You are currently browsing the category archive for the ‘Investment education’ category.
Wow! Linked up with a partner from Texas while I was at the David Lindahl seminar on Syndication with Private Investors. Now we are discussing a specific apartment building, in a terrific location in an emerging market. Is this cool or what? How lucky I was to hook up with someone who lives in the area, the American emerging market, so he can check out properties and knows the neighborhoods.
I not only discovered a well-located partner, but we discovered some similar values – what we wanted to do if we succeeded in achieving financial freedom through investing in real estate. What kind of luck is this?
I’m working on an educational program that suggests you find emerging markets elsewhere (assuming that your local market is in the slump that’s generally considered to be nationwide, if not global). This involves a lot of research, like finding demographic information from the local Chamber of Commerce, planning commission, Board of Realtors, and numerous other sources. We need to find out whether there is job growth or shrinkage, people moving in or moving out, moving into what neighborhoods, city improvement projects, and on and on. This is not a new idea. Marc Stephan Garrison and Paula Tripp-Garrison write, “Ever since 1986, [we] have [identified] real estate target markets.”
I had been working on an area that’s not too far away – the Bridgeport-Stamford area of Connecticut. After days of scratching my way through reports about new initiatives, population projections, and projects developed to attract new businesses, I realized that most of the webpages I was using hadn’t been updated since 2007. It appears (to me, and please remember I am an utter novice at this task) that Bridgeport was an emerging market, but that the general recession seems to have dampened it considerably.
On a list of cities that were good places to start a new business, I found Seattle, Charlotte, Raleigh, Orlando, and others. The idea of looking for a place so far away (I’m in Massachusetts) in which to hunt for large commercial (multifamily) real estate is absolutely daunting. And haven’t Charlotte and Raleigh been considered the favorite spots for real estate investors and developers for months or years now? I suppose my uneasy intuition ought to take a back seat to green-space development, incentives for job creation, and the lot, but this isn’t going to be an easy leap to take.
There’s so much hype in the community of real estate investment education. You find it in the books about investing: you don’t even have to look inside, it’s right on the cover! We all know that the web gives us ample examples of hype in the courses, ebooks, seminars, and “boot camps” that you can spend any money you might have been saving for a down payment. “No problem! No money down! Hard money lenders! Private investors!”
I thought perhaps that real estate investor associations would be rational, no-nonsense places where the everyday realities of real estate investment would be discussed. Not really. Some of these same gurus make the rounds of the REIAs, financial multi-level marketing schemes are touted, and the hype goes on.
I yearn to believe in these programs, these teachers, these methods. I want to believe that there is “no competition” in probate property. And that this “unique approach” will distinguish me from the dozens or hundreds of would-be investors sending postcards to homeowners in pre-foreclosure. That buying this course with 400-page manual, 8 CDs, and 6 DVDs will teach me the way to reach bank-owned homes before they are listed on the MLS.
The promises of wealth and ease are astonishing, but very well-crafted. Well, many of them are well-crafted. I am not personally left drooling at the photos of mansions, boats, and expensive cars that are temptingly inserted in the ads for these educational programs. But I am drawn in when they offer enough information to sound credible, even when they minimize the work and greatly exaggerate the rewards.
While I don’t have enough sense to resist some of these temptations, I do know enough to save the boxes and the bubble wrap, and some of these courses have gone back to their publishers.
After I placed an ad on Craigslist.org, I checked 3 or 4 hours later and I had 5 “bird dogs,” that is, people willing to spot vacant houses, take pictures, and get paid for it. One of the people is a property inspector! Probably knows more about this than I do.
Does this mean in a few days I’ll be posting pictures of houses? It all seems faster than I imagined. I expected a few weeks to get ready! I suppose if I don’t start, it’ll never happen.
I also got leads, possible partners, connections, joint venture potential – an entire evening of intense networking at the Massachusetts Real Estate Investors Association (Mass REIA). Modeled after “Speed Dating,” the REIA’s Speed Networking event is exhausting, incredibly helpful, and an awful lot of fun. And thank goodness. Even though the birddog ad in Craigslist got surprising results, much of this process is plodding and painstaking, making it hard to really launch into real estate investment. Painstaking, plodding, with bursts of fun, and, it is hoped, positive financial results.
