BloodhoundBlog

There’s always something to howl about.

Author: Jeff Brown (page 10 of 15)

Real Estate Investments Broker

February 21, 2008

I Hope Unchained Considers My Topic Wish List

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Real Estate Investments Broker

Author website

This is the year I’ve thrown down the gauntlet to myself. By the end of the year I’m gonna have my feet firmly planted, technologically speaking, in the 21st century. This may require leapfrogging most of the decade of the 1990’s, but I’m approaching this venture fearlessly. (Or at least without noticeably trembling.)

Numero Uno on the A-List is my database. It sucks so much Dyson wants to know my secret. Seriously, we’re organized, but we’re only slightly ahead of Willie Loman.

I’d love someone to tell me how I can get things done seamlessly, without either writing a check with a comma not appearing ’till after the second digit, or buying something at Databases R Us that promises me the moon but delivering something akin to Willie’s Roladex with a prompter.

Here’s what I need. I’m hoping against hope these needs will resonate with others out there, ‘cuz being the Lone Ranger would mean my checkbook is the only plausible remedy. So please, pretty please with a real estate recovery on top, chime in with anything you can add, or recommend. I’m officially lobbying for a database expert to get some face time at Unchained. (I hope that’s subtle enough for Greg and Brian.)

If it helps, here’s what we’re up against. We not only work with folks in San Diego, but in many states. We must deal with staffs or teams in each state, along with our clients and their property portfolios — all of which must be at our grubby little fingertips. (In my case of the Flintstone variety.) We’ll also have moderately large sub-databases in each region we really like. These are composed of investment property owners to which we’d like to market some day, or already have. Each one of these sports around 20-80,000 names/properties. These need to offer the capability to be kept separate or meshed together — at our whim, over and over again.

My new database would be perfect IF

  • I could break it up into various segments without giving up the ability to blend everything together if it suits my purpose.
  • I could email from it Read more
    • February 2, 2008

    Understanding the Laffer Curve — Reality & Myth — What’s Next?

    by

    Real Estate Investments Broker

    Author website

    Being just slightly to the right of Attila the Hun, taxes are of great import to me. I believe in principles long established. One of them is small government works better for its citizens than large government. Lower taxes are better than higher taxes as long as the bills are being paid, our military is strong enough to deter aggressors, and basic constitutional government functions are adequately funded.

    One of the breakthrough economic theories to be proven in the red hot fire of real life application has been the Laffer Curve. Arthur Laffer’s theory was adopted as fundamental to economic recovery by Ronald Reagan during his 1980 presidential campaign.

    I’ll let the video below speak for itself, but will allow myself a few pithy observations.

    The first time the Laffer Curve Theory was applied tax revenues skyrocketed. The U.S. Treasury’s own records show revenues generated from the early 1980’s tax cuts went up an aggregate 95%. The period measured was the time Reagan took office until he left office — just short of double in eight years. I expect this will be shown in Parts II and III when they’re released.

    Actually, the first time the theory was applied was before anyone, including Laffer himself had even thought of the Laffer Curve. It was John Kennedy who cut the top marginal rate from (I’m not making this up.) about 90.5% (!) down to a paltry 70%. The reason Kennedy used was that it would spur the economy, and increase the actual tax dollars collected. Go figure. History shows he was dead on right. That top rate remained until Reagan cut it to 28% over two decades later.

    Opinion — If we ever get income taxes, capital gains taxes, and corporate taxes where they belong, and combine them with cuts (elimination?) in the fat of government spending — we’ll see an economic surge that will make the Reagan boom look like a blip on the screen. But alas, I daydream. Cockroaches as a species will die before pork barrel spending does.

    Opinion — Together with the significant liquidity increases in both the U.S. and European Read more

    January 28, 2008

    Principles of Flight and Real Estate — Getting Off the Ground

    by

    Real Estate Investments Broker

    Author website

    I’ve seen in the real estate business the rough equivalent of what my grandma saw in her lifetime with flight. Born in 1909 she saw in real time the embryonic stage of flight. The first successful flight was only six years before her birth. 60 short years later she watched, on a ‘machine’ not in existence until she’d been married and had four children (three on her front porch), American men land on the moon and come back safely.

