Is it ever ok to fire a customer or client? With the turmoil in the market, many would say are you crazy. However, I believe that regardless of market conditions you need to be prudent in who you have as a client or customer.

How many times have you had someone that says they are looking to purchase, lease, etc a property and you spend countless hours searching and showing them properties only to have them just disappear one day and never to contact you again? Also, how many times have you tried to educate a seller in trying to establish a list price that is reasonable in today's market only to have them tell you that they will only list it at X price that is a ridiculous number that will be laughed at, and if you list it at that price you get no activity from anyone other than the seller calling daily to find out what is happening.

If you honestly evaluate the amount of time you spend on bad, unreasonable, etc. customers, I am sure that you will find a tremendous amount of time that could be better spent farming for new listings, calling to find new buyers, or updating marketing for existing listings.

I know that it is good to have lots of listings, but when you have bad listings that you know aren't going anywhere impacting your efforts for good properties properly priced that is a bad thing.

So, what do you do when you realize that you have a bad listing? The easiest thing is to have a frank discussion with the seller and explain why you believe the price is wrong, the place isn't selling, etc. to try to get them to adjust accordingly. If they are absolutely not going to work with you to modify whatever it is that needs done, then it is time to just explain to them that at this point, you don't feel that you can provide them with the service that they require and that you can either recommend another agent or that you feel it is best ot end the relationship now before there are any bad feelings. Sometimes, this is enough to prompt them to be more open minded and listen to your advice, but if not, mutually agree to end the listing, in writing of course, and move on.

Doing this will allow you to focus on more productive activities and will almost assuredly increase your bottom line. If done in a nice manner, it will also never burn bridges so that they may return to you when their expectations are adjusted at some future point.

Will you ever lose a sale to another agent by doing this? I would imagine you will, but I believe that the offset is that you will gain many more productive listings and customers that will have far greater returns than those that you have lost.

Please feel free to comment and let me know your thoughts and practices with regards to this as I always enjoy learning.

Till next time... Live with passion and be passionate about everything and everyone in your life.

Jim

We hear it all the time by the midnight "gurus of real estate". Buy their program, book, CD, etc and you can quit your job and relax in the Caribbean islands. There are programs related to flipping/rehabbing, foreclosures, no-money down, and on and on. While I am by no means against people learning about real estate investing, but actually espouse it, I do have a problem with these "gurus" charging a large amount of money for a program that they KNOW will only be used by less than 10% of the purchasers.

Before you spend money on any book, program, etc, you need to first research the source. 1) Has this "guru" really successfully invested in real estate anywhere?

2) What are you getting for the money you spend? Phone Support? Email Support? Mentoring? Any support?

3) Is there a money back guarantee with few exclusions, or is it a guarantee excluding most reasons?

4) Do you know what you want to get from the program? This is actually the most important point, and doesn't really have anything to do with the "guru" per se.

I say point 4 is the most important because if you don't have a plan for your investing business, no program will make you successful. This is applicable for real estate investing, starting a small business, or any investing you will do. If you don't have a destination, you cannot make smart decisions on how to get there. You should do this right now for all aspects of your life. Investing, personal, and relationship goals are just a few.

So, sit down now and decide what you want to get out of investing in real estate. Replace your current income from cash flow? Additional income for other investments, kid's college, or vacations? Increase your assets while minimizing taxes? Preparation for retirement and other reasons?

Once you decide on why to do it, then you can determine what your goals need to be from a financial perspective e.g. add $2,500 per month in cash flow or $10,000 per year in cash profits.

Once you know your financial goal, then you can decide how to achieve it, because your goal will help you decide on the path to take. If you want cash flow, you'll probably want to invest in apartment style properties up and running with a good cap rate. If it is building cash in the bank, you may want to do rehabs or foreclosures. You may also decide to do a combination of approaches.

Now, you can begin your research. Go to your library, and read the books available on real estate investing. Call several real estate agents that appear to be involved in investment real estate rather than personal properties. (This is important, because most residential agents do not understand the investment property field.) Make sure to look for agents that work for commercial property companies as well. Go to a book store. Most of the bigger chains allow you to read the books in the store. Once you have done your homework, then you can make an informed decision on whether or not to buy the program.

If the things I've suggested here seem like too much work, then don't buy a program, don't invest in real estate, but just give your money to a money manager. Because regardless of what you hear, real estate or any kind of investing requires effort, mostly mental, on your part for you to be successful.

I hope that this helps you with your decision to purchase or not purchase a program, and keeps you from having buyer's remorse. Remember that money is not evil. It is the Love and coveting of money that is evil. Regardless of your current means, situation in life, etc, you should live your life with a feeling of gratitude for what you have been given. Even if the only thing you can think of is that you are alive, you need to thank God (a higher power) for that. Only then will you truly enjoy life, and isn't that what it is all about.

