Wednesday, October 31, 2007

Trick or Treat? Treat!!!

Yesterday while combing through the MLS I found a real treat! I emailed the listing to my investor client base that actively invests in real estate here in the Kansas City area. To give you a clue as to how good the investment looks I have 11 potential buyers for 3 properties. Ooops.

That's a good thing for me, I guess. But I need to see if I can dig any more of these up to keep the others happy.

If you want to be added to my "mail-to" list just email me. Just so you know, I work on a first response, first served basis. It's the only way I know to be fair.


Keep in mind the time of year. As you drive home this evening be careful! I don't want you driving over a little ghost or goblin. So slow down and enjoy the ride.


One thing I try to remind everyone at Halloween is how real estate signs seem to magically move from one part of a city to the other. So if your house is for sale, do your REALTOR a favor and put the sign in the garage for the night.

Tuesday, October 30, 2007

Passive Loss Rule As It Pertains To Investing

I'm not an attorney or CPA but I was trying to explain passive loss to someone who is the other day concerning his real estate investments here in Kansas City. So I did a Google search and came up with this web page regarding the Passive Loss rule as it pertains to real estate investing.

Despite what the title of the page says you do not have to be a REALTOR to be a real estate professional. Enjoy.

Monday, October 29, 2007

Kansas City Real Estate Investing

Kansas City real estate investing is alive and well. And counter to the rest of the real estate market things are beginning to really heat up for the active real estate investor. In fact, I actually have more ready, willing and able buyers than I do properties I feel great about recommending.

But I believe that is changing. The properties side of the equation, anyway. You see as the high inventories begin to creep into the holiday season many sellers are beginning to get a little more flexible as far as their expectations are concerned. I'm seeing in the desperation of their agents.

"Motivated seller."

"Make offer!"

"Owner may finance."

These are all signs that the real estate agent and seller are feeling the pressure. (By the way, isn't it odd that the National Association of REALTORS is running it's a great time to sell commercials here in the Kansas City market? Really?) And when people feel pressure from within they tend to bend where they wouldn't bend before.

Friday, October 26, 2007

Kansas Jayhawk...Football?

Be sure to tune into ESPN2 tomorrow at 6:00 pm (Central) to watch the Kansas Jayhawk football team continue their march to the inevitable BCS Championship game.

Watch as these Jayhawks grind out yardage against the once proud Texas A&M faithful and...

...I'm sorry. I had to stop and laugh. It's hard to say Kansas football and BCS in the same sentence. But who knows? If Florida can win titles in basketball (which I still consider sacrilege) then why can't Kansas win one in football?

I invite you to give me even one good reason we can't do it!

Proceed With Caution On Your Real Estate Investments

The basics of real estate investing have never been more important than they are right now. I read a headline on Yahoo! that Countrywide Home Loans has announced a loss last quarter of $1.2 Billion. I read in the Kansas City Star that some analyst are expecting this real estate correction to last into 2009.

And while I cannot tell the future any better than you I can tell you that perception can become reality. For that reason alone I urge you to make sure that when you are purchasing your next income property that it makes sense financially to do so.

Listen, markets go up (we like that) and they go down (we like not so much). During a Seller's market it might be tempting to purchase income property on more of a "speculative" basis. A little negative cash flow may be acceptable so long as there is a belief that you will make money on the appreciation on the back side. I'm not advocating this! Just merely pointing out behavior.
But the real estate market here in Kansas City has come to a standstill, overall. Yes, there are definitely some areas of town where appreciation is still happening. Population growth and housing demand don't stop just because the credit crunch hits. But there are also many parts of town where days on market is soaring and prices are softening.
As I have always advocated and now yell from the mountain top, do not purchase income property you cannot afford to keep. Make sure that you are honest with yourself on the expense expectations including capital improvements and vacancy. Make sure rents will cover your PITI PLUS the improvements and vacancies mentioned.

Don't gamble with your retirement worth having. There is too much at stake. Now, if you are in a position to buy and buy right now, you should be smiling. But if you are in need of selling because you got caught speculating, you are probably nervous. You should be.

Just look at the slippery road caution sign. It doesn't say stop. But it does say proceed with caution and be aware of the pitfalls. The same is true with your real estate investing.

