Brian's Real Estate Coaching Update Journal

interesting read here Brian

go get them

Later Fred E

Welcome aboard.

Fairytale Story: Starring Role YOU
Dreams Do Come True

Investing can be an adventure. Let’s say that you see a large commercial property that you think would make a good investment while you are driving your car off the beaten path. You stop your car, pull out your camera, and take several pictures of the building from different angles. You go home and download these photos into your property analysis and management software program and begin developing a dossier on the property.

You start researching the market and get a feel for it. Based on your research, you believe that the property has lots of potential, but you don't know how well the property is operating under current management.

Ah Sherlock, this is when the real detective work comes in handy. You first visit the property. Its a tall office building flanked by retail on one side single family homes on the other, and a diverse job market base.

As you pull into the parking lot you notice that the parking lot has cracks in it and the paint on the cement is peeling and fading. You bust out your camera and voice recorder and begin your work. You take pictures of the parking lot cracks and fading paint noting the severity of the problem in your voice recorder. The parking lot has an awkward lay-out and you swerve up near the building a try to find a parking space with some shade, but there is no vegetation to shade the cars that are parked. The sun is beating down hard. You park your car and walk up to spot so you can get a good picture of the entire parking lot. You take a few pictures and note that the parking lot could possibly be torn up and shade trees could line up in some areas to give employees that work their some shade for their vehicles. You note in your voice recorder to call your landscaping and surveyor guys to take a look at other possibilities after you make an offer down the road.

You go inside the building and take a short walk through the hallways learning about the building. You talk to some people and ask about how they like working in the building and how are the employers. You learn about maintenance and the property management company that overseas maintenance. You begin to notice many problems with the buildings management noting them all. You take all the information that you gathered over the course of the short trip, and pinpoint where the most profit could be realized by correcting many of the properties defects. You begin getting a feeling for the potential increase in value you and your team could bring to the property.

At this point, you step back and decide to watch the property for a couple of months to see if the management is fixing any of the problems or if it continues to decline. While you are tracking the property, you begin to realize that the building could be completely renovated. If fact, the property could possibly be torn down and a hotel could be put in its place based on the surrounding market. You mind begins to come up with all sorts of ideas and you begin to find more and more problem and more and more potential. You begin to develop a love affair with the property. If fact, you are ticked that the owner has allowed this property to remain a substandard property and you are set on fixing all his shortcomings. You feel property is sacred and that it should always be cared for with the highest level of care possible. In fact, you are beginning to notice that many of the surrounding building are superb and the area is getting high traffic. It is just this property that begins to keep you up at night.

Well about six months have passed and after speaking with the management team about the current owner, you find out that he is located in New York. They tell you that he brought them in to keep up the property, but pays them a less than competitive salary. They tell you that the owner is just interested in the steady cashflow that is coming in every month. Management said that based on the restriction the owner has placed on them to maintain it, the property is losing tenants. You secretly think this is a good thing because the ones that have been occupying the property are substandard companies and you think your team could attract some quality tenants if you redesigned the building or got a contract with a major hotel company. You decide to contact the owner by phone and convince him to allow you to do a full analysis of the property with a full non-disclosure statement faxed to him. He agrees and you go to work uncovering all sorts of profit opportunities and after a week of teamwork and hard work, you come to an offer price based on the operations of the property. You call the seller and ask him if you could come out and present the offer to him in person. He agrees. After talking with him, you find out that he does this all the time. He buys properties and then put a management company in place to run it and just draws the passive income from the property. He says he is mainly a serial entrepreneur and just needs a place to put his wealth. You come to the conclusion that he doesn't know a thing about investing in real estate or how to increase the wealth from the properties with a little attention and some vision. You also find out that he doesn't even know the main team members need to evaluate properties before he buys them just by some of the question you asked him.

You develop a presentation for the entrepreneur explaining everything you plan to do with the building. You prepare to give him your grand vision based on the due diligence of the property with your team. The man likes the idea and thinks you have a good head on your shoulders when it comes to investing in property. You then begin out lining exactly what is wrong with the property operationally in specific detail and finally you go for the close.

