Leverage

Now would be a good time to talk about leverage. You know, that term that everyone has talked about for so long. It is easy to talk about leverage when everyone is doing well in the market. It is actually a joy to talk about how much leverage you have in the market and how well you have positioned yourself.

But we are just getting to the point where we are seeing a few people out there that understand what true leverage is and what the correct ratios are. For those few out there that have been through this sort of downturn in the market and actually learned from it, this is an awesome time to be a real estate investor.

Consider that if you knew where to look and what indicators to keep an eye out for, you could have seen this coming a mile away. For anyone who has a surplus of cash and is not hemorrhaging right now, it is a buyers market like nothing we have seen in 80 years. I have been saying that THIS is the real opportunity, not the past 8-10 years. This is going to go on for a while too, so don't fret. The key is to understand what your ratios are and to understand the meaning behind the numbers.

One of the worst things we can do as investors is to let the banks tell us what is acceptable and what is not acceptable. Dive into your numbers and look at the big picture, you can still be conservative and make a killing. Too many of us (yes, I have been caught up in it as well) were overly aggressive and we are lucky if we learn from our mistakes.

If we are smart, we can learn and grow our portfolios much larger than before the market toppled. The key is that we have to be disciplined enough to conduct our own debrief analysis to figure out where we went wrong and put personal investing policies in place that we actually adhere to. Discipline, discipline, discipline.

Then focus on gaining leverage. Because if this ever happens again, you will definitely want to be ready for it. Shame on all of us if we let this happen again and worse, if we are not leveraged properly!

Robert D. Cass

Touch and Go, Baby! Touch and Go!

I had the immense pleasure of catching a couple of Navy Fighter Pilots practicing their touch-and-go approaches tonight in their F-18 Super Hornets. What an awesome spectacle! I saw them flying circular patterns and new exactly what they were doing. Normally, I am not in a position to stop and check them out, but today I had a few minutes to kill. I found the absolute perfect observation spot and waited for a minute or two…sure enough, less than 100 feet directly over my head, my whole body rumbled as the jets glided to their target…As they passed over head you could see the flaps making the adjustments until the jet touched down, and then it was full power as they climbed back up to altitude! AWESOME! I stayed there for about 15 minutes and realized how lucky I was to be witnessing this first-hand.

 

It’s all about repetition. In everything we do, to become better at it, we need to practice. Even the seemingly mundane things need to be practiced and rehearsed, over and over and over again. It is no accident that we have the greatest pilots in the world. They are trained for thousands of hours and after they achieve fighter pilot status, they keep training and training and training. It is the mark of the true professional. When you keep honing your skills and keep looking for things that you could have done better. It is inspiring to witness this not only in fighter pilots, but also in real estate professionals.

 

No matter what we do, there are things in our daily professional lives that we do over and over again without thinking much about it. Take some time to slow down those every day things to see exactly how you can make a bigger impact, or become more efficient…look at every aspect of your business and find ways of pushing the envelop. This should be a continuing effort. I think that Stephen Covey called that, “Sharpening the saw.” I call it, “Touch and Go, Baby! Touch and Go!”

 

God Bless our Troops! And God Bless America!

 

Robert D. Cass

Kyte Video

I have always said that technology for the sake of technology is useless. I know there is a ton of cool technology out there and a lot of it is very “James Bond,” that is to say that it would be great to use if you were a spy, but for the rest of us it is completely useless. In order for technology to be truly useful, there needs to be an application that is useful to the everyday person. We have recently found some truly useful technology and believe there is a case for real estate professionals to embrace it.

The technology or company in this case, is Kyte. Keep in mind that I am just getting to know this video technology, but am absolutely impressed with the things that you can do with it. First of all, Kyte allows me to take video using my cell phone and post it to my Kyte Channel. That in and of itself is pretty cool, but it gets much better. When I set up my Kyte Channel, I can choose my other websites where I want my video to show up automatically when I send video to my channel. Once I send my video, Kyte does the rest. The next thing you know is that my video is showing up on all of my corporate and personal websites….Very cool!

