11/20/11: Ask The Guys – Values, Ventures, Volatility and Velocity

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Answering your questions is one of our favorite things to do!  Every few weeks, we reach into the email grab bag and pull out a handful of interesting questions from our worldwide audience.

Behind the silver microphones from The Real Estate Guys™ international world headquarters:

• Your silver tongued know-it-all host, Robert Helms
• Your tongue-tied know-nothing co-host, Russell Gray
• The silver- haired Godfather of Real Estate, Bob Helms

We picked out some good ones for this episode!

• What happens to the value of your property when a big sports complex full of screaming kids moves in next door?  Should you stay or should you go?

• What’s the easiest way to get a hard money lender out of your hair?

• Is it possible to get more loans when your personal income isn’t enough to qualify?

• What do you do when you have a great property but run out of money to finish your project?

• And more!!!

Listen in and glean precious pearls of powerful wisdom as The Guys pontificate the possibilities while pondering the plethora of problems posed by your phellow listeners.  Phew!

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to helps real estate investors succeed.

• Don’t miss a show – subscribe to the free podcast!
• Want More?  Sign up for the free newsletter!

The Not So Secret Formula for Stable Employment

The presidential campaign rhetoric is kicking into high gear.  Texas Governor Rick Perry says he’s a job creation whiz.  His detractors say it’s just dumb luck because he happens to govern a state with oil and gas under the ground.  But no one is denying there are more jobs happening in Texas than any other state.

Meanwhile, no one is talking about Jack Dalrymple.

Who???

Jack Dalrymple. He’s the governor of the state with the lowest unemployment rate in the USA.  And he’s the Governor of North Dakota.

North Dakota? Really??  Do you even know where North Dakota is? (Hint: It’s just above South Dakota, if that helps.)

According to a recent article by the Associated Press, “Booming oil, agriculture and manufacturing industries have helped the state keep the lowest unemployment rate since November 2008.”

Wow.  Oil, agriculture and manufacturing is the magic formula.  Who knew?

So what’s the lesson for real estate investors?

Well, if you believe like we do, that the best tenants are those with jobs, then paying attention to what, where and why job are happening is obviously important.

In this case, North Dakota’s experience is affirming what we’ve already come to realize:  markets with industries that are strongly linked to the geography are less likely to move off shore.  Oil and agriculture fit that bill.

So when you’re researching prospective markets to buy rental property, pay close attention to which businesses are “primary” (pulling money in from outside the area) and how “linked” they are to the geography.  And of course, those businesses need to provide the kind of jobs that renters need.  Match your property choices and price points to what the employees of the local businesses can best afford.

If that all sounds like common sense, that’s because it is.  But as the legendary football coach Vince Lombardi always reminded his championship teams, winning is matter of mastering the fundamentals.

 

 

Five Lessons Washington Could Learn From Real Estate Investors

With all the news about the debt ceiling crisis, it’s hard not to think about policy making. And while we think there are some great lessons available for real estate investors, we also think the politicians would benefit from looking at the situation like a real estate investor.

Since we recently interviewed two presidential candidates (watch for those interviews to be released soon!), maybe some policymakers are paying attention to our lowly blog?  Who knows.  But you’re here (which we appreciate), so let’s get on with it.

Lesson #1:  Add New Customers

For a real estate investor, this means acquiring more revenue producing units.  Notice that this isn’t “raising rents”. Raise rents in a weak economy and you LOSE customers, not gain them.  In fact, if you tell tenants you’re thinking about raising rents, new people won’t move in and existing tenants will start looking for someplace else to live.

For Washington, businesses are “customers”.  Like tenants, businesses and the people they employ get up every day and go to work.  Then they send a portion of their earnings to Uncle Sam (in the form of taxes) just like a tenant sends a real estate investor a portion of his earnings in the form of rent.

So if a new tenant will not move in or an existing tenant will move out if rental increases are being hinted at, is it any surprise that businesses aren’t being formed, won’t hire, or move out of the country when higher taxes (or other similar government imposed burdens) are being threatened?  Consider how General Electric and Google have organized themselves (legally) to move their profits off shore, or how Amazon recently canceled contracts with all their California based affiliate marketers.  Did those companies want to invest time and effort to do those things? No.  But they decided is was the lesser of evils.

As a landlord, if you want to attract new tenants, you must provide a safe, affordable place to live. If Washington wants to “create jobs”, the focus needs to be on providing a safe, affordable place to do business.  We look to acquire rental real estate in places that are friendly to business.

Lesson #2: High Overhead Slows Growth

The bigger your real estate portfolio grows, the more people you’ll need to help you manage it.  These include your tax advisor, estate planning attorney, asset protection attorney, insurance broker, mortgage broker, etc.  You’ll also have property managers, maintenance people and a bevy of sub-contractors.

All these people must be supported by your rental income.  But you have to add tenants before you add team members.  If you get it backwards, you go broke, even though you have a “big” business.  “Big” isn’t necessarily profitable.

When you watch the news coming out of Washington, ask yourself if Uncle Sam is growing government in response to a growing number of businesses, or independently of economic growth.  In other words, private sector employment should be growing first and faster.  If not, then expenses will go up and revenues won’t and you’ll be hemorrhaging cash.  And if you think raising rents on your tenants in a soft economy is the answer, go back to Lesson #1.

