Strategic Realignment

Strategic realignment refers to the act of assessing your current financial situation, evaluating current and potential sources of profits and losses (assets, debt, etc.), designing the best course of action to obtain your desired financial outcomes; and then aligning your research, plan, resources, skills, relationships, technology and actions with appropriate opportunities in order to transcend your current financial situation.

As the smoke clears and the dust begins to settle from the explosive devastation caused by the recession, people find themselves lost and confused as they sift through the debris that once made up their personal wealth – savings, home equity, retirement account, etc. As personal financial losses continue to mount while concurrently income, savings and financial resources continue to be depleted, the average American desperately struggles to find hope for their future.

The personal wealth development strategies employed in the past by the average American, shaped as much by core beliefs and values as they were on poor information and assumptions, has led most to follow an antiquated and dysfunctional plan of personal wealth development or retirement. Unfortunately, doing a lot of the wrong thing right has led to record losses of personal wealth at record speed. The time between emerging economic events and the consequences flowing from such events is forever decreasing and your ability to strategically respond to changing conditions will be largely determined by your ability to challenge well entrenched values, beliefs and “business as usual;” and your ability to grant yourself permission to think strategically.

Strategic Realignment requires you to reevaluate how you are allocating every penny. Where you can cut costs, defer payments, renegotiate price or terms, or simply eliminate the expense (including by use of strategic default) it is important to do so in order to free up money for realignment into new investments that create positive returns. This takes bold action because it defies conventional wisdom.

More than just strategic planning, strategic realignment is setting a course of effective, efficient and fluid action in motion by creating congruency between opportunities, skills, time, money and resources.

Reality Based Thinking

Reality TV seems to be by far the hottest thing on the tube right now. It amazes me that people watch so much reality TV, yet they don’t face reality in their own lives. You see, in “reality” there are two ways of viewing life that ultimately dictate how you choose to live. They are two dichotomous world perspectives. These two worlds are – the world of “Should Be” and the world of “As Is.” The sooner you get out of the world of “Should Be” and enter the world of “As Is”, the faster you will succeed in life.

There is a very common school of thought that suggests that a perfect balance of fairness and equality should exist amongst all people - there “should be” no racism, no sexism, no classism, no poor, no exceedingly rich, no this, no that, and SOMEBODY should Change the way things are so everyone has a chance to be equal because that would be fair. In a perfect world, all of that might be true, but… that is not REALITY.

The world of “As Is” puts the truth straight in your face and forces you to deal with it as it is. Once you deal with the world of "As Is", you make no more excuses for not being successful no matter what you are starting with or what obstacles are presented to you. You become solution oriented and no longer use HOPE as a strategy (Hoping things will change and be equal is a poor strategy. You accept the real world and navigate your way through the tough challenges of life. You will succeed or you won’t and no one will care except you… that’s the world of As Is.

The world of "As Is" says that even though the playing field is not level and there are many obstacles in front of me, I have the power to overcome them or to succumb to them, but either way it’s MY CHOICE.

Below are two examples to dramatically illustrate how crazy it is when you are stuck in the world of "should be" and how simple life can be when you enter the world of "as is."

Person #1 walks into a room with the intent to come out on the other side but soon realizes that there is no door to exit. He says to himself, “hmmm! There should be a door here,” and proceeds to walk into the wall. He backs up and gets angry and says again, “there should be a door here.” He continues bumping into the wall over and over until he finally gives up hope and sits down and progresses no further thinking to himself that life is not fair because there should be a door here.

Person #2 walks into the same room with the intention of coming out on the other side and also sees that there is no exit straight through. The thought does cross her mind that there should be a door there, but she does not hesitate or dwell on that thought. She simply walks back out the door having learned a valuable lesson, and then walks through the adjoining hallway that she discovered being solution oriented and passes by that room on to her desired destination.

Which world are you living in?

The Secret to Success Is No Real Secret

Let me first say that I enjoyed and appreciated reading Napoleon Hill’s classic wealthy mindset book, Think and Grow Rich. I can also say it was a brilliant strategy to take the principles of that book and put them in a modern medium (video) and create the “Secret,” another best seller and soon to be classic. They were both inspirational and chock full of exercises geared towards aligning your mind towards attracting wealth. I recommend anyone considering getting rich should own a copy of each. As a matter of fact, when surveyed, many self made millionaires said that “Think and Grow Rich” influenced them more than any other book except the Bible. That is pretty powerful.