Wednesday, October 24, 2007

Changing Relationships

I love it when I see real growth out of my clients. I had about a twenty minute conversation this evening with a gentleman I helped to buy his very first home three years ago. I said his first home. Not his first real estate investment property.

Today, he owns more property than I do. Seven to be exact. He had called for some advice regarding a particular concern he had. Hopefully I got him the answer he needed. But as we talked I asked him questions and gained insight to some things he was doing.

It seems I'm still his mentor in many ways. I'm about 16 years older. I've been working with real estate longer. And the advice of mine that he has followed has really provided him with some sweet, sweet equity positions. But I feel the relationship changing. Changing for the better.

It's a lot like when I talk with my fifteen year old, now. There was a time when I told him everything he needed to know. I helped him get dressed. I helped him fight his fights. Now I sit back amazed at the path he is taking. The answers he comes up with himself. Amazed at the man he is becoming.

Sure, I'm still there to say "what about this" now and again. But my role isn't so much to dictate as it is to advise. My boys, both literally and figuratively, are growing up.

Calculating Returns on Real Estate Investment Property

When I calculate returns for my real estate investment property here in Kansas City I am usually worried more about what my equity return is than any other issue concerning returns.

What do I mean by Equity Return?

Quite simply, the money that you have tied up in the real estate investment. For instance, in your first year your equity will be:
  • Your down payment.
  • Any difference between what it's worth and what you paid for it.

A couple of years later (say the 5-8 year window I talk about for trading in/up your real estate investments here in Kansas City) you equity will be:

  • The difference between what you sell it for minus what you owe (including your down payment).

So keep in mind you've had principal reduction going on (unless you went with an interest only loan, which could have been a good strategy depending on your situation) in conjunction with appreciation to raise that equity.

Here in Kansas City when you first purchase an investment property I would encourage you to make sure you are getting at least an 18%-22% return on your equity investment. But as you can probably figure out 6 years later that equity investment return will probably have been reduced by as much as 7%-10%.

Why? Because your accelerated depreciation has been exhausted on most facets of the personal property in the rental property and the percentage of net equity to value has steadily dropped, therefore lowering your leverage.

Knowing how you measure what a successful real estate investment property is provides you with the fist step in knowing whether or not that particular house is the right house for you and your investment property portfolio.

Tuesday, October 23, 2007

As California Burns...

Remember the people in southern California today in your prayers. I can imagine replacing my house. But replacing the memories, the photos, the keepsakes...those things you can't replace.
If you have your money in 401Ks and IRAs you are going to want to read this from last week. It's worth your time. Sound financial planning takes more than one vehicle. So go read Jeff Brown's Trojan Horse.
As I understand it the workshop I'm doing at UMKC regarding real estate investing already has more students registered than I usually speak with at one time. I've liked the smaller groups in the past because of the active participation. It will be interesting to see how this goes. You can register for this class by calling 816. 235.1448.
I was speaking to a would be real estate investor on the phone today and she said she went to a 3 hour course on REI and the only answers she got was to buy the books and tapes they had to sell. Gee, that sounds familiar.
You DO NOT have to spend thousands on books and tapes to be a good real estate investor. Work with someone that has a vested interest in your success. You could be reading one, right now.

Monday, October 22, 2007

A Real Estate Joke: Rated PG-13

A businessman met a beautiful girl and agreed to spend the night with her for $500. They did their thing, and, before he left, told her that he did not have any cash with him, but he would have his secretary write a cheque and mail it to her, calling the payment "RENT FOR APARTMENT."

On the way to the office, he regretted what he had done, realizing that the whole event had not been worth the price. So he had his secretary send a cheque for $250 and enclose the following typed note:

Dear Madam,

Enclosed find a cheque for $250 for rent of your apartment. I am not sending the amount agreed upon, because when I rented the place, I was under the impression that:

  • #1 - It had never been occupied;
  • #2 - There was plenty of heat; and
  • #3 - It was small enough to make me feel cosy and at home.

However, I found out that:

  • #1 - It had been previously occupied,
  • #2 - There wasn't any heat, and
  • #3 - It was entirely too large.

Upon receipt of the note, the girl immediately returned the cheque for $250 with the following note:

Dear Sir,

  • #1 - I cannot understand how you could expect a beautiful apartment to remain unoccupied indefinitely.
  • #2 - As for the heat, there is plenty of it, if you know how to turn it on.
  • #3 - Regarding the space, the apartment is indeed of regular size, but if you don't have enough furniture to fill it, please do not blame the management.

