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Thursday, July 02, 2009

Income for Life

Posted: 02 Jul 2009 08:06 AM PDT

Posted by Rob Minton
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As I write this, I am looking at the Dow "ticker" on a financial web site. It's down 183 points right now, mostly because of news this morning that the unemployment rate in the U.S. rose to 9.5 percent in June, after a month of higher-than-expected unemployment claims.

To balance this downer, I am going to share with you a recession story that is more uplifting.

Where I live, in Northeast Ohio, one of the few bright spots in our economy is our vast and renowned health care system. The world-famous Cleveland Clinic is the City of Cleveland's largest employer. Last December, it announced a wage freeze and restricted hiring. The president and CEO even asked employees to do what they could to save the Clinic money, as that, in turn, would save jobs.

According to a Cleveland.com article this morning, the belt-tightening worked. The Clinic announced that beginning in August, it would start issuing pay raises to its employees. The move will amount to $60 million in salary increases, and it comes after a concerted effort by the company's employees to cut costs.

From the article:

Physicians began booking more appointments during the day, giving up research and office time. Catered lunches turned into brown-bag gatherings. Overtime was cut, positions went unfilled and vendor contracts were renegotiated, a Clinic spokeswoman said.

On Wednesday, [Clinic CEO Toby] Cosgrove said it was "a pleasure to recognize those efforts."

"I am incredibly proud of each employee and physician who committed themselves personally, to doing what was necessary to reduce expenses so we could preserve jobs and provide great care to patients," he said in an e-mailed statement.

The company also restricted travel and delayed expansion projects on two buildings. In an era of recent corporate excess, this is a true company success story.

Not long ago, we had to read about private jet trips that CEOs of bailed-out automakers made, and about the huge bonuses Wall Street heads accepted while their companies either went under or were propped up by our tax dollars. So, to me, this news of a concerted effort by this region's largest employer to cut costs TOGETHER, from the top to the bottom, is truly inspiring.

Everybody made an effort -- brown-bagging lunches, working harder during business hours without overtime -- and the company flourished. Revenues went up even as costs went down, and now Cleveland's struggling economy should benefit as the largest employer's personnel all receive a little more money in their pockets.

Who says a business can't prosper in this economy?

Monday, June 29, 2009

Income for Life

Self-financing Investments

Posted: 29 Jun 2009 11:46 AM PDT

Posted by Rob Minton
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On numberous occasions, I have written about John Jacob Astor, one of the greatest investors in history. His investments became "self-financing." Income from leases went into acquiring more property.

Lately, as people are having to rebuild their finances, I have thought a great deal about self-financing investments. What does self-financing really mean with regard to investing? Here are two ways to think about self-financing investments:

Investments that pay for themselves from income generated by the investment
Investments that provide enough income to buy additional investments

The key to self-financing investments seems to be investments that provide recurring income.
What investment choices do we have that are truly self-financing? Let's take a look at a few of the most popular investments people make to see if they are self-financing:

STOCKS: For the most part, stocks are not self-financing because they do not regularly pay income to the investor. Only stocks that regularly pay dividends would fit our description as self-financing. And to pay for themselves, they'd have to pay large dividends or be held for a long period of time or both.

MUTUAL FUNDS: In most cases, these investments are not self-financing. They do not regularly pay income to their shareholders. Yes, some do, but most don't.

BONDS/CDs/MONEY MARKET ACCOUNTS: The majority of bonds pay interest income to the investor. These bonds would be self-financing. The challenge with these investments is that they usually don't pay a very high rate of return, and some don't pay interest until maturity.

LENDING MONEY: Loaning money to others would be self-financing if your borrower paid interest each month. The interest income you received could be used to loan additional funds to other borrowers. Lending money is risky if you don't acquire some form of protection, such as a lien, on their property. However, with this higher risk, you'll find higher rates of return. The other downside to lending money is the lack of investment appreciation. Throughout the loan payment period, your profits are tapped out at the interest rate charged.

REAL ESTATE (HELD FOR RENT): Now, I'm obviously biased on this investment choice. But real estate is one of the best self-financing investments you can make. This is because it pays for itself and, in many cases, it provides additional income that can be used to purchase additional investments. While this is happening, the investor also profits from price appreciation.

MOBILE HOMES: Buying and re-selling mobile homes with owner financing is another excellent self- financing investment. This, in my humble opinion, is even better than loaning money to others because you get to profit from appreciation. In many cases, you can sell the mobile home for double what you pay for it. You then get to collect attractive interest rates on this higher sale price.

YOUR OWN BUSINESS: A business you own can also be a very good self-financing investment. I'm obviously assuming that your business is generating monthly income. For most people, they launch "side" businesses in their spare time. These side businesses usually pay for themselves and then provide extra income for the owner. Many of these businesses provide regular, routine services. Examples might be house cleaning services, painting services, handyman services, consulting services and more.

If your business was launched from your home, you don't usually incur significant start-up costs. Most of the income from the business can be used to invest into additional self-financing investments.

Another potential benefit of starting your own business is that you might be able to sell your business at some point down the road. This means you should be able to profit from the appreciation in the value of the business.

Why is this idea of self-financing so important for investors? It is important because self-financing investments help you build wealth faster. In the non self-financing investments summarized in this article, you need to use your own money to acquire more of the investment. With a self-financing investment, you can use income from the investment to acquire additional investments.

Now, if you continue to use your own money to buy more self-financing investments, like you would a mutual fund, your wealth snowballs. Self-financing investments are like coupons — you buy one and get the second one free.

I guess the question we should all consider before making ANY investment is:

Is this investment self-financing or will this investment have the ability to pay for itself?

If we don't, we just might find ourselves saving for years without any significant wealth accumulation.

A recent Kiplinger article summarized how much money an individual would have to save with an 8-percent return in order to have a million dollars at age 65. A 25-year-old would have to save $286 a month for 40 years. A 35-year-old would have to save $671 a month for 30 years. A 45-year-old would have to save $1,698 a month for 20 years. A 55-year-old would have to save $5,466 a year for 10 years.

Or you could simply buy a few single-family homes and have your tenants pay for your retirement. This basically comes down working smarter, not harder.

Friday, June 26, 2009

Income for Life

Time is on our side?

Posted: 26 Jun 2009 05:52 AM PDT

Posted by Rob Minton
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I stumbled across an article on the Web this morning about retirement plans and this recession. The article's headline was "Time is on Your Side."

The gist of the article was that investors who have retirement in their sights but have been derailed by their retirement plans' losses shouldn't worry -- "adding just one or two more years on the job can put them on pace for retirement," the article says.

"Just" one or two more years working for somebody else. Like it's a good thing.

I have always said that time is our most valuable asset. Money can be replaced; time can't. This article really puts into perspective the real loss the financial crisis has caused. According to the article, a 60-year-old who makes $100,000 per year at his job and was going to retire at 65, now must work until he's almost 68.

The article makes it sound like it's no big deal. But this sort of news would be devastating to me. I think that it's terrible for someone who WAS just five years away from being able to relax and enjoy his family, maybe spend time with his grandkids or travel, gets told "Boom, you gotta work for almost three more years now."

It's a perfect example of why we all need to work toward financial freedom. At whatever age. It's never too early to start, and it's never too late. I know I hated being dependent on a job in my late 20s. To be dependent on a job at 68 would be unfathomable to me.

The thing is, this sort of article should really hit home with people ... but it won't. As sad as it is that so many folks nearing retirement age are going to remain dependent on a pay check for longer than they wanted to be, it probably won't be the financial lesson it should be.

People see retirement as a long way off, and they keep procrastinating when it comes to their financial freedom. But the truth is that the longer they wait to take their financial freedom into their own hands, the further they put themselves away from retirement. The article's headline is wrong.

Time is precious, yes, but it is NOT on your side.

Tuesday, June 23, 2009

Income for Life

Stay focused on your wealth-building plans

Posted: 23 Jun 2009 12:46 PM PDT

Posted by Rob Minton
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After an interview I once did with Stan Richelson, he said something to me that I'll never forget. He said:

"You can have anything you want in life. You just can't have everything."

What does this mean to you? For me, it means that we have a big choice to make with our lives. Do we want toys or financial independence? Do we want stuff, or monthly income? Because you can't have both. You can only have one. Which one do you want? Most people try to have both and struggle year after year.

I happen to think that was a big part of what caused this recession's severity. So many people used their primary residences to fund big lifestyles -- using home equity to purchase cars and boats and go on fancy vacations.

If you choose financial independence, you must create a wealth plan and follow it relentlessly. You must stay completely focused on your plan. You must eliminate distractions. Distractions to your wealth plan include:

Speculative Investment Opportunities (examples include hot stock tips, commodities deals and more)

Expensive Stuff (examples include new cars, ultra-expensive vacations, boats, clothes, etc. Things that go down in value after your purchase.)

The more I observe people, the more I realize that they live without a wealth plan. Or, if they do have a plan for wealth, they get easily distracted from their plan. In Income for Life, some members buy their first investment property and have great success, but then lose focus. They move on to other things. This is a BIG mistake.

