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Category Archives: Eric Buchanan

What Have Prices Been up To?

Real Estate Deals

I’m sure you have heard of the phrase, “No one knows what the future holds.” Certainly that phrase has a lot of truth to it when it comes to real estate prices. But, as investors, we have many tools to see what has happened in the recent past.

One of those tools is Standard & Poor’s Case–Shiller Composite-20 Home Price Index. It tracks the monthly change in housing prices for 20 U.S. metropolitan areas. The list of 20 consists of Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington. (See http://en.wikipedia.org/wiki/SPCS20R for a list of the submarkets included in each of the 20 cities.)

The latest data shows that this 20 city composite was up 13.4% from the one year period ending in December 2013. Of these 20 cities, Cleveland prices grew the slowest at +4.5% and Las Vegas grew the fastest at +25.5%. But the group as a whole seemed to lose ground near the end of the year. Price changes of the 20 cities were -0.1% from October to November and -0.1% from November to December. In fact, most of last year’s growth seemed to come during the first six months of the year. You can see the full report at https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/79678_cshomeprice-release-0225.pdf

Another interesting tool is the National Association of REALTORS® quarterly reports entitled Metropolitan Median Area Prices and Affordability. The latest report was released on February 11th and it shows the price changes from Q4 2012 to Q4 2013 for 173 different U.S. metropolitan markets. From this report, it seems that Elmira, NY had the worst change for the year at -11.6% and Atlanta-Sandy Springs-Marietta, GA had the best change for the year at +33.2%. The group of 173 improved by 10.1% for the year. This report too seems to show that the bulk of the increases from across the country seemed to come in the first half of the year. It seems most of the cities actually lost value during the last three months of the year. The full report can be found at http://www.realtor.org/topics/metropolitan-median-area-prices-and-affordability/data

Now, as a numbers-geek, I know that two different real estate investors (or media outlets for that matter) can look at the same data and come up with completely different interpretations of the results. So, you must decide for yourself what you believe regarding what has happened so far … and more importantly … what will happen next with real estate. So, take a look at the data and then share your thoughts on the future of housing prices by simply clicking on “Comments” near the top of this post. Only time will tell if your predictions are right.

Dodd-Frank

dodd frankI’ve mentioned this before, but I have to say it again; one of the amazing things about being involved with the Rich Dad Education organization is that I get to rub elbows with some remarkably talented and caring people. One of them reached out to me last week. Her name is Kathryn Butler and like me she occasionally takes time off from her busy investment business to teach others to do what she does. Kathryn asked me if I was up to date on the parts of the Dodd-Frank law that came into effect this month on January 10. I had almost no idea of what she was talking about. I did know that the Dodd–Frank Wall Street Reform and Consumer Protection Act had been signed into federal law by President Obama in the summer of 2010. But, like the health care law, Dodd-Frank had seen so much political kickback after it was signed that I was sure that Congress would find a way to cancel or seriously modify the law before now. So, I put the whole thing out of my mind … until Kathryn contacted me.

In a nutshell, the law is trying to prevent the type of financial crisis that this country experienced a few years ago. But, the truth is that the law has made significant changes in the country’s financial regulatory systems that affect all federal financial regulatory agencies and just about anything that is a part of the financial industry … including real estate investors.

For instance, if you are going to ever get another real estate loan, create any type of real estate loan (such as seller-financing), or buy/sell/trade real estate loans, then you need to understand this law. Unfortunately, I’ve seen a lot of misinformation on the internet regarding Dodd-Frank. And most attorneys are still trying to get their hands around how this law is going to be implemented and overseen. So, make sure you talk to a good real estate attorney who specializes in working with real estate investors. And, don’t be surprised if your attorney replies, “I don’t know.” to most of your questions. Because what is written in the law is one thing … how the government will choose to follow it is something completely different. In fact, back in 2010 Sen. Christopher Dodd, one of the law’s authors, famously said, “”No one will know until this is actually in place how it works.”

Additional Comments by Keith Gensor
Director of Education & Student Development

Being a successful Real Estate Investor is simple but hard. There are four primary steps that an REI must do again and again.
1. Marketing – you have to get your phone to ring (or you can make outbound calls); but you always have to be marketing, generating leads, letting people know what it is that you do and how you can help them.

