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Sunday, September 7, 2014

If Not...??

I've taken up surfing again. The last time I surfed was when I was 20 years old. I'm not happy to report that that was more than 20 years ago. I didn't decide to do this on my own. This decision is part of my philosophy to always surround myself with more experienced people than myself. Put yourself in the midst of those you want to emulate and they'll pull you up. One of the guys I do a lot of fly fishing with does a whole lot of business in Orange County. He's operating in that $400-$1M price range. He mentioned to me how he had started surfing with another investor we've both learned so much from. Since I was also friends with that person and we've done some business together, I decided to give him a call and see if it was an open invitation type of event.

The first weekend I went, the waves were quite big. I did manage to get up once and had a very nice ride almost all the way to the beach. While we were out there, we talked more about life decisions than business ideas. It was actually quite hard to not talk about business with him and I was doing my best to make a conscious effort to not bring up any real estate related topics.

At one point, he talked about his new house down near the beach. Then, while discussing his decision to buy it, he said "If not now, when?" Later on, in his living room he was showing me a few surf boards he had recently acquired. He then went on to say that he had just ordered another one that he really wanted and again, the phrase "If not now, when?" resurfaced.

Back at home the other night, I called up my fly fishing buddy to see if he was heading down this Sunday morning to join the surf club. He said he was up in Mammoth doing some mountain biking. I decided to share with him my experience at that first surf outing and the quote I had heard several times during my two previous trips to the beach. He added, "That's right. Also, you should be asking yourself 'If not me, who?' because someone is going to do it."

If not now, when?

If not me, who?

I put my goals on my white board above my desk. I have a copy on a yellow sheet of paper next to my bed and another in the bathroom (when I'm stinkin', I'm thinkin'). I have ticked off quite a few of them, but still have some hefty goals on the list. It is only Sept and I have lots of time left this year to complete them. I have other, non-business goals on that list that I want to accomplish as well. I've been to Thailand more than a dozen times and have never been to Cambodia or Vietnam despite saying I'm going every year. If not now, when? If not me, who? This year I've decided I'm going to Cambodia. If I don't go this year, when will I go? If I don't go this year, who WILL go?

What goals do you want to accomplish? Ask yourself; if not now, when? If not me, who?

Saturday, July 19, 2014

Let There Be Mistakes!!! (But Not Failure!)

I closed my first rehab / flip house Aug 22, 2006. In honor of my fast approaching 8 year anniversary as a real estate investor, I thought I'd explore some, just a few, of the many mistakes I've made over the years.

I bought a mobile home in a senior park with $800 space rent during the collapsing economy. I was told not to do the deal by my good friend Chris Carlson, a much more experienced investor who just got out of a horrible mobile home deal. I did it anyway thinking "I'll show him." All I showed him was how me and my partner each paid $10,000 to get rid of the mobile home.

Then me and that same partner bought another house out in Palm Springs. Didn't understand the market out there. Six months later we netted a whopping $2,500 each... on paper. That doesn't account that Palm Springs is 1.5 hours one-way from my house and I spent a lot of days out at that job. If I recall correctly, we didn't work together too much longer after that deal.

I used my IRA to buy a second mortgage on a mobile home. After a year, the borrower stopped paying on the first loan. The first foreclosed, but failed to notify me. I called them up and notified them they now owe me as I'm in first position. I should have shut my mouth because they hadn't yet recorded their deed so they just did the foreclosure all over again and wiped me off. Luckily I salvaged the note out of my IRA with another deal, but that is $5K plus interest I'll never see again.

I refinanced one of my high equity rentals to a 10 year I/O just before the economy collapsed and used the money to pay way too much for two rehab/flip houses from wholesalers. The economy stalled and started collapsing before I could sell them for a profit. Should have just gotten rid of them and been done with the loss. I still own both of them today and they once again have some equity in them, but that refi'ed rental house is still upside down! LOL

I put $18,000 into an out of state apartment deal. Never saw a dime returned. The guy who put the deal together disappeared along with $2.7M in other investor's money, I'm told the woman involved is claiming mental illness and I've also been told the building went to foreclosure. You can't make that one up!

