9/25/11: Finding the Right Market with the Right Jobs

Tenants who actually have jobs are far more likely to pay rent than those who don’t…unless you’re renting to Section 8 or retirees.  So you don’t have to be a rocket scientist to know that the durability of your rental income will be closely linked to the durability of the local economy.

And while a lot of real estate”investors” have been focused on flipping distressed properties to foreigners and newbies, if you’re a long term buy and hold investor, then finding the right market with the right jobs is job one.  After all, if you get a “great deal” on a cheap property in an economically declining market, how bright is your investment’s future?

So how do you know if a local market is attractive (or repulsive!) to businesses and job growth?  To find out, we decided to visit with a guy whose full time job is to reach out to businesses and recruit them to move to his city and set up shop.

The voices on this scintillating session on The Real Estate Guys™ radio show:

  • Your right on host, Robert Helms
  • Your left over co-host, Russell Gray
  • The Godfather of Real Estate, Bob Helms
  • Special guest, the CEO of the Greater Memphis Chamber of Commerce, John Moore

During a recent trip to Memphis (we were doing some advance work for our upcoming field trip), we had the opportunity to sit down with  two representatives from the Chamber of Commerce.  We learned so much, we thought you would like to hear about it.  So we invited them to call in to the show and tell us about what makes Memphis magic.  We must have made a good impression because they gave the job to their CEO!

Even if you aren’t interested in Memphis (cash flow can be SO boring), you can still learn a lot from this episode, which you can then apply to whatever markets you’re in to.  (If you have one you really like, use our Feedback page to tell us which one(s) and why.  Who knows?  Maybe The Real Estate Guys™ will do a field trip to your town?)

So what makes a market place attractive to businesses?  We know that a company will move to find a more favorable business climate, but what does that look really look like?  And is it really all up to the government, or is there more?

We find out that there are a variety of factors, some of which have to do with taxes and regulation, but many others that have to do with location and who the neighbors are.  Sometimes there are important synergies between businesses, so companies will set up shop simply to be near each other.  Mr. Moore gives us a couple of great examples.  Very interesting!

Of course, as real estate investors, we’re not just interested in jobs for the sake of jobs.  Though after the last few years, ANY job looks pretty good!

But real estate investors are looking for areas where there are the kind of jobs that our ideal tenants will need to be able to consistently pay rent.  Don’t you like the sound of those words? “Consistently pay rent”… like music to our ears!

So listen in to this episode and learn about some of the things you should be thinking about when scouting out your next long term real estate market!

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

9/18/11: Retirement Planning Abroad and Beyond – How to Have Your Cake and Eat It Too

When it comes to retirement, getting there means knowing where, why and how.  And without foresight, opportunities can be squandered or missed altogether.  Since real estate is simply a means to an end, it’s important to begin with the end in mind.

Host Robert Helms takes a look at what things you need to think about when planning your retirement approach. When do you want to retire?  Where do you want to live?  What do you want to leave behind?  There’s a lot to think about!  And sadly, it’s easy to put it off until there isn’t much time left.  Like cash flow, when it comes to planning, more sooner is better.

Then Robert sits down with some special guests to get updated on two very diverse topics.

First, Phil Hardcastle brings us up to speed on Mexico.  As U.S. baby boomers look for warm, affordable places to retire near the U.S., is Mexico still a hot destination?  Phil is a real estate developer and broker, originally from Southlake, Texas, who is now based in San Miguel de Allende, Mexico.  With all the hoopla about Mexico, we wanted to get the straight scoop from someone we know.

Next, Jeffrey Verdon returns to The Real Estate Guys™ radio show to give us an update on the latest and greatest tool in estate planning – something he says allows you to have your cake and eat it too.  Sounds interesting!

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

The Disappearing Middle

Recent reports from the U.S. Census Bureau declared that the U.S. middle class is getting squeezed.  Shocker.  Thank you, Captain Obvious. We were hoping the disappearing middle referred to our beer bellies, but no such luck. 😉

Of course, our good friend Robert Kiyosaki has been saying for years that the rich will get richer, the poor will get poorer and the middle class will get squeezed.  So if you’ve been paying attention, the report from the Census Bureau isn’t a surprise.

The big question is:  what are you going to do about it?

If you’re in the middle class and you’re feeling the squeeze, it may be time to make the leap from employee to entrepreneur.  Yes, it’s hard work.  But so is being poor.  If you’re reading a blog like this, you’re probably already committed to being successful, so we won’t waste time preaching to the choir.