    Think of where real estate brokerage was 40 years ago. I’d compare it to the planes used in World War I. The MLS existed, but was in book/magazine form delivered by truck, supplemented thrice weekly on paper held together by staples. The establishment of farms for Heaven’s sake, was a huge break through! Knock on the same doors every month? Why would anyone do that on purpose?

    There were no teams, not even the biggest thinkers created teams, even in the ’70’s. (at least that I can recall) The team itself was another development thought by most as staggeringly forward thinking. My father didn’t use for sale signs and he was thought of as a maverick. 🙂 We’ve seen the rise of franchises which came like a herd of buffaloes in the ’70’s. Some still exist, most don’t, but the franchise has remained as a significant player.

    The first time i heard of an agent being paid a 70% commission split by their broker I thought it was a joke. It was real. It was the beginning of what we see today. 100% commission offices with ‘desk’ fees. In-house service companies — title, lenders, escrow, etc. The shift from the broker/owner being the god of all things to the producing agent should have been predictable. The tail wagging the dog is at least in part why we’re here today. Most high producing agents would fall flat on their faces if they’d been forced to open their own companies. But that’s another post altogether.

    Where exactly is here?

    It’s business models we’d of laughed at 40 years ago. Marketing not hinted at on TV shows Read more

    January 24, 2008

    So Mr. Buffet Gets Into Insuring Bonds…Then Mr. Ross Gallops In…Coincidence?

    by

    Real Estate Investments Broker

    Author website

    Recent events brought to mind an article published last week by one of my all time favorite Wall Street guys, Max Whitmore. In it Mr. Whitmore spoke of what’s been called the PPT, or Plunge Protection Team. The short version says after the October 19, 1987 stock market crash, this team was put together.

    It’s existence cannot be proved. (Who cares anyway?) I don’t put any credence in any governmental economic ‘Black Ops Team’. I do however acknowledge documented empirical evidence of something happening. This is especially true when it happens more than once — the exact same way — with the exact same timing.

    We can discuss if there really is a ‘who’ behind it over a beer some time.

    Anyway, as Mr. Whitmore documents with historical and empirical evidence, there’s been a pattern a few times now, in which stock market moves cannot be explained. They happened. The way they happened are clone-like in their sameness. Clone-like? How ’bout down to a minute or two in real time? Each time they were bottom line effective. The market turned around.

    He’s seeing it again. And again he cannot explain it — except for the fact it’s there.

    Max Whitmore isn’t just another ‘stock guy’ trying to get publicity. He couldn’t care less. For Heaven’s sakes the last time I checked, the man now works mostly from his home in the midwest. He’s a former S & P trader of the year if memory serves. He’s one of the most revered and respected ‘chartists’ in his industry. In other words, he’s credible in the old school sense of the word.

    Masterful segue to Mr. Buffet and Mr. Ross.

    Keeping the above in mind, why aren’t we seeing more people reporting on what I’m seeing? Here is another, and here.

    The end of 2007 has Buffet getting into the Bond Insurance business. Less than a month later we’re all talking about how to save the bond insurers. Come on now, this isn’t me trying to convince anyone of a new twist on the grassy knoll. This is happening in real time for all to Read more

    January 13, 2008

    Realtors — 2008 Is The Year Technology May Leave You Behind — Pay Attention

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    Real Estate Investments Broker

    Author website

    Seth Godin has struck again. Today his words hit home to me big time. They should with agents for whom hi-tech has been merely a nuisance. Taking this post to heart may be the best decision you make this year. Though I’ve already vowed to enter the 21st century this year, I’m now on a mission.

