8/5/12: The Real Deal – Digging Beneath the Headlines to Exploit Opportunity

“Rarely do we find men who willingly engage in hard, solid thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than having to think.” – Martin Luther King, Jr.

Of course, if you’re reading this, then you’re probably a person who is working hard looking for new ideas.  Good job!  We hope to reward your diligence with this episode of The Real Estate Guys™ radio show.

We’re big fans of looking for clues in the news. It helps us gauge the mood of the market, track trends and recognize opportunities.  Best of all, there are thousands of reporters in the world all dutifully watching various aspects of our wonderful world and whipping up headlines to catch our attention.  And thanks to the internet, search engines and mobile computing, we have access to virtually all of it in the palm of our hands. Amazing.

The challenge is that sometimes those sensational headlines don’t always tell the whole story.  In fact, sometimes the headlines are more like head fakes.

Case in point: Recent reports about the Memphis (and Atlanta) real estate markets make it seem like real estate investment opportunity there is in free fall.  But having been to both places, those gloomy headlines don’t quite line up with our first hand observations.  This gave us an idea for this episode, so we decided to compare mainstream media headlines to main street real estate reality and see what the real deal is.  More, we wanted to see where the opportunities might lie.

Troweling into today’s topic:

  • Your host and a man we all dig, Robert Helms
  • Your sometimes dirty co-host, Russell Gray
  • The Godfather of Real Estate, Bob Helms
  • Our gem of a guest and our main man in Memphis, Terry Kerr

After a few weeks of having our heads in the macroeconomic clouds, we come back to earth for a reality check with our good friend Terry Kerr.

Terry is a very successful real estate investor and entrepreneur in Memphis, Tennessee.  Whenever we want to know what’s happening in Memphis residential income property, Terry is on our short list of people to call.  So when we saw a few “gloomy” headlines cross our desks, we thought it would be fun to call Terry and say “Whussuuup?”

Since we needed a new episode, we called Terry from the studio and broadcast the whole thing.  Now you get to listen in too!  And even though we talk about Memphis, there are lessons for all investors, no matter what market or markets you’re mesmerized by.

So we start out talking about what we’re reading in the mainstream press.  Falling prices, increasing vacancies, more foreclosures.  Eeeeek!

“Whoa!” says Terry.  “Those mainstream headlines are not my main street reality.”

Hmmmm….really?

Terry tells us that his occupancy “has never been higher” and confides in us his secret to occupancy success: below market rent for an above market property.  Brilliant!  And in a market that is “plagued with vacancy” according to the news, this tactic is working beautifully for Terry.  And because the cash flows are SO strong in Memphis, his properties are still very profitable.

In fact, we take some time to talk about how accepting slightly less than market rent can actually IMPROVE PROFITABILITY by minimizing vacancy and turnover expenses.  Yes, it’s common sense.  But you’d be amazed at how many investors push the rents in their quest for profitability.  We call it jumping over dollars to save pennies.

This takes us down the path of taking a market weakness and turning it into a competitive edge.

Terry’s properties are cheap.  Er, we mean, inexpensive.  Actually, his properties are quite nice.  When we visited and toured several properties and neighborhoods we were very pleasantly surprised at how nice they are.  Not what we expected in the $60,000 and less price range.

The problem with these “appetizer” properties is that it can be hard to find lenders who want to do loans for them.  We investors, we get excited about a $12,000 down payment.  But the too big to fail banks aren’t falling all over themselves to make $48,000 loans.

But while lack of conventional funding might hinder the success of lesser investors,  Terry turned it into an advantage.

Leveraging his successful track record, Terry made a deal with some local banks.  He guarantees the loans and the banks finance his buyers.  Then, Terry’s team manages the property for the investor so he actually controls the condition and cash flow of the property.

We don’t know about you, but that’s the kind of motivation we want our property manager to have!

And, as you might guess, having financed over 300 properties this way, he’s never had a loan go bad.  Very impressive.

What’s even better, Terry is now able to help people – like foreign nationals and others – who are locked out of conventional financing to start or expand their investment real estate portfolio.

So while some people may glance at the headlines and think there’s no money to be made in a place like Memphis, creative investors like Terry Kerr are finding ingenious ways to not merely survive, but thrive.  These are great lessons for all real estate entrepreneurs everywhere.

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Discover Marvelous Memphis Tennessee with The Real Estate Guys!

The Real Estate Guys™ are going to Memphis, Tennessee March 2nd thru 4th, 2012!!!

Ready to join us? Click here to download your registration form now.

Otherwise, read on and we’ll tell you all about it!

Setting the Tone – Our trips are EDUCATIONAL, so don’t worry about getting trapped in a room and getting hard closed to buy (we call this the “timeshare experience”).

Even though you’ll meet local market experts who’d love to do business with you, none of that happens on the trip. This is about exploring the market and meeting potential team members. If you like what you see, you can follow up afterwards. No pressure!

You may want to fly Fed Ex into Memphis. they have more planes there than anyone else!

