I am going to write about a friend who has demonstrated complete resistance to the downturn of the real estate market everywhere. 

She is a mother of four and has been married for twenty nine years. Her name is Penny McGehee

Platinum Selling Agent for the firm Van Eaton & Romero, Inc.  in Lafayette, Louisiana.

When I met her six years ago, she had just started being an agent. She is one of the few people who has consistently performed and delivered.  Below are her main attributes.

1. She knows how to set priorities. Her priority is her family, her husband, children and her mother. She always makes time for them.
2. She loves what she does. When she is at work, she has her whole focus on the work that needs to be done.
3. She delegates tasks. It is seldom that one does not need help in this business and she knows how to hire the best people who can help her.
4. She follows up. Whatever it is that she starts, she follows up to completion
5. She makes the phone calls. We all know that in this business being in touch with the clients is vital. She calls and makes that extra phone call for the day.
6. She always returns phone calls. Amazingly, she calls back even if to say I will get back to you with regard to…when I have more information
7. She keeps her clients happy and they come back and refer her to others. Her clients always feel that they are her only client.
8. She sends greetings for major holidays she keeps in touch with her former clients. She has the personal touch and reminds clients of herself and her services during major holidays.
9. She respects her time with friends family. She turns off the phone when she has lunch with me.
10. One feels immediately at ease in her presence. When one is with her they feel special.
11. She never feels competitive towards others. She is always ready to help other agents. She knows that making others successful contributes to her success as well without even thinking about it.
12. She is very generous of her talent but acutely aware of her limited time. While she is willing to help, she also knows that each of us has the same amount of time and her time clock is internal. She is driven to accomplish what she set for herself.
13. She does not hesitate to say “I am sorry” If she messes, she fesses. I know of no other person who is so willing to admit an error if there was one.
14. She knows when to take a break. She takes time off of her schedule for “self maintenance.”
15. She lives life to the fullest. Whatever she does, whether she is volunteering for her daugther’s group or playing poker or just having lunch with a friend, or watching the ball game, it is always with complete delight. One feels delighted just to share her activities.
16. She knows the market conditions very well and is up to date on what would serve her clients at the moment.
17. She tells the truth no matter if that is not what the clients want to hear.
18. She is trustworthy and trusts others. She maintains strict confidence with her clients and friends.
19. She works for her client’s best interest and not hers. She tells the clients as things are and allows them to decide for themselves
20. She shares her victories and is undaunted by her defeats. A winner is a winner not because they win every time but because they win a greater number of times and they consistently strive despite setbacks.
21. She opens her life up to all that want to enter. A most loving, generous and caring person.
22. She expects nothing but loyalty in return.
23. Above all else, she is authentic and is genuinely aware of herself, her strengths, her limitations, her weakenesses and she is free from the attachment to any of those. She is one person who lives in the moment.

Every realtor wants to be a successful realtor. In the final analysis, each one of us has to utilize his/her own unique talents to be successful at anything we do. 

Success is an internal mechanism. The outside is only a reflection of what goes on inside.

Like any other thing, a material possession has an emotional value attached to it. It has little to do with market price which is dictated by the current supply and demand, which is in turn dependent on local, national and global economies. Too many factors to consider.

Investors, or really eveyone, should not be attached to the investment properties. There is a time to buy and a time to sell. As it says in the Bible, a time to sow and a time to reap.

The task of the adviser is to let the clients know the current conditions affecting such properties and therefore offer alternatives to the investors based on those market conditions.

As always, the ultimate decision rests on the client. We simply do our due diligence, present facts, perhaps offer a recommendation but that is it. To each his own. We respect each other’s free will and honor each other’s paths.