As powerful as aligning your mind towards money is, it is NOT enough. Ultimately, only one thing will get you what you want – the one thing Napoleon Hill left out of the book and the “Secret” never addressed. That one thing is no real mystery – it’s DECISIVE ACTION.

“Rules such as ‘if I hold positive thoughts about prosperity, money will just start pouring into my life’ are just too simplistic to work… money exists in the physical domain. Money doesn’t come as the result of thoughts in the metaphysical realm; it comes as the result of actions in the physical domain." -Maria Nemeth, PhD; author of "The Energy of Money"

The bottom line is you can think about money, talk about it, write about it in your journal, list it with your things to do, hang it on the refrigerator in the form of an affirmation, and tell as many people that will bother to listen to you about your dreams, but none of that will make you successful unless you take decisive action. “Action speaks louder than words!”

Every day you must take focused and specific action towards your desired outcomes. If your thoughts and words are not congruent with your actions towards attaining wealth, then wealth will never be achieved. Once you align your thoughts, feelings and actions towards attaining wealth, it will come easy and continue to come for as long as you remain consistent.

Real Estate Investing In The New Economy

Whether you are a seasoned real estate investor or simply want to try your hand at it for the first time, you have an opportunity to take advantage of and create huge profits from the real estate bust as desperate property owners of top quality, pristine real estate compete to sell their properties against the glut of properties in various stages of foreclosures that are driving down the housing prices. With property sales steadily declining, and as banks continue to make it difficult for potential buyers to borrow for a mortgage, property owners seeking to sell their properties are ripe for making a deal in which you can negotiate favorable terms on a lease option deal.

What exactly is a lease option? A lease option (also known as a lease with an option to buy, lease-to-own and rent-to-own) is a lease combined with an option to purchase the property within a specified period, usually 3 years or less, at an agreed-upon price. The buyer pays a non-refundable upfront option fee, usually 1% to 5% of the price (this negotiable in today’s market and can be even less), which is credited against the purchase price. The buyer pays rent, and an additional amount of money (also negotiable) that is also credited to the purchase price. At the end of the option period, the buyer has the right to buy at the predetermined price. If the purchase option is not exercised, the buyer loses both the option fee and the additional premium.

The lease option offers property ownership opportunities to any interested buyer even if they’ve experienced a bankruptcy, foreclosure, divorce, have bad credit, no job history and have little or no money. During the option period, they have the opportunity to rebuild their credit and accumulate equity while creating income from the property. Some additional benefits include: equity accumulates much faster (five times or more) than with conventional financing through a bank or lender because of the way a traditional loan is amortized; option money and monthly payment are working towards the purchase (like buying a property on layaway); minimum cash out of pocket to take control of the property; increased buying power; no taxes and less liability; minimal maintenance; and privacy since your name will not be on the deed or in the public records until you exercise your option to buy.

Even though it seems costly, the right to not exercise the option is of value to buyers as well. It gives you the right to test drive a property without the commitment and cost of a traditional purchase. If there is something seriously wrong with the house, neighborhood, or neighbors, the money left behind on a lease option is much smaller than the cost of an outright purchase followed by a sale.

Although lease options can be used in any market, right now is a particularly good time to use this strategy. According to the Association of Progressive Rental Organizations, the rental industry’s trade association, the lease option business generates $4.4 billion in revenues for the industry, and serves nearly three million customers. It shows no signs of slowing down. In fact, all indications point to increased revenues for years to come.

