Real Deal REInvestor Network

Most people are familiar with P.T. Barnum’s circus, the “Greatest Show on Earth”.  He was called the “The Greatest Showman in the History of the Universe”.  However, the fact that Barnum was one of the richest men of his time and taught success principles is not as known.  Barnum’s, “Art of Money Getting”, is chock full of very relevant insight for any time.  He gives 20 “rules” that a “money-getter” must live by in order to be successful.  Barnum begins with noting the importance of mind set in being able to define, plan for, and then accomplish what one sets out to do.

 

Barnum noted “even though it easy to make money, it is much harder to keep it”.  Simply put, to make money, expend less than you earn.  Even though you might think this simple, he says, “perhaps more cases of failure arise from mistakes on this point than almost any other.”  People only think they understand the economy and they don’t.  “Economy is not meanness”, true economy is making income exceed the outgo.  Cutting corners in a miserly way, and then splurging on the frivolous will not make one a success.

 

“Forego consumerism for consumerism sake”, stated Barnum; live more simply, consume less.  Save pennies and dollars, accumulate interest, and save for a rainy day.  If you have more month than money, he suggests a ‘cure for extravagance’.  Barnum’s exercise will help assess spending habits, necessaries/comforts versus luxuries.  Let go of the need to keep up appearances, unnecessary to prove self-worth.  Vanity and envy lead to false standards of perfection, and just keeps one poor.

 

Barnum’s premises around making money, saving, and the economy rang so true.  Taking a look at what is going on world-wide with economic issues, debt, and consumerism, it is clear that sound principles, basic truths, of living/business have oft been discarded.   

 

Good health is wealth, according to Barnum.  He called it the foundation of success, the basis of happiness.  Being aware of the laws of nature, and staying close to them is key, as is avoiding alcohol and tobacco so as not to dull the mind and get in the way of clear business decisions.

 

Don’t mistake your vocation - be clear on what you are setting out to do, and then focus.  Select the right location, look at the competition, and avoid debt, as debt will rob you of your self-respect.  Debt means that your money works against you.  “Money is in some respects like fire; it is an excellent servant but a terrible master.”

 

The “rules” that Barnum set forth are certainly worth reviewing for one’s self-inventory.  Persevere; what ever you do, do it with all your might; depend upon your own personal exertions; use the best tools; don’t get above your business (borrowed money can be suicide); let your business be one of service and excellence; learn something useful; let hope predominate, but be not too visionary; be systematic; be versed in world affairs; diversify but don’t invest in that which you don’t know, or you’ll lose.

 

Barnum also said don’t endorse without security, or you’ll lose.  I’m aware of a number of investors who have lost millions during the recent real estate downturn as they hadn’t secured their loans, a tough lesson to learn, the hard way.   

 

Advertise your business, be polite and kind to your customers, be charitable, hold your business secrets close to the vest, and preserve your integrity, were other ‘rules’ Barnum espoused.  Although this might seem to be a list of the obvious; it is obvious, that it isn’t obvious. 

 

“The inordinate love of money is the “root of all evil”.  Money, when properly used, blesses, enabling expansion of the scope of human happiness and influence.  Wealth, requires responsibly, and using it as a friend to humanity, not to hoard or be greedy. 

 

The history of getting money is the history of civilization; and, whenever there was the right use of money there has been proliferation of art, higher learning, cultural and educational institutions, and science advancements.  The money-getters are the benefactors of our race.  Today, the pendulum appears to have swung too far one way and is painfully finding its way back to Barnum’s “true economy”.

 

Barnum’s work was inspiring and affirming, providing principles for success that never change.  Personally, I’ll be keeping a list of these rules in my business plan for periodic review.  Though always striving for excellence, it is essential to make sure it is built into the business plan, while holding employees, or joint venture partners, to these standards. His call for focus and immersion were strong as well, so necessary when building a business.    

 

P.T. Barnum’s wisdom and inspiration is strong, a must read for anyone who is in business, and seeking success.  When writing, or reviewing, your business plan or manifesto for living, inculcate the “rules” that Barnum so adeptly set forth.  Use them as a benchmark for your business, and life, and see where you might have strayed or failed to put some rule into place.  I certainly plan to do so.  To our continued success!

 

 

 

 

              At the time of the original writing; this book

              must have been on several Must Read book lists. 

              He gives the reader a different view of Mr. Barnum

              who was alleged to have said, there is a “sucker

              born every minute”.  In this overview he provides

              his perspective on making money; yet he discusses           

              several items generally overlooked in some

              business circles.  Good health and bad habits

              are but two of the twenty topics he covers. 

