In the business broker community there is a review process that helps a buyer determine if a business purchase makes sense or not. This check can be done by a Fortune 500 company where everything is f...
In the business broker community there is a review process that helps a buyer determine if a business purchase makes sense or not. This check can be done by a Fortune 500 company where everything is figured down to the penny and takes 1000 hours of research or it can be done by a small main street shop buyer who figures it out in 1 hour. Each item in this review process requires a decision. This decision can be based on extensive research or just on a reasonable guess.
The beauty of this process is; how long you want to spend on doing this activity is totally up to you. As we review this process, I will explain the variables of this system so you can make the necessary decisions where needed. Remember, this is only a tool to help you make decisions about a business purchase; it is not a sure-fire foolproof system. I will just lay it out for you and you make your own decision as to the validity of this formula for analyzing a business purchase that you may want to make.
The Sanity check requires two mathematical formulas, which require dollar amounts or other numbers to be entered in each formula. The math is calculated and then the results are compared against the purchase price. If it doesn’t work out the way you wanted, you have the option of then going back and change some of the numbers and do the calculation a second time.
The two formulas are:
1. SP + WC – BF = CR
Sale Price + Working Capital - Borrowed Funds = Cash Requirement
2. SDE – FMW (FO) – DS - ROI = Extra Profit/Loss
Sellers Discretionary Earnings - Fair Market Wage (for the owner) - Debt Service - Return on Investment (Cash Requirement x Interest rate -Stated as a Percentage) = Extra Profit/Loss
Since each item in the formula needs to have a dollar amount determined, we will define the terms and then discuss how the dollar amount is derived at.
Terms Definition:
Sale Price: The price that is being asked for the business or the price the buyer is thinking of offering. Depending on when you do this analysis. If you are trying to determine an asking price you would calculate all the other numbers in these two formulas to determine what should be your offering price. We will do examples to make this clear later in this article.
Working Capital: The short-term assets minus the short-term liabilities is the accounting definition. The simple explanation would be the amount of money necessary to be invested by the buyer to run the daily operations of the business, once purchased. This would include monies tied up in inventory, and accounts receivables. Money invested to pay the landlord’s or utility company’s deposits. Also included is the money spent on the business purchase to cover the loan origination costs and purchase escrow fees when buying the business. It is the total funds invested into the business to keep it running. The down payment given to the seller is not part of this number, since it is included as a separate item.
Calculation notes:
1. Cost of inventory: $_________________ (+)
2. Accounts receivable: $_________________ (+)
3. Landlord deposit: $_________________ (+)
4. Utility Deposits: $_________________ (+)
5. Escrow fees to purchase: $_________________ (+)
6. Loan origination costs: $_________________ (+)
7. Short term liabilities* $ _________________ (--)
Total Working Capital $_________________
* Short-term liabilities are defined as liabilities that are to be paid off within 1 year – accounts payables and the part of any notes payable that are to be paid within 1 year.
Borrowed Funds: The loan made for a business purchase from a bank or private party. The private party can be the seller or some friend or relative who might be willing to make a loan. This is borrowed money that must be paid back to someone at some time in the future.
Cash Requirement: This is the invested cash required to both buy a business, and working capital-to run the business. The amount of cash needed to make the business purchase and run the operations of the business after deducting all borrowed funds, regardless of source.
Sellers Discretionary Earnings / Owners Total Benefits: This is the total of all the non-business related benefits going to a business owner or his family on an annual basis that have been paid for, by the business. Included in this is definition are taxable profit from operations, unreported cash income, owners salary, salaries to non-working family members, any amount over the fair market value of salaries paid to working family members, family auto expenses, family telephone, family office expenses, health and life insurance for any or all family members, pension plan/ profit sharing contributions paid for the benefit of family members. This can also be stated as the reason why most people go to work everyday; they get family support for working.Calculation notes:
1. Taxable profit from operation $_________________ (+)
2. Cash $_________________ (+)
3. Owners Salary $_________________ (+)
4. Salaries of non-working family members $_________________ (+)
5. Amount over the fair market value of wages
of working Family members $_________________ (+)
6. Family Auto Expenses $_________________ (+)
7. Family Telephone Expense $_________________ (+)
8. Family Office Expense $_________________ (+)
9. Health and Life insurance of
Any/all family members $_________________ (+)
10. Pension plan/profit share family members $_________________ (+)
Total Seller Discretionary Earnings: $_________________
Return on Investment: We need to have this stated as a dollar amount in Formula two. ROI is calculated as follows:
Cash Requirement X “a Percent” - the greater the risk, the higher the percent
First we must determine what the interest rate return we wish on our investment. This is a very subjective percentage and a change in this number can change the whole result of this analysis. If it is of any help, many financial investors in “Corporate America” feels they need to get a 20% return on their invested capital. Companies do not always make money and therefore the possible loses are built into the ROI. Some of the reasons are: companies are bought and go broke, overseas competition causing expectations of growth and income not to be met, and lastly government regulations periodically close whole industries. These are just some of the many risks involved in owning a business.
Putting your money in a bank has little risk, because the Federal Government insures your deposits in the bank. The stock market has a lot of risk that many people do not fully understand, causing them to accept a long term ROI of 10-13% from mutual fund investments. A 95% drop in stock prices like the dot.com stocks or what happened when we had the oil embargo in 1992 are indications that the stock market can be a much higher risk than people realize.
I personally feel that owning your own business and buying real estate are much lower risks, providing a much higher return. The proof of this can be found in the number of people who got rich in real estate and the over 25 million small business owners across this country.
Figure out what ROI you want and insert this number as .20 amount to represent 20% or .06 to represent 6% ROI. This is an annual return on invested money.
Once you have a percentage return on your investment we need to multiply it by the Cash requirement in order to come up with a dollar amount return needed. This restated is Dollars invested x percentage (stated as a decimal) = Dollar return on investment.
Examples:
1) Investment of $50,000.00 @ 6% Return On Investment (ROI) would be calculated as follows: $50,000.00 X .06 = $3,000.000 (Dollars return on investment)
2) Investment of $50,000.00 @ 20% Return On Investment (ROI) would be calculated as follows: $50,000.00 X .20 = $10,000.00 (Dollars return on investment)
Debt Service: The reason we need this number is because this is a financial expense of owning a business. It is not an operating expense of the daily business operations but if you have debt, in your business, you must be able to make the payments, out of the business operations profit. Usually this payment is mostly interest and a smaller portion is the principal reduction of the loan balance.
Most professionals deduct the whole payment when doing this analysis, because the business must generate enough profit to make the whole payment. My personal preference is to just deduct the interest portion and to add the principal portion of the payment to working capital amount needed. This counts as more money being put into the business just like financing inventory and/or accounts receivables.
For simple one-hour analyses it is not worth splitting up the payment. In the case of a very large principal reduction payment it could be unreasonable to not split it up. It is up to you. You can always try it both ways, since this is a process to raise your understanding, not to come up with a fixed answer of, yes! it is a buy or no! it is not a buy.
Fair Market Wages: This is an amount that the new or old owner would be paid, if he were an employee not the owner. If the owner were the company salesman and also the company bookkeeper working a total 60 hours a week, a reasonable salary would have to be determined for each job. As an example only, lets say that an outside salesman, in your industry, could make $40,000 per year. And a bookkeeper usually charges $15 per hour. The salesman might very well work 50 hours at this job to earn this salary. If a bookkeeper would work 10 hours per week doing the bookkeeping that would mean 520 hours per year (10 hours x 52) times $15.00 per hour which comes to $7800 per year for the bookkeeper. The two Fair Market Salaries would come to $47,800 ($40,000 + $7,800).
Sometimes the market salaries are not so easy to figure. Lets take an owner who owns a 99-cent discount type store. This shopkeeper works 70 hours per week behind a counter in the store. You can hire a counter person for $7.00 per hour so this becomes (70 hrs x $7.00 per hour x 52 weeks).
Then you start discussing that this $7.00 per hour counter person would not be able to do the buying. You might want to figure a purchasing agent's salary. This can be done or you can just do simple numbers, leaving the salary only based on a counter person’s wages.
DOING THE MATH
By now you have the information to come up with numbers to put into the formula. Let us create a scenario. This was a transmission shop. The customers pay COD-upon pick up of the car. The parts inventory is from old transmissions and show on the books as worth nothing. The seller-owner is asking $75,000 for this business that he is able to takes out $50,000 in profit or benefits. In an interview, the owner mentioned that if a buyer will put $40,000 as a down payment he would carry the $35,000 balance at 5% interest for 5 years. By observation, we can see that the current owner sits in the office and does the bookkeeping, orders parts and makes bank deposits. He has a manager who bids jobs and handles production. No one is going out and calling on prospective business, which is one thing the owner should be doing with his time, but he is not doing. Lets go through what the numbers are with this example.
Math Formula #1: Sale Price + Working Capital - Borrowed Funds = Cash Requirement
Sales Price: $75,000
Working Capital: The business requires $10,000 cash infusion upon close of escrow, mostly to pay the landlords deposits and start a new marketing campaign.
Borrowed Funds: $35,000
So, the calculation for formula #1 looks like this:
Sales Price: $75,000
Working Capital (+) $10,000
Borrowed Funds (-) $35,000
=Cash Requirement: $50,000.00
Math Formula #2: Sellers Discretionary Earnings - Fair Market Wages For Owner - Debt Service - Return on Investment (Cash Requirement x Percentage) = Extra Profit/Loss
Seller Discretionary Earnings in this case is, let us say, $50,000.00.
Fair Market Wage: You can calculate what you consider fair or you can put all of the other numbers into the equation and see what is left for salary. If you like the salary you buy the business, if not you do not. If we were to calculate what the owner’s salary should be I would not pay much for what he does. Even though he puts in 50 hours a week he really only works 15 hours a week of true production. I am figuring 5 hours for bookkeeping and banking and 10 hours for ordering parts and answering phone calls. At $15.00 per hour he is earning $225.00 a week ($15.00 x 15 hours) and that multiplied times 52 weeks comes to $11,700 per year.
Debt Service: My financial calculator says that if you borrow $40,000 for 5 years (60 months) at 5% and the balance at the end of the 60-month is zero, the monthly payments come to $660.49. Since the formula requires yearly figures we multiply by 12 and get $7,925.92. Most of this payment is principal reduction but we are going to just deduct all of the payment as is generally accepted in the industry.
Return on Investment: We are going to use the 20% figure we discussed above. Formula one determined that $50,000 was needed as an investment which is multiplied by 20% (.20) = $10,000 per year return on investment.
Formula #2 (Sellers Discretionary Earnings - Fair Market Wages (For Owner) - Debt Service - Return on Investment (Cash Requirement x Percentage) = Extra Profit/Loss) would the look like this:
Seller Discretionary Earnings: $50,000.00
- Fair Market Wages: $11,700.00 (-)
- Debt Service: $ 7,925.00 (-)
- Return on investment: $10,000.00 (-)
= Extra Profit/Loss: $20,375.00
This means that after deducting from the income, wages, financing costs and a return on your cash investment the business still generates $20,375 more profit. Now would you buy this business under these circumstances? It would appear, yes! Of course this is based on a few assumptions, which might not be true. Lets look at them again.
The owner is only working 15 hours a week or he is only doing 15 hours of real work even though he is sitting around all day. The other assumption is that a 20% return on your investment is a sufficient return for the risk.
We can also consider that if the new owner puts in an extra 25 hours a week doing productive sales the business should be able to afford to pay him another $20,375 for the first year. It would appear that if the sales work was done then the profit should greatly increase in the second year or maybe even the second month.
Conclusion:
This is a tool to help you analyze a business. It is not the end-all of a business appraisal or evaluation. Just a tool to help increase your understanding of a business’s value that you may be seeking to purchase. Have fun with it.
Home » Archive for January 2017
Richard Parkes Cordock Interview
There is no question that Richard Parkes Cordock is an inspiration.
In his own personal quest to develop his entrepreneurial abilities he interviewed 25 ultra successful millionaire entrepreneurs on everything from the developing the millionaire mindset, right down to dealing with setbacks and disappointment.
Fortunately for all of us, he decided to organise what he learnt into the ground breaking education program called the Millionaire MBA.....
The Interview.
DS: What inspired you to set up Millionaire MBA Ltd?
RPC: I knew if I wanted to become successful as an entrepreneur, I needed to understand what made entrepreneurs successful. I could see that the common bond that glues all successful entrepreneurs together was not their business or choice of industry – but the entrepreneur themselves. More specifically it was the way the entrepreneur thought that set them apart.
I knew if I could ‘model’ their ‘millionaire mindset’ - not only would I fast track my own success as an entrepreneur, but I would be able to create a valuable training course which would benefit others.
DS: Did you have any help setting up the company or were you going it alone?
RPC: In the very first weeks of the idea I actually started working with another friend. It was clear at the outset that we had different ideas on what to develop and shortly after we went our separate ways.
From then on I built the core of the course myself.
After 6 months or so, my wife joined me in the business and I’m glad she did because there is no way I could have created Millionaire MBA without her. I certainly underestimated how much effort it would take to build the course and working with her made me realise the importance of teamwork right from the beginning.
In developing the course I have also relied heavily on external specialists and professionals.
DS: What was the biggest challenge you faced in bringing your idea to fruition? How was it overcome?
RPC: The biggest challenge initially was finding the courage to go it alone. But once I had made the decision and got the momentum moving, the challenges were just part of the journey. I talk of euphoric highs and crushing lows as an entrepreneur - but it is funny looking back - the lows just seem to disappear away, and only the highs remain.
To answer your question though - I did think at the time that ‘creating the course’ was the biggest challenge. But now I am in the sales and marketing stage - I realise that this is the biggest challenge.
The only way to overcome this or any challenge is to educate yourself, surround yourself with other people who can help you reach your goals - and get on and do it!
DS: What makes you most proud of your achievements with Millionaire MBA Ltd?
RPC: I am most proud of the product I have developed. I brought together 25 ultra-successful UK entrepreneurs to build a unique home-study system for other entrepreneurs and business owners.
No one has ever done this before and I am thrilled with the learning and wisdom contained within the course. It makes me very proud when I hear how it has changed the lives of our customers.
DS: How did you actually fund your business to get it off the ground?
