Archive for the ‘business planning’ Category

Have you begun to evaluate the performance of your real estate investments this year?

December 22, 2011

This is a great time to do a little homework concerning your investments and whether they are meeting the return guidelines that you have determined are appropriate for them.

Have you taken on some type of unstated risk and previously undisclosed risks?

Have you taken on too much risk in your investments?

Have your investments revealed that they are considerably more risky then you thought?

Are you being properly compensated for the amount of risk that you have taken?

Have the characteristics of the investment changed in such a way as to put at undue risk the total investment?

Is the investment performing in a way that is in line with its stated purpose?

Do you have a stated purpose for your investments?

Has that purpose changed?

Do you still trust the staff managing the investment?

Is the amount of debt appropriate for the investment?

Are the expenses in line with the budget? If so great is not what should be done to bring them in line or is this a reason to divest yourself of this investment?

What is the exit strategy for this investment?

What is the timeline for the exit of this investment?

How does this investment fit into my investment portfolio?

Is the overall market or demographics for this investment a good one or a poor one?

Are there some other evaluation criteria that apply to your investment that are not outlined above?   If so drop me an email so I can add them!

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Energy Audit Update

June 21, 2011

So after the energy audit I got the results which they were not good!   The insulation in the attic was of course terribly inadequate.    The windows being single pane glass of course allow lots of radiate heat into the units.    None of these things were news to me just confirmation of the age of the property.    One of the other things checked included the duct work of the HVAC system.    Not only the exhaust side but the supply side.

SO with the results of the new energy audit we began some energy improvements to the property!   Hopefully they will allow the residents to have a better living experience at the apartments.   We are going to get at least R-30 insulation blown into the attics and get solar screens put on the buildings and lastly get all the HVAC systems and ducts properly sealed.    The total cost being about 13K (ouch) but I think that the buildings will perform better and will make the energy usage lower for all of the residents!   If nothing else we will keep the city from bothering us about poor results of the energy audit and since we have already started making improvements we are far ahead of the game in terms of correcting any poor energy efficiency performance in our buildings.

Will these improvements result in higher rents?   Will they result in a longer stay for our existing and new residents?   Will they result in a higher net operating income?   The answers to these questions are not readily available.    I sure hope that they do.    So far we have gotten a few comments about the improvements and I will fill you in on them maybe on the posting.

Calpers finally gets it..

January 29, 2011

The wall street journal has an article about CALPERS changing thier real estate strategy.   From real estate private equity to CASHFLOW.

http://online.wsj.com/article/SB10001424052748704013604576104470130722678.html

Do you have some cashflow in your portfolio?   There certainly is a place for some flips, rehabs, etc but cashflow is where you make money long term in real estate.   Do you need to discuss your real estate goals with a professional real estate investor?   Call me…(512) 782-8982 or email me.

Extend and Pretend is still in full effect…..

July 28, 2010

The wall street journal recently published an article about the banks policies concerning loans for commercial properties that have come due and now cannot be refinanced.   The title of the article is….

To Fix Sour Property Deals, Lenders ‘Extend and Pretend’

You can find a link to the article by clicking the following link. 

 http://online.wsj.com/article/SB10001424052748704764404575286882690834088.html?mod=WSJ_Commercial_LEFTTopNews

What does this mean for real estate in this country?   We are in for a long haul of real estate being a drag on the economy and on banks balance sheets.   After all if banks have too many bad loans how can they make new loans?   With less capital to make new loans those businesses who need credit to grow or expand will find it harder to do so.   No expansion or growth means no new hires….

How do we solve this problem?    What has history told us to do in times like these?   Do you have any new ideas on how to navigate thru this mess?

Multiple real estate solutions…

February 17, 2010

Real Estate Investing is just like this blog by Dan Miller about finding multiple solutions to problems.