Consider this quote from Tony Robbins:

"One reason so few of us achieve what we truly want is that we never direct our focus; we never concentrate our power. Most people dabble their way through life, never deciding to master anything in particular."

Are you focused on your wealth-building plan? Have you been distracted? A lot of investors have because of this tough economy. If so, now just might be the time to focus again.

What have you done this month to work your plan? What are you going to do next month to work your wealth-building plan?

The Income for Life Wealth-Building Plan has three stages. Here they are:

Accumulate Assets
Pay Off Assets
Enjoy Income for Life (Financial Independence)

Many Income for Life members are in Stage No. 1, the asset accumulation phase. A few are in Stage No. 2. The faster you move through Stage No. 1, the faster you'll get to Financial Independence (Stage No. 3). Remember, money does follow speed.

One of the keys to moving quickly through the first stage is focus. If you lose focus on your goal, you will not make any forward progress. For example, if you start chasing hot stock tips for the next three or four months, you'll end up way behind in your IFL wealth-building plan.

You must focus upon your goal each and every day. It must be your dominant thought. A great question to ask yourself is: "What can I do today to move closer to my Income for Life goal?"

I'll be willing to bet that your life will change dramatically if you start asking yourself this question, each and every day.

Friday, June 19, 2009

Income for Life

Do you have a investing manifesto?

Posted: 19 Jun 2009 08:08 AM PDT

Posted by Rob Minton
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In June's issue of Kiplinger's Personal Finance, one of the leading money magazines in the country, Editor-in-Chief Knight Kiplinger wrote a piece titled "An Investor's Manifesto." It is a 20-item list of guidelines for his personal investing.

I don't want to reprint the entire piece, but you can see it in whole form here.

Dictionary.com defines "manifesto" as:

"a public declaration of intentions, opinions, objectives, or motives, as one issued by a government, sovereign, or organization."

So Kiplinger's manifesto is a public declaration of opinions, objectives and motives for his investing. Do you have an investor's manifesto? After I read this piece, I thought that every investor should probably have a documented list of personal objectives, principles and guidelines that he or she follows.

Some of the highlights from Kiplinger's 20-item manifesto:

I know that higher returns entail higher risk, in every kind of asset.

I accept those risks, but I mitigate them by owning a diversity of assets.

I stick with my game plan. I do not check the value of my investments every day or even every week.

I try to keep my cool when other folks are losing theirs.

But maybe his No. 1 rule, which he does put at the top of his list:

I am an investor. I do not trade my assets frequently. That's speculation, not investing.

I think this is one of the most important things we, as investors, need to remember. Jumping into and out of the next "hot" thing IS speculation. We need to remind ourselves some times that investing is a process, not an event. It's long-term. This requires discipline, so having a written reminder is a good tool.

And Kiplinger lists "I am an investor" at the top of his guiding principles, but No. 20, the final one, is "I remind myself often: I am an investor." For him, it begins and ends with that simple principle.

His other rules have probably kept Kiplinger in decent financial health during this financial crisis we are in. He tries to keep his cool when other folks are losing theirs. He sticks with his game plan. He views his home as a place to live, not a replacement for a retirement savings plan.

Pretty smart rules to invest by. What are yours?

Tuesday, June 16, 2009

Income for Life

Don't make permanent decisions from temporary situations

Posted: 16 Jun 2009 03:41 AM PDT

Posted by Rob Minton
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In an Income for Life Newsletter, I once shared a story of a man who committed suicide because his wife filed for divorce. This man was a multi-millionaire. There were many lessons from this sad story. One of the most important lessons is that we should never make permanent decisions from temporary situations.

In my opinion, divorce is temporary. I should know, my father has been divorced three times.

This rule does not just pertain to marriage. It pertains to everything in life. We all have temporary setbacks. The problem occurs when we make permanent decisions in the midst of temporary problems.

You may have a temporary situation at work that is causing you stress and anxiety. Temporary situations like this have led thousands of people to quit their jobs. They go in search of a new job that sounds better than the old stressful one. However, as is the case with most things in life, they quickly find out that the new job isn't all what it was cracked up to be. Now they regret leaving their first job. Regret is a painful feeling. Regret usually occurs when we make permanent decisions from temporary situations.

Here is another example: I could evict a tenant from one of my homes and end up with thousands of dollars in repairs (I just did). For many investors, this temporary situation may cause them to make a permanent decision — not to invest in any more homes. They could say: "I'm done investing in real estate." This is another example of making a permanent decision because of a temporary situation.

Back in 2000, I lost over $50,000 investing in the stock market. I got so fed up with my losses that I swore off the stock market for good. This was a mistake. I now invest into the stock market through my company's 401k plan. You can probably see that it only took me 7 years to learn the rule I am sharing with you today.

The problem we all face is that temporary "bad" situations distort our thinking. We tend to make incorrect decisions based upon this distorted thinking.

Is there an alternative?

Of course. The alternative is to simply ask yourself, is this situation temporary or permanent? If the situation is temporary, you should avoid making permanent decisions. Temporary decisions for temporary problems are okay. Permanent decisions are not.

When I used to be an accountant, my job required that I travel a great deal. For many clients, I was forced to drive two to three hours a day without pay. I would literally have to leave home at 6:30 a.m. in order to get to a client's offices by 8 a.m. I did get reimbursed for gasoline and car-related expenses. However, I wasn't paid for my driving time. This meant that I had to pay three hours of my time just for the opportunity to work for the day.

Unfortunately, these situations are normal in public accounting. They occur each and every year. This simply meant that the situation was permanent. I, therefore, made a permanent decision to leave the accounting world. This decision was correct because it was made based upon a permanent situation.

My decision to exit the stock market for seven years was incorrect because it was based upon a temporary situation. It would have been a thousand times better for me to learn why I lost $50,000. It was my fault. I had all of my money on Internet stocks. I let greed control my thinking. However, at the time, I couldn't see the problem as temporary. I also couldn't see that I created the situation and that I was responsible for the loss.

Here is my suggestion for you: Before making any major decision in your life, think about your life goals. How does this situation or the decision you're contemplating relate to your life's goals? Keep your eyes on the big picture. Permanent decisions should only be made based upon your life's major goals.

Friday, June 12, 2009

Income for Life

Strange days, indeed

Posted: 12 Jun 2009 06:20 AM PDT

Posted by Rob Minton
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This recession has certainly had it's share of head-scratchers. We've seen strange things happen in this economy that we haven't seen before. Especially with banks.

Everybody seems to put the blame on the banks. With their "creative" financing of real estate, the risky subprime loans that have created such a mess, it's easy to see why banks take the heat. On top of that, they seem backwards in their thinking, "modifying" mortgages to help those who stop paying but turning down refinances and yanking home equity lines of credit from those who DO pay.

And, you hear stories of banks accepting ridiculously low offers on short sales or foreclosed homes they have taken and listed for sale. At the same time, they're getting TARP money to cover their losses on their bad assets. Do you get the feeling that banks really don't know what they're doing, like they're in over their heads?

Consider the following excerpt from a story in the metropolitan newspaper in my town, Cleveland, Ohio. It's about an attorney, Marc Strauss, who bought a country club that had been foreclosed upon:

"Strauss, managing partner of Tanglewood National Golf Club LLC, had twice tried to buy the property, roughly 130 acres that includes the course, a country club and a pro shop. The longtime country club was foreclosed in 2007. The property, owned by Huntington National Bank, has been operating as a public golf course under the management of a court-appointed receiver.

In June 2008, Strauss offered $2 million for the property, in a deal that later fell apart as the nation's banking system crumbled. In March, he offered Huntington $1.2 million, which the bank rejected. During a public auction Saturday, Strauss won the bidding with an offer of $950,000 -- less than half of the course's appraised value, according to Geauga County property records."

Click here for the entire article.

Yes, a guy who tried to buy this club for $2 million a year ago got it for $950,000 last week. If you're the bank, don't you do whatever it takes to get that deal through at appraised value last summer? Don't you accept the $1.2 million the guy offered in March? No and no, the bank said, and wound up with less money. Great business practices. And these are the guys we're bailing out.

Of course, this is a great deal for the buyer. For waiting about a year, he got a property for less than half what he was willing to pay. I say good for him.

Don't believe there aren't other stories like this one out there -- there certainly are. This one happens to be well-publicized, but banks are doing things like this. There are deals to be had once properties go into foreclosure. Could you wind up finding a great property for pennies on the dollar?

Stranger things have happened.

Wednesday, June 10, 2009

Income for Life

Focus on Investments You Control

Posted: 10 Jun 2009 07:05 AM PDT

Posted by Rob Minton
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Control is a very, very important part of wealth-building. There are lessons all over right now about what happens when you don't control your investments. The Bernie Madoff ponzi scheme and the failing of some 529 college savings plans are a couple of recent examples of what can happen when you give up control.

Let's start out with my definition of control:

Investing Control: The ability to influence or impact the future value and net income of the investment.

Investing control is important for almost any type of investment.