RPC: I fortunately had some savings from my previous years working. The year before I started Millionaire MBA I was fired from my job and decided then to go it alone as a management consultant. I was lucky and was immediately asked to manage a project for one year. It paid well and I managed to save some cash.
I must say I was surprised at how expensive it was to build the course and the business – the expense was never ending. Everything takes four times as long and costs four times as much as anticipated. It is probably four times as much fun though.
DS: What attributes make a successful entrepreneur?
RPC: Ah this is my specialist subject, so rather than going into detail here, why don’t I just direct you to www.millionairemba.com. Sign up and download some of the free information!
DS: What do you believe are the necessary elements for a business venture to succeed?
RPC:
1. An entrepreneur who will make it happen
2. A good commercial idea at a price which people will pay money for
3. Access to a market or access to your prospective customers
4. The right balance of the 4 P’s of marketing
5. Access to a team of people who can make it happen
6. Some money to make it happen (although this should not be a barrier - if your will is there, then the money will follow)
DS: How essential do you see a University education in achieving success as an entrepreneur?
RPC: I personally do not think a university education is necessary at all to be an entrepreneur. I do however think it is a great start in life and would encourage anyone to take this path. If for nothing else - it’s great fun and you make some of your best friends in life there.
DS: What are the three most important lessons you have learned about business and entrepreneurship?
RPC:
1. Believe in yourself and your product. If I did not believe in what I offered and what I do - I would not continue. The 4’P’s: Price, Product, Promotion and Placement are critical. If you can get the right balance of these (by testing) - then your success will follow.
2. Customer is king. Deliver what your customer wants at a price they will pay. Just because you know what you are offering is great value - your customer may not. Make it easy for them to buy.
3. Never give up. Success is not easy and persistence is crucial. Get the fundamentals right and then go for it - and keep going (testing, refining and tweaking your offer all the way).
DS: What advice would you give to an aspiring entrepreneur?
RPC:
1. My first piece of advice for aspiring entrepreneurs is to BECOME an entrepreneur. Do not just talk about it - do it. Get out there and start something (even if it is part time). I can guarantee that you will make thousands of mistakes as an entrepreneur - so it is best to get started now. The more mistakes you make - the more you learn, so why wait?
2. My second piece of advice is educate yourself and learn from others who are successful. There are REPEATABLE AND CONSISTENT RULES for success as an entrepreneur - it makes sense to learn them!
DS: What's the number one book you would recommend to aspiring entrepreneurs?
RPC: Think and Grow Rich (written in 1937 by Napoleon Hill) stands out from the rest.
It was this book which inspired me to carry on the work of Napoleon Hill and create Millionaire MBA. I have actually just written a book which will be published in early 2006 and brings together some of the thinking in Think and Grow Rich and Millionaire MBA. As an entrepreneur it would be wrong of me not to mention this book!
DS: What memorable mistakes, if any, have you made in business? What did you learn from them and how can they be avoided?
RPC: The biggest mistake I made was to do an exclusive marketing deal and give up the marketing control of my product. I have now reversed that deal and will never do that again.
What I learned from that is that no one else will be as passionate, driven to succeed or focused on your company’s success as you. People will tell you how great they are and how much success they can create for you – but the only thing that matters is the results they produce.
So the learning from this mistake is keep total control of your business and follow your gut instinct. If you have ANY doubt when taking on a new business partner - walk away! Business is like a marriage - you would never have any doubt about your wife or husband!
DS: What are the best and worst things about being an entrepreneur?
RPC: The best thing is the freedom! Never being told what to do, and not having a boss!
The worst thing - everything rests on you. There is nowhere to hide and mistakes can cost you dearly. But at least you soon know if you are any good at what you do!
DS: Are there any other thoughts, insights, or advice for aspiring entrepreneurs that you'd like to add?
RPC: There is a big picture here which is important to look at. We live for 70-80 years on average. Most of that time is spent working, so we better do something we enjoy!
Most employees do not actually earn enough to become financially independent - compared to most entrepreneurs who do (eventually!).
The skills you develop as an entrepreneur are so wide and varied (and commercial) that they are skills for life.
Whereas most people are focused on working, earning and spending money (not saving, having a pension or preparing for later life), entrepreneurs spend their time creating value, having fun doing it and building a business that will give them financial independence.
I would say to any aspiring entrepreneur - what is it you want to get out of life? If you want a fun rollercoaster of a life and experience true independence - become an entrepreneur. If not - get a job!
Retailing Comes of Age
Have you been to buy any dog food lately? Do you remember the days when you just picked it up in the supermarket and kept walking?
Walk into any pet “box store” today and it’s a whole new experience. Prior to purchasing today’s canine’s lunch, you need to know the age and size of your dog. If you don’t know these two critical facts, the shopping experience could be a very frustrating one. In a store I recently visited in the UK, the actual merchandising was based on the age of the dog. Generational marketing has hit the pet store.
Generational Marketing!
Generational marketing is big business, the days of targeting lifestyle groups is being replaced by setting your store up to market to a specific age group.
Toy retailers and some bookstores have been into generational marketing for many years, as has the fashion industry, but this concept of marketing is now spreading across all retail sectors.
So how do you split up your merchandising to attract specific age groups? Firstly, what groups are out there that you need to be aware of?
Generational Marketing- The Main Groups
Researchers are now splitting the community into very specific age groups for marketing purposes.
Generation Y
This group are today’s teenagers and those in their very early twenties. They are very specific in their purchasing decisions and need to perceive a retail business and its product range as “cool.” It is difficult to integrate the desires of this group into most retail stores and as a result, in many retail sectors, companies have set up specific stores just to attract this target group.
Music, mood, colour and style are all very specific to this group to ensure they have the right retail experience.
Generation X, the IKEA Babies
This mid twenties to mid thirties age group is a big “power house” when it comes to buying. IKEA, the Swedish furniture lifestyle company built a global business targeting this group and as a result, their founder is now the richest man in the world.
IKEA babies are happy to spend for value. Their idea of value is that it is a lifestyle statement that literally comes in a box. They can take it home and create an instant statement. They are looking for lifestyle fashion statements and expect the retailer they frequent to be in tune with the latest fashion colours, styles and trends.
This computer literate group expects quality customer service. Talk down to them and you’ll probably lose them for life.
The Jones Generation
This 35 to 49 year old age group is a busy lot, they want an experience when they go shopping, but are time poor and if you waste their time you’ll be crossed off their visit list.
They are experimenters; they are shopping for new and exciting ideas and quickly get bored with retailers who, in their view, are not keeping them entertained with new ideas and new ways of putting old products together.
Present the right products to them and they are prepared to Do It themselves (D.I.Y) A recent survey in the UK in the home improvement sector indicated they are still prepared to spend large amounts of money on the D.I.Y sector.
The Baby Boomers
They are in their fifties. They still have a major impact on retailing as indicated by the large amount of Ray Charles’ music being purchased on his untimely death.
This sector has money, but no time. They are in the D.I.M (Do It for Me) sector and have driven new business sectors in landscape design, rent a “hubby” and chefs preparing meals in their homes. They have driven the organic food movement and the “slow” movement.
They are prepared to pay for someone to remove stress, yet also still want to be involved and are prepared to pay to indulge in the fun part of the task and to purchase the fashion statements.
Greying Tigers
This final group are the over 60’s. Researchers, a few years ago suggested that this group would be an affluent, stay at home sector and as a result gardening and entertainment would boom,
The home improvement industries have reaped the rewards of this growing group but not to the extent they thought.
This group of greying tigers is not staying at home. The cruise industry, golf courses, theatre, restaurants and general travel industry have all grown rapidly by targeting this adventurous group.
They are the most price sensitive and nostalgic sector of the population, but give them a comfortable experience and they will be loyal.
Your Challenge
The real challenge with generational marketing is that you need to create excitement and sanctuary for all these groups, often in the same building. It’s not easy, especially when you try and mix Greying Tigers with the IKEA babies, but get it right and business should blossom.
Ten Generational Marketing Retail Tips
1.Change the music style during the day to attract different age groups into your store at specific times of the day.
2.Have Generation X style workshops on a specific day of the week to attract that age group.
3.Have a “discount” day for Greying Tigers on one day a week. You may want to promote this via old peoples’ homes.
4.Use colour theming throughout the store to distinguish different zones by the use of colour.
5.Provide children’s activity days on a specific day of the week to attract the Jones Generation.
6.Display products in different combinations to attract different age groups
eg:
D.I.Y Package
D.I.M Package
D.I.W Packages (Do It With Me)
7.Promote services from your store to attract Baby Boomers. This may be a window cleaning service in a curtain category or a landscape design service in a garden centre.
8.Read the magazines that are targeted to the different age groups, so you’re aware of what they are being exposed to.
9.Make sure printed signs are in bigger print when targeting Greying Tigers.
10.Keep changing; your consumers are.
Retail Operations - Effective Branch Manager Support And Guidance
Performance and behaviour management is by far the most difficult aspect of any manager’s job and the reluctance to ‘grasp the nettle’ when performance or behaviour issues emerge is certainly a concer...
Performance and behaviour management is by far the most difficult aspect of any manager’s job and the reluctance to ‘grasp the nettle’ when performance or behaviour issues emerge is certainly a concern in many organisations. But at the end of the day that is what managers are paid to do and not doing so will certainly affect service, team morale, sales and ultimately the bottom line.
Why does this reluctance exist, why do so many mangers back away from confrontation? The problems and challenges that need to be overcome are many and the common reasons and ‘excuses’ for not doing so are as follows:
It is Risky – There is a worry in the back of the manager’s mind that discussions could turn into heated arguments and that they may open themselves up for harassment or bullying accusations. There is also a concern that team moral and motivation may be damaged by tackling an under-performer and that the team may even turn against the manager.
It is Complicated and Difficult– Performance and behaviour management is not straight forward, it is very seldom clear cut or black and white. It is ‘grey area’ stuff and often involves opinions, perceptions and subjectivity. As managers feel they cannot quantify and then justify their concerns clearly enough they do not attempt to do so.
It is Hard Work and Time Consuming – Many managers feel they do not have the time to sort out under-performers and that it is low on the priority list. “It is not worth the hassle” is a common comment to be heard.
Denial – Many managers are either blind to the fact that a person is under-performing or behaving unacceptably or they do not see it is a serious enough issue to address. There are even managers who believe that it is not their job to tackle performance and behaviour issues and that some day, someone will come along and do it for them.
Many of the aforementioned points tend to be excuses rather than reasons but there are a number of more important points that need to be taken into consideration:
Lack of Training – No new manager has any previous experience of performance and behaviour issues when they move into a manager role for the first time. New managers often inherit performance or behaviour issues from the previous manager and yet are not given relevant training for tackling these issues from the onset. Giving managers basic employment law training and the company procedures to read is not the ‘practical’ training they need and is certainly insufficient on its own. All managers need a thorough grounding in the use of the performance management tools and practice in their use. Job specs, probationary periods, reviews, counselling sessions, appraisals and the disciplinary procedures are all useful performance and behaviour tools when used correctly and at the right time. Yet this vital training is not made on someone’s appointment, often it is made later in their careers when much damage has been done.
Courage and Confidence – Doing something risky, difficult and complicated requires both courage and confidence. Unfortunately many branch managers lack both. Even if managers are given the knowledge and skill to tackle performance or behaviour issues, they will not do so without these essential qualities.
The problems and challenges are undoubtedly great and many may see the issue as un-resolvable however there is someone available to branch managers who can help them overcome many of the problems and challenges and that someone is their boss the Area Manager.
Guidance, Coaching and Support
The area manger is the only person who can guide, coach and support branch managers in the addressing of performance or behaviour issues. They can un-complicate the issues and help managers build a strong case for presenting to an employee. The area manager can also help the manager minimise the risk of harassment or bullying claims by ensuring the correct procedures are being used and that the managers say the right things in the correct way.
More importantly a good area manager will ‘encourage’ and give the manager much needed confidence. The area manager is the only one who can do this but unfortunately in many instances this is not happening and by not doing so area managers are unconsciously (or consciously) influencing a reluctance to tackle performance or behaviour issues within their branches.
Why is this happening?
Asking for support and guidance – Many branch managers are certainly reluctant to approach their area manager when they experience performance or behaviour issues within the team. If the matter falls into the gross misconduct category then managers will contact the area manager (and HR function) in the first instance. But for ‘grey area’ performance or behaviour matters they tend to keep the issues to themselves.
The reasons for this are as follows:
Many branch managers feel:
- The area manager may see it as a trivial matter and not important enough to bring to their attention.
- That seeking advice and guidance will be seen in a negative way by the area manager.
- The area manager will go into fault finding mode rather than helping find solutions.
- The area manager may start questioning the branch manager’s ability to do the job.
Many managers have in the past gone to their area mangers for advice and support on team performance issues but received such a negative, unhelpful reply that many were put off from ever doing so again, even when they changed to a different area manager.
There is also a feeling that area managers themselves do not know what to do either. “Bring me solutions not problems” is a common comment heard by branch managers when they have taken a ‘people’ issue to their area manager.
Offering support and guidance
It is a fact that very few area managers actively encourage branch managers to talk about their ‘people’ issues or are prepared to probe below the surface to identify possible performance or behaviour problems that may be affecting the business. There are many examples where area managers have placed managers in ‘problem’ branches without preparing them for the issues they will face or helped or supported them once they have taken up the position. Basically they throw them to the wolves and then leave them to get on with it.
Another common issue is when the assistant manager of the branch is turned down for the manager position. Very few area managers are competent in explaining why an individual was not appointed and give excuses rather than valid reasons. This results in the new manager having to experience considerable hostility and resentment from not only their deputy but from many of the team also.
Why do many area managers not offer support or guidance or dig below the surface looking for performance issues? There are a number of reasons for this.
Unconscious Competence
There is a saying that
“Good Management will result in good people staying and not-so-good people either improving or leaving. Where as Bad Management will result in good people leaving and not-so-good people staying and possibly getting even worse”.
