All Hail The Anti-Guru!

We have all been there at some point. We get an email, or someone tells us about them, or even worse...we are watching late night TV. It seems innocent enough at first, but then we begin to show interest, and the next thing you know you are looking for your credit card to pay for the next new product from the next big GURU.

It's nothing to be ashamed of. As real estate entrepreneurs we are always looking for more education and more coaching and that is one of the characteristics that is common among successful entrepreneurs. But we have also seen enough and heard enough from the Gurus to know that there has to be some serious substance to make our hard earned money work for us.

In the last two years I have met some folks who should be gurus, but avoid the spotlight at all costs. First of all, you would never think of them as gurus because of the way they dress. Contrary to popular belief, you don't need a $1500 custom tailored Italian suit to know what you are talking about. In fact, as I write this, it just occurred to me that the people that I have been most impressed with are the ones that are wearing flip flops on a Tuesday afternoon whom I bump into at Starbucks.

You may know some of these people, but never considered that they are the ones you should be tapping for knowledge. They are ridiculously humble and avoid telling you with exact certainty how many properties they own. In fact, they would almost prefer if you just didn't delve to deeply into their portfolio. As you make the rounds in your networking groups, start to look for those folks who are quiet and patient and are NOT trying to make the big impression. These are the people who may be worth listening to.

There are some other things you should look for in your anti-guru. Look for specific kinds of answers to questions. I remember asking a young lady from Hampton Virginia once how many properties she had and her answer was one simple word: "enough." Enough indeed! What struck me was that at the time she was in her early 20's at a time when people were outright bragging about how many properties or transactions that they were a part of...here she was giving one word answers where most people would have taken that as an opportunity to get on a soap box. When she said that, I couldn't help but notice that she was wearing athletic pants to a presentation. It made a strong impression to say the least.

You can always tell when you are dealing with a true professional anti-guru as well when you ask them how much they have made in real estate. The guru will tell you they have made millions, while the anit-guru will give you an answer that is similar to, "I have been blessed, " or "We have done well," or even better, "We have been fortunate." These are humble answers and there is much more to be said for these answers than the typical answers that some gurus hide behind.

If I ask someone how they have done and they feel compelled to tell me how much they have made, then I am going to dig deeper and quantify the numbers...this is fun if you have never done it. For those folks that like to show off their net worth in a conversation, it is easy to find that many of them do not offer a true picture of their net worth...no kidding, right? Anyway, start asking questions that relate to their debt and just probe a little bit, it won't take long to sniff out the stink in their net worth. I guess my point is that they NEED you to believe that they are successful in order to keep being successful. That's how too many of them are successful. Don't get me wrong, we all have to make money, but let's just be clear about HOW we are making our money.

I have recently run across a website that really put this into perspective for me and I want to share it with you...the website is http://www.REMentor.com and on the front page it has a "Guru Test." This is the kind of confidence that I want from someone whose advice I am taking. The questions shed light on the nature of the guru and by the end of it, there is no escaping the light of truth! I love it and I love the approach of getting to the heart of the matter. Questions 4, 5 and 9 would be enough for me to know whether or not I would work with any guru. The website is worth going to and has some excellent advice.

With regards to the anti-guru, I find myself getting nuggets of gold by the finding those humble folks whom I meet up with on occasion every other month or so. The truth in what they have learned is so incredibly valuable. There is not a "high pressure" sale for them to believe what they are saying...they don't need you to believe them. Recognize the anit-guru when you meet them. They look different, they use very specific language and they are humble. Take them out and treat them to coffee or lunch...get to know them. Don't pry for information, get to know how they think and thank them for their time.

Most of these people love sharing information and truly enjoy your company. These are the gifts of life and the gifts of our industry. Recognize these folks as the angels that they are and treat them with respect and you will have an abundance of knowledge. Keep up your formal education, but learn how to distinguish a real guru before you spend a ton of your hard earned money.