Based on your projections this property could increase in value by $30 million dollars, but you don't tell him this bit of information. Nor do you tell him that the property could potentially generate a much greater ROI. After everything is done you could refinance the property and pay off all your investors with interest and control the property 100%. Because you don't want to ruin the sale and because he couldn't figure this out himself, you decide to keep the profit potential out of the conversation. When you begin to close the seller, you give him purchase offer based solely on how the property is operating. You offer him $10.5M. He looks at you and says that he will take it. He says that he won't make much profit on the building for that was about the price he paid although it had gone up in value. He tries to negotiate the price higher, but you say that based on the operations of the property, you can't make a different offer because you have a line-up of investors willing to pay cash and they all agree the property can go no higher than 10.5M. The owner says what the heck; he has been earning passive income on the property for years and thinks it has served its purpose. He says that he likes your style and would like to keep 10% in the property because he thinks that you are a man with a vision. He begins talking about his other properties in the same city! And a few other properties he owns just outside of New York. You think to yourself, if I bring him in on the deal and dazzle him with the project, he might give me the other properties or something. Or he could join my investment team. You decide to give him 10% ownership with the stipulation that you can buy him out after a certain period of time. He agrees and you both shake hands.

All in all, you bank a fortune for everybody involved gracefully pulled the deal off. You contract with a major luxury hotel for business travelers and tourist to move into the property with a 50 year lease. This lease provides enough time to pay the property off. So you can sit easy knowing that the property you spent nearly a year stalking, is going to allow you to buy that Mansion on the Italian Riviera you have been trying to finance for several years. Now you can buy it and let your new asset pay off the mortgage on the 20M dollar property. Wow, life is good you think. Hard work really pays off. And I just acquired my dream home as well as a new buyer flush with cash, an entrepreneur with millions to finance more deals, and a great relationship with the community where you bought the building. The city is giving you special attention and more deals are rolling your way.

You sit back think about the time your mentor told you about the value of establishing momentum that once it starts going you become unstoppable. You think to yourself. Maybe I can get that guy to show me the other properties he has in the area. And so you ask.

Loving the coaching program. It methodically turning me into a an established real estate investor. Here is one thing that I learned so far. Things get much easier once you suck it up and incorporate your business as an LLC. Once that is out of the way its like a domino effect. I think not being incorporated scares us from getting started and incorporating scares us because we don't fully understand not only the protection, but the broad flexibility in the tax code. The goverment literally partners up with established businesses and give them as much as possible to succeed because small business hire a majority of the population.

In fact a sole proprietor has a 10% chance of being audited, where an LLC has a 0.03% chance of being audited. Furthermore, you have so many more tricks up your sleeve with regard to taxes.

Here is a cool tax trick. Lets say you have two kids of working age, but still teenagers. And lets say that you are giving them roughly $5,000 dollars a year. If you had an LLC, you could employ your kids and pay them that money as a salary making your tax bill $10,000 dollars less. A tax specialist however could put it better and make it more advantageous for you.

Or assume when you are going to Walmart to buy Diapers for your newborn, why not conviently look at a few neighborhoods on the way and log your miliage at .55cents per gallon you drive (.55 X 10,000miles = $5,500 in tax savings) and then when you are filling out your tax return at the end of the year, all earned income to a certain amount can be written off and if I were you I wouldn't even worry about whether something can be written off or not just get in the habit or keeping every reciept you have that you can remotely justify as a tax write-off and then let your tax specialist do the rest; oh and make sure you have a tax specialist because a CPA generally can't answer correctly more than 5 tax laws on the CPA exam, pick an accountant that has worked for the IRS and reads the tax code for fun. Heck im enjoying just writing about it. However, don't quote me on all this stuff. Try to clock in 750 or so hours of real estate time, because then you can definitly write off business expenses against your earned income. Taxes suck the life out of you and then when you die, the suck the life out of your family unless you have a good tax lawyer and accountant to eliminate this unlawful form of revenue for the goverment... Digressing sorry.

750 hours shouldn't be to difficult. Heck what I am doing right now is considered either business networking or business education. Everything I do, I try to make a real estate activity. Oh and check this out. Go to some tropical island for a weekend and take a camera. Look at some bungalos or raw land and call it a business trip, in fact you can have all your business meetings in exotic locations and call it a tax write off.