Lesson #3:  Cash Flow is Not Profit

As a real estate investor, it’s important to make payments on time.  It preserves a strong credit rating, which is a very useful tool for investing.  But if your rents decline and you’re using credit lines to make your payments, it may seem to you and the outside world that you have everything under control.  However, you’re headed for disaster.

At some point, you’ll run out of credit.  And even if your lenders are dumb enough to keep raising your credit limit, all you’re doing is delaying the inevitable because each month more of your available cash flow goes to interest until that’s all there is.  The real problem is that you’re not running a profitable business.

When an investor is faced with this problem (and it happens all the time), he has some choices:

• Increase revenue.  This can be done by raising rents on the existing tenants (if the economy will permit it – see Lesson #1) or by acquiring new profitable tenants (if you act before you’ve depleted your remaining cash and credit).
• Decrease expenses. This is hard to do, but it’s going to happen anyway if you don’t fix the problem, so better to be proactive.

When we mentor investors, we encourage them to act like they’re on a space ship in trouble (think Apollo 13).  To survive, you have to make a limited amount of resources last until you can get out of trouble.  This means cutting all non-essentials quickly and deeply.  If you just lost your job, using your “free time” and credit cards to repaint the house, put on a new roof, re-carpet and update the plumbing is probably not the kind of “investment in infrastructure” that will lead to long term prosperity.  Better to go acquire more revenue producing doors.  To survive, you have to keep the main thing the main thing.  And the main thing is to increase revenue (acquire more customers) faster than you increase expenses (hire more employees).

Lesson #4:  Inflation is Not Wealth

In a financial system that is designed to inflate (a topic too big for this article), it’s easy to be deceived into thinking your successful when you’re not.  WARNING: Math Ahead.

For example, if you own a rental property that has 10 units renting for $100 a month in 1960, your gross income is $1000 a month.  So the building might be worth $12,000.  Assume for now it’s paid for, so that’s $12,000 of equity for you.

If in 2010, units in that same building are renting for $1,000 a month, your gross income is now $10,000 a month.  So this property many be worth $1.2 million.  Again, it’s paid for, so it’s all equity.  Are you richer?

Well, think about that.  Let’s assume that you could buy a new car in 1960 for $2000.  So your building is worth 60 cars. ($120,000/$2000 = 60)

What about in 2010?

If a new car in 2010 is $20,000, then your building is still worth 60 cars. ($1,200,000 / $20,000 = 60)

Hmmm….in 2010, the building still houses 10 people and is still worth 60 cars.  So in terms of relative value and utility, it hasn’t changed.  But now you’re a “millionaire”.

If instead, over the years, you re-invested the income and equity (see Bob’s Big Boo Boo in Equity Happens), and you acquired 10 more buildings from 1960 to 2010, now you have a properties which will house 100 people and is worth 600 cars.  NOW you’re richer.  Why?  You have more property.

More property, not more dollars, make you rich. This is very important when dollars are losing value.  For an extreme example, think how many trillionaires there are in Zimbabwe.

So for Washington to measure economic growth in terms of dollars is very confusing.  And you can’t run a business with confusing numbers.  Did the economy grow or didn’t it?  Our we in recovery or aren’t we?

Think about it this way.  If an economy produces 1 million widgets at $100 each, then you have a $100 million economy.  If the price of the widgets increases to $120, you have a $120 million economy.  But did your economy really grow 20%?  The dollars say so, but production and employment say you didn’t.  You’re still only making 1 million widgets.  And your’re still only employing however many people it takes to build 1 million widgets.  So you didn’t grow at all.

Not to belabor the point (but we’re going to anyway), what if the widgets are $120 and you only make 900,000 of them and then lay off a corresponding 10% of your workforce?  Your economy “grew” from $100 million to $108 million (900,000 widgest at $120 each = $108 million).  An 8% increase!  But you produced less and have higher unemployment.  That’s called a jobless recovery or staglflation.

In real estate, if you own 1 property now and in 50 years you own 1 property, you might have a higher dollar denominated cash flow and net worth, but you aren’t any richer if everything else around you also inflated.  You don’t have any more property.

More property means more tenants.  Tenants who work (produce) means more productivity.  More productivity (not inflated dollars) is what makes you (and a country) richer. A wise real estate investor will focus on acquiring more tenants. See Lesson #1.

Lesson #5: Not All Jobs Are Equal

When a real estate investor considers a geographic region as a place to invest, jobs are the single most important factor.  Tenants have a much easier time paying rent when they have jobs.

But not all jobs are created equal.  And the difference is where the money comes from.

So businesses (the source of jobs) can be divided into two categories: Primary and Secondary.

A “Primary” business is one that sells products (derives revenue) from OUTSIDE the region.  That is, a Primary business pulls money in from elsewhere and funnels it into the local economy through their local vendors and employees.

So when a Primary business uses local business for office supplies, printing, temporary help, insurance, maintenance, utilities, sub-contract work, etc., they are effectively distributing the outside money into the local economy through these “Secondary” or support businesses.  Then all those employees further distribute the money as it passes through their hands and into the local economy.