Take care and happy investing

Robhttp://www.LocalRealEstateDeals.com

Survival of the Fittest!

If Darwin was alive today, he might use the real estate and mortgage industry to prove his theories on Survival of the Fittest. In the new millennium things happen so fast that we have seen companies come and go in the space of less than a decade. Timelines are moving at an ever-quickening pace and it has become easier to witness the growth and evolution of companies as well as industries.

 

It wasn’t all that long ago that we were able to witness the massive restructuring of the computer industry. The middle to late 90s proved to be a boom-time for almost anyone that knew anything about computers or the internet. If you have a phone book lying around from the late 90s, open it up and look up computers. There is no doubt that you will find a ton of computer companies no matter where you live. But try calling some of those phone numbers and find out how many of them are still in business.

 

You see, principles that apply to the natural world, commonly apply to the business world. In this case, the principle is survival of the fittest. Many of these companies didn’t have the discipline or business acumen to stay in business. This is not necessarily a bad thing…it is all part of a process, just like the process of decay. Economic growth, as well as, rapid economic growth has its place in business and nature and it would be wrong to label it in anyway, including “good” or “bad.” During rapid growth phases, there is typically a swarm of sub-growth or expansion as well. During the late 90s, the internet grew by leaps and bounds and companies as well as individuals figured out new and exciting ways to use it. Many of those “new ways” didn’t pan out. Many of those companies did not have a sustainable model and most of them disappeared over night.

 

The same thing has happened in the real estate industry. It was so incredibly prosperous that we leapt ahead in so many ways. A lot of the things that transpired in the last decade helped to push the limits of our imaginations and many of those things have ultimately failed. As a nation of investors, we know what works and we know of many things that don’t work. It is as natural as the seasons. Now, as you look around at the horizon, take stock of who is still standing and who isn’t. The weak are gone and the strong are still standing. There are some anomalies out there…there are a few weak companies that are still standing and a few good ones that went away, but by and large, nature has taken its typical, statistical toll on our business. Some things just take care of themselves.

 

As for the businesses, products and procedures that have failed, we need to collectively learn our lessons, as I believe most of us are. I think that we are going to see a ton of creativity in the next few years and hope that translates into highly qualified transactions. For the past decade we have been a high-volume business, but for the next 5 years at least, we need to become a high-quality business if we are all to survive.

 

To those of you still standing…Congratulations! You have survived! Now let’s thrive!

 

To your success!

 

Robert D. Cass

 

 

http://www.LocalRealEstateDeals.com

Lemonade for Sale!

 

We must be out of our minds! We started our real estate investor media group (Local Real Estate Deals) as the market was tumbling. The problem is that too many people quit before they begin. We conducted due diligence and the numbers looked reasonable, so we committed. That’s all there is to it. Ok, so the market tanked…you can’t go into your five year plan and quit after the first quarter because things aren’t going according to your plan. So, almost two years ago we started going down a path and have created www.LocalRealEstateDeals.com then we launched our Magazine, now we are launching our social media campaign, then our DotTV station…whooda thunk it?! We are still in the game and gaining ground…this is absolutely crazy! We may even be ahead of our 5 year plan at this point…I am too busy to check, but I will get back to you on that.

 

The market is doing some funky things so it is always interesting to hear the response from someone when I tell them that we are in real estate media…the responses are typically something along the lines of “wow, tough time to be in the real estate industry, bad timing huh?” to which I reply that there couldn’t be a better time to be in the real estate market! In fact we are doing the opposite of what the masses are doing. Rather than running from the industry, we are embracing it! I always worry about the collective wisdom of the masses. That’s why I observe it and run as fast I can in the other direction. We know where we are going and the path is clear, we are telling you where we are going so don’t be surprised when we get there…This is good stuff! The team, the product, the story…It doesn’t get any better than this! It is too easy to make money in a bull market, look for real innovators and leaders to be profitable during a bear market…keep an eye out for us, we are feeling a little bullish lately!