    A word to the wise. Or is it better late than never? 🙂

    January 3, 2008

    Want A Retirement The Equivalent Of House Arrest? Grandpa Economics Is Your Best Bet

    by

    Real Estate Investments Broker

    Author website

    For years I’ve put forth the principle of Grandpa Economics. I coined the phrase years and years ago. Stated simply — Relying on savings + a free and clear home + Social Security will land you in the poor house not too many years after your retirement party is long forgotten.

    The solution? Understand Grandpa lived in a world playing by starkly different rules. Those rules haven’t applied since 1980. The template now calls for investing with a prudent, thoughtful Plan — using a long term, or big picture view. I prefer real estate. Duh. Frankly, whatever floats your boat and gets you to retirement with a big enough pot of gold, will do the trick.

    As I say over and over it seems lately — nobody gives a damn how the cat was skinned, until they find out if the cat was skinned. If you hit retirement with a basket of capital/equity requiring two commas, and preferably beginning with a ‘2’ — you’ve skinned the cat. 🙂

    The Boss is always on the lookout for helpful posts and articles. She hit platinum pay dirt with a story put out by AP concerning a victim of Grandpa Economics. Today I published an in depth post based on AP’s article. The post points out the empirical, what I’d say are the predictable consequences of following Grandpa’s path to retirement.

    For the skeptics who often wonder why I’m so passionate about this topic, read the post and ask yourself how your own parents and/or grandparents are currently faring. I hope they’re in the ‘high grass’. If not, are they fine due to their own efforts, or because you’re steppin’ up to the plate?

    I’d love to hear your thoughts, as this story is gonna become common before you know it. Grandpa Economics is creating a new class of people while we watch in real time.

    December 27, 2007

    Do Others Think Of You As An Expert? You Must Be Getting Results

    by

    Real Estate Investments Broker

    Author website

    Ever noticed nobody wants to know how you skinned the cat until they ascertain the cat was actually skinned? In baseball, they ask you if you won. Or if you got any hits. They ask about the details after they find out what matters — results.

    These days so many in real estate tell whoever will listen what experts they are. Think Babe Ruth ever had to tell folks he was an expert home run hitter? Don’t answer, it’s a rhetorical question, and silly on its face.

    In baseball the first pitch of any particular plate appearance has been analyzed to death. Ricky Henderson made a career of hitting first pitches. Ted Williams, arguably the best pure hitter every to hold a piece of wood in a batter’s box — watched first pitches go right by him about 95% of the time. Pitchers knew this, yet still threw an amazing amount of balls, not strikes on all those thousands of first pitches.

    Was Ted Williams an expert? You bet. Were the pitchers he faced for more years than 99% of major league players experts? Some. Probably way less than half. Did most pitchers realize Ricky Henderson was literally hoping for a fat first pitch for immediate deposit into the left field bleachers? Absolutely.

    Both Ted and Ricky were real life experts. They knew what folks thought they knew — and knew it better than anyone in their day. Ted was the last hitter to bat .400 for a season, hitting .406 in 1946. Ricky was, no debate, don’t even embarrass yourself, the best leadoff hitter of all time. I’m not sure there’s a #2. That’s how good he was.

    He was an expert. Experts actually know what they’re doing, and better yet, know why they’re doing what they’re doing. They know what situations they’re in while it’s happening in real time. Sometimes they have to analyze more or less, but their expertise is what makes the difference.

    Today there’s been an explosion of experts in every possible discipline. Real estate is no exception. In fact in real estate there seems to be an Read more

    December 19, 2007

    The Perfect Real Estate Investment VS A Million Monkeys

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    Real Estate Investments Broker

    Author website

    Dear Real Estate Investor:

    Times are tough. Did you think sooner or later they wouldn’t be? Is that why you’re spinning yer wheels searching for the perfect property in the A+ location, priced under the market?

    Are ya leaving milk and cookies on the table for Santa next Monday too?

    Take a minute and breathe deeply the gathering… Oops, sorry, had a 70’s flashback. Let’s start again.

    We’ve all seen investors who’ve been fairly successful. Ever found one with a portfolio acquired only in boom times? Silly question isn’t it? When did they buy, making their biggest long term hits? Wait for it — here it comes — in the down times.