During their time as branch managers, many area managers did not experience risky, difficult or complicated people issues. If they did, they often resolved them unconsciously. They just acted as good managers should, which resulted in the issues being resolved quickly. Ask any manager who is competent in performance or behaviour management “how do you do it or what do you do?” and you will probably receive a shrug of the shoulders and a comment like “I don’t know specifically, I just do it” (Unconscious Competence)
Unconscious competence is not acceptable at area management level as a key requirement of the job is to coach and train branch managers in performance management. Area managers can only fulfil this critical function if they know exactly what is to be done and how to do it. (Conscious competence)
Conscious Incompetence
Unfortunately there are area managers in existence who ‘know’ they are not personally competent in dealing with performance and behaviour issues and will go to great lengths not to expose this weakness to others. (Conscious incompetence) These area managers tend to encourage branch managers to not make waves, maintaining the status quo and to tolerate rather than develop. They certainly do not dig below the surface in a branch seeking ‘people’ issues that may be affecting the business.
One of the most disappointing comments I heard from a seasoned area manager when asked why he was not supporting his managers was “I am not allowed to get involved as I am the next step of the appeal process”.
A good measure of an area manager’s competence is to look at the performance and behaviour of the area manager’s branch manager team. It is pretty certain that if they cannot coach and encourage branch mangers in the tackling of performance and behaviour issues then you can be sure they themselves are not tackling branch manager performance or behaviour issues.
Possible Solutions
If a retail organisation needs to tackle performance or behaviour issues at branch levels, I believe they need to develop the skills and competence of performance management at area management level first as area managers alone have the authority and are the biggest influence on branch manager effectiveness.
Unconscious competent area managers need to become consciously competent so they can not only develop others but also develop themselves further. Conscious incompetent area managers need to admit that they are not effective in performance or behaviour management and be prepared to learn and develop the necessary skills. If they are not prepared to do so then they themselves need to be performance managed by the company. After all, Executives cannot demand that branch managers tackle performance and behaviour issues one moment and then not do so themselves when they need to. That isn’t leading by example.
Performance and behaviour management is by far the most difficult aspect of any manager’s job and the reluctance to ‘grasp the nettle’ when performance or behaviour issues emerge is certainly a concern in many organisations. But at the end of the day that is what managers are paid to do and not doing so will certainly affect service, team morale, sales and ultimately the bottom line.
Why does this reluctance exist, why do so many mangers back away from confrontation? The problems and challenges that need to be overcome are many and the common reasons and ‘excuses’ for not doing so are as follows:
It is Risky – There is a worry in the back of the manager’s mind that discussions could turn into heated arguments and that they may open themselves up for harassment or bullying accusations. There is also a concern that team moral and motivation may be damaged by tackling an under-performer and that the team may even turn against the manager.
It is Complicated and Difficult– Performance and behaviour management is not straight forward, it is very seldom clear cut or black and white. It is ‘grey area’ stuff and often involves opinions, perceptions and subjectivity. As managers feel they cannot quantify and then justify their concerns clearly enough they do not attempt to do so.
It is Hard Work and Time Consuming – Many managers feel they do not have the time to sort out under-performers and that it is low on the priority list. “It is not worth the hassle” is a common comment to be heard.
Denial – Many managers are either blind to the fact that a person is under-performing or behaving unacceptably or they do not see it is a serious enough issue to address. There are even managers who believe that it is not their job to tackle performance and behaviour issues and that some day, someone will come along and do it for them.
Many of the aforementioned points tend to be excuses rather than reasons but there are a number of more important points that need to be taken into consideration:
Lack of Training – No new manager has any previous experience of performance and behaviour issues when they move into a manager role for the first time. New managers often inherit performance or behaviour issues from the previous manager and yet are not given relevant training for tackling these issues from the onset. Giving managers basic employment law training and the company procedures to read is not the ‘practical’ training they need and is certainly insufficient on its own. All managers need a thorough grounding in the use of the performance management tools and practice in their use. Job specs, probationary periods, reviews, counselling sessions, appraisals and the disciplinary procedures are all useful performance and behaviour tools when used correctly and at the right time. Yet this vital training is not made on someone’s appointment, often it is made later in their careers when much damage has been done.
Courage and Confidence – Doing something risky, difficult and complicated requires both courage and confidence. Unfortunately many branch managers lack both. Even if managers are given the knowledge and skill to tackle performance or behaviour issues, they will not do so without these essential qualities.
The problems and challenges are undoubtedly great and many may see the issue as un-resolvable however there is someone available to branch managers who can help them overcome many of the problems and challenges and that someone is their boss the Area Manager.
Guidance, Coaching and Support
The area manger is the only person who can guide, coach and support branch managers in the addressing of performance or behaviour issues. They can un-complicate the issues and help managers build a strong case for presenting to an employee. The area manager can also help the manager minimise the risk of harassment or bullying claims by ensuring the correct procedures are being used and that the managers say the right things in the correct way.
More importantly a good area manager will ‘encourage’ and give the manager much needed confidence. The area manager is the only one who can do this but unfortunately in many instances this is not happening and by not doing so area managers are unconsciously (or consciously) influencing a reluctance to tackle performance or behaviour issues within their branches.
Why is this happening?
Asking for support and guidance – Many branch managers are certainly reluctant to approach their area manager when they experience performance or behaviour issues within the team. If the matter falls into the gross misconduct category then managers will contact the area manager (and HR function) in the first instance. But for ‘grey area’ performance or behaviour matters they tend to keep the issues to themselves.
The reasons for this are as follows:
Many branch managers feel:
- The area manager may see it as a trivial matter and not important enough to bring to their attention.
- That seeking advice and guidance will be seen in a negative way by the area manager.
- The area manager will go into fault finding mode rather than helping find solutions.
- The area manager may start questioning the branch manager’s ability to do the job.
Many managers have in the past gone to their area mangers for advice and support on team performance issues but received such a negative, unhelpful reply that many were put off from ever doing so again, even when they changed to a different area manager.
There is also a feeling that area managers themselves do not know what to do either. “Bring me solutions not problems” is a common comment heard by branch managers when they have taken a ‘people’ issue to their area manager.
Offering support and guidance
It is a fact that very few area managers actively encourage branch managers to talk about their ‘people’ issues or are prepared to probe below the surface to identify possible performance or behaviour problems that may be affecting the business. There are many examples where area managers have placed managers in ‘problem’ branches without preparing them for the issues they will face or helped or supported them once they have taken up the position. Basically they throw them to the wolves and then leave them to get on with it.
Another common issue is when the assistant manager of the branch is turned down for the manager position. Very few area managers are competent in explaining why an individual was not appointed and give excuses rather than valid reasons. This results in the new manager having to experience considerable hostility and resentment from not only their deputy but from many of the team also.
Why do many area managers not offer support or guidance or dig below the surface looking for performance issues? There are a number of reasons for this.
Unconscious Competence
There is a saying that
“Good Management will result in good people staying and not-so-good people either improving or leaving. Where as Bad Management will result in good people leaving and not-so-good people staying and possibly getting even worse”.
During their time as branch managers, many area managers did not experience risky, difficult or complicated people issues. If they did, they often resolved them unconsciously. They just acted as good managers should, which resulted in the issues being resolved quickly. Ask any manager who is competent in performance or behaviour management “how do you do it or what do you do?” and you will probably receive a shrug of the shoulders and a comment like “I don’t know specifically, I just do it” (Unconscious Competence)
Unconscious competence is not acceptable at area management level as a key requirement of the job is to coach and train branch managers in performance management. Area managers can only fulfil this critical function if they know exactly what is to be done and how to do it. (Conscious competence)
Conscious Incompetence
Unfortunately there are area managers in existence who ‘know’ they are not personally competent in dealing with performance and behaviour issues and will go to great lengths not to expose this weakness to others. (Conscious incompetence) These area managers tend to encourage branch managers to not make waves, maintaining the status quo and to tolerate rather than develop. They certainly do not dig below the surface in a branch seeking ‘people’ issues that may be affecting the business.
One of the most disappointing comments I heard from a seasoned area manager when asked why he was not supporting his managers was “I am not allowed to get involved as I am the next step of the appeal process”.
A good measure of an area manager’s competence is to look at the performance and behaviour of the area manager’s branch manager team. It is pretty certain that if they cannot coach and encourage branch mangers in the tackling of performance and behaviour issues then you can be sure they themselves are not tackling branch manager performance or behaviour issues.
Possible Solutions
If a retail organisation needs to tackle performance or behaviour issues at branch levels, I believe they need to develop the skills and competence of performance management at area management level first as area managers alone have the authority and are the biggest influence on branch manager effectiveness.
Unconscious competent area managers need to become consciously competent so they can not only develop others but also develop themselves further. Conscious incompetent area managers need to admit that they are not effective in performance or behaviour management and be prepared to learn and develop the necessary skills. If they are not prepared to do so then they themselves need to be performance managed by the company. After all, Executives cannot demand that branch managers tackle performance and behaviour issues one moment and then not do so themselves when they need to. That isn’t leading by example.
Residual Income Is The Best Kind Of Income
The concept of this is for you to offer a subscription type product as an upsell or backend product. For example, if you're selling an ebook for $37 offer a subscription to a related e-zine for $9.95 a month. Instead of an e-zine, it could be monthly updated information for the ebook.
It's not just for e-books, you can make it work for any product or service you sell. Some subscriptions that might work for your product could be:
- e-mail/telephone consulting
- a private or members only web site
- print newsletters/magazines
- product updates
- subscription warrantees
- product insurance
- e-zine/webzines
- the ideas are endless.....
The subscription product should be related to the product or service you're selling. You could charge a weekly, monthly, or yearly subscription for the upsell product. You could sell your main product and upsell product as a total subscription package deal. You wouldn't charge the one-time price for your main product; you would just charge the basic subscription price of the upsell product.
The major benefits are that you don't have to keep creating new upsell and back end products. Once you get enough subscribers you won't have to sell anymore, you just keep generating income from your current subscribers. You would only have to sell again if you lost a lot of subscribers.
Article Tags: Upsell Product
Residual income awaits only by staying in the game
Remember the 7 words of ... any walk of life, sport, ... family life, etc, there are always going to be times when you feel like throwing in the towel. Its human nature, we do not enjoy co
Remember the 7 words of success
In any walk of life, sport, business, family life, etc, there are always going to be times when you feel like throwing in the towel. Its human nature, we do not enjoy conflict, lack of progress, always finishing runner up. The 7 words are simple and can’t be underestimated “never give up, never never give up". Historians say that Churchill’s exploits in the second world war is the best testimony to these words. When the whole world thought that Britain were doomed, by adopting a never say die attitude they eventually prevailed. I think what start up business’s need to digest here is that success is very much possible but
1) You are always are going to go through rough times and you need to accept this fact immediately
2) When rough times strike, you need to react to the situation correctly.
Its a common fact that all the entrepreneurs making it on the internet today are not the best marketers, they are not the best web designers and not the best business people. In basic terms they are making it because they are the ones that want it the most. Whatever you do in life, its not how good and talented you are in any given area, it inevitably comes down to how badly you want it. Drive and dogged determination are huge traits that entrepreneurs have in the modern age. They thrive on challenges, determined that the challenges wont get the better of them. In time like Churchill, they overcome them.
If you are going out on your own for the first time online, I suggest choosing a business where a team is incorporated. There are a multitude of programs where you can still have your own home business but will also work as part of a team. Here if rough times strike, at least you will have more than one head to tap into to solve the problem. When you are more experienced and would like to do something off your own back, you can always start another venture where maybe the risk in the start-up period would be greater.
Nobody says that online business is easy. Like everywhere there is alot of competition and alot of marketing work must be done in order to drive potential customers to your web site. Don’t expect big returns in this period and don’t let lack of income affect your drive for your business. It’s imperative in these times to keep working diligently to your plan believing that your present work is for future investment. The real question that each individual must ask themselves internally is how far you will go and how determined you are to succeed in creating YOUR OWN business. If the answer is positive, believe me you are half way there already.
Remember the 7 words of success
In any walk of life, sport, business, family life, etc, there are always going to be times when you feel like throwing in the towel. Its human nature, we do not enjoy conflict, lack of progress, always finishing runner up. The 7 words are simple and can’t be underestimated “never give up, never never give up". Historians say that Churchill’s exploits in the second world war is the best testimony to these words. When the whole world thought that Britain were doomed, by adopting a never say die attitude they eventually prevailed. I think what start up business’s need to digest here is that success is very much possible but
1) You are always are going to go through rough times and you need to accept this fact immediately
2) When rough times strike, you need to react to the situation correctly.
Its a common fact that all the entrepreneurs making it on the internet today are not the best marketers, they are not the best web designers and not the best business people. In basic terms they are making it because they are the ones that want it the most. Whatever you do in life, its not how good and talented you are in any given area, it inevitably comes down to how badly you want it. Drive and dogged determination are huge traits that entrepreneurs have in the modern age. They thrive on challenges, determined that the challenges wont get the better of them. In time like Churchill, they overcome them.
If you are going out on your own for the first time online, I suggest choosing a business where a team is incorporated. There are a multitude of programs where you can still have your own home business but will also work as part of a team. Here if rough times strike, at least you will have more than one head to tap into to solve the problem. When you are more experienced and would like to do something off your own back, you can always start another venture where maybe the risk in the start-up period would be greater.
Nobody says that online business is easy. Like everywhere there is alot of competition and alot of marketing work must be done in order to drive potential customers to your web site. Don’t expect big returns in this period and don’t let lack of income affect your drive for your business. It’s imperative in these times to keep working diligently to your plan believing that your present work is for future investment. The real question that each individual must ask themselves internally is how far you will go and how determined you are to succeed in creating YOUR OWN business. If the answer is positive, believe me you are half way there already.
Require Email Processor
Email Processors Required - Earn $5 Per email processedWork at home as an email processor.Earn $5 for every email processed directly to your account.No waiting for pay day!For full details visithttp:...
Email Processors Required - Earn $5 Per email processed
Work at home as an email processor.
Earn $5 for every email processed directly to your account.
No waiting for pay day!
For full details visit
http://www.typeinternational.com/cgi-bin/affiliates/aff.cgi?a=752&t=ep
Email Processors Required - Earn $5 Per email processed
Work at home as an email processor.
Earn $5 for every email processed directly to your account.
No waiting for pay day!