 

Kyte had businesses in mind when it developed the technology too, which is another benefit. Using Kyte, you can monetize your channel as well. What that means is that they give you the tools to allow or to create advertisers to advertise on your channel. Consider the fact that you have your own “TV Channel” why wouldn’t you collect advertising fees from those folks, or companies that would want to reach your friends, family and viewer base?  Very smart!

 

It also allows you to keep in touch with the people viewing your channel. Believe it or not, people can use that channel to communicate with each other using a built in chat feature. Why is this all important? Well, when you are building your personal real estate brand, it is important to embrace technology that will allow you to leverage your time and reach as many people as possible. You will also want to separate yourself from the pack. While there are plenty of other companies out there that allow for video, very few if any have your business in mind. Most of them are for individuals, not professionals. Kyte offers world-class technology that allows you to post video of a property instantly to the web as well as your own comments and updates on what is going on. It is a great way to build brand loyalty and to keep people tuned in to your “station.”

 

Go to www.Kyte.com to see the technology for yourself. Create a channel and work with it to determine the best way to use it, then let us know what you think of it.

 

Respectfully,

 

 

Robert D. Cass

 

V: 757.729.3124

E: rcass@LocalRealEstateDeals.com

URL: www.LocalRealEstateDeals.com

 

Real Estate Notebook

Ok, so every once in a while I come across a product that blows my mind away. For different reasons, different products impress me at different times. Keep in mind that I have bought plenty of real estate investor programs and have attended many of the same seminars that many of you have, so I have seen and paid for plenty of products.

 

I recently stumbled across www.RealEstateNotebook.com and downloaded the 2-week trial version of the product. As I was checking it out and going through the usual test procedures, I was amazed at the no-frills, no sales pitches to buy anything else approach to the program. It was extremely simple, extremely user friendly…It needed no explanation or disclaimers; in short, it was excellent!

So I immediately went back to the website and looked through the pricing…$59.95! So I looked for the “catch.” I kept looking and looking and to my surprise there is no “catch.” It is the real deal. Finally!

 

Here is what the software is not. It is not flashy, it is not full of sales pitches for other products or upgrades and it is not limited in its use. I loaded up with properties and ran reports and did everything that I would need it for on a regular basis and it worked like a champ. Keep in mind the old adage “garbage in, garbage out” because you are the one entering in the data.

 

By the way, this is not something that a sophisticated real estate investor would probably use. I would hope that any sophisticated investors would be past this and have their own system developed. If, by some strange chance, you have been investing for years and have multiple properties, then you may want to check this out. My opinion would be to try it out for two weeks to determine if it has the level of functionality that you need and the reporting that would be useful to you and if it exceeds your own system’s capability, then by all means, plunk down $59.95 and revamp your real estate system.

 

I would say that the Real Estate Notebook is more for beginner to intermediate investors who are still working off of the spreadsheets and basic formulas that they bought from the late night infomercials. I am not saying that any of those programs are bad, I am just saying that you can streamline a lot of what you are doing by using Real Estate Notebook.

 

Now, if you are considering paying $500-$5000 for any other software and are not an investor at this point, let me give you some advice. The numbers are the most important thing. You need to learn to walk away from a property if the numbers don’t work. PERIOD! The challenge for most new investors is that they don’t know what numbers are important, or forget key components that leave them short on capital to finish a project. That is not going to happen with Real Estate Notebook. It guides you through each transaction and asks you to populate each field that is specific to the transaction. At the end of it, you have a good idea whether you should move forward or not with the property. So, if you are thinking about becoming an investor, it would be wise to download the free trial version because as you answer the questions, you are actually getting trained on what to look for and what questions you should be asking about the property. Trust me when I tell you that I have literally paid thousands of dollars to be told what the Real Estate Notebook “tells” you.

 

If I could do it all over again, I would pay $59.95 for Real Estate Notebook, versus the $500-$5000 that I paid for my late night infomercial package. But that’s just me. I have been around the block a few times and I am not as easily impressed as I used to be, but I am genuinely impressed with the amount of time and energy that has been put into this streamlined, but very capable software. I also had a chance to speak with the owner and designer of the software, Michael. What a great guy, he is humble and proud of what he has created and why shouldn’t he be? It’s a great product.

