12/27/09: A Glimpse into the New Year with Ken McElroy and Kim Kiyosaki

In our continuing quest for real estate wisdom, The Real Estate Guys catch up with two of the most active real estate investors around.  As 2009 closes and we look forward to the new decade, what do the experts think?

Gazing into their crystal balls for this episode:

  • Your senior seer, host Robert Helms
  • Chief ball polisher, co-host Russell Gray
  • Rich Dad’s Real Estate Advisor, best selling author and real estate entrepreneur, Ken McElroy
  • Best selling author, prolific real estate investor and entrepreneur, Kim Kiyosaki

We like to talk to people who know what they’re talking about.  Not just because they’re smart, but because they have wisdom that only comes from experience.  We kick off with an honorary member of The Real Estate Guys, Ken McElroy.  This is a show worth listening to with a note pad because he gives us some great pearls of real estate wisdom!

Ken starts out telling us what he’s excited about as we enter the new year.  While many people are licking their wounds, Ken says 2009 was his best year ever!  Then he goes on to explain why the unraveling of the mortgage industry has provided extraordinary opportunity.  He also discusses his strategies for market selection, tells us what NOT to do, and then reveals some of the markets and product types he’s most interested in right now.  Plus, he gives us the one key item he looks for to find markets that are more likely to provide lower marketing and turnover costs, and a bigger pool of quality tenants.

Ken wraps up his appearance by sharing what he sees coming in 2010 in terms of interest rates, foreclosures, rents, inflation, the dollar and more!  Really good stuff!

The second half of the show features a conversation with Kim KiyosakiRich Woman author and big time real estate investor.  She gives us her take on the prospects for 2010, which includes both bad news and good news.  Then Kim shares some details on a huge real estate deal she just closed which exemplifies her forecast.  She reminded us that she started in 1989 in the middle of the last real estate “meltdown” with no money and no credit.  Unable to obtain conventional loans for the first 8 years, she explains how she had to be creative to get her deals done. When you hear the size of her latest deal, you’ll realize how much can change in 20 years!  As we said in Equity Happens, 20 years from now it’s going to be 20 years from now.  The difference will be what you choose to do between now and then.

We’re going to continue checking in with the biggest brains in real estate to see what they’re going to be doing in the new decade.  Stay tuned to The Real Estate Guys – and tell a friend!

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Attorney Garrett Sutton joins Summit faculty

The Real Estate Guys are proud to announce that Attorney Garrett Sutton will be a special guest teacher on their 8th Annual Investor Summit at Sea April 9-17, 2010.

Garrett Sutton is one one of Robert Kiyosaki’s original Rich Dad Advisors and has spoken all over the world on the topic of partnership formation and asset protection for investors.  He is a best selling author and has over 25 years experience practicing law with offices in Wyoming, Nevada and California.  Garrett has been a guest on both The Real Estate Guys radio and TV shows, in addition to being featured in the Wall Street Journal and the New York Times.

Many people believe 2010 will be a great year for real estate acquisition.  If you see more opportunity than you have money, then setting up investing partnerships could be your formula for success.  But when you are investing other people’s money, having a strong understanding of the legal requirements is critical.  At this year’s Summit, Garrett will be teaching on what you need to to know to do investing partnerships right.

Also, in today’s lawsuit prone society, it’s important to have an asset protection structure in place and know how to use it properly. What’s the point in earning a fortune only to lose it all in a frivolous law suit?  Garrett will explain entity structuring to maximize protection and minimize costs.

Best of all, Garrett will be on board the cruise ship with us for 8 days and 7 nights, so attendees will have plenty of opportunity to ask questions. Take advantage of this RARE OPPORTUNITY to spend time with Garrett Sutton and the rest of The Real Estate Guys Summit at Sea faculty.  Sign up today!