1. Can you find the solution here… by Dan Miller of 48 Days at http://48daysblog.wordpress.com/
Many years ago in an Indian village, a farmer had the misfortune of owing a large sum of money to the village moneylender. The old and ugly moneylender fancied the farmer’s beautiful daughter, so he proposed a bargain. He would forgive the farmer’s debt if he could marry his daughter. Both the farmer and his daughter were horrified by the proposal, but the cunning moneylender suggested that they let providence decide the matter. He told them that he would put a black pebble and a white pebble into an empty money bag. The girl would have to reach in and pick one pebble from the bag. If she picked the black pebble, she would become his wife and her father’s debt would be forgiven. If she picked the white pebble, she need not marry him and her father’s debt would still be forgiven. If she refused to pick a pebble, her father would be thrown into jail until the debt was paid.

They were standing on a pebble-strewn path in the farmer’s field. As they talked, the moneylender bent over to pick up two pebbles. The sharp-eyed girl noticed that he had picked up two black pebbles and put them into the bag. He then asked the girl to pick a pebble. Now, imagine that you were the girl standing in the field. What would you have done? If you had to advise her, what would you have told her?

Careful analysis would produce three possibilities: (1) The girl could refuse to take a pebble—but her father would then be thrown in jail. (2) The girl could pick a black pebble and sacrifice herself in order to save her father from debt and imprisonment. Or (3) The girl could pull out both black pebbles in the bag, expose the moneylender as a cheat, and likely incite his immediate revenge.

Take a moment to think through this story. I’ve used it with the hope that it will help you see alternate solutions beyond the obvious ones. The girl’s dilemma cannot be solved with traditional logical thinking.

You may be in a similar situation. You may be in a job you hate—but the pay is great. You think you have two choices: (1) You can stay in a job you hate. (2) You can leave the job but will then give up the great pay. Are these really all the options? Or you may not have a job right now. So you think either you must “find a job” or continue with no income? Could there maybe be other options?

Here is what the girl did. She put her hand into the money bag and drew out a pebble. Without looking at it, she fumbled and let it fall onto the pebble strewn path, where it immediately became lost among all the other pebbles. “Oh, how clumsy of me,” she said. “But never mind, if you look into the bag for the one that is left, you will be able to tell which pebble I picked.” Since the remaining pebble was black, it would have to be assumed that she had picked the white one. And since the moneylender dared not admit his dishonesty, the girl would have changed what seemed an impossible situation into an extremely advantageous one.

Now, how could you see more creative solutions for your situation? A couple of years ago I coached a very successful media executive who came to me with a dilemma. Because he was so respected, he had been given increasing responsibilities over the years. His current position had squeezed out all his family and community commitments. He was working seventy to eighty hours a week, but he had also become used to the $180,000 in annual pay. He was considering whether to just accept his lot in life or to quit his job, give up his salary, and seek a more balanced life.

I proposed another choice. Since he was valued, why not approach his superiors with a new solution? Delegate much of his workload to allow him to contribute in his strongest areas of competence. They readily agreed. He was able to go back to a forty-hour workweek with no decrease in compensation. He began playing the cello professionally again, volunteering in his son’s school, playing in occasional golf tournaments, and managing his church bookstore. Simply by asking for a less than obvious solution, he was able to move into a new season of true success.

Moral of the story: Most complex problems have multiple solutions, if only we attempt to think beyond the obvious choices. Practice coming up with 4 or 5 possibilities for any situation you’re facing and you will begin experiencing success that few people discover.

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This story and others are found in No More Mondays – with lots of new solutions to work issues. Use this coupon – NMMSPECIAL — for a $10.00 discount right now – we’ll send you the hardback book and also give you an immediate electronic copy. ($13 total)

By the way do you need a thinker working with you on your real estate problems if so call me at 512-689-6742.

Are you growing your business?