I once bought a house subject to another investor's hard money loan. I then sold the house to yet another investor, but I gave him the deed before he gave me my money or paid off the first investor's hard money loan. (I don't recall exactly how I was ever that dumb, but it happened.) I found out he wasn't paying on the loan so I had to make the payments and every week I begged him to deed me the house back even emailing him grant deeds. Although, I did eventually come out whole on that deal and with a very good profit when he finally got his refinance through, there were MANY months of waiting that didn't feel too good in my tummy while writing checks to cover one investor's loan on another investor's house.

I've got so many more... It's only money! Let the education continue....

Thursday, July 17, 2014

What's the Secret to Getting a Seller to Say 'Yes'

The secret is that there is no secret. The whole concept of there being a 'secret' is the psychological game gurus use to trick people into thinking the guru knows something nobody else knows and without that information, success is unobtainable. So, the guru convinces these people they must pay up in order to get those secrets or risk failure.

I talk to sellers every day; Monday thru Sunday. I like to talk to responders of my marketing on the phone. It's about the only aspect of this business I truly enjoy. At this point, getting a ‘Yes’ is more thrilling than cashing the check! (I get to keep the whole 'Yes.' The government gets a good portion of the check.) Just the idea that I got someone to read my copywriting, pick up the phone and potentially pass huge amounts of equity over to me is an amazing thing. Therefore, I want to talk to a lot of people. I ask simple questions and try to get them to talk as much as possible. Like one of my favorite instructors says "You have two ears, one mouth. You should be listening twice as much as you are talking."

A lot of new investors get overwhelmed with all the questions they think they don't know to ask. To get a great deal on a property, I only need to ask one question; "Would you take $XXX for your property?" If I get a ‘yes,’ the only other question I need an answer for is, "Is this the correct mailing address for you?" (I want to make sure escrow can mail them docs.)
I'm not worried about the paint color, leaking roof, bad tenant, filthy floors, running toilet, broken this and outdated that. Get the address and a few good comps, then crunch your numbers and make an offer. Lots of respondents say ‘no.’ A few yell. Some just hang up. I don't care about those people. They are not my customers. Imagine if you own a burger stand. Would you get depressed about all the people driving by and not stopping for a burger? No! You only focus on those that come through the door hungry, and have money to buy. If I mail to a list of 2,500 people, I'm only looking for the one or two people who are ready to say 'Yes!' I'm not focused on the 2,498 others. They are not my customer today. Maybe at some point in the future they will become my customer, but today, I'm only looking for the one or two who need my services now.

Private consulting available and read about my deal of the month:

Sunday, June 29, 2014

How I win in Eviction Court - Every Time.

I'm quite sure I've been in eviction court more than the average landlord/investor. The main reason is probably because I do not reward bad behavior with financial payouts. In other words, I don't do cash for keys. You pay, you stay. You don't, you go see the judge.

So, here is my strategy to win in court, every time, in a so-called tenant friendly state;

1. Be prepared and organized. Don't go into court with a folder of organized chaos. I put together all the documents I need, and think I might need, a few days before. I label each one Exhibit A, B, C, etc. Then I write out a short script and incorporate how I might use these documents when speaking to the judge. In the script, I might have something like, "Market rent for a 3 bedroom house similar to the one the defendant is occupying is $2,300." Next to that I type Exhibit B. Now, when I go to the judge, I have my script and I can quickly reference the correct paperwork I need for evidence.

2. Practice what you might say. I will read through my script several times. I don't know what the judge might ask me, but if he asks me a question that I imagine he might, such as "Have you had any contact with the plaintiff?" I have prepared an answer for him and it helps me to respond quickly and clearly.

4. Stick to the facts. The judge might ask, "What is the problem?" He doesn't want to hear how you have been having problems, the tenant told you to go to hell, he turned off the sprinklers and let the grass die, his dog barks all night, etc. He wants to know exactly why you are in court. "The tenant was supposed to pay me rent on the 1st and has not." You don't need to say any more. Let the tenant screw the case up for himself by talking too much.

5. NEVER talk to the defendant - NEVER. The defendant will most likely start addressing you personally. He may even try to talk over you. Just let him run his mouth. The judge will tell him to shut it. When it's the tenant's turn to talk, just ignore all the lies spewing out of his pie hole like a hate volcano. The judge has heard it all before. If there is something that concerns him, he'll ask you about it. Stay calm and remember #4.

6. Let em rant. Trust me, it's good for your case. Court cases run on tight schedules. There are lots of other people the judge needs to listen to and the last thing he wants to do is waste a bunch of time listening to a disgruntled tenant tell his entire sob story. The more the tenant rants, wastes time and talks about a whole lot of non-factual and/or irrelevant things, the better your case.

