I saw a fellow facebook friend post a video the other day on a football player discussing his interpretation of success.  In short ‘success’  is living, breathing, and doing nothing but focusing on what it is one defines as ‘success’ and sticking with it night and day.  Personally it was a good reminder of what it was I needed to stay focused on as I paused about the definition of success for me.

For us real estate investors and business men and women,  success is building up a portfolio of positive cash-flowing rentals, profitable sales on rehab-to retail homes, and an ever growing balance sheet with healthy equity on it.  Right?  Yes -but that’s just the financial aspects as a whole.  Nothing about providing good habitable homes for families, re-investing in communities, nor one’s own family with physical or mental rewards that can come with the cycle of productive work either.

You see real estate investing is just a discipline.  Not much different than perhaps your job, business, stock picking or whatever it is in your life you aspire to master.   The basics are just as simple (as any endeavor); however, I’ll contend that a true master of one’s discipline never stop’s learning nor comes close to mastering till at least 10 years of full outright work.

Sure the challenges that we’ve faced in the real estate markets have been greater then normal -yet these headwinds will not last forever.   Mastering one’s discipline during tough times only helps one excel when the direction of the winds change.  Yet -we as students must stay focused and steadfast in what it is we desire.   SUCCESS -right?  Real Estate like stocks, MLM’s, Business Opportunities, Gold, or whatever your poison are not “Get Rich Quick” tools for 99.9% of us.  Can we agree to that?    Read “Passion is the Key to Life…”

Usually I run into potential real estate investors that believe rentals are passive, selling rehab to retails are easy, and that anyone can go out there and identify, control, and sell for a quick profit on a wholesale deal.   It just ain’t going to happen sitting in your underwear in front of your computer -unless your the guy selling the “Get Rich Quick Real Estate Coarse” by sitting at your computer.   The programs and coarse are merely tools -it still takes work (and much more than that touted as the 4-hour work week)  Yesshhh!  In theory or when one achieves maximum efficiency in their operations but not practical for most situations.

Of course success may not mean working 60, 40, 20 hours to achieve (at least) your (financial) goals.  Just remember -if you’ve not reached those goals than perhaps it will.  I’ve not reached mine -yet I’ve had to step back (or at least try to on a daily basis) to focus on my own personal health and our growing family.  Age can be a b#*&# sometimes.  Going all day without lunch or night without play is not good for my mental nor physical health.  My kids (let alone wife) are both growing and demand more attention, guidance,  and help every day.  While its a joy and a blessing.  For me, it takes work to make the time.  I’ve been so geared to thinking that “Success”  is complete financial independence and dedicated to doing ‘what it is I do”….  That I’ve neglected the spiritual, family, and social aspects of my life.    So you know what it is I need to focus on!

How about you!

Ready for a video?  Watch this:Success: How Bad Do You Want It?

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Stay balanced; yet, do not be misguided by easy money stories.  Those usually only come from those trying to get your money.  Are you ready for Real Estate Investing?  How about more?  From a contrarian investor viewpoint the time is right.   What is your definition of success?  How about taking the time to sit down and right them out for all aspects of your life, execute the plan, and how real estate will fit into the equation.

I’ve gotten a few emails/calls of late asking me, “Are you leaving Real Estate Investing?” and my immediate response is “No, why?.”

A common response is: “how can you handle it all and why?”

Before I answer that, let’s back up a bit.   I started in the residential rental business in 1994 and have actively managed my properties from the beginning unless other operations demand/reward ratio called for my outsourcing of the day-to-day property management end.  While I was exploring the formal business of property management these past two years with a firm that actively managed over 700 rentals,  I’ve re-discovered that this is not a route I feel I want to go (at least at this point in my life).  It’s a perfectly good business –just not part of my plan.   So as of now, my rentals are spread between two property managers.   Remember –I believe that rentals are good retirement vehicles; however, not ideal as cash-flow businesses unless your leverage is low (or you’re a large scale apartment owner) which somewhat offsets the power of capital intensive investments.

My hard money lending operation, Gray Dog Investments, has been my main business operations for the past 6-7 years; however, with these challenging times, it makes it difficult to create good win/win loan volume.   At this stage, I would rather diversify my time, skills, and capital into new arenas –at least till we hit stability in the real estate markets and healthy demand follows.   Doesn’t mean I’m not lending –just means the demand dictates a part time operation.

Get this straight. Real Estate is my first labor of love. I have no intentions of leaving it –just letting off the pedal while the headwinds are greater, more time is needed with the kids, and a calling to develop a new skill (challenge) fulfills an inner desire.

