GURU IS NOT A FOUR-LETTER WORD -PART 1- THE TERM

Have you ever heard the term “guru” used in real estate blogs, articles or other posts on real estate communities and social media? I’m sure you have. But, have you EVER found ANY of them using the term in a positive manner? I never have, not a ONE! Typically, in its derogatory fashion the term guru is used to describe or identify someone who is really not truly knowledgeable about the real estate investing game, or maybe someone who basically “overcharges or scams” a new unwitting student to real estate investing/speculating. Most of the time the person writing or making the comment is trying to make a point, but instead of constructively referring to their own facts or supporting their own position or point of view with something concrete, they just site complaints of the many that decided to pay the “ridiculously over-inflated prices for basic real estate investing education” and move on to use a comparison between themselves (or someone they want to pump-up as the good guy) and the devious elusive “guru”.

The point is that anytime someone wants to make themselves look good, win public opinion and prop themselves up as the savior of the wannabe real estate investor community, all they have to do is taint the reputation of someone else teaching real estate by labeling them a guru. I’ve read so many real estate articles and posts where the title “guru” is used in a derogatory fashion I’m starting to think it has never had any other meaning but a derogatory one. I happen to respect and revere the term guru. But I keep seeing it in article after article, post after post especially by individuals trying to benefit from undeserved accolades (much as the real estate “gurus” they are trying to besmirch.) This is probably not the wisest method of trying to make an intelligent point, as it basically amounts to no more than demeaning or degrading the term “guru” and then applying it to whomever, or whatever the writer or speaker is trying to deface. But unfortunately, most folks buy it!

For the record, I must admit that over past years I’ve been guilty of making similar unwise and immature statements myself about a host of things. Honestly, I think we all do it, occasionally without regard for the damage we may cause to others or the impact we can have on someone else’s decision making. But when connected to real estate it’s become an epidemic!

For the sake of accuracy, let’s take a closer look at the true original meaning of this big bad term “Guru”. As I’m sure most of you already know, according to Merriam-Webster “guru” pronounced gu•ru noun ˈgu̇r-(ˌ)ü, ˈgü-(ˌ)rü also gə-ˈrü, is defined as

    : a religious teacher and spiritual guide in Hinduism

    : a teacher or guide that you trust

    : a person who has a lot of experience in or knowledge about a particular subject

“In Hinduism, a personal spiritual teacher. In ancient India, knowledge of the Vedas was transmitted through oral teaching from guru to pupil. The rise of the bhakti movement further increased the importance of gurus, who were often looked on as living embodiments of spiritual truth and were identified with the deity. They prescribed spiritual disciplines to their devotees, who followed their dictates in a tradition of willing service and obedience. Men or women may be gurus, though generally only men have established lineages.”

So actually the TRUE meaning of the term guru is pretty cool, and deciding to continue to sarcastically use it to demean someone we are basically trying to crush is extremely inappropriate.

I suppose the appropriate term to use for such an awful underhanded individual would be closer to “Charlatan” pronounced char•la•tan/ˈSHärlətən,ˈSHärlətn/ and defined as

Noun: charlatan; plural noun: charlatans

1.  A person falsely claiming to have a special knowledge or skill; a fraud.

Synonyms: quack, sham, fraud, fake, impostor, hoaxer, cheat, deceiver, double-dealer, swindler,      fraudster, mountebank.

YEA… THAT’S THE TICKET!

As for the actual title of guru, well I suppose anyone that has ever helped us in any way to see, learn or understand anything we wanted to master by explanation or actual example (even if the only thing we learned from them was that real estate is definitely not for us) then I’d say the person we received that wonderful gift from could, in fact, be considered our guru… whether we paid them or not! 

Oh, by the way, I LOVE GURUS!  😉

Making Hard Money Make Sense

Question:

I use a little hard money, but not very savy about it.

To buy and hold seems like you need to leave a lot of skin in the game. 20% on either conventional or hard money. Hard money at 60-65 of todays market value on longer terms . If I buy at a 20% discount … I still need about 20% down

With the average multi unit in the Hood of SD will cash flow 1000k a month with 100 percent financing @ 9 % and 200k-250 purchase price. Since that does seem possible, thats a 40k hit without repairs. I can only do so many of these deals…..I want to do a lot…..