February 9, 2010

One of the things I want to do this year is grow my business. So I began looking for opportunities to invest and to put together another group investment or syndication. I found a small apartment complex in one of the communities close to my home base and decided to go and look at it b/c it was a screaming great deal! I had to drive a little while to get to it but not too far. This neighboring community is very different from my home base but If I invest again in this area I will have a little experience in the area and may be able to get better results then I did when I first went into the area. This particular property is a foreclosure that appears was just over leveraged and once the debt service became too much for the previous owners they gave it back to the bank. The bank has hired a out of town broker who co-brokered the deal with a local guy. The local broker is a good guy and understands this market very well. He met me at the property and showed me around. Luckily for the bank and for me if I buy it the property has a guy looking over it and keeping the copper from growing legs. “growing legs” means things just get up and walk off i.e. get stolen borrowed or otherwise disappear. There are very few worse things that can happen then your HVAC’s, copper pipes, and wires growing legs. To replace those things cost an arm and a leg. I wanted to talk a bunch of pictures of the property but after I got there my battery died in the blackberry! Luckily the broker also has a blackberry and had his car charger so he let me charge my phone! After walking thru the place I decided that it as in ok shape and needs some work but nothing I think I cant handle so I made an offer to buy it all cash with no contingencies!

I did not offer the asking price b/c the agent and I talked a little about what I think about the property and about where the market it for this type of property. I think that the bank will need to take a bath on it and if I am able to help them I will try to do my part. This property would not be a good deal for me but a great deal if I am able to fix the problems. If I am not then it could turn into just a good deal. If all I can do is just buy a good deal then I should stay at home b/c good deals are a dime a dozen. What makes this business great is finding the great deal! The hardest thing in the world is to NOT BUY A GOOD DEAL. Good deals come along all the time but a great deal! Those are rare and when you have the potential to bring one of those down you have to be ready! If you have used all of your gun powder (investment capital) on good deals then when a great deal comes along you can not kill it and bring it home to feed your family b/c you have been taking all of these good deals.

If I get a good response from the bank I am going to talk to the current lone resident manager who is looking after the place to make sure nothing grows legs. I need to know what he knows and what happened to the past ownership.

If I end up buying it I will create an entire case study of it and post it on my case study page. Otherwise I will just write about my experience and see what happens.

This property is what I call a dirty ugly, ultra low-income property! I don’t call things a slum b/c in my opinion you can own low-income property and run it like a decent place to live or you can become a slum landlord! The property becomes a slum b/c of ownership 1st and foremost. If ownership cares then management cares and if management cares then resident’s care if everyone cares the place can be for lower income people but still be a great community and a great investment.

Planning for 2010

January 7, 2010

Many people work on thier goals for the new year around this time so I thought it would be great to share some of the tools that I use to help my cleints, friends, and family go to the next level in thier goals/planning

PURPOSE AND VISION
I have added a few files to my media liabrary that are adobe pdf files that you can use to help you create a summary of your purpose. By knowing what your true purpose is allows you to create a vision and from there you can develope goals and plans to reach those goals that support your vision and purpose. If you dont know your purpose then you dont know if reaching your goals will provide you with the fulfillment that you desire. Check out the media library for the pdf’s called Purpose and vision and how they work together, but more importantly why they are the foundation to any goal setting program. If you have any questions on how these are implemented dont hesitate to call me at 512-689-6742. Do you want to know why these are integral to a real estate investor? Call me or email me!

Freddie Mac sees rates headed to 6 percent by end of 2010 – CNBC

January 6, 2010

Freddie Mac sees rates headed to 6 percent by end of 2010 – CNBC.
How are higher interest rates going to effect your investment? How will they effect other investors who are in trouble? What opportunities are you going to see if interest rates go up and up and away? Do you have any idea how many properties have financing that is going to blow up those investments? Are you in a situation that if rates go up you will blow up?

Do you have a strategy to deal with higher rates in your investment life and the life of those around you? If not please call me at 512-689-6742 and we can discuss how you can position yourself to survive, thrive, and capitalize on this environment!


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