3/31/13: The Value of Changing Scenery and the Seasons You Go Through as an Investor

Profitable opportunities and valuable lessons are all around us…sometimes in the most unlikely of places.

In our recent travels, we found ourselves in disparate places with distinctly different, yet highly notable and successful people.

The common denominator is that we find great lessons to be learned from both – and we want to share them with you.

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

  • Your always on host, Robert Helms
  • Your on and off co-host, Russell Gray
  • Special guest, the top real estate broker in Grand Cayman, James Bovell
  • Special guest, world renowned drummer and now budding artist, Carl Palmer

Now right out of the gate, you may be wondering how we always manage to get face to face with all of these amazing guests.

Here’s a hint: they don’t come to us.  We boldly go where most talk show hosts don’t.  Sometimes a change of scenery can do you good!

We got to know James Bovell during our educational real estate shore excursion on our 2013 Investor Summit at Sea.

James runs the RE/MAX franchise on the Caribbean island known as Grand Cayman.  In fact, as we discovered on our trip, he’s the dominant broker on the island.  It’s always fun to get shown around by the top guy in a market.  It’s why we hang out with John Turley in Belize.

And there’s another lesson:  if you’re going to form associations or build a team, always go for the best.  You might have to wait a little longer, work a little harder or pay a little more, but (as Brian Tracy would say), the pain of low quality always outlasts the pleasure of low price.  Who wants the discount brain surgeon?

As we toured Grand Cayman with James, we found it to be a fairly mature market.  That means it’s already pretty built out. And because land is limited on the island and the demand is high, pricing is pretty high too.  The lesson here is that the best time to buy real estate was 20 years ago.  Of course, 20 years from now, it will be 20 years from now, which might make now a pretty good time to buy also!

Now James has been in Grand Cayman for quite some time.  So he could tell us what it was like many years ago.  If we were only looking at Grand Cayman, that might make us feel like we missed some opportunity.  But since we’re also active in other markets, it helps us see their potential before it’s been fully developed.

Of course, mature markets (like mature people) also have their advantages when compared to their less developed counterparts.  Mature markets have many more amenities, proven track records, less unknowns.  So what you see is what you get, as compared to a developing market where you need more vision and faith.

So there isn’t a right or wrong.  It’s purely a matter of personal preference and where you’re at as an investor.  The people who attend our field trips to Belize find an emerging market with lots of potential.  It’s more affordable, but far less developed. Most really like that.  Some want something more here and now.  For that, Grand Cayman is great.

Our next guest on this episode is Carl Palmer.  If you’re a classic rock enthusiast, you probably know the band Emerson, Lake and Palmer.  This is the band Carl came to fame with.  Today, he performs with his new band, The Carl Palmer Band.  In addition, he and some partners have found a way to take Carl’s drumming and create a highly unique and beautiful form of art.

Robert Helms with drummer Carl Palmer and Carl's new art. Click in the picture to see more.

But what does any of this have to do with real estate investing?

A lot more than you might think.  Remember, our thesis is that there are often great lessons to be learned in some of the most unlikely places or from the most unlikely people.

In the case of Carl Palmer, he found his initial success being part of a team of talented individuals.  He talks about the importance of aligning yourself with the best people you can find.  Obviously, this applies directly to real estate – or anything really.

But there’s so much more!

Music has changed quite a bit in the 40+ years that Carl has been performing.  Many aging rock stars are making tons of money reprising their classics.  Nothing wrong with that.  In fact, we love to go to those concerts where we know every chord and lyric.

But to drum up new fans (ba dum chhhh…sorry, we couldn’t help it), Carl know you need to keep things fresh.  And once you’ve made all the money you need, your work can become boring unless you find a way to keep yourself engaged at a high level.  Again, lots of parallels with real estate investing.  Managing your own seasons of life and career is an important part of successful investing.

Carl’s art also has some interesting lessons.  The art is only available now because the technology which creates it wasn’t available many years ago.  But instead of staying stuck in the past as many older guys do, Carl embraced the technology and the opportunity to express himself artistically in a completely new way.

Today, there are all kinds of technology tools available to real estate investors to enhance your research, due diligence, operations and organization.  Of course, Carl knows nothing about all that (that we know of), but the question is: are YOU embracing technology in your real estate investing?  As Carl explains, it’s important to keep things fresh.

We could go on and on (can you tell?), but we’ll let you listen for yourself.  This was a really fun episode to create.  We hope you enjoy it!

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3/24/13: Are You Ready to Become a Full Time Real Estate Investor?