But the key to a region’s prosperity is having a strong base of Primary businesses.  As investors, we avoid markets which don’t have a strong base of Primary businesses. Without Primary businesses, the Secondary businesses can’t thrive.  And each time a Primary business is lost, you lose not only the Primary business’ jobs, but many of the Secondary business’ jobs as well.  It weakens the entire regional economy.

It would be a like a family of brothers all living in the same house.  If one brother has a good job outside the home, he can hire one brother to wash the cars and mow the grass.  He can hire another to cook and clean.  He could rent another brother’s boat for a fun day at the lake.  He is the Primary earner and he can then trade his outside money for various goods and services within the household.  But he is really supporting the whole family, though no one is getting charity.  The prosperity is distributed to each brother according to his contribution.  However, all the brothers would be wise to be nice to the Primary earner.  If he moves out, everyone loses their jobs.

So imagine that one day, the Primary earning brother finds out that one his other brothers took some money out of his wallet without working for it.  He gets mad and decides to move, taking his primary income with him. Now all the remaining brothers are sitting home trying to figure out that to do next.

One brother decides to use his credit card to get an advance and then hires one of his other brother to mow the lawn.  Then that brother uses his “earnings” to hire another brother to cook and clean.  And that other brother uses his “earnings” to rent the boat.  To the outside world, and maybe to the brothers themselves, it looks the same as before.  But now they are simply trading with borrowed money.  How long can that last?

Sooner or later, that credit card has to be paid.  And someone better get a job outside the home and bring in some real money in, or everyone will eventually be broke and homeless.  A higher credit limit might put the problem off a while, but it isn’t a long term solution.  You can’t lose your Primary earners and expect to be prosperous long term.

A country, like a state, like a local region, like a family, better have some Primary earners. And the more, the better.  Without money coming in from the outside, deficits pile up and everyone is just passing borrowed money around and feigning prosperity while a financial time bomb is ticking in the background.  See Lesson #1.

The Real Estate Guys™ Radio Show and podcast provides real estate investing news, education, training and resources to helps real estate investors succeed.  Subscribe to the free podcast!

Explore Enchanting Belize with The Real Estate Guys!

Join Robert Helms, host of The Real Estate Guys™ Radio Show for a memorable weekend discovery trip to the beautiful country of Belize!  Three great dates to choose from: Sep 15-18, Oct 6-9 or Nov 3-6, 2011

Why Belize?

Three words: Location, Location, Location (we’ve heard those are important for real estate).

Click here to download your registration form.

Belize is the former British Honduras and is located just under Mexico’s Yucatan Peninsula. Mainland Belize features lush green tropical rain forests, while it’s Eastern border faces the Caribbean ocean safely nestled behind the world’s 2nd largest barrier reef. The islands are postcard perfect and attract vacationers, diving enthusiasts and celebrities alike. Harrison Ford, and more recently, Reese Witherspoon are known to visit Belize for private, relaxing getaways. Leonardo DiCaprio purchased a 110 acre island known as Blackadore Caye. We’ll show it to you when you attend this discovery trip!

But beyond beautiful, Belize has other unique attributes which make it attractive to investors and tourists alike. Belize is the ONLY country in Latin America whose official language is English. This, and the fact that its currency is pegged at a fixed 2:1 exchange rate with the U.S. dollar, make it a friendly place for Americans. Plus there are direct flights from several U.S. cities including Atlanta, Miami, Dallas, Houston and many others. Belize is actually closer for most Americans, Canadians and Europeans than Hawaii!

The Real Estate Guys™ will show you Belize!

Click here to download your registration form.

Robert Helms and his team have been visiting and investing in Belize for several years. He’s led several investor field trips with as few as one couple and as many as forty-five. The feedback on every trip has been over the top positive! Robert will share his extensive market knowledge, introduce you to local market experts, and personally show you the mainland, the islands, and several different developments.

This is an EDUCATIONAL event. This is not one of those “fly n’ buy” sales trips where aggressive salespeople are waiting to pounce on you. We believe the right approach to real estate is to start with the market first, then build a team, and then select property that meets your personal and investment goals. This trip is about exploring the market and meeting people who may become part of your team down the road.

Discover the real estate, banking and lifestyle opportunities available to you in beautiful Belize during a semi-private tour led by The Real Estate Guys™ Radio Show host Robert Helms.

Click here to download your registration form.

Trip Logistics

Once you’re enrolled, our registration team will contact you to help arrange your air travel. Your round trip airfare is not included in your tuition, but it’s very important that your arrival is coordinated through our team. While you’re in Belize, virtually all your trip expenses including transportation, hotel accommodations, speaker sessions, materials and most meals are included. Alcoholic beverages, souvenirs, extended stays and certain other incidental expenses are not included. Upon receipt of your completed registration form, we’ll provide you with information about what to wear, pack and expect.

The Opportunity is Now

There are lots of reasons to like a place like Belize (is there any other place like Belize?), but the opportunity today is better than ever!

Americans haven’t lost purchasing power in Belize because of the fixed exchange rate, while many other countries have gained purchasing power because of a soft U.S. dollar. Baby boomers in the U.S. still dream of warm weather, low tax, beautiful places to resort and retire, but many of the more established areas remain relatively expensive in a post recession economy.

