1/27/13: Creative Deal Structure – How to Think Like Leonardo Da Vinci

It’s been said that if you do what everyone else does, you’ll get what everyone else gets.  To dig a little deeper, you might say that if you think like everyone else thinks, then you’ll act like everyone acts, and ultimately you’ll get what everyone else gets.

Therefore, if you want to break away from the pack and achieve and acquire extraordinary things, to quote Leonardo Da Vinci, “You must become an original thinker.”

So what does this have to do with real estate investing?

In the studio to discuss this intriguing topic for this episode of The Real Estate Guys™ radio show:

  • Your creatively brilliant host, Robert Helms
  • Special guest, author and consultant, Michael J. Gelb

One of the most enjoyable and challenging aspects of real estate investing is the uniqueness of each individual deal.  Many properties are one of a kind, but even when you’re negotiating on a cookie cutter property, market and seller dynamics almost always create a one-of-a-kind situations.  Add to that your own ever-evolving personal investment philosophy, financial resources, experiences and relationships.

Sound complicated?  Maybe.  But here’s the good news:  We live in a super connected world.  This means we can easily access the creative brilliance of others.  So we stimulate your thinking by sharing a few of the many creative deals we’ve seen over the years.

You’ll hear about how the Pizza Principle was used to help one investor get a free house.  And how another investor sold a vacation property, but is still able to use it when on vacation.   Then there’s the story of a guy who ended up with an orange annuity out of a deal.  Really.

Plus, you’ll discover how one creative developer uses entities to substantially mitigate transfer tax.  Good stuff!

Of course, if everyone is just copying other people’s original thinking, sooner or later there are no more original thoughts.  And when it comes to a great idea, do you want to be the last to know or the first?

The best way to be the first to use a great idea is to be the person who comes up with it first.  This means YOU need to develop a creative mind.

To help you, we sit down face to face with Michael Gelb, the author of the classic book “How to Think Like Leonardo Da Vinci“.   Michael makes his living training people in the creativity concepts he’s gleaned from studying Leonardo Da Vinci, arguably the most creative mind that ever lived.

So feed your creative genius and listen in to this brilliant episode of The Real Estate Guys™ radio show!

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1/13/13: Embracing Change in the New Year – Getting Investors Up to Speed

Technology is changing the way people live, work and play.  Now that’s not a bad thing, but it’s easy to get left behind.

But just like calculators made doing math different, those who use them most effectively understand the basic mathematical concepts behind the speedy calculations.

So what does that have to do with real estate investing?  That’s what this episode is all about.

Talking tech and embracing change on location in sunny San Diego:

  • Your talkative and embracing host, Robert Helms
  • The Godfather of Real Estate, Bob Helms
  • Special guest, internet marketing guru, Pol vanRhee

Since Bob started investing only moments after God created dirt, we start out the conversation capturing Bob’s observations about the impact of technology on the business of real estate.  You can bet he’s seen a LOT of changes over the centuries.

In the beginning “high tech” was a calculator.  That’s a big step up from those old mechanical adding machines.

Then copy machines replaced carbon paper.  Really.  We’re not making it up.  People used to take two pieces of paper and put a dirty piece of paper in between them and type…or even write by hand.  Then the dirt from the middle sheet would make impressions on the bottom sheet and presto!  Instant copy.  Amazing.

Then things picked up.  Word processors replaced typewriters.  Fax machines became all the rage.  Then everyone had a desktop computer.  Before long, there were pagers, cell phones, laptops, smart phones, tablets and implants.

Okay, we’re not at implants yet.  At least not for communication.  Then again, a nice set of implants says something…but that’s a different discussion.

Did we mention the internet, and search engines and social media?

You get the idea.  More change is coming faster.  It’s easy to get overwhelmed.

But remember…technology is primarily designed to make the basics of human activity more efficient, which doesn’t necessarily mean it’s more effective.  There’s a big difference between being efficient and being effective.

Efficiency is about getting things done fast and right.  Of course, you can be highly efficient doing the wrong things – and that’s not very effective.

Effectiveness is about getting the right things done faster. Which brings us back to focusing on the principles behind the technology.

Real estate is a relationship business.  Sure, there’s lots of data and financial analysis.  There’s records to create, share and store.  But the CORE of the business is connecting with people and doing business.  From that stand point, all business is based in relationship.  Yet, we contend that real estate is different.

Why?

