Roger's World...

Partnerships...

We all have partners in this world.  Sometimes, as in a marriage, they work for a very long time - 30, 40, 50 years or more.  Sometimes, they last for a few weeks, or less.

I've always been fascinated with people that have been able to make relationships last so long. What is the process?  Have they aligned themselves so much with the other person and their values/beliefs/dreams/goals that it just works?  Or have they sacrificed so much of their individual sense of being in order to make it work for such a long time?  Did they get comfortable, give up on their dreams?  Or, have they really figured out some secret that I have yet to understand?  While I do have some very long and very strong friendships lasting a couple of decades, they're not certainly not like a long marriage or business relationship. 

This point was made on several occasions this past week.  One partnership that was several months in development was suddenly cut short by my partner's inability to decide and to act. Fear gripped this man, fear of losing money. So many 'what if's' occupied his thinking, that he was paralyzed from the head down. I saw it coming for a few days, and finally had to cut it off - it was a waste of time. And if I continued to nurture a person gripped by fear, I knew that I, too, would begin to fall into the same trap. So the dissolution comes with a few more lessons learned, and new opportunities unearthed.  For this I'm grateful, and re-energized!

As I continue to build my company, and grow as person, I look forward to all of the lessons that each partnership - the ones lasting a couple of minutes (like meeting people at Starbucks) or ones lasting a lifetime (people I've already known for decades) - will provide - If I'm able to keep an attitude of gratitude, and to continually ask myself the question: "What's GREAT about this??"

Please share your thoughts and insights...

Offers, Offers, Offers....

The last 2 weeks have been pretty busy in terms of the offers I'm sending out.  The big one is a 185 multi-family property near Dallas TX.  If the numbers work out, this might be a great project for me and my investors.  I'll reiterate - it MIGHT be a great project.  The reason for the skepticism is because 1) I don't know that specific area too well; 2) A trusted colleague of my cousin DOES know the area, and the industry very, very well, and was none too impressed with it.  So as I've learned long, long ago - never get emotionally invested in a property.  Ever.  This way, if it works, then great, you'll make money (hopefully!).  If it doesn't work, then the most important word to know is: Next.  Despite what some new investors believe, there is always - ALWAYS another property, and probably better than the one you were looking at.

The other property I put an offer on was another condo in the same little area of Palm Desert CA. Our 6th in this great little area. The condo does need a bit of work, but that's something I've done a bunch of.  My partner and I are very interested in these 'base hits' as my cousin calls them, to help the down time, and to build a bit of working capital for the larger projects like the multi-family units I'm interested in buying.

So in the last 6 weeks, I've put out about 6 offers on various properties - which I feel is not a lot.  But I'm amping it up.  I would ideally, like to submit 3 offers a week on either multi- or single- family properties.  This is a numbers game, and the more you offer, the more get accepted. For the other investors out there - keep it up - keep making those offers.  Something will work and you'll start making more money!

And, once again, we're always looking for partners on these projects, and willing to give up a larger portion of equity on the larger projects. If you're interested send me an email - or visit my site http://JBBHoldings.com to find out more about partnering with me. Yes - I can also help you with your deflated IRA and get it working for you, not working against you. Email me now to find out more!

And  - Keep making offers - its the ONLY way you'll get them accepted!

A couple of new offers...

It's been a while, so let's jump into some offers I've submitted.

A broker has sent several projects in the Salt Lake/Provo area, and I made an offer on one in Ogden, UT a few weeks ago.  It's a medium size property with about 150 units.  It has a unit mix that wasn't very appealing: mostly 1beds.  The other trouble with it is that its  got a flat roof, each of which will affect the cash flow (too low) and financing from a bank.  They we're asking $5 million, which I calculated to be about $1.5 million too much.  (This is based on NOI x 10 = Value) They've countered (sort of) for 'somewhere above 4 million..."  Next.

The other offer is on a small condo here in the desert.  Its a 2/1 worth 85k (once fixed up - which will cost 8-10k) and we've offered 40k for it.  We'll know in a few days...  It would be kinda fun to do a very very small rehab. I've taken on a partner to do a few deals like this to see how well we work together.  That'll be in another post.

If anyone wants to learn about investing with us, please contact me.  We'll always have good cash flow, with strong back-ends.  Very conservative numbers...

Thinking... and Writing...

It was recommended that I read a couple of books - E-Myth Mastery by Michael Gerber, and Thinking For A Change, by John C. Maxwell.  They're having a great impact on what's been happening in my head lately, and the premise of each compliment the other very well.

E-Myth has been helping me to understand how to work 'on' my business - the Vision, the Plan, the Objectives.  Writing it down.  Thinking For A Change has been helpful to remember not how to think, but what to think about - the power of a focused mind. Applying that process to my E-Myth lessons has really help to clarify where I want my biz to go, what its focus is and could be, and to, very importantly, write it down!

I've been involved with several start-ups over the years.  Some have done well (for awhile), others have not.  What they all have in common is that none of them had a Business Plan that was alive, impassioned, and most importantly: believed.  The challenge was that the plan was often a static document - one that was only for people that thought a plan was needed - not because they were passionate about the biz or about the plan.  This is my distinction.  The lesson is learned...now it's being put into practice.

So if any of you are starting a biz, or own one now, I highly recommend each of these books.  They'll help you as they're helping me, and the thousands of others that have followed the steps.

Have fun!  Be a little crazy!! But write it down, let it breath and grow...  and let me know how it's going!

Thank you Sandy King, and Marco Sangiorgi for suggesting them...

