Podcast: Clues in the News – Bears, Bailouts and the 3-Headed Monster

Crisis Investing Lessons — Navigating Uncharted Waters

Crisis is part of the investment game … and while the COVID-19 virus crisis is unlike any we’ve seen in modern memory, it’s not the first … or the last … crisis you’ll face as an investor. 

The good news is that history shows us two things. 

One … the human race will survive. And two … the backside of all busts is a big boom. 

Until the crisis passes, we all need to find a way to survive … physically and financially. 

Today, we’re talking about how lessons learned from the 2008 crisis can be applied to what we face today. We are focusing on how you can not only survive … but also thrive!

In this episode of The Real Estate Guys™ show, hear from:

• Your thriving host, Robert Helms
• His surviving co-host, Russell Gray

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Think and do

With so much going on in the world today, it is easy to get overwhelmed. 

Today, we’re talking about how to manage life when you find yourself in uncharted waters AND what lessons learned from previous crises can do for us in our current situation. 

We’re not here to tell you what is right and what is wrong. We’re here to talk about the facts and our own experiences. 

We haven’t seen everything … but we’ve seen a ton. We don’t know all the answers … but we have gotten pretty good at asking the right questions. 

One of our favorite sayings is, “Think and do is better than wait and see.” 

When there’s a crisis, the tendency is often to hunker down and wait to see what happens. But waiting and seeing has economic consequences. 

The big question now is …  what should we be thinking about?

Understanding what is happening in the market

Calmer heads always prevail. 

As real estate investors, we have a huge advantage. Markets like the stock market … or even the metals market … move instantly. That’s not true with the real estate market. 

If you look at what has happened in the stock market, with equity prices, and in bonds compared to what has happened in real estate … you’ll see a drastic difference. 

People who invest in stocks are seeing a market drop that appears already worse than the Great Depression. But your mortgage or your rent haven’t changed. 

That means that the person on the other end … the landlord or mortgage holder … their income hasn’t changed either. 

Now, that doesn’t mean it won’t. But the difference between now and 2008 is that in 2008, lenders were not ready to negotiate. They couldn’t see the ripple effect that would go through the financial system. 

But today, the Fed clearly sees it. Their reaction tells you they are bringing out the big guns early … and lenders are already beginning to contact people about ways to work things out. 

Even with all this intervention, there is still a chance that real estate investors will run into a cash flow problem … but the advantage is that real estate moves slower. You have more time to react now to future possibilities. 

Remember, the stock market doesn’t really reflect what’s going on in the economy. Stock prices are reacting to an anticipated slow down of corporate profits. 

There is plenty of cash out there. That’s not the problem. The problem is that it isn’t flowing. 

We’re basically watching an economic heart attack take place. It doesn’t matter what the blood volume is. The concern is that the blood isn’t flowing. 

So, you have to look at what is happening right now and make adjustments. Now isn’t the time to be a deer in the headlights investor. Now is the time to think and do. 

Making smart choices for your portfolio

We think that everybody listening in is going to want to own more real estate 10 years from now than they own today. 

Some of you may see opportunities … but you don’t have enough resources to take advantage. 

You can see bargains … quality assets going on sale. What do you do?

That’s why we are big proponents of syndication. 

We’re hearing on the street already that lenders are beginning to back off on their lending. If that is the case, it’s going to be a resurrection of private equity. 

When money goes looking for a safe haven after a nauseating ride on the Wall Street roller coaster … it often ends up in real estate. 

These investors are either on the equity side buying into real estate deals or on the debt side buying private mortgages and getting the yields. 

You have to be smart … but there is going to be a lot of money coming into real estate because of what’s happening. 

If you’re well-positioned and you underwrote your property correctly and you have a good lending partner, you’ll probably be ok. 

If you didn’t … well, there are going to be people who have to give up some real estate. 

If you’re in a good position, syndication can be a great way to get you ready to buy when those who need to sell make their move. 