Sign, Sign, Everywhere a Sign

Here we are the end of the first decade of the new millennium.  For old geezers like us who remember when George Orwell’s 1984 and Stanley Kubrick’s 2001: A Space Odyssey were speculations into the future, just saying “2010” is weird.  And if you’re not in the geezer group, you might not even recognize the title of this blog as the opening verse of an old 60’s rock song.  What does that have to do with real estate?  Nothing really.  The point of this blog is that as we enter this new decade, more and more positive signs keep popping up.  We’re here to help make sure you don’t miss them.

A December 19th Wall Street Journal headline says, Down Payment Standards Eased.  Well, that certainly caught our attention.  The gist of the article is simple:  Mortgage lenders and mortgage insurance companies are beginning to loosen their lending standards.  This, the Journal says, is a sign of increased confidence in housing.

You can read the article yourself, so we won’t repeat it here.  But we do want to point out a couple of ideas we think are worthy of consideration.

First, the looser standards are being applied on a market by market basis.  This acknowledges the obvious truth that real estate values are local.  This fact creates both opportunity and challenges for an out of area investor.   How do you know which markets are recovering and which ones are still declining?  While knowing what to research to figure this out is one thing, actually having the time and resources to do it is another.  How convenient when huge companies have already done some of this work for you!  So, it seems to us that any market where the looser standards have been applied might be of better-than-average interest.

Also, the article talked about the toughening of lending standards by Fannie Mae, who they say just raised its minimum credit score from 580 to 620.  That alone just took lots of people out of the running to buy a home.  While that might seem negative toward new buyers driving up values, it also means more people will need to rent.  As a property manager, if you’ve been running credit reports on prospective tenants, there might be an opportunity to pick up new customers in the 580 to 620 range.  Of course, you take more risk when you lower your standards, but unlike these automated underwriting engines that just lop people off the list at a specific point, you can be a little more personal.  There are a lot of people in this economy whose once pristine credit is tarnished because of unemployment or strategic mortgage default.  This doesn’t mean they will be poor credit risks when renting a place to live from you.

The landscape continues to change.  With every shift, problems and opportunities are created.  The signs are all around you, so keep your eyes open.  Think about what you are seeing.  Form hypotheses and develop action plans to take advantage of the shifts.  When we’re at the end of the next decade looking at 2020, where will you be?  The actions you take in this next year will be the foundation for the answer to that question.

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The Passing of a Legend

On Saturday, December 5th, the world lost a treasure. My friend and mentor Mr. Jim Rohn passed away after a prolonged battle with Pulmonary Fibrosis.  He was surrounded by his family and very close friends, as he often was in life.

Mr. Rohn was a successful businessman and dedicated father.  From humble beginnings as an “Idaho farm boy”, he went on to share his experiences and philosophies to empower people to find more success and fulfillment in their lives.

I was first introduced to Jim Rohn’s teachings in 1994, and had a chance to attend a live 2-Day seminar shortly after that. I have been a devout student ever since. Not a day goes by, nor will it, that I don’t think of Mr. Rohn.  His words have inspired me since the first time I heard him speak, and his simple ways of bringing clarity to difficult topics was unparalleled.

Mr. Rohn was very much in the public eye.  For more than 45 years he spoke with audiences small and large throughout the world.  Over 6 million people heard his words at live events and many more than that through his vast audio and video library.

Personally, Mr. Rohn led a very private life.  He never bought into the “fame” that his work created.  Instead, he was a humble servant who quietly “walked his talk”.  My friend and business partner Pol vahRhee and I had the opportunity to run the sound at many of Jim’s larger events over the years, and we were fortunate to have a chance to spend time with Mr. Rohn “backstage”.  He was a guest on the radio show multiple times.  While I often had a chance to share a few words with Jim, on three occasions I had the honor of sitting with him one on one, just the two of us.  Those are moments I will never forget.