    Next, ask them how many perfect properties they own in the best locations possible. The answer to that question, after they stop chuckling, is a big fat zero, zip, nada.

    Besides, if you actually found that property, you couldn’t afford it anyway. 🙂

    Invest in properties in solid growth areas, where jobs are plentiful and the other fundamentals are in place and for real. Buy them when the times are tough — hey! that’s now. Make sure you can use reasonable leverage with old fashioned loans. Demand they break even or better before tax, and cash flow easily after tax.

    Don’t insist on staying local, as your market probably sucks more than a new Dyson. You already know that though, right? So what’s the problem? You think you’re better off being able to drive by your property? Do you wanna drive by mediocre or occasionally fly to excellent and stellar? Is the decision really that difficult?

    If this doesn’t come across as written by Captain Obvious — read it again. The differences between highly successful real estate investors and the rest of the crowd makes for a long list. The two biggest differences providing the most profitable impact?

    Successful investors don’t need perfect properties — and they buy in buyers’ markets whenever possible, as much as possible.

    This isn’t from the third tablet Moses lost on the way down the mountain that day so long ago. Buying in a buyers’ market isn’t a genius Read more

    December 18, 2007

    Looking Through the Wrong End of the Telescope

    by

    Real Estate Investments Broker

    Author website

    This Texas trip has been both productive and instructive in so many ways on several levels. Sitting in a hotel room just a quick shuttle from Dallas’ Love Field, a dead pizza on the coffee table, I’ve been meditating on events of the last three days. I say meditating cuz that’s all I can do with the energy I have left.

    The subject came up in a meeting earlier in the day — why some transactions fail. Specifically, why do some fail for reasons unrelated to either objective analysis, actual benefit or harm, or simply cuz one side, sometimes both, begin to care what the other guy’s getting? Though it used to make me crazy, these days I just watch to see how far some folks will go to ensure the other guy fails to get something he wants — as opposed to doing their level best ensuring he gets what he wants.

    Here’s an example.

    The buyer of a 4 unit property discovers through casual conversation, into what the seller is exchanging. The 4 unit seller is tax deferring his equity, a touch over $200,000, into 8 duplexes in another state. Because the seller’s broker gave the buyer’s agent info on those duplexes at his request, the buyer has also seen the info. No big deal you say?

    It shouldn’t be.

    The buyer though, sees it as something he’s never been able to accomplish. That guy is getting too much of the pie — or so reasons the buyer. Who really knows what generates this self destructive attitude?

    How the hell can this guy take one little property and end up with almost $2 Million of brand new units? Who’d he hafta kill to make that happen?

    So during the inspection period of their deal, Buyer decides he’s gonna stick it to Seller as much as he can. After all, he’s the one turning mud into gold, right? Why should he care about a few thousand bucks in unnecessary maintenance?

    Buyer proceeds to pile it on, never forgetting how he’s only getting a lousy 4 units and this guy’s somehow secured Read more

    December 10, 2007

    Marketing Firms — Any Chance of Ever Hitting Above the Mendoza Line?

    by

    Real Estate Investments Broker

    Author website

    First, for those of you now wondering what the heck the Medoza Line is, here’s the short version.

    I come from the Mario Mendoza school, not Minnie Mendoza, as Mario was actually a major leaguer for nine years. Anyway, all it refers to is Mendoza’s consistently inept performance at the plate. His career batting average was a miniscule .215 — which included the year that produced The Mendoza Line — 1979 — in which he hit .198. Using sports hyperbole, Greg Swan could hit .198 — and I’m not positive he knows which end of the bat to hold. 🙂

    Seth Godin wrote a piece Sunday morning letting the cat out of the bag.

    Marketing people worship at the altar of The Mendoza Line.

    Quoting Seth:

    Marketers have lots of ‘bullets’ and they don’t notice the ones they miss (I usually miss 99.5% of the time online, and more than 99.999% of the time selling books). We just reload and blithely continue on.