For the stock market, this means controlling a majority of a company's shares. Now, this is extremely difficult for average people, like you and me. This is why we should invest a smaller portion of our money into the stock market.

However, you could invest and obtain control of smaller, non-public companies. By having control, you can directly impact the growth, income and expenses of your investment.

For real estate, the best investors want active control over their properties. Active control can be obtained in partnerships and individual investments alike. Most people would rather be passive real estate investors. The tiny few who grow wealthy prefer to be active investors.

The majority of families focus their investments into assets they do not control. This is why they struggle to accumulate "real" wealth. This is also why many people will not have enough money accumulated when they retire.

In fact, it boggles my mind that most people prefer not to be in control of their investments. They would much rather have an mutual fund planner, stockbroker or someone else control their money. "Done for you" wealth is not available. You are going to have to do much of it yourself. You do it by controlling assets.

It is perfectly fine to invest a small portion of your money into investments you do not control. But I would be very careful investing large sums of your money into uncontrollable investments. I have investments into assets that I do not control. However, these investments represent a small portion of my net worth. I have control over the assets in which the majority of my money is invested.
These same assets also represent the largest portion of my net worth.

If you study wealthy people, you'll quickly see that they do the exact opposite of everyone else. They desire, fight for and cherish control. Everyone else desires, cherishes and pays big money to have no control. Notice the difference.
I remember reading a biography on Kirk Kerkorian, a billionaire. In every single investment Kerkorian made, he fought for control. When he didn't have control over an investment, he quickly divested himself of the investment. Same goes for Wayne Huzienga, who built three separate billion-dollar companies (Waste Management, Blockbuster and Republic Industries).

I believe most people prefer passive investments because they are easier. Passive investments allow the investor to invest without having to take any responsibility. Passive investments do not require the investor to be decisive. Passive investments do not require the investor get his hands dirty.

Control requires that you take responsibility for your investments. Control requires you to be active. Control requires that you pay attention. Control requires that you be decisive. Control requires you to roll up your sleeves and get dirty every once in awhile. Some believe control is risky. I believe lack of control is risky.

Once you have control of your investment, you should work hard to increase its value. You increase value by increasing its income.

One of the most valuable wealth-building skills you can have in life is the ability to increase the net income of your investments. With this skill, you can literally write your own ticket.

For example, Kerkorian purchased enough stock to control MGM Studios in the late 1960s. By the early 1970s, he had built the MGM Grand hotel in Las Vegas. This hotel and casino dramatically impacted the value of MGM's stock. Guess what happened to Kirk's wealth? Within three years, his wealth was in excess of $100 million.

This is how powerful control can be. Could Kerkorian have created $100 million if he wasn't in control? No.

You must strive for control over your investments. Control is critical for true wealth. Don't be lazy. Don't copy the masses and happily turn over control to your hard earned money.

Tuesday, June 09, 2009

Baldwin County Tax Sale Information

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Friday, June 05, 2009

Income for Life

Business lessons from a basketball guy

Posted: 04 Jun 2009 06:05 PM PDT

Posted by Rob Minton
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I am not much of a sports fan. I don't really follow sports closely, but living where I live -- Northeast Ohio -- it's hard to open a newspaper or turn on the TV without seeing LeBron James. So it's not like it's easy to ignore the Cleveland NBA team, the Cavaliers.

Their season just ended when they lost in the playoffs before reaching the finals. Recently, the local newspaper had a question-and-answer interview with the team's owner, Dan Gilbert, after the season.

Gilbert founded Quicken Loans, kind of pioneering the area of home financing online. He bought the Cavaliers a few years ago, and the general feeling around here is that he has spared no expense to build a winner. His team has the third-largest payroll in the league, and he was quoted in the article as saying he will do whatever it takes to win a championship.

The Cavs had the best record in the league this year and the 10th-best in league history, but the owner's comments weren't about what they accomplished. It's about what they didn't accomplish. Their goal was a championship, and after they fell short, it's interesting to see the owner basically come out and say, "We have to do better."

I remember when the league had its trading deadline over the winter, and there was this opinion and that opinion about why would the Cavs try to get another player in a trade with another team. People were saying "They have the best record in the league, why mess with that?"

Well, the answer is that you can always try to get better. In fact, in business, you MUST always try to get better. You can't rest on past success -- if you're not getting better, you're getting worse. In business, in your career, in your investing, anything.

Anyway, I give Gilbert credit for coming out and saying they have to get better. I think it was smart of them to look at trying to get better with a trade even when they were on top of the league during the season. Even when things are going good, you have to look for ways to get better. If you wait until things turn rough, it's often too late. That is good business.

Also good business, I learned in the article, was that the team is selling a 15-percent share in ownership to a group in China. Why? Because basketball is big in China, it sounds like. There's over a billion people there, and the article said that one game this year, between NBA teams that both had a Chinese player, drew something like 300 million TV viewers in China. Gilbert said in the article that's five times more than the most-watched Super Bowl drew.

So he has the biggest star in the world, the most marketable player, and he is tapping into the world's biggest market by becoming the first team with Chinese ownership involved. Smart, if you ask me. He is investing into demand.

Sports is big business here in the States, and people complain about that sometimes. But sometimes, it reminds us of big business lessons, too. Even if you're not a sports fan!

Wednesday, June 03, 2009

Baldwin County Tax Sale Information

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Tuesday, June 02, 2009

Pay attention to what the numbers tell you

Posted: 02 Jun 2009 10:01 AM PDT

Posted by Rob Minton
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A few weeks ago, I mentioned in a post (click here to read it) that news articles were starting to pop up suggesting the bottom of this real estate market might soon be in sight. Of course, as I always say, no one can time the exact bottom of the market, but there was another blip on the radar screen today that seems encouraging.

According to the National Association of Realtors, pending home sales shot up in April at a one-month jump we haven't seen since 2001. Pending home sales, an indicator of future existing home sales, rose 6.7 percent in April, the NAR said. The gain was way higher than economists expected. Here's what one had to say, according to an Associated Press article:

"This is yet another positive indication that the bottoming process is forming," Jennifer Lee, an economist at BMO Capital Markets, wrote in a note to clients. "Now if only prices would stabilize."

Of course, price stabilization is what everyone means when they say "bottom." What they're looking for is the price stability that means prices won't fall any further. Chances are that in much of the United States, they still will. But the rate of home sales is helping clear the glut of homes on the market, which, right now, is one of the biggest factors driving down prices. There are more homes out there for sale than there are buyers for them. You learned in your high school economics class that prices are always driven down by that scenario.

I'm not an expert at timing the bottom of a real estate cycle. However, a man whom I have a great deal of respect for -- professional real estate investor and author Robert Campbell -- is a big believer in timing the bottom. Not only does he think it can be done, he can show you the data he's collected, analyzed and put to work to predict the up and down trends in real estate over the past 30 or so years.

I wrote about it in the June Income for Life Newsletter, but it bears mentioning here again today. Campbell says that in any market, there are five "Vital Signs" that signal which way the market is going.

One of his "vital signs" is existing home sales. With pending sales on the rise, existing home sales will follow. And we are now looking at three straight months of rising sales. Could a trend be starting to form?

Campbell's other vital signs are new home permits; mortgage defaults; foreclosure sales; and interest rates. Nationally, permits for construction of single-family homes have been on the rise, as have interest rates. I'm not saying there's any kind of data here that's screaming "We're at bottom," but what I am saying is there have been enough positive bumps in the numbers in these indicators to start paying attention.

In other words, if you think you can time the bottom, it is certainly time to start tracking the pertinent data in your local market. And regardless of whether you time the exact bottom, now remains a great time to buy a house!

P.S. Just a side rant here: Why is is that whenever you read one of these stories about an increase in numbers, it's always "exceeding analysts forecasts," or "much more than economists projected," or "better than the experts expected?" If they're the experts, and the numbers are usually better than they expect, or forecast or project them to be, should we really keep listening to them about where the market is headed?

Friday, May 29, 2009

We've just got to accept it

Posted: 29 May 2009 06:13 AM PDT

Posted by Rob Minton
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Two articles on USAToday.com this morning kind of sum up this recession for the average U.S. citizen.

One article explains that all the government borrowing and spending meant to pull us out of this recession will put an extra $55,000 or so tax burden on each household in the U.S. That's the biggest bump in the bill our government has asked us to pay since expanding Medicare coverage in 2003. It means that while unemployment is rising and incomes are falling, our household debt is growing.

The other article says that banks will attempt to cover some of their losses by hiking fees, this time on checking accounts. So even though legislation was drawn up to protect us from banks taking it out on consumers by raising credit card interest rates, the financial institutions that are so much to blame for this whole economic mess are still finding ways to pass the cost of it onto their customers.

Read these two articles, and your first reaction might be "This just isn't fair."

And you know what? You're right. It isn't.

But in this recession, not much has been fair. True, some Wall Street firms have paid the price for being too greedy, but how many innocent bystanders to this mess have had to pay a price, too?