And don’t forget that this doesn’t apply to just real estate. Real assets like metals and oil will have good deals, too. 

One of the biggest lessons we gleaned from 2008 is to keep your finger on the pulse of your markets and niches. 

Wherever you are in the world, whatever niche you’re in, whatever market you’re in … lean on your tribe. Enhance your participation in whatever forums or virtual meetups you have the opportunity to be part of. 

The closer you get to the front lines … the more real-time your information is … and the better you will be able to make decisions. 

For more lessons learned on investing during a crisis … listen in to the full episode!

More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

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

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What the Coronavirus Means for Real Estate Investors

The COVID-19 pandemic and panic is well on its way to eclipsing the Great Financial Crisis of 2008 and the Great Depression of 1929 as the most devastating economic event in modern human history. 

But humanity has a way of surviving even the greatest calamities … odds are we’ll survive this one too. 

So, we’re taking a look at the current crisis through the lens of things we’ve learned from the past. 

We’re discussing where future opportunities might be and ideas for what investors like YOU can do when facing uncertainty. 

In this episode of The Real Estate Guys™ show, hear from:

• Your keeping calm host, Robert Helms
• His carrying on co-host, Russell Gray

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Economic issues and COVID-19

There’s so much going on in the world. COVID-19. The Fed lowering interest rates to zero. Social distancing. Sheltering in place. 

Today, we’re going to be discussing one of the biggest questions our listeners have been pelting us with … what does coronavirus mean for real estate investors?

Let’s start with this truth … it doesn’t matter what we think. All that matters at the end of the day is what you think. We’ll just share some food for thought. 

Remember, we don’t give advice. We give ideas and information. 

What we have is our own perspective … and that doesn’t mean we are right. Right now, some of our very good friends have polar opposite opinions and positions on this topic. 

But that’s why we can talk about it! We can all respectfully disagree and share ideas so you can make your own decisions. 

We’re going to focus mostly on the economic issues surrounding COVID-19. 

From an economic perspective, this situation is what we call a Black Swan … something nobody saw coming. 

The first thing we have to do is accept that we can’t do anything about the coronavirus. It is out of our control. But we can control how we respond. 

There can still be opportunity

The fact of the matter is that when certain parts of society go away … even temporarily … it has a lasting impact. Those things don’t come back quickly. 

It slows the velocity of the economy. Even the Fed can’t speed that up. All they can do is try to increase the volume and hope the volume compensates for the velocity. 

We saw a bunch of money run from the stock market … which tanked … and that has an impact on people, especially retirees. 

That money moved into bonds, which drove interest rates way down … which actually created a huge opportunity for real estate investors to lock in mortgages at record lows once the crisis abates. 

But the flip side is that the Fed is printing a lot of money. The government is going into debt … and that changes the already frail economic system. 

The flip side of chaos, of course, is opportunity. There’s always opportunity to help the situation, because making money is a byproduct of providing solutions in the marketplace. 

SWOT analysis, potential outcomes, and diversity 

With a situation like this, there are short-term, mid-term, and long-term effects. 

Short-term there is a demand shift for certain types of real estate. Most month-to-month tenants aren’t moving over the virus. 

In fact … big picture … those tenants are probably staying put, provided they have income. If they were thinking about making a move, they are probably staying put. 

Now is a good time to do a SWOT analysis … strengths, weaknesses, opportunities, and threats … of your portfolio. 

Look at each individual property and ask yourself, “Where does the money come from? Where do the tenants work? What drives the local economy?”

Looking at the answers to these questions, you can make an educated prediction for what is going to happen in that sector in the future. 

You may even be able to make some moves now to reduce your risk or exposure … like refinancing debt, lowering costs, or tightening up expenses. 

Now, the challenge is that everybody is instinctively cutting back. That’s part of how we go into recession. 

If we cut way, way back and everybody withdraws … we’re going into depression. 

