Satori Alliance | Financial Counseling | Real Estate Investment Products | Financial Guidance Seminars

It has been my practice for the last 5+ years to do my best to advise and counsel real estate investors.  As market conditions have changed several times in that span, of course my advice has shifted as well.  My basic philosophy is Buy what you can afford while prices and rates are low, and this continues to be good advice.  After all:

• The number of people who need homes to live in is increasing
• The available supply of homes is finite and not expanding
• According to a US Census Bureau survey, home ownership is down nationwide (see details below)
• People who want to own remains constant
• The majority of buyers are first timers
• Affordability has drastically improved, while financing availability has deteriorated

If this is you, it is the perfect storm:

• You have at least $100,000 or as much as $2.5 million you want invested in real estate immediately
• You have a high tolerance for the risk of buying property across the country you have not and will never see
• You may or may not want to become a landlord, but a looking for fast turn-around and high ROI’s
• Owning 20 - 30 properties short term while they are sold does not frighten you
• You are an active investor who would hire a trusted adviser to oversee a 3-6 month project
• Recycling distressed property to return it to homeowners appeals to you
• Avoiding all complications by not securing financing appeals to you
• A portion of your investment capital can be at work for 3-5 years or longer

US Census Bureau Survey results:

“The homeownership rate declined in 2008 for the fourth straight year according to the Housing Vacancy Survey, conducted by the US Census Bureau in conjunction with the Current Population Survey.

The home ownership rate for 2008 was 67.8%, down from 68.1% in 2007.

By region, home ownership in 2008 was highest in the Midwest at 71.7%, followed by the South (69.9%), the Northeast (64.6%) and the West (63.0%).” - Home Ownership Rates

The major problem with these types of investments has not been investors who meet the milestones listed above, but the companies who secure the property have had 3 major drawbacks:

1. They could not acquire bulk REO or distress property below 60% of current value leaving insufficient margins for wholesalers or investors to implement a profitable exit strategy
2. They have not had a reliable or tested turn-key process that worked to dispose of the purchased property by their investors
3. They have not had a dependable relationship with suppliers to be able to acquire property on an ongoing basis at low discount prices.

Since the buyers are back in force and multiple offers on the lowest priced property is again common, there are now several companies with programs that have solved the 3 performance issues above.  But you won’t find them advertising or taking a high profile in any way.  They prefer to remain connected and committed to their long term, private referral sources, who seem to be able to supply them with all the business they need.

This is the best example “It’s not what you know but who”, and my strong advice is to protect those relationships that give you access to high ROI’s.

A common thread in todays’ world is how busy we all seem to be.  As you grind your teeth, sweat that next deadline and do your best to get through email and return calls, do you wonder if it’s possible to think about abundance and joy, let alone have that experience?

Occasionally you meet one of those rare people who appears to have life figured out AND is enjoying it - Amazing!  How do they do that having some of the same stuff to deal with that you do?

Just for a moment, with nothing else to pay attention to, see if you can imagine the experience of having these 7 habits fully developed in your life:

1. Build every day with the raw materials of your values and the vision of the future you want to live.  For this habit to be developed, DISCIPLINE is the practice.
2. Live life moment by moment.  PLANNING is a habit to master since the next moment is upon us.  Choose how to use it, or let it pass and deal with the next… oops, that one just went by.
3. A part of abundance is wealth.  What you have and need to live now, and what you will need in order to accomplish what you are going for.  The skill for this is FINANCIAL GOALS, a practice that will get you to and through your retirement years.
4. Sweep away tired uninspiring goals and replace them with an inspiring life purpose, from which an endless supply of relevant goals will emerge.  The practice to develop here is REGULAR REVIEWS.
5. Fight fear with action and get yourself an accountability partner who will hold you to account to accomplish your desires.  INTEGRITY is the practice of saying what you will do, by when, then doing just that.
6. Nourish yourself and others in small ways every day with simple things; like cleaning up your vocabulary and never complaining to anyone who cannot make a positive impact on the object of your complaint.  How many of us “Tell The Truth” in a negative way about our financial situation?  This is complaining and only ensures that things stay as they are, or get worse.  ANTICIPATION or POSITIVE EXPECTATION are skills well worth the time and practice to develop.
7. Finally, CELEBRATE everything you can.  There is much to celebrate if you look for it.  If you have trouble with this one, start an appreciation journal and commit yourself to write in it daily.

Live life by design, think about your credit, your budget, the impact of financing, saving, and investments on your long term planning.  Biggest of all, is your plan abundant enough to live a joyous life?

Try this     (click to follow) new tool to build a great plan in a short session.

“3 Insider secrets to help you predict where interest rates will be headed”

While this seems like a promising headline, for the last few weeks the mortgage backed securities market and the stock market have resumed their previous predictable pattern of behavior which is good news, or is it?

For years those in the mortgage lending industry were able to with relative confidence learn to predict where interest rates were headed by what was happening, in general, in the stock market and the bond or treasury market.  I don’t at all mean to suggest that anyone could accurately determine what rates would be but those with experience would “study the tea leaves” and make a relatively good prediction and hit it more times than not.