2. Analyze Deals – you must be capable to analyze a deal over the phone, and if it has potential, visit the property to visually inspect it and complete your due diligence to determine if it is worth pursuing as a good deal.

3. Make a presentation and get the property under contract – this is the crux of real estate investing; and when we say that it is a “people business”; you have to get out, get in front of people, develop a rapport, make sure they know that you are the solution to their problems, and make an offer on the property (aka get a signed contract).

4. Finally, run the final numbers to determine if this particular property does indeed fit your criteria and get the contract & property to closing.

Rinse & repeat. Do this again & again. In fact, this simple outline of what it takes to be a successful real estate investor is what you will concentrate on for the life of your Real Estate investing career..

Oh yeah! There’s one more step that needs to be completed when you first being your career in real estate investing: create a Power Team. This can be overwhelming when you are new as there are so many things that need to be completed, so much to learn, so many people to meet & speak with, that you seem to run out of hours in a day.

However, you must ensure that you have competent professionals that you like & trust on your Power Team. Because once you have picked a Power Team you pretty much can leave it is as is.

You should have a Realtor, a mortgage broker, home inspector, accountant, title person, appraiser, & so forth. But one of the most important is a very good real estate attorney who is well-versed in real estate law and contracts too.

For the most part your Power Team is hand-picked by you for their skills & expertise, and from there you operate under the “Aces in their places” mentality. Which means you let those who are the best at their job, do their job. It is important to know a little bit about everything, but you do not have to be the expert in those particular fields where you are relying on your power team, particularly real estate law.

If you’re not an attorney, don’t pretend to be one, and don’t study to become one. Focus on being a real estate investor, acting & playing the part, and have a little common knowledge, but be sure that your attorney is up-to-date on the Dodd-Frank Act and how it directly affects your investing goals. Specifically, what can and what can’t you do? Leave that to the experts. And then work within those boundaries.

Your job is to do steps 1 – 4 again & again until you have momentum, a pipeline, and a system. Free up your time by delegating those specialty areas to your power team, particularly those in real estate law.

Get going & get investing!

Overcoming Fears

Overcoming Fears

Are you afraid of something?  Failure?  Success?  What others might think of you?  Not making a mistake?  Doing it perfectly?  The economy?  Changes in the real estate market? 

Fear in small doses is actually a good thing.  For instance, fear of making a mistake on a particular real estate purchase is the motivation we need to do our due diligence such as checking the title, inspecting the physical condition of the property, and verifying the market (comps, days on market, market rent, vacancy rate, etc.)

But too much fear can lead us to leap without looking, make costly mistakes, or worst yet, inaction.  In fact, fear that leads to inaction is probably the worst type of fear.  Theodore Roosevelt once said, “In any moment of decision the best thing you can do is the RIGHT THING, the next best thing is the WRONG THING, but the worst thing you can do is NOTHING”

So what is the best way of handling any and all fears?  Nike says the answer is, “Just Do It.”  I say the answer is “Calculated Action.”  Calculation means you gather information that may help you make a decision.  With this step, timing is important.  Do not take two weeks to make a two minute decision, or vice versa.  Next, act upon the information that you have.  By the way, sometimes the result of calculated action is to do nothing.  Roosevelt would say that this is an example of the RIGHT THING rather than NOTHING.

This process is how humans should handle any fear.  At its basis is our “fight or flight” response instinct.

Know that if you act on the available information, then you CANNOT make a mistake.  Don’t believe me?  Think back in your life to when you had a fear, made a decision, and then later regretted the decision you made.  (I’ll wait for you to think of a good one … )  Now, what was the Big Gift that life gave you as a result of your decision.  There is always a Big Gift; you just need to discover it.  For instance, did you learn something new about yourself?  Did you learn something new about other people?  Did you learn something about life itself?  Or, did that decision eventually lead you to something much better like the love-of-your-life?  As long as you are moving forward there are no mistakes, only big gifts.

This leads us to the final step in the process: Always Move Forward.  Let’s say you face a fear and then make a decision that is, in Roosevelt’s words, the WRONG THING.  If you always keep moving forward, then life will give you the opportunities to get to the RIGHT THING … or something even better.

