Lifestyles member Bryan Upton blogs about how to set investing goals and the five ways real estate makes you money. The article, from Allie’s Acquisitions, demonstrates how to form strategies for specific goals such as cash flow and net worth. Peppered throughout the post are useful investing maxims such as “a liability is someone else’s asset,” and “never do a deal where you don’t have monthly cash flow.”

Real Estate Investing Strategies

Creative Real Estate Investing shares investing strategies for today’s market, focusing on three central tips. First, invest in real estate knowledge. They advise attending seminars and conversing with mentors so that you know what to expect and don’t have to “go it alone.” It is also useful to know that you can be successful in any economy, and that actually, there are discounts to be had in slumps that don’t necessarily exist in “economic booms.” Finally, it is important to not let a money shortage intimidate you into not investing; you can get rich off of other people’s money!

Home Prices “Bottoming Out?”

CNN Money reports that after recent jumps in home prices and months of previous decline, the housing market may finally be stabilizing. While dwindling inventories and the advent of a second quarter of consecutive gains are sure signs of recovery, home prices are still down from 2008. Countering the encouragement of the first time home buyer credit are the psychological factors facing victims of record high unemployment (10.2%!) Although hopeful, writers Les Christie and Ben Rooney acknowledge the role of progressive economic and psychological factors in full recovery.

Knocking out Beliefs that Hold You Back

April Dykman of Get Rich Slowly uses her dream of being a freelance writer as a metaphor for vanquishing fears and accomplishing goals. She outlines three steps that will help you overcome road blocks by setting intentions, finding mentors, and ignoring others limiting beliefs. The thought process Dykman has employed to achieve her dream of being a freelance write can be applied to any goal- including overcoming common real estate investing fears.

Bank Failures - A Good Thing?

Multifamily Insiders accepts that banks are failing at alarming rates - but doesn’t necessarily view this as bad news for the economy. They claim that the capture of “zombie banks” (banks whose operation is merely a formality) by more stable institutions could result in new lending opportunities for real estate investors. Comparing the current situation to the S&L crisis of 1992, Multifamily Insiders credits amazing buying opportunities and increased “transaction volume” as some of the benefits investors can expect to face as a result of weak bank failures.

7 Common (Expensive) Financial Mistakes

Robert Kiyosaki’s blog, Wisdom of Rich Dad, highlights some of the most common financial mistakes young adults make and how to avoid them. He lists keeping an emergency fund, being aware of slow leaks (like unnecessary daily purchases), and being an effective budgeter as the best ways to avoid these monetary pitfalls. Warning of the hazards of bad credit, he emphasizes the importance of not using college loans for casual expenses and of course, the dangers of using credit cards.

New FDIC Rules’ Impact on Commercial Real Estate

Denise Kalette of National Real Estate Investor considers the new FDIC banking rules’ implications for commercial real estate. Although she admits that it will delay a banking crisis, many experts feel that that’s all it will do. They believe that the new rules are not enough and that the FDIC should take measures to ensure that loans are not secured by property that’s value is less than the amount of the loan. With nearly half of 1.4 trillion commercial mortgages expected to default before maturity, commercial real estate’s role in a future banking crisis is certain.

We’d love to hear from you! If you become aware of any interesting and valuable articles or blog posts, please email them to us at webmaster@luinc.com.

This time I stood in a line and there was a crazy lady standing right behind me.

The people behind the counters working for DPS were kind of snickering and laughing at her.

45 Lessons

Well, my friends, I had a very interesting morning. I want to tell you about it. But what really is interesting is that someone sent me an email today that I thought was really poignant for the way my life went this morning. So I want to just go ahead and dig into this thing here.

The email is about all of the things—and I guess let’s see how many things there are. There’s 45 things that I’ve learned in life over my past 70 years—very interesting list of things most of which I agree, some of which don’t, but there’s a lot of concepts here.

And what I’ve been trying to teach ever since I got on the radio was that it’s really not about whether you are a real estate investor or whether you trade stocks or you’re a bond guy, it’s really all about understanding money. It’s really all about understanding life. And my saying that everybody hates, “It’s not the money; it’s the lifestyle” and everybody goes, “That’s crazy. It really is the money,” but no, it really isn’t. It really is the lifestyle.

Choosing the Lifestyle

And the lifestyle is something that you choose. You make a conscious choice of how you want to live your life. That can’t be done by anybody else. You can be told what to do, but you don’t have to do it. You can be pushed around. You can be cajoled. You can even be outlawed, you can move to a different country. You can do whatever you want to do.

The bottom line is your life is filled with choices. The most important choice is how you relate to the world each day. The stuff that comes at you, how do you take it? Do you let it come into your life and destroy your life, or do you just put it back out there and go you know what, that’s the world. That can’t stick to me. The world can’t stick to me.

The world has nothing to do with me, and the world has everything to do with me. I’m of the world. I’m just particles; I’m just molecules. I’m just, you know, spinning around in space 99 percent nothing where my energies and existence and knowledge and information come together to be this being, which has no lasting power on this earth whatsoever. I’ll be gone in a blink of the eye in comparison to this whole world, so I’m really nothing. I’m everything of this world; I’m nothing of this world.

Useless

And so there’s really no relevance at all talking about this because it’s useless. Except at the same time life is the most wonderful thing in the world—especially as we know it—and to let that life become miserable is a terrible thing.

Well, today I had to go down and renew my driver’s license. And I have to tell you that if you are not afraid of the government becoming in charge of your health care, then you need to go down to DPS and renew your driver’s license—or attempt to renew your driver’s license. And you will come in contact with the most frightening thing in the entire world: The U.S. government in charge of something. My gosh. What a scary thought.

You know, you walk in there, you’ve got to find the place, first of all, you know—that’s one thing. There’s going to be scarcity, and there’s massive scarcity. And you walk in and get in line for information. Yes, to get information. Now, when you get to the end of the line, there are things explaining what you need to do to get into another line.

Lines

And one of the things that I didn’t do was I had brought a credit card. I didn’t know they wouldn’t take credit cards. They wanted cash or checks. So I had to run back out to my car and bring my checkbook in and go stand in another line.

This time I stood in a line and there was a crazy lady standing right behind me. I mean literally crazy—screaming, talking at the top of her lungs. Now, we’re in a police station basically—there are DPS officers all around—and no one would stop her. The people behind the counters working for DPS were kind of snickering and laughing at her.

But this lady was screaming and yelling at everybody, walking up and down the line, talking to people about nothing and—all the way across the room talking to people. Just insane. Everybody there was just nervous about it. You could see it. But they wouldn’t do anything about it. But I think she was drunk as can be, myself. I can’t tell. Was just crazy.

The Normal Span

Then you look around and you’re standing in a line with people where when you come to someplace like Lifestyles—which is one of the few places that I frequent—or you go out to a nice restaurant where I would go, or just about anyplace else, the people all kind of look normal. But I’ll tell you what they’re not. The places I go and the things I do, the people there, the accumulation and diversity are not the normal span of our society.

This is one of the reasons I believe that people in their ivory tower democrats can go out there and put into place laws that don’t affect them ‘cause they’re not going to be down there dealing with all this craziness. They’re going to go to their own private health care place.