    Surely, he’s being overly modest — yet, even discounting his humility, he speaks basic truth.

    Yep, that’s my experience with marketers. They aspire to the Mendoza Line.

    My opinion of most marketing people is about the same as it is for most real estate agents or mortgage brokers — most of them couldn’t find their asses with both hands, a map, two helpers, and a GPS.

    Yet, hypocritically, I’m using two of ’em to make my point. Guys like Seth and Richard Riccelli, stick out like sore thumbs because in my opinion, they actually produce results. Go figure.

    Let’s pause here to be clear and forthright about my understanding of marketing.

    My definition: It’s their job to generate more chances for their client to succeed. Put another way — if their ideas work, the agent/client finds himself in front of far more prospects. In baseball-ese, those are at-bats. The agent who gets 20 more opportunities a month, and hits at The Mendoza Line, makes a ton more money each year.

    That’s how I define marketing.

    Let’s quantify those additional 20 opportunities in today’s terms. If your market’s median home price is $200,000 and Read more

    December 2, 2007

    Turning 2’s Into 10’s — Learning In Interesting Times

    by

    Real Estate Investments Broker

    Author website

    It’s been an interesting year, in the sense of the old Chinese proverb about interesting times. Interesting in this context meaning hard times. Mortgage brokers are scrambling, trying to give great service while simultaneously discerning between serious borrowers and serious time wasters. Real estate agents, many of them in he business since 2000 or later, never having experienced even a normal market, are being harshly introduced to reality. I’ve recently learned some of the agents with whom I’ve become friendly during the great times, have taken 8-5 jobs. Many of them are wondering how long they can hang.

    Turns out real estate, lending, blogging, marketing, and all the other jobs, require expertise and hard work. Go figure.

    Another surprising development has been how experience has also quickly risen to the top as a quality attribute the last couple years. (Think my tongue almost penetrated my cheek on that one.)

    Because there is not nearly as much business going on these days, the small things are creating big problems. I don’t mean by themselves though. It’s because, in my opinion, people are reacting poorly under pressure. A small problem, a 2 on the 1-10 scale, will arise. They respond though, as if it’s a 10. They do this because even a small threat to their acutely reduced income, scares them silly. Over time, their credibility suffers, as nobody around them takes them seriously. No matter how it’s framed, a problem worthy of only a 2 rating, doesn’t become a 10 just because it’s treated that way. People aren’t stupid — they notice — sometimes. In an alternate scenario, others become infected by this overreaction virus. Now all around are behaving as if the 2 is in reality a 10. I’ve seen easily solvable problems become deal killers — they died from the dreaded, ‘2 into 10’ fever.

    It can get ugly when that happens. Egos get involved, emotions take over, and before anyone realizes it, the elevator has crashed thunderingly into the basement.

    My first really tough market when everything went to hell in a hand basket, began in the last quarter of ’79. Read more

    December 2, 2007

    Lenders Lend — Are You a Believer Yet? — Altered Circumstances Changes Behavior

    by

    Real Estate Investments Broker

    Author website

    What constitutes real knowledge? By real, I mean knowledge that is truth, not logically provable by means of rational debate.

    If that sounds ambiguous, let me focus the picture a bit.

    After the 1927 real estate collapse, the infant Federal Reserve Board decided the best course of action was two-fold in nature. Constrict the money supply, and raise interest rates.

    They arrived at that strategy, one which in hindsight would seem to have caused (or at least exacerbated), instead of avoided the Depression, by means of rational debate, logically put forward. We can assume they thought it was clearly the right thing to do. Put plainly — they weren’t trying to cause the Depression.

    They were tragically incorrect. Their logic was akin to ‘proving’ the world is flat, which was rationally believed — and logically, God forbid, scientifically proved — for centuries.

    How might history have been altered, had the Feds flooded the banking system with cash while simultaneously slashing interest rates? Again, logic tells us they’d have more likely than not, avoided the Depression.