Where I went to obtain a University degree, everyone’s tuition was paid for by the government except those kids whose parents owned whole islands or are highl ranking government officials. As we were the scholars of the citizens of the Philippines, we were reminded that if we were not going to work hard, on our own, then if we could please have the integrity to leave so that someone else who was more deserving could take our place. We owed our education to the people of the Philippines who paid taxes.  As classmates, we addressed each other formally as Mr. or Miss or Mrs. We were not allowed to miss school, and certainly we were not allowed to borrow notes from each other. If we missed school because we got ill, it meant we were not disciplined enough to take care of ourselves. We could approach our teachers if and only if we had exhausted all avenues and we were stuck. We attended lectures, we went back to our dormitory rooms and hit the books. 

I am and will always be grateful for the highest class of education I had. However, looking back, perhaps I would not do it the same. Yes, I would have studied as hard, but I would have certainly asked the help of the people with brilliant minds-my associates and peers.

When I started real estate investing, I did everything by myself. It was partly because of fear. If I did it and I failed, I certainly would not want to broadcast it. The other part was pride. I could do it on my own.  These two attitudes cost me and were I to do it all over again, I would have first found a one on one mentor. Experience though is a great teacher and sooner or later, one must experience some setback in order to push forward.

I suggest that beginning investors learn everything first from the readily available literature and get their feet wet.   Success builds on success and the more success you have, the more enthusiastic you become.

A mentor who is available to you is invaluable when you really do not know what to do and wish to be reassured.  The more confidence you build, the better you become at it.  That is what a coach who has experience can help build in you.  A good coach will not necessarily tell you what to do, but will share his or her experienc that relates to your particular need. He or she will always just prod you to get the answer for yourself. Ultimately you decide and are responsible for your own decisions.

A good investor learns and learns and learns. Each transaction is unique and is treated as such.

Earnest money is the money you put into escrow before the closing to indicate to the buyer that you are serious in purchasing the property.  If you deposit it with an individual, you may ask that he holds it, however as soon as you give the check to another person, it is implicit that it is funded.  This amount varies from broker to broker and from state to state.

Inspection money.  You will need to have an inspection done in order to determine whether there are hidden defects in the structure of the building. This money is necessary because an inspection report will allow you to renegotiate the price of the property, and it will tell you how much needs to be done. You will then have to decide whether you are willing to do all of those.

Appraisal money.  The property has to appraise for the price that you are willing to pay for it, preferably within a few thousand dollars of the asking price.  There is no huge advantage in having the property appraise for a lot more than what you would pay for it, until after you own it. First, a value that is way higher than the selling price raises flags with lenders, unless of course they are the ones who are selling it.

Property insurance money. In Louisiana, you have to bring proof of insurance purchase and it will say it will take into effect when the property is already in your name, but you do have to purchase it prior to closing.

Closing costs. Closing costs are broken down to attorneys fees, title search, title insurance, recording fees and mailing fees. You will need a very good attorney which you would if you had alredy assembled your team.  Your HUD statement will detail all of the costs of closing. This is also where you will see the cost of your loan as far as your mortgage broker fees. Different mortgage brokers charge different fees, depending on the type of the loan.  Some lenders will also require that you insure the title for the property in order for them to lend you the money.  If there are any questions on your HUD statement, feel free to bring it up on the table during closing. Your attorney has an obligation to tell you everything that is there.

If you pay for the property in cash you will still have to pay for everything other than the mortgage broker’s fee. I recommend that you still purchase the title insurance.

I am fond of old houses.  They have character.  If the walls could talk, what wonderful stories they would tell.  I prefer to look at old houses with good foundation and basic structure, both as a piece of history and a work of art. They reflect the history of the street, the subdivision, the town.  They reflect the craftmanship available at the time and the materials that the workmen had at that time.

The new houses signify new beginnings and for that, they are special.  The new occupants can fill the walls with their stories.

Each building is different, no matter if they are cast from the same model and outwardly looks the same.  If we ever stop to ponder at the amount of work that was put into each building, we would appreciate each and everyone of them for themselves. Countless man hours, a perfect coordination of the people involved, timely delivery of the materials to each building in progress.  There has to be a great deal of planning and coordination, although I prefer to call it a harmonious process involving many people.  Each house, no matter how closely they resemble the next one, is a work of art.