Does anybody know what my second hobby is?

How about the internet!

I first started getting active with the internet @2000-2001 when I discovered Mr. Landlord.  It is an online forum that helps landlords with a live Q&A forum.  From that point I’ve been hooked with helping and learning from fellow real estate investors (such as yourself).  I’ve watched my parents run an ancillary internet operation (that basically mirrors their brick & mortar store) for over the past decade.

Then in 2009 my good friend and founder of AskTheLandlord.com, Sean, called up and said “Here you go.”   My response was “Here we go –what?”   You see we had been talking for years about my creating a financial and/or real estate course –yet I had never taken the action to do it (ever hear that excuse before?).   What did he do?  He had bought (the domain name), created the real estate blog, and then said “Here you go, it’s yours –start writing.”  How many friends actually give you the keys to a piece of real estate? CharlotteREblog.com had been born.

Talk about selflessness!

From that point, I was off to the races creating real estate articles.   It has been both therapeutic and rewarding.   I am constantly amazed at the positive feedback and support to keep it going not to mention what I’ve learned from the internet.  Although, I’ve just scratched the surface, I’ve had a goal of monetizing my efforts.

And so the search began….

You see…  I’ve yet to figure out how I can effectively create and market a real estate/financial coarse, mentoring, and/or the real estate itself – that is a good bang for its buck for my fellow investors and maintain integrity.    The true key is that I must simply do and it will happen -Baby-steps right?

Well so here I was working real estate and continuously being told to get off the computer by the better half in the after-hours.  I’d already pulled out of 2-3 internet companies that I had been under contract due to questions regarding the financials or true worth of the company itself.  Sure I was wondering if my route was correct; yet, I trudged on seeking to fulfill an inner desire.

Remember: ignore those that are negative without proper reasoning.

I am here to report that officially this month, I’ve taken over the keys to a new piece of property –virtual that is.  The Insole Store has certainly been a journey to-date.  It is satisfying in providing a product that can help alleviate true foot pain and problems whether it be from a health issue, sports, and/or working conditions.   Perhaps, it is best left to an article itself. I will tell you (that it is no different) it’s filled with the same feelings of hope, dreams, fear, and surprise that one gets when buying a rental property or is in the thick of a full scale rehab project.

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The goal is to create a new cash flow generator -a business to offset the hard money lending.  I will run both of these like I handled my rental operations in the 90’s while maintaining a corporate career.  I will push both as hard as I can –until one clearly delineates itself worthy of requiring my full-time attention if that’s the plan.

The truth is (of course) –if you know me, real estate is in my blood and no matter what, I will always have rentals, some private money loans, and/or a rehab to sell retail project going on somewhere.

I have to remember that life is a journey -one that I can help direct in making the ride more enjoyable.   It’s about relationships, education, spiritual growth, and so much more.   A rental property, checking account, business, job, etc., are just tools or chess pieces in the game of life that can enrich the journey (if used properly) -not dictate it.

Do you realize that during the real estate boom that at least 80% of those attending real estate investment association group meetings made all the same negative statements that we hear today?

So back to the money!

Everybody is complaining about not being able to obtain funds to make a real estate deal.  Here is the thing.  Have you noticed that certain real estate investors are doing deals?  Yes. Miraculously they are obtaining the funds too.  Want to know why? They are finding what we call  ‘no-brainers’  (or a real deal) and implementing a business plan rather than winging it off the top of their head or random scribbles on note book paper.  How many successful businesses truely operate like yourself? If your facing headwinds, perhaps it’s a good time to examine what those whom are having success do.  Don’t gloss over the wow of some big rehab project.  Look at the little things, such as organization, daily to-do’s, method of handling phone calls, marketing programs, and processes of actual implementation.

But back to the money!

It occurred to me the other day that there are many many real estate investors out there that have openned Self Directed IRA’s over the years.  Many have it simply sitting in cash doing nothing.   The greatest problem of the past was that the dollar amounts most had in these accounts were perhaps: $5,000, $15,000, $25,000, etc,.   Back in the boom years, this amount couldn’t secure most cookie-cutter real estate transactions.   However,  today the real estate markets are rampant with homes selling for $12,000, $20,ooo, $30,000, etc.   It is absolutely phenomenal.   No we’re not just talking war zones here.  I’m talking low income stable, working class, and even transitional neighborhoods too.

As of this morning, there are 89 homes  (listed under $40,000) available for sale in our Charlotte, North Carolina Multiple Listing Service that Realtors use available for sale in just 6 zones of the 13 main zones that cover our city.