But I’m telling you what, you look around—this was 90 percent people that were below the poverty level. If they’re not, they dress that way, they act that way, their haircut is that way, they look that way, they smell that way.

Frightening

I mean I don’t know how you get that many people that look that bad, that impoverished—now, I’m not saying I’m a handsome guy. Don’t get me wrong. This is not about being cute. This is about whatever you look like let’s make yourself look as bad as you possibly can type thing to go in public. Oh, my God. It was frightening. I was scared just being there, to be honest with you.

And so I stood in line to get up to take the eyeglasses thing, and there’s a guy sitting there that comes in to try to get his thing. And he’s some kind of foreign nationality, and he has a hard time communicating with the lady. And she says, “Do you have your green card,” and whatever it was, and I don’t know what he was.

And he went to look in the thing and the guy can’t see. He couldn’t read the thing—the testing machine—and the lady goes, “Can’t you read that?” And he goes, “No.” This guy was trying to get a driver’s license and he was almost blind. Oh, my gosh. It’s scary.

Just Scary

Another guy was there was like 90 years old. He couldn’t even hear the lady. She was talking to him and she was asking him for his stuff, and he goes, “No.” And he pulls his driver’s license out, and he’s got three years left on his driver’s license. He’s basically senile. And the lady goes, “You don’t need to renew it.” He goes, “No. I have to renew it. They sent me a letter.” Oh, my God. It’s just scary.

If you’ve got questions about real estate, please call ‘cause I’m going to go on with this because this is just the most frightening thing I’ve ever seen in my whole life and this is the precursor to Obamacare.

“When you look at people who really do have everything—peace, joy, love, wealth, health, happiness…

…Any competent, successful person is constantly focused on how they’re here to help and serve others. “

The Scarcity Mentality

The scarcity mentality. There is a huge group of people around the world, in the United States, everywhere, that literally run their lives as if everybody’s out for themselves—it’s dog eat dog; it’s me, myself and I—and I am telling you that there are people like that out there.

But there are also—and if you look at people who are successful, you look at people who are really excelling—and I need to be very careful. I’m not talking about the guys that appear to be excelling, because so many of you judge the wrong things.

And so many of the people who have the me-myself-and-I mentality, they look at the car the person drives, they look at the suits the person wears, they look at the church they go to, they look at this, that and the other—all these superficial things, and they judge that person as successful because of that—not looking deep into it to see if they really have everything out of life that they appear to have.

The Abundance Mentality

When you look at people who really do have everything—peace, joy, love, wealth, health, happiness—you’re going to find those people have the opposite of the scarcity mentality. They’ve got a thing called the abundance mentality.

If you want to study this, I refer this book out constantly. It’s The Seven Habits of Highly Effective People by Dr. Stephen Covey. He brings it up. Deepak Chopra brings it up in The Seven Spiritual Laws of Success. Any competent, successful person is constantly focused on how they’re here to help and serve others.

I’ve got friends so negative they don’t even realize how negative they are. They don’t even realize how wrong they are and how scarcity mentality and how competitive they are. And if you ask them, they’d never say, “Yeah, I’m a competitive, me-myself-and-I person. They always say everybody else is. But I’m telling you those are the people.

Having it All

The people that have mentored me, the people that I look up to and study and read about and imitate are the people who have all of what I’m trying to achieve. And the one thing that you’ll find in common with these people that I refer you to or that you hear me discuss here, they have that mentality of how are they here to serve.

Now, there’s a quick little quip—Del says it all the time—the founder of Lifestyles Unlimited. I originally heard it from a man named Zig Ziglar. He’s outstanding. If you haven’t listened to this guy, you should. He’s got I’d say hundreds of CD’s out there for you to listen to.

But when I talk about building your team every single day and how life is a team sport, it’s because if you’re out there focused on helping and serving other people, it is obvious why it’s a team sport. You’ve got to have assistance. There’s no way you can get out there and do everything all by yourself. The me-myself-and-I concept is ridiculous at best.

Helping Others First

But when you get out there and you change from that scarcity mentality, that me-myself-and-I mentality thinking everybody’s against you everybody’s trying to harm you and you stop thinking about yourself for a while and you start focusing on how you’re here to help and serve, it leads you to this little phrase by Zig Ziglar.

He says, “You can have everything in life that you want if you first help enough other people get what they want.” “You can have anything in life that you want if you first”—and there’s the key word—“first help enough other people get what they want.”

Let’s take this from a simple mechanic who owns a little mechanic shop in any city here in Houston or around Houston. If they want money, what do they have to do? Well, first off where does money come from? It comes from other people. If you want to make a lot of money, it has to come from a lot of other people.

Capitalism

What’s a mechanic do? He helps or she helps other people get their cars running properly. And if they help a lot of other people, then as a result they get paid capital—capitalism. They get paid capital, money, and eventually they can buy whatever they want.

But where will they buy whatever they want? From another person who’s helping them get what they want. And then that person helps them get what they want and he then has money to go get what he wants from someone who’s helping other people get what they want.

There’s so many ways to look at this. But you’re always going to come back to the same exact thing — it’s people helping people. Anybody who’s successful—and you can’t be all things to all people.

Diversification

In other words, what happens if that mechanic suddenly says, “Well, I’m also going to be a financial planner.” What you now have is diversification—unfocused—and they’re not going to achieve anywhere near the goals that they would if they would focus.

Boy, I’m opening a can of worms here because I’m attacking diversification again. Let me just put it to you this way: You all love Sony, right? Everybody loves Sony. Sony’s an unbelievable company. They build just about everything. Their profit over the last few years has been about three percent per year. By the way, that gets you fired as the CEO. There’s now an Englishman who’s the CEO of Sony.

So there’s another little company out there called Nintendo. Nintendo does what? They don’t build everything. They build one thing. They build games. They build video games. Their growth—remember Sony building everything? All things to all people? Three percent? Nintendo 15 percent. That little tiny Nintendo is worth more on the stock market than dog-gone Sony. Focus, focus, focus. And I’ll leave that at that.

Teams

You need a team otherwise you’re going to end up diversified. You’re going to end up a Sony, and you’re not going to excel. Whereas if that mechanic has on his team a mentor for his finances—and he should really have a mentor for his mechanic business as well—and he has mentors for his purchasing, and he has mentors for his fitness and mentors for his spiritual side and mentors—he builds that team while he’s focused on his one thing.

Boy, this really was supposed to just be about building a team, but I got into diversification as well. But those two points, they do have to be discussed at the same time since we came up with this and I was talking about building your team. The team is there to keep you from getting diversified in a way that holds you back.

The real subject of today’s show though is I want to talk about mentors. I want to talk about the—we talked last week and if you go to lifestylesunlimited.com you’ll see The Five Laws of Gold is the first article. Last week, either Monday or Tuesday, I reviewed The Five Laws of Gold from The Richest Man in Babylon by George Clason. And I mentioned the fact that the last three of them had something in common.

When I first read this book I had my doubts as to whether strategies and tactics based on thousand year old principles would be relevant to me in the 1990’s.