1 - When bond yields are up mortgage interest rates will move down.  Even though these two are not related but are distant cousins, it was a pretty reliable assumption.

2 - If the stock market is doing well the bond market tends to react in the opposite direction.  This used to be reliable because if investors liked putting their money in equities (stock) they would usually take it out of securities (bonds) to do that.

3 - Talk about the threat of inflation and the bond market would sell off and rates would rise within a few days and stay up in a protective mode until the conversation changed or inflationary fears subsided.

For the past year or so, these have not been dependable measures to predict where interest rates are headed due to the overall lack of enthusiasm and trepidation about the financial markets.  Interest rate behavior was pressured down, they stayed there & nothing negative about the market would have much of an effect on rates.  It has been a hay-day of low, good rates so to speak. . .

My friend Ray Avanzino presents a very straight up picture of current market conditions, check out his work.  Bottom line, the fear of inflation surrounding the increase in federal debt is increasing and therefore the bond market has sold off more dramatically than ever in the past.  This usually means higher rates and indeed they have gone up quite a bit in the last 2 weeks.  However, higher rates threaten our fragile recovery so now the pendulum is poised to swing the other direction so as not to slow down or stall what little recovery we might have going.

The lending industry is doing all it can to get clients locked and closed before major increases threaten already weak business.  So if you are in line, hopefully you have a skilled agent who can see these trends developing and will tell you when to achieve your home run for this cycle.

As usual, please comment, don’t be afraid, you’ve got a couple of minutes, just do it!

I heard it said at a sales meeting last night that people are downsizing in a way that takes them “Back to their roots” of family, close social gatherings, & needs type purchases instead of wants.  Further, that this is becoming a trend and a new way of life.

On the NBC Today Show a couple of days ago, there was a piece on the values of real estate.  One of the claims was that according to NAR (National Association of Realtors) the average home size desired now has dropped to a taste over 2,000 square feet, several hundred square fees less than just 1.5 years ago.

As I look around, I certainly do see examples of all this but how wide spread is it?  I am now working to build a larger consensus.

I’m working with an Intern who’s major is finance at a local university who put a 6 questions survey together to help answer the questions above in more detail.

Please take 5 minutes and answer these few questions; you may even win a prize for doing it.  Then after you do it, have others take it, he thinks we can get 1,000 responses in a very short while.  Right on Daniel!

The Financial Preferences Survey =  Click Here

Lets discuss your views too

Cheers. . .Danno

I ask myself all the time, am I making the right choice?  We could debate right or wrong all day on different levels but the point is I make choices and so do you.  Losing 25-50% of your long term savings is a problem.  Just this week we’ve heard about folks putting off retirement for 5 - 7 years or who need to subsidize retirement income, or who may not retire at all and then around age 90, it’s over!  It’s just not fair - - Says who?

Who made every single choice in your life, in my life?  You did, I did, and then life goes the way it does and we see the results of those choices.  Why is it then we begin a process of disempowering ourselves and forsaking any learning that we might benefit from by looking around for somebody or something to blame for how it turned out?  Oh but when it goes well & we win, guess who gets the credit. . .

Like children learning to walk who do not give up when they fall, we keep living and making choices, thousands of them each day.  The question is who or what is driving them?

The simple answer is:  every thought, feeling, belief, or memory we’ve had, combined to form your past, your history.  So is our history choosing for us?  Do we simply look for what we already tried that worked or avoid what didn’t for our next choice?  Are there any other options, what about the present or better yet the future, how do we get there?

Moving forward will require great courage and very different thinking to form new habits if we’re to get valuable lessons from history with which to move forward. We are about to experience a massive economic recovery.  It may already be underway.  To be positioned to gain from it, here are some ideas to work with if we can give up blaming for just a bit:

• Update your plans, dreams, and goals for what you most want in your life.
• Translate them into the monetary equivalent. What income will you need, what will that new car cost & when & how many years before college planning begins and what will the cost be?
• Do research to determine what choices you need to make now and in the near term. Base them on what’s current, strengths and weaknesses, and what’s anticipated. Create your own criteria for choosing. Bring in experts when you need them & listen to them if they are more skilled than you, which might be why you brought them in.
• Avoid making choices or decisions in extreme emotional states which would obviously be emotional choices. Make your choices based on carefully considered criteria which have the best odds of producing a win.
• Finally, we’re back to where we began. Life goes the way it does, you get what you get. Be responsible for the choices you made, take the results and move on and make more!

See where this began Click here

Our culture’s psychology today is not doing well.  People are absolutely panic stricken. Everything they thought was true about money is being turned on its head. Seemingly rock-solid institutions have collapsed.   Average affluent individuals have lost 25-50% of their net worth in the last year, and many have of course lost far more.  These are people who seemingly did everything right and were following the rules–diversified portfolios, thoughtful weighting of risk vs. return, etc.  So what do we do now?

How do we instruct our children moving forward - what common sense are we to use to build the future we want to live?

