Saturday, April 25, 2020

Books to Care of Your Home

With many people on enforced vacation these days, it may be a good time to handle some of the jobs around the house. Most guys are somewhat handy around the house, at least that is how we see ourselves - replacing broken light switches clearing clogged drains and that sort of thing, but we can always use a little help. Unfortunately now that there is time to do some of the jobs, money for hiring a handyman or contractor may not be so available for some.

No matter how handy a guy... or girl is unless they are a know-it-all TV contractor that makes fun of home repairs, a little help is good to have. If you are a new homeowner, a little help is essential. I am somewhat in the middle as I've rehabbed and remodeled houses... and the more I learn, the more I see that I don't know. To be honest, I'm sure TV hotshots need some help sometimes too.

I have a book or two that I like but it's not the only one – there a many that will fill the bill and some that go into much more detail. The point is that it's better to be prepared when the lights go out or the garbage disposal stops working and springs a leak. Most run in the ten to twenty dollar range, which is a mere pittance should you have to bring in a professional. Most will also tell you when it is time to bring in a pro to avoid doing more damage and having to shell out even more money. Sure you can look things up on the internet but you may not always want to drag your laptop into the crawl space under the house... plus it's harder to make notes to help you out next time.

What can you save? For example, you can buy a toilet at Sam's Club for under a hundred dollars. Lowes has one almost as low and I'm sure Home Depot has something in that price range. If you know what you are doing, that's about all you need as many come with the wax ring and hardware? What's a wax ring? The instructions will show you, but you will approach the job with more confidence if you know what all is going on and why. Either way, what will you save? I've had one plumber in the Tampa Bay area quote a minimum of $500 if they remove the toilet, and that is just labor. So for about half that, you can get the super powerful flusher rather than the base model if you want.

If you are ready to tackle some of these jobs for the first time, here are a couple tomes that can make you look like a pro.

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Yes... and if you are just starting out... you may need some tools too. I'm a little partial to Craftsman tools since I got at set shortly after high school and they served me well Sunday afternoons at the drag strip and ever since. Mechanical pieces like the ratchets still work nicely. The only time I took advantage of their lifetime warranty was to replace a screwdriver that broke when I was using it for something a screwdriver was not designed to do. You can get cheaper and more expensive tools, but I don't think you can get much better.


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Saturday, April 18, 2020

Keeping in Touch for Free


With the recent need to set aside the benefits of face to face meetings many of us have taken to working from our homes, Along with the obvious advantages of bypassing the commute to the office and having the refrigerator only a few steps away, there are some downsides to this new found immobility.

For many in the real estate investor community the dealing with remote associates is nothing new. Unless the investor is one of the big guys, he (or she) probably doesn't have a regular office and on site team to work with. Many of us get by with a cell phone and email. We sign contracts online. We do preliminary research online... including reviewing pictures and videos, when available, online. We have learned to function pretty well with this arrangement.

However we still had the gift of mobility to back up our electronic connections. I would meet with buyers, sellers and contractors at one of my many remote offices around town. My empire is so large, I probably have at least one in your town. You can recognize these offices by the big sign out front that says Dunkin' Donuts, or now some of the new ones just say Dunkin'.

I hope to get back to that practice as soon as possible because studies have shown that 55% of communicating happens through facial expression and body language and another 38% through tone of voice and only 7% through the actual words. (Dr Mehrabien at UCLA.) We can pick up the tone of voice through the phone, but even that is totally missing from email communication. One trick that former FBI hostage negotiator Chris Voss suggests to help prevent miscommunication is to read your email aloud in the most hostile tone of voice to see how it sounds... and then fix it before hitting Send.

Years ago I was working for an energy company in Virginia. I couldn't say how many states they had facilities, but communication was an expensive issue. People would travel to a nuclear plant in Connecticut or a coal-fired plant in West Virginia – or perhaps workers from the various plants would come to the home office. They would lose a day or two traveling for a meeting that lasted an hour or two or three.

Then along came video conferencing. We could have a team of people in Richmond meet with a team from Connecticut. The meeting would run for an hour and then we could get back to our regular tasks. The process that saved a multi-billion dollar company hundreds of thousands of dollars a year was generally out of reach for small business people.

Along came programs like Skype, Webex and Zoom among others and this capability is as close as your laptop or cell phone. And much of it is available at no charge. As I look over the connections I have available just now at my desk, figuring what would work best for me I see I already have a couple of the programs already and I'm pretty sure you do to.

The first one I found is part of the ubiquitous Google suite called Hangouts. You can do one on one conversations up to ten participants... twenty-five if you spring for another package. Being so readily available has its drawbacks as well. There are a number of young ladies... make that women... on LinkedIn who seem to think it is a dating app and are looking for sugar daddies among the businessmen who frequent the site. They tend to want to start on Hangouts. I've had one act offended when I told her I wasn't interested, but happy hunting.