I’m sure that news of Jim’s passing has many people thinking about the ways he influenced them, and thinking about some of their favorite Jim Rohn quotes.  Here are a few of my personal favorites:

“You cannot change your destination overnight, but you can change your direction overnight.”

“You don’t get paid for the hour.  You get paid for the value you bring to the hour.”

“The book you don’t read can’t help.”

“The few who do are the envy of the many who only watch.”

“You can change all things for the better, when you change yourself for the better.”

“Always do more than you are paid to do as an investment in your future.”

“We can have more than we’ve got because we can become more than we are.”

In 2005 as Russell Gray and I completed our manuscript for our book Equity Happens – Building Lifelong Wealth

The Legendary Jim Rohn with Robert and Russ

The Legendary Jim Rohn with Robert and Russ

with Real Estate, I offered a draft copy to Mr. Rohn and he graciously agreed to provide an endorsement of the book.  Jim often said, “It’s wonderful when your name appears in someone’s testimonial”, and after years of endorsing his work, I was blessed to have Mr. Rohn endorse mine.

It is because of Jim’s close friend and business partner Kyle Wilson that I had the amazing opportunity to get to know Mr. Rohn, and for that I am forever grateful.  Last year, as Jim was doing his best to deal with his challenging health situation, Kyle spearheaded a project to create a video tribute to surprise Jim and share with the world the effect his work has had.  A few dozen of us were invited to come film a story or reflection for a few minutes, then take an extra couple of minutes to look into the camera and address Jim personally.  With the support of Stuart Johnson at Video Plus, Kyle oversaw the painstaking process of editing all of that material into about 3 hours which he put on DVD and sent to Jim.  You can see a short sample of that video at http://tribute.jimrohn.com/.   Needless to say, Jim was touched by the gesture and moved hearing directly how his work positively affected so many people.

When we lose someone important in our lives, we rarely get the chance to share with them just how much they mean to us.  Thanks to Kyle, a few of us got that chance.  What an amazing gift…to Jim, and to us.

Jim often spoke about the ripple effect, and that you never know how many people you can influence by sharing meaningful words.  As I browse the various forums where people are paying tribute to Mr. Rohn, I am in awe of the number of people that have had their lives improved by his teachings.  So many of these folks never saw Jim in person, but have come to know him through his recordings.  Fortunately, many of Jim’s seminars are forever preserved for future generations.

I know my life will never be the same thanks to Mr. Rohn.  He was an extraordinary man with a profound ability to bring out the best in people.  Thank you, Jim; it is a gift I will continue to pay forward for the rest of my days.

Robert Helms
December 7, 2009

Let others lead small lives, but not you.
Let others argue over small things, but not you.
Let others cry over small hurts, but not you.
Let others leave their future in someone else’s hands, but not you.

– Jim Rohn

12/13/09: Ask The Guys – What’s On Your Mind?

What is the meaning of life?  Why did God create flies?  How many little styrofoam balls in a bean bag chair?  These are just some of the many questions that The Real Estate Guys will never answer.  Fortunately, our listeners have sent in much better questions!  To provide irrefutable answers to our listeners’ real estate questions, we decided to the gather together the world’s most brilliant minds.  But since they weren’t available, we decided to take a stab at it ourselves.

The professional pontificators in studio for today’s show:

  • Your illustrious host, Robert Helms
  • Financial philosopher, Russell Gray
  • The Godfather of Real Estate, Bob Helms

Answering your questions is one of our favorite things to do.  But because we want to keep our broadcasts topical and focused, we typically don’t take calls.  Instead, we gather up questions during the week(s) and look for common themes.  Then, we dedicate a show to sharing our ideas and opinions on a few select questions.  For this broadcast we addressed the following topics:

  • Is it dangerous and dumb to buy an out of area property without seeing it first?  Is there a way to do it safely?
  • What should I so with my negative equity / negative cash flow rental property?
  • What do you think about the investment opportunities in Southern California real estate?
  • I’ve been studying real estate for two years, but haven’t bought anything because I’m afraid of making a mistake. What should I do?