So let’s talk about what a disappearing U.S. middle class means to you as a real estate investor.

In the Clues in the News segments of our Mentoring Club meetings, one of the things we watch for is what “the big dogs” are doing when faced with market shifts. And it isn’t just real estate investors we watch.  It can be fund managers or corporations.  We can learn from anyone who’s watching the economy and managing cash, cash flow, debt and equity.

We saw an article in the Wall Street Journal, As Middle Class Shrinks, P&G Marketing Aims High and Low, that talked about how big corporations are shifting to an “hourglass” marketing strategy.  (When it comes to hourglasses and figures, we understand getting excited…but marketing?  We must be getting old.)

You can read the article yourself, but the point here is that big corporations are making major adjustments to their businesses to adapt to a disappearing U.S. middle class.  Similarly, is there anything a real estate investor should be doing to adjust to the new American reality?

Here are some things to consider:

People will move to where there are jobs.  Duh.  The million dollar question is where in America are their jobs?  If you’ve been watching the Presidential debates, you’ve been hearing about all the jobs in Texas.  Dumb luck or great leadership, it’s no surprise that more people and businesses are moving to Texas than moving out.

People and businesses will move to where it’s cheaper.  State income taxes take a big bite out of most budgets, so look for good investment areas in a no tax (there’s only seven) or low tax state.  Two of our favorites right now are Tennessee and Texas.  Businesses also look for low cost land, a big labor pool (population), and nearby educational institutions.

People will move down before they move away.  They have families and friends and don’t want to leave them.  As the affluent fall down the food chain,  prices will likely soften in the affluent areas, while demand will increase for lower priced properties near those affluent areas.  Watch what’s happening in whatever markets you’re investing in.  Talk to property managers, real estate agents, local resident (it’s amazing what you can learn in a coffee shop!) and the Chamber of Commerce.  Which sub-markets are people and businesses moving away from and to?  As in all investing, the trend is your friend.

Pick markets carefully with “geographically linked” economies.  That is, industries that must be located in the region and can’t be easily moved, if at all.  It’s also important that those industries be permanent (you don’t want to buy all the houses next to video cassette manufacturing plant).

Two great examples of permanent and geographically linked industries are commodities (like oil, gas, lumber, etc.) and distribution.  It might be easy to move a widget manufacturing plant to China or Mexico, but you can’t move mining or farming offshore.  Those jobs have to stay in the area – and those commodities are always in demand.

Similarly, moving boxes from point A to point B is a logistical operation.  Even if the U.S. is poor, there will still be 300+ million people who need food, clothes, household products, etc.  All that stuff might be made in China or Mexico, but it’s moving through the U.S., so those distribution jobs are linked to the real estate.  And it’s not just location, but huge and expensive infrastructure like airports, roads and railways.  Two cities that come to mind are Dallas and Memphis.

Now if the U.S. shakes off the doldrums and comes roaring back to economic life, any market that’s sound in a tough economy will only be more sound in a great economy.  Either way, you win. 🙂

 

 

 

 

 

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.

 

 

Memphis on My Mind – October 14-16, 2011

The Real Estate Guys™ are leading an enthusiast group of real estate investors on market field trip – and YOU’RE INVITED!!!

Click here now to learn more about the trip.  We’d love to hang out with you in marvelous Memphis!!!

In Memphis, Cash Flow is King...but so is Elvis!!!

Cash Flow is King

If you’re a fan of the show, you know we’ve been spending a lot of time with Robert Kiyosaki.  One of Mr. K’s favorite words is CASH FLOW (is that one word or two???).

We like cash flow too because it’s where equity comes from.  Income properties are valued by the income they produce.  More income equals more value (equity).  So cash flow and equity investing are NOT mutually exclusive.

One thing you’ll like about Memphis is that properties there tend to CASH FLOW.  Perfect!

The Market Matters

Investing is about being on the right side of demographic and economic moves. When people and money move away, markets weaken.  When people and money move in, markets get stronger.

If you invest in something that others are moving away from (contrarian investing), you may get a deal or may get a dud.  It depends on why the moves are happening.  Do you know what’s happening in the markets you’re in?  Do you know how to tell?  One the biggest benefits of a field trip with The Real Estate Guys™ is we talk about how to read a market.  That’s a skill you can use in ANY market you visit.

On the trip, we’ll talk about what’s moving in Memphis and why.  Good quality of life, low cost of living, and no state income tax are just some of the attractions for both people and businesses.  We think you’ll be pleasantly surprised!