 

While some may see this as a down economy and down market, we are making lemonade, and you know what? It aint bad, you oughta try some!

 

 

Rob Cass,

Richmond RING (Leader)

 

I love my job! I get to meet the brightest and hardest working professionals in the real estate industry and I get paid to do it! How great is that? As it happens I get to meet more people than I ever imagined and you begin to see some trends in personalities and conversations, and there is one trend that I can’t pass up sharing with you.

 

You see, as a publisher of a media group, I get proposals and joint partnership offerings on a fairly regular basis. Most of the time it is easy to tell right off the bat that I am going to end up doing a whole lot of work for very little benefit. That does not fit the traditional win-win scenario that we have all been trained to work towards. Recently, I met up with Melody Scott who happens to be the President of the Richmond Ring www.RichmondRing.com while she was visiting her cross-town counterpart Richmond REIA. She struck me as the type of person who makes a difference. She is one of those rare people that adds value to a relationship without holding her hand out. In fact, if she says she is going to do something, you can take it to the bank! While most people are trying to figure out how you can help them, she has taken the approach of “How can I help you first?” Wow! Refreshing!

 

My goal in this blog, among other things, is to identify the people places and things that are working successfully in this real estate market and to let the world know about them. Even if you don’t live anywhere near Richmond, Virginia, it still makes sense to emulate the Richmond Ring. If the success of every organization rises and falls on leadership, then the Richmond Ring is going to be around for a while because they have people like Melody leading the way. It is my opinion that the way out of our current economic downturn is to buddy-up with local experts to improve the situation in our own backyard one deal at a time. What better way is there to do that than to sync up with the local experts at Richmond Ring or your own local Real Estate Investor Association?  The people that attend the monthly meetings are forward thinking, positive, creative people that are collectively looking for solutions to keep moving forward. You can always watch the news or talk to your brother in law about how bad things are, but those don’t make an impact, in fact, those conversations perpetuate the problems by giving them our attention. By attending a monthly meeting, you are re-directing your time and energy to be a part of the solution, not part of the problem.

 

Like I said, I love my job…I get to meet the brightest real estate professionals in the business at all levels, and I feel fortunate to have made the acquaintance of Melody Scott of Richmond Ring…check them out at www.RichmondRing.com and give them my regards!

 

Robert D. Cass

 

 

Bubbles

History repeats itself. We have heard it before and we are hearing it again. While there are many differences between the dot com bubble of a decade ago, there are as many similarities to the housing bubble that just burst.

Among other things, a good deal is a good deal in any market. What do I mean by that? Well, if you are using the right metrics and buying at the right price, then you are going to make money, whether you are buying stocks or buying real estate. In both of the bubble cases that we are talking about today, emotions not real value, is what drove the market to its inevitable collapse.

What bothers me most is that is just went through a ridiculous bubble 10 years ago...10 short years ago. Everyone was caught up in the frenzy of making millions or getting their share that not many people sat back and figured out that things were going awry. It takes self discipline and a deep sense of self. You have to know yourself. You have to be confident that you can take your profits and be happy with them. You have to be willing to leave some money on the table. You can't second guess yourself once you have made a deal. You can't have your head on a swivel looking for your next deal before the first one is complete. You have to have a plan...and you have to stick to the plan.

We can't afford to go through this again as a nation. We are killing ourselves, our credit, our credibility as a nation of borrowers. We have to be smarter next time...if we can all learn from our mistakes then this is real estate downturn could be one of the best things that ever happened to us. Sadly, many people won't learn from their mistakes and the same mistakes will be made again in another 10 years. But for those who have learned their lessons and keep growing as investors and real estate professionals, this is an incredible lesson that will help you amass a fortune. Just make sure you recognize the signs of a bubble. Maybe that is something that we will talk about in a later blog.