Two of my cousins are architects. I had no idea of the amount of work that goes into each plan until I really began asking them about them.  Each drawing is to scale, each model takes a long time to build.  It is materializing a vision that was first formed from the mind of the person who commissioned the work or for the lucky architects who have a free hand in envisioning, designing and building it, it is a beautiful process which combines both skill and creative talent.

I always keep in mind that investors must not really fall in love with the property they are buying, but there is nothing preventing them from appreciating the properties as well.  That one is not attached to a particular piece of property does not run contrary to appreciating it.  One likes it well enough and appreciates it well enough to purchase it, and is perfectly willing to give it up to someone who values it.  It is simply flow.

     One can predict the future profitability of a real estate purchase within a span of a few years.  The fact remains that the land value will always tend to go up, barring cataclysmic global events.

     I remember my grandfather giving away a small piece of land to one of his tenants. It was not much, about 100 acres. It was located too far away from where he lived at the time and he did not want to travel that much anymore after World War II.  What he did not think of at the time was that it was bordering a huge lake, which, 50 years later became a tourist attraction in the region.  The land became a most desired location and the heirs of his former tenant were richly rewarded.  I always thought that whoever created the wealth has the authority to dispense it, but I do sometimes wish that I could visit those spas built in that land without having to pay. Just a wish, not a nagging yearning.

     No one can predict with absolute certainty where the greatest gain in the value of real estate will be.  In these tumultuous times in the financial markets, it is understandable to be a little scared.  The newspaper heralds the double digit declines in housing values, but keep in mind that each market is unique, each town is unique.  Everything goes in cycles like the seasons. If you are a long term investor you ride the waves, just like a surfer.

     The next question then is must one buy a developed real estate or an undeveloped land? The choice is always up to you and is dictated by your financial situation.  There is only one caution you need to be aware of and it is never to fall in love with your purchases. You must be ready to let it go when it is time.  Always keep in mind that we borrow it and then enjoy it for some time and then let it go for someone else to use and enjoy.

     The people will come and go, the buildings will get run down and replaced.  Nothing is permanent. Only the land remains.

     Who is Ted Turner?  Answer (A) The ex-husband of Jane Fonda (B) Founder of CNN (C) Donor of US $1B to the UN (D) Owner of the largest acreage in the US. 

     Answer? Take a guess.

     The business world, of which real estate investing is much more varied, fluid, dynamic and kaleidoscopic.  In the earlier part of this theme I posted the steps to be taken by anyone who would invest in real estate. It is for everyone.

     Even the most sophisticated investor, will at one point in time, question whether they made the right decision in the purchase of the property.  As long as you own up to your decisions and not blame anyone else for something that did not go quite well, you will do fine.  You accept that you made the best decision that you can at the time that you made them.

     It is said that as music is the language of the soul, mathematics is the language of the gods.  Numbers are what you see on paper. They are generated by precise formulas. Numbers are impersonal. If you use the same formula for calculating something, then your calculator or program will always give you the same answer ad infinitum. 

     I have walked away from deals that look good on paper. On those, I lost my deposit money, and I chalked it up to learning.  When everything else looks good and you are ready to sign on the dotted line, you still have to feel inside that this deal is for you.  It is as simple as that.  How do you know?  You just do. Every once in a while, you will see that one of the deals that you walked away from was actually a good deal.  The first tendency is to regret, but this serves no purpose at all.  There will always be good deals. That is why you have a team.  For every success and for every perceived loss, you learn something. You have to ask yourself what you learned from it and use that knowledge for your future purchases. In this case there is no difference between buying a stock and real estate. You win some, you lose some. As long as you win more than you lose, and that is where your instinct has to play a part, you will always be on track to long term wealth building.