What do you think the odds are that out of those 89:

• 25 will pique my curiosity
• 8 will be worthy of viewing
• 4 will be on the target list to make an offer
• 1 will be bought

I know what you might be thinking… There are not homes at that price in my area, or locations that I’m comfortable in.  Those houses require major renovations (let alone structural issues).   What good will it do?  I can’t get the money.

Now.  I have got to ask you:  Are you part of the 80% that watch others do it or are you going to be part of the 20% that actually do it!?!

Ok so what do we do?

Start networking with your fellow real estate investors.  Let them know of your business plan.  Let them know that your targeting lower priced homes with demand and that you maybe able to help them create an income stream with  little chunks of cash sitting in Self Directed IRA’s that are doing absolutely nothing.

As you know, there is alot more involved than that.  They idea is to provide some idea’s of how to take positive forward actions in your real estate business that maybe getting overlooked.  Don’t forget life is a journey.  Constantly educate yourself by networking, going to real estate meetings not to mention reading books and coarses.

The opportunities are out there.  There is more than one way to do a deal.  Focus on 1 or 2.  Just do it!

How’s that song go?  “A little bit of this -A little bit of that”.

If you are in a market were your vacancy rates are tightening, I would suggest you go with conservative raises and use improved cash-flows (or at least partially) for improvements to your rental properties.  At least in the mid-term (2-4 years), I would say we will likely see a double-dip in the vacancy rates.  Sooner or later, all those unoccupied homes (somewhere in the foreclosure cycle) will be absorbed.  I do not think we can expect a logical absorption as more household formations (occur) and people re-enter the home-ownership role.  Therefore, prepare for the vacancy rate to weaken as the unoccupied houses get reabsorbed in the market.

I had read that some 10.3 million homes (average) were vacant in 80′s, 10.5 million in the 90′s, and then 15.3 million through the 00′s. In reality,  I’m not so sure that is completely out of whack (is that a word?). After-all, we have averaged 30 million in population growth for each of those decades.   Hmmmm  -perhaps, the locations with absurd vacant home rates are the area’s with the greatest boom & bust effect.   You know those 5 States that have represented some 60-65% of the foreclosure’s through America’s Credit Crisis.  Of course, one has to take into account other factors (such as doubling-up & population migration) that maybe affecting your local vacancy rates too.

With that said, I posted an article, Vacancy Rates, about a month ago were I had sited an extremely weak 4th quarter in our local rental markets (Charlotte, North Carolina) and backed it up with Census Bureau statistics.  Unscientifically, I am seeing a reversal -now.  Year-to-date, I am seeing our vacancy rates improve dramatically and predominately driven by three main effects: Tired of having a roommate (or living with mom & dad),  new job, and/or transfer into town (with a weighting towards cannot sell old home vs. waiting to get comfortable with our new surroundings).   I suspect our local vacancy rates will trend down from the 9.8-11% range down to 7.8 to 9.5% for the first half of 2011.   After-that,  it’s anyone’s guess.

Why do I say that?

I believe 2011 will be the year of the deluge of distress houses on the market (at least for Charlotte, NC) after the back-up from the ‘robo-signing’ fiasco.  Read my “Blood in the Streets” for thoughts of how I believe this is the year for a real estate investor to have the greatest odds of taking advantage of the market distortions that we’ve been witnessing for the past 3 years.    I think investors will be putting the majority of these homes back on the market ‘for rent’.

So -I do not predict an extremely healthy rental market trending down to 5-7.5% vacancy rates (at least locally).  However, I think we as a Nation have been so beat-up, especially after getting blind-sided contrary to what the vast majority of experts were espousing during the great boom years of 2003 to 2007, that we are underestimating our abilities and talents in this great country we call the United States of America.    Jobs -they are coming.  This will heal our issues (although -not overnight).

So while our country works at creating another 30 million people in this Nation from 2011 to 2020, we will slowly whittle down that excess 5.3 million in homes (from the decades average(s) quote from above).  Don’t forget home builders will probably not exceed in creating anymore than 250k to 600k new homes per year for the next 2-3 years while we continue to average some 500k to 1 million new household formations and an unknown amount of  double-up declines (from those new jobs).  Remember supply and demand.   So what are the media pundits going to espouse next?

It’s gonna happen -the formation of a bottom is setting now.  The ball is starting to roll.