In any case Hangout is available and ready to go. It ties into your Gmail contact list and is one more way Google insinuates itself into our lives. You can make calls and send texts from it as well. Google also makes an Android app called Duo and you can get about ten people on the line with that one as well, but it does not do SMS texts. It does have end to end encryption if you don't want anyone else to know what you are up to.

Another choice I found was WhatsApp. It's less common than Google as you have to look it up and download it, but it also ties in to you Gmail contact list – with your permission and lists those who already have the app, which is kind of a nice thing. I got it when my grandson was traveling through Germany as it works well internationally. It's a nice program, not quite as common as Hangouts, but is well worth checking out.

Then I checked out my Skype program which I used several years ago with great success. It was easy to use and the picture quality was acceptable. You can get a free trial, which is a tip-off to what I found when I logged in to my account. Micro$oft has made this a paid service. It's not expensive unless you are on the phone all day. It does have the advantage of allowing you to get a local number even in another country if you so desire. I don't know if Google Voice does that.

This week I had the privilege of taking part in a meeting with about a dozen others using a program from Jitsi.org. It seemed to work very nicely with inputs from spreadsheets and an overhead projector. It is free for occasional use and inexpensive for use of regular teams that need to stay in communication. If you have a group that needs to meet periodically, it's worth looking at.

There are others, Cisco Webex that I have not used and Zoom which is more of an enterprise solution. The point is that you can keep in touch and see who you are talking to and what they are talking about without driving all over town or across the state or country. This time that we are locked up, or I guess I should say locked down may just teach us to use some tools to make us more efficient, which is not a bad thing. This stuff will help, but no matter what Dr Fauci would like us to do, there is no substitute for getting together with real people.

Sunday, April 12, 2020

What's With The Housing Market?

I look over emails every day with a dozen or more sellers dropping the price of their property. This is a response to the temporary situation along with a need or perceived need to sell their house quickly. It may also come from agents who need to sell something to keep the paychecks flowing.

It seems that everything is working against the sellers these days. And it's not too great for the buyers either. I've seen reports that in some areas realtors cannot have lockboxes – not even on vacant properties. I'm not sure what that is about other than the need to exercise some of the newfound power by some members of the ruling class.

It may be a back door attempt to stifle the showing of properties which is already hindered by the hesitancy of sellers to allow strangers into their homes and the difficulty of presenting properties while maintaining “social distancing” standards. It may be that the powers that be should just be honest and ban the showing of real estate if they are that concerned.

They can ban this all they want, but that doesn't help the realtor trying to help his or her clients – any more than much of the whole shutdown helps anyone whose income has evaporated. It also doesn't help the family who needs to sell their home as quickly as possible.

As I mentioned earlier about the drop in real estate prices, it's not necessarily a reduction in value but an increase in the need to sell. But lowering the price of a piece of real estate does absolutely no good if no buyers are coming around to see the place.

As I look through Craigslist ads, about all I see in the Tampa Bay area are mobile or manufactured homes. The owners looking to sell the houses seem to have disappeared. I don't know if they have just put their plans on hold or if they have given up then listed their property with a realtor. Whether they have done that or not, their house or condo is still competing with many others for a smaller pool of buyers.

Video tours have helped fill the gap up to a point. However, before I agree to buy a property, I want to see it, especially if it is one I will live in. The videographers are doing a very good job of showing properties. They were most helpful in creating a piece for a property I recently sold. I am told that you can't put lipstick on a pig and make it something else, but as an old photographer I can tell you that I can take a questionable house and make it look like a nice place to live. I am not unique in this. Anyone good with the camera can do the same thing – and they do. Many times I thought I was going to see a nice looking house and it just didn't turn out so well. The pictures were right, but there was a lot you couldn't see.

Perhaps if one really has to sell, it would be time to go with one of the hedge fund corporate buyers or local investors. These people are not foolish, they know the market is not the same as it was months ago, and really, it is most likely not the same as it will be several months down the road when America is open for business again.

Two things can be learned by looking at today's market. First is that unless some disaster really strikes or the naysayers keep us shut down indefinitely, the low prices may not hold for long. For the buyer this is an opportunity as we are in a buyers market for those who are anxious to sell. On the other hand, unless one really needs to unload a property quickly, holding on a few more months could be quite beneficial. When things open up, the pent up demand from those who have not been greatly damaged by the shutdown could well push the prices up again. It's not time to panic and dump the place cheap unless you really, really need to sell.