The last bit of advice is to do the opposite of what the masses are doing. Actually, RUN in the opposite direction that the masses are running.

Good Luck and Happy Investing!

Rob

Credit Crisis Indeed!

I don’t know how it escapes the masses that a part of our problem is the way that we evaluate individual credit scores in the first place. Here we are in the midst of the most profound and far reaching credit crisis that many of us will ever experience in multiple lifetimes, but nobody is talking about personal credit and the way that we “earn” our own personal credit scores.

 

First of all, let me just start by saying that the 3-Bureau System we have has served its purpose, and has done so fairly well in many ways. On the other hand, it is not only failing, but it is contributing to the downward spiral that we are in right now. I know enough people that have incredibly high credit scores (above 750 or above) to know that the credit system is not teaching anybody anything except how to keep good credit. In that way, the system is serving itself…the credit system, that is. Many people are so worried about their credit scores that they literally worry themselves sick about it. These same people work hard, have nice cars, have never been late on a mortgage payment, kids in college etc. They are afraid of the “bad things” that will happen if their credit score drops to a number. They don’t even know what number is bad or what is going to happen if they miss a payment here or there. While I am not advocating late payments in any way shape or form, I am suggesting that it is not worth getting sick over and losing sleep over.

 

The real problem is that many people have great credit scores but they don’t understand money and finances and that is the real problem. If you are focusing on your credit score, but don’t understand money, then you are missing the point completely. It’s kind of like the testing for students across the country. There are Standards of Learning or SOLs in many states and one of the criticisms is that we are teaching our children how to take the test versus getting an education. So what we find in some, not all, cases, is that we have students who know how to take an SOL test, but are not learning materials. Basically at that point we are teaching the wrong subject…or to put it another way, we are sending the wrong message to our students. Among other things, we need to teach children how to learn as well as what to learn…but let’s get back to credit. The problem is that we have many people who have great credit, but they have no idea why they have fought so hard to have great credit, nor do they know how to leverage it to help them gain financial advantages other than getting a great interest rate on their next automobile purchase or refinance.

 

Don’t get me wrong, those are great things, but if that is all you are fighting for, then you are missing the big picture. You see, we have been taught to fear the credit bureaus over the past 20 years in a way that is becoming dangerous to the system, because we fear the system without knowing why. More and more people tie their self-esteem to their credit score and it is a false sense of pride or guilt depending on where you fall and what your score is. The truth is that you shouldn’t tie your self esteem to your credit score one way or the other. Your credit score has nothing to do with the kind of person you are and does not reflect what is really going on in your life, or has happened in your life. Your credit score is a continuously moving snapshot of an ambiguous cross-section of financial data. Now, there are some things we know about credit scores, but it is meaningless if we are not financially educated.

 

Among other things, I am suggesting that part of our credit score should be based on a standardized test for financial literacy…and yes, I know I just dogged standardized tests a few paragraphs up…But it shouldn’t be the ONLY thing that we use to judge credit scores…it should only be a part of it. The way that the credit system is currently set up, the credit of more and more people will be going down the tubes with foreclosures and late mortgage payments becoming a growing daily occurrence. How is this helping our situation? It isn’t, so under the heading of “If you aren’t part of the solution, you are part of the problem” then our current credit system is definitely part of the problem.

 

As an entrepreneur I have experienced wild swings in my personal income that are to the extremes of both poles. It has gotten to the point that when someone tells me they are an entrepreneur I joke back and say, “Yeah, my credit sucks too!” More often than not, I am met with a hearty chuckle. If you have never started a business or pursued an entrepreneurial endeavor, you would be amazed at how ridiculous lending requirements are for small business owners. If all you did was watch the news, you might believe that money was falling like manna from heaven for business owners. The truth is not quite that pleasant.