Belize offers an English speaking, affordable, “non-touristy”, and reasonably nearby alternative. And popular TV shows like House Hunters International are helping a growing number of people discover Belize as a great option not just for retirement, but also full time residency for a growing new class of telecommuters and independent information workers. Think about it: would you rather sit in a corporate cubicle in Cleveland or a beautiful beach in Belize?

Additionally, Belize still enjoys a great reputation as a tax friendly jurisdiction with strong privacy banking and asset protection laws. As citizens of “developed” countries face increasing concerns about privacy, taxes and frivolous litigation, the affluent are seeking off-shore alternatives in greater numbers than ever.

All of these trends point to increasing demand, but the wave is still growing. Alert investors can position themselves in the market to provide the properties that tourists, retirees, remote workers and ex-pats will want to buy or rent. Besides, if the worst thing that happens is that you have to live or use your property for personal use, would you rather it be a duplex in Detroit or bungalow in Belize? Meanwhile (check with your own tax advisor), once you have investments in Belize, your trips to visit just might be tax deductible. Very cool.

A Visit is with Worth a Million Words

If a picture is worth a thousand words, then a personal visit to paradise is worth at least a million. Come see it with your own eyes!

Click here to download your registration form now.

We look forward to seeing YOU in beautiful Belize!

2/6/11: Ask The Guys – Who, What, Where, When, Why and How

There’s no such thing as a stupid question.

Well okay, there actually are some pretty stupid questions, but that’s why we take questions by email and not call in.  That way we can filter out the bad ones and just bring you the really good ones!  We really aren’t qualified to advise you on what color to do dye your hair or what style of nose ring to purchase.  But if you have a real estate related question, we’re your Guys!

In the studio to provide powerful pontifications in response to several of the great questions we receive each week:

• Your host and hero, Robert Helms
• His trusty sidekick, Russell Gray
• Wise sage of all things real estate, The Godfather of Real Estate, Bob Helms

For this episode of Ask the Guys we reached into the email grab bag and pulled out some gems:

From a listener in Australia (who understandably thinks we’re amazing), who just bought two properties (good job!), and wants to know should he buy more – in his wife’s name with “negative gearing”.  Hmmmm…. you need to be careful about anything negative when your spouse is involved – and what type of gear you use with your wife…well, that’s really none of our business.

For our next question, Simon says he put in a deposit on a pre-construction property, but undisclosed costs have made him nervous.  Now Simon says he wants out of the deal and his deposit back.  But what does the contract say?

From Philadelphia, the city of brotherly love, Kevin and his siblings have inherited dad’s duplex and are debating what to do.  One sibling says keep it, the other two want out.  What’s a brother to do?

Rasean has aspirations to become a real estate syndicator (what a good idea!) and is trying to track down the bible of syndication, written by our friend Sam Freshman.  Hint: The Real Estate Guys™ have a Recommended Reading bookstore on our website under our RESOURCES tab.

And Martin, who lives in Smallville, wants to know if he should invest in his own backyard or seek super returns in Metropolis.  So we ducked into the nearest phone booth (hard to find these days!) and fired up our x-ray vision to look for the answer.

If YOU have a question for The Real Estate Guys™, just click on Ask the Guys to send us your query.  Then, Walter in the mail room will throw it in the mail bin, where we’ll dive in later to pluck questions for some future show.  Maybe we’ll pull yours out, so keep those cards and letters coming!

Listen now!
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The Real Estate Guys™ Radio Show podcast provides education, information, training and resources to help investors make money with their real estate investments.

11/7/10: Travel Tips for Real Estate Road Warriors

“Live Where You Want to Live, but Invest Where the Numbers Make Sense” – Robert Helms

Not everyone lives in prime real estate investment areas.  So if you decide to “live where you want to live but invest where the numbers make sense”, then travel is going to be a regular part of your life as a real estate investor.

In this episode, The Real Estate Guys™ draw upon their own substantial travel experience to provide practical tips for successful real estate road trips.

Riding along in the real estate radio tour bus:

• Driver and veteran real estate road warrior, host Robert Helms
• Riding in the back of the bus, co-host Russell Gray
• Special guest, Senior Editor of Orbtiz.com, Jeanenne Tornatore

Like a corporate traveler, getting to where you need to be and arriving focused and organized is very important.  But for a real estate road warrior, that’s only part of the game.  Picking up clues about the market and its opportunities is arguably the important component of your real estate road trip.  Of course, getting the best value for your travel dollar is also a worthy topic, so we invited the Senior Editor for Orbitz to chime in with some timely tips.

The Real Estate Guys™ Radio Show podcast provides education, information and training to help investors make money with their real estate investments.

Listen now!
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7/4/10: Profiting from Your Vacation – Exploring New Markets in Your Bathing Suit

Most people don’t get into real estate investing because they like tenants, toilets and all the tribulations you go through. And most of the time, they don’t get into properties they would like to live in or visit on vacation.  In fact, most investors would be happy if they never saw their properties.  That’s probably why stock investing is so popular.  You just buy a line item on your brokerage statement.  You never visit the company or meet the management.  It’s all very sterile and anesthetized.  Maybe that’s why you almost can’t feel it when the stock market gives you a networthectomy.  But we digress (how unusual).

