they spend money.  In case you hadn’t guessed, this is all very good for the economy and for your real estate.

Your personal satisfaction with the election results is really just a function of which side you’re “pulling” for.  Whichever side that is really doesn’t matter (for purposes of this discussion). What’s important is that everyone is pulling and that the tension pulls us into the middle.  That’s good, not because of the policies or the gridlock, but because it makes the majority comfortable and eventually confident.  We know it’s hard to get excited when your team “loses”.  But this recent election isn’t the big win or big loss so many want to make it out to be.  It’s a glimmer of hope for one group and a reality check for another.  It’s tense, which is what makes it good long term for the economy and for your real estate.

Even more good news:  it will take time for a renewed healthy tension to restore confidence.  And even more time for that confidence to actually show up in the economy – because most people take a Wait and See approach.

This is where YOU have opportunity.  Because when the swells of recovery are rising on the horizon and the average person isn’t moving until it’s upon them, there’s still a lot of time for you to get in position to ride the next wave.  Keeping with the surfing analogy, not every swell will turn into a wave you can ride.  But some will.  So, proceed carefully, but proceed.  As we like to say, Think and Do is better than Wait and See.  Surf’s up!

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