Please send the rent in full or we will be forced to contact your present landlady.


Thanks you to Al S. for sending this way.

Saturday, October 20, 2007

Kansas City Royals Have New Manager

The Kansas City Royals have hired a new manager by the name of Trey Hillman. He's the guy pictured below celebrating a Japan Series win with the Hokkaido Nippon Ham Fighters. (Try saying that three times quickly with a straight face.)

As stated here before my first choice would have been for Frank White. Having said that, I don't think you want me running a baseball team with my vast knowledge of college basketball.
To date most of Dayton Moore's decisions have been spot on as to changing the talent make-up and losing culture of the Royals. We had very modest improvement this year with a manager that came in with a lousy record. So in walks this guy who knows how to win. He knows how to adapt. He wasn't a golden boy. He was the kid you wanted to cut but couldn't. At least that's what I get when I read between the lines. See Joe Posnanski's article in today's Kansas City Star.
Also, doesn't this all make you wonder about Buddy Bell's "retirement?" He retired to spend more time with family and work in the Royals' front office. Then, an hour and a half later, he takes a scouting job with the Chicago White Sox. Does that sound like he retired? Sounds like Dayton Moore allowed him to leave with dignity so that he could make a hire of a younger manager more in tune with all the young talent the Royals have both here in Kansas City and Wichita.
In a closing thought this can only help real estate investing, right? As the Royals begin a ten year tear winning 3 World Series titles the value of the team and the city will rise exponentially. It's perfect! :)

Friday, October 19, 2007

UMKC Communiversity Class On Real Estate Investing

On November 10th, 2007 I have been asked to teach a class on practical real estate investing here at the University of Missouri-Kansas City's Communiversity. Communiversity is an adult outreach service of UMKC.

Of course I have agreed to do so because it is in everyone's best interest that as many people know about and understand real estate investing as possible. I didn't say everyone needed to be a real estate investor, though that wouldn't be a bad idea. But if people understand the basic dynamics of income property and real estate investing then maybe they won't fall victim to the get-rich-quick gurus out there.

Thursday, October 18, 2007

Boston Legal To Take On Foreclosure Mess

I was speaking to a client today and the subject of his work on Boston Legal came up. I asked him when Alan Shore and Denny Crane were going to take on the whole real estate foreclosure mess that has been taking place.

There was a pause, and then he said "soon." Seems Alan Shore is working up one of his passionate closings to expel the evils of banks, mortgage brokers and quite possibly real estate agents.

One of the reasons I like Boston Legal is because it takes on relevant current events. The show's format and characters allow several points of view to come forward before the inevitable closing filled with emotion, un-arguable logic and conviction.

Since real estate, real estate investing and the current condition of the market are of great importance to me I cannot wait to see how Hollywood interprets this current condition we find ourselves in.

As noted, here in Kansas City, Tulsa, Dallas and other cities the market really isn't that bad when compared to California, Arizona and Florida. I can't wait to see what their view cooks up. And I'll probably be siding with Denny Crane. :)

Wednesday, October 17, 2007

The College Basketball Experience

Frequent readers of this blog know my passion and love for the game of college basketball and my beloved Kansas Jayhawks. Today is a special day in Kansas City and around the country for those that love the game of college basketball. The College Basketball Experience opened today. It's adjacent to the new Sprint Center and it's fantastic.

There is no way I'm going to do the place justice with one blog post. Let me just say that if you live in and around Kansas City you need to check this place out. Tickets are just $10.00 for adults and you will get your money's worth even if you are just a casual fan.

Upstairs I got to:
  • Shoot baskets against a clock.
  • Take free throws staring into the Illinois student section.
  • Listen to the crowd groan when I missed a last second three for the win.

I passed on the dunking areas. Unless I can do it on the 10' rim I don't see the point. And that wasn't going to happen. My heart raced, my breathing grew heavy and I worked up a sweat pretending I had any talent what-so-ever. After evaluating my performance, it's no wonder Larry Brown didn't spend any time recruiting me.

There are photos of everybody and anybody who has left their mark on college basketball. There are computer screens everywhere to hear from your favorite coaches. There are areas for the little ones to get into the game, too.