Now, 20 plus years later, after having executed the laws and rules outlined in the book, I know it to be as true today as in the past.

Clason’s work is timeless because the needs of man and the laws of gold are timeless and never changing.

Human desire for peace, joy, love, wealth, health and happiness never change. How we each achieve that may be different but the goals remain unchanged.

The fact that money comes to us from one place, other people, also never changes. To make money you must help and serve other people in a way that deserves them giving you there money.

Let’s take a moment and review each of the Five Laws of Gold together.

Pay thyself first

1. Gold (money) cometh gladly and in increasing quantities to any many who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.

It is safe to say (and has been said before) that few ever get rich living from paycheck to paycheck thinking that the goal is simply a bigger and bigger paycheck. A consistent savings plan is the beginning of all great wealth as it leads to law 2.

Until I read this, I always paid everyone else first. I paid my car note, house note and credit cards leaving very little to nothing for savings. Once I reversed the order, things changed quickly. I put my payment to my savings first and everything else second.

What this meant to me was as my income went up over the years, I made it a point not to raise my expenses (new car or bigger house) and kept the first 10% of all paychecks for me.

Pay yourself first means just that. Pay 10% to your savings first. Then you have 10% for charity, 10% to pay off debt or for saving/investing and live off of the 70% that is left and never let your personal expenses go above that. Never.

Invest to Build More Wealth

2. Gold (money) laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
Saving is the starting point of all great wealth but is not enough by itself. You must be looking for ways outside of your earned income to build additional streams of income.

This brings up the point that money just sitting actually loses value due to inflation. You must use your saving to invest and build income streams that constantly replenish your cash reserves and get them to grow.

Real estate is extremely effective for building wealth since it produces cash flow, equity build up, appreciation, equity capture and tax advantages. The stock market is speculation (gambling) not investing so be cautious as you make your investing decisions.

Read, Study and Seek Qualified Advise

3. Gold clingeth to the protection of the cautious owner who invests it under the advise of men wise in its handling.

By qualified, I mean you have spent a huge amount of time “qualifying” the advisor.

Ask: Does the person that I am about to take advise from…

1. Have all the time with his or her family I want?
2. Have the fitness that I want?
3. Have the community involvement that I want?
4. Have the happiness, peace and joy that I want?
5. Have the wealth that I want?

Simply put, unless the person you are about to take advise from has the results from their life that you want, they are not qualified to advise you. Note: You may need multiple mentors to achieve all of this. Maybe you need one from each category.

Do not fall into the trap of titles. Stockbroker and financial planner mean nothing more that they have passed a few more tests than you and do not indicate whether or not they have ever actually achieved anything of worth.

Other titles that may harm you are “parents” who offer their advice, but have never been in the financial position that you want to be in. Teachers, spouses, professors and bosses also need to be qualified by you.

“In the real estate context, this means get a qualified mentor that has achieved in real estate what you are wanting to achieve. In the lead investor context, the lead partner must be experienced.” Jeff Smith, Lifestyles Mentor

Don’t be Gullible

4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
Of the three wealth killers: ego, laziness and greed, this law encompasses the first two.

Either a person is so lazy that they won’t read, attend seminars or other wise educate themselves or they are just so egotistical that they think they are too smart to need any further education. How many day traders have just simply thought “everyone else must be stupid. I have this all figured out.” I believe most.

“In the real estate context, this means to be as educated as possible in the business you about to invest in. In the lead investor context, know what you are investing in and check out the lead investor thoroughly.” Jeff Smith, Lifestyles Mentor

Don’t be Greedy (The Third Wealth Killer)

5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

While I don’t agree with the phrase “If it sounds to good to be true, it must be.” I do believe “If it sounds to good to be true, do more research.”

Laziness, arrogance and greed will keep you from doing the research and must be controlled at many levels to ever have any true peace and financial wealth.

“In the real estate context, this means to leary of any lead investor that might promise ridiculously high rates of return. Consult your mentor and check out all the details of the deal.” Jeff Smith, Lifestyles Mentor

VIP Realty elaborates on the top 10 reasons for this trend; trade oppurtunities, location, proximity, affordability, corporate headquarters, international companies, education and tourism. These factors not only explain the expected growth in commercial real estate, but also the health of the region’s economy as a whole.

Click here to read the entire article at VIPrealtyusa.com.

“The ant works hard in the withering heat and in the rain all summer long building his house and laying up supplies for the winter.

… and demands to know why the ant should be allowed to be warm and well fed while he is cold and starving.”

Two Versions

Well, my friends, I want to read you something that I got in an email. It’s long; it’s involved; it’s in-depth, but I think it’s worth it because it just so exemplifies the way I see the world. So I would like to go ahead and do it.

It says, “A question, food for thought. Here’s a story about the ant and the grasshopper.” There’s two versions, one, the old moralistic version and two, the second newer version. Goes on,

“The ant worked hard in withering heat all summer long building his house and laying up supplies for the winter. The grasshopper thinks the ant is a fool and laughs and dances and plays all the summer away. Come winter the ant is warm and well fed. The grasshopper has no food or shelter, so he dies in the cold. Moral of the story: Be responsible for yourself.”

Sharp Contrast

Now, the modern version. “The ant works hard in the withering heat and in the rain all summer long building his house and laying up supplies for the winter. The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away. Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while he is cold and starving.

“CBS, NBC, PBS, CNN, and ABC show up to provide pictures of the shivering grasshopper next to the video of the ant in a comfortable home with a table filled with food. America’s stunned by the sharp contrast. How can this be that in a country of such wealth the poor grasshopper’s allowed to suffer?

“Kermit the Frog appears on Oprah with the grasshopper, and everybody cries when they sing it’s not easy being green. Acorn stages a demonstration in front of the ant’s house where the news station films the group singing We Shall Overcome. Then Reverend Jeremiah Wright has the group kneel down on one to pray to God for the grasshopper’s sake.

Green Czars

“President Obama condemns the ant and blames President Bush, President Reagan, Christopher Columbus and the Pope for the grasshopper’s plight. Nancy Pelosi and Harry Reid exclaim in an interview with Larry King that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant and make him pay for his fair share.

“Finally the EEOC drafts an Economic and Equity and Anti-grasshopper Act retroactively to the beginning of the summer. The ant is fined for failing to hire a proportionate number of green bugs. And having nothing left to pay his retroactive taxes, his home is confiscated by the government—the government’s green czar—and given to the grasshopper.

“The story ends as we see the grasshopper and his freeloading friends finishing up the last bits of the ant’s food while he’s in the government’s house—which as you recall just happened to be the ant’s old house—as the house crumbles around them because the grasshopper doesn’t maintain it. The ant has disappeared into the snow never to be seen again.

Everything for Nothing

“The grasshopper is found dead in a drug-related incident and the house now abandoned is taken over by a gang of spiders who terrorize and ramshackle the once prosperous and peace-loving neighborhood. The entire nation collapses bringing the rest of the free world with it.

“Moral of the story: Be careful how you vote in 2010. I sent you this because I believe you’re an ant and not a grasshopper. Make sure that you pass this onto others. Don’t bother sending it onto any grasshoppers because they wouldn’t understand it anyway.”