Because homes and offices are PERSONAL.  And the numbers are BIG.  There are emotions involved and people want to work with people they like and trust, in relationships where they feel understood.  You might buy a book or a pair of socks on line, but a $300,000 four-plex?   You probably want to talk to someone.

Yet with all this wonderful technology at your disposal, it’s easy to forget the human factor.  Technology should ENHANCE your relationships, not replace them.  It sounds obvious, but it’s really easy to forget.  Why take the call, when you let it roll to voicemail?  Why call back, when you can text or email?  Be careful.

Beyond that, even the holy grail of marketing, “word of mouth” has a new meaning because of technology.  Someone may simply forward an email, share a link, like a page, tweet a URL, etc.   Your mission is to make that easy for your tenants to tell other prospective tenants about your property.  And to be keenly aware of how quickly bad customer service can spread.  There’s little margin for error in today’s connected world.

Pol vanRhee explains how the internet allows people to perform research, seek out products and services, and share information with unprecedented speed.  This means you have more competition when you’re searching for deals or marketing your properties.  It can be good or bad, but that’s not the point.  It’s here, like it or not.

So get ready!  It’s a brand new year and there’s lots of change and opportunity on the horizon.  Open your mind and arms and get ready to embrace it!

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1/6/13: Real Estate Perspectives, Predictions and Precautions for 2013

Even though we’ve survived the Mayan doomsday, we’re still paddling towards the fiscal cliff and Congress hasn’t produced a budget in over 1350 days. Plus we’re banging up against yet another lifting of the debt ceiling.

But don’t worry, the recession ended in June 2009, remember?

Meanwhile, real estate just keeps chugging along.

So what does 2013 portend for real estate investors?

Well, every year at this time, all the pundits and prognosticators whip out their balls (crystal, that is) and tell the world what they think is going to happen.  And just for fun, we sift through all the noise and try to pick out some interesting tidbits to comment on ourselves.

So sitting behind The Real Estate Guys™ big shiny crystal ball is your one and only intrepid host, Robert Helms.  Co-host Russell Gray had to sit out this session because his ball was too small to add any real excitement to the broadcast.

Now that we’ve gotten past our juvenile crudities (c’mon, you smiled a little), we’re really here to talk about the state of real estate and where the market is…and more importantly, where people who spend most of their time paying attention think it’s headed.

We know that the banks just bought another multi-billion dollar get-out-of-jail-free card for all their violations of mortgage and foreclosure law.     Billions may seem like a lot, but compared to the damage they did and the legal consequences they escaped, it was a bargain.

But whether you like it or not, the settlement moves the marketplace yet another step closer to flushing the foreclosure inventory.  This means continued downward pressure on pricing, more people renting, and lots of motivation for the Fed to hold interest rates at ridiculously low rates for a little while longer.

Now, what’s an investor not to like about lower prices, more renters and low interest rates?  Just be careful not to stand around admiring all the bargains and overlook actually getting in on the action.  We continue to think this will go down in history as one of the greatest real estate buying opportunities of our lifetimes.

Builder confidence is on the rise, but still very low compared to the heyday.  Still, more new product is beginning to come out of the ground.  Since some of the existing inventory is selling below replacement costs, it will either be very hard for builders to sell their product at a profit, or the new product will start to pull prices up.  Considering how much money they Fed continued to pump into the system, we’re betting on the latter.

The population continues to grow, but employment isn’t keeping up.  That means a more competitive labor market and downward pressure on incomes.  And if you’re a saver (noble ideal, but bad strategy when facing inflation), trying to live in interest income, you’re getting squeezed by higher prices and lower interest rates.  All that to say, that if the squeeze continues, people and businesses will continue moving to lower cost, lower taxed areas.  Keep that in mind when selecting markets and product types to invest in.

One thing the last few years have proven once again:  markets cycle.  Some of the worst hit markets in 2006-2009, have become some of the highest appreciating markets over the last 3 years.  Seems obvious in hindsight, but how often do we freak about about buying at the bottom?  That’s where perspective comes in.

So listen in as Robert reviews and comments on the chatter in the market.  Just be careful not to get lost in the forest of information and miss the big picture.   Worse, don’t let fear of uncertainty keep you from getting in the game.  After all, the only thing 100% certain is the past…but by then, you’ve missed it.

Your job as a real estate investor, is to study, think about the possibilities, and act on the probabilities.   As long as you don’t bet the farm on any one deal, even when you get it wrong, you should live to invest another day.  And since doomsday didn’t come, we can rejoice that (at least for now) we all get some more days to live.

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed. Visit our Feedback page and tell us what you think!