Make the trip to Kansas City and make sure you visit The College Basketball Experience. It is sure to be an attraction in our city that will bring folks from around the world that love college basketball.

Borrowing To Get Out Of Debt?

I've been reading quite a bit lately and the blogs/newspaper articles that have been grabbing my attention all center around debt and consequences. And while this seemingly has nothing to do with real estate investing it does speak to the mindset of many of the people that you and I know. And the debt mindset has an effect on how much our money costs when we do borrow and filters down into every consumer item you and I touch.

(In the interest of full disclosure I am not now, nor have I ever been since the age of 18, debt free. Besides my houses I have a car payment and a couple of other miscellaneous debts. So I too am a part of the problem.)

Jeff Brown had an article yesterday talking about Social Security, the Boomer generation and the probable lack of funding for future generations. It's a read definitely worth your time. And don't forget to take a few minutes and go through the comments. You should also take the link jump over to Brian Brady's blog and thoughts on the subject.

Then in today's Opinion section of the Kansas City Star Lewis Diuguid has an op-ed piece that has some numbers I haven't seen before;

  • At the end of 2006 US residents owed $745 billion on general-purpose credit cards... up $34 billion from the previous year.
  • The savings rate for 2006 was NEGATIVE 1%.
  • 13% of all credit cards have balances of more than $25,000.
  • The national debt now stands at $9,815 trillion.

Reading those numbers and knowing how our government works you cannot help but know that taxes will start going up to pay for a whole lot of people who chose cable television, SUV's and lavish vacations over savings. (Not everyone, but a good many.)

Younger generations are headed for uncertain times in which they'll be taxed to pay for their parents' and grandparents' retirements as well as having the additional burden of saving out of pocket for their own.

If the government continues to lower interest rates to prop up the ease of additional debt I'm really not sure with whom to be upset. The American population's appetite for instant gratification has gotten us to a point were financial disaster looms for tens of millions. And with our own government so far in debt (can you conceptualize $10 trillion?) there is really no way they are going to be able to help. Not in a manner that doesn't cost you and I a lot of cold hard cash...or maybe we'll just pay our taxes with our credit cards.

Tuesday, October 16, 2007

What Is A Pro Forma?

People love to show me the pro formas on the investment property they are trying to sell. And I look at them...with a wary eye.

What is a pro forma? It's a set of numbers that project what a property should be getting/spending versus what it is getting/spending. It adjusts income and expense numbers to reflect true market rates. Or does it?
To me pro forma probably means "I'm lying to you." Now, I hate to sound cynical. However, if an income property should be getting $850/mo in rents per side why is it only getting $725/mo per side in rents? Also, how can you say expenses will only be "Y" when it is an eighteen year old property with the original heating, air, roof and water heater. Don't you believe there will be capital expenses to account for next year?

I know you can turn investment properties around. There is a lot of money to be made in doing so. But choosing the right property is a daunting task and it should not be based solely on what the seller's pro forma is showing you. You need to research, fact check and look at the numbers with a cold, rational approach. Take off the rose colored glasses before you get yourself into trouble.

Monday, October 15, 2007

Get Ready To Pounce!

About two months ago I started saying that winter was going to be a great time to pick up good investment property here in the Johnson County, Kansas area. And I like it when a plan comes together.

Over the last two months inventories have swelled from about 42 multi-family housing units for sale in Johnson County to today's number of 72 multi-family housing units for sale. Many/most have starting prices too high and that is to be expected.

Realty is quickly setting in on many of these sellers. They are trying to sell at premium prices, above and beyond what was reasonable even 18 months ago. How do I know? Because their rent to purchase price ratios are out of whack. Numbers don't lie. I know I can show each of these sellers the past three years of pricing trends and get them down.

Most of these investors own these properties and know the real numbers anyway, even if their REALTORs don't. I just need to start picking and choosing.

Friday, October 12, 2007

Is That A Good Deal?

It just seems to me that people keep missing the point. The question isn't "Is that a good deal?" The question is "Where else could I put my money and would that be more or less profitable?"

When it comes to real estate investing people are constantly asking me (after I've shown them a property) "Is this a good deal?"
"I don't know."
Now, I'm really not trying to be flippant. In fact, I'm trying to make you think. After all, what is a good deal for you may not be a good deal for the very next guy discussing the very same property. Why?
  • Different criteria.
  • Different job incomes.
  • Different credit scores.
  • Differing ability to take advantage of passive loss.
  • Different down payments.