 

I made no bones about telling him that his product was woefully under-priced. If I was him, I would go on the speaking circuit, put it in a flashy box and sell it for at least $499, here’s why. I believe in providing quantifiable value. Here is a guy who has designed a great real estate management system. If you use this software correctly and do your due diligence, you may find that the property you were going to purchase is just not going to pan out, so you don’t buy it. Let’s just say for the moment, that you would have bought it, if you didn’t go through a correct analysis of the property. That property could end up costing you thousands and maybe even tens of thousands of dollars over the course of your ownership. So in one respect, it is like an insurance policy against bad decisions. It doesn’t guarantee that you are going to make great decisions, but it will help steer you clear of bad decisions….You are always welcome to make bad decisions by the way, but at least you will have the advantage of knowing ahead of time that you are about to make a bad decision.

 

Next, it will help you make better decisions based on data versus scattered notes and loose pieces of paper. You will be able to look back and say with certainty that you made a good decision based on “X” numbers and your real estate business will be based on sound real estate principles, versus speculation.

 

For what it is worth, I told Michael that I wouldn’t offer a money back guarantee…the price is already ridiculously under priced, and he gives a two week free trial for crying out lout! Use it and you will make your money back in spades. If you are worried about losing $59.95 don’t even bother buying it…keep your day job and work a couple of hours overtime every week, because you are not risk-tolerant and you don’t understand a deal when it is staring you in the face.

 

Either way, good luck and happy investing.

 

Robert D. Cass

 

time to test the technology

Ok, sorry you have to be a part of this…but we are testing our email capability to our blogging platform…If you can read this…it worked. What that means is that I was able to post from my laptop while on a train, going under a bridge that an airplane was flying over….ok, the test is over…Thank you for your patience.

 

Respectfully,

 

 

Robert D. Cass

 

V: 757.729.3124

E: rcass@LocalRealEstateDeals.com

URL: www.LocalRealEstateDeals.com

 

Can't Refi? MODIFY!

There is a lot of talk going around about whether loan modification is a good thing or not. Well, whether you agree with it or disagree, if you take a look at the big picture, you might see that it is helpful for the moment. And yes, I understand that there are a lot of really responsible folks out there that have been paying their bills on time and have been completely responsible, but if our economy collapses we will all be in trouble.

What I am not saying is that it is the right thing to do, I am saying that it represents an unprecedented opportunity to set things right with your own personal finances. There were a ton of companies that made money off of what we are now calling "predatory" loans. I have seen some ridiculous interest rates and the problem is that many people never fully understood the implications of the loan that they were signing...many did, but by and large many did not...Why is that? because many of the loan officers who were soliciting and selling these loans didn't understand the implications of those loans.

One way to offset the lack of education is to work with loan officers and mortgage professionals that are affiliated with the National Association of Mortgage Brokers, or NAMB for short. This organization adheres to the highest standards for ethics and they encourage and support education in the industry.

But let me get back to my point...Many loan officers did not have the first bit of financial training, yet they were offering advice to folks about the biggest investment of their lives...That is a major problem. You can bet these loan officers were not telling people to make sure that they had adequate insurance protection on their family and to make sure that they were contributing the maximum amounts to tax deferred retirement accounts. You can bet that most of these loan officers were not telling their clients to be careful and set aside reserves for down times. That is what makes me angry. You know why none of that was happening? because there is no legal reason for these loan officers to be telling you these things.

Why is it, insurance and financial professionals need to go through rigorous licensing requirements and background checks, but loan officers do not? This is absolutely amazing! The fact that someone can get a $200,000 loan from someone who is completely uneducated about money, but they have to seek professional counsel for putting $100 away per month in an IRA or 401k? The logic is beyond me.

And while I am on this topic, why is it that most of these loan officers that were hawking these loans now in dire straits themselves? Well, the obvious reason is that they didn't understand sound financial concepts and were giving dangerous advice...advice that they were taking themselves.