Well, it has come and gone now and we had a blast, but didn’t spend a lot on it. It was essentially a family reunion. On August 2’nd, I was married to Wendy by one of my uncles. She is an integral part of my life already and always has a smile and is able to have a positive outlook. I don’t often hear guys say that their favorite fishing partner is their wife, but that is how I feel about her. An interesting comment by her daughter is, “Jim is exactly like you only in man form.” Even though I’ve known this for quite a while, it is amazing what you can do when you have a team that is effectively able to communicate and function together.  

You may wonder why I am posting this here, but I assure you it is more than just sharing my happiness. My main point is really the last sentence and in particular one word, TEAM. If you are going to be successful in real estate investing and really any undertaking, it is critical to have a good team. In real estate, the main players are and in no particular order:

1. Property Manager

2. Real Estate Agent

3. Attorney

4. Accountant

5. Contractor (General or Individual Trades)

6. Mortgage Broker

7. Insurance Agent

You can be successful managing your own properties but only to a certain degree. The whole idea of real estate is to set yourself up for long-term success where you are able to enjoy your time and efforts. If you are managing, finding, etc. your own properties, you will always be tied to them on a short leash. By having a team, you are paying for the expertise of each trade and can expect specific performance by them. You are also able to multiply the amount of work done exponentially so that you can work ON your business and not IN your business.

There are many more things to be said about teams, but I hope this gets you started thinking about how establishing a team will do nothing but benefit you.

In closing, if you click on this link, you can take a look at some individual pics from the wedding. By the way, it was at my folks place on the shores of Lake Erie in Wine Country.

Hi there! Did I get your attention and have you scratching your head? If so, I thought that I'd try to help you out a bit with some of the investment real estate acronyms that are out there and commonly used. In my past, I worked in the satellite communications industry and associated techie businesses where we had an acromyn for just about everything including a lunch break. OK, not really for lunch, but I bet someone tried...

OK. So here are some of the common terms and some basic definitions/descriptions of them. As always, please do your research, because some of them are dependent upon the area of the country in which you live.

GI/AGI, etc...(Gross income, Adjusted Gross Income, and several others): I will just use these 2 examples, which some use interchangeably, but shouldn't. GI or Gross Income is simply all of the income that a particular property generates. AGI or Adjusted Gross Income is typically your gross income adjusted for unknown factors such as a vacancy rate. Some prefer to include the vacancy rate as a line item under operating expenses, but since the true number will vary on a year to year basis, a percentage of the gross is typically used such as 6%. So, if your GI is $10,000/year and you have a 6% vacancy rate, your AGI will be $10,000-$600 (6% of 10,000) which equals an AGI of $9,400.

NOI (Net Operating Income): This is your gross income minus any expenses other than debt service. Some examples are utilities, trash removal, water/sewer, taxes, etc.

CAP or CAPITALIZATION RATE: This number is expressed as a percentage and simply put is: NOI (not including debt service) divided by the sales price. Example - NOI= $20,000 (year) Sales price = $200,000
CAP RATE = 20,000/200,000 or 10%. It is important to ensure that you use the NOI and the Gross Income number as well as not to include anticipated or existing debt service.

Cash on Cash Return: This term is very important as it relates to your long term returns for a property. This is simply put your annual net cash flow (This is the number that actually goes into your bank account or GROSS INCOME - ALL EXPENSES and expenses does include debt payments divided by the amount of cash invested. Example: You bought a property and needed to put in $20,000 of your own money to purchase it. The property has an NOI, including debt service of $2,000. The cash on cash return would be 2,000/20,000 which equals 10%. You should also note that cash on cash does not include appreciation or other phantom increases, it is only related to actual cash in and out of your pocket.

IRR or Internal Rate of Return: As this will take a lot of space, I will refer you to a website that has a good description at http://www.solutionmatrix.com/internal-rate-of-return.html

I hope this helps to give you a quick reference point for some common investment real estate terms. There are many others that you will see and are important, but these are most common. I may post others here in the future, but feel free to comment or email me if you have others you'd like to see or would like to share alternative definitions.

I've proofread this a couple of times, but please let me know if you find any mistakes so that they may be corrected quickly.

Thanks Again,

Jim

Greetings everyone. Time is of the essence with this so I thought that this would be another good place to ask for help for this boy. My friend has spent a lot of time and money helping in Peru after the massive earthquake they had there. One of the friends he made is the Godfather of this child, and the only thing they need now is a safe and comfortable place for him to stay while in the US. The child's parents aren't allowed to travel with him, so he will be alone. If there is anyone in Washington near the hospital below that could offer this assistance, I would be happy to forward your information on to the organization.