Boy, is that not just the perfect—absolute perfect—example of what’s going on in this world right now? I mean it can’t get any more perfect than that. Here it is, folks, the grasshoppers they want everything for nothing.

A Common Mantra

They’re not willing to work; they’re not willing to save; they’re not willing to do anything that the ants do, and then they wonder why the ants get ahead. So what do they do? They legislate to take everything away from the ants.

Well, my friends, can that persist or will that not eventually send the economy, send the entire nation into poverty, into just a disaster? Because how many people are going to be willing to work if you keep taking everything away from them?

Now, this is a common mantra that we’ve heard forever and ever and ever, and yet we continue to be mesmerized by the slick words of politicians who completely try to demonize people who make it and living by being successful and who are constantly trying to level the playing field as they take the money out of your pocket and put it in somebody else’s.

American Again

My friends, I want to thank the people of the east coast today for voting the way they did. They made me believe I’m American again. That there are actually people out there that care, that actually will not allow these people that are in government right now to dominate us and to take and do things that we don’t want them to do.

When 60 percent of the people don’t want a health care program, they lie to us and tell us that yes 60 percent do. When everybody out there knows that it’s a lie, they continue to lie and misrepresent the facts and cover it up and go after people that tell the truth.

I probably won’t be here tomorrow. You’ll probably see me gone because I even stepped up and said something. Now, I think America stepped up and said something yesterday, something that should have been said a long time ago.

Abundance Mentality

But the problem is it takes time for people to realize that they have given up their freedom for safety, given up their freedom for a promise that can’t be true. You cannot run a country based on the zero-sum game theory.

The zero-sum game says that for me to have a dollar you have to give it up. That is not the way you run a country. That is not the way you grow a group of people into the most prosperous people in the world. No. You change your mentality. Change it to the abundance mentality.

The abundance mentality says that one plus one is 11. And there’s massive amounts to go around for everybody, because if you do not look at it that way, there will be massive unemployment. You will starve out the very people that are willing and able to go out and create the type of environment necessary for businesses to grow. But no, it takes time.

Duped

It takes time before you realize that you’ve been duped, that you’ve been promised things that can’t be true. Wow. Think about that. How often in your life have you just woken up one day and realized you’ve been duped? Well, guess what? You’ve been duped.

These people are creating massive, massive, massive debt. And they are going out there and redistributing that debt to their little cronies—not to anything that would be productive. I mean I remember Obama talking about building a better country and putting people back to work. I don’t see the stimulus creating any jobs. I don’t see it saving any jobs. I just see it’s money being paid to the cronies.

The Real Estate Economy Watch reports that senate debate has officially ended on the extension of the home buyer tax credit. With only two senators in opposition, the legislation is expected to receive President Obama’s signature this week. In addition to the extension, the new tax credit will include a “move up” option and will be made available to couples with combined incomes of up to $225,000. Dissidents cite fraud as their main trouble with the bill, so the IRS will be granted expanded oversight of the process.

What is Your Retirement Risk Index?

Tough Money Love blogs about the scariest retirement statistics out there. Nationwide Insurance conducted a study that showed 51% of Americans would be unable to maintain their standard of living if they retired at age 65, without accounting for medical expenses. This percentage is up from 2007’s 44%, despite declines in home equity and the government’s raising of the required age to receive social security benefits.

Facts about Homeowner Loans

This article allows you to brush up on changes to the terms of homeowner or secured loans, which can be used to purchase a number of things including cars and property. The Daily Press provides interesting insight to how the fall in home prices altered the standard terms of the loans. Lenders will now match only 80% of the property’s value and generally have a limit of $50,000-$100,000 versus the pre-recession $250,000 allowance.

The “Housing Bust’s” Impact on Different Regions

Les Christie of Norada Real Estate argues against the idea of a nationwide “housing bust,” stating that only certain areas were severely impacted. Among them “bubble states” like Florida and California have been experiencing skyrocketing foreclosures as a result of previous explosions of home prices. Contrarily, states in the “heartland,” like Texas, did not experience the same phenomena because land was readily available. Avoid generalizations, Read this article to learn the affects recent trends in the housing market have had on different parts of the country.

New Advantages for Home Buyers

Phoebe Chongchua of Realty Times says that the abundance of housing options is advantaging buyers and resulting in new expectations for investors to focus on amenities that will give their property a leg up on the competition. One of Lifestyles’ central principles is the concept of “best product best price.” By employing this tactic investors can match their property to the expectations of the neighborhood, ensuring choice buyers.

Worst Hit Cities by Foreclosure

CNN Money reports that metropolitan areas are increasingly affected by the foreclosure crisis. Cities in California, Florida, and Nevada have consistently made the list for the highest foreclosure rates in the nation and there are mixed views on what the future has in store. While half of the cities in the top 10 have experienced yearly declines, a number of other cities have seen dramatic increases. Despite stabilizing home prices, a full recovery of the housing market is not yet in sight.

The Real Estate Downturn of the Early 90’s and Today

The National Real Estate Investor compares two downturns in the commercial real estate market. While attributing the slump in the early 90’s to overbuilding and the deregulation of the lending industry, they note the dramatic declines in construction that today’s market is experiencing. Although financing is available, investors are weary of commercial investment due to the increase in land and construction costs. Further, unemployment and historic declines in consumer spending is leading to a decrease in demand. Refer to this article to learn how past experience should shape your investing approach today.

We’d love to hear from you! If you become aware of any interesting and valuable articles or blog posts, please email them to us at webmaster@luinc.com.

Now, you think about it.

You know, nobody believes they’re messing their life up.

Overcoming Limitations

Just came back from San Antonio and spent two wonderful days with some great people. An interesting thing happened in the middle of the seminar where it’s just jam-packed full with information. And because we can never get anybody to sit through that much information, we cut it down to 16 hours and basically take the highlights of the most important topics and teach those so people are able to go out and understand what they need to get started, and then the details are filled in as you go along.

Well, somewhere along the second day I just stopped and asked people, you know, “What is it that keeps you guys from taking action?” And I said, you know let’s spend the rest of the day overcoming limitations. What is it that is keeping you from going—and we spent another 2-3 hours and covered every excuse that people could come up with.

And the outcome was that we probably had some of the best response we’ve ever had from members. They were totally happy. Half of the people committed to taking action right away right out of the whole room, which is normally 20 to 30 percent commit to immediate action. These guys — 50 percent of them — committed to immediate action, so it was very effective.

Immediate Action

But what was more interesting than that was is late that night after you know I had gone out to dinner and come back to the hotel room I got an email. And the email came from one of the members that had visited the class that day.

He said that he’d spoken to his wife and he explained the material to his wife, and she immediately completely changed her mind from being a massive skeptic on the issue to saying you need to get back there right now and commit to taking immediate action. And so he emailed me and said he wanted to take immediate action right away. And of course we got with him the next day—not doing anything that late.

But the point was this: To me it was the most interesting thing in the world that there is one thing, one comment, one point, one something or other that makes a person snap and realize that what you’ve been doing for 20 years isn’t working.