It's not fair that your home equity line has been taken away from you, even if you've never been late on a payment. It's not fair that your neighbors, who might skip a house payment or two, can get their loans "modified" while you, even though you've done all the right things, can't even refinance to take advantage of lower home loan rates.

If you're a real estate investor, it's not fair that your assets have dropped in value because of the foreclosures in the neighborhoods where your investments are located. If you're a retiree, it's not fair that your nest egg has shrunk because stocks and mutual funds have been dragged down by this mess.

It's not fair that the many must suffer because of the mistakes of the few.

It hurts; I know. But I also know this: We must accept that this whole situation is unfair. And then we must move on.

Here's the thing: We can't control "fair." In fact, in much of life, we can't control what happens to us. We can only control how we react to it. If you get all caught up in "This is unfair," it can paralyze you. Complaining that everything is unfair will get you nowhere.

As I said, we must just accept the unfairness. We must not let "unfair" distract us from our goals. Don't let the things you can do nothing about get in the way of the things you CAN do something about.

Credit card interest rates are higher? Yep, so get to work on that debt.

The value of your home has dropped? Yep, so challenge your property tax assessment.

Gas prices are climbing again? Yep, so try to drive a little less.

It is so easy to complain about the things you can't control. It's so easy to get caught up in "It's not fair." But this will get you nowhere fast. The saying goes, "Grin and bear it." I have found that if you can just accept that there will be unfairness along the way, it will be easier to stick to your plan.

And if it helps you to believe in the Karma thing -- what goes around comes around -- and hang onto that hope that if you just keep doing everything right you will somehow be rewarded in the end, then fine, believe that the unfairness will be made up to you. But if you can actually take action instead of complaining "It isn't fair," then I guarantee you will be better off in the end.

Tuesday, May 26, 2009

Fear makes us irrational

Posted: 26 May 2009 11:04 AM PDT

Posted by Rob Minton
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The big news on the financial front today is that U.S. consumer confidence rose sharply in May, higher than expected, which could mean the mood in the States is getting better when it comes to the economy.

And that makes sense in some ways. We have long been gripped by negative thinking and fear. The survey that determines this consumer confidence level reports that fewer people are down on the job market than have been recently. I have written before that confidence -- by consumers, investors, employers, etc. -- will be key to our economic recovery. So this recent survey is good news.

Well, not all of it.

The survey indicated that consumers are increasingly likely to buy a new car in the next six months. The number of consumers who gave this answer, 5.5 percent, is the highest level in a year. It would seem to indicate that buyers recognize the problems of the automobile market are to their advantage. With the industry struggling, prices are low, finanacing is attractive and, if you have good credit, incentives are plentiful.

The survey also indicated that only 2.3 percent of respondents said they'd consider purchasing a house in the next six months. This to me is a head-scratcher.

Like the auto industry, most housing markets are struggling. This means that, like the auto industry, prices are at very low levels. Like the auto industry, financing for homes is attractive. And incentives? Well how about up to $8,000 in tax credits for first-time buyers? I'd say that's an incentive.

What's more, homes have tax benefits that cars don't. And I don't care what market you live in, how bad it is, you have a better chance at your investment appreciating with a home than a car. In fact, I will GUARANTEE your new car purchase will depreciate. It's worth thousands less than you pay as soon as you drive off the lot with it.

And yet the number of people who will buy a home in the next six months is less than half of those who plan to buy a car. Why?

I believe that fear makes us do things that are irrational. And we have been reminded for the past two years that real estate is at the heart of this recession. Real estate is why we're in this mess, we're told, so our fear is around real estate. And so while might be irrational to believe a car right now is a better purchase than a house, that's what consumers seem to be saying.

Is it a good time to buy a car right now? Absolutely. I am not saying it isn't. But it's also a great time to buy a house right now -- for several of the same reasons it's good timing for a car -- and people just aren't understanding that, apparently.

It's fear that gets them all mixed up.

Monday, May 18, 2009

New tax credit twist could help U.S. real estate investors

Posted: 18 May 2009 07:19 AM PDT

Posted by Rob Minton
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If you are a real estate investor interested in selling a home in the United States, you could soon be getting a boost from the U.S. government.

On May 12, U.S. Housing and Urban Development secretary Shaun Donovan announced a plan that will allow first-time home buyers to use the federal $8,000 tax credit toward their down payment on Federal Housing Administration loans.

The plan will allow FHA borrowers who qualify for the credit to access the funds at closing, using them for down payment, rather than having to wait for a check from the IRS after purchasing the home.

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment," Donovan said at the National Association of Realtors' Midyear Legislative Meetings & Trade Expo, according a statement released by HUD.

The FHA will allow approved lenders and state and local agencies to issue bridge loans to first-time buyers, which will provide funds at closing, then be re-paid when the borrower gets his or her tax credit.

Donovan said that FHA will announce all the details of the plan soon.

If you are an investor with tenant-buyers in a rent-to-own home, this program could give them a big-time incentive to buy out your home now. Your tenant-buyers would have access to $8,000 (or 10% of the value of the home, whichever is less) to use as funds at closing. You should share this information with your tenant-buyers immediately.

The first-time home buyer tax credit was passed in February, and gives those who have not owned a home in the past three years a credit of 10 percent of the purchase price of a new home, up to 8,000.

Borrowers must meet income requirements to be eligible for the full credit - it drops for single borrowers who earn between 75,000 and 95,000 a year and for married couples earning 150,000 to 170,000. Buyers with incomes over those thresholds are not eligible for the credit, which expires Dec. 1.

The National Association of Realtors has been pushing for down payment assistance legislation, and this new program brings back the "no-money" down type loans of recent years - but with a big exception: The government is providing the down payment.

FHA currently requires as low as a 3.5-percent down payment, which means an FHA borrower who qualifies for a loan could buy a 230,000 house and have his or her down payment covered by Uncle Sam.

With interest rates that continue to hover around all-time lows, this soon-to-be-finalized program will add even more affordability for buyers in the housing market.

Here is a link to the NAR's release on the announcement of the program:

http://www.realtor.org/press_room/news_releases/2009/05/re_summit

Tuesday, May 12, 2009

Good news among the bad

Posted: 12 May 2009 11:09 AM PDT

Posted by Rob Minton
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In my post below, "Time to get off the fence," I wrote that I have been seeing articles in major publications hinting that the bottom could be in sight for some real estate markets here in the United States.

Now, it seems we might have some more indications that the worst has possibly past for some markets.

Today, the National Association of Realtors released sales statistics for the first quarter of this year. Of course the headline for this Associated Press article is "Median home prices fell in US in Q1," as the headline writers continue to beat us over the head with negativity and continue to get paid to state the obvious. Anyway, the article says the median home price here in the States fell about 13.8 percent from a year ago.

Considering the fact that so many foreclosure bargains are making up our sales statistics these days, the price drop is totally expected. Frankly, I am a bit surprised that it was only a 13.8 drop. But buried in the bad news (depending on how you look at it) about median home prices -- and disguised as even more bad news -- was a bit of good news.

From the article:

"Home sales fell in all but six states -- Nevada, California, Arizona, Florida, Virginia and Minnesota -- where buyers have been able to snap up foreclosures at a deep discount.
Sales more than doubled in Nevada, rose 81 percent in California and grew 50 percent in Arizona -- signaling that the worst may be over for those distressed states."

Notice the language "Home sales fell in all but six states." That sounds like bad news. But the real news, in my opinion, in this story is the DRAMATIC increases in sales in the states that were hit the earliest and the hardest by the real estate bust.

As I said in my earlier post, there is evidence that first-time homebuyers and bargain shoppers are finally helping revitalize some of the worst housing markets. I think this is a good sign that other markets will follow, just as they lagged the California, Arizona and Nevada markets on the way down.

The fact that foreclosures make up about half of all U.S. sales right now will keep prices flat for a while, but as more buyers come out of the woodwork and sales of existing homes continue to climb, we will start to see price increases again.

It's a good time to pay attention to sales of existing homes and foreclosures in your market if you're trying to time the "bottom" of the real estate market. If sales are on the rise and foreclosures rates are dropping, it is a good sign prices will soon start to rise.

I will say it again -- now is a good time to buy!

Thursday, May 07, 2009

Time to Get off the Fence

Posted: 07 May 2009 02:22 PM PDT

Posted by Rob Minton
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It wasn't the sort of thing you see in the news these days, not ever. But the lead for a New York Times article the other day was "Is this what the bottom looks like?"

The article pointed out that some of the markets across the country that were earliest hit by the real estate bust are finally starting to show signs of life (read the article here). It said some markets, such as Sacramento, Calif., are actually starting to show signs of a rebound.

Did you catch that? I said rebound! That's not a word any prognosicators have been comfortable using yet. But here we are, with news stories starting to pop up that we might be approaching the "bottom" of this housing market.

The New York Times is not alone, either. Two recent USA Today articles have actually hit on bits of good news, as well. One article is about the demand for foreclosure bargains being so high in some markets that homes are starting to get multiple offers, which, the article suggests, could be a sign that the downturn is nearing an end.