 

              The first part of the book; he covers understanding

              the economy, keeping up and plain common sense;

              in addition to; “Penny Wise and Pound Foolish,”

              and “Easy Come, Easy Go”.  The points made in this

              book are as valid today; as they were when first

              written.

 

               Today advertising is article marketing, social media,

               video marketing, and offline marketing, to name

               a few.  It is not just hanging a wooden sign over the

               door of your business.  Technology, business plans

               and financial documents have changed today’s

                business considerations; but not the concepts.

              What does this book want you to do or not do

               moving forward?

 

               DO NOT depend on your own personal exertions;

               when they are limited in a vocation like real

               estate investing.  Get a mentor and consume

               all the knowledge and information you can; to

                lesson or prevent unnecessary mistakes.

 

                What changes do you plan to make in your “Money

               Getting” pursuit; because of reading this book?

               DO NOT scatter your focus powers.  This, references

               previous training to select one or two fields to focus.

               I have already selected the areas in which to work;

               and this rule strengthens my decision.

 

               Why should others read this book?

               Reading this book reinforces the training you may

               have already received. This also provides an in

               depth overview of rules that a “Money-Getter”

               must abide by in order to be successful; but are

               often overlooked or ignored.

                  

               This is an easy read and should be on every

               entrepreneur’s Must Read list.  His concepts

               are sound and provide valuable insights.

              http://www.hisrealestatenetwork.com/userfiles/P_T_-Barnum-The-Art-of-Money-Getting-Free-Ebook.pdf

I had some one send me a bit of humor today in an email and  I wanted to share it with the group.  It reminded me of a Rodney Dangerfield routine or Jay Leno initating him in a monologue.  This is for all you members who don't think attorneys have a sense of humor!

So here goes..... drum roll and rim shots will ring in your ears if you catch the drift.

The economy is so bad...that I got a pre-declined credit card in the mail. 
  
The economy is so bad... I ordered a burger at McDonalds and the kid behind the counter asked, "Can you afford fries with that?" 
  
The economy is so bad...that CEO's are now playing miniature golf. 
  
The economy is so bad...if the bank returns your check marked "Insufficient Funds," you call them and ask if they meant you or them.
  
The economy is so bad...Hot Wheels and Matchbox stocks are trading higher than GM. 
  
The economy is so bad...McDonalds is selling the 1/4 ouncer. 
  
The economy is so bad...parents in Beverly Hills fired their nannies and learned the names of their children. 
  
The economy is so bad...a truckload of Americans was caught sneaking into Mexico . 
  
The economy is so bad...Dick Cheney took his stockbroker hunting. 
  
The economy is so bad...Motel Six won't leave the light on anymore. 

Ed Young
His Real Estate Network

While the media cries doom and gloom for the Commercial Real Estate Industry, investors and lenders are getting ready to square off.

Two things that I want to point out:

1. If the market is so horrible and the assets so toxic, why are the lenders fighting to stay in control ?

2. It does not matter at which trend the real estate cycle is in, there will always be buying opportunities for those who understand investing.

We have lined up to buy income producing assets, have you? 

The battle lines are being drawn for control of distressed properties.

But opportunistic real estate buyers have been running into roadblocks coming from two of the least expected sources — lenders and existing debt holders. As it turns out, some lenders and debt investors are not only unwilling to sell their secured real estate-backed loans, but their unsecured loans as well.

A brewing showdown

An old strategy has been driving this behavior of late, one in which parties are using their subordinated and unsecured debt positions to muscle their way into control of underlying properties.

In some cases, investors are buying up debt for pennies on the dollar, and so far the move has netted them control of trophy properties such as the Stuyvesant Town/Peter Cooper Village in New York, the John Hancock Tower in Boston, and the Sheffield57 in New York. As borrowers default on unsecured debt, this has spelled the demise of some otherwise secured deals.

Consider that Citigroup has put the kibosh on a deal in which opportunity investment fund Max Property is attempting to buy out a £232 million ($383 million) portfolio of UK industrial properties from the receiver of a joint venture called the Cambridge Place-Torre Asset Foundation.

The joint venture's real estate was placed into receivership with Ernst & Young. Citigroup provided a £38.9 million ($64.2 million) mezzanine loan in the original financing transaction, and believes it can best recover its investment by acquiring the entire portfolio.