Then the question is, does the Fed and the government have enough firepower left to prevent that from happening … or are we about to go through a gigantic economic reset?

For those who have all their investment in stocks … it’s a scary time. The nice thing about real estate is that it’s stable. Stock investors might think it is boring, but it’s stable.

More of those investors are going to be looking to go into real estate … which means a huge opportunity for syndicators. 

If you’re thinking of making the move to real estate, you need to undertake that same SWOT analysis for the various real estate niches. 

And we can’t preach diversity enough. Diversity of income. Diversity of markets. Diversity of real estate niche. Diversity helps you weather the storm. 

Real estate for the long haul

At the end of the day, YOU are the only person who can decide what is best for you and your family. Do the work to get educated, analyze your deals, and do what you feel is right. 

The reality is that 10 years from now, this crisis is probably going to be in the history books. It’s going to be like 2008 … something that happened and changed the world quite a bit. 

But the long-term fact is that people will always be out there. They will need places to live. They will need places to gather. They’ll still need medical care and to eat. 

Real estate will always fulfill a potential need. In the long term, smart investments remain smart investments. 

Real estate is about buying and committing and being in for the long haul. 

For more on what the coronavirus means for real estate investors … listen to the full episode!

More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

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

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Podcast: Crisis Investing Lessons – Navigating Unchartered Waters

Podcast: What the Coronavirus Means for Real Estate Investors

Unlock Next Level Success by Turbo-Charging Your Amazing Brain

The human brain is one of the most amazing things on the planet … but scientists say that we only use a small fraction of our brain’s potential. 

No matter how successful you are … that means your brain is capable of SO MUCH MORE. 

We’re talking to someone who tapped into the under-utilized power of the human mind to get better performance … and more success … from himself and his team. 

Listen in and discover how to take your real estate game to the next level by activating your amazing brain!

In this episode of The Real Estate Guys™ show, hear from:

• Your brainiac host, Robert Helms
• His maniac co-host, Russell Gray
• Author, speaker, and business growth expert, John Assaraf

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Your most important tool is your brain

What’s the most important tool for being successful in real estate investing? YOUR BRAIN. 

Today, we’re talking about how you can activate your brain and create fuel for your success. 

If you study success principles in any endeavor, you’re often going to be able to translate those directly into whatever you want to be successful in … including your real estate investing business. 

You definitely need to understand the specifics of real estate. But your team begins with you. 

If you have muddled thinking and don’t know exactly what you’re trying to accomplish, it will be hard for you to lead a team. 

You have to think about your mindset. How you think and what you believe affects what you do … or if you do anything at all. 

When people have results they don’t like, they say, “I’ll change my actions.” But it goes farther than that. It’s time to change the way you think. You have to be strategic and intentional. 

Our guest today has made a practice of studying this very thing. In fact, the reason we wanted to have him on the show is because he is an amazing real estate guy. 

John Assaraf has been investing for more than 30 years. He was one of the largest broker owners in the world, managing tons of agents and offices. 

But through his experience, he has figured out that it’s not just what you do … but why and how you train your brain.

The difference between success and mediocrity 

“When I was 26, I bought the franchising rights for RE/MAX of Indiana and proceeded to open up 85 offices,” John says. “So, I understand the residential, commercial, industrial side of real estate.”

John loves real estate … and that’s what led him on his search to figure out what holds people back and what makes people successful. 

When John was building RE/MAX of Indiana, he had 1,500 real estate agents. Some made $25K a year. Others made more than $1 million a year. 

“I was fascinated and wondered how it was possible that I’m giving the same training, the same coaching to all of my agents, and there is such different levels of success,” John says. 

By unlocking some of the mysteries of the mind, John was able to help his agents have an average income of $120K. 

What did he teach them?

“I really didn’t teach them much about selling real estate or investing in real estate. I taught them how the level of success that they would achieve would be directly a reflection of their beliefs, their self-image, and the habits they developed,” John says. 

John worked to help his agents augment their beliefs from limiting beliefs to empowering beliefs. 