In another article, USA Today's Stephanie Armour reports that incentivized first-time home buyers are snatching up homes at today's bargain prices, which is also helping housing markets.

I realize a few positive articles does not mean we are finally at the "bottom." No one can time the bottom -- never have, never will. However, I will say this:

IF YOU HAVE BEEN THINKING ABOUT BUYING A HOME, THEN BUY A HOME NOW!!!

Sorry for yelling, but it's time to get off the fence. If you have been wishy-washy about taking advantage of today's low prices, now is the time to stop being wishy-washy. If you want to buy before the rebound, you should do it now. Because the rebound is coming. We might not be at the bottom, but you can almost see it coming. There are three reasons to think a rebound is near:

1. If the markets that first got hit with foreclosures are starting to rebound, you can bet the other markets will follow. It happened with the crash that way, and it will happen with the upturn. And some of the worst neighborhoods in America in terms of foreclosure are starting to show revitalization. From the USA Today article:

""What I'm seeing is incredible. At ground zero in Florida, my business has tripled overnight," says Suzanne White, an agent at ZipRealty in Tampa. "There isn't grass overgrown and mosquitoes all around in these neighborhoods anymore. First-time home buyers are saying rates are so low they can pay less than rent. The bank-owned properties are getting multiple offers and selling higher than asking price."

Which leads us to Reason No. 2 ...

2. If there are multiple offers and bidding wars, you can bet that prices will start to rise. Bidding wars normally mean more buyers than sellers are out there -- which isn't the case yet -- but competition for the great deals on homes is going to start driving up prices. That, in turn, will bring out even more buyers. For some reason, home buyers buy when everyone else is buying. And when that happens, it will accelerate the price increases.

Which is also why Reason No. 3 is so important ...

3. In this day and age, public sentiment and media hype drive markets. We saw it with the dot.com bubble. We saw it last summer with the ridiculous run-up in oil prices. We saw it with the massive sell-off of financial stocks and even with the huge bounce in the price of gold. With the Internet and 24-hour news channels hungry for sensational headlines and sound bytes, ANY kind of speculation, ANY suggestion of good news or bad, moves markets.

If media stories are starting to pop up about the bottom being here, the markets will react as though it's here. And if one paper is reporting good news, the next one will, then the next one -- just as they attempt to beat each other to the really bad news. And when the media sentiment turns, buyers will return to real estate in droves. How many have been sitting on the sidelines waiting for the news anchors to tell them it's OK to buy a house again? If you are thinking of buying, buy before this rabid pack of buyers gets released into the wild.

There have been plenty of real estate investors who have made money in this down market, despite not trying to figure out or wait for the bottom. There still is money to be made. And if you've been waiting for some sort of sign that it's time for you to make a move, consider this your sign.

I can't tell you the timing of the absolute bottom, but the writing is on the wall. I CAN tell you the timing is right to get off that fence.

Monday, May 04, 2009

Still think it's a "bad" market?

Posted: 04 May 2009 10:02 AM PDT

Posted by Rob Minton
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Everywhere you turn, you hear or read that we are in a "down" real estate market here in the United States. There's no question that the mortgage mess and the drop in real estate prices have created uncertainty and nervousness about real estate. If you want to call it a "down" market, that's fair.

But don't mistake a "down" real estate market to mean a market in which investors can't make any money. A "down" real estate market does not mean a "bad" market.

If you think about it, those who have recently lost money on real estate were those buying at the height of the market -- flippers and speculators, mostly, trying to make a quick buck. They're now stuck with homes they can't sell, or even rent for enough to cover their losses. To me, the market in which they bought those homes was more of a "bad" market to buy in. Now, with prices having dropped so much and with a huge inventory of homes to choose from, investors are actually at an advantage. And investors ARE making money in this market.

Below is a check for $10,000 an Income for Life investor recently received from a tenant-buyer as a down payment on a rent-to-own purchase.

This investor received this large up-front payment on this property, AND is earning positive cash flow every month. How could anybody say that was a bad investment?

The fact is that despite what you hear about the real estate market, investors ARE making money. There is still great demand for rental properties, and people who might have qualified to purchase a home just a couple of years ago are now among those in the rental market. Wouldn't a tenant who had saved up enough money to put down $10,000 on a home make a pretty good tenant? Also, with prices lower, it is now easier to find rental properties that will give you positive cash flow each and every month.

Just as stock investors can make money in both bull and bear markets, real estate investors can make money in both up and down markets. So when it comes to real esate investing, don't just assume that a "down" market means a "bad" market.

Thursday, April 30, 2009

Try not to kill the pigs

Posted by Rob Minton
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By now, you've probably heard plenty about the swine flu. The news is everywhere. Maybe you hadn't heard of the swine flu before this outbreak, or maybe, if you're old enough, you remember 1976.

I was around in 1976, but too young to pay much attention to what was in the news. At that age, I was more concerned with riding my bike, making that transition from kindergarten to first grade, and managing my rental properties. Just kidding. I didn't start investing in properties THAT early.

Anyway, since I was too young to remember it, I have read quite a bit lately about the supposed swine flu pandemic of 1976. A soldier in New Jersey died as a result of it, and the flu had spread to other soldiers on his base. Fearing a situation like the 1918 pandemic that killed as many 50 million people all over the world, the U.S. government convinced drug manufacturers to rush out a vaccine as part of a campaign to vaccinate the entire U.S. population.

A hoky pair of public service announcements from the government's 1976 vaccination campaign can be seen here:

Well, the pandemic in 1976 never materialized. The predicition that millions of U.S. citizens would die was way off, as it appears the soldier whose death sparked the whole uproar was the only fatality confirmed to be a result of the swine flu.

Meanwhile, evidence suggests the vaccine itself caused health problems in many Americans, including a nervous-system disorder that can cause paralysis and death. The government abrubtly halted the program.

I'm no doctor, no scientist, so I am not telling you not to pay attention to your health. I am just pointing out that the government's reaction in 1976 might have been an OVERreaction. And now, 33 years later, swine flu is causing some overreaction again.

In Egypt yesterday, an order was given to kill every single pig in the country. This is despite the fact that A.) There are no confirmed cases of the disease in Egypt; and B.) the flu is transmitted human-to-human -- YOU CAN'T GET IT FROM PIGS.

Unfortunately, human nature is prone to such overreactions. Take our current economic conditions, for example.

Recession hits and people stop spending money, hurting the economy more. People see their 401k plans dropping in value, and they yank all their money -- taking the losses -- and stick it in a savings account that earns 1% interest. Real estate drops in value and so they swear they are never going to buy a house again.

I am guilty of financial overreaction in my own past. After the dotcom stock market bust, I swore off investing in the securities markets ever again. It took me years to realize that this was a mistake, and it cost me a ton of money. I'm telling you this because I don't want it to happen to you.

You can't simply dump everything, cancel your wealth-building plans, simply because of one seemingly catastrophic event. You can't let your emotions take over reason. You can't let the recession make you give up.

You can't kill the pigs.

Monday, April 27, 2009

GPS system for investors

Posted: 27 Apr 2009 07:31 AM PDT

Posted by Buddy Blackman
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This past Saturday, we were conducting one of our Foreclosure RoundUp Tours. Somehow, I ended up as the lead car (big mistake). I had my 9-year-old son with me and he was (as always) asking lots of questions. Long story short ... I missed several turns, trying to get to the next house.

After we all finally previewed that home, one of the new Income for Life investors in our group said that he had a GPS system in his car and would lead us to the next house. After arriving at the next house, I realized I had no idea on what part of town I was in, and neither did the investor with the GPS.

The reason: He relinquished his decision-making and put total faith in the GPS. The investor had researched the system before he purchased it, and he learned about how it worked. Once purchased, though, the investor trusts in the GPS because he knows it works. He turned left when it told him to, turned right when it told him to ... and arrived at the desired destination.

Does the GPS ever make a mistake ? Maybe. Sometimes it might tell you to turn the wrong way down a one-way street. It's possible that it could direct you onto a road that is closed for repair. But once you take a different route, the GPS automatically adjust and continues to assist you with your final destination. Because of one mistake (that is out of the GPS's control) you don't throw the GPS out the window and try to "wing it."

Our "Income for Life" organization is like an "Investor GPS" system. The investor researches our reports, reviews the investments being made both locally and internationally with our members, understands that we have a proven system that is constantly being "tweaked" and updated to provide the best performance for our members, and then joins our membership to assist him with his goals. The member who keeps his eyes on the "GPS" system and acts quickly (Velocity of Money) will be the most successful.

Am I saying that an investor should turn his decision-making over completely to his "Income for Life" organization ? No, I am not saying that. But just as with the GPS, having a system to follow gives you guidance at every turn.

I know there are a lot of investors wandering out there in the jungles without a system to navigate their direction. I hope that somehow they find their way to Income for Life and request the free reports they can use to research our system.

It would be a great first step in finding their way!