If nothing else, please keep him in your prayers.

Thanks,

Jim

Message follows:

From: Romulo Fernandez [mailto:roferbaya@gmail.com]
Sent: Thursday, June 26, 2008 11:38 PM
To: Paul Breitfeld
Subject: Help needed

 Dear Paul.

 Before I mention the objective of this setter, I'd like to greet you and Jane,  I hope you both are fine.

The objective of this letter is to ask you a very special favor. There is a 11 year old boy in Cusco in which head doctors have found a tumor, and they say it is not possible to be treated here in our country. His parents have tried everything is possible in Peru but they have been told that the boy is going to live only for six more months, because a biopsy could cause him death, however there is a chance of taking the boy to a hospital in the US (*) to be treated there where this hospital has offered a solution to this problem, it is a Human Organization that is making it possible, in fact they are going to afford the medical expenses, but we need a place where he can stay in this city.

I'd really appreciate it if you could do it since it is the only chance the boy has to continue living, it's the only opportunity to save his life.

Greetings,

Romulo Fernandez Baca

(*) The hospital is: WESTERN WASHINGTON CHAPTER HEALING - THE CHILDREN

The address is: 225 - Colby Avenue Suit 3

                        PMB 178 Everett, WA 98201 US

Hello everyone. I hope that I got your attention, because I have some thoughts to offer, but first I must apologize for my absence here. Between business, preparing for my wedding in a couple of months, putting on a golf tourney fundraiser, and being Master of my Masonic Lodge, it really hasn't left much time for writing. However, I did want to get back here while I had a breather.

So, I thought that I'd write a state of the Valley Commercial Real Estate Market from my perspective. First, I'd like to say that this has been an interesting period due to so many variables being in play with the economy, jobs, gas prices, interest rates, etc. While I really don't see too much of a downturn in the economy as a whole, except for certain specific industries and areas, the talk in the press has been very negative with very little substances to their reporting. I believe that just being in the press convinced many people to just sit on the sidelines or take rash actions unfounded in reality. That said though, I have been seeing many businesses expand as well as starting up. The people doing this tend to have a strong capital position and didn't need to rely on loans and lines of credit. I have completed quite a few deals for retail leasing over the past few months and all of the owners have spoken about a continued strong demand for their products and services.

One thing that I haven't seen is as many investment properties coming on the market as I expected to see by now, although, the ones that are there are at higher cap rates than previously seen for the valley. This is a good thing for investors, and those that want to be successful in investing need to seek out these opportunities and not wait until the papers say things have turned around, because by then it will be too late, and they will be buying high to sell low instead of the opposite. This is why you need to be organized and ready to move when an opportunity shows itself.

This means that you need to have capital ready to invest, lines of credit, or know that you can get a loan for a property. Be 100% sure that your credit scores are accurate and kept at high levels. Be sure that you have discussed your plans with your accountant to get advice on your direction from a tax planning perspective, and have a good loan broker to complete the deal when it happens. The people who make money are the ones that are prepared to act when things are bad so that when things return to good, they will have made the most money. I know that it sounds crazy and opposite of most things you have heard in your life, but if you do your research, you will find that the people who are thought to be crazy in times like these are the ones who have long-term success.

So, I wish you the best and hope that you will take the time to do your homework and prepare to be successful. Be passionate in all you do and give thanks for all of the blessings you have received, because if you are reading this, it means you are blessed with the ability to read, think, and have access to a computer. It also means that you are blessed to have men and women that have volunteered for military service and are fighting to keep you and your country free! It is because of them that I have the freedom to write here and I thank them for there service and pray that God will keep them safe.

Till next time, I thank you for reading.

Hello all. I just thought that now is a perfect opportunity to share with you. Recently, I was asked to give a price opinion on a property that is in pre-foreclosure. Without giving too much information, I'd like to relate what transpired, and use it as an example of what not to do.

The property is an 8 unit with a mix of 1,2, and 3 br/ 1 ba units. The current owner purchased it with only 1 vacancy for approximately $500K. Based on what I know at this time, the purchase price was probably in line with market values. At this time, there are 4 tenants with only 3 paying tenants, hence, the owner is in pre-foreclosure.

The owner is from out of town, and decided it was best to offer free rent to one of the tenants in return for doing the management and maintenance. This works out to be about 8.5% of 100% occupancy Gross Income. The building has at least some roof damage that appears to have been there for quite some time, and the landscaping is poor at best.

Now, let's examine values apples to apples. Under the current operation and with the current occupancy, there is a Gross Income of $33,000 and Net Operating Income of $18,350/Yr. If we use a simple capitalization rate of 10%, that would put the current value of the building at $183,500 and a negative cash flow.