So now that my LLC is in the works, I feel a sense of forward momentum. Now I feel comfortable purchasing a 1800 #, buying some business cards, building a website, and talking to people about what I do. In fact I could go out right now and walk around and tell people in my downtown area that I am a real estate investor.

Heres a hairbrain idere, I could set up a real estate investment booth with the cities permission, and hand out flyers, business cards, books I publish, and even offer a sweepstakes drawing to people that come back later, and as all the people are passing by, I could have some bird dogs shamoozing the pedestrians like pan handlers begging for a $10,000 paychecks. I could walk into my barbar shop, the one I've be going to sense I was a boy, and telling him about my new business and say with confidence that "I am a real estate entrepreneur, and I am helping people solve housing problems." I could talk to him for a while and I bet some opportunity would result from the conversation. In fact the guy has served as county commissioner now that I think about it. I couldn't do this without feeling credible.

Once you get your business up and running just start doing crazy stuff for marketing, build a website from scratch and enter a blog, start a email newletter, post affiliate banners on the site and embedd links to products in your writing, create videos for your business of all the houses you are working on and get some testimonials. Man the marketing tactics are endless.

Heck, I heard about this guy who was in Las Vegas when the market was in a trough and he found out about a builder that basically was upside down on an entire street or neighborhood with upward of 20 vacant houses going unsold. Guess what he did? What would you do to make money in this situation??????????????????? hummm?????????????

This is what he did. He approached the builder and asked him if he could sell the builder's entire inventory in one day, would the builder give him one of the brand spankin new houses. The builder looked him up and down like he lost his marbles, but said what the heck. Anyway, so the builder and him worked out an agreement that the houses would each be marked down by $10,000 and other various price reduction levels. The marketer then advertises a free barbecue in the neighborhood along with open houses and special lottery for people to purchase their new homes at a deep discount. The marketer flys in a helicoptor in and drops ping pong balls from it with dollar figures written on them representing the discount they would get on their new home. The balls get caught in the wind and scatter all over the neighborhood unexpectantly. The families go wild scurring all over the the place to get a ping pong ball and claim thier prize. Believe it or not the marketer unloaded the inventory that day and got a free brand new house for his unorthadox do what ever the heck you want approach to marketing. Brilliant! Love that story. I hope to tell one of those to my grand kids one day.

Man I think marketing is just going to get more and more creative. And its all because of that confidence in having established an official business.

I am going to do something cool with my busines cards. I am going to do some type of card that is glow in the dark, so that when a prospect enters a dark room he gets some information that he wasn't expecting like a special bonus for keeping the dang thing. It will say on the back or something, "because of your great respect for the money and time I invested in this card, call the number listed and claim your prize." or something along those lines. I wonder what I could offer. Maybe a book that I publish from some creative publishing company that can make unknowns into authors. I know about a service that does it. And you know their is something special about writing a book regardless of your credibility before you write the book because the book establishes you credibility, and you can hand them out for free instead of business cards and sell some if you want. Just write a simple 50 page book about what it was like starting out in real estate and put a link in the book to your website and video blog that shows the story unfold on camera.

There is something special or sacred about books; they never end up in the trash. People value them. I mean come on if you really knew your true worth anything you write would be worth sitting down and reading sporadically; however, you might want to get a copywriter to ensure that it is interesting to read and easy to follow.

Man that gives me another idea, what if I wrote a childrens book on the fundamentals of transforming imagination into money. I could teach them the process from start to finish. That way these children could be building businesses that are 10X better than some lame lemonade stand.

Its my belief that children hold the answers to some of the greatest innovations, but we older more practical people have been neglecting that goldmine of brainpower. This is a personal mission of mine. I want to get children from all over the world together into a global forum like a special retreat from all bueacracy and let their minds go as they play and experiment. And while they are their, we get them together in small groups to brainstorm on all of the things they want to see become a reality. Then I bring in like a bunch of big time investors and we give them the resources and mentorship to begin making those ideas a reality. I think it could change the world. Well that didn't have anything to do with real estate, but I hope you will follow me on my mission;) Alright, Peace, Love, and Property!!