Tim's blog

I can't remember a more challenging planning cycle in my adult life. I know I have not had a more difficult time planning for the coming business year since I have had to do this type of planning.

Today, I spent about an hour on the phone with someone I thought was looking to turn-around an under performing apartment building. After about 50 minutes, I finally figured out it was a sting operation by a "tenant advocacy" group.
After we discussed their "problems" I talked in general terms about some of the things that might help to put them in a position of actually turning a profit.

If your real estate investments are losing money, you have two options and only two.
You can either sell it, often at a loss or fix the problems causing you to lose money.
The problem many investors face is they don't have the knowledge, experience or objectivity to decide with path to pursue. Then once a path is chosen or forced upon them, they lack the knowledge, experience and objectivity to use that path to their fullest advantage.

Part of being a consultant is giving bad news. I don't like to give bad news any more than I like to receive bad news. That does not stop me from delivering the plain truth to a client or potential client, even when it is bad news, even when they don't like it and even if it means they won't use my consulting services. Such is what happened recently.

For that last 18 months or so I have been working with clients on turning around problem investments. More and more by the time they find me they are in a desperate situation. In some cases, they haven't had enough time left for me to help them. In other cases, their situation wasn't as dire as they thought.

I have been investing in real estate, the stock market, the bond market and private note markets for over a quarter of a century. I've been through economic ups and downs. I've been through favorable and unfavorable government involvement in the markets. I've seen other investors enter the world of investing survive and thrive as well as crash and burn. I've made my share of mistakes and tried to learn from every single one of them as well as the successes.

Investors who quickly crash and burn seem to share some common traits in the mistakes they make.

It is not unusual to receive testimonials in emails from customers who've purchased eBooks I publish or training I've conducted. In a typical day, I get ten or more; some days, much more. I read every one of them and often respond. I also forward them to the author or authors of the eBook being praised.

This morning, I received one from Barry Walker in Los Angeles, CA.

I know you think you're a great landlord. And I am sure your spouse or significant other thinks you are a great landlord. Your banker may think you're great landlord because you pay your bills on time and your repair people may think you're wonderful landlord to do business with because you pay promptly and you don't make unreasonable requests of them.

But what do your tenants think about you?

Your tenants are your customers; they are your clients; they are everything that makes your landlord business an actual operating business.

Many successful investors use the following quick formula to quickly gauge the strength of a deal.

Estimate or verify the current monthly market rent for a house, duplex, triplex, quad or other investment property. Then take 50% of that number. Then deduct your desired cash flow and the number you are left with is the maximum monthly payment for principal and interest you have to work with. From that you can work backwards to your maximum loan amount and consequently your maximum purchase amount.

I have been a consultant for most of my professional career. Even when I was a W-2 employee I was mostly in consulting roles. I built and ran a consulting business for many years. Historically, my "career" as a consultant has been in the software arena solving difficult real world business problems.
In addition to that I have been an active investor for more than 25 years.
If you have read my articles here, you will note I have encouraged people to keep or get a regular job while building their investing portfolio.