Now, let's look at it if managed properly. At 100% occupancy, at fair market rents, the Gross Income would be $70,200/Yr. The yearly expenses not included in the current condition are Management Fee of 6%, Vacancy Rate of 5%, and reserves of 3% of the Gross Income. This leaves a net operating income of $51,722 / Yr. Using the same capitalization rate, this puts the value at $517,220 with a nice positive cash flow.

So, what does this show you? From a purely numbers perspective, you have a property that might be valued over $300,000 less than it should be. From an operational perspective, it tells the tale of what happens when you try to operate an investment property from out of town without using professionals to manage it. Not only does it cost you more in your cash flow, but it also significantly decreases the overall value of your property.

The above information just reinforces why I always preach about utilizing professionals when you are dealing with any business, which this is a business. They may cost you a bit upfront, but in the long run, they will help guide you to make your venture successful. Please, please, please heed my warnings on this. Otherwise, you will pay for it in the long run through loss of equity, negative cash flow, foreclosure, or bankruptcy.

As always, should you have any questions or comments, please feel free to leave them here or email me or call me directly at jbarbour@markwardgroup.com or 610-967-0538.

Thanks for stopping and have a great day,

Jim

It has been a crazy time over the holidays with all of the market corrections. The market for retail lease space has been absolutely nuts with quite a few businesses opening up or expanding. Although the types of businesses have been varied, the majority of them have been food or entertainment related, there have been other sporting or even clothing stores that have started. This area isn’t my primary focus, but due to the demand, I have been quite involved.

Now, here’s some info on my area of investment properties. Even I have been a bit surprised at the significant shift within the Lehigh Valley Market. Many of the properties that have been on the market for quite some time have drastically changed their prices. More and more are adjusting to show cap rates of >10% as well as the new ones coming onto the market starting out at or above this cap rate. I fully expected the investment market to adjust, but not quite this quickly or to this level already.

As things continue to progress, the opportunities will continue to grow and for those that are ready to take advantage of them, they will have quite a selection. The people that bought when the market was hot without regards to returns are now finding themselves in over their heads and now need to dump unprofitable properties. This leaves a void to be filled by the qualified and experienced investor, or by those that are being guided by experienced investors.

My belief is that this correction will only serve to improve the rental market in the valley and increase returns to the smart investor. So, start shopping now and when an opportunity presents itself, be ready to jump on it without feeling bashful about asking for a discount.

If you are looking for someone to guide you in growing your portfolio or in getting started, please feel free to contact me either via email: jbarbour@markwardgroup.com or phone at 610-295-6119. Be sure to visit my company web for all of our listings at: http://www.markwardgroup.com.

Thanks, and as always love what you do and live with passion!!!

Jim

Hello everyone. I hope that you all had a Safe and Merry Christmas or any other Holiday you may have celebrated. There is still some time left before the new year begins, and if you haven't already done it, you need to make appointments with yourself to set and then review your various goals; personal, business, financial, etc. You really should be reviewing your goals at least monthly, if not weekly, to determine your progress, what new steps you need to take, etc.

I believe that the upcoming year is going to be a great year for real estate investors that know what they are doing. I say this, because I believe that we will be starting to see properties come on the market that were bought improperly. There were quite a few people who thought that real estate is a no lose proposition, and jumped in headfirst without properly analyzing their properties before buying. They thought that you can buy an investment property regardless of the numbers, hold it for a time, and then sell it for a profit. They did not understand the concept that you make your profit when you buy.

So, with all that said, you may be asking, "Where are all the properties?" My response to that is that I am beginning to see a few properties come on the market where the sellers are pressing to sell quickly, but they still aren't being priced reasonably. The longer they stay on the market, the more they will understand that the properties need to be priced based upon income and not on a ridiculous value based on speculation. During that time, others will be coming on the market priced to sell quickly and based on income/expenses.

Please remember that doing the opposite of public/press concensus is usually the winning strategy as long as you understand the reasoning behind the public opinion, and you don't blindly invest. Always remember to thoroughly evaluate any investment and utilize your advisors for their opinions.

Think Big, Grow Rich, and Live Your Life with Passion,

Jim Barbour
jbarbour@markwardgroup.com

610-967-0538 (Mobile)

The neighborhood was bustling preparing for the season to come
But very few people knew it was offensive to some

How were they to know that when shopping for gifts at the mall
They weren't allowed to call them Christmas presents at all

Although they were Christians and it is the time of the year
They were told to be quiet and not wish Christmas Cheer

So thanks to the courts and the ACLU
I cannot say Merry Christmas to you

So, it is with much regret that I must say
Seasons Greetings to you. What a big load of hay!