Crybabies

Now, you think about it. The average person defends their position because psychologically, emotionally your ego is wrapped up in that decision because we all believe we’re doing the very best we can for ourselves. Even a crack dealer believes he’s doing the best he can do for himself. You know, nobody believes they’re messing their life up.

Many people believe their life is messed up because of other people or it’s not fair or they’re given the wrong opportunities in life blah, blah, blah. But that’s the crybabies. I’m talking the people that are self-made, proactive individuals that are out there—hard working individuals that do the right thing.

But then to wake up one day and figure out that you made less money and saved less money in 20 years than you could make in one year—that’s got to be devastating, and so your brain has got to hold on to that belief system of your past and especially if that came from your parents.

Snap

Can you imagine a woman talking to her husband and the husband is telling her crazy stuff like, “We’re going to borrow a million dollars and buy an apartment complex.” Where everything this little girl’s been told since she was a kid by her father was, “My God, we lived through the recession. When I was a kid my dad wouldn’t even let us have more than one slice of butter on our bread, and we only got five peas on our plate, and if we reach back for a second muffin he would hit us across the knuckles with his knife. And by gosh if we wasted—“

I remember my dad telling me have one square of toilet paper in the bathroom each time you used the bathroom that was it. One square. Can you imagine having to listen to this crap your entire life, forever, and then your husband says we’re going to go borrow a million bucks? You’ve been told your entire life get out of debt, don’t go into debt, stick to your job, get a good job, put your money in a 401(k), IRA.

The bottom line is this: Somewhere along the line you have to snap and realize that everything you’ve been told about money is wrong. When you look back to the 1600s—and I tell you this all the time and am going to keep coming back with it until you get the point—was before Galileo people believed that the sun revolved around the earth. They believed that the earth was flat. And their entire science and math were based on that—calendars were based on that. The entire world basic science was based on this incorrect, inaccurate belief. And yet people got through.

Getting By

They got by in life. And you’re going to get by, and it doesn’t matter what that loudmouth Del Walmsley says. It doesn’t matter. The other day at the BizRadio fair this guy Vince Rowe, “Oh, my God, I don’t believe in what Del says.” And then Loral Langemeier, “Oh, I don’t believe what Del says.” Blah, blah, blah, blah, blah. But you know, you’re going to be okay believing all that stuff.

But the reality is you’re not going to make a million bucks this year because you don’t believe that you can. You’re not going to go out there and make more than one real estate deal, one house than you saved your entire life.

And there are many of you—the median life savings in this country is only 45,000 bucks. You can make that on one deal. “Just got to think about it.” No, you won’t. Why? Because you don’t want to? Because you’re afraid? Or because it’s just easier? I’m beginning to believe that it’s just because it’s easier. It’s laziness, just total laziness. It’s not really fear. It’s just not having any motivation to do any more than what you’re doing right now.

But irrespective of whether I think it is and what it really is, it really doesn’t matter. What matters to me is the result. Are you getting them or are you not? And now what I want to talk about today is I want to talk about why you’re not.

The assumption is that if you’re wealthy, you’re going to buy one of these big houses.

…You need a new definition for what an asset is and what a liability is. Assets put money in your pocket every month; liabilities take it.

A Map

I’m going to share with you a map today that’s based off the Five Laws of Gold from The Richest Man in Babylon by George Clason. We discuss this at least a couple times a year. I read a couple of articles on the Five Laws of Gold.

I’m going to synopsize some of those for you as well as share with you some of the ridiculous stuff that people are saying out there when they try to somehow convince people that George Clason and the Babylonians would have thought that the stock market was a good place to invest their money. That’s a reach.

That’s a big reach because what these guys did—including the actual parables that are taught in The Richest Man in Babylon—they went to individuals and invested money with individuals. They didn’t just hand their money to a stock market. They didn’t speculate. They actually went and invested it in something that they had some control over. But we’ll talk about those Five Laws of Gold.

Impressions

There’s one other thing that came up this weekend I want to make a big disclaimer on. I was talking to some friends who had listened to my show, and they got the impression that I’m some rich, big wig, money bags, multi-, multi-, multi-millionaire, that I have a $6 million home or whatever.

And not that I ever said I had a $6 million home—I didn’t—but people got the impression that that was the lifestyle that I was leading and I should be in that based on the way that I talk. And I want to make sure that you understand that that is not the case. I am not a multi-, multi-, multi-millionaire.

Am I a millionaire? Yes. Do I have everything in life that I want and more? Yes. Am I in a better financial position than I ever thought I would be in or ever even had the goal of being in? The answer is yes to all of those questions. But I live in a $175,000 house. Now, I have a big fancy beach house; I have a boat; I have a lot of toys; I drive nice cars and things like that.

Misconceptions

But there is something about houses that people literally judge people—their financial success by their houses. I’ve got to tell you people, you’ve got to watch out. If you’re doing that, that shows a core, foundational misconception that is probably going to destroy your life. And I want to discuss that here right now.

So first off let me just say one more time, if I came across egotistical or like I was some super-rich Donald Trump style, I apologize. I’m not that. I don’t think I will ever be that, nor do I ever really want to.

The assumption is that if you’re wealthy, you’re going to buy one of these big houses. And I think that assumption comes from the misunderstanding—core, foundational, damaging misunderstanding that a home is an asset. Let me say that one more time. The misunderstanding is people think a home is an asset.

Ego Purchases

Now, why do so many wealthy people have big homes? Well, the number one reason is going to be ego—not that there’s anything wrong with that. I’m not putting down that. I have an ego, but my ego is boat and cars, you know. There’s where my money goes. If you want to see frivolous spending, it’s boats and cars Escalades, Porsches, Mercedes, Bajas. That’s where my money goes. But I have to admit that is an ego purchase. It’s a purely fun, ego-based purchase.

Then you have people who their home is their toy and they have a 5,000 square foot home. Do you realize how ridiculous a 5,000 square foot home is? Sorry, for those of you that have them. I just made fun of myself for having Escalades and Land Rovers and all of these cars and trucks, so I’m not just—I will pick on myself too. But think about that. There are people with six, seven, eight bedroom houses—it’s them and two kids. Do you get why that’s just purely ego?

The second reason people do it is because they’ve been lied to and told that a home is an asset. And what financial planners will do because the majority of financial planners are incompetent. Sorry.

Competency

The way you determine whether a financial planner is competent or not is you just ask the question: Is this financial planner retired and wealthy with their investments? Well, you’re going to find that the vast, vast, vast, vast, vast majority of financial planners are not. They’re working. They’re living paycheck to paycheck just like you are and advising you on how to invest your money.

But what they do is as soon as someone gets a raise and they get into a higher tax bracket, they literally tell people, “Hey, I’m your financial planner. Go buy a bigger house so you have a bigger tax deduction.”

So you’ve got the ego on one side wanting to have the bigger house so that you can appear to other people as if you’re doing better than you are, then you’ve got this second group of incompetents giving you an excuse to do it—because you’ll have a bigger tax deduction.