Buddy Blackman
Income for Life, Charlotte
www.QuitWorkCharlotte.com

Monday, April 20, 2009

Build in redundancy as you rebuild

Posted: 20 Apr 2009 08:54 AM PDT

Posted by Rob Minton
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I might have mentioned in previous posts that I have taken flying lessons. Learning to fly has helped me see investing a little bit differently. And today's economy is a reminder that this different perspective is especially helpful.

You see, in order to learn to fly, you must learn about airplanes. It is part of your "ground school" training. You need to learn about the engine, electrical equipment, aero-dynamics, etc.

I was amazed to learn how many "back-up plans" were built into airplanes. These back-up plans are referred to as "redundancy" in the flying world. Here is part of the definition of an aircraft engine from Wikipedia:

"Aircraft engines also tend to use the simplest parts and include two sets of anything needed for reliability, including ignition system (spark plugs and magnetos) and fuel pumps. Independence of function lessens the likelihood of a single malfunction causing an entire engine to fail."

Airplanes were built, for the most part, to continue flying in spite of failure. For example, you could completely lose battery power mid-flight and still be able to fly the plane. Many airplanes are built with two engines. The second engine is added to allow the airplane to stay in the air if the first one malfunctions. Each major component of the plane has "independence of function." This allows them to continue operating regardless of other systems in the plane.

This "built-in redundancy" is the main reason why flying is the safest mode of transportation.

Now, here is the million-dollar question for you:

If "built-in redundancy" is the main reason for safe flight, what would it do for your wealth-building? Especially considering what has happened in the past 18 months or so.

Planes were designed to continue flying in spite of systems failure. Your plan for wealth (financial plan) should be designed with "built-in redundancy," too. Unfortunately, the majority of people do not have "redundancy" with their financial plan.

The majority of people do not have a failsafe to protect their financial futures. They rely on one income stream and/or one investment strategy. One is a very dangerous word in the flying world. One should also be a dangerous word in your financial plan. The majority of people are relying on their retirement plan at work for their financial future. What happens if this retirement plan malfunctions? Their financial plan crashes to the ground. They are doomed.

I hope this has not happened to you in this recession, as the securities markets have taken a beating and real estate values have dropped in many areas.It's a reminder that your financial plan should include several different investments, each with independence of function.

Some time ago, I mentioned in an Income for Life newsletter that I read a biography on Kirk Kerkorian, a self-made billionaire. The biography is titled, "Kerkorian, an American Success Story" and was written by Dial Torgerson. Used copies of this older book are for sale right now on Amazon.com for more than $300. I checked this book (treasure) out of my library for free. (Hint, hint…)

I learned that Kerkorian ALWAYS had several back-up plans when investing. In fact, it seems that his thought process for investing started with planning in advance for failure. He specifically noted plan B, C, D and E to compensate for plan A failing. He did this BEFORE making an investment into plan A. I don't know this for sure, but I'm guessing that Kerkorian learned to plan for failure as a pilot. He learned to fly and flew some very dangerous missions as part of the Air Force. I'm guessing that he learned about redundancy in airplanes, too. I'm also guessing that he applied the redundancy lessons to his businesses and investments.

This redundancy by Kerkorian actually saved him from financial disaster. You'll have to read the book to find out what happened!!!

What is your Plan B? What is your Plan C? What is your Plan D? What is your Plan E?

Don't get me wrong…

Your retirement plan at work is super. However, it's not enough. You need a failsafe. You need redundancy. You need other plans to protect your family. As you rebuild your finances while the economy turns back around, think about using redunancy to protect yourself.

I'm going to outline a financial plan with redundancy for you. This plan actually looks very similar to my financial plan. Notice that you won't be relying on any one investment to provide for your future.
I, obviously, have many real estate investments. In addition, I also have a self-directed Roth IRA. The majority of money in my self-directed Roth IRA is invested into mobile homes (last month's audio CD) and/or loans to other individuals at high fixed rates of return. In addition, I have a Roth 401k retirement plan through my business. I'm contributing the maximum amount into this plan each and every month through automatic payroll deductions. For the most part, these funds are invested into the stock market. And then there is my business. As the business grows, so does the value. On top of all of this, I'm using excess funds to pay off debt.How much redundancy do I have in my financial plan?

Real Estate (Residential & Commercial Properties)
Self Directed Roth IRA (Notes)
Roth 401k through business (Stock Market)
Business with Equity
Debt Reduction
Bonds

What would happen to my financial plan if my stock market investments go south? Would I still be on track? Can you now see the importance of building redundancy into your financial plan?

Thursday, April 16, 2009

Are foreclosure opportunities expanding for investors?

Posted: 16 Apr 2009 06:48 AM PDT

Posted by Rob Minton
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There has obviously been a lot of attention in the media on homeowners facing foreclosure. The number of homes in foreclosure in the States is staggering, and the government has definitely tried to address what it sees as a huge issue.

With all the attention on homeowners, we might have been missing what has been happening with other property owners.

Today, General Growth Properties filed for bankruptcy protection. General Growth is the second-largest shopping mall operator in the United States, with more than 200 malls. The company has enough cash flow to cover operations and interest payments on its debt, but is trying to restructure some of that debt. The company says it has not been able to refinance loans because financial institutions have been unable or unwilling to issue large mortgages and loans.

That doesn't sound all that different from the situation Mr. and Mrs. Smith down the street might be facing, does it?

General Growth, which according to a Reuters article, defaulted on several mortgages and bonds before seeking bankruptcy protection. The inability to refinance seems to have caused the largest non-financial institution bankruptcy so far in this crisis.

Industry experts are predicting that two other large mall operators will seek to purchase some of GGP's assets out of bankruptcy. That's just another example of how healthy businesses are using the financial crisis as an opportunity to gain strength. You and I can't afford to buy a mall, but couldn't we look at this crisis as an opportunity to strengthen our own investments, too.

I've been recently showing one of my rental properties to prospective tenants, and the demand seemed unusually high to me. I remarked to one of these prospective tenants that I've had a ton of people looking, and she told me that renters of apartment buildings are looking for new places to live. That, she said, is because apartments are getting foreclosed on, too, which means tenants are either being evicted by banks or are choosing to move because the landlords in foreclosure aren't providing the services tenants rely on.

I found an interesting article on this subject here.

So far, there has been a big spotlight on foreclosures of single-family homes, and there's no doubt investors are taking advantage by acquiring properties at discounts. But it seems as though the foreclosure tentacles are spreading further out. It might be time for investors to start paying attention to commercial and multi-family properties that could start hitting the market at below-value prices, too.

Monday, April 13, 2009

How to Save Money and Live Significantly Below Your Means

Posted by Rob Minton
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About a year ago, I wrote an article for the Income for Life members-only monthly newsletter about a post on the blog of Tim Ferris, author of "The 4-Hour Work Week" (His blog is here). Tim's post was about something called "The Compact."

The Compact was a group of people who made a pact not to purchase anything new for an entire year, except for necessities such as food, medicine and toiletries. They were forced to become resourceful, borrowing, buying second-hand, or going without things they wanted or needed. The group's commitment was environmentally inspired -- they figured not buying anything new for a year would be the ultimate recycling.

The group completed their year saying it wasn't as difficult as it sounded. Aside from the environmental impact, could you imagine the kind of money you could save by not buying anything new for a year? With unemployment rising, I wonder if people are making efforts like this to cut their spending. People talk about "budgets" and "cutting back," but could they really make this kind of effort?

Could YOU go for an entire year without buying anything brand new? If you could, imagine
how much money you would save? This means...

♦ No new books, magazines or newspapers

♦ No new TVs, DVD players or Tivo

♦ No new automobiles

♦ No new clothes or shoes

♦ No new electronic gadgets, games or cell
phones

♦ No new toys, exercise machines

♦ No new furniture

♦ No new appliances or kitchen utensils

This would be a very big challenge, wouldn't it? It also might be kind of fun to do with your family.
You would learn resourcefulness very quickly. You would have to figure out a way to find things second
hand. The goal isn't to stop buying things for your family, it's to not buy anything brand new.
Used is perfectly fine. Instead of spending time at the mall, you would be shopping at flea markets, eBay and secondhand thrift stores. I can see the reality show on TV right now!

You would probably buy fewer items, which may simplify your life. You would have less clutter
and more peace. You would also save a significant amount of money. In most cases, you would probablysave 60 to 75 percent on all of your purchases. Throughout the period of a year, this savings would be astronomical.

If the average family spends $2,000 a month on material items, this expense would be reduced to $300 or $400 a month. The extra $1,600 or $1,700 a month could wipe out all of your credit card debt in a very short period of time. Or it could help create a nice emergency fund for your family. Or it could be a down payment on another income property.

One of the requirements to achieving financial independence is to live below your means. I realize that I'm a broken record on this, but it is critically important. It's impossible to achieve financial freedom if you spend every penny you make. Most people believe that this means delaying gratification. However, this may not be entirely true. What it may mean is that you have to become resourceful. You
have to learn new ways of doing things. You have to be creative, instead of impulsive.

Could you do it?