As a subordinate lender in the structure, Citigroup stands to lose all of its investment, if Max Property is successful in a distressed discount purchase. So Citigroup is asking the receiver to allow it to put in a competing bid for the portfolio.

The fact that Citigroup is willing to go to such lengths to recoup its investment as a subordinated debt provider is proof positive that the battle lines are being drawn for control of distressed assets. And as a result the tsunami of distressed deals that many cash-rich investors are expecting to pick off on the cheap may be anything but certain.

With lenders and debt investors just as eager to gain access to distressed properties, there may be a showdown underway to pre-empt the fire sale of distressed properties — especially high-quality assets. That showdown will likely be between opportunistic investors and asset managers acting on behalf of lenders, portfolio holders, and even some securities investors.

Putting cash to work

There is precedent here from the equity and corporate finance investment business. The August 2009 Merrill Lynch Fund Managers Survey of 204 fund managers — with $554 billion under management — found that investors are eager to put cash to work. The survey showed the highest optimism among managers and investors since 2003.

One of the survey's measures is average cash balance held by these fund managers. These balances have fallen to 3.5% of total fund assets from 5.4% at the beginning of the year, according to the survey, and stands at its lowest level since July 2007. This trend is consistent with the mounting level of cash that real estate investors want to put to work.

Now that real estate fund sponsors have raised capital from partners and private investors, with a focus on buying distressed notes and properties, expect more confrontations like the showdown between Citigroup and Max Properties.

And by the way, a third party has entered the fray of late. Delancey Real Estate Asset Management Ltd., a London-based private equity firm, has joined Citigroup in its rival bid against Max Properties.

And with so many battles for control of distressed properties occurring, it is likely that some distress fund investors will be disappointed. The highly anticipated wave of real estate deals to be had — mainly the result of maturing loans that are having trouble getting refinanced — has so far turned out to be primarily lower-quality transactions sold mostly through the Federal Deposit Insurance Corp. Those deals are unlikely to attract major institutional investors.

On the other hand, well-capitalized lenders and institutional note investors like Citigroup and the asset managers they can deploy are keen to pre-empt the easy distress buyout opportunities. For this reason, the standoff between lenders and opportunity investors may only be getting started.

W. Joseph Caton is managing director of Oxford, Conn.-based Hartford One Group, a real estate finance training consultant.

DISTRESSED MORTGAGE SALES AT A GLANCE

What follows is a snapshot of FDIC transactions in the second quarter of 2009.

Commercial Mortgages Sold:

$1.2 billion

Proceeds:

$650 million

Transactions:

171 deals

Price:

55 cents for each dollar

Recovery:

55% of the loans' balance

Sources: FDIC, Distressed Asset Coalition
 By W. Joseph Caton

The market will never tell you when to buy, only how to buy within each trend. So get ready to build wealth one deal at a time. No matter what anyone says... there will be deals out there.

Are you ready?

Rick Melero
www.RealDealOrlando.com

As a real estate investor I can tell you that some of the information on this white paper article can help you during these hard economic times.

To succeed in this real estate market, investors and managers need a new kind of toolbox. While financial implements are still critical, more traditional tools of the trade, a hammer, paintbrush and the number of a good plumber, for example, have joined them.

As the industry experiences one of the worst downturns in decades, real estate investors and managers are reconsidering strategies for success. Many of them have embraced a back-to-basics approach that provides a path for staying strong in a difficult economy. A key part of that approach: actively maintaining their properties.

                             Download Full White Paper

Rick Melero
www.RealDealOrlando.com

The Many Faces of Unemployment
by Nilus Mattive

Dear Subscriber,

Last Friday we got word that the employment picture in the U.S. improved substantially over the month of November. According to the Labor Department, the nation shed 11,000 jobs, a mere fraction of the 130,000 economists were expecting.

The news came as a shock to many. In fact, president Obama reportedly corrected his chief economic adviser when she first told him the news, saying "You mean a one hundred and eleven thousand job loss?"

And make no mistake — I'm as happy and as surprised as everyone else to hear the better-than-expected news.

But in my mind, there are deeper issues at hand when it comes to the employment picture here in the United States ...

Let's Start with the Very Way Washington
Measures Employment in the First Place ...

Along with the 11,000-new-jobs-lost number, we also learned that the nation's unemployment rate dipped to 10 percent from last month's result of 10.2 percent.

That's another encouraging sign, though it still represents a situation as bad as we've seen in decades.

If you stop looking for a job, you're not considered unemployed in the official data.

What's more disconcerting to me is the fact that this official measure of unemployment is dubious in the first place.