Anyway, with summer time in full swing and people heading off for a well-deserved vacation, we thought it would be refreshing to talk about how to combine real estate business with vacationing pleasure.

In the radio mini-van, headed to the beach of broadcasting for fun in the sun and investing too:

• Your host and mini-van driver, Robert Helms
• Captain Speedo, Russell Gray
• The Godfather of Real Estate, Bob “Board Shorts” Helms

Before we hit the road of conversation we do a quick check of the packing list.  Did we remember to pack our investor mindset?  What about our notebook to keep track of our ideas, conversations and those all important (potentially) tax-deductible expenses?

We’re all good, so off we go!

Since most people don’t vacation in C-class neighborhoods, we start our conversation on the idea of resort area investing.  But as soon as we jump out of the mini-van, we are faced with that ugly limiting belief, “I can’t afford it”.  It’s easy to look at real estate in a beautiful area and disqualify yourself before you even get started.  So we talk about how to push through the traffic of doubt in one’s mind by asking the question, “How can I afford it?”

We decide to ride this train of thought and talk about the importance of getting the right answers and advisors, by learning how to ask the right questions. Bad questions yield bad answers.  It’s like, “Which Speedo looks best on Russ?”  That’s a bad question (and worse visual) with no good answer.

Of course, we can’t miss the opportunity for some shameless self-promotion, so we hang a u-turn on the notion of making one’s vacation an opportunity to look for real estate.  What about the idea of using a real estate trip as a vacation? Many of our listeners have come with us on our Investor Summit at Sea™ or field trips to Belize, Cabo San Lucas or other fun places we’ve gone.  Even though the main purpose of the trip is to look at real estate, is it against the rules to have fun?  So, when time and budget is limited, it just makes good sense to leverage your vacation / real estate “research and development” budgets.

We have a fun time with this show.  We think you’ll like it too!

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May 14-16, 2010: Field Trip to Dallas, TX

We just got back from our 8th Annual Investor Summit at Sea where we got to hang out with some of the biggest brains in real estate.  One of our special guest faculty members was Robert Kiyiosaki’s Rich Dad Real Estate Advisor Ken McElroy.  Ken has over 10,000 rental units and is adding more each month!  We’re not sure how many you have, but we’re guessing Ken’s a little ahead of most folks.

Market Selection Matters
Since we’re big believers in picking the market first and the finding the best deal in the right market, we naturally asked Ken which markets he likes best and why.  One of his favorites is North Texas and the Dallas/Ft. Worth area.  That made us feel really smart, since we’ve been fans of Dallas for the last couple of years.  Ken’s always been a die hard cash flow investor (even though he loves to force equity through re-hab), so no surprise he likes Dallas.  The GRMs / cap rates have always been pretty attractive there (if you don’t know what we just said, see Equity Happens pages 312 to 315).  But, good rents relative to purchase price is only one part of the market selection process.

One of Ken’s keys to successful market selection is jobs.  How may are there?  What kind are they?  How much do they pay?  How stable are they?  Inquiring minds want to know!  Texas is the top ranked stated for ease of doing business and has strong track record of job creation and preservation – even during the latest recession!  That alone should warrant a closer look.

Whenever we hear enough of the right people saying a market is worth looking at, we pack our bags and head to the airport to go check it out.  After we get to know some folks and do a little business, if we like the market, we invite our inner circle to join us for a field trip.  Since we’re broadcasters, our circle is pretty big.  And guess what?  You’re in it!

YOU’RE INVITED to The Real Estate Guys™ Field Trip to Dallas Texas on May 14-16, 2010!

Can’t make that one?  That’s okay!  We got so excited we decided to schedule not one, but TWO MORE dates:  June 11-13 and July 9-11. Now, you don’t have any excuse.

But, we only take one (small) bus load at a time, so SPACE IS LIMITED.  Our accountant says that’s stupid because if we did one trip with hundreds of people it would be more economical.  Maybe.  But it’s hard to see out the window with another field tripper in your lap.  And if we had more than one vehicle, someone is sure to feel left out.  Who gets to ride with the tour guide and who has to ride in the other van and read lips from across the traffic lane?  So, the accountant is overruled and we’re doing three cozy trips instead of one giant trip.  Plus we made it really affordable!

For only $699 per person (double occupancy), you get:

• Ground transportation
• Hotel accommodations
• Meals and snacks
• Notebook with market information
• All educational sessions
• A guided tour of several sub-markets and properties
• Introduction to local market experts and service providers

These items are NOT included:

• Airfare or other transportation from where you are to the Dallas airport
• Any investment properties you decide you want
• Uncomfortable, high pressure, hard-sell from desperate real estate agents.  This is an EDUCATIONAL event.
• An autographed Tony Romo Dallas Cowboys jersey (we have to draw the line somewhere)

Not sure it’ll be worthwhile?  Check out these comments from some folks who attended previously:

“I definitely recommend this. The trip gave me different insights when evaluating a market. Really enjoyed spending time with other investors and the general real estate conversations.” – Leslye S., Mission Viejo, CA

“I likely will invest in this market soon. The field trip is absolutely a must if you are interested in Dallas and have not been there. – Markus M., Detroit MI