• First - Careful, thoughtful and responsible choices. If we learned anything, could be we consider not only what we want but what might be lost and do research and investigate our options more thoughtfully.
• Second - The cry of the ages, save more & spend less. We now know the purpose of savings and lots of it, maybe the US savings rate will stay up & we will discover we not only like it but will live more peacefully doing it.
• Third - How about a responsible plan that gets reviewed often and followed rigorously until following it becomes a habit.  This could curtail some of the out-of-control emotional spending.
• Fourth - Let’s create additional sources of income, passive income so we don’t have to rely 100% on an ever evolving career or job.
• Fifth - Design our children’s education system to include basic financial literacy then support it with practical applications and examples from the parents who follow those very principles.
• Sixth - We could also look for others in our communities who needs support and work with them in ways that transfer the skills that come from the unique experiences we each have from our lives.

In the coming posts, I’ll discuss & develop each of these a bit more.

What do you think?

Danno. . .

  A financing client I’ve worked with for many years asked a difficult question last week.  He is contemplating turning his keys in on a home he purchased 6 years ago as part of his retirement plan.  His main concern how a foreclosure or short sale would impact his credit & if he really needed to be concerned about that with the number of people in situations like his.

For retirement planning purposes, he purchased this home and planned on big appreciation to make up for lost savings in the “Dot Com Bust” of 2000 & 2001.  The property value increased, he refinanced taking out cash to purchase two more properties.  He had a high leverage, high appreciation plan.

My answer was he did need to be concerned and that he would loose between 100 & 150 points in credit score.  Repairing this score will not happen quickly and for a period of at least 7 - 10 years my client will have less access to credit with increased expense for the credit he does get.  This in turn will negatively impact his ability to acquire additional financed assets he might use for retirement.

Although he called to discuss one property, he will soon need to address the other two which are high cost as well.  This strategy works well in rapidly appreciating markets which never last as long as normal or down market.

He would have done much better moving his profits to a lower leveraged property that could carry itself in any market.  That would have been a most powerful move.  Also, the financing on low leverage properties is slowly retired as tenants make their rent payments which increases equity.

First, let me say straight up ”I love what I’m doing”, AND the recipe for developing my skills at Internet marketing and E-commerce has not been a simple one, although it sure was supposed to be according to all I’ve read.  I have spent nearly 1 year assembling the ingredients learning and producing the structure I’m finally using, and at great personal and monetary expense.  My wife is completely frustrated and doesn’t understand anything I’m doing saying “I just don’t see products like in the stores.”  My point, had I known, had someone told me it would have cost me this much to open the door to begin receiving business, I would likely never have begun.  I kept preparing and believed in the feast.

This meal started with a hunger, a desire to build my own business supporting those who needed personal financial literacy training.  A dream of mine for over 20 years, I had little idea how big the demand would become.  To this recipe was added a declining Silicon Valley real estate investment appetite in late 2007 combined with a pound of sub-prime loan failures in early 2008 and the stage was set for an almost certain flop.   I kept preparing and believed in the feast.

Tim Ferris in his book “The 4 Hour Work Week” has whole sections on how simple it is to develop a product, test it, sell it, and profit for life.  I’m the first to admit I was hooked.  That was a feast I wanted for myself and my family, and while I was at it my ideas were so good I figured I’d feed a few others.  I kept preparing and believed in the feast.

I just completed with a coaching client today and will have my last session with them tomorrow.  He is 65 years of age, a successful CEO retired from his business and in just about the same spot I was in one year ago.  Our work was to get his personal and business goals identified and prioritized for him to move forward on what ever business is next which will include the Internet and E-commerce.  I gave him my best and how to avoid what delayed me, and shared with him a way to prepare and believe in the day of the feast.

Well, just like Thanksgiving which most of us will enjoy in a couple of days, the feast is almost on the table and will be enjoyed.  In spite of all the preparation, in spite of it’s cost, and in spite of all else I could have been doing, I will taste this feast of financial freedom and guess what - just like Thanksgiving next year, I’ve got plans for the next feast and am preparing.  I know it will take too long, won’t go the way I think it will, and obstacles will be encountered because that is the life we enjoy, it’s the journey & not the destination we’re after.  So I will continue to prepare for enjoying the next feast.  How about you?

Caught it! - Now What?

On this the first day after Barack Obama was voted our 44th president, the questions and assertions are flying.

All the way from speculation about massive deflation followed by epic inflation, to the black community’s shining enthusiasm, to the client who now believes he should sell his investment properties.

What will happen next and how will we know?

Do we tell our extravagant spendthrift children that the gravy train has left the station, not to return for year?  OR, is it time to sit in the recliner & discuss with the family how there will soon be health care for all?

Nobody can really say though everyone is sharing wildly today.

Personally I believe life will go on.  And without dramatic differences as many believe.  We will have all our usual breakdowns and concerns about our finances, our families, our relationships, and all areas of our life.  Then there will be all the conversation that continues to give us hope for the future that things will get better, - or worse, which ever side of a topic you are on.  And that’s really the whole point!

It really will go the way each of us says it will go and what we rally for, just like we did to win this elections.

I have historically voted to the right side of issues but this time, well, it seems it’s time for a change, so now -

Lets see how this dog and his pack hunt!