6. Dress appropriately. I don't wear a dress shirt and khaki pants to court. I don't want to come off as too slick. I wear nice jeans, black dress shoes, a single colored polo shirt (mine is olive green with my company name in small white letters over my left chest) tucked in and a black bet. When I stand in front of the judge, I stand with my hands clasped in front of me or behind me as a sailor might do when at ease. Don't put your hands in your pockets. The bailiff won't like that. Don't cross your arms. You'll come off as angry. Also, leave the Rolex watch, diamond earrings and 24K gold chain at home. You won't need any of those in court. Just stand at ease and keep your eyes on the judge.

7. Be polite and respectful. Address the judge as "Your Honor" and use lots of "Yes, sir" or "No, Ma'am"s. Your tenant might be a total scumbag, but calling him one won't win you any points with the judge. If the judge asks you a question you don't understand, just politely ask the judge to "Please repeat the question."

8. Hire a professional. I never go to court without a lawyer. I do my own postings, but I let the lawyer take over after the posting has expired. Most of the time, I never end up in court. If the tenant doesn't file an answer, I get a default judgement and life goes on. If the tenant does and the answer is nonsense, I go for the MSJ or motion summary judgement. This is an expedited process where my lawyer asks for a judgement because the tenant's answer is irrelevant to the facts of the case. These don't always work out and if they don't, I will have to go to the court and testify.

Disclosure - I'm just a landlord. I'm not giving out legal advice. I'm not a lawyer, although I sometimes play one while driving because all other drivers on the road are guilty of being idiots who should not be behind the wheel and I'm great at arguing those cases.

Friday, May 30, 2014

Discovering the Correct Pattern, Size & Color

When any fly fisherman heads to his favorite water, the first thing he must do is select a fly from his box. Typically, we carry any where from a few dozen different patterns, to hundreds of different flies. It can be daunting. After observing what insects might be coming off the water, or the time of year, we make our selection, tie one on, and give it a few casts to water we perceive as holding fish. If nothing happens, we switch flies. I've been on the river and have gone through 10 or more flies before I find out what the fish are keying in on. There is nothing more frustrating than seeing fish rising and not being able to catch them. Changing flies is time consuming. I can assure you, casting the wrong pattern to rising fish is not the formula for a good time.

Once we get the right pattern, size and color, the odds are in our favor. Knowing what the fish are biting puts the advantage on our side. We stick with that pattern until it stops producing. If you're getting drive-by's, bites and landing fish, why would you even consider switching to another pattern or color? Once you discover what leads you to success, you need to work that pattern for all it's worth while it lasts.

In my business, a question I often ask myself and others during consulting sessions (if you need one please sign up here) is, "What makes you the most money in your business?" This is a very powerful, thought provoking question. For me, the answer is, without a doubt, making offers. If I don't make offers, I don't get deals. I originally thought the answer was marketing. Marketing makes the phone ring. That creates leads which I can work. By working my leads, I filter out the junk, find the motivated sellers with equity, make an offer, and every so many offers I get an acceptance. The problem with marketing is, it is easy to send out lots of marketing. It is easy to make the phone ring. It is also easy to work my leads and analyze the properties. Only through the offer am I able to present myself to the seller as a serious buyer which leads to me getting an acceptance and a deal in escrow. I've asked myself this question many different times through my 10+ years in real estate and the answer has changed over time. Now, as a self reliant investor, meaning I have no partners, when I asked myself this question recently, as had happened many times in the past, I initially (and proudly) wrote down ''Marketing." I think I did it almost as an auto-response falsely believing it was the correct answer. As I looked at the word, I realize it was in fact, quite wrong! I crossed it off, and wrote "Making Offers" underneath it. It was like an awaking.

Making offers!

My goal, every morning I sit at my deal maker desk (which is the Iceberg 8' utility-grade resin folding banquet table, platinum granite from Staples), is to put a green check for each offer I make in the box for that day on my At-a-Glance desk calendar, also from Staples. The more green checks, the more successful the day. Just making offers doesn't get deals, but nothing happens until the offer gets made. I also do lots of follow up and I never stop marketing. The former two, however, always come AFTER I make my offers for that day. Any leads that come in throughout the day are taken down, processed, then set aside until the following morning when I have my time block for making offers. This is my priority. I don't need to and I won't deal with anything else until the offers are made. The contractor can wait. Escrow can wait. The buyer with to many questions about the wholesale deal I sent him can wait. I do my offers, then I let everyone else eat up the rest of my day. My making offers revelation was like finding the right pattern, in the exact color and perfect size.