Get the picture?

I am not advising here the infamous real estate investing technique of "paralysis by analysis." I am saying that you need to know what's on the market and how each of those properties would be expected to perform in order for you to answer the question "Is this a good deal?" about any one particular investment property.

Wednesday, October 10, 2007

Note To All You Costa Rica Spammers

You are annoying the hell out of me with all your stupid "Great post! Have you thought about blah, blah, blah" followed by your stupid, un-asked for links.

You want a link from this blog? Let me tell you you are going about it all wrong. And in case you haven't noticed I just keep throwing them in the trash.

Please discontinue your links. If you like, and it won't bother me a bit, quit reading, as well.

More Growth News For Olathe, Kansas

Looks like I'm doing a week long series on how real estate, and therefore real estate investing, is affected by the influx or outflow of jobs in a given region. Since I live in Olathe, I've been focusing on Olathe and southern Johnson County, Kansas. (Which includes Overland Park and Leawood and maybe some of Lenexa.)

From today's Business section of the Kansas City Star comes an article by Kevin Collison that states U.S. Bank is building a 100,000 square-foot facility that will house technical equipment to support this bank's nationwide operations. The western Olathe site was chosen from 93 possible sites and was chosen for reasons including "competitive utility costs and availability of labor."
While the contractor building the site will be from Minneapolis they are expected to use as much as 70% local subs . This new business in Olathe should bring at least 80 long term jobs.
From today's Olathe Neighborhood News section of the Kansas City Star there is an article written by Sarah Benson that talks about the continued growth of the Olathe School District.
Here are some choice sentences;
The district is growing at an unprecedented rate.
The district (Olathe) gained 842 students this year, bringing it's enrollment to 26,385.
Quoting Superintendent Pat All: "We've had straight-line growth for 41 years."
And my favorite paragraph of the article: Olathe's growth isn't just because of new subdivisions. All said that student population in older, established neighborhoods is up, too. That's because of young families with small children are finding affordable housing in older neighborhoods.
As a real estate agent who lives in works in Olathe that last paragraph goes along with what I'm seeing. Do date the older neighborhoods aren't decaying. In fact, many buyers are buying low and fixing up to build their equity and live closer to where they choose.
As Olathe steams towards the projected goal of 300,000 people by 2050 we are going to see a lot of changes. It will be important to keep our schools healthy as well as our job growth. Olathe, like Overland Park, can be a strong city in it's own rights. Not just living off of the jobs provided by Kansas City.

Tuesday, October 09, 2007

Forsee Out At Sprint: What This May Mean In Kansas City

Coming on the heels of yesterday's post about the growth and expansion of Garmin is last night's news that Gary Forsee has stepped down (fired?) as CEO of Sprint. It seems that Sprint has been hemorrhaging customers and has lost it's way concerning customer service, vision and execution.

This is potentially very good or very bad news for Kansas City's economy, specifically Johnson County and it's housing market.

Should a new CEO come in and embrace Sprint's Kansas City roots, turn the company around and cause economic growth/expansion those middle management houses will once again be in short supply and high demand. But if some east coast guy comes in who thinks of Kansas City as a liability more than an asset and decides to move more and more operations towards Reston, VA, well, there could be big, big trouble.

This is development worth watching. I have quite a few clients that are Sprint employees. Sprint is the single largest employer around Kansas City and pays very well compared to many other tech companies here, from what I'm told.

Monday, October 08, 2007

Real Estate Values & Expansion

A basic tenet of real estate theory is that anywhere there is job growth real estate will be more in demand. As there is more demand, there is pressure for prices to rise. Less demand usually follows jobs fleeing an area. The people will follow leaving a downward pressure on housing.

How does this relate to real estate investing in Olathe, Kansas? Just thought you would like to know that Olathe's Garmin, Inc, the world headquarters of the GPS leader, is expanding again just a few years after completing their new headquarters.

Also, Olathe still predicts a near doubling in population over the next twenty years. A commercial agent I know says light industry and warehouse space is going quickly.

Just thought I would share.

Sunday, October 07, 2007

Am I The Only One Who Didn't Know?