Consider some of the people that it does not include:

Anyone who is "discouraged" — i.e. they have basically given up on looking for work

Anyone who has taken a part-time job even if they were formerly a full-time employee (known as "marginally attached")

And the legions of folks who are now "underemployed," meaning they are working jobs that pay far less than before — engineers driving cabs, for example ...

Thus, we should be asking two important questions:

First, what is the nation's real unemployment rate?

Interestingly enough, the Bureau of Labor Statistics also keeps what it calls "alternative measures of labor underutilization."

No, you won't hear this touted in a government press release, but it's buried here on the BLS website.

The U-6 number, which includes marginally attached workers, workers with part-time jobs because of economic reasons, and other categories shows the current jobless rate is 17.2 percent.

And realize that there's really no way to include people who have taken major paycuts or other under-the-radar losses.

Second, will those underemployed folks ever find jobs comparable to what they once had?

My personal answer is "some will, but other broad categories will not."

Consider all the Johnny-come-lately realtors, mortgage brokers, and contractors who were riding the housing bubble for all its worth.

And consider other workers — like factory hands who were benefiting from over-the-top overtime payouts and other unsustainable trends.

Heck, this excerpt from a recent Wall Street Journal story on the underemployed proves my point:

"Mr. Crane had been earning more than $100,000 a year operating heavy machinery at Delco, a former unit of General Motors ... but when he lost his job he was thrust into a netherworld of part-time gigs: working the registers at Taco Bell, organizing orders at McDonald's, whatever he could find."

Now, don't get me wrong. I feel bad for Mr. Crane. But am I the only one who finds six-figure salaries on factory floors a little shocking? I know someone who runs an entire hospital and makes the same amount!

Sure, when factories were running full-tilt, even folks at chicken processing plants were raking in $70,000 a year or more. But those days are long gone.

Look, I'm not trying to sound callous. I'm just saying that facts are facts. Magical thinking won't change them.

Yet plenty of people have now become so used to the really good times — or are so far in debt — that they aren't willing or able to accept even merely good times

Consider this tidbit from another Wall Street Journal story published last month:

"Paul Joegriner hasn't worked since March 2008, when he was laid off from his $200,000-a-year job as chief executive officer of a small bank. But you wouldn't know it by appearances.

"His wife, Marzena, shuttles their two young children to private school every morning. The family recently vacationed in Virginia Beach, Va., and likes to dine on Porterhouse steaks. Since losing his job, Mr. Joegriner, 44 years old, has had several offers. He's turned each down in hopes of landing a position comparable to what he held before."

Now, if we were talking about job offers with pay cuts of 50 percent, I could sympathize. But Mr. Joegriner reportedly said no to one offer that paid $140,000 a year in a lower-cost area!

And this is not an isolated story. In my personal life, I know of someone who stubbornly refused to take a comparable job because it was a mere one hour from his current town.The fact that people like this continue to collect unemployment — and even have their benefits extended — while millions of others are genuinely struggling and going uncounted demonstrates just how jarbled this country's jobs situation is right now.

More importantly, all of these issues raise serious questions about the sustainability and rate of our economic recovery, especially with so much of GDP tied to consumer spending and so many consumers still struggling with credit hangovers from the days of excess.

So I don't care what the latest job number says ... I will continue to suggest that investors keep their core portfolios invested in more conservative companies, in more defensive industries, and in assets that produce strong income streams.

The recession seems to be abating, but many structural problems remain. And some of them are in our collective psyche.

Yes, we should remain hopeful. We should continue to try and make hay while the sun shines in the markets, too. But we should also remember that even an official unemployment rate of 10 percent is hardly something to celebrate.

Best wishes,

Nilus

---

For more information and archived issues, visit http://www.moneyandmarkets.com


Luis D Roque

You have heard it in the past that… “When there is blood on the streets you buy real estate.” This statement is so true. You must always remember that the market cycle does not tell us when to buy but how to buy within each trend. This video clearly shows us that there are many funds out there raising equity to be able to take advantage of the opportunities that are and will be available in the commercial industry.

Some are waiting for the lending sector to open up more so that they can leverage in, but I believe that if you partner with the right people and invest with equity partners you can buy great deals now and minimize your risk of debt. Prudent investors should be getting ready to invest now.

In the times when people are screaming “run away,” investors should be looking with caution for the opportunities that are out there. A distressed economy is breeding ground for a fortune. When the fortunes are made, will you be one of the prudent investors who took advantage?

Rick Melero

www.RealDealOrlando.com