Liabilities

And don’t forget—and here comes the third one—don’t forget your financial planner so incompetently tells you, “Your home’s your biggest asset. So the bigger home you’ve got the bigger asset you got.” People, a home is not an asset; it’s a lia-freakin-bility.

You need a new definition for what an asset is and what a liability is. Assets put money in your pocket every month; liabilities take it. Assets put money into your pocket every month; liabilities take it. What is your home? It takes money every month, doesn’t it?

Now some of you are going, “Yeah, but Steve, I paid my home in full. I got that system beat.” Huh-uh. It still takes money from you. Taxes and insurance don’t stop when you pay off that house, do they?

Statistics

Do you realize people who buy a million dollar house have $30,000 a year in taxes? That’s about $2500 a month still even though the house is paid off. Then you figure your insurance might be around ten grand—or five grand. I’m sorry. I’m thinking of coastal houses. Let’s say it’s five grand. That’s another what, $400 a month. They’re at $3,000 a month even with their home paid off.

So does paying off a home suddenly make it a positive cash flow, suddenly make it an asset? No. And let me give you some statistics to make this very clear and we’ll move on.

The Wall Street Journal did the numbers. They said let’s go buy a home for $200,000 and a rent property for $200,000. If over a 20-year period both of them triple in value—triple in value—your personal residence will have lost you $86,000 after maintenance, upgrades, interest, principal, taxes and insurance. Negative $86,000 even if you bought it for 200 and sold it for 600. You would have still—out-of-pocket—lost $86,424.

If you had bought one rent property for $200,000 on the same day and it had tripled in value over the next 20 years, you would have made $404,000 profit for you and your family. You see the difference between an asset and a liability now?

There is a lot of talk still in the news today about the ailing housing market and the continuing rise of foreclosures both here in Texas and across the country.

Unemployment is up, the housing market is down, the future is uncertain, we’re mired in a global recession; the news continues to get worse.

So is this really a good time to invest in real estate? Or is it wise to sit on the sidelines and wait to see how things play out?

If you dig a little deeper than the national media stories, then you may find a slightly different story. It turns out that this is a great time to invest in real estate, and for those of us living in Texas, the circumstances are especially favorable. There are several reasons why this is true. So while all the sensationalistic news outlets continue to focus on the doom and gloom let’s take a look at the other side of the coin.

Why is this a good time to invest in real estate?

In short, because real estate is on sale.

Due to the large number of foreclosures all over the country, the real estate market is like a giant clearance sale. It’s like buying a sweater in May, or shorts in December.

Today you can buy a house cheaper than you could have bought just a year ago, and in many cases you can buy a house for less than the cost of building a new home.

Cash Flow

In short, because real estate is on sale. Due to the large number of foreclosures all over the country, the real estate market is like a giant clearance sale. It’s like buying a sweater in May, or shorts in December. Today you can buy a house cheaper than you could have bought just a year ago, and in many cases you can buy a house for less than the cost of building a new home. I’m the kind of guy who does not like to spend money, but when things are on sale it seems to feel less agonizing to me. It just makes good financial sense to buy something when the price is discounted. The Yahoo! real estate front page shows a graph taken from zillow.com that illustrates the one year median home value falling from this time last year (take a look at the 5 year and 10 year trends too).

Because cash flow rates are up. As a direct result of buying a property at a low price, cash flows are higher today than they have been in recent times. Although this is not necessarily true of commercial properties, it is the case with residential real estate. A single family home bought in today’s market can be purchased for lower price than similar properties could have been purchased last year. Consider the following examples of realistic cash flow potentials in today’s real estate market versus the market a year ago.

Higher Equity Capture

Along with higher cash flow is higher equity capture. Naturally, if you can buy a property for $15,000 less than you could just a year ago, as in the above example, then the equity capture is higher from day one. For the sake of simplicity in this example I have not taken into account closing costs and other factors that will lessen the realized equity capture. Keep in mind that the equity capture is in today’s market and will likely increase.

With all the foreclosures on the market today, it is difficult in some neighborhoods to get a comparative market analysis (CMA) that does not include distressed properties. At some point in the future the number of foreclosures and distressed properties will curtail and that will allow values to rise to a more realistic number. The reason I use the word “realistic” is because a property that has just had a $10,000 rehab is not comparable to a still-distressed property, however some appraisers are using the still-distressed properties in their CMA’s. When appraisers stop using distressed properties and toxic assets that banks are desperate to unload in their CMA reports, then property values will increase and equity capture will likewise increase.

In turn, a neighborhood doesn’t necessarily have to improve in order for values to go up, all that is needed is for the number of distressed properties to decrease. Eventually, that will happen and today’s large equity captures will be tomorrow’s very large capital gains.

Easy Negotiation

Negotiations are easier. As an investor, you should try to pay the lowest price you can negotiate when purchasing a piece of real estate. Unfortunately, many people are not very good negotiators. The good news is that in this current real estate environment, you don’t have to be a good negotiator. With prices so low, you can completely avoid the back and forth jostling that can occur during the negotiation process and still come away with a great deal even if you pay full asking price. Just keep in mind that being a good negotiator is what sets apart the professional investor from the amateur. So rather than avoiding negotiations all together, go ahead and try honing your negotiation skills.

If you end up getting a better deal than you expected, then you win! If you lose out on a deal, don’t sweat it. Learn from your mistakes, ask your real estate agent why negotiations fell through, ask for advice on how you could have made the deal work out, lick your wounds, then move on to the next property. There are enough properties for sale at a great price that if you miss out on one deal, it’s not a big loss. Just like the bus, there will be another one in a few minutes.

Demand for rental property is up. The news continues to report that foreclosure rates are still on the rise. The third quarter of 2009 saw
record high foreclosure activity record high foreclosure activity. What does that mean to the real estate investor? What it means is that a one time home owner has been forced to become a renter. Those families who have lost their homes to foreclosure still need a place to live. They don’t just disappear, they go into the rental market. This means that thousands of families are in need of clean, functional housing that is provided to them by the real estate investor.

Servicing debt is still cheap. Because mortgage interest rates have been low for a few years now, it is easy to consider these low rates as the norm. But if you look at historical rates for a 30-year mortgage you will realize that interest rates are actually lower now than they have been compared to years past. The web site Home Finders, which graphs historic trends. shows the 2009 entry as having the lowest rates for a 30-year fixed loan over the period dating back to 1983. It is cheaper now to borrow money for real estate purchases than it was ten years ago, twenty years ago, even thirty years ago. Combine low property prices with low interest rates to borrow money and that makes for a winning combination.

Although it is cheaper to borrow money to purchase real estate now than it has been in decades that does not mean that it is easier to qualify for that loan. Two years ago loans were very easy to obtain and lenders approved countless thousands of loans that should not have been approved. Those thousands of loans have become thousands of foreclosures. Remember again that those people who have had a home foreclosed on them still need a place to live, but they now cannot qualify for a home loan. That means they will rent a home or apartment from an investor, hopefully from you.