Steps to a Successful Lease Option Deal

Step 1 - After assessing your available resources (available cash, credit, etc.), and regional trends (potential growth areas), choose a geographic location to specialize in.
Step 2 – Locate leads (For sale by owner is best) and qualify them by analyzing the numbers. It’s all about profit potential.
Step 3 – negotiate with the seller to determine the purchase price. You must delineate all terms of the purchase at the time you make the lease-option agreement. If property prices go down, you will have to choose between buying the property at the originally agreed-upon higher price and losing the option money.
Step 4 - Agree on the term of the lease. This will be the maximum length of time you want the opportunity to exercise your option to buy. You may be asked to put up option money - typically 1% to 5% of the purchase price paid to the seller - for the privilege of having the option to buy.
Step 5 - Determine how much you will pay for your monthly rent. (This is the amount a person would pay to simply rent the property.) Then add $250 to $1,000 per month to be applied toward the future down payment of the property. (This is not a requirement, but it helps you accumulate money for a down payment.) All option and additional rent monies paid to the seller are nonrefundable if you do not exercise the option to buy.
Step 6 - Agree upon terms regarding the exercise of the option, such as the escrow period and financing.
Step 7 - Determine who will pay for inspections, work and warranties when the time comes to complete the purchase.
Step 8 – Have your attorney review the lease-option contract.
Step 9 - Handle the transaction as a lease until you are ready to exercise the option.
Step 10 – Generate income from the property (by subletting, vacation rentals, government programs, etc.) to cover your costs.
Step 11- Exercise the option in writing.

Reinventing Yourself for the New Economy

One very serious affect that a recession has is the inevitable layoffs that occur as companies struggle to keep their doors open by cutting their greatest expense – labor. Unemployment is currently at a 25 year high at 8.9%, and according to the new Federal Reserve outlook, unemployment is expected to continue to rise to between 9.2% and 9.6% this year. The minutes from the April 28-29 Federal Open Market Committee meeting showed Most Fed members "indicated they expected the economy to take five or six years to converge to a longer-run path characterized by a sustainable rate of output growth and by rates of unemployment and inflation consistent with the Federal Reserve's dual objectives, but several said full convergence would take longer." This means that the staggering 5.7 million jobs lost since the recession officially began in December 2007, including the 539,000 jobs lost last month, pales in comparison to what is to come. As gloomy as this seems, it doesn’t mean that there will not be ample opportunity to make more money than ever before. With innovations in technology, transportation and communication you now have a global marketplace to tap into.

Protestors march with picket signs everyday trying to hang on to jobs from industries long gone to distant shores where corporations can find less expensive labor and materials. Gone are the days when you could graduate high school and work at the local factory or mill or go to college and manage that plant or mill until you were ready for retirement 40 years later. Being a life-long employee in a company just isn't realistic anymore. Those days are gone forever. The quicker we begin to understand that, the quicker we can see the new opportunities that are emerging around the world.

Outsourcing, which many Americans see as the downfall of this country can also be the saving grace of this country. Aside from the fact that outsourcing has kept inflation down, thus maintaining a higher standard of living for the average American, it has also provided new opportunities for those with the technical skills that emerging economies around the world require. Once we get past our own arrogance, we can see that as the US dollar declines against the British pound, the Euro and the Yen we are a cheaper source of labor for companies in other countries. You can become the recipient of outsourcing from other countries that lack the affordable labor pool with the skills required for their growth. You can place your skills on websites that cater to a global audience of companies that require services such as www.elance.com.

There is also money to be made closer to home if you are willing to examine the future trends of how companies will do business in the new economy. Companies are scaling down to skeleton crews, and will begin to hire specialists (independent contractors) on a job by job basis. This allows a company to reduce its operating costs and maintain a higher profit margin as opposed to keeping a full time staff that would require union wages, sick leave, vacation time, payroll taxes and health benefits. This means that in order to have steady income you must retrain and repackage yourself as an independent contractor that moves from company to company offering your specialized knowledge at a price. Independent contractors can perform specific functions for a company ranging from, telemarketing, advertising manager to electrician, and sign an independent contractor agreement specifying the range of time they'll be working with the company and how and when they are compensated. You become a highly-valued specialist and the very thing most people only dream of... your own boss.

Outsourcing your skills or becoming an independent contractor is not a simple task to accomplish. However, neither is getting up to go to work and having other people dictate your agenda, your meal breaks, what time you'll go home, and then leaving feeling under-appreciated and realizing you can get axed at anytime. Weigh your options, start doing the research, and make something happen. Your future depends on it.