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WSJ says House Flipping Make a Comeback

We noticed an interesting headline it today’s Wall Street Journal.  “House Flipping Makes a Comeback”.  That brought back fond memories of easy equity during the days of “irrational exuberance” in real estate.  Of course, there’s a dark side to irrational exuberance which we’re sure you don’t need to be reminded of.

So why did this article catch our interest?

The star of the article is a real estate “investor” in Phoenix…really? Phoenix?  We thought Phoenix was a train wreck.  Or, is their opportunity in chaos?

Anyway, this guy in Phoenix went to an auction and bought a house that was formerly worth $1.3 million.  He paid just under $489,000.  He then sold it to a woman for $699,000.  That’s about $210,000 in quick profit.  In The Real Estate Guys’ world, we call this “found” equity.  It’s “found” because he didn’t do anything to the property to make it worth more.  It was worth more than what he paid for it at the time he bought it.  The bank left money on the table.  He found it.

Sounds easy, right?  How many of those would you like to to do in a year?

The article goes on to talk about different markets and statistics.  It provides some insight into bank motives. Blah, blah, blah.  This isn’t to be critical of the Wall Street Journal.  But they write for a different reason than we do.  We’re thankful they brought the topic up.  Now we have something to build on.

What we’re interested in is HOW to do it.  Though we’re not experts in purchasing foreclosures, we have certainly done our share of “found equity” deals.  Based on our experience, here are some tips if you decide to play this game (which can be very fun and profitable!):

ALWAYS know your exit before you get into the deal. And ideally, you want more than one.  The article doesn’t say if the Phoenix guy had his buyer identified BEFORE he bought the property, but that’s the way we would have played it.  With a buyer in hand, you show up at the auction (or go into the open market) and look for a property that your buyer wants.  If you know what they’re willing to pay and you can buy it for less, then you have margin and a quick and known exit.

Make sure your buyer is real. That is, he’s ready, willing and able (as in financially capable of buying).  If you’re a real estate agent, this is basic.  If you’re a newbie flipper, it’s gold.  You don’t want to be stuck holding the property.

Make sure your margin is more than 6%. Even though 6% on a $300,000 deal is $18,000 and it sounds like doing that 10 times a year might be a decent living, it’s the same as if you were a real estate agent.  The difference is a real estate agent isn’t putting his own capital at risk.  If you’re going to take more risk, you need to receive more reward.

Don’t put all your money into one deal. It will be SO tempting when the “no miss” deal comes along.  But remember, this is real estate. Something ALWAYS goes wrong.  It doesn’t necessarily mean you lose money, but it might be tied up for awhile, so you lose opportunity.  Side note:  If you don’t happen to have $500K sitting around like our friend from Phoenix apparently did, go find 10 friends who have $50K and do a small syndication.  Now no one has all their money in one deal.  And if this whole process takes 90 days, $200K on $500K is a 40% return in 3 months.  That’s 160% annualized.  We’re betting there are some investors out there who would want to get in on that.  If you decide to go this route, make sure you visit with your attorney first.  Syndicating isn’t something for the newbie do-it-yourselfer.

Did we mention to have a plan B? And C and D?  If your buyer falls through, have 2 or 3 more lined up.  If possible, be prepared to “Flip and Hold”.  This is what we call buying a property for cash, then refinancing it to get most of the money (or if you bought it low enough and wait a bit, you can sometimes get ALL your money back out).  Then rent the property for enough to float the mortgage and expenses.  Obviously, this is more complex and there’s some math to do to make sure it all makes sense.  And we know that getting loans on certain types of properties (and cash out loans in general) is harder to do today than in the past.  We recommend knowing your financing options BEFORE you buy, even if you don’t plan to hold.  You never know how it’s going to work out.  The more options you have the safer you are.