Trip Logistics

When you schedule your flight (please wait until we confirm your registration – sometimes we sell out), plan to arrive at the Memphis International Airport (MEM) on Friday in time to catch the airport shuttle to the hotel by 4:30 pm. Your registration includes your room, which will serve as home base for the weekend. We’ll tell you which hotel…and the secret handshake ;-)…after you’ve registered.

Friday night, you’ll meet your hosts (those handsome guys at the top of this page) and your fellow field trippers. We’ll have a market overview presentation (and a special guest speaker), then we’ll head out for dinner (included!). Then back to the hotel for some shuteye.

Saturday morning we’re up and at ‘em early. After a quick breakfast, we’re into the bus for a FULL day of touring the market. You’ll see a variety of neighborhoods and employment centers, and get an understanding for the overall health and vibrancy of the market.

You’ll meet a variety of experts on specific neighborhoods and property types. You’ll learn how to look for the telltale signs of opportunity (or danger!) at the neighborhood level. This is important because you don’t buy a market, you buy a neighborhood.

We emphasize single and multi-family residential because that’s what most people are interested in, but we’ll also see commercial and retail areas.

Maybe we'll hitch a ride on a riverboat queen...Proud Mary keep on rollin'!

We keep the group small, so there’s ample time to ask questions and lots of interaction with the guest speakers, tour guides and your fellow field trippers. We cap the day off with a fun dinner and some tasty libations. Then back to the hotel for a nap.

Sunday morning is a lively interactive strategy session, some Q&A, and presentations from local experts.

By now, you’re brain is swollen with market knowledge, you heart is racing with excitement, and you’ve made a lot of new friends and strategic connections. You’ll get more done in one guided weekend than most people accomplish in multiple trips on their own!

So Why Memphis?

Small town prices with big city culture. A good combination for tourists and retirees looking for an affordable destination.

It’s no secret we date other markets. Each one has it’s own unique personality and attributes. And after the Great Recession (which we heard ended June 2009, but we must’ve missed the memo), it’s critically important to be careful and strategic when selecting markets. The volume, location and quality of the jobs in a local area is essential to long term rental property investing success.

To be safe, we like markets that have major job centers that are geographically linked to the area. That is, the primary employers can’t easily pack up and move to China, India or some other location where labor and land are less expensive.

Memphis has a great strategic location and infrastructure which makes it an ideal distribution hub. Maybe that’s why Fed Ex made it their HQ. And with low cost land, labor, no state tax, and close proximity to distribution, Memphis is attractive to U.S. manufacturers who want to stay in the U.S.

It’s also important to have the price-to-rent ratio be favorable to creating positive cash flow. This is important on so many levels, there isn’t time to describe it all! But you’re going to REALLY like the numbers in Memphis!

“Live where you want to live, but invest where the numbers make sense.” – Robert Helms

Also, Tennessee is one of only seven states with no state income tax. This is attractive to both businesses and retirees. If the U.S. economy continues to struggle, and as U.S. baby boomers try to retire on portfolios that have been wounded by the Great Recession, markets like Memphis have a very strong appeal – which you’ll understand when you see it with your own eyes.

We could go on and on (can you tell?), but a website isn’t a substitute for a field trip.

So what are you waiting for? Click here now to download your registration form and we’ll continue the lesson in Memphis!

3/27/11: Turnkey Rental Property Solutions for Busy Investors

Listen now:

Sometimes people confuse real estate investing with running a real estate business – especially when everyone says you’re supposed to run your investments like a business.  Confusing isn’t it?  That’s why many people simply turn their money over to Wall Street.  It’s painless and easy.  Like a scalpel.  It’s all fun and games until someone loses their net worth.

Real estate attracts people who want to be closer to real tangible investments they can understand and have more direct control over.  But not everyone has the time, talent or temperament to find, fix up and rent out properties.  So before you pick up a hammer and plunger, you may want to look at turnkey rental property solutions as a great way to get in on all the amazing bargain inventory available today.

What is a turnkey property solution you ask? We wanted to know too, so after our wives had us scour the sink, they let us out to scour the country – and we found a guy who’s been in the turnkey rental property business for nearly 10 years.  He called in and our crack engineering crew patched him into the broadcast.

Lending their voices to this sparkling edition of The Real Estate Guys™ Radio Show:

  • Your host and shining star, Robert Helms
  • Co-host and chief scrub, Russell Gray
  • Turnkey Rental Property Purveyor, Practitioner and Pontificator, Terry Kerr

With all the talk about unemployment and real estate entrepreneurship, what if you’re one of the throwback investors who actually have a good job with good income and some investment capital you want to put to work?  That’s where a turnkey provider comes in real handy.  They’re in the business of buying, fixing up, renting out and handing over to you a plug n’ play cash flowing property – complete with long term property management in place.  Now doesn’t that just sound groovy?

But (and as always it’s a big one), not all “turnkey” providers are the real deal.  With all the distressed inventory in the market, banks are dumping it wholesale.  That can be good, but just having a property flipped to you doesn’t mean it’s plug ‘n play.  It end up as “pull the plug”.  Not fun.