12 Principles of Successful Real Estate Investing

There is no doubt that we are in one of the worst economic times that America has seen in many years. Massive layoffs, interest rate adjustments, and over building have lead to a major crisis for many in the real estate market. These factors have led to a record numbers of foreclosures. With a glut of foreclosed properties entering the market, prices of all properties continue to drop as fewer qualified buyers are in the market to purchase these properties.

Although, this market may seem like the worst time to be a real estate investor, it is actually the best time – if you know how to maneuver in this game. I bought my first property in 1996. It was a major ordeal full of unbelievable trials because I didn’t have a clue how the process worked. I relied on others who didn’t have my best interest at heart to close the deal. In retrospect, a lot of people made a lot of money from my ignorance. In the years that followed, I have amassed a tremendous amount of knowledge investing in real estate during boom times as well as during the decline. The best lessons I have learned have not only come from my personal experiences, but from observing others in the game – some who were greatly successful and others who disastrously failed. From this experience, I have come up with a set of twelve guiding principles that any investor, green or seasoned, can follow in order to succeed.

Rule #1: The numbers don’t lie

There are only five types of math you need to know to be a good investor. They are addition, subtraction, multiplication, division and probability. If you analyze every deal using simple math – not emotion, not speculation – you will only pick the deals that can make you a profit. Don’t ever forget that real estate investing is a business in which your ultimate goal is to make a profit; whether that profit comes in the form of a cash return on a sale or from monthly cash flow from rentals, the objective is to make money. A bad deal is a bad deal. It doesn’t matter how you try to justify it or explain it away, if the numbers don’t add up to a significant profit, don’t enter into the deal.

Rule #2: You can’t do good deals with bad people
Unfortunately, there are some very unscrupulous people in the real estate industry. Do your homework and check out anybody you intend to do business with. Interview them, Google them, ask for references, check with watch dog agencies and see if there is something that raises a red flag. If you find anything wrong, tangible or simply a bad feeling, move on. A predator does not discriminate. If they took advantage of someone else, no matter what they try to tell you or how safe and profitable the deal looks, they WILL eventually take advantage of YOU!

Rule #3: Don’t try and predict the market trends
The only guarantee about the market is that it will shift. There are no real indicators that can determine how long the excesses will last, nor is there any way to know what will change the attitudes of the government, lenders and buyers that fuel the change. So, whether there is a “bubble” or a down turn in the market, you should remain disciplined in how you analyze and acquire your investments. During a “bubble,” don’t assume the market will continue to climb and purchase an overpriced property speculating that it will increase in value.

Rule#4: Learn to recognize opportunity
There is ample opportunity to profit in any market. You have to learn how to recognize those opportunities that no one else can see. While others are blinded by the market trends – chasing any dangling carrot put in front of them - you must remain clear and focused on real value. The best opportunities exist investing in areas that have properties with intrinsic value that have been adversely affected by circumstances causing people to forget about its long term economic value.

Rule #5: Understand the difference between price and value
This can be explained simply; price is what you pay. Value is what you get. Often times, new investors confuse the two. Based upon a fear or lack of available resources they often chase after the deals with the lowest price only to find that what they bought does not have strong economic value. In essence, it would have been better to pass on the low price and increase resources to purchase something that will produce greater profitability through a resale or rental income. A smart investor realizes that a property does not have to be bought for a rock bottom price to be a good investment. It only has to be selling for less than what you determine the value of the property is.

Rule #6: Always look for intrinsic value
There is no formula to figure out intrinsic value. You have to understand the neighborhood in which you intend to invest. In New York City, there are certain types of buildings, such as brownstones and limestones that have intrinsic value that transcend the market fluctuations. This is because of their architectural beauty and quality. You cannot reasonably afford to build a property with that level of quality and craftsmanship in the proximity of other equally magnificent properties today. Since the cost to build one will continuously ascend out of reach, to acquire one of these properties gives you long term economic value. The same consideration goes for waterfront properties which are finite and properties overlooking Central Park in Manhattan or Prospect Park in Brooklyn.

Rule #7: If everybody’s buying – SELL!
Most people get interested in investing real estate when it’s popular. The best time to get interested in real estate investing is when no one else is. The bottom line is when it comes to investing you can’t buy what is popular and do well. When there is a buying frenzy, prices are driven up by the overwhelming demand; this is not the time to buy. It is the time to sell and reap the benefits of the markets irrationality. Also, when the buying seems to grind to a halt, prices drop and inventory increases. This is the time to seek out bargains and buy as much as possible.