Many people look at real estate investing as a way to escape the daily grind of working for someone else.  And while self-employed folks don’t necessarily have a “boss” that they’re trying to get out from under, the idea of sitting at home and opening rent checks as a full time occupation sounds pretty appealing.

So we decided to discuss the what, when and why of going full time.

In the studio for another exhilarating episode of The Real Estate Guys™ radio show:

  • Your full time host, Robert Helms
  • A man who’s been investing for a lifetime, the Godfather of Real Estate, Bob Helms

(Co-host Russell Gray is playing hooky this week)

Going “full time” and “real estate investing” mean different things to different people.  So right out of the gate it’s important to get clear on the definitions.

First, for purposes of our discussion, “full time” really means your MAIN vocation.  It’s what you spend most of your time doing and where most of your money comes from.

With that said, the Internal Revenue Service of the United States (the “IRS”) has an additional definition to lump on top of that (just to keep things simple for you U.S. taxpayers ;-)).  The IRS says you need to put in at least 750 hours a year to be considered a full-time investor for tax purposes.

Why is that important?  Because if you’re full-time, you can use more of your depreciation (phantom loss) to offset positive cash flow (income) and mitigate, if not completely eliminate, tax!

Now please keep in mind that we’re not tax advisors, CPAs or even all that bright.  So PLEASE be sure to get qualified professional advice before taking action on anything you read here or hear on the broadcast.

The point is that going full time has tax advantages you’ll want to be aware of.

What about “real estate investing”?

Well, some folks think any activity involving real estate is “investing”.  But we disagree.

If you’re flipping houses, wholesaling, doing ground up development, or any other activity where your efforts are adding substantially to the value of the property and your profit stops when you do, then we would argue that you have a BUSINESS.

Now there’s nothing wrong with having a business.  In fact, you might like it better than having a job.  But your income still depends largely on your daily efforts.  We don’t call that “investing”.

We think of real estate investing in terms of acquiring and managing assets that produce passive income.  So if you decide to take a month off, you continue to get monthly checks.  If there’s enough to pay all your living expenses, our friend Robert Kiyosaki calls this “getting out of the rat race”.  It’s the Holy Grail of real estate investing.

So now that we’re clear on the meanings of “full time” and “investing”, the bigger discussion is about when and how to become a full time investor.

Based on the definitions, the “when” should be pretty obvious.  You should have enough passive income coming in to fully support your living expenses.  Hopefully, you have even more so you can add to your investment fund and acquire more properties.

Of course, when you’re full time, you have more time to look for creative opportunities where you don’t need a lot of cash to acquire that next cash flowing property.  Or you may be able to use 1031 tax-deferred exchanges to grow your portfolio through “equity optimization” (see Bob’s Big Boo-Boo in Equity Happens).

So HOW do you get to full time?

A great first step can be to move into a real estate related vocation, such as brokerage, lending or property management.  You might even take on some small time real estate development.

Granted, you’re not a full time investor yet (more like a Padawan learner), but you’re much closer to the people, deals and resources you’ll need for your investing.

Another way is to become a syndicator.  This simply means your form a real estate investing company and raise funds from other investors who don’t have the time or expertise to invest.  You might raise money on a deal-by-deal basis or you could create a fund that works more like a mutual fund, where you buy, manage and sell properties according to a predetermined investment objective.  If this is something which interest you, you’ll want to attend our next Secrets of Successful Syndication seminar (under Events).

What’s important to keep in mind, especially in today’s more stringent lending environment, is the value of your paycheck when it comes to qualifying for loans.  If you can stomach staying on the job until you’ve maxed out your personal borrowing power, it might be a really good idea to hold off going full time.

Remember, once you’re “self-employed”, you’ll likely need at least two years tax returns to prove your income when applying for residential (1-4 units) loans.  And even if you’re going for apartments or commercial properties, the lender will want to see experience, a strong balance sheet, and enough income for you to live on outside of the deal.

Why?  They don’t want you to collect the rents, buy your own groceries, and then skip paying them back for their loan.  Yeah, that happens.  In fact, we’ve seen guys collect as much as half a million dollars before the lender can get control of the property again.

We don’t want you to be tempted to be “that guy” (or gal).  So tune into the conversation and consider all the things you need to look at before you leap into becoming a full time real estate investor.

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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!

3/17/13: Embracing Change and Overcoming Adversity – A Conversation with RE/MAX Co-Founder Dave Liniger

Do you know what makes good times so good?

Bad times.

There’s a lot of truth to that old adage, “Whatever doesn’t kill you makes you stronger.”

We know.  Like us, you’d rather soar above the peaks and valleys and enjoy a smooth ride non-stop to the top.  But the more we hang around hyper-achievers, the more we find adversity is a common denominator.