    In reality though — we don’t, rather we can’t know that. We can convince ourselves by virtue of the last 80+ years of experience since then — but in the end, we just don’t know for sure.

    The Wall Street Journal is now reporting the Treasury Department is in the late stages of negotiations with major lenders to avert next year’s tsunami of interest rate adjustments on over 2 million sub-prime loans.

    I’ve been telling anyone who’d listen, for over a year now, lenders were simply not gonna foreclose on hundreds of thousands of homes. The thought itself is ludicrous. The Wall Street gang(sters), better known as either Bears, or one-way @$%^&#’s, are gonna be beside themselves when this is announced. So many of them are invested in bad news — in the most literal sense. They need the economy to tank, at least a little. They’ve shorted everything but their four martini lunches. 🙂 For many of them, good economic news is now bad.

    Many other Wall Streeters will be elated by this news. The Bulls Read more

    November 23, 2007

    Black Friday — Not Just Crazed Women Shoppers — Drinking the Kool-Aid — Perception and Confidence

    by

    Real Estate Investments Broker

    Author website

    What takes hold of women on Black Fridays? It’s like a perfect storm of planned group hysteria, guaranteed bargains galore, and shopping, shopping, shopping. Realizing how many women will take umbrage to this, I hereby stipulate only a smallish minority participates in this annual ritual of dueling plastic at dawn.

    Pardon me — did I say dawn? My bad. How ’bout 4 AM?! And this after coma inducing feeding frenzies the afternoon before. I guess when the monkey needs feeding, energy isn’t a problem. 🙂

    I see on the far horizon the possible sighting of Black Friday, The Real Estate Version. As my crystal ball is as cracked as yours, I’ve no idea whatsoever when it’ll begin. I’m sensing it though. It’s coming from that spot located in the back of my head, where all the small voices reside. This voice is barely audible. I’m not even sure if it’s the right voice, but I know one thing — it’s louder today than it was last month.

    Like malls around the country, holding the fort against the hordes of shopping junkies, there is method to their madness. There’s a clearly perceived empirical benefit driving them. I have to believe that, cuz my own mom talked my own Much Better Half into participating. Yep, I awoke this morning just before 10 from my expertly induced Thanksgiving coma, to find Trophy Wife asleep on the couch in front of the TV. Nothing like doing over five hours of pre-dawn battle with Black Friday Kool-Aid drinkers I guess. 🙂

    Let’s create an analogy here to the current real estate correction.

    Assuming the annual January clearance sales will follow the holidays as night follows day (for Black Friday participants, kinda like the hair of the dog) let’s call post January, The Shopping Correction.

    The RE Correction has lasted for over two years now, or roughly the equivalent of these things historically. For shoppers, going from January to Black Friday is an eternity, much as this correction must seem to most who’re feeling the pain of the RE version.

    What if, as my little voice seems to be Read more

    November 10, 2007

    Want Garlic On That Ice Cream? You Don’t Want Cash Flow On Your Capital Growth Either

    by

    Real Estate Investments Broker

    Author website

    Dad, when he was poor, survived on peanut butter and onion sandwiches — no lie, as I couldn’t make that up. 🙂

    Though not nearly as weird, I like spinach salads with olive oil and malt vinegar. garlic ice creamI’ve not run into anyone else who likes it. They usually put balsamic vinegar on instead. Go figure. 🙂

    I love garlic in my stir fry, onions too. The malt vinegar on my spinach salads might be a little quirky, but not up to the level of garlic on ice cream, know what I mean, Verne? Not even if it was free. 🙂

    The same goes with cash flow. It goes well with retirement. In fact, surveys show it’s #1 on retirees’ wish list — more of it, that is. 🙂

    You’re invited to my place, for a short weekend read on the subject of how cash flow can actually significantly reduce your ultimate retirement income.

    The misuse, or rather, poorly timed pursuit of cash flow is maybe the most misunderstood factor in real estate investing.

    While you’re there, try listening to a podcast or two. By far, the two most popular are Purposeful Planning and Grandpa Economics.

    Enjoy your weekend.

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