Eric Buchanan  

Rich Dad Education Trainer

Politics and the Real Estate Investor

Real Estate Investor Politics

The Impact of Politics on Real Estate Investing

The politicians in Washington are arguing about the national budget again.  It is basically the same thing we saw at the end of last year, but this time there is added drama with all sorts of new twists that we are now seeing and are going to see in the coming days.

I think all of this drama may help me buy some better real estate deals in the near future.  You see, quite a few real estate sellers seem to panic when they perceive the economy is unstable. They talk like “the government is going to run out of money” or “the government could default on its debt payment obligations.” This has an effect on those sellers and that can have an effect on the local real estate market.  Now, I’m not saying that this country is or isn’t in for some rough times in the next month or two.  However, sellers in general seem to over-panic at times like this.  This means that if you hunt hard, you can probably find a few sellers who think the sky is falling and willing to sell at a big discount for a quick sale.

So what do I think the politicians should do about the national budget?  As a CITIZEN, I have a strong opinion, but this is not the forum for those viewpoints.  As an INVESTOR, I really don’t care what the Republicans do, what the Democrats do, or what the President does. My success does not depend on any of them. My success depends on me and only me.  Because of that, I need to do four things:

  1. Be well educated on many different investment strategies
  2. Be an expert on my local real estate market
  3. Watch for changes in that market
  4. Take ACTION

Eric Buchanan
Rich Dad Education Elite Trainer and Mentor

Do You Have What It Takes to Be a Mentor or an Elite Trainer?

Rich Dad Education Elite Training

Rich Dad Education Elite Training

A few months ago I posted a topic on this blog entitled, “How I Became an Elite Trainer.”   I got some good feedback as well as some questions.  One of the questions was, “Eric, how can I become a Trainer or a Mentor?”  I’d like to answer that here.

First, let’s take a moment to define a couple of terms.  A Rich Dad Education Trainer is someone who teaches a class, either in a 3-day format or online over a few hours each week.  A Rich Dad Education Mentor is someone who usually travels to a student’s market and spends three or four days showing them how they can improve their investment results in that market.  Trainers and Mentors are not Rich Dad Education employees; they are considered independent contractors.  But, since the Trainers and Mentors have direct contact with students, the company goes through great lengths to make sure that they are of the highest caliber.  For this reason, anyone who wants to teach or mentor must go through several steps of a comprehensive vetting process.  This process includes the following:

  1.  Let Rich Dad Education know that you are interested in teaching and about your investment successes.  You can do this by staying in email contact with your former mentor or trainer(s).  Another way you can do this is by contacting Rich Dad Education directly using the “Share Your Success” link on the company’s website.  Some of those “Share Your Success” investors go on to become Hall of Fame winners. This certainly gets the company’s attention.  Remember that occasionally existing Trainers and/or Mentors take breaks from teaching … sometimes for extended periods of time.  So the company is always on the lookout for new  talent.
  2.  If Rich Dad Education likes what they have heard about you, then they will invite you to go through the official vetting process.  They are looking to see that you have been, and still are, a successful real estate investor.  You will need to show them actual proof that you meet their hallmarks of personal net worth through active real estate investing.  Sometimes this process can seem a bit invasive, but it is a necessity.
  3.  Once the company sees proof that you are the real deal, they will next want to see if you have the ability to teach other to be successful too  (there are a lot of great investors who are terrible teachers). So, you will need to do a series of “ride-alongs” with other Trainers or Mentors.  This will be on your own dime, and the Trainers or Mentors will have to give favorable reports back to the company before you can move on to the fourth stage.
  4.  Finally, you will be given an opportunity to train or mentor actual students while a seasoned trainer or mentor observes you.  It is only after you have successfully passed this last step that you can become an official Trainer or an official Mentor.

Wow! That is a lot to do, yes?  Why, in the world, would anyone put themselves through that kind of scrutiny?  Well each of us has his or her own answers to that question.  If you want to know what my answers are, then read my previous blog post entitled, “How I Became an Elite Trainer.”

Eric Buchanan
Rich Dad Education Elite Trainer and Mentor

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