Since we’re always on the lookout for inspiring stories and powerful lessons, we couldn’t resist the chance to sit down with a guy that has overcome tremendous adversity and achieved amazing success.  And while you may know his company, you may not know the man.  But we’re about to change that.

On location in glamorous Las Vegas for this edition of The Real Estate Guys™ radio show:

  • Your go-with-the-flow good times host, Robert Helms
  • The push-the-rock-uphill co-host, Russell Gray
  • RE/MAX Co-Founder, Dave Liniger

Unless you’ve been living under a rock, you’ve undoubtedly heard of RE/MAX.

REMAX Co-Founder Dave Liniger

But let’s stop right there and let that sink in.  RE/MAX is one of the biggest, best known brands in the world.  Not just in real estate.  In anything.  THAT’s amazing all by itself.  How do you just start a little real estate brokerage and turn it into RE/MAX?

Okay, now turn it around.  Instead of wondering how a guy builds a brand as big as RE/MAX, think about how a brand as big as RE/MAX builds a guy.

Interesting concept, right?

Whenever we sit down with an amazing person, we never quite know what’s going to come out of their mouth.  But most of the time, it’s really good.  Sometimes, it’s the stuff between the words that’s the richest.

We’ve noticed that most people want to build a big company to become rich beyond their wildest dreams.  We’ve also noticed that most people with that motivation seldom succeed on a large scale.  And even if they make the money, they aren’t necessarily happy or “successful”.  We like money as much as anyone, but most people consider true success to include much more than money.

When you listen to the interview, try to put yourself in Dave’s shoes.  And ask yourself what his focus is and why he didn’t quit when he already had everything he wanted, nothing left to prove, and every reason to want to stop working. It will give you some insight into one of the common characteristics we’ve noticed in several of the most successful people we know.

So maybe it’s true.  Maybe attitude really is everything.

Be forewarned.  This is a great interview, but if you’ve been feeling even a little sorry for yourself, you might be a little embarrassed as you listen to Dave’s story.  We’re guessing you’ll be inspired to attack the challenges of your life with new hope and zeal.  And when you go, you’ll not only enrich yourself, but the lives of many others along the way!

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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!

3/10/13: The 11th Annual Investor Summit at Sea Broadcast

Listen in as Peter Schiff, Ken McElroy, Tom Wheelwright, Josh and Lisa Lannon and the rest of the 2013 Investor Summit at Sea™ faculty share their reflections on the 11th annual event!

It’s hard to believe we’ve done eleven annual Summits so far.  We thought we’d never top last year’s 10th anniversary extravaganza which featured Robert and Kim Kiyosaki and G. Edward Griffin.  Yet, many of the folks who also attended 2012, said this year’s edition was even better!  WOW.  That’s high praise.

So what keeps so many super successful, highly sought after, hyper-busy people coming back year after year?  And how is it that we continue to attract great new faculty each year?  Most importantly, what can you learn about success from the contemplations of our faculty?

Inquiring minds want to know!

Sharing the microphones aboard the Royal Caribbean Freedom of the Seas on our final day of the 11th annual Summit:

  • Your intrepid skipper and host, Robert Helms
  • The first mate and co-host, Russell Gray
  • First time Summit Faculty Member, Euro-Pacific Capital CEO Peter Schiff
  • Four time Summit Faculty Member and Rich Dad Advisor for real estate, Ken McElroy
  • Two time Summit Faculty Member and Rich Dad Advisor for taxes, Tom Wheelwright CPA
  • Two time Summit Faculty Members (but 3 time Summiteers!) and Rich Dad Advisors for Social Capitalism, Josh and Lisa Lannon
  • Three time Summit Faculty Member and CEO of Paradigm Life, Patrick Donohoe
  • First time Summit Faculty Member, economist Dr. Robert Murphy
  • First time Summit Faculty Member (2nd time Summiteer), Belize real estate broker, John Turley
  • Eight time Summit Faculty Member, international real estate developer, Beth Clifford
  • Eleven time Summit Faculty Member, the Godfather of Real Estate, Bob Helms

Obviously, with a huge faculty panel (and this wasn’t everyone!) and only 60 minutes to share, this broadcast is a collection of top of mind reactions to an amazing week together with dozens of investors from around the world.  No matter how hard we try to describe the Summit experience, until you’ve been you’ll never quite get it.  There’s nothing like it.

So listen for yourself as these enthusiastic faculty members share their thoughts and feelings about the what and why of the 2013 Summit.  Then make YOUR plans to be a part of the 12th Annual Investor Summit at Sea™ on March 22nd.

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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!