Thursday, April 09, 2009

One Income for Life Member's Reading List

Posted: 09 Apr 2009 04:15 AM PDT

Posted by Rob Minton
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I enjoy hearing about people becoming better off financially through their membership in Income for Life, but I think I enjoy it even more when I hear how their membership has changed people beyond just the dollars in their pockets. I want to share with you a recent letter I received from a member in Cleveland, Ohio.

Hi Rob,
It has now been 2 years since I joined IFL. Prior to joining, I would
have never known where to begin if I wanted to invest in single-family
homes or mobile homes. Honestly and irresponsibly, I didn't really think
about my financial future and investing before joining. Your program has
totally changed the way that I think about money in general and how I
make financial decisions.
One other thing that IFL has instilled in me is the desire to
continually learn and improve my knowledge level. I try to listen and
read as much as I can to items related to real-estate, self-improvement
and wealth-building. The following should drive this point home
and put it into perspective ...
I am currently 38 years old. Do you want to know how many books
I read over the years since finishing school?
*ZERO* - - - In total contrast, I have listed below all of the books
that I have either read or listened in the past 2 years since joining
IFL (these are in addition to your monthly newsletters).
Books Read:
Rich Dad, Poor Dad - Robert Kiyosaki
Cashflow Quadrant - Robert Kiyosaki
Tax and Legal Strategies for Real Estate Investors - Garret Sutton
Increasing your Financial IQ - Robert Kiyosaki
Equity Happens - Real Estate Guys
Missed Fortune 101 - Douglas Andrew
The ABC's of Real Estate Investing - Ken McElroy
Rich Dads Prophecy - Robert Kiyosaki
The Top 10 Distinctions Between Millionaires and the Middle Class - Keith Cameron Smith
Section 8 Bible_ - Michael McLean
Raising Confident Kids - Denis Waitley
Currently Reading:
7 Habits of Highly Effective People - Steven Covey
The Psychology of Winning - Jim Rohn
Getting to a Yes: Negotiating Agreement Without Giving In - Roger Fisher

Comparatively speaking, this list might not seem that long, but for me it
is a radical change!!!
Thank You!
Mark Butler

Thank YOU, Mark, for sharing that with me. As you probably know, books have changed my life. At one time, I wasn't that much of a reader, either. It's good to see that reading has become so important to you. Knowledge is the one thing that can never be taken from us. Investing the time into reading books is an investment in yourself that never loses!

Rob

Monday, April 06, 2009

Want to Win Some CASH? New IFL Challenge!

Posted: 06 Apr 2009 11:19 AM PDT

Posted by Rob Minton
Follow me on Twitter

I wrote about this in the April Income for Life Members-only Newsletter, and I want to bring it up again here: I have a fun challenge for you, and the good news is that you can win $500!

Below is a question that I want you to answer with as much detail as possible. The member with the best answer will win $500. The second-place winner will win $250. The third-place winner will win $150 and the fourth-place winner will win $100. Sound good?

Here is the question I want you to answer:

"If your life depended on making an extra $25,000 cash in the bank within the next 30 days, what would you do?"

This is a very interesting question to ask yourself. I would normally just suggest that you ask the question knowing that many of you wouldn't actually take the time to do it. However, this time I figured I would pay you to do it.

What would you be able to do with an extra $25,000? Would you buy a foreclosed home for pennies on the dollar? Would you use the money as an emergency savings fund? Would you pay off a few credit cards or a car? Would you buy a mobile home investment?

Questions like these get you to see opportunities. These questions are extremely important to ask yourself, especially in challenging economic times.

Send your answers to me at:
Email: robminton@myhomesellingteam.com
Fax: 440-918-0347
Mail: 31811 Vine Street, Willowick, OH 44095

To be eligible for one of the four prizes, you must submit your answers no later than May 15, 2009. We will feature your answers in an upcoming Income For Life newsletter!

Thursday, April 02, 2009

A better, easier way to do things

Posted: 02 Apr 2009 11:50 AM PDT

Posted by Buddy Blackman
www.charlotteinvestorguide.com

I meet with (and interview) a lot of real estate investors. These are experienced investors, "experienced" meaning they have purchased at least one investment property. Their experience may be good or bad -- but they are experienced nonetheless.

I met with an investor a few months back who stated that he was more than happy if he could get $100-per-month positive cash flow from his rentals (he is doing straight rentals).

A hundred dollars a month ??? I'm not sure that took into account whether that even covers all of his landlord problems, calls, management, etc. This investor was suprised to see that my investor clients, Income for Life Members, are consistently getting $3,000 to $7,000 in up-front down payments from tenant/buyers (option fee) and between $300 to $700 a month positive cash flow. What makes our approach different from his?

A few days ago I met with another experienced investor. She had purchased a four-unit house. Obviously a straight rental situation. This four-plex, she admitted, was in the middle of a rough neighborhood, and she was managing it herself! She claimed she was having challenges.

You think?

I met her because she attended a free seminar I did for non-member investors. She is an educated person, an attorney, so she understands the importance of education -- that is why she is signing up for every investor information package that she can. She came to our free seminar because FREE is better than the big fee she just paid to the well-known "guru" who did a seminar in our town while on his seminar tour of what seems to be the whole country.

Anyway, this local investor is doing what most of us have thought to do. We know that we should be investing in Real Estate. The real question is "how?" She is jumping on the "tri-investing" method. Have you heard of this method ?

The "Tri-Investing" method goes like this: "TRY" everything, and the method that you make the most money with "WINS." The good news about this approach is that you are going to get a good education in real estate investing. But we all know, educations cost money. She is going to pay for that education in the time, frustration and money that she is going to lose (not counting on the SAFETY issue with collecting rent or evicting the rough tenants that rough neighborhoods inevitably attract.

After sitting throuh our seminar, I don't think all the "light bulbs" came on for this woman. She didn't seem interested in our "Nice Homes in Nice Places" strategy. She didn't understand the large up-front down payments (vs. her one-month security deposit). She didn't seem to grasp why we can command the larger than market rent, or the built-in appreciation we enjoy.

Believe it or not, this investor decided to NOT join our investor organization. She stated that she was more interested in "low income housing and Section 8 tenants."

I bid her "farewell" and "good luck" (she will need lots of it). I did give her a big packet of investing reports and information, so maybe we'll hear back from her (I'm sure I will ... after she reads this post).

To Your Success,

Buddy Blackman

Not a member yet? Vist www.IFLapplication.com

Monday, March 30, 2009

How One Man Turned an $11-an-hour Job into $3 million

Posted: 30 Mar 2009 07:53 AM PDT

Posted by Rob Minton
Follow me on Twitter

Have you ever heard of Paul Navone? I read an article about him a little while ago, and his story seems relevant in these financial times. Let me share it:

Paul, who is nearing 80, never made more than $11 an hour at his job. However, last year he donated $2 million dollars to two schools. He also has about $1 million more saved for his retirement.

With his first job, he began saving money. At the age of 23, he purchased a duplex. He lived in one half and rented out the other half. He went on to purchase four more properties.

He used the income from his investment properties to cover his living expenses. In fact, here is what he said:

"I never spent any of my wages!"

Instead, he saved and invested 100% of his wages. The article stated "Navone invested in 'a little bit of everything' and stuck with a buy-and-hold strategy. He is partial to utility stocks, with their steady earnings and dividends (which he always reinvests)."

I found Paul's story fascinating. He turned a job paying $23,000 a year into $3 million dollars. His process was exactly what I have been teaching in Income for Life. His first investments were real estate. Remember my article titled "The Velocity of Money?" He used the income from the real estate to cover his living expenses. He then invested his paycheck into the stock market. This was possible because he lived below his means. Had he spent his paycheck on toys, he would never have accumulated $3 million dollars.

Paul adhered to the buy-and-hold strategy with all of his investments, including his real estate. He saved and reinvested dividends. Isn't this the same thing as trading one home for two?

It seems to me with the bargains out there now in both the real estate market, and the stock market, that now would be a pretty good time to start trying to duplicate what Paul did.

Something to think about, huh?

Monday, March 23, 2009

An unfamiliar smell in the air

Posted: 23 Mar 2009 01:57 PM PDT

Maybe it's because it's finally that time of year here in Northeast Ohio, where I live. We haven't seen any snow for a few weeks; you can hear birds chirping outside; and last Friday was the official first day of spring. Whatever the reason, late last week and over the weekend, it seemed to me there was a faint scent in the air that we haven't experienced for quite some time.

The scent of optimism.

Have you gotten a whiff of it?

It must not be just me. Despite a down day last Friday, Wall Street had rallied over the previous 10 days or so. Buried a bit in the news last week was a report that housing starts had unexpectedly increased in February. Today we learned that sales of existing homes was on the rise, too. And for what it's worth, the announcement that the Treasury has a plan for buying banks' bad assets got Wall Street optimistic even further, the Dow rallying almost another 500 points today.

Now, I'm not saying there's a TON of reason to be optmistic -- whether the Treasury's plan works remains to be seen, for example -- and I'm not sure what we're catching a whiff of now will be sustained. I'm just saying that we might finally be seeing some signs of optimism. And optimism is what it's going to take to bring us out of this recession. Optimism on the part of investors. Optimism on the part of institutions that lend money. Optimism for the companies that hire workers. And optimism of consumers who buy things.