 

It is true that there is money for many first time entrepreneurs who have great credit and a good DTI and collateral. Not a problem. The challenge is that most businesses fail in a relatively short time and all that the “system” did was create a person with horrible credit out of a person with stellar credit. If you knew nothing else, that would tell you that our system is not working well. But let’s keep the scenario going. Now we have a person who had great credit and strong entrepreneurial drive and if that person fails, then they carry a stigma with them for many, many years. You may say, “Ok, that is the risk that they took” and you may be right. But the point is that the system rigorously penalizes folks who strike out on their own in the name of capitalization. We are not very tolerant of those who fail, which is in opposition to the idea of capitalism in the first place. It appears that as a nation we embrace capitalism as long as it is successful but we toss aside those who don’t make it, like yesterdays news.

 

Back to credit…there are many cottage industries popping up to circumvent the problems concerning credit, like credit repair companies etc. Whether you believe in these companies or not, which is a whole other story, you have to admit, that they wouldn’t be here if the system was not in need of a total overhaul. Now, instead of people dealing with their financial ignorance, we are making the problem worse by encouraging them to work the system against itself. It is a logical step, but is indicative of our deep psychological need to have instant gratification with regards to credit. It is also indicative of our refusal to deal with the real issues at hand, instead of becoming financially literate; we displace blame and don’t take accountability for our actions. WONDERFUL! (Now, we are encouraging a lack of integrity to support our lack of financial knowledge…this can’t end well!)

                                                                                            

Kids and credit. This is a sore spot with me. To me credit is like tobacco in that it needs more than a gentle warning to those who are going to use it. It is a dangerous thing and needs to be used with great caution. We teach so many things in school, but we don’t do an adequate job, even at the collegiate-level educating and warning students about the hazards of credit. This needs to be addressed the same way that students are indoctrinated into college life. A short class or lecture on credit would be a great starting point, but is certainly not enough. Periodic and consistent messages should be programmed into students about credit…as I write, I can envision a program that parallels the “safe sex” public awareness campaigns around the country…THAT IS THE LEVEL OF AWARENESS that we need to employ! Anything less is a national crime against ourselves and our future!

 

 

If you don’t believe that the system is corrupt, just look at the amount of identity theft that has popped up in the past few years and also the products that protect credit and identity theft. This is crazy! Does anyone else see a direct correlation with the broken credit system and all of these problems??? Enough is enough! Let’s put our heads together and look for a better way to deal with credit. The system had the right concept in place, but it has gone unchecked for so long that it is out of control. We can’t expect things to get better by just sitting back and doing our best to keep our own credit scores as high as possible. It is a false sense of security. The real answer is personal knowledge of financial principles, not credit scores. If we encourage the education of personal finance and wealth building principles, then credit scores will increase. If we keep focusing on credit scores, the scores will most likely keep going down as will the knowledge that we need to bring the scores up in the first place.

 

If you are not a part of the solution, then you are part of the problem….Join me in becoming part of the solution.

 

            Respectfully,

 

 

 

            Robert D. Cass

 

V: 757.729.3124

E: rcass@LocalRealEstateDeals.com

 

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Financial and Self Literacy is the key to moving beyond this mess!

 

 

I am not sure if that is the right term or not, but I have been consumed with the idea that a nation of private real estate investors and the potential of their collective borrowing power. I think we rely too heavily on commercially available financing for the majority of our entrepreneurial needs. The system that is in place has worked for the first 200 years of our country, but I think that too much has changed to keep using outdated economic systems.

 

Before I go any further, I want to be clear that I don’t have the answer, but I do think that it is worth pondering. So much has changed since the 70s and the digital age in almost every aspect that it seems like we were doomed to collapse financially, whether it was real estate or some other industry imploding. Rather than look at real estate and mortgages as the cause of the collapse, look at it as the effect of another greater cause. Don’t be quick to jump to the usual assumptions about the market…that would be too easy. We have all read about the recent woes of many companies and processes that have broken down and have contributed to the fall of the industry…Let’s go up another 10,000 feet to see if we can see any other notable trends. It is a thought exercise and I am not going to entertain that thought here, but just consider where we have been in the last 200 years and where we are now. Much of what we do from a financial standpoint is still steadfast in old-world ways. I think that the whole system needs to be revamped from scratch, starting with the definition of capitalism.