Alot of people underestimated the impact of the expiring Home Tax Credit in mid-2010.   I would encourage your reading my “You Can’t Handle the Truth: Part II”.  In that article I stated that I didn’t believe our government could afford to let it expire and if it did, a good 10-15% drop in valuations would occur.   It appears that the credit was providing a good 15-25% of the home sales volume.  Scary. I believe the initial goal of the stimulus was met (by helping slow the rapid decent in valuations that were occurring in 2009) while attempting to re-ignite the market (a rare few realized the damage).   Truth be told one common factor that I could never get a grip on was the amount of vacant homes -something we’ve not been able to grasp up until now with the latest census count figures. Those area’s that were hit with the greatest Boom & Bust are now reflecting pretty scary numbers of some 10-30% vacancy rates.  I don’t even want to calculate the net absorption rate in those areas.

I thought that we would see the rapid-panic sell in homes (by both homeowners, investors, and even the banks) in the Fourth Quarter of 2010.  What I didn’t anticipate was the ‘robo-signing’ fiasco.  Without getting into what’s right or wrong, this temporarily stalled lenders to enforce their rights to take back the collateral on a loan were the borrowers failed to meet their commitment.  It will be rectified.  This fiasco has delayed the whole foreclosure cycle. Thus the supply of vacant homes on the market will feel additional pressures as we go into the Summer of 2011.    The ramp up in more distressed housing product hitting the market (for sale) coupled with the $1.00+ increases in gas and World uncertainty (middle eastern uprisings & nuclear fallout in Japan) will cause a systemic rise in the homes available for sale.  Watch the consumer confidence numbers over the next few months -we’ll see a slight deterioration that will result in fewer home-owner sales.

This is a time to buy folks!!!

When I’m jumping in the car looking at deals -I’m telling you the time is now. Can you buy a $30k rental and achieve $600/mo rent in our markets now?  Yup!  Not to mention, we are not talking the worst of the worst neighborhoods.  I recommend your looking. If the price is right you can almost pay any terms, so focus on REAL-DEALS with an eye towards owner financing or private money.   Read my article, “The Money is the Easy Part”, for thoughts on ramping up the lubrication that gets the deal done.  Folks  -I don’t know how to say this more clearly! If you have a real buying opportunity, you will get the money. Do you know what one of the greatest challenges I face?  Getting calls from real estate investors that think they have a deal -but don’t.   Those that do find the money, provide a good return for their investor with a strong collateral base.

Think rehabbing-to-resale retail is dead?

Think again. I know a few investors that focus on this short-term cycle of real estate investing (really a business) and we all held our breath for 2-3 months last year. From June to September 2010, a huge hang-over effect hit the markets as first-time home-buyers scrambled to get the Housing Tax Credit before the June 30th closing deadline.  Come September-October though -the market came back and came back strong through the year-end for those that focused on conservative purchase price, craftsmen like fit & finishes, while putting out realistic asking prices.  Those who are struggling in this segment of the business are failing to see were the demand is.   Low income (sub-prime markets) neighborhoods and dysfunctional (where distress sales versus non-distress sales of 1 to 1 or greater) neighborhoods are not consistent places to park your money.

It will be interesting to see how the Spring/Summer real estate markets work.  Remember: the year over year numbers should be down as last year was the end of the Tax Credit. Lending criteria has remained high (although -really no different then in the 90′s prior to the fog a mirror days).  Cost of living increases -yes inflation (minus real estate)!  These are just some of the headwinds (not to mention the huge supply of homes) that the real estate market is facing.  Look for a 5-10% drop in valuations through the end of the year with alot of “Once-In-A-Lifetime” buying opportunities.   Cash-flow!  Rentals must cash-flow.

Really there are two great trends that will come out of the FED and their printing money theories.  Think emerging markets for stock (sorry couldn’t resist a stock thought) with inflation and lower U.S. Dollar valuations and real estate.   The home builders (as a whole) will suffer continuous pain, while the average age of our growing population will continue to increase.  What does that spell!?! Inflation.  Growth in Demand.   Downward supply cycle.

Jobs will occur. Ah yes, this is the main ingredient that will heal all and pull real estate off the bottom.  Now -I am not advocating any short-term appreciation in real estate.  Here are additional economic thoughts I posted a few months back: Going Up.   We are real estate investors right? Ok -then if we are buying at a discount to value (no different then a trained eye buying an antique at a garage sale) then during these lows the opportunity for distortions in valuation are great.

Relax and become a “Contrarian Value Investor”.   Ignor the ‘Talking Head’s and their rhetoric of a double-dip in housing valuations.  They are reporting lagging indicators -as the ‘double-dip’ is already here my friends.   We as investors know this right?  If not, you should!   Yes -2011 will not be pretty.  This is the moment.