I saw a quote not long ago by Louis "Studs" Terkel, a Pulitzer-prize winning broadcaster, actor and author. Studs said:

"With optimism, you look upon the sunny side of things. People say, 'Studs, you're an optimist.' I never said I was an optimist. I have hope because what's the alternative to hope? Despair? If you have despair, you might as well put your head in the oven."

It seems to me there's been a lot of despair about the economy lately. And despair to me is useless. Like Studs said, you might as well put your head in the oven. Well, a nation of people with their heads in the oven is not going to recover from a recession.

Sticking your head in the oven isn't going to keep the unemployment rate from going up or fix the housing market. I'm not sure optimism alone will do those things, either, but it's a better alternative, isn't it?

Rob Minton

Tuesday, March 17, 2009

Are you a battlefield warrior?

Posted: 17 Mar 2009 10:41 AM PDT

Posted by Rob Minton
Follow me on Twitter

Have you ever watched the movie "Troy?" To me, the movie turned out to be a dud, except for one particular scene.

Early in the movie, Brad Pitt's character, Achilles, is headed off to fight a life-or-death battle with an enormous warrior. A young boy was helping Achilles suit up for battle. The young boy had already seen the warrior Achilles was to fight, and he tells Achilles "I have seen the man you have to fight, and I would not want to fight him."

Achilles responds:

"That is why no one will ever remember your name."

The message delivered was that nobody respects or honors those who do not fight. You might be wondering how this relates to real estate investing or wealth building?

In my opinion, it relates on many levels because these things sometimes require you to fight. Those investors who choose not to fight lose massively. Here is what is lost when you decide to quit and not fight:

They lose self-confidence because deep down they know they quit.

They lose money on the actual investment.

They lose the opportunity to become financially free.

In fact, I would bet that most people who decide to quit do not realize the magnitude of what they have lost. They typically look at the short-term outcomes but completely miss the long-term ramifications as noted in No. 3 above.

Let's go back to the movie again and change it a little bit. Let's assume that the warrior is Donald Trump and instead of fighting a battle, he is considering investing in a large skyscraper that is half vacant. The little boy is shining his shoes when he tells Mr. Trump "I have seen the property you are considering investing in, and I wouldn't want to buy that building."

How do you think Trump would respond? The same way Achilles did. He would say:

"That is why you will never be wealthy."

At some point in your life, you need to become a battlefield warrior. If you don't, you will always be at the mercy of someone else. Not long ago, a partner of mine decided to leave our little partnership. I'm fine with him leaving the partnership, but I'm saddened because of the long-term ramifications of his decision. At some point, he needs to decide to fight.

Where are our Battlefield Warriors?

Why is it that when something goes wrong with an investment, most people complain, cry and say things like "This is too hard" or "This doesn't work" or "This isn't for me."

It sometimes feels as though we are becoming a nation of sissies. Why are we so lazy and unwilling to fight for our financial future? Why is giving up the best choice? In Vince Lombardi's famous speech he said:

"And in truth, I've never known a man worth his salt who in the long run, deep down in his heart, didn't appreciate the grind, the discipline. There is something good in men that really yearns for discipline and the harsh reality of head-to-head combat."

This doesn't seem to be the case anymore. It doesn't seem as though many people want to face the harsh reality of head-to-head combat. Instead, they would rather give up and go home.
Here is what author Carlos Castaneda said:

"To be a warrior is not a simple matter of wishing to be one. It is rather an endless struggle that will go on to the very last moment of our lives. Nobody is born a warrior, in exactly the same way that nobody is born an average man. We make ourselves into one or the other."

Building wealth sometimes feels like you are going to war. Many times, things don't go your way. You must become a warrior and fight when this happens.

I challenge you to read any biography of any billionaire and not find countless examples of when they fought. Go read about Andrew Carnegie, John D. Rockefeller, or Donald Trump. I promise you will see that they are all Battlefield Warriors.

Bill Gates had to fight a long and ugly anti-trust lawsuit — he prevailed.

Andrew Carnegie fought several strikes at his steel mills. In one of these strikes, several people were killed — he prevailed.

The "Donald" has fought many battles. In the 1980s he fought with tenants in a building he wanted to tear down. He ended up keeping the building and converting it into condos — he prevailed. (I'm not even going to mention the battle with Rosie O'Donnell…)

John D. Rockefeller battled 20 different government lawsuits against Standard Oil. He lost the lawsuit and was forced to dismantle his company. In the process his wealth escalated further.

Oprah Winfrey had a major battle with the dairy farmers over her comments on mad cow disease — she prevailed.

I could go on and on with billionaire battles, the point being that battling is part of wealth-building. If you are afraid to battle, don't invest in real estate.

You don't have to be a warrior to invest in a mutual fund. Simply mail your check to them and kick back and relax. Just remember, you have to keep saving and saving your money until you're 83-and-a-half so that you can retire some day.

It's your choice; would you rather be Achilles, or the young boy who nobody will ever remember?

Tuesday, March 03, 2009

What are your criteria for evaluating opportunity?

Posted: 03 Mar 2009 11:15 AM PST

If you are the resourceful type, you're probably now seeing opportunities that others don't see in this recession. New business opportunities. New investing opportunities. Maybe new personal or career development opportunities. This is great! The problem with being so resourceful is that you might also be chasing opportunities that you shouldn't be chasing.

I have noticed this during my private consulting meetings with clients. I notice that people have the tendency to chase multiple opportunities at the same time. In almost every instance of this, I recommend that the person stop chasing lower-value opportunities and reinvest their time and resources into other higher-value opportunities.

So how do you determine what opportunities to pursue? This is a million-dollar question, isn't it?

I would suggest setting up your own decision-making criteria. Apply your criteria with every opportunity you consider. Your criteria will help you quickly focus on the best opportunities and eliminate others. Here are a few things for you to think about in creating your "opportunity" criteria.

1. Does this opportunity provide any synergy for you? Does it directly relate to something else you're already doing? Synergy occurs when one opportunity feeds the other. Disney is fantastic about using Synergy in their businesses. One business feeds the other. Disney started with kids movies. Then they moved to theme parks based around characters in the movies. Next, they build resorts for theme park visitors. Notice they didn't go from kids movies to auto manufacturing? Each new opportunity they pursue can be promoted to the same customers. Had they chosen to go into auto manufacturing, they would have to start from ground zero without any momentum.

2. Does the opportunity give you leverage? Can attractive outcomes be obtained from little inputs? For example, I have been asked to provide consulting on many occasions. I could build a consulting business, however, there is zero leverage in consulting. Consulting isn't a business. It's a job in which you trade time for money. I would rather work once and get paid over and over again. See the leverage?

3. Do you have control over the opportunity? Most people don't want control. They would rather be passive and leave the decision-making process and responsibilities up to others. Not me. I want control. I don't like to be dependent upon anyone or anything. I'll pass on opportunities if I don't have control over them.

4. How much do you have to invest and what is the expected return? Your investment includes both your time and your money. Does the opportunity provide an attractive return based on the total required investment? Is there another opportunity that meets your criteria that would provide an overall higher return? One Income for Life member I met with had just made $12,000 on one opportunity with about 15 hours of work. However, he was chasing a new opportunity that provided significantly less return with more risk. I suggested he spend more time on the $12,000 opportunity instead. Be honest when applying this criteria.

5. Am I a fan of the product or service myself? Before Income for Life, I tried to sell products or services that I wasn't using. I struggled. I now only recommend/sell things that I'm using myself. I always go first. This works much better for me.

I use the four criteria above when considering opportunity. This hasn't always been the case. I've chased many opportunities and made some big mistakes. After each mistake, I tried to learn from it. I also tried to determine how to avoid making the same mistake again. This led me to creating my own little system for evaluating opportunity. Don't follow my "opportunity" criteria blindly. Use it to create your own "opportunity" criteria. The point is to have criteria. Don't simply chase every opportunity that comes your way.

MyFavoriteAgent.com

Thursday, July 02, 2009

Monday, June 29, 2009

Friday, June 26, 2009

Tuesday, June 23, 2009

Friday, June 19, 2009

Tuesday, June 16, 2009

Friday, June 12, 2009

Wednesday, June 10, 2009

Tuesday, June 09, 2009

Friday, June 05, 2009

Wednesday, June 03, 2009

Tuesday, June 02, 2009

Friday, May 29, 2009

Tuesday, May 26, 2009

Monday, May 18, 2009

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Thursday, May 07, 2009

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Thursday, April 30, 2009

Monday, April 27, 2009

Monday, April 20, 2009

Thursday, April 16, 2009

Monday, April 13, 2009

Thursday, April 09, 2009

Monday, April 06, 2009

Thursday, April 02, 2009

Monday, March 30, 2009

Monday, March 23, 2009

Tuesday, March 17, 2009

Tuesday, March 03, 2009

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