There’s a saying in the neuropsychology field that says you will never outperform your hidden self-image. 

When you work on your self-esteem and self-worth, when you eliminate your limiting beliefs about what’s possible or not possible for you. 

When you start to recalibrate what you do to match the income or wealth that you want to achieve, then you have the inner game and the outer game aligned. 

So, the person who is making more money than you is not necessarily smarter than you. 

Until you train your brain to think differently and increase your self-worth, you wouldn’t act upon the information that they have in the same way. 

Training your brain

Our brain is a highly organized organism. Self-confidence is a neuro muscle. So is willpower. 

So, what would happen if we thought about some of our neuro muscles as things that we can strengthen or weaken, just like other muscles?

“If we disempower a network in our brain, it weakens. If we reinforce a new powerful network in our brain, like confidence or awareness, then we start a deliberate evolution of ourselves,” John says. 

John’s book, Innercise, is a user’s manual on how to use your brain better. “We have more control over our own brains than we ever thought possible,” John says. 

Too often, though, we take our brains for granted. 

So, we must start with awareness. Be aware of the thoughts you have. Are they empowering or are they destructive? Are they building blocks that will help you achieve your goals?

Then, think about emotions. 

Emotions are nothing more than the effect of what is happening in your subconscious mind. Emotions cause feelings, which can have a powerful enabling or disabling effect. 

After feelings comes behavior … the actions you take. 

John says, “When you look at your bank account and it doesn’t have the money you want, don’t get mad. Get curious.”

How can you shift your thinking? How can you shift your emotions? How can you change your behavior?

Changes on the outside happen because of changes on the inside first. 

For more on how to turbo-charge your amazing brain, listen in to the full episode!

More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

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

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Podcast: Unlock Next Level Success by Turbo-Charging Your Amazing Brain

Finding and Creating Value in a Hot Market

Markets can seem like a mystery. They’re hard to time … and no one wants to sit on the sidelines and miss out on an opportunity. 

Luckily, our guest today has been in the game for quite a while. He has found ways to thrive in ALL kinds of markets … and he is sharing his take with investors like YOU. 

Ken McElroy is real estate partner and advisor to Rich Dad Robert Kiyosaki. He knows how to find value in a hot market … so let’s get started!

In this episode of The Real Estate Guys™ show, hear from:

• Your hot host, Robert Helms
• His hot-diggity-dog co-host, Russell Gray
• Real estate guru and Rich Dad advisor, Ken McElroy

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Meet Ken McElroy

Our good friend Ken McElroy is an icon in real estate. He started out in property management and decided it would be better for him to own apartments. 

Today, he owns more than 7,000 units. 

Ken has a lot of practical, pragmatic wisdom … and he LOVES helping people grow and be successful.  

That love is reflected in his work as Rich Dad Advisor for real estate to Robert Kiyosaki and in his library of books. You’ve probably read Ken’s classic The ABCs of Real Estate Investing. 

Well, we’re at an interesting time right now. We’ve been in a really long cycle … and everyone wants to know what is going to happen next … and what to do about it. 

Navigating market changes

“One of the mistakes people make is that they try to time everything,” Ken says. 

There’s nothing wrong with thinking about things and trying to consider what the future will bring, but don’t overanalyze yourself into a corner. 

If you’ve bought correctly, and you’ve made some good money … you shouldn’t be concerned. 

Ken said his team had some properties that they really didn’t want anymore. As you grow your portfolio, you’ll have things doing really well, things doing just fine, and things that are taking up your time. 

As you feel like you are coming to the end of a cycle, it’s a good time to dump any projects that aren’t paying off for you. 

But what about if you’re trying to force equity?

One of the classic ways to force equity is ground up construction. Ken says he is still seeing those opportunities today, but investors should be prepared for market changes. 

As the market changes, you may have to rework your strategy. You take what the market gives you. 