Income Streams

It’s always a good time to make more money. One important principal to remember when buying investment property is that you are not spending money just for the sake of spending money, you are spending money to buy an income stream. It’s like buying a miniature business. If you use the numbers from the example above, then you will have an extra $350 a month in passive income. That comes out to an extra $4,200 in your pocket in a year. Accumulate just four such miniature businesses and you could be adding over $16,000 to your bottom line. Tough economic times are an especially good time to add to the bottom line.

Naturally you have to do your due diligence to make sure that your business will generate income. What does it mean to do your due diligence? It means research what a property will sell for after you have made all the necessary repairs by doing a good CMA. It means finding out how much it will cost you to do the necessary repairs. It also means finding out what the house will rent for when you put a family in there, and ensuring that the rent is enough to cover the expenses you will incur to own the house; expenses such as servicing the debt. In order to find out all this important information you will need to access recent home sales information, property tax information, and get a good faith estimates from reputable lenders.

It’s always a good time to pay less tax. Real estate is a tax shelter, plain and simple. I try not to look into the reasons why that is, and I don’t overly concern myself with tax law; that’s why we hire attorneys and CPA’s. The way I look at it, the people who make the laws own a lot of real estate and always have. They make the laws to favor their financial situation. Mortgage interest is tax deductable. There is the depreciation that you can deduct even though your property is actually appreciating over time. Property taxes are deductible from your income. The beauty of that fact is that you get the tax deduction even though your tenant is paying the tax bill through their rent. The list of things you can deduct goes on and on. I am a firm believer that we can pay a third less taxes in this country and still enjoy the exact same standard of living. And as it turns out, I’m on a one man mission to prove myself right. Won’t you join me?

Act Now!

The time to act is now. Although it is true that patience is a virtue, it is also true that very often in life the time to act is now. I was asked just this week if now is a good time to invest in real estate. I get asked that question often. When I tell people that it is a great time to invest, they always seem surprised because the news says that the real estate market is down. Then I point out to them the same reasons I stated above, at which point they tell me that it sure makes a lot of sense.

Today’s real estate market is not just a typical “time to act”. It is an atypical market with so many factors making it the most favorable time in decades to be a real estate investor. Don’t let the bad news on TV and in the magazines and newspapers scare you. The news says the real estate market is down and foreclosures are up, and consumer sentiment is down, and unemployment is up. That just means that prices are down and demand for rental property is up, because fewer people can buy right now.

If you have been patiently sitting on the sidelines, not sure if you should make the move to start investing in real estate, you’re in luck because your number has just been called. Get in the game! If you’re not sure how to get in the game, then go find a coach. I do wish you well.

So the question is who keeps these crooks alive? Is it really the police that keep you from getting hurt by the crooks? The police only get to wipe up the mess.

They know how to cut them off. They know how to circumvent them. They know how to get into a safe, and they know how to get into your pocket.

Problem Solving

Well, my friends, I had one heck of an interesting day yesterday. I went to the BizRadio MoneyFair and gave my little talk to wake everybody up in the morning, and then I attended the panel discussion later in the afternoon. After that I came for a panel discussion here at Lifestyles.

I’m going to go into the Lifestyles panel discussion ‘cause I thought it was interesting—a topic that people would not want to cover. And I’m the kind of guy that’s like if you have got a scab, pick it. You have got to dig into the problem and solve the problem.

And the issue we went through is that the deals are getting so large and some of our people are partnering with groups of people. The deals are getting better and they’re moving faster, and people are starting to realize that there’s a difference between a good operator and a bad operator and someone with good intentions and someone with bad intentions.

Business

And it’s really interesting because if you step back from it and look at it for just a second, what you’ve got is this whole paradigm that we went through the other night—that you have got about 90 percent of the people that I do business with that I know through business, whatever business it is.

And I’m not just talking about real estate now; I’m talking about everything. I’m talking about every business I’ve been in, talking about all the people we meet through the radio shows and all the different businesses you meet. But in general I find that about 95 percent of the people have integrity in what they do and about 95 percent of the people have somewhat competency at what they do. But that leaves a ten-percent gap.

There are ten percent of the people out there that either do not have integrity 100 percent or do not have competency 100 percent. Now, these people are dangerous. And the interesting point that I came to the conclusion of last night was I understand how society survives. I understand how politicians survive. I understand how the world goes round, and it’s more clear to me today than yesterday.

Breaking Laws

The bottom line is this: People who can’t do it don’t want to be hurt by it and want legislation to keep people from doing it. So what happens is is that there is that minority of individuals that break the laws—the minority who break the laws either because they’re ignorant of the laws, they just don’t understand what they’re doing, or because they have no integrity.

But because the minority is breaking the laws, the majority that ended up getting affected by them are upset and want some type of control over that. So you talk about the Bernie Madoff thing. I mean there’s a perfect example. He’s just one bad apple among a whole bunch of people that are in the financial industries. But how was it that Bernie Madoff was able to survive?

And I am here to share with you something that you don’t want to hear—it’s because of your own personal greed. It’s because you were willing to believe that some guy could give unrepresentative results in a marketplace that’s almost neutral—in other words almost everybody does the same thing. Everybody gets the same prices on bonds; everybody gets about the same price with stocks, et cetera, et cetera, et cetera.

A Negative Sell

And you have a guy here that’s promising you that he can time and time and time again double those results. Now, whether or not he can or whether or not anybody can is not really the question. The real question is do you just blindly believe that? And so your friend tells you about it, and you tell your friend, and people start saying, “Hey, I’ve got this guy.”

And you know what’s funny? I’ve been to cocktail parties like this guy’s. I remember being at cocktail parties where somebody would tell me, “Hey, my advisor is the best in the world. He’s known all over the world. In fact he won’t take your account unless you have a million dollars. And it’s almost like a negative sell. “You’d be lucky for me to lose your money for you.”

But they almost always promise that this guy has broken all the records. He has stayed ahead of the average. And the other one they always tell you is he’s guessed the market—guessed it when it was high, when the market was low, guessed when to go into gold. He was always right.

Fast Cash Greed

And you know I’d like to think there are people like that. I’d like to think I’m like that. I have found out that it’s not true. I’ve made flaws in my investment career. I didn’t guess black Monday right. I did it wrong. And when it dropped precipitously I felt, “Wow! Here’s an opportunity to make some fast cash.” And my greed jumped all over me, and I went ahead and bought. In the second day it dropped again another hundred points, and so I lost a lot of money.

So the question is who keeps these crooks alive? Is it really the police that keep you from getting hurt by the crooks? The police only get to wipe up the mess. That’s always the way it is. Locks keep honest people honest. Crooks know how to pick locks. They know how to cut them off. They know how to circumvent them. They know how to get into a safe, and they know how to get into your pocket.

And when someone starts to talk to you about something that’s too good to be true that can’t be proved that has no documentation behind it whatsoever that can actually be tracked, where the documentation is filled with assumptions and filled with disclosure, then you need to ask yourself, “Am I just kidding myself? Am I the one that’s selling myself into something for nothing, instantaneous gratification diseased idea? Is that what I’m really thinking about here?”

Disagreement

It’s interesting. It really is. Because I was sitting there and I was thinking to myself everybody—it was like there were 300 people in the room— 200 people probably and 180 of them are saying, “I don’t get it.” Everybody agrees on what is the right thing to do.