Okay, so yesterday I wrote about how mad I was about the way tickets disappeared in 30 seconds or less. Check the time of my post and I think you will see that it was just minutes after 10:00 am. After having done so I made one last pathetic attempt to find tickets on Ticketmaster.

No such luck.

So imagine my surprise when I open the paper this morning and find that they sold out 9 shows. They must have made the announcements moments after I turned off the computer and went out to live the rest of my life. I didn't know I had to hang around and monitor for more shows. I thought they would announce them later.

I've since tried again this morning hoping for a secretly announced 10th show. I must be destined to not see him this time around. Oh well, I'll have fond memories of the show I saw in the Cap Center outside of Washington, DC. There all I had to do was make a phone call.

Saturday, October 06, 2007

Sprint Center + Ticketmaster = Corruption

Okay, so Garth Brooks tickets went on sale 6 minutes ago. By 10:00 they said no tickets available online. Now I have 3 computers all refreshing by the second and a phone dialer (who never got through) and we've been doing this since 9:58 am as I'm sure thousands of others were. But are you telling me that at 10:00 am when the tickets went on sale that they were already sold out?
How exactly is this thing working? How do you sell 18,000 seats in less than 30 seconds? Were 18,000 really available or was it like the Hannah Montana fiasco where they only made 4,000 available to the "regular" people?
I'm sure Brooks will add concerts. But will the public have a fair shot at them? Or will they go to people hand picked by the Sprint Center, Wal-Mart and Ticketmaster from out of town. My guess is the latter. It will bring in great tax revenue for the city. But the people who voted to fund this thing really don't have much of a chance. Granted, I live in Olathe so I didn't vote or pay a tax (yet, they'll get me at the Power & Light District) but it's still frustrating.

Kansas City Part of Quiet Boom?

Will Kansas City be part of a quiet boom due to the commodities that flow through our region? I really hadn't thought about it but after having read this post by THE GNOME OF ZURICH INVESTOR my gut reaction is that he may be right. I'll have to think about it a little longer.

But let me say this. Since Kansas City is a central railway/trucking hub and transportation is a huge part of our economy along with all the agricultural products that come through our town, it does make sense. Think on this and let me know your thoughts.

Friday, October 05, 2007

Investors Say They Were Duped In Real Estate Scam - Part 1

It's one thing to say you were duped. But am I to believe that each and every one of these people did not read their loan application? No, I don't believe it.

As for the mortgage guys I hope the state banking commission will go after these guys full force.

Never forget that any fudging on a loan application will only lead to trouble down the road. Just don't do it.

And here is a tip: If you make $35,000 a year and are getting approved for $2,000,000 in loans...something might be up.

House Alarms: Annoying or Helpful?

Am I the only one who finds house alarms more annoying than helpful? Seriously, I fear nothing more than opening the door for a client and not having been told that there is an active alarm.

This actually happened to me once. The sellers forgot there was going to be a showing and set their alarm. An honest mistake to be sure. But a gigantic waste of time for both myself and my buyer as we stumble around trying to figure out what to do.

Should we wait for the police? Whom do we call? Darn, the seller isn't answering! Now what? Do we just leave? Sorry, it's hard to see the features of a house when a horn is blaring in your ear.

I'm quite certain that alarms have saved people's lives...somewhere. Usually they just go off on accident and annoy the neighbors whose baby was trying to sleep. At least that's been my experience here in Johnson County, Kansas.

Next subject: Why does Tulsa (how crime ridden can it be?) have so many gated communities?

Thursday, October 04, 2007

Shouldn't This Go Without Saying?

So I had some time to kill over lunch and I needed to pick up a signed contract and earnest money from a client who works at the General Motors Assembly Plant in Kansas City, Kansas. (Fairfax) While there I decided to use the "facilities" and was amused with these signs on the wall for everyone to read.
Shouldn't this just go without saying? Do I really have to put myself in the position of hearing this question coming from behind a closed stall door?: "Does anyone have any extra toilet paper...and a cheeseburger?"
SPECIAL NOTE TO ATHOL KAY: Disclaimer, really. I didn't have a camera. This was taken with my Treo Palm in a low lit (fluorescent lighting) bathroom. So get off my back about the quality and focus!!!! :)

Building Real Estate Wealth in a Challenging Market

Anyone that has talked to me about real estate investing knows that I really like John Schaub's book . Mr. Schaub has a new book out concerning real estate investing titled Building Real Estate Wealth in a Challenging Market.

