Posted on May 4, 2010 @ 6:15 pm - Written by BawldGuy
When I used to teach aspiring real estate investment brokers/agents this side of the business, what they often referred to as ‘The Dark Side’, I’d usually start out with a little talk about what their future clients really wanted. ‘Course, before I began, I’d do the whole teacher thing, (it’s in the book, you can look it up) and ask them for their thoughts on the subject.
The answers followed a predictable path. You know, analysis, research, knowing pertinent tax law — you could probably fill out the rest of the list. They’d start gettin’ itchy as I kept shakin’ my head no. Then, for my own personal entertainment I’d tell ‘em they weren’t even warm — keep tryin’.
Availability, 24/7 etc. Returning phone calls, or now, emails, texting and the like. Nope. Still not close. Read the rest of this entry »
Posted on December 1, 2009 @ 5:54 pm - Written by BawldGuy
You might be wondering why anyone would even have rent increases on their menu these days. Fair enough. But there are regions in which the future will indeed include rising rents — in fact the last 12 months have seen rents head northward for the folks who’ve invested in the Texas neighborhoods I’ve recommended. It’s been roughly 2-4% in our real life/real time experience there. Just food for thought. 
My decades as a real estate investment broker have led me to understand how landlords can rationalize just about anything, especially when it comes to direct dealings with their tenants. This is a good time to recommend professional management, as my stance has always been that your income property should work for you, not you for it. It’s not always feasible, and I get that, but if it’s at all possible, at least consider it seriously.
The question is often posed, “Should I always be on the cutting edge of market rents?” OR “What will happen if I raise my rents and they all move out?” There are myriad iterations. Read the rest of this entry »
Posted on October 27, 2009 @ 4:22 pm - Written by BawldGuy
When analysts wanna illustrate a point with a little extra gravitas, they’ll often invoke the concept of the vaunted ‘Fundamentals’. Given analysis with them vs without them, we’d all opt to have them well blended into the equation, right? Of course.
Here’s the problem though, especially as it relates to the garbage in/garbage out principle in the form of an axiom.
BawldGuy Axiom: Using most of the required tools to complete a job well ain’t gonna work — and the proof will show up in the results.
Ever been workin’ out in the gym and seen one of those guys who didn’t get the memo about workin’ the body as a whole? They generally look like Ahnold from the waist up and Olive Oil from the waist down. I’ll bet you’ve seen this before. They’re applying the fundamentals of body building through resistance training — but doing it selectively. FAIL. Read the rest of this entry »
Posted on September 16, 2009 @ 8:34 pm - Written by BawldGuy
So much of what concerns you as an investor (Captain Obvious alert!) is return on your capital. Everyone’s lookin’ for THE property. You know the one — double digit cap rate, highest quality tenants, location to die for, yadda yadda. What happens next is the learning curve, right? We all found out where the extra high cap rates hang out — bring yer bodyguard. It rapidly evolves into two lines intersecting. One is a return with which you’d be happy — the other the level of risk it takes to produce said return — one with which you’d be comfortable.
And there’s the rub.
Lip service is given to the intimate relationship between risk and return, but often not much else. What’s worse, both risk and return are just as often misjudged by the investor as a result of their analysis of a given property. Though I used to believe risk was more routinely misunderstood, I’ve come to believe it’s probably the return side of the equation. Read the rest of this entry »
Posted on August 31, 2009 @ 2:14 pm - Written by BawldGuy
Part of my job as a real estate investment broker is to recommend investors do — nothing. Whether that’s the case or not, the common denominator found in all my advice to clients, or those merely seeking a little quick guidance, is to ferret out what fits the factual circumstances and the investor. It’s not always cut and dry, but there’s almost always a path combining common sense with the comfort zone of the investor. Hint: It’s not the path clearly blocked.
By far the most difficult part of what I do involves both sides of the same coin. One side is advise given, which for one reason or another is not taken. I never take it personally. They asked, I offered my professional opinion along with a Purposeful course of action, then left it up to them. The other side of that coin is when they’ve chosen either to ignore my advice and/or picked an entirely different path to travel altogether. The only time that bothers me is when it backfires on them.
It’s like when we challenge gravity — paid for with a trip to the emergency room, some stitches, and a bill — and that’s when we’re relatively lucky. Read the rest of this entry »
Posted on June 30, 2009 @ 8:45 pm - Written by BawldGuy
Some weekend when you’re lookin’ for something to do, grab a clipboard, a legal pad, and a pen, then head over to one of your income properties. Start at ground zero and pick a direction to start walkin’ and talkin’ with tenants in the neighborhood. I can almost guarantee an eye opening hour or two. I’ve had clients do this for years as a hands on exercise designed to show them all the things they didn’t know about the area, and all the misconceptions they may have had.
One client called me up laughing. Seems he came upon his high school sweetheart living a couple streets down. Ya never know what you’ll find and/or learn, but you’ll do both if you’re focused.
Here are some suggestions you may wanna incorporate. Read the rest of this entry »
Posted on June 16, 2009 @ 7:23 pm - Written by BawldGuy
I know, I know, too subtle, yes? I love saying this ‘cuz it’s true — some of my best friends are agents specializing in the listing and selling of single family homes, condos, and the like. The first seven years of my career were spent learning the ropes doing just that. After doing something for that long one gets the feeling they pretty much have figured out where the bodies are buried. Though I was pretty good after a few years, it became painfully obvious that those with far more experience did indeed have more knowledge, more and better skill sets, and were categorically better agents.
More simply put, they produced higher quality results, most of the time more quickly than I did. As I put more years behind me, I began to understand what Dad and many of his silver haired agents told me. They said after enough time I’d ‘get it’. Who knows when that really happened, but after about five years, my confidence level seemed to be much higher.
I compare it to umpiring at the Division I level of college baseball. You clearly don’t get to that point without having proven yourself. Watch umpires at any level of baseball and observe their body language. You can tell the grizzled vets, right? They’re always where they’re supposed to be at the right time. I used to help train youth umpires while working for the NCAA, and the rookies were an easy spot. Tentative was their middle name. They were never really sure of where to be, the rules, or sometimes even whose call it was.
It gets worse. Read the rest of this entry »
Posted on May 4, 2009 @ 9:14 pm - Written by BawldGuy
As long as I’ve been doin’ this, leaving your real estate empire to heirs upon your demise had a preordained happy ending. The real estate investor who passed, did so knowing his kids (usually) could sell some or all of his properties without paying a cent in capital gains taxes. He knew this, and what was even better, relied upon this due to IRC Section 102. Section 102 is fairly wordy, but in essence it’s the hook on which taxpayers have been hangin’ their hats for a long, long time.
In a nutshell it (102) says the heirs take the property(s) tax free. Good enough — as far as it goes. But, you ask, what if I wanna sell it? What happens then? On what does the heir then calculate their capital gain? Is it a capital gain? Will the heir have any tax liability?
Section 1014 of the IRC, in a nutshell says no. It’s called ’stepped up basis’. The property is valued at Fair Market Value at the time of death. This acts to effectively raise the basis from whatever it may have been to current market value, more or less. Because of Section 1014 any rise in value of the property in question which occurred during the decedent’s lifetime may never be taxed. I know, sounds to good to be true, but I’ve dealt with dozens of heirs over the years, and except for the amount of sales price exceeding the value at death — their was no tax liability incurred by the heirs. Read the rest of this entry »