Ken also says not to discount the power of small wins. Small wins add up. Look for opportunities to cut costs without cutting quality. 

This is especially true if you are involved in new construction or you are working with a large amount of units. 

If you can save $10 on 100 units, that’s $1000. Look for the small wins … and if you can, buy in bulk. 

In a hot market, the key is finding opportunities to add value. If you increase value, you increase your profit. 

Keys to success in partnership, investment, and family

Ken and his real estate partner, Ross, have been working together for nearly 20 years. That partnership has been key to his success. 

What makes them so effective as partners?

“We stay out of each other’s way, but we keep each other accountable,” Ken says. 

Ken and Ross have a clear division of responsibility that plays to their strengths. Ross handles tax and legal. Ken handles operations and equity. 

Together, they work on acquisitions. 

Ken says that in your partnerships, it is important to keep each other updated and in the loop. “We periodically sit down and make sure we each know about the moving parts,” Ken says.

Those moving parts include investors and tenants. Does taking care of tenants automatically translate into taking care of your investors?

“We think that that is really where it all starts,” Ken says. “Our tenants and our employees are as important if not more important than our investors.”

Why? Because if tenants are being treated well, you can reward your employees. And if they are happy … they keep doing a great job. 

All good things flow up. The investors benefit from happy employees and happy tenants. 

Ken points out that that same lesson applies to family as well as business. 

“If you haven’t played the cashflow game with your kids, you’re crazy,” Ken says. “My kids were not particularly great at math, but we invested in their education and treated them well.”

Ken says that by the time his kids got into finance and higher math in school, they understood income and expense, asset and liability, what a stock purchase was, and how capital gains work. 

Part of treating your kids well is helping them understand the hard work that goes into purchasing and investment. 

“My sons went to private school, and a lot of the kids were driving fancy cars. I made them save their money and buy their first car. It’s hard, but it’s easier to teach them to make money than to give them money forever,” Ken says. 

For more tips and wisdom from Ken, listen in to the full episode!

More From The Real Estate Guys™…

• Sign up for The Real Estate Guys™ Free Newsletter
• Check out all the great free info in our Special Reports library.
• Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
• Stay connected with The Real Estate Guys™ on Facebook,  and our Feedback page.

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

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Podcast: Finding and Creating Value in a Hot Market

Ask the Guys — Equity Sharing, Self-Directed IRAs, and Gold

It’s time for Ask The Guys … the episode where you ask, and we answer!

In this episode, we have another fantastic collection of questions from our fabulous listeners. 

We’re taking on equity sharing, self-directed IRAs, gold, and MORE!

Remember … we aren’t tax advisors or legal professionals. We give ideas and information … NOT advice. 

In this episode of The Real Estate Guys™ show, hear from:

• Your wise host, Robert Helms
• His wise-guy co-host, Russell Gray

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Where to begin in real estate

Our first question comes from Lloyd in Canton, Georgia. His dream is to own two to three homes that he can rent out … but he wants to know where he should begin and what to watch out for. 

The whole idea of having rental homes is so you can get your money to work instead of you. 

Some people who buy single family homes like to do the work … fix them up, make them nicer, improve them, and then rent or sell them. But many people just want to sit back and let money make money. 

Where you start depends on your personal investment philosophy … who you are as an investor, what real estate you want to do, and how involved you want to be. 

You also want to think about what your investor resources are. There are seven we highlight … cash, cash flow, equity, credit, time, talent, and relationships. 

As often as possible, put yourself in an environment where you will be around more experienced real estate investors and ask questions. Learning from their experience will help you make decisions for your experience. 

One of the first things you want to do is meet with a mortgage professional as quickly as you can. Don’t wait until you think you are ready to invest. 

It can take up to two years to really prepare your financials so you can borrow effectively. Find out how to manage your credit score and your documentable income. 

While you are doing all of that, you can work on aggregating a down payment, shop for markets, and building a team. 