This post was inspired by The One Thing by Gary Keller. An absolutely must read book for anyone needing more focus in their business, or any where for that matter. Click the link and buy your copy now.

Wednesday, April 23, 2014

Real Estate & Fly Fishing - The Bite

When I fish small streams, there's generally a succession of small pools followed by a run or riffle and then a few more pools. Generally, in each pool there's a hungry fish waiting for its next meal. I present my fly, and most often there is a quick take or bite. If I'm quick, I can set the hook and reel in a nice fish. If I pause, I miss the hook set and I blank on that pool. Continuing to recast to that same pool is pointless. Once the fish goes for the fly and I miss the hook set, it turns off the bite and there's no chance of catching that fish again. At least not at this moment. If I head up stream and come back down, I might have another chance and surely on my next trip to the stream I'll get another chance in each pool.

Marketing to sellers is basically the same as casting to trout.

When I mail to potential sellers, my phone always rings. Just like the hungry fish in the pool, there's always a few property owners out there waiting for a good presentation. When the potential seller calls, I make my best presentation. If the seller bites and I set the hook in time, I reel in a nice deal. If I miss the hook set, I miss the sale and I need to move onto the next potential seller. Standing there and casting and casting to the same pool will produce no results. However, I can mail that same seller again in a few weeks or months, and possibly close the deal then.

Cast your fly, wait for the strike, set the hook, manage the fish, land a nice catch.
Send your mail, wait for the phone to ring, make your offer, stay on top of the transaction, land a nice deal.

If you're presentation/offer doesn't work, move on to the next one.

Monday, March 31, 2014

Real Estate & Fly Fishing - Change of Scenery

I like to spend my Sundays fishing the local high mountain freestone streams. I go 3 out of every 4 weekends. It is a succession of pools, almost like a fish ladder, all the way up through the rocky valley. The entire stream, with the exception of a few short flat runs, is literally pool after pool and in each is a hungry little trout waiting for my presentation. Sometimes, these pools are secluded from the rest of the stream in that there is a high waterfall at the beginning and an obstacle at the tail, be it a fallen tree, shallow water, or some other obstruction essentially imprisoning the fish until the water levels change and either flush it further downstream or give it an opportunity to move further up. When I catch one of these hungry predators, every once in a while I choose to liberate the trout and release her into another pool hoping she appreciates the change of scenery, other fish she encounters and new sources of food.

I recently purchased a rental property from an out of state landlord. She lived there 20 years ago, but since has changed husbands and homes now leaving her residing on the east coast. She told me her tenant had been in the house 19 years. I was telling my fly fishing partner and fellow real estate investor about this situation. He responded quite simply, “Sounds like he’s in a rut.” As I thought about this man in this situation, paying rent for 19 years, I decided to help him too get some change in his life and sent him a 60 day notice of termination of tenancy. 

I can only hope he too will eventually appreciate the change in scenery, other people he will encounter, and new sources of food from local restaurants wherever it is he ends up.

Real Estate & Fly Fishing - What Are You Targeting?

It really is amazing how many similarities I see between my real estate investing business and fly fishing. Actually, any fishing. For example; if I told you I like to buy houses, it would be too obtuse to understand. 'Houses' is a such a broad word. It would be better if I told you specifically what type of houses I like to buy wouldn't it? Just like fishing, if I told you let's go fishing on Sunday, be ready, I'll pick you up at 9am, you'd have absolutely no idea how to dress or what to bring. What if 'ready' to you meant shorts, a t-shirt, a lounge chair, flip-flops and a surf casting rod, but I took you up in the mountains to fish for trout on a freestone stream? Your flip flops wouldn't do so well on the slimy rocks, your legs would get destroyed by the scrub brush and that surf casting rod might be a bit overkill.

Likewise, if you told me you are a cash buyer and I kept sending you wholesale deals I had on $500,000 houses, but you are a cash buyer only for $150,000 houses or less, you probably wouldn't be too interested or prepared to close on any of those deals. They might be deals, but not to you. Same goes if we reverse that scenario. You want to go out fishing for tuna, and I keep inviting you to catch pan fish - you're probably not interested.