Ok, so back to loan modifications. If you find yourself in the position of needing a loan modification, you can do a few things yourself that will greatly improve your chances of getting some help. This is not an all inclusive list, but certainly take some of this advice and throw out what doesn't work...

1. Don't present yourself as a victim. Once a victim, always a victim. Be positive when you are talking to the person on the other side of the phone. Believe it or not, it makes a tremendous difference. Nobody wants to talk to a person who is a "downer" all the time. People like to talk to energized positive people. If you are not one of those people, become one, at least long enough to get off the phone.

2. Make a friend on the other line. Banks are up to their necks right now in loan modifications. They have departments that are set up to handle these transactions. When you find someone that sympathizes with you, MAKE A FRIEND. Connect with them, make sure you get their extension number. It is not going to hurt you, in fact it will most likely help you. Each person that you speak to creates notes in your file. You might as well get the best notes possible in your file. You may even find that you have an advocate on the other side of the phone. One day it may come down to that person making a recommendation on your file and you want that person to make the decision in your favor even if it only buys you a little time...Sometimes that is all you need.

3. Once you get an offer, even if it is an awesome offer, don't display any emotion...simply ask "is that the best you can do?" Don't sign anything immediately. Sit on the offer for at least 48 hours. As uncomfortable as it is, do your best to get a better offer. You already know that they are willing to work with you, now see how deep they can go. Trust me, the first offer is generally a smoke screen...don't jump on it. Ask yourself if this is truly going to help you six months down the road, or even a year. If you are going to be in the same position, then ask for more or else it just doesn't' make sense. Keep in mind that once you have completed and signed your loan modification, there is very little chance you will ever get the opportunity to modify your loan again. So make sure that you are getting the best deal possible. .

These simple things won't guarantee that you are going to be successful, but none of them are going to hurt an already bad situation.

Good Luck and God Bless...hang in there and know that you will make it through this one way or the other.

Rob

http://www.LocalRealEstateDeals.com

The Pendulum Swings both ways!

There are so many wild things going on in real estate and mortgages right now, that you have to expect some overreactions on all sides of the business. Specifically, last September Fannie Mae's guidelines limited investors to purchasing 4 properties. Ouch! This put a crunch on many would-be investors.

At the time it looked like an over reaction, but in hindsight, it did have some positive effects. Over the past decade, there were many "investors" who had no business being in the business of real estate investing. Now, they were not the only problem, but the system encouraged them to purchase 10 properties and the vast majority of those folks were completely over-leveraged and not prepared to handle a down turn in the market.

While I completely disagreed with the decision last fall to cut back to 4 properties per investor, it did serve to stem the tidal wave of investors who were getting into the market and were ill prepared for the worst. Granted, by that time, the damage had already been done, but at least the effort was made to correct one aspect of the problem. I think that, by and large, it worked to keep the people out who should not have been investing.

Here is the funny part though...the people who are true investors know how to move money around and purchase properties REGARDLESS of what Fannie Mae is up to. Those relatively few have been largely unaffected because they understand how to buy correctly and more importantly, know what ratios they should stay under to keep from being over-leveraged. If we the bankers tell us what we can and can't do, we will be in a pretty precarious place. Thank God there are those investors who know where to get the money to move properties.

You see, it's a very bad thing when deal flow stops, so we all need investors to keep deals going when the market slows down. There is legislation being considered in every state that threatens the rights of investors and that is a very dangerous thing. While we are in this down market, we need investors like never before because, by and large, they are the only ones making a consistent difference. I know there will be someone who will tell my how untrue that is, but I don't care...whether I am right or wrong is not important, the fact remains that real estate investors are a very, very necessary part of our financial eco-system. Take them away and bad things happen.

The herd of Investors has been thinned out to a reasonable degree. Now we need to get back to basics and build a nation of educated investors...and by that I am not talking about an education by Carleton Sheets. I am talking about sound business plans with reasonable exits and a deep understanding of leveraging principles.


Healthy Investing!

Rob

http://www.LocalRealEstateDeals.com