Was I naive, to discover seminars that cost $4995, and home study courses (self-published large notebook with print on one side of the page, 5 or 6 DVDs and 5 or 6 CDs, often both DVD and CD recordings of the same event) can run from a few hundred dollars to over $2000? After all (as they tell us), your first deal will more than pay for this! And here’s some advice for novices: “Invest in your education.”
I have had mixed experiences with these educational materials and events. On the one hand, you can learn and absorb material differently in a live event, or even those CDs and DVDs, than you can reading a book. For some, it’s simply better. On the other hand, the books can be much better organized and certainly better-edited (maybe, just “edited,” period!).
The mixed experience? These products are often pitched in a “Webinar,” or a guest speaker’s routine at a local real estate investment association. I heard one hour+ talk on a Webinar, by Peter Conti, that I thought was excellent. The material was clear, sound, and filled the session. Only in the last 5 or 10 minutes did he pitch his “course.” The rest of the webinar was informative and refreshingly free of comments like, “This is covered in more detail in the course.”
To my amazement, the course was almost the opposite. The DVDs and CDs were of the same event (a seminar, not the Webinar that I heard). The presenter was not using a PowerPoint, but overhead transparencies in a hotel meeting room. Filming and sound quality were poor. Worst of all, the course contained a whole lot of upselling of the presenter’s “boot camp” event. It seemed to me that I’d learned most of the useful material in the hour-long Webinar, which was free, and had spent $1200 on a course that covered the same ground, only not as well. I returned it.
I try to avoid these pitches because I am frightfully vulnerable to them. I actually own two different training courses on buying self-storage facilities! They are both excellent – one is by Scott Meyer, who specializes in this, and the other by Dave and Jeff Lindhal. The courses include lots of information – more than you could squeeze into a Webinar – as well as computer programs to analyze pricing of the properties, forms to use in the business, and more. Now if I can only choose between them!
I’ve been impressed with Dave Lindhal’s books, courses, and seminars altogether. I’ll be attending my first big “boot camp” in March – offered by Lindhal on finding private investors, syndication, and learning the SEC regulations. I’ll let you know how it goes! This organization has almost sold me on getting into the “coaching” program (for many thousands) but I have managed to resist it so far. Perhaps because I started allocating this money for buying real estate! Made an offer on a property Friday! Wish me luck.
If my jaded experiences with seminars has discouraged you, read below about learning this stuff from books. If you need hands-on learning, a job with a Property Management firm will teach you a LOT.
Do you have to go to expensive seminars or spend hundreds on “home study courses?” The advertising is very convincing! If you are new and not sure if this is for you, start by investing in some used books, from your local used bookstore, or paperbacks from the chain bookstore, or used books from Amazon.com. How do you sort the wheat from the chaff? There is a considerable amount of chaff in this genre! I started with the books of Gary Eldred, on the advice from people on the early retirement discussion forums associated with a fine retirement calculator, in addition to a great philosophy about early retirement. Eldred’s books are basic and quite helpful. Not quite for the beginner, but lacking completely in charm and chaff, are the books of John Reed (johntreed.com), who also has a lovely curmudgeonly “review” page, offering his opinions on many of the real estate “gurus” publishing today.
I think you can tell by the titles of many books whether they’re going to be useful or not. Unfortunately, though, some really good information can be found in books with lurid names! Confessions of a Real Estate Entrepreneur: What it Takes to Win in High-Stakes Commercial Real Estate by James Randel, is one such book. Nevertheless, the titles, as well as the cover designs, are usually good indicators. What’s your guess about Weekend Millionaire Mindset: How Ordinary People Can Achieve Extraordinary Success by Mike Summey and Roger Dawson, or Are You Dumb Enough to be Rich? by G. William Barnett II? If I decide I need to read one of this type of book, I try to leaf through it at the bookstore or find it used on Amazon.com. Many successful real estate investors swear by Kiosaki’s books (the Rich Dad, Poor Dad series) but they are not my style. Long on what you might call “philosophy” and very short on how-to details, I never found them very useful.