For full details visit
http://www.typeinternational.com/cgi-bin/affiliates/aff.cgi?a=752&t=ep
Remember the 7 words of success
Remember the 7 words of ... any walk of life, sport, ... family life, etc, there are always going to be times when you feel like throwing in the towel. Its human nature, we do not enjoy co
Remember the 7 words of success
In any walk of life, sport, business, family life, etc, there are always going to be times when you feel like throwing in the towel. Its human nature, we do not enjoy conflict, lack of progress, always finishing runner up. The 7 words are simple and can’t be underestimated “never give up, never never give up". Historians say that Churchill’s exploits in the second world war is the best testimony to these words. When the whole world thought that Britain were doomed, by adopting a never say die attitude they eventually prevailed. I think what start up business’s need to digest here is that success is very much possible but
1) You are always are going to go through rough times and you need to accept this fact immediately
2) When rough times strike, you need to react to the situation correctly.
Its a common fact that all the entrepreneurs making it on the internet today are not the best marketers, they are not the best web designers and not the best business people. In basic terms they are making it because they are the ones that want it the most. Whatever you do in life, its not how good and talented you are in any given area, it inevitably comes down to how badly you want it. Drive and dogged determination are huge traits that entrepreneurs have in the modern age. They thrive on challenges, determined that the challenges wont get the better of them. In time like Churchill, they overcome them.
If you are going out on your own for the first time online, I suggest choosing a business where a team is incorporated. There are a multitude of programs where you can still have your own home business but will also work as part of a team. Here if rough times strike, at least you will have more than one head to tap into to solve the problem. When you are more experienced and would like to do something off your own back, you can always start another venture where maybe the risk in the start-up period would be greater.
Nobody says that online business is easy. Like everywhere there is alot of competition and alot of marketing work must be done in order to drive potential customers to your web site. Don’t expect big returns in this period and don’t let lack of income affect your drive for your business. It’s imperative in these times to keep working diligently to your plan believing that your present work is for future investment. The real question that each individual must ask themselves internally is how far you will go and how determined you are to succeed in creating YOUR OWN business. If the answer is positive, believe me you are half way there already.
Remember the 7 words of success
In any walk of life, sport, business, family life, etc, there are always going to be times when you feel like throwing in the towel. Its human nature, we do not enjoy conflict, lack of progress, always finishing runner up. The 7 words are simple and can’t be underestimated “never give up, never never give up". Historians say that Churchill’s exploits in the second world war is the best testimony to these words. When the whole world thought that Britain were doomed, by adopting a never say die attitude they eventually prevailed. I think what start up business’s need to digest here is that success is very much possible but
1) You are always are going to go through rough times and you need to accept this fact immediately
2) When rough times strike, you need to react to the situation correctly.
Its a common fact that all the entrepreneurs making it on the internet today are not the best marketers, they are not the best web designers and not the best business people. In basic terms they are making it because they are the ones that want it the most. Whatever you do in life, its not how good and talented you are in any given area, it inevitably comes down to how badly you want it. Drive and dogged determination are huge traits that entrepreneurs have in the modern age. They thrive on challenges, determined that the challenges wont get the better of them. In time like Churchill, they overcome them.
If you are going out on your own for the first time online, I suggest choosing a business where a team is incorporated. There are a multitude of programs where you can still have your own home business but will also work as part of a team. Here if rough times strike, at least you will have more than one head to tap into to solve the problem. When you are more experienced and would like to do something off your own back, you can always start another venture where maybe the risk in the start-up period would be greater.
Nobody says that online business is easy. Like everywhere there is alot of competition and alot of marketing work must be done in order to drive potential customers to your web site. Don’t expect big returns in this period and don’t let lack of income affect your drive for your business. It’s imperative in these times to keep working diligently to your plan believing that your present work is for future investment. The real question that each individual must ask themselves internally is how far you will go and how determined you are to succeed in creating YOUR OWN business. If the answer is positive, believe me you are half way there already.
Recruiters for MSN or Data Miners?
Overview: Imagine receiving a phone call saying MSN Microsoft is interested in hiring you, but first you must go through a 45 minute phone interview. Discover how your company’s vital data is in jeopardy.
A word of caution: Are recruiting and marketing analytics’ companies enabling the next wave of identity and corporate information theft?
As a founder and owner of ValorCrossMedia.com an Online Advertising and Marketing company with 15+ years of experience in the field I could not have been more weary when a man from Kenexa called me, allegedly to recruit me for a job in New York as a Search Marketing Analyst for Microsoft’s new MSN search engine.
The first time he called he said he was looking for someone to do work for Fortune 400 clients. I told him I was really busy and that I usually deal with smaller clients. He didn’t think that would be a problem … he was very insistent to talk to me. I suggested I’d call him back, so we left it up in the air for a few weeks and I forgot about him.
Then he called me a second time, telling me I was supposed to call him and set up an interview. He practically begged me to do a 45-minute phone interview to see if I was right for the “job.” He e-mailed me and sent me a very generic job description that was more like a classified newspaper ad than anything else.
Well, something smelled fishy about the whole thing, but if it was for real how could I turn down a chance to get some high-paying work from Microsoft, so I agreed to the interview and we set a date.
The phone interview was unlike any job interview I have ever had while working for Fortune 400 companies in the past.
The man never mentioned my resume, never asked about my work experience or salary requirements, had absolutely no interest in me as an individual or asked any of the usual questions a company asks when trying to size up a potential employee.
Instead he was interested in my clients, their budgets, my current involvement in search word optimization, how much time I spend on each client and was very interested in only the most negative experiences with clients, asking me to name them more than once (which I refused to do). This went on for about half an hour, with him finally asking me
“Can you give me some of the specifics of an optimal (website) life-cycle and what happens in that life cycle?”
I answered with “I can’t give you specifics without looking at my data.”
Then came the kicker …
“Do you have your data with you?”
“This guy seems to wants it all,” I thought. He wants to know nothing about my qualifications for this “job” but he doesn’t mind asking me l about my clients, my strategies and pretty much how a small, successful web design and online advertising and marketing company like ValorCrossMedia.com keeps its clients and now he wants to see my data?
I said “This information is confidential.”
At the end of the interview, and without asking a single question about my background, experience in a corporate environment, expectations, or any kind of question that was even remotely related to me, or that provided me with information about the job, the interviewer notified me: ”I don’t think I am getting the answers I need” then he added ”I don’t think I am getting the answers Microsoft wants”, and hung up the phone on me rather briskly..
After the interview I got very curios as to why Microsoft would not do their own hiring and I found out that they do at GotDotNet.ru Microsoft is actively recruiting for MSN in Russia according to their website, and if you are interested, please email your CV in English to russiacv@microsoft.com. MSN is also hunting for AdCenter Marketers at the Career page on MSN's web site with some jobs in New York, but mostly in Washington State. I have YET to find any listing of Microsoft engaging Kenexa to do their hiring for MSN in New York. I contacted Microsoft HR department with a question about their connection to Kenexa, but have yet to receive a reply.
Could the interview by Kenexa be nothing more than the company testing a new piece of software? It’s hard to tell, but it is pretty obvious that to test any software of this type, you need human subjects. What could be better than allegedly picking the brains of an independent freelancer to find out the “human factor” under the guise of a job interview? For a giant Human Resources company to allegedly use the experiences of a small company to fine-tune its software without compensation or foreknowledge is scary to say the least. If it really was a job interview and is the wave of the future, watch out when Kenexa contacts you … it could be Big Brother cashing in.
copyright 2005 Galina Arlov
For comments or questions about this article contact galina@ValorCrossMedia.com or visit
http://www.ValorCrossMedia.com
Receiving a Brochure Printing Quote
When you receive your brochure printing quote, go over it thoroughly and make sure all items or services that you need and their prices have been included. The price per hour for corrections made to your files is often a hidden cost within your brochure-printing job and should not be overlooked. Most brochure price quotes include processing one set of uploaded files and creating a single digital proof.
Brochures are a great way to get your message across. While having a brochure can be extremely useful, it is sometimes hard to know whether it is affordable. The price for brochures can vary widely, with many variables contributing to the final quote.
There are two basic ways to arrive at a price for your brochure. Many people find an online quote form to be the most convenient. After you clearly identify the specific needs of your brochure, including type of paper, type of finish, type of fold, shipping, print run and color, fill out the online quote request form to the best of your ability. Usually the company will respond within twenty-four hours. If you do not get a response as quickly as you expected, contact the printer via e-mail or phone.
You may also speak directly to a customer service representative. If you choose to call directly, experienced estimators will be able to help you to determine the right paper, inks, finishes, bindery and shipping that will combine to make the best use of your press time and keep costs down. Estimates are usually turned around quickly; most printing companies provide a very efficient and comprehensive quoting system, and unless your brochure requires very unique or very customized work, you can expect to get a good estimate on your brochure in a short time.
When you receive your brochure printing quote, go over it thoroughly and make sure all items or services that you need and their prices have been included. The price per hour for corrections made to your files is often a hidden cost within your brochure-printing job and should not be overlooked. Most brochure price quotes include processing one set of uploaded files and creating a single digital proof. Images and pages are sent through the Internet for the customer’s final approval. Brochure printing companies will often send a link to you via e-mail when your proof is ready. If you want a hard copy of your brochure mailed to you, there will probably be a charge for postage and for each hard copy proof. Brochure printing price quotes are easy to calculate and quick to find, so what are you waiting for, get out there and price your brochure.
Brochures are a great way to get your message across. While having a brochure can be extremely useful, it is sometimes hard to know whether it is affordable. The price for brochures can vary widely, with many variables contributing to the final quote.
There are two basic ways to arrive at a price for your brochure. Many people find an online quote form to be the most convenient. After you clearly identify the specific needs of your brochure, including type of paper, type of finish, type of fold, shipping, print run and color, fill out the online quote request form to the best of your ability. Usually the company will respond within twenty-four hours. If you do not get a response as quickly as you expected, contact the printer via e-mail or phone.
You may also speak directly to a customer service representative. If you choose to call directly, experienced estimators will be able to help you to determine the right paper, inks, finishes, bindery and shipping that will combine to make the best use of your press time and keep costs down. Estimates are usually turned around quickly; most printing companies provide a very efficient and comprehensive quoting system, and unless your brochure requires very unique or very customized work, you can expect to get a good estimate on your brochure in a short time.
When you receive your brochure printing quote, go over it thoroughly and make sure all items or services that you need and their prices have been included. The price per hour for corrections made to your files is often a hidden cost within your brochure-printing job and should not be overlooked. Most brochure price quotes include processing one set of uploaded files and creating a single digital proof. Images and pages are sent through the Internet for the customer’s final approval. Brochure printing companies will often send a link to you via e-mail when your proof is ready. If you want a hard copy of your brochure mailed to you, there will probably be a charge for postage and for each hard copy proof. Brochure printing price quotes are easy to calculate and quick to find, so what are you waiting for, get out there and price your brochure.
Reap Lifestyle Rewards from Improved Time Management
Increase your motivation to improve your time management. Provide yourself with more time for family, fun and recreation. Transposing your success of managing your business activities over to your non-business life can reap surprising rewards.
Someone once said, “kindness will go a long way when it should stay at home.” The same can be said of time management methods.
Time with your family requires effective time management. When there are more than one loved one in your family circle, it’s more rewarding when you allocate more one-on-one times with each. Your spouse appreciates and values the private time you devote to his/her needs and concerns. Children, especially, cherish the moments which they do not have to share with siblings and others.
The more you value your time devoted to your business or professional activities, the more it is appreciated by your loved one. Quality time with your loved ones rewards you with a greater stature, a greater sense of well-being and extreme pride.
Adjust your time managing from time-with-the-family to time-with-a-family-member. You and each member will be glad you did.
Fun-loving people enjoy more success. People respect those who optimally manage their fun time. Since people like to have fun, they admire and follow those who are skillful at optimizing their time for fun. Include FUN in your time management improvement program. A fun-filled life is a healthy life.
Strive to make your fun time more efficient, rewarding and inspiring.
Recreation is different from just having fun. While it’s obvious that recreation time is a time to recreate, we often neglect this objective when managing our recreation activities. Well-rounded individuals are admired for the balance they achieve in their mental, physical and spiritual development. Again, it’s obvious, such achievements take time to develop and time management to make them happen.
Apply your improved time managing techniques to true re-creating activities.
Manage to do the things that make you and others feel good.
Strong friendships develop over time. This can evolve through happenstance or it can be managed to fulfill your dreams and desires. Selecting, recruiting and nourishing a friendship needs orchestrated, caring and purposeful actions.
Manage your time for treating other people the way they like to be treated and they will become fast friends.
Self-actualization is at the pinnacle of Abraham Maslow’s Hierarchy of Needs. He suggested that few people reach that peak. That form of serenity is not desired by everyone. Besides, a person usually strives to satisfy other needs such as food, shelter, security, love before aspiring to self-actualize.
Doesn’t such a quest benefit from the application of time management techniques to a more enhanced lifestyle?
Real estate software for Pocket PC
What do real estate professionals need to make a successful deal?
1.PC
2.Cell Phone
3.Fax
4.Internet
5.Quick responsiveness
All that and much more can be carried in one's pocket. First you need to buy Pocket PC. If you buy a communicator, you won't have to additionally buy a cell-phone. With GPS module and area map installed you will easily find the property location.
Using GPRS connection with the required software you can send and receive fax and e-mail messages.
Another fantastic option is reading e-books through MS Reader program. Of course, there are almost all simplified versions of Microsoft software available for Pocket PC's like Pocket Word, Pocket Excel, Internet Explorer, Outlook etc.
If you have a website that contains all your database of apartments and houses for sale or rent, and you want to check the information on it whenever you need it, Pocket PC will help you anywhere you go, even if you are far away from your office or home. All you need to do is to connect to Internet will the help of the built-in GPRS or through your cell-phone (if case your Pocket PC does not support GPRS) and off you go! The now mobile browser is another zest of Pocket PC. It supports HTML 3.2 and allows viewing the majority of websites both in online and offline modes. It's also apt to create web-pages.
If you are used to communicating with partners, associates and clients through MSN Messenger or ICQ, Pocket PC will help you to keep in touch even being far away from your office or home PC.
Using the built-in recorder you can record certain moments related to you deal.