“It is great to actually see an area that is growing and makes sense to invest in.  Also, I got a better understanding of how a property manager thinks and sees things.” – Jerry B., Turlock, CA

“As a real estate agent and regular listener of The Real Estate Guys, I learned many points when assessing an area. I would recommend this trip very strongly.” – Kathy B., Maui, HI

“Excellent source of information. Amazing! After this weekend, I have decided to go on the cruise!!!” – Peter E., Austin, TX

4/25/10: LIVE! from the 8th Annual Investor Summit at Sea

Most of the time when we do a show, our producer keeps us locked up in the cold, lonely studio with our headphones on.  And even though we have each other, we have to use our imaginations to see our listeners.  But this week, we get to do the show in front of a LIVE STUDIO AUDIENCE! Better yet, we’re aboard a cruise ship sailing through the Caribbean!  Best of all, we’re hanging out with some the brightest, most committed real estate investors on the planet.  Toss in our SPECIAL GUESTS and the whole experience is over the top awesome!

On board and behind (and in front) of the microphones on the beautiful Carnival Triumph for this week’s show:

•    Your Captain and a mighty sailing man, host Robert “Skipper” Helms
•    Your brave and sure first mate, co-host Russell “Gilligan” Gray
•    The Godfather of Real Estate, Bob Helms
•    Rich Dad’s Asset Protection Advisor, Garrett Sutton
•    Rich Dad’s Real Estate Advisor, Ken McElroy
•    Rich Dad’s Creative Finance Advisor, Wayne Palmer
•    International Real Estate Developer, Beth Clifford
•    International Entity Planner, Attorney Mauricio Rauld
•    Special guest from Puglia’s restaurant in Little Italy, New York; featured entertainer in Adam Sandler’s Big Daddy, the one and only Jorge Buccio
•    Fine passengers that sailed that day, a cast of thousands (okay, maybe a few dozen), our live Summit at Sea audience!

As we’re stuffing the faculty and studio audience into the Big Easy Piano Bar for this live taping, we quickly that discover fitting everyone in (physically into the room, but also getting their comments into a one hour broadcast) is anything but easy!  However, the Skipper quickly takes control and before we know it, we’re off and running.

After some brief opening remarks, the Skipper asks each of the Summit Faculty to share their insights and reflections on the remarkable week we’ve all had together.  For the Rich Dad Advisors, this was their first (but hopefully not last!) Summit with The Real Estate Guys™.   They’ve all heard Robert Kiyosaki call us wild and crazy, but now they had a chance to observe it first hand.  Of course, none of that stuff makes it into the show because Summit Rule #1 is “what happens at sea stays at sea”.  Sorry!  Join us next year and then you can be a Summit Insider too!

For today’s show, each Faculty Member shares some of the highlights from their Summit presentations.

Ken McElroy taught on how he approaches real estate in today’s economy.  This is a guys who has over 10,000 doors under his control and is actively acquiring more…in spite of the “bad” real estate market.

Garrett Sutton spoke on state-of-the-art asset protection structures for real estate investors.  He also did a class on how to properly structure deals using investors and partners.  Many well meaning people end up in trouble when they raise money to buy real estate – simply because they don’t know what they don’t know.  Considering that syndicating is arguably the fastest path to big deals and big bucks, a small investment in knowing how to do it right is time and money well spent!

Wayne Palmer comments about his extensive series of classes on the creative use of private notes.  Wayne uses notes for putting together real estate deals which might not otherwise happen.  He also uses them to create equity and cash flow from next to nothing!  It seems like magic, but during the Summit he revealed some of his trade secrets.   Also, he shared the guidelines he follows to mitigate risk and optimize return.  His classes were among the most demanding, but also the most popular.  Powerful and practical principles for profiting from paper (say that fast 10 times).

Beth Clifford wowed the group with her amazing presentation on the how and why of going offshore with some of your investments and business ventures.  Hers was one of the most popular topics at the Summit, even with the faculty!  Wayne Palmer said Beth’s presentation stretched his brain and was his favorite of the Summit.  Now THAT’S saying something!

Mauricio Rauld expanded on the concept of international investment and business structures – and how to avoid the dangerous schemes which land so many novices in trouble.  There are many valid, legal and ethical structures which can be used to better protect assets, protect privacy and mitigate taxes.

There’s a lot more that happened on the Summit which just can’t fit into the radio show – even in a summary – including the Apartment Investors Panel, the Ask the Attorneys Panel and the Investor Roundtables.  Plus the fun in the sun real estate shore excursion in Belize, the more fun in the sun beach party in Cozumel and all the private shipboard parties.  Alumni will never look at a napkin the same way again!

Going into the Summit, we weren’t sure what the Rich Dad Advisors would think by the end of the week.  After all, they get to hang out with Robert Kiyosaki and talk in front of crowds of thousands!  But when it was all said and done, they had a great time.  Don’t take our word for it.  Listen to the show and you can hear it for yourself!

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To get in on the EARLY BIRD deals for the 2011 Investor Summit at Sea, use the Feedback page to send us your request.   You’ll be given an opportunity to sign up at the lowest public price.  And after listening to this show, why wouldn’t you want to be with us on the 9th Annual Summit at Sea?