Market Analysis – A Critical Skill for Real Estate Investors

Most people don’t pick markets strategically.  They find a “good deal” and buy it, then figure the market out later.

And many real estate “tours” are about selling properties, not learning the market.  When you explore a market with The Real Estate Guys™, we focus on explaining the market.  While you can learn  a lot about a market from a distance (thanks to Google!), there’s no substitute for actually being there.  And when you’re on one of our field trips, you have experienced guides and lots of other investors to learn from.  Plus, we ALWAYS have a good time.  🙂

Join The Real Estate Guys™ in Memphis October 14-16th, 2011.  Click here for more info.

 

 

 

9/11/11: A Tale of Two Investors – Building a Business and Leaving a Legacy

As much as we love real estate, we know it’s merely a means to an end.  And a big part of each individual investor’s personal investment strategy will be based on the end they are pursuing.

In this episode of The Real Estate Guys™ radio show, we talk to two very different real life real estate investors to find out how they are using real estate to achieve some of their personal goals.

Behind the microphones in Memphis and Las Vegas:

  • Your well meaning host, Robert Helms
  • Your co-host, a man of means by no means, Russell Gray
  • Special guest, Memphis real estate entrepreneur, Terry Kerr
  • Special guest, our faithful Oregon buy and hold listener, Craig Horton

Like many buy and hold investors, our special guest Terry Kerr found himself with more opportunity than money.  But rather than resign himself to the slow path to prosperity, he found an entrepreneurial way to create opportunities for others and down payments for himself.  And when he found himself in need of a reliable property management solution, rather than pay someone else, he decided to create his own company.  His story is a great case study in ambition, resourcefulness, hard work, common sense and smart business.

Meanwhile, on the West Coast, Craig Horton grew up in a real estate investing family.  As a result, he’s built a nice portfolio while enjoying a great relationship with his father.  And because they see real estate investing as a transcending activity, they’ve found a creative way to use their real estate wealth to benefit more than just themselves.

Both men have interesting real estate stories that we’re sure you’re going to enjoy.  So listen in to Terry Kerr and Craig Horton and consider how YOU want to use real estate as a tool to build a life you will enjoy and be proud of.

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

 

 

Getting Your Retail Real Estate in Shape

Retail has been a battered sector of late.  It was bad enough that the internet migrated lots of shoppers out of malls and into cyberspace, but then we had to go and have a financial crisis.  When it rains it pours.

Of course, with every crisis comes an opportunity.  And as we’ve been saying for months, when the going gets tough, the tough get creative.

The Wall Street Journal recently published an article about how health clubs have become the beneficiary of and the a savior to a tough retail real estate market.  The lesson is that when the market changes, you have to think outside the box.

If you’re facing challenges with any of your properties, then get around the most creative people you know and brainstorm about solutions.  It may seem obvious, but sometimes we get stuck on a problem and just try thinking harder.  Sometimes it’s more important to think differently.

Albert Einstein (we heard he was a pretty smart fellow) said:

“You cannot solve a problem from the same consciousness that created it. You must learn to see the world anew.”

How true!

And if you need a little inspiration, click here to listen to our podcast Creative Solutions to Today’s Property Problems.  Then use our Feedback page to tell us about your problem and creative solution.  Who knows?  Maybe you’ll end up as an inspiration for another investor somewhere down the road!

 

9/4/11: Reaping Profits from Resource Backed Investments

When the quality of the currency is questionable, it’s critical to be extra careful when selecting markets and property types.

That sounds good, but what does it mean in the real world?

The answer isn’t short, but it’s very common sense once you hear it.  And we get the lessons from some unlikely guests.

Behind the silver microphones for this profitable episode of The Real Estate Guys™ radio show:

  • Your resourceful host, Robert Helms
  • Your recycled co-host, Russell Gray
  • Special guest, President of EverBank Direct, Frank Trotter
  • Special guest, real estate entrepreneur, Mark Bragg

Frank Trotter is a banker who deals not only in dollars, but in a variety of currencies, so he has a unique perspective on how resources such as oil affect the stability of currencies.  And yes, there’s a very important lesson for real estate investors.

Our next guest is Mark Bragg of Shadowrock Farms.  Mark draws attention to food as one of the most important resources of all.  Once again, there is a very interesting real estate play involved – and we’re betting it’s something you haven’t thought of.

So listen in as The Real Estate Guys™ research the strategic role of resources in strategically picking markets, properties and currencies to protect and grow your wealth.

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