However long we are stuck in this holding pattern, there is definitely one more lesson that is to be learned or reinforced if it has not already been learned. That is, for all the benefits of owning real estate – the income and capital appreciation along with the tax treatment, it is not a liquid investment. Whether it is your home or rental property or vacant land you can't just go to your online broker and sell when the urge strikes you. It is market-driven and the value of a property is not necessarily what the Zestimate says or what the appraiser says. The value of a property is just what someone is willing to pay for it.


Sunday, April 5, 2020

The Value of Trust


I recently had the privilege of hearing a talk about trust that Stephen M R Covey gave to the students at Liberty University. He is ths son of the man who has given us books like 7 Habits of Highly Effective People. The apple did not fall from the tree with this fellow. He spoke of trust as being a business virtue in addition to being a human virtue. He talked about activities and organizations where trust is present operating with more efficiency and speed along with being more satisfying to work with.

I got to thinking about how this applies to the real estate business, whether it is working with agent buying a home or as an investor rehabbing a house. I thought back to some of my experiences with and without the quality of trust. While I didn't see it that way at the time, it turns out life proves his theory.

Hardly anything can be done in this field without a team of people. Trust is the lubricant that smooths the rough edges and fills in the bumps in the road. When I first moved to the Sunshine State I knew no one and had no connections. My first deal here was wholesaling a small house in northern Pinellas County. It so happened that the investor who bought it connected me with a title company that just makes things work.

I didn't know them or the investor, and we worked through several issues. Over time I developed a degree of trust with the investor and I believe he, with me as we have done other deals smoothed out with familiarity and trust. This is even more so with the title company as we have done multiple deals and they have come through every time. I just have to email them the paperwork and I know things will be handled professionally and legally. I don't waste time with worry or excessive follow up.

When working on houses, the same holds true with the tradesmen involved. They can make your profit or kill it. You need to have people you can trust, not just to do the job, but do it on time for the quoted price. When you start out you have to go by recommendations if you can get them. Learning this by experience can be quite expensive, but sometimes it is necessary. For the investor, it involves forming relationships with other investors who may have come across your situation before. For the new home owner getting to know they neighbors is a good place to start.

I had a water leak in a second floor condo that had to be fixed NOW! I did not have a plumber at the time so I relied on one recommended by a lady at the local REIA. It turned out to be a good choice. Even as a new client, the guy showed up within the hour and the situation was resolved... and he didn't take advantage of the situation with the bill. From that one experience he earned my trust and I have used him on multiple jobs satisfactorily.

As time went on and he developed some health issues he recommended another plumber to do the work he was no longer doing. I didn't hesitate to call the new guy because I had confidence in the man who recommended him. He turned out to be just as good. This saved me a lot of time and aggravation looking for replacement.

The reverse of this situation is also true. When you depend on someone who promises to get the job done and they bail on you, you lose time and have to pay more to get another tradesman to finish the job... if you can find one who is willing to pick it up in the middle.

I had this situation on another job where my electrician that I had used for small jobs in the past started the job but was not qualified to finish it. He disappeared without a word. I wasted time trying to find someone to finish the job. Then I got another recommendation. It was a young Vietmanese guy. It seemed he had just gone out on his own. He pulled the permits got the job done and he will be called next time I need an electrician.

So what do we get from all this? What happens when your trust is misplaced? Yes you learn, but you don't stop trusting. If things look good at the beginning you have reason to trust until you see a reason not to... but you don't go looking for reasons not to. If someone is untrustworthy they will reveal it themselves.

Of course it is better to deal with people you know and trust. But how do you find them? Where are they?

The place to start is to be trustworthy yourself. In my case, no investor would risk their relationship with someone important to their business if they thought you were a jerk and going to treat their guy badly. Then you need to, using common sense and wisdom, show some trust in the people you are dealing with. If they sense you don't trust them, it will be hard for them to trust you and become dependably trustworthy. You have to do a cost benefit analysis. Build trust on smaller efforts and let it work it's way up. When it does you will spend far less time and get more done.

I go to meeting with a group of investors. There is a certain trust built into that group. You are expected to treat each other fairly. If someone talks about a rental property they want to sell, it is understood that you will not bother the tenant. If it is a contract to be assigned, it is expected that you will not go around them to the owner and try to cut them out. People that can't work with this way are banned from the group. Her lack of trust not only slows things down, it brings it to a halt. You only cheat someone once.

Most people will live up to your expectations. There are those who will try to take advantage of you, but its kind of like the old adage – if you want a friend, be a friend. It also helps to pick your friends wisely. Don't hang out with shysters.

You can find out more about this concept of trust being a business virtue as well as a personal one in Covey's book Speed of Trust. Living that kind of life will make things work better and you will feel better than if you are trying to hustle everyone.. Better to have people trust you than have them count their fingers after they shake your hand – like I do with most lawyers.