With the help of Windows Media Player you can show your client a short pre-filmed video of the property you offer.
Real estate software for Palm PC
A real estate professional may discuss business matters with a client at the office, but sometimes business meetings take place out of it. When you are out of the office, it's sometimes hard to show t...
A real estate professional may discuss business matters with a client at the office, but sometimes business meetings take place out of it. When you are out of the office, it's sometimes hard to show the property you offer.
Of course, it causes often certain discomfort, unless you have such a personal assistant as Palm PC. Nowadays there are a lot of software database programs apt to view images and detailed information on a property. This can help greatly when discussing the purchase with your client being out of the office. Have you ever tried to write some information on the property price and all the related payments down on a napkin when sitting with the client at a coffee house? Now, when you have this great personal assistant, you need a napkin to wipe your hands on and then take your Palm PC. There's software for Palm PC that may help you count and show changes to the property price, even monthly.
Can you explain all the mortgage specificities to your client without a decent assistant? Mortgage calculators for Palm OS will give you this possibility. Moreover, you will be able to show your client multiple mortgage offers to determine which one would be the most affordable and lucrative.
When talking on the phone you may use standard application for Palm PC called Memo Pad. You can make short notes and then sort them out at the end of your working day.
Contact List is also convenient in use where you can store phone numbers and other contact information. To plan the up-coming meetings it's best to use Date Book. Add your most important plans in your personal To Do List. This software is standard and bound to each other. For instance, you can view information on the planned things in your Date Book along with information from To Do List. Making notes in any of the application you can add contact information from the Contact List. You may also sort the information into groups.
To keep you away from data losses (whether you battery discharged or you had to perform a 'hard reset') you can synchronize your Palm PC with your desktop computer. When you perform synchronization, the information will be copied to the desktop computer with the option to edit it and re-save again. With repeated synchronization all the changes you made will be saved back to your Palm PC.
Most of the modern real estate professionals use e-mail service. You certainly use e-mail and often have no time to sort out all the letters. With Palm PC you can work with your mail anywhere you want. You can receive letters and send off feedback from any place. You may use Palm Modem or connect to Internet through your cell phone via infrared connection.
Unfortunately, Palm PC cannot still replace desktop PC, but it may help greatly in real estate and other businesses.
Go and get software here:
http://www.pro-real-estate-software.com/real-estate-software-palm.html
Article Tags: Real Estate
A real estate professional may discuss business matters with a client at the office, but sometimes business meetings take place out of it. When you are out of the office, it's sometimes hard to show the property you offer.
Of course, it causes often certain discomfort, unless you have such a personal assistant as Palm PC. Nowadays there are a lot of software database programs apt to view images and detailed information on a property. This can help greatly when discussing the purchase with your client being out of the office. Have you ever tried to write some information on the property price and all the related payments down on a napkin when sitting with the client at a coffee house? Now, when you have this great personal assistant, you need a napkin to wipe your hands on and then take your Palm PC. There's software for Palm PC that may help you count and show changes to the property price, even monthly.
Can you explain all the mortgage specificities to your client without a decent assistant? Mortgage calculators for Palm OS will give you this possibility. Moreover, you will be able to show your client multiple mortgage offers to determine which one would be the most affordable and lucrative.
When talking on the phone you may use standard application for Palm PC called Memo Pad. You can make short notes and then sort them out at the end of your working day.
Contact List is also convenient in use where you can store phone numbers and other contact information. To plan the up-coming meetings it's best to use Date Book. Add your most important plans in your personal To Do List. This software is standard and bound to each other. For instance, you can view information on the planned things in your Date Book along with information from To Do List. Making notes in any of the application you can add contact information from the Contact List. You may also sort the information into groups.
To keep you away from data losses (whether you battery discharged or you had to perform a 'hard reset') you can synchronize your Palm PC with your desktop computer. When you perform synchronization, the information will be copied to the desktop computer with the option to edit it and re-save again. With repeated synchronization all the changes you made will be saved back to your Palm PC.
Most of the modern real estate professionals use e-mail service. You certainly use e-mail and often have no time to sort out all the letters. With Palm PC you can work with your mail anywhere you want. You can receive letters and send off feedback from any place. You may use Palm Modem or connect to Internet through your cell phone via infrared connection.
Unfortunately, Palm PC cannot still replace desktop PC, but it may help greatly in real estate and other businesses.
Go and get software here:
http://www.pro-real-estate-software.com/real-estate-software-palm.html
Article Tags: Real Estate
Real Estate Property Management Software
If you own three or more real estate properties, managing them takes a lot of time. To make it easier for yourself you can either hire a person to manage your real estate or get one of the real estate...
If you own three or more real estate properties, managing them takes a lot of time. To make it easier for yourself you can either hire a person to manage your real estate or get one of the real estate management software programs.
Of course, it's easy to hire a property manager. You pay him his salary or let him have commission off you rental income. This is not the worst choice, though quite expensive. As a matter of fact, you give this person or company the money that could be yours. How, in this case, is it possible to reduce the management expenses? The answer is - real estate management software. This will save your money and let you perform all the dos that normally took hours in few minutes.
How many properties can I manage with Real Estate Property Management Software?
Using real estate management software programs you can manage any number of properties. You can own three of them, thirty or even three hundred. With a few mouse clicks you can select a property and check its status. It's also possible to calculate the required payments.
What options are available with real estate management software regarding payment calculation?
Calculation of payments that already took place and those to be completed on any of the properties you own. You can adjust your real estate management software program to remind you of the coming payment on a property. Moreover, some of the real estate management software programs have option of sending automatic notification to your renters about the approaching payment deadline. Another useful option of real estate management software is tracing the expiry dates of contracts and notifications about that.
Who else may use real estate management software?
Real estate management software can be used by private investors. These tools can be convenient assistants for real estate professionals as well. Application of real estate management software programs by real estate pros will give them greater advantages and bring more order in all the business processes.
Real estate management software means little investment in your efficient management.
Go and get the software here:
http://www.pro-real-estate-software.com/real-estate-management-software.html
Article Tags: Real Estate Property, Estate Property Management, Property Management Software, Real Estate Management, Estate Management Software, Management Software Programs, Real Estate, Estate Property, Property Management, Management Software, Estate Management, Software Programs
If you own three or more real estate properties, managing them takes a lot of time. To make it easier for yourself you can either hire a person to manage your real estate or get one of the real estate management software programs.
Of course, it's easy to hire a property manager. You pay him his salary or let him have commission off you rental income. This is not the worst choice, though quite expensive. As a matter of fact, you give this person or company the money that could be yours. How, in this case, is it possible to reduce the management expenses? The answer is - real estate management software. This will save your money and let you perform all the dos that normally took hours in few minutes.
How many properties can I manage with Real Estate Property Management Software?
Using real estate management software programs you can manage any number of properties. You can own three of them, thirty or even three hundred. With a few mouse clicks you can select a property and check its status. It's also possible to calculate the required payments.
What options are available with real estate management software regarding payment calculation?
Calculation of payments that already took place and those to be completed on any of the properties you own. You can adjust your real estate management software program to remind you of the coming payment on a property. Moreover, some of the real estate management software programs have option of sending automatic notification to your renters about the approaching payment deadline. Another useful option of real estate management software is tracing the expiry dates of contracts and notifications about that.
Who else may use real estate management software?
Real estate management software can be used by private investors. These tools can be convenient assistants for real estate professionals as well. Application of real estate management software programs by real estate pros will give them greater advantages and bring more order in all the business processes.
Real estate management software means little investment in your efficient management.
Go and get the software here:
http://www.pro-real-estate-software.com/real-estate-management-software.html
Article Tags: Real Estate Property, Estate Property Management, Property Management Software, Real Estate Management, Estate Management Software, Management Software Programs, Real Estate, Estate Property, Property Management, Management Software, Estate Management, Software Programs
Real Estate problem Solver
Introduction There are many areas one can invest in. Since I was 15 years old I have looked for the fastest, most effective way to accumulate a lot of wealth, with the least amount of risk. I am now ...
Introduction
There are many areas one can invest in. Since I was 15 years old I have looked for the fastest, most effective way to accumulate a lot of wealth, with the least amount of risk. I am now 58. While looking for this road to truth, I spent a lot of time in the school of hard knocks. The school of hard knocks is a very interesting but painful school to attend. It is also the most expensive way to learn something, but when you graduate you have a PHD in what to do and not do with your time and money. The schools I attended were: Investing in businesses as a silent partner, owning my own businesses, working for another family member-in my case my father, buying publicly traded stocks and securities, penny mining stocks, commodity trading, investing in gold and silver, real estate private lending, real estate development, real estate remodeling, buying foreclosure properties. I also worked as a real estate problem solver/matchmaker, bringing business owners together with business buyers, and matching up real estate owners with real estate buyers.
Writing about all of these activities would take an encyclopedia, so we will limit this essay to the kinds of situations you can run across in the real estate school of hard knocks. I will present my solution with the given situation. There are more than one possible solution and I invite you to come up with other possible solutions as you read. If you get some value from my experiences that will hopefully lower your tuition to the real estate school of hard knocks. Feel free to e-mail me your comments, alternate solution or stories. Do, please, let me know that it is all right for me to publish them.
My Real Estate Philosophy
As a way of introducing myself, I thought you might find what lessons I have learned, after all these years of real estate, interesting. Buy real estate instead of stocks, bonds, mutual funds, or commodities. When you pick a winner in one of these non-real estate areas you can make 5-10 times your money. When you are wrong, in one of these non-real estate areas, you can actually loose up to 90% of your money. In real estate, if you are not greedy-not trying to get rich quick-in one year, you can make 100 times your money, on the upside. The downside risk is only based on how well you looked at all the possibilities ahead of time. If you did, the downside risk is reduced to only the holding time to fix a mistake. If you rush in and do not explore all the possibilities of a business venture, you can actually loose 100% of your money. In my mind an upside of 100 times profit is better than 10 times profit.
My philosophy on real estate ownership has changed in the last 15 years. I used to think that selling at the top of the market was the smart move and buying in the crash. Now I feel that buying when prices are down is still a smart move but never selling is the way to go. In order to hold on to a property in a down market you require proper planning to survive the crash. This I call a back door or emergency plan. This is have a plan and knowing what you will do if everything goes wrong with you original plan. When you have a backup plan, you rarely need it. This is the basis of my philosophy. With this understanding, you might more clearly see why I did what I did in these situations.
The Stories and article:
The area of real estate investing is one of the most complex because it is a combination of law and real estate. It is one of the most interesting because fortunes are made and lost in this area, and the numbers are so enormous. Lastly it is an area where crooks can make a lot of money and many times get away with it. Following are some stories (case histories) I have dealt with and some articles I have written on the subject of fraud in real estate. Finally, I have included an article on the basics of foreclosures and real estate in general, for your interest. I hope you enjoy them.
The Stories:
Story #1:
It was early March 2000 and I received a call from Kevin. He said that he had heard about me from some mutual friends. He wanted to speculate in buying HUD houses (Properties that the Government had foreclosed on). He wanted to buy them, fix them up and then sell them at a profit. He had heard that I had bought many foreclosures in the 1970’s and 80’s and he was hoping I could advise him. We met for lunch and he told me his life story. The important part of this conversation is that he had bought a boarded up 14 unit apartment building in downtown San Bernardino, across the street, from one of the roughest high schools in California.
By the end of the meeting, I had figured out that he had overpaid about $75,000 for the building, he had already wasted $200,000 trying to remodel it, and it was still $100,000 away from being finished. He had bought it 1.5 years ago and a large part of his costs was the interest on all his loans, related to this project. He was now broke, and in deep trouble, but in his mind, the badly needed money was coming.
It is interesting to note where he got the money to invest in this project. 4 years earlier he was given money to buy an apartment building by his father. He was given enough money that he only needed a very small $150,000 real estate loan to purchase a building in Pasadena that cost him a total of $525,000. In order to buy the San Bernardino rehab project, he first refinanced the first trust deed on the Pasadena building and jumped the loan balance to $385,000. When that money was gone he borrowed $74,000 as a second Trust Deed on both the Pasadena and San Bernardino properties. By the way, that loan cost him 15% interest and $15,000 in up front fees to get the money. Before we parted, I told him that he made a very expense mistake in buying San Bernardino. I explained that from the day he bought the building it was a sure bet that the project would fail. I then had to tell him that I would not lend him any money on San Bernardino, to save his butt.
Over the next 2 months I received periodic phone calls, telling me the progress of the fund raising. One of those updates I was told that the existing 2nd Trust Deed lender was saying that he might give Kevin the added $100,000 he needed to finish the project. At the same time, Kevin also believed he had found a bank that might refinance all the loans of San Bernardino. The difficulty with the bank loan was that the appraisal fee was $3,000, and it had to be paid in advance, even to just apply for the loan. Again Kevin asked me for money. Again I refused to put more good money down his black hole.
Then one morning I got a call from Kevin, “If I don’t make the $2,000 payment to the 2nd trust deed holder, he will start foreclosure in 2 days. Kevin also told me “The 2nd trust deed lender said that he would buy the Pasadena apartment building for what I had paid for it, 4 years ago, $525,000.” The offer had a stipulation to it. Kevin had to bring the loan current first. In my mind, if Kevin could bring the loan current, why would he even bother to sell the property for a wholesale price? I couldn’t believe what I was hearing.
After hearing all of this I decide that it is time I stop saying no and help. What Kevin thought he wanted was a real estate loan for a lot of money. The truth is, that money was not the solution to his problem. The problem had to be different than what Kevin believed, which is why the problem persisted. The real situation was not more borrowing. More borrowing meant more money down the drain.
Experience has taught me, “If the problem was what Kevin thought it was, it wouldn’t be a problem.” What does this phrase mean? A businessman has a financial set back. He thinks that with some short term funding he can recover from the set back and return to the top. After looking around, our businessman will usually find the money, but strangely enough the problem doesn’t resolve. If the problem did correct itself, then the businessman was right about what the problem was, and the problem would be gone. Usually the money doesn’t help, but the businessman doesn’t understand that. He doesn’t realize that the problem wasn’t money in the first place. If it were, the problem would now be gone. Lets continue the explanation. The last money borrowed is now gone and the problem persists, so our businessman goes out to find more money to solve the problem that didn’t solve with the money he borrowed, the first time. What happens the second time? The same thing. The money is used up and still the problem continues.