To help you avoid this terrible fate, Terry Kerr shares his tips for turnkey property investing – and gives us some local knowledge on a low cost, high cash flow market that you’ve probably heard of, but may not know that well.  And pay attention, because we persuaded Terry to produce a special report on this tantalizing topic so you don’t have to take too many notes. 😉

The Real Estate Guys™ Radio Show podcast provides education, information, training and resources to help investors make money with their real estate investing.

10/17/10: Avoiding PMS – The Single Most Important Element for Healthy Cash Flow

When your real estate investments are properly managed, money flows in each month like clock work.  But when the monthly flow is accompanied by pain, it could be a sign of Property Management Stupidity or PMS.

When PMS sets in, it can severely cramp cash flow and may be accompanied by heavy bleeding.  Investors suffering from PMS are often very irritable.  PMS is known to play a role in the break up of marriages and partnerships.  Left unattended, PMS causes balance sheet anemia and can lead to embarrassing stains on a previously lily white credit score.

To help you avoid getting your undies in a bunch when dealing with this sometimes messy and often unspoken topic, The Real Estate Guys™ sit down with a second generation property manager and past President of a local chapter of the National Association of Residential Property Managers.  We discuss the causes and cures of Property Management Stupidity and how to keep your monthly cash flow safe and sanitary.

In studio for today’s real estate radio show podcast for this absorbing conversation:

  • The best darn real estate radio talk show host in the world, period!  Robert Helms
  • Your sometimes bloated and sensitive co-host, Russell Gray
  • A man who has avoided PMS throughout seven decades of investing,  The Godfather of Real Estate, Bob Helms
  • Special expert guest and seasoned property manager,  Jay Hartley

A comfortable monthly flow of cash is the life-blood of financial success for households and businesses.  Cash flow is what a professional investor buys when purchasing either stocks or real estate.  Fundamental price appreciation (not that which is merely caused by inflation) is a reflection of cash flow and the market’s willingness to pay for it.

So when it comes to real estate investment, it seems investors would pay close attention to finding the best property management company available.  But sadly, most landlords don’t focus on property management until they’re in pain and are trying to stop the bleeding.   Then they impatiently hand their new property manager a big mess to clean up.

But there’s a better way!

Listen to this podcast and discover:

  • How to find the best property management company
  • Stop the bleeding on your rental house and other rental property
  • Avoid loss to your real estate investment and make money as a property owner and landlord

The Real Estate Guys™ Radio Show podcast provides education, information and training to help investors make money with their real estate investments.

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Real Estate Field Trip to Dallas Texas!

Why has Dallas become one of our favorite US real estate markets?

  1. Texas is ranked the #1 business friendly state in the US. Last time we looked, tenants have an easier time paying the rent when they have a job.  And landlords have an easier time paying the mortgage when tenants pay the rent.  Jobs are good.
  2. Dallas is the nation’s 5th largest media market. Hey, we are radio guys.
  3. Dallas is in the top 10 big US cities where it makes more financial sense to rent rather than own.  That means tenants stay tenants longer.  Less turnover means less expenses.  Less expenses means better cash flow.  Cash flow is good.
  4. Dallas real estate values have held up very well throughout the mortgage meltdown and the resulting unprecedented drop in real estate values across the US.  After the last two years of “Drop Zone”, a Merry-Go-Round sounds exciting enough.
  5. Dallas is only 2-1/2 hours from Belize. Does that count?
  6. The Real Estate Guys™ TV show is taped in Dallas (Addison actually, but it’s close enough).
  7. Most rental residential real estate prices are well within the FHA / Fannie / Freddie conforming guidelines. That means it’s easier to get loans.  It’s also easier for resale buyers to get loans.  Life is easier when you can get loans.
  8. Our friend, Ken McElroy, says Dallas is one of his favorite markets for the next 5-10 years.  And we think he’s well qualified to have an opinion.
  9. Infrastructure! Centrally located in the US, a huge airport, a great freeway system, on the path from Mexico to the North and Northeast, a big labor force and good higher education.  Plus they have an amazing $1.2 billion football stadium.  That’s infrastructure, isn’t it?
  10. Big and diverse economy. Dallas is home to lots of huge companies.  But for every huge company, there are lots of little ones that support them.

We could go on, but you get the idea.  But why take our word for it?  Come to Dallas and check it out for yourself! Reading blogs and looking at stats on the internet is interesting in “student mode”.  To get to “investor mode” (where you actually buy, own and manage real estate), you need to visit the market.  How long does it take to learn a new market?  A lot longer if you go it alone!

Invest a weekend with us in Dallas and we’ll help you compress time frames. We’ll help you get the lay of the land (literally!), explore various sub-markets, meet local experts and service providers; plus we’ll introduce you to some of our key contacts.  And no one is going to ask (or pressure) you to buy anything including the next “boot camp” or any specific property.  That’s not the way we roll.  But if you find something or someone that interests you, you can follow up when you’re ready.  Sound fair?

For more information, about the next field trip to Dallas, click here.