Seven Lessons from the Summit at Sea

The Real Estate Guys™ 8th Annual Summit at Sea was a huge success! We feel sorry for everyone that wasn’t with us this year.   All the energy, education, experiences and relationships are hard to put into words, but we have 7 lessons we believe will help you.

We kicked off the 2010 Summit in the French Quarter of New Orleans. Many Summit attendees wisely came in a day early and made plans to stay a day or two later in order to enjoy the hospitality of this amazing city.  Those who got the most out of their trip had invested the time to research the city beforehand.  When they arrived they had geographical context and some idea about what they wanted to see and do.  One of our attendees had plans to attend a certain restaurant he’d heard good things about.  The food of the French Quarter was certainly one of the highlights of this trip. Russ took the opportunity to try turtle soup and fried alligator.  Both were great and he’d order them again!

Summit Lesson #1:  Life’s best surprises go to the curious and adventurous. Invest time to visit new places, meet new people, try new things and discover new ideas.  You’ll be the richer for it.  If you’re not that way naturally (like Russ) – hang out with people who are (like Robert).  Some of our best real estate deals and business relationships have come from simply exploring.  Deal hunting is as much art as science.  You can’t always script it.

Back to our attendee. So this guy is heading out according to his plan.  But when he steps into the hotel elevator, he runs into Rich Dad Advisor® Wayne Palmer and his family.  The short of it is our guy ends up going to dinner with Wayne!  We’ve been at Rich Dad events with hundreds and thousands of people in attendance, many of whom wait in line for a long time just to get two minutes with an Advisor.  Can you imagine being able to enjoy a long casual dinner with Wayne Palmer?

Summit Lesson #2:  Great opportunities to meet interesting people and learn new things won’t happen to those who stay home, arrive late, leave early or aren’t flexible. If you want to build strategic relationships, you must go to where the right people are and put yourself in a position to get lucky (speaking purely in terms of business).

As real estate investors, it’s important to practice exploring markets. There’s so much more you learn from actually being there.  The internet can’t capture the spirit of a market.  From cab drivers, to hotel and restaurant workers, to local shop keepers and business owners, to the people on the street, there is a lot you will discover about what’s REALLY happening in a local economy when you’re physically in it.  People living in a community know what’s happening right now with rents, prices, migration trends, demographics and job creation.  Only when you add this anecdotal information to your own real life observations can you begin to put statistics into useful perspective.  Remember: stats reports things that have already happened – not what’s happening now.

We noticed that New Orleans is a very entrepreneurial city. Perhaps in the wake of Katrina (the effects of which were still apparent) the bravest, most resilient and dedicated people have returned first.  In any case, these folks weren’t asking for handouts.  They were happy for the opportunity to earn our business – and very thankful for it when they got it.  As our nation and world continues to work through the effects of the financial crisis, the people of New Orleans gave us hope.  If people all over the world dedicate themselves to working their way out of a mess like these people are, our world is going to come out of this Great Recession just fine.

Summit Lesson #3:  Entrepreneurship and hard work (not handouts) are the keys to personal and societal recovery. Everyone who’s struggling in this economy should take a trip to New Orleans and see how winners react to adversity.  No wonder the Saints won the Super Bowl.  If we all take the spirit of New Orleans back to our businesses, this recession will quickly fade into the rear view mirror.

After a great session in the hotel, the group headed to the pier and boarded the ship.  We sailed on the Carnival Triumph, which was SOLD OUT!  Cruise lines are actually weathering the financial storm pretty well.  Why? Perhaps people realize that a cruise is a great value, meets a basic human need (to refresh themselves) and attracts financially capable people from all over the world (a broad market).  Do these principles apply to real estate investing?  It’s obvious that real estate meets a basic human need, but we’re reminded of the importance of having a large, financially capable target market.  No matter how badly someone wants something, if they can’t afford it (or don’t think they can) they won’t buy.

Summit Lesson #4:  Pick markets and properties that appeal to a large demographic of financially capable people and you will weather difficult times more easily.

The next lesson came later, but is an extension of lesson #4.  Rich Dad’s Real Estate Advisor Ken McElroy talked about the markets and properties he targets:  B-Class apartments (meets a basic human need – housing) with affordable rents (provides a great value) that appeal to working class people (a large, financially capable demographic) in markets with good mid-to-long term job creation (he focuses on areas with fundamental and growing industries such as energy).

What was very interesting is that on the real estate shore excursion to Belize, we saw a very different variation on the same themes.

In Belize, we visited a piece of beautiful waterfront land and listened as the developer shared her vision for the property.  She plans to build high quality, moderately priced residential units suitable for resort, retirement or ex-pat full time occupancy.  While the country of Belize is sparsely populated and very poor, it is a land of breathtaking natural beauty and terrific year round warm weather.

Like the cruise ship, the project in Belize provides great value, satisfies a basic human need and desire, and appeals to a worldwide, financially capable demographic.  In other words, the project’s success isn’t dependent on the local population to be successful.  It attracts people from all over the world.  And because there will be so few units available relative to the size of the market, it’s hard to imagine the project won’t be successful.  It’s very different than B-class apartments, but like the cruise line, follows a similar fundamental formula.