 

This is going to take many great thinkers and modelers of economic paradigms, and would be excited to see what kind of results would be generated by this kind of a think tank, but for the moment it is not going to happen. I do think that one aspect of future lending and economic growth lies in Micro Lending…I don’t know enough about the banking system to tell you the pros and cons of how that might work, but I can tell you that there are individuals and companies large and small that are lending hard money to get deals done. In some cases, those are the only deals getting done. And that money is out there in spades if you know where to look.

 

I know that there are systems out there that are working, that could be employed or modified to encourage and support continued economic growth. On the other hand, we, as a nation, need to take a deep breath and re-evaluate our systems and recover from the mess that we are in right now. There are no quick fixes. I think that we need to have a very healthy debrief on what the hell just happened. I know there are many pundits out there who know exactly what happened and they have the fix for it all…I am not buying it, nor am I in any rush to make any determinations as to how we should get out of this flux. If mistakes precede progress, and it has proven that it does, then we are in for one hell of an upside when we learn our lessons and apply them intelligently.

 

By the way, I am not telling anyone that all of our systems are broke. I think that there is a lot of good and many good systems in place. I just think that we need to take a holistic approach and look at the problem as completely connected, versus, one or two key ingredients gone bad. I suspect that the problem has to do with our “thinking” and our “habits” as much as anything else. This presents its own set of problems because these are not easily undone, even if we understand at an academic level, what the problems are.

 

Many problems can be understood academically, but at the emotional level it is much harder to deal with and undo. Now consider that we have the emotions of a nation to deal with and you can begin to understand the scope of what really needs to be addressed. There is not a doubt in my mind that we can employ the brightest minds (and I hope we do) to create a new economic model, a newer, more updated version of capitalism that woks. However, until we are able to educate and excite a nation, then all is for naught.

 

And you know, education is really a big part of it. Not primary or secondary education, but the lack of financial literacy in general. One of the problems is that institutional learning is so far removed from the reality of daily living and real businesses, that it can’t provide an adequate education to entrepreneurs or business leaders. The mere attempt by a learning institution to create a financial literacy curriculum is an exercise in futility. The attempt is noble, but the exercise is futile.

 

This is going to have to come from the private sector and it will have to be simple…As I write this, I keep envisioning a financial Declaration of Independence, Constitution and Bill of Rights. Something so new and profound that has been designed from the ground up that sets the new standards for financial literacy…That is the scope and scale that I have envisioned. So much is broken that it might make more sense to start from scratch. The problem with that is it creates a new model…new models create fear…fear creates uncertainty and the masses are not comfortable with uncertainty…INDEED!

 

In my humble opinion there is another problem that is going to be incredible hard to address. We are not only financially ignorant, we are also “self ignorant.” It takes too much time and energy for us to admit that we are a part of the problem, but make no mistake about it…we are. We have forgotten that the greatest subject we can study is ourselves…Know thyself has become a phrase rarely uttered and even less heeded to. We have to know ourselves or at least make an attempt to understand our psyche because it plays into our understanding of money. We are emotional creatures and the majority of our decisions are emotionally based decisions. We can’t expect to understand our actions if we don’t make time to study ourselves. The problem is that the gratification is delayed in studying ourselves. It is not an easy subject and is often fraught with deep psychological scars that we would prefer not to deal with if we even acknowledge them in the first place.

 

The trend in almost every aspect of our lives is pointing to quicker and quicker gratification so this is going to be a hard trend to reverse. It can be done, but it isn’t going to happen overnight.

 

These are my thoughts and this is the process that I am going through to understand this turmoil and trying to come to terms with how it has affected my life.

http://www.LocalRealEstateDeals.com