No one’s really in disagreement of that except for about ten people who have had very bad experiences with about ten people and all 190 other people are going, “I don’t get it. Why is there a problem?” And the problem, my friends, is because our society is filled with “ten percenters.”

Using the Case-Shiller index, analysts are able to track the recent shift in home prices to higher levels, admitting that the upswing may be attributable to the first time home buyer credit.

Although foreclosure and unemployment remain central concerns, most economists expect prices to continue to climb, with North Texas cities, such as Dallas-Fort Worth, leading the road to recovery.

Dallas News used the S&P Case-Shiller Home Price Index to rank the decline in house prices in August 2009 from the year before in each market. According to the index Dallas-Forth worth saw the least decline:

City with Percent Decline
1. Las Vegas -29.9%
2. Phoenix -25.1%
3. Detroit -22.6%
4. Miami -18.8%
5. Tampa, Fla. -17.7%
6. Seattle -14.7%
7. Minneapolis -13.7%
8. Chicago -12.7%
9. Portland, Ore. -12.5%
10. San Francisco -12.5%
11. Los Angeles -12.0%
12. Composite (20 cities) -11.3%
13. Atlanta -10.6%
14. New York -9.6%
15. San Diego -8.9%
16. Charlotte, N.C. -8.6%
17. Washington, D.C. -7.9%
18. Boston -4.2%
19. Cleveland -2.8%
20. Denver -1.9%
21. Dallas -1.2%

Click here to read the entire article at Dallasnews.com.

“Fannie Mae is replacing a forbearance program for troubled borrowers with one that will make the breaks available to property investors and owners of second homes. In a forbearance, the government-sponsored enterprise reduces the monthly payment on a mortgage for up to six months. The current program only provides this relief for loans on owner-occupied properties.

The GSE said it wants to give property investors and owners of second homes “new options of support” since they are ineligible for the Obama administration’s Home Affordable Modification Program.”

Read the entire article here.

CHRIS X: I’m Chris X filling in for Steve who is heading out to San Antonio for our case study. And we’re going to bring on Karen Davis. Karen is a real estate investor. She’s also a mentor with Lifestyles Unlimited. Karen has been kind enough to join us here on today’s show. And we are going to talk a little bit about leasing, also a little bit tenant retention. If you want to join us here on the program, all you have got to do is pick up the phone and give us a call.

Karen is here to answer any questions that you may have about your real estate investment properties—getting started, you want to call about our free workshop tonight, well Karen is here to answer those questions. Also we’re logged onto the Stickam. We have got a lot of people already logged on and they are ready to chat as well. So Karen Davis, thank you, so much for being here in honor of Steve’s absence.

KAREN: Thank you for having me on.

CHRIS X: Tell you what, let’s get into this talking a little bit about—you want to talk about leasing first as we get rolling?

KAREN: Yeah, I do because I’ve been getting a lot of calls from members. You know, they’ve been having problems leasing their property, or it’s been vacant for longer than it should be.

And I just kind of want to go over the steps really that should be followed or should be taking place that are not. And Del, of course, talks about this in the two-day class in great detail, and then we also have additional classes and on line classes that we talk about this very thing—so just touch on that really.

So let’s skip past all the looking for the property, buying a property, okay? Let’s say it’s all done; we’ve got this property on our hands. And let’s imagine in this scenario that you’re still working on the rehab. You’ve just bought the property, you’ve got guys in there doing whatever it is that they’re doing, and you need to rent the property.

First and foremost I want everyone who’s not a member who hasn’t been to the two-day class or even if you just need a bit of a refresher, what we teach here at Lifestyles is make your property the absolute best product and best price available.

So that means whatever for the neighborhood fits, make sure your house is just the same plus one—plus one upgrade. I know Jeff Smith always says that, and I think it’s a catchy tune so we’ll stick with it.

CHRIS X: Yeah.

KAREN: You know, you’re not going to put granite and spend the money on granite on a house completely from top to bottom in a neighborhood where there’s formica and that’s just the standard. Well, I suppose you could, but I don’t think you’ll get your cost back.

CHRIS X: Yeah.

KAREN: How do you say that—I always forget—recoup the cost.

CHRIS X: Recoup the cost, basically your return on investment.

KAREN: Correct, yeah. So get the property in the best condition, replace things from the get-go that you don’t think is going to have the shelf life that they normally would if they were brand new.

You want to make sure the AC system is working. You want to make sure that the roof doesn’t have any leaks. You want to make sure that everything works as far as the water heater, the appliances, et cetera, et cetera, yada, yada.

Best price—now, I know this is another question that actually someone called about today. Everything was fine, they were following all the steps with their property like Del teaches except for getting comps or comparables.

CHRIS X: Yeah.

KAREN: What other properties in that same neighborhood with the same dimensions are renting for. This person got them a little bit backwards. What he had done was he had a Realtor friend who pulled comps for him through HAR—you know, agent access—but gave him comps for properties that were currently for rent, not rented. And they were at least 60 days old.

So first and foremost these properties weren’t rented and that’s not a comparable. Number two, they were taking 60 days to rent or they had been on the market for 60 days, so obviously something’s wrong there. You don’t want to mirror that. Well, he was using that number as his number.

CHRIS X: Yeah.

KAREN: So this property was vacant I think he said—I can’t remember—one or two weeks. I’m looking at Alfonso ‘cause he talked to him on the phone.

CHRIS X: Okay.

KAREN: One or two weeks and that’s just too long. You have the wrong price.

CHRIS X: Amazing. You can see Alfonso through the walls because he’s in his office working diligently right now.

KAREN: Correct.

CHRIS X: I’m kind of impressed that you can do that.

KAREN: I’m awesome.

CHRIS X: You have x-ray vision?

KAREN: No, I’m just awesome.

CHRIS X: All right.

KAREN: Well, I think another question that has been coming up—and I’ll get back to the member’s question from earlier—but people are always asking, “Well, you know, is it a good time for renters?” “Can you rent the properties quickly?” “Are there really people out there?” Everyone — not everyone, but people think that the economy’s down and everything’s—

CHRIS X: Everything’s dead.

KAREN: Totally not the case. You have to always—I mean whenever there’s an up—who’s it, Chris? You’re smarter than me. You know stuff. Equal and opposite reaction—

CHRIS X: Yeah, for every action there’s an equal and opposite reaction. It’s an astronomical—

KAREN: Who said that? Newton? I mean Einstein?

CHRIS X: Can’t remember.

KAREN: Jeopardy question, Alfonso. Newton.

CHRIS X: Isaac Newton — one of those smart guys with an N in his name.

KAREN: One of them. Whenever something is up in the economy or—okay, in this case down in the economy, something else is up. So people who don’t have good credit, they’re losing their homes, they losing their jobs—well, okay, that’s really horrible, and I’m not saying that’s awesome.

What I am saying though is everyone needs a place to live. So for us landlords, it’s totally up right now for us right now. We have lots of renters out there.

CHRIS X: Yeah, you’re right. Less people can afford to buy homes now. What are they going to do? Well, they’re going to rent.