Our businessman is working on the wrong problem. The problem is not money, or the problem would have been gone. Kevin thought the problem was money. It wasn’t. He had already poured $300,000 into the San Bernardino building, on top of the $209,000 1st Trust Deed loan that came about when he bought the building. Before he was finished, he spent over $500,000 in a building that needs $100,000 to finish, but was only worth $475,000, after it was finished.
What could I do? Use what the good lord gave me. 30 years of experience, on the subject of getting out of problems that I created when I was young and inexperienced. Here was the war strategy. I got Kevin to agree to turn over total management of the two properties to me. Knowing that I was managing the property and working on what I believed was the correct problem, I felt comfortable about loaning money on this deal. If I can’t trust myself to solve this problem, whom can I trust? I started by loaning Kevin $25,000 to make needed repairs to the Pasadena building, pay the property taxes and to bring the first and second loans current on the Pasadena property only. Nothing was to be spent at this time, on the San Bernardino building.
Now that I controlled the Pasadena apartment building, I discovered what repairs the building needed. The list was so long it took one man three months, full time, to fully handle it. I then did a very detailed market study and determined what the market would pay in rents. I asked the tenants for a list of everything they wanted done in their apartments to be happy. I then did everything the tenants requested and I then raised their rents 30%. After the building was full, I raised the rents another 15%. The value of the building went up and I received an offer for $725,000. This was $200,000 more than its value 6 months earlier. I put it into escrow, and then I realized that I could raise the rents some more. I raised the rents again in escrow and forced the buyer to pay another $25,000 for the building. Bringing the price to $750,000. That $225,000 profit was needed to help cover the money being lost in San Bernardino.
Author’s Note: The escrow fell through and the building was kept until this update, December 5, 2004. The building is now in escrow for $1,583,000
What did I do about San Bernardino? I contacted the seller/lender and asked him if he would like me to pull the security guard out of the building and let him have it back in foreclosure. He didn’t want it back, even though he pretended that he was willing to do that. He offered me $25,000 in incentives to get me to personally lend the money necessary for the completion of the building, so he wouldn’t have to take it back. For 3 months he tried to get me to put money into the building, with the idea that once I put my money in I wouldn’t walk away from it. The real story was that I wouldn’t put a dime into that black hole until I figured out how to make it recover at least $100,000 of Kevin’s lost money. I asked for a $70,000 discount on the note, and offered to pay him off. We negotiated for two months. Just when I was ready to finish the deal, the seller sold his note to someone else for only a $30,000 discount. I was not able to make the money I wanted because now the new note holder wanted 100% of interest and principal due. This threw a monkey wrench into my negotiating. All this time, I had a buyer standing in the wings to buy the building from Kevin while I was negotiating. I was then forced to sell the property to this buyer and Kevin recovered only a little bit of his investment. The lender and I were both playing a high stakes poker game. I lost this round. If I could have gotten the payoff reduced, Kevin would received a large hunk of money from an “as is” sale. This is what I call playing “Craps” on a very big Monopoly board.
Author’s Note: The buyer, thinking he was going to put $125,000 to finish the remodeling, notified me, after one year, that he had spent $300,000 to finish the building. The apartment building values were increasing rapidly during this time period, so Kevin’s project was increasing in value at the same time the buyer was going deeper and deeper into construction costs. The buyer made out all right in the end. If the market had died, he would have lost $200,000 on this building after Kevin had already lost a fortune. It’s all about timing, isn’t it?
Kevin learned that money alone was not the answer to his problems; he needed a Genie, to turn his turkey into a swan.
Story #2
Janet is the daughter of one of my oldest and wealthiest friends and clients. We have been doing real estate deals together since 1975. Janet and her husband started buying distressed real estate in Phoenix Arizona in 1994, which was 8 years ago when it was the thing to do. It was now Dec 2000. The market appears to be slowing down and did after September 11, 2001. Janet had been continually borrowing money from her father, whenever things got too difficult. She later sold everything in Phoenix and bought property in Northern California. Then in 1999, one year before I was brought in, she started buying real estate in Kansas City. One day Janet’s father called me and asked for my help. He had loaned his daughter $200,000 and felt that everything she owned was upside down. (Loans more than the market value.). This was further complicated by the fact that if she sold her properties, to pay off her father, the capital gains taxes would eat up any cash, from the sale. On top of all this, Janet kept asking for more money to keep up the payments on the properties that had a negative cash flow and didn’t have enough rental income.
He hired me to help his daughter and agreed to pay my fee. I would work with this 40 years old kid, to get her to return her fathers $200,000 and make herself totally debt free. Janet and I met. She was brilliant. She did know what she was doing, as far as picking good real estate deals. She owned, at the time of our meeting, 10 properties located in 2 different states, and there was $500,000 in equity. If we could get it out, before her father had a stroke things would be great. Janet agreed to the arrangement, happily, if I would be her adviser, not his. Her father agreed to fund whatever money was requested as long as I approved it. Also I had to be the one to ask Janet’s father for the money, since the upset between the farther and daughter was getting unbearable.
This is what we did. A list of needed repairs was created for each of the 11 properties. Bids were received and the work ordered to be done within 30 days. This was not to take months. It had to be done immediately so we could go to step two. Step 2 was to put on the market all of the expensive Northern California property. To my disbelief, Janet wanted to move her family, to a new city, in the middle of all this and her father agreed to let her do it. She had found an old run down house that she felt was undervalued. That meant that her old residence was put into the group of properties to sell. Sell is what we planned to do. Everything was to be put on the market, and sold at the best price to be gotten, but sold regardless. The property in Kansas was to be repaired and fully rented. The properties that could be sold at what we thought was full retail, were also put on the market. The plan was that when everything was sold, the father would get paid off; the loans on the remaining properties would be paid off and the balance of the cash would be put into the bank. Since all of the Kansas deals appear to be a good investment, Janet could now continue to buy more Kansas property, (she had only been spending $25,000 on each deal) but for all cash. The rents coming in would generate enough income for her family to live on without having to ask for money from dad or touching her investment nest egg. That was the plan.
I forgot one last thing. Because many of the properties had been bought years ago on a 1031 exchanges (tax-free exchange), the capital gain tax was going to eat up the cash proceeds. That was one of the traps Janet fell into. She felt she couldn’t sell without buying a replacement. Of course by not liquidating before starting anew, she would never get out of debt with her real estate lenders or her father. The solution, for this problem was simpler than one would think.
First, the father did a 1031 exchange with Janet for one of the big profit houses. The father sold Janet his personal residences for no money down. Now Janet rented her father the house he lives in. So much for capital gains tax on the $150,000 profit in that one big sale. The second big profit was in the house Janet currently lived in. That was tax-free under the current laws. Since the other houses sold had smaller profits, it was decided that the business decision to get out of debt was more important than avoiding paying any taxes.
Author’s Note: That was the plan. So what happened? Janet decided she didn’t want to sell the junk in Kansas and fired me. She refused to pay her father back and as of December 2004 he had not seen a dime. Father has deducted what she owes him from her inheritance, which will be put into a trust administered by her brother for the benefit of the grandchildren. Real estate in California skyrocketed after 9/11/01 terrorist attack and her properties all doubled in value.
Summary: Everyone thinks that his or her problem is not confrontable and therefore unsolvable. I have found that someone other than myself can solve my un-confrontable problems in 10 min and I can do the same for them. It is not a question of being smarter, or more experienced, though experience helps a lot when coming up with easy solutions, quickly. It is really that we all are willing to confront someone else’s problems much easier than our own. When we are willing to confront our own problem head-on, solutions begin to appear miraculously. What I do is help people take their mountains and turn them into molehills. The molehills are then flattened with ease.
The Real Estate Fraud Articles:
These articles were published individually at different times. Here they appear all together, as parts 1, 2 and 3.
Fraud in real estate, are you being victimized? (Part I)
Rip off artists appear in all shapes and sexes. They usually are nice looking, well dressed and very smooth talkers. They, in conversation, tell you about a financial killing they made, or are in the middle of closing. Then they change the subject. A really smooth talker never asks or suggests you invest. They wait until you beg and plead with them to let you in on their great deal. At this point you are HAD. That means, " your goose is cooked and you are invited to the feast, because you are the main course." The logical question is how do you know, before you lose your money that you are going to be ripped off? The answer is independent research, and lots of it.
1) Find a friend, or a friend's friend who is an "expert" in the specific field of investment you are considering. Ask lots of questions and listen to him. Ask him or her how to make sure you are protected. In the years, 1990 to 1995, eight people I know paid the same real estate trainer over $5,000 each to show them how to buy real estate for "NO MONEY DOWN." The trainer claimed she got results. Not one of the students, all of who got to know each other, after years of trying, ever bought a property for "No Money Down."
Recently the same trainer is offering to get her students 100% financing on real estate, even with bad credit. The MARK (the name for a con artist's pigeon) thinks he is paying for an education. The education is that you are $5,000 poorer and you have the name of a loan company that will charge you 8.5% on a 1st Mtg. and 11% on a 2nd mtg. I will tell you how to find such a lender yourself and it will only cost you a phone call.
2) See an attorney or an accountant to review the deal, especially the paperwork. I have seen contracts that if you just read it yourself, word for word and think about what it said you would run like a wolf is chasing you. He is. One simple real estate contract allowed the con man to take the money out of the joint account before he did the repair work. He took the money and never did any work. Never release money until you have everyone's signature on the paperwork and your adviser has read the whole contract, word for word. If you cannot afford an attorney, do not do the deal. It is better to not make a profit than to loose what you already have. "A fool and his money are soon parted." Don't be the fool.
3) Get to know this person. Who are his friends? Who does he work with? What information does the real estate commissioner or the "Better Business Bureau." have on him or her? Ask for the names of people who have already invested with the "con artist", made their profit, and are out of the deal. Do not ask anyone who has gotten in but hasn't gotten out yet. Multi-level people love to have you talk to people that have just entered the group, just before you have.
One of smoothest people around was a securities investment adviser in Santa Barbara. He got hundreds of people to invest with him because hundreds of people had already invested with him. None of them did the level of homework they should have. The few people, who did do independent research, smelled a rat and didn't invest. Many of his investors have lost their whole life's savings; the rest just lost a lot of money, but will recover. If you think I am trying to scare you, then you are absolutely right. "Money should come in rapidly and be spent very slowly.
Fraud in real estate, are you being victimized? (Part II)
The phone range and Peter was on the other end of the line. "Willard, I have a friend of mine that has a real estate problem." I said, "Send him over." Two hours later, Jerry sat in front of me terribly upset. Three years earlier, he had been talked into buying a 4 unit building in partnership with Smooth Talker, a knowledgeable, smooth talking real estate salesman. Smooth Talker offered to find the property, arrange the financing, manage the building and even put up the down payment. Jerry was told that all he had to do was use his perfect credit to qualify for the loan and then sit back, wait seven years and the money would come rolling in.
Smooth Talker also promised that the two of them would do more deals and Jerry would make over $100,000. What Jerry did not know and would not figure out until 3 years later, was that Smooth Talker had no intention of splitting anything and Jerry could kiss his perfect credit goodbye! 3 years ago, Smooth Talker had Jerry and two other buyers, buy three buildings, located on one street. The buildings cost $150,000 each. Smooth Talker put up $1,500 down payment for each property, while at the same time, telling the buyers that he was putting in $12,000.00 for each. There was an unexplained difference of $10,500 each.
Smooth Talker also collected a $9,000 Real Estate commission on each. Smooth Talker also agreed to take the building in as-is condition, with no inspections and without requiring the seller to make any repairs. There were, unknown to Jerry $10,000 worth of air-conditioning as well as other work that needed to be done on the building.
Smooth Talker had those other two buyers borrow from the Federal Government a remodeling loan of $48,000 to make the needed repairs. When those other two buyers each got their loans, Smooth Talker took all the money and said he spent it on Jerry's building. Let me clarify that. Smooth Talker stole the money from the other two investors, telling them he used it on Jerry's building. That is still stealing. My research later showed that he did almost no repairs to any of the buildings, and what little repairs he did have done, were not even paid for.
Smooth Talker cheated the poor workers out of their pay. No one could ever understand what he was doing. He even collected rent, pocketing any cash. When the buyers wanted an accounting. Smooth Talker wouldn't even supply it. When I came on the scene and demanded, as a matter of law, an accounting of what was received and spent. Smooth Talker didn't have any proof of what happen to all the money.
Jerry wanted out of the partnership but Smooth Talker didn't want the building sold; but he did want to make sure he got his due, if it was. He gave me a statement showing that he had put in $34,000 (which was not true) into the building and wanted that before any split of profits. This would have left Jerry receiving $5,000 and Smooth Talker making $46,400 on the whole deal.
To avoid being in this kind of a situation, I advice the following, before doing any sort of real estate deal; a) Evaluate your risk. What is your downside? Have a real estate expert study the deal. b) Set up operating and reporting guidelines with your partners. Put everything in clear English. c) Have everything reviewed by an attorney or an accountant. d) Choose your people partners with care.
Fraud in real estate, are you being victimized? (Part III)
Jonathan's Story: Jonathan had the sadist story I ever heard. You decide how the story turns out. It was 1997 and I received a call from Jonathan. He had received my letter asking if he wanted to sell his business any time soon. He asked me to come out and see him. Jonathan was 81 years old. He owned a woodworking factory that had been going for 40 years. He also owned two commercial factory buildings and had a beautiful residence that was debt free.
His wife, Janet, also 81, was the sweetest woman I ever met. They were both healthy and they loved each other dearly. They had no children or grandchildren. Janet had nieces and nephews on her side of the family. Jonathan had no living relatives of any kind. When I met Jonathan I adopted him. Sounds like the perfect picture, doesn't it. It was until 5 years ago.
Jonathan received a letter from Nigeria explaining that if he would front them some cash to pay off some government officials, they would pay him millions of dollars out of what the government owed them. You may have heard this story. It has been on 60 minutes. In fact Jonathan had heard this story; the problem was that he thought that his contact was different. They showed him legal documents, had Nigerian attorneys certify the validity of them and they did everything else necessary to con a rich old man into believing that his ship had come in.