I've only just begun the book. (Chapter 4 at this point.) But once again I have to say that I am happy with what I'm reading. As reasonable adults with differing opinions I stress that I don't endorse 100% of Mr. Schaub's thoughts and ideas. But by in large, it's right on track with my way of thinking.

From the Introduction...

For 35 years I have adapted my investment strategy to change. Recessions, tax law changes, and fluctuating interest rates have all taken their best swing at the housing market. Through it all an din spite of periodic predictions of a housing collapse, house prices have continued their steady climb.

Today the stage is set for a wave of distress selling and a new era of buying opportunities. Lenders have long forgotten the collapse of the real estate market in the 1980's. New young lenders are making many high-risk loans. Some of today's borrowers will become tomorrow's distressed sellers. The next few years will bring the opportunity of a lifetime to buy quality properties at bargain prices.

It should be noted that the copyright on this book is 2007. Meaning he wrote those two paragraphs at some point in 2006 BEFORE the mortgage crisis. Nothing beats experience.

Building Real Estate Wealth in a Changing Market: Reap Large Profits from Bargain Purchases in Any Economy

Wednesday, October 03, 2007

When Good Mascots Go Bad

Principles Stay The Same, Performance Moves Forward

Flying is a terrific way to get from Point A to Point B. And logic presumes that any airplane could do that for you. But is that true?

During the process of learning to fly an airplane I quickly learned that each and every airplane is different. Different checklists. Different performance levels. Different capacities, weights and balances.
The earliest pilots flew planes much like this Piper Cub still in use today. These planes would make them free from the Earth and allow them access to the skies in unprecedented fashion. They could travel farther, faster and more enjoyably than ever before.

Science moved forward in lock step with engineering. Compare the cockpit of the pictured Cub to the all glass cockpit of the Boeing 777.

Excuse me, Chris. But you are doing it again. May I remind you that this is a blog about real estate investing. We know you used to fly airplanes. Cool. We're impressed. Whatever. Can you please get back on topic.

Alright. Sorry. But again I have to remind you that lessons in life are easily transferred. Today's Boeing 777s fly on the exact same principles as yesterday's Piper Cubs. But the 777s have learned from experience, improved on function and the result is superior performance.

Yes. Both planes can take you from Kansas City to Los Angeles. But one can get you there in 1/10th the time while allowing room for error and greater performance.

Today, many real estate investors are still using the real estate investing techniques of the Piper Cub. Twenty to twenty-five percent down. The one percent rule. Cash flow is king.

And while not discounting those, and many more, tried and true methods I want to point my finger upwards to show you the jet that is smoking you. It's flying higher, faster, farther than you are and without the fuel stops that you have to make.

Consider other options to maximize your investments. Learn from the real estate investing principles that have been given to you and see what others are doing with them. Don't know what I'm talking about? Then we need to talk.

Tuesday, October 02, 2007

Questions To Ask When Investing In Real Estate

Other than telling you to read this post by Jeff Brown I have nothing to say. Quit reading and hit the link. Do it now.

Monday, October 01, 2007

Renting Your Home To Family

I got a phone call today from a person wanting to know about real estate investing. In fact, she and her husband will probably read this post and know I am talking about them. :)

Anyway, the subject of buying a home and letting their mother live in it came up. Is that an investment rental property?

Maybe yes. Maybe no. The IRS, as I understand it, wouldn't look too kindly on that situation. It's not "arms length." So if you are going to do something like that you had better check with your CPA first. One thing you could do is to make sure, and document, that your family member pays fair market rents for that housing unit.

Of course, if the IRS disallows the rental property as an investment you might be able to count it as a second home. Any thoughts chimed in here by CPAs would be most appreciated.

American Royal Barbecuelooza This Weekend

I can't say as I know very much about horses and rodeos. But I do know bbq. And there is a very exciting weekend coming up down at the American Royal.

Barbecuelooza will be kicking off at 3:00 pm on Friday, October 5 and again on Saturday, October 6 at 10:00 am.

Yeah. There's music. Fireworks. And horses, I guess. But more importantly there will be bbq. And lots of it!

Come hungry. You won't be disappointed. For more information on this subject visit this site.