We obviously could go on and on (we’re experts at that).  This topic is too deep for a simple blog post.  But it should get your brain whirring (which is always a good thing).  Our recurring theme is that there is a lot of money to be made in real estate right now simply because most people still aren’t ready to play.  This guy in Phoenix made 200 grand because other people weren’t there bidding.  And what a great service he provided for his buyer!

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12/6/09: The Home Stretch – Year End Strategies with Attorney Garrett Sutton

The end of the year is a great time to look back and grab lessons from the past so you can apply them to your plans for the new year.  It’s also a great time to clean up loose ends and organize yourself for a fast start in January.  While it’s exciting to build your portfolio, it also means you have more details to manage.  Being organized is no longer a luxury.  It’s a necessity!  On this broadcast, The Real Estate Guys focus on some of the many often overlooked, yet very important details of keeping your real estate empire tidy.

On this broadcast, making their lists and checking them twice are:

  • Your Host, Robert Helms
  • Co-Host and Chief Financial Organizer, Russell Gray
  • The Godfather of Real Estate, Bob Helms
  • Special Guest: Rich Dad Advisor, Attorney and Author, Garrett Sutton

The show kicks off with a quick discussion of the importance of getting off the hamster wheel long enough to take time to both reflect on the past and to plan for the future.  “Busy” isn’t always productive.  It’s important to work smart.  A big part of working smart is having a personal advisory board to help you know what to do.  But who do you need and how do you work with them?

Joining in on the discussion is attorney Garret Sutton.  Garrett begins with a review of essential asset protection strategies for real estate investors.  Then he provides important updates on upcoming and potential changes to tax, estate and asset protection laws that affect real estate investors.

In today’s challenging economy, it’s important to make every dollar count.  Garrett shares critical information about changes in fees related to entity formation and maintenance.  This leads to a discussion of jurisdictions which offer the best protection and privacy for the price.  He also reveals a little known technique to minimize the costs of moving an entity from one jurisdiction to another.  Good stuff!

Garret closes out with important reminders about critical, though mundane, tasks which should be attended to in order to maximize asset protection.  The Guys go on to discuss other items which should be considered in year end planning.  The show wraps up with an overall outlook for the new year.

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11/29/09: Coming Up Short – The Realities of Selling Your Property for Less than You Owe

With so many properties with mortgages that exceed the current value, many owners are feeling trapped.  When loan modification fails and you can’t afford to pay the mortgage, before you toss in the towel and allow the lender to foreclose, consider a short sale.  No, this isn’t a garage sale of your used underwear to raise money for the mortgage.  It’s the process of working with the lender to get them to release you from the loan when you bring in a new buyer who pays less than you owe.

In studio to brief you on short selling:

  • Your host, Robert Helms
  • Co-Host and Financial Strategist, Russell Gray
  • The “Godfather of Real Estate”, Bob Helms

The Guys kick off the show with a discussion of what a short sale is and why a property owner would bother.  Why not just throw the keys at the lender and walk?  And what about the lender?  Why would the lender accept a loan payoff for less than the full amount due?  This show builds upon a March 22, 2009 show (available to Backstage Pass Members in the Archives) which covered the opportunities for investors in buying short sales.

Moving on from the motivations of the various parties, the Guys delve into the actual process of a short sale.  Is this something you can or should do yourself, or does it make sense to get professionals involved?  If so, which professionals are needed and what questions should you be asking?  While short sales are nothing new, Bob pointed out that it’s been decades since they were a significant portion of the market.  Who do you need on your team and how important is experience when seeking professional help?

The Guys also touched on the concept of “deficiency” and the possible tax consequences of a short sale for both homeowners and investors.  The show concluded with a discussion of what to watch out for in today’s economic climate.  Whether you are someone in need of getting out of a property that’s underwater, or if you’re an investor looking to pick up a bargain by providing a borrower and his lender an alternative to foreclosure, this show will give you some food for thought!

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