Over the next 3 years, Jonathan stopped paying his real estate loans, borrowed on his factory equipment, ran up $500,000 in credit card charges and cleaned out his wife's separate bank account, all without telling her anything. Every payment to Nigeria was supposed to be the last one, and Jonathan was hooked. When I found Jonathan he couldn't raise what he thought was the last $10,000 necessary to finish the deal. His creditors were getting very upset and were ready to sue him.
As terrible as this sounds, Jonathan was the 3rd person that I have met in the last 10 years that has been stung by this scam. I cried. I know that at least $500,000 was sent. Jonathan thinks he sent closer to $1 Million. Jonathan decided that it was fate that sent me to him. He may be right. By the way my company name is Kismet Real Estate Investments, Inc. Kismet means Fate, Destiny, Karma, etc in Turkish, Indian, and Arabic. Time was very short, we had work to do and fast.
His wife knew nothing of what was happening, and I had to get Jonathan to tell her that they had gone from being millionaires to destitute in one conversation. Jonathan told his wife the truth. She forgave him. (Now that's love.) Her one concern was that she didn't want to loose her home. We were but a few weeks away from the creditors coming down on his business and her mortgage free house. In one clean swallow, they would put her into bankruptcy, a one-bedroom apartment and living on social security, which would have actually killed her. How much can one take at that age?
I went to work. First I promised Janet that no one would take her house away from her. She needed to trust ME, a total stranger, to not put the nail in the coffin. I do not know if I could have made the decision she had to make. We put her house in an irrevocable trust for her family when she died. That meant she had to give up ownership of her house, to me, a total stranger, in order to continue to live in it the rest of her life. Next we sold his two buildings to an investor who would work with us. The loans on the two buildings were equal to the market value at that time.
We then found a buyer for the worse of the two buildings and made a deal with the Small Business Administration, to lower the interest rate and payments on the remaining building. Those payments are about 30% of current market rents today. By making those very low payments, the lender who is on the building and the business equipment was happy. The result of all this was that Jonathan was able to keep his factory running and make just enough to pay his current living expenses.
Then the creditors, eight of them, started suing Jonathan, one after the other. Each tried to take the assets of the business. There was nothing to take. Some tried to go after the commercial buildings. That failed as they had been sold. One tried to go after the house. I arranged for someone friendlier than the bank to buy the bank's judgment at a discount and hold it until it doesn't make any difference. The bankruptcy attorney said we would never get away with what we were doing. He said that Jonathan needed to file Bankruptcy. Jonathan decided that he trusted my ability more than the attorney's advice. It has been 3 years now and all is quiet on the northern front. Jonathan and Janet are now 84 years old, still healthy, and still in love.
Everyone thinks that his or her problem is un-confrontable and therefore unsolvable. I have found that someone other then myself can solve my un-confrontable problems in 10 min and I can do the same for them. It is not a question of being smarter, or more experienced, though experience helps a lot to come up with easy solutions quickly. It is really that we all are willing to confront someone else's problems much easier than our own.
When we are willing to confront our own problem head on, solutions begin to appear miraculously. What I do is help people take their mountains and turn them into molehills. The molehills are then flattened with ease.
Foreclosure; the basic procedure:
In order for foreclosure to occur in California, there are certain basic things that have to take place. How this works, in the case of a Deed of Trust, called a ‘Non Judicial Foreclosure,’ goes like this - with regard to the time line.
The borrower (property owner) does not make the monthly payment to the person or institution that he or she borrowed money from. Technically, a default occurs the moment the first payment is missed. However, for practical purposes, most lenders do not really start the foreclosure proceedings until after the third payment is missed. A few only wait until the second payment is missed, but this is rare.
The procedure, once started, is continued on through to the end unless the property owner stops it by bringing the loan current (bringing it current means to make all back payments owed to the lender).
Day 1 - A notice of default is recorded.
Within 10 business days - The Notice of Default (NOD) is posted on the property, mailed to the property owner and published in a countywide newspaper.
Introduction
There are many areas one can invest in. Since I was 15 years old I have looked for the fastest, most effective way to accumulate a lot of wealth, with the least amount of risk. I am now 58. While looking for this road to truth, I spent a lot of time in the school of hard knocks. The school of hard knocks is a very interesting but painful school to attend. It is also the most expensive way to learn something, but when you graduate you have a PHD in what to do and not do with your time and money. The schools I attended were: Investing in businesses as a silent partner, owning my own businesses, working for another family member-in my case my father, buying publicly traded stocks and securities, penny mining stocks, commodity trading, investing in gold and silver, real estate private lending, real estate development, real estate remodeling, buying foreclosure properties. I also worked as a real estate problem solver/matchmaker, bringing business owners together with business buyers, and matching up real estate owners with real estate buyers.
Writing about all of these activities would take an encyclopedia, so we will limit this essay to the kinds of situations you can run across in the real estate school of hard knocks. I will present my solution with the given situation. There are more than one possible solution and I invite you to come up with other possible solutions as you read. If you get some value from my experiences that will hopefully lower your tuition to the real estate school of hard knocks. Feel free to e-mail me your comments, alternate solution or stories. Do, please, let me know that it is all right for me to publish them.
My Real Estate Philosophy
As a way of introducing myself, I thought you might find what lessons I have learned, after all these years of real estate, interesting. Buy real estate instead of stocks, bonds, mutual funds, or commodities. When you pick a winner in one of these non-real estate areas you can make 5-10 times your money. When you are wrong, in one of these non-real estate areas, you can actually loose up to 90% of your money. In real estate, if you are not greedy-not trying to get rich quick-in one year, you can make 100 times your money, on the upside. The downside risk is only based on how well you looked at all the possibilities ahead of time. If you did, the downside risk is reduced to only the holding time to fix a mistake. If you rush in and do not explore all the possibilities of a business venture, you can actually loose 100% of your money. In my mind an upside of 100 times profit is better than 10 times profit.
My philosophy on real estate ownership has changed in the last 15 years. I used to think that selling at the top of the market was the smart move and buying in the crash. Now I feel that buying when prices are down is still a smart move but never selling is the way to go. In order to hold on to a property in a down market you require proper planning to survive the crash. This I call a back door or emergency plan. This is have a plan and knowing what you will do if everything goes wrong with you original plan. When you have a backup plan, you rarely need it. This is the basis of my philosophy. With this understanding, you might more clearly see why I did what I did in these situations.
The Stories and article:
The area of real estate investing is one of the most complex because it is a combination of law and real estate. It is one of the most interesting because fortunes are made and lost in this area, and the numbers are so enormous. Lastly it is an area where crooks can make a lot of money and many times get away with it. Following are some stories (case histories) I have dealt with and some articles I have written on the subject of fraud in real estate. Finally, I have included an article on the basics of foreclosures and real estate in general, for your interest. I hope you enjoy them.
The Stories:
Story #1:
It was early March 2000 and I received a call from Kevin. He said that he had heard about me from some mutual friends. He wanted to speculate in buying HUD houses (Properties that the Government had foreclosed on). He wanted to buy them, fix them up and then sell them at a profit. He had heard that I had bought many foreclosures in the 1970’s and 80’s and he was hoping I could advise him. We met for lunch and he told me his life story. The important part of this conversation is that he had bought a boarded up 14 unit apartment building in downtown San Bernardino, across the street, from one of the roughest high schools in California.
By the end of the meeting, I had figured out that he had overpaid about $75,000 for the building, he had already wasted $200,000 trying to remodel it, and it was still $100,000 away from being finished. He had bought it 1.5 years ago and a large part of his costs was the interest on all his loans, related to this project. He was now broke, and in deep trouble, but in his mind, the badly needed money was coming.
It is interesting to note where he got the money to invest in this project. 4 years earlier he was given money to buy an apartment building by his father. He was given enough money that he only needed a very small $150,000 real estate loan to purchase a building in Pasadena that cost him a total of $525,000. In order to buy the San Bernardino rehab project, he first refinanced the first trust deed on the Pasadena building and jumped the loan balance to $385,000. When that money was gone he borrowed $74,000 as a second Trust Deed on both the Pasadena and San Bernardino properties. By the way, that loan cost him 15% interest and $15,000 in up front fees to get the money. Before we parted, I told him that he made a very expense mistake in buying San Bernardino. I explained that from the day he bought the building it was a sure bet that the project would fail. I then had to tell him that I would not lend him any money on San Bernardino, to save his butt.
Over the next 2 months I received periodic phone calls, telling me the progress of the fund raising. One of those updates I was told that the existing 2nd Trust Deed lender was saying that he might give Kevin the added $100,000 he needed to finish the project. At the same time, Kevin also believed he had found a bank that might refinance all the loans of San Bernardino. The difficulty with the bank loan was that the appraisal fee was $3,000, and it had to be paid in advance, even to just apply for the loan. Again Kevin asked me for money. Again I refused to put more good money down his black hole.
Then one morning I got a call from Kevin, “If I don’t make the $2,000 payment to the 2nd trust deed holder, he will start foreclosure in 2 days. Kevin also told me “The 2nd trust deed lender said that he would buy the Pasadena apartment building for what I had paid for it, 4 years ago, $525,000.” The offer had a stipulation to it. Kevin had to bring the loan current first. In my mind, if Kevin could bring the loan current, why would he even bother to sell the property for a wholesale price? I couldn’t believe what I was hearing.
After hearing all of this I decide that it is time I stop saying no and help. What Kevin thought he wanted was a real estate loan for a lot of money. The truth is, that money was not the solution to his problem. The problem had to be different than what Kevin believed, which is why the problem persisted. The real situation was not more borrowing. More borrowing meant more money down the drain.
Experience has taught me, “If the problem was what Kevin thought it was, it wouldn’t be a problem.” What does this phrase mean? A businessman has a financial set back. He thinks that with some short term funding he can recover from the set back and return to the top. After looking around, our businessman will usually find the money, but strangely enough the problem doesn’t resolve. If the problem did correct itself, then the businessman was right about what the problem was, and the problem would be gone. Usually the money doesn’t help, but the businessman doesn’t understand that. He doesn’t realize that the problem wasn’t money in the first place. If it were, the problem would now be gone. Lets continue the explanation. The last money borrowed is now gone and the problem persists, so our businessman goes out to find more money to solve the problem that didn’t solve with the money he borrowed, the first time. What happens the second time? The same thing. The money is used up and still the problem continues.
Our businessman is working on the wrong problem. The problem is not money, or the problem would have been gone. Kevin thought the problem was money. It wasn’t. He had already poured $300,000 into the San Bernardino building, on top of the $209,000 1st Trust Deed loan that came about when he bought the building. Before he was finished, he spent over $500,000 in a building that needs $100,000 to finish, but was only worth $475,000, after it was finished.
What could I do? Use what the good lord gave me. 30 years of experience, on the subject of getting out of problems that I created when I was young and inexperienced. Here was the war strategy. I got Kevin to agree to turn over total management of the two properties to me. Knowing that I was managing the property and working on what I believed was the correct problem, I felt comfortable about loaning money on this deal. If I can’t trust myself to solve this problem, whom can I trust? I started by loaning Kevin $25,000 to make needed repairs to the Pasadena building, pay the property taxes and to bring the first and second loans current on the Pasadena property only. Nothing was to be spent at this time, on the San Bernardino building.
Now that I controlled the Pasadena apartment building, I discovered what repairs the building needed. The list was so long it took one man three months, full time, to fully handle it. I then did a very detailed market study and determined what the market would pay in rents. I asked the tenants for a list of everything they wanted done in their apartments to be happy. I then did everything the tenants requested and I then raised their rents 30%. After the building was full, I raised the rents another 15%. The value of the building went up and I received an offer for $725,000. This was $200,000 more than its value 6 months earlier. I put it into escrow, and then I realized that I could raise the rents some more. I raised the rents again in escrow and forced the buyer to pay another $25,000 for the building. Bringing the price to $750,000. That $225,000 profit was needed to help cover the money being lost in San Bernardino.
Author’s Note: The escrow fell through and the building was kept until this update, December 5, 2004. The building is now in escrow for $1,583,000
What did I do about San Bernardino? I contacted the seller/lender and asked him if he would like me to pull the security guard out of the building and let him have it back in foreclosure. He didn’t want it back, even though he pretended that he was willing to do that. He offered me $25,000 in incentives to get me to personally lend the money necessary for the completion of the building, so he wouldn’t have to take it back. For 3 months he tried to get me to put money into the building, with the idea that once I put my money in I wouldn’t walk away from it. The real story was that I wouldn’t put a dime into that black hole until I figured out how to make it recover at least $100,000 of Kevin’s lost money. I asked for a $70,000 discount on the note, and offered to pay him off. We negotiated for two months. Just when I was ready to finish the deal, the seller sold his note to someone else for only a $30,000 discount. I was not able to make the money I wanted because now the new note holder wanted 100% of interest and principal due. This threw a monkey wrench into my negotiating. All this time, I had a buyer standing in the wings to buy the building from Kevin while I was negotiating. I was then forced to sell the property to this buyer and Kevin recovered only a little bit of his investment. The lender and I were both playing a high stakes poker game. I lost this round. If I could have gotten the payoff reduced, Kevin would received a large hunk of money from an “as is” sale. This is what I call playing “Craps” on a very big Monopoly board.
Author’s Note: The buyer, thinking he was going to put $125,000 to finish the remodeling, notified me, after one year, that he had spent $300,000 to finish the building. The apartment building values were increasing rapidly during this time period, so Kevin’s project was increasing in value at the same time the buyer was going deeper and deeper into construction costs. The buyer made out all right in the end. If the market had died, he would have lost $200,000 on this building after Kevin had already lost a fortune. It’s all about timing, isn’t it?
Kevin learned that money alone was not the answer to his problems; he needed a Genie, to turn his turkey into a swan.