Summit Lesson #5: Essential principles of successful investing don’t vary much, even though markets, properties and target customers might. Or as the old adage says, there’s more than one way to skin a cat (though we have no idea why anyone would want to do that – it’s cruel).

Even though this was our 8th Summit, there is no doubt it was our most compelling line up of speakers. We were very fortunate to have not one, but THREE of Robert Kiyosaki’s Rich Dad Advisors® teaching at our Summit.  Creative real estate genius Wayne Palmer taught a powerful and practical series on how to create capital, produce profits and generate cash flow with the creative use of private notes.  Even though people had to ice their brains after each session, Wayne was gracious to make himself available during non-class times.  He answered questions and even did some individual personal consultations.  These opportunities weren’t part of the official program, but some people at the event got lucky (see Summit Lesson #2).  People left the event believing they could use the education they got to do at least one deal which would more than pay for the cost of the entire Summit – and next year’s too!

To quote Robert Kiyosaki, “Savers are Losers”.  Though we agree with his premise (and highly recommend you read his latest mega bestseller Conspiracy of the Rich), we’re saying it for a completely different reason.  We think people who “saved money” by not coming on the Summit actually lost money.  We know.  That sounds like sales pitch.  But anyone who’s ever tried to do an event like this knows that no one is getting rich by promoting it.  More, if you saw the surveys of the people who came, you’d realize that we still haven’t figured out how to over-promote the Summit.  Everyone felt it was easily worth the time and money.

When you’re around people who know how to make money in a tough economy; who are optimistic about the future; who are resourceful and busy taking advantage of all the opportunities they see in the market, you quickly realize those who lost out were those who wanted to attend and chose not to because they told themselves “I can’t afford it”.  This paradigm looks at the Summit (or similar events) as an expense and not an investment.  The difference is that an expense pays for something that is consumed and doesn’t produce a profit.  An investment pays for itself and returns a profit.  The paradigm should have been, “I can’t afford not to” and “How can I afford it?”  Most people believe a college education is worth the price, yet hesitate to invest in non-institutional education.  Could it be they believe the degree is more important than the knowledge?  What do you believe?

Summit Lesson #6:  Paradigms affect potential and profits, so pick your paradigms carefully. The Summit was full of winners and after living with these amazing people for a week we found ourselves picking up new paradigms and making commitments to shed some bad ones.  One of the great challenges is to manage the influences to our thinking.  We look for every opportunity to hang around top performers.

One common theme we noticed in the presentations of nearly all the speakers was “control”.  Wayne Palmer talked about his rules for risk.  He follows strict (but flexible) guidelines for collateral, loan-to-values, target returns and cash flows in order to control the risks he takes in any deal.  Rich Dad’s Asset Protection Advisor, attorney Garrett Sutton, talked about entity planning and how to structure your affairs in order to control liability and tax risk.  Attorney Mauricio Rauld spoke on international entity structures which further control liability and tax risk when investing outside of the US.

Ken McElroy talked about his guidelines for market and property due diligence, as well as his dogged attention to cash flow.  He uses these disciplines to control market risk.  He says this control is why his real estate investments aren’t in trouble even though he’s going through the same challenging market conditions that are wiping out so many others.  He doesn’t rely upon the market to do the work for him.  He looks for deals with upside and works to improve the cash flow, which in turn increases the equity.  Then he uses prudent leverage to release the new equity and return his seed capital so he can move forward with positive cash flow – all on no money invested.  This produces what Robert Kiyosaki calls “infinite returns”.  Meanwhile, he recycles the seed capital to do the next deal!

Robert Helms stressed the importance of controlling one’s mindset when investing in the wake of an unprecedented drop in values (see Summit Lesson #6).  Each had a different angle, but again, all variations on a theme: control.

Summit Lesson #7:  Pay careful attention to the things you can control so you’re able to withstand the challenges caused by the things you can’t (inflation, taxes, market cycles, interest rates, etc).  When it comes to investing, most people are out of control.  Fear overrides common sense and they buy high and sell low.  They turn their money over to bankers and Wall Street and hope for the best (hope is not a strategy).  They manage cash flow by feel rather than budgets and bookkeeping.  Worst of all, they wait for external circumstances to get better rather than investing in making themselves better with education, relationships, strategies, disciplines, systems and a willingness to take action in the face of uncertainty.

We could go on and on!  There are SO many great lessons to glean from the Summit.  Of course, the only way to really get them is to actually be there.  The Real Estate Guys™ Summit isn’t the only event of its type, but after reading the surveys of the attendees, and even more, hearing the feedback of the Rich Dad Advisors®, we think it’s one of the best.  And we’re already making plans to make next year’s Summit even better!

We encourage you to make it your goal to be with us in 2011. Without exception, every survey we received said the event exceeded expectations and was well worth the time and money invested.  Over one third of this year’s group has already signed up for next year!

To make sure YOU get the upcoming announcement about The Real Estate Guys™ 9th Annual Summit at Sea in 2011, be sure to sign up for our newsletter. To be extra sure you get the early bird deal, use our feedback page to let us know you’re interested and we’ll put you on our VIP notification list.

All the best!

Robert Helms and Russell Gray
Hosts
The Real Estate Guys™ Radio Show

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