How do I finance or purchase other wise with keeping some skin!???

P.S I ordered your REO 101 package yesterday…Im sure there will be some good stuff in there!

Answer:

First, thanks for the ordering course.

Now, on the stuff I buy to keep – my goal is always to refi and get 100% of my money out of the property and still have at least $100 of monthly “real net profit” (that means after ALL the expenses- PITI- vacancy & credit loss, maintenance & 10% management.) So I try to buy at 50% to 60 % of ARV (after repair value or fix-up value) This is does not happen everyday, but those type of buys must make up at least 50% of my purchases. Now keep in mind that those are fixers where I’m forecasting spending 10% to 20% of the ARV on buying & repair costs as well as 10% to 20% on holding and selling costs. Keep in mind that since I don’t read minds or crystal balls, I don’t know when the market will change so…

When I buy, the property must jump through 2 hurdles: buy & sell and buy & hold.

Many times I’m purchasing properties where the repairs or other costs are less than my worst case scenario and that is typically reflected in a higher purchase price or percentage of purchase price to ARV, such as paying 70% of ARV.

OK, keeping in mind that the real estate market can change at any one moment, you must plan your attack with several acquisition strategies to assure your desired outcome. You MUST have more than just one method of catching the prey, especially if your long-term goal is to “hold it,” until it gets fat and juicy, while eating the eggs it produces periodically, and that is as good an analogy as possible – the chicken!

Even if you are flush with cash, if you believe and are banking on benefiting from appreciation, financing will be both your salvation and your weakness. Part of your daily tasks should equally include both the pursuit of leverage and new inventory, for you cannot continue to grow without both.

Do not limit your thinking nor listen to your well-informed logical thought process when it comes to your acquisitions of both of these needed components because the secret to acquire both to fill your coffers will come from consistent, relentless and unrelenting pursuit of both simultaneously, regardless of your own thinking (past, present or future continued imagined results). Almost daily you will have to wipe your opinionated-mind clean of your own “bull shit” thoughts and perceived conclusions and re-fix your focus on your deliberate chosen actions.

Financing is available from one of several sources

1- your cash stores

2- conventional lenders (FNMA up to 10, but really 4 to 5 properties)

3- local commercial banks – 5 to 10 (but really limited only by your finances and relationships)

4- hard money- same as #3

5- true investors, as in older real estate people that have been in and understand the business and now just want to get checks instead of managing properties (they are everywhere) – search in real estate offices; start with agents and their clients, referrals. Also, ads in a large newspaper like the LA Times- although these folks are typically looking for short term type investments; it’s all about returns.

6- Other retirees looking for better returns than the bank can provide- there are thousands- try to stay local when looking for these folks. People that prepare tax returns such as CPA’s or enrolled agents are a great source for people that earn good wages and need to find investments to give them either tax shelter or additional income to off-set their increasing tax liability.

7- Other investors like yourself looking to partner up with someone who has any of the components they perceive (or have actually identified) as missing from their own tool box needed to do this business. Local investor clubs are a very good source for these folks.

8- Check out the Homepath financing available to investors on FNMA Homepath approved properties. You can get up to 10 and the financing is superior to anything on the market. You may be paying a higher price for the properties, but when you add in the financing component it may make mucho sense. I personally am trying to buy 10. They identify several approved lenders to work with on their site. Make sure to confirm they have closed prior deals and are presently active doing these type loans with FNMA.

These are just a few tips to sort of jar your own mind and get you to start thinking in a different direction instead of just hard money for long-term financing.

Tony interviews Andrea Esplin Part 1 of 4

Join us as Andrea Esplin tells us how and why she got started in the Real Estate business and what kind of background she has! Did Andrea have any special Real Estate education when she first started the business? Does Andrea think it takes any special skills to get started? Find out by tuning in to this one-of-a-kind interview of a true, hardworking investor making it big in the real estate world!

To view this interview in its’ entirety & to catch Bruce Norris’ interview, go to http://www.HDREIN.com & sign-up for a FREE membership!