Mike’s Apartment Blog

Most people who read this blog and haven’t seen a post in a couple weeks, might think that is because nothing is going on.  Quite the contrary… it has been a madhouse.  Lots has been going on lately and unfortunately this blog suffers.  But, I want to keep ya’ll in the loop (where I can of course).

Cirese Court – Still waiting on the inspection from the city.  They are dragging their feet, which never really made sense to me.  That building was a drug den before we took it over, now it has come together quite nice.  The city seems determined to charge us and delay us wherever possible.  I think this is how difficult neighborhoods get started.  The good news is we are taking this delay to get licensed to run ATR (Alcoholism-To-Recovery) Programs there.  This will allow us to accept grants from the city government, effectively doubling our cash flows.

New Apartment Deal #1 – This is an apartment I have written about previously.  Talk about your on again, off again relationship.  This deal got away from me earlier, when another buyer offered a higher asking price.  They defaulted on the sale (chickened out).  Now it is back in my lap, which we have negotiated a decent deal on involving some seller financing.  I think this is a good opportunity since there is significant value-add.  We are still in the negotiation stage, so I need to keep details fairly secret at this stage.  When we close, I can afford to be more open.

New Apartment Deal #2 – This is a deal in my backyard.  An owner has found himself in trouble with the operations of his building.  We are attempting to partner with him, cut a deal with the bank, and bring some cash to the table.  The resulting upside will come through stablizing the building and holding until rents rebound.  Unfortunately, this may take some time as the Phoenix-metro area is not expected to rebound until 2014.  Again, another deal in which we need to respect the parties involved and maintain secrecy.

New Business – Yes, I decided to help a friend take on a new endeavor.  He is starting a company and needs help in understanding the business side of things.  He is excellent on the core functions, but knows that if he wants to grow this thing, he will need to build it properly.  For this, he has asked my help.  I don’t want to scoop him and give away the premise, but sufficed to say, it is a great opportunity for him and I am helping in return for a small piece of the company.  Goal is to build this business around him, so when it becomes successful I can sidestep the craziness and be bought out (for a premium, of course).  Apartments are my thing, but I can’t resist helping good people get things started!

Guys, opportunity abounds.  If you are in the real estate investment business, now is the absolute best time to take advantage of depressed asset prices.  I am scrambling to grab everything I (and my investors) can.  We may not see another opportunity like this for a long time, if ever!

There it is.  With all the things that are going on, I am lucky my wife still wants to stay married to me – I am going to have to put in some serious family time this upcoming week.

by Cristina Stefan on Flickr

Ahhh… the Trumpster.  Is it me or does he always seem angry?  Love him or hate him, he has become a household brand – which was always his angle.  Why else would he keep the same ugly-ass hairdo, if not to keep his brand image as everyone is used to?

Believe it or not, brand is what sets many companies and investment businesses apart.  Cabal Investments, for example, is focused branding on “Good People”.  We do everything possible to attract the best individuals out there: the best residents, the best employees, the best partners.  But you only get those people by treating them better than anyone else does.

• For residents, we offer safe, secure, and comfortable living arrangements.
• For employees, we offer competitive compensation plans and flexible work hours.
• For partners, we offer solid business plans and high returns.

On the flipside, we expect the best in return from them.  Zero tolerance on trouble makers, dishonesty, and slacking performance.  If you want to be the best, you need to surround yourself with the best.

And a brand does not come overnight.  It comes over years and years of repeated results, service and support. 

The point is, branding is one of the few things that sets companies apart.  The importance of building and then maintaining that brand cannot be understated.  When you have and support a strong brand, everyone wins.

In this case, I mean opportunities.

Right now, my company is vetting two opportunities we had previously bid on in the past.  Both opportunities slipped past because we could not get to an agreeable compromise.  Now the opportunities are back, for whatever reason, and we are bidding on them again.

Negotiations can be tense, especially when there are large dollar descrepancies between offer prices and asking prices.  I have found that most investors are reasonable people and a good, sound and logical explanation behind and offer goes a long way to maintaining a relationship.  If a deal cannot be made now, perhaps it can be made again in the future.

And that is exactly the case now.  Unfortunately, for both opporunities, both the seller and buyer situations have changed.  Sellers are coming back asking for same offer as made before, but buyer has modified offers because the investment landscape has changed.

An important thing to keep in mind is to maintain the relationship with both parties.  In both cases, the folks are reasonable and looking to maximize their returns.  At this point it is a matter of matching expectations if possible.  And if not, part with mutual respect. 

Hey, you might have to work with these folks again in the future.

This is absolutely crucial when it comes to investing.

Along the same vein as the necessity for a business plan, when investing, ALWAYS plan with the end in mind.  Not doing so sets you up with uneeded risk. 

It can be akin to deciding to somewhere, hopping in the car, heading out, without a destination in mind.  When you finally realize where you want to go you are likely heading in the wrong direction, perhaps low on gas, perhaps you forgot to bring things necessary for your destination.

I am all for spontaneity, as long as its miles away from investing.  Positive results in investing only come through calculated risks, and you cannot calculate risks without knowing all the variables.  Make sure you do your due diligence and have your end result in mind before putting forth effort/dollars into any endeavour.

It’s a question a lot of folks ask themselves in all sorts of situations.  In business, this question becomes key.

Sure, we all want to be valuable.  But, how valuable?  Not enough value and you wont be successful.  Too much value and you can’t leave without hurting the business.

In any entrepreneurial endeavour, you want to provide value enough to make the business successful without it becoming dependant on you.  Add to this the ability to delegate and create a self-sustaining operation without training your future competition. 