     First, we have to acknowledge that realtors get paid by commission. It is their job and they are entitled to it.  Money is used as a means to pay for goods and services rendered and your realtor has an implicit obligation to render you the best service possible.  A good realtor will look after your interests, and this means more than giving you a ballpark estimate on where your offer should come in based on the previous sales in the area you are looking to buy. It also means that he or she will make sure that there are no loose ends in your transaction.  Actually, this process is so fascinating in it’s intricacies.

     Your Realtor® is a professional. He or she knows the market and can make recommendations to you, but keep in mind that one who looks after your interest will only recommend something that is in line with your expectations. Also, keep in mind that you always have the final decision.

     Because the realtors work very closely with each other, you will find that he or she may call you before a property is listed on the Multiple Listing Services. Since they are always in contact with each other, the listing agents often call their other associates on properties that will be listed within a day or so.  Consider this your preview of the coming attraction. You could be the first person to view the property once it is listed.

     If the property is for sale by owner, your realtor makes it easier for you to see the property by setting up the appointment for you and being with you when you visit it.  Selling, by anyone, is always an emotional process.  The presence of a realtor creates an impartial ground between you and the seller.

     Once you have decided to buy the property, your realtor is responsible for negotiating the price with the listing agent. Keep in mind that your realtor may suggest but you ultimately decide on whethery to buy or not. Once the contract is signed, your realtor makes sure that the process goes smoothly until the time of closing.

     One final point. A good realtor will not be mad at you if after all that she or he has done you decide you do not want to proceed to closing at all.  You are after all the client. He or she may not get the commission for that deal, but keeping you as a client who, in the future, with his or her help, can and will buy more properties is more important.  A long term relationship is better than one deal that did not go through.

     Your realtor is key to your success as an investor, but just like a doctor, you have to be very comfortable working with him or her. He or she is, after all, one of your partners in building your portfolio.

Depending on how conscientious you were in the past about guarding your credit, this process can take up to one year. You will need to interview the members of your team because you will be working with them continuously.

Here are the steps that you have to do.

1. Visit your local banker and speak with the person who deals with all loans. If the bank is small enough, this person will handle all loan inquiries in that particular branch.

2. Assemble your papers. This means bank statements, pay stubs, cds, titles to properties you already own.

3. Find the addresses of  the three major credit bureaus. Ask for your most recent credit report (you may or may not have to pay for this service).

4. Begin interviewing mortgage brokers. You do not need to send in paperwork to all the mortgage brokers that you know, as every time they access your credit report there is a corresponding decrease in your credit score.

5. Work with a real estate agent who has done the same thing you are going to do. Someone who sold you your million dollar home may or may not have had experience in investing, very simply because they have different focus and have defined niches.

6. Your real estate agent should have a list of everyone that can help you manage and or keep up your investment.  This list will include appraisers, inspectors, plumbers, electricians, cleaning ladies, carpenters, painters, landscape or yard maintenance person. If you decide to have someone manage the property for you, interview not 3 but 5. This is  a crucial choice. It can save you a lot of frustration, not to mention lost income.

7. You will need an attorney that will do the legal work for you and it has to be a real estate attorney.

8. Once you  have assembled your team, set up a meeting with your finance team (banker/mortgage broker/accountant) and tell them what you intend to do.

9. Set up a meeting with your real estate agent, the one who is going to find you the properties. Be specific in your criteria when defining what you want to invest with (is it location? type of construction? undeveloped land? a new construction? is it a single family home? is it a multifamily home?). Those are the questions that only you can answer.

10. Know the area you want to invest in like the palm of your hand. Where are the grocery stores? Where is the nearest bus stop? Is there a laundromat close by? How are the buildings in that area? Do the owners maintain them? The most important criteria: Will you live there?

You have assembled a team of experts and your task is almost done. That is just the preparation for your buying process. You have to be doing all of this in addition to your family/social obligations and your career. Give yourself some time.