When I fish for steelhead, I bring a heavy rod, typically a 6 wt, with fluorocarbon leader and I dress warm with chest waders. When I fish for trout on freestone streams in the mountains, I bring my 1 wt superfine rod, wear a long sleeve shirt, and typically wet wade with just wading boots and neoprene booties. The hunt determines the gear. When you go 'hunting' for deals, make sure you are determining what exactly you are hunting for before you set out. If you're going after entry level houses, know your product, the typical cost of rehab, what they might sell for in the farm they are in and who your buyer most likely will be. Because you'll never find what you don't look for. Being correctly geared up is the best recipe for success.

Thursday, March 27, 2014

You Probably Already Know What You Need to Do...

...but, you're just not doing it. That is what I have found from the countless consulting sessions I have been having week after week. Don't get me wrong, I thoroughly enjoy meeting with other investors and know that I am very good at revamping businesses. Just ask my last business partner how different his life is now.

When sitting down with a client, the first thing I want to know is what does their business look like. Many times, they have one source of deal flow. All their properties come from one, maybe two sources and this is the lifeline of their business. To me, that is unacceptable. I have no less than 5 ways I attract leads into my office and am always looking for new sources to implement.

Next, we cover the specific items they want to discuss. I ask them to submit these before we meet. This typically takes up the majority of the time and I think it is important to cover the topics in-depth. The interesting phenomenon that I have discovered is that most investors already know exactly what they should be doing, but are just not doing it. I have found that they simply need reassurance that it is OK to implement that new idea. Sometimes, it needs a little tweaking from a professional such as myself, but mostly they have the general idea of what needs to be done.

It reminds me of a story I once heard, and I don't recall the players any longer, but it went something like this; A large company hired a consultant to help them grow their business. The consultant came into the board room, told all the executives to pull out a piece of paper and a pen. He then told them to write down all the things that they thought they should be doing, but weren't. When they were finished, he said, "Now, do those things." I also don't recall exactly how much they paid him, but it was considerably more than I charge.

If you need help in your business, I'm sure I can answer any questions for you, feel free to contact me. Most of the time, it can be handled within a few minutes over the phone at no cost. If you actually NEED to sit down with me and discuss your business in depth, you can reach me at and click on the 'Services' tab at the top of the page to schedule a consulting session. All information is held in the strictest confidence and I'm positive you'll walk away re-energized about your business and have a plan of action to help you make more money, faster, with less work.

Tuesday, January 14, 2014

Is This Person a Good Business Partner or Just Filling a Hole??

I've had my fair share of real estate investing partners. Some good, but mostly about average. We always made money, but things were definitely lacking which would have pushed those partnerships from good to great.

I think the first thing one should do when considering getting into business with another person is to each write out your vision of where you want to be in 5 and 10 years and what that looks like. Don't share ideas. Do it privately and then exchange info. I say this because the immediate feedback you might get from the person you are courting could cause you to bend your vision to be more inline with what that person might be thinking in hopes of getting a 'yes.' Don't do this. Stick to your guns. If the person you are contemplating going into business with does not have the same vision as you over the long term, it simply will not work. Trust me.

I've fired my fair share of partners. I've always been the one to walk away due to the lack of long term vision that was inline with my goals and dreams. The income achieved was never in the quantity and manner which I saw possible for myself. I have always wanted to build an investing business. Bricks and mortar. It doesn't mean I have to be there 8-10 hours/day, 5-6 days a week, but why shouldn't my staff, the more intelligent people I hire to help me realize my vision. And it's big. Trust me.

I'm now on the precipice of a new joint venture. As the dreamy eyed romantic states, I believe this is 'the one.' We'll be launching soon and I definitely foresee big things. Systems are being built. Staff is being trained. It's a well oiled and tested machine. Unlike NASA, I won't send an expensive machine into uncharted territory and hope the parachute opens. The machine we're about to unleash has traction.

I do think partnerships are, not good, but great. Nobody gets there alone. Find a partner and look for one that has the same vision as you. Don't worry about skill sets, those can be hired. That has always been my mistake. I've partnered with people who could do things I couldn't. I've wasted a lot of time learning that it would have been more productive and less costly just paying someone to do those things I couldn't or didn't want to instead of giving the partner half and not ending up where I wanted to be.