Looking to do real estate full time 

Blake in Gretna, Louisiana, says, “Right now I have a trade job where I’ll currently be making about $80,000 a year. How can I invest this money properly in real estate so I can eventually do that full time?”

Rule number one is to live below your means. Live as frugally as possible until you can get a stake in the game. You don’t need a ton of money to do that. 

If you’re going to leverage at 20 percent down and 80 percent loan to value … lots of great rental properties sell for $60K to $100K. 

Whatever your situation, start where you are and with what you have. Get a mortgage professional … and start ratcheting up your credit score. 

You’ll also want to learn what debt-to-income ratios are. 

If you really feel like you want to be a professional real estate investor, then recognize that your current job is a means to an end. 

And, as we said before, start surrounding yourself with people who are already doing what you want to do. 

Put a lot of emphasis on putting together a good team. The most important thing you build is business relationships. 

Getting familiar with equity sharing 

Jacqueline in Punta Gorda, Florida, is interested in learning more about equity sharing. 

First, the basic premise of equity sharing is that you have two parties who are both involved in a transaction but who want different things out of the transaction. 

The classic equity sharing situation looks like this. 

You have a young couple. They’re making good money. They could afford to make a house payment, but they haven’t saved up the 20 percent necessary for a down payment. 

So, they go to somebody … family, friends, parents, or even someone non-related … who brings in part or all of the down payment. 

One person puts up the money. The other person makes the payments. Then, you split the equity in the future. 

Typically you would want both those parties to be on the title, and you’d work with a lending professional to follow particular guidelines. 

Equity sharing is common in single family homes, but you can equity share any type of property you want. 

Like any deal, before you have a deal in place, you’ll want to visit with a mortgage professional. 

You’d also be smart to get a real estate attorney in the specific jurisdiction that you’re going to be transacting in and talk about legal options and considerations as well. 

Depending on the situation, you may not want to be on the title or publicly recorded on the deed. There are various reasons for that approach … specifically with taxes. 

So, it’s smart to talk to a tax advisor as well. 

The low-down on self-directed IRAs

Carolina in San Dimas, California, says that she and her husband want to open a self-directed IRA so they can invest in real estate. But she doesn’t know where to start. 

There are several different ways to do this … and it can be a little complicated … but we’ll try to give a decent overview. 

In the tax code, there are provisions that allow you to accumulate wealth for the long term. You either get benefits when you put it in or as you’re building it and when you pull it out. 

Really, all IRAs are self-directed. All self-directed means is that you can invest in anything you want to that isn’t specifically prohibited by the IRS. 

The prohibited list is pretty short … less than 10 things. 

One of the challenging things with IRAs is that when you use leverage, you gain a benefit inside your IRA from something outside your IRA, which is the debt. 

That creates a tax issue if you’re not aware of it. So, you want to make sure you understand UBIT … unearned business income tax. Talk to your IRA provider about that. 

And since most people want to use debt when they use real estate, that’s really what you want to focus your learning on. 

Starting to invest in gold

Brendan in Johns Creek, Georgia, has a question about gold. 

“I just listened to an episode where gold sounds like it is completely liquid, like it can be swapped for currency anywhere in the world,” he says, “but as I research, it sounds like in a lot of precious metals investment you own it but it is stored somewhere else.”

When you go looking on the internet for ideas for investing in gold, you’ll find plenty of propaganda trying to persuade you to invest in a way where you don’t actually own gold. 

On the other hand, you could walk into a gold dealer in your local town and buy a number of gold coins and walk out, and it would be totally private. 

A lot of people who buy gold do it that way for privacy and actual control of their gold. And there isn’t any counterparty risk when the gold is in your physical possession. 

Not to mention that the exact opposite of that transaction happens if you walk in with gold. You’ll walk out with cash. 

Gold is portable and highly liquid. There are always bids on gold. And, we’ve seen the price go up pretty consistently for the last few years.  

More Ask The Guys

Listen to the full episode for more questions and answers. 

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