In contrast, I can wholeheartedly recommend Jeffrey Taylor’s The Landlord’s Survival Guide: How to Successfully Manage Rental Property as a New or Part-time Real Estate Investor, Leigh Robinson’s Landlording, Mike Butler’s Landlording on Autopilot: A Simple, No-Brainer System for Higher Profits and Fewer Headaches, and Nolo Press’s most recent edition of Every Landlord’s Legal Guide, which includes a CD with leases and other forms appropriate for each state! Recent useful purchases have included Thomas Lucier’s How to Make Money with Real Estate Options, David Lindhal’s Commercial Real Estate Investing 101: How Small Investors Can Get Started and Make it Big (part of the Trump University series). Very useful when you need to start understanding the math of investment: Frank Gallinelli’s Mastering Real Estate Investment. This book gives more examples and elaborates on the formulas in his earlier book, What Every Real Estate Investor Needs to Know about Cash Flow. . . and 36 Other Key Financial Measures. I recommend the second book; it’s less intimidating and more helpful to those of us for whom the last math course was many, many years ago!
Learning about market cycles, one of Lindahl’s areas of expertise, is covered well in Unlimited Real Estate Profits: Creating Wealth and Build a Financial Fortress with Today’s Real Estate Investing by Mark Stephan Garrison and Paula Tripp-Garrison. The title sounds a little over-the-top but the information is good.
I’m a reader, and reading lots of books about a subject makes me feel ready to step in to the process. Others learn better from listening to speakers and talking with more experienced investors. The place to do this is your local Real Estate Investment Association. There’s a directory here: REIA Directory on Bigger Pockets. Everyone interested in real estate investment should join the local REIA and attend regularly. Those connections, the network that you develop over time, forms one of the most important parts of your foundation as an investor.
Some other people’s lists of recommended real estate investment books: Recommended Real Estate Books, or Best Book Buys.
In another post I’ll discuss internet resources: the good, the bad, and the ugly!
There’s retirement advice everywhere. Since the baby boomers are coming of retirement age, retirement advice has proliferated and inhabits books, magazines, newspapers, the internet – oh, it’s all over the internet. The advice from all these sources have always required common sense and discernment. No change now, although it somehow seems that there’s an abundance of tired boilerplate, dire warnings, and get-rich-quick schemes alongside useful advice from sober, knowledgeable advisors.
Kiplingers, Smart Money, Money Magazine, books by Jane Bryant Quinn, Suze Orman, Dave Ramsey, David Bach, The Motley Fool, Choose to Save, and countless other sources offer direction. Even the government offers the standard “good” advice, at my money.gov . Why stray from the received wisdom? The advice that always made the most sense to me involved turning aside from attempts to time the market and pick stocks, using asset allocation with index funds, to remove emotion (and hubris) from investment choices. See these articles about asset allocation: The Index Investor,
Asset Allocation, and the SEC’s advice – Beginner’s Guide to Asset Allocation. Possibly the least sexy approach to investing for the future, it was apparent to me that the strongest approach was probably the one supported by research, not by fees that pay the salaries of stockbrokers or mutual fund directors. Using asset allocation and index funds meant that my money would grow roughly at the same pace as the overall market and the economy. Seemed like a pretty good plan until 2008.
As a homeowner, I couldn’t help but notice that one could really grow the nest egg by buying at the low ebb of the market and selling when it was back up. Or by buying a fixer-upper and investing some sweat equity into remodeling, landscaping, refinishing, and painting. Of course, if you sell your home at the top of the market, you’ll be buying another at similar high prices, unless you want to live in a tent until the next downturn. But what about real estate other than your own house? Wouldn’t this be an investment that offered a little more control, and used a little more of one’s own judgment, than tying your fortunes to the overall economy?
I bought my first investment property during one of the upswings in the market. It took 6 or 7 months to track down my little 2-family REO. (REO means Real Estate Owned, by the bank that foreclosed on it.) This particular REO had frozen pipes and boilers, asbestos, a tired roof, and an attic just crying out to become added bedrooms. It was an awful lot of work, and calling contractors, getting estimates, monitoring their work, advertising, screening tenants – I won’t do it again, but it was worth it. That house pays me a modest sum every month, unless both apartments should be empty at the same time. It’s a good investment. Not the most liquid of investments – I wouldn’t sell it now unless I had no choice – but a good place for money to be kept for the future.
The advice available to those of us who would like to invest in real estate is information hidden inside a jungle of hype, impressive salesmanship, expensive redundant “home study courses” and amazingly pricey “boot camps.” Books are better, but there are plenty of books with garish covers, incredible claims, and large type that have more in common with the snake oil courses than more useful sources of information.