Story #2
Janet is the daughter of one of my oldest and wealthiest friends and clients. We have been doing real estate deals together since 1975. Janet and her husband started buying distressed real estate in Phoenix Arizona in 1994, which was 8 years ago when it was the thing to do. It was now Dec 2000. The market appears to be slowing down and did after September 11, 2001. Janet had been continually borrowing money from her father, whenever things got too difficult. She later sold everything in Phoenix and bought property in Northern California. Then in 1999, one year before I was brought in, she started buying real estate in Kansas City. One day Janet’s father called me and asked for my help. He had loaned his daughter $200,000 and felt that everything she owned was upside down. (Loans more than the market value.). This was further complicated by the fact that if she sold her properties, to pay off her father, the capital gains taxes would eat up any cash, from the sale. On top of all this, Janet kept asking for more money to keep up the payments on the properties that had a negative cash flow and didn’t have enough rental income.
He hired me to help his daughter and agreed to pay my fee. I would work with this 40 years old kid, to get her to return her fathers $200,000 and make herself totally debt free. Janet and I met. She was brilliant. She did know what she was doing, as far as picking good real estate deals. She owned, at the time of our meeting, 10 properties located in 2 different states, and there was $500,000 in equity. If we could get it out, before her father had a stroke things would be great. Janet agreed to the arrangement, happily, if I would be her adviser, not his. Her father agreed to fund whatever money was requested as long as I approved it. Also I had to be the one to ask Janet’s father for the money, since the upset between the farther and daughter was getting unbearable.
This is what we did. A list of needed repairs was created for each of the 11 properties. Bids were received and the work ordered to be done within 30 days. This was not to take months. It had to be done immediately so we could go to step two. Step 2 was to put on the market all of the expensive Northern California property. To my disbelief, Janet wanted to move her family, to a new city, in the middle of all this and her father agreed to let her do it. She had found an old run down house that she felt was undervalued. That meant that her old residence was put into the group of properties to sell. Sell is what we planned to do. Everything was to be put on the market, and sold at the best price to be gotten, but sold regardless. The property in Kansas was to be repaired and fully rented. The properties that could be sold at what we thought was full retail, were also put on the market. The plan was that when everything was sold, the father would get paid off; the loans on the remaining properties would be paid off and the balance of the cash would be put into the bank. Since all of the Kansas deals appear to be a good investment, Janet could now continue to buy more Kansas property, (she had only been spending $25,000 on each deal) but for all cash. The rents coming in would generate enough income for her family to live on without having to ask for money from dad or touching her investment nest egg. That was the plan.
I forgot one last thing. Because many of the properties had been bought years ago on a 1031 exchanges (tax-free exchange), the capital gain tax was going to eat up the cash proceeds. That was one of the traps Janet fell into. She felt she couldn’t sell without buying a replacement. Of course by not liquidating before starting anew, she would never get out of debt with her real estate lenders or her father. The solution, for this problem was simpler than one would think.
First, the father did a 1031 exchange with Janet for one of the big profit houses. The father sold Janet his personal residences for no money down. Now Janet rented her father the house he lives in. So much for capital gains tax on the $150,000 profit in that one big sale. The second big profit was in the house Janet currently lived in. That was tax-free under the current laws. Since the other houses sold had smaller profits, it was decided that the business decision to get out of debt was more important than avoiding paying any taxes.
Author’s Note: That was the plan. So what happened? Janet decided she didn’t want to sell the junk in Kansas and fired me. She refused to pay her father back and as of December 2004 he had not seen a dime. Father has deducted what she owes him from her inheritance, which will be put into a trust administered by her brother for the benefit of the grandchildren. Real estate in California skyrocketed after 9/11/01 terrorist attack and her properties all doubled in value.
Summary: Everyone thinks that his or her problem is not confrontable and therefore unsolvable. I have found that someone other than myself can solve my un-confrontable problems in 10 min and I can do the same for them. It is not a question of being smarter, or more experienced, though experience helps a lot when coming up with easy solutions, quickly. It is really that we all are willing to confront someone else’s problems much easier than our own. When we are willing to confront our own problem head-on, solutions begin to appear miraculously. What I do is help people take their mountains and turn them into molehills. The molehills are then flattened with ease.
The Real Estate Fraud Articles:
These articles were published individually at different times. Here they appear all together, as parts 1, 2 and 3.
Fraud in real estate, are you being victimized? (Part I)
Rip off artists appear in all shapes and sexes. They usually are nice looking, well dressed and very smooth talkers. They, in conversation, tell you about a financial killing they made, or are in the middle of closing. Then they change the subject. A really smooth talker never asks or suggests you invest. They wait until you beg and plead with them to let you in on their great deal. At this point you are HAD. That means, " your goose is cooked and you are invited to the feast, because you are the main course." The logical question is how do you know, before you lose your money that you are going to be ripped off? The answer is independent research, and lots of it.
1) Find a friend, or a friend's friend who is an "expert" in the specific field of investment you are considering. Ask lots of questions and listen to him. Ask him or her how to make sure you are protected. In the years, 1990 to 1995, eight people I know paid the same real estate trainer over $5,000 each to show them how to buy real estate for "NO MONEY DOWN." The trainer claimed she got results. Not one of the students, all of who got to know each other, after years of trying, ever bought a property for "No Money Down."
Recently the same trainer is offering to get her students 100% financing on real estate, even with bad credit. The MARK (the name for a con artist's pigeon) thinks he is paying for an education. The education is that you are $5,000 poorer and you have the name of a loan company that will charge you 8.5% on a 1st Mtg. and 11% on a 2nd mtg. I will tell you how to find such a lender yourself and it will only cost you a phone call.
2) See an attorney or an accountant to review the deal, especially the paperwork. I have seen contracts that if you just read it yourself, word for word and think about what it said you would run like a wolf is chasing you. He is. One simple real estate contract allowed the con man to take the money out of the joint account before he did the repair work. He took the money and never did any work. Never release money until you have everyone's signature on the paperwork and your adviser has read the whole contract, word for word. If you cannot afford an attorney, do not do the deal. It is better to not make a profit than to loose what you already have. "A fool and his money are soon parted." Don't be the fool.
3) Get to know this person. Who are his friends? Who does he work with? What information does the real estate commissioner or the "Better Business Bureau." have on him or her? Ask for the names of people who have already invested with the "con artist", made their profit, and are out of the deal. Do not ask anyone who has gotten in but hasn't gotten out yet. Multi-level people love to have you talk to people that have just entered the group, just before you have.
One of smoothest people around was a securities investment adviser in Santa Barbara. He got hundreds of people to invest with him because hundreds of people had already invested with him. None of them did the level of homework they should have. The few people, who did do independent research, smelled a rat and didn't invest. Many of his investors have lost their whole life's savings; the rest just lost a lot of money, but will recover. If you think I am trying to scare you, then you are absolutely right. "Money should come in rapidly and be spent very slowly.
Fraud in real estate, are you being victimized? (Part II)
The phone range and Peter was on the other end of the line. "Willard, I have a friend of mine that has a real estate problem." I said, "Send him over." Two hours later, Jerry sat in front of me terribly upset. Three years earlier, he had been talked into buying a 4 unit building in partnership with Smooth Talker, a knowledgeable, smooth talking real estate salesman. Smooth Talker offered to find the property, arrange the financing, manage the building and even put up the down payment. Jerry was told that all he had to do was use his perfect credit to qualify for the loan and then sit back, wait seven years and the money would come rolling in.
Smooth Talker also promised that the two of them would do more deals and Jerry would make over $100,000. What Jerry did not know and would not figure out until 3 years later, was that Smooth Talker had no intention of splitting anything and Jerry could kiss his perfect credit goodbye! 3 years ago, Smooth Talker had Jerry and two other buyers, buy three buildings, located on one street. The buildings cost $150,000 each. Smooth Talker put up $1,500 down payment for each property, while at the same time, telling the buyers that he was putting in $12,000.00 for each. There was an unexplained difference of $10,500 each.
Smooth Talker also collected a $9,000 Real Estate commission on each. Smooth Talker also agreed to take the building in as-is condition, with no inspections and without requiring the seller to make any repairs. There were, unknown to Jerry $10,000 worth of air-conditioning as well as other work that needed to be done on the building.
Smooth Talker had those other two buyers borrow from the Federal Government a remodeling loan of $48,000 to make the needed repairs. When those other two buyers each got their loans, Smooth Talker took all the money and said he spent it on Jerry's building. Let me clarify that. Smooth Talker stole the money from the other two investors, telling them he used it on Jerry's building. That is still stealing. My research later showed that he did almost no repairs to any of the buildings, and what little repairs he did have done, were not even paid for.
Smooth Talker cheated the poor workers out of their pay. No one could ever understand what he was doing. He even collected rent, pocketing any cash. When the buyers wanted an accounting. Smooth Talker wouldn't even supply it. When I came on the scene and demanded, as a matter of law, an accounting of what was received and spent. Smooth Talker didn't have any proof of what happen to all the money.
Jerry wanted out of the partnership but Smooth Talker didn't want the building sold; but he did want to make sure he got his due, if it was. He gave me a statement showing that he had put in $34,000 (which was not true) into the building and wanted that before any split of profits. This would have left Jerry receiving $5,000 and Smooth Talker making $46,400 on the whole deal.
To avoid being in this kind of a situation, I advice the following, before doing any sort of real estate deal; a) Evaluate your risk. What is your downside? Have a real estate expert study the deal. b) Set up operating and reporting guidelines with your partners. Put everything in clear English. c) Have everything reviewed by an attorney or an accountant. d) Choose your people partners with care.
Fraud in real estate, are you being victimized? (Part III)
Jonathan's Story: Jonathan had the sadist story I ever heard. You decide how the story turns out. It was 1997 and I received a call from Jonathan. He had received my letter asking if he wanted to sell his business any time soon. He asked me to come out and see him. Jonathan was 81 years old. He owned a woodworking factory that had been going for 40 years. He also owned two commercial factory buildings and had a beautiful residence that was debt free.
His wife, Janet, also 81, was the sweetest woman I ever met. They were both healthy and they loved each other dearly. They had no children or grandchildren. Janet had nieces and nephews on her side of the family. Jonathan had no living relatives of any kind. When I met Jonathan I adopted him. Sounds like the perfect picture, doesn't it. It was until 5 years ago.
Jonathan received a letter from Nigeria explaining that if he would front them some cash to pay off some government officials, they would pay him millions of dollars out of what the government owed them. You may have heard this story. It has been on 60 minutes. In fact Jonathan had heard this story; the problem was that he thought that his contact was different. They showed him legal documents, had Nigerian attorneys certify the validity of them and they did everything else necessary to con a rich old man into believing that his ship had come in.
Over the next 3 years, Jonathan stopped paying his real estate loans, borrowed on his factory equipment, ran up $500,000 in credit card charges and cleaned out his wife's separate bank account, all without telling her anything. Every payment to Nigeria was supposed to be the last one, and Jonathan was hooked. When I found Jonathan he couldn't raise what he thought was the last $10,000 necessary to finish the deal. His creditors were getting very upset and were ready to sue him.
As terrible as this sounds, Jonathan was the 3rd person that I have met in the last 10 years that has been stung by this scam. I cried. I know that at least $500,000 was sent. Jonathan thinks he sent closer to $1 Million. Jonathan decided that it was fate that sent me to him. He may be right. By the way my company name is Kismet Real Estate Investments, Inc. Kismet means Fate, Destiny, Karma, etc in Turkish, Indian, and Arabic. Time was very short, we had work to do and fast.
His wife knew nothing of what was happening, and I had to get Jonathan to tell her that they had gone from being millionaires to destitute in one conversation. Jonathan told his wife the truth. She forgave him. (Now that's love.) Her one concern was that she didn't want to loose her home. We were but a few weeks away from the creditors coming down on his business and her mortgage free house. In one clean swallow, they would put her into bankruptcy, a one-bedroom apartment and living on social security, which would have actually killed her. How much can one take at that age?
I went to work. First I promised Janet that no one would take her house away from her. She needed to trust ME, a total stranger, to not put the nail in the coffin. I do not know if I could have made the decision she had to make. We put her house in an irrevocable trust for her family when she died. That meant she had to give up ownership of her house, to me, a total stranger, in order to continue to live in it the rest of her life. Next we sold his two buildings to an investor who would work with us. The loans on the two buildings were equal to the market value at that time.
We then found a buyer for the worse of the two buildings and made a deal with the Small Business Administration, to lower the interest rate and payments on the remaining building. Those payments are about 30% of current market rents today. By making those very low payments, the lender who is on the building and the business equipment was happy. The result of all this was that Jonathan was able to keep his factory running and make just enough to pay his current living expenses.
Then the creditors, eight of them, started suing Jonathan, one after the other. Each tried to take the assets of the business. There was nothing to take. Some tried to go after the commercial buildings. That failed as they had been sold. One tried to go after the house. I arranged for someone friendlier than the bank to buy the bank's judgment at a discount and hold it until it doesn't make any difference. The bankruptcy attorney said we would never get away with what we were doing. He said that Jonathan needed to file Bankruptcy. Jonathan decided that he trusted my ability more than the attorney's advice. It has been 3 years now and all is quiet on the northern front. Jonathan and Janet are now 84 years old, still healthy, and still in love.
Everyone thinks that his or her problem is un-confrontable and therefore unsolvable. I have found that someone other then myself can solve my un-confrontable problems in 10 min and I can do the same for them. It is not a question of being smarter, or more experienced, though experience helps a lot to come up with easy solutions quickly. It is really that we all are willing to confront someone else's problems much easier than our own.
When we are willing to confront our own problem head on, solutions begin to appear miraculously. What I do is help people take their mountains and turn them into molehills. The molehills are then flattened with ease.
Foreclosure; the basic procedure:
In order for foreclosure to occur in California, there are certain basic things that have to take place. How this works, in the case of a Deed of Trust, called a ‘Non Judicial Foreclosure,’ goes like this - with regard to the time line.
The borrower (property owner) does not make the monthly payment to the person or institution that he or she borrowed money from. Technically, a default occurs the moment the first payment is missed. However, for practical purposes, most lenders do not really start the foreclosure proceedings until after the third payment is missed. A few only wait until the second payment is missed, but this is rare.
The procedure, once started, is continued on through to the end unless the property owner stops it by bringing the loan current (bringing it current means to make all back payments owed to the lender).
Day 1 - A notice of default is recorded.
Within 10 business days - The Notice of Default (NOD) is posted on the property, mailed to the property owner and published in a countywide newspaper.