It’s a tough balance, but understanding what value you bring to the table and how it is brought is a key element to entrepreneurial success.

by biblicone on Flickr

A business plan for investing?  You betcha!

Newsflash – investing IS a business.  It has customers, suppliers, and provides a service/product.  Even trading stocks on the NYSE, you buy shares from people who are selling (vendors), sell to people who are buying (customers), and are trading shares in companies (product).  The more time you take to understand all these things, the greater your chance of success is.

It’s not about the actual plan that is written down on paper, that is just the end product.  All the data that goes in there about competition, marketplace, customer desires, and suppliers mindsets are the valuable things.  It helps prepare you and educate you before you drop even one dollar into the market.  This preparation greatly increases your chance of success.

A business plan also helps keep you focused.  When you start to get off track, or find yourself looking at other potential avenues, refer to your business plan.  Is it part of the plan?  No?  Stick to the plan!  If it has been working well so far, stick to it.  If you still think its worth taking the risk to go after another avenue, fine, write it into your business plan first.  This will ensure you have done all the proper research prior to taking on additional risk.

I write business plans, not only for my various businesses, but also for every apartment we purchase (yes, apartments are businesses too).  It greatly increases your chance for success.

Every cloud has a silver lining and every problem is really an opportunity.  That could not be more true when looking at our economy.

When the economy is in a depression, a dollar gets you more.  People drop their prices to make a sale, retailers get desperate, and overall business goals go from maximizing margin to just simply surviving.  That is where we are and why you get more for your money these days.

Case in point: we had a move out in a rental unit and have decided that instead of installing carpet, we will do tile.  I was amazed at prices for tile these days.  First, you can get quality materials for a very low price.  Second, you can get quality installation service for cost.  At this point, it’s cheaper than having your maintenance team do it and looks more professional.  You cannot beat that!

At this point, you can get a full job for $3/sqft which includes demo (removal of old carpet and pad), floor prep, installation, and clean up.  There really isnt a better deal out there that I have ever heard of (even in the past).

So keep in mind, when a problem shows up (especially a wide spread problem) think about how you can turn it into an opportunity.  This is the core of entreprenuerial ideals.

We our biweekly mastermind call this last weekend.  I like these calls because it keeps me moving forward.

One valuable thing I learned was balance.  For those entreprenuers and hard working folks out there, it is easy to let work take us over.  To absorb all your free time and brain cycles.  This is an addiction, plain and simple.  Like any addiction, it is unhealthy.  Any time you focus on one thing in your life to the point you neglect all other aspects, it is unhealthy.

I realized I often neglect my social life and relationships.  Because of this, I set specific goals.  I happen to be married, so I set specific goals to spend time with my family, pets, and housework.  I find that spending time strengthening these relationships helps me continue to move forward in other areas of life.

Don’t forget why we are all out here and working our butts off.  Without our health and our loved ones, financial success is a hollow victory.

Two heads are better than one… how about seven heads?  I think so.  I mean the hydra had seven heads and he was pretty much a badass, right?

So how do you get seven heads?  And what do you do with them once you got them?

Enter the mastermind.  A mastermind is a group of individuals who get together to weigh in on difficult topics.  In this case, the difficult topic is getting rich, and the seven heads are entrepreneurs at various stages of success.  Having a varied group allows affords you two things: keeps you focused and accountable on your goals, and helps you come up with solutions to issues you can’t on your own.

My mastermind meets every two weeks.  We check in on each other, push eachother towards success, brainstorm over tough problems.  It’s very empowering and I highly suggest getting involved in one if you have given yourself difficult goals.

How do you get involved in a mastermind?  Well, it depends on who you associate with.  Though its pretty hard to find a bunch of folks in your immediate area, so I suggest the internet.  Any forum or site where you can find folks with similar goals, you can get together.  I met my mastermind group on www.fastlanetomillions.com.  It primarily a forum for budding entreprenuers, but there are folks from all walks of life.

Where do I begin?  I have read a lot of entrepreneur blogs which spend all sorts of time talking about folks who were in dead end jobs.  Jobs where their bosses were tyrants, coworkers were bungholes, and customers were PIA’s.  They were almost forced into entrepreneurship as a last ditch effort before they jumped off a bridge.

Not me.  I can’t sit here and tell you some sob story.  I enjoyed working for corporate america.  I liked my coworkers.  I liked my managers.  Most of all, I enjoyed my job.  But I wanted more… sounds sick?

Well liked, respected, and valued.  That’s how I would describe my job.  But I just wasn’t satisfied.  I am one of those constant thinkers – the wheels are always turning, always something to do, something to achieve.  A constant multi-tasker whose best work comes during the first hour of performing any action.  This means I am best served rotating through thirty-five different problems rather than dealing with only one (maybe that’s why apartment investing comes so naturally).  I am always competing against myself, an entreprenuerial flagellant so-to-speak, constantly measuring how much pain, stress, and expectation I can pile on myself and still survive.  Okay, too melodramatic?  I know… let’s just say I am always pushing myself to the max.

Kayne West sang, “That which doesn’t kill me, can only make me stronger.”  Okay, he stole it from Nietzsche, but he remixed it into a song which went triple platinum.  Kinda like apartment investing, you don’t have to be new, just different and adaptable.  And a rap artist, but I digress.

Real estate has always been of unique interest to me.  The fundamentals were simple, buy a place with leverage and make sure the rents more than cover the payments.  When I bought my first home and rented the extra bedrooms to my buddies, I was enthralled with the fact that my roommates paid rent regardless of whether I made it into the office or not.  It was my first real experience with passive income and it was a massive relevation - me likey!

Bottomline, I love business, want more, and can’t stop my mind from going-going-going.  With my already piqued interest in real estate, apartments were a natural progression.