Dirt Rich, Paper Poor

In this economy, it’s more and more clear that you can't buy a piece of paper to make you rich. Everyone I’ve spoken to over the last 10 months has lost money in the market. That’s obvious.  What interests me is how other people have been making money given these challenging times.

The people I’ve been encountering, the ones still doing well, are investing in real estate.  As you may know, I’ve been espousing this for quite sometime.  My philosophy has always been to buy something with inherent value, such as land, property, or something with an attached asset - like a deed of trust.  Even gold and silver are a much wiser investment than a stock.  Some won’t agree with me on this.  I don’t care. It’s proven itself over and over again. Those of you that disagree - have fun waiting 5 years to get back to where you were a year ago.  Those of you that agree with me, you already know why.

OK - now that we’ve got those people out of here, let me explain a few things.  First  - we need to learn our lessons - sometimes the easy way, sometimes the hard way. And we need to remember that no investment is ever 100% safe. Even T-bills? Not even T-bills, and I can tell you why.

As of today, the long term T-bills rate is somewhere between 2% - 2.17%.  And according to some accounts, the rate of inflation in 2008 was 3.85%.  So if you had $1000 invested in a T-bill last year hoping to earn $20 -$21.70, then you’re a bit sad, because after trying to be safe, your $1000 is now only worth $983.36. (I used the 2.17% to compute)  So those people ‘investing’ in T-bills have lost about $17 for every thousand.  So do you think it's safe?  No, it's Paper Poor...

Where does that leave us?  You need to buy tangible assets. Gold, silver for the smaller investors. Coins - not bullion.  For the larger investor - ones known as accredited investors - you should have diversified your portfolio into several sectors, and real estate should make up the most.  And I’m not speaking of REITs.  Actual property that is making money - positive cashflow - not negative (not a vacant lot that you may want to build a house on someday.  Remember: Cash-flow is KING!)  THIS is how you get yourself out of this economic mess the world is in.  Become Dirt Rich...

There are many avenues to do this.  You can go educate yourself about buying properties with strong cash-flow. You can learn how to find these properties. You can then learn how to make an offer, do the due diligence and study the financials of a property. You can learn which markets in the USA are still doing well.  If you’re lucky enough to find a building and buy it, you can learn to manage it.  Then learn to manage it well.  Hopefully, your money is still yours, and your learning curve hasn’t depleted what you had.

If all of this sounds a little overwhelming, not to worry.  Partner with someone doing it.  I started doing real estate deals in 1996, and have some hard-fought experience under my belt. I’ve been doing all of those things I just listed for quite some time, and have learned many lessons and pitfalls to watch out for in the process. Take your time and read, listen and learn. You'll succeed if you're smart about it.

The last few years have been a challenge for all of us.  But the future can be and should be one of great change - Change that can turn loss into gain!

My offer...

On Friday, I set over a LOI (Letter Of Intent) to the seller of a building here in Palm Springs.  It's the first offer I've put to a seller on a property in some time. But I did it, lowball as it may be.

While I understand that it's going to be a challenge to the seller to accept, it does get the ball rolling again.  It felt great, too, and after analyzing it for several months, I determined that it could be a good investment - IF purchased at the right price.  So, as time presses on, I'll be updating you of my progress.

Sometimes we get the 'Analysis of Paralysis' where we keep punching in the numbers, and never taking action.  I made certain to move beyond that limiting pattern - tough as it can be at times - and sent it over. I feel better about my  progress, and by doing this, I've sent a message to the universe telling it that I'm ready to have this be a part of my life.

One thing I made sure to do, was to include a letter of explanation describing exactly why I needed to offer them such a low price, and that it was nothing personal - Just how I need to run my biz, that's all. That way, it adds a bit of a personal touch to a biz transaction. 

Just how I need to run my life!

And yes - you CAN wish me luck!

A New Prospect...

I've been looking at this 23 unit multi-family building here in Palm Springs for a few months now.  Its been interesting speaking with the seller, getting the financial information, trying to figure out if its a good prospect or not.

The thing I'm most amazed with is the way people are running their small businesses.  It turns out that they're coming out of pocket to pay their mortgage each and every month which means they're running at about a 12% vacancy (for 2008).  How does somebody do that?  How does someone not require the management company to actively pursue getting tenants into the units? How does someone decide to keep that manger on this project?  This is your money, and they're throwing it away!

I may have the answer: Lack of Education.  They didn't know what is required to 'manage the manager'.  They didn't take the time to properly interview the manager and set the parameters and expectations of the manager.  I'm not sure they even know what this is truly costing them, both in the short and long run.

By not educating themselves, they've lost any equity that they've had when they purchased (the down payment is gone!) 4 years ago.  They're losing money - several hundred thousand dollars.  That's the high price of ignorance.

And it continues: Because of the management challenges, and the subsequent loss of value, they're trying to sell this property for much more than its true value is. And the sad part is that the sellers have no idea. And they're hoping to unload it to someone just like them.

That's why its A New Prospect.  The lack of education on their part might benefit me and my investor partners over the coming years.  Because I'm constantly education myself - attending classes, reading books, meeting other investors, I'm in the position to determine the projects' value and to decide if it's the best, most conservative property.  This information helps prevent mistakes... mistakes that could have made the sellers lots of money.

I probably won't pick this one up.  They're upside down in the mortgage, and the expectations are too high to make it a good deal. Plus, Palm Springs isn't known as having a hot new job market coming anytime soon!

Remember, CASH IS KING!  Positive monthly cashflow is how lenders determine true value. And we never buy with negative cashflow!