Rule #8: Minimize risk
There is no way to completely avoid risk because every factor cannot be 100% accounted for, but you can significantly reduce your risk to close to zero. This is done by performing tedious due diligence on every deal. Develop a niche neighborhood to invest in, don’t get caught up in the trends, scrutinize every opportunity to find the best use of the property, add up all of your costs and subtract that from potential income to determine the profit margin; and make sure you have your team and resources in place to capitalize on opportunities. Most of all don’t get emotionally attached to any deal; learn to walk away if the risk is too great.

Rule# 9: Avoid overleveraging
Do not borrow more money than you can afford to pay back if the market shifts or an unforeseen event causes you to liquidate the property. One hundred and one hundred and six percent financing has caused the financial ruin of many new and seasoned investors that greedily gobbled up every property they could get their hands on over the past five or six years. The market shifted, sparking decreases in value and now the properties are worth less than what they paid for with borrowed money. There is no opportunity to sell the properties without still owing the lender money.

Rule# 10: Be patient
You only need to make moves when opportunities arise. There will be times when multiple opportunities will come your way, and their will be times when nothing good comes you r way for a long time. That is the nature of the game. Fight the temptation to force a deal to happen simply because you are impatient. Impatience causes you to ignore sound investing principles. This leads to greater risk and potential losses. Don’t panic or become remorseful over a missed opportunity either since it is inevitable that a new opportunity will come your way again.

Rule # 11: Only invest in what you understand
Ignorance coupled with borrowed money is a recipe for disaster. Do not try to do deals that are outside of your scope of understanding. Keep it simple and develop your knowledge and skill set in a very specific neighborhood, property type, investment strategy and ability to determine value. Learn from your mistakes and continue to expand your knowledgebase.

Rule # 12: Know your ultimate goal for the investment
Before you get into any deal, you need to know what your ultimate goal is for the property. Is your intention to buy the property, improve it to increase its value in order to sell it quickly for a profit; or is your intention to fill it with amenities attractive to your target market to maximize monthly cash flow from rentals. Before you can determine if a deal is good or not, you must know what your intention for the property is.

Wealth Building Secrets

I want to welcome you to a new and revolutionary look at wealth building that transcends any economic swing – positive or negative. I want to share with you the fundamentals of how a free market economy, such as that which we live in, has the potential to produce wealth consistently if you are able to both see and, in a timely fashion, seize the abundance of opportunities that are constantly created.

Wealth building starts with a shift in perspective that requires a close examination of how the entire system works. Once you understand the rules (allowances and restrictions), and the nature of the economy it becomes easy to master over time.

This starts with understanding the foundation of our economy which you can find in Adam Smith’s 1776 masterpiece, “An Inquiry into the Nature and Causes of the Wealth of Nations.” Without getting into a long winded economic explanation of what a free market economy is based upon, it can be summed up in three major points:

1. It allows competition domestically and is open to trade with the rest of the world
2. It has institutions that make an economy work
3. It has a judicial system that enforces the rights of ownership

In the coming weeks, I will explain exactly how to employ these fundamental rules to creating an abundance of wealth through business ownership, real estate investing and securities investing that can be passed on from generation to generation.

To understand the nature of free market economies and how wealth is developed requires you to tap into your primitive survival mindset. It requires you to understand that “the market” like nature can provide everything you need to flourish, but “the market” just like nature is unforgiving if you do not pay attention. Mistakes can be catastrophic if you do not respect the power of the market.

Alan Greenspan summed it up best in this quote:

“Market economies have succeeded over the centuries by thoroughly weeding out the inefficient and poorly equipped, and by granting rewards to those who anticipate consumer demand and meet with the most efficient use of labor and capital resources.”

We are about to witness the greatest transfer of wealth in US history. For those who have the courage and tenacity to succeed, I will be offering - from my personal experience and the experience of others - tips, secrets and opportunities to be on the receiving end of this massive shift of wealth. I welcome any and all questions or comments and look forward to sharing with you.